United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
August 23, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
_______________ Clerk
No. 02-21182
_______________
JOE ALFRED IZEN, JR.; KAREN SUTER IZEN,
Plaintiffs - Appellants,
VERSUS
TERRANCE CATALINA, Special Agent, Individually;
JAMES CLIMER, Special Agent, Individually;
UNITED STATES OF AMERICA,
Defendants - Appellees.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________
Before JONES, MAGILL,* and SMITH, Circuit Judges.
PER CURIAM:
Plaintiff-Appellant Joe Alfred Izen, Jr., a Texas attorney,
appeals the district court's order granting summary judgment in
favor of IRS agents Terrance Catalina and James Climer. Izen's
Bivens action alleges that Catalina and Climer engaged in malicious
prosecution and retaliation in violation of the Fourth and First
*
Circuit Judge of the United States Court of Appeals for the
Eighth Circuit, sitting by designation.
Amendments, respectively, when they investigated and prosecuted him
for money laundering. The district court, acting on remand from
this court in Izen v. Catalina, 256 F.3d 324 (5th Cir. 2001)
("Izen I"), granted summary judgment in favor of the agents on
Izen's Fourth Amendment malicious prosecution claim on the ground
that Izen did not meet the common law elements of that tort. It
granted the agents' motion for summary judgment on Izen's First
Amendment retaliation claim for the same reason, and held in
addition that Izen had not raised a genuine issue of material fact
as to the agents' retaliatory motive. The court also granted the
United States' motion for summary judgment on Izen's Federal Tort
Claims Act claims of malicious prosecution, false arrest, inten-
tional infliction of emotional distress, and negligence. Izen
appeals.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm
the district court's grant of summary judgment on all of Izen's
claims other than his claim against Catalina for retaliation; As to
that claim we reverse and remand.
I.
Izen is a tax attorney. He has long represented tax protes-
tors and other defendants in criminal tax cases. In August 1989,
IRS agent Catalina received a referral from the Waco, Texas IRS
collection office alleging that Izen had not filed income tax
2
returns for tax years 1986, 1987, and 1988. The referral contained
allegations from a third party informant that Izen was involved in
money laundering, including allegations that Izen was involved in
the failure of a private bank and had accounts in foreign coun-
tries. Catalina soon deemed the informant unreliable. Izen
alleges the informant was Michael J.B. Easton, who had an indict-
ment pending against him at the time and, according to Izen, aided
Izen's ex-wife in surreptitiously withdrawing a large sum of money
from an account of Izen's.
In October 1989, Catalina accepted the referral for investiga-
tion of the charge of failure to file tax returns. He determined
there was insufficient basis to investigate Izen for money
laundering, but recommended opening a criminal income tax investi-
gation for the years 1986 through 1988 based on the missing
returns. Catalina also recommended including 1985 in the investi-
gation, though a return had been filed. Catalina's tax investiga-
tion was soon derailed by the fact that Izen ultimately filed his
1986 return in September 1989, and filed his 1987 and 1988 returns
in April 1990, even receiving refunds approved by Catalina.
Although Catalina dropped the income tax investigation, he
then embarked on a money laundering investigation. Izen alleges
that the impetus for the investigation was a desire to retaliate
against him for his history of association with tax protestors, his
representation of criminal tax defendants, and his representation
of taxpayers utilizing foreign trusts to reduce their federal
3
income tax. See, e.g., United States v. Dahlstrom, 713 F.2d 1423
(9th Cir. 1983) (reversing the convictions of foreign tax shelter
promoters, one of whom was represented by Izen). Izen's contention
finds support in IRS investigative reports that prominently mention
both Izen's association with tax protestors as well as his
successful representation of tax clients. Catalina in turn alleges
that the investigation was prompted by his review of various
reports concerning a client of Izen's, Nassau Life Insurance
Company Limited ("NLIC"), and persons and banks related to or doing
business with that entity.
