Orozco v. Day

96-344

No. 96-344

IN THE SUPREME COURT OF THE STATE OF MONTANA

1997

DANIEL OROZCO,

Plaintiff and Appellant,

v.

RICK DAY, Director off the Department of

Corrections and Human Services, MIKE

MAHONEY, Section Warden, MYRON BEESON,

Section Warden, CANDYCE NEUBAUER,

Classification Manager, DAVE LANNING,

Unit Manager, MONTANA DEPARTMENT OF

CORRECTIONS AND HUMAN SERVICES, MONTANA

STATE PRISON.

Defendants and Respondents.

APPEAL FROM: District Court of the Third Judicial District,

In and for the County of Powell,

The Honorable Ted L. Mizner, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Daniel Orozco, Pro Se, Deer Lodge, Montana

For Respondents:

Lois Adams, David L. Ohler, Diana P. Leibinger,

Attorneys at Law, Department of Institutions,

Helena, Montana

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Submitted on Briefs: October 10, 1996

Decided: March 10, 1997

Filed:

__________________________________________

Clerk

Justice Karla M. Gray delivered the Opinion of the Court.

Daniel Orozco (Orozco), appearing pro se, appeals from the

opinion and order of the Third Judicial District Court, Powell

County, dismissing his complaint for failure to state a claim upon

which relief could be granted. We affirm in part, reverse in part

and remand for further proceedings consistent with this opinion.

We restate the issues on appeal as follows:

1. Did the District Court err in concluding that the

Department of Corrections and the individual defendants are not

"persons" under 42 U.S.C. 1983?

2. Did the District Court err in concluding that the

individual defendants have qualified immunity?

Factual and Procedural Background

Orozco is an inmate at the Montana State Prison (MSP). On

March 26, 1995, Unit Manager Dave Lanning notified Orozco, via a

document entitled "Due Process Notifications," that an ongoing

investigation indicated that he was involved in a conspiracy to

traffic drugs within the MSP. The notice further stated that a

classification hearing would be held to address Orozco's custody

level and job assignment and that Orozco could present evidence on

his own behalf at the hearing. On the same day, Orozco was placed

in temporary lock-up in maximum security for investigation purposes

pursuant to MSP Policy No. 15-002.

Orozco was not provided with a hearing investigator to assist

in his defense at the classification hearing held on March 28,

1995. As a result of the hearing, Orozco was reclassified to

maximum security and was unable to continue earning thirteen days

per month good time credits.

Orozco subsequently filed a 42 U.S.C. 1983 civil rights

action against Rick Day, Director of the Department of Corrections;

Mike Mahoney, Section Warden; Myron Beeson, Section Warden; Candyce

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Neubauer, Classification Manager; Dave Lanning, Unit Manager for

Close Unit One; the Department of Corrections (Department); and the

MSP. Orozco requested a declaratory judgment that the defendants

had violated his due process rights under the Fifth and Fourteenth

Amendments to the United States Constitution by failing to assign

a hearing investigator to assist in his defense during the

classification hearing which could, and did, result in his

inability to continue to earn thirteen days per month good time

credits. He also sought a preliminary and permanent injunction

requiring the defendants to adequately train and supervise

personnel in established policy and discipline personnel for

failure to comply with such policy; to place him back in the

general prison population; and to credit him with thirteen days per

month good time which was lost due to his placement in maximum

security. Finally, Orozco requested an award of money damages

against each of the defendants.

The defendants moved to dismiss Orozco's complaint pursuant to

Rule 12(b)(6), M.R.Civ.P., for failure to state a claim upon which

relief could be granted. The District Court held a hearing in

December of 1995 and, thereafter, granted the defendants' motion to

dismiss. Orozco appeals.

Additional facts are set forth below where necessary to our

resolution of the issues.

Standard of Review

The District Court dismissed the entirety of Orozco's

complaint pursuant to Rule 12(b)(6), M.R.Civ.P. In evaluating a

Rule 12(b)(6) motion to dismiss, courts are required to construe a

complaint in the light most favorable to the plaintiff. The court

should not dismiss the complaint unless it appears that the

plaintiff is not entitled to relief under any set of facts which

could be proved in support of the claims. Loney v. Milodragovich,

Dale & Dye, P.C. (1995), 273 Mont. 506, 509, 905 P.2d 158, 160.

