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WASTE CONVERSION, INC. v. SIMS

November 15, 1994

WASTE CONVERSION, INC., STOUT ENVIRONMENTAL, INC., and MARK ALSENTZER, Plaintiffs,
v.
LANA SIMS, MICHAEL B. McKITISH, and JAMES J. ROSENBERG, Defendants



The opinion of the court was delivered by: JOSEPH E. IRENAS

 IRENAS, DISTRICT JUDGE:

 Plaintiff Waste Conversion, Inc. ("Waste Conversion") is a subsidiary of plaintiff Stout Environmental, Inc. ("Stout"). Plaintiff Mark Alsentzer is the President of Stout. (Collectively the "plaintiffs.") Plaintiffs engage in the hazardous waste disposal industry in New Jersey.

 Defendants Lana Sims, Michael B. McKitish, and James J. Rosenberg (collectively the "defendants") were all, at various times relevant to this case, either Director or Acting Director of the New Jersey Department of Treasury's Division of Purchase and Property ("P&P"). P&P is the New Jersey government agency responsible for negotiating outside service contracts, such as hazardous waste hauling contracts, on behalf of the state.

 Plaintiffs brought this action under 42 U.S.C. § 1983 (1988), alleging that P&P's twenty-six month suspension of plaintiffs' ability to contract with the state infringed their property rights without due process of law. Plaintiffs also appended several supplemental New Jersey state law claims under 28 U.S.C. § 1367 (1988). Plaintiffs sued McKitish and Rosenberg individually, and Sims both individually and in her official capacity as the current director of P&P.

 This matter originally came before the Court on defendants Rosenberg and McKitish's motion for summary judgment on plaintiffs' § 1983 claim. The Court then indicated that it would reconsider the March 30, 1993, Opinion and Order denying all defendants' cross-motion for summary judgment on qualified immunity and granting plaintiffs' motion for summary judgment on liability against defendant Sims on the § 1983 claim.

 I. FACTS AND PROCEDURAL HISTORY

 Waste Conversion holds a Hazardous Waste Transporter License issued by the New Jersey Department of Environmental Protection ("DEP"). This license allows Waste Conversion to act as a broker for the transportation and disposal of hazardous waste materials generated in New Jersey. Waste Conversion's clients included the State of New Jersey.

 On December 2, 1988, the DEP issued an administrative order seeking to revoke Waste Conversion's hazardous waste transporter license, to bar Alsentzer from the hazardous waste industry in New Jersey, and to impose administrative penalties on Waste Conversion. (Witt Aff. at 1a.) *fn1" Pursuant to the New Jersey Administrative Procedures Act, N.J.S.A. § 52:14B-11 (West supp. 1994), Waste Conversion and Alsentzer were given twenty days to request a hearing before an administrative law judge ("ALJ"), which they apparently did. DEP also sent a letter to Rosenberg, then Director of P&P, requesting that Waste Conversion and Alsentzer be "immediately suspended and ultimately disbarred from hazardous waste contracting with the State of New Jersey." (Witt Aff. at 37a.)

 On September 8, 1989, Rosenberg issued an Order of Suspension suspending Waste Conversion and Alsentzer from contracting with the State of New Jersey "pending the completion of proceeding by the DEP to revoke [Waste Conversion's] waste transporter license and to bar Alsentzer from the waste industry, and pending debarment proceedings by the [P&P]." (Witt Aff. at 39a-40a.) The Order of Suspension also stated that "if debarment proceedings are not commenced within sixty days of the date that [Waste Conversion] and Mark Alsentzer are served with this Order, they shall be given a statement of the reasons for thereafter continuing the suspension and an opportunity for a hearing." (Witt Aff. at 40a.) The Order of Suspension was signed by the New Jersey Attorney General and became effective on September 22, 1989.

 P&P did not initiate debarment proceedings within sixty days, nor did it inform plaintiffs *fn2" of the reasons for its continued suspension. On April 24, 1990, McKitish, Rosenberg's successor, sent Alsentzer a letter informing him that the suspension "will remain in effect pending the outcome of the litigation by DEP." (Witt Aff. at 44a.) The letter also contained a memorandum from DEP setting forth the reasons for the suspension. (Witt Aff. at 45a-53a.) The letter did not inform plaintiffs of their right to a hearing, but plaintiffs did not request a hearing upon receiving the letter, or at any time thereafter. *fn3"

 Meanwhile, on September 27, 1991, while the Commissioner of DEP was still reviewing the ALJ's decision, plaintiffs filed the instant action. Plaintiffs complained that P&P had deprived them of their ability to do business with the state for two years without due process of law, and requested monetary and injunctive relief. The case was originally assigned to another judge in this district.

 On November 25, 1991, Lana Sims, the Director of P&P, advised plaintiffs that she would lift the Order of Suspension if plaintiffs would agree to abide by certain conditions, including the DEP Commissioner's "corrective plan." Apparently, these conditions were met, and plaintiffs' suspension was lifted sometime thereafter. This decision rendered plaintiffs' request for injunctive relief moot.