Upon reviewing the reports concerning Izen's client, Catalina
commenced an undercover investigation of Izen himself which lasted
from 1990 to 1992. Climer was the undercover agent assigned to the
investigation. Climer posed as a client seeking to create a
foreign trust in which to deposit proceeds from the sale of
purportedly stolen oil. Numerous conversations between Izen and
Climer were apparently taped, though the agents have not placed any
of the recordings in the record.1 Catalina testified before a
grand jury in May 1995, and it returned a four-count indictment of
Izen for conspiracy to commit money laundering and aiding or
abetting or attempting money laundering. Izen alleges that the
indictment was secured in part due to alleged misrepresentations
1
Izen placed in the record those portions of the recordings
which he argues are exculpatory.
4
made by Catalina to the grand jury.2 In May 1996, for undisclosed
reasons, the United States moved to withdraw the presentment of the
indictment and all criminal charges against Izen were dismissed.
Izen brought suit in 1997, alleging various constitutional and
non-constitutional torts. The district court dismissed all of
Izen's claims. Izen appealed the dismissal of his Fourth Amendment
malicious prosecution claim, his First Amendment retaliation claim,
his Fifth Amendment claim, the denial of his motion for disclosure
of grand jury materials, and the grant of summary judgment in favor
of the agents based on their qualified immunity defense.
In Izen I we reversed the dismissal of the malicious prosecu-
tion and retaliation claims, holding that the district court had
misconstrued the applicable law on both. In addition, we held that
a genuine issue of material fact existed as to whether Izen was
investigated and prosecuted in retaliation for representing
criminal tax defendants. We affirmed the dismissal of Izen's Fifth
Amendment claim as well as the denial of his motion for disclosure.
On remand, Izen filed a second amended complaint in which he
added a Federal Tort Claims Act cause of action against the United
States. The district court again granted summary judgment in favor
of the agents and United States on all claims. Izen appeals the
grant of summary judgment on his malicious prosecution claim, his
2
Only a small fraction of Catalina's grand jury testimony is
in the record. Because of Izen's allegations, the district court
did not rely on the indictment.
5
retaliation claim, and his Federal Tort Claims Act cause of action.
II.
This court reviews a grant of summary judgment de novo.
Chriceol v. Phillips, 169 F.3d 313, 315 (5th Cir. 1999). We may
affirm a grant of summary judgment on grounds other than those
offered by the district court. Id. The moving party bears the
burden of showing that there is an absence of evidence to support
the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986). If this burden is met, then the nonmoving party
must set forth specific facts showing a genuine issue for trial
remains. Fed. R. Civ. P. 56(e).
A. Malicious Prosecution
We affirm the district court's order granting summary judgment
on Izen's claim of malicious prosecution, though on different
grounds. In this circuit, plaintiffs no longer allege a constitu-
tional violation by satisfying the state law elements of malicious
prosecution alone. Castellano v. Fragozo, 352 F.3d 939, 942 (5th
Cir. 2003) (en banc).3 Because Izen's complaint does not state a
3
Though the claim in Castellano was brought under § 1983
while Izen invokes Bivens, we have held that the constitutional
torts authorized by each are coextensive. Evans v. Ball, 168 F.3d
856, 863 n.10 (5th Cir. 1999), overruled on other grounds by
Castellano, 352 F.3d 939 ("A Bivens action is analogous to an
action under § 1983—the only difference being that § 1983 applies
to constitutional violations by state, rather than federal,
officials."). Thus we do not distinguish here between Bivens
claims and § 1983 claims.
6
claim under the Fourth Amendment directly, the district court
properly granted the agents' motion for summary judgment.4
B. Federal Tort Claims Act
Izen's second amended complaint alleges claims under the
Federal Tort Claims Act based on the state torts of malicious
prosecution, false arrest, intentional infliction of emotional
distress, and negligence. The district court held that each of
these claims failed for lack of exhaustion under 28 U.S.C. § 2675.
Section 2675 provides that a would-be plaintiff must first present
his claim to the appropriate federal agency. While Izen did so,
the district court held that the scope of the claims stated in his
second amended complaint went far beyond his administrative
complaint. Because Izen has not contested this holding, we affirm.
