Clark v. Adams

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 08a0684n.06
Filed: November 6, 2008

Case No. 07-5539

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

ELIZABETH A. CLARK, et al., )
)
Appellants, ) ON APPEAL FROM THE
) EASTERN DISTRICT OF
v. ) KENTUCKY
)
KATHY ADAMS, et al., )
)
Appellees. )
_______________________________________ )

BEFORE: BATCHELDER and DAUGHTREY, Circuit Judges; ZATKOFF, District Judge.*

ALICE M. BATCHELDER, Circuit Judge. At issue in this appeal is whether the district

court’s judgment staying federal court proceedings pending the outcome of the appellants’ state court

proceedings is either a final appealable order or an interlocutory order from which we have

jurisdiction to hear an immediate appeal. Because it is neither, we have no jurisdiction to decide the

present appeal and, therefore, DISMISS this appeal for lack of appellate jurisdiction.

I.

Plaintiff-appellant Elizabeth Clark1 is the owner and director of Copper Care, Inc., a

Kentucky corporation (formerly) licensed “to operate as a foster-care agency, approve foster homes,

*
Honorable Lawrence P. Zatkoff, United States District Judge for the Eastern District of M ichigan, sitting by
designation.

1
There are actually four plaintiffs: Ms. Clark, Copper Care Inc., Gladys Jenkins, and Donald Herrin. Ms.
Jenkins and Mr. Herrin are foster parents associated with M s. Clark and Copper Care. For ease of reference, and because
Ms. Clark is the true plaintiff in this action, we refer to only Ms. Clark as the plaintiff-appellant throughout this opinion.
place children in approved locations, and oversee and assist in adoptions.” Three Kentucky state

agencies oversee these services — the Kentucky Cabinet for Health and Family Services, the

Southeastern Kentucky Division of Regulated Childcare, and the Kentucky Office of the Inspector

General — and the 24 defendants-appellees are all employees of these three agencies.

After an investigation culminated in an “emergency action” to suspend Copper Care’s

license, an administrative law judge (ALJ) upheld that action on May 24, 2005. On June 29, 2006

— following a hearing — that same ALJ upheld the agencies’ recommendation to revoke Copper

Care’s license permanently. On October 6, 2006, the Kentucky Cabinet for Health and Family

Services approved the ALJ’s recommendation and permanently revoked Copper Care’s license.

Copper Care appealed to the Madison County (Kentucky) Circuit Court on November 1, 2006.

Meanwhile, on February 7, 2006 — while the state’s administrative proceedings were still

ongoing — Ms. Clark filed the present lawsuit in federal court, claiming that the defendants had

discriminated against her because she is black. Ms. Clark asserted seven specific causes of action:

1. Unlawful Search: i.e., certain defendants “authorized, directly
participated in[,] approved, or failed to curtail the unreasonable
searches and seizures” of Ms. Clark’s Copper Care offices, all of
which was in violation of the Fourth Amendment.

2. Selective Enforcement: i.e., the defendants selectively enforced
Kentucky Cabinet for Health and Family Services regulations, in
violation of the Fourteenth Amendment, by “manufacturing or
creating alleged violations of [health and safety] regulations that were
not enforced when committed by non African-Americans and/or
entities that ha[d] not filed complaints against Defendants.”

3. Retaliation: i.e., the defendants retaliated against Ms. Clark, in
violation of the First and Fourteenth Amendments, by “creating
violations of regulations, conducting unreasonable searches and
seizures, [and] suspending and enforcing an emergency suspension of
[her] license.” The retaliation was due to her (1) refusing to assist the

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 defendants in their attempt to obtain federal funds by fraud, by
“placing facts on Copper Care’s letterhead that did not occur,” and (2)
“successful[ly] litigati[ng] [against them] before [] the United States
Department of Human Services, Office of Civil Rights.”

4. Fourteenth Amendment Violation: i.e., “All Defendants’ actions [as
alleged in the previous paragraphs] are in violation of the Fourteenth
Amendment to the United States Constitution.”

5. Discrimination: i.e., the defendants interfered with Ms. Clark’s “right
to enforce contracts and to petition for redress of grievance” on the
basis of her race, in violation of 42 U.S.C. § 1981.

