Carlsberg v. Gatzek

• Decision Date: 16 December 1977
• Docket Number: No. CV 77-678-F.,CV 77-678-F.
• Citation: 442 F. Supp. 813
• Court: U.S. District Court — Central District of California
• Parties: Arthur W. CARLSBERG, Carlsberg Financial Corporation, a Delaware Corporation, and Esco Corporation, a California Corporation, Plaintiffs, v. Deborah R. GATZEK and Sanya Ryan, Defendants.

442 F. Supp. 813

Arthur W. CARLSBERG, Carlsberg Financial Corporation, a Delaware Corporation, and Esco Corporation, a California Corporation, Plaintiffs, v. Deborah R. GATZEK and Sanya Ryan, Defendants.

No. CV 77-678-F.

United States District Court, C. D. California.

December 16, 1977.

COPYRIGHT MATERIAL OMITTED

Donald L. Stone, Marvin L. Benson, Norbert A. Schlei, Hughes, Hubbard & Reed, Los Angeles, Cal., for plaintiffs.

Charles R. Hartman, Regional Counsel, S. E. C., Los Angeles, Cal., for defendants.

MEMORANDUM OPINION

FERGUSON, District Judge.

Plaintiffs Arthur W. Carlsberg, Carlsberg Financial Corporation, and Esco Corporation brought this action against Deborah Gatzek and Sanya Ryan, two attorneys employed by the Securities and Exchange Commission, alleging that the defendants had intentionally violated their constitutional rights. Two pendent claims charging the defendants with the torts of abuse of process and interference with contractual relations are also asserted.

The major allegations of the complaint may be summarized as follows:

Prior to June, 1976, the defendants were assigned to investigate the activities of a company called Pre-Builder Land Corporation (PBL) which had acted as a broker in certain real estate transactions in which the plaintiffs were also involved. Although the plaintiffs in this case were not targets of that investigation and were not found to have acted unlawfully in connection with the transactions in question, the defendants allegedly formed the intention to use their official positions to injure and inflict harm on the plaintiffs in violation of their rights under the United States Constitution and other provisions of state and federal law. In furtherance of that purpose, the defendants are said to have taken the following actions:

1. On June 8, 1976 the defendants caused an action to be filed in federal district court seeking injunctive relief against Pre-Builder Land Corporation and others charging violations of the securities laws. The prayer for relief in that case included a request that certain disclosures be made to persons who were making payments on promissory notes held by plaintiff Carlsberg or his affiliates as a result of land sales on which PBL had acted as broker. The plaintiffs in the present action were not named as parties in the PBL suit.

2. On two occasions the defendants sought a preliminary injunction ordering the above-described relief. Plaintiffs were not given notice or an opportunity to be heard in those proceedings.

3. On June 17, 1976 the defendants knowingly caused an affidavit containing false statements damaging to plaintiffs to be filed in connection with the PBL case.

4. In the complaint and other documents filed in the PBL action and "on numerous occasions thereafter," the defendants made public statements which identified the plaintiff Arthur Carlsberg as a "friend and associate" and former employer of certain of the principals of PBL, when defendants knew or should have known that such statements were false.

5. On "various occasions" the defendants counseled and advised owners of property purchased from plaintiffs to stop making payments to plaintiffs on their promissory notes.

Pursuant to a stipulation between the parties the action against the defendant Ryan was dismissed without prejudice on September 19, 1977. Defendant Gatzek's motion to dismiss or, in the alternative, for summary judgment, was heard on October 3, 1977. Because certain matter outside of the pleadings has been presented to and considered by the court, the motion will be treated as one for summary judgment. Rule 12(b), F.R.Civ.P.

It is a well-settled rule that on a motion for summary judgment the moving party bears the burden of demonstrating the absence of any genuine issue of fact and of establishing that he is entitled to prevail as a matter of law. Jones v. Halekulani Hotel, Inc., 557 F.2d 1308 (9th Cir. 1977). Therefore, in considering the instant motion, the court must view the allegations of the complaint and the facts supporting them in the light most favorable to the plaintiffs. Nevertheless, in order to overcome a defendant's summary judgment motion, it must appear that the facts, when so construed, support a viable legal theory which would entitle the plaintiffs to recovery from the defendant for the acts complained of. Mutual Fund Investors v. Putnam Management Co., 553 F.2d 620 (9th Cir. 1977). Bearing these principles in mind, this court concludes that the defendant Gatzek's motion for summary judgment must be granted as to all three causes of action stated in plaintiffs' complaint.

