Ward v. Ryan

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TIMOTHY LEE WARD,  No. 07-17156

Plaintiff-Appellant,

v.  D.C. No.

CV-01-02226-ROS

CHARLES L. RYAN, Director,

OPINION

Defendant-Appellee.



Appeal from the United States District Court

for the District of Arizona

Roslyn O. Silver, District Judge, Presiding

Argued and Submitted

January 12, 2010—San Francisco, California

Filed September 27, 2010

Before: Alex Kozinski, Chief Judge, J. Clifford Wallace and

Richard R. Clifton, Circuit Judges.

Opinion by Judge Clifton

16527

16530 WARD v. RYAN

COUNSEL

Beau Sterling, Las Vegas, Nevada, for the plaintiff-appellant.

Michele L. Forney, Phoenix, Arizona, for the defendant-

appellee.

OPINION

CLIFTON, Circuit Judge:

Timothy Lee Ward, an inmate held by the Arizona Depart-

ment of Corrections (“Department”), appeals from the district

court’s summary judgment in favor of the Director of the Depart-

ment.1 Ward alleges that the Department’s withdrawal of

$50.00 from his prison wages pursuant to an Arizona statute

that requires that amount of money be placed in a dedicated

discharge account, to be paid to him upon his release from

incarceration, violates the Fifth and Fourteenth Amendments.

He seeks immediate access to the funds, because his 197-year

sentence makes it unlikely that he will ever be released prior

to his death. The district court denied Ward’s claim. We

affirm.

I. Background

Ward was sentenced to 197 years in the custody of the

Department as a result of twenty-two felony convictions. As

a prisoner who works, Ward is entitled under Arizona law to

compensation at a rate to be determined by the Director. Ariz.

Rev. Stat. § 31-254(A). For the most part, this compensation

is placed in the inmate’s spendable account and may be with-

drawn for certain enumerated purposes, such as inmate store

1

Charles L. Ryan is substituted for former Director Dora Schriro, who

had herself been substituted for former Director Terry L. Stewart.

WARD v. RYAN 16531

purchases or long distance telephone calls. Withdrawal of

funds requires approval by prison officials.

Pursuant to Section 31-237(A) of the Arizona Revised Stat-

utes, a percentage of the wages earned by a prisoner must be

deposited by the Department into a separate account, called a

dedicated discharge account, until that account registers a

$50.00 balance. The money held in this account is not avail-

able for the prisoner to spend while he in prison but will be

distributed to him as “gate money” when he is discharged or

is transferred to community release or home arrest. See Ariz.

Rev. Stat. § 31-237(B). If a prisoner dies in prison, the gate

money is applied to cremation costs or other related expenses,

and any remaining funds are released to his estate or heir.2 As

required by the Arizona statute, $50.00 was withheld from

Ward’s prison wages and is held by the Department in his

dedicated discharge account.

Ward filed pro se a 42 U.S.C. § 1983 civil rights suit

against the Director alleging denial of access to the courts in

violation of the Sixth Amendment. He amended his complaint

to add a claim that the withholding of his wages constituted

a violation of the Eighth Amendment and sought both com-

pensatory and punitive damages against the Director, as well

as injunctive relief. Ward’s complaint was dismissed by the

district court for failure to state a claim. Ward appealed the

dismissal to this court. We affirmed the dismissal of the

access-to-courts claim but reversed the dismissal of the due-

process claim, remanding for further proceedings, which will

2

Department Order 711.05, providing for the disposal of a deceased

inmate’s property, was amended effective April 16, 2009. It supercedes

the previous 2007 version of the order, which was cited in the district

court’s decision below. The current version makes no specific mention of

the proposition that dedicated discharge account funds will be applied first

to a deceased inmate’s cremation costs, suggesting that the funds may sim-

ply be released to the prisoner’s estate or heir. This amendment has no

effect on our decision.

16532 WARD v. RYAN

be more fully described below.3 See Ward v. Stewart, 81 F.

App’x 229 (9th Cir. 2003) (unpublished).

