Vander Zee v. Reno

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

___________________

No. 95-50482

HARLAN D. VANDER ZEE,

Plaintiff-Appellant,

versus

JANET RENO; ROBERT E. RUBIN; STONE

OAK BANKSHARES INC.; STONE OAK

NATIONAL BANK; FIDELITY AND DEPOSIT

COMPANY OF MARYLAND; EUGENE LUDWIG,

Comptroller of the Currency of the

United States,

Defendants,

and

RONALD F. EDERER, U.S. ATTORNEY;

JACK C. FRELS; ROBERT S. MULLER, III;

JOAN EARP; JESSE WONG; JEFF DOWDY;

JOE FLORIO; UNITED STATES OF AMERICA,

Defendants-Appellees.

________________________________________________

Appeal from the United States District Court for the

Western District of Texas

(A-94-CV-469)

________________________________________________

October 4, 1996

Before GARWOOD, DAVIS and DeMOSS, Circuit Judges.*

GARWOOD, Circuit Judge:

*

Pursuant to Local Rule 47.5, the Court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

Plaintiff-Appellant Harlan D. Vander Zee (Vander Zee) appeals

the dismissal of his claims brought against the United States under

the Federal Tort Claims Act (FTCA) and against several individual

federal defendants under Bivens v. Six Unknown Named Agents of the

Federal Bureau of Narcotics, 91 S.Ct. 1999 (1971). We affirm.

Facts and Proceedings Below

Between 1986 and 1991, Vander Zee served as executive vice-

president of Stone Oak National Bank in San Antonio, Texas. During

this period, he became aware of large cash deposits being made by

Mario Alberto Salinas-Trevino (Salinas) and his associates. By all

indications, Vander Zee properly reported these transactions to

federal authorities as required by law. In March 1989, Salinas was

indicted and arrested on drug trafficking charges, although he

later escaped from custody.

Vander Zee alleges that following Salinas’ escape Assistant

United States Attorney Jack C. Frels (Frels) threatened Vander Zee

with indictment for money laundering unless he would falsely

testify that he and other Stone Oak officers were aware that the

funds deposited by Salinas were drug proceeds. Vander Zee and

Stone Oak’s president, Herbert E. Pounds, Jr. (Pounds), were

subsequently indicted by a federal grand jury on money laundering

charges, although they were ultimately acquitted by the trial court

at the close of the government’s case-in-chief. Following Vander

Zee’s indictment, Vander Zee’s resignation was requested by Stone

2

Oak’s Board of Directors. Vander Zee alleges that “Jack C. Frels,

Joseph Florio and unknown persons at justice [sic] in Washington

calling the shots caused someone at the OCC [Office of the

Comptroller of the Currency], on information and belief Wong or

Earp to orally demand that the bank fire Vander Zee,” and that “Mr.

Schumann, President of the Bank, duly reported to the Board of

Directors the demand by the Department of Justice (conveyed by

OCC), that either Vander Zee would be fired or the bank would be

closed.” Vander Zee resigned from his position at Stone Oak on May

22, 1990.

After the conclusion of the criminal proceedings against

Vander Zee, the government continued to pursue a civil forfeiture

action against assets seized at the time of Salinas’ arrest.

Salinas’ interest in these assets was forfeited. Stone Oak, which

had a lien on the assets securing loans it had made, and the United

States were the sole remaining litigants. Stone Oak eventually

reached a settlement agreement with the United States allowing

Stone Oak to retain these assets to recapitalize the bank. In

addition, an addendum to the settlement agreement provided that

Stone Oak would neither rehire Vander Zee nor pay attorneys’ fees

or provide other financial assistance “unless the Bank becomes

legally obligated to do so.” The settlement agreement and addendum

were expressly made contingent upon approval by the United States

District Court in which the forfeiture action was pending, which

approval was subsequently obtained, and an order accepting the

3

settlement was entered by the district court on August 14, 1992.

On August 13, 1993, Vander Zee filed suit against the United

States and several former government officials in their individual

capacities, including former Assistant Attorney General Robert S.

Mueller, III (Mueller), former United States Attorney Ronald Ederer

(Ederer), and former Assistant United States Attorney Jack C.

