McMurtray v. Holladay

• Decision Date: 28 December 1993
• Docket Number: 93-7002,Nos. 92-7255,s. 92-7255
• Citation: 11 F.3d 499
• Parties: Katherine A. McMURTRAY, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees. Richard L. BUFORD, Plaintiff, v. J. Mac HOLLADAY, et al., Defendants. George A. GEORGE, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees. Ginger CROCE, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 499

11 F.3d 499

Katherine A. McMURTRAY, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees.

Richard L. BUFORD, Plaintiff, v. J. Mac HOLLADAY, et al., Defendants.

George A. GEORGE, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees.

Ginger CROCE, Plaintiff-Appellant, v. J. Mac HOLLADAY, Individually, et al., Defendants-Appellees.

Nos. 92-7255, 93-7002.

United States Court of Appeals Fifth Circuit.

Dec. 28, 1993.

Michael F. Myers, Whitman B. Johnson, Steen, Reynolds, Dalehite & Currie, Jackson, MS, for plaintiffs-appellants.

Mary Margaret Bowers, Asst. Atty. Gen., Mike Moore, Atty. Gen., Jackson, MS, for defendants-appellees in No. 92-7255 and 93-7002.

James F. Steel, Asst. Atty. Gen., Jackson, MS, for defendants-appellees in No. 93-7002.

Appeals from the United States District Court For the Southern District of Mississippi.

Before WISDOM, KING, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

This appeal is comprised of three separate lawsuits. Two of the suits were tried together in the same district court; the other was tried in the same district but by a different court. In each suit, a former Mississippi state employee sued several state officers alleging that his/her constitutionally protected property right in employment with the state was extinguished without due process of law. Both district courts granted the state officers summary judgment. Because we find no genuine issues of material fact exist, we affirm.

I. FACTS AND PROCEDURAL HISTORY

Under Mississippi law, state employees are categorized in one of two ways: "state service" employees or "nonstate service" employees. MISS.CODE ANN. Sec. 25-9-107(b), (c). State service employees are afforded the protections of the state personnel system. MISS.CODE ANN. Sec. 25-9-121. Accordingly, no state service employee in Mississippi:

may be dismissed or otherwise adversely affected as to compensation or employment status except for inefficiency or other good cause, and after written notice and hearing within the department, agency or institution as shall be specified in the rules and regulations of the state personnel board complying with due process of law.

MISS.CODE ANN. Sec. 25-9-127. A state service employee also "may appeal his dismissal or other action adversely affecting his employment status to the employee appeals board" and ultimately to the courts. MISS.CODE ANN. Sec. 25-9-131(1), (2). Nonstate service employees are not covered by the state personnel system. MISS.CODE ANN. Sec. 25-9-123.

The appellants, Katherine McMurtray, George George, and Ginger Croce, were employees with Mississippi's Department of Economic Development (DED) until October 1988. At that time, the appellants were terminated as part of a legislatively mandated reorganization of the DED. Specifically, in May 1988, the State of Mississippi enacted Senate Bill 2925 (the Act). ¹ The Act, effective July 1, 1988, abolished the state's Research and Development Center (R & D Center), reorganized its DED, and established the University Research Center (URC). ² A portion of the R & D Center's duties were transferred to the DED, and the remaining duties were transferred to the URC. The Act also transferred employees of the R & D Center to the DED and the URC in accordance with the transfer of duties.

To facilitate the reorganization of the DED, the Act provided in Section 28. (6):

For a period of one (1) year after the effective date of this act the personnel actions of the department shall be exempt from State Personnel Board Procedures in order to give the department flexibility in making an orderly, effective and timely transition to the mandated reorganization.

The appellee, J. Mac Holladay, the Executive Director of the DED, interpreted these sections of the Act to mean that, between July 1 1988, and July 1, 1989, state service employees with the DED lost the protection of the state personnel system, thereby enabling the DED to terminate its employees at will without providing written notice and a hearing. On October 26, 1988, Holladay therefore informed DED employees that "the property interest of employees of the Mississippi Department of Economic Development has been eliminated for a period of one year beginning July 1, 1988." In addition, he informed them that each position at the DED had been eliminated and replaced with entirely different positions. DED employees, he said, would have the "first opportunity" for reemployment at the restructured DED, and would be allowed to apply for a maximum of two positions by October 28, 1988.

