Lead Opinion
COLE, J., delivered the opinion of the court, in which DRAIN, D.J., joined and in
Daily Services, LLC sued various employees of the Ohio Bureau of Workers’ Compensation after the Bureau filed a series of judgments and liens against the company in violation of Ohio’s statutory and administrative procedures. Daily Services claimed that the defendants violated its right to procedural due process. The district court concluded that the defendants were entitled to qualified immunity. The court recognized that Parratt v. Taylor,
We find the district court’s conclusion in error because the applicability of Parratt is irrelevant to the “clearly established” prong of the qualified immunity analysis. Nevertheless, because the Parratt doctrine does apply, and Daily Services has not pleaded that Ohio provided inadequate postdeprivation remedies, we affirm the district court’s decision granting the defendants’ motion for judgment on the pleadings.
I. BACKGROUND
Because the defendants moved for judgment on the pleadings, this court accepts the complaint’s well-pleaded factual allegations as true and construes the complaint in the light most favorable to Daily Services. See Ashcroft v. Iqbal,
Daily Services provides short-term temporary employment services in central Ohio. The company’s sole member is Ryan Mason. Mason was also the sole member of I-Force, LLC, a company that provided longer-term temporary employment services. After losing coverage under the Bureau’s group insurance rating plan, I-Force applied with the Bureau for self-insurance status. The Bureau denied the application, and I-Force owed over $3 million in unpaid workers’ compensation premiums. Unable to make payments towards the premiums, I-Force closed. Daily Services acquired some of I-Force’s customers and began offering longer-term temporary employment services.
Ohio law allows the Bureau to recover unpaid premiums by filing judgments and liens against delinquent employers. See Ohio Rev.Code Ann. §§ 4123.37, 4123.78; Ohio Admin. Code § 4123-14-02. Under this administrative process, the Bureau first must provide the employer with written notice of the overdue premiums and an opportunity to pay the premiums within twenty days. See Ohio Rev.Code Ann. § 4123.37. If the employer does not pay within twenty days, the Bureau must provide an “assessment” by certified mail. Id. The assessment becomes final twenty days later, unless the employer petitions for reassessment, at which point the Bureau’s administrator must issue findings and an order. Id. The employer may appeal the administrator’s findings and order to the Franklin County Court of Common Pleas. Id. Once the assessment is final, the Bureau may file a judgment with the state court and a lien with the county recorder. See id. §§ 4123.37, 4123.78. Ohio law, in other words, provides the employer with notice and an opportunity to
Ohio law also allows the Bureau to deem one company the successor of another for purposes of the workers’ compensation laws. See id. § 4123.32(C); Ohio Admin. Code § 4123-17-02(B) & (C). The Bureau may transfer a prior employer’s experience rating, which is used to calculate premiums, and, if an employer “wholly succeeds another in the operation of a business,” the Bureau may transfer the obligation to pay unpaid premiums. See Ohio Admin. Code § 4123-17-02(B).
In May 2009, the Bureau decided internally that Daily Services wholly succeeded I-Force, and it began a quest to recover I-Force’s unpaid premiums from Daily Services. We need not detail the lengthy procedural history between the Bureau and Daily Services here. In relevant part, the Bureau did not provide notice of its assessment via certified mail or an opportunity to be heard, in violation of Ohio law, before it filed the following judgments and liens against Daily Services: a $54 million lien and a $54 million judgment on November 6, 2009; a $22 million lien on November 17; a $3 million lien on July 8, 2010; and a $3 million judgment on July 13.
Daily Services moved in state court to vacate the judgments in September 2010. Because the Bureau had not provided pri- or notice, the state court vacated the $3 million judgment in October 2010 and the $54 million judgment in February 2011. Ten days later, the Bureau released the three liens. That same day, however, the Bureau filed another $3 million lien and another $3 million judgment against Daily Services. This time the Bureau provided prior notice of its assessment, but it filed the lien and judgment before the Bureau’s administrator heard Daily Services’ appeal of the assessment.
