United States Court of Appeals,
Fifth Circuit.
No. 91-2763.
Elvis E. JOHNSON, Plaintiff-Appellee,
v.
Robert SAWYER, et al., Defendants,
United States of America, Defendant-Appellant.
March 16, 1995.
Appeal from the United States District Court for the Southern
District of Texas.
Before POLITZ, Chief Judge, KING, JOHNSON, GARWOOD, JOLLY,
HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHÉ, WIENER, BARKSDALE, EMILIO
M. GARZA and DeMOSS, Circuit Judges.*
GARWOOD, Circuit Judge:
In this Federal Tort Claims Act (FTCA)1 suit, Elvis Johnson
(Johnson) was awarded a ten million dollar judgment against the
United States for the issuance by Internal Revenue Service (IRS)
personnel of two press releases concerning Johnson's recent
conviction for filing a false and fraudulent federal income tax
return contrary to 26 U.S.C. § 7201. Johnson claimed, and the
district court found, that issuance of the press releases violated
26 U.S.C. § 6103(a)(1), which proscribes disclosure of tax return
information by federal employees, and caused him to lose his job as
the senior executive vice president of American National Insurance
*
Judges Benavides, Stewart, and Parker were not members of
the Court when this case was submitted en banc and did not
participate in this decision.
1
28 U.S.C. § 1346, 2671-2680.
1
Company, one of the largest life insurance companies in the United
States. Johnson v. Sawyer, 760 F.Supp. 1216 (S.D.Tex.1991). See
also id., 640 F.Supp. 1126 (S.D.Tex.1986). On the government's
appeal, a divided panel of this Court affirmed the determination of
liability. Johnson v. Sawyer, 980 F.2d 1490, 4 F.3d 369 (5th
Cir.1993).2 We voted the case en banc, and now reverse. The panel
majority held that the issuance of the press releases violated
section 6103(a) and that this violation established the FTCA
required liability under local law, either under the Texas invasion
of privacy tort, which denounces the public disclosure of
embarrassing private facts about another, although none of the
facts so disclosed were private, or under the Texas negligence per
se doctrine. We reject the reasoning of the panel majority,
because it ultimately grounds the duty not to disclose on federal
law, and under the FTCA recovery may only be had on the basis of
local law, here that of Texas.
Facts and Proceedings Below
Factual Context
Johnson, a long-time American National executive, was assigned
to its headquarters in Galveston, Texas, in 1972, and he and his
wife bought a home there at 25 Adler Circle one or two years later.
By 1976 he had become senior executive vice president and a member
of American National's board of directors. The board varied in
size from ten to twelve members. By the time of the events in
2
The panel reduced the economic damages award from
$5,902,117 to $5,075,857, and remanded the $5,000,000 noneconomic
damages award for further findings.
2
issue, Johnson had become the company's number two executive,
second only to the president, and both he and the president
reported directly to the board. In the late 1970s, the IRS began
detailed examination of the income tax returns of Johnson and his
wife for the years 1972 through 1975. The examining agent referred
the matter to the IRS Criminal Investigation Division, which
ultimately assigned it to Special Agent Robert Stone (Stone).
Following the criminal investigation, the Department of Justice
reviewed the matter and recommended prosecution for tax evasion for
the years 1974 and 1975 under section 7201, which then provided for
a maximum prison term of five years and a $10,000 fine for "[a]ny
person who willfully attempts in any manner to evade or defeat any
tax imposed by this title." The case was assigned to Assistant
United States Attorney Powers.
Johnson had kept the company lawyers, the president, and one
or two other directors informed of his problems with the IRS. He
was also represented by his own counsel. On January 9, 1981,
Powers wrote Johnson's lawyer that the Department of Justice, after
review by its Tax Division, had directed that an indictment be
sought against both Mr. and Mrs. Johnson. On February 4, 1981,
Powers again wrote Johnson's attorney stating that he planned to
seek an indictment of Mr. and Mrs. Johnson under both section 7201
and 26 U.S.C. § 7206(1) (filing false return), but that if Johnson
pleaded guilty to a one-count section 7201 information the
government would forego prosecution of Mrs. Johnson and would
recommend a probated sentence. A February 13, 1981, letter from
3
Johnson's lawyer to Johnson stated that Powers and the lawyer
agreed they would seek the district judge's authorization to have
a presentence investigation performed before charges were filed,
which would "involve contacts with ... a select group of
individuals to find out whether you are a good citizen." The
letter also references "fifty or so statements" that had been
submitted to the government on Johnson's behalf. After the
presentence investigation report (PSR) was reviewed, there would be
a meeting with the judge to discuss probation and an offer to enter
a nolo contendere plea. After the meeting with the judge, they
would decide whether "we would rather try the case." The plea
would be entered about 5:00 p.m. some afternoon, to a one count
information.
By March 18, 1981, Johnson and his counsel had filed with the
court consents to institution of the presentence investigation, and
the PSR was ultimately delivered to the district court on April 2,
1981. On March 31, 1981, Johnson's counsel wrote the district
clerk "Re: E.E. Johnson" confirming that "this captioned matter"
would be heard "Friday, August 10, at 4:00 p.m. in the courtroom in
Galveston," Texas. On April 3, 1981, Johnson's attorney wrote
Powers stating that "we request" that the information be filed at
the time of the hearing, that the waiver of indictment and the
"Plea Bargain Agreement" would "be filed at the same time," and
that "the "Defendant's Information Sheet' prepared by your office
reflect Mr. Elvis Johnson's address c/o 28th Floor, 1100 Milam
Street, Houston, Texas 77002, which is our office address." This
4
letter also enclosed "a proposed information." In that document,
the defendant is said to be "Elvis Johnson, A/K/A "Gene' Johnson,"
and no reference is made to the defendant's address.
At approximately 4:00 p.m. Friday, April 10, 1981, Johnson's
lawyer and Powers met with the district judge in his office. When
they came out, Johnson's lawyer informed him that the judge would
not accept a nolo contendere plea. Thereafter, at 4:10 p.m.
proceedings on the record were commenced in open court in the
Galveston federal courtroom before the district judge. Johnson
signed and filed a waiver of indictment.3 An information was filed
charging Johnson as follows:
"That on or about April 15, 1976, in the Southern
District of Texas, the defendant ELVIS JOHNSON, a resident of
Galveston, Texas, did willfully and knowingly attempt to evade
and defeat a large part of the income tax due and owing by him
to the United States for the calendar year 1975, by preparing
and causing to be prepared, by signing and causing to be
signed, and by mailing and causing to be mailed, in the
Galveston Division of the Southern District of Texas a false
and fraudulent income tax return, which was filed with the
Internal Revenue Service, wherein he stated and represented
that his taxable income for said calendar year was $53,589.00
and that the amount of tax due and owing thereon was the sum
of $18,374.50, whereas, as he then and there well knew, his
taxable income for 1975 was $59,784.18 upon which said taxable
income he owed to the United States an income tax of
$21,849.47. (Violation: Title 26, United States Code,
Section 7201)."
Johnson then also signed and swore to a written "Plea of Guilty,"
also signed "approved" by Powers, which was then filed. This
3
The waiver recites that Johnson is accused of violating
both section 7201 and section 7206(1).
There was also filed at that time the "Defendant
Information" sheet (form AO-257) listing the defendant as
"Elvis Johnson" and showing his address as "1100 Milam St.,
28th Floor, Houston, Texas 77002."
5
document concludes by stating:
"After consulting with my attorney, I have entered into
the following agreement, in the nature of "plea bargaining'
with the United States Attorney to this effect, and no
further: In the event I enter a plea of guilty to this
Information, I will not be prosecuted for violation of Title
26, for the year 1974. Further, Mrs. Johnson will not be
prosecuted for either of the years 1974 or 1975. Finally, the
Government will not oppose a probated sentence."4
Being informed that Johnson desired to plead guilty, the
district court (Judge Gibson) advised Johnson of his rights,
examined him and his counsel in accordance with FED.R.CRIM.P. 11 to
insure that the plea was entirely knowing and voluntary,
ascertained that the terms of the plea agreement were as above set
out, had Powers recite the factual basis of the offense,5 and had
the information read in full. On inquiry of the court, Johnson
stated that he pleaded "guilty," and the court accepted the plea.
After Johnson and his counsel declined the court's invitation to
4
The written "Plea of Guilty" also recites "I have received
no promises of leniency, or of any other nature, from my own
attorney, from the attorney of the United States, or from any
other person to induce me to plead guilty" and "I have received
no threat of a more severe sentence, of harsh treatment, or of
any other nature to induce me to plead guilty" and "I understand
the elements of the offense, and I am entering this plea of
guilty ... because I am guilty."
5
The factual basis was as follows:
"During the year in question, the Defendant attempted
to evade a substantial amount of tax that was due to
the United States. This attempt was willful and was
accomplished by a filing of an income tax return that
the Defendant knew was not correct in that it did not
report all of the income earned by the Defendant on his
tax return. At the time the Defendant signed the
income tax return, his actions were knowing and willful
with respect to the year 1975."
6
say anything about sentencing or the PSR,6 the court proceeded to
sentence Johnson to six months' confinement with execution of the
sentence suspended for a one-year probationary period. The court
stated on the record that the probation would be "supervised," but
the supervision would be relaxed so it would "not interfere with
the performance of your duties as an executive for the American
National Insurance Company."7
On Monday, April 13, 1981, Stone, who was stationed in Houston
and had talked to Powers on the telephone concerning what happened
at the courthouse on Friday, called Sally Sassen (Sassen), the IRS
District Public Affairs Officer who was based in Austin,8 and gave
her information to prepare a press release. Based on what Powers
told her, Sassen drafted a release and called Stone and read it to
him and he approved it.9 Sassen also cleared the release with
6
The court had previously stated that "the court is going to
follow the recommendation of the government, and that probation
will be accorded you."
7
Shortly thereafter, at 4:35 p.m., the open court
proceedings concluded. On April 13, 1981, the written judgment
of conviction and sentence was filed, showing, inter alia, the
full name of Johnson's counsel. On July 24, 1981, the transcript
of the April 10, 1981, proceedings was filed. The transcript
also reflects, inter alia, the full name of Johnson's counsel
(and the name of his firm, which includes his last name) and his
office address, "20th Floor, 1100 Milam Street, Houston, Texas"
(contemporaneous correspondence in the record plainly indicates
that "20th" is a misprint for "28th").
8
The IRS Austin District then included Houston and
Galveston.
9
Stone testified by deposition (he did not testify in
person) that after Sassen read him the proposed release, he
called Powers and cleared it with him and then called Sassen and
told her he had done so. The district court (Judge Singleton)
expressly disbelieved Stone's testimony that he had cleared the
7
Stone's superior in Houston. Sassen then mailed the press release
to twenty-one media outlets in the Galveston area later that day.
