Moreno v. Small Business Admin., Civ. 3-87-239.
| Decision Date | 22 March 1988 |
| Docket Number | No. Civ. 3-87-239.,Civ. 3-87-239. |
| Citation | 681 F. Supp. 1370 |
| Parties | Celso Carlos MORENO, Plaintiff, v. SMALL BUSINESS ADMINISTRATION, an agency of the United States of America; and James Abdnor, its Administrator; James C. Sanders; Richard D. Durkin; James L. Charney; J. Fred Herlocker; Robert A. Turnbull; James N. Thomson; Gene Graves; and Donald W. Showalter, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Jack D. Elmquist, Jack D. Elmquist Law Offices, Minneapolis, Minn., for plaintiff.
Mary E. Carlson, Asst. U.S. Atty., Minneapolis, Minn., for defendants Small Business Admin., James Abdnor, James Sanders, Richard Durkin, James Charney, J. Fred Herlocker, Robert Turnbull, James Thomson, and Gene Graves.
Arlene Messinger, Washington, D.C., for defendant Small Business Admin.
Frederick W. Morris, Minneapolis, Minn., for defendant Donald W. Showalter.
The government has moved for dismissal of this action for lack of jurisdiction and for failure to state a claim upon which relief may be granted.
For purposes of this motion, the facts are alleged in plaintiff's complaint are assumed to be true. According to the complaint, the plaintiff is a management level employee in the Small Business Administration (SBA) who held the position of District Director of SBA's Minneapolis District Office from November 1982 through July 1985. Shortly after his appointment to this position he began receiving reports of improprieties in the Minnesota District portfolio of minority contracting awards (8(a) contracts). Plaintiff relayed these reports to the Inspector General of the SBA and a full investigation and criminal prosecutions followed.
In March of 1985, plaintiff was informed that he had been selected to fill a vacancy in a pilot position entitled Regional Director for Private Sector Initiatives. Plaintiff's position was the only one of its kind. In December of 1986, plaintiff was informed that his position was being abolished and that there were no positions in his competitive area to which he was entitled. Plaintiff was placed in a downgrade position as Assistant District Director for Business Development in Cleveland, Ohio.
Essentially, plaintiff alleges that he was placed in a deliberately temporary, experimental position and then in a downgrade position in retaliation for "whistle-blowing" by conveying reports of improprieties to the Inspector General. He also alleges racial discrimination. He has instituted this action against the SBA and individually against nine employees or former employees of the SBA.
In Count I, plaintiff alleges that defendants conspired to violate plaintiff's first amendment rights in violation of 42 U.S.C. sections 1985 (1) and (3). The government makes three arguments in support of its claim that Count I fails to state a claim. The government claims that the administrative grievance and review system of the Civil Service Reform Act (CSRA) provides an exclusive remedy for federal employees with employment related claims, precluding an action under Section 1985. The government cites Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed. 2d 648 (1983), in support of this argument. However, Bush v. Lucas determined only that a nonstatutory cause of action should not be judicially created for federal employee grievances that could be redressed through the administrative system established by Congress. Bush v. Lucas does not hold or suggest that the CSRA precludes other statutory causes of action.
The government next argues that because Section 1985 confers enforcement not substantive rights, plaintiff should pursue any rights conferred by the CSRA under its own enforcement provisions. While it is true that Section 1985 creates no substantive rights, Great American Savings and Loan Ass'n v. Novotny, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979), a close reading of the complaint shows that Count I alleges a conspiracy by defendants to deprive whistle-blowers of equal protection of their rights conferred by the first amendment. Thus, the government's argument that CSRA rights must be pursued under the remedial provisions of the Act does not demonstrate a failure to state a claim in Count I.