1. Intentional Violation of Constitutional Rights.

Under the principles established by the United States Supreme Court in Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), a federal official may be sued and held personally liable if he acts under color of law in such a manner as to deprive a person of his constitutional rights. Applying this theory in their first cause of action, the plaintiffs assert that the defendant Gatzek intentionally used her position as a government attorney to deny them the right to due process of law in connection with the prosecution of the PBL enforcement action.

It is now a well-established rule that a prosecutor in a criminal case enjoys an absolute immunity from liability arising out of activities which constitute "an integral part of the judicial process." Imbler v. Pachtmen, 424 U.S. 409, 430, 96 S.Ct. 984, 995, 47 L.Ed.2d 128 (1976).¹ The Ninth Circuit, in the case of Flood v. Harrington, 532 F.2d 1248 (1976), expanded the absolute immunity doctrine to protect federal government attorneys like the defendant Gatzek who are involved in civil enforcement actions as well as criminal prosecutions.

In their opposition to the present motion the plaintiffs argue that the total immunity conferred in Imbler and in Flood should not be available where, as here, the person seeking recovery for alleged constitutional violations was not a party to the underlying civil or criminal action. This asserted distinction is not a convincing one. The basic rationale for recognizing an absolute immunity in these cases is the avoidance of a harmful chilling effect on the exercise of prosecutorial discretion.

"A prosecutor is duty bound to exercise his best judgment both in deciding which suits to bring and in conducting them in court. The public trust of the prosecutor's office would suffer if he were constrained in making every decision by the consequences in terms of his own potential liability in a suit for damages." Imbler v. Pachtman, supra, 424 U.S. at 424-5, 96 S.Ct. at 992.

The importance of averting this deleterious effect is equally compelling whether the threat of suit comes from a party or a non-party. It is inevitable that government prosecutions, both civil and criminal, will frequently have extensive and possibly adverse effects on persons who are not named as parties; and the possibility of damage actions by such persons would not be negligible or easily disregarded. Furthermore, a non-party enjoys essentially the same inherent protections from prosecutorial abuse as are afforded to a party — the most important being the scrutiny of a judicial officer presiding over the conduct of the case. For these reasons, the doctrine of absolute immunity established in Imbler must be applied in this case. Therefore, insofar as the plaintiffs' allegations relate to the prosecution of the PBL enforcement case, the defendant is entitled to prevail as a matter of law.

The filing of the PBL complaint and the prayer for relief included therein, the requests for preliminary injunction, the filing of the allegedly false affidavit, and the inclusion of allegedly false statements in the complaint and other pleadings are all actions which clearly fall within this area of absolute immunity. The plaintiffs' allegations of malice and of knowledge are irrelevant with regard to these distinctly prosecutorial actions, since no inquiry is made regarding intent, motive or purpose where the immunity is absolute rather than qualified. Imbler v. Pachtman, supra, 424 U.S. at 419, 96 S.Ct. 984. (Prosecutor was immune from suit despite charges that he had knowingly introduced perjured testimony.)

The plaintiffs also complain of injury suffered because of defendant's repetition of allegedly false statements contained in the PBL pleadings to members of the public. The statements linking the plaintiffs with the principals of PBL were an important part of the SEC's charge that PBL had failed to disclose certain material facts in connection with the sale of land-related securities. The public repetition of those statements cannot reasonably be separated from the defendant's prosecutorial function; and, in fact, such announcements regarding pending enforcement actions are an integral part of the defendant's prosecutorial duties as an SEC attorney.² Therefore, the rule of absolute immunity requires judgment for the defendant as to these allegations as well.

The only portion of plaintiffs' complaint which involves conduct arguably outside the scope of defendant's prosecutorial immunity is the allegation that the defendant counseled and advised persons who had purchased property from the plaintiffs through PBL to stop making payments to plaintiffs. It would be difficult to characterize such action as "an integral part of the judicial process" or as related in any meaningful way to defendant's role as a prosecutor. Nevertheless, the defendant is also entitled to summary judgment as to this allegation because it appears on the record now before the court that there is no genuine issue of fact regarding the occurrence of the conduct complained of.

The only evidence which suggests that there was any such counseling of investors in connection with the PBL case is the affidavit of Sue N. Stuard filed as an exhibit to plaintiffs'...