Melvin D. Reuber v. United States of America (Two Cases.) Melvin D. Reuber v. Food Chemical News (Two Cases.)

BORK, Circuit Judge,

concurring:

I concur in Judge Wald’s result and in her opinion with the exception of Part IV, addressing appellant’s federal common law claims against the Litton corporate defendants. These claims are based on appellant Reuber’s allegations that federal officials, in retaliation for his exercise of freedom of speech, induced his private, corporate employer to take disciplinary action against him that led to his “constructive discharge.” The questions for decision are whether a Bivens action and actions for several kinds of equitable relief, including reinstatement, will lie against Reuber’s employer insofar as its disciplinary actions and their alleged effects are state action. I agree with Judge Wald that both damages and equitable relief are available in this case, but reach this result on narrower grounds, and for different reasons.

I.

Judge Starr argues that three “special factors” make it undesirable to imply a Bivens action here. These are, first, the private status of the defendants, which Judge Starr takes to imply that they do not enjoy official immunity; second, the fact that Reuber’s expression of his views concerned the subject-matter of his employer’s business; and, finally, the availability of a state-law defamation remedy. I agree with Judge Starr that we can consider a broad range of factors in deciding whether to imply a constitutional tort in novel circumstances. In my view, however, the first of these factors is absent here: a private person whose conduct is allegedly instigated and directed by federal officers should be treated as a federal agent. Like any other federal agent, the private person should under these circumstances be subject to Bivens liability and entitled to qualified official immunity. The remaining factors set forth by Judge Starr are not weighty enough to justify refusing to allow a Bivens action here — especially since official immunity is available.

This case falls within a subcategory of “state action” cases in which, in addition to making allegations that satisfy the state action requirement, the plaintiff alleges that the private person acted as an agent, formal or informal, of federal officers. Just as this is the strongest type of case for extending official immunity, it is the strongest for applying the Bivens doctrine. I need not and do not decide that a Bivens action should be available whenever the state action requirement is met as to a private person whose conduct, for that reason, becomes subject to constitutional constraints. But where federal officials are not only fairly responsible but primarily responsible for a constitutional violation, the scope of a Bivens action — and of official immunity — should not turn on the fortuity of whether the damage was actually done by a federal official or by a private person acting pursuant to the exertion of official power. Cf. Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 , 102 S.Ct. 2744, 2754 , 73 L.Ed.2d 482 (1982) (state action doctrine requires only that “the conduct allegedly causing the deprivation of a federal right be fairly attributable to the State”).

The case-law, though sparse, clearly supports the appellees’ status as ad hoc federal agents entitled to invoke official immunity as a defense. In Becker v. Philco Corp., 372 F.2d 771 (4th Cir.), cert. denied, 389 U.S. 979 , 88 S.Ct. 408 , 19 L.Ed.2d 473 (1967), plaintiffs sued their employer, Phil-co Corporation, for allegedly defaming them in a security clearance report to the federal government. Philco was required by its defense contracts to investigate possible breaches of security and report its findings to the government. The Fourth Circuit held that because the company was in effect an agency of the government, charged with maintaining secrets affecting national security, “the company and its trusted personnel were imbued with the official’s character, and partake of his immunity to liability, whenever and wherever he would enjoy the absolute privilege.” 372 F.2d at 774 . On similar facts, district courts have reached the same conclusion in *1064 Logiurato v. Action, 490 F.Supp. 84, 91 (D.D.C.1980) (extending qualified immunity for constitutional violations to medical examiners who acted under Peace Corps direction and control), and in Blum v. Campbell, 355 F.Supp. 1220 (D.Md.1972) (housing project managers acting under the direct supervision and control of the FHA were absolutely immune from state-law defamation claims). Moreover, the district court in the present case noted its conclusion that the corporate defendants would enjoy official immunity, though it did not need to reach that question since it held there was no federal subject-matter jurisdiction as to those defendants. J.A. at 55 n. 2.

