February 14, 2017
from the United States District Court for the Southern
District of Indiana, Indianapolis Division. No.
l:13-cv-01660-TWP-TAB - Tanya Walton Pratt, Judge.
Rovner, Williams, and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
appeal presents a classic test of procedural due process. As
the case comes to us, we must assume that a county board
revoked a man's professional license without giving him
prior notice or an opportunity to be heard.
case arises from Brown County, Indiana, where the rolling
hills and brilliant fall foliage draw over a million visitors
each year, and where the natural beauty has been the subject
of countless paintings, including those of T.C. Steele, a
noted American Impressionist. Rural Brown County is home to
just about 15, 000 residents, or fewer than fifty people per
square mile. With such a sparse population, most families and
businesses depend on septic systems to dispose of wastewater.
Plaintiff John Simpson installed and repaired septic systems
in the county until June 14, 2013, when his license to do so
was revoked by the Brown County Board of Health.
then brought this action under 42 U.S.C. § 1983 against
Brown County, the Brown County Health Department, and the
Brown County Board of Health (collectively, "the
County"). Simpson alleged he was deprived of property
without due process of law and sought compensatory damages
for his loss of income. After prolonged procedural fencing
over the pleadings, the district court dismissed
Simpson's operative complaint under Federal Rule of Civil
Procedure 12(b)(6). The district court's theory was that
post-deprivation remedies under state law, such as common-law
judicial review, satisfied the Fourteenth Amendment's due
process requirement and that Simpson had not availed himself
of such remedies. Simpson appeals that decision. Taking
Simpson's allegations as true, we hold (1) that Simpson
has plausibly alleged that he was denied the pre-deprivation
notice and hearing he was due; and (2) that even if the
evidence ultimately shows the County had some basis for
summary action, the County has not shown there is an adequate
post-deprivation remedy under state law, whether in the form
of common-law judicial review or anything other. We reverse
and remand for further proceedings.
Factual and Procedural Background
John Simpson owns Monroe, LLC, a septic installation company
based in Brown County. Simpson previously held a license to
install and repair septic systems. He was told his license
was revoked in a letter sent by County Health Officer Paul
Page on June 14, 2013.
weeks earlier, on May 31, 2013, Page had sent Simpson a
corrective action letter demanding that he immediately repair
the septic system on Simpson's mother's property. In
that letter, Page threatened that if Simpson did not make the
necessary repairs to the septic system, Page would request
legal action through the county prosecutor's office and
"may request an executive meeting of the Health Board to
recommend that [Simpson's] license to install septics be
rescinded." Without apparent further process or an
opportunity for Simpson to be heard, Page followed through on
that threat with his June 14 letter: "Based on the
findings our Health Board members approved the removal of
your name from our list of approved septic contractors."
The letter did not inform Simpson of any law or regulation he
had violated, and it did not identify any opportunities for
administrative or judicial review.
time, septic installation and repair licenses were governed
by a county ordinance. The ordinance provided in section 501:
"Any person engaged in ... the installation or repair of
sewage disposal systems within Brown County shall submit an
application to the Health Officer to have his name placed on
the County Register." The procedures for removal of a
septic installer from the register were described in section
503. That section broadly delegated the power of license
revocation to the Health Officer, who could remove any person
or firm that had demonstrated "inability or
unwillingness to comply with these rules and
requirements." The affected party could re-apply for a
license after one year, and if the Health Officer still
deemed him unable or unwilling to "comply, " then
the installer might be removed from the register permanently.
brought this suit in October 2013 alleging that his removal
from the list of licensed septic installers deprived him of a
protected property interest without due process of law. After
two rounds of amendments to the complaint, the district court
granted the County's Rule 12(b)(6) motion to dismiss and
dismissed the case with prejudice in 2014. Relying on the
balancing test from Mathews v. Eldridge, 424 U.S.
319 (1976), the district court held that Simpson was not
entitled to pre-deprivation remedies because the County's
interest in protecting public health outweighed "the
potential value of affording [Simpson] additional procedures
prior to revocation." Simpson v. Brown County,
No. l:13-cv-01660-TWP-TAB, 2014WL 4840768, at *3 (S.D. Ind.
Sept. 29, 2014). The court had erroneously assumed that
Simpson had an adequate post-deprivation remedy under Indiana
Code § 13-15-7-3, which authorizes the state's
Office of Environmental Adjudication to review certain
environmental permit revocations. As the district court
acknowledged a year later in granting in part Simpson's
subsequent Rule 59(e) motion, § 13-15-7-3 has no bearing
on a county-level revocation of a septic installer's
license. See Simpson v. Brown County, No.
l:13-cv-01660-TWP-TAB, 2015WL 5775513, at "3, 7, 9 (S.D.
Ind. Sept. 30, 2015).
district court corrected its mistake but then held for the
first time that Simpson had alleged a "random and
unauthorized" deprivation of his license, such that the
County had no duty to provide pre-deprivation process.
Id. at ""5. The court granted Simpson
leave to amend his complaint again, but only if he could
"plead sufficient facts to [show] that he actually
pursued all available post-deprivation remedies or
sufficiently explain the specific reasons that the available
post-deprivation remedies were inadequate." Id.
third amended complaint, Simpson cited the septic ordinance,
though he had no obligation to do so. See Johnson v. City
of Shelby, 574 U.S. -, 135 S.Ct. 346, 346 (2014)
("Federal pleading rules call for 'a short and plain
statement of the claim showing that the pleader is entitled
to relief; they do not countenance dismissal of a complaint
for imperfect statement of the legal theory supporting the
claim asserted.") (citation omitted); Avila v.
CitiMortgage, Inc., 801 F.3d 777, 783 (7th Cir.
2015) ("plaintiffs are not required to plead specific
legal theories"), citing King v. Kramer, 763
F.3d 635, 642 (7th Cir. 2014). Simpson argued that the
revocation of his license occurred pursuant to section 503 of
the county ordinance and that, far from "random and
unauthorized" conduct, the revocation was a
"predictable abuse of broadly delegated uncircum-scribed
power." Simpson argued he was thus entitled to
pre-deprivation procedures and received none. Alternatively,
Simpson argued that state law afforded him no adequate
district court rejected Simpson's arguments, chiding him
for "attempting to re-litigate the previously decided
issue of pre-deprivation due process" and adding that he
failed to plead that he had taken advantage of the one
post-deprivation remedy available to him under state law in
the form of common-law judicial review. Simpson v. Brown
County, No. 1:13-cv-01660-TWP-TAB, 2016 WL 1700370, at
*4-5 (S.D. Ind. Apr. 27, 2016). The court dismissed the
action with prejudice. Simpson appeals.
review de novo the district court's dismissal
for failure to state a claim. Tamayo v. Blagojevich,526 F.3d 1074, 1081 (7th Cir. 2008). In doing so, we construe
the operative third amended complaint in the light most
favorable to Simpson, accepting as true all ...