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Austin v. Marion County Housing Authority

United States District Court, S.D. Illinois

June 12, 2017




         Before the Court is defendants' motion to dismiss plaintiff's wrongful termination and defamation complaint pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(1) (Doc. 7). Based on the following, defendant's motion to dismiss is GRANTED; all remaining state-law claims are DISMISSED for lack of subject matter jurisdiction.

         I. BACKGROUND

         In January 2017, plaintiff Allison Austin (“Austin”) filed a four-count complaint naming defendants and alleging various civil-rights and common law violations (Doc. 1). Austin alleged in January 2015, she entered into an employment contract (“Agreement”) with defendants where it was agreed she would serve a three-year term as Executive Director of the Marion County Housing Authority (Id. at 3; Doc. 16). In December 2016, defendants advised she was being terminated “for cause” without providing notice or allegations of misconduct (Doc. 3.).

         Austin claimed to remain in compliance with stipulations governing the Agreement, and did not act in any manner construed as a “grave misconduct, ” which-according to the Agreement (Doc. 16)-would solely justify termination “for cause” (Id. at 4). Moreover, Austin contended defendants ignored repeated requests for an explanation about being fired (Id.), and further, damaged her reputation by disseminating news of her termination through local media outlets (Id. at 6, 9). She asserted claims of deprivation of property interest and liberty interest without due process under the Fourteenth Amendment, breach of contract, and defamation. For relief she requested damages and costs (Doc. 1).

         In response, defendants filed a motion to dismiss for failure to state a claim and lack of subject matter jurisdiction over common law claims-assuming deprivation of property and liberty interest counts are initially dismissed (Doc. 7). Defendants argue, inter alia, Austin has no protectable property interest in employment because said interest was created and defined by terms of the Agreement (Id. at 2-3); and, no protectable liberty interest based on reputational loss due to her failure to demonstrate defendants caused her alleged defamation injury (Doc. 14).

         In retort, Austin argues, among other things, state law governs whether she maintains a protectable property interest (Doc. 13 at 3); and, in Illinois, public employees who are terminated “for cause” may not be terminated without due process (Id. at 4). Furthermore, she declares sufficient pleading of an occupational liberty claim due to defendant's alleged false and defamatory public statements (Id. at 8). In reply, defendants contend the occupational liberty claim must fail, as no legal basis to assert a violation of liberty interests exists under the facts of this case (Doc. 14).


         A. Fed.R.Civ.P. 12(b)(6)

         Rule 12(b)(6) permits a motion to dismiss for failure to state a claim upon which relief can be granted. Hallinan v. Fraternal Order of Police Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). The Supreme Court explained in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), that Rule 12(6)(b) dismissal is warranted if the complaint fails to set forth “enough facts to state a claim to relief that is plausible on its face.” Notice pleading remains all that is required in a complaint, even though federal pleading standards were overhauled by Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009). “A plaintiff still must provide only ‘enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and, through his allegations, show that it is plausible, rather than merely speculative, that he is entitled to relief.' ” Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008) (citation omitted).

         The Seventh Circuit offers further instruction on what a civil action must allege to endure 12(b)(6) dismissal. In Pugh v. Tribune Co., 521 F.3d 686, 699 (7th Cir. 2008), the Court reiterated the standard: “surviving a Rule 12(b)(6) motion requires more than labels and conclusions”; the complaint's allegations must “raise a right to relief above the speculative level.” A plaintiff's claim “must be plausible on its face, ” that is, “the complaint must establish a non-negligible probability that the claim is valid.” Smith v. Med. Benefit Admin. Grp., Inc., 639 F.3d 277, 281 (7th Cir. 2011).

         B. Fed.R.Civ.P. 12(b)(1)

         Rule 12(b)(1) requires dismissal if the Court lacks subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). When a defendant makes a 12(b)(1) challenge, the plaintiff bears the burden of establishing jurisdiction. See United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003), overruled on other grounds by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012) (en banc) (burden of proof 12(b)(1) issue is on party asserting jurisdiction). “[A] district court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff.” St. John's United Church of Christ v. City of Chi., 502 F.3d 616, 625 (7th Cir. 2007). Yet, a court may receive and weigh evidence outside allegations in the complaint to determine if it has subject matter over the case. See id.

         III. ANALYSIS

         Fundamentally, a question of law determines whether specific employment actions affecting public employees allude to constitutionally protected property interests. See Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 904 (7th Cir. 2011). “The Fourteenth Amendment's Due Process Clause does not itself create any property interests. It protects property interests that ‘are created and . . . defined by existing rules or understandings that stem from an independent source such as state law.' ” Dibble v. Quinn, 793 F.3d 803, 808 (7th Cir. 2015) (quoting Board of Regents v. Roth, 408 U.S. 564, 577 (1972)). An employee must present-not just an optimistic belief-but a legitimate, legal, and factual entitlement to employment to establish a discernible property right. See Moore v. Muncie Police and Fire Merit Comm'n, 312 F.3d 322, 326-27 (7th Cir. 2002) (stating employee has no property interest in prospective personnel matters).

         A. The “Agreement”

         Austin's suit derives from an Agreement entered into with defendants where it was established she would serve a 3-year term-from January 5, 2015 to January 5, 2018-as the Executive Director of the Housing Authority of the County of ...

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