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Waltz v. Board of Education of The Hoosick Falls Central School District

United States District Court, Second Circuit

September 10, 2013

MARK WALTZ, et al., Plaintiffs,
v.
BOARD OF EDUCATION OF THE HOOSICK FALLS CENTRAL SCHOOL DISTRICT; KENNETH FACIN; JUDY WOODWARD; AMY FERULLO; and HOOSICK FALLS TEACHERS' ASS'N, Defendants.

PHILLIP G. STECK, ESQ., COOPER ERVING & SAVAGE LLP, Albany, New York, Counsel for Plaintiffs.

WILLIAM RYAN, JR., ESQ., BRIAN M. QUINN, ESQ., TABNER, RYAN AND KENIRY, LLP, Albany, New York, Counsel for Sch. Dist. Defendants.

HAROLD EISENSTEIN, ESQ., OFFICE OF RICHARD E. CASAGRANDE, ESQ., Counsel for Teachers' Ass'n Defendants, Latham, New York.

DECISION and ORDER

GLENN T. SUDDABY, District Judge.

Currently before the Court in this civil rights action are the following motions: (1) a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6) by defendants, the Board of Education of the Hoosick Falls Central School District and Kenneth Facin (collectively, "the School District") (Dkt. No. 13); (2) a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6) by defendants, Judy Woodard, Amy Ferullo and the Hoosick Falls Teachers' Association (collectively, "the Association") (Dkt. No. 14); and (3) a motion to amend the complaint pursuant to Fed.R.Civ.P. 15(a)(2) by plaintiffs, twenty-seven retirees of the Hoosick Falls Central School District ("Plaintiffs") (Dkt. No. 16). For the reasons set forth below, Defendants' motions to dismiss are granted and Plaintiffs' motion to amend is denied.

I. RELEVANT BACKGROUND

A. Plaintiffs' Claims

Generally, Plaintiffs' Complaint asserts a claim of conspiracy to violate Plaintiffs' contractual health insurance rights "to an indemnity-type health insurance plan including major medical coverage" in violation of Article 1, Section 10 of the United States Constitution under 42 U.S.C. §§ 1983 and 1985.

Plaintiffs' proposed Amended Complaint reasserts their Contract Clause claim and adds claims that Defendants conspired to violate Plaintiffs' rights under the Takings Clause of the Fifth Amendment and Plaintiffs' procedural due process rights under the Fourteenth Amendment.

D. Pending Motions

1. The School District's Motion to Dismiss

Generally, in support of its motion to dismiss, the School District argues as follows: (1) Plaintiffs' Complaint fails to state a claim under the Contract Clause because (a) this case does not involve any legislative action, (b) Plaintiffs have not plausibly alleged a contractual impairment, (c) the impairment Plaintiffs allege is insubstantial, and (d) Plaintiffs' cannot recover the monetary damages they seek under the Contract Clause; (2) Plaintiffs' Complaint fails to state a claim under Section 1983 because Plaintiffs have not alleged and cannot prove a deprivation of a constitutional or statutory right; (3) Plaintiffs' Complaint fails to state a claim under Section 1985 because Plaintiffs have not plausibly alleged a conspiracy or that the conspiracy was motivated by racial or other class-based discrimination; and (4) Plaintiffs cannot recover attorneys' fees under 42 U.S.C. § 1988 because they cannot prevail on their claims under Sections 1983 or 1985. ( See generally Dkt. No. 13-1 [Sch. Dist.'s Mem. of Law].)

2. The Association's Motion to Dismiss

Generally, in support of its motion to dismiss, the Association argues as follows: (1) Plaintiffs fail to state a claim for a violation of their rights under the Contract Clause because they do not allege any legislative action; (2) Plaintiffs fail to state a claim for a violation of their due process rights under the Fourteenth Amendment because they do not have a constitutionally protected property interest in a particular level of health care benefits; (3) Plaintiffs fail to state a claim under § 1983 because they do not allege any facts plausibly suggesting that the Association Defendants are state actors; (4) Plaintiffs fail to state a claim under § 1985 because they do not allege any facts plausibly suggesting a conspiracy that was motivated by racial or class-based discrimination; and (5) Plaintiffs' claims arise, if at all, under state, not federal, law and therefore, should be dismissed for lack of subject matter jurisdiction because without any legislative action, Plaintiffs' have actually pleaded either a claim for breach of the duty of fair representation or a claim for a violation of New York's moratorium laws on the diminution of retiree health benefits. ( See generally Dkt. No. 14-2 [Ass'n's Mem. of Law].)

