Dlx, Inc. v. Kentucky

Decision Date26 August 2004
Docket NumberNo. 03-5528.,03-5528.
Citation381 F.3d 511
PartiesDLX, INC., Plaintiff-Appellant, v. Commonwealth of KENTUCKY, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Appeal from the United States District Court for the Eastern District of Kentucky, David L. Bunning, J.


D. Duane Cook (argued and briefed), Stamping Ground, KY, for Plaintiff-Appellant.

David J. Obradovich, James J. Grawe, Office of the Attorney General, Todd E. Leatherman, Office of the Attorney General, Mark A. Posnansky (briefed), S. Bradford Smock (argued and briefed), Office of Legal Services Capital Plaza Tower, Frankfort, KY, for Defendants-Appellees.

Before: SILER, MOORE, and BALDOCK, Circuit Judges.*

MOORE, J., delivered the opinion of the court, in which SILER, J., joined. BALDOCK, J. (pp. 528-534), delivered a separate opinion concurring in the judgment of dismissal only.


MOORE, Circuit Judge.

Plaintiff-Appellant DLX, Inc. ("DLX") appeals from the dismissal of its § 1983 action against Defendants-Appellees the Commonwealth of Kentucky, the Kentucky Natural Resources and Environmental Protection Cabinet ("Cabinet"), and James E. Bickford, Secretary of the Cabinet, in his official capacity (collectively, "Kentucky"), alleging a taking of its property without just compensation in violation of the Fifth Amendment. The district court dismissed the complaint on Kentucky's Federal Rule of Civil Procedure 12(b)(1) motion, for lack of subject matter jurisdiction, on the basis of ripeness and the Rooker-Feldman doctrine. Although both of these grounds were inapposite, we sustain this dismissal on different reasoning, because the Eleventh Amendment bars DLX's claims against Kentucky in federal court. The district court's dismissal is therefore AFFIRMED.


The Lilley Cornett Woods ("Woods"), in Letcher County, Kentucky, is a tract of land owned by the state and maintained by Eastern Kentucky University as a wildlife refuge and research facility. The Woods are designated a National Natural Landmark as "[p]robably the only surviving virgin tract of any size in the Cumberland Mountains section of the mixed mesophytic forest, which is characterized by a great variety of tree species." National Park Service, National Registry of Natural Landmarks, http://www.nature.nps.gov/ nnl/Registry/USA—Map/States/Kentucky/nnl/lcw/index.htm. The surface rights to the Woods were originally purchased by Kentucky from the Kentucky River Coal Company, which retained the mining rights; a portion of the property was also purchased from the Cornett heirs. In 1975, the South-East Coal Company obtained a lease from the Kentucky River Coal Company to mine coal, including coal under the Woods, pursuant to which South-East acquired a permit from the state to mine 3,000 acres. Immediately before filing the amendment to South-East's then-existing permit that is at issue in this case, South-East filed for bankruptcy. DLX purchased all of South-East's assets, including the leases with Kentucky River and the state permit. At that point, DLX had a lease and permit allowing it to mine approximately 3,000 acres, which did not include any mining under the Woods. All the coal remaining in the lease is either under the Woods or can only be accessed by DLX through the land under the Woods.

DLX applied for Amendment No. 3 to the existing permit, which proposed an additional 130 acres to be added to the 3,000-acre permit area. DLX submitted an initial plan to the Cabinet, which responded with a "deficiency letter." DLX resubmitted, adding "a pillar design for subsidence control." Joint Appendix ("J.A.") at 73 (Hearing Officer's Report and Recommendation). After additional deficiency letters, a seventy-five-foot vertical cover between mine operations and the surface was proposed in a third submittal; further deficiency letters resulted in a fourth submittal which left a 250-foot vertical cover, and proposed a fifty-percent recovery, that is, that half the coal in the area was extractable under the plan. No deficiency letter was issued by the Cabinet, but DLX in reassessing its fourth submittal decided that the proposal was unfeasible, and that a 250-foot cover would result in only twenty-five-percent recovery. DLX therefore withdrew its fourth proposal, submitting a fifth proposal instead which provided for fifty-percent recovery, but only a 110-foot vertical cover. This proposal was submitted with a letter requesting that the permit be issued or denied "as is." J.A. at 73 (Report). On April 25, 1994, the application was denied, for six reasons: the potential danger to the old-growth forest portion of the Woods; a failure to demonstrate that the mining operation could be feasibly accomplished under 405 KAR 8:010 § 14(2); that the application did not contain sufficient geological and hydrologic information to demonstrate the hydrologic consequences of the project on the Woods; that it did not present information detailing the care the applicant would take to minimize hydrologic consequences; that there was inadequate information regarding the surrounding nature habitats; and there was no information on the minimization of the impact of mining on those habitats. DLX petitioned for review, and at the hearing, the reasons for denial of the application were distilled to one: "The application for the Permit (Amendment No. 3) was acceptable to the Cabinet except for the failure of the Petitioner to agree to a minimum cover (i.e., distance from mining to the surface) of greater than 110 feet." J.A. at 75 (Report).

