Opinion
1:02CV78-T
July 31, 2002
MEMORANDUM AND RECOMMENDATION
THIS MATTER is before the court upon defendant's Motion to Dismiss for failure to state a claim upon which relief can be granted. The undersigned has considered the briefs submitted, and due to a number of issues raised in the pleadings but not addressed, oral arguments were heard on July 17, 2002, and duly recorded. Having considered all the arguments presented, the undersigned enters the following findings, conclusions, and recommendation.
FINDINGS AND CONCLUSIONS I. Background
Plaintiff was incarcerated by the State of North Carolina and served a term of imprisonment at the Mountain View Correctional Facility ("Mountain View"), located in Mitchell County, North Carolina. At times relevant to this action, Mountain View was a private prison facility operated by defendant, which is a Tennessee corporation. In bringing his common-law claim for simple negligence, plaintiff contends that on February 19, 2002, a guard placed handcuffs on his wrists in a manner that caused serious injury and resulted in surgery and permanent damage.
According to public information made available by the North Carolina Department of Correction at www.doc.state.nc.us, of which the undersigned has taken judicial notice, "Mountain View Correctional Institution opened in December 1998 as a private prison owned and operated by Corrections Corporation of America ["CCA"]. On October 1, 2000, the Department of Correction assumed operating control of the facility. CCA continues to own the prison facility and leases it to the state."
Plaintiff has not brought any claims under 42, United States Code, Section 1983, but has filed a claim against the State of North Carolina, which is pending before the North Carolina Industrial Commission.
A Section 1983 cause of action cannot be founded upon simple negligence. Daniels v. Williams, 474 U.S. 327 (1986); Wadhams v. Procunier, 772 F.2d 75 (4th Cir. 1985).
Procedurally, plaintiff filed this action in the North Carolina General Court of Justice, Buncombe County Division, on February 14, 2002. While not made part of the removal documents, defendant requested and received from plaintiff, in accordance with Rule 8, North Carolina Rules of Civil Procedure, a notice of monetary relief sought, wherein plaintiff stated he sought damages in the amount of $200,000 for the alleged injury to his wrist. Upon receiving that notice, defendant removed the state-court action to this court in accordance with 28, United States Code, Sections 1441(b) and 1446, contending that the amount in controversy exceeded $75,000 and that the parties were diverse.
On April 22, 2002, defendant filed its answer to plaintiff's complaint and therein included motions to dismiss that were not then supported by a memorandum of law. L.R. 7.2 (W.D.N.C.). Upon the filing of an answer, the initial pretrial conference was promptly scheduled for May 29, 2002, by the Clerk of this court, and the Pretrial Order was entered on May 31, 2002. On May 28, 2002, however, defendant filed the instant Motion to Dismiss (which reasserts grounds for dismissal raised in the Answer) and supported it with a memorandum of law.
Plaintiff timely filed his response; defendant timely filed its reply. In substance, defendant contends that this action must be dismissed because it enjoys the protections of sovereign immunity, as well as public-official immunity. Based upon the fact that, at the relevant time, it operated the Mountain View facility pursuant to a contract with the state, defendant claims that it enjoys the same immunity privileges as would the state because the state, by statute, conveyed those protections to defendant. Defendant argues that because the state is immune from tort liability in such circumstance and has only waived such liability to the maximum amount of $100,000 for claims filed with the Industrial Commission, this action must be dismissed.
Defendant notes in its reply that plaintiff's response was late and explained at the hearing how it came to that conclusion. The undersigned has deemed plaintiff's response timely, inasmuch as it took six days from mailing for defendant's motion to be filed with this court, and the undersigned must assume that it took just as long for that motion to be received by plaintiff.
II. Jurisdiction
In removing this action from state court, defendant has invoked the diversity jurisdiction of this court under 28, United States Code, Section 1332. This court is obliged to question its subject-matter jurisdiction at all stages of the proceedings, and at this point, the court has difficulty with each prong of diversity jurisdiction claimed.