Frels, as well as against private defendants Stone Oak, Stone Oak

Bankshares, Inc., and Fidelity & Deposit Company of Maryland. The

United States and the former government officials sued in their

individual capacities filed motions to dismiss pursuant to Federal

Rules of Civil Procedure 12(b)(1) and 12(b)(6). These motions were

granted by the district court. The district court held, inter

alia, that Vander Zee’s Bivens claims against the individual

defendants should be dismissed because Vander Zee failed to allege

the violation of any constitutionally protected interest, or,

alternatively, because the individual defendants were entitled to

qualified immunity because the interests allegedly infringed were

not “clearly established.” These claims were subsequently severed

from the original action, and a final judgment for the defendants

was entered on August 26, 1994. Appeal was taken to this Court,

which affirmed the judgment of the district court. Vander Zee v.

Reno (Vander Zee I), 73 F.3d 1365 (5th Cir. 1996).

The present action (Vander Zee II) was filed in the United

States District Court for the Western District of Texas, Austin

4

Division, on July 1, 1994. Vander Zee has attempted to assert

state law tort claims against the United States under the Federal

Tort Claims Act (FTCA) and against the individual defendants for

false arrest, false imprisonment, malicious prosecution, abuse of

process, intentional and/or negligent infliction of emotional

distress, defamation, civil conspiracy, and interference with

contract rights relating to Vander Zee’s purportedly coerced

resignation from Stone Oak, his arrest and prosecution, and harms

allegedly caused by the terms of the settlement agreement and

addendum entered into between Stone Oak and the government. Vander

Zee also asserts Bivens claims against several government attorneys

including Ederer, Frels, Mueller, and Joseph Florio (Florio),

against FBI agent Jeff Dowdy (Dowdy), and against employees of the

Office of the Comptroller of the Currency (OCC) Joan Earp (Earp)

and Jesse Wong (Wong) for their actions relating to these events.

Motions to dismiss were filed on behalf of the United States

and the individual federal defendants, which were granted by the

district court by order entered April 25, 1995. The district court

first held that the United States was properly substituted for the

individual defendants with respect to Vander Zee’s state law claims

pursuant to a notice of substitution filed by the United States as

provided under the Westfall Act, 28 U.S.C. § 2679. The district

court then held that all claims against the United States must be

dismissed for want of subject matter jurisdiction as Vander Zee’s

5

state law claims all fell within the exceptions to the FTCA’s

general waiver of sovereign immunity as provided at 28 U.S.C. §

2680(h). Alternatively, the district court held that Vander Zee’s

claims were barred by the FTCA’s discretionary function exception

as provided at 28 U.S.C. § 2680(a). With respect to the remaining

Bivens claims against the individual defendants, the district court

held that Vander Zee’s claims were barred by the applicable statute

of limitations, that Vander Zee’s claims pertaining to the terms of

the settlement agreement and addendum were barred by collateral

estoppel having previously been decided in Vander Zee I, that

defendants Mueller, Ederer, Frels, and Florio were entitled to

absolute immunity from any claims related to Vander Zee’s

indictment and prosecution, and that the individual defendants were

entitled to qualified immunity from Vander Zee’s claims relating to

the terms of the settlement agreement and to his allegedly coerced

resignation from Stone Oak. Vander Zee now brings this appeal.

Discussion

We review the district court’s dismissal under Rule 12(b)(6)

for failure to state a claim de novo, taking all facts properly

pleaded as true and viewing them in the light most favorable to the

plaintiff. Rolf v. City of San Antonio, 77 F.3d 823, 827 (5th Cir.

1996). “Dismissal is not proper unless it appears, based solely on

the pleadings, that the plaintiff can prove no set of facts in

support of the claim(s) warranting relief.” Id; see also Morin v.

6

Caire, 77 F.3d 116, 120 (5th Cir. 1996). Though we take factual

allegations of the complaint to be true, “we do not assume facts

the plaintiffs have not alleged.” McCormack v. National Collegiate

Athletic Ass’n, 845 F.2d 1338, 1343 (5th Cir. 1988). The district

court’s dismissal under Rule 12(b)(1) for lack of subject matter

jurisdiction is similarly subject to de novo review. Zuspann v.

