Davis v. Detroit Pub. Sch. Cmty. Dist.
| Decision Date | 24 July 2017 |
| Docket Number | Case No. 17-cv-12100 |
| Parties | ROBERT DAVIS, et al., Plaintiffs, v. DETROIT PUBLIC SCHOOLS COMMUNITY DISTRICT, et al. Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Plaintiffs' lawsuit has two distinct facets. First, Plaintiff Robert Davis complains about allegedly unconstitutional treatment that he received during a June 23, 2017 meeting of Defendant Detroit Public Schools Community District Board of Education. At the same time, Plaintiffs continue their efforts, which began in a prior case, to prevent or undo taxpayer-funded financing of the new Little Caesars sports arena in Detroit, Michigan, as that financing scheme is currently structured. Generally speaking, Plaintiffs claim that the funding scheme violates their rights guaranteed by the U.S. Constitution, because City of Detroit millage voters only consented to be taxed for school purposes. By way of relief, Plaintiffs request that the Board of Education put the funding scheme to a vote of the school electors for the City of Detroit.
Both plaintiffs are Wayne County residents, but only Plaintiff D. Etta Wilcoxon lives in Detroit. Am. Compl. ¶¶ 23-24. The original defendants in this suit are the Detroit Public Schools Community District, Detroit Public Schools, and the Detroit Public Schools Community District Board of Education, as well as its president, Dr. Iris Taylor, in her official capacity (collectively, "DPS Defendants").1 When Plaintiffs filed their amended complaint, they added as defendants Olympia Entertainment Events Center LLC ("Olympia Entertainment"), Palace Sports and Entertainment LLC ("Palace Sports"), and the National Basketball Association ("NBA"). Appearing as intervening defendants are the Detroit Downtown Development Authority ("DDA") and the Detroit Brownfield Redevelopment Authority ("DBRA") (collectively, "Intervenor Defendants") — entities created by local governments, pursuant to a state statute, for the purpose of spurring economic growth and revitalization.
The issues have been fully briefed, and a hearing was held on July 19, 2017. For the reasons set forth below, DPS Defendants' motion to dismiss is granted in part and denied in part; Intervenor Defendants' motion for summary judgment is granted; and Plaintiffs' motion for partial summary judgment is denied as moot.
In the City of Detroit's November 2012 general election, voters approved the renewal of the 18-mills Detroit Public Schools operating millage. See Am. Compl. ¶ 170. Plaintiffs argue that Intervenor Defendants intend to unlawfully use revenue generated from the school operating millage for a purpose other than the one that voters approved. See id. ¶¶ 253-254, 269-270, 274. Specifically, Intervenor Defendants allegedly plan to reimburse Defendants Olympia Entertainment and Palace Sports approximately $56,500,000 collected pursuant to the millage to fund certain aspects of the relocation of the Detroit Pistons professional basketball team fromAuburn Hills, Michigan, to Detroit, Michigan. See id. ¶¶ 266-267. The DDA intends to reimburse Olympia Entertainment in the amount of $34,500,000 for improvements needed to accommodate the Detroit Pistons at the Little Caesar's arena, and the DBRA intends to reimburse Palace Sports in the amount of $22,000,000 for constructing the Detroit Pistons' practice facility and corporate headquarters. Id.
Michigan statutes require that all millage proposals "fully disclose each local unit of government to which the revenue from that millage will be disbursed." See Am. Compl. ¶ 274 (quoting Mich. Comp. Laws § 211.24f(1)). Under Mich. Comp. Laws § 380.1216, revenues levied for school operating purposes, in particular, may only be used for that purpose without the consent of the local electors. Id. ¶ 254. Plaintiffs argue that both statutes have been violated, because the millage ballot proposals did not identify that the funds would be used by non-school entities for the non-school purpose of supporting the relocation of the Pistons to Detroit.
Plaintiffs purport to implicate DPS Defendants in the above-described conduct due to DPS Defendants' alleged refusal to place a proposal on the November 2017 general election ballot through which electors can vote on whether to approve the non-school use of funds. Olympia Entertainment and Palace Sports are implicated based on their alleged intent to receive reimbursement from Intervenor Defendants, which reimbursement comes from school millage revenues.
