Here is the ruling by U.S. District Judge Robert Cleland putting Matty Moroun’s claim of federal powers right where it belongs: In the garbage.
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
COMMODITIES EXPORT COMPANY,
Plaintiff/Counter-Defendant,
v.
CITY OF DETROIT, UNITED STATES OF
AMERICA,
Defendants/Cross-Defendants,
and
DETROIT INTERNATIONAL BRIDGE
COMPANY,
Defendant/Counter-Plaintiff/Cross-
Plaintiff/Third Party Plaintiff,
v.
WALTER LUBIENSKI and DEAN AYTES,
Third Party Defendants.
Case No. 09-CV-11060-DT
/
OPINION AND ORDER DENYING DIBC’S MOTION FOR SUMMARY JUDGMENT
AND GRANTING THE UNITED STATES’S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
The Ambassador Bridge spans the international border defined by the Detroit
River from Detroit, Michigan on the American side to Windsor, Ontario on its opposite
shore. The bridge is privately owned and operated by the Detroit International Bridge
Company (“DIBC”). This litigation began with, and appears to revolve around,
allegations that DIBC regularly resorts to a self-claimed status of “federal
instrumentality,” and the immunity from local and state regulation that such status
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implies. Defendant United States of America (or “Government”) argues that if DIBC
were truly a federal instrumentality, certain implications would arise, including potential
obligations or liabilities inhering to the federal government of which the United States
wants no part. Before the court is a motion, filed on February 5, 2010 by Defendant
United States of America, captioned “Motion for Summary Judgment on ‘Federal
Instrumentality’ Status of DIBC” [Dkt. # 55] in which the United States seeks a
declaratory judgment that DIBC does not qualify for federal instrumentality status.
Defendant/Cross Plaintiff DIBC filed its essentially mirror-image “Motion for Summary
Judgment” [Dkt. # 63] on February 26, 2010. The matters have been fully briefed and
the court conducted a hearing on April 28, 2010. For the reasons stated below, the
court will grant the motion of the United States and deny DIBC’s.
II. BACKGROUND
Plaintiff Commodities Export Company initiated this action on March 20, 2009,
against Defendants the United States of America and the City of Detroit.
Plaintiff later filed an amended complaint on May 1, 2009. On December 21, 2009,
following the conclusion of discovery, the court granted a motion to intervene filed by
DIBC. Thereafter, by stipulation, Plaintiff filed its “Second Amended Complaint.”
DIBC filed a Counter-Complaint against Plaintiff, and a Third Party Complaint
against Walter Lubienski and Dean Aytes. Plaintiff and Third Party Defendants have
filed a motion for partial summary judgment related to the Counter-Complaint and Third
Party Complaint. That motion will not be addressed in this order.
On February 5, 2010, the United States filed a Cross Claim against DIBC.
The parties have since filed various motions seeking to limit or resolve the issues
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before the court. At issue in this order are 1) a motion for summary judgment filed by
the United States on the issue of DIBC’s “federal instrumentality” status, and 2) DIBC’s
related motion for summary judgment on the United States’s Cross Claim.
A. Plaintiff’s Claims
In its “Second Amended Complaint,” Plaintiff alleges that it is the owner of
property located at 3317-3325-3331 West Lafayette, Detroit, Michigan in the immediate
area of the international Ambassador Bridge. (2nd Am. Compl. ¶ 2.) Plaintiff further
contends that the Defendant City of Detroit is a Michigan municipal corporation with
jurisdiction over streets and roads in the City of Detroit and specifically over 23rd Street
and W. Lafayette in the City of Detroit. (2nd Am. Compl. ¶ 3.) Defendant DIBC is a
for-profit Michigan business corporation which owns and operates the Ambassador
Bridge. (2nd Am. Compl. ¶ 4.)
According to the “Second Amended Complaint,” sometime before November 27,
2008, contractors in the employ of DIBC removed and destroyed the roads (portions of
23rd Street and W. Lafayette) in front of and leading to Plaintiff’s property. (2nd Am.
Compl. ¶ 8.) The property is currently rented and the tenants cannot conduct their
business, receive customers or obtain police or fire protection. (2nd Am. Compl. ¶ 9.)
There are no known government sanctioned plans for removing or abandoning
Lafayette or 23rd Street. (2nd Am. Compl. ¶ 10.) Removing Lafayette or 23rd Street
leaves Plaintiff’s property without access, landlocked and valueless. (2nd Am. Compl. ¶
11.)
Plaintiff alleges that under certain federal regulations and statutes, the U.S.
Customs and Border Protection, an agency of the United States Government, is
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responsible for enforcing the requirement that a duty free establishment must make
delivery of tax and duty-free merchandise from a sealed compound to insure exportation
of such merchandise and preclude such merchandise from returning to the United
States. (2nd Am. Compl. ¶ 5.) Plaintiff further contends that the U.S. Customs and
Border Protection has tacitly endorsed the taking of Plaintiff’s land by finding that the
Ammex Duty Free Store operated at the Ambassador Bridge is in compliance with the
“sealed compound” requirement when the Ammex is only “sealed” due to the
expropriation of City streets. (2nd Am. Compl. ¶ 6.)
The Michigan Supreme Court has issued an opinion affirming a lower court
determination that DIBC is an instrumentality –albeit a “limited” instrumentality– of the
United States Government. (2nd Am. Compl. ¶ 4.) Plaintiff contends that this
designation has hindered or prohibited the City of Detroit from enforcing its ordinances
against DIBC. (2nd Am. Compl. ¶ 12.)
Under Count I of the “Second Amended Complaint,” Plaintiff asserts that the City
of Detroit has failed to enforce its ordinances against DIBC and that, therefore, the City
of Detroit and the DIBC have engaged in acts that constitute a taking of Plaintiff’s
property rights without just compensation under the Fifth Amendment of the
Constitution. (2nd Am. Compl. ¶ 14-18.) Plaintiff also asserts this claim against the
United States of America, arguing that the Government is responsible for the actions of
its agent and instrumentality, DIBC. (2nd Am. Compl. ¶ 19-20.) Plaintiff requests in this
claim that the court (1) “[e]njoin all obstructions of 23rd and W. Lafayette in the vicinity
of Plaintiff’s property and affirmatively require that the streets be replaced forthwith” and
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(2) “[o]rder whatever other relief this [c]ourt determines to be appropriate.” (2nd Am.
Compl. ¶ 20.)
Under Count II, Plaintiff asserts a claim against DIBC entitled “Intentional
Trespass/Nuisance/Interference with Easement.” Plaintiff contends that DIBC has
trespassed and interfered with the easement rights which Plaintiff and all other abutting
land-owners share in the property “across and [a]long these roads to access their
property and . . to the center line of all roads.” (2nd Am. Compl. ¶ 22.) Plaintiff
requests that the court order the abatement of DIBC’s public and private nuisance, and
award damages and attorney fees associated with DIBC’s trespass. (2nd Am. Compl. ¶
28.)
In Count III, Plaintiff seeks injunctive and declaratory relief. Specifically, Plaintiff
seeks a declaration that DIBC “is not a federal instrumentality or that they are otherwise
bound to follow the Ordinances of the City of Detroit with respect to Plaintiff’s property.”
(2nd Am. Compl.¶ 34.) Plaintiff also seeks injunctive relief requiring the City of Detroit
to enforce its ordinances, and requiring DIBC to cease its actions with respect to W.
Lafayette and 23rd Street and reconstruct the roads. (2nd Am. Compl. ¶ 34.)
In Count IV, Plaintiff asks the court to issue a mandamus requiring the City of
Detroit to enforce its ordinances, ordering the abatement of Defendants’ public and
private nuisance, and ordering the United States to compel its agent and instrumentality
to discontinue its interference with Plaintiff’s property rights. (2nd Am. Compl.¶ 40.)
Count V asserts an action against DIBC under 42 U.S.C. § 1983. Plaintiff claims
that DIBC’s actions with respect to the relevant property has been taken under the color
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of state law, with a “mantle of authority” which subjects DIBC to liability under § 1983.
(2nd Am. Compl.¶¶ 42-49.)
Count IV asserts a “Bivens” claim against DIBC, arguing that DIBC has also
taken its actions under the color of federal law and, as such, should be compelled to
cease its alleged unconstitutional actions. (2nd Am. Compl. ¶¶ 51-54.)
Finally, in Count VI, Plaintiff asserts an “Interference with Business Expectancy”
claim against DIBC.