Appellant contends that these authorities are invalid after Dennis v. Sparks, 449 U.S. 24 , 101 S.Ct. 183 , 66 L.Ed.2d 185 (1980), in which the Supreme Court refused to extend absolute judicial immunity in a section 1983 case to a judge’s private co-conspirators. Dennis is easily distinguishable, however, because in that case it was alleged that the private defendants had bribed the judge to induce him to enter an injunction depriving the plaintiffs of property without due process of law. 449 U.S. at 26, 28 , 101 S.Ct. at 185, 186 . The private defendants were not enlisted by the state to assist in performing its functions but knowingly induced the misuse of state power. Here, by contrast, the chain of causation runs the other way: Reuber alleges that it is the federal officials who induced the corporate defendants to discipline Reuber in retaliation for speech protected against state action by the first amendment. Dennis simply means that there are some situations in which a private actor’s conduct can constitute state action without simultaneously constituting the conduct of an agent of the state. This is not one of those situations. 1

This analysis also explains why the Zerilli court’s recognition of private status as a special factor weighing against implying a Bivens action is inapposite here. In Zerilli, the plaintiff sought to bring a Bivens action against a newspaper that had published the contents of communications by the plaintiff allegedly obtained by the federal government in violation of the fourth amendment. Although plaintiff apparently alleged a conspiracy, see 628 F.2d at 218, it is clear that only the government had the power to disclose that information to the newspaper. Thus, whatever assistance or encouragement the newspaper may have provided seems distinctly secondary to the government’s actions in obtaining and later disclosing the communications. The Zerilli court’s assertion that “a defendant’s private status” was a special factor counsel-ling against implication of a Bivens remedy, id. at 223-24, should be construed in light of those facts, which would have precluded the newspaper from asserting official immunity. Indeed, the Zerilli court gave as the reason for its assertion the fact that “the primary purpose of the Bivens doctrine is to remedy abuses by those who act as agents for the sovereign.” Id. at 224 (emphasis added). The concept of “agency,” for purposes of constitutional tort law, is broad enough to include conspiracies such as the one alleged in the present case, though not conspiracies such as the one alleged in Zerilli.

The first of the special factors on which Judge Starr relies — the defendant’s status as a private party — is accordingly inapplicable here. Judge Starr suggests that the fact that Reuber’s expression also was directed to the business operations of his employer and the availability of a state-law defamation remedy also counsel hesitation in allowing a Bivens action to go forward here. Once it is established that the defendants are ad hoc federal agents who are immune from damages liability so long as they acted in good faith, however, these *1065 reasons lose much of their force. To the extent that Reuber’s criticisms concern his employer’s business judgment and integrity, for example, the employer may be able to show that it punished Reuber in the good-faith belief that his disloyalty entitled it to do so. On the other hand, Reuber alleges that he was punished because his remarks were critical of the federal government, and that is precisely the kind of speech the first amendment was designed to protect. Nor, as Judge Wald shows, is the defamation remedy an effective substitute for those aspects of Reuber’s constitutional claim that relate to his “constructive discharge.” Though an employer’s relations with his employees are indeed an area in which we should be slow to intrude, that consideration alone does not support denial of compensatory damages to a person aggrieved by the unconstitutional conduct of an employer acting under the direction of federal officers.

II.

In addition to damages, Reuber has requested injunctive relief directing the corporate defendants to refrain from any future interference with his constitutional rights, to reinstate him to his former position, and to expunge any false or inaccurate records concerning him. Only the first of these requests is squarely governed by the “presumed availability of federal equitable relief against threatened invasions of constitutional interests,” Bivens, 403 U.S. at 404, 91 S.Ct. at 2008 (Harlan, J., concurring) (emphasis added), on which Judge Wald relies. The request for reinstatement is a request for relief from harms already accomplished and inherently unlikely to be repeated, and the request for expungement can be viewed as both corrective of past harm and preventive of threatened future harm. Consequently, although I agree with Judge Wald that the district court has power to enjoin the corporate defendants from future interference with Reuber’s constitutional rights if it finds that the prerequisites to awarding injunctive relief have been met, the case for allowing the claims for reinstatement and expungement to go forward is much closer.

