Ernst v. Roberts, No. 02-2287.

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: Clay
• Citation: 379 F.3d 373
• Parties: J. Richard ERNST, William T. Ervin, James E. Wilson, and John Patrick O'Brien, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Douglas B. ROBERTS, Treasurer of the State of Michigan; Christopher M. DeRose, Director, Department of Management and Budget Office of Retirement Systems; George M. Elworth, Member, Michigan Judges Retirement Board; Roy Pentilla, Member, Michigan Judges Retirement Board; Eric E. Doster, Member, Michigan Judges Retirement Board; Lyle Van Houten, Member, Michigan Judges Retirement Board; and Robert Ransom, Member, Michigan Judges Retirement Board, Defendants-Appellees.
• Docket Number: No. 02-2287.
• Decision Date: 12 August 2004

379 F.3d 373 J. Richard ERNST, William T. Ervin, James E. Wilson, and John Patrick O'Brien, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
Douglas B. ROBERTS, Treasurer of the State of Michigan; Christopher M. DeRose, Director, Department of Management and Budget Office of Retirement Systems; George M. Elworth, Member, Michigan Judges Retirement Board; Roy Pentilla, Member, Michigan Judges Retirement Board; Eric E. Doster, Member, Michigan Judges Retirement Board; Lyle Van Houten, Member, Michigan Judges Retirement Board; and Robert Ransom, Member, Michigan Judges Retirement Board, Defendants-Appellees. No. 02-2287. United States Court of Appeals, Sixth Circuit. Argued: January 30, 2004. Decided and Filed: August 12, 2004.

Appeal from the United States District Court for the Eastern District of Michigan, Bernard A. Friedman, Chief Judge.

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Kenneth A. Flaska (argued and briefed), Chester E. Kasiborski, Jr. (briefed), Kasiborski, Ronayne & Flaska, Detroit, MI, for Plaintiffs-Appellants.

Lori M. Silsbury (briefed), Wendell A. Wilk (argued and briefed), Dykema Gossett, Lansing, MI, David L. Balas, Asst. Atty. Gen., Office of Attorney General, Lansing, MI, Larry F. Brya (briefed), Asst. Atty. Gen., Office of Attorney General Economic Development & Retirement Div., Lansing, MI, for Defendants-Appellees.

Before SUHRHEINRICH and CLAY,

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Circuit Judges; GWIN, District Judge.^*

CLAY, J., delivered the opinion of the court, in which GWIN, D.J., joined. SUHRHEINRICH, J. (pp. 394-405), delivered a separate dissenting opinion.

OPINION

CLAY, Circuit Judge.

Plaintiffs, J. Richard Ernst, William T. Ervin, James E. Wilson, and John Patrick O'Brien, appeal from the order issued by the United States District Court for the Eastern District of Michigan, entered on September 30, 2002, granting the motion to dismiss of Defendants (Treasurer of the State of Michigan Douglas B. Roberts and affiliated parties), declining to exercise supplemental jurisdiction over Plaintiffs' state law claims, and denying as moot Defendants' motion for abstention or, alternatively, for a stay of proceedings, and Plaintiffs' motion to strike an affidavit, in this action under 42 U.S.C. § 1983, challenging the Michigan Judges Retirement Act of 1992, Mich. Comp. Laws § 38.2101 et seq., as violating the United States and Michigan Constitutions and also asserting state law claims for wasting trust and breach of fiduciary duty. For the reasons set forth below, we REVERSE the district court's dismissal of Plaintiffs' federal claims.

BACKGROUND Procedural History

On September 5, 2001, Plaintiffs filed a complaint, in which they alleged that the Michigan Judges Retirement Act of 1992, Mich. Comp. Laws § 38.2101 et seq., violates the Equal Protection Clauses of the United States and Michigan Constitutions and various provisions of state law. The complaint set forth ten counts. The initial eight counts of Plaintiffs' complaint alleged four separate theories of violation of equal protection. For each theory of the complaint, one count is devoted to federal law and another to state law. The final two counts of the complaint alleged violations of state law not related to equal protection, namely, wasting trust and breach of fiduciary duty.¹

Plaintiffs sought various forms of relief. Plaintiffs sought certification of the action as a class action pursuant to Fed.R.Civ.P. 23. Plaintiffs also sought restitution in the form of monetary awards. Additionally, Plaintiffs sought declaratory and injunctive relief, to alter the retirement system's functioning, for the purpose of bringing it into compliance with the laws whose violation Plaintiffs alleged.

The federal law counts relied upon 42 U.S.C. § 1983 as the basis for pleading the liability of Defendants (the Treasurer of the State of Michigan and affiliated parties), all of whom are government officials. On December 7, 2001, Defendants filed a Motion for Abstention or, Alternatively, for a Stay in the Proceedings. On December 18, 2001, Defendants filed a Motion to Dismiss or, in the Alternative, for Summary Judgment. On February 8, 2002, Plaintiffs filed a Motion to Strike the Affidavit of Daniel A. Norberg. On March 20, 2002, the district court held a hearing on Plaintiffs' motion to strike, Defendants' motions to dismiss or for summary judgment, and Defendants' motion for abstention or for a stay of proceedings.

