975 F.3d 406
3rd Cir.2020Background
- Three tenured Scranton public-school teachers (Watters, Popish, Burdett) received suspension notices after Pennsylvania enacted Act 55 (Nov. 6, 2017), which added an "economic reasons" ground for suspending tenured teachers under the Public School Code.
- In Jan. 2018 the Scranton Board adopted a resolution citing a projected ~$4.5 million deficit and estimated savings of $691,033 from reducing teaching staff; the Board followed Act 55’s procedural requirements, held hearings, and voted to suspend the teachers effective Aug. 30, 2018.
- The teachers sought hearings and some were later recalled; three remained suspended and pursued state-law and federal claims challenging the suspensions as violating the Contracts Clause via 42 U.S.C. § 1983.
- The District Court dismissed the § 1983 claim for failure to state a claim; the teachers appealed only the federal claim.
- The Third Circuit assumed (without deciding) that § 1983 could support a Contracts Clause claim and that Act 55’s application could be a substantial impairment, but resolved the appeal on the alternative Contracts Clause inquiry: whether the impairment was necessary and reasonable.
- The Third Circuit affirmed, holding that, on the face of the complaint and exhibits, the School District’s suspensions were a necessary and reasonable means to address legitimate and significant budgetary problems.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1983 provides a private right for Contracts Clause claims | § 1983 permits enforcement of Contracts Clause rights | § 1983 does not supply a private Contracts Clause cause of action | Court assumed § 1983 could apply for purposes of the appeal but did not decide the issue |
| Whether Act 55’s post-contract change substantially impaired tenure contracts | Act 55’s addition of "economic reasons" materially impaired pre-existing tenure contracts | Contracts incorporate the Public School Code and its amendments, so no impermissible impairment | Court assumed substantial impairment for argument’s sake and did not decide the issue |
| Whether suspensions were "necessary" to address the budget crisis | Suspensions were unnecessary; other less-impairing alternatives existed | Board had exhausted other cost-saving measures and suspensions were necessary to avoid deeper program cuts | Held necessary: record showed other measures were considered and insufficient |
| Whether the suspensions were "reasonable" and appropriately drawn to advance a legitimate public purpose | Not reasonable because the district’s financial problems predated Act 55, so impairment was unjustified | District followed Act 55 procedures, provided detailed findings, and afforded hearings — action was reasonable under the circumstances | Held reasonable: given the Board’s findings, procedures followed, and absence of foreseeability at contract formation, the suspensions were appropriately tailored |
Key Cases Cited
- Sveen v. Melin, 138 S. Ct. 1815 (interpreting Contracts Clause impairment and the means/ends inquiry)
- Energy Rsrvs. Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400 (state police power limits on Contracts Clause)
- U.S. Tr. Co. of N.Y. v. New Jersey, 431 U.S. 1 (necessity and reasonableness scrutiny when state is party)
- United Steel Paper & Forestry Rubber Mfg. Allied Indus. & Serv. Workers Int’l Union v. Gov’t of V.I., 842 F.3d 201 (3d Cir.) (more exacting scrutiny when state actor is contracting party)
- Elliott v. Bd. of Sch. Trs. of Madison Consol. Schs., 876 F.3d 926 (7th Cir.) (comparative precedent on tenured-teacher layoffs and Contracts Clause)
- Kaminski v. Coulter, 865 F.3d 339 (6th Cir.) (argument that Contracts Clause claims may not be actionable under § 1983)
- Crosby v. City of Gastonia, 635 F.3d 634 (4th Cir.) (recognizing limited § 1983 remedies for Contracts Clause injuries)
- S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885 (9th Cir.) (Contracts Clause actionable where state or political subdivision impairs obligations)