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Saginaw County v. STAT Emergency Medical Service, Inc.

United States District Court, E.D. Michigan, Southern Division

July 31, 2018

SAGINAW COUNTY, a Michigan municipal corporation Plaintiffs,
v.
STAT EMERGENCY MEDICAL SERVICE, INC., a Michigan for-profit corporation Defendants.

          OPINION AND ORDER GRANTING DEFENDANT'S RENEWED MOTION TO DISMISS (DKT. 14)

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE

         I. Introduction

         Saginaw County passed an ordinance in 2016 requiring anyone seeking to provide ambulance services in the county to first obtain the approval of the County Board of Commissioners. One ambulance company-licensed to provide ambulance services by the State of Michigan- went ahead and operated in the county without the Board's approval. Now the County (“Plaintiff” or “Saginaw”) is suing that company, STAT Emergency Medical Services (“STAT” or “Defendant”), seeking a declaratory judgment that its ordinance is legal under state law and that enforcing it against Defendant would not violate the federal Sherman Antitrust Act (the “Sherman Act”). Saginaw County is a Michigan county organized as a municipal corporation under Michigan law. STAT is a for-profit corporation that operates ambulance services throughout the state of Michigan, including within Saginaw County. STAT moved to dismiss the County's complaint. The Court heard oral argument on the motion to dismiss on May 2, 2018. For the reasons set out in detail below, that motion will be GRANTED.

         II. Background

         At the heart of this dispute lies the question: through what means can Saginaw County prevent a company from providing emergency services within its borders when that company has obtained authorization from the State of Michigan to provide such services throughout the State as well as medical oversight from the Saginaw County Medical Control Authority?

         Plaintiff alleges that as early as 2009, it established a primary ambulance provider system as reflected through contracts with Mobile Medical Response, Inc. (“MMR”), another ambulance company. See Dkt. 10, Pg. IDs 216-18. Plaintiff's Emergency Services Communication Ordinance (the “Ordinance”), Dkt. 1, Ex. H, “enforces the macro-ambulance system established by the County through the primary services contract with MMR and the 911 plan.” Dkt. 10, Pg. ID 219. Plaintiff maintains that its exclusive ambulance service contract with MMR was most recently renewed for another five-year term in 2013. Id; see also Dkt. 1, Ex. C (2013 Renewal). The contract with MMR provides in relevant part that, “The COUNTY hereby designates [MMR] as the sole provider of mobile basic and advanced life support ambulance services for COUNTY during the term of this Agreement.” Dkt. 1, Exhibit C, Pg. ID 29. According to Plaintiff, the County held public meetings prior to entering into the primary ambulance provider contract with MMR in 2009, and also before renewing the contract in 2013. Dkt. 10, Pg. ID 218. While STAT did not appear at the public meeting in 2009, Plaintiff alleges that STAT did appear at meetings held in September and October of 2013. See id.

         According to Plaintiff, at the September 2013 meeting, counsel for STAT contended that the MMR contract would violate the Sherman Antitrust Act and the Due Process clause of the 14th Amendment to the United States Constitution. Id. Counsel for STAT also said it was prepared to initiate legal action against the County if it proceeded with the renewal, according to the Amended Complaint. Dkt. 10, Pg. ID 218. At another meeting in October 2013, Plaintiff claims that STAT's counsel and CEO appeared, “repeat[ing] their threats of Sherman Antitrust and 14th Amendment Due process claims and resolve to take legal action if the contract were renewed.” Dkt. 10, Pg. ID 218. The County ultimately approved the renewal of the MMR contract. Id.; See Dkt. 1, Ex. C. Plaintiff maintains that STAT is providing ambulatory services in Saginaw County in contravention of Plaintiff's contract with MMR and its Ordinance.

         Plaintiff adopted the Ordinance on April 19, 2016, at least in part to protect its primary services contract with MMR. Dkt. 1, Ex. H, Pg. IDs 89-94. Plaintiff alleges that the Ordinance works to enforce the system established by the County through the 911 Plan, yet the record suggests the referenced 911 Plan was adopted by the County on the same day as the Ordinance itself-April 19, 2016. Dkt. 1, Ex. G. This lawsuit primarily concerns Section 5.5 of the Ordinance, which provides that “No Person shall request, operate or provide ambulance service within the County that has not been approved by the Board through contract or resolution.” Dkt. 1 Exhibit H, Pg. ID 94.