In considering whether to dismiss a complaint under Federal Rule Civil Procedure 12(b)(1) due to lack of subject-matter jurisdiction, the plaintiff bears the burden of proving the existence of subject-matter jurisdiction. Musson Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244, 1248 (6th Cir. 1996). If the motion attacks the assertion of subject matter jurisdiction set out in thecomplaint, the court accepts the complaint's allegations as true and construes them in the light most favorable to the non-moving party. United States v. A.D. Roe Co., Inc., 186 F.3d 717, 721-722 (6th Cir. 1999). A motion that alleges lack of standing is properly characterized as a motion to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1). See Stalley v. Methodist Healthcare, 517 F.3d 911, 916 (6th Cir. 2008) ().
On a motion to dismiss pursuant to Rule 12(b)(6), on the other hand, "[t]he defendant has the burden of showing that the plaintiff has failed to state a claim for relief." Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citing Carver v. Bunch, 946 F.2d 451, 454-455 (6th Cir. 1991)). Such a motion "should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. The plausibility standard requires courts to assume that all the alleged facts are true, even when their truth is doubtful, and to make all reasonable inferences in favor of the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-556 (2007); In re NM Holdings Co., LLC, 622 F.3d 613, 618 (6th Cir. 2010). The complaint "does not need detailed factual allegations." Twombly, 550 U.S. at 555; see also Erickson v. Pardus, 551 U.S. 89, 93 (2007) (). It needs only enough facts to suggest that discovery may reveal evidence of actionability, even if the likelihood of finding such evidence is remote. Twombly, 550 U.S. at 556. Evaluating a complaint's plausibility is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
A. Plaintiffs Lack Standing to Challenge the Tax Increment Finance Plan
Counts VII, VIII, and X through XIV allege, in one way or another, that DPS Defendants, Olympia Entertainment, and Palace Sports are complicit in the wrongful diversion of school millage revenue away from school use. Plaintiffs allege that the diversion and use of this millage revenue for non-school purposes, without notice to and approval by the school electors, violates Mich. Comp. Laws § 380.1216 and Mich. Comp. Laws § 211.24f, as interpreted by Debano-Griffin v. Lake County, 782 N.W.2d 502 (Mich. 2010); City of South Haven v. Van Buren County Board of Commissioners, 734 N.W.2d 533 (Mich. 2007); and In re Request for Advisory Opinion on Constitutionality of 1986 PA 281, 422 N.W.2d 186 (Mich. 1988).
In addition to the Article III criteria that every case before a federal court must satisfy, state-law standing principles must also be satisfied when a plaintiff brings a state-law claim in a federal court. See Aarti Hosp., LLC v. City of Grove City, Ohio, 350 F. App'x 1, 6 (6th Cir. 2009). Accordingly, this Court will apply Michigan's standing doctrine as set forth in Lansing Schools Education Association v. Lansing Board of Education, 792 N.W.2d 686 (Mich. 2010).
Previous to Lansing Schools, Michigan standing jurisprudence tracked federal standing jurisprudence. See Lansing Schs., 792 N.W.2d at 693 (). Concluding that Michigan's constitution lacked the U.S. Constitution's "case or controversy" language, however, Lansing Schools marked Michigan's return "to a limited, prudential doctrine that is consistent with Michigan's long-standing historical approach to standing." Id. at 699. Lansing Schools articulated the test for standing as follows:
A litigant has standing whenever there is a legal cause of action. Further, whenever a litigant meets the requirements of MCR 2.605[declaratory judgments], it is sufficient to establish standing to seek a declaratory judgment. Where a cause of action is not provided at law, then a court should, in its discretion, determine whether a litigant has standing. A litigant may have standing in this context if the litigant has a special injury or right, or substantial interest, that will be detrimentally affected in a manner different from the citizenry at large or if the statutory scheme implies that the Legislature intended to confer standing on the litigant.
Id. (emphasis added).
Plaintiffs do not attempt to argue that they have standing based on having a cause of action at law; nor do they expressly claim that they have suffered a special injury. Rather, Plaintiffs assert that they have standing because they meet the requirements of Mich. Ct. R....
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