National Commodity & Barter Ass'n v. Gibbs

• Decision Date: 27 November 1991
• Docket Number: Civ. A. No. 87-S-500.
• Citation: 790 F. Supp. 233
• Court: U.S. District Court — District of Colorado
• Parties: NATIONAL COMMODITY & BARTER ASSOCIATION, National Commodity Exchange, Plaintiffs, v. Lawrence R. GIBBS, et al., Defendants.

790 F. Supp. 233

NATIONAL COMMODITY & BARTER ASSOCIATION, National Commodity Exchange, Plaintiffs, v. Lawrence R. GIBBS, et al., Defendants.

Civ. A. No. 87-S-500.

United States District Court, D. Colorado.

November 27, 1991.

William Allan Cohan, Cohan & Greene, Denver, Colo. and Jennifer A. Greene, Cohan & Greene, Encinitas, Cal., for plaintiffs.

Michael J. Norton, U.S. Atty., William G. Pharo, U.S. Attorney's Office, Civ. Div., Denver, Colo., and S. Hollis Fleischer, U.S. Dept. of Justice, Tax Div., Trial Attorney Office of Sp. Litigation, Washington, D.C., for defendants.

ORDER

SPARR, District Judge.

THIS MATTER comes before the Court on Defendants' motion to dismiss the third amended complaint or for summary judgment. In light of the particular circumstances of this case, a brief description of its procedural history is in order.

Procedural History

The third amended complaint was filed on November 27, 1989. On March 30, 1988, Judge Weinshienk dismissed the complaint and cause of action. Plaintiffs appealed the dismissal and on November 14, 1989 the Court of Appeals issued its mandate, affirming the dismissal on all claims except the National Commodity & Barter Exchange's (hereafter NCBA or Plaintiffs) Bivens claims for violations of the First and Fourth Amendments against the Defendants in their individual capacities. The cause was remanded to the District Court with directions to allow the NCBA to file a third amended complaint which clearly outlines the basis for both of these claims 886 F.2d 1240, 1248 (10th Cir.1989). In particular, the opinion noted that the third amended complaint must clearly identify the property held by NCBA as an entity which has been subject to the allegedly illegal searches violative of NCBA's constitutional rights under the First and Fourth Amendments, as well as the dates of the violations and the specific property involved and indicate how the claims raised in this case are different from those raised in earlier actions. The Court of Appeals also indicated that the NCBA can sue only with respect to its own property or rights allegedly infringed by identifiable Defendants, and the complaint must clearly indicate the property held by the NCBA as an entity which has been subject to the allegedly illegal search or seizure. Finally, the Court of Appeals set forth the two-step analysis which this Court must now undertake: if the district court determines that the NCBA has set forth sufficient facts to state a claim under the First and Fourth Amendments, it should then consider whether the Defendants are entitled to the defense of qualified immunity. This court will consider the directions of the Tenth Circuit in considering the sufficiency of the complaint.

The remainder of the original action, which the Court of Appeals examined in terms of the propriety of dismissal, concerned sovereign immunity as a bar to suit against the Defendants in their official capacities; the claim for injunctive relief barred by 26 U.S.C. § 7421 (1982); and the (then) Plaintiffs' failure to overcome the presumption that 26 U.S.C. § 6700 was constitutional. The Court of Appeals determined that the claim for relief under Bivens for violation of the Fifth Amendment would not be cognizable¹, and also affirmed dismissal of the RICO claim and request for injunctive relief.

The Court of Appeals noted at 1244 that the previous (second amended) complaint did not comply with the requirement that it present a "short and plain" statement of claims. This observation is noteworthy as the Court of Appeals explained later at 1248 that "due to the obtuse language of much of the complaint, we are unable to discern the precise factual basis for each of these Bivens claims for violations of the First and Fourth Amendments) claims." The Tenth Circuit allowed the NCBA to refile these claims within the guidelines of the opinion on appeal. The Tenth Circuit affirmed the dismissal of the remainder of the claims and parties.

The Court's examination of the third amended complaint, the motion to dismiss, the response, as well as the supplemental pleadings, will be comprised of two primary portions: (1) whether Plaintiffs have stated claims a Bivens action for violation of the First and Fourth Amendments — here this court will also consider Plaintiffs' compliance with the explicit directions of the Tenth Circuit; and (2) if Plaintiffs are able to state such claims, whether Defendants are entitled to the defense of qualified immunity.