B. Cross Claim by the United States
In its Cross Claim, the United States asserts one Count against DIBC, entitled
“Misappropriation of Federal Status.” The United States alleges that DIBC continuously
holds itself out as a federal instrumentality and the United States specifically opposes
this characterization of DIBC. (Cross Cl. at ¶¶ 7-10.) The United States contends that it
is improper to invoke federal instrumentality status over the objection of the
Government. (Cross Cl. ¶ 20.) The United States asserts that “Plaintiff Commodities
has stated claims against the United States in this action on the grounds that the federal
government’s instrumentality, DIBC, has committed an unconstitutional taking[ ] and
otherwise interfered with Commodities’s rights,” (Cross Cl. ¶ 15), but that because DIBC
is not a federal instrumentality “DIBC’s misfeasance or alleged misfeasance towards
Commodities, is not properly attributable to the federal government,” (Cross Cl. ¶ 21).
The United States thus seeks declaratory and injunctive relief as follows:
Pursuant to 28 U.S.C. §2201, Fed. R. Civ. Proc. 57, and this Court’s
inherent authority, the United States hereby requests enforcement of
federal law through a declaration by the Court that DIBC is not a federal
instrumentality or limited federal instrumentality or any type of appendage
of the federal government.
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Pursuant to 28 U.S.C. §2202 and this Court’s inherent authority, the
United States hereby requests that the Court permanently enjoin DIBC
and its corporate affiliates from misappropriating the status of “federal
instrumentality,” and to cease and desist from misrepresenting that it is
any kind of federal instrumentality or other arm or agent of the federal
government, in state court, federal court, or elsewhere.
(Cross Cl. ¶¶ 22-23.)
C. Michigan Supreme Court Case
Much of the substance of the parties’ arguments herein arise out of or relate to
an opinion rendered by the Michigan Supreme Court in 2008. In City of Detroit v.
Ambassador Bridge Co., 748 N.W.2d 221 (Mich. 2008), the City of Detroit filed an action
against DIBC to enforce its zoning ordinance to stop DIBC’s construction projects
located in and around the Ambassador Bridge’s footprint, specifically related to the
construction of toll booths. After a four-week bench trial, the trial court issued an
opinion finding that DIBC was immune from Detroit’s zoning ordinance due to its status
as a federal instrumentality. Id. at 223-24. The trial court also found that Detroit’s
zoning ordinance was preempted by the federal government’s “demonstrated intent to
control the entire bridge complex.” Id. at 224. The Michigan Court of Appeals reversed
on both grounds. Id. The Michigan Supreme Court subsequently reversed the Court of
Appeals and found that DIBC “is a federal instrumentality for the limited purpose of
facilitating traffic over the Ambassador Bridge and, as such, is immune from the zoning
regulation of the city of Detroit that would preclude construction projects furthering this
limited federal purpose.” Id. at 223. In so holding, the Michigan Supreme Court noted:
We note that the DIBC’s status as a federal instrumentality is limited to
actions that are clearly and directly associated with the facilitation of traffic
across the Ambassador Bridge. Accordingly, the DIBC may not fit its
non-traffic-facilitative actions into this status. This issue could be
described as evaluating the scope of the federal instrumentality’s
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immunity. This issue is particularly important in cases of limited federal
instrumentalities, such as this case, because immunity extends only to
acts that are within the scope of instrumentality’s federal purpose. While
we do not attempt to list all the actions that do or do not fall within the
DIBC’s scope of immunity, we agree with the trial court that the DIBC’s
construction projects are within its scope of immunity.
Id. at 230-31. Having determined that DIBC is a “limited federal instrumentality and
holding that its construction projects were actions within its scope of immunity,” the
court next addressed whether enforcement of the subject City of Detroit ordinances
would interfere with DIBC’s federal function. Id. at 231. The court stated that “if the
city’s ordinance does interfere with the DIBC’s limited federal purpose, we must analyze
the magnitude of that interference because federal instrumentalities are not ‘insulated
from incidental or nonburdensome local requirements.’” Id. (citing Don’t Tear It Down,
Inc. v. Pennsylvania Ave. Development Corp., 642 F.2d 527 (D.C. Cir. 1980)). The
court found that the City of Detroit’s ordinance did, in fact, inhibit DIBC’s federal
purpose. The court thus concluded that “the DIBC, as a limited federal instrumentality, is
immune from the city’s ordinance as it applies to the construction projects before us.”
Id. at 233. The court’s “Conclusion” section stated:
After accepting the facts established by the trial court, we affirm the
judgment of the trial court, reverse the judgment of the Court of Appeals,
and hold that the DIBC is a federal instrumentality for the limited purpose
of facilitating traffic flow across the Ambassador Bridge and is, therefore,
immune from any state law or local regulation that directly inhibits that
purpose. Further, we affirm the trial court’s holding that this particular
application of the city’s zoning ordinance inhibits the DIBC’s federal
purpose. However, we choose not to formulate an arbitrary bright-line rule
concerning future conflicts between the DIBC, in its limited
federal-instrumentality status, and state or local regulation. We trust the
trial courts to examine whether a state law or local regulation directly
inhibits the DIBC’s unique and limited federal-instrumentality status in any
future disputes.
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The parties all treat the cross-motions as motions under Federal Rule of Civil
Procedure 56. DIBC’s motion, however, could likely have been filed under Rule
12(b)(6) as it appears to be directed primarily at the pleadings. Nonetheless, as the
parties all label their motions as summary judgment motions, and as they all rely on
matters outside of the pleadings, the court will analyze them under Rule 56.
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The judgment of the Court of Appeals is reversed, and the case is
remanded to the trial court for the entry of an injunction consistent with this
opinion.
Id.
On July 31, 2008, after the case had been remanded, the trial court judge issued
a permanent injunction ordering that:
the City of Detroit and its agencies, departments, and personnel are
hereby permanently enjoined from enforcing or implementing any
ordinance, regulation, policy, practice, rule or procedure the purpose of
effect of which would directly inhibit the [DIBC], its successors and assigns
conducting its activity as a federal instrumentality which includes,
addressing, expanding, improving, managing or in any manner facilitating
the flow of traffic across the Ambassador Bridge.
(7/31/08 Injunction at 2, DIBC’s Resp. Br. Ex. C.)
III. STANDARD1
Under Federal Rule of Civil Procedure 56, summary judgment is proper when
there is no genuine issue as to any material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c). “In deciding a motion for summary
judgment, the court must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.” Sagan v. United
States, 342 F.3d 493, 497 (6th Cir. 2003). “Where the moving party has carried its
burden of showing that the pleadings, depositions, answers to interrogatories,
admissions and affidavits in the record, construed favorably to the non-moving party, do
not raise a genuine issue of material fact for trial, entry of summary judgment is
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appropriate.” Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987) (citing Celotex
Corp. v. Catrett, 477 U.S. 317 (1986)).
The court does not “‘weigh the evidence [to] determine the truth of the matter
but[, rather,] to determine whether there is a genuine issue for trial.’” Sagan, 342 F.3d
at 497 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). The moving
party discharges its burden by “‘showing’–that is, pointing out to the district court–that
there is an absence of evidence to support the nonmoving party’s case.” Horton v.
Potter, 369 F.3d 906, 909 (2004) (citing Celotex, 477 U.S. at 325). The burden then
shifts to the nonmoving party, who “must do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must put forth enough
evidence to show that there exists “a genuine issue for trial.” Horton, 369 F.3d at 909
(citing Matsushita, 475 U.S. at 587). Summary judgment is not appropriate when “the
evidence presents a sufficient disagreement to require submission to a jury.” Anderson,
477 U.S. at 251-52.
IV. DISCUSSION
A. DIBC’s Motion
DIBC argues that it is entitled to summary judgment on the Government’s Cross
Claim for a variety of reasons, but the organization-by-shotgun methodology of DIBC’s
brief makes it difficult to identify with precision the arguments on which DIBC relies.
The “Argument” section of DIBC’s brief, however, identifies three distinct theories,
specifically identified and enumerated under separate headings. The Government’s
response focuses on these three arguments as does DIBC’s reply. The court will
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Nonetheless, it bears mention that one of DIBC’s arguments appears to have
been revealed as disingenuously inconsistent with its nearly contemporaneous pleading
in another case. DIBC asserts that it has “not taken or claimed to take any action
Plaintiff complains of based on the fact that DIBC is a federal instrumentality.” (DIBC’s
Mot. Br. at 3.) Instead, DIBC contends that it either owned both sides of 23rd Street or
it had the permission of the owners of 23rd Street. DIBC states that the City, at MDOT’s
request, closed Lafayette for the Gateway Project, and DIBC constructed an access
road to the Bait Shop. (Id.) DIBC asserts it was not acting as a federal instrumentality
in these actions. (Id.)
