Johnson v. Morales

Decision Date07 January 2020
Docket NumberNo. 17-2519,17-2519
Parties Rita R. JOHNSON, Plaintiff-Appellant, v. Timothy MORALES; Dennis Jordan; City of Saginaw, Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

OPINION/DISSENT

NALBANDIAN, Circuit Judge.

I.

Plaintiff Rita Johnson challenges the suspension of her business license by Defendants City of Saginaw, City Manager Timothy Morales, and City Human Resources Director Dennis Jordan. Morales issued Johnson a notice to immediately suspend all commercial activities at her restaurant. This came after persons unaffiliated with Johnson or her restaurant began shooting at it one night. Jordan upheld the suspension in a hearing where he served as the hearing officer. And an appeal panel later upheld his decision. Johnson eventually filed this action in the district court, alleging several constitutional violations. She now appeals the district court’s order dismissing her case for failure to state a claim and denying her leave to amend her complaint. For the following reasons, we AFFIRM in part, REVERSE in part, and REMAND.1

II.

Rita Johnson owns and operates Rita’s Southern Soul Café in the City of Saginaw, Michigan ("City").2 One evening, Johnson rented her restaurant to a private party. For unknown reasons, individuals unaffiliated with her or the party emerged from a vehicle that night and began shooting at the restaurant. According to Johnson, no guest of the restaurant instigated the shooting. Nor did the shooting "ha[ve] [anything] to do with the commercial activities of [her] business." (R. 15-1, Proposed Second Am. Compl. at PageID #250 ¶ 17.) Although police were called during the shooting, they never apprehended any of the shooters. But Saginaw Police Chief Robert Ruth opined that the incident may have "involve[d] gangs from the ‘southside’ and ‘northside’ of Saginaw." (Id. ¶ 21.)

Less than two days after the shooting, City Manager Timothy Morales issued Johnson a notice ordering the suspension of all business activity related to her restaurant. Morales issued the suspension order under section 110.06(F) of Saginaw’s Code of Ordinances. Section 110.06(F) allows the city manager to immediately suspend any license or permit issued by the City if he considers the suspension necessary and "in the interest of the public health, morals, safety, or welfare[.]" Saginaw, Mich., Code of Ordinances § 110.06(F) (2018).

The suspension order listed the following non-exclusive reasons for suspending Johnson’s license:

1. Serious and violent criminal activity generated by the operation of this establishment;
2. The aforementioned serious and violent criminal activity has resulted in significant injury to persons and damage to property;
3. The aforementioned serious and violent criminal activity has occurred as recently as Saturday, May 6, 2017;
4. The aforementioned serious and violent criminal activity constitutes a hazardous condition contrary to the health, morals, safety and welfare of the public;
5. Failure to maintain adequate security to prevent or discourage unlawful behavior[.]

(R. 15-1, Proposed Second Am. Compl. at PageID #265 (alterations omitted).)

The order also informed Johnson that a hearing would occur three days later, where she would have to "show cause" as to why her license should not remain suspended or revoked. (Id. at PageID #251 ¶¶ 33–36.) A little over two months after the hearing, Human Resources Director Dennis Jordan issued a decision upholding the suspension of Johnson’s license. But Johnson believed she did not receive a fair administrative process. So she filed a complaint in the district court alleging that Defendants had violated several of her constitutional rights.

Johnson then amended her complaint to include additional factual allegations and another count against Defendants. She also filed a motion for a temporary restraining order and, alternatively, a motion for a preliminary injunction to prevent Morales from sitting on the appeal panel expected to review Jordan’s decision. The district court denied that motion. Later, Defendants moved to dismiss Johnson’s complaint for failure to state a claim.

After the district court denied Johnson’s motion for equitable relief, she filed her administrative appeal. The appeal panel, which did not turn out to include Morales, held a hearing where it affirmed Jordan’s decision upholding the suspension of her license. The very next day, Johnson filed a motion for leave in the district court to amend her complaint again. And roughly two months later, the district court granted Defendantsmotion to dismiss and denied Johnson’s motion to amend her complaint on futility grounds.

This appeal followed.

III.

We review the district court’s grant of Defendantsmotion to dismiss de novo. Beydoun v. Sessions , 871 F.3d 459, 464 (6th Cir. 2017) (citing Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006) ). Because the district court denied Johnson’s motion to file a second amended complaint on futility grounds, we review that decision de novo. Id. (citing Colvin v. Caruso , 605 F.3d 282, 294 (6th Cir. 2010) ). Several of Johnson’s claims overlap both complaints; we analyze those claims before we analyze the claims unique to her proposed second amended complaint.