After the case returned to district court, the Director moved

for summary judgment on the due-process claim, asserting

that he was entitled to qualified and sovereign immunity. The

district court granted partial summary judgment in the Direc-

tor’s favor, holding that the Director was entitled to qualified

immunity regarding his personal liability and to sovereign

immunity for his official actions. The court also granted sum-

mary judgment for the Director on Ward’s due-process claim

for punitive damages. The court did not at that point grant

summary judgment on Ward’s claim for injunctive relief,

instead ordering supplemental briefing on that issue.

In his supplemental brief Ward for the first time alleged

violations of his Fifth and Fourteenth Amendment rights

against the government’s taking of property without just com-

pensation. Following consideration of Ward’s claims, includ-

ing the new takings claim,4 the district court denied Ward’s

request for injunctive relief and dismissed the remainder of

his claims.

This appeal followed.5

II. Discussion

We review the district court’s summary judgment de novo.

See Universal Health Servs., Inc. v. Thompson, 363 F.3d

3

The district court interpreted Ward’s Eighth Amendment claim as a

due-process claim, and we followed this interpretation.

4

The district court elected to consider Ward’s takings claim because the

allegations of a pro se complaint are held to a less stringent standard,

Haines v. Kerner, 404 U.S. 519, 520 (1972) (per curiam), and because the

Director had the opportunity to respond to Ward’s takings claim in his

supplemental reply brief.

5

In this appeal Ward has been represented by counsel appearing pro

bono.

WARD v. RYAN 16533

1013, 1019 (9th Cir. 2004). Our review is governed by the

same standard used by the trial court under Federal Rule of

Civil Procedure 56(c). Adcock v. Chrysler Corp., 166 F.3d

1290, 1292 (9th Cir. 1999). “We must determine, viewing the

evidence in the light most favorable to the nonmoving party,

whether there are any genuine issues of material fact and

whether the district court correctly applied the relevant sub-

stantive law.” Universal Health Servs., 363 F.3d at 1019

(internal quotation marks omitted). Where, as here, the under-

lying facts are not in dispute, we are left to determine whether

the district court correctly applied the law. Id.

[1] Ward’s primary argument on appeal is that the with-

holding of the $50 for gate money constituted a taking of his

private property in violation of his constitutional rights. The

Takings Clause of the Fifth Amendment prohibits the govern-

ment from taking private property for public use without just

compensation. This right is applicable to the states through

the Due Process Clause of the Fourteenth Amendment.

Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155,

160 (1980).

[2] To establish a violation of the Takings Clause, Ward

must first demonstrate he has a property interest that is consti-

tutionally protected. Schneider v. Cal. Dep’t of Corr. (Schnei-

der II), 151 F.3d 1194, 1198 (9th Cir. 1998). “Only if [the

plaintiff] does indeed possess such an interest will a review-

ing court proceed to determine whether the expropriation of

that interest constitutes a ‘taking’ within the meaning of the

Fifth Amendment.” Id. Property interests are not constitution-

ally created; rather, protected property rights are “created and

their dimensions are defined by existing rules or understand-

ings that stem from an independent source such as state law.”

Bd. of Regents of State Coll. v. Roth, 408 U.S. 564, 577

(1972).

[3] Inmates forfeit many of their traditional rights to prop-

erty. See Givens v. Ala. Dep’t of Corr., 381 F.3d 1064, 1068

16534 WARD v. RYAN

(11th Cir. 2004). And inmates did not have a protected prop-

erty interest in their wages at common law. See Calero-

Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 682

(1974). The Supreme Court of Arizona has recognized, how-

ever, that Arizona created a protected property interest in

inmate wages by statute. See Zuther v. State, 14 P.3d 295, 302

(Ariz. 2000); Ariz. Rev. Stat. § 31-254(A) (“Each prisoner

who is engaged in productive work . . . shall receive for the

prisoner’s work the compensation that the director deter-

mines.”). It is thus undisputed that Ward has a protected prop-

erty interest in his prison wages.

[4] Nonetheless, courts have consistently held that such

statutes granting inmates a protected property interest in their

wages may also limit and define the contours of such interest.

See, e.g., Washlefske v. Winston, 234 F.3d 179, 185 (4th Cir.