Plaintiff, however, has filed a response to DIBC’s motion, relevant to the
arguments asserted against Plaintiff’s complaint. Attached to the response is a
pleading filed in state court on March 5, 2010, which seeks a declaration of rights
regarding a portion of 23rd Street. (Pl.’s Resp. at Ex. A.) The pleading states that it is
based in part on Michigan statutory and common real property law and “partly upon this
Court’s permanent injunction and upon the decision of the Michigan Supreme Court,
which unanimously ‘h[e]ld that DIBC is a federal instrumentality for the limited purpose
of facilitating traffic flow across the Ambassador Bridge and is, therefore, immune from
any state law or local regulation that directly inhibits that purpose.’” (Id., citing City of
Detroit v. Ambassador Bridge Co., 481 Mich. 29 (2008) (alteration in original).)
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therefore primarily devote its analysis to these three arguments. Under a heading
entitled “Introduction and Summary of the Arguments,” DIBC includes eight additional,
or supplemental, subheadings. Some of these subheadings are merely factual
assertions (see subheadings 1, 2), some overlap with DIBC’s primary arguments (see
subheadings 6-8), and many attack Plaintiff’s complaint (see subheadings 3-5). DIBC
seems to argue that if Plaintiff’s complaint fails, then the Government’s Cross Claim
must be dismissed. However, as will be discussed below, the Government’s Cross
Claim has identified a sufficient federal claim to invoke this court’s jurisdiction and is not
dependant on the success or vitality of Plaintiff’s claims. Further, a motion for summary
judgment on the Government’s Cross Claim is not the appropriate place to advance an
attack on Plaintiff’s complaint. The court rejects any DIBC argument that relates to
Plaintiff’s complaint.2
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1. Justiciable Controversy
DIBC first argues that there is no justiciable controversy between it and the
United States. As DIBC points out, the Sixth Circuit has “recognized that declaratory
judgment actions often require courts to face the difficult task of distinguishing ‘between
actual controversies and attempts to obtain advisory opinions on the basis of
hypothetical controversies.’” Coalition for Government Procurement v. Federal Prison
Industries, Inc., 365 F.3d 435, 458 (6th Cir. 2004) (quoting Kardules v. City of
Columbus, 95 F.3d 1335, 1343-44 (6th Cir. 1996)). Indeed, “the Declaratory Judgment
Act, 28 U.S.C. §§ 2201-2202, ‘does not broaden the jurisdiction granted to the federal
courts by the Constitution and statutes enacted pursuant thereto,’ and that,
consequently, ‘there still must be a case or controversy before a federal court can
assume jurisdiction and reach the merits of a [declaratory judgment action].” Id. at 458-
459 (quoting Brennan v. Rhodes, 423 F.2d 706, 706-07 (6th Cir. 1970)). “The question
is ‘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.’” Super Tire
Engineering Co. v. McCorkle, 416 U.S. 115, 122 (1974) (quoting Maryland Casualty Co.
v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)).
DIBC argues that the United States has presented a “hypothetical controversy,”
and that the United States is “attacking a decision of the Michigan Supreme Court that
has absolutely no effect upon the acts, conduct, rights or privileges of the [United
States], but directly affects the State of Michigan and its political subdivisions.” (DIBC’s
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2/26/10 Mot. Br. at 14.) DIBC contends that a declaration regarding its status as a
federal instrumentality will not “in any manner affect the conduct between DIBC and the
[United States]. DIBC has not asserted its status as a federal instrumentality as a
defense to any actual or threatened action by the [United States] nor has it used its
status as a means to obligate or make the [United States] liable in any way.” (Id. at 14-
15.) DIBC further argues that the United States “has not identified any action taken
against DIBC that would be affected in any manner by a declaration by this [c]ourt that
DIBC is or is not a federal instrumentality.” (Id. at 15.)
In response, the United States argues that federal jurisdiction exists because the
determination of whether an entity is a federal instrumentality presents a federal
question. This argument, however, addresses whether subject matter jurisdiction
exists generally, not to whether the United States has asserted an actual and immediate
controversy sufficient to invoke the protection of the Declaratory Judgment Act. To that
end, the United States also argues that a justiciable controversy exists because if DIBC
is an instrumentality of the United States, and DIBC “deprived private landowners like
Commodities of their property rights without compensation, as alleged here, then such
landowners would have a claim against the federal government.” (Gov’t 3/18/10 Resp
at 6.) In support of this position, the United States cites cases in which courts have
held that federal instrumentalities are capable of actions attributable to the federal
government.
In Lebron v. National R.R. Passenger Corp., 513 U.S. 374 (1995), the Supreme
Court held that the federal government could not avoid its constitutional obligations by
creating a “private” company to act in its stead. The Court reasoned:
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That Government-created and -controlled corporations are (for many
purposes at least) part of the Government itself has a strong basis, not
merely in past practice and understanding, but in reason itself. It surely
cannot be that government, state or federal, is able to evade the most
solemn obligations imposed in the Constitution by simply resorting to the
corporate form. On that thesis, Plessy v. Ferguson, 163 U.S. 537, 16 S.Ct.
1138, 41 L.Ed. 256 (1896), can be resurrected by the simple device of
having the State of Louisiana operate segregated trains through a
state-owned Amtrak. In Pennsylvania v. Board of Directors of City Trusts
of Philadelphia, 353 U.S. 230, 77 S.Ct. 806, 1 L.Ed.2d 792 (1957) (per
curiam), we held that Girard College, which had been built and maintained
pursuant to a privately erected trust, was nevertheless a governmental
actor for constitutional purposes because it was operated and controlled
by a board of state appointees, which was itself a state agency. Id., at
231, 77 S.Ct., at 806.
Id. at 397. The Court held that “where . . . the Government creates a corporation by
special law, for the furtherance of governmental objectives, and retains for itself
permanent authority to appoint a majority of the directors of that corporation, the
corporation is part of the Government for purposes of the First Amendment.” Id. at 400.
The United States also cites two cases in which the federal government was
sued for the alleged wrongdoing of a federal instrumentality. (See Gov’t 3/18/10 Resp
at 6 (citing L’Enfant Plaza Properties, Inc. v. United States, 3 Cl.Ct. 582, 585
(Cl.Ct.1983).) In L’Enfant Plaza, defendant United States had moved to dismiss on
grounds that the court lacked jurisdiction because RLA was not a federal
instrumentality. The trial court, however, held that RLA was a federal instrumentality,
L’Enfant Plaza Properties, Inc. v. United States, 209 Ct.Cl. 727 (1976), and trial ensued
in which the court held that leases were breached by RLA and that the United States
was liable for the damages thereby incurred. The United States also cites Breitbeck v.
United States, 500 F.2d 556 (Ct.Cl. 1974), in which the court found that it was
clear that action here is not precluded by the mere fact that the
[defendant] entity is a wholly-owned federal corporation which is itself
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3
Similarly, in a post-hearing brief filed by the City of Detroit, the City
contends that if this court were to accept an argument made by DIBC that the
federal government authorized DIBC to take control of the City’s public streets,
then the City would, in turn, assert a Fifth Amendment takings claim against the
federal government. (See City’s May 5, 2010 Supp. Br. at 2-3, n.3.)
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suable in some other court. The critical questions, as formulated in Butz
Engineering, are, first, whether the organization is functioning as an
instrumentality of the Federal Government, and, second, whether the
Government can demonstrate some special reason why this court is
without jurisdiction, even though the agency is a federal instrument, to
hear the claim.
Breitbeck v. United States, 500 F.2d at 558 (emphasis added).
In light of this authority, the court finds that the United States has sufficiently
identified a justiciable controversy for purposes of seeking a declaratory judgment
concerning DIBC’s activities relative to Plaintiff’s property. The United States contends,
and the court agrees, that in the event DIBC is a federal instrumentality, DIBC’s actions
could expose the United States to liability. Specifically, as relates to this action, if
DIBC’s actions, taken as a purported federal instrumentality, resulted in an unlawful,
uncompensated taking of Plaintiff’s property, the United States could be held liable to
Plaintiff.3 This controversy is of “sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.’” Super Tire Engineering Co., 416 U.S. at 122.
