Procedural Due Process Damages: Post-Deprivation Evidence May Prove Termination Was Inevitable, Limiting Recovery to Nominal Damages

Introduction

In Nationwide Recovery, Incorporated; Julia Hussein; Hussein M. Hussein; Jerry Parker; Annie Hussein; Louay M. Hussein; Carol Hendon v. City of Detroit, Michigan, the Sixth Circuit addressed damages for a conceded procedural due process violation arising from Detroit’s suspension/termination of a police towing permit without a hearing. The plaintiffs (a towing company and related individuals) alleged that the City deprived them of a property interest—the towing permit—without constitutionally required process.

The key issues on appeal were: (1) whether the district court properly refused to strike portions of a police official’s declaration offered on summary judgment, and (2) whether, despite the lack of process, the plaintiffs were limited to nominal damages because the permit termination would have occurred anyway.

Summary of the Opinion

The Sixth Circuit affirmed. It held that the district court did not abuse its discretion in considering Lieutenant Parish’s declaration, including his opinion—based on experience— about how the Board of Police Commissioners would have acted. On damages, the court applied Carey v. Piphus and Sixth Circuit’s two-step approach from Franklin v. Aycock to conclude that the City’s failure to provide a hearing did not cause compensable loss because the permit would have been terminated once proper process occurred. Critically, the court rejected limiting the “justification” inquiry to evidence known on the date of the initial termination; instead, it considered evidence that would have been available at the post-deprivation hearing that should have occurred “as soon as practicable.”

Analysis

Precedents Cited

1) Evidentiary and summary-judgment framework (motion to strike)

Blount v. Stanley Eng'g Fastening and Ondo v. City of Cleveland: These cases supplied the abuse-of-discretion standard for reviewing the denial of a motion to strike and the operative meaning of Rule 56’s personal-knowledge requirement. The panel relied on Ondo for the principle that courts may look past imprecise phrasing (like “belief”) if the substance is grounded in personal knowledge and experience.
Fed. R. Civ. P. 56(c)(4) and Fed. R. Civ. P. 56(e): The court emphasized that declarations must be made on personal knowledge and present admissible facts, but defects can be addressed flexibly (including by disregarding only the improper portion).
Turner v. Long (citing United States v. Hickey): Used to characterize personal knowledge as a “not a high bar,” satisfied by first-hand observation or experience.
Johnson v. Memphis Light Gas & Water Div. (quoting Harris v. J.B. Robinson Jewelers): Supported the admissibility of lay opinion when based on “personal and rational perceptions” and open to cross-examination.
F.R.C. Int'l, Inc. v. United States (quoting A.L. Pickens Co. v. Youngstown Sheet & Tube Co.): Cited for the proposition that courts may disregard inadmissible “extraneous material” rather than striking entire submissions.
Nagel v. United Food: Distinguished. The Sixth Circuit read Nagel as turning on the absence of personal knowledge, not as establishing a categorical bar on testimony predicting how others would vote.

2) Procedural due process damages and “justification”

Carey v. Piphus: The foundation. The court reiterated that compensatory damages are not presumed for procedural due process violations; absent proof of actual injury caused by the lack of process, the remedy is nominal damages.
Mathews v. Eldridge: Used via Carey to reinforce that procedural protections are designed to reduce the risk of erroneous deprivation.
Franklin v. Aycock: Provided the Sixth Circuit’s two-step inquiry: (1) would the same action have been taken even with due process; and if not, (2) is there proof of actual injury supporting compensatory damages.
Parrish v. Johnson and Farrar v. Hobby: Cited for the general principle that § 1983 damages compensate injuries caused by constitutional deprivation, and nominal damages may be appropriate where only the right is vindicated.
Parratt v. Taylor (rev’d on other grounds by Daniels v. Williams) and Moody v. Mich. Gaming Control Bd.: Deployed to frame post-deprivation process as the moment at which the government “finally deprives” a person of property interests in contexts where immediate action occurs first.
FDIC v. Mallen: Central by analogy. The court used Mallen to explain why post-deprivation evidence is integral to post-deprivation hearings: an acquittal could eliminate the basis for continued deprivation, while a conviction strengthens it. The “two-way street” concept supported admitting inculpatory and exculpatory evidence.
Zinermon v. Burch: Quoted for the idea that the procedural due process violation is not “complete” until the State fails to provide due process—supporting the court’s focus on what would have occurred at the hearing that should have happened.

Legal Reasoning

1) The declaration: “belief” language did not defeat personal knowledge

Nationwide sought to strike paragraph 12 of Lieutenant Parish’s declaration because it used the word “belief” and opined about what an eleven-member Board would have done. The Sixth Circuit refused to treat “belief” as dispositive. Applying Ondo v. City of Cleveland, it treated the phrasing as a potential “stylistic error” and asked whether the statement was substantively grounded in Parish’s first-hand experience supervising the towing program and interacting with the Board.

