Cooley v. Pennsylvania Housing Finance Agency

• Citation: 830 F.2d 469
• Decision Date: 30 September 1987
• Docket Number: No. 86-5896,86-5896
• Parties: COOLEY, William, Appellant, v. PENNSYLVANIA HOUSING FINANCE AGENCY; Gerhold, Wayne D.; Smith, Karl C.; and Donadee, Michael A.
• Court: U.S. Court of Appeals — Third Circuit

Page 469

830 F.2d 469

COOLEY, William, Appellant, v. PENNSYLVANIA HOUSING FINANCE AGENCY; Gerhold, Wayne D. Smith, Karl C.; and Donadee, Michael A.

No. 86-5896.

United States Court of Appeals Third Circuit.

Argued June 16, 1987.

Decided Sept. 30, 1987.

Debra K. Wallet (argued), Wallet & Christianson, Camp Hill, Pa., for appellant.

LeRoy S. Zimmerman, Atty. Gen., Jerome T. Foerster (argued), Deputy Atty. Gen., John G. Knorr, III, Senior Deputy Atty. Gen., Andrew S. Gordon, Chief Deputy Atty. Gen., Office of Attorney General, Litigation Section, Harrisburg, Pa., for appellees.

Before SEITZ and MANSMANN, Circuit Judges, and DEBEVOISE, District Judge. ^*

OPINION OF THE COURT

MANSMANN, Circuit Judge.

This appeal comes before us on review of entry of summary judgment in favor of a state agency, the Pennsylvania Housing Finance Agency, ("PHFA"), and against a former employee of the agency, William Cooley. Cooley asserted both federal and state claims for damages allegedly suffered as a result of his dismissal from employment with the PHFA.

We will affirm the district court's decision granting summary judgment with respect to the alleged violation of federal constitutional rights, finding no deprivation of protected property and liberty interests. Because we find that extraordinary circumstances exist to justify continuing jurisdiction over the pendent state claims, we will vacate the court's judgment dismissing them and remand for further proceedings on the merits.

I.

William Cooley was employed as a construction representative by the PHFA from October 2, 1978 through September 14, 1984. According to the PHFA, early in 1984 the agency began receiving complaints concerning Cooley's behavior in the course of his employment with both the public sector and internal PHFA staff. When the agency decided to take disciplinary action against Cooley it was determined, because of a belief that Cooley had potential as a valuable employee, that a two-week, no-pay, suspension, rather than a dismissal, should be imposed. To this end, a letter of reprimand was sent to Cooley informing him of the suspension and his placement on probationary status. Cooley, through his attorney, then requested a hearing as to the merits of the suspension. Although no formal hearing was ever held, Cooley met with various officials of the PHFA to discuss his job performance and his suspension.

On August 27, 1984, Cooley was notified that his employment with the agency was terminated. The reasons for his dismissal were outlined in a letter which stated that his conduct on the job had not conformed to acceptable agency standards. Cooley was not provided with a hearing on his dismissal.

Cooley then commenced this action in the Commonwealth Court of Pennsylvania claiming that the allegations on which his separation from employment was based are false, that his dismissal has injured his reputation and hindered him from obtaining other employment, that the Executive Director acted without authority in firing him, and that his dismissal was not effectuated within the guidelines of the PHFA's employee manual in circulation. In support of his request for recovery for violation of his constitutional rights under 42 U.S.C. Sec. 1983 (1982), Cooley asserted deprivation of property and liberty interests contrary to the guarantees of the Fourteenth Amendment. His state law claims arise from an assertion that the due process provisions of Pennsylvania's Administrative Agency Law, 2 Pa.C.S.A. Sec. 101 et seq., were not followed.

Over Cooley's objection, the PHFA removed the case to the United States District Court for the Middle District of Pennsylvania and discovery commenced.

After discovery, the parties filed cross-motions for summary judgment and, in conjunction, statements of undisputed material facts. The magistrate recommended dismissal of Count I of the complaint, the state law claims, citing lack of jurisdiction to support their retention. He also recommended that summary judgment be entered against Cooley and for PHFA on Count II of the complaint, wherein the federal causes of action were enumerated. On review de novo, the district court, adopting the report and recommendations of the magistrate, granted the PHFA's summary judgment motion and denied Cooley's motion to remand to state court.