Reuber’s constitutional claim, if proved, entitles him to relief unless official immunity is successfully interposed as a defense 2 — but it does not follow that relief should be by way of reinstatement rather than damages. For, if damages are an adequate remedy at law, equitable relief such as reinstatement would not be available in federal court. E.g., O’Shea v. Littleton, 414 U.S. 488, 499, 502 , 94 S.Ct. 669, 677, 679 , 38 L.Ed.2d 674 (1974). Nor is it true, as Judge Wald seems to think, that this decision must be left to the district court. Of course, “in shaping equity decrees, the trial court is vested with broad discretionary power.” Lemon v. Kurtzman, 411 U.S. 192, 200 , 93 S.Ct. 1463, 1469 , 36 L.Ed.2d 151 (1973). However, the prerequisites to thé granting of equitable relief, such as the absence of an adequate remedy at law, involve an inquiry that is primarily jurisprudential rather than evidentiary. An objection to injunctive relief on grounds that there is an adequate remedy at law “does not go to the jurisdiction of *1066 the court as a federal court and may be waived and not considered if not timely raised.” Petroleum Exploration, Inc. v. Public Service Commission, 304 U.S. 209 , 216 n. 7, 58 S.Ct. 834 , 838 n. 7, 82 L.Ed. 1294 (1938). Yet, “if it be obvious that there is an adequate remedy at law, the court acts sua sponte to preserve the courts of equity as a forum for extraordinary relief____” 3 Id. Especially in view of the unusual extent to which Reuber’s constitutional claims involve non-governmental entities and interests, 4 it is appropriate for us to make the determination as to the existence of an adequate remedy at law ourselves.

Given that damages are available, a compelling argument can be made that reinstatement as an equitable remedy is foreclosed, because damages are an adequate remedy as a matter of law. The loss of employment is not a loss that is inherently immeasurable or noncompensable in monetary terms — such losses are routinely measured and compensated in a variety of legal contexts. Similarly, the fact that Congress has made reinstatement available against private employers in furtherance of federal labor and employment discrimination policy, see 29 U.S.C. § 160 (c) (1982) (NLRB may order reinstatement as remedy for unfair labor practice); 42 U.S.C. § 2000e-5(g) (1982) (court may order reinstatement as remedy for employment discrimination), suggests less that damages are inadequate to compensate victims than that reinstatement is necessary to prevent employers from “buying back” rights Congress has conferred on employees in furtherance of a broad federal policy. Furthermore, because by definition a request for reinstatement presupposes that the harm to the plaintiff has already occurred, this class of cases does not entail the risk that a too-ready application of the inadequacy prerequisite would permit a threatened violation of a constitutional right to go forward, to the irreparable detriment of the plaintiff. At least in cases such as this one, in which it is alleged that the government induced the conduct that harmed the plaintiff, there seems little hazard to enforcement of federal constitutional rights in adhering to the traditional understanding that damages are an adequate remedy for loss of employment.

These considerations gain added force when it is recalled that reinstatement is the equivalent of specific performance of a contract for personal services. The common law traditionally disfavored specific performance of such contracts precisely to avoid the friction and the social costs that may result when employer and employee are forcibly reunited in a relationship that has already failed. Reinstatement is, even today, not the ordinary remedy for breach of an employment contract at state law. See Restatement (Second) of Contracts § 367 (1979). 5 Indeed, “the presence of an adequate remedy at law is often given as a specific reason for denying specific performance of a contract for services, and the general rule in respect of contracts for *1067 personal services is that for breach thereof a party must avail himself of the remedy afforded at law.” Am.Jur.2d Specific Performance § 164 (1973). Equitable relief in the form of reinstatement, therefore, would appear to be barred in this case on the grounds that Reuber has an adequate remedy at law.