It read as follows:
"INSURANCE EXECUTIVE PLEADS GUILTY IN TAX CASE
GALVESTON, TEXAS—In U.S. District Court here, Apr. 10,
Elvis E. Johnson, 59, plead [sic] guilty to a charge of
federal tax evasion. Judge Hugh Gibson sentenced Johnson, of
25 Adler Circle, to a six-month suspended prison term and one
year supervised probation.
Johnson, an executive vice-president for the American
National Insurance Corporation, was charged in a criminal
information with claiming false business deductions and
altering documents involving his 1974 and 1975 income tax
returns.
In addition to the sentence, Johnson will be required to
pay back taxes, plus penalties and interest."
On April 14 or 15, the American National comptroller informed
Johnson that a Galveston journalist had called the American
National public relations director to inquire about Johnson's
conviction. A copy of the release was procured and furnished to
Johnson, who called his lawyer, who in turn called Powers on April
15. A recording of their telephone conversation reflects that
Powers denied any knowledge of the press release, assumed the IRS
was responsible, and said "[i]f they damaged your client in any
way, sue the hell out of them as far as I'm concerned."10 Johnson's
release with Powers. Sassen testified, without contradiction,
that Stone told her he had checked the release with the United
States Attorney.
10
As reflected by the recording, Johnson's lawyer complained
of the release "saying that Johnson for '74 and '75 has been
charged with altering a bunch of documents" and "putting matters
in the release that are matters that aren't covered by the public
record." Johnson's lawyer also then said to Powers "I was of the
view that you guys wouldn't have made such a release," to which
8
lawyer then called and wrote the IRS. As a result, the IRS
informed the media outlets to which it had sent the release that it
might contain errors and asked them to put a hold on it. The IRS
then procured a copy of the information to which Johnson had
pleaded, and on April 17, 1981, issued to the same outlets a new
press release as follows:
"INSURANCE EXECUTIVE PLEADS GUILTY IN TAX CASE
GALVESTON, TEXAS—In U.S. District Court here, Apr. 10,
Elvis E. Johnson, 59, plead [sic] guilty to a charge of
federal tax evasion. Judge Hugh Gibson sentenced Johnson, of
25 Adler Circle, to a six-month suspended prison term and one
year supervised probation.
Johnson, an executive vice-president for the American
National Insurance Corporation, was charged in a criminal
information with willful evasion of federal tax by filing a
false and fraudulent tax return for 1975.
In addition to the sentence, Johnson will be required to
pay back taxes, plus penalties and interest."
This release was the same as the earlier one except that the
words in the second paragraph of the release describing what the
criminal information charged Johnson with were changed from
"claiming false business deductions and altering documents
involving his 1974 and 1975 income tax returns," in the first
release, to "willful evasion of federal tax by filing a false and
fraudulent tax return for 1975" in the second release.
Johnson testified that when he returned from court on April
Powers responded, "[w]ell, we never make a release. Well, I say
we never make a release, that's not true. No we didn't make a
release in that case."
Neither Powers nor Johnson's lawyer testified at trial,
by deposition or otherwise.
9
10, he called the president of American National and told him what
had happened. The president told Johnson they would talk Monday
morning, April 13, which they did at about 8:00 a.m. The president
expressed his confidence in Johnson, and said it was best for the
company for Johnson to remain in his position. When Johnson
received a copy of the press release on April 14 or 15, he took it
to the president and told him he, Johnson, should go to the board
of directors and explain the situation. The president replied,
"Why don't you let me handle it. I can do it in a more personal
way and I will make sure the board understands about it." At this
time, Johnson testified, "we didn't have a board meeting coming up
for a few days." Johnson said he heard nothing further from the
matter until Saturday afternoon, which would have been April 18,
when the president called and then came by Johnson's house and told
him he, the president, had visited with two of the directors,
telling one of them "about the news release" and "in essence what
it said." This director's reply, according to what the president
told Johnson, was "well, did you get his resignation on the spot?"
Johnson further testified that the president then told him "I guess
that's why what I am asking you for right now is your resignation."
On Monday, April 20, Johnson resigned from American National's
board and from his position as its senior executive vice president.
He was assigned to its Springfield, Missouri, office, as assistant
regional director for the region including Missouri, Kansas,
Arkansas, Oklahoma, and part of North Texas. He served there, at
considerably diminished compensation, through 1986, at which time
10
he retired, having reached age 65 during that year.11
Johnson testified, without explanation other than as set forth
above, that he was "in essence" fired. However, only the board of
directors could terminate Johnson, and there is no evidence of any
such action by the board. Nor is there any evidence that even a
majority of the board was aware of Johnson's conviction before
April 22. No one who claimed to be privy to any decision to
terminate Johnson testified, nor did anyone who claimed to have
learned of any such decision from one who was privy to it. There
is no documentary evidence respecting any such decision. Apart
from Johnson himself, no present or former American National
director, officer, or employee testified.
Johnson further testified:
"Q. At some point you were going to tell the Board that you
were a tax felon?
A. It would be in the footnotes of the annual report, sir.
Q. And would have gone out to the board of directors?
A. And to the shareholders.
Q. And to the shareholders. And you were going to do that
regardless whether there was a press release?
A. It would have to have been done, yes, sir."12
11
American National issued a press release April 21
announcing Johnson's resignation "effective immediately" from the
board and his position as senior executive vice president, and
quoting the president as saying Johnson "many times expressed his
desire to return to Springfield in order to work more directly in
life insurance sales."
12
Johnson's testimony reflects that American National was a
publicly held corporation that sent annual reports to its
shareholders. When he first came to it in 1951, American
National was the 18th largest life insurance company out of some
11
In his testimony Johnson also asserted that he was not guilty
of tax evasion and that he was wholly unaware that any items
claimed as business expenses on his return were factually false or
overstated. He claimed that in these respects the returns were
based on his wife's erroneous recordkeeping, which he had assumed
to be correct. His wife testified in essence that her errors were
innocent. The district court apparently credited all their
testimony.13
17,000 such companies in the United States and Canada; it had
grown substantially since then, had thousands of employees and
offices throughout the United States, and had $105 million
profits in 1980. His brief describes it as "one of the largest
life insurance companies in the United States."
13
In so doing, the court in effect rejected the government's
contention that "this is a matter of res judicata, it's not open
to attack." In this respect, the district court clearly erred.
Johnson's section 7201 conviction has never been
challenged, much less set aside or modified. The count in
the information of which Johnson was convicted alleged that
he "willfully and knowingly attempted to evade and defeat a
large part of the income tax due and owing by him ... for
... 1975" by filing "a false and fraudulent income tax
return" that showed his taxable income and income tax at
specified figures, "whereas, as he then and there well knew
" the correct said figures were specified amounts, of
several thousand dollars, larger (emphasis added). The
italicized allegations were not surplusage, for we have
consistently held that a conviction under section 7201
requires that the defendant have "acted willfully and
knowingly with specific intent to evade his income tax
obligations." United States v. Daniels, 617 F.2d 146, 148
(5th Cir.1980). See also United States v. Garber, 607 F.2d
92, 97-98 (5th Cir.1979) ("a negligent, careless, or
unintentional understatement of income" does not violate
section 7201; rather, "[t]he Government must demonstrate
that the defendant willfully concealed and omitted from her
return income which she knew was taxable"). Moreover, the
district judge refused to accept a nolo plea from Johnson,
and, as the government pointed out below, Johnson's written
plea, which he signed and swore to in open court, stated
that he was "entering this plea of guilty ... because I am
12
District Court
On April 6, 1983, Johnson filed this suit in the court below
against Sassen and several other IRS employees asserting that the
press releases constituted a disclosure in violation of section
6103(a)(1), which prohibits any federal employee from disclosing
tax return information obtained by him in connection with his
government service.14 Recovery was sought on the basis of 26 U.S.C.
guilty" (emphasis added). Johnson's plea hence cannot be
characterized as an "Alford " plea. See North Carolina v.
Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970).
In this civil suit by Johnson against the United States,
Johnson is clearly estopped from taking any positions
inconsistent with his subsisting section 7201 conviction.
Piper v. United States, 392 F.2d 462, 464-65 (5th Cir.1968);
Tomlinson v. Lefkowitz, 334 F.2d 262, 264-65 (5th Cir.1964),
cert. denied, 379 U.S. 962, 85 S.Ct. 650, 13 L.Ed.2d 556
(1965); United States v. Thomas, 709 F.2d 968, 972 (5th
Cir.1983).
14
Section 6103(a) provides:
"(a) General rule.—Returns and return information
shall be confidential, and except as authorized by this
title—
(1) no officer or employee of the United States,
(2) no officer or employee of any State, any local
child support enforcement agency, or any local
agency administering a program listed in
subsection (l )(7)(D) who has or had access to
returns or return information under this section,
and
(3) no other person (or officer or employee
thereof) who has or had access to returns or
return information under subsection
(e)(1)(D)(iii), (l )(12), paragraph (2) or (4)(B)
of subsection (m), or subsection (n),
shall disclose any return or return information
obtained by him in any manner in connection with his
service as such an officer or an employee or otherwise
or under the provisions of this section. For purposes
13
§ 7217, which authorized a damage suit against any person who
disclosed return information contrary to section 6103.15
of this subsection, the term "officer or employee'
includes a former officer or employee."
Section 6103(b)(2) defines "return information" as
including:
"(A) a taxpayer's identity, the nature, source, or
amount of his income, ... deductions, ... liabilities,
... tax liability, ... deficiencies, ... whether the
taxpayer's return was, is being, or will be examined or
subject to other investigation or processing, or any
other data, received by, ... [or] prepared by ... the
Secretary with respect to a return or with respect to
the determination of the existence, or possible
existence, of liability (or the amount thereof) of any
person under this title for any tax, penalty, interest,
fine, forfeiture, or other imposition, or offense...."
Section 6103(b)(6) states that "[t]he term "taxpayer
identity' means the name of a person with respect to whom a
return is filed, his mailing address, his taxpayer
identifying number (as described in section 6109), or a
combination thereof."
15
Section 7217 provided:
"(a) General rule.—Whenever any person knowingly,
or by reason of negligence, discloses a return or
return information (as defined in section 6103(b)) with
respect to a taxpayer in violation of the provisions of
section 6103, such taxpayer may bring a civil action
for damages against such person, and the district
courts of the United States shall have jurisdiction of
any action commenced under the provisions of this
section.
(b) No liability for good faith but erroneous
interpretation.—No liability shall arise under this
section with respect to any disclosure which results
from a good faith, but erroneous, interpretation of
section 6103.
(c) Damages.—In any suit brought under the
provisions of subsection (a), upon a finding of
liability on the part of the defendant, the defendant
shall be liable to the plaintiff in an amount equal to
the sum of—
14
(1) actual damages sustained by the plaintiff as a
result of the unauthorized disclosure of the
return or return information and, in the case of a
willful disclosure or a disclosure which is the
result of gross negligence, punitive damages, but
in no case shall a plaintiff entitled to recovery
receive less than the sum of $1,000 with respect
to each instance of such unauthorized disclosure;
and
(2) the costs of the action.
