Key v. Rutherford, 79-1305

• Citation: 645 F.2d 880
• Decision Date: 22 May 1981
• Docket Number: No. 79-1305,79-1305
• Parties: 107 L.R.R.M. (BNA) 2321 Thomas J. KEY, Plaintiff-Appellant, v. Bud RUTHERFORD, individually and in his official capacity as City Manager of the City of Stroud, Oklahoma; John Killingsworth, individually and in his official capacity as Mayor of the City of Stroud, Oklahoma; Clarence N. Van Meter, individually and in his official capacity as Councilman for the City of Stroud, Oklahoma; Levi Neese, individually and in his official capacity as Councilman for the City of Stroud, Oklahoma; Olen Bly, individually and in his official capacity as Councilman for the City of Stroud, Oklahoma; Eugene Rogers, individually and in his official capacity as Councilman for the City of Stroud, Oklahoma; The City of Stroud, Oklahoma, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 880

645 F.2d 880

107 L.R.R.M. (BNA) 2321

Thomas J. KEY, Plaintiff-Appellant, v. Bud RUTHERFORD, individually and in his official capacity as

City Manager of the City of Stroud, Oklahoma; John

Killingsworth, individually and in his official capacity as

Mayor of the City of Stroud, Oklahoma; Clarence N. Van

Meter, individually and in his official capacity as

Councilman for the City of Stroud, Oklahoma; Levi Neese,

individually and in his official capacity as Councilman for

the City of Stroud, Oklahoma; Olen Bly, individually and in

his official capacity as Councilman for the City of Stroud,

Oklahoma; Eugene Rogers, individually and in his official

capacity as Councilman for the City of Stroud, Oklahoma; The

City of Stroud, Oklahoma, Defendants-Appellees.

No. 79-1305.

United States Court of Appeals,

Tenth Circuit.

Argued July 7, 1980.

Decided April 10, 1981.

Rehearing Denied May 22, 1981.

Frank M. Hagedorn of Hall, Estill, Hardwick, Gable, Collingsworth & Nelson, Tulsa, Okl. (J. Kevin Hayes, P. Thomas Thornburgh, Tulsa, Okl., on brief), for plaintiff-appellant.

George W. Dahnke of Hastie & Kirschner, Oklahoma City, Okl. (Richard James of James & Gilmore, P. C., Stroud, Okl., on brief), for defendants-appellees.

Before SETH, Chief Judge, McKAY, and SEYMOUR, Circuit Judges.

SEYMOUR, Circuit Judge.

This civil rights claim was brought under 42 U.S.C. § 1983 by Thomas Key against the City of Stroud, Oklahoma, its City Manager Bud Rutherford, its Mayor John Killingsworth, and four members of the Stroud City Council. The City officials were named as defendants both individually and in their official capacities. In his amended complaint, ¹ Key alleges that he was unlawfully discharged from his position as police chief of Stroud because he exercised his First Amendment rights, specifically the rights to petition the government, to freedom of speech, and to freedom of association. ²

Key was hired as police chief of Stroud in November 1976. He was discharged on or about July 26, 1977. The events leading to his termination are allegedly as follows. Key became aware shortly after he assumed his position that the police force was dissatisfied with the police salary structure. There had been some talk about forming a Fraternal Order of Police (FOP) Lodge to discuss this issue with the City. At first, Key attempted to discourage the formation of an FOP chapter and told his men that he would present their budget grievances to city officials. Key then spoke to City Manager Rutherford without success. He also discussed the budget with Mayor Killingsworth at Killingsworth's place of business. When his efforts failed, Key approved formation of an FOP chapter, became a member, and publicly announced his support of the FOP, although he declined to be elected president. Three days after Key informed Rutherford that an FOP chapter had been organized, Rutherford notified Key that he was discharged.

The subsequent formal termination notice stated that Key had been discharged for insubordination and listed four allegedly insubordinate acts. In one of the allegations Key was charged with violating section 4.11 of the City of Stroud Employees' Handbook by approaching the mayor about the police budget at his place of business. Section 4.11 provides that "(e)mployees are not to discuss complaints or problems with City Council members. To do so is considered grounds for dismissal."

Key was given a hearing before the City Council on his discharge. The Council affirmed the finding of insubordination and approved Key's termination. Key then filed this suit.

At the trial below, the judge instructed the jury that section 4.11 was unconstitutional and void on its face as "an abridgement of free speech, and also an unlawful restraint on the right of a citizen to petition the Government for a redress of grievances." Rec., vol. I, at 241. He further instructed the jury on Key's claim that his First Amendment rights "were violated because he was discharged in reprisal for allowing members of the police department to hold organizational meetings for the establishment of a Fraternal Order of Police and publicly announcing his support therefore." Id. at 240. The jury was told that in order to prevail on his civil rights claim, Key bore the burden of establishing by a preponderance of the evidence that the exercise of his First Amendment rights was a motivating factor in his discharge. Finally, an instruction was given that the individual defendants and the City of Stroud would be immune from liability if the city officials had acted in good faith. The jury returned a verdict in favor of all defendants.