2. Jurisdiction and the Rooker-Feldman Doctrine
DIBC next argues that “this court has no jurisdiction to make any declaration
about the finding of the Michigan Supreme Court at all, and especially when there are
no federal interests are at issue.” (DIBC Mot. Br. at 16.) Specifically, DIBC contends
that the United States “seeks a declaratory judgment by collateral attacking the
Michigan Supreme Court’s decision and the subsequently issued Permanent Injunction
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[and s]uch review is barred by a practical application of the principles underlying the
Rooker-Feldman doctrine.” (Id.)
The Rooker-Feldman doctrine originated in two Supreme Court cases, Rooker-
Fidelity Trust Co., 263 U.S. 413 (1923) and District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462 (1983). The doctrine holds that lower federal courts do not have
jurisdiction to review challenges to state court decisions, because such reviews may
only be had in the Supreme Court pursuant to 28 U.S.C. § 1257. Tropf v. Fidelity Nat.
Title Ins. Co., 289 F.3d 929, 936 (6th Cir. 2002).
The Supreme Court reaffirmed and clarified the doctrine in Exxon Mobil
Corporation v. Saudi Basic Indus. Corp., 540 U.S. 280 (2005), holding that the doctrine
applies to “cases brought by state-court losers complaining of injuries caused by state-
court judgments rendered before the district court proceedings commenced and inviting
district court review and rejection of those judgments.” 540 U.S. at 284. The Supreme
Court, however, also stated that even if “a federal plaintiff ‘present[s] some independent
claim, albeit one that denies a legal conclusion that a state court has reached in a case
to which he was a party,” jurisdiction still exists. Id. at 293 (quoting GASH Assocs. v.
Rosemont, 995 F.2d 726, 728 (7th Cir. 1993)).
“In the wake of Exxon, [the Sixth Circuit] has tightened the scope of Rooker
-Feldman.” Pittman v. Cuyahoga County Dep’t of Children and Family Servs., 241 F.
App’x 285, 287 (6th Cir. 2007) (citing Coles v. Granville, 448 F.3d 853, 857 (6th Cir.
2006) (“Rooker -Feldman is a doctrine with only limited application.”)). The Sixth Circuit
has interpreted Exxon’s “limitation to mean that the Rooker-Feldman doctrine applies
only when a plaintiff complains of injury from the state-court judgment itself.” Carter v.
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Burns, 524 F.3d 796, 798 (6th Cir. 2008). “The pertinent inquiry after Exxon is the
‘source of the injury’ the plaintiff alleges in the federal complaint.” In re Smith, 349 F.
App’x 12, 14 (6th Cir. 2009) (citing McCormick v. Braverman, 451 F.3d 382, 393 (6th
Cir. 2006)).
If the source of the injury is the state court decision, then the Rooker-
Feldman doctrine would prevent the district court from asserting
jurisdiction. If there is some other source of the injury, such as a third
party’s actions, then the plaintiff asserts an independent claim.
McCormick, F.3d at 393. As explained by the Sixth Circuit:
The Rooker-Feldman doctrine embodies the notion that appellate review
of state court decisions and the validity of state judicial proceedings is
limited to the Supreme Court under 28 U.S.C. § 1257, and thus that
federal district courts lack jurisdiction to review such matters. See Exxon
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291, 125 S.Ct.
1517, 161 L.Ed.2d 454 (2005) (“[T]his Court’s appellate jurisdiction over
state-court judgments … precludes a United States district court from
exercising subject-matter jurisdiction.”); Lawrence v. Welch, 531 F.3d 364,
368 (6th Cir.2008) (“The Rooker-Feldman doctrine is based on the
negative inference that, if appellate court review of such state judgments
is vested in the Supreme Court, then it follows that such review may not
be had in the lower federal courts.”). The Rooker-Feldman doctrine
applies in those circumstances where a party initiates an action in federal
district court “complaining of an injury caused by the state-court judgment
and seeking review and rejection of that judgment.” Exxon Mobil, 544
U.S. at 291, 125 S.Ct. 1517 (emphasis added).
In re Cook, 551 F.3d 542, 548 (6th Cir. 2009).
There are, however, limits to the doctrine. For example, the doctrine does not
apply to bar a suit when there is parallel state and federal litigation nor, in such
situations, is Rooker-Feldman “triggered simply by the entry of judgment in state court.”
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4
Issue preclusion, unlike the Rooker-Feldman doctrine, is not a jurisdictional
issue. Exxon Mobil Corp., 544 U.S. at 293. “In parallel litigation, a federal court may be
bound to recognize the claim- and issue-preclusive effects of a state-court judgment,
but federal jurisdiction over an action does not terminate automatically on the entry of
judgment in the state court.” Id.
18
Exxon Mobil Corp., 544 U.S. at 292. “Disposition of the federal action, once the
state-court adjudication is complete, would be governed by preclusion law.” Id. at 293.4
Further, under the Rooker-Feldman doctrine, 28 U.S.C. § 1257 does not “stop a district
court from exercising subject-matter jurisdiction simply because a party attempts to
litigate in federal court a matter previously litigated in state court.” Id. (“If a federal
plaintiff ‘present[s] some independent claim, albeit one that denies a legal conclusion
that a state court has reached in a case to which he was a party . . . , then there is
jurisdiction and state law determines whether the defendant prevails under principles of
preclusion.’”) (quoting GASH Assocs. v. Rosemont, 995 F.2d 726, 728 (7th Cir. 1993)).
More directly applicable to this case, however, the Sixth Circuit has definitively
held that “[t]he Rooker-Feldman doctrine does not apply to bar a suit in federal court
brought by a party that was not a party in the preceding action in state court.” United
States v. Owens, 54 F.3d 271, 274 (6th Cir. 1995) (citing Valenti v. Mitchell, 962 F.2d
288 (3rd Cir. 1992)). This is because “[c]learly, a party cannot be said to be appealing a
decision by a state court when it was not a party to the case.” Id. Additionally, “the
doctrine may not bar a party against whom there is no state court judgment.” Id. (citing
Leaf v. Supreme Court of Wisconsin, 979 F.2d 589 (7th Cir.1992)).
The Michigan Supreme Court case was filed by the City of Detroit against DIBC.
While both of those parties are also parties to the instant litigation, the doctrine cannot
be asserted against Plaintiff or against the United States, as they were not parties to the
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5
Plaintiff is not a “citizen” of Detroit in privity with the City of Detroit simply
because it is a Michigan corporation that operates in the City of Detroit. Contrary to
DIBC’s arguments, Plaintiff asserts wrongs distinct from those felt by every taxpayer in
the City of Detroit related to the alleged actions restricting or preventing the use of
Plaintiff’s property. Moreover, as Plaintiff points out, Plaintiff appears to be a “citizen” of
Clinton Township, Michigan, if anywhere, as it is there that Plaintiff maintains its
registered office. (Pl.’s Resp. at 6.) In addition, there can be no cogent argument that
the United States is in privity with the City of Detroit.
19
prior litigation. Owens, 54 F.3d at 274. Moreover, although both Plaintiff and the United
States challenge the holding of the Michigan Supreme Court, they cannot be said to be
“state-court losers” of the prior litigation, as they were not parties of that litigation. The
“Rooker-Feldman doctrine could not apply to parties that were not present in the
state-court litigation.” Pieper v. Am. Arbitration Ass’n, Inc., 336 F.3d 458, 463 n.4 (6th
Cir. 2003) (citing Owens, 54 F.3d at 274).
The court rejects as frivolous DIBC’s argument that Plaintiff, as a “citizen”5 of the
City of Detroit, is necessarily in privity with the City and is therefore precluded by the
principles underlying Rooker-Feldman because the City was a party to the prior
litigation. DIBC relies on preclusion law as support for this argument (see DIBC’s Mot.
Br. at 5-6), but as stated above, preclusion is an issue separate from the Rooker-
Feldman doctrine. DIBC cites Lance v. Dennis, 546 U.S. 459 (2006) for the proposition
that one of the requirements of the Rooker-Feldman doctrine is that “the party against
whom the doctrine is invoked must have actually been a party to the prior state-court
judgment or have been in privity with such a party.” Id. at 462 (quoting Lance v.
