Ginn v. Mathews

• Decision Date: 29 March 1976
• Docket Number: No. 74-2607,74-2607
• Citation: 533 F.2d 477
• Parties: Jimmy GINN et al., Plaintiffs-Appellants, v. F. David MATHEWS, Secretary, United States Department of Health, Education and Welfare, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 477

533 F.2d 477

Jimmy GINN et al., Plaintiffs-Appellants, v. F. David MATHEWS, Secretary, United States Department of Health, Education and Welfare, et al., Defendants-Appellees.

No. 74-2607.

United States Court of Appeals Ninth Circuit.

March 29, 1976.

Rehearing Denied May 10, 1976.

Dennis J. Woodruff (argued), San Francisco, Cal., for plaintiffs-appellants.

Benjamin D. James, Jr. (argued), of Williams & James, San Francisco, Cal., for defendants-appellees.

OPINION

Before CHAMBERS, KILKENNY and TRASK, Circuit Judges.

TRASK, Circuit Judge:

The three plaintiffs below, Jimmy Ginn, Helen Valdez, and Mitchell Zimmerman, appeal from the order of the district court granting the defendants' motions to dismiss and denying the plaintiffs' motions for summary judgment. The action was dismissed on May 30, 1974. The claim was that the defendant, the Economic Opportunity Council of San Francisco (EOC), a private nonprofit corporation, discharged the three without according them their due process rights under the Constitution of the United States, and in violation of their First and Fourteenth Amendment rights. It is the plaintiffs' position that EOC was in reality a de facto arm of the state and federal governments and its action constituted "state action," and thus was subject to federal constitutional limitations.

The Economic Opportunity Council of San Francisco was a private corporation incorporated under the laws of the State of California. It operated the Project Headstart Program in San Francisco, which was a "community action program" within the meaning of the Economic Opportunity Act of 1964, 42 U.S.C. §§ 2701 et seq. Project Headstart was created by statute, 42 U.S.C. § 2809(a) (1), and focused upon children below the age of compulsory school attendance with a purpose to provide "such comprehensive health, nutritional, education, social, and other services" as the Director of the Office of Economic Opportunity (Director) finds would aid such children to reach their full potential. The Director was empowered to provide financial assistance "to public or private nonprofit agencies," to carry on such projects. 42 U.S.C. § 2809(a). The Economic Opportunity Council of San Francisco was such an agency. In this case, the Director did provide a measure of the financial assistance to EOC necessary for EOC to carry out its Headstart Program.

Taking the allegations of the plaintiffs' complaint as true, as we must on a motion to dismiss, Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263, 268 (1972); Dodd v. Spokane County, 393 F.2d 330, 334 (9th Cir. 1968), plaintiffs allege that Helen Valdez worked as a full-time teacher and permanent employee of EOC in the Headstart Program from 1967 to 1973. She was active in forming a union to represent employees in child-care programs, and she also actively and publicly supported a suit for back vacation pay filed against EOC in a superior court in California. She was terminated by EOC on October 19, 1973, without being afforded a hearing or an appeal. She is one of the plaintiffs in this action. Plaintiff Mitchell Zimmerman was employed by EOC in its state-funded Child Development Program from April 1972 to May 1973. Zimmerman was also active in forming the union and was a union officer; he also "publicly supported the back pay suit." He was terminated on June 15, 1973, without a hearing. Plaintiff Jimmy Ginn was a community organizer and kitchen manager for EOC from 1967 to 1973. He also was active in the effort to unionize the Headstart staff. He was simply not rehired for the year 1974, but was subsequently offered a lower paying position which he accepted under protest.

All three in their prayer for relief seek damages from EOC as a result of not being able to work or as a result of being required to work at a lower paying job. They also seek injunctive relief restraining EOC from operating in violation of federal and state statutes, regulations, and directives, and further injunctive relief restraining the Department of Health, Education and Welfare (HEW) from funding EOC for further administration of the San Francisco Headstart Program.

