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Rebirth Christian Academy Daycare, Inc. v. Brizzi

United States Court of Appeals, Seventh Circuit

August 30, 2016

Rebirth Christian Academy Daycare, Inc., Plain tiff-Appellant,
v.
Melanie Brizzi and Michael Gargano, Defendants-Appellees.

          Argued January 5, 2016

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 12-cv-01067-SEB-DKL - Sarah Evans Barker, Judge.

          Before WOOD, Chief Judge, and Kanne and ROVNER, Circuit Judges.

          ROVNER, Circuit Judge.

         Rebirth Christian Academy Daycare, an Indiana non-profit corporation, ran a child care ministry-a "child care operated by a church or religious ministry that is a religious organization exempt from federal income taxation." IND. Code § 12-7-2-28.8. A state agency revoked Rebirth's registration after an inspector concluded that the organization had violated several statutory and regulatory provisions governing registered child care ministries. Rebirth sued state officials for damages and injunctive relief under 42 U.S.C. § 1983, claiming that they had violated the due-process clause of the Fourteenth Amendment by revoking its registration without providing it with an opportunity to be heard. The district court dismissed Rebirth's individual-capacity claims, concluding that qualified immunity protected the defendants from liability for civil damages because they had not violated clearly established law. After the parties developed an evidentiary record on the official-capacity claims, Rebirth ultimately prevailed on its claims for injunctive relief. It now challenges the district court's dismissal of its claims for damages against the defendants sued in their individual capacities. We conclude that, based on the allegations in the complaint, the defendants were not entitled to qualified immunity because they violated clearly established law: the complaint adequately alleges that they deprived Rebirth of a property interest without first providing an opportunity for some type of hearing. Accordingly, we reinstate Rebirth's individual-capacity claims and remand for further proceedings.

         I.

         Child care ministries are extensively regulated by the State of Indiana-specifically, by the Bureau of Child Care (a sub-agency of the Division of Family Resources, which is a branch of the Indiana Family and Social Services Administration, see Ind. Code §§12-13-6-1, 12-13-1-1). Indiana statutes provide that, to operate a child care ministry lawfully, a religious organization must either obtain a license from or register with the Bureau. Id. §§ 12-17.2-6-1 to-2.

         A religious organization may procure a license to operate a child care ministry as either a "child care home" (a child care located in a residential building, IND. CODE § 12-7-2-28.6) or a "child care center" (a child care located in a nonresidential building, id. § 12-7-2-28.4). To secure either type of license, a provider must submit an application with supporting documents, id. §§ 12-17.2-4-3, 12-17.2-5-3; undergo site visits and inspections, id. §§ 12-17.2-4-7, 12-17.2-4-15 to -16, 12-17.2-5-6, 12-17.2-5-15 to -16; and get re-licensed every two years, id. §§ 12-17.2-4-12(a), 12-17.2-5-12(a).

         To operate a registered (as opposed to licensed) child care ministry lawfully, a religious organization must submit an application to the Bureau, see Indiana Family & Social Services Administration, The ABC's of a Child Care Business, at 7-8 (Nov. 2010), available at http://www.in.gov/fssa/files/ 5236_The_ABCs_of_a_Child_Care_Business.pdf; pay a registration fee of $50, Ind. Code § 12-17.2-6-12; submit an application to Indiana's Department of Homeland Security for the state fire marshal (paying another $50), id. § 12-17.2-6-13; ABC's of a Child Care Business, supra, at 8; and pass inspections by both the State Fire Division Inspector and the Bureau's inspector, Ind. Code §§ 12-17.2-6-4 to -5. (A registered child care ministry must also submit to semiannual inspections, id. § 12-17.2-6-4, and re-register annually, ABC's of a Child Care Business, supra, at 8.) A religious organization that satisfies these requirements is issued a certificate of registration showing that it is authorized to operate a child care ministry without a license.

         The state may revoke a child care ministry's certificate of registration only "if the operator or an employee of the child care ministry violates" the statutes or regulations governing registered ministries. IND. CODE §12-17.2-6-9. A license to operate a child care ministry likewise may be revoked only for a violation of the law. Id. §§ 12-17.2-4-33, 12-17.2-5-33. State law affords a procedure for administratively appealing the revocation of a license (and allows a licensed child-care provider to continue operating while such an appeal is pending). See id. §§ 12-17.2-4-33(b)(1), 12-17.2-4-19 to-22, 12-17.2-5-33(b)(1), 12-17.2-5-19 to -22. But Indiana's statutory scheme does not give providers an administrative opportunity to challenge the Bureau's decision to revoke a certificate of registration.

         Rebirth obtained a certificate of registration and began operating a child care ministry in late 2009. In mid-2012, a representative of the Bureau conducted an unannounced inspection of the ministry. After the inspection, the Bureau gave Rebirth a document titled "Plan of Improvement, " which stated that Rebirth had violated statutes and regulations governing registered child care ministries. The Plan of Improvement alleged eight violations; it also directed Rebirth to cure the purported infractions and submit proof within ten days that it had done so. The document did not, however, offer any procedure for challenging the Bureau's findings.

         Rebirth believed that it had not committed any of the violations identified by the Bureau and thus did not submit any documentation showing that it had cured the violations alleged in the Plan of Improvement. Shortly after the deadline for submitting the documentation had passed, Melanie Brizzi, the head of the Bureau, sent Rebirth a letter notifying the organization that the Bureau would terminate Rebirth's certificate of registration in two weeks because of Rebirth's failure to provide evidence that it had cured the purported violations. Like the Plan, the notice of termination did not give Rebirth a chance to challenge the Bureau's findings or its decision to terminate Rebirth's registration.

         Rebirth nonetheless sent the Bureau a letter requesting an opportunity to appeal administratively the agency's impending termination of the registration. Brizzi responded with a letter of her own, telling Rebirth that "[t]he Indiana General Assembly did not provide for an administrative appeal process for the loss of" a certificate of registration and that therefore the Bureau would not grant "an administrative appeal review process before the Division of Family Resources." The Bureau terminated Rebirth's registration without any hearing, and Rebirth ceased operating the child care ministry.

         The following month, Rebirth filed a lawsuit claiming that the Bureau had violated its right to due process under the Fourteenth Amendment by terminating its registration without first providing Rebirth with an opportunity to challenge the termination. In Rebirth's first amended complaint (the complaint relevant to this appeal), it named as defendants Brizzi and Michael Gargano, who was the Secretary of the Indiana Family and Social Services Administration and who oversaw the Bureau when it terminated Rebirth's registration. Rebirth sued the defendants in both their individual and official capacities, seeking damages and injunctive relief.

         Early in the litigation, the district judge granted the defendants' motion to dismiss the individual-capacity claims on the ground of qualified immunity. The judge noted that the procedures of the Family and Social Services Administration do not require an administrative appeals process and reasoned that, in light of this fact, Brizzi and Gargano did not act contrary to clearly established law when they failed to provide Rebirth ...


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