6. Conspiracy: i.e., the defendants conspired to deny Ms. Clark “the
equal protection of the laws . . . and . . . and of contractual rights” on
the basis of her race, in violation of 42 U.S.C. § 1985(3).

7. Neglect: i.e., certain defendants, who “knew of the wrongs conspired
to be done in violation of section 1981, 1983, and 1985,” and who
had “the power to prevent . . . the commission of” those wrongs,
“neglected and refused to do so, in violation of 42 U.S.C. [§] 1986.”

Based on these seven causes of action, Ms. Clark sought a broad declaratory judgment, four separate

injunctions, and $10 million in damages, asking, among other things, that the court:

A. Declare the defendants’ actions unconstitutional.
B. Enjoin defendants from “interfering with the license of Copper Care
or otherwise suspending the operation of Copper Care.”
C. Enjoin defendants from issuing noncompliance letters “without
specifically stating the action that is in noncompliance and without
stating specifically what action will bring Plaintiffs into compliance.”
D. Enjoin the defendants “from taking further retaliatory measures
against Plaintiffs in any form or fashion.”
E. Enjoin the defendants “from proceeding further in the ‘emergency
license suspension’ proceeding in State Court.”
F. Award five million dollars in compensatory damages.
G. Award five million dollars in punitive damages.
H. Award costs and attorney’s fees.

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 I. Award “any and all other appropriate relief.”

The defendants moved to dismiss the complaint, arguing Eleventh Amendment immunity from

damages claims for official-capacity conduct, expiration of the statute of limitations for many of the

claims, and Younger abstention2 with regard to the ongoing license-suspension proceeding. The

defendants also sought dismissal under Fed. R. Civ. P. 12(b)(6), but the district court rejected that

argument. Similarly, the defendants argued that they are entitled to qualified immunity, but the

district court deferred ruling on that argument and it is not presently before us.

On March 29, 2007, the district court granted the defendants’ motion in part — dismissing

some of the claims and holding other claims in abeyance. The court dismissed all damages claims

against the defendants in their official capacities, on the basis of Eleventh Amendment immunity.

The court also dismissed all claims based on events alleged to have occurred prior to February 7,

2005, holding that the statute of limitations had expired on those claims.3 After these dismissals, the

court was left with Ms. Clark’s requests for: (1) declaratory judgment; (2) the four injunctions; (3)

damages from the defendants in their individual capacities for events alleged to have occurred after

February 7, 2005; and (4) costs and attorney fees.

The court then embarked on a somewhat lengthy discussion of Younger abstention, which

concluded with the following disposition:

Having determined that this case is an appropriate one for Younger abstention, this
Court then has the discretion to dismiss the case without prejudice or hold the case

2
“Younger abstention: A federal court’s decision not to interfere with an ongoing state criminal [or
administrative] proceeding by issuing an injunction or granting declaratory relief, unless the prosecution has been brought
in bad faith or merely as harassment. Also termed equitable-restraint doctrine.” Black’s Law Dictionary (8th ed. 2004),
abstention (citing Younger v. Harris, 401 U.S. 37 (1971)).

3
The court identified three surviving events: “(1) interview of foster children, (2) attempted access to Copper
Care records in April 2005, and (3) revocation of Copper Care’s license following a suspension order.”

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 in abeyance pending the outcome of the state proceedings. Because the statute of
limitations has now run on Plaintiffs’ claims regarding licensure, this Court will stay
these proceedings rather than dismiss them without prejudice. If there are any claims
remaining following a final decision in the state courts, Plaintiffs will be able to raise
them at that time based on the state court record.

It is clear that two of the requested remedies (set out above as “B” and “E”) could not survive the

state court proceedings, but it is equally clear that the others might, particularly the damages claims

against the defendants in their individual capacities (and their corresponding qualified immunity

arguments). So, the district court held that after the state court had reached a final decision on the

administrative license revocation, it would consider — in light of the state court record — Ms.