Brown, 60 F.3d 1156, 1157 (5th Cir. 1995), cert. denied, 116 S.Ct.

909 (1996).

I. Claims Against the United States

A. Substitution of United States for Individual Defendants

on State Law Claims

The Westfall Act, 28 U.S.C. § 2679, provides:

“Upon certification by the Attorney General that the

defendant employee was acting within the scope of his

office or employment at the time of the incident out of

which the claim arose, any civil action or proceeding

commenced upon such claim in a United States district

court shall be deemed an action against the United States

under the provisions of this title and all references

thereto, and the United States shall be substituted as

the party defendant. Id. at § 2679(d)(1).

Generally, such certification is subject to de novo judicial

review, and the question whether the employee was acting within the

scope of employment is governed by the law of the state in which

the conduct at issue occurred. Garcia v. United States, 62 F.3d

126, 127 (5th Cir. 1995)(en banc). Although we give no judicial

deference to the Attorney General’s findings, Palmer v. Flaggman,

93 F.3d 196, 198-99 (5th Cir. 1996), the plaintiff bears the burden

7

of proof to show that the employee’s conduct was not within the

scope of employment. Williams v. United States, 71 F.3d 502, 506

(5th Cir. 1995).

In the present case, Helene M. Goldberg, Director of the Torts

Branch, Civil Division of the United States Department of Justice,

certified that the individual defendants were acting within the

scope of their employment with respect to the conduct alleged

within Vander Zee’s First Amended Complaint.1 The court below

noted that Vander Zee filed no opposition to the notice of

substitution, although he had alleged in his First Amended

Complaint and in response to the motion to dismiss that the

individual defendants’ acts were outside of the scope of their

employment. The district court found based upon the pleadings that

the individual defendants were acting within the scope of their

employment. We agree, for the reasons set out below in our

discussion of the FTCA discretionary function exception (see part

1

Vander Zee suggests in his brief that the certification is

invalid because it was not made by the Attorney General. However,

authority to make this certification is delegated to the Director

of the Torts Branch by the Assistant Attorney General in charge of

the Civil Division at 28 C.F.R. 15.3, Appendix (Directive No. 90-

79).

In addition, the government acknowledges that the

certification erroneously cites section 2679(d)(2) which deals with

certification for purposes of removal of cases brought against

government employees in state court and substitution of the United

States as party defendant. The proper provision is found at

section 2679(d)(1), which addresses substitution following

certification for cases brought in a United States district court.

However, this discrepancy does not invalidate the certification nor

did it cause any prejudice to Vander Zee.

8

I C, infra) and of the defendants’ entitlement to qualified (and,

in part, absolute) immunity (see part II B, infra). The district

court’s substitution of the United States for the individual

defendants was correct and is affirmed. Further, the district

court also held that by failing to oppose the certification Vander

Zee in substance waived any challenge to it and failed to carry his

burden of showing the certification was erroneous. We agree with

the district court that having failed to oppose the notice of

substitution Vander Zee necessarily waived any challenge to it and

failed to carry his burden of showing the certification was

erroneous. As Vander Zee failed to challenge the notice of

substitution and certification, for this reason also the United

States was properly substituted for the individual defendants with

respect to Vander Zee’s state law claims.

B. Section 2680(h) of the Federal Tort Claims Act

As sovereign, the United States is generally immune from suit

except where it has expressly consented to be sued. Saraw

Partnership v. United States, 67 F.3d 567, 569 (5th Cir. 1995);

Truman v. United States, 26 F.3d 592, 594 (5th Cir. 1994). Absent

such consent, any suit brought against the United States must be

dismissed for lack of subject matter jurisdiction. Truman, 26 F.3d

at 594. However, the Federal Tort Claims Act (FTCA) waives

immunity for any --

“negligent or wrongful act or omission of any employee of

the Government while acting within the scope of his

9

office or employment, under circumstances where the

United States, if a private person, would be liable to

the claimant in accordance with the law of the place

where the act or omission occurred.” 28 U.S.C. §

1346(b).