The issues Orozco raises on appeal assert error in the

District Court's conclusions of law. We review a district court's

conclusions of law to determine whether the court's interpretation

of the law is correct. Werre v. David (1996), 275 Mont. 376, 385,

913 P.2d 625, 631.

Discussion

1. Did the District Court err in concluding that the

Department and the individual defendants are not

"persons" under 42 U.S.C. 1983?

Orozco based his claim against the Department and each

individual defendant on 42 U.S.C. 1983, which provides:

Every person who, under color of any statute, ordinance,

regulation, custom, or usage, of any State or Territory

or the District of Columbia, subjects, or causes to be

subjected, any citizen of the United States or other

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person within the jurisdiction thereof to the deprivation

of any rights, privileges, or immunities secured by the

Constitution and laws, shall be liable to the party

injured in an action at law, suit in equity, or other

proper proceeding for redress.

In order to prevail on a 1983 claim, the plaintiff must

establish:

(1) a violation of rights protected by the [United

States] Constitution or created by federal statute, (2)

proximately caused (3) by conduct of a "person" (4)

acting under color of state law.

Crumpton v. Gates (9th Cir. 1991), 947 F.2d 1418, 1420.

The District Court concluded that the Department and the

individual defendants are not "persons" within the meaning of

1983. Orozco contends that the court erred.

Department of Corrections

The United States Supreme Court has held that municipalities

and local government units are among those "persons" to whom 42

U.S.C. 1983 applies. See Monell v. New York City Dep't of Social

Serv. (1978), 436 U.S. 658, 690, 98 S.Ct. 2018, 2035, 56 L.Ed.2d

611, 635. States and other governmental entities, on the other

hand, are considered "arms of the state" and, as a result, they are

not "persons" within the meaning of 1983. See Will v. Michigan

Dep't of State Police (1989), 491 U.S. 58, 70, 109 S.Ct. 2304,

2312, 105 L.Ed.2d 45, 57. The exclusion of states and "arms of the

state" from the term "person" contained in 1983 is based on the

immunity from suit provided to states by the Eleventh Amendment to

the United States Constitution. See Will, 491 U.S. at 66.

The Department is an entity within the executive branch of

government in the State of Montana (State). See 2-15-102(4) and

2-15-2301, MCA. Thus, it is a governmental entity which is

considered an "arm of the state" and not a "person" for 1983

purposes. See Will, 491 U.S. at 70.

Orozco argues that 2-9-305(2), MCA, required him to join the

Department in this action and, therefore, that the District Court

erred in concluding that it was not a proper 1983 defendant. The

Department did not respond to Orozco's argument but, in any event,

Orozco misreads the statute.

Section 2-9-305(2), MCA, requires governmental entity

employers to defend and indemnify employees sued for misconduct

committed in the course and scope of the employees' office or

employment, including employees against whom a 1983 action is

brought. It does not refer to, or require, joinder of a

governmental entity when an employee of that entity is sued. See

2-9-305(2), MCA. Although the heading of 2-9-305, MCA,

contains the language "Governmental entity to be joined as

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defendant," nothing in the text of the statute relates to or

supports that portion of the heading. We have held that the text

of the statute takes precedence over the title in matters of

statutory interpretation. See ISC Distrib., Inc. v. Trevor (1995),

273 Mont. 185, 196, 903 P.2d 170, 177.

Orozco's contention that, under 2-9-305(2), MCA, the

Department was a proper party in his 1983 action is also without

merit. The statute addresses actions brought against employees; it

does not relate to the propriety or impropriety of suing

governmental entities, and the law is clear that 1983 does not

apply to arms of the state. See 2-9-305(2), MCA; Will, 491 U.S.

at 70.

We hold that the District Court correctly concluded that the

Department is not a "person" within the meaning of 42 U.S.C.

1983.

Individual Defendants

State officials sued for money damages in their official

capacities also are not "persons" within the meaning of 1983,

because the suit is not a suit against the state officials, but is

a suit against the officials' offices. Therefore, an action for

money damages against a state official in his or her official

capacity is no different than a suit against the state itself.

Will, 491 U.S. at 71.