The court further rejected a categorical rule that a declarant can never offer an experience-based opinion about how a decisionmaker would likely act. It held that Rule 56(c)(4) permits opinion testimony when it is based on the declarant’s “personal and rational perceptions” and is subject to cross-examination (citing Johnson v. Memphis Light Gas & Water Div.). Any arguably legal-conclusory phrasing (e.g., “fraudulent”) could be disregarded without striking the entire paragraph (citing F.R.C. Int'l, Inc. v. United States).

2) Damages: the “justification” counterfactual includes evidence available by the time process should have occurred

On damages, the court squarely addressed what evidence informs the first step of Franklin v. Aycock’s Carey v. Piphus inquiry: whether the same action would have occurred even if due process had been afforded. Nationwide argued the court must limit itself to evidence the City possessed on July 19, 2017 (the date of the permit action), warning against post hoc rationalizations.

The Sixth Circuit rejected that limitation as inconsistent with the function of post-deprivation review. A post-termination hearing (especially one required “as soon as practicable”) is designed to decide whether continued deprivation is justified in light of the evidence available at the hearing—evidence that can either exonerate or further incriminate. The court anchored this in FDIC v. Mallen (later developments can eliminate or strengthen the basis for deprivation), and in Zinermon v. Burch (the due process claim matures when the state fails to provide the required process).

Applying that lens, the court considered (i) evidence that a Nationwide driver, Kenneth “Turbo” Christian, colluded with car thieves, including forensic text evidence and suspiciously rapid recoveries, and (ii) evidence of systematic overcharging in violation of the Towing Rules, including complaints received shortly after the termination and an audit showing inflated tow, administrative, storage, and add-on fees. The court held these grounds would have been presented at a timely hearing and were sufficient to support termination. Therefore, the lack of process did not cause compensable loss; Nationwide was limited to nominal damages of one dollar under Carey v. Piphus.

Impact

Clarifies the damages inquiry for procedural due process claims in the Sixth Circuit: Courts assessing “same decision anyway” causation are not confined to the government’s evidentiary posture on the date of the initial deprivation; they may consider evidence that would have been available at the post-deprivation hearing that due process required.
Reduces windfall compensatory awards for procedurally flawed but substantively justified deprivations: The decision reinforces Carey v. Piphus’s insistence on causation and actual injury, channeling many cases into nominal damages where justification is established.
Incentives and guardrails: While the court rejected the “perverse incentive” framing, it implicitly conditions reliance on later-developed evidence on what would have been available at the hearing that should have occurred— not on limitless post-litigation rationales. Future litigants will likely dispute the timing of when a hearing was “practicable” and what evidence would realistically have been before the decisionmaker then.
Summary-judgment practice: Experience-based testimony predicting institutional decisionmaking may survive Rule 56(c)(4) challenges when anchored in concrete job experience and interactions with the relevant body.

Complex Concepts Simplified

Procedural due process: The Constitution may require notice and a meaningful opportunity to be heard before (or promptly after) the government takes away certain interests (like a license or permit). The question here was not whether Detroit had grounds to end the permit, but whether it followed the required procedures.
Property interest in a permit: A permit can be a protected property interest when rules and practices limit the government’s ability to terminate it (e.g., termination only for specified reasons, with hearing requirements). The district court had already held the permit was such an interest; damages were the focus on appeal.
Nominal vs. compensatory damages: Nominal damages (often $1) recognize a rights violation without proving monetary loss caused by that violation. Compensatory damages require proof that the lack of process caused actual injury (e.g., lost profits that would not have occurred if a proper hearing had been held).
“Same decision anyway” / justification counterfactual: Courts ask: if the government had provided the required hearing, would it still have taken the same action? If yes, then the procedural error did not cause the economic loss, and damages are typically nominal.
Post-deprivation hearing and post-termination evidence: When immediate action is permitted (e.g., to protect the public), due process can be satisfied by a prompt hearing afterward. The Sixth Circuit held that such a hearing would consider evidence available at that time—whether helpful or harmful to the permit-holder—so damages analysis may do the same.
Personal knowledge under Rule 56(c)(4): A declaration supporting summary judgment must be based on first-hand knowledge or experience, not mere speculation. Here, the court treated Parish’s opinion about Board practice as grounded in his supervisory role and prior interactions, despite his use of the word “belief.”

Conclusion

Nationwide Recovery, Inc. v. City of Detroit, Michigan solidifies a practical, hearing-focused approach to damages for procedural due process violations: when evaluating whether a deprivation would have occurred even with due process, courts may consider evidence that would have been before the decisionmaker at the post-deprivation hearing that should have occurred, not merely what the government knew at the moment it acted. Applying Carey v. Piphus and Franklin v. Aycock, the Sixth Circuit held that substantively justified termination—supported by evidence of collusion and overcharging—breaks causation for compensatory damages, leaving only nominal damages to vindicate the procedural right.