Doran v. Houle, s. 82-3445

• Decision Date: 19 December 1983
• Docket Number: Nos. 82-3445,82-3457 and 82-3465,s. 82-3445
• Parties: M.P. DORAN, James A. Scott and James H. Bailey, Plaintiffs-Appellees, Cross-Appellants, v. F.H. HOULE and James W. Glosser, Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1182

721 F.2d 1182

M.P. DORAN, James A. Scott and James H. Bailey, Plaintiffs-Appellees, Cross-Appellants, v. F.H. HOULE and James W. Glosser, Defendants-Appellants,

Cross-Appellees.

Nos. 82-3445, 82-3457 and 82-3465.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 1983.

Decided Nov. 18, 1983.

As Amended on Grant of Rehearing Dec. 19, 1983.

Gregory O. Morgan, Bozeman, Mont., for plaintiffs-appellees, cross-appellants.

Jack L. Lewis, Jardine, Stephenson, Blewett & Weaver, Great Falls, Mont., Wendy M. Keats, Dept. of Justice, Washington, D.C., for defendants-appellants, cross-appellees.

On Appeal from the United States District Court for the District of Montana.

Before ANDERSON and FLETCHER, Circuit Judges, and TAYLOR ^*, District Judge.

FRED M. TAYLOR, District Judge:

Three Montana veterinarians brought an action under 42 U.S.C. Sec. 1983 and the Constitution against two government officials, Dr. Glosser who was employed by the state of Montana, and Dr. Houle who was employed by the federal government. The complaint alleged a conspiracy to deprive plaintiffs of certain government issued permits without due process of law. The permits in question, which were part of a joint federal-state disease eradication program, allowed the holder to perform a specific test for brucellosis in cattle. Plaintiffs obtained a substantial judgment following a jury trial and defendants appealed. We reverse on the basis that plaintiffs had no constitutionally protected interest in the permits.

OVERVIEW

Brucellosis is a highly contagious and infectious bacterial disease. It occurs primarily in cattle, causing reproductive failure and the abortion of calves. Testimony at trial indicated that, by comparison, brucellosis is presently a greater threat to ranchers than anthrax or hoof-and-mouth disease. Brucellosis can also cause undulant fever and other ill effects in humans.

Montana is particularly vulnerable to this disease as cattle ranching is a major industry in the state. The Department of Livestock is the state agency directly responsible for monitoring and protecting the health of Montana's cattle population.

The federal government, acting through the United States Department of Agriculture (USDA), is also involved in regulating animal welfare. See 21 U.S.C. Secs. 111, 114 (1976). One of the steps taken by the federal government to prevent the spread of brucellosis is a requirement that cattle moved interstate be tested and certified as "brucellosis-free". See Department of Agriculture Regulations, 9 CFR, Part 78, subpart B (1983).

There are a number of different tests which can be used to detect the presence of brucellosis in cattle. This case deals with the permits to perform a particular diagnostic test, the "card test". The principal advantage of the card test is its ability to quickly and reliably determine whether a particular animal does not have brucellosis. This makes it particularly suitable for use at auction markets where cattle are assembled and sold prior to interstate shipment.

The card test is performed on a blood sample which can be drawn by any licensed veterinarian. If the test results are negative, the animal is considered to be free of the disease and may be shipped across state lines. If the results are positive, additional tests are required to be certain the animal is not infected. In the interim, the suspect animal is placed in quarantine until followup tests can be completed.

The card test itself is owned by the federal government. The USDA has for many years issued permits to qualified veterinarians. These permit holders have never been allowed to charge cattle owners for performing the test, although as licensed veterinarians they may charge for drawing the necessary blood sample.

In 1973, alerted by a resurgence of brucellosis in Montana, the USDA and the Montana Department of Livestock agreed to cooperate in an aggressive joint-eradication program. The basic parameters of the program were set forth in two government memoranda: a federal Veterinary Services Memorandum and a joint federal-state Memorandum of Understanding.

