United States Court of Appeals,
Fifth Circuit.
No. 94-50702.
Harlan D. VANDER ZEE, Plaintiff-Appellant,
v.
Janet RENO, Attorney General, The Honorable Attorney General of
the United States, et al., Defendants,
United States of America, et al., Defendants-Appellees.
Feb. 2, 1996.
Appeal from the United States District Court for the Western
District of Texas.
Before GARWOOD, DUHÉ and PARKER, Circuit Judges.
GARWOOD, Circuit Judge:
Plaintiff-appellant Harlan D. Vander Zee (Vander Zee) appeals
the district court's dismissal of his Bivens action against federal
prosecutors and claims for declaratory and injunctive relief
against the United States based upon alleged violations of due
process arising from a settlement agreement entered into between
the Department of Justice and his former employer. We affirm.
Facts and Proceedings Below
Vander Zee was formerly employed as an executive
vice-president at Stone Oak National Bank (Stone Oak) in San
Antonio, Texas. During his tenure at Stone Oak, Vander Zee became
aware of large cash deposits being made by Mario Alberto Salinas-
Trevino (Salinas). After consulting with the bank's president,
Herbert E. Pounds, Jr. (Pounds), Vander Zee properly reported these
deposits to federal authorities and apparently continued to do so
1
throughout the period in question.
In March 1989, Salinas was indicted and arrested on drug
trafficking charges, although he subsequently escaped from custody.
On May 10, 1990, the United States Attorney obtained a superseding
indictment naming Pounds and Vander Zee, which alleged violations
of federal money laundering statutes relating to the handling of
the Salinas deposits. After his indictment, Vander Zee tendered
his resignation to Stone Oak by letter dated May 22 pursuant to a
formal resolution by the Board of Directors. Although the charges
lodged against Pounds and Vander Zee proceeded to trial, the
district court granted a Motion for Judgment of Acquittal by Vander
Zee and Pounds at the close of the government's case-in-chief.
However, the government continued to pursue five related civil
forfeiture actions against assets seized at the time of Salinas'
arrest. Although Salinas' interest in these assets was defaulted
at the time of his escape from custody, Stone Oak remained a party
to the forfeiture actions by virtue of having filed a lienholder's
claim. Among these assets were nine certificates of deposit held
by Stone Oak with a principal face value of $850,000 that had been
pledged as security for loans made by the bank. Stone Oak retained
possession of the certificates of deposit pending the outcome of
the litigation. Ultimately, these forfeiture actions were
consolidated for purposes of settlement, and the government and
Stone Oak entered into a "Stipulation and Settlement Agreement and
Hold Harmless Agreement" (Agreement) and Addendum. The Agreement
and Addendum provided that Stone Oak would retain the certificates
2
of deposit to apply towards its recapitalization "in order to
achieve and satisfy the capital and financial requirements as set
forth by the Office of the Comptroller of the Currency (OCC) in
order to remain and maintain itself as a viable, financial and
banking institution in the community." In exchange, Stone Oak
released any claim to the assets sought in the remaining forfeiture
actions.
However, the Agreement and Addendum contained additional
recitals and conditions which are relevant to the present action.
Among these conditions was that
"Stone Oak National Bank in recognition of the allegations
concerning the conduct of Herbert E. Pounds, Jr. and Harlan D.
Vanderzee [sic], as set forth in the verified complaint for
forfeiture in United States v. U.S. Currency Including Nine
(9) Certificates of Deposit, et al, SA-90-CA-113, agrees to
provide no further attorney fees nor other forms of financial
assistance to Herbert E. Pounds, Jr. and Harlan D. Vanderzee
[sic] except for such within the normal and usual course of
any other banking customer's business, or unless the Bank
becomes legally obligated to do so."
The Agreement contained additional recitals impugning the conduct
of Pounds and Vander Zee.1 The Addendum further required Stone Oak
1
For instance,
"[t]he Bank asserts its innocence to the forfeiture of
its interests in the Respondent Properties of the five
(5) civil forfeiture cases in claiming that the Bank
had no knowledge of and gave no consent to the
allegedly unlawful money laundering activities
performed by Herbert E. Pounds, Jr. and Harlan D.
Vanderzee [sic], former employees of the Bank, which
allegedly unlawful activities involved the Respondent
Properties."
While the Agreement acknowledged the acquittal of
Pounds and Vander Zee, it further noted,
"their acquittal in that criminal case does not
3
to provide "assurances in writing that Stone Oak National Bank
shall not rehire Herbert E. Pounds, Jr., or Harlan D. Vander Zee
[sic] in any capacity, because of the poor judgment they exercised
in dealing with Mario Salinas." The Agreement and Addendum were
expressly made contingent upon approval by the district court,
which was obtained, and an order accepting the settlement was
entered by the district court on August 14, 1992.
