Burnham v. Pub. Utils. Comm'n of Ohio
| Docket Number | 1:23-cv-484 |
| Decision Date | 26 October 2023 |
| Parties | KENNETH BURNHAM, ET AL., Plaintiff, v. PUBLIC UTILITIES COMMISSION OF OHIO, ET AL. Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
[RESOLVING DOCS. 5, 6, 14]
Plaintiff Columbia Park Water & Sewer System (CPWSS) and Plaintiff Kenneth Burnham bring another lawsuit to remedy what they view as the unjust 2019 bank foreclosure and receivership of CPWSS and the related bank foreclosure and receivership of a wastewater treatment plant.
Having already filed several unsuccessful lawsuits,[1]Plaintiffs now sue the State of Ohio, the Public Utilities Commission of Ohio (PUCO), PUCO Chair Jenifer French, Governor Mike DeWine, and State Treasurer Robert Sprague, in their official capacities.[2]Plaintiffs allege unjust takings in violation of the Fifth and Fourteenth Amendments to the U.S Constitution and Art. 1, § 19 of the Ohio Constitution due process violations, and seek attorney's fees under 42 U.S.C. § 1983.[3] Defendants DeWine, Sprague, and State of Ohio, and Defendants PUCO and French separately moved to dismiss Plaintiffs' complaint.[4] Plaintiffs then voluntarily dismissed Defendants DeWine and Sprague while continuing the case against the State of Ohio, the PUCO and French.[5]
Plaintiff opposed the remaining Defendants' motions to dismiss.[6]The Defendants filed separate replies.[7] Plaintiffs then moved to strike Defendant State of Ohio's reply to its motion to dismiss.[8] Defendant State of Ohio opposed the motion to strike.[9]
For the following reasons, the Court GRANTS all Defendants' motions to dismiss. Additionally, the Court DENIES Plaintiff's motion to strike Defendant State of Ohio's reply as moot.
The Court summaries the background events as described in opinions resulting from the prior lawsuits.
Plaintiff CPWSS[10] entered into a loan agreement with a private party, secured by a mortgage on several pieces of property.[11]That private party assigned its interests to U.S Bank National Association (U.S. Bank).[12]CPWSS then defaulted on its obligations, and U.S. Bank brought an Ohio state court foreclosure lawsuit.[13] U.S. Bank also asked the state court foreclosure judge to put the mortgaged properties in receivership.[14] Plaintiff CPWSS opposed the receivership, but its opposition lost.[15]Plaintiff CPWSS then unsuccessfully appealed to the Ohio court of appeals and the Ohio Supreme Court.[16]
After the Ohio trial court issued the receivership order, CPWSS separately applied to the PUCO to allow a rate increase for utility functions that CPWSS performed.[17] At the time Plaintiff CPWSS asked the PUCO for a rate increase, Plaintiff was in receivership. Given the state court receivership order, the PUCO granted U.S. Bank's and the receiver's motion to intervene in CPWSS's rate application and then dismissed CPWSS's rate increase application.[18]CPWSS petitioned the Ohio Supreme Court to review the PUCO's dismissal, but then voluntarily dismissed the appeal.[19]
Plaintiff Burnham and CPWSS then filed a 2019 federal court lawsuit against the PUCO, U.S. Bank, the receiver, and three Ohio appellate judges for their respective involvement in the receivership order.[20] In the first federal lawsuit, Plaintiff Burnham and CPWSS asked the federal district court to enter judgment declaring that the defendants' acts “violat[ed] . . . Plaintiffs' constitutional rights to compensation for property taken[;]” declaring PUCO's actions unconstitutional for “violat[ions of] Plaintiffs' rights to due process under the 5[th] and 14[th] Amendments[;]” and declaring PUCO's decision to dismiss Plaintiff's rate increase application unconstitutional, among other claims.[21]
The earlier case district court dismissed Plaintiffs' claims with prejudice, on sovereign immunity grounds and a finding that Plaintiffs otherwise failed to make cognizable claims.[22]
Plaintiffs appealed the district court decision, and, in the interim, agreed to sell the wastewater treatment plant as part of a settlement agreement.[23]The Sixth Circuit found Plaintiffs had mooted the appeal by entering a settlement agreement.[24]
Plaintiffs appealed, alleging that the court erred in finding that there was a settlement agreement. The Sixth Circuit again declined the appeal.[25]
Plaintiffs' subsequent appeals were unsuccessful. The Sixth Circuit denied en banc review and the Supreme Court denied a petition for certiorari.[26] The district court's dismissal was not reversed. Plaintiffs filed the present action on March 10, 2023.[27]
The remaining Defendants move to dismiss the complaint, arguing that Plaintiffs' claims are barred by sovereign immunity and res judicata, and that Plaintiffs fail to state a cognizable claim upon which relief can be granted.