Davidson, 379 F.Supp.2d 1117, 1124 (2005)). DIBC accurately quotes those certain
words from the Court’s opinion in Lance, but the cited material comes from the Court’s
recitation of the district court opinion which the Court then proceeded to vacate. The
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20
Court’s opinion at that point focused on the district court’s mistake in finding that the
Rooker-Feldman doctrine applied to privies. The Court explained:
In the case before us, the plaintiffs were plainly not parties to the
underlying state-court proceeding in Salazar. Salazar was an action
brought by the state attorney general against the secretary of state, in
which the Colorado General Assembly intervened. 79 P.3d, at 1227. The
four citizen-plaintiffs here did not participate in Salazar, and were not in a
“position to ask this Court to review the state court’s judgment.” De
Grandy, supra, at 1006, 114 S.Ct. 2647; see Karcher v. May, 484 U.S. 72,
77, 108 S.Ct. 388, 98 L.Ed.2d 327 (1987) (“[T]he general rule [is] that one
who is not a party or has not been treated as a party to a judgment has no
right to appeal therefrom”).
Although the District Court recognized the “general rule” that “
Rooker-Feldman may not be invoked against a federal-court plaintiff who
was not actually a party to the prior state-court judgment,” 379 F.Supp.2d,
at 1123, it nevertheless followed Tenth Circuit precedent in allowing
application of Rooker-Feldman against parties who were in privity with a
party to the earlier state-court action, 379 F.Supp.2d, at 1123 (citing
Kenmen Eng. v. Union, 314 F.3d 468, 481 (2002)). In determining whether
privity existed, the court looked to cases concerning the preclusive effect
that state courts are required to give federal-court judgments. 379
F.Supp.2d, at 1125 (citing Washington, 443 U.S., at 693, n. 32, 99 S.Ct.
3055; Taxpayers of Tacoma, 357 U.S., at 340-341, 78 S.Ct. 1209). It
concluded that-for Rooker-Feldman as well as preclusion purposes-“the
outcome of the government’s litigation over a matter of public concern
binds its citizens.” 379 F.Supp.2d, at 1125.
Lance, 546 U.S. at 465. The Court specifically rejected the insertion of preclusion law
into the Rooker-Feldman doctrine:
The District Court erroneously conflated preclusion law with
Rooker-Feldman. Whatever the impact of privity principles on preclusion
rules, Rooker-Feldman is not simply preclusion by another name. The
doctrine applies only in “limited circumstances,” Exxon Mobil, supra, at
291, 125 S.Ct. 1517, where a party in effect seeks to take an appeal of an
unfavorable state-court decision to a lower federal court. The
Rooker-Feldman doctrine does not bar actions by nonparties to the earlier
state-court judgment simply because, for purposes of preclusion law, they
could be considered in privity with a party to the judgment.
A more expansive Rooker-Feldman rule would tend to supplant Congress’
mandate, under the Full Faith and Credit Act, 28 U.S.C. § 1738, that
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6
Further, to the extent DIBC relies on any theory of preclusion, the court finds
such reliance misplaced. Under Michigan law, the doctrine of res judicata bars a
subsequent action when “(1) the first action was decided on the merits, (2) the matter
contested in the second action was or could have been resolved in the first, and (3) both
actions involve the same parties or their privies.” Estes v. Titus, 751 N.W.2d 493, 499
(Mich. 2008) (quoting Dart v. Dart, 597 N.W.2d 82 (Mich. 1999)). Similarly, the doctrine
of collateral estoppel “bars relitigation of an issue in a new action arising between the
same parties or their privies when the earlier proceeding resulted in a valid final
judgment and the issue in question was actually and necessarily determined in that prior
proceeding.” Leahy v. Orion Township, 711 N.W.2d 438, 441 (Mich. Ct. App. 2006) (per
curiam). Because the court is unconvinced that either Plaintiff or the United States is a
privy of the City of Detroit, the doctrines of res judicata and collateral estoppel do not
apply. Likewise, the court also finds that the Younger abstention doctrine does not
apply, because Plaintiff and the United States are neither parties nor even privies to the
Michigan Supreme Court injunction. See Gottfried v. Medical Planning Services, Inc.,
142 F.3d 326, 329 (6th Cir. 1998) (“One could argue that the ongoing injunction is the
equivalent of a pending state court action for purposes of Younger abstention. Yet that
argument only holds if the federal plaintiff is a party to the state court’s injunction. As
with the Anti-Injunction Act and the rules of preclusion, Younger abstention cannot apply
to one like Gottfried who is a stranger to the state proceeding.” (citations omitted)).
21
federal courts “‘give the same preclusive effect to state court judgments
that those judgments would be given in the courts of the State from which
the judgments emerged.’” Baker v. General Motors Corp., 522 U.S. 222,
246, 118 S.Ct. 657, 139 L.Ed.2d 580 (1998) (quoting Kremer v. Chemical
Constr. Corp., 456 U.S. 461, 466, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982));
see Exxon Mobil, supra, at 293, 125 S.Ct. 1517. Congress has directed
federal courts to look principally to state law in deciding what effect to give
state-court judgments. Incorporation of preclusion principles into
Rooker-Feldman risks turning that limited doctrine into a uniform federal
rule governing the preclusive effect of state-court judgments, contrary to
the Full Faith and Credit Act.
Id. at 466 (footnote omitted). The Supreme Court rejected the very argument now
asserted by DIBC, i.e., that the Rooker-Feldman doctrine applies to bar an action by the
privies of the parties from the prior litigation. The Supreme Court has spoken clearly on
this issue. DIBC’s argument fails.6
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22
3. Agency Relationship
DIBC next asserts that Plaintiff’s claims against the United States rely on agency
law, as distinct from the law related to federal instrumentalities. There appears to be no
dispute among the parties that DIBC is not an agent of the United States. DIBC argues
that, even if it is a federal instrumentality, this status does not subject the United States
to any liability for DIBC’s actions. As explained above, however, the Government has
identified exemplar cases in which the United States was sued for the actions of an
entity determined to have been a federal instrumentality. Plaintiff’s claims against the
United States are potentially viable, contingent upon the legitimacy of DIBC’s status as
instrumentality. DIBC’s argument is therefore rejected. Because DIBC has failed to
show that the Government’s cross claim fails as a matter of law, its motion for summary
judgment will be denied.
B. The Government’s Motion
The Government has filed its own motion for summary judgment on the federal
instrumentality issue. Specifically, the Government moves that the court “declare that
DIBC is not a federal instrumentality and enjoin DIBC from misrepresenting that it is
such an arm of the federal government.” (Gov’t’s Mot. Br. at 2.) The Government also
asks that the court thereafter dismiss the United States from this lawsuit. (Id.) The
Government’s motion is focused principally on seeking a general declaration that the
DIBC is not a federal instrumentality. The court, however, examines the federal
instrumentality question within the facts of this case, arising as they do out of DIBC’s
actions with respect to Plaintiff’s property rights.
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23
“It is long established that any state or local law which attempts to impede or
control the federal government or its instrumentalities is deemed presumptively invalid
under the Supremacy Clause.” Augustine v. Department of Veterans Affairs, 429 F.3d
1334, 1339 (Fed. Cir. 2005) (citing Leslie Miller, Inc. v. Arkansas, 352 U.S. 187, 189-90
(1956); Johnson v. Maryland, 254 U.S. 51, 57 (1920); McCulloch v. Maryland, 17 U.S.
316, 429-430 (1819); Mount Olivet Cemetery Ass’n. v. Salt Lake City, 164 F.3d 480,
486 (10th Cir. 1998); Don’t Tear It Down, Inc. v. Pa. Ave. Dev. Corp., 642 F.2d 527,
534-35 (D.C.Cir.1980)).
In its motion and supporting brief, the Government sets forth an accurate and
comprehensive history of federal instrumentalities. Indeed, both parties have identified
numerous cases discussing, in varying terms of specificity, the meaning and purpose of
federal instrumentalities. The principle of federal instrumentality immunity arose in
McCulloch v. Maryland, 17 U.S. 316 (1819), in which the Supreme Court established
the doctrine of federal immunity from state taxation. As later explained by the Sixth
Circuit:
In that case, the Court held that, absent Congressional consent, the
federal government and its instrumentalities are immune from state
taxation under the Supremacy Clause of the Constitution. Id. Congress
clearly has not consented to state taxation of federal credit unions; to the
contrary, Congress has expressly prohibited state taxation of federal credit
unions, except for ad valorem taxation of real and personal property. 12
U.S.C. § 1768. Therefore, if federal credit unions are federal
instrumentalities, they are entitled to constitutional, as well as, statutory,
immunity from state taxation.