2000) (“[A]n inmate has no property interest in any ‘wages’

from his work in prison except insofar as the State might

elect, through statute, to give him rights.”); Rochon v. La.

State Penitentiary Inmate Account, 880 F.2d 845, 846 (5th

Cir. 1989) (“[Petitioner] receives incentive wages solely

because of the state statutory scheme. Thus, the nature of his

property interest in those funds may be defined by the reason-

able provisions of that legislation.”); see also Givens, 381

F.3d at 1069-70 (holding that the statutory provisions creating

a property interest in inmate wages do not create an interest

in the interest accrued on their accounts); Allen v. Cuomo, 100

F.3d 253, 261-62 (2d Cir. 1996) (holding that the statute pro-

viding for payment of inmate wages did not create an entitle-

ment in access to wages prior to release); Hrbek v. Farrier,

787 F.2d 414, 416 (8th Cir. 1986) (holding that the statutory

scheme allowed for deductions from prison wages and stating

that the “statutory provisions clearly establish that [petitioner]

can assert no legitimate claim of entitlement to the full

amount of his wages based upon state law”).

In Tellis v. Godinez, 5 F.3d 1314 (9th Cir. 1993), we con-

sidered a Nevada inmate’s right to interest earned on money

WARD v. RYAN 16535

deposited in his personal property fund. In holding that the

inmate did have a constitutionally protected property interest,

we determined that we needed to look not only at the plain

language of the section of the statute providing for the

inmate’s property interest, but also its context within the sur-

rounding statutory framework. Id. at 1316-17 (“[T]he statute

is to be read as a whole, since the meaning of statutory lan-

guage, plain or not, depends on context.”) (internal quotation

marks omitted).

[5] In turning to the Arizona statutory framework, we

begin by observing that in Zuther, the Supreme Court of Ari-

zona rejected a challenge by a different Department inmate to

the same gate-money requirement that is at issue in this case.

While recognizing that the inmate had a statutorily-created

property interest in his wages, the Arizona court held that the

inmate had “no constitutional right to possess that property

while in prison, and [that] the delay in access to the amount

withheld [was] at most a de minimus deprivation.” Zuther, 14

P.3d at 302.

We pointed out in our previous decision in this case, how-

ever, that Zuther might not be dispositive here because Zuther

had actually been released and granted access to the withheld

funds, see id. at 298 n.2, while Ward is serving a 197-year

sentence and therefore will probably never gain personal

access to the funds. Ward, 81 F. App’x at 229.

On remand, the district court considered the consequences

of Ward’s particular sentence on the withholding of wages in

the dedicated discharge account and concluded that the appli-

cation of the requirement did not alter the outcome for two

reasons. First, even prisoners sentenced to life imprisonment

are sometimes able to obtain release prior to expiration of

their natural life through reversal of their conviction or sen-

tence on appeal; reprieve, commutation, or pardon; or a

reduction of sentence by subsequent law. Second, funds held

in a dedicated discharge account for an inmate who dies in

16536 WARD v. RYAN

prison are applied to his cremation or other final expenses,

and any remaining funds inure to his estate. We agree with the

district court’s conclusion.

[6] Arizona statutes impose several limitations on an

inmate’s spending of his wages and delineate mandatory

deductions from inmates’ accounts. These limitations and

mandatory deductions indicate the state’s intent to place

restrictions on an inmate’s control over the wages he has

earned. Section 31-254 of the Arizona Revised Statutes leaves

the amount of compensation for inmate work to the discretion

of the Director. Ariz. Rev. Stat. § 31-254(A). The statute pro-

vides for mandatory deductions from inmate wages, not only

for the dedicated discharge account, but also for court costs,

room and board costs, and court ordered dependent care. Id.

§ 31-254(D), (E). The Director is also given explicit authority

to regulate inmate usage of the funds in prisoner spendable

accounts. Id. § 31-230(B) (“The director shall adopt rules for

the disbursement of monies from prisoner spendable

accounts.”). Additionally, the statute creating the dedicated

discharge account does not provide for exceptions or adjust-

ments based on the length of an inmate’s sentence. Id. § 31-

237.