In reviewing the propriety of the entry of a cross-motion for summary judgment, we utilize the identical test the district court was initially required to apply. Our scope of review mandates a determination that there is no genuine issue as to any material fact and that the cross-movant is entitled to judgment as a matter of law. Koshatka v. Philadelphia Newspapers, Inc., 762 F.2d 329 (3d Cir.1985). In applying the law to the undisputed facts, our review of the grounds for summary judgment is plenary. IUE-AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118 (3d Cir.1986).

With regard to the dismissal of the pendent state claims, we must decide whether the dismissal is tantamount to an abuse of discretion by the trial judge. Walck v. American Stock Exchange, Inc., 687 F.2d 778 (3d Cir.1982), cert. denied, 461 U.S. 942, 103 S.Ct. 2118, 77 L.Ed.2d 1300 (1983).

II.

Cooley has characterized his public employment as providing him with a protected property interest, deprivation of which violated the due process mandates of the Fourteenth Amendment. He recognizes that, based upon Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), he must have more than a unilateral expectation of the protected property interest. "He must, instead, have a legitimate claim of entitlement to it." Id. at 577, 92 S.Ct. at 2709.

We turn to state law to determine the source of a property interest in Cooley's employment with the PHFA. Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976).

As a rule, public employees in Pennsylvania have at-will status and are subject to summary removal by the employing agency. Scott v. Philadelphia Parking Authority, 402 Pa. 151, 166 A.2d 278 (1960). Unless there is express legislative language to the contrary, the security of tenure does not attach to public employment. In general, Pennsylvania governmental agencies do not have the power to grant tenure and where it has intended that tenure should exist, the legislature has been very precise in so stating. Scott, id. ¹

Cooley refers to the PHFA's enabling statute, the employee manual in circulation and decisions of Pennsylvania's Commonwealth Court as the primary sources of Pennsylvania law entitling him to a protected property interest in his state employment.

Cooley points to the "Housing Finance Agency Law," 35 Pa.S.A. Sec. 1680.101 et seq., PHFA's enabling statute, as creating an entity separate and apart from the Commonwealth, capable of entering into employment contracts by its own volition. Specific provisions relied upon to demonstrate the required legislative intent bestowing this power are as follows:

(3) To enter into contracts of all kinds and to execute all instruments necessary or convenient for carrying on its operations.

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(14) Employ an executive director and other officers, agents, employes, professional and business advisors as may from time to time be necessary in its judgment and to fix their compensation; and to promote and discharge such officers, employes, and agents.

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(17) To do all things necessary or convenient to carry out the powers granted by this act or other acts. 35 Pa.S.A. Sec. 1680.205.

Cooley's argument that the PHFA has de facto right to contract with its employees by virtue of these provisions must fail. In Banks v. Redevelopment Authority, 416 F.Supp. 72 (E.D.Pa.1976), affirmed, 556 F.2d 564 (3d Cir.1977), cert. denied, 434 U.S. 929, 98 S.Ct. 414, 54 L.Ed.2d 288 (1977), addressing a similar claim concerning an analogous enabling statute, the district court decided, and we affirmed, that these grants of power did not give the Redevelopment Authority the ability to create regulations which altered dismissal at will, the traditional Pennsylvania rule regarding public employees not holding specified tenured positions.

Again, in Abraham v. Pekarski, 537 F.Supp. 858 (E.D.Pa.1982), affirmed in part, 728 F.2d 167 (3d Cir.1984), cert. denied, 467 U.S. 1242, 104 S.Ct. 3513, 82 L.Ed.2d 822 (1984), the district court noted that the general test for a property right vesting in a public employee is whether there was an enforceable expectation of continued employment. The court concluded that this situation will never occur in an employment relationship based upon employment at will. We affirmed.

Clearly the key to resolving whether a protected property interest has been presented through the enabling statute is by identifying a statement of the Pennsylvania legislature permitting PHFA to enter into employment contracts with their employees. The simple answer is that no such authority has been granted. The Housing Finance Act embodies a wide spectrum of powers under which PHFA operates. Making contracts with its employees, affording them guarantees of continuity in their employment, is notably absent in the list of enunciated powers. Because of the long tradition of at-will public employment, it must be assumed that when the legislature speaks, it does so explicitly, and if, in their wisdom, it chose to grant tenure to the PHFA employees, it would have enacted an appropriate provision.

Cooley directs our attention to the terms of the employee manual distributed by the PHFA and asserts that the manual provided an identifiable property interest in his employment, entitling him to redress for his separation from that interest. In reaching this conclusion, he relies primarily upon two Pennsylvania Commonwealth Court cases wherein provisions of personnel manuals distributed by government units were interpreted as conferring reasonable expectations of enforcement of certain employment...