Disraeli v. Rotunda

• Decision Date: 13 June 2007
• Docket Number: No. 05-51418.,05-51418.
• Citation: 489 F.3d 628
• Parties: David DISRAELI, Plaintiff-Appellant, v. Joseph Jason ROTUNDA; David Andrew Grauer; John Robert Morgan; John Doe, 1; John Doe, 2; John Doe, 3; John Doe, 4; John Doe, 5, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

489 F.3d 628

David DISRAELI, Plaintiff-Appellant, v. Joseph Jason ROTUNDA; David Andrew Grauer; John Robert Morgan; John Doe, 1; John Doe, 2; John Doe, 3; John Doe, 4; John Doe, 5, Defendants-Appellees.

No. 05-51418.

United States Court of Appeals, Fifth Circuit.

June 13, 2007.

David Disraeli, Austin, TX, pro se.

Russ Harris, Austin, TX, for Defendants-Appellees.

Appeal from the United States District Court for the Western District of Texas.

Before KING, WIENER, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

David Disraeli ("Disraeli"), appearing pro se, appeals the district court's judgment dismissing his complaint filed pursuant to 42 U.S.C. § 1983. In his original complaint, Disraeli named Joseph Rotunda ("Rotunda"), David Grauer ("Grauer"), and John Morgan ("Morgan") as defendants. He later amended his complaint to add five John Does ("the Does") as additional defendants. Disraeli never amended his complaint to more specifically identify the Does. The district court found that all three named defendants are entitled to absolute immunity from civil liability in connection with their duties as government officials and that Disraeli failed to prosecute his claims against the Does. Disraeli appeals this ruling.

I. FACTS AND PROCEEDINGS

In October 2002, Rotunda, an enforcement attorney with the Texas State Securities Board ("the Board"), observed an advertisement for an investment opportunity placed by Disraeli in the Austin American Statesman. Rotunda suspected that the advertisement indicated possible violations of Texas's securities laws. Rotunda then began an investigation of Disraeli and concluded that Disraeli might be misrepresenting himself as a licensed investment adviser, when in fact he was not. Rotunda also discovered that the advertised investment opportunity was neither registered nor permitted for sale in Texas. When Rotunda contacted Disraeli in the course of the investigation, Disraeli represented that he had not sent any materials relating to the investment to any potential investors, though Rotunda knew the opposite to be true. Consequently, Rotunda concluded that Disraeli was actively misrepresenting the nature of the investment. Rotunda presented his findings and conclusions to Grauer, the director of the enforcement division of the Board, who agreed with Rotunda that "an Enforcement Cease and Desist Order was necessary to protect the public." Grauer and Rotunda drafted an order and presented it to Morgan, the acting Securities Commissioner at the time, who agreed that such an order was necessary. On November 10, 2003, Morgan signed and executed the Emergency Cease and Desist Order ("emergency order"), ordering Disraeli to immediately cease and desist from offering the securities at issue in the investigation in Texas until the securities could be registered, using misleading or fraudulent offers in connection with the securities, and rendering services as an investment adviser without a license to do so. See TEX.REV.CIV. STAT. ANN. art. 581-22 (establishing statutory requirements for advertising securities). The order notified Disraeli of his right to request a hearing from the Securities Commissioner. Disraeli ultimately waived his right to a hearing and consented to entry of a Cease and Desist Order ("consent order") that prohibited the same activities named and prohibited in the emergency order.

On November 5, 2004, Disraeli filed suit under 42 U.S.C. §§ 1983 and 1985(3), as well as 28 U.S.C. § 2201, alleging that Rotunda, Grauer, and Morgan were liable for violating his right to due process by issuing the emergency order. He further asserted that the defendants violated federal trademark law by publishing his name in a disparaging manner without his consent. Defendants asserted absolute immunity from suit and moved to dismiss under Rule 12(b)(6); the district court converted their motion into one for summary judgment under Rule 56. The district court ordered limited discovery on the question of defendants' actions with respect to the emergency order. Following discovery, defendants moved formally for summary judgment, again asserting that they were entitled to absolute immunity or, in the alternative, qualified immunity. The magistrate judge recommended dismissing Disraeli's claims and the district court did so, specifically finding that the named defendants "are entitled to absolute immunity in this cause," that the defendants were within their jurisdiction to issue the emergency order, and that Disraeli had abandoned his claims against the John Does. Disraeli now appeals this decision.