[7] These statutes clearly establish a framework under

which inmates’ property interest in their wages is limited by

the oversight of the Director and is subject to mandatory

deductions. The statutes do not give inmates a full and unfet-

tered right to their property but rather restrict their control

over their earnings. Accordingly, Ward does not possess a

protected property interest in the immediate access to wages

held in his dedicated discharge account, because he does not

currently have the statutory right to use these funds in the

account. Ward’s life sentence does not alter this outcome.

While these funds are Ward’s property, the Director may

properly restrict his access to them without offending tradi-

tional notions of property law.

WARD v. RYAN 16537

Ward argues that even if a statute does not explicitly create

a property interest, such right may nonetheless still exist. That

is true. We held in Schneider II that courts must consider

whether the claimed property interest is “a ‘core’ notion of

constitutionally protected property into which state regulation

simply may not intrude without prompting Takings Clause

scrutiny.” 151 F.3d at 1200. Property’s “core” meaning is

determined “by reference to traditional ‘background princi-

ples’ of property law.” Id. at 1201.

In Schneider II we examined the California Department of

Corrections’ failure to pay interest on funds deposited in

inmate trust accounts. Id. at 1195. We held that “[t]he ‘inter-

est follows principal’ rule’s common law pedigree . . . leaves

us with little doubt that interest income of the sort at issue

here is fundamental that States may not appropriate it without

implicating the Takings Clause.” Id. In the fourth round of lit-

igation in Schneider, we held that California’s failure to pay

interest was therefore a taking under the Fifth Amendment

where the interest was diverted to a common inmate welfare

fund. Schneider v. Cal. Dep’t of Corr. (Schneider IV), 345

F.3d 716, 719-21 (9th Cir. 2003).

[8] Ward’s claim does not concern a “core notion of con-

stitutionally protected property.” As we previously explained,

under common law prison inmates lost their rights to unfet-

tered control and use of private property. The dedicated dis-

charge account, while not currently accessible by Ward, is

being held for Ward’s benefit. It will be paid to him upon dis-

charge, used for his final expenses, or left to his heir. It has

not and will not be taken and used by the government for its

own benefit or for the benefit of anyone else, unlike the inter-

est income in the Schneider cases, which was permanently

taken by the California Department of Corrections and placed

in a common fund to be used for the inmate population as a

whole. In light of Ward’s limited property right in his wages

and the fact he has not suffered a permanent taking of his

wages by their placement in a dedicated discharge account,

16538 WARD v. RYAN

Ward has not stated a claim for the unconstitutional taking of

his property. The dedicated discharge account here thus dif-

fers from inmate accounts at issue in other cases where we

held that the Takings Clause was implicated. See, e.g., Schnei-

der IV, 345 F.3d at 719-21; McIntyre v. Bayer, 339 F.3d 1097,

1099-1100 (9th Cir. 2003) (holding that pooling interest on

Nevada inmate trust accounts and requiring inmates to con-

tribute a portion of their wages to a victims’ compensation

fund implicated the Takings Clause).

[9] Ward also makes a due process claim, but that is not

viable either. To establish a due process violation, an inmate

“must demonstrate that [he] ha[s] been deprived of a pro-

tected liberty or property interest by arbitrary government

action.” McKinney v. Anderson, 924 F.2d 1500, 1510 (9th Cir.

1991), vacated on other grounds by Helling v. McKinney, 502

U.S. 903 (1991). As discussed above, Ward does not have a

protected property interest in the current use of the funds in

the dedicated discharge account, and he has not been perma-

nently deprived of any property interest. Furthermore, the

government’s action here is not arbitrary; as the district court

pointed out, “[g]ate money promotes public welfare and the

common good by aiding inmates’ integration into society and

removing the immediate temptation to acquire needed funds

through illegal means.”

III. Conclusion

[10] Ward does not have a current possessory property

interest in the wages withheld in the dedicated discharge

account and he has not been permanently deprived of those

funds, so the Department’s withholding of the $50.00 from

his wages for gate money does not violate his constitutional

rights. The district court properly granted summary judgment

for the Director. Because of our resolution of that issue, we

do not need to address the separate arguments regarding qual-

ified immunity and punitive damages.

AFFIRMED.