Meyer v. Fidelity Sav.

• Decision Date: 13 September 1991
• Docket Number: Nos. 89-16695,90-15025,s. 89-16695
• Citation: 944 F.2d 562
• Parties: John H. MEYER, Plaintiff-Appellant-Cross-Appellee, v. FIDELITY SAVINGS, et al., Defendants, and Federal Savings and Loan Insurance Corporation, Defendant-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 562

944 F.2d 562

60 USLW 2226

John H. MEYER, Plaintiff-Appellant-Cross-Appellee, v. FIDELITY SAVINGS, et al., Defendants and Federal Savings and Loan Insurance Corporation Defendant-Appellee-Cross-Appellant.

Nos. 89-16695, 90-15025.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 5, 1991.

Decided Sept. 13, 1991.

Gennaro A. Filice, III, and Catherine Douat-Murray, Hardin, Cook, Loper, Engel & Bergez, Oakland, Cal., for plaintiff-appellant-cross-appellee.

Daniel Johnson, Jr., Robert L. Eisenbach, III, Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, Cal., for defendants-appellee-cross-appellant.

Appeal from the United States District Court for the Northern District of California.

Before TANG, FARRIS and D.W. NELSON, Circuit Judges.

D.W. NELSON, Circuit Judge:

With the enactment of the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671-80, Congress partially punctured the immunity of the sovereign. At the same time, however, it limited the relief available against parties other than the government by making the United States the exclusive defendant in various situations. This case presents one of the numberless questions arising out of this interplay: whether a suit predicated on the tortious deprivation of fifth amendment due process, and therefore arguably beyond the reach of the FTCA, may nonetheless be brought against the Federal Savings & Loan Insurance Corporation ("FSLIC") pursuant to a "sue-and-be-sued" clause. We hold that it may.

I.

In 1966, plaintiff John Meyer ("Meyer") joined Fidelity Savings & Loan ("Fidelity"), where he remained for the ensuing sixteen years. By 1982, at the time he was terminated, he had reached the position of executive vice-president. That same year, as a result of dubious loan policies, Fidelity began experiencing severe financial difficulties. They finally came to a head on April 13, 1983, when California's Savings and Loan Commissioner seized Fidelity's assets and appointed the FSLIC as state receiver. Because the FSLIC was later appointed the sole federal receiver by the Federal Home Loan Bank Board pursuant to 12 U.S.C. § 1729(c)(2), federal receivership replaced state receivership by operation of law. ¹ Also on April 13, Robert Pattullo ("Pattullo") was named as the FSLIC's special representative to handle Fidelity's receivership. He promptly proceeded to terminate four employees. Among them was Meyer.

No reason was given Meyer for his termination, nor was he provided an opportunity either to hear the reasons why he should, or put forth the reasons why he should not, be terminated. In the same vein, he subsequently was denied the opportunity to appeal the decision or present evidence to challenge it.

Meyer's suit, filed against a number of defendants, grows out of these events. As of the time of trial, the sole remaining claim alleged that the FSLIC's and Pattullo's actions had deprived plaintiff of a property interest without due process of law, in violation of the Fifth Amendment. ² The FSLIC's argument that it was protected by the doctrine of sovereign immunity having been rejected by the United States magistrate presiding over the trial, ³ the trial proceeded before a jury.

On September 19, 1989, the jury reached its decision pursuant to a special verdict. It found that Meyer had "a legitimate claim of entitlement to employment or a reasonable expectation of continued employment arising out of an implied contract with Fidelity;" that Meyer was "discharged ... by the FSLIC and/or Robert L. Pattullo;" that the FSLIC and/or Pattullo "failed to provide John Meyer with a hearing, the reasons for his discharge, and an opportunity to contest the reasons for his discharge before his termination;" that Pattullo was "acting within the scope of his employment at the time he terminated plaintiff;" and that Meyer was "damaged as a result of the discharge." Upon instruction challenged by appellant, and after the court had rejected appellant's request that it allow expert testimony on the state of the law at the time of Meyer's termination, the jury also found Pattullo to be "immune from liability under the doctrine of qualified immunity."

The FSLIC timely appealed, arguing that Meyer's claims against the federal agency were barred by sovereign immunity. In the alternative, it disputes the conclusion that Meyer was deprived of a protected property interest. Meyer then filed a cross-appeal on the issue of Pattullo's qualified immunity. ⁴

II.

The jurisdictional puzzle presented by this case consists of four principal pieces. First is the fundamental proposition that, "[a]bsent a waiver of sovereign immunity, the Federal Government is immune from suit." Loeffler v. Frank, 486 U.S. 549, 555, 108 S.Ct. 1965, 1969, 100 L.Ed.2d 549 (1987); see also United States v. Testan, 424 U.S. 392, 400, 96 S.Ct. 948, 954, 47 L.Ed.2d 114 (1976); LaBarge v. County of Mariposa, 798 F.2d 364, 366 (9th Cir.1986), cert. denied, 481 U.S. 1014, 107 S.Ct. 1889, 95 L.Ed.2d 497 (1987).

