UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-41214
DALE A. BROWN; ET AL
Plaintiffs,
DALE A. BROWN; R. SCOTT SATTERWHITE;
ANTHONY P. HODGSON
Plaintiffs-Appellants,
VERSUS
NATIONSBANK CORPORATION; ET AL
Defendants,
NATIONSBANK CORPORATION; JODIE JONES; CONN & COMPANY;
SOUTHERN TECHNOLOGIES DIVERSIFIED, L.P.; HAL FRANCIS, also
known as John Clifford; JOSEPH CARROLL, also known as Joe Carson;
HILTON HOTELS; LEISURE HOSPITALITY MANAGEMENT COMPANY doing
business as Sheraton Hotel-Astrodome; UNITED STATES OF AMERICA
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Texas
September 8, 1999
Before DAVIS, STEWART, and PARKER, Circuit Judges.
ROBERT M. PARKER, Circuit Judge:
Dale A. Brown, R. Scott Satterwhite, and Anthony P. Hodgson
brought claims against the United States, federal agents, and
1
private businesses who assisted federal agents in an undercover
operation designed to detect contract procurement fraud in the
space industry. The district court dismissed all claims against
the government, federal agents, and private defendants. Brown,
Satterwhite, and Hodgson appeal. We AFFIRM.
I. FACTS
Dale A. Brown, R. Scott Satterwhite, and Anthony P. Hodgson
(“Appellants”) owned and operated two respected and successful
Houston-based corporations called TerraSpace, Inc. and TerraSpace
Technology, Inc. The companies provided high-tech engineering and
management services to the private and government sectors.
TerraSpace, Inc. received several engineering and management
contracts for services to the private sector. TerraSpace
Technology was successful in securing engineering and software
development contracts with aerospace firms and were awarded a
multi-million dollar Space Shuttle software development contract.
In the Fall of 1991, the Federal Bureau of Investigation began
a sting operation, called Operation Lightning Strike, designed to
uncover contract procurement fraud and other illegal activity
committed in the aerospace community. The undercover operation
targeted employees of the National Aeronautic and Space
Administration and aerospace contractors doing business with NASA.
Both the NASA Office of the Inspector General (“OIG”) and the
Defense Contractor Investigative Service (“DCIS”) participated in
2
the sting.
In May, 1992, FBI Special Agent James H. Francis, posing as a
wealthy investor named John Clifford, initiated contact with
Appellants Brown, Satterwhite, and Hodgson. Clifford told
Appellants that he owned a Maryland-based company called Eastern
Tech Manufacturing Company (“ETMC”) and that he wanted to find a
Houston-based aerospace firm to form a partnership with ETMC in
order to gain contracts with NASA and its contractors. Appellants
were not targets of the sting operation, but were selected by the
FBI as entities that could be used in order to gain access to the
aerospace community. Appellants were unaware that they and their
companies were being set up by the FBI as tools of deception in an
undercover operation.
Clifford represented to Appellants that he wanted to develop
a miniature medical device, a “lithotripter,” that astronauts could
use to pulverize kidney stones while in space. Clifford suggested
that his company, ETMC, would provide technology and facilities for
the development of the lithotripter. Further, Clifford contended
that the device would be developed into a multi-tissue ultrasonic
imaging system.
In July 1992, as the plans for the lithotripter developed,
Clifford offered Brown a job as the Chief Financial Officer and
Vice-President of Marketing of another company ostensibly owned by
Clifford, called Space, Inc. As the Vice-President, Brown was
offered a monthly salary of $5,000.00 plus expenses. Brown was to
3
receive his salary through yet another one of Clifford's
illusionary companies, Southern Technologies Diversified, L.P.
(“STD”). Clifford directed Brown to perform a number of activities
for Space, Inc. From August of 1992 to March of 1993, Brown made
numerous presentations as the Chief Financial Officer and Vice-
President of Marketing of Space and he spent time merging financial
summaries of Clifford's businesses with Space. To further gain
Appellants’ confidence and trust, Clifford promised to lend them
millions in venture capital for their companies.