C. First Amendment Retaliation
1. The Retaliation Standard
Izen alleges that Catalina launched the sting operation and
prosecuted him in retaliation for his history of representing
criminal tax defendants. "[T]he First Amendment prohibits not only
direct limitations on speech but also adverse government action
against an individual because of her exercise of First Amendment
freedoms." Colson v. Grohman, 174 F.3d 498, 508 (5th Cir. 1999).5
4
Nor does the record here support a claim directly under the
Fourth Amendment, rendering remand fruitless.
5
See also Smith v. Plati, 258 F.3d 1167, 1176 (10th Cir.
2001) ("'Any form of official retaliation for exercising one's
(continued...)
7
Subjecting an attorney to criminal investigation and prosecution
with the substantial motivation of dissuading him from associating
with and representing clients opposing the IRS would violate the
First Amendment.
In the criminal prosecution context, plaintiffs must establish
three elements in order to make out a retaliation claim. Keenan v.
Tejeda, 290 F.3d 252, 258 (5th Cir. 2002). Plaintiffs must show
that "(1) they were engaged in constitutionally protected activity,
(2) the defendants' actions caused them to suffer an injury that
would chill a person of ordinary firmness from continuing to engage
in that activity, and (3) the defendants' adverse actions were
substantially motivated against the plaintiffs' exercise of
constitutionally protected conduct." Id. As the Keenan court
noted, this is the law of other circuits as well. Id. (citing
cases from the Eighth, Tenth, and Sixth Circuits). This court
requires plaintiffs in the prosecution context to establish each of
the common law malicious prosecution elements in addition to those
three derived from the First Amendment. Id. at 260; see also
Johnson v. La. Dep't of Agric., 18 F.3d 318, 320 (5th Cir. 1994)
(same).
The district court applied the Johnson standard and granted
5
(...continued)
freedom of speech, including prosecution, threatened prosecution,
bad faith investigation, and legal harassment, constitutes an
infringement of that freedom.'") (quoting Worrell v. Henry, 219
F.3d 1197, 1212 (10th Cir. 2000)).
8
summary judgment on behalf of the agents, reasoning in part that
Izen had not established the common law elements of malicious
prosecution. Izen v. Catalina, 251 F. Supp. 2d 1327, 1340-41 (S.D.
Tex. 2002). In particular, the court held that Izen had not raised
an issue of material fact as to whether the agents lacked probable
cause to prosecute.
It is true, as the district court noted, that the government
need not have even reasonable suspicion to undertake an investiga-
tion. United States v. Allibhai, 939 F.2d 244, 249 (5th Cir.
1991). However, this is beside the point. Izen's claim, properly
understood, is not that Catalina violated the First Amendment by
undertaking an investigation without reasonable suspicion, but
rather that he violated the First Amendment when he undertook an
investigation with the substantial motivation of retaliating
against Izen for his advocacy on behalf of unpopular criminal tax
defendants. Allibhai's holding that the government need not have
reasonable suspicion in order to investigate does not entail the
proposition that the government may investigate with the motive of
retaliating against its target for engaging in constitutionally
protected conduct.6 It is well established that "'[a]n act taken
6
Under the district court's reasoning, the government could
choose its targets based in large part on their race, religion, or
political affiliation as well. We reject the notion that Allibhai
leads to this conclusion. See Anderson v. Davila, 125 F.3d 148,
160-61 (3d Cir. 1997) (holding that the government's motive in
setting up surveillance of a suspect is relevant to a retaliation
claim).
9
in retaliation for the exercise of a constitutionally protected
right is actionable . . . even if the act, when taken for a
different reason, would have been proper.'"7
2. Evidence of Retaliation
As an alternative reason for granting summary judgment in
favor of the agents, the district court held that Izen had failed
to meet his burden of raising an issue of material fact as to
whether Catalina's decision to investigate and prosecute him was
substantially motivated by Izen's representation of criminal tax
defendants. 251 F. Supp. 2d at 1342. We disagree.
