The opinion of the court was delivered by: Illston, District Judge.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION
On February 11, 2000, the Court heard argument on a motion for
summary judgment by defendant C.A. Terhune, Director of the
California Department of Corrections ("CDC") and a motion for
preliminary injunction by plaintiffs. Having carefully
considered the arguments of counsel and the papers submitted,
the Court GRANTS defendant's motion for summary judgment and
DENIES plaintiffs' motion for preliminary injunction.
Plaintiffs are fifteen current and former California inmates
who have brought a § 1983 action against defendants California
Department of Corrections ("CDC"), James Gomez, former Director
of the CDC, and C.A. Terhune, current Director of the CDC.
Plaintiffs allege that defendants committed an unconstitutional
taking and violated prisoners' equal protection rights by
failing to pay interest on funds deposited by prisoners in
Inmate Trust Accounts ("ITAs").
On March 24, 1997, this Court held that plaintiffs did not
possess a property interest in the interest income earned on
money placed in ITAs and dismissed plaintiffs' complaint without
leave to amend. See Schneider v. California Dept. of
Corrections, 957 F. Supp. 1145, 1149 (N.D.Cal. 1997). After this
Court denied reconsideration of its ruling, plaintiffs appealed.
On August 4, 1998, the Court of Appeals for the Ninth Circuit
reversed and remanded, holding that plaintiffs possessed a
constitutionally cognizable property right in the interest
earned on funds deposited into the ITAs. Because such a property
right triggered Fifth Amendment takings scrutiny, the Court
ordered further discovery and proceedings regarding accrual of
actual or constructive interest on ITA funds. See Schneider v.
California Dept. of Corrections, 151 F.3d 1194, 1201 (9th Cir.
On May 14, 1999, plaintiffs filed an amended complaint,
alleging § 1983 damages resulting from defendants' alleged
unconstitutional taking and violation of plaintiffs' equal
protection rights. Plaintiffs also requested injunctive relief.
On August 20, 1999, this Court dismissed defendants CDC and
James Gomez from this action. See Schneider v. California Dept.
of Corrections, No. 96-1739 SI (N.D.Cal. Aug. 20, 1999) (Order
Granting Motion to Dismiss). Now before the Court is defendant
Terhune's motion for summary judgment, and plaintiffs' motion
for preliminary injunction.
For security reasons, state prisoners are not permitted to
possess money while in prison. See 15 C.C.R. § 3006(b); Flores
Decl. ¶ 3. Should prisoners wish to have access to funds while
incarcerated,*fn1 inmates can choose to place their money in
either an ITA, which does not earn interest to the prisoner, or
in a Passbook Savings Account, which does earn interest.*fn2
See Flores Decl. 1 6; Response to Plffs' Second Set of
Interrogatories, No. 1. Only those funds placed in an ITA are
available to inmates for use in the prison Canteen*fn3 to
purchase items such as soap and toothpaste. See Flores Decl. ¶
6. The CDC does not charge the prisoners a fee for maintaining
the ITAs. See id. ¶ 2.
The California Penal Code provides that, when specifically
authorized on a separate written form by the inmate, the CDC may
place ITA funds into an interest-bearing bank account. See
Cal.Penal Code § 5008; Declaration of Counsel in Supp. of Mtn.
for Prelim. Inj., Exh. E. Prior to October 1998, ITA funds that
exceeded the estimated current needs of inmates were deposited
into the Inmate Welfare Fund ("IWF"), a fund which is used to
improve prison conditions and provide prisoner programs, such as
movies and library materials. See Flores Decl. ¶¶ 7, 9. In
turn, IWF funds in excess of the estimated needs of the IWF
program were deposited into the State Treasury. See Flores
Decl. ¶ 7. Any interest earned on these excess IWF funds was
returned to the IWF account. See id.*fn4 However, as of
October 1998, excess ITA funds are no longer transferred into
the IWF account or the State Treasury. Rather, these funds
remain in the individual inmates' non-interest-bearing ITAs.
Based upon a survey performed by R. Flores, Chief of the
Inmate Welfare Fund and Trust Accounting Section of the CDC,
defendant estimates that operating the current
non-interest-bearing ITA system costs $1,1789,892 per year (or
$7.84 per prisoner), no part of which is actually charged to the
prisoners. See Flores Decl. T ¶ 2, 11. The CDC further
estimates that the annual interest earned on ITA funds would
total $516,116.28, or $3.43 per prisoner. See id. ¶ 12. In
order to institute and maintain a system in which ITA funds earn
interest and in which that interest is accounted for to each
individual inmate, additional staffing, equipment, and office
space costs may also be necessary. See id. ¶ 10. As such,
interest-bearing ITA accounts would generate substantial,
systemic net losses. See id. ¶ 13.
A motion for summary judgment may be granted when "the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
A party seeking summary judgment bears the initial burden of
court of the basis for its motion and of identifying those
portions of the pleadings and discovery responses which
demonstrate the absence of a genuine issue of material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct.
2548, 91 L.Ed.2d 265 (1986). Where the moving party will have
the burden of proof on an issue at trial, the movant must
affirmatively demonstrate that no reasonable trier of fact could
find other than for the moving party. However, on an issue for
which the nonmoving party will have the burden of proof at
trial, the movant can prevail merely by pointing out that there
is an absence of evidence to support the nonmoving party's case.
Id. If the moving party meets its initial burden, the
nonmoving party must then set forth, by affidavit or as
otherwise provided in Rule 56, "specific facts showing that
there is a genuine issue for trial." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986);
In judging evidence at the summary judgment stage, the Court
does not make credibility determinations or weigh conflicting
evidence and draws all inferences in the light most favorable to
the nonmoving party. See T.W. Elec. Serv., Inc. v. Pacific
Elec. Contractors Assn., 809 F.2d at 630-31. The evidence
presented by the parties must be admissible. Fed.R.Civ.P. 56(e).
Hearsay statements found in affidavits are inadmissible. See,
e.g., Fong v. American Airlines, Inc., 626 F.2d 759, 762-63
(9th Cir. 1980). Conclusory, speculative testimony in affidavits
and moving papers is insufficient to raise genuine issues of
fact and defeat summary judgment. See Falls Riverway ...