(d) Period for bringing action.—An action to
enforce any liability created under this section may be
brought, without regard to the amount in controversy,
within 2 years from the date on which the cause of
action arises or at any time within 2 years after
discovery by the plaintiff of the unauthorized
disclosure."
Section 7217 was enacted as a part of the Tax Reform Act of
1976, Pub.L. 94-455, Title XII, § 1202(e)(1), 90 Stat. 1687,
and was amended in 1978. Pub.L. 95-600, § 701(bb)(7), 92
Stat. 2923.
In 1982, section 7217 was repealed and replaced by 26
U.S.C. § 7431 in legislation providing that "[t]he
amendments made by this section shall apply with respect to
disclosures made after the date of this Act [September 3,
1982]." Pub.L. 97-248, § 357(c), 96 Stat. 646. Hence, the
disclosures at issue here are governed by section 7217 and
not by section 7431.
Section 7431(a) provides for a cause of action against
the United States for disclosure by federal employees
contrary to section 6103. Section 7431(b) provides for a
cause of action against a person who is not a federal
employee for a disclosure made by such person in violation
of section 6103. Section 7431 states in this respect:
"(a) In general.—
(1) Disclosure by employee of United States.—If
any officer or employee of the United States
knowingly, or by reason of negligence, discloses
any return or return information with respect to a
taxpayer in violation of any provision of section
6103, such taxpayer may bring a civil action for
damages against the United States in a district
court of the United States.
15
At approximately the same time, Johnson filed with the IRS an
FTCA administrative claim, likewise asserting that the press
releases violated section 6103 and that the IRS was negligent in
(2) Disclosure by a person who is not an employee
of United States.—If any person who is not an
officer or employee of the United States
knowingly, or by reason of negligence, discloses
any return or return information with respect to a
taxpayer in violation of any provision of section
6103, such taxpayer may bring a civil action for
damages against such person in a district court of
the United States.
(b) No liability for good faith but erroneous
interpretation.—No liability shall arise under this
section with respect to any disclosure which results
from a good faith, but erroneous, interpretation of
section 6103.
(c) Damages.—In any action brought under subsection
(a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the
plaintiff in an amount equal to the sum of—
(1) the greater of—
(A) $1,000 for each act of unauthorized disclosure
of a return or return information with respect to
which such defendant is found liable, or
(B) the sum of—
(i) the actual damages sustained by the plaintiff
as a result of such unauthorized disclosure, plus
(ii) in the case of a willful disclosure or a
disclosure which is the result of gross
negligence, punitive damages, plus
(2) the costs of the action.
(d) Period for bringing action.—Notwithstanding any
other provision of law, an action to enforce any
liability created under this section may be brought,
without regard to the amount in controversy, at any
time within 2 years after the date of discovery by the
plaintiff of the unauthorized disclosure."
16
its supervision of those issuing the press releases. After six
months passed without action on the FTCA claim, Johnson filed an
amended complaint adding the United States as a defendant and
seeking recovery against it under the FTCA.16 As against the United
States, Johnson asserted that the press releases violated section
6103 and that IRS personnel were guilty of negligence and/or
intentional misconduct in issuing such releases and in failing to
take measures to prevent their issuance. The following were the
complained of items of return information allegedly disclosed in
the press releases contrary to section 6103:
"A. Plaintiff's age was disclosed;
B. Plaintiff's address was disclosed;
C. It was stated that Plaintiff was charged with false
business deductions and altering documents involving his 1974
and 1975 returns. The criminal information that had been
filed of record in the court proceeding dealt with the year
1975 and neither the criminal information nor other data in
the public record made references to "claiming false business
deductions and altering documents.'
D. Plaintiff's position as Executive Vice-President of
American National was stated.
E. It was stated that Plaintiff would be required to pay back
taxes plus penalties and interest."17
Johnson sought recovery from the United States of his actual
damages, alleging that he was discharged from his employment as a
result of the press releases, and consequently suffered humiliation
16
A second amended complaint named further individual IRS
employees, including Stone, as additional defendants from whom
recovery was sought under section 7217.
17
Virtually the same allegations were made in the FTCA
administrative claim.
17
and mental anguish, loss of earnings, and relocation expenses.18
He also sought to recover punitive damages from the United States.
The parties filed motions to dismiss and for summary judgment.
The district court denied the government's motion claiming a want
of FTCA jurisdiction, granted Johnson's motion that the press
releases violated section 6103 and the government's motion that it
could not be liable for punitive damages, and denied all the
individual defendants' motions except one relating to the
computation of liquidated damages under section 7217(c)(1).
Johnson v. Sawyer, 640 F.Supp. 1126 (S.D.Tex.1986) (Singleton, J.).
Thereafter, the case against the individual IRS employees was
severed, and the FTCA case proceeded to a bench trial following
which the district court ordered judgment in favor of Johnson.19
The district court found that the press releases were issued in
18
The Second Amended Complaint (the final complaint)
alleged:
"As to Defendant United States of America, Plaintiff is
entitled to recover judgment for his actual damages for
the following:
A. Plaintiff was discharged from his employment as
a result of the publication of Exhibit C [the April 13
press release]; such discharge, together with the
humiliation and mental anguish sustained by Plaintiff
and his family, caused actual damages of $7,500,000;
B. In addition, Plaintiff sustained other and
further damages of the nature of relocation expenses
and loss of earnings in the amount of at least
$1,000,000."
In substance, these were the allegations made in the
FTCA administrative claim.
19
So far as we are informed, the case against the individual
defendants remains pending.
18
violation of section 6103 and caused Johnson to be discharged from
his position as senior executive vice president and member of the
board of American National. Damages in the amount of $10,902,117
were awarded, of which $5,902,117 were for loss of earnings,
pension benefits, deferred compensation, and loss on the sale of
his Galveston house, and $5,000,000 was for "loss of position"
meaning "the aggregate of luxuries that are the familiar
perquisites of members of the corporate elite" and "emotional
distress and mental anguish." Johnson v. Sawyer, 760 F.Supp. 1216,
1233 (S.D.Tex.1991) (Singleton, J.).
Although the claimed invasion of Johnson's rights was
predicated on section 6103, the district court recognized that "an
FTCA claim must be based on a state law cause of action." Id. at
1224. The court stated that Johnson had advanced four theories of
recovery in this respect under Texas law, namely (1) respondeat
superior; (2) negligent supervision of employees; (3) breach of
a confidential relationship; and (4) violation of the right of
privacy. Id. at 1225.20
The district court held for Johnson on respondeat superior,
stating that "[t]he negligence of Stone and Sassen is clear.
Section 6103 created a duty; they breached that duty by engaging
in activity that led to the release of information not in the
public record," id. at 1230 (footnote omitted), and "[w]e hold the
20
The district court also rejected the government's reliance
on the discretionary function and tax exceptions to the FTCA, 28
U.S.C. § 2680(a) & (c). See Johnson, 760 F.Supp. at 1225-1228.
We do not reach and express no opinion concerning these rulings.
19
United States vicariously liable for the negligence of Sassen and
Stone." Id. at 1231. It also held for Johnson on negligent
supervision, noting that because under Texas law negligent
supervision is "superfluous" where the employee's offending action
was within the course and scope of his employment,21 therefore "a
finding of negligent supervision appears to follow almost
automatically from our finding of respondeat superior negligence.
We hold that the United States was negligent in its supervision of
Sassen and Stone ..." Id. at 1232.
The court rejected Johnson's invasion of privacy and breach of
confidential relationship claims. As to the former, the court
noted that under Texas law breach of privacy was divided "into four
distinct torts," of which Johnson "pleads only two," namely "public
disclosure of embarrassing facts about the Plaintiff" and "false
light." Id. at 1232. As to the first, the elements, under
Industrial Foundation of the South v. Texas Industrial Accident
Board, 540 S.W.2d 668 (Tex.1976), cert. denied, 430 U.S. 931, 97
S.Ct. 1550, 51 L.Ed.2d 774 (1977), were that (1) publicity was
given to matters concerning the plaintiff's private life, (2) the
publication of which would be highly offensive to one of ordinary
sensibilities, and (3) the matter publicized is not of legitimate
public concern. Johnson at 1332. Though "[s]keptical," the
district court was unable to find that postconviction press
releases do not help to deter prospective tax evaders, and stated
21
The district court cited Dieter v. Baker Service Tools,
739 S.W.2d 405, 408 (Tex.App.—Corpus Christi 1987, writ denied),
in this connection.
20
"we cannot, therefore, hold that the identity of those who are
convicted of violating the tax laws is not of legitimate public
concern." Id. The court did not address the other two elements of
this tort. As to the "false light" privacy claim, the district
court noted that Johnson claimed the press release "[p]laced him in
a false light in the public eye, by implying that he had admitted
to falsifying deductions and altering documents." The court held
this claim barred because "[i]ts essence is injury to Johnson's
reputation, and it therefore falls under 28 U.S.C. § 2680(h), which
exempts from the FTCA any claim arising from libel, slander or
misrepresentation." Id.
The district court, citing Thompson v. Norton, 604 S.W.2d 473,
476 (Tex.Civ.App.—Dallas 1980, no writ), also rejected the claim of
breach of confidential relationship, finding nothing akin to that
between attorney/client, partners, or family members, or long-time
relations of trust in which one party is justified in relying on
the other to act in his best interest. It also rejected the notion
that such a "concept embraces relations between a citizen and his
government." Johnson, 760 F.Supp. at 1233.
The government appealed.
Panel
The panel majority, in its initial opinion, Johnson v.
Sawyer, 980 F.2d 1490 (5th Cir.1992), affirmed the finding of
liability on a negligence per se theory, reasoning that "the IRS
agents' violations of ... the duty established in § 6103 amounted
to negligence under Texas tort law," id. at 1497, and holding that
21
the district court did not err "in finding that the actions of the
IRS agents violated § 6103, and that when such a violation of a
statute injures persons whose interests are intended to be
protected by the statute, the violation constitutes a tort under
Texas law, thereby implicating the FTCA." Id. at 1505. Neither
Johnson nor the panel addressed the district court's holdings
rejecting recovery on the basis of publication of embarrassing
private facts about another, false light, and breach of
confidential relation.22 The panel made a reduction in the portion
22
The initial panel majority opinion also rejected the
government's argument that Johnson's suit was in contract, not
tort, and hence was not covered under the FTCA. See Paul v.