Daily Services again moved in state court to vacate the judgment. In November 2011, the state court vacated the second $3 million judgment because the assessment was not “final” in light of the pending administrative appeal. Four days later, on November 25, the Bureau filed an $8,400 lien against Daily Services based on its yet-to-be-issued decision that four other companies owned by Mason should be “combined” with Daily Services into one workers’ compensation policy. The Bureau did not provide notice of its decision before filing the lien. Daily Services appealed the Bureau’s decision, but while the appeal was pending the Bureau filed an $8,400 judgment against Daily Services on December 12. About six weeks later, after Daily Services filed the instant complaint, the Bureau dismissed the judgment and released the lien. The Bureau has not released the second $3 million lien. The parties are still litigating whether Daily Services wholly succeeded I-Force.
Daily Services sued Tracy Valentino, Chief Financial Officer of the Bureau; Tom Sico, Assistant General Counsel of the Bureau; Tina Kielmeyer, the Bureau’s Chief of Customer Service; and five unknown Bureau employees, all in their individual capacities, under 42 U.S.C. § 1983. Daily Services alleged that the defendants violated its Fourteenth Amendment right to procedural due process nine times — one count for each judgment and lien. According to Daily Services, these judgments and liens prevented it from securing conventional financing, causing Daily Services to incur excess interest and hindering the company’s ability to expand. Daily Services sought over $1 million in damages. Daily Services also claimed that the defendants acted intending to shut down Daily Services, in part because Valentino is a close friend of the owner of one of Daily Services’ competitors.
The district court had jurisdiction under 28 U.S.C. §§ 1331 and 1343, and 28 U.S.C. § 636(c) gave the magistrate judge authority to decide the case. This court has jurisdiction under 28 U.S.C. §§ 636(c)(3) and 1291.
II. ANALYSIS
This court reviews de novo a decision dismissing an action under Federal Rule of Civil Procedure 12(c). Fritz v. Charter Twp. of Comstock,
This court also reviews de novo the district court’s finding of qualified immunity. Bloch v. Ribar,
A. Mootness
As an initial matter, the defendants argue that this case is moot because the state court vacated all but one of the judgments and the Bureau released the liens and remaining judgment against Daily Services. A case becomes moot, depriving federal courts of jurisdiction, “when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Already, LLC v. Nike, Inc., — U.S. —,
Daily Services’ federal complaint seeks compensatory and punitive damages caused by the judgments and liens, not simply release from the judgments and liens. The damages claim alone keeps this ease alive. See Deakins v. Monaghan,
The defendants ignore this classic analysis, instead relying on Campbell v. City of Allen Park,
Campbell relied solely on Punton v. City of Seattle,
WJW-TV, too, does not help the defendants. That case’s holding does not apply where a plaintiff seeks additional damages in federal court. See WJW-TV,
Braley is also inapplicable. There, a plaintiff filed suit in federal court alleging a § 1983 violation and three pendant state-law claims. Braley,
We conclude that this take on mootness and the availability of a § 1983 action, expressed in dicta, is not viable. First, the Braley court’s mootness reasoning relied heavily on Campbell, which itself rested on dubious and subsequently overruled grounds. See Braley,
B. Qualified Immunity’s Clearly Established Law and Parratt
Our qualified immunity analysis first addresses the sole basis for the district court’s decision: whether Daily Services’ claimed constitutional right was “clearly established.” A constitutional right is clearly established where its contours are “sufficiently clear that a reasonable official would understand that what he is doing violates that right” — in other words, where “it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.” Anderson v. Creighton,
The district court granted qualified immunity because of uncertainty about whether the Parratt doctrine applies in this case. To prevail on its due process claim, the court explained, Daily Services must show that its claimed right to prede-privation process was clearly established. The court recognized that, under the Par-ratt doctrine, a state need not provide predeprivation process so long as it provides adequate postdeprivation remedies. The court then reasoned by this logic: Daily Services’ right to predeprivation process exists only if the Parratt doctrine does not apply; it was uncertain, and therefore not clearly established, that the Parratt doctrine does not apply; thus, it was not clearly established that Daily Services had a right to predeprivation process. Under this formalist approach, the court granted the defendants qualified immunity-
