Johnson v. Perdue

Decision Date06 July 2017
Docket NumberNo. 15-3962,15-3962
Parties Lott JOHNSON, Plaintiff-Appellant v. Sonny PERDUE, Secretary, Department of Agriculture; Mark Petty; Linda Newkirk ; James Culpepper, III; Hendra Woodfork; Chana Thompson; John and Jane Does, Defendants-Appellees
CourtU.S. Court of Appeals — Eighth Circuit

Ronald Carl Wilson, WILSON & ASSOCIATES, P.O. Box 1299, West Memphis, AR 72301-1299, for Plaintiff-Appellant

Richard Pence, Jr., Assistant U.S. Attorney, U.S. ATTORNEY'S OFFICE, Eastern District of Arkansas, Suite 500, 425 W. Capitol Avenue, Little Rock, AR 72201, Jane W. Duke, Mary Catherine Way, MITCHELL & WILLIAMS, Suite 1800, 425 W. Capitol Avenue, Little Rock, AR 72201, for Defendants-Appellees

Before SMITH, Chief Judge, KELLY, Circuit Judge, and SIPPEL, District Judge.2

KELLY, Circuit Judge.

Lott Johnson is an African American farmer who operates and manages 79 acres of farmland in Lonoke County, Arkansas. He brings claims against the Secretary of the United States Department of Agriculture (USDA) and five USDA employees, alleging racial discrimination, retaliation, and conspiracy regarding his loan applications, servicing requests, and the application of administrative offsets to collect on a defaulted loan. The district court dismissed the complaint with prejudice, and this appeal followed. We affirm in part, reverse in part, and remand for further proceedings.

I. Background

This is the third time Johnson has brought claims alleging the USDA discriminated and retaliated against him with regard to his loans. In 2010, Johnson filed a complaint with the USDA's Office of the Assistant Secretary for Civil Rights (the Office). In a Final Agency Decision under 7 C.F.R. § 15d and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq., the Office found that Johnson proved the USDA racially discriminated against him when it withdrew his Farm Service Agency (FSA) loan application, delayed processing his FSA loan application and servicing requests, and denied him primary loan servicing. It also found the USDA retaliated against him based on a prior discrimination complaint he filed with the Office when it improperly accelerated his outstanding debt and withdrew his loan application. The Final Agency Decision denied several other retaliation claims based on Johnson's prior discrimination complaint, all of his retaliation claims based on his status as a Pigford claimant,3 and one additional race discrimination claim. The Office awarded Johnson $13,440 in economic damages; $35,000 for stress, humiliation, and depression; and $9,780 in debt relief on his FSA loans.

In 2012, Johnson filed a complaint in federal court and ultimately named the Secretary and five USDA employees as defendants (hereinafter, Johnson I ). Like his complaint with the Office, his amended federal complaint was based on alleged discrimination and retaliation in loan applications, loan servicing requests, and application of administrative offsets. The district court dismissed the claims against the Secretary based on res judicata due to the Office's Final Agency Decision; and dismissed the claims against the individual defendants for failure to effect timely service, preclusion by the Office's comprehensive remedial scheme, and failure to state a claim. The court entered final judgment, dismissing the case without prejudice, in September 2014. Johnson initially appealed the judgment, but later voluntarily dismissed the appeal, choosing to refile his claims instead.

On March 23, 2015, Johnson refiled his amended federal complaint with minor changes concerning the dates of the alleged wrongful actions and adding conspiracy allegations (hereinafter, Johnson II ). The complaint was filed against the Secretary of the USDA and the same five USDA employees—Mark Petty, Linda Newkirk, James Culpepper, III, Hendra Woodfork, and Chana Thompson—all in their official and individual capacities. It stated claims for violations of the ECOA; violations of due process, equal protection, and retaliation under 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) ; and conspiracy pursuant to 42 U.S.C. § 1985(3). The defendants moved to dismiss and the district court granted the motions, concluding the ECOA claims were barred by res judicata based on the Office's Final Agency Decision; the ECOA claims were barred by collateral estoppel due to Johnson I 's resolution of the res judicata issue; the Bivens claims were precluded by the Office's comprehensive remedial scheme; the Bivens claims against defendants in their official capacity were barred by sovereign immunity; the claims against the Secretary in his individual capacity were insufficiently pleaded; and the conspiracy claim was insufficiently pleaded. The district court dismissed the complaint with prejudice and this appeal followed.

