Daily Servs., LLC v. Valentino

Citation756 F.3d 893
Decision Date30 July 2014
Docket NumberNo. 13–4157.,13–4157.
PartiesDAILY SERVICES, LLC, Plaintiff–Appellant, v. Tracy VALENTINO; Tina Kielmeyer; Tom Sico; John Does, Nos. 1 Through 5, Employees of the Ohio Bureau of Workers' Compensation, Defendants–Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

OPINION TEXT STARTS HERE

ARGUED:W. Evan Price II, Law Office of W. Evan Price II, LLC, Dublin, Ohio, for Appellant. James A. King, Porter, Wright, Morris & Arthur LLP, Columbus, Ohio, for Appellees. ON BRIEF:W. Evan Price II, Law Office of W. Evan Price II, LLC, Dublin, Ohio, for Appellant. James A. King, David S. Bloomfield, Jr., Caitlin E. Chamberlin, Porter, Wright, Morris & Arthur LLP, Columbus, Ohio, for Appellees.

Before: MOORE and COLE, Circuit Judges; DRAIN, District Judge. **

COLE, J., delivered the opinion of the court, in which DRAIN, D.J., joined and in which MOORE, J., joined except as to Part II.C.3. MOORE, J. (pp. 910–11), delivered a separate opinion dissenting in part.

COLE, Circuit Judge.

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, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), and its progeny sometimes allow a state to satisfy due process without providing notice or an opportunity to be heard before depriving a property interest. Because it was not clearly established that Parratt did not apply, the court reasoned, Daily Services did not have a clearly established right to predeprivation process.

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, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

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. SeeOhio 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. SeeOhio 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 be heard before the Bureau may file a judgment or lien against it.

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. SeeOhio 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 prior 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 defendants answered the complaint and moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The district court granted the motion. It concluded that the defendants were entitled to qualified immunity because the law did not clearly establish that Daily Services was entitled to notice and an opportunity to be heard before the judgments and liens were filed. Daily Services timely appealed.

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, 592 F.3d 718, 722 (6th Cir.2010). We evaluate a Rule 12(c) motion for judgment on the pleadings as we would a Rule 12(b)(6) motion to dismiss. Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 511–12 (6th Cir.2001). To survive the Rule 12(c) motion, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted).

This court also reviews de novo the district court's finding of qualified immunity. Bloch v. Ribar, 156 F.3d 673, 677 (6th Cir.1998). To determine whether state officials are entitled to qualified immunity, we generally ask two questions: whether the plaintiff has alleged facts that make out a violation of a constitutional right, and whether the right at issue was clearly established at the time of the misconduct. See Santiago v. Ringle, 734 F.3d 585, 593 (6th Cir.2013). The court may address either question first. Pearson v. Callahan, 555 U.S. 223, 236, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009).

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...

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