The government also contends that plaintiff has failed to allege a class based animus and purposeful discrimination, necessary elements of a Section 1985(3) action. However, whistle-blowers have been designated as a "class" within the meaning of Section 1985(3), as have political opponents, supporters of a political candidate, and even a single family. Lapin v. Taylor, 475 F.Supp. 446, 450 (D.Hawaii 1979), citing Life Ins. Co. of North American v. Reichardt, 591 F.2d 499 (9th Cir.1979); Means v. Wilson, 522 F.2d 833 (8th Cir.1975); Cameron v. Brock, 473 F.2d 608 (9th Cir. 1973); Azar v. Conley, 456 F.2d 1382 (6th Cir.1972). Thus, Count I's allegations of low performance ratings and reassignment in retaliation for whistle-blowing state a cause of action under 42 U.S.C. Sections 1985(1) and (3).
In Count II, plaintiff alleges racial discrimination in violation of 42 U.S.C. Section 1981. The government contends that plaintiff has failed to state a claim for racial discrimination, arguing that Title VII provides the exclusive remedy for federal employees alleging such discrimination. Brown v. General Services Administration, 425 U.S. 820, 96 S.Ct. 1961, 48 L.Ed. 2d 402 (1970); Premachandra v. United States, 739 F.2d 392, 394 (8th Cir.1984).
The government also noted that even if Title VII had been invoked, the complaint would be deficient because of plaintiff's failure to exhaust his administrative remedies under Title VII for his claim of discrimination. It is well established that a plaintiff must exhaust its administrative remedies in a Title VII action before seeking judicial redress. See 42 U.S.C. Section 2000e-16(c); McIntosh v. Weinberger, 810 F.2d 1411, 1424 (8th Cir.1987). Finally, the government argues that a Title VII complaint may only be taken against the head of the involved agency in his or her individual capacity. See, e.g., Cooper v. U.S. Postal Service, 740 F.2d 714, 715-716 (9th Cir.1984).
Plaintiff admits his failure to exhaust his administrative remedies and does not contest the government's argument that Title VII preempts Section 1981 in this context. Consequently, the motion to dismiss is granted with respect to this Count.
Count III alleges that defendants individually and jointly acted in violation of his first amendment rights by effecting plaintiff's lateral transfer and demotion in retaliation for whistle-blowing. He seeks recovery of damages on a Bivens -type theory.
The government contends that a Bivens remedy is unavailable for claims arising out of a federal employment relationship, citing Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983); McAlister v. Ulrich, 807 F.2d 752, 753 (8th Cir. 1986); Premachandra v. United States, 739 F.2d 392, 394 (8th Cir.1984).
While the language of these cases appears to support the government's contention at first reading, upon closer analysis, their reasoning does not apply in this instance.
The Court in Bush declined to fashion a Bivens remedy for an alleged violation of a federal employee's first amendment rights by his superiors. The Court declined to create a Bivens remedy to augment the comprehensive administrative redress system that had been established for most federal employment actions:
Federal civil servants are now protected by an elaborate, comprehensive scheme that encompasses substantive provisions forbidding arbitrary action by supervisors and procedures — administrative and judicial — by which improper action may be redressed. They apply to a multitude of personnel decisions that are made daily by federal agencies. Constitutional challenges to agency action, such as the First Amendment claims raised by petitioner, are fully cognizable within this system.
Bush v. Lucas, 462 U.S. at 386-387, 103 S.Ct. at 2415. It is clear that the Supreme Court found the comprehensiveness of the system, including intra-agency remedies, appeals to the Merit Systems Protection Board (MSPB), and judicial review, vital to its decision not to create a Bivens remedy. Furthermore, the concurring opinion of Justice Marshall makes it clear that "there is nothing in today's decision to foreclose a federal employee from pursuing a Bivens remedy where his injury is not attributable to personnel actions which may be remedied under the federal statutory scheme." Bush v. Lucas, 462 U.S. at 391, 103 S.Ct. at 2418.
As pointed out by the plaintiff, the action he complains of, transfer and demotion in retaliation for whistle-blowing, is not subject to review by the MSPB and judicial review as an adverse employment action. S...
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Moreno v. Small Business Admin.
...interlocutory appeal, objecting to the district court's denial of the SBA's motions for dismissal and/or partial summary judgment, 681 F.Supp. 1370 (1988). We reverse in part and, in the light of the enactment of the Federal Employees Liability Reform and Tort Compensation Act of 1988, rema......