This analysis seems to me defeated, however, by the Supreme Court’s decision in Mount Healthy City Board of Education v. Doyle, 429 U.S. 274 , 97 S.Ct. 568 , 50 L.Ed.2d 471 (1977), which establishes that the presence of a damage remedy does not bar reinstatement as equitable relief in a constitutional case. In Mount Healthy, an untenured teacher alleged that the school board’s refusal to renew his contract was in retaliation for his exercise of his first amendment rights. The Court held that “[e]ven though he could have been discharged for no reason whatever ... he may nonetheless establish a claim to reinstatement if the decision not to rehire him was made by reason of his exercise of constitutionally protected freedoms.” Mount Healthy, 429 U.S. at 283-84 , 97 S.Ct. at 574 . The general rationale for this holding, as stated in Perry v. Sindermann, 408 U.S. 593, 597 , 92 S.Ct. 2694, 2697 , 33 L.Ed.2d 570 (1972), is that

even though a person has no “right” to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interests — especially, his interest in freedom of speech.

It is quite clear that this long-standing principle applies both to the states, as in Perry and Mount Healthy, and to the federal government. See, e.g., United States v. Robel, 389 U.S. 258 , 88 S.Ct. 419 , 19 L.Ed.2d 508 (1967); Cafeteria Workers v. McElroy, 367 U.S. 886, 897-98 , 81 S.Ct. 1743, 1749-50 , 6 L.Ed.2d 1230 (1961). It seems equally clear that when the principle is applied to “denials of public employment,” Perry, 408 U.S. at 597 , 92 S.Ct. at 2697 , reinstatement is one of the ordinary remedies. E.g., Mount Healthy, 429 U.S. at 283-84 , 97 S.Ct. at 574-75 ; Bueno v. City of Donna, 714 F.2d 484, 495 (5th Cir.1983) (“reinstatement is normally ‘an integral part of the remedy for a discharge which contravenes the first amendment’ ”). The question, then, is whether the availability of reinstatement as a non-statutory remedy for constitutional denials of public employment belies the argument that damages are an adequate remedy at law.

In large part the answer to this question is supplied by the fact that damages against the government itself, absent a statutory or other waiver, are barred by sovereign immunity. See generally Edelman v. Jordan, 415 U.S. 651 , 94 S.Ct. 1347 , 39 L.Ed.2d 662 (1974). Since that is so, there is clearly no adequate remedy at law against the sovereign, and it would be strained indeed to bar reinstatement on the basis of the possible personal liability of the state or federal officials.

This reasoning, however, does not suffice to explain Mount Healthy, because the Court in that case also held that the local school board was not entitled to assert the sovereign immunity defense. 429 U.S. at 280-81 , 97 S.Ct. at 572-73 . The Court did not discuss the inadequacy prerequisite to equitable relief. This omission is not surprising, since the Court simply assumed, without deciding, that a cause of action could be stated directly under the fourteenth amendment and brought under general federal-question jurisdiction. 429 U.S. at 279 , 97 S.Ct. at 572 . The absence of any direct consideration of the proper remedies under the assumed cause of action may make Mount Healthy less than compelling precedent for abandoning the inadequacy prerequisite in fashioning relief against governmental entities that cannot assert sovereign immunity. At a minimum, however, the fact that the Court allowed the action for reinstatement to go forward on remand must mean that the availability of a damages remedy is not, standing alone, enough to bar reinstatement in a constitutional case. We, of course, are bound by that determination. Therefore, unless this case can fairly be brought outside the probable rationale for this respect of Mount Healthy, Reuber’s claim for reinstatement must be remanded to the district court.