United States of America v. State of Mich., 851 F.2d 803, 805-06 (6th Cir. 1988)
(footnote omitted).
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24
Justice White, dissenting in Goodyear Atomic Corp. v. Miller, 486 U.S. 174,
succinctly set forth the rationale behind federal instrumentality immunity:
The Court’s seminal decision in McCulloch v. Maryland, 4 Wheat. 316, 4
L.Ed. 579 (1819), establishes the principle that the States may not
exercise their sovereign powers so as to control those instrumentalities of
the United States which have been judged necessary and proper to carry
into effect federal laws and policies. Although the narrow issue in that
case involved only the assertion by the State of Maryland of its power to
tax a federal bank, the Court laid down a more general construction of the
Supremacy Clause that has proved to be enduring in its force of reason.
As the Court stated: “The attempt to use [state sovereign power] on the
means employed by the government of the Union, in pursuance of the
constitution, is itself an abuse, because it is the usurpation of a power
which the people of a single State cannot give.” Id. at 430. The contrary
principle would be “capable of arresting all the measures of the
government, and of prostrating it at the foot of the States. The American
people have declared their constitution, and the laws made in pursuance
thereof, to be supreme; but this principle would transfer the supremacy, in
fact, to the States.” Id. at 432. “The result,” the Court concluded, “is a
conviction that the States have no power, by taxation or otherwise, to
retard, impede, burden, or in any manner control, the operations of the
constitutional laws enacted by Congress to carry into execution the
powers vested in the general government.” Id. at 436 (emphasis added).
Although, again, the narrow issue in McCulloch concerned only the power
to tax, which as the Court noted “involves the power to destroy,” id., at
431, the passages quoted above demonstrate that the decision was
formulated, explicitly, with sufficient breadth to apply to other measures a
State might impose that would “retard, impede, burden, or in any manner
control” the operations of federal instrumentalities. Id. at 436. And,
clearly, the power to regulate also involves “the power to destroy” if the
regulatory web is spun too tightly around its object. More commonly,
however, the additional and perhaps conflicting regulations imposed by a
State would simply burden the federal instrumentality, interfere with its
operations, and frustrate the federal objectives it is designed to achieve.
Nonetheless, the law has long been settled that such regulation cannot be
imposed on federal instrumentalities by the States, under the Supremacy
Clause, unless the Federal Government directly indicates that it finds such
impositions to be consistent with the proper pursuit of its powers under
federal law. Hancock v. Train, 426 U.S. 167, 178-179, 96 S.Ct. 2006,
2012-2013, 48 L.Ed.2d 555 (1976); Mayo v. United States, 319 U.S. 441,
447-448, 63 S.Ct. 1137, 1140-1141, 87 L.Ed. 1504 (1943).
Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 186-188 (1988) (White, J., dissenting).
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25
As both parties acknowledge, there is no bright line test or rule to identify a
federal instrumentality. Augustine, 429 F.3d at 1339; see also Dep’t of Employment,
385 U.S. at 358-59 (“There is no simple test for ascertaining whether an institution is so
closely related to governmental activity as to become a tax-immune instrumentality.”).
Instead, “the Supreme Court has looked to several factors, including: whether the entity
was created by the government; whether it was established to pursue governmental
objectives; whether government officials handle and control its operations; and whether
the officers of the entity are appointed by the government.” Augustine, 429 F.3d at 1339
n.3 (citing Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 397-98 (1995)). The
Sixth Circuit similarly has stated that “[t]he leading cases suggest that we examine the
purpose for which federal credit unions were created, that we determine whether they
continue to perform that function, and that we assess the federal government’s control
over and involvement with these organizations.” State of Mich., 851 F.2d at 806.
Further, “[o]ne significant factor in determining whether a particular entity is a federal
instrumentality is whether it performs an important governmental function.” Id. (citing
Federal Land Bank v. Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1, 86 L.Ed. 65
(1941)).
For example, in situations addressing state taxation of contractors conducting
business with the United States, “an instrumentality is entitled to implied tax immunity
only when it is ‘so closely connected to the Government that the two cannot realistically
be viewed as separate entities.’” Director of Revenue of Missouri v. CoBank ACB, 531
U.S. 316, 321 (2001) (quoting United States v. New Mexico, 455 U.S. 720, 735 (1982).
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26
In addressing the distinction between Conrail, which is not a federal instrumentality, and
Amtrack, which is, the Supreme Court explained:
Respondent also invokes our decision in the Regional Rail Reorganization
Act Cases, 419 U.S. 102, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974), which
found the Consolidated Rail Corporation, or Conrail, not to be a federal
instrumentality, despite the President’s power to appoint, directly or
indirectly, 8 of its 15 directors. See id., at 152, n. 40, 95 S.Ct., at 363, n.
40; Regional Rail Reorganization Act of 1973, § 301, 87 Stat. 1004. But
we specifically observed in that case that the directors were placed on the
board to protect the United States’ interest “in assuring payment of the
obligations guaranteed by the United States,” and that “[f]ull voting control
. . . will shift to the shareholders if federal obligations fall below 50% of
Conrail’s indebtedness.” 419 U.S., at 152, 95 S.Ct., at 363. Moreover, we
noted, “[t]he responsibilities of the federal directors are not different from
those of the other directors-to operate Conrail at a profit for the benefit of
its shareholders,” ibid.-which contrasts with the public interest “goals” set
forth in Amtrak’s charter, see 45 U.S.C. § 501a. Amtrak is worlds apart
from Conrail: The Government exerts its control not as a creditor but as a
policymaker, and no provision exists that will automatically terminate
control upon termination of a temporary financial interest.
Lebron v. National R.R. Passenger Corp., 513 U.S. 374, 399 (1995). Likewise, the
Supreme Court has held that the Red Cross is a federal instrumentality due to the
degree of control the United States maintains over its operations:
On the merits, we hold that the Red Cross is an instrumentality of the
United States for purposes of immunity from state taxation levied on its
operations, and that this immunity has not been waived by congressional
enactment. Although there is no simple test for ascertaining whether an
institution is so closely related to governmental activity as to become a
tax-immune instrumentality, the Red Cross is clearly such an
instrumentality. See generally, Sturges, The Legal Status of the Red
Cross, 56 Mich.L.Rev. 1 (1957). Congress chartered the present Red
Cross in 1905, subjecting it to governmental supervision and to a regular
financial audit by the Defense, then War, Department. 33 Stat. 599, as
amended, 36 U.S.C. s 1 et seq. Its principal officer is appointed by the
President, who also appoints seven (all government officers) of the
remaining 49 Governors. 33 Stat. 601, as amended, 36 U.S.C. § 5. By
statute and Executive Order there devolved upon the Red Cross the right
and the obligation to meet this Nation’s commitments under various
Geneva Conventions, to perform a wide variety of functions indispensable
to the workings of our Armed Forces around the globe, and to assist the
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27
Federal Government in providing disaster assistance to the States in time
of need. Although its operations are financed primarily from voluntary
private contributions, the Red Cross does receive substantial material
assistance from the Federal Government. And time and time again, both
the President and the Congress have recognized and acted in reliance
upon the Red Cross’ status virtually as an arm of the Government. In
those respects in which the Red Cross differs from the usual government
agency-e.g., in that its employees are not employees of the United States,
and that government officials do not direct its everyday affairs-the Red
Cross is like other institutions-e.g., national banks-whose status as
tax-immune instrumentalities of the United States is beyond dispute.
Department of Employment v. United States, 385 U.S. 355, 358-360 (1966) (footnotes
omitted).
Consistent with these principles, and the various, additional cases addressing
federal instrumentality status, the Government proposes eight features which Supreme
Court jurisprudence accepts as relevant in holding an entity to be a federal
instrumentality:
(1) it performs governmental functions;
(2) government officials thoroughly control its operations;
(3) it would be deemed a servant under the law of agency;
(4) its officers are appointed by the President or other high government
official;
(5) it is not organized for profit or to perform commercial
activities;
(6) it is created by federal statute;
(7) the government owns it or it is supported by the government, which
carries its profits and losses; and
(8) it is considered by Congress and the President to be an arm of the
federal government.
(Gov’t’s Mot. Br. at 9.) While the court does not generally disagree with any of these
factors, the court also does not understand this to be an exhaustive, or mandatory list of
factors to consider. Essentially, the question is a fact-based determination examining
the degree of control or involvement the federal government has exercised over the
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28
creation, operation, control, and function of the entity. Augustine, 429 F.3d at 1339 n.3;
State of Mich., 851 F.2d at 806.
