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SCHNEIDER v. CALIFORNIA DEP'T OF CORRECTIONS

March 21, 1997

PAUL JOHN SCHNEIDER, et al., Plaintiffs,
v.
CALIFORNIA DEPARTMENT OF CORRECTIONS, et al., Defendants.



The opinion of the court was delivered by: ILLSTON

 On March 14, 1997, the Court heard argument on defendants' motion to dismiss. Having considered the arguments of counsel and the papers submitted, the Court hereby grants defendants' motion to dismiss without leave to amend.

 BACKGROUND

 Plaintiffs are current and former state inmates of Pelican Bay State Prison, California Correctional Institution, and the Central California Women's Facility. The inmates allege that defendants California Department of Corrections ("CDC") and James Gomez, Director of the CDC, have violated the Fifth Amendment Takings Clause by failing to pay interest on funds deposited by prisoners in Inmate Trust Accounts ("ITAs").

 For security reasons, prisoners are not permitted to possess money while they are in prison. 15 C.C.R. § 3006(b). For funds to which prisoners wish to have access while incarcerated, *fn1" inmates can choose to place their money in either an ITA, which does not pay interest to the prisoner, or in a Passbook Savings Account which does pay interest. *fn2" In order to have a Passbook Savings Account, inmates are required to maintain a balance of $ 25.00 in an ITA. *fn3" Only those funds placed in an ITA are available to inmates for use in the Canteen *fn4" to purchase items such as soap and toothpaste.

 The California Penal Code provides that any interest earned on funds placed in an ITA *fn5" is allocated to the Inmate Welfare Fund, whose funds are used to improve prison conditions in the State of California. Cal. Penal Code § 5008.

 Plaintiffs argue that inmates are unconstitutionally forced to choose between earning interest via the Passbook Savings Account, which funds may not be used at the Canteen, and having access to the Canteen via their ITAs, which do not earn interest. *fn6" They assert that access to the Canteen is a necessity of prison life. Plaintiffs allege that the CDC's failure to pay interest on funds deposited by prisoners in an ITA constitutes a taking in violation of the Fifth Amendment on the part of the CDC and prison officials. Plaintiffs further allege that defendant James Gomez, the Director of the CDC, is personally liable for implementing the policy on prisoner bank accounts. Plaintiffs seek monetary and injunctive relief against each of these defendants.

 Defendants have filed a motion to dismiss with prejudice for failure to state a claim.

 LEGAL STANDARD

 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss is not whether a plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of the claim. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974).

 In answering this question, the Court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in the plaintiff's favor. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of the pleadings suggests that the chance of recovery is remote, the Court must allow the plaintiff to develop the case at this stage of the proceedings. United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir. 1981).

 DISCUSSION

 The Fifth Amendment provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const. amend. V. The Fifth Amendment Takings Clause has been held to apply to the states through the due process clause of the Fourteenth Amendment. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160, 66 L. Ed. 2d 358, 101 S. Ct. 446 (1980). The Fifth and Fourteenth Amendment property and due process guarantees apply only to situations in which an individual is deprived of property in which there exists a constitutionally protected property interest. Board of Regents v. Roth, 408 U.S. 564, 569, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972). Protected property interests are created by "existing rules or understandings that stem from an independent source, such as state law--rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Id. at 577.

 In order for plaintiffs to establish that they have a protected property interest in the interest income created by funds deposited in an ITA, they must show that they have a legitimate claim of entitlement through either California law or some other independent ...


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