In Izen I, we explicitly held that "[b]ased on the record and
the briefs, there is a genuine issue of material fact as to the
reasons Izen was investigated and prosecuted and therefore we
vacate the grant of summary judgment as to Izen's retaliatory
prosecution claim." 256 F.3d at 329. The district court avoided
our mandate by reasoning that it was limited to the record then
before us, which the district court had since allowed the agents to
augment. 251 F. Supp. 2d at 1343.
7
Greene v. Barber, 310 F.3d 889, 895 (6th Cir. 2002) (quoting
Bloch v. Ribar, 156 F.3d 673, 681-82 (6th Cir. 1998)); Morfin v.
City of E. Chicago, 349 F.3d 989, 1005 (7th Cir. 2003) (same);
Poole, 271 F.3d at 961; Cody v. Weber, 256 F.3d 764, 771 (8th Cir.
2001) (same); cf. Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S.
274, 283-84 (1977) (holding that even though a teacher "could have
been discharged for no reason whatever, and had no constitutional
right to a hearing prior to the decision not to rehire him, he may
nonetheless establish a claim to reinstatement if the decision not
to rehire him was made by reason of his exercise of constitution-
ally protected First Amendment freedoms").
10
There is an exception to the law of the case doctrine where
evidence at a subsequent trial is substantially different than that
on the record before the court of appeals. United States v.
Matthews, 312 F.3d 652, 657 (5th Cir. 2002), cert. denied, 538 U.S.
938 (2003). A district court may hear additional evidence on
remand only if our mandate does not foreclose the issue. United
States v. Becerra, 155 F.3d 740, 754 (5th Cir. 1998). Here, while
we did not direct the district court to consider additional
evidence, our mandate did not foreclose it. However, we cannot
agree with the district court that "Izen completely fails to
present any evidence, direct or circumstantial, that Catalina or
Climer had any retaliatory motivation against him." 251 F. Supp.
2d at 1342. Because in Izen I we held that there was a genuine
issue of material fact as to the agents' motivation, we need only
consider whether the evidence offered in the interim has negated
this holding.
Far from negating a genuine issue of material fact as to
Catalina's motivation, the evidence adduced on remand provides
further support for Izen's position. The evidence now in the
record provides proof that Catalina was well aware of Izen's
representation of criminal tax defendants. A Criminal Investiga-
tion Case Analysis Guide bearing Catalina's name and dated 10/17/89
contains the following statements: "The subject of the [money
laundering] investigation is an attorney who specializes in
representing tax protestors. . . . The taxpayer has represented
11
several protestors in the Houston area and all across the country.
He is very well known in the protest movement." R. at 771.
Catalina's Request for Undercover Operation form also
prominently notes Izen's association with tax protestors, and
mentions a case in which Izen successfully opposed the IRS: "Izen
is very well known throughout the country. He has represented tax
protestors from the East coast to the West coast. Izen represented
Dahlstrom before the Ninth Circuit. Dahlstroms's conviction was
reversed. The case had to do with a foreign trust scheme devised
to create sham tax deductions." R. at 732. Despite the fact that
much of the information Catalina relates about Izen pertains to his
representation of clients in his professional capacity, Catalina
concludes that "Izen's actions demonstrate that he has very little
regard for the tax laws and is predisposed to launder money."
R. at 731.
Moreover, a Statistics and Case Summary Report dated
December 11, 1989, and allegedly drafted by Catalina's supervisor
commences with the following under the heading of "Allegations":
"Izen is a well known tax protestor attorney in the Houston area.
He files personal returns on an irregular basis, and they are
always filed late. He was head of the legal dept. for Nassau Life
Insurance, a tax shelter in the Bahama Islands. He had close ties
to the Center for Independence for Judges and Lawyers . . . ."
R. at 756.
In addition to those reports bearing Catalina's name, reports
12
that Catalina claims to have considered in deciding to prosecute
Izen also strengthen his retaliation claim. One of the primary
sources of information Catalina relied on was a 1986 Summary Report
regarding NLIC, Izen's client. R. at 670. However, nothing in the
report connects Izen to money laundering. Instead, the report
details a tax shelter devised by the former President of NLIC,
Robert S. Chappell, a fugitive on an Indiana mail fraud conviction
living in the Bahamas.