On August 13, 1993, Vander Zee filed this suit against a host
of governmental and private defendants. However, we are now
concerned only with Vander Zee's claims against the federal
officials sued in their individual capacities and certain claims
against the United States as these claims presently before us on
this appeal were dismissed and severed from the original action.2
The individual defendants to the claims now before us are former
Assistant Attorney General Robert S. Mueller, III, former United
States Attorney Ronald Ederer, former Assistant United States
Attorney Jack C. Frels, and United States Attorney Helen M.
establish Stone Oak National Bank as an innocent
lienholder in either of the five (5) civil forfeiture
cases which are the subject of this Agreement. The
acquittal in that criminal case merely established that
the trier of fact in that case had reasonable doubt as
to their alleged criminal conduct as set forth in the
criminal indictment against them."
2
Other original defendants who are not before this Court for
the purposes of the present appeal due to the severance below of
the actions against them are private defendants Stone Oak
National Bank, Stone Oak Bankshares, Inc., and Fidelity & Deposit
Company of Maryland. The United States was substituted below for
governmental defendants Janet Reno, Attorney General; Eugene
Ludwig, Comptroller of the Currency; and Lloyd Bentsen,
Secretary of the Treasury; each sued in their official
capacities, pursuant to the Federal Tort Claims Act (FTCA).
4
Eversberg.3 Vander Zee brought Bivens actions against these
individual defendants claiming that the recitals and conditions
contained in the Agreement and Addendum operated to deprive him of
protected liberty and property interests in violation of the Due
Process Clause of the Fifth Amendment. Vander Zee also asserted
state law tort claims against the individual defendants and the
United States pursuant to the Federal Tort Claims Act (FTCA).
Finally, Vander Zee asserted claims under the Administrative
Procedure Act (APA) as well as seeking various forms of declaratory
and injunctive relief against the United States.
The defendants filed motions to dismiss pursuant to
Fed.R.Civ.P. 12(b)(1) and 12(b)(6), which were granted by the
district court by order of June 6, 1994. The district court held
that (1) Vander Zee's APA claims should be dismissed because the
Agreement and Addendum were settlement decisions within the
"exclusive discretion" of the Department of Justice, and therefore
were not reviewable pursuant to § 701(a)(2) of the APA; (2) the
Bivens claims should be dismissed because Vander Zee failed to
allege the violation of any constitutionally protected interest, or
alternatively, the individual defendants were entitled to qualified
immunity because the interests allegedly infringed were not
"clearly established;" and (3) the FTCA claims should be dismissed
3
The district court determined that all claims against
United States Attorney Eversberg should be dismissed not only
pursuant to the United States' Motion to Dismiss, but also
because there were no Bivens claims asserted against her
individually and because she had never been properly served. In
the present appeal, Vander Zee does not complain of the dismissal
of the claims against Eversberg.
5
for lack of subject matter jurisdiction because Vander Zee had
failed to first present the claims to the Department of Justice as
required by 28 U.S.C. § 2675, and additionally because the claims
for defamation and interference with contractual rights fell within
the sovereign immunity reserved by § 2680(h).4 These claims, which
are those now before us, were subsequently severed from the
original action, and a final judgment was entered on August 26,
1994.5
Discussion
We review the district court's dismissal under Rules 12(b)(1)
and 12(b)(6) de novo, taking the allegations of the complaint to be
true. Carney v. Resolution Trust Corp., 19 F.3d 950, 854 (5th
Cir.1994). The district court's dismissal will be affirmed only if
it appears beyond doubt that the plaintiff can prove no set of
facts which would entitle him to relief. Id.
I. Qualified Immunity
The qualified immunity defense affords government officials
4
Vander Zee presents no points of error with respect to his
claims under the APA or the FTCA. Accordingly, the district
court's disposition of these claims is affirmed.
5
The government suggests in its brief that this Court lacks
jurisdiction to hear this appeal because the district court
failed to certify a final judgment pursuant to Fed.R.Civ.P.
54(b). However, Rule 54(b) certification is required only when
the district court directs the entry of a final judgment with
respect to less than all of the parties or claims presented in a
single action. When the district court severed the claims
against the individual defendants and the United States from the
original action, it created two separate actions. The district
court then entered a judgment dismissing all of the claims before
us today. Therefore, no Rule 54(b) certification was required to
render the judgment final and appealable. See United States v.
