Cahoo v. Fast Enters. LLC

Decision Date25 March 2021
Docket NumberCase Number 17-10657
Citation528 F.Supp.3d 719
Parties Patti Jo CAHOO, Kristen Mendyk, Khadija Cole, Hyon Pak, and Michelle Davison, Plaintiffs, v. FAST ENTERPRISES LLC, CSG Government Solutions, Stephen Geskey, Shemin Blundell, Doris Mitchell, Debra Singleton, and Sharon Moffet-Massey, Defendants.
CourtU.S. District Court — Eastern District of Michigan

Anthony D. Paris, John C. Philo, Maurice and Jane Sugar Law Center, Hannah Rachael Fielstra, Kevin S. Ernst, Ernst Charara & Lovell, Julie H. Hurwitz, William H. Goodman, Goodman and Hurwitz, P.C., Tyler M. Joseph, Jonathan R. Marko, Marko Law PLC, Detroit, MI, Donald H. Slavik, Slavik Law Firm LLC, Steamboat Springs, CO, for Plaintiffs Patti Jo Cahoo, Kristen Mendyk, Khadija Cole.

Anthony D. Paris, John C. Philo, Maurice and Jane Sugar Law Center, Hannah Rachael Fielstra, Kevin S. Ernst, Ernst Charara & Lovell, Jonathan R. Marko, Marko Law, Julie H. Hurwitz, William H. Goodman, Goodman and Hurwitz, P.C., Detroit, MI, Donald H. Slavik, Slavik Law Firm LLC, Steamboat Springs, CO, for Plaintiff Michelle Davison.

Claire E. Wells Hanson, Hoban Law Group, Craig E. Stewart, Holland & Hart LLP, Denver, CO, Erik F. Stidham, Sara M. Berry, Stefan Hasselblad, Holland & Hart LLP, Boise, ID, Stephen J. Rosenfeld, McDonald Hopkins LLC, Chicago, IL, Walter J. Piszczatowski, Hertz, Schram, Bloomfield Hills, MI, for Defendant Fast Enterprises LLC.

Jennifer D. Armstrong, McDonald Hopkins LLC, Cleveland, OH, John D. Fitzpatrick, Mandell Menkes LLC, Stephen J. Rosenfeld, McDonald Hopkins LLC, Chicago, IL, Timothy J. Lowe, McDonald Hopkins PLC, Bloomfield Hills, MI, for Defendant CSG Government Solutions.

Kimberly Pendrick, State of Michigan, Detroit, MI, Rebecca M. Smith, Zachary A. Risk, Department of Attorney General, Lansing, MI, for Defendant Steven Geskey.

Debbie K. Taylor, Department of Attorney General, Kimberly Pendrick, State of Michigan, Detroit, MI, Rebecca M. Smith, Lansing, MI, for Defendant Sharon Moffet-Massey.

OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

DAVID M. LAWSON, United States District Judge

In the remaining count of their amended complaint, the five named plaintiffs allege that the defendants deprived them of their right to due process of law when the State of Michigan's Unemployment Insurance Agency (UIA) used its Michigan Integrated Data Automated System (MiDAS) to make fraud determinations arising from their respective claims for unemployment insurance. Defendants CSG Government Solutions and FAST Enterprises, Inc. played key roles in the development and implementation of MiDAS, and the plaintiffs allege that they share responsibility for the harm caused.

The plaintiffs also sued several individual employees of the Michigan Unemployment Insurance Agency for their roles in the implementation of MiDAS and the adjudication of their fraud cases. These defendants, Sharon Moffet-Massey, Stephen Geskey, Shemin Blundell, Doris Mitchell, and Debra Singleton (the State defendants), also moved for summary judgment.

In their respective motions, CSG and FAST have moved for summary judgment arguing that (1) the plaintiffs suffered no injuries, (2) the defendants did not cause any injuries, (3) they are not state actors and cannot be sued for violating constitutional rights, and (4) three plaintiffs are not the real parties in interest and should be judicially estopped from bringing their claims because they failed to disclose in their respective bankruptcy schedules their property interests in this litigation.

CSG and FAST raised these same arguments in motions to dismiss, which they filed after the close of discovery. Those arguments, they asserted, supported their contention that the plaintiffs lacked standing to sue them under Article III of the Constitution. The Court denied their motions, Cahoo v. FAST Enterprises LLC , ––– F. Supp. 3d ––––, No. 17-10657, 2020 WL 7493103 (E.D. Mich. Dec. 21, 2020), and for the same reasons rejects those arguments in their respective summary judgment motions, although two issues require additional discussion here. In the opinion and order denying the motions to dismiss, the Court noted that although the facts supported a conclusion that the plaintiffs’ injuries were fairly traceable to FAST's and CSG's conduct, the Court did not determine the question of proximate cause. Id. at –––– – ––––, 2020 WL 7493103 at *10-12 (noting that "causation to support standing is not synonymous with causation sufficient to support a claim") (quoting Parsons v. United States Dep't of Justice , 801 F.3d 701, 715 (6th Cir. 2015) ). In addition, the Court determined that the factual record was not sufficient to address the effect of Cahoo's, Mendyk's, and Cole's bankruptcy filings on whether they should be estopped from asserting their present claims, Cahoo , ––– F. Supp. 3d at –––– – ––––, 2020 WL 7493103 at 12-13. Those issues are ready for determination now.

