American Federation of State, County & Municipal Employees, Council 25 v. Charter County of Wayne, 704 F. App'x 401

Background

AFSCME (and Local 3317) negotiated a CBA with Wayne County that expired Sept. 30, 2014; Article 38 contained retirement/pension provisions including a pension multiplier and an arbitration-related clause.
Michigan enacted Act 436 (effective Mar. 2013) authorizing appointment of emergency managers/chief administrative officers with broad powers affecting local governments’ contracts and bargaining; a consent agreement under Act 436 designated County Executive Evans a chief administrative officer for Wayne County.
The consent agreement suspended Wayne County’s duty to bargain and permitted the chief administrative officer to impose terms for previously covered employees; MERC concluded the County could not be compelled to participate in Act 312 arbitration while subject to the consent agreement.
After the suspension took effect (Sept. 21, 2015), Evans changed pension terms (reducing the multiplier) and Wayne County declined arbitration; AFSCME sought injunctive relief and sued in federal court asserting Due Process and First Amendment claims.
The district court dismissed AFSCME’s claims (without prejudice initially); after amended complaints, it dismissed the operative complaint under Rule 12(b)(6) for failure to plead a protected property interest.
On appeal, the Sixth Circuit affirmed: it found AFSCME failed to allege a constitutionally protected property interest in (a) maintaining a 2.5% pension multiplier through 2020, or (b) the arbitration process itself under Act 312.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether AFSCME had a protected property interest in pension multiplier/Article 38 through 2020	Article 38 and §38.01(L) of the CBA preserved retirement provisions (including 2.5% multiplier) beyond CBA expiration until 2020, so changing multiplier deprived property without due process	CBA expired; §38.01(L) does not affirmatively keep benefit levels in effect until 2020 and consent agreement/Act 436 authorized chief administrative officer to impose terms after expiration	Held: No protected property interest alleged; contract language does not show Article 38 survived expiration or fixed multiplier through 2020; dismissal affirmed
Whether AFSCME had a protected property interest in Act 312 arbitration (right to submit disputes)	Parties contracted to submit disputes to Act 312 arbitration; that contractual arbitration right is a vested property interest protected by Due Process	Arbitration is a remedial/ procedural mechanism, not a substantive property interest; Act 436 and consent agreement modified statutory bargaining/arbitration rights after expiration	Held: No protected property interest alleged; arbitration is process, not the substantive right protected by Due Process; dismissal affirmed
Whether res judicata/collateral estoppel barred AFSCME’s suit	(Not raised by AFSCME)	Defendants argued MERC decision and AFSCME’s withdrawal of appeal precluded relitigation	Court found defendants waived these affirmative defenses by failing to timely and adequately raise them below
Whether dismissal should be with leave to amend to plead property interest	AFSCME argued additional factual allegations could show vested rights/arbitration claims	Defendants contended pleadings were conclusory and insufficient	Held: Pleadings were insufficient; district court dismissal affirmed (district court had denied leave for further amendment as to operative complaint)

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
Board of Regents v. Roth, 408 U.S. 564 (1972) (property interests defined by independent sources such as state law)
Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (process protects substantive property interests; process is not the interest)
Olim v. Wakinekona, 461 U.S. 238 (1983) (procedural protections serve to protect substantive interests)
Rodgers v. 36th Dist. Court, [citation="529 F. App'x 642"] (6th Cir. 2013) (CBA just-cause provisions can create property interests; arbitration is process to protect that interest)
Leary v. Daeschner, 228 F.3d 729 (6th Cir. 2000) (contract/CBA may create property interests)
Weisbarth v. Geauga Park Dist., 499 F.3d 538 (6th Cir. 2007) (pleading requirements for material elements of a claim)
Ohio Public Employees Retirement System v. Federal Home Loan Mortgage Corp., 830 F.3d 376 (6th Cir. 2016) (standard of review for Rule 12(b)(6))