Gean v. Hattaway

• Decision Date: 06 June 2003
• Docket Number: No. 01-5749.,01-5749.
• Citation: 330 F.3d 758
• Parties: Timothy Ray GEAN; John Eric Greene; Christopher Lynn Cross, Plaintiffs-Appellees, v. George W. HATTAWAY, Commissioner of the Tennessee Department of Children's Services; Margaret Dorse, Director, Fiscal Services, Tennessee Department of Children's Services; C. Warren Neel, Commissioner of the Tennessee Department of Finance and Administration, Individually and in their Official Capacities, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

330 F.3d 758

Timothy Ray GEAN; John Eric Greene; Christopher Lynn Cross, Plaintiffs-Appellees, v. George W. HATTAWAY, Commissioner of the Tennessee Department of Children's Services; Margaret Dorse, Director, Fiscal Services, Tennessee Department of Children's Services; C. Warren Neel, Commissioner of the Tennessee Department of Finance and Administration, Individually and in their Official Capacities, Defendants-Appellants.

No. 01-5749.

United States Court of Appeals, Sixth Circuit.

Argued: March 22, 2002.

Decided and Filed: June 6, 2003. Pursuant to Sixth Circuit Rule 206

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Lenny L. Croce (briefed), Theresa-Vay Smith (argued and briefed), Rural Legal Services of Tennessee, Inc., Oak Ridge, TN, Irwin B. Venick (briefed), Dobbins & Venick, Nashville, TN, for Plaintiffs-Appellees.

E. Blaine Sprouse (argued and briefed), General Civil Div., Douglas E. Dimond, Office of the Attorney General, Nashville, TN, for Defendants-Appellants.

Before: BATCHELDER and CLAY, Circuit Judges; ALDRICH, District Judge.^*

BATCHELDER, J., delivered the opinion of the court, in which ALDRICH, D.J., joined. CLAY, J. (p. 777), delivered a separate opinion concurring in the outcome reached by the majority opinion.

OPINION

BATCHELDER, Circuit Judge.

In this interlocutory appeal, the defendants challenge the district court's denial of their motion to dismiss the plaintiffs' claims on grounds of sovereign and qualified immunity. The district court held that the defendants were entitled to neither qualified nor sovereign immunity, and that all but one of the claims set forth by the plaintiffs set forth facts which, if true, could entitle plaintiffs to relief. Because the district court failed to apply the appropriate legal standard to a number of the issues raised, and in light of the Supreme Court's recent decision in Washington State Department of Social and Health Services v. Guardianship Estate of Keffeler, 537 U.S. 371, 123 S.Ct. 1017, 154 L.Ed.2d 972 (2003), we reverse the judgment of the district court denying the motion to dismiss except as to those claims brought under the Rehabilitation Act against the defendants in their official capacities, and remand the case for further proceedings.

I.

Christopher Cross, John Greene, and Timothy Ray Gean (together plaintiffs)¹ are young men who were formerly in the custody of the state of Tennessee. The defendants-appellants include George Hattaway, the Commissioner of the Tennessee Department of Children's Services (DCS), Margaret Dorse, the Director of the Fiscal Services branch of the DCS, and C. Warren Neel, the Commissioner of the Tennessee Department of Finance and Administration (together defendants). After the plaintiffs had, individually, been adjudicated delinquent by a state juvenile court, Tennessee placed them in various live-in treatment facilities. As children in state custody at residential treatment facilities with in-house schools, they were presumed disabled and therefore entitled to the benefits of the Individuals With Disabilities Education Act (IDEA) and/or the Rehabilitation Act. A variety of state and federal programs provided for the plaintiffs' maintenance, medical care, and educational needs while they were in custody, and they were therefore not personally liable for the cost of their care.

In addition to the benefits just described, each of the plaintiffs was entitled to receive Social Security benefits.² Once the plaintiffs entered state custody, DCS sought and received from the Social Security Administration the appointment of defendant Dorse as the representative payee for the purpose of receiving and managing the plaintiffs' Social Security benefits.³ As a representative payee, Dorse (acting on behalf of DCS) was constrained to use the Social Security benefits she received only for the benefit of the plaintiffs, in accordance with the Social Security Administration's regulations and guidelines requiring a representative payee to use the funds for the current maintenance of the beneficiaries, and to hold in trust any funds not so used. DCS kept the Social Security benefits it received as representative payee in a collective account over which Dorse was the custodian, although Dorse did not have the authority to make disbursements from that account and it is not clear at this stage of the litigation whether DCS's accounting practices with regard to the Social Security benefits were proper and in accord with the Social Security Administration's regulations and policies.

