Waddell v. Forney
| Decision Date | 22 April 1997 |
| Docket Number | Nos. 96-1339,96-2009,s. 96-1339 |
| Citation | 108 F.3d 889 |
| Parties | George E. WADDELL, Jr., Appellee, v. James FORNEY; Henry Garcia, Individually and as Assistant Regional Deputy of the National Credit Union Administration (NCUA); Mark Treichel, Individually and as Examiner for the National Credit Union Administration, Appellants. DuTrac Community Credit Union, Intervenor Below. |
| Court | U.S. Court of Appeals — Eighth Circuit |
David Laird Charles, Des Moines, IA, argued (Margaret C. Callahan, on the brief), for Mark Treichel and Henry Garcia in No. 96-2009.
Grant Keith Dugdale, Assistant Attorney General, Des Moines, IA, argued (Thomas J. Miller, on the brief), for James Forney in No. 96-1339.
Angela C. Simon, Dubuque, IA, argued (David L. Hammer, on the brief), for appellee.
Before BOWMAN and HEANEY, Circuit Judges, and SMITH, 1 District Judge.
After his employment termination as general manager of a state-chartered credit union, George E. Waddell, Jr. initiated this action against federal and state defendants, alleging that they deprived him of protected property and liberty interests in his employment without procedural due process. 2 The defendants appeal from the district court's denial of their motions for summary judgment based on qualified immunity, principally arguing that Waddell's alleged constitutional rights were not clearly established. We affirm in part and reverse in part.
As an initial matter, we address Waddell's claim, based on Johnson v. Jones, 515 U.S. 304, ----, 115 S.Ct. 2151, 2153, 132 L.Ed.2d 238 (1995), that this court lacks jurisdiction to consider an appeal from a denial of qualified immunity based on disputed issues of fact. The district court denied summary judgment to the defendants based on its determination that genuine issues of fact regarding the defendants' conduct remain and that, construing the facts in favor of Waddell, a reasonable jury could find for him. While we cannot review the district court's determination that material issues of fact remain for trial on the merits of Waddell's claims, see Allison v. Dept. of Corrections, 94 F.3d 494, 496 (8th Cir.1996), we can consider the legal question whether, in view of the facts that the district court deemed sufficiently supported for summary judgment purposes, the individual defendants' conduct was objectively reasonable given their knowledge and the clearly established law. Id. As Justice Scalia explains in Behrens v. Pelletier:
Johnson reaffirmed that summary-judgment determinations are appealable when they resolve a dispute concerning an "abstract issu[e] of law" relating to qualified immunity, ... typically, the issue whether the federal right allegedly infringed was "clearly established." ... Johnson permits petitioner to claim on appeal that all of the conduct which the District Court deemed sufficiently supported for purposes of summary judgment met the Harlow standard of "objective legal reasonableness."
--- U.S. ----, ----, 116 S.Ct. 834, 842, 133 L.Ed.2d 773 (1996) (citations omitted). Accordingly, we deny Waddell's motion to dismiss and consider whether the individual defendants are entitled to qualified immunity.
Government officials are entitled to qualified immunity when "their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). Thus, we must consider what specific constitutional rights the defendants allegedly violated, whether the rights were clearly established in law at the time of the alleged violation, and whether a reasonable person in the official's position would have known that his conduct would violate such rights. Waddell has alleged that the defendants unlawfully interfered with his employment relation, deprived him of a protected property interest in his employment without due process, and similarly deprived him of a protected liberty interest. After a summary of Waddell's allegations, we address each constitutional claim in turn.
