Leonard v. District of Columbia

• Decision Date: 29 March 2002
• Docket Number: No. 98-CV-763.,98-CV-763.
• Citation: 794 A.2d 618
• Parties: J. David LEONARD, et al., Appellants, v. DISTRICT OF COLUMBIA, et al., Appellees.
• Court: D.C. Court of Appeals

794 A.2d 618

J. David LEONARD, et al., Appellants, v. DISTRICT OF COLUMBIA, et al., Appellees.

No. 98-CV-763.

District of Columbia Court of Appeals.

Argued September 24, 1999.

Decided March 29, 2002.

John W. Karr, with whom Theodore S. Allison, Washington, DC, was on the brief, for appellants.

Mary E. Pivec, Washington, DC, with whom John M. Ferren, Corporation Counsel at the time the brief was filed, Charles L. Reischel, Deputy Corporation Counsel, Lutz Alexander Prager, Assistant Deputy Corporation Counsel, and Stephen C. Taylor, General Counsel, were on the brief, for appellees.

Before WAGNER, Chief Judge, and SCHWELB and REID, Associate Judges.

WAGNER, Chief Judge.

Appellants appeal from a decision of the trial court granting appellees' motion to dismiss their claims for failure to state a cause of action for injunctive and other relief arising out of their discharge from employment with the District of Columbia government.¹ Appellants sued for unlawful termination, alleging that they were career civil service employees who had been terminated from their employment without cause, prior notice or due process and in violation of their rights under the Comprehensive Merit Personnel Act of the District of Columbia (CMPA), D.C.Code § 1-601.1 et seq. They also alleged that the Chief Financial Officer (CFO) of the District made false, malicious, reckless and defamatory public declarations that they were incompetent.² The trial court concluded that appellants' civil service status had been converted to an "at-will" employment by section 152 of the Omnibus Consolidated Rescission and Appropriations Act of 1996 (OCRA Act) and that the CFO acted lawfully within his broad grant of authority under that Act. The trial court also rejected appellants' constitutional challenges to the OCRA Act and dismissed their complaint. Appellants argue for reversal on the grounds that: (1) the complaint alleged a justiciable claim that their firings were motivated by bias, political and other unlawful reasons; (2) section 152 did not convert their career status to "at-will" employment; (3) they were terminated in a manner which impugned their reputations thereby requiring a due process "reputation hearing"; and (4) the statute, as applied, unconstitutionally deprived them of procedural and substantive due process. We hold that the OCRA Act implicitly repealed appellants' career service status and converted them to "at-will" employees subject to discharge without the benefit of the procedures specified in the CMPA. Concluding that the trial court erred in dismissing appellants' defamation-based claim, we reverse for further proceedings as to that count. Otherwise, we affirm the trial court's decision.

I. Factual and Procedural Background

Prompted by concern for a fiscal crisis in the District of Columbia, Congress enacted the D.C. Financial Responsibility and Management Assistance Act (Financial Responsibility Act), Public Law 104-8, on April 17, 1995, which placed various governmental functions under the Financial Responsibility and Management Assistance Authority (commonly referred to as the "Control Board"). The Financial Responsibility Act placed the personnel and functions of the Controller, Office of Information Services and the Department of Finance and Revenue under the direction and control of the CFO. Subsequently, Congress included in section 152 of the OCRA Act a provision for personnel in specified budget, accounting and financial management offices to be appointed by and to serve at the pleasure of the CFO. Thereafter, without advance notice to appellants, the CFO fired appellants, all of whom had been employed in the covered financial operations.