As the Operation developed, the FBI enlisted the assistance of
several private companies to legitimize and lend credibility to its
fictitious business enterprises. During the summer of 1992,
Nationsbank provided financial information via telephone to Brown's
business associate, Neil Jackson, about Clifford and Clifford's
business partner, Joe Carson (FBI agent Joseph Carroll).
Nationsbank informed Jackson that Clifford and Carson had accounts
with Nationsbank totaling one hundred thirty (130) million dollars
and a one million dollar line of credit. In June and July, 1992,
Dun & Bradstreet provided favorable information via telephone and
fax about the FBI’s front company, STD. In July, 1992, Conn &
Company also provided favorable financial information via telephone
regarding STD.
By October, 1992, the Operation had developed its facilities
for the production of the lithotripters. Larry Seiler, a Vice-
President of ETMC, flew Brown to Columbia, Maryland to view ETMC’s
4
facilities and to learn about the manufacture of lithotripters. At
this time, ETMC persuaded Brown that it had the capability to
develop a product called the Printed Wiring Assembly Robotic
Tinning System (“PWARTS”), for which it represented it intended to
negotiate a future contract with the Tobyhanna U.S. Army base. In
the following months, ETMC represented, via fax and telephone,
various plans to develop other devices such as a digital pager,
infrared sensors, and mine detectors.
In 1992 and 1993, Appellants worked hundreds of hours and
spent large amounts of money bidding on projects. Appellants also
introduced Clifford to managers at NASA and aerospace companies,
including Rockwell, Lockheed, IBM, Loral, Boeing, General Electric,
McDonnell Douglas, Martin Marietta, and others. Ultimately, Space
submitted several successful bids on contracts.
In December, 1992, Clifford and Carson offered Brown an
opportunity to develop a multi-million dollar hotel and dive resort
in the Bahamas, called “The Isle of Gold.” Persuading Brown to
leave his job in the aerospace industry, Clifford and Carson
promised him a large salary, excellent fringe benefits, and a
personal plane. Because of this opportunity, Brown dissolved his
business relationship with Satterwhite and Hodgson and made
extensive arrangements to leave the country and sell his home.
On February, 26, 1993, Clifford told Jackson, Brown's
associate, that a procurement officer from the U.S. Army's
Tobyhanna base would be arriving in Houston. Clifford directed
5
Jackson to “entertain” the procurement officer and told Jackson to
enlist Brown's assistance. On March 4, 1993, Brown and Jackson
went to the Hilton Hotel at Hobby Airport in Houston. In the
parking lot, Jackson provided Brown with a sealed envelope
containing “entertainment funds,” and told Brown to deliver the
envelope to the procurement officer's hotel room. As Brown
delivered the envelope to a man in the hotel, the FBI recorded the
transaction, using audio and visual recording equipment in the
room.
Six months later, on August 4, 1993, Brown learned that there
was no miniature lithotripter device and that Clifford and Carson
were government undercover agents. Attempting to convince Brown to
work as an unpaid undercover informant to set up stings, the FBI
agents physically and psychologically intimidated Brown. On
numerous occasions throughout August and September, 1993, the
agents questioned Brown for multiple hours without the presence of
an attorney and detained him against his will. Brown was
threatened with prosecution of twenty-one different crimes, which
could result in sixty years imprisonment and over a million dollars
in fines. The FBI agents also questioned Satterwhite on at least
one occasion for approximately two hours.
In May, 1994, the FBI abandoned Operation Lightning Strike.
A few months later, in August 1994, a federal grand jury indicted
Brown for one count of offering a $500 bribe to a public official.
The first trial resulted in a mistrial. The United States declined
6
to retry the case and later dismissed the indictment against Brown.
II. PROCEEDINGS
On January 6, 1996, Appellants presented claims to the FBI,
the OIG, and the DCIS for injuries suffered from the undercover
operation. On February 22, 1996, Appellants brought this suit in
the United States District Court for the Southern District of
Texas.
A. Claims
Appellants made claims against the United States, through the
actions of the FBI, OIG, and DCIS agents, under the Federal Torts
Claim Act (“FTCA”) for abuse of process, malicious prosecution,
assault, intentional infliction of emotional distress, false
imprisonment, and invasion of privacy.