Foremost, defendant claims that the jurisdictional amount is met based upon a statement of monetary demand submitted in the state-court proceeding. The docket removed from state court does not contain the referenced paperwriting, but the court has assumed that such a demand was made. Even so, the court has difficulty imagining that an injury sustained when handcuffs were improperly applied could lead to damages exceeding $75,000. A jurisdictional amount has been the second prong of the test for diversity jurisdiction since the Judiciary Act of 1789 — 1 Stat. 73, 79 (Sept. 24, 1789). In Saint Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938), the Supreme Court determined, as follows:
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed, or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed. Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.
Id., at 288-90. It would appear that $200,000 is the high end of what is an open-ended complaint; however, this court cannot find, based upon the minimal factual allegations contained in the complaint, that the amount of the claim is really for less than the jurisdictional amount to "a legal certainty. . . ." Id.
The second prong is complete diversity of the parties. At the hearing, the court asked counsel for plaintiff why he did not sue the guard who allegedly injured plaintiff, and counsel responded that the guard was not sued because plaintiff could not remember his name. Had plaintiff sued the guard or sued a "John Doe," which is standard practice in negligence claims, this matter would probably have been non-removable, inasmuch as the guard would likely be a resident of the State of North Carolina, defeating complete diversity.
The presence of a nondiverse party automatically destroys such jurisdiction: No party need assert the defect. No party can waive the defect, or consent to jurisdiction. No court can ignore the defect; rather a court, noticing the defect, must raise the matter on its own.
Wisconsin Dept. of Corrections v. Schacht, 524 U.S. 381, 382 (1998). Having noticed a potential defect, the undersigned has respectfully brought such matter to the attention of the district court for whatever action it may deem appropriate, inasmuch as it is probable that such nondiverse guard is a necessary party, in whose absence complete relief could not be granted in this matter.
More troubling on the issue of diversity is defendant's assertion that for purposes of removing a matter from the courts of North Carolina, it is a resident of another state, but for purposes of having to defend that removed action, it should be treated as if it were the State of North Carolina. In Moor v. Alameda County, 411 U.S. 693 (1973), the Supreme Court held, as follows:
There is no question that a State is not a "citizen" for purposes of the diversity jurisdiction. . . . At the same time, however, this Court has recognized that a political subdivision of a State, unless it is simply "the arm or alter ego of the State," is a citizen of the State for diversity purposes. The original source of this latter principle was the rule that corporations are citizens of the State in which they are formed, and are subject as such to the diversity jurisdiction of the federal courts.
* * *
The County in this case contends, however, that unlike the counties of most States, it is not a municipal corporation or an otherwise independent political subdivision, but that it is, under California law, nothing more than an agent or a mere arm of the State itself.
Id., at 717 (citations and footnotes omitted; emphasis added). In this case, defendant is contending that, by statute, North Carolina has made it or, at least, its employees, "agents" and that it intends to assert the immunities and defenses such agency confers. Chapter 148-37(g) of the North Carolina General Statutes provides, in relevant part, as follows:
Custodial officials employed by a private confinement facility are agents of the Secretary of Correction and may use those procedures for use of force authorized by the Secretary. . . .
Id. A logical reading of Moor indicates that states and their agents are not entities which could be considered diverse. Were it not for the state statute cited by defendant on its claim of agency, the undersigned would find that defendant is a diverse party, inasmuch as it has all the attributes described by the Court in Moor that pertain to independent entities. Defendant simply cannot claim that it is an agent for purposes of immunity, but ignore such agency for the purposes of diversity. To that end, the undersigned will recommend that the district court remand this action to state court, where defendant's assertion of state sovereign immunity can be addressed in a most appropriate forum.
III. Motion to Dismiss A. Standard Applicable to the Motion to Dismiss
The undersigned recognizes that the above recommendation is on a novel issue and that it may be necessary for the district court to reach the question of whether plaintiff has stated a claim; therefore, the undersigned respectfully submits the following recommendation on defendant's Motion to Dismiss in the alternative to the above recommendation. Defendant has moved for dismissal pursuant to Rule 12(b), Federal Rules of Civil Procedure, contending that plaintiff has failed to state a cognizable claim. Rule 12(b) authorizes dismissal based upon a dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 109 S.Ct. 1827, 1832 (1989); Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Conley v. Gibson, 355 U.S. 41 (1957). As the Court discussed in Neitzke:
This procedure [for dismissal], operating on the assumption that the factual allegations in the complaint are true, streamlines litigation by dispensing with needless discovery and fact finding. Nothing in Rule 12(b)(6) confines its sweep to claims of law which are obviously insupportable. On the contrary, if as a matter of law "it is clear that no relief could be granted under any set of facts . . . a claim must be dismissed, without regard to whether it is based on outlandish legal theory. . . . What Rule 12(b)(6) does not countenance are dismissals based on a judge's disbelief of a complaint's factual allegations."