In its summary judgment brief, the Government argues that there is no issue of
fact that DIBC cannot qualify as a federal instrumentality. The Government proffers the
following factual observations:
The government does not own DIBC, or hold its stock, or bear its gains or
losses. DIBC is, again, a privately incorporated, for-profit company
engaged in commercial enterprises. It was not created by a federal
statute and does not owe its existence to Congress. Its corporate officers
are not appointed by the President of the United States. Nor are its
officers or board members otherwise answerable to government officials.
Likewise, government officials do not dictate or control the company’s
operations. Nor is the company perceived by Congress or the President,
or any federal agency, to be an extension of the federal government. Last
but not least–and as a reflection of the above–DIBC does not perform any
important governmental function. Rather, it is engaged in proprietary
activity for its own benefit.
(Gov’t’s Mot. Br. at 10-11.) The Government suggests that due to these undisputed
facts, the court should find as a matter of law that DIBC is not a federal instrumentality.
In support of its motion the Government has submitted DIBC’s Articles of
Incorporation to show that DIBC is a private, state-chartered, for-profit corporation.
(See Gov’t’s Ex. 1.) The Government has also submitted the affidavit of Hala Elgaaly,
the Administrator of the United States Coast Guard Bridge Program at Coast Guard
Headquarters in Washington, D.C. Elgaaly states, “To the best of my knowledge and
information, my staff and I have never stated, implied or suggested that DIBC holds any
federal agency powers. Neither I nor my staff have ever delegated or directed DIBC to
act on behalf of the Coast Guard as a federal agency.” (Elgaaly Aff. at ¶ 2, Gov’t.’s Ex.
2.) Elgaaly continues, “I have . . . notified DIBC that the Coast Guard has not issued a
Bridge permit on the [Ambassador Bridge Enhancement Project (“ABEP”)], hence any
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29
construction they may have started on the ABEP, is construction by a private entity
without the required federal permit.” (Id. at ¶ 3.) Attached to Elgaaly’s affidavit is a
letter in which Elgaaly requests DIBC to show cause why its construction of the new
Ambassador Bridge is not in violation of various federal statutes and regulations. (Id.)
The Government has also submitted an affidavit of Donald Melcher, who is a
Project Manager in the General Services Administration’s (“GSA’s”) Great Lakes
Region. Melcher states that “DIBC is not an arm of the Federal Government, nor has it
ever been. At no time has anyone representing or working for DIBC represented the
interests of GSA.” (Melcher Aff. at ¶ 2, Gov’t.’s Ex. 3.) Melcher then proceeds to list six
examples of DIBC’s actions which were either in direct contravention of the expressed
direction of GSA, or at least antithetical to GSA’s interests. (Id.)
Finally, the Government relies on the affidavit of James Steele, the Michigan
Division Administrator of the Federal Highway Administration. (Steele Aff., Gov’t.’s Ex.
4.) Mr. Steele avers that to the best of his knowledge and information “no one from the
Federal Highway Administration has ever stated or implied that [DIBC] holds or
exercises any federal powers. Nor has the Federal Highway Administration delegated
power to [DIBC], or authorized the Company to act on the agency’s behalf.” (Id. at ¶ 2.)
He also states that “[n]o other federal agency that I am aware of has delegated federal
powers to the [DIBC], and I am not aware that the company exercises any federal
powers.” (Id. at ¶ 3.) Steele concludes that, rather than exercising any such power,
DIBC in fact “has interests adverse to the Federal Highway Administration. [DIBC] and
the [Federal Highway Administration] are currently in litigation, as is [DIBC] and other
federal agencies.” (Id. at ¶ 4.)
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7
DIBC’s primary argument is that the court should not address this issue at all,
for the reasons stated in DIBC’s motion for summary judgment. The court, of course,
has rejected DIBC’s arguments that the federal instrumentality issue is not cognizable
here.
8
Similarly, the court accepts as persuasive the two United States Supreme Court
cases which held that the predecessor to DIBC was not exempt from paying a state tax.
See Detroit International Bridge Co. v. Corporation Tax Appeal Board of State of
Michigan, 294 U.S. 83, 85-86 (1935); Detroit International Bridge Co. v. Corporation Tax
Appeal Board, 287 U.S. 295, 298 (1932). The Court held that DIBC was not engaged in
interstate commerce and thus it did not offend the United States Constitution to impose
a state tax on what was essentially a state business. Detroit International Bridge Co.,
287 U.S. at 298 (“The record discloses that the appellant owns, maintains, and operates
a bridge between Michigan and Canada across the Detroit river; that for passing over
this it demands and collects tolls from vehicles and pedestrians. It ‘conveys no persons
or goods across the international boundary line. It merely collects tolls from such
persons as use it (the bridge). It provides an instrumentality which others may use in
conducting foreign commerce.’”). While this holding is relevant to the court’s
discussion, it is not identical; the Court’s holding does not conclusively determine the
outcome of this case. Nonetheless, it bears noting that the Supreme Court, when faced
with a similar question, held that DIBC was not exempt from state taxation.
30
DIBC does not specifically dispute these facts, but instead argues that the federal
instrumentality issue is not appropriately decided on summary judgment.7 Without
specifically identifying which facts are in dispute, DIBC argues that the court should
accept “the extensive factual findings of the Wayne County Circuit Court adduced from
extensive testimony provided by, among others, federal government witnesses who
strained mightily to support the City’s position.” (DIBC’s Resp. Br. at 3.) Indeed, the
bulk of DIBC’s brief focuses on the facts and holdings of the prior litigation, all but
ignoring the terms of the present litigation. As discussed above, this litigation is not
precluded by the previous litigation. Nor has any party shown that the doctrines of res
judicata or collateral estoppel mandate any particular holding or conclusion. The
opinion of the Michigan Supreme Court is, at most, persuasive authority, but is certainly
nonbinding on this court.8
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31
Because DIBC focused solely on making legal arguments, without attacking or
disputing the Government’s proposed facts, the court is unable to find a genuine issue
of material fact sufficient for this case to proceed to trial. Under well-known summary
judgment standards, the moving party discharges its burden by “‘showing’–that is,
pointing out to the district court–that there is an absence of evidence to support the
nonmoving party’s case.” Horton v. Potter, 369 F.3d 906, 909 (2004) (citing Celotex,
477 U.S. at 325).
When, as here, “the moving party bears the burden of persuasion on the issue at
trial, its showing must sustain that burden as well as demonstrate the absence of a
genuine dispute.” William W. Schwarzer, et al., The Analysis and Decision of Summary
Judgment Motions, 139 F.R.D. 441, 477 (1992) (footnote omitted); see also Wells Fargo
Bank, NA v. MPC Investors, LLC, — F. Supp. 2d. —, 2010 WL 1499291, *5 (E.D. Mich.
Apr. 9, 2010) (“When the moving party also bears the ultimate burden of persuasion, the
movant’s affidavits and other evidence not only must show the absence of a material
fact issue, they also must carry that burden.”). “Thus, it must satisfy both the initial
burden of production on the summary judgment motion-by showing that no genuine
dispute exists as to any material fact-and the ultimate burden of persuasion on the
claim-by showing that it would be entitled to a directed verdict at trial.” Schwarzer, 139
F.R.D. at 477-478 (footnote omitted).
The court finds that the Government has carried its initial burden, under Federal
Rule of Civil Procedure 56(a) of showing that the evidence submitted to the court
entitles it to a judgment on the federal instrumentality issue. The Government has
pointed to sufficient facts that show that DIBC is a private company which, although it
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9
The court recognizes that even the Government has proffered very few facts in
this regard. Nonetheless, the summary judgment standard is not based on quantity.
The moving party need only point to enough evidence to show the absence of an issue
of fact.
32
facilitates the flow of vehicular traffic –and, in turn, interstate commerce– is engaged in
a private business. From the limited facts before the court, the only conclusion to be
drawn is that the federal government maintains very little control or involvement in
DIBC’s operations.9 Augustine, 429 F.3d at 1339 n.3 (“[T]he Supreme Court has
looked to several factors, including: whether the entity was created by the government;
whether it was established to pursue governmental objectives; whether government
officials handle and control its operations; and whether the officers of the entity are
appointed by the government.”) (citation omitted).