Appellants made Bivens1 claims against FBI agents Francis,
Carroll, Jean Barrett Yetman, Michelle Wyckoff, and Sheila Chadwick
for due process and Fifth Amendment violations.
Appellants also alleged violations of the federal Racketeering
and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961-1968, by
Nationsbank, Conn & Company, Dun & Bradstreet, Southern
Technologies Diversified, Eastern Tech Manufacturing Corporation,
various employees of these private businesses, and FBI agents
Carroll, Francis, and Yetman.
1
Bivens v. Six Unknown Named Agents of Federal Bureau of
Narcotics, 403 U.S. 388 (1971).
7
Finally, Appellants brought state law claims for: civil
conspiracy against ETMC, Nationsbank, Dun & Bradstreet, Conn &
Company, Hilton Hotels Corporation, various employees of the
private companies and FBI agents Carroll, Francis, and Yetman;
invasion of privacy claims against Hilton Hotels and Leisure
Hospitality Management Company doing business as Sheraton Hotel-
Astrodome; and interference with economic advantage and benefit,
intentional infliction of emotional distress, and fraud and deceit
claims against all defendants.
B. District Court Decision
The defendants filed, and the district court granted, Motions
to Dismiss the Appellants’ claims. The district court ruled that
the claims for abuse of process and malicious prosecution were
barred by the discretionary function exception to the FTCA. The
district court ruled that the Appellants' FTCA claims for false
imprisonment, assault, intentional infliction of emotional
distress, and invasion of privacy were barred by the statute of
limitations, as were the Appellants' Bivens claims. The district
court then found that the Appellants' RICO claims should be
dismissed because the Appellees were protected by qualified
immunity. Finally, the district court ruled that the Appellants'
state tort claims should be dismissed because they were barred by
the principle of federal supremacy.
III. DISCUSSION
8
A. Standard of Review
The district court granted the Appellees’ Motions to Dismiss
pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
We review the district court's dismissal of a complaint for failure
to state a claim for which relief can be granted under FED. R. CIV.
P. 12(b)(6) de novo. See Lowrey v. Texas A & M University System,
117 F.3d 242, 246 (5th Cir. 1997). The complaint must be liberally
construed in favor of the plaintiff, and all the facts pleaded in
the complaint must be taken as true. See Campbell v. Wells Fargo
Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986). The district court
may not dismiss a complaint under rule 12(b)(6) “unless it appears
beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief.” Conley v.
Gibson, 355 U.S. 41, 45-46 (1957). This standard of review under
rule 12(b)(6) has been summarized as follows: “The question
therefore is whether, in the light most favorable to the plaintiff
and with every doubt resolved in his behalf, the complaint states
any valid claim for relief.” 5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTICE AND PROCEDURE § 1357, at 601 (1969).
B. Abuse of Process and Malicious Prosecution Claims
Appellants argue that the district court erred when it
dismissed their abuse of process and malicious prosecution claims
under the discretionary function exception to the FTCA. The
government urges us to affirm on the alternative ground that, as a
9
matter of law, Appellants failed to state malicious prosecution and
abuse of process claims. See Gulf Island, IV v. Blue Streak
Marine, Inc., 940 F.2d 948, 952 (5th Cir. 1991)(In reviewing the
district court’s order, the appellate court can affirm on any
ground presented to the district court, even though it may not have
formed the basis for that court’s decision.)
1. Malicious Prosecution
The FTCA applies state law to determine the government’s
liability for torts within the FTCA waiver of immunity. See 28
U.S.C. §§ 1346(b), 2674. Under Texas law, there are seven elements
for a malicious prosecution claim: (1) commencement of a criminal
prosecution against the plaintiff; (2) causation (initiation or
procurement) of the action by the defendant; (3) termination of the
prosecution in the plaintiff’s favor; (4) the plaintiff’s
innocence; (5) the absence of probable cause for the proceedings;
(6) malice in filing the charge; and (7) damage to the plaintiff.
See Richey v. Brookshire Grocery Co., 952 S.W.2d 515, 517 (Tex.