The waiver of immunity found in the FTCA is, however, subject to

several exceptions found at section 2680(h), which excludes “[a]ny

claim arising out of assault, battery, false imprisonment, false

arrest, malicious prosecution, abuse of process, libel, slander,

misrepresentation, deceit, or interference with contract rights.”2

These exceptions are to be strictly construed in favor of the

government. McNeily v. United States, 6 F.3d 343, 347 (5th Cir.

1993); Saraw Partnership, 67 F.3d at 569.

We agree fully with the district court’s conclusion that

Vander Zee’s state law claims all fall within the exceptions to the

waiver of sovereign immunity contained in section 2680(h), and

recapitulate this analysis only briefly here. With respect to

Vander Zee’s claims for false imprisonment, false arrest, malicious

2

The exceptions to the waiver of sovereign immunity contained

in section 2680(h) are inapplicable to “investigative or law

enforcement officers” defined as “any officer of the United States

who is empowered by law to execute searches, to seize evidence, or

to make arrests for violations of Federal law.” 28 U.S.C. §

2680(h). Vander Zee suggests in his First Amended Complaint that

the United States Attorneys should be considered “law enforcement

officers” by virtue of the control which they exercised over the

actions of agents of the FBI. However, those courts that have

considered the question have concluded that prosecuting attorneys

are not “law enforcement officers” within the meaning of this

section. See Bernard v. United States, 25 F.3d 98, 104 (2d Cir.

1994); Ware v. United States, 838 F.Supp. 1561, 1563-64 (M.D. Fla.

1993); Dirienzo v. United States, 690 F.Supp. 1149, 1158 n.8 (D.

Conn. 1988). We agree.

10

prosecution, and abuse of process, these causes of action are all

expressly included in section 2680(h), except for acts or omissions

of “investigative or law enforcement officers.” Vander Zee

attempts to evade the strictures of section 2680(h) by attributing

the acts that form the basis of these claims to agents of the

Federal Bureau of Investigation. As the district court properly

noted, Vander Zee’s complaint suggests that his prosecution was the

result of his unwillingness to testify against the bank as

allegedly demanded by Assistant United States Attorney Frels.

Therefore, Vander Zee’s claims for malicious prosecution and abuse

of process are premised on actions of a government agent who is not

an investigative or law enforcement officer, and these claims are

expressly foreclosed by the FTCA. Clearly, the United States

Attorney’s office was responsible for prosecuting Vander Zee, and

the fact that the FBI may have assisted in the investigation does

not alter this analysis. As far as the claims for false

imprisonment and false arrest are concerned, Vander Zee’s arrest

and detention were pursuant to an indictment and therefore cannot

form the basis for a claim for false imprisonment or false arrest

against the FBI agents performing the arrest under Texas law. See

Pete v. Metcalfe, 8 F.3d 214, 218-19 (5th Cir. 1993)(no action for

false imprisonment for arrest pursuant to valid warrant); see also

Campbell v. City of San Antonio, 43 F.3d 973, 976 & 980 n.11 (5th

Cir. 1995).

11

Vander Zee’s complaint contains additional allegations that

could be read as either claims for deprivations of constitutionally

protected property rights or as state law claims for interference

with contract rights and defamation relating to his allegedly

coerced resignation and the subsequent settlement agreement entered

into between the bank and the government. In either case, Vander

Zee may not recover from the United States under the FTCA. Federal

constitutional torts may not be pursued under the FTCA, Federal

Deposit Ins. Corp. V. Meyer, 114 S.Ct. 996, 1001 (1994), while

claims for interference with contract rights or defamation are

specifically excepted from the FTCA’s waiver of sovereign immunity

by section 2680(h).

Vander Zee additionally asserts claim for either intentional

or negligent infliction of emotional distress. While these claims

are not specifically excepted from the FTCA’s waiver of sovereign

immunity under section 2680(h), our opinion in Truman v. United

States, 26 F.3d 592, 594 (5th Cir. 1994), explains that “[i]f the

conduct upon which a claim is based constitutes a claim ‘arising

out of’ any one of the torts listed in section 2680(h) then federal

courts have no jurisdiction to hear that claim.” Plainly Vander

Zee’s claim arises out of his arrest and prosecution, allegedly

coerced resignation from his job, and the terms of the settlement

agreement, which we have already indicated must be understood to be

claims for torts specifically enumerated under section 2680(h).