 Defendants then brought a motion to dismiss plaintiffs' due process claim. In an Opinion dated July 8, 1992, the court held: (1) that the Eleventh Amendment barred plaintiffs' claim for monetary damages against Sims in her official capacity, (Opinion of July 8, 1992, at 7); (2) that New Jersey law created a protected property interest in contracting with the state, (id. at 9); and (3) that plaintiffs were not entitled to a pre-deprivation hearing, (id. at 14). The court then noted that the DEP proceedings would, in themselves, provide adequate post-deprivation process. (Id. at 15). The court refused to dismiss the complaint, however, because it was not clear whether P&P provided the process due "at a meaningful time." (Id. at 16).

 Subsequently, plaintiffs moved for summary judgment as to liability on their federal and state law claims, and defendants cross-moved for summary judgment on the basis of qualified immunity. In an Opinion and Order dated March 30, 1993, the court denied all defendants' cross-motions for summary judgment on qualified immunity, granted plaintiffs' motion for summary judgment against defendant Sims as to liability on the § 1983 claim, denied that motion as to defendants Rosenberg and McKitish, and denied plaintiffs' motion for summary judgment on the state law claims.

 The court held that plaintiffs' procedural due process rights had been violated. (Opinion of Mar. 30, 1993, at 6). The court also found that the right to a prompt post-deprivation right was "clearly established," and thus defendants were not entitled to qualified immunity. (Id. at 7). Furthermore, summary judgment on liability against Sims was appropriate because, at the time of her tenure, plaintiffs had not had a hearing for twenty-six months, and "a reasonable official standing in Ms. Sims shoes would have known what she was doing violated plaintiffs' rights." (Id. at 9). As to the other two defendants, however, it was unclear whether their acts during their tenure at P&P were unreasonable, and thus summary judgment was inappropriate.

 The case was reassigned to this Court by Order dated March 28, 1994. On September 26, 1994, defendants McKitish and Rosenberg filed motions for summary judgment. In an Order dated October 5, 1994, this Court indicated that it would reconsider the March 30, 1993, Opinion and Order insofar as it granted plaintiffs' motion for summary judgment on liability as to defendant Sims, and denied all defendants' cross-motion for summary judgment.

 II. RECONSIDERATION OF THE MARCH 30, 1993, OPINION AND ORDER

 Plaintiffs argue that we cannot reconsider the March 30, 1993, Opinion and Order. Plaintiffs premise their argument on two bases: (1) that the denial of qualified immunity was immediately appealable, and that defendants' waiver of the right to interlocutory appeal divests us of jurisdiction to reconsider the issue, and (2) that the "law of the case" doctrine precludes our reconsideration of the prior court's decision. We reject both arguments.

 A. Waiver of Right to Interlocutory Appeal

 In Mitchell v. Forsyth, 472 U.S. 511, 86 L. Ed. 2d 411, 105 S. Ct. 2806 (1985), the Court held that "a district court's denial of a claim of qualified immunity . . . is an appealable 'final decision' within the meaning of 28 U.S.C. § 1291 notwithstanding the absence of a final judgment." Id. at 530. The Court reached this conclusion because it found that the doctrine of qualified immunity provides "an immunity from suit " as well as a defense to liability. Id. at 526. This immunity, the Court reasoned, is "effectively lost if a case is erroneously permitted to go to trial." Id. Thus, if not reviewed after denial, the question could never effectively be reviewed at all, and therefore is appealable under the "collateral order" doctrine of Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 93 L. Ed. 1528, 69 S. Ct. 1221 (1949). 472 U.S. 511, 105 S. Ct. 2806, 86 L. Ed. 2d 411.

 Defendants did not take advantage of Mitchell and appeal to the Third Circuit following the court's denial of qualified immunity on summary judgment. Plaintiffs argue that defendants' failure to pursue this avenue of review effectively waived their right to reconsideration this issue.

 Plaintiffs premise their argument on the Sixth Circuit's decision in Kennedy v. City of Cleveland, 797 F.2d 297 (6th Cir. 1986), cert. denied, 479 U.S. 1103, 94 L. Ed. 2d 185, 107 S. Ct. 1334 (1987). In that case, the court held that interlocutory appeals from denials of qualified immunity are subject to "the same temporal limitations that are applicable generally to the perfection of appeals." Id. at 301. See also Kenworthy v. Hargrove, 826 F. Supp. 138, 142 n.6 (E.D. Pa. 1993). Therefore, failure to take advantage of the right to interlocutory appeal within the thirty day time proscription of Fed. R. App. P. 4(a) waives the right to interlocutory appeal. Kennedy, 797 F.2d at 301.

 From this, plaintiffs argue that defendants have waived their right to review of the denial of qualified immunity. The time to take interlocutory appeal of this issue has expired, plaintiffs point out, and thus the appellate court could not review the issue at this time. Therefore, plaintiffs argue, the district court lacks jurisdiction to reconsider the issue.

 Kennedy, however, does not support plaintiffs' argument. That case makes clear that "decisions with respect to dismissal or summary judgment, if adverse, do not preclude the interposition of the defense of immunity as a defense to liability on the merits." 797 F.2d at 300. Later courts interpreting Kennedy have held that while failure to take a timely interlocutory appeal of a denial of qualified immunity may waive that right, it does not waive the right to raise the issue on direct appeal. Zayas-Green v. Casaine, 906 F.2d 18, 25 (1st Cir. 1990); Kurowski v. Krajewski, 848 F.2d 767, 773 (7th Cir.), cert. denied, 488 U.S. 926, 102 L. Ed. 2d 328, 109 S. Ct. 309 (1988). Therefore, while defendants may have ...


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