DCS used the plaintiffs' Social Security benefits to reimburse the state for the cost of the plaintiffs' current maintenance. Upon leaving state custody, each plaintiff requested an accounting of his Social Security benefits. When the accounting was made, DCS offset the amount of Social Security benefits it had received for each plaintiff by the amount of money the state expended for his care. Because the state had spent far more money on each plaintiff's current maintenance than it had received in Social Security benefits on his behalf, none of the plaintiffs was able to get any money back from the state after he left its custody.⁴

The plaintiffs brought several causes of action under 42 U.S.C. § 1983, which we have grouped as follows: (1) alienation of Social Security benefits in violation of 42 U.S.C. § 407; (2) unconstitutional taking in violation of the Fifth and Fourteenth Amendments; (3) breach of fiduciary duty; (4) violation of the Equal Protection Clause of the Fourteenth Amendment; (5) denial of due process rights under the Medicaid Act; (6) violation of the right to a free, appropriate education under the Individuals with Disabilities Education Act ("IDEA"); (7) discrimination on the basis of disability in violation of the Rehabilitation Act; and (8) discrimination on the basis of disability in violation of the Americans with Disabilities Act. Upon the defendants' motion to dismiss, the district court found that, with the exception of the discrimination claim brought under the ADA,⁵ the plaintiffs stated claims upon which relief could be granted, and that neither sovereign nor qualified immunity protected the defendants from suit in this instance. The defendants timely brought an interlocutory appeal, upon which we rule today.

II.

In discussing the claims before us, it will be essential to address the difference between suits against state actors in their official capacities and suits against them in their individual capacities; the difference between claims brought under 42 U.S.C. § 1983 and claims brought as direct causes of action under applicable federal statutes; and how those differences affect the analysis and outcome of the motion to dismiss that is before this court. Two of these claims — denial of due process rights under the IDEA, and discrimination on the basis of disability under the Rehabilitation Act — can be brought directly under the named federal statutes, although the plaintiffs style their claims exclusively as § 1983 actions. Because "[t]he form of the complaint is not significant if it alleges facts upon which relief can be granted, even if it fails to categorize correctly the legal theory giving rise to the claim," Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 604 (5th Cir.1981), we will examine the plaintiffs' claims under § 1983, and, where pertinent, directly under the federal statute in question as well.

We review de novo the district court's ruling on a motion to dismiss, Tahfs v. Proctor, 316 F.3d 584, 590 (6th Cir.2003), and view all evidence and allegations presented thus far in a light most favorable to the plaintiffs. Pfennig v. Household Credit Servs., Inc., 295 F.3d 522, 526 (6th Cir.2002). However, it is important to remember that we accept as true only the factual allegations of the non-moving parties, and "need not accept as true legal conclusions or unwarranted factual inferences" set forth in the complaints. Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir.1998). The issues in this case are complicated, and we must be wary of accepting uncritically the plaintiffs' theories of how federal law applies to the asserted facts.

Before moving to the individual claims brought by the plaintiffs, it is helpful to review the difference between official-capacity suits and individual-capacity suits against state officials, and the implications of each. "[D]amages actions against public officials require[ a] careful adherence to the distinction between personal and official-capacity suits." Kentucky v. Graham, 473 U.S. 159, 165, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985). 42 U.S.C. § 1983 imposes liability upon "[e]very person who, under color of [law] of any State ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws [of the United States]...." In Will v. Michigan Dep't of State Police, 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), the Supreme Court confronted the issue of whether state agents could be sued under § 1983, and held "that neither a State nor its officials acting in their official capacities are `persons' under § 1983." The Court based this conclusion upon the fact that "a suit against a state official in his or her official capacity is not a suit against the official but rather is a suit against the official's office," and, "[a]s such, it is no different from a suit against the State itself." Id.

The Court in Will does not remove all government actors in their official capacities from the scope of § 1983, but only those officials whose offices are considered "the State" for the purposes of an immunity analysis. See id. For the purposes of analysis in this case, both the Tennessee Department of Children's Services and the Department of Finance are "the...