On September 30, 2002, the district court entered an opinion and order, granting

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Defendants' motion to dismiss Plaintiffs' federal claims (Counts I, III, V, and VII) due to Defendants' Eleventh Amendment immunity; declining to exercise supplemental jurisdiction over Plaintiffs' state claims (Counts II, IV, VI, VIII, IX, and X); denying as moot Defendants' motion for abstention or for a stay of proceedings; and denying as moot Plaintiffs' motion to strike the Norberg affidavit. Ernst v. Roberts, 225 F.Supp.2d 781, 789 (E.D.Mich.2002). Plaintiffs filed a timely notice of appeal.

Substantive Facts

The district court stated the background facts that gave rise to this case as follows:

The plaintiffs in this case are a Michigan circuit judge, a Michigan probate judge, a Michigan district judge, and a retired Michigan circuit judge. The case has not been certified as a class action, nor have plaintiffs moved yet for class certification. Nonetheless, plaintiffs purport to represent all active and retired Michigan judges who are "similarly situated." The basic allegation in the complaint is that the Judges Retirement Act of 1992 ("JRA"), which created the Judges Retirement System ("JRS"), treats judges of the 36th District Court more favorably than the "non-36th District Court judges." Plaintiffs claim that this disparity violates equal protection because there is no rational basis for providing judges of the 36th District Court more favorable pensions.

The defendants are:

— Mark Murray[²], the Treasurer of the State of Michigan;

— Christopher DeRose, the Director of the Office of Retirement Systems, which is part of the Michigan Department of Management and Budget. DeRose is also the executive secretary of the Judges Retirement System; and

— George Elworth, Roy Pentilla, Eric Doster, Lyle Van Houten, and Robert Ransom, all of whom are members of the Michigan Judges Retirement Board ("MJRB").

Under the JRA, as amended in 1996, all Michigan judges are covered by one of two pension plans. "Tier 1" is a defined benefit plan; "Tier 2" is a defined contribution plan.[³] Judges who first entered office before March 31, 1997, were in Tier 1. Judges who first entered office thereafter were in Tier 2. The 1996 amendment to the act permitted Tier 1 participants to move to Tier 2, but they had to make this election by a certain date in 1998.

Ernst v. Roberts, 225 F.Supp.2d at 783-84. More of a factual background is not needed, for purposes of this opinion, because the district court never reached the merits. As explained below, the district court's dismissal of the federal claims under the Eleventh Amendment constituted a dismissal for lack of jurisdiction.

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DISCUSSION

Plaintiffs make four arguments. First, Plaintiffs claim that the district court erred in dismissing the federal claims on the basis of Eleventh Amendment immunity. Secondly, Plaintiffs argue that even if, arguendo, the federal claims were properly dismissed due to Eleventh Amendment immunity, the district court erred in dismissing the claims with prejudice. Thirdly, Plaintiffs aver that the district court erred by granting Defendants' motion to dismiss without identifying the precise rule upon which it relied and by ruling without affording Plaintiffs discovery regarding the Eleventh Amendment immunity defense. Finally, Plaintiffs argue that if Defendants are not entitled to Eleventh Amendment immunity, then the district court should be required to revisit the issue of assuming supplemental jurisdiction over Plaintiffs' state law claims.

Because we rule that Defendants are not entitled to Eleventh Amendment immunity on any of the claims, we decline to address Plaintiffs' second argument. We take the remaining three issues in order.

The first two issues that we address are reviewed de novo, because these issues address the ruling on Eleventh Amendment immunity. Barton v. Summers, 293 F.3d 944, 948 (6th Cir.2002).

I.

Eleventh Amendment immunity bars federal courts from exercising jurisdiction⁴ over a claim,⁵ where the party asserting immunity establishes that immunity applies.⁶ In burden allocation, as well as in other respects, Eleventh Amendment immunity may be considered to be an affirmative defense to jurisdiction.⁷

Plaintiffs argue that Eleventh Amendment immunity does not bar the federal claims in this case. The Eleventh Amendment bars suits against a state by citizens of another state, and, under Hans

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v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890), the Eleventh Amendment prohibits citizens from suing their own state. Barton v. Summers, 293 F.3d 944, 948 (6th Cir.2002) (citing Hans).

When a state or an arm of the state is sued, there are various exceptions to immunity;⁸ but none of these exceptions fully governs the present case. Contrary to the dissent's characterization of our holding,⁹ we do not rule that the state has waived its immunity to suit. The dissent emphasizes that a waiver of state court immunity does not constitute a waiver of immunity to suit in federal court. This proposition is perfectly true and equally irrelevant. Our holding is not that the state has waived immunity to suit against the JRS; rather, for the reasons stated below, we hold that the JRS is akin to a political subdivision (and not an arm of the state), which means that immunity never applied. Because immunity never applied, it was not waived.

Under Ex Parte Young, there is no immunity for a claim for only...