State officials are "persons" within the meaning of 1983,

however, if sued for money damages in their individual capacities

for actions taken under color of state law. See Trout v. Bennett

(1992), 252 Mont. 416, 425, 830 P.2d 81, 85-86 (following Hafer v.

Melo (1991), 502 U.S. 21, 112 S.Ct. 358, 116 L.Ed.2d 301). Orozco

argues on appeal that, because he sued the individual defendants in

their individual capacities, the District Court erred in concluding

that the individual defendants are not "persons" under 1983.

Generally, where state officials are sued for damages under

1983, it is presumed that the officials are sued in their

individual capacities. See Shoshone-Bannock Tribes v. Fish & Game

Comm'n, Idaho (9th Cir. 1994), 42 F.3d 1278, 1284 (citation

omitted).

Any other construction would be illogical where the

complaint is silent as to capacity, since a claim for

damages against state officials in their official

capacities is plainly barred.

Shoshone-Bannock Tribes, 42 F.3d at 1284. In cases where the

complaint does not clearly specify whether state officials are sued

in their individual or official capacities, the course of the

proceedings will indicate the type of liability sought to be

imposed. Larez v. City of Los Angeles (9th Cir. 1991), 946 F.2d

630, 640 (citation omitted).

Here, Orozco's complaint does not clearly indicate in which

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capacity he sued the individual defendants. The caption of the

complaint, in which the individual defendants' names are followed

by an identification of their positions within the Department or at

the MSP, suggests that Orozco sued them in their official

capacities. In addition, the complaint contains a section entitled

"DEFENDANT'S [sic]" which sets forth the name of each defendant and

his or her position, followed by a description of the defendant's

official duties.

On the other hand, Orozco's complaint also contains

indications that Orozco intended to sue the individual defendants

in their individual, rather than their official, capacities. For

example, the complaint asserts that the Eleventh Amendment does not

bar actions against officials who, acting under color of state law,

deprive a plaintiff of constitutionally protected rights. This

assertion appears to reflect an awareness by Orozco that, while

Eleventh Amendment immunity applies to state officials sued in

their official capacity (see Will, 491 U.S. at 70-71), it "provides

no shield for a state official confronted by a claim that he had

deprived another of a federal right under the color of state law"

(see Scheuer v. Rhodes (1974), 416 U.S. 232, 237, 94 S.Ct. 1683,

1687, 40 L.Ed.2d 90, 97).

Orozco's complaint also states that the individual defendants

are "not entitled to the protection of the good faith immunity."

Such a defense for the individuals named in Orozco's complaint only

becomes an issue, however, when they are sued in their individual

capacities, because personal immunity defenses may be asserted only

by officials sued in their personal, rather than their official,

capacities. See Hafer, 502 U.S. at 25. Thus, the reference in

Orozco's complaint to personal immunity defenses suggests an intent

to sue the defendants in their individual capacities. Otherwise,

inclusion of such a reference would be meaningless.

Orozco's complaint further states that the defendants "acted

with malicious intent, outside [the] scope of their authority." In

this regard, Orozco's complaint is similar to those in Scheuer,

where the plaintiffs alleged that the defendants acted

intentionally, recklessly, willfully and wantonly either under

color of state law or outside the scope of their authority. See

Scheuer, 416 U.S. at 235. Faced with such allegations in the

context of a trial court's decision to dismiss the complaints at

the pleading stage, the United States Supreme Court concluded that

the plaintiffs' allegations demonstrated that they were seeking to

impose individual liability on the named defendants. Scheuer, 416

U.S. at 238.

Orozco's complaint does not clearly and consistently establish

whether he is suing the individual defendants in their official or

individual capacities. We conclude, however, that a fair reading

of the complaint suggests an intent by Orozco to sue the individual

defendants in their individual capacities. We hold, therefore,

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that the District Court erred in concluding at the pleading stage

of this case that the individual defendants were not "persons"

under 42 U.S.C. 1983.

2. Did the District Court err in concluding that the

individual defendants have qualified immunity?

The District Court also concluded that the individual

defendants were entitled to qualified immunity. Orozco contends

that the court erred in this conclusion as well.

We recently discussed qualified immunity at length in Boreen

v. Christensen (Mont. 1996), 930 P.2d 67, 53 St.Rep. 1450.