IV.
A.

In Count I of Johnson’s first amended complaint and Count IV of her proposed second amended complaint, Johnson alleges that the City and Jordan violated her due process rights by having Jordan serve as the hearing officer at her initial administrative hearing. Her argument rests on a "command influence theory," which she articulates as follows: "[I]mmediate subordinates are not ‘neutral and detached’ enough to satisfy due process when called upon to review an immediate boss’s decision." (Johnson’s Opening Br. at 18.) According to Johnson’s theory, Jordan was not "neutral and detached" enough to serve as her hearing officer. (Id. at 10.) This is because he was sitting in review of his immediate supervisor’s decision to suspend her license.

Federal due process "guarantees ‘an absence of actual bias’ on the part of a judge." Williams v. Pennsylvania , ––– U.S. ––––, 136 S. Ct. 1899, 1905, 195 L.Ed.2d 132 (2016) (quoting In re Murchison , 349 U.S. 133, 136, 75 S.Ct. 623, 99 L.Ed. 942 (1955) ). But we apply an objective standard in evaluating whether the government has fulfilled that guarantee. Id. So in reviewing claims of actual bias, we "ask[ ] not whether a judge harbors an actual, subjective bias, but instead whether, as an objective matter, the average judge in his position is likely to be neutral, or whether there is an unconstitutional potential for bias." Id. (internal quotation marks omitted). Moreover, claims of bias "must overcome a presumption of honesty and integrity in those serving as adjudicators[.]" Withrow v. Larkin , 421 U.S. 35, 47, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975).

Johnson traces the origins of her theory to two state court decisions: State ex rel. Ellis v. Kelly , 145 W.Va. 70, 112 S.E.2d 641 (1960) and Mayer v. Montgomery County , 143 Md.App. 261, 794 A.2d 704 (Md. Ct. Spec. App. 2002).3 We examine both in turn.

In Kelly , West Virginia’s Department of Motor Vehicles ("Department") suspended a used car dealer’s license after the Department’s commissioner investigated the dealership and found that the dealer had breached certain record-keeping requirements. 112 S.E.2d at 642. The Department later held a hearing on the suspension. Id. at 643. There, the deputy commissioner served as the hearing officer and the commissioner testified before the deputy. Id . West Virginia’s Supreme Court of Appeals held that this violated due process. The court found:

It can hardly be contended that the commissioner, in the making of the investigation and in testifying before the deputy commissioner appointed by him and responsible to him, beyond any reasonable probability, did not become biased and prejudiced in the matter being heard. It would seem to be beyond human experience and expectation for impartiality to result where the officer is the investigator, prosecutor, witness and trier of the facts.

Id. at 644.

But it was essential to the court’s analysis that "the commissioner personally conducted the investigation and personally testified before his deputy." See id. at 643. In contrast, Johnson alleges neither that Morales testified at her hearing nor that he investigated her business. Johnson’s argument hinges on her allegations that Morales issued the suspension order, selected Jordan to serve as the hearing officer, and is Jordan’s immediate supervisor. Because Morales was not the "investigator, prosecutor, witness and trier of the facts" in Johnson’s case, Kelly is inapposite.

The second case Johnson relies on, Mayer , involved a county police sergeant who sought a promotion to the rank of lieutenant. 794 A.2d at 706. The sergeant filed a grievance after he was denied the promotion. And a county director denied his grievance through a written "Step II" response. Id. at 708. Then, the County Administrative Officer ("CAO") designated a subordinate of the director to conduct a "Step III" hearing. So the sergeant requested a different hearing officer. Id. He argued that the subordinate "would be loath to render a decision adverse to that of her superior and therefore would not be impartial, or at least would not appear to be impartial." Id. The CAO denied the sergeant’s request for a different hearing officer. And the subordinate denied the grievance. Id. at 709. So the sergeant appealed. Yet the Maryland Court of Special Appeals concluded that "the CAO’s appointment was contrary to the governing laws ...." Id. at 717.

But those "governing laws" did not refer to the Due Process Clause. Instead, they referred to the county’s "governing [ ] laws, regulations, or procedures," which the court cited at the beginning of its analysis. Id . at 709, 711–12.4 Indeed, the sergeant’s...

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