O'Neil, 709 F.2d 361, 368-69 (5th Cir.1983).
6
not just immunity from liability, but immunity from suit. Mitchell
v. Forsyth, 472 U.S. 511, 525-26, 105 S.Ct. 2806, 2815, 86 L.Ed.2d
411 (1985). "Unless the plaintiff's allegations state a claim of
violation of clearly established law, a defendant pleading
qualified immunity is entitled to dismissal before the commencement
of discovery." Id. (citing Harlow v. Fitzgerald, 457 U.S. 800,
817-19, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982)). Even limited
discovery on the issue of qualified immunity "must not proceed
until the district court first finds that the plaintiff's pleadings
assert facts which, if true, would overcome the defense of
qualified immunity." Wicks v. Mississippi State Employment Serv.,
41 F.3d 991, 994 & n. 10 (5th Cir.1995) (emphasis in original).
However, "[a] necessary concomitant to the determination of whether
the constitutional right asserted by a plaintiff is "clearly
established' at the time the defendant acted is the determination
of whether the plaintiff has asserted a violation of a
constitutional right at all." Siegert v. Gilley, 500 U.S. 226,
232, 111 S.Ct. 1789, 1793, 114 L.Ed.2d 277 (1991). We agree with
the district court that Vander Zee failed to allege the violation
of any constitutionally protected interest, at least not of any
that was clearly established, and therefore, dismissal pursuant to
Rule 12(b)(6) was proper.
Vander Zee alleges that in drafting the conditions of the
Agreement and Addendum, the defendants acted to deprive him of
various liberty and property interests in violation of the Due
Process Clause of the Fifth Amendment. Specifically, Vander Zee
7
urges that he was deprived of: (1) his liberty interest in future
employment within the savings and loan industry; (2) his property
interest in his employment with Stone Oak because the defendants
both coerced his termination and prevented Stone Oak from re-hiring
him; and (3) his property interest in reimbursement for his
attorneys' fees in the criminal proceeding to which he was entitled
under Texas law.
A. Liberty Interest
Following Paul v. Davis, 424 U.S. 693, 710-11, 96 S.Ct. 1155,
1165, 47 L.Ed.2d 405 (1976), we have consistently required
plaintiffs alleging that the defamatory statements of a government
official operated to deprive them of a protected liberty interest
to satisfy what has sometimes been referred to as the "stigma plus
infringement" test. San Jacinto Savings & Loan v. Kacal, 928 F.2d
697, 701-702 (5th Cir.1991); Blackburn v. City of Marshall, 42
F.3d 925, 935 (5th Cir.1995). In order for a statement to be
sufficiently stigmatizing to satisfy the first prong of the test,
the statement must be both false and assert some serious wrongdoing
on the part of the plaintiff. See Kacal, 928 F.2d at 701;
Blackburn, 42 F.2d at 936. We doubt whether the statement that
Vander Zee and Pounds exercised "poor judgment" is sufficiently
condemnatory to satisfy the stigma prong of the test. While the
recitals regarding the "allegedly unlawful money laundering
activities" and "alleged criminal conduct" of Vander Zee carry the
suggestion of wrongdoing, they are clearly stated as allegations
not facts. Such allegations had been made in the indictment.
8
Moreover, the Agreement clearly states that Vander Zee was
acquitted of the criminal charges. Therefore, the necessary
element of falsity was not present. In any event, it is plain that
the law was not clearly established that statements such as those
here complained of satisfied the stigma prong, and hence the
individual defendants were entitled to qualified immunity. See
Noyola v. Texas Department of Human Resources, 846 F.2d 1021, 1024-
26 (5th Cir.1988).
Moreover, regardless of whether the stigma prong of the test
was satisfied, Vander Zee's Bivens claims were properly dismissed
because he failed to allege the deprivation of a protected
interest. To the extent that Vander Zee's claim rests on, to use
his own words, the loss of his "freedom of choice in the job
market," we are in agreement with the district court that his claim
is barred by the Supreme Court's decision in Siegert. Neither harm
to reputation nor the consequent impairment of future employment
opportunities are constitutionally cognizable injuries. Siegert,
500 U.S. at 233-35, 111 S.Ct. at 1794; State of Texas v. Thompson,
70 F.3d 390, 392 (5th Cir.1995). In Siegert, a psychologist
brought a Bivens action against his former supervisor at a
government hospital based upon the supervisor's highly unfavorable
remarks regarding Siegert's performance in a letter written in
response to inquiries from a subsequent employer. Siegert alleged
that the supervisor's letter had resulted in the loss of his
position at another hospital and in his inability to find similar
employment, thereby depriving him of a liberty interest protected
9
by the Fifth Amendment. In concluding that Siegert failed to state
a claim for the denial of a constitutional right, the Supreme Court
observed, "[t]he statements contained in the letter would
undoubtedly damage the reputation of one in his position, and
impair his future employment prospects ... [b]ut so long as such
damage flows from injury caused by the defendant to a plaintiff's
reputation, it may be recoverable under state tort law but it is
not recoverable in a Bivens action." Siegert, 500 U.S. at 234, 111
S.Ct. at 1794.
