Bennie v. Munn

Citation822 F.3d 392
Decision Date11 May 2016
Docket NumberNo. 14–3473.,14–3473.
PartiesRobert R. BENNIE, Jr., individually and on behalf of Bob Bennie Wealth Management, Inc., Plaintiff–Appellant v. John MUNN, in his official capacity; Jack E. Herstein, in his official capacity; Rodney R. Griess, in his official capacity, Defendants–Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Gene Summerlin, argued, Marnie Jensen, Lincoln, NE, Mark Davis Hill, Omaha, NE, on the brief, for PlaintiffAppellant.

Mark Collins Laughlin, argued, Timothy J. Thalken, on the brief, Omaha, NE, for DefendantsAppellees.

Before RILEY, Chief Judge, BEAM and KELLY, Circuit Judges.

RILEY

, Chief Judge.

Robert R. Bennie, Jr., a financial advisor, sued Nebraska financial regulators after they investigated him and his broker-dealer employer around the time a newspaper reported Bennie made unkind comments about the President of the United States. The district court1 found that even though the regulators targeted Bennie partly in retaliation for his constitutionally protected political speech, they did not do enough to deter someone of ordinary firmness from continuing to speak, so Bennie's claim failed. Because we cannot say that finding was clearly wrong, we affirm.

I. BACKGROUND

Until November 2010, Bennie worked for LPL Financial (LPL). LPL is a broker-dealer, meaning it holds accounts and assets and executes financial transactions. It operates through agents like Bennie, who deal with customers. As a broker-dealer, LPL is subject to regulation by the Nebraska Department of Banking and Finance (department). See generally Neb.Rev.Stat. § 8–1120

; 48 Neb. Admin. Code § 1.002.01. Among other things, the department regularly reviews LPL's agents' advertisements and other public statements for compliance with applicable rules. The department can sanction broker-dealers and their agents for violations, including by fining them or barring them from operating in Nebraska. See Neb.Rev.Stat. § 8–1103(9)(a)(b).

In late 2009, a department employee received, through an acquaintance, a promotional compact disk (CD) of Bennie's, along with an accompanying brochure, and took the CD to the department's office. The compliance supervisor at the department, Rodney Griess, reviewed the CD on the assumption Bennie was currently distributing it. In fact, Bennie had sent the CD to his clients several years earlier, when different disclosure rules were in effect, but no one in the department knew that. In the meantime, Griess determined the CD was missing disclosure required under the 2009 rules. He contacted someone at LPL, who agreed and promised to talk to Bennie. Griess forwarded LPL's admission to Jack Herstein, an assistant director of the department, who responded “Bob [Bennie] always is seen wearing a cowboy hat lately, so I say ‘Hang Him High.’

Around the same time, Griess also reviewed a television commercial in which Bennie rode a horse and said he would give customers who did business with him “a hundred dollars towards the purchase of a firearm.” Because Griess thought the offer “unusual,” he suspected Bennie had not gotten the necessary approval from LPL to run the commercial. Eventually, Griess scheduled a conference call to talk to LPL about the issues with Bennie.

A few days before the call, the Lincoln Journal Star ran a story about Bennie's role in the Tea Party political movement. The article quoted Bennie denouncing the government and politicians, including President Barack Obama. The article also mentioned Bennie's business and was accompanied by a photograph of Bennie at his desk in his office. Griess emailed LPL a link to the online version of the article. In the body of his message, Griess quoted Bennie, in the article, calling President Obama “a communist,” “dishonest,” and “an evil man.” The next day, Griess told a colleague his upcoming call with LPL would cover Bennie's “recent string of activities; i.e., lack of ... disclosure, gun slingin ads, and calling Obama a ‘communist’ and an ‘evil’ man issues.”

On the call, department employees and LPL discussed Bennie's CD and commercial and the article about him, and the department asked for information about LPL's review, if any, of the commercial and the article. Afterward, in an email exchange with LPL to schedule a follow-up call, Griess wrote that it “would be nice to know” if

LPL anticipate[d] imposing any kind of heightened supervision, more frequent/unannounced exam schedule, specialized advertisement approval process or other sanction(s) that may provide the Department with a little better sense that the firm is “on top of” addressing this type of activity which in turn may be of some comfort to us and really is in the best interest of the public....