United States, 929 F.2d 1202, 1204 (7th Cir.1991) ("Claims based
on the plea bargain invoke contract, not tort" and hence are
excluded from the FTCA); City National Bank v. United States,
907 F.2d 536, 546 (5th Cir.1990) (grossly negligent breach of
contractual duty excluded from FTCA as contract claim); 28
U.S.C. § 2680(h) (excluding from FTCA claims for
"misrepresentation, deceit, or interference with contract
rights"). In this connection, the panel majority correctly noted
that
"The government mischaracterizes both Johnson's cause
of action and the basis for the district court's
judgment. Neither relied on breach of the plea
agreement.... [T]he IRS was not even a party to the
plea agreement between the Department of Justice
[actually, the United States Attorney] and Johnson, and
thus had no privity with Johnson. Without privity
there can be no breach of contract. Moreover, Johnson
never asserted that the government was liable to him
because the IRS violated his agreement with the
Department of Justice. To the contrary, Johnson has
consistently asserted that the government's liability
results from violation of its duty toward him as
established by § 6103." Johnson, 980 F.2d at 1501
(footnote omitted).
See also id. n. 42: "The plea agreement specified only that
the Justice Department would not issue a press release."
We also observe that neither Johnson's FTCA
22
of the award for lost pension benefits and remanded for further
findings the $5,000,000 portion of the award for noneconomic
damages from loss of position and associated emotional distress.
The panel majority subsequently issued a "Supplemental and
administrative claim nor his second amended complaint make
any reference whatsoever to even the existence, much less
the breach, of any agreement (or plea agreement) between
Johnson and any officer or employee of the United States.
Further, most of what the district court found was
"agreed" by "Powers" as "part of the plea bargain," Johnson,
760 F.Supp. at 1221, is not a part of the sworn, written
"plea of guilty" which purported to state the full extent of
the government's obligations (see text at n. 4), and is not
supported by any writing. The district court's finding that
Powers agreed that "the U.S. Attorney's office would publish
no press release" is supported by no writing and the only
testimony in that respect is the following by Johnson under
examination by his own counsel: "Q. And do you recall that
he [Powers] agreed, or at least that I told you he had
agreed to not make a news release? A. That was my
understanding, yes, sir." (Emphasis added).
The only record support for the district court's
findings that Powers agreed (a) "all papers filed in the
case would give plaintiff's name as "Elvis Johnson' rather
than "E.E. "Johnny" Johnson,' by which he is normally known"
and (b) "papers requiring Johnson's street address would
give it as 1100 Milam Street in Houston, which was the
address of his attorney, and no reference to his address at
25 Adler Circle, Galveston, would be made," are: (1)
Johnson's testimony on direct, when asked of "a plea bargain
that we made with Mr. Powers, your recollection," that "my
recollection is that I would be referred to as Elvis
Johnson, that my address would be shown as 28th Floor 1100
Milam in Houston," and (2) the April 3, 1981, letter from
Johnson's lawyer to Powers stating "we request" that "the
"Defendant's Information Sheet' prepared by your office
reflect Mr. Elvis Johnson's address c/o 28th Floor, 1100
Milam Street, Houston, Texas 77002, which is our office
address."
Finally, we note that there is no finding nor any
evidence that any IRS employee was aware of any agreement
between Powers and Johnson's counsel (or Johnson) not
contained in the written "Plea of Guilty" (see text at n. 4
supra ), or even of all the terms of that document.
23
Amending" opinion. Johnson v. Sawyer, 4 F.3d 369 (5th Cir.1993).
That opinion held that "Texas courts have consistently recognized
that the existence of a duty is the threshold question in a
negligence action," id. at 377 (footnote omitted), and that
"[i]nstead of creating a duty on the part of the IRS toward Johnson
(as found by the district court and as initially found by this
panel's majority), § 6103 simply establishes a standard of care
applicable to the independently existing duty to refrain from
publicizing damaging or embarrassing private facts about another
person." Id. at 378.23 The opinion further held that "Texas
recognizes an invasion of privacy cause of action for public
disclosure of private facts," id. at 373, and, despite the fact
that Johnson did not so contend before this Court, went on to hold
"that the district court erred in not holding for Johnson on his
public disclosure cause of action." Id. at 376. The panel
majority did not modify any of its other previous holdings and
ultimately reached the same result as it had originally.
We took the case en banc, thus vacating the panel opinions.
Discussion
FTCA Requires Breach of State Law Duty
The FTCA, subject to several exceptions, waives the sovereign
immunity of the United States, making it liable in tort "in the
same manner and to the same extent as a private individual under
23
Similarly, the opinion states "[w]e do realize, however,
that the district court did err (as did we originally) in stating
that § 6103 created a duty when it actually only established a
standard of conduct." Id. at 392.
24
like circumstances," 28 U.S.C. § 2674, for certain damages "caused
by the negligent or wrongful act or omission of any employee of the
Government while acting within the scope of his office or
employment, under circumstances where the United States, if a
private person, would be liable to the claimant in accordance with
the law of the place where the act or omission occurred." 28
U.S.C. § 1346(b) (emphasis added). While as a matter of abstract
linguistics the phrase "law of the place where the act or omission
occurred" might be thought to include generally applicable federal
law, it has long been settled that it does not, and that "the
liability of the United States under the Act [FTCA] arises only
when the law of the state would impose it." Brown v. United
States, 653 F.2d 196, 201 (5th Cir.1981). Thus, even a violation
of the United States Constitution, actionable under Bivens,24 is not
within the FTCA unless the complained of conduct is actionable
under the local law of the state where it occurred. Brown at 201.
It follows, of course, and has consistently been held, that
"the FTCA was not intended to redress breaches of federal statutory
duties." Sellfors v. United States, 697 F.2d 1362, 1365 (11th
Cir.1983). As the Second Circuit said in Chen v. United States,
854 F.2d 622, 626 (2d Cir.1988):
"The FTCA's "law of the place' requirement is not satisfied by
direct violations of the Federal Constitution, see
Contemporary Mission, Inc. v. U.S.P.S., 648 F.2d 97, 104-05 n.
2 (2d Cir.1981); Birnbaum v. United States, 588 F.2d 319, 328
(2d Cir.1978), or of federal statutes or regulations standing
alone, Cecile Indus., Inc. v. United States, 793 F.2d 97, 100
24
Bivens v. Six Unknown Named Agents of Federal Bureau of
Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971).
25
(3d Cir.1986); Art Metal—U.S.A., Inc. v. United States, 753
F.2d 1151, 1157-58 (D.C.Cir.1985); Birnbaum, 588 F.2d at 328;
Nichols [v. Block], 656 F.Supp. [1436] at 1444-45 [
(D.Mont.1987) ]. The alleged federal violations also must
constitute violations of duties "analogous to those imposed
under local law.' Cecile Indus., 793 F.2d at 100 (quoting Art
Metal, 753 F.2d at 1158.)"
See also, e.g., Zabala Clemente v. United States, 567 F.2d 1140,
1149 (1st Cir.1977) ("... even where specific behavior of federal
employees is required by federal statute, liability to the
beneficiaries of that statute may not be founded on the Federal
Tort Claims Act if state law recognizes no comparable private
liability"); Gelley v. Astra Pharmaceutical Products, Inc., 610
F.2d 558, 562 (8th Cir.1979) ("... federally imposed obligations,
whether general or specific, are irrelevant to our inquiry under
the FTCA, unless state law imposes a similar obligation upon
private persons").
We have long followed this rule. United States v. Smith, 324
F.2d 622, 624-25 (5th Cir.1963) (the FTCA "simply cannot apply
where the claimed negligence arises out of the failure of the
United States to carry out a [federal] statutory duty in the
conduct of its own affairs" and is unavailable where "[t]he
existence or nonexistence of the claim" "depends entirely upon
Federal statutes"); Brown; Tindall v. United States, 901 F.2d 53,
56 at n. 8 (5th Cir.1990) ("a federal regulation cannot establish
a duty owed to the plaintiff under state law," citing Smith ). See
also Bosco v. U.S. Army Corps of Engineers, 611 F.Supp. 449, 454
(N.D.Tex.1985).
This is not to say that the required state law must be one
26
directly applicable to the conduct of federal employees or to the
precise activity from which the claim arose. The Supreme Court
made this clear in Indian Towing Co. v. United States, 350 U.S. 61,
64-65, 76 S.Ct. 122, 124, 100 L.Ed. 48 (1955), where it held that
the United States could be liable under the FTCA for the Coast
Guard's negligence in the operation of its lighthouse, asserting
"it is hornbook tort law that one who undertakes to warn the public
of a danger and thereby induces reliance must perform his "good
Samaritan' task in a careful manner." See also Block v. Neal, 460
U.S. 289, 293-95, 103 S.Ct. 1089, 1092, 75 L.Ed.2d 67 (1983).
Although Indian Towing did not expressly refer to state law,
subsequent decisions have made plain that in FTCA cases "the
application of the "Good Samaritan' doctrine is at bottom a
question of state law." United States v. S.A. Empresa de Viacao
Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 816 n. 12, 104
S.Ct. 2755, 2765 n. 12, 81 L.Ed.2d 660 (1984). See also Sheridan
v. United States, 487 U.S. 392, 400-01, 108 S.Ct. 2449, 2455, 101
L.Ed.2d 352 (1988). If the government undertakes to perform a
duty, such as to furnish a lighthouse service or direct air
traffic, and negligently performs that duty, then it may be liable
under the FTCA if a similarly situated private enterprise would be
liable under the local law good Samaritan rule.25 We have applied
25
As the Court said in Sheridan,
"By voluntarily adopting regulations that prohibit the
possession of firearms on the naval base and that
require all personnel to report the presence of any
such firearm, and by further voluntarily undertaking to
provide care to a person who was visibly drunk and
27
the same theory in FTCA cases involving air traffic controllers.
See Gill v. United States, 429 F.2d 1072, 1075 (5th Cir.1970).26
The teaching of these authorities is that the violation of a
federal statute or regulation does not give rise to FTCA liability
unless the relationship between the offending federal employee or
agency and the injured party is such that the former, if a private
person or entity, would owe a duty under state law to the latter in
a nonfederal context. If the requisite relationship and duty
exist, then the statutory or regulatory violation may constitute or
be evidence of negligence in the performance of that state law
duty.
Negligence Per Se
In accordance with the foregoing, in FTCA cases courts have
generally refused to find the necessary state law duty in an
assertedly violated federal statute or regulation merely because
visibly armed, the Government assumed responsibility to
"perform [its] "good Samaritan" task in a careful
manner.' " Indian Towing Co. v. United States, 350
U.S. 61, 65, 76 S.Ct. 122, 124, 100 L.Ed. 48 (1955).