All three plaintiffs applied for and were issued card test permits in 1976, pursuant to this joint federal-state program. At that time, Drs. Bailey and Scott had recently joined Dr. Doran's practice as salaried associates. Dr. Doran had been practicing veterinary medicine in Great Falls for approximately twenty-five years and had previously held a card test permit. Plaintiffs were unique in that all other permit holders in Montana were employed by the state and worked exclusively at auction markets.

The dispute which culminated in this action began with the discovery in November Plaintiffs, who thought the termination unjustified, made no serious effort to appeal Dr. Glosser's decision until January, 1978, when they attempted to present their case before the Department of Livestock's Board of Directors. The Board Chairman advised plaintiffs they would need to make a formal request for a hearing. Such a request was made, but not until March 6, 1978. The matter was set to be heard in April. At plaintiffs' request, the hearing was subsequently postponed until May. In the meantime, one of the Board's staff attorneys presented plaintiffs with a three page letter explaining the reasons for Dr. Glosser's termination of their card test authority.

1977, that two cows card tested by plaintiffs and found to be suspect had been released from quarantine prior to a final determination of their health by the Montana State Laboratory. On November 28, 1977, Dr. Glosser, the State Veterinarian for the Department of Livestock, orally notified plaintiffs that their permits were being terminated as a result of their failure to control the two suspect animals and their prior history of permit violations. A letter confirming the termination was mailed two days later.

In May, the Board voted to reinstate the three permits. However, because of a subsequent federal investigation into the quarantine breach and changes in Department of Livestock policy regarding re-issuance of card test permits to private veterinarians, plaintiffs were unable to have their permit authority reinstated.

Plaintiffs then filed this action alleging that Dr. Glosser and Dr. Houle, an employee of the USDA, conspired to deprive plaintiffs of their constitutionally protected liberty and property interests without due process of law. Following summary judgment motions, the district court determined, inter alia, that a property interest did exist in the card test permits. ¹ Doran v. Houle, 516 F.Supp. 1231, 1234 (D.Mont.1981). The case proceeded to trial where a jury awarded plaintiffs compensatory and punitive damages totaling $272,000.

MERITS

The threshold issue in this case is whether a constitutionally protected property interest was implicated. Although the answer to the question of whether a property interest was present necessarily depends on the facts in this case, it remains a legal issue requiring an interpretation of the federal Constitution. Memphis Light, Gas and Water Division v. Craft, 436 U.S. 1, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978). Therefore, we are obligated to conduct an independent review of plaintiffs' claim and are not bound by the district court's prior determination. See Shillingford v. Holmes, 634 F.2d 263, 265-66 (5th Cir.1981).

The Supreme Court in Board of Regents of State Colleges v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) made it clear that property interests protected by procedural due process are not restricted to a few rigid, technical forms. Rather, the constitutional concept of property embraces a broad, although not infinite, range of interests. Id. at 571-72, 92 S.Ct. at 2705-06; Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 2699, 33 L.Ed.2d 570 (1972); see generally C. Reich, The New Property, 73 Yale L.J. 733 (1964).

To have a property interest in any government benefit, a person must have more than an abstract need or desire for it; he must have a legitimate claim of entitlement. Roth, 408 U.S. at 577, 92 S.Ct. at 2709. Plaintiffs contend they have such a legitimate claim, while defendants argue that any expectation of continued entitlement was entirely unilateral.

A legitimate claim of entitlement cannot be premised on the Constitution itself but must be derived from some independent source in either state or federal law. Id. In the immediate case, there were no statutes or regulations establishing administrative standards for issuing or revoking card test permits. Cf. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) (social security disability benefits). Nor was there an express contract granting a right to continued possession. Cf. Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434 (1934) (war risk insurance policies).

The absence of a specific statute, regulation or written contract in this case does not necessarily foreclose the possibility that a property interest might have been created, although the absence of such formal sources is "highly relevant" to the due process question. Sindermann, 408 U.S. at 602, 92 S.Ct. at 2699-700. The Supreme Court has declared that a legitimate claim of entitlement can also be based on the conduct and representations of government officials when their actions lead to the creation of a "mutually explicit understanding". Id. at 601, 92 S.Ct. at 2699.

The record shows that the card test program in Montana was jointly administered and regulated by...