Bauserman v. Unemployment Ins. Agency

Decision Date26 July 2022
Docket NumberSC 160813
PartiesGRANT BAUSERMAN, KARL WILLIAMS, and TEDDY BROE, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellees, v. UNEMPLOYMENT INSURANCE AGENCY, Defendant-Appellant.
CourtSupreme Court of Michigan

Argued on application for leave to appeal on October 6, 2021.

Grant Bauserman, Karl Williams, and Teddy Broe, on behalf of themselves and all others similarly situated, brought a putative class action in the Court of Claims against the Unemployment Insurance Agency, alleging that defendant had violated their due-process rights in violation of Const 1963 art 1, § 17 and that defendant had also engaged in unlawful collection practices. Plaintiffs, who were all recipients of unemployment compensation benefits specifically alleged that defendant had used an automated fraud-detection system-the Michigan Integrated Data Automated System (MiDAS)-to determine that plaintiffs had received unemployment benefits for which they were not eligible and then garnished plaintiffs' wages and tax refunds to recover the amount of the alleged overpayments, interest, and penalties that defendant had assessed without providing meaningful notice or an opportunity to be heard. Defendant moved for summary disposition on multiple grounds, including that the claims were not timely filed and that plaintiffs could not pursue a constitutional-tort claim against defendant because plaintiffs had alternative remedies they could pursue under the Michigan Employment Security Act (MESA), MCL 421.1 et seq. The Court of Claims Cynthia D. Stephens, J., denied defendant's motion reasoning, in part, that plaintiff's constitutional claims were viable because the administrative remedies were inadequate. Defendant appealed. In an unpublished per curiam opinion issued July 18, 2017 (Docket No. 333181), the Court of Appeals, Gadola, P.J., and Meter and Fort Hood, JJ reversed, concluding that plaintiffs' claims were not timely filed. Plaintiffs sought leave to appeal in the Supreme Court, which ordered and heard oral argument on the application. 501 Mich. 1047 (2018). In lieu of granting leave to appeal, the Supreme Court held that the actionable harm in a predeprivation due-process claim occurs when a plaintiff has been deprived of property and that such a claim accrues when a plaintiff has first incurred the deprivation. As a result, Bauserman and Broe had timely filed their claims within six months following the deprivation of their property, but Williams had not. The Supreme Court thus affirmed in part and reversed in part the Court of Appeals judgment and remanded the case to the Court of Appeals for consideration of defendant's argument that plaintiffs failed to raise cognizable constitutional-tort claims. 503 Mich. 169 (2019). On remand, in a published opinion issued December 5, 2019, the Court of Appeals, Meter and Fort Hood, JJ. (Gadola, P.J., concurring), concluded that the alleged violations arose from actions taken by state actors pursuant to a governmental policy and that they could be characterized as an established practice of state government officials such that they amounted to a custom supported by the force of law. 330 Mich.App. 545 (2019). In concluding that damages were available as a remedy for the due-process deprivation plaintiffs alleged, the Court of Appeals applied the multifactor balancing test set forth by Justice Boyle in her opinion in Smith v Dep't of Pub Health, 428 Mich. 540 (1987) (Boyle, J., concurring in part and dissenting in part). Defendant sought leave to appeal. The Supreme Court ordered and heard oral argument on whether to grant defendant's application for leave to appeal or take other action. 506 Mich. 965 (2020).

In an opinion by Justice Cavanagh, joined by Chief Justice McCormack and Justices Bernstein, and Welch, the Supreme Court, in lieu of granting leave to appeal, held:

A constitutional-tort action for monetary damages against the state exists except in two specific circumstances: (1) when the Constitution has delegated to another branch of government the obligation to enforce the constitutional right at issue or (2) when another branch of government has provided a remedy that the Supreme Court considers adequate. An alternative remedy is adequate when it is at least as protective of a particular constitutional right as a judicially recognized cause of action would be. Justice BOYLE's differing multifactor approach for determining whether a constitutional-tort action could be brought against the state was rejected as was her assertion that the state could not be held vicariously liable. People who have been deprived of a constitutional right may seek redress through the courts, regardless of whether the harm was inflicted pursuant to state custom or policy; in other words, the state can be responsible under a theory of respondeat superior for the actions of its agents whether or not the agents were acting under a state custom or policy at the time of the alleged tort. In this case, neither of the exceptions to the existence of liability for a constitutional tort applied to plaintiffs' claims that defendant violated their due-process rights. Plaintiffs alleged a cognizable constitutional-tort claim for which they could recover money damages. The Court of Claims correctly denied defendant's motion for summary disposition.