McMurtray, George, and Croce applied for positions in the newly organized DED but were not hired. In November 1988, McMurtray filed suit in federal district court against Holladay and several other DED officials, in their individual capacities, alleging that she had a constitutionally protected property right in employment with the DED which Holladay extinguished without due process of law. Holladay filed a motion for summary judgment, which the court granted in March 1992. George and Croce, meanwhile, also filed suit ³ against Holladay, et al., in April 1989, alleging that they, too, had a constitutionally protected property right in employment with the DED which Holladay extinguished without due process of law. Holladay again filed a motion for summary judgment, which the district granted in February 1992. See Buford v. Holladay, 791 F.Supp. 635 (S.D.Miss.1992). ⁴ McMurtray, George, and Croce appeal together.

II. DISCUSSION

A. Standard of Review

We review a summary judgment de novo, sitting as if we were the district court itself. D.E.W., Inc. v. Local 93, Laborers' Int'l. Union, 957 F.2d 196 (5th Cir.1992). Therefore, summary judgement is appropriate if there is "no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c).

B. Status of the Appellants' Property Interests

The appellants' first contention is that Holladay's summary termination of them was a violation of their due process rights under the United States Constitution because Section 28. (6) of the Act did not extinguish their property interest in employment with the DED. The United States Constitution is not the source of property interests. Rather, it merely provides procedural protections against the invasion of an acquired property interest. U.S. CONST. amend. XIV, Sec. 1; Board of Regents v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 2708, 33 L.Ed.2d 548 (1972). Property interests "are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law." Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538, 105 S.Ct. 1487, 1491, 84 L.Ed.2d 494 (1985); see also Schaper v. City of Huntsville, 813 F.2d 709, 713 (5th Cir.1987). Once bestowed, property interests may not be extinguished by the state without adherence to minimal due process standards. Boucvalt v. Board of Comm'rs, 798 F.2d 722, 728 (5th Cir.1986). But the legislature, which creates the property interest in the first place, may also take it away: "The procedural component of the Due Process Clause does not 'impose a constitutional limitation on the power of Congress to make substantive changes in the law of entitlement to public benefits.' " Atkins v. Parker, 472 U.S. 115, 129, 105 S.Ct. 2520, 2529, 86 L.Ed.2d 81 (1985) (quoting Richardson v. Belcher, 404 U.S. 78, 81, 92 S.Ct. 254, 257, 30 L.Ed.2d 231 (1971)); see also Gattis v. Gravett, 806 F.2d 778, 781 (8th Cir.1986) ("the legislature which creates a property interest may rescind it, whether the legislative body is federal or state and whether the interest is an entitlement to economic benefits, a statutory cause of action or civil service job protections").

In this case, the appellants and Holladay agree that the appellants had a constitutionally protected property interest in their employment with the DED, at least through June 30, 1988. The dispute arises over whether the Mississippi Legislature abrogated that property interest with enactment of Section 28. (6) of the Act. The appellants stress that their property interest arose out of their state service status, MISS.CODE ANN. Sec. 25-9-107(b), and the concomitant procedural protections of the state personnel system. MISS.CODE ANN. Secs. 25-9-121, 25-9-127. Therefore, the appellants argue, if the Legislature intended to extinguish their property interests, it would have to explicitly abolish the state service status of all employees at the DED. Then, and only then, could the DED terminate its employees at will, without adhering to procedural due process as required by Sec. 27-9-127.

As for Section 28. (6), which afforded the DED a one year exemption from "State Personnel Board Procedures," the appellants insist that this provision does not explicitly abolish, or even affect, their state service status. Instead, they claim that the provision goes no further than it says, that the DED is exempt from the State Personnel Board Procedures. Furthermore, they argue, Section 1. (3)(d) permitted the DED, in its reorganization, to reclassify "positions" within the DED but subject to an important limitation: "the approval of the State Personnel Board." Holladay's, and both the district courts', interpretation of Section 28. (6) is totally inconsistent with Section 1. (3)(d), they claim. While Section 28. (6) fails to explicitly address the employees' state service status, Section 1. (3)(d) places their "positions" squarely within the control of the State Personnel Board and not the DED. Thus, they conclude, the Act never extinguished their property interests.

The appellants' contention is not meritless. But it begs an important question: what exactly does a department's exemption from such procedures ultimately mean? Our reading of the relevant statutes tells us that, in fact, the Legislature...