Qualified immunity shields government officials performing

discretionary functions from civil damages "'insofar as their

conduct does not violate clearly established statutory or

constitutional rights of which a reasonable person would have

known.'" Boreen, 930 P.2d at 70 (quoting Harlow v Fitzgerald

(1982), 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396). "Qualified

immunity 'gives ample room for mistaken judgments by protecting all

but the plainly incompetent or those who knowingly violate the

law.'" Boreen, 930 P.2d at 70 (quoting Hunter v. Bryant (1991),

502 U.S. 224, 229, 112 S.Ct. 534, 537, 116 L.Ed.2d 589, 596).

Courts apply a two-pronged test in determining whether an

official is entitled to qualified immunity. First, the court must

determine whether a clearly established right has been violated;

and second, the court must determine whether a reasonable person or

official would have known that his or her conduct violated that

right. Sacco v. High Country Indep. Press (1995), 271 Mont. 209,

216, 896 P.2d 411, 415 (citation omitted).

The threshold inquiry in applying the qualified immunity test,

therefore, is whether the constitutional right allegedly violated--

here, an alleged right to due process arising from a liberty

interest in accumulating good time credits--was clearly established

at the time of the conduct giving rise to the litigation. See

Boreen, 930 P.2d at 70. Relying on Remington v. Dep't of Corr. &

Human Serv. (1992), 255 Mont. 480, 844 P.2d 50, the District Court

concluded that Orozco did not have a liberty interest in good time

credits which implicated due process concerns.

In Remington, inmate Daniel Remington petitioned this Court

for habeas corpus relief, contending that the Department violated

his right to due process by denying him good time credits for

successfully completing correspondence courses. Remington, 844

P.2d at 52. We noted that, if a liberty interest in good time

credits exists, due process concerns arise in order "'to insure

that the state-created right is not arbitrarily abrogated.'"

Remington, 844 P.2d at 52 (quoting Wolff v. McDonnell (1974), 418

U.S. 539, 557, 94 S.Ct. 2963, 2975, 41 L.Ed.2d 935, 951). In

determining whether a liberty interest existed, we stated that

[a] liberty interest is created when the legislature

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expressly mandates to an agency the performance of some

activity to be carried out within specific parameters

which include definitions, criteria, and mandated

"shalls."

Remington, 844 P.2d at 52 (citing Connecticut Bd. of Pardons v.

Dumschat (1981), 452 U.S. 458, 466, 101 S.Ct. 2460, 2465, 69

L.Ed.2d 158, 166). We then scrutinized 53-30-105, MCA (1991),

which authorized the Department to adopt rules concerning the

dispensation of good time credits. We concluded that 53-30-105,

MCA (1991), did not contain definitions, criteria or mandates for

the good time rules it directed the Department to adopt and, as a

result, the Department "has virtually unfettered discretion in

establishing the rules which will govern the dispensation of 'good

time' credits to prisoners." Remington, 844 P.2d at 52. In light

of that virtually unfettered discretion, we held that MSP inmates

do not have a liberty interest in good time credits which raises

due process concerns. See Remington, 844 P.2d at 53.

Subsequent to Remington, the United States Supreme Court

changed its focus in defining state-created liberty interests in

Sandin v. Conner (1995), 515 U.S. ___, 115 S.Ct. 2293, 132 L.Ed.2d

418. The Supreme Court reflected that, post-Wolff, it had departed

from determining whether the state had created an interest of "real

substance" and focused, instead, on whether states had gone beyond

issuing mere procedural guidelines and used "'language of an

unmistakably mandatory character' such that the incursion on

liberty would not occur 'absent specified substantive predicates.'"

Sandin, 115 S.Ct. at 2298 (citation omitted). Noting that the

post-Wolff "mandatory language/substantive predicate" focus had

served as a disincentive for states to codify prison management

procedures in the interest of uniform treatment and led to the

involvement of courts in the day-to-day management of prisons, the

Supreme Court concluded that it was time to return to the "interest

of 'real substance'" approach to due process established in Wolff.

Sandin, 115 S.Ct. at 2298-2300.

