Narey v. Dean

Decision Date26 September 1994
Docket NumberNo. 93-8566,93-8566
Parties, 9 IER Cases 1709 James H. NAREY, Plaintiff-Appellee, v. Darrell DEAN, Individually and in his official capacity as Georgia Department of Human Resources, District One, District Medical Director, et al., Defendants-Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

William C. Joy, Carol Atha Cosgrove, Ronald R. Womack, Sp. Asst. Atty. Gen., LaFayette, GA, for appellants.

John W. Davis, Jr., Gleason & Davis, David James Dunn, Rossville, GA, Benjamin Peter Erlitz, Atlanta, GA, for appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before BIRCH and CARNES, Circuit Judges, and BLACKBURN *, District Judge.

CARNES, Circuit Judge:

Georgia state officials Dean, Gates, and Moss appeal from a district court judgment based on a jury verdict and damages award against them in this Sec. 1983 suit. In light of McKinney v. Pate, 20 F.3d 1550 (11th Cir.1994) (en banc), we reverse.

I. BACKGROUND

James Narey was the director of the Northwest Georgia Community Mental Health Center in Fort Oglethorpe. As a tenured state employee, he had a property interest in his job. Narey's supervisor was Darrell Dean, the District Health Officer. In January 1988, after an audit revealed questionable financial practices by the Center, Dean asked his supervisor, John Gates of the State Division of Mental Health and Mental Retardation, for an investigation. Gates forwarded the request to the Department of Human Resources's Office of Fraud and Abuse, which assigned James Moss to the task. Dean suspended Narey, with pay, during the pendency of the investigation.

After the investigation was concluded, Dean requested that Narey be terminated, citing numerous problems with his management of the Center, including improper handling of client funds, failure to maintain a computerized drug inventory, misuse of state grant-in-aid funds, and failure to obtain approval prior to entering a lease. Narey asked Gates to conduct a pre-termination review. Gates agreed that Narey's performance was problematic, but instead of firing him, Gates demoted him, cut his pay, and assigned him to work as a counselor in the same health center that he had formerly directed.

After his demotion, Narey appealed to the State Personnel Board. After a seven-day, quasi-judicial hearing on the matter, the hearing officer upheld Gates's decision. Narey appealed to the full Board, which affirmed. Narey then filed an appeal with the Catoosa County Superior Court, which he later voluntarily dismissed without prejudice.

Narey then filed this Sec. 1983 suit in federal district court, alleging that the defendants had concocted "trivial, technical, minute and inconsequential" charges against him in order to remove him from his position in violation of his rights under the Fifth and Fourteenth Amendments of the United States Constitution. He asserted three due process claims: that the defendants had demoted him for pretextual reasons, that they had failed to satisfy the requirements of progressive discipline before demoting him, and that they were without legal authority to take the adverse action against him. Narey also asserted a state law claim for tortious interference with his contractual rights, which he abandoned before trial. The district court granted judgment as a matter of law for the defendants on Narey's claim that the defendants lacked the authority to demote him. The remaining two due process claims went to the jury, which returned a verdict for Narey, and awarded him $400,000 in compensatory damages; the jury also awarded Narey $550,000 in punitive damages against Dean, $550,000 in punitive damages against Gates, and $250,000 in punitive damages against Moss. The court entered a judgment based on the jury's verdict on December 28, 1992. The defendants brought this appeal.

II. ISSUES

On appeal, the defendants argue that, under the Rooker- Feldman and res judicata doctrines, the decision of the State Personnel Board upholding Narey's demotion barred the district court from hearing Narey's case. Alternatively, the defendants argue that the district court erred in allowing Narey to proceed with a substantive due process claim for pretextual demotion. Narey argues that, because the defendant's notice of appeal was defective, we do not have jurisdiction over this appeal. We will first address the threshold jurisdictional issues concerning the notice of appeal and the Rooker- Feldman doctrine, and then discuss the defendants' other contentions.

A. THIS COURT'S JURISDICTION OVER THE APPEAL

Narey contends that the defendants' notice of appeal was untimely because it was filed before the judgment became final, and that we therefore have no jurisdiction over this appeal. We disagree.