Appellants first challenged their terminations with the Office of Employee Appeals (OEA), claiming that the CFO violated their merit protection rights under the CMPA. Consistent with the position of the CFO, the OEA concluded that appellants had been converted to "at-will" employees by section 152 of the OCRA Act, which had suspended any procedural rights they might have had under the CMPA. Prior to the conclusion of the proceedings before the OEA, appellants filed their initial complaint with the Superior Court seeking injunctive relief and damages. In their complaint, appellants contended that since the CFO claimed that their appeals to the OEA were a legal nullity in light of controlling legislation, attempts to exhaust administrative remedies would be futile. They alleged unlawful discharge from employment with the District where each had been a permanent career service employee. Appellants alleged that they had performed satisfactorily or better, having received performance evaluations ranging from satisfactory to excellent or outstanding. They alleged, and it is not disputed, that prior to notifying them that they would be terminated, the CFO issued a press release stating his "intention to dismiss a number of employees who clearly lack the skills to perform their job functions and/or have not demonstrated the level of professional commitment required in this new environment of performance and accountability." Appellants further alleged that these statements were false and made maliciously and recklessly and without regard as to their truth or falsity. Appellants also filed a motion for preliminary injunction, contending that they were being irreparably harmed as a result of their unlawful terminations from government service. In that motion, appellants challenged: (1) section 152 of the OCRA Act as unconstitutional on its face and as applied to them because it arbitrarily deprived a small group of employees of property rights conferred by the CMPA; (2) section 152 is unrelated to any legitimate objective of Congress and violates appellants' substantive due process rights; (3) the CFO exceeded his authority under section 152 of the OCRA Act; (4) section 152 does not render them "at-will" employees; and (5) public assertion by the CFO that appellants were incompetent constitutes an unconstitutional deprivation of liberty without due process of law.

After appellants filed their original complaint, the OEA issued a decision holding that section 152 made them "at-will" employees at the time the CFO terminated them, and therefore, they were not entitled to the protections of the CMPA.³ Appellants then filed an amended complaint reasserting the claims set forth in the original complaint and further seeking review of the OEA's decision on the ground that it was erroneous as a matter of law and that factual disputed issues precluded summary disposition. The District and the CFO filed a motion to dismiss the amended complaint for failure to state a cause of action upon which relief may be granted. The trial court affirmed the decision of the OEA, denied appellants' motion for preliminary injunction and granted the District's motion to dismiss the remaining claims pursuant to Super. Ct. Civ. R. 12(b)(6) for failure to state a cause of action upon which relief can be granted. The trial court agreed with the OEA that section 152 of the OCRA Act converted appellants to "at-will" employees, thereby divesting them of any pre-termination procedural rights or rights to be terminated only for cause under the CMPA. The trial court also rejected appellants' claims that: (1) section 152 cannot withstand constitutional scrutiny because of the small percentage of employees discharged; and (2) the CFO's press statements about the reason for their terminations touched any protected liberty interest which might give rise to a due process "reputation" hearing. Further, the court rejected their substantive due process challenge to the statute.⁴

II.

A. Due Process and Property Interest

Appellants argue that the trial court erred in rejecting their claim that the firings infringed on their due process rights. They contend that they have a property interest by virtue of their right to continued employment under the CMPA which could not be taken away without procedural due process. In order to invoke the Fifth Amendment's procedural due process protections, an employee must show that a protected liberty or property interest is implicated. See Board of Regents v. Roth, 408 U.S. 564, 569-70, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). To trigger due process protection in the area of public employment, an employee must "have a legitimate claim of entitlement to it." Id. at 577, 92 S.Ct. 2701. For example, tenure and contract provisions have been recognized as property interests of the type safeguarded by due process protections. Id. at 576-77, 92 S.Ct. 2701 (citing Slochower v. Board of Educ., 350 U.S. 551, 76 S.Ct. 637, 100 L.Ed. 692 (1956) and Wieman v. Updegraff, 344 U.S. 183, 73 S.Ct. 215, 97 L.Ed. 216 (1952)). The requisite property interests for due process protections are "created and their dimensions are defined by existing rules ... that stem from an independent source such as state law-rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Id. at 577, 92 S.Ct. 2701. Our first inquiry, therefore, is whether appellants were deprived of a protected interest. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 428, 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982)

. If so, the inquiry becomes what process is due. Id.

Appellants argue that they have a protected property interest in their employment which could not be taken away without according them due process. That process, they contend, is prescribed by the CMPA, which provides for the discharge of career civil service employees only for cause and after notice and an opportunity to respond to the charges. The District and the CFO do not challenge that the CMPA afforded such protections to career civil service employees prior to the enactment of the OCRA Act. See D.C.Code §§ 1-617.1 & -617.3 (1992 Repl. ed.). They argue, however, that appellants have no protection under the CMPA because by...