Kaminski v. Coulter
| Decision Date | 05 May 2016 |
| Docket Number | Case No. 15-cv-12810 |
| Parties | CHARLES N. KAMINSKI, et al., Plaintiffs, v. BRAD COULTER, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Gershwin A. Drain
OPINION AND ORDER GRANTING THE RETIREMENT COMMISSION DEFENDANTS' MOTION TO DISMISS [#18], GRANTING THE MERC DEFENDANTS' MOTION TO DISMISS [#54] AND GRANTING IN PART AND DENYING IN PART THE STATE TREASURER DEFENDANTS' MOTIONS TO DISMISS [#52, #60]On August 10, 2015, Plaintiffs filed the instant action seeking class certification, damages and injunctive relief stemming from an order issued by the Defendant City of Lincoln Park's Emergency Manager, Defendant Brad L. Coulter, which terminated Plaintiffs' City-provided health insurance payments and replaced them with stipends. Plaintiffs allege that their constitutional rights under the Contract, Due Process and Taking Clauses, as well as their First Amendment right to petition the government have been violated.
In addition to the City of Lincoln Park and Coulter, Plaintiffs also assert their claims against the following: R. Kevin Clinton, the former Treasurer of the State of Michigan; Nick A. Khouri, the current Treasurer of the State of Michigan, the City of Lincoln Park Police and Fire Retirement Commission and five of its Trustees, Thomas E. Karnes,1 Larry Kelsey,2 Patrick Culter, Matt Sadowski and Thomas Jankowski (collectively the "Retirement Commission Defendants"); Lincoln Park's City Council members Thomas Murphy, Mark Kandes, Elliott Zelenak, Mario Desanto, Christopher Dardzinski; the City of Lincoln Park's Finance Director, Lisa Griggs; the City of Lincoln Park Municipal Employees Retirement Commission and its members John DiFrancesco, Clifford Harris and Janice Hochberg (collectively the "MERC Defendants"); and the City of Lincoln Park General Employees Retirement Commission.
Presently before the Court are Motions to Dismiss filed by the Retirement Commission Defendants [Dkt. No. 18], the current and former Treasurers of the State of Michigan, R. Kevin Clinton and Nick A. Khouri [Dkt. Nos. 52 and 60], and the MERC Defendants [Dkt. No. 54]. These motions are fully briefed and a hearing was held on April 11, 2016.
Due to concerns for the ongoing financial distress experienced by the City of Lincoln Park and its ability to meet its financial obligations, the City Council voted to request a State of Michigan review of the City's financial stability on August 19, 2013. The request was made pursuant to § 4(1)(a) of P.A. 436, MICH. COMP. LAWS § 141.1541 et seq. The State commissioned Gabriel Roeder to perform the evaluation. Among other conclusions, his report found that the retirement system was not well funded and that receipt of contributions was critical to ensuring the system's assets would not be exhausted.
On February 10, 2014, a financial review team from the State of Michigan was appointed to review the financial condition of the City of Lincoln Park. After meeting several times with various City Officials and representatives and conducting an extensive review of the City's financial condition, the Review Team concluded that, in accordance with § 5(4)(b) of P.A. 436, a local government emergency existed and the appointment of an Emergency Manager was necessary to avoid municipal bankruptcy.
Governor Rick Snyder designated Defendant Coulter as the State Emergency Manager for the City of Lincoln Park on July 3, 2014. In his first report to the Defendant State Treasurer, dated August 20, 2014, Defendant Coulter wrote of theongoing mismanagement of the Police and Fire Retirement System. On January 17, 2015, he wrote to the Michigan Governor and proposed elimination of the health insurance coverage for the Lincoln Park retirees. The financial savings from the termination of the health coverage payments would be used to re-fund the pension system.
On April 22, 2015, Defendant Coulter issued two orders, under authority granted by P.A. 436, that replaced City-provided health insurance payments for the named Plaintiffs with a stipend. The stipend payments for retirees included $150.00 per month for retirees under the age of 65 and $50.00 per month for retirees 65 and older. Additionally, retirees were required to start paying into Medicare "Part B" each month. Before issuing the orders, the State Treasurer determined that Defendant's Coulter's proposal satisfied the criteria in § 12(1)(k) of P.A. 436.
Federal Rule of Civil Procedure12(b)(6) allows the court to make an assessment as to whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). "Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the ... claim is and the grounds uponwhich it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957). Even though the complaint need not contain "detailed" factual allegations, its "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atlantic, 550 U.S. at 555).
The court must construe the complaint in favor of the plaintiff, accept the allegations of the complaint as true, and determine whether plaintiff's factual allegations present plausible claims. To survive a Rule 12(b)(6) motion to dismiss, plaintiff's pleading for relief must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (citations and quotations omitted). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 668 (2009). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. "[A] complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. The plausibility standard requires "more than a sheer possibility that a defendant has acted unlawfully." Id. "[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, thecomplaint has alleged-but it has not 'show[n]'- 'that the pleader is entitled to relief.'" Id.
The district court generally reviews only the allegations set forth in the complaint in determining whether to grant a Rule 12(b)(6) motion to dismiss, however "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account. Amini v. Oberlin College, 259 F. 3d 493, 502 (6th Cir. 2001). Documents attached to a defendant's "motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Id.
To recover under section 1983, Plaintiffs must plead and prove two elements: (1) they suffered the deprivation of a right secured by the Constitution or the law of the United States, and (2) the deprivation was caused by a person acting under color of state law. Wittstock v. Mark A. Van Sile, Inc., 330 F.3d 899, 902 (6th Cir. 2003). Damages are recoverable under section 1983 only where the plaintiff can "establish a defendant's personal responsibility for the claimed deprivation of a constitutional right." Diebitz v. Arreola, 83 F. Supp. 298, 304 (E.D. Wis. 1993); Ashcroft v. Iqbal,556 U.S. 662, 676 (2009) ()
The Contract Clause provides that: "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." U.S. Const. art. I, § 10, cl.1. While it appears the Contract Clause precludes any and all impairments of contract, the "prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula." Home Bldg. & Loan Ass'n v. Blaisdel, 290 U.S. 398, 428 (1934).
As a threshold matter, a Contract Clause claim "must be based on legislative acts because 'the prohibition [against the impairment of contracts] is aimed at the legislative power of the state, and not at the decisions of its courts, or the acts of administrative or executive boards or officers, or the doings of corporations or individuals.'" Welch v. Brown, 551 F. App'x 804, 808-09 (6th Cir. 2014) (quoting Ross v. Oregon, 227 U.S. 150, 162 (1913)). To determine if actions are an exercise of legislative power depends on "whether they contain matter which is properly to be regarded as legislative in its character and effect." Welch, 551 F. App'x at 809. While Defendant Coulter's issuance of an Order replacing the retiree health benefits with stipends in lieu of insurance payments may properly be considered a legislative act, none of the Retirement Commission Defendants' nor the MERC Defendants'complained of conduct can be considered legislative in nature. See Welch v. Brown, 551 F. App'x 804, 809-10 (6th Cir. Jan. 3, 2014) ().
The Retirement Commission is charged with the administration, management and operation of the City's Police and Firefighters Retirement System. Its purpose is to provide "retirement allowance and death benefits for policemen and firemen of the City of Lincoln Park." Plaint...
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