On appeal Key urges setting aside the jury verdict as against the clear and overwhelming weight of the evidence. He also argues that reversal as to the city is required by Owen v. City of Independence, 445 U.S. 622, 100 S.Ct. 1398, 63 L.Ed.2d 673 (1980), in which the Supreme Court held that qualified immunity is not available to a city when its officials undertake unconstitutional activity in good faith.

We affirm in part, reverse in part, and remand for a new trial in accordance with this opinion.

I. Municipal Immunity

The Supreme Court decision in Monell v. New York City Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), established that local governmental units are subject to suit under 42 U.S.C. § 1983. In that case, however, the Court expressly declined to consider whether a city would be entitled to "some form of official immunity." Id. at 701, 98 S.Ct. at 2041. Thus on January 31, 1979, when the trial court entered judgment on the jury verdict in favor of the City of Stroud, the availability of qualified municipal immunity was an unsettled question.

Pending appeal of this case, we held in Bertot v. School District No. 1, Albany County, 613 F.2d 245 (10th Cir. 1979) (en banc), that a school board is not entitled to qualified immunity based on the good faith of its members and noted that under Monell school boards and municipalities are not to be distinguished for purposes of a section 1983 cause of action. Id. at 247. The Supreme Court then squarely addressed the issue of qualified municipal immunity in Owen, 445 U.S. 673, 100 S.Ct. 1427, which was also handed down while the instant case was pending appeal. After a thorough analysis of the relevant policy considerations, the Court in Owen concluded that "municipalities have no immunity from damages liability flowing from their constitutional violations ...." Id. at 657, 100 S.Ct. at 1418.

As a consequence of these subsequent changes, the trial court's jury instruction that Stroud would be immune if its city officials acted in good faith is erroneous under the current state of the law. The general rule under these circumstances requires that, absent manifest injustice, the appeals court take notice of an intervening decision ³ and apply the law in effect at the time the appeal is to be decided. See Bradley v. Richmond School Board, 416 U.S. 696, 711-21, 94 S.Ct. 2006, 2016-21, 40 L.Ed.2d 476 (1974); Concerned Citizens v. Sills, 567 F.2d 646, 649 n.5 (5th Cir. 1978).

Appellees argue that Key should be precluded from raising the Owen decision as grounds for reversal on appeal because he failed to object to the trial court's instruction. We disagree. Although the giving of an instruction cannot ordinarily be assigned as error under Fed.R.Civ.P. 51 if an objection was not made at trial, ⁴ this court has recognized an exception to the application of Rule 51 when the interests of justice require. See Glasscock v. Wilson, 627 F.2d 1065, 1067-68 (10th Cir. 1980).

The Supreme Court in Owen articulated compelling policy reasons for requiring municipalities to bear the financial loss resulting from their unconstitutional conduct. The Court also pointed out that the Civil Rights Act confers broad powers upon the federal judiciary to remedy constitutional violations. Owen, 445 U.S. at 636 n.17, 100 S.Ct. at 1408 n.17. The trial judge here did not have the benefit of the Owen decision when he formulated his instructions. On this record, the jury could have found in favor of the City of Stroud solely because of the good faith defense instruction. We believe the interests of justice are best served by remanding this case for a new trial as to the City of Stroud and the individual defendants in their official capacities ⁵ in light of the holding in Owen. See Bradley, 416 U.S. at 716-21, 94 S.Ct. at 2019-21; Pennington v. Lexington School District 2, 578 F.2d 546 (4th Cir. 1978).

II. First Amendment Rights

Section 4.11 of the Stroud Employees' Handbook prohibits employees from discussing grievances with City Council members. The trial court ruled that the provision was unconstitutional on its face as an abridgment of employees' First Amendment rights. We agree with defendants that this was error which inured to the benefit of the plaintiff. However, since the case is to be retried as to the City of Stroud, the error must be addressed in this appeal.

Our analysis of the constitutionality of legislation regulating the speech of public employees begins with Pickering v. Board of Education, 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968). Pickering, a teacher, contended that a state statute which authorized dismissal of teachers if required by the interest of the school violated the teachers' First Amendment rights. Pickering claimed that the statute was unconstitutional both on its face and as applied to the facts of his case. The Supreme Court did not reach the issue of the statute's facial validity. See 391 U.S. at 565 n.1, 88 S.Ct. at 1733 n.1. Instead, recognizing that "the State has interests as an employer in regulating the speech of its employees that differ significantly from those it possesses in connection with regulation of the speech of the citizenry in general," id. at 568, 88 S.Ct. at 1734, the Court established a balancing test to be used when...