Hill v. CEO of Union Supply Group

Background

Nathan Hill, an inmate at Salinas Valley State Prison, filed a self-represented action under 42 U.S.C. § 1983. The court reviewed his amended complaint under the prisoner-screening statute, 28 U.S.C. § 1915A. That statute requires a court to identify claims that may proceed and dismiss claims that are frivolous, malicious, fail to state a claim, or seek money from an immune defendant.

The initial complaint named Union Supply Group, a John Doe chief executive officer of Union Supply Group, and a John Doe chief executive officer of Union Supply Company. It alleged that Union Supply Company, a corrections-department-authorized vendor, refused to credit Hill for items missing from a package. The court previously dismissed that complaint with leave to amend because it did not allege a violation of federal law or the Constitution, and because there is no private right of action for wire fraud while the remaining claims were based on state law.

The amended complaint named the California Department of Corrections and Rehabilitations, Secretary Ralph Diaz, CEO of Union Supply Group, Union Supply Group Inc., CEO of Union Supply Co., and Union Supply Co. Hill alleged that he deposited $600 into a trust account with Union Supply Co. from 2019 to 2020 and ordered packages subject to corrections-department and Union Supply rules. He alleged that Union Supply failed to provide some ordered items and incentive items, refused to notify him when items were out of stock, failed to refund more than $32 for undelivered items, and would not allow him to use a remaining $140 account balance.

Claims and analysis

Hill characterized the alleged deprivation of his goods and money as an unlawful seizure under the Fourth Amendment and a taking without due process under the Fifth and Fourteenth Amendments. He also invoked Article I, Section 10 of the Constitution, which restricts states from passing laws that impair contractual obligations. Hill argued that the Union Supply defendants acted under color of state law because the corrections department contracted with them to provide canteen services that it did not want to provide directly. He also argued that the corrections department had a contractual fiduciary duty to him.

The court held that the amended complaint did not establish that Union Supply Co. or Union Supply Group was a state actor. The court explained that private conduct qualifies as state action only when there is a sufficiently close connection between the state and the challenged conduct. Because the corrections department had no constitutional duty to provide inmates with canteen services or supplies, its authorization of Union Supply to provide those services did not make Union Supply a state actor.

The court further held that, even assuming the Union Supply defendants acted under color of state law, the amended complaint still failed to state the asserted federal claims. The Fourth Amendment claim failed because the court said it does not protect an inmate from the seizure or destruction of property. The due-process claim failed because the alleged deprivation was not caused by an established state procedure. The court noted that corrections regulations required a refund when an item was out of stock, and Hill had not identified an established state procedure authorizing the defendants to hold his money. The court treated the alleged deprivation as random or unauthorized and concluded that an available state post-deprivation remedy, such as a state tort action, provided sufficient process.

The court also held that Article I, Section 10 did not apply because the corrections department’s approval of Union Supply as an authorized vendor was not the passage of a law impairing contracts.

Disposition

The court dismissed the Fourth Amendment claim with prejudice, dismissed the due-process claim with prejudice, and dismissed the Article I, Section 10 claim with prejudice. It then dismissed the entire action with prejudice because amendment would be futile. The clerk was directed to enter judgment for the defendants and close the case. The order added that Hill may seek relief in state courts on his state-law claims. Judge Jon S. Tigar signed the order.