12

Finally, Vander Zee asserts a claim for civil conspiracy to

deprive him of his job, his future employment prospects, and legal

fee reimbursement to which he claims an entitlement. However,

there is no independent liability for civil conspiracy under Texas

law, but rather liability is premised upon a conspiracy to commit

an underlying wrongful act. See Banc One Capital Partners Corp. v.

Knepper, 67 F.3d 1187, 1194-95 & n.10 (5th Cir. 1995). As we have

already established, Vander Zee’s claims arise out of torts

specifically enumerated under section 2680(h), and therefore his

civil conspiracy claim may not be maintained under the FTCA.

For the foregoing reasons, we concur in the district court’s

conclusion that it was without subject matter jurisdiction of

Vander Zee’s claims against the United States, and therefore these

claims were properly dismissed.

C. Discretionary Function Exception

The district court held in the alternative that Vander Zee’s

claims were barred by section 2680(a) of the FTCA, often referred

to as the “discretionary function exception,” which provides:

“The provisions of this chapter and section 1346(b)

of this title shall not apply to -

(a) Any claim based upon an act or

omission of an employee of the Government,

exercising due care, in the execution of a

statute or regulation, whether or not such

statute or regulation be valid, or based upon

the exercise or performance or the failure to

exercise or perform a discretionary function

or duty on the part of a federal agency or an

employee of the Government, whether or not the

discretion involved be abused.” 28 U.S.C.

13

2680(a)(emphasis added).

Whether the conduct of a government employee falls within

the ambit of the discretionary function exception involves a two-

part inquiry. First, “[t]he exception covers only acts that are

discretionary in nature, acts that ‘involv[e] an element of

judgment or choice.’” United States v. Gaubert, 111 S.Ct. 1267,

1273 (1991)(quoting Berkovitz v. United States, 108 S.Ct. 1954,

1958 (1988))(alteration in original). This first requirement “is

not satisfied if a ‘federal statute, regulation, or policy

prescribes a course of action for an employee to follow,’ because

‘the employee has no rightful option but to adhere to the

directive.’” Id. (quoting Berkovitz, 108 S.Ct. at 1958-59).

If this first requirement is met, it must be determined

whether the challenged action was of the type that the

discretionary function is designed to shield as “the exception

‘protects only governmental actions and decisions based on

considerations of public policy.’” Id. at 1273-74 (quoting

Berkovitz, 108 S.Ct. at 1959). “When established governmental

policy, as expressed or implied by statute, regulation, or agency

guidelines, allows a Government agent to exercise discretion, it

must be presumed that the agent’s acts are grounded in policy when

exercising that discretion.”3 Id. at 1274.

3

See also ALX El Dorado, Inc. v. Southwest Savings & Loan

Assn., 36 F.3d 409 (5th Cir. 1994)(applying Gaubert analysis);

McNeily v. United States, 6 F.3d 343 (5th Cir. 1993)(same).

14

With respect to Vander Zee’s allegedly coerced resignation

from Stone Oak, he contends that the discretionary function

exception is inapplicable because: (1) the government lacked

discretion to remove him as a bank officer without following the

formal procedures set forth at 12 U.S.C. § 1818; and (2) the

Department of Justice lacked authority to interfere in the

regulation of banking personnel.

Vander Zee’s first argument is contradicted by the Supreme

Court’s decision in Gaubert in which the Court, applying a statute

governing the supervisory powers of the Federal Home Loan Bank

Board (FHLBB) that is analogous to § 1818, concluded:

“Although the statutes provided only for formal

proceedings, there is nothing in the language or

structure of the statutes that prevented the regulators

from invoking less formal means of supervision of

financial institutions. Not only was there no statutory

or regulatory mandate which compelled the regulators to

act in a particular way, but there was no prohibition

against the use of supervisory mechanisms not

specifically set forth in statute or regulation.”

Gaubert, 111 S.Ct. at 1277.