"The District Court and the Court of Appeals both
assumed that petitioners' version of the facts would
support recovery under Maryland law on a negligence
theory if the naval hospital had been owned and
operated by a private person." Id., 487 U.S. at 401,
108 S.Ct. at 2455 (footnote omitted).
26
Gill was a Texas case. Texas has recognized the good
Samaritan doctrine since well before enactment of the FTCA. See,
e.g., Colonial Savings Ass'n v. Taylor, 544 S.W.2d 116, 119
(Tex.1976). Similarly, in an action between private parties who
owe a duty one to the other under general state law, such as the
duties owed by a seller to a buyer in respect to the quality of
the goods sold, violation of applicable federal law may
constitute a breach of that duty under a negligence per se
concept, just as would violation of state law. See Gibson v.
Worley Mills, Inc., 614 F.2d 464, 466 (5th Cir.1980).
28
the law of the relevant state included a general doctrine of
negligence per se. Thus in Art Metal—U.S.A., Inc. v. United
States, 753 F.2d 1151 (D.C.Cir.1985), the D.C. Circuit rejected
FTCA liability sought to be predicated on a violation of federal
regulations, notwithstanding that local law had a broad negligence
per se doctrine and the plaintiffs were intended beneficiaries of
the regulatory provisions violated. The court observed: "[d]uties
set forth in federal law do not, therefore, automatically create
duties cognizable under local tort law. The pertinent question is
whether the duties set forth in the federal law are analogous to
those set forth in local tort law." Id. at 1158 (citing Indian
Towing Co.). This language and holding were cited with approval by
the Third Circuit in Cecile Industries, Inc. v. United States, 793
F.2d 97, 100 (3d Cir.1986). And, in Myers v. United States, 17
F.3d 890 (6th Cir.1994), the court refused to authorize FTCA
recovery on the basis of breach of a duty imposed by federal
regulations. Myers cites Art Metal with approval as
"characterizing plaintiff's attempt to invoke doctrine of
negligence per se without establishing an underlying state-law duty
as a "mistake' and a "flawed analysis.' " Myers at 899.
Where a claim is wholly grounded on a duty imposed by an
allegedly violated federal statute or regulation, to allow FTCA
recovery merely on the basis of a general state doctrine of
negligence per se, without requiring that there be some specific
basis for concluding that similar conduct by private persons or
entities would be actionable under state law, is to in essence
29
discriminate against the United States: recovery against it is
allowed, although for similar conduct the private person or entity
would not be subject to liability under state law. Plainly, the
FTCA waiver of sovereign immunity does not go so far. To allow
section 6103(a)(1) to create the duty allegedly breached merely
because Texas generally follows the doctrine of negligence per se
violates the rule of Tindall that for FTCA purposes "a federal
regulation cannot establish a duty owed to the plaintiff under
state law." Id. at 56 n. 8 (citing Smith ). Accordingly, we hold
that the relevant duty not to disclose must be found in Texas law
apart from section 6103(a)(1) and the Texas doctrine of negligence
per se.
Even apart from the foregoing, there is no showing that Texas
would create a common law cause of action for violation of section
6103(a)(1), inasmuch as section 7217 provided for a comprehensive
private cause of action for any such violation (see n. 15 supra ).
While Texas generally recognizes the doctrine of negligence per se,
see El Chico Corp. v. Poole, 732 S.W.2d 306 (Tex.1987), no Texas
decision has been found applying the doctrine to create a common
law cause of action for a statutory violation where there is a
comprehensive and express statutory private cause of action for the
statutory violation. Moreover, in this instance both the statute
violated and the statute creating the cause of action for that
violation are federal. We can think of no reason for a Texas court
to create a common law cause of action for the statutory violation
30
in such a circumstance.27 We have long followed the principle that
we will not create "innovative theories of recovery or defense"
under local law, but will rather merely apply it "as it currently
exists." Galindo v. Precision American Corp., 754 F.2d 1212, 1217
(5th Cir.1985) (footnote omitted). See also, e.g., Junior Money
Bags, Ltd. v. Segal, 970 F.2d 1, 11 (5th Cir.1992); Mitchell v.
Random House, Inc., 865 F.2d 664, 672 (5th Cir.1989); Graham v.
Milky Way Barge, Inc., 824 F.2d 376, 381 (5th Cir.1987); Harmon v.
Grande Tire Co., 821 F.2d 252, 259 (5th Cir.1987). As there is
currently no Texas law creating a common law cause of action for a
statutory violation for which violation there is an express and
comprehensive statutory cause of action, we will not undertake to
ourselves create such a Texas common law cause of action.28
27
State as well as federal courts would be available for
section 7217 suits, as its grant of federal jurisdiction does not
purport to be exclusive. See, e.g., Tafflin v. Levitt, 493 U.S.
455, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990).
28
Our proper reluctance to take such a step is enhanced by
the concern, which would surely be shared by Texas judges, that
any such Texas common law cause of action predicated solely on a
violation of section 6103(a)(1) might well be preempted by
section 7217. We deal here only with federal employees acting in
the course of their employment, and the only portion of section
6103(a) which extends its prohibitions to them is clause (1),
which states "no officer or employee of the United States"
(clause (2) describes specified state and local governmental
employees, and clause (3) speaks to specified "other person[s]"
(emphasis added), thus excluding federal employees). In Boyle v.
United Technologies Corp., 487 U.S. 500, 503-06, 108 S.Ct. 2510,
2514-15, 101 L.Ed.2d 442 (1988), the Supreme Court stated:
"Another area that we have found to be of peculiarly federal
concern, warranting the displacement of state law, is the civil
liability of federal officials for actions taken in the course of
their duty. We have held in many contexts that the scope of that
liability is controlled by federal law." See also, e.g., United
States v. Demko, 385 U.S. 149, 152, 87 S.Ct. 382, 384, 17 L.Ed.2d
258 (1966) (federal compensation statute preempts FTCA; "[t]here
31
Respondeat superior; Negligent Supervision
The district court held that the fact that Stone and Sassen,
within the scope of their employment, violated section 6103(a)(1),
though not thereby committing a tort under local law, nevertheless
sufficed to impose liability on the United States under the FTCA,
because Texas follows the doctrine of respondeat superior and thus
holds private employers liable for the torts committed by their
employees in the course and scope of their employment. So far as
we are aware, no other court has adopted this approach in an FTCA
case. We reject it for essentially the same reason we have held
that general state law principles of negligence per se do not
suffice to convert a duty created only by federal statute into one
owing under state law for purposes of the FTCA's requirement that
liability thereunder be that which would be imposed on a private
party by local law. All states recognize the general doctrine of
respondeat superior, and did so when the FTCA was enacted; and,
the FTCA itself applies only to the conduct of a federal "employee
is no indication of any congressional purpose to make the
compensation statute in 18 U.S.C. § 4126 non-exclusive");
Rollins v. Marsh, 937 F.2d 134, 139-140 (5th Cir.1991) (Civil
Service Reform Act preempts both FTCA and state law claims);
Atkinson v. Gates, McDonald & Co., 838 F.2d 808, 812-13 (5th
Cir.1988) (despite absence of express preemptive language,
Longshore and Harbor Workers' Compensation Act remedy for
stopping compensation without notice of controversion preempts
state law tort action for bad faith practices). We need not now
ultimately resolve the issue of whether Texas could have created
a cause of action for violation of section 6103(a)(1) where a
comprehensive cause of action for such a violation was provided
by section 7217 (nor need we now resolve the analogous issue of
whether section 7217 preempts the FTCA). These substantial
preemption concerns are but an additional reason for us not to
create such a cause of action for Texas when it has not already
done so.
32
... while acting within the scope of his office or employment."
Section 2674. All FTCA liability is respondeat superior liability.
To say that the only local law we must look to is that of
respondeat superior is to in effect render the FTCA's local law
component substantially meaningless. Respondeat superior does not
impose liability on the employer unless the employee's conduct has
been actionable. See, e.g., Knutson v. Morton Foods, Inc., 603
S.W.2d 805, 807 n. 2 (Tex.1980) ("It is well established that where
the employer's liability rests solely on respondeat superior, an
adjudication acquitting the employee of negligence will stand as a
bar to a subsequent suit against the employer"). A private
employer is not liable under local law if the complained of conduct
of his employee, though within the scope of employment, is not
tortious under local law. Under the FTCA, the United States is not
liable if the private employer would not be liable pursuant to
local law.
The same analysis applies to the negligent supervision
theory. This tort came into Texas law by way of analogy to
negligent entrustment. See, e.g., Deerings West Nursing Center v.
Scott, 787 S.W.2d 494, 495-96 (Tex.App.—El Paso 1990, writ denied);
Park North General Hospital v. Hickman, 703 S.W.2d 262, 265-66
(Tex.App.—San Antonio 1985, n.r.e.). Texas negligent entrustment
law clearly requires, inter alia, that the accident or occurrence
injuring the plaintiff have been proximately caused by the tortious
conduct of the person to whom the vehicle (or other
instrumentality) was negligently entrusted. See, e.g., Schneider
33
v. Esperanza Transmission Co., 744 S.W.2d 595, 596-97 (Tex.1987).
Likewise, in negligent hiring or supervision cases, the general
rule is clearly that "liability ... must be predicated upon the
wrongful act or omission of the employee at the time of the
infliction of the injury complained of ... and, if the employee is
guilty of no such act or omission, there is no liability on the
part of the employer, however inexperienced, incompetent, and unfit
the employee may have been for his task." 53 AM.JUR.2d Master and
Servant § 422 at 435. Other courts reach the same result on the
basis of "proximate cause," which "requires that the third person
must have been injured by some negligent or other wrongful act of
the employee so [negligently] hired." Id. at 437. See also, e.g.,
Texas Skaggs, Inc. v. Joannides, 372 So.2d 985, 987
(Fla.App.1979).29 We are aware of no reported Texas decision to the
contrary. Where liability has been imposed on the employer on a
negligent hiring or supervision basis, it has always been where the
plaintiff's injury was caused by an employee's conduct that was
tortious under Texas law.30 No rational law would impose liability
29
There the court held: "... Florida recognizes negligent
hiring, training or retention as legitimate bases of recovery
against an employer.... [H]owever, ... in order to impose
liability on an employer for such torts, a plaintiff must first
show that he was injured by the wrongful act of an employee."
Id.
30
Generally, Texas cases have applied negligent hiring or
supervision to instances where the employee's wrongful
conduct—typically assault on a third person—was not within the
scope of his employment, but was nevertheless to some degree job
related. See Dieter v. Baker Service Tools, 739 S.W.2d 405, 408
(Tex.App.—Corpus Christi 1987, writ denied). The doctrine has
also been applied to authorize punitive damages against the
employer, but, again, only in cases where the plaintiff's injury
34
on an employer for the nontortious acts of its employee. We
decline to adopt any such extension of Texas law. Since a
requisite for employer liability under the failure to supervise
theory is that the employee's conduct wrongfully invaded the
plaintiff's rights, to be actionable under the FTCA that element
must be tested under local, not federal, law. Otherwise, the
requirement that the liability be such as would result under local
law is disregarded.
