Andrews v. Federal Home Loan Bank of Atlanta

• Decision Date: 28 June 1993
• Docket Number: No. 92-2464,92-2464
• Citation: 998 F.2d 214
• Parties: 8 IER Cases 1191 Harrell G. ANDREWS, Plaintiff-Appellant, v. FEDERAL HOME LOAN BANK OF ATLANTA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 214

998 F.2d 214

8 IER Cases 1191

Harrell G. ANDREWS, Plaintiff-Appellant, v. FEDERAL HOME LOAN BANK OF ATLANTA, Defendant-Appellee.

No. 92-2464.

United States Court of Appeals Fourth Circuit.

Argued May 4, 1993.

Decided June 28, 1993.

Robert Mauldin Elliot, J. Griffin Morgan, Eliot, Pishko, Gelbin & Morgan, P.A., Winston-Salem, NC, argued, for plaintiff-appellant.

John Francis Wymer, III, Powell, Goldstein, Frazier & Murphy, Atlanta, GA, argued (Martin N. Erwin, Smith, Helms, Mulliss & Moore, Greensboro, NC, on brief), for defendant-appellee.

Before WILKINSON and HAMILTON, Circuit Judges, and MICHAEL, United States District Judge for the Western District of Virginia, sitting by designation.

OPINION

WILKINSON, Circuit Judge:

This case presents the question of whether a regional Federal Home Loan Bank was a government actor when it discharged one of its employees. We hold that it was not, and accordingly, we affirm the district court's grant of summary judgment to defendant.

I.

The Federal Home Loan Bank of Atlanta (the Bank) is one of twelve regional banks set up by Congress under the Federal Home Loan Bank Act to provide banking services to member institution savings-and-loans. 12 U.S.C. §§ 1421-49. Services include lending to member thrifts, serving as a depository, processing of checks, and providing economic analysis. The Bank operates as a central credit facility for its members, enhancing the liquidity of the thrift industry by allowing members to secure advances against their assets, which are primarily home mortgages. See Fidelity Financial Corp. v. Federal Home Loan Bank, 792 F.2d 1432, 1434 (9th Cir.1986). The Bank receives no federal funding. 12 U.S.C. § 1438. It is a corporation whose shares are wholly owned by its member institutions and whose profits are distributed as dividends on a quarterly basis to those shareholders. 12 U.S.C. § 1426(g). Member institutions vote for eight of the fourteen directors of the Bank, 12 U.S.C. § 1427(a), and the directors are responsible for directing the Bank's affairs, including the election of the Bank president. 12 U.S.C. § 1427(j).

At the time of the events giving rise to this lawsuit, the Bank was supervised and regulated by the Federal Home Loan Bank Board (the Board), an independent agency of the federal government. 12 U.S.C. § 1437, repealed by Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Title VII, § 703(a), Pub.L. No. 101-73, 103 Stat. 183, 415. The Board appointed six of the Bank's directors and designated the Bank's chairman and vice-chairman. 12 U.S.C. § 1427(a), (g), repealed by Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Title VII, § 702(a), Pub.L. No. 101-73, 103 Stat. at 413. In addition, the Board (through its authority over the Federal Savings and Loan Insurance Corporation) had the authority to examine savings-and-loans, which it had delegated to employees of the regional Home Loan Banks. See generally Dirk S. Adams & Rodney R. Peck, The Federal Home Loan Banks and the Home Finance System, 43 Bus.Law. 833 (1988).

In June 1987, Harrell G. Andrews was fired by the Bank from his position as a field examiner in its Charlotte office. The parties offer very different explanations for the discharge. Andrews claims that he was discharged for criticizing a change in the Bank's asset-classification policy. The Bank claims that it terminated Andrews for behavior that compromised an examination and for his failure to cooperate with Bank personnel who were charged with inquiring into that behavior. At Andrews' request, an Ombudsmen Committee appointed by the Federal Home Loan Bank Board reviewed Andrews' termination. The Committee upheld the action of the Bank.

After his termination, Andrews filed this lawsuit, alleging violations of the First and Fifth Amendments, along with a variety of state law claims. After removing the case to federal court, the Bank filed a motion for summary judgment, which the district court granted. The court rejected Andrews' constitutional claims because the Bank that terminated him was not a government actor. It rejected Andrews' state law claims because they were preempted by federal statute. Andrews now appeals.

II.