Based upon this analysis, the Supreme Court concluded that the

regulators’ informal actions fell within the reach of the

discretionary function exception. Id. at 1278. We similarly

conclude that the OCC possessed discretion in its supervision of

banking personnel, as Vander Zee cites us to no statute or

regulation to the contrary.

Vander Zee’s second argument is similarly unavailing because

his First Amended Complaint does not allege that the Department of

15

Justice alone was responsible for his allegedly forced resignation

from Stone Oak, but rather that the OCC demanded Vander Zee’s

resignation, albeit at the behest of the Department of Justice.4

As we have just indicated, the OCC clearly possessed discretion in

its regulation of banking personnel. We do not see that this

result is altered by the allegation that the OCC allegedly took the

action as a result of consultation with employees of the Department

of Justice.

The actions of the government attorneys related to Vander

Zee’s indictment and prosecution are similarly protected by the

discretionary function exception. See Sutton v. United States, 819

4

In particular, Vander Zee’s First Amended Complaint alleges:

“Within the next several days Jack C. Frels,

Joseph Florio and the unknown persons at

justice (sic) in Washington calling the shots

caused someone at the OCC, on information and

belief Wong or Earp to orally demand that the

bank fire Vander Zee.”

The complaint further alleges:

“Mr. Schumann, President of the Bank, duly

reported to the Board of Directors the demand

by the Department of Justice (conveyed by

OCC), that either Vander Zee would be fired or

the bank would be closed.”

Vander Zee now argues in his brief that “Even before his trial

DOJ attorneys, acting without the concurrence of the OCC, took away

his job...” Vander Zee apparently bases this new allegation in his

brief on the testimony of bank examiner Jesse Wong obtained at the

trial of Vander Zee’s action against Stone Oak following the

severance in Vander Zee I. However, this allegation was not before

the district court in Vander Zee’s present complaint and his motion

to supplement the record on appeal has been denied.

16

F.2d 1289, 1298 (5th Cir. 1987)(“absent extremely compelling

circumstances, an unsuccessful prosecution must generally be

determined to warrant application of the discretionary function

exception”); see also Moore v. Valder, 65 F.3d 189, 196-97 (D.C.

Cir. 1995), petition for cert. filed, 64 U.S.L.W. 3856 (U.S. June

7, 1996)(No. 95-2005). Nor does Vander Zee’s allegation that Frels

used the threat of indictment to force Vander Zee to testify

against Stone Oak place his actions outside of the scope of the

discretionary function exception. See Moore, 65 F.3d at 197

(discretionary function exception applicable to prosecutor’s

actions despite allegations that he “pressured witnesses into

incriminating [plaintiff], concealed and distorted exculpatory

evidence to create a false impression of what [plaintiff] knew

about the fraud schemes and withheld material exculpatory

information from him”).

Finally, we agree with the district court that the actions of

the United States Attorneys in settling the civil forfeiture action

with Stone Oak also fall within the discretionary function

exception. Negotiating the terms of a settlement agreement appears

to us to be an act in which a great deal of discretion necessarily

inheres, and Vander Zee has cited us to no statute, regulation, or

policy setting forth a course of action for government attorneys to

pursue in negotiating a settlement agreement in a civil proceeding.

In particular, settling a civil forfeiture action upon which the

17

solvency of a financial institution depends would appear to be the

type of policy decision that the exception is intended to protect.

II. Claims Against the Individual Defendants

The only remaining claims are Bivens claims against the

individual defendants for alleged violations of Vander Zee’s

constitutional rights.

A. Collateral Estoppel

The district court held that Vander Zee’s Bivens claims

arising out of the terms of the settlement agreement were barred by

collateral estoppel having been decided by the district court in

Vander Zee I. In order for collateral estoppel to apply, the

following elements must be satisfied: “(1) the issue under

consideration is identical to that litigated in the prior action;

(2) the issue was fully and vigorously litigated in the prior

action; (3) the issue was necessary to support the judgment in the

prior case; and (4) there is no special circumstance that would

make it unfair to apply the doctrine.”5 Copeland v. Merrill Lynch

& Co., Inc., 47 F.3d 1415, 1422 (5th Cir. 1995).

