Wilkinson v. Legal Services Corp., Civ.A. 91-0889 (JHG).

• Citation: 27 F.Supp.2d 32
• Decision Date: 19 November 1998
• Docket Number: No. Civ.A. 91-0889 (JHG).,Civ.A. 91-0889 (JHG).
• Parties: David L. WILKINSON, Plaintiff, v. LEGAL SERVICES CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

27 F.Supp.2d 32

David L. WILKINSON, Plaintiff, v. LEGAL SERVICES CORPORATION, Defendant.

No. Civ.A. 91-0889 (JHG).

United States District Court, District of Columbia.

November 19, 1998.

As Amended November 20, 1998.

COPYRIGHT MATERIAL OMITTED

Reuben B. Robertson, Washington, DC, for David L. Wilkinson, plaintiff.

Charles Samuel Fax, Shapiro & Olander, Baltimore, MD, Niccolo N. Donzella, Baltimore, MD, for Legal Services Corporation, defendant.

Allison C. Giles, U.S. Department of Justice, for United States of America, intervenor-defendant.

OPINION AND ORDER

JOYCE HENS GREEN, District Judge.

In 1989, defendant Legal Services Corporation ("LSC") hired plaintiff David Wilkinson ("Wilkinson") to be its first Inspector General ("IG"). Wilkinson's tenure was fraught with internal dissension and managerial gridlock, and, in February 1991, LSC notified Wilkinson that his employment contract would not be renewed. Wilkinson sued in three counts. One of the counts raised an important and undecided constitutional issue concerning the Board's authority to fire him, which, along with a second count, has been finally resolved.¹ Although not previously apparent, the remaining Count III also raises an important question of first impression concerning the obligations of "private" corporations that have been created by Congress to follow their own rules.

This novel issue arises from Wilkinson's claim that he was wrongfully discharged because LSC failed to comply with its personnel manual before it notified him that his contract would not be renewed. On its face, such a claim is hardly new. When brought against a private employer, a discharged employee's claim based on a personnel manual is generally styled as breach of contract, alleging that the manual is binding on the employer because it incorporates the terms of an express or implied agreement.² If the claim is brought against a government agency, a discharged employee may argue that the personnel manual gave rise to a "property" interest in continued employment that was deprived without due process of law or that the manual set forth internal regulations that the agency was bound to follow under the Accardi doctrine.³

The novelty in this case arises from Wilkinson's exclusive reliance on the Due Process Clause and the Accardi doctrine, both of which apply only to public agencies, even though Congress has declared that LSC "shall not be considered a department, agency, or instrumentality, of the Federal Government," 42 U.S.C. § 2996d(e)(1).⁴ Consequently this case now presents two threshold questions:

1) Can a congressionally-created, private corporation be sued for violation of the Due Process Clause?

2) Can a congressionally-created, private corporation be sued for violating its own rules under the Accardi doctrine?

For constitutional claims, the Court must independently determine whether LSC is a public or private agency, notwithstanding the disclaimer of governmental identity in § 2996d(e)(1). See Lebron v. National RR Passenger Corp., 513 U.S. 374, 392, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995). As to the Accardi claim, even if LSC is a public agency for constitutional purposes, the Court also must address whether Wilkinson's Accardi claim derives from the Constitution or from a lesser source. See id. Although this and other courts deciding administrative law cases routinely invoke the Accardi doctrine as a "well settled" or "familiar" principle, e.g., Fort Stewart Schools v. Federal Labor Relations Auth., 495 U.S. 641, 654, 110 S.Ct. 2043, 109 L.Ed.2d 659 (1990); Woerner v. United States Small Business Admin., 739 F.Supp. 641, 646 (D.D.C.1990) (Green, J.), the principle has become "well settled" only by judicial repetition; its origins are quite obscure.

Consequently, this Opinion relates two stories: the story of how Wilkinson came to join and then leave LSC, and the story of how the Supreme Court came to announce and apply the Accardi doctrine, on which Wilkinson so heavily relies. For those who wish to forgo the narrative journey, the Court has come to the following conclusions.

With respect to the threshold legal issues, the Court holds that LSC is a public agency subject to the Due Process Clause. The Court also must reach Wilkinson's alternative Accardi claim and holds that the Accardi doctrine derives from the Due Process Clause's obligation that government agencies follow the law, even if that "law" is a procedural regulation by which the agency has gratuitously limited its otherwise unfettered discretion. This rule-of-law requirement is a necessary founding principle implicated in any suit against the government for its violations of law. But the constitutional stature of this founding principle does not make every agency's violation of its own rules into a constitutional violation. Unless the agency has violated an independent constitutional provision, a lawsuit based on the Accardi doctrine relies on the predicate requirement that government agents are bound by law, but, for jurisdictional purposes such a claim arises under the regulation claimed to be violated, not the Due Process Clause.