The district court's December 28, 1992 judgment did not mention reinstatement, although the court had previously announced its intention to award Narey that relief. On January 7, 1993, Narey moved for entry of an order of reinstatement to his former position. The defendants then moved for judgment as a matter of law or for a new trial. On April 22, 1993, the defendants' motion was denied. On April 30, while Narey's motion for reinstatement was still pending, the defendants filed their notice of appeal. On May 4, the district court issued an order stating that Narey would be reinstated, but that the entire judgment would be stayed until the disposition of the appeal.

Narey then moved the district court to dismiss the appeal, arguing that the judgment did not become final until that court's May 4 ruling on Narey's motion for reinstatement--four days after the notice of appeal was filed. At that time, Fed.R.App.P. 4(a)(4) provided that a notice of appeal filed before the disposition of a motion to alter or amend the judgment has no effect. Narey argued to the district court that his motion to amend the judgment to include reinstatement therefore made the defendants' notice of appeal ineffective. The defendants countered by moving the district court to retroactively certify for appeal its April 22 order denying their motion for a new trial or judgment as a matter of law. In response, the district court concluded that it had granted reinstatement previously, although not in writing. The court therefore concluded that the April 22 order was the final decision in the case, and the May 4 order was merely a collateral ruling on when reinstatement was to occur (i.e., not during the appeal). A motions panel of this Court accepted the district court's interpretation of the events and its characterization of the May 4, 1993 order as "wholly collateral to the judgment," and denied Narey's motion to dismiss the appeal for lack of jurisdiction.

Observing that Eleventh Circuit Rule 27-1(f) gives the merits panel the power to overturn the motions panel's decision, Narey now renews his argument that we lack jurisdiction over this appeal. Narey argues that if the district court had not entered the May 4, 1993 order, the judgment would have become final after ten days, and the issue of his reinstatement would have been waived. He therefore reasons that the order did alter or amend the judgment by granting him a form of relief he otherwise would have lost. Because of a recent amendment to Fed.R.Civ.P. 4, we need not decide whether Narey's characterization of the May 4, 1993 order, or that of the district court, is correct.

Until December 1, 1993, Rule 4 provided that the filing of a Rule 59 motion to alter or amend a judgment voided any notice of appeal filed before the disposition of the motion. However, under the version of Rule 4(a)(4) that took effect on December 1, 1993, an otherwise timely notice of appeal filed before the disposition of a Rule 59 motion is not voided but instead merely lies dormant while the motion is pending, and the notice of appeal becomes effective as of the date of the order disposing of the Rule 59 motion.

We applied the new Rule 4(a)(4) retroactively in Virgo v. Rivera Beach Assocs., Ltd., 30 F.3d 1350 (11th Cir.1994). In that decision, we noted that the Supreme Court's order adopting the new Rule 4(a)(4) provided that it was to apply to all cases then pending " 'insofar as just and practicable.' " Id., 30 F.3d at 1355 n. 3 (quoting Burt v. Ware, 14 F.3d 256, 258 (5th Cir.1994)). The only limitation on the Supreme Court's power to apply procedural rules retroactively is contained in 28 U.S.C. Sec. 2074, which prohibits retroactive application where "the application of such rule ... would work injustice." In Burt v. Ware, the Fifth Circuit concluded that it is not an injustice for a party to lose the "windfall" of having an appeal dismissed because of a loophole in the procedural rules, 14 F.3d at 260, and our decision in Virgo essentially adopted that position.

Because the new Rule 4(a)(4) is to be applied retroactively, it does not matter whether Narey's motion was a Rule 59 motion to alter or amend the judgment. Even if it were, the defendants' notice of appeal became effective May 4, 1993--the date the district court disposed of the motion. We would therefore still have jurisdiction over this appeal. Accordingly, we reject Narey's argument that we lack jurisdiction.

B. THE ROOKER-FELDMAN ISSUE

The defendants argue that under the Rooker- Feldman doctrine, the decision of the State Personnel Board deprived the district court of subject-matter jurisdiction over Narey's lawsuit, a contention we review de novo. Latin Am. Property & Casualty Ins. Co. v. Hi-Lift Marina, Inc., 887 F.2d 1477, 1479 (11th Cir.1989).

The Rooker- Feldman line of cases has been described as the "jurisdictional transmutation of res judicata doctrine." 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure Sec. 4469 (1981). The essence of the Rooker- Feldman doctrine is that "a United States District Court has no authority to review final...

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