5

While some decisions issued by this Court have cited this

last requirement as a general requirement for the application of

collateral estoppel, see United States v. Shanbaum, 10 F.3d 305,

311 (5th Cir. 1994), at least one of our decisions suggests that

the fairness requirement may be limited to cases involving

offensive, as opposed to traditional, collateral estoppel only.

See RecoverEdge L.P. v. Pentecost, 44 F.3d 1284, 1290-91 n.11 (5th

Cir. 1995). As the fairness requirement has not been raised by the

parties as an obstacle to the application of collateral estoppel ,

nor do we perceive any such unfairness, we need not resolve this

question today.

18

Applying this standard to the present facts, we concur in the

district court’s conclusion that collateral estoppel prevents

Vander Zee from relitigating the issue of the individual

defendants’ Bivens liability arising out of the terms of the

settlement agreement and addendum. In Vander Zee I, the district

court dismissed Vander Zee’s claims pertaining to the terms of the

settlement and addendum on the ground that Vander Zee had failed to

allege the invasion of a constitutionally protected interest in

liberty or property. Alternatively, the district court held that

the United States Attorneys were entitled to qualified immunity as

the interests allegedly infringed were not “clearly established.”

Vander Zee’s asserted liberty interest in Vander Zee I was in his

future employment in the banking industry while his asserted

property interest was in being rehired by Stone Oak and in

receiving attorneys’ fees to which he believed he was entitled.

Vander Zee’s present complaint asserts the violation of precisely

these same interests, thereby satisfying the first prong of the

collateral estoppel standard.6

6

Vander Zee’s amended complaint alleges in relevant part:

“Since May 1990 Vander Zee has been largely

unemployed and essentially unemployable in the

profession of his choice, at the Stone Oak

National Bank, or a comparable institution.”

....

“Vander Zee further would show that the

individual defendants, either acting alone or

19

We further conclude that the second prong of the collateral

estoppel analysis is satisfied as the Bivens claims relating to the

terms of the settlement agreement and addendum were fully briefed

and argued in Vander Zee I in resolving the motions to dismiss.

The resolution of the Bivens claims was clearly necessary to the

judgment as the determination of these issues was central to the

defendants’ motions to dismiss. Finally, we perceive no unfairness

under the facts of the present case in applying collateral estoppel

to bar relitigation of claims that have already been fully and

in concert, under color of federal law,

engaged in constitutionally prohibited conduct

in violation of ...Bivens by going beyond the

course and scope of their duties as federal

prosecutors, without good faith, and with

malice, in coercing the Bank into...(2)

failing to re-hire Vander Zee as promised, and

(3) signing the Settlement Agreement and

Addendum to the Settlement Agreement, which

operated as a bar to Vander Zee’s employment,

forever, with the Bank and any prospective

opportunities for employment in the banking

industry....”

Vander Zee contends both in his initial brief and in his reply

brief that collateral estoppel is inapplicable because different

facts have been alleged in the present case with respect to Vander

Zee’s allegedly coerced resignation and because Vander Zee’s FTCA

claims are now ripe for adjudication. These arguments reflect a

basic misapprehension of the district court’s decision below. The

district court held that collateral estoppel operated to bar only

relitigation of Vander Zee’s Bivens claims relating to the terms of

the settlement agreement and addendum. That Vander Zee might now

have further evidence on these points is no reason not to apply

collateral estoppel. And, Vander Zee’s arguments pertaining to the

allegations concerning his resignation or the ripeness of his FTCA

claims are irrelevant to the holding respecting the settlement

agreement and addendum.

20

fairly litigated in a previous suit.

B. Qualified Immunity7

The determination of whether a government official’s actions

are entitled to the protection of qualified immunity requires a

two-part analysis:

“First, the court must determine whether the plaintiff

has alleged the violation of a clearly established

constitutional right. If the plaintiff fails this step,

the defendant is entitled to qualified immunity. If she

is successful, the issue becomes the objective legal

reasonableness of the defendant’s conduct under the

circumstances.” Baker v. Putnal, 75 F.3d 190, 198 (5th

Cir. 1996)(internal citations omitted).

