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Mallum v. Wisconsin Laborers' Health Fund

United States District Court, E.D. Wisconsin

May 3, 2017



          LYNN ADELMAN District Judge

         George Mallum brings this action under 42 U.S.C. § 1983, alleging that defendants violated his Fourteenth Amendment due process rights during worker's compensation proceedings before the Wisconsin Department of Workforce Development (DWD). Before me now are defendants' motions to dismiss and various motions concerning, among other things, discovery and service of process.

          I. BACKGROUND

         When a Wisconsin worker is injured or disabled on the job, he may recover reasonable medical expenses and compensation for lost wages from his employer. Mallum sought such worker's compensation benefits from two employers, but his employers disputed his claims, so he brought them before DWD, the state agency authorized to adjudicate such disputes. Aaron Konkol, a DWD administrative law judge, presided over the dispute.

         Wisconsin Laborers' Heath Fund (WLHF) notified the parties that it had paid certain medical expenses related to Mallum's worker's compensation claims and asserted a right to reimbursement for those payments. Konkol, in an email to the parties, described DWD's authority to order direct reimbursement out of worker's compensation benefits for certain payments by an insurer, directed Mallum's attorney to work with WLHF's attorney to determine whether and to what extent WLHF was entitled to reimbursement, and indicated that he would not approve a “compromise agreement” between the parties while WLHF's claim was in dispute. A compromise agreement is a specific type of agreement that parties to worker's compensation proceedings can submit if they prefer to settle without a hearing. See generally Worker's Compensation Guide, State of Wis. Dep't of Workforce Dev., publications/wc/WKC-7580.htm (last updated Apr. 1, 2015).

         About ten months later, Mallum, his attorney, and his employers signed a limited compromise agreement. Mallum agreed to relieve his employers of liability for past medical expenses, and in exchange, his employers agreed to pay a total of $190, 000, of which they would pay $40, 000 directly to WLHF. Later that week, Konkol approved the terms of the compromise agreement in an order.

          II. DISCUSSION

         Mallum sued Konkol, WLHF, DWD, and the State of Wisconsin in this court. He alleges that Konkol peremptorily ruled, in his email, that WLHF was entitled to reimbursement and finalized that ruling when he ordered direct payment to WLHF according to the compromise agreement. He further alleges that WLHF wantonly, willfully, and maliciously interfered in his worker's compensation proceedings in violation of state law. Though the scope of his claims is not entirely clear, his central claim seems to be that, despite his requests for a hearing, he was never provided with an appropriate opportunity to dispute WLHF's claim and, therefore, was deprived of $40, 000 worth of worker's compensation benefits without due process of law.

          A. Motions to Dismiss

          The state defendants (Konkol, DWD, and Wisconsin) and WLHF separately move to dismiss, raising many grounds for dismissal, including sovereign and judicial immunity, the Rooker-Feldman doctrine, and issue and claim preclusion. I need not consider every basis for dismissal that they raise because Mallum's complaint clearly “fails to state a claim on which relief may be granted” and “seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B)(ii)-(iii). Defendants raise and the parties have fully argued both of these grounds for dismissal. To the extent that the complaint raises claims that do not fall within the scope of § 1915(e)(2)(B), they are beyond the subject-matter jurisdiction of this court.

          1. Failure to State a Claim

          To state a cognizable claim under § 1983, a plaintiff must plausibly allege that he was deprived of a federal constitutional or statutory right by a person or persons acting under color of state law. Buchanan-Moore v. County of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009) (citing Kramer v. Village of North Fond du Lac, 384 F.3d 856, 861 (7th Cir. 2004)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To state a valid due process claim under the Fourteenth Amendment, a plaintiff must plausibly allege that the state deprived him of life, liberty, or property without due process of law. U.S. Const. amend. XIV, § 1.

         First, states, state agencies, and state officials in their official capacity are not “persons” within the meaning of § 1983 and cannot be sued for damages under that law. Will v. Mich. Dep't of State Police, 491 U.S. 58, 62-71 (1989). Thus, Mallum fails to state a § 1983 claim against Wisconsin, DWD, or Konkol in his official capacity.

         Second, private actors are generally not subject to suit under § 1983 for alleged violations of the Fourteenth Amendment, which only protects citizens from state action. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 815 (7th Cir. 2009). A private actor can be sued for a due process violation if its “private conduct takes on the color of law, ” but that only happens in limited circumstances, none of which are present here. See Id. at 815-16 (collecting cases). Mallum suggests that WLHF acted under color of state law because it “conspire[d] or . . . jointly engaged with state actors to deprive [him] of constitutional rights.” Id. at 815 (citing Dennis v. Sparks, 449 U.S. 24, 27-28 (1980)). However, to state such a claim, a plaintiff must allege that there was “an understanding, or some concerted effort or plan, to cause [him] harm or injury.” 1 Sheldon H. Nahmod, Civil Rights and Civil Liberties Litigation § 2:22, Westlaw Next (Updated Sept. 2016) (footnotes omitted) (citing Moore v. Marketplace Rest., Inc., 754 F.2d 1336 (7th Cir. 1985); Bendiburg v. Dempsey, 909 F.2d 463, 469 (11th Cir. 1990)). Mallum does not plausibly allege that WLHF did anything more than openly assert in public proceedings ...

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