Eleventh Amendment sovereign immunity deprives federal courts of subject-matter jurisdiction when a citizen sues his own state.[28]It also extends to suits against state agencies or departments, as well as to “suit[s] against state officials where the state is the real, substantial party in interest.”[29] The Defendants here-the State of Ohio, an Ohio executive agency, and the executive agency's leader in her official capacity-involve the Eleventh Amendment.
“There are three exceptions to sovereign immunity: (1) when the state has waived immunity by consenting to the suit; (2) when Congress has expressly abrogated the state's sovereign immunity; and (3) when the doctrine set forth in Ex Parte Young applies.”[30]
None of the sovereign immunity exceptions apply to the present case.
“In order to fall within the Ex Parte Young exception, a claim must seek prospective relief to end a continuing violation of federal law.”[31]
In their opposition to Defendants' motions to dismiss, Plaintiffs say that they seek prospective declaratory relief within Ex Parte Young because they request “a declaration that a taking occurred and that compensation is due.”[32]
However, Plaintiff's complaint requests relief of “judgment . . . in the form of just compensation . . . with interest” and attorneys' fees.[33]Despite Plaintiffs' attempt to recharacterize this requested relief, it is neither prospective nor declaratory. “The Supreme Court has explicitly stated that just compensation is, like ordinarily money damages, a compensatory remedy . . . [and therefore] legal relief.”[34]
As such, the Sixth Circuit has held that sovereign immunity bars both federal and Ohio state takings claims against entities like the Defendants here.[35]This is because the Ohio treasury is responsible for any judgment against Defendants State of Ohio, against the PUCO, and against Chair French.
Plaintiffs' claims therefore do not fall within the Ex Parte Young exception to sovereign immunity.
The Defendants have not waived their sovereign immunity to Plaintiffs' claims, and Congress has not abrogated it.
Defendant State of Ohio has not waived its sovereign immunity from suit in federal courts.[36] The Ohio General Assembly has provided that the only means to sue Defendant PUCO is with a lawsuit filed with the Ohio Supreme Court, not federal court.[37] Defendants' litigation conduct also has not “clearly indicated their intent to waive their immunity,” as they have only filed the present motions to dismiss.[38]
In their opposition, Plaintiffs say that the Defendants have waived sovereign immunity because they have accepted federal funds.[39]Plaintiffs say that $15 million of the PUCO's $60 million 2023 budget comes from federal funds, and by accepting such funds, the Defendants consented to suit in federal court.[40]
“[A] finding that a [s]tate has waived its sovereign immunity by accepting federal funds must be based on unequivocal language in the statute that makes the waiver unambiguous.”[41]“[M]ere participation in a federal program is not sufficient to waive immunity.”[42]
Plaintiffs do not point to any unequivocal language that creates an unambiguous waiver of sovereign immunity via Defendants' federal funds use. Even if the Court were to consider the facts in Plaintiff's opposition, those facts still do not show how Defendants consented to waiving their immunity.[43]The complaint lacks specific factual allegations showing how Defendant PUCO's receipt of any federal funds constitute an express waiver.
Finally, Congress has not abrogated Defendants' sovereign immunity for claims under the Fifth or Fourteenth Amendments, or 42 U.S.C. § 1983.[44]
Plaintiffs' claims fall within none of the exceptions to sovereign immunity and are thus barred.
In addition to sovereign immunity, Plaintiffs' complaint warrants dismissal because it fails to state a claim for which relief can be granted.
To survive a dismissal for failure to state a claim, a complaint must set forth “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”[45]Here, Plaintiffs assert United States and Ohio Takings Clause violations.[46]
“When the government acquires private property for a public purpose, the plain language of the [federal] Takings Clause requires that the government pay the property owner.”[47] The Ohio Constitution's Takings Clause essentially provides the same.[48]
Plaintiffs say that Defendant PUCO transferred Plaintiff CPWSS's operational and property rights during the 2019 foreclosure action, a “definitional taking” requiring just compensation.[49]
Plaintiffs do not allege with specificity how the government Defendants took its private property for a public purpose. The complaint...
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