Because the Supreme Court did not articulate its rationale, some degree of speculation is necessary to resolve this problem. One explanation for this apparent exception to the inadequacy prerequisite is that an unconstitutional discharge from employ *1068 ment is null and void — the court in effect orders the employer to allow the employee to resume a position he never legally lost. This rationale, which employs a legal fiction akin to that announced in the sovereign immunity context in Ex parte Young, 209 U.S. 123 , 28 S.Ct. 441 , 52 L.Ed. 714 (1908), is as plausible when applied to a private employer who terminates an employee under circumstances in which the employer is an ad hoc federal agent as it is when applied to a federal official.

An alternative rationale for holding that damages are not adequate relief where government has unconstitutionally discharged a public employee is that government should not be allowed to “buy back” the limitations placed on its powers by the federal Constitution. That rationale, too, is applicable here, for a refusal to allow reinstatement here would allow the government to achieve the same unconstitutional result, albeit with someone else’s money. The threat of damages might suffice to deter private employers from implementing the unconstitutional government decision in the first place, but that argument proves too much: the same threat might deter governmental officers from engaging in unconstitutional conduct, yet the availability of an action for damages against those officers does not bar reinstatement under Mount Healthy.

This leaves only the fact that Reuber’s, employer has reverted to private status for the future as a basis for distinguishing this case from Mount Healthy. 6 It is true that injunctive relief would operate in the future, and hence in one sense would implicate the interests of a private employer in making its own personnel decisions. However, reinstatement is at bottom a backward-looking remedy, just as damages are; it serves to redress a wrong that has already taken place rather than to prevent a wrong that may occur in the future. Since Reuber alleges that he was constructively discharged at a time when his employer was acting as a federal agent, and since reinstatement relates back to that time, the employer’s private status does not suffice to take this case outside the ambit of Mount Healthy. It follows that binding precedent requires us to hold that Reuber’s claim for reinstatement is not barred by the availability of damages against his employer. But for that precedent, the analysis set out above might persuade me that no action for reinstatement would lie.

Reuber’s request for expungement of his employment records must also be allowed to go forward. The power of the federal courts to direct expungement of government records gathered or maintained in violation of the first amendment is well-established. E.g., Hobson v. Wilson, 737 F.2d 1, 65 (D.C.Cir.1984); Chastain v. Kelley, 510 F.2d 1232 (D.C.Cir.1975). “[T]he correction of records is an equitable remedy designed to correct, not compensate for, the violation, and may be essential to prevent future harm as a result of the original violation.” Carter v. Orleans Parish Public Schools, 725 F.2d 261 , 263 n. 4 (5th Cir.1984). The district court must, however, find that there is a real and immediate threat of irreparable harm before it can allow expungement, and on these facts that means it must find a threat of continuing or future conspiracy between the federal government and the corporate.defendants. It is clearly relevant to that determination that Reuber would have a constitutional tort claim for damages from any retaliatory use of his employment records. Moreover, before the court may order expunge *1069 ment it must balance the potential harm to the plaintiff against the importance to the employer of maintaining the records in question. See Hobson, 737 F.2d at 66 . These conditions may make it difficult for Reuber to prevail on his expungement claim, but the finding as to threat of harm and the balancing of relevant interests are fact-laden determinations that must be confided to the discretion of the district court.

. There is every reason to extend official immunity — which in the constitutional context means good-faith immunity — to private actors for whose conduct federal government officials are primarily responsible. Official immunity exists to "protect officials who are required to exercise their discretion and the related public interest in encouraging the vigorous exercise of official authority.” Butz v. Economou, 438 U.S. 478, 506 , 98 S.Ct. 2894, 2911 , 57 L.Ed.2d 895 (1978). On innumerable occasions, the exercise of official discretion in the public interest requires the active cooperation of private persons. Whether that cooperation is compelled by contract, as in Philco, by legal duty, as when a policeman demands help in making an arrest, or by the government's bargaining power in the context of a mutually advantageous relationship, as seems to be alleged in the present case, the private person who cooperates ought not be deterred from doing so by the prospect of liability without regard to whether he has acted in good faith. Indeed, there may well be circumstances in which the state officer will prove not to be immune, yet the private "co-conspirator" will be able to show that he relied on the official’s authority in good faith.