Clark’s four remaining requests, for: (1) declaratory judgment; (2) two injunctions; (3) damages

from the individual defendants for the post-February 7, 2005 allegations; and (4) costs and attorney

fees.

Ms. Clark appealed and the defendants moved this court to dismiss, arguing that the district

court’s order was not final and, hence, this court had no appellate jurisdiction. A motions panel

denied the motion, finding that “[t]he abstention-based stay issued by the district court puts the

plaintiffs ‘effectively out of court,’ and the order is appealable as a final order.” Clark v. Adams, No.

07-5539, Order (6th Cir. Sept. 14, 2007) (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 10 (1983), Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 715 n.2

(1962), and Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 713 (1996)). But, the present (merits)

panel reconsidered the issue of our appellate jurisdiction and, at oral argument, we instructed the

parties to submit additional briefing on this issue. Both sides submitted letter briefs.

II.

“The courts of appeals . . . shall have jurisdiction of appeals from all final decisions of the

5
district courts of the United States.” 28 U.S.C. § 1291 (emphasis added). “A final decision is one

which ends the litigation on the merits and leaves the court nothing to do but execute the judgment.

. . . Conversely, a stay of proceedings is generally considered interlocutory.” M&C Corp. v. Erwin

Behr GmbH & Co., 143 F.3d 1033, 1036 (6th Cir. 1998). Moreover, “[w]hen an action presents

more than one claim for relief . . . the court may direct entry of a final judgment as to one or more,

but fewer than all, claims . . . only if the court expressly determines that there is no just reason for

delay.” Fed. R. Civ. P. 54(b). “Otherwise, any order . . . that adjudicates fewer than all the claims

. . . does not end the action as to any of the claims . . . and may be revised at any time before the

entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” Id.

In the present case, the district court clearly did not “end[] the litigation on the merits and

leave[] . . . nothing to do but execute the judgment,” M&C Corp., 143 F.3d at 1036, but rather, it

stayed or continued its proceedings until the state had entered a final decision on Ms. Clark’s

administrative appeal of her license-revocation. The district court specified:

[T]his Court will stay these proceedings rather than dismiss them without prejudice.
If there are any claims remaining following a final decision in the state courts,
Plaintiffs will be able to raise them at that time based on the state court record.
Furthermore:
Defendants’ motion to abstain from further proceedings in this matter pursuant to
Younger v. Harris is GRANTED. These proceedings are STAYED and will be held
in abeyance pending the outcome of Plaintiffs’ state court proceedings regarding
licensure[.]
Such a stay “is generally considered interlocutory.” See M&C Corp., 143 F.3d at 1036.

In the “Statement of the Basis for Subject Matter Jurisdiction” portion of her appellate brief,

Ms. Clark asserted: “Pursuant to Title 28 U.S.C. § 1291, this Court has jurisdiction to hear this

appeal from a final order of the District Court granting Defendants’ Motion to Stay Proceedings.”

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Apt.’s Br. at 1 (emphasis added). As Ms. Clark did not view this as an interlocutory appeal, she did

not offer any theory that would provide jurisdiction for us to hear it as an interlocutory appeal.

While this appeal was pending before this court, the defendant-appellees moved to dismiss

it for lack of appellate jurisdiction, arguing that “[t]his is an interlocutory appeal that has not been

certified pursuant to 28 U.S.C. § 1292(b) or Fed. R. Civ. P. 54(b).” In her response to that motion,

Ms. Clark insisted that the order was indeed “final” because “the district court ha[d] nothing else to

consider until the completion of the state proceedings.” Alternatively, she argued that this was a

proper interlocutory appeal because it presented “a controlling question of law,” that being a

“determination that [she] was the victim of racial discrimination.” Ms. Clark theorized that it was

indeed a question of law, despite appearances to the contrary, inasmuch as “the particular facts in

this case have not been previously addressed by the Sixth Circuit.” In their reply motion, the

defendants cited Summers v. Leis, 368 F.3d 881, 889 (6th Cir. 2004), in which we explained:

The district court’s failure to dismiss the entire action pursuant to Younger does not
qualify as a final decision under 28 U.S.C. § 1291, nor does it fit within the collateral
order exception to that statute. Additionally, the district court’s decision does not
qualify as an interlocutory order as defined in 28 U.S.C. § 1292.