1. Although the Court of Appeals has frequently applied the multifactor test set forth in Justice BOYLE's partial concurrence in Smith, the Michigan Supreme Court has not previously found consensus on whether violations of the state's Constitution are compensable through actions seeking monetary damages. However, in Bivens v Six Unknown Named Agents of Fed Bureau of Narcotics, 403 U.S. 388 (1971), which recognized for the first time a cause of action against federal agents for a violation of federal constitutional rights, the United States Supreme Court made clear that constitutional violations have historically been redressed with monetary damages; other state courts have similarly concluded that they bear the duty of vindicating rights guaranteed in their constitutions. The continued vitality of Bivens and how federal constitutional torts differ from state constitutional torts was not relevant to the holding of the Court in this case; the holding did not rely on Bivens but on the authorities discussed in that case. Plaintiffs' cause of action was grounded in state constitutional rights and the Michigan Supreme Court's authority and duty to say what the law is.

2. Relevant here, Article 1 of Michigan's Constitution, the Declaration of Rights, is the bedrock upon which everything else in the Constitution was built because it guarantees civil and political integrity and the freedom and independence of the state's citizens. Any right given in the Constitution must have a remedy or it is not a right at all but, instead, a voluntary obligation. The Constitution does not have to explicitly provide for a remedy for a constitutional violation in order for the Court to enforce its guarantees, regardless of whether the appropriate remedy is in the form of an injunction or money damages; indeed, only a handful of the 27 sections of the Declaration of Rights mention remedies at all.

3. While the Constitution vests the legislative power of the state in the Senate and House of Representatives, granting them the right to make laws and to alter or repeal them, it exclusively vests the judicial power of the state in the Court, which retains all judicial power not ceded to the federal government. The Separation of Powers Clause of Michigan's Constitution requires courts to recognize and redress constitutional violations; in that regard, the Michigan Supreme Court has primary responsibility for interpreting and enforcing the Constitution absent an explicit constitutional provision limiting its authority to redress constitutional violations. Stated differently vindication of constitutional rights is not dependent on legislative action unless the Constitution specifically delegates that power to the Legislature. The scope of the Legislature's authority to regulate tort liability created by statute has no bearing on whether the Legislature has authority to restrict rights codified in the Constitution, let alone whether those rights remain undeveloped without legislative enactment. Further, Legislative silence on the issue of remedies for a due-process violation under Const 1963, art 1, § 17 does not signal the ratifiers' intent to preclude any mechanism of enforcement. However, while the Legislature may not trump the Constitution, it may enact a remedial scheme to provide a way in which to vindicate a constitutional right equal to that which the Court could afford. Thus, if the Legislature already provides an adequate mechanism to remedy a constitutional tort-i.e., one that is at least as protective of a particular constitutional right as a judicially recognized cause of action would be- the Court is not required to duplicate the effort. Absent those considerations, the Court retains authority to vindicate the rights guaranteed by the state's Constitution, including by recognizing actions seeking money damages. Accordingly, money damages are an available remedy for constitutional torts unless (1) enforcement of the constitutional right was delegated to another branch of government by the Constitution or (2) the Court considers adequate the remedy provided by another branch of government. By adopting this test, the Court rejected Justice BOYLE's multifactor approach in Smith. The Court's inherent judicial authority requires the Court to afford a remedy for all constitutional violations, not just those it deems wise or justified. Further, unlike Justice BOYLE's test, the standard of...

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