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Coleman v. Sanitation District No. 1 of Northern Kentucky

United States District Court, E.D. Kentucky, Northern Division, Covington

February 24, 2014



DAVID L. BUNNING, District Judge.


Plaintiff Charlie Coleman brings this purported class action against Sanitation District No. 1 of Northern Kentucky, Boone County Judge Executive Gary Moore and Campbell County Judge Executive Steve Pendery. Plaintiff seeks a declaratory judgment that Defendants raised sanitation service rates in 2012 in a manner that violated K.R.S. § 220.542. Plaintiff also claims that the allegedly improper rate increase amounted to common law conversion, and deprived him of his right to due process of law guaranteed by the Fourteenth Amendment.

Shortly after this case was removed from Campbell County Circuit Court, the parties proposed that they file cross-motions for summary judgment on Plaintiff's claim that Defendants improperly raised 2012 service rates in violation of K.R.S. § 220.542. Additionally, the parties proposed that all other claims-including the federal claim-be stayed pending the Court's resolution of the dispositive motions. The Court initially found that this proposal made practical sense; if the Court found in favor of Defendants on this claim as a matter of law, Plaintiff's remaining claims necessarily failed. Thus, there was the potential that the Court might resolve this case on the state-law claim at the outset, saving the parties significant litigation costs. The Court, therefore, permitted the parties to file cross-motions on the state-law claim and stayed the remaining claims. Those cross-motions for summary judgment are now before the Court (Docs. # 10, 11), have been fully briefed (Docs. # 13, 14, 17, 18), and are ripe for review.

During the Court's initial review of the cross-motions for summary judgment, the Court had concerns that the parties' proposed resolution might run afoul of a more significant concern: the Court may be issuing an opinion on a state-law matter when it lacks subject matter jurisdiction. The case was removed to Federal court on the premise that Plaintiff's § 1983 claim gave the Court federal question jurisdiction pursuant to 28 U.S.C. § 1331. On its face, Plaintiff's Complaint clearly states a federal claim. However, in considering the claim, the Court had concerns that Plaintiff's federal claim was wholly insubstantial and frivolous or completely devoid of merit such that the Court was deprived of federal question jurisdiction. The Court then ordered the parties to file supplemental briefing on the merits of Plaintiff's § 1983 claim in order to make an initial determination about whether the Court has subject matter jurisdiction. The parties have now submitted supplemental briefing in compliance with the Court's directive. (Docs. # 21, 22). Having reviewed the parties' supplemental briefing, the Court finds that Plaintiff's § 1983 is entirely devoid of merit; therefore, the Court cannot exercise federal question jurisdiction over this case.


A. Rate Increase

Defendant Sanitation District No. 1 ("SD1") provides sanitation removal services to property owners in Boone, Kenton, and Campbell Counties, all in Northern Kentucky. It presently owns and maintains more than 1, 600 miles of sanitary sewer lines, 143 wastewater pumping stations, 15 flood pump stations, eight package treatments plants, and two major wastewater treatment plants. (Doc. # 10-6). Plaintiff Charlie Coleman, a Campbell County resident and property owner, receives services from SD1. Consequently, he has paid service fees to SD1, including the allegedly unlawful rate increase in 2012 that is at the heart of this litigation.

For reasons insignificant to this lawsuit, SD1 determined that it would suffer a revenue shortfall in Fiscal Years 2012 and 2013. Specifically, SD1 forecasted that it would spend $158 million in Fiscal Year 2012, and $127 million in Fiscal Year 2013, while only bringing in $75 million in revenue each year. Thus, anticipated revenues amounted to approximately fifty percent of anticipated expenditures.

SD1's Board of Directors began considering rate increases to remedy the shortfall. On January 18, 2011, the Board passed a resolution proposing three options for rate increases. (Doc. # 10-8). Option 1 proposed a fifteen percent increase in sewer rates over each of Fiscal Years 2012 and 2013; Option 2 proposed a twelve-and-a-half percent increase; and Option 3 proposed a nine-and-a-half percent increase. ( See Doc. # 10-10 at 30).

The following day, County Judges Executive Gary Moore, Steve Pendery and Steve Arlinghaus, of Boone, Campbell and Kenton Counties, respectively, convened a special meeting concerning SD1. The Judges Executive were briefed on the infrastructure challenges faced by SD1, the need for the rate adjustments, and three rate adjustment options proposed by the Board. Finally, the Judges Executive were advised when public hearings would be scheduled, and on the length of the public comment period.

That same day, the proposed rate increases were published in The Kentucky Enquirer newspaper. (Doc. # 10-8). The publication gave Northern Kentucky residents notice of three public hearings to take place in Boone, Campbell and Kenton Counties on January 26, 2011, January 27, 2011 and January 29, 2011, respectively. Finally, the publication gave notice that the SD1 Board of Directors would meet on March 22, 2011 for final consideration and approval of the rate increases.

Consistent with the notice, three public hearings were held in Boone, Campbell and Kenton Counties. Then, on March 22, 2011, the Board of Directors met to finally consider the proposed rate increases. (Doc. # 11-42). After considering the three options and public comments, Board Member Chuck Heilman moved to accept and approve Option 1 - the fifteen percent rate increase with one limited and irrelevant exception. Seven Board Members voted in favor of the increase and only one Member abstained. The fifteen percent rate increase for Fiscal Years 2012 and 2013 was thus accepted and approved.

On March 29, 2011, the Judges Executive reconvened to finally consider and approve one of the three rate increases. (Doc. # 10-13). Before considering the rates, though, the Judges Executives were provided information regarding House Bill 26, which is at the heart of this litigation and will be discussed more fully below. They were then advised of the public hearings and comments, and the rate increase that was ultimately approved and recommended by the SD1 Board. Thereafter, Boone County Judge Executive Gary Moore and Campbell County Judge Executive Steve Pendery voted in favor of a fifteen percent rate increase for Fiscal Year 2012, followed by a fifteen percent rate increase for Fiscal Year 2013; Kenton County Judge Executive Steve Arlinghaus voted against the increases. The rate increases were thus adopted and approved. The Fiscal Year 2012 rate increase became effective April 1, 2011, and the Fiscal Year 2013 increase became effective April 1, 2012.

B. Statutory Procedure to Amend Rates and House Bill 26

The parties agree that until June 8, 2011, K.R.S. § 220.035 governed the procedure by which sanitation rates could be amended. That statute provided:

(1) A fiscal court may:
(a) Review and approve, amend, or disapprove proposed district land acquisitions;
(b) Review and approve, amend, or disapprove proposed district construction of ...

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