The Parratt doctrine, in contrast, asks whether the state is responsible under the Due Process Clause for its employee’s misconduct. If an official’s conduct would otherwise deprive an individual of procedural due process but is “random and unauthorized,” the Parratt doctrine allows the state to avoid liability by providing adequate remedies after the deprivation occurs. See Hudson v. Palmer,
In other words, qualified immunity prevents personal liability in order to allow officials to act in the public interest where the law is not clearly established. The Parratt doctrine prevents liability in order to allow the state to avoid responsibility for denying process it cannot reasonably be expected to provide. See Zinermon v. Burch,
The applicability of Parratt, then, is irrelevant to the clearly established prong of the qualified immunity analysis. As a colleague on our sister circuit noted, “Granting immunity based on the lack of clarity as to whether the State bears responsibility would turn the qualified immunity doctrine on its head. The official would in effect be seeking immunity based on a ‘reasonable’ belief that his conduct was so wrong — i.e., it was ‘random and unauthorized’ — that it could not provide the basis for a procedural due process claim.” San Gerónimo Caribe Project, Inc. v. Acevedo-Vilá,
Indeed, the Supreme Court has never looked to the Parratt doctrine when assessing whether a defendant deserves qualified immunity because the claimed procedural due process right was not clearly established. Nor has our court ever held that uncertainty about whether Parratt applies gives rise to qualified immunity. At times, in fact, we have suggested the opposite. See, e.g., Silberstein v. City of Dayton,
Some of our sister circuits and other courts also have suggested that uncertainty about the Parratt doctrine does not affect the “clearly established” inquiry. See, e.g., Bailey v. Pataki,
A handful of other cases have discussed the Parratt doctrine while assessing whether the claimed procedural due process right was clearly established, but none have examined whether the Parratt doctrine is properly part of the clearly established law inquiry in the first place. See, e.g., Clement v. City of Glendale,
Thus, while courts may consider the Parratt doctrine to determine whether the plaintiff has alleged a procedural due process violation, courts should not consider the Parratt doctrine to determine whether the due process right at issue was clearly established. The doctrine simply has no place in assessing whether “it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.” Brosseau,
Here, the district court erred when it granted qualified immunity based on its understanding that the law “is unsettled as to whether the failure of a public official to follow established procedure constitutes ‘random and unauthorized’ conduct, thereby triggering Parratt.” Simply put, the court focused on the clarity of the wrong law. The inquiry is not whether a reasonable official would understand that his wrongful denial of predeprivation process might not ultimately amount to a due process violation by the state under the Par-ratt doctrine. Rather, in the context of this procedural due process claim, the “clearly established law” inquiry should ask whether a reasonable official would understand that the plaintiff was entitled to notice and an opportunity to be heard before the official filed a judgment or lien against the plaintiff. See Silberstein,
At the time of the defendants’ actions, it was clearly established that “even the temporary or partial impairments to property rights that attachments, liens, and similar encumbrances entail are sufficient to merit due process protection.” Connecticut v. Doehr,
It is well-established and unassailable that “a reasonably competent public official should know the law governing his
C. Procedural Due Process Violation
Though clearly established in this specific context, Daily Services’ right to procedural due process has not been violated. States may not “deprive any person of life, liberty, or property, without due process of law.” U.S. Const, amend. XIV, § 1. This clause has a procedural component, which “is traditionally viewed as the requirement that the government provide a ‘fair procedure’ when depriving someone of life, liberty, or property.” EJS Props., LLC v. City of Toledo,
1. The Parratt doctrine
The Federal Constitution defines the procedures a state must follow when depriving an individual of a property interest. Loudermill,
Under certain circumstances, however, a state may satisfy due process without providing notice or an opportunity to be heard before the deprivation. Three cases stake the main guideposts of this notorious doctrine: Parratt v. Taylor,
In Parratt, a state prison guard negligently destroyed a prisoner’s property.
Hudson extended Parratt to a state prison guard’s intentional destruction of a prisoner’s property.