In Wolff, a Nebraska prison inmate sued under 1983, alleging

that prison disciplinary proceedings which could result in the loss

of good time violated the Due Process Clause of the Fourteenth

Amendment. Wolff, 418 U.S. at 553. Several Nebraska statutes were

relevant to whether a due process liberty interest existed in good

time. The first required good time allowances in specified amounts

for good behavior and mandated reducing an inmate's term of

commitment by the amount of accumulated good time for parole

eligibility purposes. Wolff, 418 U.S. at 546 n. 6. It also

provided that good time reductions of an inmate's term could be

forfeited or withheld by the head of the prison on the basis of an

inmate's misconduct after the inmate "ha[d] been consulted

regarding the charges of misconduct." Wolff, 418 U.S. at 546 n. 6.

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Under a different statute, "flagrant or serious misconduct" could

result in both forfeited or withheld good time credits, affecting

the term of confinement, and disciplinary segregation affecting

only conditions of confinement. Wolff, 418 U.S. at 546-47. Prison

officials had adopted written regulations setting forth policies

and procedures for controlling misconduct and imposing discipline.

Wolff, 418 U.S. at 548-53.

The United States Supreme Court noted at the outset that,

while an incarcerated person's "rights may be diminished by the

needs and exigencies of the institutional environment, a prisoner

is not wholly stripped of constitutional protections when he is

imprisoned for crime." Wolff, 418 U.S. at 555. Thus, the

protection afforded by the Due Process Clause extends to inmates of

state prisons, but it can be limited by institutional needs and

objectives. See Wolff, 418 U.S. at 556.

The Supreme Court observed that Nebraska had provided a

statutory right to good time credits and had specified that such

credits could be forfeited only as a sanction for serious

misbehavior. Wolff, 418 U.S. at 557. On that basis, the Supreme

Court concluded that Nebraska had created an interest of real

substance "embraced within Fourteenth Amendment 'liberty'" which

entitled Nebraska prison inmates to minimum due process procedures

appropriate under the institutional circumstances to insure that

the state-created right to good time was not abrogated arbitrarily.

Wolff, 418 U.S. at 557.

The United States Court of Appeals for the Ninth Circuit

recently applied the Sandin/Wolff "interest of real substance"

approach to due process inquiries with regard to state-created

rights in Gotcher v. Wood (9th Cir. 1995), 66 F.3d 1097. There,

Norman Gotcher, a Washington prison inmate, alleged in a 1983

action that Washington Department of Corrections employees failed

to afford him due process in prison disciplinary hearings; his

claim was premised on an asserted liberty interest in receiving

good time credits. Gotcher, 66 F.3d at 1098-99. The federal

district court relied on the "mandatory language/substantive

predicate" analysis in concluding that Gotcher did not have a

liberty interest in receiving good time. See Gotcher, 66 F.3d at

1098, 1100.

On appeal, the Ninth Circuit reversed. It noted that

Washington's statutes regarding good time credits were

indistinguishable from those enacted in Nebraska and held by the

Supreme Court in Wolff to create a liberty interest. Gotcher, 66

F.3d at 1100. Because the Supreme Court had abandoned the

"mandatory language/substantive predicate" analysis in Sandin and

returned to the Wolff principles, the Ninth Circuit held that the

federal district court erred in concluding that no liberty interest

in good time credits existed. Gotcher, 66 F.3d at 1100-1101.

Our holding in Remington that MSP inmates do not have a

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liberty interest in good time credits predated Sandin and was

premised on the "mandatory language/substantive predicate" analysis

of state-created rights. See Remington, 844 P.2d at 52-53. In

light of Sandin and Gotcher, it is clear that Remington must be,

and is hereby, overruled insofar as it applied that analysis. As

a result, we must determine whether Orozco had a liberty interest

in good time credits under the Sandin/Wolff due process principles.

Section 53-30-105, MCA (1993), provided:

(1) The department of corrections and human services

shall adopt rules providing for the granting of good time

allowance for inmates employed in any prison work or

activity. . . . The good time allowance shall operate as

a credit on the inmate's sentence as imposed by the

court, conditioned upon the inmate's good behavior and

compliance with the rules made by the department or the

warden.

. . . .

(2) In the event of . . . a violation of the rules

prescribed by the department or warden, the inmate may be

punished by the forfeiture of part or all good time

allowances.