As to the Secretary, Johnson appeals only the dismissal of his ECOA claim. As to the individual defendants, Johnson appeals the dismissal of his ECOA claims, his Bivens claims against them in their individual capacities, and his conspiracy claim.

II. Discussion

We review the district court's grant of a motion to dismiss de novo. See Laase v. Cty. of Isanti , 638 F.3d 853, 856 (8th Cir. 2011). Johnson argues the district court improperly transformed defendants' motions to dismiss into motions for summary judgment by considering a document outside the pleadings, namely the Office's Final Agency Decision. The district court properly considered the Final Agency Decision because it is embraced by the allegations in the complaint, is a matter of public record, and its authenticity has not been questioned. See Ashanti v. City of Golden Valley , 666 F.3d 1148, 1151 (8th Cir. 2012) ("[D]ocuments necessarily embraced by the complaint are not matters outside the pleading" and "include documents whose contents are alleged in a complaint and whose authenticity no party questions" (internal quotations omitted)); see, e.g. , Johnson v. Vilsack (Curtis Johnson) , 833 F.3d 948, 951 n.4 (8th Cir. 2016) (approving of the district court's consideration of the Office's Final Agency Decision on a motion to dismiss).

A. ECOA Claims
1. Preclusion

The district court dismissed Johnson's ECOA claims against all defendants as barred by res judicata based on the Office's Final Agency Decision, or, in the alternative, by collateral estoppel based on the Johnson I court's resolution of the same res judicata issue. Johnson appeals both conclusions.

After the district court entered judgment in Johnson II , we issued our decision in Curtis Johnson . Like Johnson here, Curtis Johnson received a partially favorable decision from the Office pursuant to a complaint alleging that FSA's denials of his debt settlement applications were racially discriminatory. 833 F.3d at 952–53. He subsequently filed a lawsuit in federal court stating ECOA, Bivens , and conspiracy claims against the Secretary and eleven USDA employees, many of whom are defendants in the present action. Id. at 953. The district court dismissed the ECOA claims in part on the grounds that they were precluded by the Office's administrative proceedings. Id. We reversed, concluding that "a final agency decision by the USDA resolving a complaint under 7 C.F.R. Pt. 15d using the administrative procedures currently in effect does not result in claim preclusion." Id. at 958. We reached this decision after reviewing the Office's procedures and finding that there was no opportunity for discovery, "no procedure for questioning evidence submitted by the opposing party, much less an evidentiary hearing," and "no avenue for seeking judicial review of [the Office]'s final decisions." Id. at 955. We found that these procedures were "too bare bones to bar future federal-court litigation." Id. at 957.4

In light of Curtis Johnson , we cannot agree with the district court's conclusions that Johnson's ECOA claims are barred by res judicata and collateral estoppel. As to res judicata, the Secretary and individual defendants argue that Johnson's ECOA claims were properly dismissed because res judicata bars relitigation of the claims previously decided by the Office. After the parties in this case completed briefing the issue, Curtis Johnson established that the Office's Final Agency Decision on Johnson's ECOA claim does not bar his subsequent federal ECOA claim. Id. at 958.

Only the Secretary pursues the argument that collateral estoppel bars Johnson's ECOA claim because the res judicata issue was actually litigated and decided in Johnson I .5 See Robinette v. Jones , 476 F.3d 585, 589 (8th Cir. 2007) (setting out the elements of collateral estoppel as requiring, inter alia , that the issue was "actually litigated in the prior action" and was "determined by a valid and final judgment" (quoting Anderson v. Genuine Parts Co. , 128 F.3d 1267, 1273 (8th Cir. 1997) )). However, given our subsequent decision in Curtis Johnson , the Secretary's argument cannot prevail because "collateral estoppel extends only to contexts in which ... applicable legal rules remain unchanged." Montana v. United States , 440 U.S. 147, 158, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (internal quotation omitted); accord Ginters v. Frazier , 614 F.3d 822, 827 (8th Cir. 2010). At the time of Johnson I , it was still an open question in this circuit whether a Final Agency Decision by the Office could have res judicata effect, and the district court there decided such preclusion was permissible. Subsequently, in Curtis Johnson , we stated that a decision by the Office could not bar subsequent federal litigation. 833 F.3d at 958. This change in the applicable legal rules prevents the application of collateral estoppel in the present case. See Ginters , 614 F.3d at 827 (holding that collateral estoppel did not apply where an intervening Supreme Court decision "constitute[d] a significant change in controlling legal principles"). We...

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