The Court limited Parratt’s reach in Zinermon. There, state mental hospital staff admitted the plaintiff under a “voluntary” placement statutory procedure even though he was not competent to give the informed consent required by the statute. See Zinermon,
The Court cast Parratt and Hudson as special cases of the well-known due process balancing test articulated in Mathews v.Eldridge,
The Court found Parrott and Hudson inapplicable in Zinermon for “three basic reasons.” Id. at 136,
Second, the Zinermon defendants could not claim that predeprivation process was impossible to provide. Id. at 136,
Third, the Zinermon defendants could not characterize their conduct as “unauthorized,” as Parrott and Hudson used that term. Id. at 138,
Ultimately, the Court stated, the Ziner-mon plaintiffs suit was “neither an action challenging the facial adequacy of a State’s statutory procedures, nor an action based only on state officials’ random and unauthorized violation of state laws.” Id. at 136,
2. Sixth Circuit precedent under the Parratt doctrine
Our own precedent has grappled with the Parratt doctrine. This court often has sought to place procedural due process suits into two categories: “those involving a direct challenge to an established state procedure” and “those challenging random and unauthorized acts.” Mertik v. Blalock,
This court has wisely noted, however, that not all due process challenges can be easily categorized as a direct challenge to an established state procedure or a challenge to random and unauthorized conduct. Mertik,
Courts may dismiss a procedural due process claim if the state provides an adequate postdeprivation remedy and “(1) the deprivation was unpredictable or ‘random’; (2) predeprivation process was impossible or impracticable; and (3) the state actor was not authorized to take the action that deprived the plaintiff of property or liberty.” Copeland v. Machulis,
S. Application of the Parratt doctrine
On the specific facts of this case, we find that the Parratt doctrine applies and requires Daily Services to plead that Ohio did not provide adequate postdeprivation remedies. Because Daily Services failed to make such an allegation, the defendants must prevail on their motion for judgment on the pleadings.
Daily Services’ complaint explicitly disclaims any challenge to the constitutionality of Ohio’s predeprivation procedure statutes. Nevertheless, relying on Wedgewood,
Daily Services also claims that the challenged acts were not random or unauthorized. We therefore carefully analyze the Zinermon factors. See Mertik,
First, the defendants’ wrongful deprivations were unpredictable or “random” from the state’s perspective. See Zinermon,
Second, predeprivation process was impracticable here. See Zinermon, 494 U.S.
Third, the defendants were not “authorized” to take the actions that deprived Daily Services of its property. See Ziner-mon,
Daily Services argues that the defendants’ actions were “authorized” because they were taken by high-ranking officials who abused their positions. But we need not resolve whether acts by certain high-ranking officials should never be considered “random and unauthorized,” as the Second Circuit has held. See Rivera-Powell v. N.Y. City Bd. of Elections,
In light of the three Zinermon factors, “postdeprivation tort remedies are all the process that is due, simply because they are the only remedies the State could be expected to provide.” Zinermon,
III. CONCLUSION
The district court erred when it held that uncertainty about the applicability of Parratt entitled the defendants to qualified immunity. Nevertheless, because the Par-ratt doctrine does apply, and Daily Services has not pleaded that Ohio provided inadequate postdeprivation remedies, Daily Services’ complaint does not state a constitutional violation. Accordingly, we affirm the district court’s decision granting the defendants’ motion for judgment on the pleadings.
Concurrence Opinion
concurring in part and dissenting in part.
I agree entirely with the majority’s well-written and well-reasoned explanation of the relationship between the Parratt and qualified-immunity doctrines. However, I cannot concur in the majority’s ultimate conclusion that the Parratt doctrine applies in this case, because I do not believe that the defendants’ actions were “unauthorized” as defined by the Supreme Court in Zinermon v. Burch,
In Zinermon, “[t]he State delegated to [the defendants] the power and authority to effect the very deprivation complained of ..., and also delegated to them the concomitant duty to initiate the procedural safeguards set up by state law to guard against unlawful confinement.” Id. The Court distinguished that case from Parratt v. Taylor,
The case here is similar to Zinermon. Section 4123.37 of the Ohio Revised Code grants the Bureau power to present the Court of Common Pleas clerk with the Bureau’s assessment of premiums in arrears and to cause a judgment to be entered against the noncompliant employer. Ohio law also imposes upon the Bureau,
