Perez v. Ellington

F I L E D

United States Court of Appeals

Tenth Circuit

PUBLISH

August 22, 2005

UNITED STATES COURT OF APPEALS

PATRICK FISHER

Clerk

TENTH CIRCUIT

DAVID A. PEREZ, SR.; TONY B.

VIGIL; HAROLD PORTER; and

JAMES D. PORTER,

Plaintiffs-Appellees,

v. No. 04-2181

T. GLENN ELLINGTON; JAMES

BURLESON; DAVID FERGESON;

RICKY A. BEJARANO; and JAVIER

LOPEZ, in their individual capacities,

Defendants-Appellants,

---------------------------------------------

TOM TALACHE, Governor of Nambe

Pueblo; HERBERT YATES, Tribal

Councilman of Nambe Pueblo;

TAXATION & REVENUE

DEPARTMENT, STATE OF NEW

MEXICO,

Movants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW MEXICO

(D.C. No. CIV-03-361 JP/LFG)

John B. Pound of Long, Pound & Komer, P.A., Santa Fe, New Mexico, for

Defendants-Appellants.

Daniel Yohalem (Richard Rosenstock with him on the brief), Santa Fe, New

Mexico, for Plaintiffs-Appellees.

Before BRISCOE, McKAY, and MURPHY, Circuit Judges.

McKAY, Circuit Judge.

This is an appeal from the district court’s denial of summary judgment

based on a claim of qualified immunity and absolute immunity. Defendants-

Appellants are officials from the New Mexico Tax and Revenue Department

(TRD). The underlying facts surrounding this lawsuit are detailed and quite

involved. In light of the narrow issues presented by this appeal, we only recite

the facts relevant to our holding.

Plaintiffs, a faction of the Nambé Pueblo Indian Tribe, entered into a

contract with Mr. Ken Newton (acting for Gasplus, his gasoline distribution

corporation) regarding the management of Nambé Pueblo’s gasoline distribution

business (Gasplus agreement). Plaintiffs entered into the Gasplus agreement on

behalf of the Nambé Pueblo Development Corporation (NPDC). The NPDC is a

registered gas distributor and can take advantage of the gas tax deduction for

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Indian tribal distributors in the state of New Mexico. 1 Mr. Newton had previously

been investigated by TRD officials for his involvement with a fraudulent tax

scheme designed to illegally take advantage of such tax breaks.

Defendants, officials from the TRD, were contacted by Nambé Pueblo’s

governor, 2 Tom Talache (Governor Talache), numerous times regarding the

Gasplus arrangement. In a series of clandestine meetings, Governor Talache

voiced his concern to TRD officials about the validity of the Gasplus agreement.

After hearing Governor Talache’s accounts of Plaintiffs’ involvement with Mr.

1

N. M. Stat. Ann. § 7-13-4(F) (Michie 2004) states that

[the following] gasoline may be deducted from the total amount of

gasoline received in New Mexico during the tax period:

gasoline received in New Mexico and sold by a registered Indian

tribal distributor from a nonmobile storage container located within

that distributor’s Indian reservation, pueblo grant or trust land for

resale outside that distributor’s Indian reservation, pueblo grant or

trust land; provided the department certifies that the distributor

claiming the deduction sold no less than one million gallons of

gasoline from a nonmobile storage container located within that

distributor’s Indian reservation, pueblo grant or trust land for resale

outside that distributor’s Indian reservation, pueblo grant or trust

land during the period of May through August 1998; and provided

further that the amount of gasoline deducted by a registered Indian

tribal distributor pursuant to this subsection shall not exceed two

million five hundred thousand gallons per month, calculated as a

monthly average during the calendar year . . . .

Governor Talache is part of a political faction within Nambé Pueblo

2

opposed to Plaintiffs’ faction and was upset with the Gasplus agreement, an

agreement in which he took no part.

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Newton and Gasplus, Defendants decided to investigate the matter. 3

Fearing that a traditional investigation of the nation would prove difficult

because of tribal sovereign immunity protections, Defendants decided to issue a

jeopardy tax assessment against Plaintiffs. A jeopardy tax assessment is a method

used by New Mexico tax officials in emergency situations when an official

“reasonably believes that the collection of any tax for which a taxpayer is liable

will be jeopardized by delay . . . .” N.M. Stat. Ann. § 7-1-59(A) (Michie 2004).

Such jeopardy tax assessments give tax officials greater latitude to investigate

potential tax offenders. In this case, by issuing the jeopardy tax assessments,

Defendants were able to obtain access to Plaintiffs’ financial records.