We find Vander Zee's present claim to be indistinguishable.
To the extent that Vander Zee's ability to obtain other employment
as a bank officer has been impaired, this impairment is the result
of harm to his reputation rather than a result of any direct
restrictions placed upon him by the settlement drafted by the
defendants. The Addendum does not prevent Vander Zee from working
at any financial institution, but only from being re-hired by Stone
Oak. In this respect, Vander Zee's claim is distinguishable from
de facto licensing cases such as Phillips v. Vandygriff, 711 F.2d
1217, 1221-23 (5th Cir.1983), in which we recognized the impairment
of a protected liberty interest when a custom operated to exclude
an individual from holding any position within a given field.
Therefore, we conclude that Vander Zee failed to allege facts
sufficient to make out a deprivation of a protected liberty
interest under either the "stigma-plus-infringement" or the de
facto licensing analysis.
B. Property Interest
10
It has been stated that an individual's "right to hold
specific private employment and to follow a chosen profession free
from unreasonable governmental interference comes within the
"liberty' and "property' concepts of the Fifth Amendment." Greene
v. McElroy, 360 U.S. 474, 492, 79 S.Ct. 1400, 1411, 3 L.Ed.2d 1377
(1959); see also Fed. Deposit Ins. Corp. v. Mallen, 486 U.S. 230,
239-40, 108 S.Ct. 1780, 1787, 100 L.Ed.2d 265 (1988) (bank
president possessed property right to continue to serve as
president with which FDIC could not arbitrarily interfere).
Indeed, the district court noted in its order that had Vander Zee
alleged that the defendants had coerced his termination from his
position at Stone Oak he could have presented a claim which would
withstand a qualified immunity defense.6 However, Vander Zee's
6
Both in his brief and at oral argument, Vander Zee's
counsel maintained that the complaint had alleged that the
defendants had coerced Vander Zee's termination. However, this
assertion simply is not supported by the pleadings. Vander Zee's
First Amended Complaint, the only "live" pleading in this case,
alleges that Vander Zee's termination was coerced by two
individuals with the office of the Comptroller of the Currency
(OCC) who are not defendants in the present action. In addition,
the complaint alleges that Vander Zee's termination was
"mandated" by the Department of Justice. However, the complaint
contains no allegations that the individual defendants before us
today in any way coerced Vander Zee's termination.
We believe that the confusion stems from the highly
irregular procedural step taken by Vander Zee's counsel of
filing a Second Amended Complaint after the district court
had dismissed these defendants and severed the claims
against them. In addition, the district court specifically
denied Vander Zee's request for leave to amend, but instead
allowed Vander Zee to amend his pleadings in a related suit
pending before the district court to include any meritorious
claims that he believed he possessed. Although this
so-called Second Amended Complaint included allegations that
Frels had participated in coercing Vander Zee's termination,
this pleading is a nullity in the present appeal and is of
11
complaint alleges that it was the defendants' participation in
drafting the Agreement and Addendum that interfered with his
property interest in his employment with Stone Oak. The defendants
could not have interfered with any protected property interest that
Vander Zee may have possessed in his former position with Stone Oak
as he had already resigned from the bank as of the date of the
settlement.
Unlike the cases cited above, Vander Zee's complaint does not
allege that the defendants caused him to be terminated from an
existing position. Instead, Vander Zee complains that the Addendum
preventing his rehiring interfered with his property interest in an
alleged oral agreement to rehire him at some unspecified time in
the future. The district court treated this claim as simply
another allegation of reputational harm to future employment
opportunities under Siegert, and therefore concluded that Vander
Zee failed to allege the invasion of a constitutionally protected
interest. While we reach the same ultimate result, we cannot
concur in this analysis.
Unlike the reputational due process claim in Siegert, Vander
Zee alleges a direct restriction on his rehiring at some point in
the future by Stone Oak. Therefore, Vander Zee's alleged
impairment of his future employment with Stone Oak stems from more
than harm to reputation. Nonetheless, while Vander Zee's
allegations may present a state law claim for interference with
contractual relations, they likely do not state a claim for the
no consequence to our resolution of it.