Neither respondeat superior nor negligent supervision
justifies FTCA recovery here absent a determination that issuance
of the press releases violated Johnson's rights under Texas law.
Public Disclosure of Private Facts
The panel majority's second opinion grounded recovery on the
Texas tort of "public disclosure of embarrassing private facts
about the plaintiff," as recognized in Industrial Foundation of the
Industrial Foundation of the South v. Texas Industrial Accident
Board, 540 S.W.2d 668, 682 (Tex.1976). This cause of action
requires the plaintiff to prove (1) that the publicized information
"contains highly intimate or embarrassing facts about a person's
private affairs, such that its publication would be highly
objectionable to a person of ordinary sensibilities," id. at 683;
(2) that such information was "communicated to the public at
large," not simply to "a small group of persons," id.; and (3)
"that the information publicized not be of legitimate concern to
resulted from the employee's tortious conduct. See, e.g., Estate
of Arrington v. Fields, 578 S.W.2d 173, 175-76, 178-79
(Tex.Civ.App.—Tyler 1979, n.r.e.).
35
the public." Id. at 684-85.31 The Texas Supreme Court in
Industrial Foundation further expressly held that this tort did not
extend to publication of facts, no matter how intimate,
embarrassing, or otherwise private, which were a matter of open
public record, stating: "the State may not protect an individual's
privacy interests by recognizing a cause of action in tort for
giving publicity to highly private facts, if those facts are a
matter of public record." Id. at 684. In this connection, as the
Texas Supreme Court noted, id., the United States Supreme Court in
Cox Broadcasting Corporation v. Cohn, 420 U.S. 469, 495, 95 S.Ct.
1029, 1046, 43 L.Ed.2d 328 (1975), held that "the First and
Fourteenth Amendments command nothing less than that the states may
not impose sanctions on the publication of truthful information
contained in official court records open to public inspection."32
Texas clearly has continued to follow the rule that "[o]nce
information is made a part of a public record, there can be no
liability for publicizing it." Gill v. Snow, 644 S.W.2d 222, 224
31
As noted, the district court denied recovery on this
basis, made no finding favorable to Johnson on any of the
necessary elements, and expressly found that Johnson had not
shown that the publicized information was not of legitimate
public concern. Prior to the second panel opinion, Johnson had
made no complaint before this Court as to these aspects of the
district court's decision.
32
See also, e.g., Innovative Database Systems v. Morales,
990 F.2d 217, 221-22 (5th Cir.1993) (Texas law unconstitutional
to the extent it prohibits sale of truthful motor vehicle
accident information obtained from the public records of a law
enforcement agency).
36
(Tex.App.—Ft. Worth 1982, no writ).33
Thus, the proper focus must be on the information contained in
the press releases but not a part of the public record of Johnson's
criminal case. This was correctly identified in the panel
majority's second opinion as follows:
"True, several items contained in the press releases
(Johnson's first and last name, the guilty plea to one count
of tax evasion, the sentence imposed, and the fact that he was
an executive with American National) were part of the trial
record. But several other items contained in those releases
(Johnson's middle initial—he was known as "E.E', his age, his
home address in Galveston, and his official job title with
American National) were neither discussed at his arraignment
[ ] or sentencing [n]or placed in any public record." Johnson
v. Sawyer, 4 F.3d at 381 (footnote omitted).34
33
The panel majority's second opinion appears to suggest
that Cox Broadcasting could be limited to publication by "the
press," though correctly recognizing that Texas interprets that
decision as "extending ... to anyone who publicizes such
information." Johnson v. Sawyer, 4 F.3d at 374. Of course,
Texas law is what is relevant here. Moreover, the language from
Cox Broadcasting above quoted in the text (at n. 32) is not
limited to publication by the press, nor is the rationale of that
opinion. Indeed, Cox Broadcasting relies in part on comment c to
the then tentative draft of Restatement (Second) of Torts § 652D,
stating " "there is no liability for giving publicity to facts
about the plaintiff's life which are matters of public record.' "
Cox Broadcasting, 420 U.S. at 494, 95 S.Ct. at 1045
(incidentally, the quoted language has been incorporated into the
final, approved version of comment b to section 652D). Nothing
in section 652D or its commentary suggests (or suggested) in this
respect a different rule for publication by "the press" as
opposed to publication by others. Nor are we aware of any case
that has so restricted Cox Broadcasting.
34
The panel majority properly did not include in its listing
in this respect the statement in the first press release that
Johnson "was charged in a criminal information with claiming
false business deductions and altering documents involving his
1974 and 1975 income tax returns." (Emphasis added). This
language, which on its face purports only to describe the content
of the criminal information, is not return information under
section 6103(a). While this misdescription of the criminal
information would be actionable under Texas libel law, it is not
actionable under the FTCA, which exempts "[a]ny claim arising out
37
However, none of these items of information—middle initial,
age, street address, job title—can be characterized under Texas law
as "private" and "highly intimate or embarrassing facts about a
person's private affairs, such that its publication would be highly
objectionable to a person of ordinary sensibilities." Industrial
Foundation at 683. Texas invasion of privacy law in this respect
has been guided by Prosser, Law of Torts § 117 (4th ed. 1971) and
Restatement (Second) of Torts, § 652D. See Industrial Foundation
at 682 & n. 21, 684 & n. 22; Gill at 224. Prosser, supra, states
" "[t]he plaintiff cannot complain when an occupation in which he
publicly engages is called to public attention or when publicity is
of ... libel, slander, misrepresentation...." Section 2680(h).
As the district court correctly recognized, "false light"
invasion of privacy essentially amounts to libel, slander, or
misrepresentation. In any event, Texas does not recognize the
tort of false light invasion of privacy. Cain v. Hearst Corp.,
878 S.W.2d 577 (Tex.1994). Finally, there is no finding or
evidence that the inclusion of this matter in the first press
release (it was omitted in the second, corrected release) caused
Johnson to lose his position (or otherwise harmed him).
Likewise, for essentially the same reasons, the panel
majority properly did not include in its listing the
statement in both press releases that "Johnson will be
required to pay back taxes, plus penalties and interest."
To the extent that this might be taken to misdescribe the
penalty judicially imposed on Johnson, it might be
actionable under Texas law as some form of defamation, but
would be exempted from the FTCA (if viewed in this respect
simply as "false light," it would not in any event be
actionable under Texas law). Further, the quoted statement
in substance merely describes the known, universally
applicable legal consequences of willfully and knowingly
filing a false and fraudulent income tax return understating
the tax due by several thousand dollars. See 26 U.S.C. §§
6601 (interest), 6651(a)(3) (penalty), 6653(2) (penalty).
Finally, there is, again, no evidence and no finding that
the inclusion of this information in the press releases had
anything to do with Johnson's loss of position (or otherwise
harmed him).
38
given to matters such as the date of his birth....' " Id. § 117 at
858. An individual "must expect the more or less casual
observation of his neighbors and the passing public as to what he
is and does" and thus there is no liability for publicizing "that
he has returned home from a visit, or gone camping in the woods, or
given a party at his house for his friends." Id. at 857. The
Restatement (Second) of Torts, § 652D, comment b, is to the same
effect, viz: "[t]here is no liability for giving publicity to
facts about the plaintiff's life ... such as the date of his birth
... [or] the fact that he is admitted to the practice of medicine
or is licensed to drive a taxicab ..." and "there is no liability
for giving further publicity to what the plaintiff himself leaves
open to the public eye." Id. at 385, 386. See also Hubert v.
Harte-Hanks Texas Newspapers, Inc., 652 S.W.2d 546, 551
(Tex.App.—Austin 1983, n.r.e.) ("We do not regard the candidates'
names to be facts of a highly embarrassing or intimate nature");
Vandiver v. Star-Telegram, Inc., 756 S.W.2d 103, 106
(Tex.App.—Austin 1988, no writ); Ross v. Midwest Communications,
Inc., 870 F.2d 271, 274 (5th Cir.1989) ("name, residence, or
"identity' are not easily characterized as "private, embarrassing
facts.' "); Tobin v. Michigan Civil Service Comm'n, 416 Mich. 661,
331 N.W.2d 184, 189 (1982) ("Names and addresses are not ordinarily
personal, intimate, or embarrassing pieces of information"). No
Texas (or other) authority to the contrary is cited by the
majority. Moreover, there is no evidence whatsoever that Johnson's
middle initial, his age, his title at American National, and his
39
home address, or any of these, were actually secret or concealed,
or were regarded by him, or would be regarded by the average
person, as private or embarrassing or intimate. To the contrary,
they were obviously matters that Johnson, in the words of the
Restatement, "leaves open to the public eye." As to the middle
initial, its inclusion in the press release is nowhere complained
of in either the FTCA administrative claim or in Johnson's final
complaint. Indeed, in his brief below Johnson asserted that
"Powers agreed that the criminal information and others papers
filed with the Court would identify the Plaintiff as "Elvis E.
Johnson'...."35 Further, the undisputed evidence at trial was that
Johnson was listed in the Galveston telephone directory as "E.E.
Johnson" with address of "25 Adler Circle" (the directory also
separately listed him as "Johnny Johnson," again showing the same
address and the same telephone number). The criminal information
itself disclosed that the defendant "Elvis Johnson" was "a resident
of Galveston, Texas." At the time of the events in issue, the
Johnsons had lived at the Adler Circle address in Galveston for at
least seven years, during all of which time he had worked as an
executive at the American National headquarters, which was in
Galveston, and since 1976 was Senior Executive Vice President
there. Johnson was the number two executive at American National
and reported directly to its board of directors, of which he was
one of the ten or twelve members. Because the company's president
35
Also, in writing the district clerk to set the criminal
case, Johnson's counsel captioned the letter "Re: E.E. Johnson."
40
did not drink, Johnson was in effect its chief entertainer, and
when in Galveston conducted business entertaining almost nightly at
his home there. As a result, he said, "my home was sort of Grand
Central Station" and his wife became "well known" for her role as
hostess on these occasions. Mrs. Johnson described herself as an
unpaid "hostess for the Company" who, with her husband,
"entertained in our home" and "was expected to be at all
entertainment affairs to greet everyone who came in."
Moreover, Johnson testified that American National was a
large, publicly held corporation, operating throughout the country,
that sent annual reports to its shareholders. As such, we
judicially know that the company was required by law to file annual
reports with the Securities and Exchange Commission (SEC) that
disclosed the name, age, and all positions and offices with the
company held by each director and executive officer.36 Further, in
36
17 C.F.R. § 240.13a-1 requires of publicly held
corporations the filing each year with the SEC of "an annual
report on the appropriate form authorized or prescribed
therefor." The form prescribed for this purpose is the SEC Form
10-K. See Ratner & Hazen, Securities Regulation, Selected
Statutes, Rules, and Forms (West 1993) at 912-22. Item 10 of the
form requires the same information concerning "Directors and
Executive Officers" as is "required by Item 401 of Regulation S-
K." Id. at 920. Item 401 of Regulation S-K requires, among
other things, the listing of "the names and ages of all
directors" and "of all executive officers" of the company, with
"all positions and offices with" the company "held by each such
person." 17 C.F.R. § 229.401(a) & (b). Item 401 also provides
in part as follows:
"(f) Involvement in certain legal proceedings.