Applying this holding to the instant case, the Due Process Clause creates a presumption that judicial review of an Accardi claim against a government-created "private" corporation is available where Congress has given the corporation the power to make regulations that have the force and effect of law. Where, however, Congress has not given law-making power to such a corporation, the Accardi doctrine does not apply; the corporation's personnel policies are no more public "law" than those of any other private employer.⁵

With respect to Wilkinson's claims, the Court finds that although they are not barred as a matter of law, the evidence supports neither claim. With respect to his Due Process claim, the Court finds that Wilkinson was not guaranteed that he would be discharged only for cause by either the 1978 or the 1990 manual, and therefore he had no property interest in staying on. With respect to the Accardi claim, the Court further finds that on the present record the 1990 Manual did come into force and that the provisions of the manual on which Wilkinson relies do not qualify as binding regulations and, even if they did, they do not apply to the LSC Inspector General. Finally, it is clear that even if LSC had been obliged to give Wilkinson periodic job evaluations, its failure to do so was harmless because Wilkinson's contract would not have been renewed in any event. What follows are the Court's findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of Civil Procedure.

I.

A. The Legal Services Corporation

The Legal Services Corporation is a non-profit, tax-exempt corporation established by the Legal Services Corporation Act of 1974 ("LSC Act"), codified at 42 U.S.C. § 2996b et seq. (1994). LSC provides financial support for legal assistance in certain noncriminal proceedings to persons throughout the United States who cannot otherwise afford legal assistance. LSC generally does not provide legal services to the indigent directly but does so through a series of grants to local organizations. See 42 U.S.C. § 2996e(c)(1). During the time relevant to this case, LSC distributed funds to approximately 300 grantees. See Trial Transcript ("Tr.") at 187-88 (Testimony of former Board member, Howard H. Dana, Jr.).

By law, LSC is governed by an eleven-member Board of Directors ("Board"). See 42 U.S.C. § 2996c(a). Board members are appointed by the President of the United States with the advice and consent of the Senate and serve a specific term of years. Id. § 2996c(a), (b). However, certain members of the Board have served under recess appointments made by the President without the advice and consent of the Senate. See Stipulations of Fact ("Stip.") ¶ 3. Although the Board is composed wholly of political appointees, the LSC Act declares that its members shall not be full-time employees of the United States, id. § 2996c(a), and that Board members "shall not, by reason of such membership, be deemed officers or employees of the United States." Id. § 2996c(c).⁶

The LSC Act also provides that LSC is to be managed by a President, who is elected by the Board and serves as chief executive officer subject to the Board's supervision. See 42 U.S.C. § 2996d(a). The Board may also appoint "such other officers as [it] determines to be necessary." Id. As with the Board, Congress has directed that

Except as otherwise specifically provided in this subchapter, officers and employees of the Corporation shall not be considered officers or employees, and the Corporation shall not be considered a department, agency, or instrumentality, of the Federal Government.

42 U.S.C. § 2996d(e)(1). Rather, LSC is to have the powers of a non-profit corporation under District of Columbia law. See 42 U.S.C. § 2996e(a).

LSC, however, is not like most non-profit corporations. Not only is it controlled entirely by presidential appointees, but also — like numerous other agencies and unlike most non-profit corporations — LSC has been required to have an Inspector General who reports to Congress since 1988.⁷ Although for some agencies, the IG is nominated by the President and confirmed by the Senate,⁸ when Congress amended the IG Act in 1988, it gave the "designated federal entities" such as LSC six months from October 18, 1988 to establish an Office of Inspector General and authorized the "head" of LSC to recruit an individual to fill the position. See 5 U.S.C.App. 3 § 8G(b), (c).⁹

B. Wilkinson's Tenure at LSC

In 1989, to comply with the IG Act, LSC established its Office of Inspector General ("OIG"). LSC selected Wilkinson to be its first Inspector General. Wilkinson is an attorney licensed to practice in Utah who, prior to joining LSC, had served as that State's Attorney General for eight years. See Tr. 74, 117 (Wilkinson). When Wilkinson arrived at LSC, he...