Jurisdiction was invoked in the district court under 28 U.S.C. § 1331(a) (federal question jurisdiction); 28 U.S.C. § 1343(3) and 42 U.S.C. § 1983 (deprivation of constitutional rights under color of state law); 28 U.S.C. § 1361 (mandamus); and 5 U.S.C. § 702 (Administrative Procedure Act).

The district court granted the motion to dismiss of the nonfederal defendants for the reason that the court lacked subject matter jurisdiction since EOC was a private corporation and no state action was involved; it granted the motion to dismiss of the federal defendants for the reason that the plaintiffs lacked standing to sue; and it denied the plaintiffs' motion for summary judgment against the federal defendants.

Upon appeal the issues have become more limited, and two questions are submitted by appellants for review: whether the district court erred in ruling that it lacked subject matter jurisdiction because defendant EOC was a private corporation and therefore not subject to the due process clauses of the Fifth and Fourteenth Amendments; and whether it erred in ruling that it lacked subject matter jurisdiction because there was no state action involved in the activities of EOC and therefore the First and Fourteenth Amendments could not limit its activities. ¹

The principles that guide us in resolving the controversy have been announced before and are quickly recalled. Where the action taken is entirely by a private corporation with no overriding or pervasive state involvement, the provisions of the First, Fifth, and Fourteenth Amendments impose no limitations upon that action; when the state acts directly or even indirectly and its influence is significant, then constitutional restraints must be observed. It all began in the Civil Rights Cases, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835 (1883). After stating the Fourteenth Amendment, Mr. Justice Bradley for the Court said:

"It is State action of a particular character that is prohibited. Individual invasion of individual rights is not the subject-matter of the amendment." Id. at 11, 3 S.Ct. at 21, 27 L.Ed. at 839.

Some 65 years later in Shelley v. Kraemer, 334 U.S. 1, 13, 68 S.Ct. 836, 842, 92 L.Ed. 1161, 1180 (1948), Mr. Chief Justice Vinson reiterated the same position:

"Since the decision of this Court in the Civil Rights Cases, 109 U.S. 3 (, 3 S.Ct. 18, 27 L.Ed. 835) (1883), the principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful."

More recently, the Court has reexamined the problem in Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). There, a restaurant which was a lessee in an automobile parking building owned and operated by the Wilmington Parking Authority, an agent of the State of Delaware, refused to serve a customer because he was black. In an action brought to obtain declaratory and injunctive relief, the Authority defended upon the ground that the restaurant was a private enterprise operating in a purely private capacity. The Court examined all of the circumstances under which the parking building was built and operated, pointing out the land was acquired by the Authority partly by the issue of its revenue bonds and in part by cash donated by the city of Wilmington. For the purpose of generating monies to fund the repayment of the revenue bonds because projected parking revenues were insufficient, long term leases were negotiated with tenants for other parts of the building including the restaurant. The Authority provided the type of finishing required by the lessee and agreed to furnish heat to the building and to make at its own expense all structural repairs. The Court held that the Authority's degree of participation and involvement in the restaurant indicated "that degree of state participation and involvement in discriminatory action which it was the design of the Fourteenth Amendment to condemn." Id. at 724, 81 S.Ct. at 861, 6 L.Ed.2d at 52.

"The State has so far insinuated itself into a position of interdependence with (the restaurant) that it must be recognized as a joint participant in the challenged activity, which, on that account, cannot be considered to have been so 'purely private' as to fall without the scope of the Fourteenth Amendment." Id. at 725, 81 S.Ct. at 862, 6 L.Ed.2d at 52.

In the case before us, the government participation in Project Headstart began in 1964 when Congress enacted massive legislation to launch a great antipoverty program. The Economic Opportunity Act, 42 U.S.C. §§ 2701 et seq., begins:

"The United States can achieve its full economic and social potential as a nation only if every individual has the...