The motions panel denied the defendant-appellees’ motion, but in so doing did not apply Ms.

Clark’s reasoning. Instead, the motions panel relied on Moses H. Cone, 460 U.S. at 10, Idlewild, 370

U.S. at 715 n.2, and Quackenbush, 517 U.S. at 713, for the proposition that “an order that stays a

federal action in deference to pending state court proceedings is appealable if the plaintiff is

‘effectively out of court.’” The motions panel then concluded that “[t]he abstention-based stay

issued by the district court puts the plaintiffs ‘effectively out of court,’ and the order is appealable

as a final order.” That decision, however, is clearly incorrect, both legally and factually.

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 Legally, the motion panel’s conclusion is incorrect because Moses H. Cone, Idlewild, and

Quackenbush all involve abstention-as-deference, whereas the present case involves abstention-as-

continuance. See, e.g., Growe v. Emison, 507 U.S. 25, 32 n.1 (1993) (explaining that courts should

use the word “deference,” rather than “abstention,” when they actually mean deference). Thus, when

considered in the present circumstances, their reasoning and holdings are inapposite.

In Moses H. Cone, 460 U.S. at 8, the plaintiffs — invoking diversity jurisdiction — filed suit

in federal court to compel arbitration of a contract dispute, but the district court stayed the action

under Colorado River abstention,4 pending the completion of a state-court action in which the

defendants had already filed for a declaratory judgment on that same contract dispute. The Supreme

Court, relying on Idlewild, 370 U.S. at 715, held that the abstention-based stay order was appealable

under § 1291 because it put the litigants “effectively out of court.” The Court explained:

A district court stay pursuant to Pullman abstention is entered with the expectation
that the federal litigation will resume in the event that the plaintiff does not obtain
relief in state court on state-law grounds. Here, by contrast [i.e., under Colorado
River abstention and the circumstances of this case], the District Court predicated its
stay order on its conclusion that the federal and state actions involved the identical
issue of arbitrability of the claims of Mercury Construction Corp. against the Moses
H. Cone Memorial Hospital. That issue of arbitrability was the only substantive issue
present in the federal suit. Hence, a stay of the federal suit pending resolution of the
state suit meant that there would be no further litigation in the federal forum; the state
court’s judgment on the issue would be res judicata. Thus, here, even more surely
than in Idlewild, Mercury was effectively out of court. Hence, as the Court of
Appeals held, this stay order amounts to a dismissal of the suit.

Moses H. Cone, 460 U.S. at 10 (footnotes, citations, and quotation marks omitted). To recap: the

stay was final (and appealable) because “this stay amounts to a dismissal of the suit,” because “the

4
“Colorado River abstention. A federal court’s decision to abstain while relevant and parallel state-court
proceedings are underway.” Black’s Law Dictionary (8th ed. 2004), abstention (citing Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800 (1976)).

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state court’s judgment on the [only substantive issue in the federal suit] would be res judicata.” That

is surely not the situation in the present case, in which there are numerous issues and few, if any, will

be subject to res judicata from the state court’s decision on administrative revocation. The Moses

H. Cone Court recognized the uniqueness of its situation and reiterated the premise of Idlewild:

Of course . . . Idlewild does not disturb the usual rule that a stay is not ordinarily a
final decision for purposes of § 1291, since most stays do not put the plaintiff
‘effectively out of court.’ Idlewild’s reasoning is limited to cases where (under
Colorado River, abstention, or a closely similar doctrine) the object of the stay is to
require all or an essential part of the federal suit to be litigated in a state forum.

Id. at 10 n.11 (citation omitted). This is the part of Moses H. Cone (and Idlewild) that is pertinent

to the particular circumstances of the present case, and the motions-panel decision is contrary to it.