1997). The government asserts, and we agree, that Appellants
cannot meet the fifth criterion, absence of probable cause.
Brown was indicted for bribing a public official in violation
of 18 U.S.C. § 201(b)(1)(A)& (C), which provides:
(b) Whoever (1) directly or indirectly, corruptly gives
. . . anything of value to any public official . . . with
intent
(A) to influence any official act; or
10
(B) to induce such public official . . . to commit or aid
in committing, or collude in, or allow, any fraud, or
make opportunity for the commission of any fraud, on the
United States;
shall be [subject to criminal liability].
Probable cause is defined as “the existence of such facts and
circumstances as would excite belief in a reasonable mind, acting
on the facts within the knowledge of the prosecutor [complainant],
that the person charged was guilty of the crime for which he was
prosecuted.” Richey, 952 S.W.2d at 517 (citation omitted) (editing
original). If the facts necessary to instigate a criminal
prosecution are in dispute, the issue of probable cause is a mixed
question of law and fact to be resolved by a jury. Where the facts
underlying the decision to prosecute are not disputed, however,
then the question of probable cause is a question of law decided by
the court. See Richey, 952 S.W.2d at 518.
It is undisputed that Brown accepted and delivered an envelope
containing money to a United States Army procurement officer at his
hotel room. The only dispute concerns Brown’s mens rea – what he
knew or intended. “[T]he complainant’s failure to make a further
investigation into the suspect’s state of mind does not constitute
lack of probable cause if all objective elements of a crime
reasonably appear to have been completed.” Id. at 518. Even
though the government’s evidence might have been weak and the
prospects of obtaining a conviction may not have been good, as a
matter of law, the government has proffered proof of probable
11
cause, and thus, Appellants have failed to state a claim for
malicious prosecution.
2. Abuse of Process
Under Texas law, there are three elements for an abuse of
process claim: “(1) that the defendant made an illegal, improper or
perverted use of the process, a use neither warranted nor
authorized by the process; (2) that the defendant had an ulterior
motive or purpose in exercising such illegal, perverted or improper
use of the process; and (3) that damage resulted to the plaintiff
as a result of such illegal act.” Sierra Club, Lone Star Chapter
v. Cedar Point Oil Co. Inc., 73 F.3d 546, 577 (5th Cir. 1996).
Appellants' allegations are fatally defective because they
fail to allege use of the process other than the mere institution
of the criminal complaint, which was not improper. See In re
Burzynski, 989 F.2d 733, 739 (5th Cir. 1993). Thus, as a matter of
law, Appellants have failed to state a claim for abuse of process
upon which relief can be granted.
C. RICO Claims
Appellants argue that the district court erred in dismissing
their RICO claims against the government agents and private
defendants on the basis of qualified immunity. Government
officials performing discretionary functions are shielded from
“liability for civil damages insofar as their conduct does not
violate ‘clearly established’ statutory or constitutional rights of
12
which a reasonable person would have known.” Harlow v. Fitzgerald,
457 U.S. 800, 818 (1982). The district court determined that
defendants were entitled to qualified immunity from the RICO claims
because the Plaintiffs cannot show a violation of statutory rights
secured by RICO. Specifically, the district court reasoned that
“[t]he FBI agents are not liable for RICO violations in the
performance of their duties because there can be no RICO claim
against federal officials on account of their alleged official
misconduct,” citing McNeily v. United States, 6 F.3d 343, 350 (5th
Cir. 1993). The district court misconstrued our holding in
McNeily, which held that the FDIC cannot be sued under the RICO
statute because the FDIC, as a federal agency, is not chargeable,
indictable or punishable for violations of state and federal
criminal provisions. See id., relying on Berger v. Pierce, 933
F.2d 393, 397 (6th Cir. 1991). Had the Plaintiffs named the FBI as
a defendant to this suit, the district court would have been on
firm ground in dismissing RICO claims against that federal agency
based on McNeily. However, McNeily does not support the grant of
qualified immunity to the FBI agents or to the private individuals
who acted at the direction of those agents. However, if the
defendants are entitled to qualified immunity on some alternative
ground, we will affirm the district court’s dismissal. See Gulf
Island IV, 940 F.2d at 952.
