Am. Premier Underwriters, Inc. v. Nat'l R.R. Passenger Corp.

• Decision Date: 05 March 2013
• Docket Number: No. 11–4054.,11–4054.
• Citation: 709 F.3d 584
• Parties: AMERICAN PREMIER UNDERWRITERS, INC.; American Financial Group, Inc., Plaintiffs–Appellants, v. NATIONAL RAILROAD PASSENGER CORPORATION, aka Amtrak, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

709 F.3d 584

AMERICAN PREMIER UNDERWRITERS, INC.; American Financial Group, Inc., Plaintiffs–Appellants,

v.NATIONAL RAILROAD PASSENGER CORPORATION, aka Amtrak, Defendant–Appellee.

No. 11–4054.

United States Court of Appeals, Sixth Circuit.

Argued: Oct. 5, 2012.

Decided and Filed: March 5, 2013.

ARGUED:Michael L. Cioffi, Blank Rome LLP, Cincinnati, Ohio, for Appellants. Pierre H. Bergeron, Squire Sanders (US) LLP, Cincinnati, Ohio, for Appellee. ON BRIEF:Michael L. Cioffi, Thomas H. Stewart, Blank Rome LLP, Cincinnati, Ohio, for Appellants. Pierre H. Bergeron, Rachael A. Harris, Squire Sanders (US) LLP, Cincinnati, Ohio, for Appellee.

Before: COLE and KETHLEDGE, Circuit Judges; THAPAR, District Judge. ^*

OPINION

COLE, Circuit Judge.

Plaintiffs–Appellants American Premier Underwriters, Inc. and American Financial Group, Inc. (collectively “APU”) appeal the district court's dismissal of five of its claims against Defendant–Appellee National Railroad Passenger Corporation (“Amtrak”). For the following reasons, we reverse in part and affirm in part.

I.

Congress enacted the Rail Passenger Service Act of 1970 (“RPSA”) to “avert the threatened extinction of passenger trains in the United States,” Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374, 383, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995), by creating a “rail passenger corporation for the purpose of providing modern, efficient, intercity rail passenger service,” known today as “Amtrak.” Pub.L. No. 91–518, § 101, 84 Stat. 1327, 1328 (1970). Struggling railroads could, under the RPSA, be excused from providing intercity rail passenger service by entering into a contract with Amtrak. See id. § 401.

In April of 1971, after filing for bankruptcy the prior year, the trustees of the Penn Central Transportation Company (“PCTC”), now American Premier Underwriters, Inc., decided to take advantage of § 401 of the RPSA. PCTC contracted under the “Basic Agreement” to (1) pay Amtrak half of the amount of PCTC's 1969 losses ($52 million); and (2) provide Amtrak with the use of its tracks, facilities and services. In return, Amtrak was to, among other things, (1) relieve PCTC of its “entire responsibility” for the provision of intercity rail passenger service; and (2) issue to PCTC one share of common stock for every ten dollars paid by PCTC to Amtrak, i.e., approximately 5.2 million shares.

PCTC elected to receive the stock shares instead of a tax deduction for the $52 million amount. See RPSA §§ 401(a)(2), 901. The $52 million payment was described as “in consideration of” Amtrak's relieving PCTC of rail service responsibility. The stock issue was not described this way; the agreement merely said that it would take place “promptly after” the $52 million payment.

In 1978, as part of PCTC's reorganization, PCTC and Amtrak entered into the “1978 Settlement Agreement,” whereby they agreed to release all then-existing claims against each other, as well as all claims arising from events prior to March 31, 1976.

In 1997, Congress enacted the Amtrak Reform and Accountability Act of 1997 (“1997 Act”), seeking to “improve Amtrak's financial condition” and ensure its survival by providing it with “additional flexibility” to “operate in a businesslike manner ... to manage costs and maximize revenues.” Pub.L. No. 105–134, § 2, 111 Stat. 2570 (1997). Section 415(b) of the 1997 Act, titled “Redemption of Common Stock,” said: “Amtrak shall, before October 1, 2002, redeem all common stock previously issued, for the fair market value of such stock.” Id. § 415(b).

A full decade after the deadline, Amtrak has redeemed none of APU's stock, and each party blames the other. In 2000, APU rejected Amtrak's redemption offer of $0.03 per share. The two negotiated until January 2008, when Amtrak allegedly refused to consider any alternative transaction to redeem the stock, such as an exchange of assets instead of cash. APU filed its complaint on May 19, 2008.