Describe any of the following events that occurred
during the past five years and that are material to an
evaluation of the ability or integrity of any director,
person nominated to become a director or executive
officer of the registrant;
41
open court in the criminal case, Johnson was described as "an
executive for the American National Insurance Company."
We reject the theory advanced in the second panel majority
opinion, Johnson v. Sawyer, 4 F.3d at 387 & n. 87, that although
the disclosed nonpublic record information—middle initial, age,
street address, and executive job title—was not itself "private" in
the relevant sense, nevertheless it became so because it would aid
the public in identifying Johnson, the executive vice president of
American National, as being the same person as the Elvis Johnson,
an executive with American National residing in Galveston, who was
recently convicted of felony tax evasion in the federal court in
Galveston. But this enhanced ease of public identification does
....
(2) Such person was convicted in a criminal
proceeding or is a named subject of a pending criminal
proceeding (excluding traffic violations and other
minor offenses); ..." 17 C.F.R. § 229.401(f).
The same requirements are all applicable to proxy
statements, and these too must be filed with the SEC. 17
C.F.R. §§ 240.14a-3(a); 240.-14a-6; 240.14a-101, Item
7(b). Shareholders must receive proxy statements and annual
reports at the same time each year. 17 C.F.R. § 240.14a-
3(b).
We, of course, take judicial notice of federal
regulations. See, e.g., McCormick on Evidence § 335 at 939
(3d ed. 1984).
Similarly, Texas law required (and requires) corporate
franchise tax reports to disclose at least annually "the
name, title, and mailing address of each director and
officer of the corporation" "which the Comptroller of Public
Accounts shall forward to the Secretary of State to be
available for public inspection." See former V.A.T.C.S.,
Title 122A, Taxation-General, Art. 12.12 (now contained in
Texas Tax Code §§ 171.203(a)(3) & (c) and 171.207(2)).
42
not make the middle initial, street address, or the like "private"
information; to the contrary, it emphasizes the nonprivate nature
of that information. Of course, the publication of nonprivate
information—e.g., a person's name or other identifying public facts
about him—can invade the subject's privacy where it publicly ties
that individual to some private occurrence that is intimate or
embarrassing; for example, publicizing that the person who is
having the previously secret affair with Mrs. X is the man named
Mr. Y who lives at such and such an address. Here, however, the
nonprivate identifying information—middle initial, street address,
etc.—ties the subject only to what is properly public (his recent
conviction in open court for felony tax evasion). Further, Johnson
was not convicted under a pseudonym or concealed identity, but
rather in open court—as required by the Constitution—under his own
name (Elvis Johnson) pursuant to public proceedings that identified
him as a Galveston resident employed as an American National
executive having taxable income of $59,784.18 in 1975.37 We
likewise reject the argument that section 6103 makes any
information disclosed in violation thereof private, intimate, and
embarrassing as a matter of law, and that Texas courts would
therefore hold that whoever publicizes any information contrary to
section 6103 commits the Texas tort of invasion of privacy.
37
We recognize that occasionally statutes provide for the
use in certain criminal proceedings of a victim's pseudonym.
See, e.g., TEX.CODE CRIM.PROC. art. 57.02. We are aware, however,
of no comparable statute, state or federal, authorizing a felony
defendant's use of a pseudonym in the criminal proceedings
against him. And, certainly, Johnson did not use one.
43
There are several things wrong with this. To begin with,
section 6103 does not say that whatever is in a tax return is
always private, intimate, and embarrassing. A tax return typically
shows the taxpayer's name, occupation, employer, and address. The
facts that Ronald Reagan was President of the United States and
lived at the White House are not made private, intimate, and
embarrassing by section 6103.38 Obviously, this is not what section
6103 is concerned with. Section 6103 is a regulation of the
conduct of those who in the course of their duties as government
employees or contractors glean information from tax returns. The
regulation is prophylactic, proscribing disclosure by such an
individual of any of such information so obtained by him. Plainly,
Congress was not determining that all the information on a tax
38
Similarly, we of course recognize that private information
does not become public merely because it is included in an
official record which is not open to public inspection. Thus,
Restatement (Second) of Torts § 652D comment b states that "[i]f
a record is one not open to public inspection, as in the case of
income tax returns, it is not public, and there is an invasion of
privacy when it is made so." However, this obviously does not
mean that whatever appears on an individual's income tax return
is therefore necessarily "private" information about him
protected by the invasion of privacy tort. What the quoted
language does mean is that information that is otherwise
"private" in the relevant sense does not lose its character as
such by appearing on an official governmental record that is not
open to public inspection, although it would lose its character
as "private" if the record were open to public inspection. See
id. comment d. Certainly Texas law follows this common sense
approach, as the Texas Supreme Court clearly held in Industrial
Foundation that information on a governmental record not open to
public inspection could be partially non-"private"—such as the
name of the person filing and the general nature of the form—and
partially "private." Id. at 686 (but if the government record is
open to public inspection, then giving publicity to any of it is
not tortious no matter how "private" what is publicized may
otherwise be. Id. at 684).
44
return would always be truly private and intimate or embarrassing.
Rather, it was simply determining that since much of the
information on tax returns does fall within that category, it was
better to proscribe disclosure of all return information, rather
than rely on ad hoc determinations by those with official access to
returns as to whether particular items were or were not private,
intimate, or embarrassing. Because such determinations would
inevitably sometimes err, ultimately a broad prophylactic
proscription would result in less disclosure by return handlers of
such sensitive matters than would a more precisely tailored
enactment.39
39
These comments are similarly applicable to the then in
force V.A.T.C.S., Title 122A, Taxation-General, art. 1.035 §§ 1 &
2 (now replaced by Texas Tax Code §§ 111.006 & 111.007) providing
that federal tax returns (and federal tax return information)
required to be filed with a state tax return filed with the Texas
Comptroller of Public Accounts is confidential, and prohibiting
disclosure thereof by any "official, employee, or former official
or employee of the comptroller of public accounts." We also note
that art. 1.035 in this respect was obviously responsive to
section 6103(p)(8), which prohibits disclosure of return
information to state authorities which require the state tax
return to have attached a copy of the federal return, unless the
state adopts laws protecting the confidentiality of the federal
return copy attached to the state return. Also then in force was
V.A.T.C.S., Title 122A, Taxation-General, art. 12.10A (now
replaced by Texas Tax Code § 171.208), which proscribed
disclosure by those "having access to any franchise tax report
filed as provided by law" of "the amount or source of income,
profits, losses, expenditures, or any particulars thereof, or any
other information pertaining to the financial condition of the
corporation set forth or disclosed in such report." None of
these Texas statutes are (or were) applicable to personal tax
returns, and none proscribed disclosure of the information
acquired from other sources, or purported to make confidential
such matters as the name, age (or date of incorporation),
address, or type of business engaged in by the taxpayer, or the
names, addresses, or titles of its officers and directors (which
were required to be of public record, see n. 36, supra ), or
whether or not the taxpayer (or any of its officers or directors)
45
Unlike section 6103(a), the Texas tort of "[p]ublic disclosure
of embarrassing private facts about" another, Industrial Foundation
at 682, is not concerned with the identity of the party making the
disclosure, or his sources, but merely with whether the information
disclosed is both private and intimate or embarrassing, and also
not of public concern, none of which factors are relevant under the
terms of section 6103(a). The Texas tort and section 6103(a)
address totally distinct subject matters and impose distinctly
different duties: the latter, applicable only to certain
individuals who in connection with their government-related duties
obtain tax return information, enjoins them not to disclose any of
it so obtained, even though it is not private and not intimate or
embarrassing and is of public concern; the former, applicable to
all persons and regardless of the source of the information,
proscribes publication thereof only if the matter is private and is
intimate or embarrassing and is not of public concern.
In these circumstances, to say that section 6103 makes the
information private for purposes of the Texas tort when it would
not otherwise be so is simply another way of allowing recovery for
the violation of section 6103(a)(1) itself, contrary to our noted
holding in Tindall that "a federal regulation cannot establish a
duty owed to the plaintiff under state law."40
had been convicted of a criminal offense.
40
Nor have we been cited to any case in which intrinsically
nonprivate information—such as name, age, address, and
occupation—has been held "private" and "embarrassing" for
purposes of the tort of disclosure of "embarrassing private facts
about" another merely because it was disclosed contrary to a
46
Thus, the facts not previously disclosed in public in
connection with the criminal case—Johnson's middle initial, age,
street address, and executive title—were not "private" or "highly
intimate and embarrassing" as required for the first element of the
Texas tort of public disclosure of embarrassing private facts.
While publication of these facts may have made it easier for the
public to identify the "Elvis Johnson, a resident of Galveston,
Texas," an American National executive, who was recently convicted
by the federal court in Galveston, as the E.E. Johnson who was the
senior executive vice president of American National, this would
not disclose any private fact—Johnson having appeared in open court
under his own name41—and Texas does not recognize a privacy cause
of action for giving publicity to even highly private facts that
are a matter of public record.
Moreover, we sustain the district court's determination that
Johnson had not demonstrated that his conviction was not of
statute providing certain official information would not be
disclosed. Such might be the result if the information so
disclosed identified some truly private and embarrassing fact
about the plaintiff; but not where what is thus revealed and
embarrassing is a fact of public record, here a recent, local
felony conviction in open court. As previously observed (see n.
38, supra ), the Texas common law recognizes that the mere fact
that information appears in an official nonpublic record does not
preclude its being private and intimate or embarrassing and not
of public concern; but it does not make it so. Industrial
Foundation at 686.
41
Thus, in Cox Broadcasting, the Supreme Court quoted with
approval from Craig v. Harney, 331 U.S. 367, 374, 67 S.Ct. 1249,
1254, 91 L.Ed. 1546 (1947), in part as follows: " "A trial is a
public event. What transpires in the courtroom is public
property.' " Cox Broadcasting 420 U.S. at 492, 95 S.Ct. at 1045.
47
legitimate concern to the public, and thus failed to establish the
third element of the Texas tort.42 The conviction was for a felony,
carrying a penalty of up to five years' imprisonment, and requiring
proof of specific criminal intent. See n. 13, supra. As the Texas
Supreme Court recently held, after an exhaustive review of
decisions throughout the nation, "[t]he weight of reason and
authority lead us to the conclusion that a violation of 26 U.S.C.
§ 7201 involves moral turpitude per se." Matter of Humphreys, 880
S.W.2d 402, 408 (Tex.1994). In Cox Broadcasting, the Court said
"[t]he commission of crime, prosecutions resulting from it, and
judicial proceedings arising from the prosecutions, however, are
without question events of legitimate concern to the public ...."
