McMurtray v. Holladay ( 1993 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-7255
KATHERINE A. McMURTRAY,
Plaintiff-Appellant,
versus
J. MAC HOLLADAY, Individually, ET AL.,
Defendants-Appellees.
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No. 93-7002
RICHARD L. BUFORD,
Plaintiff,
versus
J. MAC HOLLADAY, ET AL.,
Defendants.
* * * * * *
GEORGE A. GEORGE,
Plaintiff-Appellant,
versus
J. MAC HOLLADAY, Individually, ET AL.,
Defendants-Appellees.
* * * * * *
GINGER CROCE,
Plaintiff-Appellant,
versus
J. MAC HOLLADAY, Individually, ET AL.,
Defendants-Appellees.
Appeals from the United States District Court
for the Southern District of Mississippi
(December 28, 1993)
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. § 25-9-107(b),(c). State service
employees are afforded the protections of the state personnel
system. MISS. CODE ANN. § 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. § 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. § 25-9-131(1),(2). Nonstate service
2
employees are not covered by the state personnel system. MISS. CODE
ANN. § 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
1
The Act was later codified at MISS. CODE ANN. § 57-1-1 et
seq.
2
In particular, Section 1 of the Act reads in pertinent
part:
SECTION 1.(1) The Mississippi Research and Development
Center is hereby abolished from and after July 1, 1988. All
of the functions of the center shall be transferred on that
date to the Mississippi Department of Economic Development
or to the University Research Center which is created in
Section 3 of this act.
(2)(a) From and after July 1, 1988, the duties and
responsibilities of the Research and Development Center
which are depicted organizationally in the 1989 fiscal year
budget request of the Research and Development Center and
which are performed by the Forecast and Analysis Division,
the Administration Division, the Government Services
Division and the Data Services Division except as provided
in subsection 3(b) shall be transferred to the University
Research Center.
(b) From and after July 1, 1988, the duties and
responsibilities of the Research and Development Center not
included in the transfer described in paragraph (a) except
as provided in (3)(c) of this subsection shall be
transferred to the Mississippi Department of Economic
Development.
3
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
(3)(a) All personnel of the Mississippi Research and
Development Center shall be transferred to the Department of
Economic Development or to the University Research Center
according to the transfer of their duties pursuant to this
section.
* * *
(d) It is the intention of the Legislature that there be
a reduction in personnel where there is a duplication of
effort as a result of the transfers required by this
subsection. The Department of Economic Development in its
reorganization pursuant to this act may utilize savings
realized from personnel attrition and other economies to
reallocate and reclassify positions within the department,
subject to the approval of the State Personnel Board.
(e) All personnel transferred to the University Research
Center shall become subject to all personnel and
compensation policies of the Board of Trustees of State
Institutions of Higher Learning; however, anyone so
transferred shall retain all of the protection and benefits
to which they have been entitled under the state personnel
system.
4
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 re-
employment 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 suit3 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
3
The suit was filed in the same federal district, the
Southern District of Mississippi, but in a different court.
5
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, § 1; Board of Regents v. Roth, 408 U.S. 564,
576, 92 S. Ct. 2701, 2708 (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 (1985); see also Schaper v. City of Huntsville,
4
The district court's opinion in McMurtray v. Holladay, Civ.
Action No. J88-0619(W) (S.D. Miss. Mar. 31, 1992), was not
published.
6
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 (1985) (quoting Richardson v. Belcher, 404 U.S. 78, 81, 92 S.
Ct. 254, 257 (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. § 25-9-107(b), and the
concomitant procedural protections of the state personnel system.
MISS. CODE ANN. §§ 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
7
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 § 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 intended to
suspend DED employees' property interests for one year. Under
Mississippi law, the State Personnel Board, which is created under
MISS. CODE ANN. § 25-9-109, is charged with "[a]dopt[ing] and
8
amend[ing] policies, rules and regulations establishing and
maintaining the State Personnel System." MISS. CODE ANN. § 25-9-
115(c). In effect, the State Personnel Board represents the state
personnel system, meaning any of the system's rules, regulations,
or procedures are also the Board's. The state personnel system
requires that, for a state service employee to be terminated, the
department (or other entity) must have good cause and also provide
the employee with written notice and a hearing. MISS. CODE ANN. §
25-9-127. Therefore, if a department (or other entity) is exempt
from the state personnel system's rules and regulations, then that
department is free to terminate its employees at will, without
notice or a hearing.
With regard to the alleged contradiction between Section
28.(6) and Section 1.(3)(d), we point out that the Act was limiting
the DED's ability to reclassify "positions" and not its authority
to terminate personnel. The Legislature in Section 1.(3)(d) merely
was reaffirming existing Mississippi law with regard to
reclassifying state service positions: the board "[r]ecommend[s]
policies and procedures for the establishment and abolishment of
employment positions within state government." MISS. CODE ANN. § 25-
9-115(i) (emphasis added). The provision is unrelated to the DED's
personnel responsibilities, in stark contrast to Section 28.(6).