In assessing a claim of qualified immunity, we must determine
13
whether: (1) the plaintiffs have asserted a constitutional or
statutory violation; (2) the law regarding the alleged violation
was clearly established at the time of the operative events; and
(3) the record shows that the violation occurred, or at least gives
rise to “a genuine issue of material fact as to whether the
defendant actually engaged in conduct that violated the clearly-
established law.” Kerr v. Lyford, 171 F.3d 330, 338 (5th Cir.
1999). If we determine that the official’s conduct violated
clearly established law, we address whether that conduct was
objectively reasonable. See Wren v. Towe, 130 F.3d 1154, 1159 (5th
Cir. 1997).
The Racketeering and Corrupt Organizations Act (“RICO”) imposes
criminal and civil liability upon those who engage in “a pattern of
racketeering activity” defined as “any act or threat involving”
specified state-law crimes, acts indictable under various specified
federal statutes, and other federal offenses. See 18 U.S.C. §
1961(1). Section 1964(c) allows a private party who has been
sustained damages from a RICO violation, to recover those damages.
See 18 U.S.C. § 1964(c). Appellants’ complaint alleges that the
Government and private defendants’ racketeering activities included
mail and wire fraud, which are included among the enumerated
predicate acts for a RICO claim. See 18 U.S.C. § 1961(1).
We are not persuaded that the Appellants have asserted a
violation of statutory rights which were clearly established at the
14
time of the events. In McNally v. United States, 483 U.S. 350
(1987), the Supreme Court held that the mail fraud statute did not
prohibit schemes that defrauded people of their intangible rights
to an honest and impartial government. Following McNally, Congress
enacted 18 U.S.C. § 1346,2 which, in one sentence, provided that
“[f]or the purposes of this chapter, the term ‘scheme or artifice
to defraud’ includes a scheme or artifice to deprive another of the
intangible right of honest services.” In 1997, the Fifth Circuit,
sitting en banc, held that, by enacting § 1346, Congress intended
to protect the intangible right of honest services from wire fraud
schemes by state actors. See United States v. Brumley, 116 F.3d
728, 733 (5th Cir. 1997) (“fraud statutes cover the deprivation of
intangible rights.”). However, prior to the en banc resolution of
Brumley, we cannot say that such rights were clearly established by
the enactment of § 1346. See id. at 736 (dissent)(“It is therefore
incomprehensible to us that the majority can conclude . . . that [§
1346] reflects a clear statement of a Congressional intention to
protect the citizenry of a state from corrupt state officials.”).
Because the rights asserted by Appellants were not clearly
established at the time of defendants’ alleged acts, we conclude
that the district court did not err in dismissing Appellants’ RICO
claims.
2
Added by Pub.L. 100-690, Title VII, § 7603(a), Nov. 18,
1988, 102 Stat. 4508.
15
D. Supremacy Clause and State Law Claims
Appellants brought state law claims for civil conspiracy,
invasion of privacy, interference with economic advantage and
benefit, intentional infliction of emotional distress,3 and fraud
and deceit. Appellants contend that the district court erred when
it dismissed the Appellants’ state law claims on the ground that
they were barred by the federal supremacy clause.4
1. Government Agents
The individual agents’ immunity from suit under Texas law is
not at issue. The Attorney General certified under 28 U.S.C. §
2679(d)(1) that the agents acted within the scope of their
employment at the time of the events at issue, thereby substituting
the United States as defendant on those claims, see Gutierrez de
Martinez v. Lamagno, 515 U.S. 417, 420 (1995). This procedure is
not challenged.
2. Private Defendants
The district court also dismissed Appellants’ state law claims
against the private defendants under the federal supremacy clause.
3
Appellants brought two separate claims for intentional
infliction of emotional distress. The claims brought pursuant to
Texas state law are addressed here. The causes of action seeking
relief under the Federal Tort Claims Act are discussed below.
4
It is not clear from the record before us, and we do not
reach the question, whether Appellants’ state law claims are
governed by the Texas two year statute of limitations, TEX. CIV.