Id., at 1832 (citation omitted). For the limited purpose of making a recommendation as to disposition of defendant's motion, the undersigned has accepted as true the facts alleged by plaintiff in the complaint and has, above, viewed them in a light most favorable to plaintiff.
B. Discussion
The issue presented: What common-law immunities from suit do private prison corporations enjoy at common law? The starting point for evaluating immunities in private prison actions is Richardson v. McKnight, 521 U.S. 399 (1997), wherein the United States Supreme Court held, in the context of a Section 1983 claim and eleventh-amendment immunity, that private prison guards were not entitled to qualified immunity for injuries caused by applications of restraints. The Richardson Court reasoned, as follows:
Defendant herein was the employer of the prison-guard defendants in Richardson.
The guards argue that those purposes support immunity whether their employer is private or public. Brief for Petitioners 35-36. Since private prison guards perform the same work as state prison guards, they say, they must require immunity to a similar degree. To say this, however, is to misread this Court's precedents. The Court has sometimes applied a functional approach in immunity cases, but only to decide which type of immunity — absolute or qualified — a public officer should receive. And it never has held that the mere performance of a governmental function could make the difference between unlimited § 1983 liability and qualified immunity . . . especially for a private person who performs a job without government supervision or direction. Indeed a purely functional approach bristles with difficulty, particularly since, in many areas, government and private industry may engage in fundamentally similar activities, ranging from electricity production, to waste disposal, to even mail delivery.
Id., at 408-09 (citations omitted). As defendant pointed out at the hearing, Richardson differs from the case herein, inasmuch as it was brought under the federal court's original jurisdiction and did not reference any state legislation conveying immunity. Richardson, however, is too close to ignore and has given this court pause in considering defendant's argument.
First, this court has considered the contractual nature of the relationship between the State of North Carolina and defendant. In United States v. Winstar Corp., 518 U.S. 839 (1996), the Supreme Court, summarizing the state of current law, held, as follows:
[A] contract with a sovereign government will not be read to include an unstated term exempting the other contracting party from the application of a subsequent sovereign act . . ., nor will an ambiguous term of a grant or contract be construed as a conveyance or surrender of sovereign power.
Id., at 878. In this case, the lesson to be drawn from Winstar is that the mere making of a contract between a governmental entity and a private corporation to perform a governmental function does not infer a transfer of governmental immunity, and that any such transfer must be specific. A further rule that can be drawn from Winstar is that when a government unequivocally expresses its intent to cloak a private party in its immunity, that grant must be honored, inasmuch as it constitutes part of the consideration.
In this case, defendant does not appear to rely solely on its contract with the state, but points to legislation, discussed above, that makes its employees state agents. While Winstar cautions against inferences that would convey immunity, Chapter 148-37(g) of the North Carolina General Statutes, while not mentioning immunity, makes private prison guards agents of the Secretary of Correction and, in so doing, extends to such agents the responsibilities of state-employed guards and the privileges and immunities enjoyed by state-employed guards. To read the statute otherwise would be to give it no meaning. Through enacting Chapter 148-37(g), North Carolina has conveyed immunity to private prison guards coterminus with the immunity enjoyed by state-employed prison guards, at least in the context of simple negligence claims. The North Carolina courts have held, as follows:
When a governmental worker is sued individually . . . our courts distinguish between public employees and public officers in determining negligence liability. A public officer sued individually is normally immune from liability for "mere negligence."