The report contains a section entitled "PROTEST GROUP
AFFILIATIONS," in which it is alleged that:
Chappell and his organization have attracted a number of
fugitives and individuals who are anti-government, anti-
black, anti-Jew, etc. The business has been increasing
since joining forces with these extremist groups. The
seminars at Rock Sound Club are attended, promoted, and
taught by the right wing Klu Klux Klan affiliates.
Several fugitives are allegedly living in the Bahamas and
working with Chappell. These fugitives include tax
protestors involved with militant groups such as the
Posse Comitatus, Patriot Network, and Center for Inde-
pendence of Judges and Lawyers.
R. at 666. Numerous individuals are listed as somehow affiliated
with Chappell, though it is striking that none is accused in the
report of laundering money. The sole mention of Izen is as
follows: "Izen is an attorney out of Houston, Texas. He has
issued tax opinions for Nassau Life. According to intelligence
that we have acquired, Izen has been representing Nassau Life since
June 1983. IRS discontinued an investigation of Izen in April
1984." R. at 661.
13
Thus both the reports prepared by Catalina and those he
reviewed prominently refer to Izen's associations with unpopular
targets of the IRS, but contain scant, if any, evidence of money
laundering, the purported purpose of the investigation. Catalina
and Climer later gathered evidence in their sting operation which
they claim supports their defense that Izen was not investigated
and prosecuted in retaliation for his protected activities, but
rather for his apparent willingness to engage in suspect transac-
tions.
However, analyzed under the third element of Keenan and set
against the evidence above, we cannot agree that Izen has failed to
raise a genuine issue of material fact as to retaliatory motive.
A reasonable trier of fact could determine that retaliation was a
substantial motivation for Catalina's investigation and prosecution
of Izen.
Although we reverse the district court's grant of summary
judgment as to Catalina, we affirm its grant of summary judgment as
to Climer. All of the evidence pertaining to the agents' motive
relates to Catalina, not Climer. In order to maintain a claim
against Climer, Izen must establish that Climer caused him to
suffer an injury that would chill a person of ordinary firmness
from continuing to represent tax defendants, and that Climer was
substantially motivated by Izen's representation.
Izen has shown neither. He has pointed to no evidence that
Climer caused the alleged constitutional violation; nor does he
14
point to evidence of retaliatory motive harbored by Climer.
3. Qualified Immunity
The district court offered alternative reasons for holding
that Catalina is entitled to qualified immunity. In our qualified
immunity analysis, we must "first determine whether the challenged
conduct, viewed in the light most favorable to the plaintiff, would
actually amount to a violation of federal law in the first place."
Kinney v. Weaver, 367 F.3d 337, 350 (5th Cir. 2004) (en banc). The
district court reasoned that because Izen could not prove his
retaliation claim, he could not make the necessary showing of a
constitutional violation. 251 F. Supp. 2d at 1343. Our position
on retaliation requires us to reverse this holding as well.
Taking Izen's allegations as true, he alleges a violation of
the First Amendment. The second prong of qualified immunity
analysis requires us to determine whether the agent's conduct
violated clearly established federal law. Kinney, 367 F.3d at 350.
It has long been the law of this circuit that government officials
violate the First Amendment by undertaking a prosecution "in
retaliation for or to deter the exercise of constitutionally
protected rights." Wilson v. Thompson, 593 F.2d 1375, 1377 (5th
Cir. 1979). If substantially motivated by a desire to retaliate
against Izen for his association with and representation of tax
defendants (an issue we are remanding for a fact finder to
determine), Catalina's actions were not objectively reasonable. A
reasonable agent would not have believed it permissible to
15
investigate and prosecute an attorney in order to discourage him
from opposing the IRS.
III.
For the foregoing reasons, we AFFIRM the district court's
order granting summary judgment as to all of Izen's claims other
than his claim of First Amendment retaliation on the part of agent
Catalina. As to that issue, we REVERSE and REMAND for further
appropriate proceedings.
16