With this the only possible conclusion under the Government’s facts, the Rule 56
burden then shifts to the nonmoving party, who “must do more than simply show that
there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co.,
475 U.S. at 586; see also Alexander v. CareSource, 576 F.3d 551, 558 (6th Cir. 2009)
(“Once that occurs, the party opposing the motion then may not ‘rely on the hope that
the trier of fact will disbelieve the movant’s denial of a disputed fact’ but must make an
affirmative showing with proper evidence in order to defeat the motion.”) (citing Street v.
J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989)). This case appears to be one
of those in which the non-moving party has done just what the Supreme Court and the
Sixth Circuit cautioned against in Matsushita and Street. DIBC has done nothing more
than to suggest that facts may be in dispute. DIBC argues that the court should deny
the Government’s motion because the determination of whether DIBC is a federal
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33
instrumentality is fact-based, and therefore not appropriate for summary judgment.
(DIBC’s Resp. at 3.) DIBC contends that the court should make a “thorough review of
the facts” and either “accept the extensive factual findings of the Wayne County Circuit
Court” (which has not been provided to this court) or hold “supplementary evidentiary
hearings.” (Id.) It is well-established, however, that a party cannot avoid summary
judgment by merely suggesting that a factual dispute exists, without providing any
evidence on which to find a dispute. This principle has long been known. As aptly
stated in this district in a pre-Matsushita case more than thirty years ago,
Plaintiff has responded to the facts as set forth and to the conclusion that
can be drawn therefrom with the mere assertion that some unspecified
proof, presumably to the contrary, will be forthcoming at trial. It is settled
that in motions for summary judgment, the responding party must set forth
its facts in the form of affidavits, depositions, exhibits and the like. It is only
in this way that a ‘genuine issue’ is created, and a respondent cannot
succeed by asserting that proof will be forthcoming at trial or by relying
upon unsupported allegations or claims in the pleadings.
Ann Arbor Trust Co. v. North Am. Co. for Life and Health Ins., 383 F. Supp. 310, 315
(E.D. Mich. 1974). Indeed, “if the movant puts forward evidence-such as affidavits,
purported business records, purported government records, etc.-the other party cannot
withstand summary judgment by simply sitting mute and failing to challenge the
authenticity, admissibility, or veracity of those documents.” Leys v. Lowe’s Home
Centers, Inc., 664 F.Supp.2d 828, 831 (W.D. Mich. 2009) (citing Donoho v. Smith Cty.
Bd. of Ed., 21 F. App’x 293, 298 (6th Cir. 2001)). DIBC is not entitled “to get to the jury
on the basis of the allegations in their [pleadings], coupled with the hope that something
can be developed at trial . . . .” Smith v. Hudson, 600 F.2d 60, 65 (6th Cir. 1979)
(quoting First National Bank v. Cities Service, 391 U.S. 253, 289-90 (1968)); see also
Bryant v. Com. of Ky., 490 F.2d 1273, 1275 (6th Cir. 1974) (“[W]here the movant brings
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10
This sworn statement appears to have been contradicted at oral argument by
DIBC’s counsel who affirmed several times that DIBC had “presented itself as a federal
instrumentality” even before the Michigan Supreme Court issued its ruling to that effect.
34
forward and supports his motion for summary judgment, his opponent may not rest
merely upon his pleadings but rather must come forward to show genuine issues of fact.
Mere conclusory and unsupported allegations, rooted in speculation, do not meet that
burden.”).
DIBC has not put forth any evidence to dispute the Government’s evidence. The
sole affidavit attached to DIBC’s brief relates primarily to whether the property in
question is owned by the City of Detroit or has been abandoned. (DIBC’s Resp. Br. at
Ex. A.)
The only averments made with respect to DIBC’s status as a federal
instrumentality are found at paragraphs 14-17, in which the president of DIBC, Dan
Stamper, avers that DIBC has never asserted that is “an appendage, agent, constituent,
or servant” of a state, local or the federal government (id. at ¶¶ 14,15, 17)10 and that
DIBC does not claim to have taken any action of which Plaintiff complains based on its
possible status as a federal instrumentality (id. at ¶ 16). These averments bolster,
rather than contest, the Government’s position.
Likewise, DIBC also submits the Government’s responses to Plaintiff’s request to
admit, in which the Government makes the following admissions:
(1) [T]he federal government did not create or authorize the creation of [DIBC]
(the corporate entity, not the Ambassador Bridge itself) or its corporate
predecessor.
(2) [T]he federal government does not have any control of DIBC’s articles of
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35
incorporation, by-laws, or other corporate documents.
(3) [T]he federal government does not own all or any part of DIBC.
(4) [T]he federal government does not handle and control the operations of
DIBC.
(5) [T]he federal government does not appoint any of DIBC’s officers.
(6) [T]he federal government does not have any control of the hiring, firing or
supervision of any of DIBC’s employees or officers.
(7) [T]he federal government does not fund DIBC’s operations.
(8) [T]he federal government does not have any control over DIBC’s
spending.
(9) [T]he federal government does not receive any share of profits generated
by DIBC’s operations.
(10) [T]he federal government does not bear any portion of losses resulting
from DIBC’s operations.
(11) [T]he federal government is not liable for any judgments entered against
DIBC.
(12) [T]he federal government does not have any control over DIBC’s policies
or positions.
(13) [T]he federal government does not have any control over lawsuits filed by
DIBC or actions or positions taken by DIBC in litigation.
(14) DIBC is not indispensable to the workings of any federal department or
unit.
(15) [T]he federal government does not have the power to dissolve DIBC.
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36
(16) DIBC does not perform any governmental function.
(17) [N]o federal statute, regulation or guideline designates DIBC as a federal
instrumentality or indicate that the federal government believes DIBC to be
a federal instrumentality.
(18) [N]o federal contract requires that DIBC seize, destroy and build upon 23rd
Street in Detroit, Michigan, immediately north of Fort Street.
(19) [N]o federal law requires that DIBC seize, destroy and build upon 23rd
Street in Detroit, Michigan, immediately north of Fort Street.
(20) [N]o federal policy or objective requires that DIBC seize, destroy and build
upon 23rd Street in Detroit, Michigan, immediately north of Fort Street.
(DIBC Resp. at Ex. D.) These admissions further support, in greater detail, the
Government’s motion. The court is unclear as to why these statements would be
submitted by DIBC and not the Government, they have nonetheless become part of the
record before the court on summary judgment. Considering this evidence, in addition to
the evidence submitted by the Government, leaves the court with only one possible
conclusion: judgment must be entered in favor of the Government as a matter of law.
DIBC has identified no factual dispute for trial. Horton, 369 F.3d at 909 (citing
Matsushita, 475 U.S. at 587) (stating that the non-moving party “The failure to present
any evidence to counter a well-supported motion for summary judgment alone is
grounds for granting the motion.” Everson v. Leis, 556 F.3d 484, 496 (6th Cir. 2009)
(citing Skousen v. Brighton High School, 305 F.3d 520, 528 (6th Cir. 2002)). Not only
has DIBC submitted no evidence that contradicts the Government’s position, the
evidence it did submit supports the Government’s motion. The court will grant the
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11
In its post-hearing supplemental brief, DIBC argues that the use of the term
“Federal” is not prohibited by law, absent circumstance not present here. DIBC misses
the point though. The court is not enjoining DIBC based on the use of the word
“Federal” in its name, but from claiming the status of a federal instrumentality, limited or
otherwise, and from claiming that is exempt from state or local ordinances based upon
that asserted status.
37
Government’s motion for summary judgment, declare that DIBC is not a federal
instrumentality, and enjoin DIBC from claiming such status and potentially subjecting
the United States to liability for DIBC’s actions.11
V. CONCLUSION
IT IS ORDERED that the United States’s “Motion for Summary Judgment on
‘Federal Instrumentality’ Status of DIBC” [Dkt. # 55] is GRANTED and DIBC’s “Motion
for Summary Judgment” [Dkt. # 63] is DENIED.
IT IS FURTHER ORDERED that Government shall submit a proposed
declaratory judgment and injunction, consistent with this order and closely tracking its
Cross Claim within seven days of the date of this order.
S/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: June 29, 2010
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, June 29, 2010, by electronic and/or ordinary mail.
S/Lisa Wagner
Case Manager and Deputy Clerk
(313) 234-5522
S:ClelandJUDGE’S DESKC3 ORDERS 9-11060.COMMODITIES.FederalInstrumentality.SJ.5.wpd
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