Hare v. Butler, 99 N.C. App. 693, 699-700, disc. review denied, 327 N.C. 634 (1990). In Cherry v. Harris, 110 N.C. App. 478, 481 (1993), the appellate court adopted the reasoning of the Court of Appeals for the Eighth Circuit in Lawyer v. Kernodle, 721 F.2d 632 (8th Cir. 1983), which had held that where a private actor was hired pursuant to statutory authority, and "was performing those [official] duties under color of state law . . . he clearly enjoyed the same immunity privilege. . . ." Id., at 635. Inasmuch as the state could assert the immunity of its employees in defending their actions, so, too, may defendant assert the immunity of its employees.
North Carolina extends public-official immunity to public officials, not public employees, which raises an issue as to whether a prison guard is a public official or a public employee. The court notes for purpose of further review that North Carolina has held that a prison guard is a public official, rather than a public employee. In Price v. Davis, 132 N.C. App. 556 (1999), the North Carolina Court of Appeals dismissed a claim against a prison sergeant and others for alleged tortious conduct, holding, as follows:
[D]efendants are protected by public official immunity from individual liability for alleged violations of State statutes and prison regulations. The essence of the doctrine of public official immunity is that public officials engaged in the performance of their governmental duties involving the exercise of judgment and discretion, and acting within the scope of their authority, may not be held liable for such actions, in the absence of malice or corruption.
Id., at 562. Public employees may be sued in their individual capacities for injuries proximately caused by their negligence. Harwood v. Johnson, 92 N.C. App. 306, 309, aff'd in part, rev'd in part on other grounds, 326 N.C. 231 (1990). In contrast, public officials cannot be sued individually for simple negligence, only for malicious conduct. Davis v. Messer, 119 N.C. App. 44 (1995). Sued under a theory of respondeat superior, defendant has properly asserted a defense that would have been available to its employees, had they actually been sued, inasmuch as prison guards are treated by North Carolina courts as public officials, Price v. Davis, supra; and the custodial management of prisoners is a governmental function, Kephart v. Pendergraph, 131 N.C. App. 559 (1998).
Finally, the court has considered plaintiff's argument that North Carolina has waived sovereign immunity to the extent of the purchase of insurance, which is expressed in the state's Tort Claims Act. In Meyer v. Walls, 347 N.C. 97 (1997), the North Carolina Supreme Court held, as follows:
[T]he Tort Claims Act applies only to actions against state departments, institutions, and agencies and does not apply to claims against officers, employees, involuntary servants, and agents of the State.
Id., at 107 (emphasis added). Inasmuch as Chapter 148-37(g) is a clear expression of legislative intent to make defendant's employees "agents" of the state, any waiver of sovereign immunity to suit in a civil action would be inapplicable to this defendant.
Plaintiff's only remedy, which he is now pursuing, is a suit against the North Carolina Department of Correction before the Industrial Commission, which can issue an award of up to $100,000. Any equitable concerns are assuaged, inasmuch as the assertion of immunity in this case does not leave plaintiff without a remedy, and defendant is not relieved of all responsibility, inasmuch as it would be liable for reimbursement to the state for any award given by the Industrial Commission.
The undersigned, after much reflection over this most difficult issue, must recommend, in the alternative, that defendant's Motion to Dismiss be granted because, under current North Carolina law, defendant enjoys public-official immunity from suit for claims of simple negligence. Fed.R.Civ.P. 12(b)(6).
RECOMMENDATION
IT IS, THEREFORE, RESPECTFULLY RECOMMENDED that this matter be REMANDED to the North Carolina General Court of Justice for lack of subject-matter jurisdiction, or, in the alternative, that this matter be DISMISSED for failure to state a claim upon which relief may be granted.
The parties are hereby advised that, pursuant to 28, United States Code, Section 636(b)(1)(C), written objections to the findings of fact, conclusions of law, and recommendation contained herein must be filed within ten (10) days of service of same. Failure to file objections to this Memorandum and Recommendation with the district court will preclude the parties from raising such objections on appeal. Thomas v. Arn, 474 U.S. 140 (1985), reh'g denied, 474 U.S. 1111 (1986); United States v. Schronce, 727 F.2d 91 (4th Cir.), cert. denied, 467 U.S. 1208 (1984).