Thinkstream, Inc. v. Adams

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
October 16, 2007

No. 06-30922 Charles R. Fulbruge III
Clerk

THINKSTREAM, INC.; BARRY BELLUE,

Plaintiffs-Appellants/Cross-Appellees
v.

PAUL ADAMS; DOUG HEBERT;
CATHERINE KIMBALL; CHRIS ANDRIEU,

Defendants-Appellees/Cross-Appellants

LOUISIANA COMMISSION ON LAW
ENFORCEMENT; GLENN ARCHER;
TEMPLAR, INC.,

Defendants-Appellees

Appeals from the United States District Court
for the Middle District of Louisiana
(05-844-D-M2)

Before JOLLY, DAVIS, and WIENER, Circuit Judges.
PER CURIAM:*

*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
 No. 06-30922

Plaintiffs-Appellants Thinkstream, Inc. and Barry Bellue appeal the
district court’s dismissal with prejudice of their 42 U.S.C. § 1983 action.
Defendants-Appellees/Cross-Appellants, Paul Adams, Doug Hebert, Catherine
Kimball, and Chris Andrieu, appeal the district court’s denial of their motions
for sanctions. We affirm all rulings of the district court.
Thinkstream, Inc. and Bellue filed this action under 42 U.S.C. § 1983,
alleging that Defendants-Appellees, whom they refer to collectively as “state
actors,” conspired to defame them, to derail a public contract award, and
constructively to debar them from competing for future state contracts, in
deprivation of Plaintiffs-Appellants’ liberty interest. In response, all
Defendants-Appellees filed motions to dismiss pursuant to Federal Rule of Civil
Procedure 12(b), and Adams, Hebert, Kimball, and Andrieu filed sanctions
motions under Federal Rule of Civil Procedure 11.
In a sound and thorough opinion, the district court granted all motions to
dismiss, concluding that Thinkstream, Inc. and Bellue had failed to allege the
deprivation of a constitutionally protected liberty interest. Specifically, the
district court held that Thinkstream, Inc. and Bellue did not meet the “stigma-
plus-infringement” test set forth in Paul v. Davis,1 or demonstrate that
Louisiana law had established a protected liberty interest in one’s business
reputation and goodwill. In denying sanctions, the district court concluded that
Thinkstream, Inc. and Bellue’s legal contentions were warranted by a
nonfrivolous argument for the extension, modification, or reversal of existing
law, or for the establishment of new law.
Having fully reviewed the record on appeal and carefully considered the
parties’ briefs and arguments, we are satisfied that the district court applied the
proper legal standards to the relevant facts and reached the correct result with

1
424 U.S. 693 (1976).

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 No. 06-30922

respect to the Rule 11 motions for sanctions. Some additional commentary is
needed, however, with respect to the dismissal of Thinkstream, Inc. and Bellue’s
claims.
This case stands and falls on the allegations of harm made by
Thinkstream, Inc. and Bellue. In particular, those allegations fail to meet the
Paul “stigma-plus-infringement” test. This test permits recovery under § 1983
when a claimant shows that the government, through defamation, “sought to
remove or significantly alter a life, liberty, or property interest recognized and
protected by state law or one of the incorporated provisions of the Bill of
Rights.”2 And the freedom to operate a legitimate business is a protected liberty
interest.3
The harms alleged by Thinkstream, Inc. and Bellue do not rise to the level
of a significant alteration of a liberty interest. First, most of their alleged harms
address opportunity costs, that is, contracts for which they claim they no longer
have the ability to compete. But the loss of future employment opportunities
does not typically qualify as the kind of “tangible interest” that Paul
contemplated.4 The loss of the specific contract that Thinkstream, Inc. had with
the State of Louisiana is more tangible in nature, but the loss of isolated
contracts does not of itself entail a significant impairment to operating a
business.5 Indeed, Thinkstream, Inc. has successfully contracted within the

2
Texas v. Thompson, 70 F.3d 390, 392 (5th Cir. 1995).
3
See San Jacinto Savings & Loan v. Kacal, 928 F.2d 697, 702 (5th Cir. 1991).
4
Paul, 424 U.S. at 701; Vander Zee v. Reno, 73 F.3d 1365, 1369 (5th Cir. 1996)
(“Neither harm to reputation nor the consequent impairment of future employment
opportunities are constitutionally cognizable injuries.”).
5
Cf. Kacal, 928 F.2d at 702 (holding that state harassment of arcade patrons such that
the arcade was forced out of business was sufficient evidence of a § 1983 liberty interest to
survive summary judgment); Thompson, 70 F.3d at 392 (holding that defamation of a business
by state officials that forced the business into bankruptcy would qualify as a violation of a
liberty interest).

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State of Louisiana since losing the contract that is at the center of its complaint.
For these reasons, the judgment of the district court is
AFFIRMED.

4