LPL sent Griess materials from its review and approval of the commercial and told him it had not reviewed the article. In response to Griess's question about LPL's supervision of Bennie, LPL explained that since a recent internal reorganization, Bennie's proposed advertisements were reviewed by a senior analyst. Department employees asked whether LPL had any guidelines about agents like Bennie publicly communicating their political views. LPL said it did not.

Not long after the second call, the director of the department, John Munn, asked Griess to review a mass-mailing Munn had received, in which Bennie invited prospective customers to discuss their investment plans over dinner. Griess concluded the invitation violated applicable rules, so he emailed LPL asking for the name and contact information of Bennie's senior-analyst supervisor, all notes and communications related to the review and approval of the invitation, a list of everyone in Nebraska it was sent to, and a list of everyone in Nebraska who had accepted. He also ordered LPL to cancel any scheduled dinners and not to schedule any more until the invitation was corrected. And he warned LPL that [t]he Department may invoke whatever administrative action deemed necessary and appropriate under its authority against both Mr. Bennie and/or LPL Financial to insure compliance.”

That week, Bennie contacted Nebraska Governor David Heineman and told him the department was targeting Bennie and “harassing [Bennie] because of his political views.” Governor Heineman called Munn to discuss the situation. Afterward, Munn had Griess review a draft memorandum responding to the Governor. Griess observed the draft did not say anything about the newspaper article and explained he “felt compelled to at least mention it” because

While Mr. Bennie did not author the article, and does not appear to be subject to our regulatory purview regarding it, the comments made regarding the President etc., regardless of anyone's political views do tend to be quite polarizing to say the least, not all that dissimilar to the firearm purchase statement. Anyway, it's another piece of the puzzle and just saw that it was missing.

Munn agreed to “mention that situation.”

Around the same time, LPL pushed back against the department's treatment of Bennie's dinner-invitation mailing, arguing both LPL and a federal regulator had approved the invitation and there was nothing wrong with it. The department “agree[d] to disagree” and said Bennie could go ahead with any meetings he had scheduled.

Herstein, the assistant director, then received another mailing from Bennie, this one about a seminar on retirement income, which he also gave to Griess to review. Griess determined the seminar mailing was “a classic example” of a noncompliant advertisement and alerted LPL. LPL agreed the seminar mailing lacked required disclosure, but explained the senior analyst had approved it because she mistakenly thought it would be printed on letterhead containing the missing information. Herstein and Griess decided to “keep this in a reserve file and move on.” Herstein added “hopefully [Bennie] will eventually hang himself along with LPL.” That was in March 2010.

LPL fired Bennie at the beginning of November 2010. At that point, Bennie was still active in the Tea Party movement. In mid–2011, Bennie filed a public-records request and received the department's internal communications regarding the investigations in 2010. According to Bennie, after learning what people in the department wrote about him, he stopped arranging Tea Party events and writing letters to the editor and restrained himself from criticizing President Obama publicly. He also pursued a media campaign against the department for harassing him, calling for the people involved to be fired and prosecuted.

Bennie then sued several department employees in their official and individual capacities. He eventually dropped all but his official-capacity claims against Griess, Herstein, and Munn (collectively, the state regulators) for First Amendment retaliation based on the department's investigation and inquiries. See 42 U.S.C. § 1983

. After a bench trial, the district court found the state regulators were partly motivated by Bennie's protected speech and [s]ome of the questions they asked of LPL would not have been asked had it not been for [Bennie's] political activity,” but nonetheless ruled in the state regulators' favor because their retaliation would not have deterred an ordinary person in Bennie's position from continuing to speak. Bennie appeals. See 28 U.S.C. § 1291 (appellate jurisdiction).

II. DISCUSSION

Before addressing the merits of Bennie's appeal, we dispose of three threshold issues raised by the state regulators. First, the remedy Bennie asks for—a declaratory judgment and injunctions against future retaliation—is the sort of prospective relief that can be sought in federal court from state officials sued in their official capacities, notwithstanding the state's sovereign immunity, under Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908)

. See, e.g.,

Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 281, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997) (“An allegation of an ongoing...

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