12
invasion of any constitutionally protected property interest as he
fails to allege that the defendants caused his termination from an
existing position.
In any event, we are persuaded that the district court
correctly held that even if Vander Zee's allegations were
sufficient to allege the invasion of a protected property interest,
the interest was not so clearly established as to overcome the
defense of qualified immunity. We were confronted with similar
facts in Connelly v. Office of the Comptroller of the Currency, 876
F.2d 1209 (5th Cir.1989). In Connelly, the plaintiff brought suit
against the Comptroller and other OCC officials in both their
official and individual capacities alleging, inter alia, that they
had acted to deprive him of protected liberty and property
interests in violation of the Due Process Clause of the Fifth
Amendment. Connelly had signed a contract to become the president
of a proposed national bank in Houston, Texas. However, the OCC
District Administrator had sent a letter to the bank organizers
informing them that the bank's charter would not be approved as
long as Connelly was designated as president as the OCC was of the
opinion that Connelly did not possess the necessary qualifications.
As a result, Connelly's executory contract with the bank was
canceled. In response to Connelly's suit, the defendants raised
the defense of qualified immunity. Although we stopped short of
holding that Connelly had no protected property interest in his
prospective employment with the bank, we did hold that Connelly's
alleged property interest was "at best "arguable.' " Therefore, we
13
concluded that the facts did not present a violation of a clearly
established constitutional right which would overcome a qualified
immunity defense.
While Connelly involved the OCC as opposed to officials of the
Department of Justice, our disposition of the case turned not on
the authority of the OCC to regulate the employees of chartered
banks, but on the nature of the interest allegedly infringed.
Because Vander Zee also alleged that the defendants interfered with
an (oral) agreement to employ him (at some time unspecified) in the
future rather than causing him to be terminated from a position in
which he was serving at the time, we are similarly compelled to
conclude that Vander Zee has failed to allege the violation of a
clearly established constitutional right.
Finally, Vander Zee's claim that the defendants acted to
deprive him of attorneys' fees incurred in mounting his criminal
defense to which he was entitled under state law fails to state a
claim because there simply was no deprivation. The Agreement
expressly provided that Stone Oak was not to provide attorneys'
fees or other financial assistance to Pounds and Vander Zee "unless
the bank becomes legally obligated to do so." Therefore, contrary
to Vander Zee's contentions, the Agreement simply did not have the
effect of depriving Vander Zee of any attorneys' fees to which he
may have been entitled under state law.
II. Claims Against United States
Vander Zee also complains that the district court failed to
address his request for declaratory and injunctive relief against
14
the United States for violations of his constitutional rights
brought about as the result of the Agreement and Addendum. We
understand these claims to have been addressed by the district
court's holding that actions pertaining to the settlement of
litigation are within the "exclusive discretion" of the Department
of Justice, and therefore fall within one of the exceptions to the
APA's waiver of sovereign immunity for non-monetary claims against
the United States found at 5 U.S.C. § 701(a)(2). Without deciding
the question of whether the settlement authority of the Department
of Justice is so far reaching, we also conclude that Vander Zee's
claims for declaratory and injunctive relief were properly
dismissed. However, we find this result to be dictated by
different concerns.
Section 702 of the APA provides for judicial review of
"agency action," and waives sovereign immunity for claims "seeking
relief other than money damages." However, the federal courts are
specifically excluded from the APA's definition of "agency" by §
701(b)(1)(B). In the case at bar, the Agreement specifically
provided that it would not become effective and binding until
approved by order of the district court.7 Therefore, Vander Zee
seeks declaratory and injunctive relief not from an agency action,
7
"The Parties further agree that this Agreement shall not be
final and become binding until this Agreement has been fully
accepted and approved by the United States Department of Justice
in accordance with the Code of Federal Regulation governing the
settlement authority regarding this Agreement and further
accepted, approved, granted, and ordered by the United States
District Court, Western District of Texas, San Antonio Division."
15
but instead seeks to collaterally attack the district court order
approving the terms of the settlement. Should Vander Zee wish to
challenge the district court's order approving the term of the
settlement, the proper avenue would be to seek to intervene before
the district court which has retained jurisdiction in order to
enforce the terms of its order.8
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.
8
Should the district court in that proceeding deny
intervention or, although granting intervention, deny Vander Zee
relief, he could seek review of such order by direct appeal (or,
perhaps, mandamus, should direct appeal be for some reason
unavailable).
16