Daniel Kerber v. Wayne Cnty., Mich.
20-1769
| 6th Cir. | Jul 6, 2021Background
- Kerber, a long‑time Wayne County Airport Authority employee, signed a 2009 severance agreement allowing him to transfer from Plan Five (a hybrid plan) back to Plan One (a more generous defined‑benefit plan) conditioned on transferring his Plan Five defined‑contribution (DC) assets to Plan One.
- WCERS transferred Kerber’s defined‑benefit assets but did not transfer his ~ $340,166 DC account; Kerber later requested and received a full distribution (~$277,431) from Prudential.
- WCERS learned Kerber had not transferred the DC funds, reported the matter to prosecutors, and halted his Plan One pension payments without notice or a hearing; criminal charges were later dismissed by the Michigan Court of Appeals.
- WCERS held an administrative appeal and later concluded Kerber never satisfied the severance condition precedent, reinitiated Plan Five payments, and reduced future payments to recoup alleged overpayments.
- Kerber sued under § 1983 (due process and related claims) and multiple state tort and constitutional claims against WCERS, individuals, WCPO, and WCAA; the district court found a due process violation (no adequate pre‑deprivation hearing) but concluded Kerber was never entitled to Plan One benefits and awarded only $1 nominal damages.
- On appeal Kerber contested (1) entitlement to Plan One benefits, (2) denial of punitive damages, (3) denial of certain state claims (governmental immunity for Grden), and (4) dismissal of tortious interference claim against WCAA; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to Plan One benefits | Kerber: "agrees to allow" is permissive; he was entitled to Plan One; WCERS waived condition or performance was impossible | WCERS/Grden: transfer of DC assets was a clear condition precedent; Kerber failed it and produced no evidence of impossibility or waiver | Court: transfer was a condition precedent; Kerber never satisfied it; no entitlement to Plan One; summary judgment for WCERS/Grden; $1 nominal damages affirmed |
| Due‑process pre‑deprivation hearing | Kerber: WCERS cut off/reduced benefits without adequate pre‑deprivation process | WCERS: process was adequate or not required because of fraud concerns | District court found WCERS violated due process (no pre‑deprivation hearing); parties did not appeal that ruling |
| Punitive damages under § 1983 | Kerber: WCERS/Grden acted breachfully and owed fiduciary duties warranting punitive damages | WCERS/Grden: punitive damages require evil motive or reckless indifference; record lacks such intent | Court: no evidence of malicious or reckless intent; punitive damages denied |
| Governmental immunity for Grden (state tort claims) | Kerber: Grden could not reasonably believe termination was within his employment authority | Grden: acted reasonably within scope to protect the retirement system from suspected fraud | Court: Grden reasonably believed he acted within his authority; governmental immunity applies; state claims dismissed |
| Tortious interference claim against WCAA | Kerber: WCAA (as signatory) failed to ensure agreement was carried out and tacitly approved WCERS’ actions | WCAA: not a third party to the contract (signatory), took no affirmative act; governmental immunity | Court: WCAA was signatory (not a third party) and alleged only inaction; no affirmative wrongful act pleaded; dismissal affirmed |
Key Cases Cited
- Solo v. United Parcel Serv. Co., 819 F.3d 788 (6th Cir. 2016) (standards of review for contract interpretation and summary judgment)
- Hunt v. Sycamore Cnty. Sch. Dist. Bd. of Educ., 542 F.3d 529 (6th Cir. 2008) (summary judgment standard)
- Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409 (6th Cir. 2008) (contract interpretation reviewed de novo)
- Smith v. Wade, 461 U.S. 30 (1983) (standard for punitive damages under § 1983)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment and genuine dispute standard)
- Hance v. Norfolk S. Ry. Co., 571 F.3d 511 (6th Cir. 2009) (abuse of discretion review for damages rulings)
- Odom v. Wayne Cnty., 760 N.W.2d 217 (Mich. 2008) (Michigan governmental immunity: acting or reasonably believing one was acting within scope)
- MacDonald v. Perry, 70 N.W.2d 721 (Mich. 1955) (condition precedent doctrine)
- Knight Enters., Inc. v. RPF Oil Co., 829 N.W.2d 345 (Mich. Ct. App. 2013) (need for specific affirmative acts to plead tortious interference)