         At the hearing on Defendant's motion to dismiss, both parties acknowledged that STAT is currently providing emergency services within the County in contravention of the Ordinance. STAT maintains that the Ordinance as written requires that it be licensed by a body which has no authority to license and is therefore not authorized or enforceable, as it conflicts with Michigan law. See, e.g., Dkt. 17 Ex. A, Pg. ID 496.

         III. Legal Standards

         Federal Rule of Civil Procedure 12(b)(6) allows the court to make an assessment as to whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief', in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests'.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). While a complaint need not contain “detailed” factual allegations, its “factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true.” Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly, 550 U.S. at 555).

         Challenges to subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) “come in two varieties: a facial attack or a factual attack.” Gentek Bldg. Prod., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). Under a facial attack, all of the allegations in the complaint must be taken as true, much as with a Rule 12(b)(6) motion. Id.; see also Lovely v. United States, 570 F.3d 778, 781 (6th Cir. 2009), cert. denied, 558 U.S. 1111, 130 S.Ct. 1054, 175 L.Ed.2d 883 (2010). A factual attack, on the other hand, is not a challenge to the sufficiency of the pleadings' allegations, but a challenge to the factual existence of subject matter jurisdiction. On such a motion, “no presumptive truthfulness applies to the factual allegations” and “the court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994); see also 2 James Wm. Moore, Moore's Federal Practice § 12.30[4] (3d ed. 2000) (“[W]hen a court reviews a complaint under a factual attack, the allegations have no presumptive truthfulness, and the court that must weigh the evidence has discretion to allow affidavits, documents, and even a limited evidentiary hearing to resolve disputed jurisdictional facts.”).

         IV. Analysis

         Federal courts are not courts of general jurisdiction; rather, they have only the power that is authorized by Article III of the United States Constitution and statutes enacted by Congress. A plaintiff must have “constitutional standing” under Article III as well as statutory standing pursuant to a congressional grant in order to avail itself of a federal court's jurisdiction and power to adjudicate a particular case. These two sources together govern a federal court's subject matter jurisdiction. See, e.g., Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986).

         Article III of the United States Constitution prescribes that federal courts may exercise jurisdiction only where an “actual case or controversy” exists. See U.S. Const. art. III, § 2. That federal courts are confined by Article III to adjudicate only actual “cases” and “controversies” represents a fundamental limit on the federal judiciary's power. Thus, “the threshold question in every federal case is whether the court has the judicial power to entertain the suit.” Parsons v. U.S. Dep't of Justice, 801 F.3d 701, 709 (6th Cir. 2015) (quoting Nat'l Rifle Ass'n of Am. v. Magaw, 132 F.3d 272, 279 (6th Cir.1997)). Under Article III, courts are required to “avoid issuing advisory opinions based upon hypothetical situations.” Briggs v. Ohio Elections Comm'n, 61 F.3d 487, 493 (6th Cir. 1995). The case or controversy requirement works to ensure federal courts do not render advisory opinions or consider hypothetical or abstract questions.

         Courts have explained the case or controversy requirement through a series of “justiciability doctrines, ” such as the standing doctrine. See Nat'l Rifle Ass'n of Am. v. Magaw, 132 F.3d 272, 279 (6th Cir. 1997). Standing concerns a plaintiff's ability to sue, requiring that a litigant must have suffered an injury-in-fact that is fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

         Another doctrine which “cluster[s] about Article III” is ripeness. Peoples Rights Org., Inc. v. City of Columbus, 152 F.3d 522, 527 (6th Cir. 1998) (citing Vander Jagt v. O'Neill, 699 F.2d 1166, 1178-79 (D.C. Cir. 1982) (Bork, J., concurring.). Where standing concerns a plaintiff's ability to sue, ripeness focuses on the timing of the action. The ripeness doctrine buttresses Article III's case and controversy requirement by “pre-vent[ing] the courts, through premature adjudication, from entangling themselves in abstract disagreements.” Nat'l Rifle Ass'n, 132 F.3d at 284 (citing Thomas v. Union Carbide Agric. Prod. Co., 473 U.S. 568, 580 (1985)). Thus, the ripeness doctrine prevents courts from handling cases that have not yet matured into full-blown disputes, thereby ensuring federal courts do not issue opinions advising what the law would be upon a hypothetical set of facts.