See also Vera v. Tue, 73 F.3d 604, 607 (5th Cir. 1996). We

determine that Vander Zee’s claims against the individual

defendants fail the first step of this analysis, and we affirm the

district court’s holding that the individual defendants are

entitled to the protection of qualified immunity.

In Vander Zee I, we thoroughly analyzed Vander Zee’s Bivens

claims pertaining to the terms of the settlement agreement and

7

The court below additionally held that Mueller, Ederer,

Frels, and Florio were entitled to absolute immunity in connection

with Vander Zee’s Bivens claims pertaining to his criminal

prosecution. See, e.g., Graves v. Hampton, 1 F.3d 315, 318 (5th

Cir. 1993)(absolute immunity “applies to prosecutor’s actions in

initiating prosecution and in carrying the case through the

judicial process”). The district court noted that Vander Zee

conceded this issue below, and he does not contest it in his

original brief to this Court. While Vander Zee does raise the

issue of absolute immunity in his reply brief, he does so only in

a wholly conclusory and inadequate fashion. “An appellant abandons

all issues not raised and argued in its initial brief on appeal,”

Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir.), cert. denied, 115

S.Ct. 189 (1994). We affirm the district court on this point.

21

addendum and concluded that Vander Zee had failed to allege the

violation of a clearly established constitutional right, therefore

concluding that the individual defendants were entitled to the

defense of qualified immunity. We find nothing to alter this

analysis, and accordingly do not revisit this issue here.

Vander Zee additionally alleges in the present case that

employees of the OCC acting in conjunction with employees of the

Department of Justice coerced Stone Oak into demanding Vander Zee’s

resignation. As we previously noted, however, the Supreme Court in

Gaubert has approved of the use of informal means by regulators to

remove officers of financial institutions. See Gaubert, 111 S.Ct.

at 1277. Indeed, the Court in Gaubert noted that the use of

informal means by regulators to supervise financial institutions

has a long history and has previously been approved by the courts.

Id. at 1279. Vander Zee cites us to no contrary authority

suggesting that the actions of the OCC employees in the present

case in allegedly seeking his removal through informal channels

violated his clearly established constitutional rights. Nor do we

find that the fact that the OCC allegedly so acted as a result of

requests by employees of the Department of Justice alters this

result. Therefore, we affirm the district court’s conclusion that

the individual defendants were entitled to the defense of qualified

immunity against Vander Zee’s claims arising out of his allegedly

22

coerced resignation from Stone Oak.8

Finally, Vander Zee has not adequately challenged the district

court’s further holding that his Bivens claims were also barred by

the applicable statute of limitations.9

Conclusion

For the foregoing reasons, the district court’s judgment

dismissing all claims against the United States and the individual

defendants is hereby

8

Contrary to Vander Zee’s contentions, our holding today is

in no way inconsistent with our opinion in Vander Zee I on this

point. In Vander Zee I, we noted that the district court had

observed that “the district court noted in its order that had

Vander Zee alleged that the defendants had coerced his termination

from his position at Stone Oak he could have presented a claim

which would withstand the qualified immunity defense.” The

individual defendants referred to in Vander Zee I were the

Department of Justice attorneys, as the OCC employees had not been

made parties to that action. Vander Zee does not allege in his

present complaint that the United States Attorneys acting alone

coerced his resignation, but that the OCC employees (who are

parties to the present action) acting as a result of requests by

these defendants made the demand on Stone Oak. As the power of

financial regulators to use informal means to supervise financial

institutions has been approved, Vander Zee’s complaint fails to

allege the violation of a clearly established constitutional right.

9

Vander Zee’s initial brief contains no argument with respect

to the statute of limitations, and this point is therefore waived.

See, e.g., Cinel, 15 F.3d at 1345. Vander Zee challenges the

government’s waiver argument in his reply brief by citing isolated

references to the statute of limitations in his initial brief.

However, an issue must be “briefed and argued” in the initial brief

to avoid waiver. Id. Vander Zee’s isolated references in his

initial brief make no effort at cogent argument so as to avoid

waiver.

23

AFFIRMED.10

10

All pending, undisposed of motions are denied.

24