That provision exempts the "personnel actions" of the DED "from
State Personnel Board Procedures in order to give the department
flexibility in making an orderly, effective and timely transition
9
to the mandated reorganization." As one of the district courts
stated below:
The difference between the two sections is the difference
between a job classification and the person holding the job
classification. Under Section 28(6), a person holding a
particular job classification was subject to termination, but
under Section 1(3)(d), the job classification could not be
modified without compliance with the procedures of the State
Personnel Board.
Buford, 791 F. Supp. at 642.
We agree with the appellants that the Act does not explicitly
provide that DED employees lost their state service status.5 The
Legislature certainly could have been more precise. Nonetheless,
the logical extension of Section 28.(6), when read in conjunction
with other relevant portions of the Act and the Mississippi Code,
5
The appellants further submit that, in addition to its
absence of explicit language, the Act as a whole evinces the
legislature's intent to preserve the property interests of state
service employees, such as those with the DED. Specifically,
Section 1.(3)(e) of the Act extended the protections of the state
personnel system to those employees transferred from the R&D
Center, which had carried state service status, to the URC, which
currently carries nonstate service status. See MISS. CODE ANN. §
25-9-107(c)(vii). The appellants maintain that this is evidence
of the legislature's general interest in preserving property
interests rather than limiting them. The appellants' argument is
unconvincing, and possibly counterproductive to their effort.
The legislature's affirmative efforts to extend protections to
these employees -- and not DED employees -- strongly suggest
that, when it wants to ensure that employees retain their state
service status, the legislature is clear and unambiguous about
its intentions.
Finally, the appellants also ask us to consider two other
matters in determining the status of their property interests:
the actions of the DED before and after enactment of the Act, and
two conflicting interpretations of the Act by the office of the
state's attorney general. While such evidence may suggest that
the state government had difficulty interpreting the Act, we
refuse to consider such matters. Our resolution of this appeal
will rest solely on interpreting the Mississippi Legislature's
intentions, as embodied in the Act.
10
is that the legislature intended to suspend the property interests
of DED employees for one year. Because no genuine issue of
material fact exists as to whether Section 28.(6) of the Act
extinguished the appellants' property interest, summary judgment
for Holladay was appropriate.
C. Legislative Due Process
Finding that the appellants property interest was extinguished
by the Act, we must next consider the appellants' contention that
they nonetheless were denied due process. The Supreme Court long
ago established that, when a legislature extinguishes a property
interest via legislation that affects a general class of people,
the legislative process provides all the process that is due. Bi-
Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441, 445-
46, 36 S. Ct. 141, 142-43 (1915); Logan v. Zimmerman Brush Co., 455
U.S. 422, 433, 102 S. Ct. 1148, 1156 (1982); see also Jackson Court
Condominiums v. City of New Orleans, 874 F.2d 1070, 1074 (5th Cir.
1989); Gattis, 806 F.2d at 781.
The appellants claim that the Act affected a specific, and not
a general, class of people: the 29 individuals who lost their jobs
at the DED through reorganization. We disagree. While those 29
individuals (including the three appellants) may have lost their
jobs, the Act was intended to affect every employee at the DED,
which qualifies as a general class of people. See O'Bannon v. Town
Court Nursing Ctr., 447 U.S. 773, 799-801, 100 S. Ct. 2467, 2483
(1980) (Blackmun, J., concurring) ("[w]hen governmental action
affects more than a few individuals, concerns beyond economy,
11
efficiency and expedition tip the balance against finding that due
process attaches"). Because no genuine issue of material exists as
to whether the appellants were denied legislative due process,
summary judgment was appropriate.
D. Monetary Compensation
The appellants' last contention is that, when the state
extinguished their property rights, the Act constituted a "taking,"
and they should therefore be justly compensated pursuant to the
Fifth Amendment. Even if the Act amounted to a "taking" under the
Fifth Amendment, and we do not conclude that it does, the
appellants' claim would be barred because under the Eleventh
Amendment, a citizen may not sue his own state in federal court.
U.S. CONST. amend. XI; Pennhurst State School & Hosp. v. Halderman,
465 U.S. 89, 98, 104 S. Ct. 900, 906 (1984). Therefore, the
portion of the appellants' suit regarding monetary compensation is
barred.6
III. CONCLUSION
The summary judgments granted below were appropriate and are
therefore AFFIRMED.
6
The portion of the appellants' suit regarding the status of
their property interest and whether they were denied legislative
due process is not similarly barred because Congress has the
power with respect to the rights protected by the Fourteenth
Amendment to abrogate Eleventh Amendment immunity. See U.S.
CONST. amend. XIV, § 5; Fitzpatrick v. Bitzer, 427 U.S. 445, 451-
56, 96 S. Ct. 2666, 2669-71 (1976). Congress granted federal
courts jurisdiction to hear private suits against states
involving constitutionally protected property interests under 42
U.S.C. § 1983.
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