835 F.3d 742
7th Cir.2016Background
- Rebirth Christian Academy Daycare (an Indiana religious organization) obtained a certificate of registration to operate an unlicensed child care ministry and was subject to state inspections and registration rules.
- A Bureau inspector issued a "Plan of Improvement" alleging eight regulatory violations and required proof of cure within ten days; Rebirth disputed the violations and did not submit cure documentation.
- The Bureau head (Brizzi) notified Rebirth its certificate would be terminated two weeks later; the Plan and termination notice provided no administrative appeal or pre‑deprivation hearing.
- Rebirth requested an administrative appeal; Brizzi replied the Indiana General Assembly had not provided for one and the Bureau would not hold such a review. The Bureau then terminated the registration and Rebirth stopped operating.
- Rebirth sued Brizzi and Michael Gargano (Secretary of Family and Social Services) in their individual and official capacities under 42 U.S.C. § 1983 for violation of Fourteenth Amendment procedural due process (seeking damages and injunctive relief).
- The district court granted injunctive relief on official‑capacity claims (finding a protected property interest and inadequate process) but dismissed the individual‑capacity claims on qualified immunity grounds; the Seventh Circuit vacated that dismissal and remanded those individual‑capacity claims for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rebirth had a protected property interest in its certificate of registration | Rebirth: state law created a nondiscretionary entitlement to registration that is a property interest protected by due process | Defendants: registration is an "exemption" not a license; not clearly a property interest | Held: Yes — registration functioned as a de facto license; established precedent makes the property interest clear |
| Whether due process required a pre‑deprivation opportunity to be heard before revocation | Rebirth: revocation without any pre‑deprivation hearing violated clearly established due process rights | Defendants: notice and chance to correct via Plan, and post‑deprivation judicial remedies, were sufficient; no statutory requirement for administrative appeal | Held: Yes — established law required some pre‑deprivation hearing; notice/cure opportunity and post‑deprivation review were inadequate |
| Whether the constitutional right was "clearly established" for qualified immunity purposes | Rebirth: Supreme Court and Seventh Circuit precedent plainly put officials on notice that pre‑deprivation hearings are required for property deprivations | Defendants: no controlling on‑point precedent and officials could reasonably believe no pre‑deprivation hearing was required for a registration exemption | Held: Yes — prevailing precedent (e.g., Loudermill and related cases) put reasonable officials on notice; qualified immunity unavailable at pleading stage |
| Whether Brizzi and Gargano were plausibly personally responsible for the due process violation | Rebirth: Brizzi’s letters and agency actions show personal involvement; Gargano’s statutory authority permits inference of personal responsibility | Defendants: lack of a statutory appeal means responsibility lies with the legislature, not officials | Held: Complaint plausibly alleges personal involvement by Brizzi and permits inference as to Gargano; plaintiffs may pursue discovery on individual‑capacity liability |
Key Cases Cited
- Cornelius v. LaCroix, 838 F.2d 207 (7th Cir.) (property interest exists where state law creates nondiscretionary rules for benefit revocation)
- Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (pre‑deprivation notice and opportunity to be heard required before loss of significant property interest)
- Goldberg v. Kelly, 397 U.S. 254 (welfare benefits constitute statutory entitlements protected by due process)
- Boddie v. Connecticut, 401 U.S. 371 (pre‑deprivation hearing ordinarily required before depriving significant interests)
- Ashcroft v. al‑Kidd, 563 U.S. 731 (qualified immunity framework and clear‑establishment standard)