Second comes Congress' express provision that the FSLIC may "sue and be sued, complain and defend, in any court of competent jurisdiction in the United States." 12 U.S.C. § 1725(c)(4) (repealed 1989); see also F.H.A. v. Burr, 309 U.S. 242, 245, 60 S.Ct. 488, 490, 84 L.Ed. 724 (1939) (stating that "such waivers by Congress of governmental immunity in case of such federal instrumentalities should be liberally construed"). We consistently have held that this "sue and be sued" language constitutes a general waiver of sovereign immunity. Woodbridge Plaza v. Bank of Irvine, 815 F.2d 538, 542-43 (9th Cir.1987); Morrison-Knudsen Co., Inc. v. Chg Intern., Inc., 811 F.2d 1209, 1223 (9th Cir.) ("Unless Congress clearly directs otherwise, such 'sue and be sued' language waives an agency's sovereign immunity"), cert. dismissed, 488 U.S. 935, 109 S.Ct. 358, 102 L.Ed.2d 349 (1987).

The third item is the FTCA, 28 U.S.C. §§ 1346(b), 2671-2680. The FTCA waives the United States' sovereign immunity from tort claims "in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. § 2674; see also Bush v. Eagle-Picher Indus., 927 F.2d 445, 447 (9th Cir.1991). ⁵

The fourth and final piece of the puzzle is the FTCA provision that states:

The authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under section 1346(b) of this title.

28 U.S.C. § 2679. Construing these four pieces together, our task can be expressed in the following question: Is a claim alleging deprivation of property without due process of law "cognizable" under the FTCA?

If the answer to this question is yes, the sue-and-be-sued clause has no effect on this case, see 28 U.S.C. § 2679(a), and Meyer's suit must be dismissed. Where the FTCA governs, its remedy is exclusive and a government agency may not be sued in its own name. See Loeffler, 486 U.S. at 549, 108 S.Ct. at 1966. The issue, then, simply becomes whether the FTCA waives the United States' sovereign immunity for the particular tort at stake and whether the plaintiff has duly complied with the Act's requirements. Meyer's suit alleges a constitutional tort, which, by definition, is based on federal, not state, law. Because the FTCA restricts its waiver to injuries "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), his claim would be barred. ⁶

On the other hand, if the tort is not "cognizable" under the FTCA, then § 2679(a) has no application in this case and Meyer's suit is authorized by the broad waiver of sovereign immunity embodied in the sue-and-be-sued provision. See Woodbridge Plaza, 815 F.2d at 542-43; Morrison-Knudsen, 811 F.2d at 1223.

In deciding whether a claim is or is not cognizable, courts appear to have established three broad categories. First, claims brought against sue-and-be-sued agencies that clearly fall under the FTCA's coverage--that is, for which the FTCA provides a cause of action--are cognizable under section 1346(b). As a consequence, the remedy provided by the FTCA is exclusive. That result derives directly from section 2679(a) and the Supreme Court's opinion in Loeffler, where it stated:

Congress expressly limited the waivers of sovereign immunity that it had previously effected through "sue-and-be-sued" clauses and stated that, in the context of suits for which it provided a cause of action under the FTCA, "sue-and-be-sued" agencies would be subject to suit only to the same extent as agencies whose sovereign immunity from tort suits was being waived for the first time.

486 U.S. at 562, 108 S.Ct. at 1973.

Second, claims against sue-and-be-sued agencies that do not sound in tort, and therefore escape the FTCA's ambit, are unaffected by section 2679(a). That much is clear from Loeffler, in which the Supreme Court held that limitations on a sue-and-be-sued waiver of sovereign immunity must be "expressly" created by Congress. 486 U.S. at 561, 108 S.Ct. at 1972. The waiver of sovereign immunity, in sum, is left intact as to non-tort causes of action. See also Woodbridge, 815 F.2d at 543-44 (holding that where a claim is not "within the exclusive purview of the FTCA ... the 'sue-and-be-sued' provision" remains available to waive the agency's sovereign immunity) (citing Franchise Tax Board v. United States Postal Service, 467 U.S. 512, 104 S.Ct. 2549, 81 L.Ed.2d 446 (1984)).

In the third hypothetical lies the real brain teaser. These are hybrid cases where the claim sounds in tort but is excluded from the FTCA's coverage. They fall into two subgroups: explicitly excluded claims, and implicitly excluded claims. The question in both instances is whether the fact that the FTCA does not provide a remedy means that the action is not...