The State defendants argue that (1) the plaintiffs suffered no injuries, (2) the defendants did not cause any injuries, (3) the defendants are entitled to qualified immunity, (4) the plaintiffs are not entitled to injunctive relief, (5) the Court should preclude the plaintiffs from obtaining medical-related damages because they have not identified any expert witnesses, and (6) plaintiff Kristen Mendyk's claim is barred by the statute of limitations.

The plaintiffs also moved for partial summary judgment on liability, arguing that the undisputed facts demonstrate that (1) the fraud questionnaires and determinations did not provide adequate substantive notice, (2) the manner of notice — by traditional mail and email — was constitutionally deficient, (3) they were denied a fair hearing through the inadequate notice in the questionnaires and determinations, and (4) the plaintiffs’ interest in the vindication of their constitutional rights outweighs the costs of imposing additional procedural safeguards on the State, and (5) defendants CSG, FAST, Geskey, and Moffet-Massey are responsible for the due process violations.

There is sufficient evidence of causation to preclude summary judgment for FAST and CSG on that ground. The bankruptcy filings by plaintiffs Cahoo, Mendyk, and Cole will not require dismissal of their claims at this time. The claim by plaintiff Pak against all defendants must be dismissed because the undisputed facts show that he has not suffered a constitutional injury. The record reviewed in the light most favorable to the other plaintiffs shows that defendants Blundell, Mitchell, and Singleton did not implicitly authorize, approve, or knowingly acquiesce to developing the UIA's unconstitutional policies or forms, and therefore the amended complaint against them will be dismissed. The record precludes summary judgment against defendants Sharon Moffet-Massey and Stephen Geskey, and they are not protected by qualified immunity. And although the forms MiDAS generated to notify claimants of possible redetermination of benefits were insufficient to inform them of fraud accusations, fact questions exist in the record as to the effects of the notice deficiencies on the plaintiffs that preclude partial summary judgment in their favor.

I.

The facts of the case have been discussed many times in the Court's previous opinions and need not be repeated here. The most recent and relevant discussion is found in the opinion and order on the motions to dismiss for lack of standing, Cahoo , ––– F. Supp. 3d at –––– – ––––, 2020 WL 7493103, at *1-8, and that recitation is incorporated by reference in this opinion.

The roles of the individual State defendants were not the subject of the motion to dismiss, and more needs to be said about them here. The adoption of MiDAS was a large, comprehensive modernization project spearheaded by Clay Tierney, who was the Director of the Agency's Office of Technology and Modernization. He no longer is a defendant in this case. The UIA had two separate teams dedicated to fraudulent unemployment claims: the first, "nonmonetary benefits" team, headed by Susan Easton, investigated and adjudicated overpayments and fraud; the second, "restitution and collection team," headed by defendant Shemin Blundell, collected overpayments.

A. Sharon Moffet-Massey

Defendant Sharon Moffet-Massey was appointed the director of the UIA in April 2014 and maintained that position until January 2017. As the director, she oversaw the UIA's operations and ensured that the Agency processed unemployment claims. She served as the director when the Auditor General audited MiDAS and when the Department of Labor (DOL) reviewed the UIA's operations; she served as the DOL's "point of contact" throughout its investigation. The plaintiffs allege that as the head of the UIA, she pursued the allegedly defective and unconstitutional policies.

By the time Moffet-Massey assumed her position, the "benefits side" of the UIA "pretty much fully implemented" MiDAS. She had the ultimate responsibility of approving forms, processes, and any changes to MiDAS. Her name appears on the form 1713 fraud questionnaires and form 1302 fraud determinations under the heading "authorized by."

Moffet-Massey received weekly or biweekly updates on the MiDAS project and had the authority to prioritize and approve any modifications or changes to the system, policies, and procedures. However, she apparently disregarded several recommendations from defendant Steven Geskey, an attorney, to modify the UIA's practices. Geskey dep., ECF No. 473-20, PageID.35299, 35317, 35315, 35327, 35332, ("I recommended against the fraud finding decision trees" "which went unheeded;" "I began making that request earlier, and continued that request even later when those were not changed pursuant to my recommendations"). However, the record is unclear if Geskey made these recommendations to Moffet-Massey or her predecessor, Steve Arwood, or both. Despite the negative press about MiDAS, Moffet-Massey said that she was unaware of any "issues" with the...

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2 cases
  • Cahoo v. Fast Enters. LLC
    • United States
    • U.S. District Court — Eastern District of Michigan
    • January 18, 2022
    ...of the case; they were set forth in detail in the Court's opinion on the cross motions for summary judgment, Cahoo v. Fast Enterprises LLC , 528 F. Supp. 3d 719 (E.D. Mich. 2021), the opinion denying motions to dismiss, 508 F. Supp. 3d 162 (2020), and the opinion denying the motion to certi......
  • Cahoo v. Fast Enters.
    • United States
    • U.S. District Court — Eastern District of Michigan
    • January 18, 2022
    ...for summary judgment, which the Court denied except as to certain individual State defendants, who were dismissed from the lawsuit. 528 F.Supp.3d 719. As result of these and other decisions, only one procedural due process claim remains against CSG and FAST and two UIA supervisors. In the o......

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