In Quackenbush, 517 U.S. at 709, the California State Insurance Commissioner sued Allstate

Insurance Company in state court, seeking contract and tort damages. Allstate removed the action

to federal court on diversity grounds and moved to compel arbitration under the Federal Arbitration

Act, 9 U.S.C. § 1, et seq. The Commissioner sought remand to state court on the basis of Burford

abstention,5 arguing that resolution of the case might interfere with California’s regulation of its

insurance industry. “The District Court concluded this case was an appropriate one for the exercise

of Burford abstention [and] did not stay its hand pending the California courts’ resolution of the

setoff issue, but instead remanded the entire case to state court. The District Court entered this

remand order without ruling on Allstate’s motion to compel arbitration.” Id. at 710.

On appeal, the Supreme Court relied on Moses H. Cone and Idlewild to conclude that the

abstention order was final and appealable. Id. at 713. The Quackenbush Court explained that the

5
“Burford abstention: A federal court’s refusal to review a state court’s decision in cases involving a complex
regulatory scheme and sensitive areas of state concern.” Black’s Law Dictionary (8th ed. 2004), abstention (citing
Burford v. Sun Oil Co., 319 U.S. 315 (1943)).

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district court’s decision was “in all relevant respects indistinguishable from the stay order we found

to be appealable in Moses H. Cone,” reasoning:

No less than an order staying a federal court action pending adjudication of the
dispute in state court, it puts the litigants in this case ‘effectively out of court,’and its
effect is precisely to surrender jurisdiction of a federal suit to a state court. Indeed,
the remand order is clearly more ‘final’ than a stay order in this sense. When a
district court remands a case to a state court, the district court disassociates itself
from the case entirely, retaining nothing of the matter on the federal court’s docket.

Id. at 714 (citations and certain quotation marks omitted). To recap: remand puts the litigants out

of federal court entirely. That is surely not the situation in the present case, in which there are clearly

issues that remain to be decided by the federal court after resolution of the state court case.

So, the motions-panel decision is legally insupportable, inasmuch as its cited authorities do

not support its proposition under these circumstances. Furthermore, it is factually incorrect, as the

stay issued by the district court does not put the plaintiffs “effectively out of court.” More to the

point, the district court’s stay order is not final and we have no jurisdiction to review it. The only

question remaining is the continuing effect of the (incorrect) motions-panel decision.

The law in this circuit is clear that “that the law of the case doctrine does not foreclose

reconsideration of subject-matter jurisdiction.” Amen v. Dearborn, 718 F.2d 789, 794 (6th Cir.

1983); Edwards v. UPS, Inc., 99 F. App’x 658, 660 (6th Cir. 2004). Indeed, every circuit to consider

this issue has ruled the same way. See, e.g., Council Tree Commc’ns, Inc. v. F.C.C., 503 F.3d 284,

292 (3d Cir. 2007) (“the law of the case doctrine does not bar a merits panel from revisiting a

motions panel’s assumption of subject matter jurisdiction”); Crystal Clear Commc’ns, Inc. v. Sw.

Bell Tel. Co., 415 F.3d 1171, 1176 n. 3 (10th Cir. 2005); United States v. Arevalo, 408 F.3d 1233,

1237 (9th Cir. 2005) (“a merits panel should reconsider jurisdictional issues even if previously

10
decided by a motions panel”); Sammie Bonner Constr. Co. v. W. Star Trucks Sales, Inc., 330 F.3d

1308, 1311 (11th Cir. 2003); CNF Constr., Inc. v. Donohoe Constr. Co., 57 F.3d 395, 397 n.1 (4th

Cir. 1995) (citing cases for the proposition that “the doctrine of ‘law of the case’ does not prevent

this Court from revisiting a prior ruling of a motion panel on the Court’s jurisdiction”); Ass’n of Inv.

Brokers v. SEC, 676 F.2d 857, 863 (D.C. Cir. 1982); Green v. Dept. of Comm., 618 F.2d 836, 839

(D.C. Cir. 1980) (“The earlier action of the motions panel does not free this court from the

independent duty to decide whether we have jurisdiction.”).

Thus, we are not bound by the motions panel’s determination and, based on an independent

assessment of jurisdiction, must conclude that the order from which Ms. Clark appealed is not final

and we have no jurisdiction to hear this appeal.

III.

For the foregoing reasons, we DISMISS this appeal for lack of jurisdiction.

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