PRAC. & REM. CODE ANN. § 16.003 or the four year statute of
limitations, TEX. CIV. PRAC. & REM. CODE ANN. § 16.004. See Williams
v. Khalaf, 802 S.W.2d 651, 658 (Tex. 1990).
16
While this Court has not addressed the issue of whether the
supremacy clause preempts state law tort claims against private
defendants acting at the direction of the federal government, there
is some precedent to guide us.
In Boyle v. United Technologies Corp., 487 U.S. 500 (1988),
the Supreme Court considered the issue of whether the supremacy
clause preempted state law liability of independent contractors
performing work for the federal government. Under Boyle, state law
may be preempted where: (1) there is a uniquely federal interest
and (2) there is a significant conflict between federal policy and
the operation of state law. See Boyle, 487 U.S. at 504-05, 507.
The liability of private defendants for actions taken at the
direction of agents acting within their authority is a unique
federal interest. Private businesses and individuals provide
invaluable assistance as informants who provide evidence against
law violators or, as in this instance, lend credibility to FBI
undercover operations. If private businesses were not eligible for
immunity from state law claims arising from assisting undercover
federal operations, this would provide a major disincentive to
assisting law enforcement and would undermine the needs and
interests of the federal government.
At issue then, is whether the federal policy conflicts with
the operation of state law. If the private defendants committed
what would have been illegal acts under state law at the direction
17
and control of agents acting within their authority, the operation
of state law would conflict with federal policy. In Hunter v.
Wood, 209 U.S. 205 (1908), where state law conflicted with a
federal court order, the Court precluded a state law prosecution of
a railroad clerk who sold tickets pursuant to that order.
Similarly, this Court has suggested that federal immunity privilege
should be extended to preclude an action against a telephone
company who assisted federal law enforcement agents with
wiretapping. See Fowler v. Southern Bell Telephone & Telegraph
Co., 343 F.2d 150, 156-57 (5th Cir. 1965). See also Connecticut v.
Marra, 528 F. Supp. 381 (D. Conn. 1981) (holding that defendant
working at direction of FBI was entitled to federal immunity from
state law prosecution). State law cannot operate to impede
individuals who have government authority and act as is necessary
and proper within that authority. See, e.g., Cunningham v. Neagle,
135 U.S. 1, 75 (1890).
If the private defendants acted in good faith by reasonably
relying upon the authority of government agents, their actions are
shielded from state law action. In this case, the private
defendants, in good faith, supported the FBI’s undercover operation
with credibility and legitimacy. There has been no suggestion that
the private defendants acted maliciously or attempted to derive
personal gain from assisting in the operation. Moreover, the
private defendants’ actions, consistent with the apparent authority
18
granted by the government agents, were objectively reasonable.
Under the veil of apparent authority, the private defendants had no
reason to believe that their actions were illegal or would cause
injury to the Appellants. Thus, Appellants’ state law claims
against the private defendants are barred by the supremacy clause.
E. FTCA and Bivens Claims: Statute of Limitations
Appellants argue that the district court erred in finding that
their FTCA causes of action and Bivens claims were barred by the
statute of limitations. We affirm the district court’s ruling as
to Brown and Satterwhite. Although we conclude that the district
court erred in holding that Hodgson’s Bivens claims are time
barred, we nevertheless affirm the dismissal of those claims on the
basis of qualified immunity.
1. FTCA Claims
The FTCA applies a two-year statute of limitations from the
accrual date of the cause of action. See 28 U.S.C. § 2401(b). A
cause of action accrues, under federal law, “when the plaintiff
knows or has reason to know of the injury which is the basis of the
action.” See Moore v. McDonald, 30 F.3d 616, 620-21 (5th Cir.
1994). The plaintiff's knowledge of the injury depends on two
elements: (1) the existence of the injury; and (2) the connection
between the injury and the defendant's actions. See Piotrowski v.
City of Houston, 51 F.3d 512, 516 (5th Cir. 1995).