Defendants’ decision to issue the jeopardy tax assessments was buttressed

by an opinion from the Bureau of Indian Affairs (BIA) that found the Gasplus

agreement invalid. After some preliminary investigation, Defendant Fergeson

agreed with the BIA’s conclusion regarding the invalidity of the Gasplus

agreement, and he reported this to Defendant Ellington who, in turn, issued a lien

against Plaintiffs’ property pursuant to the New Mexico Tax Administration Act.

Upon completion of its audit, however, Defendants determined that there

was nothing illegal about Plaintiffs’ agreement with Gasplus. Consequently, TRD

3

Defendant Ellington, a TRD official, allegedly knew of the factional

animosity within the Nambé Pueblo between Governor Talache and the previous

tribal administration which included the Plaintiffs.

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recommended an abatement of the jeopardy tax assessments. The abatements

were signed on March 11, 2002, by a TRD official and authorized a month later.

However, the liens associated with the tax assessments were not released until

July 1, 2003, more than one year later. 4

As a result of the above, Plaintiffs brought various claims under 42 U.S.C.

§§ 1981, 1982, and 1983. Defendants asserted the defense of qualified and

absolute immunity and moved for summary judgment on each of the claims. The

district court granted summary judgment for Defendants on all of Plaintiffs’

claims except their § 1983 claim based on the First Amendment right of

association. The district court held there to be “a question of material fact as to

whether the Defendants acted in an objectively reasonable manner,” Aplt. App.,

Vol. I, at 413 (Dist. Ct. Order), from which a reasonable juror could find a

deprivation of constitutionally protected rights by retaliating against Plaintiffs for

their association with Mr. Newton. The district court also denied Defendants’

claim of absolute immunity. Defendants brought this interlocutory appeal from

the denial of summary judgment on that claim.

Generally, we have jurisdiction to review purely legal questions that arise

from the denial of qualified immunity. See Mitchell v. Forsyth, 472 U.S. 511, 528

4

Typically, the tax liens associated with the jeopardy assessments are

released at the same time as the jeopardy assessment abatement.

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(1985). Our inquiry focuses on “whether the facts alleged . . . support a claim of

a violation of clearly established law.” Id. at 528 n.9. If our de novo review of

Plaintiffs’ version of the facts reveals that they do not amount to a violation of a

clearly established right, we can reverse on an interlocutory basis. Conversely, if

Plaintiffs’ version of the facts amounts to the violation of a clearly established

constitutional right, we lack jurisdiction to review the denial of summary

judgment on an interlocutory basis if Plaintiffs’ version of the facts is disputed.

We review de novo a district court’s denial of a summary judgment motion raising

qualified immunity questions. Medina v. Cram, 252 F.3d 1124, 1128 (10th Cir.

2001).

It is first necessary to determine exactly which clearly established

constitutional right Plaintiffs claim Defendants violated. In this appeal, Plaintiffs

allege Defendants’ retaliatory actions violated their First Amendment right to

association. The First Amendment bars retaliation for exercising the right of

association. See DeLoach v. Bevers, 922 F.2d 618, 620 (10th Cir. 1990).

Although retaliation is not expressly discussed in the First Amendment, it may be

actionable inasmuch as governmental retaliation tends to chill citizens’ exercise

of their constitutional rights. ACLU of Md., Inc. v. Wicomico County, 999 F.2d

780, 785 (4th Cir. 1993) (citing Perry v. Sindermann, 408 U.S. 593, 597 (1972)).

First Amendment retaliation claims are generally brought in the public

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employment context. Connick v. Myers, 461 U.S. 138 (1983); Pickering v. Bd. of

Educ., 391 U.S. 563 (1968).

In this case, Plaintiffs are not employed by Defendants, and no contractual

relationship exists between the parties. When the retaliation claim is not

grounded in the public employment context, we employ the substantive standard

we announced in Worrell v. Henry, 219 F.3d 1197 (10th Cir.2000). Therefore, to

establish a violation of the First Amendment right to associate, Plaintiffs must

demonstrate: “(1) that [they were] engaged in constitutionally protected activity;

(2) that [Defendants’] actions caused [Plaintiffs] to suffer an injury that would

chill a person of ordinary firmness from continuing to engage in that activity; and

(3) that [Defendants’] adverse action was substantially motivated as a response to

[Plaintiffs’] exercise of constitutionally protected conduct.” Worrell, 219 F.3d at

1212 (internal quotation marks and citations omitted).