3. Plaintiffs' Opposition to Defendants' Motions to Dismiss and Plaintiff's Cross-Motion to Amend Their Complaint

In Plaintiffs' response to Defendants' motions to dismiss, they argue as follows: (1) there was legislative action in this case because, by either authorizing the superintendent to execute the collective bargaining agreement or by adopting the agreement itself, the Board of Education may exercise its legislative authority; (2) Plaintiffs alleged an impairment of a contract because the Defendants re-negotiated the terms of the collective bargaining agreement in contravention of the unambiguous terms of the agreement; (3) under § 1983, a conspiracy may exist between a state actor and a private entity; (4) Plaintiffs have alleged facts plausibly suggesting that the effect of the impairment of the collective bargaining agreement is substantial; and (5) Plaintiffs may bring a Contract Clause claim pursuant to § 1983. ( See generally Dkt. No. 16-1, at 5-11 [Pls.' Response Mem. of Law].)

Generally, in support of their motion to amend, Plaintiffs argue as follows: (1) Plaintiffs should be allowed to amend their complaint to add a claim under the Takings Clause of the Fifth Amendment pursuant to Professional Firefighters of Omaha v. Zalewski, No. 10-CV-198, 2010 WL 2426446 (D. Neb. June 10, 2010); and (2) Plaintiffs should be allowed to amend their complaint to add a procedural due process claim because the collective bargaining agreement created a property interest. ( See generally Dkt. No. 16-1, at 11-13 [Pls.' Mem. of Law].)

4. Defendants' Replies and Opposition to Plaintiff's Motion to Amend

In its reply, the School District essentially reiterates previously advanced arguments regarding Plaintiffs' Contract Clause claim, with the exception of noting Plaintiffs' apparent concession that their § 1985 claim is not viable and should be dismissed. In opposition to Plaintiffs' motion to amend, the School District argues that (1) Plaintiffs' proposed takings claim is futile because (a) Plaintiffs do not have a protected property interest in any specific type of health insurance plan and have failed to allege any actual economic loss and (b) no taking occurred, as Plaintiffs are still afforded health insurance and the School District's participation in collective bargaining negotiations is not the requisite level of government action for a takings claim; and (2) Plaintiffs' proposed procedural due process claim is futile because they have not alleged the denial of any property interest protected by the Due Process Clause. ( See generally Dkt. No. 17 [Sch. Dist.'s Reply Mem. of Law].)

In its reply, the Association essentially reiterates previously advanced arguments, except that it argues that ratification of a collective bargaining agreement by a Board of Education is not legislative action for purposes of asserting a Contract Clause claim. In opposition to Plaintiffs' motion to amend, the Association argues that Plaintiffs' proposed claims are futile because Plaintiffs do not allege a constitutionally protected property interest. ( See generally Dkt. No. 18 [Ass'n's Reply Mem. of Law].)

5. Plaintiffs' Surreply

Generally, in their surreply, Plaintiffs assert the following arguments: (1) there is no caselaw to support the argument that the legislation and ratification of a collective bargaining agreement by a Board of Education is not legislative action as contemplated by the Contract Clause simply because it is not accompanied by a local law or ordinance; (2) the collective bargaining agreement in this case created vested rights that continue after its expiration; (3) whether or not there is a violation of State law is irrelevant to the question of whether Plaintiffs may bring a claim for violations of the United States Constitution; (4) Defendants have cited no caselaw supporting the argument that the Takings Clause is inapplicable to the precise facts of this case where the collective bargaining agreement at issue created long-term property rights; and (5) contract rights are protected under the Due Process Clause. ( See generally Dkt. No. 19 [Pls.' Surreply Br.].)

In their motion papers, the parties have demonstrated an adequate understanding of the factual allegations asserted in Plaintiff's Complaint and proposed Amended Complaint. As a result, the Court will not recite that information in its entirety in this Decision and Order, which is intended primarily for the review of the parties. Rather, ...


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