John Simpson v. Brown County, Indiana, 2017 U.S. App. LEXIS 11307

Background

John Simpson, owner of a septic installation business in Brown County, Indiana, had his county-issued septic installer license removed by the County Health Officer in a June 14, 2013 letter after a corrective-action letter regarding his mother’s property.
The county septic ordinance delegated broad discretion to the Health Officer to remove installers for "inability or unwillingness to comply" and did not specify pre-revocation procedures.
Simpson sued under 42 U.S.C. § 1983 alleging deprivation of property without procedural due process and sought lost-income damages; the district court twice dismissed his claims; he appealed the third dismissal.
On review the Seventh Circuit treated Simpson’s allegations as true and held the revocation was authorized by the county ordinance (not a random, unauthorized act), so Parratt/Hudson did not excuse pre-deprivation process.
Applying the Mathews v. Eldridge balancing test, the court found Simpson plausibly alleged a significant private interest, a high risk of erroneous deprivation under the ordinance, and that the County had not shown an emergency or other strong interest justifying summary removal.
The court also held that available Indiana post-deprivation remedies (common-law judicial review, tort claims, or state administrative review) would not provide adequate compensation for Simpson’s alleged financial losses, so they are not an adequate substitute for due process.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Simpson possessed a property interest in his septic license protected by due process	Simpson: license is a government-created property interest entitling him to due process	County: license revocation served public health interests and could be summary; also argued post-deprivation remedies were adequate	Held: Simpson had a protected property interest; pre-deprivation process presumed required unless narrow exceptions apply
Whether the revocation was a "random and unauthorized" act excusing pre-deprivation process under Parratt/Hudson	Simpson: revocation implemented under the county ordinance’s broad delegation, so it was authorized and predictable	County: argued actions were sufficiently discretionary or that Simpson received process	Held: Revocation was authorized by ordinance, not random/rogue, so Parratt/Hudson do not apply
What pre-deprivation process Mathews requires here	Simpson: needed at least meaningful notice and an opportunity to be heard before revocation	County: public-health interests and administrative efficiency weighed against pre-deprivation procedures; argued costs outweigh benefits	Held: Under Mathews, taking allegations as true, Simpson plausibly was entitled to pre-deprivation notice and an opportunity to be heard; County hadn’t shown emergency or undue burden
Whether state post-deprivation remedies were adequate to satisfy due process	Simpson: common-law judicial review and other state remedies would not compensate for lost income and therefore are inadequate	County: post-deprivation common-law review (and other state remedies) are adequate, so federal due-process claim fails	Held: Proposed state remedies would not make Simpson whole for economic losses; they are inadequate, so § 1983 claim may proceed

Key Cases Cited

Mathews v. Eldridge, 424 U.S. 319 (1976) (three-factor balancing test to determine required procedural protections)
Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (public-employment license/entitlement is property requiring due process)
Parratt v. Taylor, 451 U.S. 527 (1981) (post-deprivation remedies may suffice where deprivation was random and unauthorized)
Hudson v. Palmer, 468 U.S. 517 (1984) (similar to Parratt on unauthorized/state-actor deprivation)
Zinermon v. Burch, 494 U.S. 113 (1990) (Parratt/Hudson inapplicable where deprivation is authorized or predictable under state law)
Goldberg v. Kelly, 397 U.S. 254 (1970) (necessity of hearing before termination of critical government benefits)
Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264 (1981) (emergency summary action may justify post-deprivation hearing)
Monell v. Dep’t of Social Servs., 436 U.S. 658 (1978) (municipal liability under § 1983 requires unconstitutional policy or custom)
Easter House v. Felder, 910 F.2d 1387 (7th Cir. 1990) (distinguishing random unauthorized acts from predictable abuses of delegated power)
Pro’s Sports Bar & Grill, Inc. v. City of Country Club Hills, 589 F.3d 865 (7th Cir. 2009) (state remedies inadequate if they cannot compensate economic losses caused by summary licensing actions)
Gable v. City of Chicago, 296 F.3d 531 (7th Cir. 2002) (state tort remedies can satisfy due process where they fully compensate loss)