After carefully reviewing the Appellants’ Second Amended
19
Complaint, we conclude that their claims for assault, false
imprisonment, intentional infliction of emotional distress, and
invasion of privacy are barred by the statute of limitations. They
rest on allegations of events that occurred in August and September
1993. Appellants presented their claims on January 8, 1996 and
January 10, 1996. Because the claims were presented more than two-
years after the events giving rise to the complaint, the district
court was correct in dismissing them.
2. Bivens Claims
We also hold that Brown and Satterwhite’s Bivens claims for
due process and Fifth Amendment violations are barred by the
statute of limitations. Under Bivens, a person may sue a federal
agent for money damages when the federal agent has allegedly
violated that person's constitutional rights. See Bivens v. Six
Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388
(1971). A Bivens action is controlled by the applicable state
statute of limitations. See Alford v. United States, 693 F.2d 498,
499 (5th Cir. 1982) (per curiam). This Court, applying Texas law,
has held that the statute of limitations period on a Bivens claim
is two years. See Pena v. United States, 157 F.3d 984, 987 (5th
Cir. 1998). Brown became aware that he had been injured by the
Defendants’ alleged violation of his constitutional rights on
August 10, 1993, when the FBI agents revealed to him that he had
been expending his time and energy furthering the deceptions of
20
Operation Lightning Strike, rather than his own business interests.
Likewise, the pleadings allege that the FBI revealed the undercover
scheme to Plaintiff Satterwhite on August 20, 1993. However, we
find nothing in the record that establishes when Plaintiff Hodgson
was made privy to this information. We therefore affirm the
district court’s holding that Brown and Satterwhite’s Bivens claims
are barred by Texas’ two-year statute of limitations, but find that
we are unable to affirm the district court’s dismissal of Hodgson’s
Bivens claims on statute of limitations grounds.
3. Qualified immunity
Although neither the pleadings, the district court’s order nor
the briefs develop the analysis, it is obvious that defendants have
a qualified immunity defense to the Bivens claims. Therefore, in
the interest of judicial economy, we affirm the dismissal of
Hodgson’s Bivens claims on that alternative ground. See Gulf
Island, IV, 940 F.2d at 952.
“Governmental officials performing discretionary functions are
shielded from liability for civil damages insofar as their conduct
[does] not violate clearly established statutory or constitutional
rights of which a reasonable person would have known.” Wyatt v.
Cole, 504 U.S. 158, 166 (1992). Hodgson’s Bivens claims are
bottomed on defendants’ alleged violations of his constitutional
21
due process rights.5
No court has addressed the particular issue presented by this
case: the specific limits on federal agents’ authority in
undercover operations. The district court found no limits on the
power of federal agents operating under cover, reasoning that if
Appellants are allowed to pursue state law causes of action it
would “effectively stop” federal undercover operations because, “by
their very nature [they] seek to invade the privacy of those who
violate the law.” The district court went on to hold, without
citation to authority, that “[t]he constitutional structure of our
federal system does not permit private litigants to police federal
law enforcement activities by asserting state law claims against
federal law enforcement agencies or their agents.” The district
court erred: it asked the wrong question and reached the wrong
conclusion.
The district court should have asked whether it was
constitutionally permissible for federal agents to inflict damages
on innocent non-targets6 during an undercover operation and refuse
them compensation. Because the Fifth Amendment due process
guarantee against conscience-shocking injury imposes clear limits
5
Brown and Satterwhite brought additional Bivens claims
based on violations of their rights to remain silent and to
consult with an attorney during their encounters with agents.
Hodgson makes no allegation that he suffered similar violations.
6
We emphasize at the outset that the legitimacy of the
operation vis-a-vis those who violate the law, i.e. the targets
of Operation Lightning Strike, is not at issue in this analysis.
22
on law enforcement conduct, we conclude that it was neither
necessary nor proper for the defendants in this case to destroy the
lives and businesses of innocent non-targets in the name of law
enforcement.
“The touchstone of due process is protection of the individual
against arbitrary action of government.” Wolff v. McDonnell, 418
U.S. 539 (1974). The Due Process Clause was intended to prevent
government officials from abusing their power or employing it as an
instrument of oppression. See Collins v. City of Harker Heights,
Tex., 503 U.S. 115, 126 (1992). The cognizable level of executive
abuse of power is that which “shocks the conscience,” violates the
“decencies of civilized conduct” or interferes with rights
“implicit in the concept of ordered liberty.” Rochin v.