Beginning in September 1985, Waddell was the general manager of First Family Credit Union in Dubuque, Iowa. The deposit funds at the credit union were insured by the National Credit Union Administration ("NCUA"), an independent, federal regulatory agency that has the authority and obligation to periodically examine, investigate, and assist federally insured, state-chartered credit unions pursuant to the Federal Credit Union Act, 12 U.S.C. §§ 1751-1795k. The NCUA has the authority to terminate a credit union's insured status, 12 U.S.C. § 1786(b) & (c), and to remove an officer or director of a credit union after notifying the individual of the charge and setting a hearing, 12 U.S.C. § 1786(g). According to the NCUA Examiner Guide, however, an examiner should never recommend the removal of credit union management or personnel except for criminal acts. (Jt.App. at 131.) The guide provides:
Removal of credit union management and/or personnel may be one of the alternatives presented to the officials, but any removal action must clearly be the officials' decision. Removal of officials and management by NCUA can be done only in accordance with the Act and the Rules and Regulations.
Id. At all times relevant to this action, defendant Henry Garcia was an Assistant Regional Deputy of the NCUA and Mark Treichel was an NCUA examiner in the region supervised by Garcia.
First Family is also regulated and supervised by the Iowa Credit Union Division (ICUD), under the direction of defendant James Forney, the Superintendent of Credit Unions for the State of Iowa. See Iowa Code § 533.55 (1993). Forney similarly has the authority to remove any officer, director, employee, or committee member of a credit union if, after notifying the individual of the charge against him and giving him a reasonable opportunity to be heard, he determines that the individual has either violated a law or has engaged in an unsafe or unsound practice in conducting the business of a credit union. Iowa Code § 533.6(5) (1993).
In 1990, after several years of concern about First Family's financial stability, the ICUD and the NCUA conducted a joint examination of the credit union. In August, Forney requested First Family to show cause why he should not initiate formal proceedings to revoke its charter. First Family prepared a business plan addressing the concerns raised by Forney and presented it at a meeting of the board, Forney and other ICUD members, and NCUA officials including Treichel. At that time, Forney did not decide whether he would seek revocation of the credit union's charter.
Both Forney and the NCUA continued to monitor First Family's progress. Treichel, on behalf of the NCUA, conducted an audit of the credit union. He concluded that First Family was insolvent and that its problems were due in large part to Waddell's negligence. He submitted a written report to Garcia, recommending that as a condition of further assistance to First Family, its Board should terminate Waddell "for negligence" without paying him termination compensation as provided under his contract. (Jt.App. at 129-30.) Garcia adopted the report as NCUA's official position. In September, Garcia gave Forney a copy of Treichel's report and told him that in the opinion of the NCUA, First Family was insolvent and its manager had disregarded prudent lending practices when making business loans.
On Friday, September 28, Forney met with Waddell and requested his resignation. Waddell refused, denying the allegations in the NCUA report and requesting a hearing to clear up the matter. Forney arranged for a meeting with the credit union board that evening. At the meeting, Forney told the board about his discussions with the NCUA officials and their recommendations, including their demand that Waddell be removed immediately. He then presented the board with three alternatives, which he indicated came from the NCUA through Garcia. The first option was that the NCUA could take over the credit union the following Monday and appoint its own manager to replace Waddell. Alternatively, First Family and Forney could select a manager to replace Waddell and take over the credit union in a short time period. Finally, the Board could retain Waddell as manager, but Forney indicated that he would initiate administrative proceedings against the credit union and require the credit union to immediately post a sign on its doors stating that in one year it would no longer have insurance.
The board considered the first two options unrealistic due to the time pressures and the lack of input the credit union would have. The final option, according to Carl McCarthy, the board's chairman, was in "fact," "a threat saying--telling our depositors that their money is no longer insured...." (Dist.Ct.Op. at 7 (quoting McCarthy Dep. at 36).) McCarthy explained, "the effect of [the third option] would be that the day after you put that [sign] on your door, there wouldn't be a credit union because there would be no funds there." (Id. (quoting McCarthy Dep. at 35).) In light of the alternatives, the board suggested a fourth option: a merger with another credit union. Forney accepted the merger option but maintained that Waddell would still have to be fired. (Id. at 8.) According to McCarthy, the board wanted to retain Waddell and did not believe that the charges against him were substantiated, but the directors' hands were essentially tied because the message from the NCUA was clear--they had no real choice but to terminate Waddell.
Over the course of the next few days, the threats and demands of the NCUA were repeated to the board members and expanded to include threats that the individual...
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