This statute mandated rules granting good time for work activity as

a credit on an inmate's sentence. Consistent with this statute,

the Department adopted Policy No. 505, which required that good

time allowances provide a credit on the inmate's sentence as

imposed by the court. The policy clarified when good time accrual

begins and set forth the circumstances, including an increase in

custody classification, which could result in the loss of the

opportunity to earn, or a reduction of, good time credits.

By these legislative and administrative actions, the State

created a right to good time as a direct credit to inmates'

sentences. As in Wolff, the good time provisions contained in both

53-30-105, MCA (1993), and Policy No. 505 directly affect the

duration of inmates' confinement at the MSP. Applying the

Sandin/Wolff due process analysis, we conclude that the State had

created an interest of real substance sufficiently embraced within

Fourteenth Amendment "liberty" so as to entitle Orozco to due

process procedures appropriate under institutional circumstances.

See Sandin, 115 S.Ct. at 2300; Wolff, 418 U.S. at 557. As a

result, we hold that the District Court erred in determining that

no liberty interest existed in this case.

The existence of a liberty interest giving rise to due process

requirements is not dispositive, however, of the qualified immunity

issue presently before us. As discussed above, our threshold

inquiry in addressing qualified immunity is whether the due process

right arising from Orozco's liberty interest in good time credits

was clearly established at the time of the individual defendants'

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conduct which gave rise to this action. See Boreen, 930 P.2d at

70. We hold that it was not.

We decided Remington in 1992 and held therein--on the basis of

the Supreme Court's "mandatory language/substantive predicate"

analysis--that Montana inmates do not have a liberty interest in

good time credits. See Remington, 844 P.2d at 53. The

classification hearing which resulted in Orozco losing the

opportunity to earn additional good time credits, and which he

alleges violated his due process rights, occurred on March 28,

1995. Remington was the controlling Montana case on Montana

statutes and Department policies relating to good time on the date

of Orozco's hearing. As of that date, then, no Montana case

recognized a state-created due process liberty interest in good

time credits.

Moreover, the Supreme Court did not decide Sandin, in which it

returned to the Wolff "interest of real substance" principles,

until June 19, 1995, nearly three months after Orozco's

classification hearing. See Sandin, 115 S.Ct. at 2293. The Ninth

Circuit followed with Gotcher in October of 1995. See Gotcher, 66

F.3d at 1097. Even assuming those cases interpreted statutes and

policies identical to Montana's and determined on such bases that

an interest of real substance in good time credits existed which

gave rise to due process requirements before those credits could be

withheld, the cases postdated the conduct of the individual

defendants which allegedly violated Orozco's due process rights in

the present case. We conclude, therefore, that the liberty

interest in good time credits which gives rise to Orozco's due

process rights here was not clearly established at the time of his

classification hearing. As a result, we further conclude that the

individual defendants are entitled to qualified immunity from

liability for civil damages. See Boreen, 930 P.2d at 75.

Accordingly, we hold that the District Court was correct in so

concluding.

As previously mentioned, the District Court dismissed the

entirety of Orozco's complaint--which sought not only money

damages, but also declaratory and injunctive relief--pursuant to

Rule 12(b)(6), M.R.Civ.P. The District Court correctly dismissed

the Department from the entirety of Orozco's 1983 suit because it

is an arm of the State and, therefore, not a "person" within the

meaning of 1983. In addition, the District Court correctly

dismissed the damage claim against the individual defendants based

on qualified immunity. Given Orozco's liberty interest in

accumulating good time credits, however, we conclude that the

District Court improperly dismissed Orozco's complaint pursuant to

Rule 12(b)(6), M.R.Civ.P., with regard to the declaratory and

injunctive relief requested under 1983. See Loney, 905 P.2d at

160. As a result, it is necessary to remand for further

consideration of remaining issues, including what "process" was

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"due" Orozco before his opportunity to earn good time credits was

withdrawn and whether Orozco received the process due him. These

issues, insofar as they relate to Orozco's declaratory and

injunctive relief claims, have not been addressed by the District

Court because of the early stage at which the District Court

dismissed the entirety of Orozco's complaint and the reasons

underlying that dismissal.

For these reasons, we affirm in part, reverse in part and

remand this case for further proceedings consistent with this

opinion.

/S/ KARLA M. GRAY

We concur:

/S/ J. A. TURNAGE

/S/ WILLIAM E. HUNT, SR.

/S/ JAMES C. NELSON

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