California, 342 U.S. 165, 209-210 (1952). Obviously, this
guarantee of due process protects citizens against deliberate harm
from government officials. See Daniels v. Williams, 474 U.S. 327,
331 (1986). Allegations of lesser culpability have been held
adequate to state a claim in some circumstances. For example,
deliberate indifference suffices to impose due process liability
when government actors fail to provide adequate care for pretrial
detainees with serious medical needs. See Hare v. City of Corinth,
74 F.3d 633 (5th Cir. 1996)(en banc). However, harm inflicted due
to government actors’ simple negligence is categorically beneath
the threshold of constitutional due process. See Daniels, 474 U.S.
23
at 328.
The Supreme Court recently provided a road map for navigating
mid-level-culpability due process claims. In County of Sacramento
v. Lewis, 523 U.S. 833 (1998), parents of a motorcycle passenger
killed in a high-speed police chase brought a 42 U.S.C. § 1983
action against the officer and governmental agencies involved,
alleging deprivation of their decedent’s substantive due process
right to life. Lewis, 118 S. Ct. 1708, 1712. The Supreme Court
rejected the plaintiff’s contention that proof of deliberate
indifference by the officer would be sufficient to establish a due
process violation. Id. at 1711. “A police officer deciding
whether to give chase must balance on one hand the need to stop a
suspect and show that flight from the law is no way to freedom,
and, on the other, the high-speed threat to everyone within
stopping range, be they suspects, their passengers, other drivers
or bystanders.” Id. at 1720. Analogizing the circumstances of a
police chase to the situation of officers called on to quell a
prison riot, the Supreme Court held that “‘[a] deliberate
indifference standard does not adequately capture the importance of
such competing obligations, or convey the appropriate hesitancy to
critique in hindsight decisions necessarily made in haste, under
pressure, and frequently without the luxury of a second chance.’”
Id. at 1720, quoting Whitley v. Albers, 475 U.S. 312, 320 (1986).
The court went on to distinguish situations where mid-level fault
24
was sufficient to impose liability. For example, liability for
deliberate indifference to inmate welfare rests upon the luxury
enjoyed by prison officials of having time to make unhurried
judgments, upon the chance for repeated reflection, largely
uncomplicated by the pulls of competing obligations. See Lewis,
118 S. Ct. at 1720. “When such extended opportunities to do better
are teamed with protracted failure even to care, indifference is
truly shocking. But when unforeseen circumstances demand an
officer’s instant judgment, even precipitate recklessness fails to
inch close enough to harmful purpose to spark the shock that
implicates ‘the large concerns of the governors and the governed.’”
Id., quoting Daniels v. Williams, 474 U.S. at 332.
Applying the Lewis analysis to the FBI’s alleged activity in
this case, we conclude that the FBI made decisions which harmed the
Plaintiffs after ample opportunity for cool reflection. In fact,
they invested almost two years and thousands of man hours in
developing the sting operation. Thus, the due process clause
protects the Plaintiffs from any harm that arose from the officers’
deliberate indifference. The facts, as pleaded, establish at least
that level of federal agent culpability as Operation Lightning
Strike evolved into a disastrous boondoggle. We therefore hold
that Hodgson’s allegations that federal agents inflicted damages on
him, an innocent non-target, during this particular undercover
operation and refused him compensation states a claim under Bivens.
25
However, because we address today for the first time the
parameters of due process protections afforded innocent third
parties injured by law enforcement sting operations run amok, and
because the Supreme Court’s language that drives our analysis
appeared in a case decided in 1998, we cannot say that the due
process rights claimed by Hodgson were clearly established during
1992-94. See Lewis, 523 U.S. 833. We therefore affirm the
district court’s dismissal of Hodgson’s Bivens claims on the
alternative basis of qualified immunity.
IV. CONCLUSION
Based on the foregoing, we affirm the district court’s
dismissal of Appellants’ suit.
AFFIRMED.
26