Opinion ID: 798855
Heading Depth: 3
Heading Rank: 2

Heading: Wee Care's Claims Against the State Defendants

Text: The Wee Care IV complaint raises one claim against the State Defendants, a per se violation of Section 1 of the Sherman Antitrust Act. Wee Care bases its antitrust action on ODJFS's allegedly improper process of responding to license renewal applications, which involves a procedure Wee Care characterizes as a zero out scheme. Under this alleged zero out scheme, Wee Care contends that ODJFS would not respond timely to renewal applications and, with the cooperation of FCDJFS, would deny Title XX funding to day care centers awaiting a renewal decision. As the day care centers were left to operate under expired licenses that often reduced the number of children the center could serve, the day care centers would have trouble negotiating necessary third-party contracts. With fewer clients and no Title XX funding, the businesses eventually would be forced to close. Wee Care alleges that ODJFS implemented this zero out procedure as a means to control the day care market and drive disfavored businesses out of the market without providing the due process hearing required by Ohio law. Section 119.06(C) of the Ohio Revised Code requires any licensing agency to afford a hearing upon the request of a person whose application for a license has been rejected. . . . Ohio Rev.Code § 119.06(C). Wee Care alleges that when ODJFS wanted to deny an application, rather than affording the day care operator a hearing, the State Defendants would delay the hearing for such lengthy periods of time that the day care center eventually went out of business, mooting the request for a hearing. Wee Care's attempt to establish an antitrust claim against the State Defendants based on this alleged zero out scheme fails both as a matter of state and federal law. As a threshold matter, as the district court correctly concluded, § 2743.02(A)(1) expressly prohibits Wee Care from raising any claims regarding any such zero out procedure against individual government employees. In this section, Ohio law provides a limited waiver of sovereign immunity and consent to suit in the Court of Claims. However, it also provides that a plaintiff who elects to sue the state in that court waives the right to raise claims against individual employees of the state. Section 2743.02(A)(1) states that filing a civil action in the court of claims results in a complete waiver of any cause of action, based on the same act or omission, which the filing party has against any officer or employee. . . . This waiver is void if the court determines that the act or omission was manifestly outside the scope of the officer's or employee's office or employment or that the officer or employee acted with malicious purpose, in bad faith, or in a wanton or reckless manner. Id.; see Leaman v. Ohio Dep't of Mental Retardation & Dev. Disabilities, 825 F.2d 946, 953 (6th Cir.1987) (en banc). When Wee Care filed Wee Care III in the Court of Claims against ODJFS and the State of Ohio, it waived any claims against the individual officers and employees that arose from the same act or omission. Wee Care contends that Wee Care III does not involve the same acts or omissions as Wee Care IV, because its current complaint couches its causes of action in terms of antitrust and conspiracy violations, whereas prior iterations of the complaint were presented as due process violations. Although the parties dispute whether Wee Care even raised this new claim of conspiracy against the State Defendants, even assuming that the conspiracy claim was properly raised, we have previously rejected the argument that a plaintiff may evade the reach of § 2743.02(A)(1) by employing a new cause of action. In Thomson v. Harmony, we held that because § 2743.02(A)(1) specifically refers to an `act' rather than an `allegation' or `claim,' waiver applies if the two cases involve the same acts or omissions regardless of whether they share the same legal or theoretical foundation. . . . 65 F.3d 1314, 1319 (6th Cir. 1995) (emphasis omitted). Because the case before this Court involves the same issue previously raised in the Court of Claims in Wee Care III the impropriety of ODJFS and FCDJFS's purported zero out schemeunder § 2743.02(A)(1), Wee Care is barred from suing individual government employees and the district court properly dismissed the case. Regardless of the waiver issue, the State Defendants are further entitled to dismissal under Rule 12(b)(6) because Wee Care has failed to state a claim to relief that is plausible on its face. Viewing Wee Care's complaint in the light most favorable to it and accepting all its well-pleaded allegations as true, Wee Care has not alleged facts that would plausibly allow it to show that the State Defendants violated antitrust laws. To prove antitrust injury, the key inquiry is whether competitionnot necessarily a competitorsuffered as a result of the challenged business practice. CBC Cos., Inc. v. Equifax, Inc., 561 F.3d 569, 571-72 (6th Cir.2009) (emphasis omitted). Because protecting competition is the sine qua non of the antitrust laws, a complaint alleging only adverse effects suffered by an individual competitor cannot establish an antitrust injury. Care Heating & Cooling, Inc., v. Am. Standard, Inc., 427 F.3d 1008, 1014-15 (6th Cir.2005). A review of Wee Care's complaint reveals that it has not set forth sufficient factual matter . . . to state a claim to relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and citations omitted), because it lacks any factual basis for concluding a harm to competition beyond adverse effects suffered by an individual competitor, Care Heating & Cooling, Inc., 427 F.3d at 1014-15. Wee Care provides no facts, beyond mere conclusory statements, to support the allegation that ODJFS's procedures harmed competition. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. A complaint, such as that in Wee Care IV, that solely tenders naked assertion[s] devoid of further factual enhancement, cannot survive a motion to dismiss under Rule 12(b)(6). Id. at 678, 129 S.Ct. 1937 (internal quotation marks omitted) (alteration in original). As such, the district court properly granted the State Defendants' motion to dismiss and we need not address the State Defendants' defenses under qualified immunity and the state action doctrine.