Hybrid Employment Agreement Did Not Create A Property Interest

Posted on March 22, 2011 by Michael Rigney

COLE v. MILWAUKEE AREA TECHNICAL COLLEGE DISTRICT (February 24, 2011)

Milwaukee Area Technical College employed Darnell Cole as its president. His employment agreement, which ran through June of 2011, contained two termination provisions. Under one provision, the College could terminate his employment without cause by giving him 90 days notice and paying him all of this salary and vacation that he would have earned through the end of his contract term. Under another provision, the College could terminate his employment at the end of any month for performance or conduct "considered grounds for dismissal" by the College. In February of 2009, Cole was charged with driving under the influence of alcohol. In a February board meeting, the College decided to terminate Cole's employment effective February 28. Cole brought suit pursuant to § 1983 (the College is a creature of Wisconsin law), alleging a due process violation. Magistrate Judge Gorence (E.D. Wis.) granted the defendants' motion to dismiss. Cole appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge McCuskey affirmed. The threshold question in any due process case, stated the Court, relates to the existence of a property interest. If Cole has a property interest, it must come from his employment agreement and state law. Under Wisconsin law, due process attaches only when the employment agreement requires a "cause" for termination. The Court concluded that Cole’s employment agreement fell somewhere between an at-will employment agreement and a "cause" employment agreement. Although the College needed some reason to terminate Cole's employment without notice and without severance, their discretion to do so was not meaningfully restricted. The Court therefore concluded that Cole did not have a constitutionally protected property interest.

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Government's Equitable Claim For A Cleanup Remedy Was Not Discharged In Bankruptcy

Posted on December 8, 2009 by Michael Rigney

UNITED STATES v. APEX OIL CO. (August 25, 2009)

Years ago, a corporate predecessor of Apex Oil Co. owned a refinery near Hartford, Illinois. According to the EPA, the operation of the refinery contributed to the contamination of the groundwater in the area. The United States brought an action, pursuant to the Resource Conservation and Recovery Act (RCRA), for an injunction to require Apex to clean up the site. Apex argued that its earlier discharge in bankruptcy relieved it of any cleanup obligation. The district court issued the injunction. Apex appeals.

In their opinion, Judges Cudahy, Posner and Kanne affirmed. The Court identified the principal issue on appeal as whether the government's claim for the injunction was discharged in bankruptcy. Under the bankruptcy laws, the Court stated that a debtor is discharged from any "liability on a claim." A "claim" is further defined as a "right to payment" or a "right to an equitable remedy for breach of performance if such breach gives rise to a right to payment." The Court concluded that the natural reading of the bankruptcy provision is that an equitable claim is dischargeable if the holder can obtain a money judgment in lieu of the injunction under certain circumstances. Here, however, the statute under which the government sought the injunction (RCRA) does not authorize any form of money judgment -- the only remedy available to the government is a cleanup order. The fact that the cleanup order would require a significant payment by Apex did not convert the injunction into a money judgment. The Court distinguished the Supreme Court's opinion in Kovacs. In Kovacs, the plaintiffs were seeking money from the debtor. Apex also challenged the injunction itself on vagueness grounds. The Court actually agreed that the injunction was vague and that it has in the past insisted on compliance with the requirement that an injunction describe in some reasonable detail the acts required. However, the Court concluded that that policy applies when compliance with the rule is feasible. Here, the subject of the injunction is a complicated refinery remediation. In such cases, more leeway is necessary.

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