The Hearing Officer of the Cabinet affirmed the decision of the Cabinet to deny the permit, finding both that the Cabinet could provide extra protection for the old-growth portion of the Woods that is not required for second-growth forests and that the Cabinet had a sufficient basis for determining that the 110-foot vertical cover proposed by petitioner was inadequate to minimize the impact to the hydrologic balance of the Woods. Noting that the petitioner bore the burdens of production and persuasion, the officer concluded that DLX failed to carry its burden of showing "that a 110-foot vertical cover would minimize disturbances to the hydrologic balance within the old-growth portion of the Lilley Cornett Woods." J.A. at 93 (Report). This report was adopted by then-Secretary Phillip J. Shepherd without comment.

Although Kentucky law allows a permit applicant to seek judicial review of a Secretary's final Order under KRS § 350.0305, DLX immediately filed a state-court takings claim, asserting that the denial of a permit to mine under the Woods constituted a regulatory taking of its property in violation of the Kentucky constitution. DLX expressly reserved its federal claims, noting,


DLX hereby reserves its Federal claims. DLX will pursue in Federal court any remedies it may have under the United States Constitution or under United States statutes or regulations.

J.A. at 67 (State Ct. 1st Am. Compl.). After the state trial court dismissed the case for lack of ripeness, an intermediate court reversed, and the Supreme Court of Kentucky granted the Cabinet's petition for review. See Commonwealth v. DLX, Inc., 42 S.W.3d 624, 625 (Ky.2001). That court decided the case on the basis of exhaustion of administrative remedies, rather than ripeness. See id. ("We conclude that DLX failed to exhaust its administrative remedies."). Because DLX had not appealed the Secretary's final order before filing a takings claim, it could not proceed on the state constitutional takings claim. Id. at 626-27. Two justices (of seven) dissented, noting that DLX was prevented from raising its constitutional claims in the administrative proceedings, and that it would have been prevented from doing so in its appeal from the decision of the Cabinet. Id. at 627 (Wintersheimer, J., dissenting). As the decision was one of state law only, a writ of certiorari from the United States Supreme Court was not sought.

One year after the Kentucky Supreme Court dismissed DLX's state constitutional claim, DLX filed in federal district court, alleging a violation of the Fifth Amendment actionable under 42 U.S.C. § 1983. Kentucky immediately moved for dismissal under Federal Rule of Civil Procedure 12(b)(1), arguing that the court lacked subject matter jurisdiction under the doctrine of sovereign immunity of the Eleventh Amendment, the doctrine of ripeness, the doctrine of exhaustion, the RookerFeldman doctrine, and res judicata. The district court granted the motion on March 24, 2003, on the basis of ripeness and the Rooker-Feldman doctrine.

A. Standard of Review

A Rule 12(b)(1) motion can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff must be considered as true, or it can attack the factual basis for jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction exists. See RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1133-35 (6th Cir. 1996); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994); Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990). As the district court made essentially no factual findings in deciding it that lacked jurisdiction, we will treat this as a "facial" 12(b)(1) motion. We review a motion to dismiss under Rule 12(b)(1) de novo where it requires no fact-finding. See Cob Clearinghouse Corp. v. Aetna United States Healthcare, Inc., 362 F.3d 877, 880 (6th Cir.2004); RMI, 78 F.3d at 1135 (in factual attack, district court's factual findings are reviewed for clear error).

B. Rooker-Feldman

The Rooker-Feldman doctrine, named for Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923), and District of Columbia Court of ...

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