In their original complaint, American Premier Underwriters, Inc. and its parent American Financial Group (the beneficial owner of APU's Amtrak stock) made seven claims: (1) Amtrak caused the value of its stock to erode and thereby effected a taking without just compensation of APU's shares in violation of the Takings Clause of the Fifth Amendment (“takings claim”); (2) APU is entitled to restitution of the $52 million payment under state law; (3) Amtrak converted APU's shares when it failed to redeem them; (4) Amtrak's “irrational” valuation of APU's shares deprived APU of a protected property interest in violation of the Due Process Clause of the Fifth Amendment (“due process claim”); (5) Amtrak's valuation denied APU procedural due process because the self-interested Amtrak was the sole fact-finder, the valuation was arbitrary and APU was denied notice and an opportunity to be heard in the valuation process (“procedural due process claim”); (6) Amtrak's valuation denied APU substantive due process by valuing the stock at the “unfair” amount of $0.03 per share (“substantive due process claim”); and (7) Amtrak failed to comply with its obligations under § 415(b) and APU has a valid statutory private right of action as a result (“ARAA claim”).

APU sought monetary damages in all of these claims, except for the due process claim, in which APU sought a declaratory judgment that Amtrak's implementation of § 415(b) violated constitutional due process, along with commencement of eminent domain proceedings for the redemption of the shares.

The district court granted Amtrak's motion to dismiss, finding that APU failed to state a single valid claim. It dismissed the second and third claims on state law grounds. The district court found that Amtrak “qualifie[d] as an agency for the purpose of seeking redress of constitutional violations,” which led it to dismiss the first, fifth and sixth claims on the grounds that federal agencies cannot be sued for monetary damages for their constitutional violations. The district court then found that § 415(b) did not create a private right of action for Amtrak shareholders, like APU, to sue for redemption. As a result, the district court dismissed the fourth and seventh claims.

Though it did not need to reach the issue, the district court held that, if any of APU's claims had been viable, it would not have dismissed them under either a statute of limitations or the 1978 Settlement Agreement because further factual inquiry would have been required.

II.

APU appeals the district court's grant of Amtrak's motion to dismiss as to the five federal law claims. We review the district court's decision to dismiss the complaint de novo, to determine whether the facts pleaded in the complaint are sufficient to state a plausible claim. See Mediacom Se. LLC v. BellSouth Telcomms., Inc., 672 F.3d 396, 398, 400 (6th Cir.2012).

A.

The district court did not err in dismissing APU's takings claim, procedural due process claim, and substantive due process claim. Even in the absence of sovereign immunity, a federal agency cannotbe sued under an implied cause of action for monetary damages that stem from the agency's constitutional violations. FDIC v. Meyer, 510 U.S. 471, 486, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). Like the district court, we read Lebron v. National Railroad Passenger Corp., 513 U.S. 374, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995) to mean Amtrak is a federal agency for the purpose of seeking redress of constitutional violations, and, accordingly, that Meyer bars these three claims.

In Lebron, Michael A. Lebron sued Amtrak for violating his First Amendment rights by refusing to display his billboard advertisement for political reasons. Id. at 376–77, 115 S.Ct. 961. The district court entered judgment for Lebron, ordering Amtrak to display his advertisement for two months. Lebron v. Nat'l R.R. Passenger Corp. (Amtrak), 811 F.Supp. 993, 1005 (S.D.N.Y.1993), rev'd,12 F.3d 388 (2d Cir.1993), rev'd,513 U.S. 374, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995). The Second Circuit reversed and remanded, holding that Amtrak could not be held liable because it was “not a governmental actor subject to ... the First Amendment,” 12 F.3d 388, 389 (2d Cir.1993), rev'd,513 U.S. 374, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995), and instructing the district court to dismiss the suit, see id. at 393. On appeal to the Supreme Court, Amtrak denied being a government entity, pointing to the disclaimer of agency status in its authorizing statute. Lebron, 513 U.S. at 392, 115 S.Ct. 961 (citation omitted). The Supreme Court held that agency status was not “within the power of Congress to eliminate.” Id. at 394, 115 S.Ct. 961. Although the disclaimer sufficed to strip Amtrak of sovereign immunity, id. at 392, 115 S.Ct. 961 (citation omitted), the Supreme Court held that Amtrak was “an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution.” Id. at 394, 115 S.Ct. 961. Effectively, Amtrak's agency status served as the hook for its liability.

In FDIC v. Meyer, 510 U.S. 471, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), the Supreme Court held that a federal agency could not be sued under an implied cause of action for monetary damages stemming from a constitutional violation. Id. at 486, 114 S.Ct. 996. After his discharge, John Meyer sued the agency for depriving him of a property right without due process of law in violation of the Fifth Amendment. See id. at 473–74, 114 S.Ct. 996. Meyer framed his suit as a Bivens challenge, i.e., an implied cause of action for damages from a constitutional violation by the FDIC. See id. at 474, 114 S.Ct. 996 (explaining that Bivens had “implied a cause of action for damages against federal agents who allegedly violated the Fourth Amendment”); see also Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). The Court held that a statute waived the FDIC's sovereign immunity, Meyer, 510 U.S. at 483, 114 S.Ct. 996,...