In this case, Plaintiffs have alleged that they were unconstitutionally

discouraged from associating with non-tribal members because of Defendants’

retaliatory action. Plaintiffs support this allegation citing Defendants’ quick

issuance of the jeopardy tax assessments, Defendants’ failure to follow the normal

procedures for issuing jeopardy tax assessments, and Defendants’ failure to timely

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release the liens after their abatement. 5

Assuming the factual allegations above are true, it is necessary to determine

whether the law is so clearly established that under such circumstances persons of

“ordinary firmness” would be deterred from associating. Or, in other words,

whether the type of conduct above is so egregious that an official would be on

clear notice that his actions would deter the ordinary person from continuing in

that association. From the facts of this case, we hold that a reasonable factfinder

could conclude that Defendants caused Plaintiffs an injury sufficient to meet that

standard; Defendants’ quick decision to issue jeopardy tax assessments against

Plaintiffs could, if ultimately found by the jury to be the case, chill a reasonable

person from associating with an outside distributor who, as the facts of this case

show, happened to be at odds with Defendants. See Mimics, Inc. v. Village of

Angel Fire, 394 F.3d 836, 847 (10th Cir. 2005).

As to the third element of Plaintiffs’ First Amendment retaliation claim,

Defendants’ extreme delay in releasing the liens on Plaintiffs’ property evidences

a retaliatory motive. See DeLoach, 922 F.2d at 620 (“An act taken in retaliation

for the exercise of a constitutionally protected right is actionable under § 1983

even if the act, when taken for a different reason, would have been proper.”)

Plaintiffs claim to have experienced various problems with their credit

5

because of the liens.

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(citation omitted).

We conclude that “the facts alleged . . . support a claim of a violation of

clearly established [First Amendment right to associate] law.” See Mitchell, 472

U.S. at 528 n.9. We point out that Defendants may be able to rebut Plaintiffs’

allegations at trial. Defendants may be able to convince the trier of fact that their

actions were all based on a good faith belief that Plaintiffs were involved in an

illegal agreement with Gasplus and that Defendants’ extreme time lapse in

releasing the liens after the agreement was determined to be legal was purely a

result of Defendants’ negligence. However, because the record contains evidence

from which a factfinder could conclude that Plaintiffs have established a violation

of clearly established law, the district court did not err in denying Defendants’

motion for summary judgment as to Plaintiffs’ First Amendment claim.

Defendants also appeal the district court’s ruling that they are not entitled

to absolute immunity. Defendants ask to be treated like prosecutors because of

the unique nature of their positions as tax assessment officials and to find them

absolutely immune from suit. Aplt. Br. at 28. We find this argument to be

without merit, and affirm the district court’s ruling.

We review determinations of absolute immunity de novo. Scott v. Hern,

216 F.3d 897, 908 (10th Cir. 2000). State officials are absolutely immune from

suit if they “perform functions analogous to those of a prosecutor in initiating and

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pursuing civil and administrative enforcement proceedings.” Pfeiffer v. Hartford

Fire Ins. Co., 929 F.2d 1484, 1490 (10th Cir. 1991) (quotation omitted).

Absolute immunity does not extend to actions “that are primarily investigative or

administrative in nature” but, instead, attaches only to actions which a prosecutor

must perform while fulfilling his duty as an officer of the court. Id. (quotation

omitted).

We apply a functional approach to determine whether absolute immunity

applies to a defendant. This approach requires us to examine “the nature of the

function performed, not the identity of the actor who performed it.” Malik v.

Arapahoe County Dept. of Social Services, 191 F.3d 1306, 1314 (10th Cir. 1999)

(quotation omitted). “The more distant a function is from the judicial process, the

less likely absolute immunity will attach.” Snell v. Tunnell, 920 F.2d 673, 687

(10th Cir. 1990). The state official claiming absolute immunity has the burden of

showing why absolute immunity should apply instead of the more common

qualified immunity. Forrester v. White, 484 U.S. 219, 224 (1988).

As a general proposition, state officials, like Defendants acting in a merely

investigatory capacity, are not entitled to absolute immunity. See Buckley v.

Fitzsimmons, 509 U.S. 259, 273 (1993) (“A prosecutor’s administrative duties and

those investigatory functions that do not relate to an advocate’s preparation for

the initiation of a prosecution or for judicial proceedings are not entitled to

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absolute immunity.”). Applying the law regarding determinations of absolute

immunity to the facts of this case, we agree with the district court’s opinion on

this point.

The district court’s denial of summary judgment regarding Plaintiffs’ First

Amendment right of association claim is hereby AFFIRMED. The district

court’s denial of absolute immunity is also AFFIRMED.

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