Id. 420 U.S. at 492, 95 S.Ct. at 1045 (emphasis added). On this
basis alone, it is evident that Johnson's recent conviction was
"without question" a matter "of legitimate concern to the public."
Further, SEC regulations required (and require) that there be
publicly reported annually as to each executive officer and
director of a publicly held company such as American National not
only such person's name and age and the positions and offices with
the company held by such person, but also any criminal conviction
(excluding traffic violations and other minor offenses) within the
past five years if such conviction is "material to an evaluation of
42
See Industrial Foundation at 684-85: "The last
requirement for an actionable invasion of privacy is that the
information publicized not be of legitimate concern to the
public."
48
the ability or integrity" of that person.43 The law has long
considered conviction of any felony as material to an evaluation of
the integrity of the person so convicted. See, e.g., Green v. Beck
Laundry Machine Co., 490 U.S. 504, 521-26, 109 S.Ct. 1981, 1991-93,
104 L.Ed.2d 557 (1989) (witness veracity). Indeed, an offense,
such as a violation of section 7201, which is held to be one of
"moral turpitude per se," Matter of Humphreys, would necessarily be
material to an evaluation of the convicted person's integrity.44
43
See n. 36, supra. All such information must also be
included in the proxy statements which must accompany the annual
reports sent the shareholders. Id.
44
See also TEX.INS.CODE ANN. art. 21.07-3, § 12(f) (conviction
of any felony grounds for revocation of license of managing
general agent; while Johnson may not have been a managing
general agent, it is undisputed that a major portion of his
duties consisted of performing functions very similar to those of
a managing general agent as defined in TEX.INS.CODE ANN. art.
21.07-3 § 2(a)).
The district court's determination that Johnson's
conviction was not a matter "that a reasonable investor
would consider ... important in deciding whether to invest,"
760 F.Supp. at 1230, is not controlling as to whether
Johnson's conviction would have to be included in the annual
report to the SEC and in the proxy statement. To begin
with, the test under the regulations is not the conviction's
materiality to the investment decision, but is rather its
materiality "to an evaluation of the ... integrity of" the
person convicted. Further, the district court based its
conclusion on the assumption that the investor would know
that Johnson was in fact not guilty of a section 7201
violation. 760 F.Supp. at 1220, 1221, 1230 (indeed, at
trial the court observed that "what Mr. Johnson did here
was, in effect, like getting a speeding ticket"). This
approach, however, is wide of the mark, for the question is
not whether what Johnson did, or says he did, is material,
but rather whether his "conviction" (or what he was
convicted of) is material (to an evaluation of his
integrity). Further, as previously noted, Johnson is
estopped to challenge his guilt of the section 7201 offense
as alleged in the information. See n. 13, supra.
49
Accordingly, it is clear that Johnson's conviction—as well as his
name, age, and positions with American National—was a matter of
legitimate concern to the public.45
We accordingly affirm the district court's determination that
Johnson has not made out a case under the Texas tort of public
disclosure of embarrassing private facts about the plaintiff. The
disclosure was of information either of public record or otherwise
neither private nor highly intimate or embarrassing, and the
information was also of legitimate concern to the public.
Conclusion
This FTCA action has always been grounded on asserted
violations of section 6103(a)(1) by IRS employees in the scope of
their employment.46 However, the FTCA requires that the duty
45
Moreover, that Johnson's felony conviction is a matter of
legitimate public concern likewise renders nonintimate
information tending to identify him as the person so
convicted—such as his name, age, residence, job title—likewise of
legitimate public concern. The two are really inseparable. Cf.
Ross v. Midwest Communications, Inc., 870 F.2d 271, 274 (5th
Cir.1989).
46
Because Johnson has never complained of any disclosure
assertedly in violation of section 6103(a) that disclosed matters
of open public record, we need not and do not determine whether
to follow the rule of Lampert v. United States, 854 F.2d 335, 338
(9th Cir.1988), cert. denied, 490 U.S. 1034, 109 S.Ct. 1931, 104
L.Ed.2d 403 (1989), that section 6103(a) does not bar disclosure
of matters of public record. We observe, however, that such a
bar, at least as to recent federal felony convictions, would
appear in some tension with Cox Broadcasting. See also
Innovative Database Systems v. Morales; United States v.
Wallington, 889 F.2d 573, 576 (5th Cir.1989) (construing
narrowly, to avoid First Amendment concerns, nondisclosure
provisions of 18 U.S.C. § 1905). Nor do we decide what breadth
Lampert should have, were we to adopt it.
Further, we assume, arguendo only, that there is
sufficient evidence that the press releases, or the
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breached by the government employees be not simply one imposed by
federal statute or regulation, but rather arise under state law.
This requirement for a breach of state law duty is not met simply
by invoking general state law principles of respondeat superior or
failure to supervise. Nor may the requirement be fulfilled by
simply invoking the state's general negligence per se doctrine.
That is particularly so in the present setting where there is
nothing to indicate that the state would invoke that doctrine to
create a common law cause of action for violation of section
6103(a)(1) where there was already a comprehensive federal
statutory cause of action therefore, here section 7217. Finally,
while Johnson may have stated a state law claim for defamation,
that is exempted from the FTCA. To the extent, if any, not so
exempted, "false light" is not recognized in Texas. The district
court correctly denied recovery on these claims, as well as on
Johnson's claim for breach of fiduciary duty.47 Johnson's core
assertion of a Texas law duty is that, established in Industrial
Foundation, not to publicly disclose embarrassing private facts
about another. We hold that the district court correctly denied
recovery in this respect. Johnson has not made out a case on this
basis. The facts disclosed were not private and were of legitimate
challenged matters therein that may have enhanced the
public's ability to identify Johnson, were a cause of his
complained of loss of position.
47
As to the latter, we are in general agreement with the
district court's analysis. 760 F.Supp. at 1232-33. It is
evident that Johnson and the IRS knowingly stood in an
adversarial relationship, one to the other, and that Johnson
looked to his lawyer, not to the IRS or Powers, for advice.
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public concern.
For the reasons stated, the judgment of the district court is
REVERSED and the cause is REMANDED with directions that Johnson's
FTCA claim be DISMISSED.
WIENER, Circuit Judge, dissenting, joined by JOHNSON, Circuit
Judge.
My usual temerity—and Judge Johnson's—in dissenting from any
of Judge Garwood's opinions is heightened in this instance by the
awareness of the landslide concurring vote that his opinion was
given by our colleagues on the en banc court. But as the erstwhile
panel majority, Judge Johnson and I remain convinced that Mr. E.E.
Johnson was entitled to recover under the FTCA. Having killed so
many trees, however, through publication of our original panel
majority opinion (first opinion)1 and our supplemental and amending
panel opinion (second opinion),2 we shall refrain from
regurgitating ad nauseam the pertinent facts and the law as we see
it. Rather, we reiterate and adopt by reference the factual and
legal positions we espoused in our second opinion.
Our unwavering belief continues to be that the district court
correctly concluded, albeit for the wrong reasons, that Mr. Johnson
did have a valid cause of action under the FTCA. The basis for the
district court's judgment, which we erroneously adopted in our
first opinion, was that the requisite state law cause of action
(and thus the "duty" owed) for Johnson's FTCA claim was supplied by
1
Johnson v. Sawyer, 980 F.2d 1490 (5th Cir.1992).
2
Johnson v. Sawyer, 4 F.3d 369 (5th Cir.1993).
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§ 6103, a federal statute. We did our best in our second opinion,
however, to correct our mistake, first by expressly disavowing our
earlier pronouncement and then by affirming the district court for
reasons which were and remain valid under the FTCA: The state
cause of action required for a valid FTCA claim is here supplied by
one of Texas's recognized invasion-of-privacy torts—usually
denominated "public disclosure of embarrassing facts"—as well as by
negligence per se. We tried carefully to distinguish the duty owed
from the standard of care required in the performance of that duty.
In this dichotomy, the prerequisite state tort created the duty and
thus the cause of action for a breach thereof; the federal
statute—§ 6103—merely supplied the standard of care for determining
whether the duty was breached.
Regrettably, the en banc majority opinion from which we
dissent today turns a blind eye to this dichotomy when it states,
in its opening paragraph, that the panel majority "ultimately
grounds the duty not to disclose on federal law." By thus
misreading or mischaracterizing the principal thrust of our second
opinion, the en banc majority opinion essentially ignores the
duty/standard of care analysis of our second opinion.
Consequently, the en banc majority opinion wrongly concentrates its
efforts on rejecting our first opinion's admittedly erroneous
contention that § 6103 was the source of the duty owed to Mr.
Johnson rather than the measure of the standard of care for a
performance or breach of a state law duty. But we already rejected
that theory when we filed the second opinion! Because our
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colleagues who have concurred in the en banc majority opinion seem
nevertheless to have swallowed its legal legerdemain hook, line and
sinker, there is nothing left for us to say except "Please—go back
and re-read our second opinion!"
We believe that the propriety of this entreaty is confirmed by
the quantity of ink devoted in the en banc majority opinion to
justifying its conclusion that those facts included in the press
release that were return information but were not public record3
were somehow not the kind of private facts that are actionable
under the state tort that we, in our second opinion, insisted did
establish the state law duty and thus the predicate state law cause
of action for FTCA purposes. If we had indeed merely continued to
hold that Johnson's FTCA cause of action was grounded in § 6103,
would the en banc majority have felt so strongly compelled thus to
explain away the Texas statutory tort by characterizing the
non-public record, return facts as not embarrassing? "The lady
doth protest too much, me thinks."4
Reduced to its barest essentials, our position was and remains
that a private citizen has a duty under the Texas tort law not to
do what the IRS agents, particularly Special Agent Stone, did here.
Consequently, the FTCA is available to those like Johnson to whom
such a duty is owed. Our second opinion demonstrates the
3
Remember, the record of the plea and sentencing hearing was
not even transcribed and filed until more than three months after
the damaging news releases were disseminated and published, and
well after Mr. Johnson was demoted and removed from the company's
Board of Directors.
4
Shakespeare, Hamlet III, ii, 242.
54
availability of that Texas tort to serve as the state law basis for
Johnson's FTCA claim.
Only after successfully completing the search for a state law
cause of action do we look to the federal statute—§ 6103—and then
only as the source of an applicable yardstick, the standard of care
against which to test the federal agents' actions that so
undeniably damaged Mr. Johnson. In this second inquiry there can
be no serious dispute that Texas courts examining the actions of
private citizens accused of breaching a state law duty can and
frequently do use the provisions of statutes—not just state or
local but federal as well—as standard-of-care yardsticks. Given
the state law duty and the statutory standard of care, Mr.
Johnson's right to seek recovery under the FTCA is unassailable.
I respectfully dissent.
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