I. Sufficiency of the Bivens Claims.

The Supreme Court in Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) held that there should be a cause of action for damages against a Federal official who engages in unconstitutional conduct. The Court, however, cautioned that if there are any "special factors counseling hesitation in the absence of affirmative action by Congress," id., at 396, 91 S.Ct. at 2005, courts should decline to create an additional remedy. See Lombardi v. Small Business Admin., 889 F.2d 959, 960-61 (10th Cir.1989). In NCBA v. Gibbs the Tenth Circuit determined that such special factors existed with regard to the Bivens claim for a Fifth Amendment violation, and disallowed the requested remedy. The Court did not make such a finding on either the First or Fourth Amendment claims. Consequently, this court will allow the claims as a matter of law. The Bivens remedy has been extended to First Amendment claims by dicta in Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982), and has also been held as a proper basis for a Bivens claim in Dellums v. Powell, 566 F.2d 167 (D.C.Cir.1977).

A. The First Amendment Claim

Here, the Plaintiffs were charged with the responsibility of identifying with particularity the Defendants involved as well as the conduct which amounted to the violation of the NCBA's own rights (not asserted on behalf of others). It appears unlikely that the NCBA has met this challenge, but the court will examine each element with particularity.

As an organization, the NCBA is entitled to First Amendment right of freedom of association. Pleasant v. Lovell, 876 F.2d 787, 795 (10th Cir.1989). The Supreme Court has identified two aspects of the First Amendment right of freedom of association: a liberty interest in intimate human relationships which is secured against undue intrusion by the government; and the right to associate for purposes of engaging in First Amendment protected activities, which amounts to a means of preserving liberties. Roberts v. United States Jaycees, 468 U.S. 609, 618, 104 S.Ct. 3244, 3249, 82 L.Ed.2d 462 (1984). The Supreme Court also noted that it had "long understood as implicit in the right to engage in activities protected by the First Amendment a corresponding right to associate with others in pursuit of a wide variety of political, social, economic, educational, religious, and cultural ends." Id. at 622, 104 S.Ct. at 3252 (citations omitted). An explanation of prohibited government actions follows this description, but the Roberts opinion notes the qualification that the right to associate for expressive purposes is not absolute, and that "infringements on that right may be justified by regulations adopted to serve compelling state interests, unrelated to the suppression of ideas, that cannot be achieved through means significantly less restrictive of associational freedoms." Id. at 623, 104 S.Ct. at 3252 (citations omitted). It is with this instruction that this court will examine the sufficiency of the NCBA's asserted claims.

In addition to the above mentioned qualifications on the right of freedom of association articulated in the Roberts v. United States Jaycees case above, it is also appropriate to note other restrictions on the right. The Tenth Circuit noted in Pleasant v. Lovell, 876 F.2d at 803: "The first amendment does not protect against investigation of suspected criminal activity, but as a safeguard, the requirements of the fourth amendment must be applied with `scrupulous exactitude.'" Citing Zurcher v. Stanford Daily, 436 U.S. 547, 564, 98 S.Ct. 1970, 1980-81, 56 L.Ed.2d 525 (1978). The "scrupulous exactitude" standard, originating in Stanford v. Texas, 379 U.S. 476, 85 S.Ct. 506, 13 L.Ed.2d 431 (1965), was elaborated upon in Zurcher, where the Supreme Court added that "where presumptively protected materials are sought to be seized, the warrant requirement should be administered to leave as little as possible to the discretion or whim of the officer in the field. Zurcher v. Stanford Daily, 436 U.S. at 564, 98 S.Ct. at 1981.

The type of "chilling effect" mentioned by Plaintiffs in the complaint is not particularly specific. It describes only very generally ways in which the NCBA's rights are implicated. In fact, the complaint does not describe activity which would not be considered as a subjective chill and not actionable pursuant to Laird v. Tatum, 408 U.S. 1, 92 S.Ct. 2318, 33 L.Ed.2d 154 (1972). Laird raises the issue of whether the federal court's jurisdiction can be invoked by a complainant who alleges that the exercise of First Amendment rights is being chilled by the mere existence, without more, of a governmental investigative and data gathering activity that is alleged to be broader in scope than is reasonably necessary for the accomplishment of a valid governmental purpose. The claim also fails to set forth any particular injuries suffered by the Plaintiffs themselves, and it only offers the general allegation that the rights of the NCBA's members were chilled by the Defendants' conduct. The claims of individual members of the NCBA were dismissed in the previous action, and such dismissal was affirmed by the Tenth Circuit. In light of the structure of this complaint, it is exceedingly difficult to determine which claims (as factual allegations in particular) are directed particularly at associational activities of the...