II. DISCUSSION

A. Standard of Review

We review a district court's grant or denial of summary judgment de novo, applying the same standard as the district court. Gowesky v. Singing River Hosp. Sys., 321 F.3d 503, 507 (5th Cir.2003). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). Any reasonable inferences are to be drawn in favor of the non-moving party. Gowesky, 321 F.3d at 507.

If a party moves for summary judgment and asserts a defense of absolute or qualified immunity in good faith, the burden shifts to the other party to rebut it. Beck v. Tex. State Bd. of Dental Exam'rs, 204 F.3d 629, 633-34 (5th Cir.2000). The movant can support its motion by relying on the pleadings alone. Id. at 634.

B. Absolute Immunity

Absolute immunity denies all remedies to an individual, like Disraeli, who asserts that his rights have been violated. O'Neal v. Miss. Bd. of Nursing, 113 F.3d 62, 65 (5th Cir.1997). Consequently, the Supreme Court has been "quite sparing" in broadening its scope. Id. (quoting Forrester v. White, 484 U.S. 219, 224, 108 S.Ct. 538, 98 L.Ed.2d 555 (1988)). Judges and prosecutors are generally entitled to absolute immunity. Beck, 204 F.3d at 634. Absolute immunity is also available to certain quasi-judicial officers and agencies. Butz v. Economou, 438 U.S. 478, 512, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978); Beck, 204 F.3d at 634 (noting that immunity may extend to state agencies as well). Agency officials "performing certain functions analogous to those of a prosecutor" are immune from civil liability resulting from such acts. Butz, 438 U.S. at 515, 98 S.Ct. 2894. This court applies a "nonexhaustive list" of factors from Butz to determine whether an administrative employee or agency is entitled to absolute immunity:

(1) the need to assure that the individual can perform his functions without harassment or intimidation;

(2) the presence of safeguards that reduce the need for private damages actions as a means of controlling unconstitutional conduct;

(3) insulation from political influence;

(4) the importance of precedent;

(5) the adversary nature of the process; and

(6) the correctability of error on appeal.

Beck, 204 F.3d at 634 (citing Butz, 438 U.S. at 512, 98 S.Ct. 2894). No one factor is controlling. Id. Applying these factors, this court has found that members of a state nursing board, O'Neal, 113 F.3d at 67, members of a state dental board, Beck, 204 F.3d at 636, and members of the disciplinary board of the National Association of Securities Dealers, Austin Mun. Secs., Inc. v. Nat'l Ass'n of Secs. Dealers, Inc., 757 F.2d 676, 679 (5th Cir.1985), are entitled to absolute immunity from suit in the performance of their quasi-judicial functions. In Beck, the court held that while the board was entitled to absolute immunity, an investigator employed by the board was not, as he "performed investigative, not adjudicative nor prosecutorial functions." Beck, 204 F.3d at 636. The Beck court pointed out that the investigator "neither initiated nor pursued prosecution of the complaint" against the plaintiff, and his work was thus "not at the heart of the adjudicative process." Id. at 637.

C. Applying Butz

Disraeli primarily challenges the issuance of the emergency order, which he contends "acted as a de facto disbarment." He asserts that because of the nature of the process by which an emergency order is issued, the defendants should not be protected by absolute immunity.

It is clear from the facts that the actions of the three named defendants in drafting and issuing the emergency order were prosecutorial or adjudicative in nature and were "at the heart of the adjudicative process" established by the Texas State Securities Board. See Beck, 204 F.3d at 637. More specifically, by applying the Butz factors we hold that the district court correctly granted absolute immunity to the defendants.

1. Need to protect against harassment or intimidation

Disraeli concedes that "both Rotunda and Grauer must be free from harassment or intimidation to carry out their duties." We agree and point out that the attorneys here perform a disciplinary function in their work for the Board, which this court has noted makes individuals "likely targets for suit." Austin Mun. Secs., 757 F.2d at 689; see also O'Neal, 113 F.3d at 66. The Texas Securities Commissioner is charged with "tak[ing] such measures and [making] such investigations as will prevent or detect the violation of any provision" of Texas's securities laws. TEX.REV.CIV. STAT. ANN. art. 581-3. Further, the Commissioner must present any evidence of wrongdoing to the proper District or County Attorney. Id. Here, the defendants' actions were all in furtherance of these statutory duties, which by their nature are both prosecutorial and likely to arouse the ire of targeted individuals.

2. The presence of safeguards that reduce the need for private damages

Disraeli asserts that because the Board can issue an emergency order without any preceding process, there is an absence of safeguards to protect against violations of constitutional rights before any reputational...