         In this action, Plaintiff seeks relief pursuant to the Declaratory Judgment Act (the “Act”). See Dkt. 10. The Act provides in relevant part: “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The Act's “actual controversy” requirement is coextensive with Article III's constitutional limits, and necessarily includes the standing and ripeness doctrines from Article III as well. See Fieger v. Mich. Sup. Ct., 553 F.3d 955, 961 (6th Cir. 2009). Thus, the Act's “case of actual controversy” requirement refers to the type of cases and controversies that are justiciable under Article III of the U.S. Constitution. See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126 (2007) (citing Aetna Life Ins. v. Haworth, 300 U.S. 227, 240 (1937)).

         To determine whether parties have an actual case or controversy as required under the Act (and Article III), courts must ask whether the facts alleged, under all the circumstances, show that there is a substantial controversy between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See Commodities Export Co. v. Detroit Int'l Bridge Co., 695 F.3d 518, 525 (6th Cir. 2012); MedImmune, 549 U.S. at 127. Framed another way, the dispute between the parties must be “definite and concrete, touching on the legal relations of parties having adverse legal interests and be real and substantial and admit of specific relief through a decree of conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical set of facts.” See Kreinberg v. Dow Chemical Co., 2007 WL 2782060 at *9 (E.D. Mich. Sept. 24, 2007) (citing Medimmune, Inc., 549 U.S. at 127).

         Critically, the Act only provides a procedural mechanism; it does not independently confer a federal court with subject matter jurisdiction. See Skelly Oil Co. v. Phillips Petroleum, 339 U.S. 667, 671-72 (1950). Thus, an action can be maintained under the Declaratory Judgment Act only if a plaintiff has an independent basis to invoke a federal court's subject matter jurisdiction. Michigan Southern R.R. Co. v. Branch & St. Joseph Counties Rail Users Ass'n., Inc., 287 F.3d 568, 575 (6th Cir. 2002) (“It is well-settled that the Declaratory Judgment Act cannot serve as an independent basis for federal subject matter jurisdiction.”) (internal citations omitted). In this action, Plaintiff alleges federal question jurisdiction, federal antitrust jurisdiction, and supplemental jurisdiction under 28 U.S.C. §§ 1331, 1337, and 1367, respectively.

         The Court notes that Plaintiff's case presents somewhat of an atypical posture for a declaratory judgment action. Typically, a plaintiff that seeks declaratory relief surrounding the enforceability of a particular law or statute uses the declaratory judgment act as a shield, in an attempt to protect itself from injuries it has or will suffer if the challenged law is enforced against it.[1] In the present case, however, Plaintiff maintains that: 1) it has created a regulatory regime pursuant to the powers given to it by the Michigan legislature regarding the provision of emergency services within its County, 2) Defendant is engaging in activities in violation of that regime, and 3) Plaintiff has been harmed by Defendant's noncompliance. See generally, Dkt. 10. Plaintiff's Amended Complaint requests this court to:

1. Declare that the County's 911 Plan and primary services ambulance contract [with MMR] are legal and enforceable against STAT's unauthorized ambulance services originating within the County;
2. Declare that the Ordinance is legal and enforceable against STAT's unauthorized ambulance services originating within the County, and that STAT has violated that Ordinance;
3. Declare that the enforceability of the County's 911 Plan or Ordinance against STAT's unauthorized ambulance services originating within the County does not violate the Sherman Anti-Trust Act or the Due Process clause of the 14th Amendment; and
4. Enjoin STAT from providing ambulance services originating within the county without the authorization of the County Board of Commissioners through contract or resolution.

See Dkt 10, Pg. IDs 222-23.

         Despite the atypical nature of Plaintiff's action, the Act nevertheless provides a mechanism for the pre-enforcement review of a statute; and, while the Act does not on its face differentiate between its use as a “sword” versus a “shield, ” Plaintiff faces different hurdles in satisfying the necessary Article III and statutory standing requirements to establish subject matter jurisdiction. The Court begins by addressing its power under Article III to hear this case.

         A. Plaintiff's Alleged Injuries in Fact

         The Court begins its analysis with “[p]erhaps the most important” of the justiciability doctrines: whether Plaintiff has standing to invoke the jurisdiction of the federal Courts. See Nat'l Rifle Ass'n, 132 F.3d at 279. Standing concerns a plaintiff's ability to sue, and turns on whether he or she has suffered a concrete injury inflicted by ...


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