In order to establish a violation of the First Amendment, Andrews must first show that the federal government was responsible for the termination of his employment. Hudgens v. NLRB, 424 U.S. 507, 513, 96 S.Ct. 1029, 1033, 47 L.Ed.2d 196 (1976) ("It is, of course, a commonplace that the constitutional guarantee of free speech is a guarantee only against abridgment by government, federal or state."). In our constitutional scheme, state action doctrine protects the private sector from the restrictions imposed on the conduct of government. The line drawn by state action thus "permit[s] citizens to structure their private relations as they choose subject only to the constraints of statutory or decisional law." Edmonson v. Leesville Concrete Co., Inc., --- U.S. ----, ----, 111 S.Ct. 2077, 2082, 114 L.Ed.2d 660 (1991).

Many of the indicia of the Bank's operations are characteristic of a private institution: the Bank is privately funded, privately owned, and it pays out its profits to its shareholders in the form of quarterly dividends. The Bank provides private banking services, such as lending money, issuing letters of credit, and serving as a trustee. The Bank's employees are not in the civil service and are not employees of the federal government. There is thus ample reason to conclude that, despite its federal charter, the Bank operates more like a private entity than as a part of the federal government. See San Francisco Arts & Athletics, Inc. v. United States Olympic Committee, 483 U.S. 522, 543, 107 S.Ct. 2971, 2985, 97 L.Ed.2d 427 (1987) (holding USOC to be a private entity despite its federal charter). It is clear that Congress intended that the Home Loan Bank system be owned and operated in the main by member institutions rather than the federal government. See Hannah v. Federal Land Bank, 903 F.2d 1159, 1162 (7th Cir.1990) ("both Federal Land Bank Associations and Production Credit Associations are farmer-owned and operated agencies rather than federal instrumentalities.").

III.

Andrews nonetheless claims that the Bank's termination of him qualifies as state action, because the Bank was an agent or instrumentality of the federal government. Alternatively, Andrews claims that the Board was a joint participant in the decision to terminate him.

We recognize that the many private characteristics of the Bank's operations cannot end the inquiry. In certain circumstances, a private actor can still be bound by constitutional limitations because its "conduct is fairly attributable to the state." Arlosoroff v. National Collegiate Athletic Ass'n, 746 F.2d 1019, 1021 (4th Cir.1984) (footnote omitted). In order to show state action by a private entity, however, it must be demonstrated that "the private party charged with the deprivation could be described in all fairness as a state actor." Edmonson, --- U.S. at ----, 111 S.Ct. at 2083 (citations omitted). A private party can be deemed a state actor in four contexts: (1) when the state has coerced the private actor to commit an act that would be unconstitutional if done by the state; (2) when the state has sought to evade a clear constitutional duty through delegation to a private actor; (3) when the state has delegated a traditionally and exclusively public function to a private actor; or (4) when the state has committed an unconstitutional act in the course of enforcing a right of a private citizen. If the conduct does not fall into one of these four categories, then the private conduct is not an action of the state. Applying these categories to the instant case, we find no state action in Andrews' termination.

A.

The first category, coercion by the state, stands for the obvious proposition that when the government orders specific conduct, it must be held accountable for that conduct. The presumption in favor of respecting the private choice of individuals is dissolved by the force of state command. "When the State has commanded a particular result, it has saved to itself the power to determine that result and ... has removed that decision from the sphere of private choice." Peterson v. City of Greenville, 373 U.S. 244, 248, 83 S.Ct. 1119, 1121, 10 L.Ed.2d 323 (1963) (state action when restaurant excluded black patrons in conformity with local ordinance); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 170, 90 S.Ct. 1598, 1615, 26 L.Ed.2d 142 (1970) ("a State is responsible for the discriminatory act of a private party when the State, by its law, has compelled the act."). The application of the category of coercion may be less obvious in other cases. In Skinner v. Railway Labor Executives' Ass'n, 489 U.S. 602, 109 S.Ct. 1402, 103 L.Ed.2d 639 (1989), the Court found state action for Fourth Amendment purposes when federal regulations authorized railroads to test for the presence of drug or alcohol in employees who violated certain safety rules. Although the regulation was permissive on its face, the Court nonetheless concluded that state action was involved because the regulations superseded collective bargaining agreements and prohibited the railroad from divesting itself by contract of the authority to test employees. Id. at 615, 109 S.Ct. at 1412. In addition, the regulation made compliance by employees mandatory. Id. Thus, the regulation narrowed the range of private choices available under contract law to the railroad and its employees; accordingly, constitutional limitations came into play to restrain the government's power.

The Board's regulation of the Bank does not fall within this first category of governmental coercion. The Board can hardly be said to have coerced the Bank into terminating Andrews. The Bank made that decision on its own, and the Board became involved only when...