McVarish v. Mid-Nebraska Community Mental Health Center, MID-NEBRASKA

• Decision Date: 27 December 1982
• Docket Number: MID-NEBRASKA,No. 82-1282,82-1282
• Citation: 696 F.2d 69
• Parties: Don McVARISH, Appellant, v.COMMUNITY MENTAL HEALTH CENTER (M.N.C.M.H.C.); Rita Parle, individually and as director of M.N.C.M.H.C.; Dr. William Landis, Chairman of the Board; Ed Scott, Vice Chairman; Mary Stalker, Secretary; Joseph Higgins, Treasurer; Henry Bonsall, Trustee; Irene Abernathy, Trustee; Richard Huber, Trustee; Michael Gloor, Trustee; Paul Kemling, Trustee; Gerald Hruza, Trustee; Arvid Stranberg, Trustee; Clara Krolikowski, Trustee; Dale Mulligan, Trustee; and Wilbur Fuss, Trustee; Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 69

696 F.2d 69

Don McVARISH, Appellant, v. MID-NEBRASKA COMMUNITY MENTAL HEALTH CENTER (M.N.C.M.H.C.);

Rita Parle, individually and as director of M.N.C.M.H.C.;

Dr. William Landis, Chairman of the Board; Ed Scott, Vice

Chairman; Mary Stalker, Secretary; Joseph Higgins,

Treasurer; Henry Bonsall, Trustee; Irene Abernathy,

Trustee; Richard Huber, Trustee; Michael Gloor, Trustee;

Paul Kemling, Trustee; Gerald Hruza, Trustee; Arvid

Stranberg, Trustee; Clara Krolikowski, Trustee; Dale

Mulligan, Trustee; and Wilbur Fuss, Trustee; Appellees.

No. 82-1282.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 9, 1982.

Decided Dec. 27, 1982.

Walter M. Calinger, of Wall, Wintroub & Weiner, Omaha, Neb., for appellant.

James D. Livingston, of Cunningham, Blackburn, VonSeggern, Livingston, Francis & Riley, Grand Island, Neb., for appellees.

Before LAY, Chief Judge, HENLEY, Senior Circuit Judge, and ARNOLD, Circuit Judge.

ARNOLD, Circuit Judge.

Don McVarish filed suit alleging that the Mid-Nebraska Community Mental Health Center fired him in violation of his due process rights under the Fifth and Fourteenth amendments. The District Court held that the action of the Center, plaintiff's employer, was not state action and dismissed on the pleadings for lack of jurisdiction. We hold that there was state action and that McVarish properly alleged federal jurisdiction. We reverse and remand for further proceedings.

In 1963 Congress passed the Community Mental Health Centers Act (CMHCA), 42 U.S.C. Secs. 2681 et seq. (1963) (repealed 1981). It authorized funds for the development of public and other nonprofit community mental health centers. States wishing to take advantage of these funds had to devise programs for the administration of mental health care programs. 42 U.S.C. Sec. 2684 (1963) (repealed 1981). The Nebraska Comprehensive Community Mental Health Services Act (CCMHSA), Neb.Rev.Stat. Secs. 71-5001 et seq. (1976 & Supps.1980, 1981), establishes such a state program. The defendant Center came into being pursuant to Nebraska's Interlocal Cooperation Act, Neb.Rev.Stat. Secs. 23-2201 et seq. (1976), and the CCMHSA, as part of Nebraska's plan for implementing community mental health services envisioned by the CMHCA. The Interlocal Cooperation Act enables local government units to make agreements for providing government services jointly.

The defendants in this case are the Center, its director, and its Board of Trustees. The Center employed McVarish as a program evaluator from March 1, 1980, until February 9, 1981, when he was discharged. McVarish contends that since he was employed for longer than six months he had attained "permanent status" and was entitled to a hearing before the Board prior to termination under defendants' "Administrative and Personnel Policies" manual.

The Fourteenth Amendment provides in part that "[n]o state shall ... deprive any person of life, liberty, or property without due process of law." It "erects no shield against merely private conduct, however discriminatory or wrongful." Blum v. Yaretsky, --- U.S. ----, 102 S.Ct. 2777, 2785, 73 L.Ed.2d 534 (1982), quoting Shelley v. Kraemer, 334 U.S. 1, 13, 68 S.Ct. 836, 842, 92 L.Ed. 1161 (1948). Where, however, there is state action, a constitutional question arises, and federal jurisdiction may be asserted. Deciding whether there is state action in a particular case is not always easy. "Only by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance." Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961). State action is not necessarily present merely because an entity is funded, even wholly funded, by the state, Blum v. Yaretsky, supra 102 S.Ct. at 2789; Rendell-Baker v. Kohn, --- U.S. ----, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982), or because it is subject to state regulation, Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974). State action exists, however, when there is so close a nexus between the state and the challenged act of an ostensibly private organization that the state can be said to be responsible. Blum v. Yaretsky, supra, 102 S.Ct. at 2786.

The Center and its Board acted as an arm of twelve counties, which are creatures of the State. The Center was created under authority granted by the CCMHSA and the Interlocal Cooperation Act. The Interlocal Cooperation Act enables counties to cooperate to provide services and facilities to their citizens. The CCMHSA provides that "[a]ny combination of counties operating under the provisions of the Interlocal...