. The same reasons that support extending official immunity to the corporate defendants as to damages support allowing qualified official immunity as a bar to reinstatement. There is a threshold difficulty, however: the limits on injunctive relief against state or federal officers ordinarily derive from sovereign immunity, not official immunity. See, e.g., Butz v. Economou, 438 U.S. 478, 523 , 98 S.Ct. 2894, 2919 , 57 L.Ed.2d 895 (1978) (Rehnquist, J., concurring in part and dissenting in part) (conceding that equitable relief by way of mandamus or injunction is generally available against government officials, and arguing that for that very reason government officials should enjoy absolute rather than qualified immunity from damages liability); cf. Pulliam v. Allen, - U.S.-, 104 S.Ct. 1970 , 80 L.Ed.2d 565 (1984) (holding that absolute judicial immunity does not bar prospective injunctive relief under § 1983 against a state-court judge acting in a judicial capacity). Of course, the reason why government officials cannot assert qualified official immunity as a defense to injunctive relief is that they normally are not personally liable for the costs of complying with an affirmative injunctive decree. See Rowley v. McMillan, 502 F.2d 1326 (4th Cir. 1974) (official immunity doctrine has no application to suits for injunctive relief, at least so long as they do not have the inhibitory effect of suits for money damages). Here, by contrast, the corporate defendants would bear the costs of reinstatement, and it seems clear that the inhibitory effect would be at least as great as the effect of an award of damages. Moreover, to authorize reinstatement but refuse to allow official immunity as a defense to that remedy could produce topsy-turvy results: the federal officials primarily responsible for the wrong would be held harmless if they acted in good faith, while the private employer, acting in equally good faith, would be subject to a most intrusive remedy.

. At the time Petroleum Exploration was decided, the inadequacy prerequisite was embodied as a statutory rule in former section 267 of the Judicial Code, 28 U.S.C. § 384 (1940). Although the rule is no longer statutory, it retains its binding and nondiscretionary character. See, e.g., O'Shea v. Littleton, 414 U.S. 488, 499 , 94 S.Ct. 669, 677 , 38 L.Ed.2d 674 (1974).

. If Reuber were a federal civil servant, he would have a statutory right to reinstatement and back pay if he prevailed in administrative proceedings, see 5 U.S.C. § 7513 (a) (1982) but, under the holding in Bush v. Lucas, 462 U.S. 367 , 103 S.Ct. 2404 , 76 L.Ed.2d 648 (1983), he could not also maintain a Bivens action for damages. If Reuber were a state employee, it appears that reinstatement would be available against state officials in their official capacities, see Hall v. Medical College of Ohio at Toledo, 742 F.2d 299, 307 (6th Cir.1984) (holding without discussion that reinstatement claim is not barred by state sovereign immunity), while damages would be available against state officials as individuals but, by virtue of state sovereign immunity, not against the state itself. See Edelman v. Jordan, 415 U.S. 651 , 94 S.Ct. 1347 , 39 L.Ed.2d 662 (1974).

. Nor does reinstatement appear to be the ordinary remedy for the new tort of wrongful discharge or retaliatory discharge that some — but by no means all — state courts have fashioned as a limitation on the employment-at-will doctrine. See, e.g., Holien v. Sears, Roebuck & Co., 66 Or.App. 911 , 677 P.2d 704, 708 (1984) (noting that state wrongful discharge statute provides equitable relief, in contrast to the relief available at common law, which permits "general damages but generally not injunctive relief'). Some state courts, however, have founded the wrongful discharge action on contractual grounds and thereby made reinstatement available under some circumstances. See, e.g., Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561 , 335 N.W. 834 , 841 (1983).

. Although Reuber’s allegations require us to treat his employer's "constructive discharge" of him as state action, his allegations do not suffice to make his employer’s normal business operations state action. Reuber’s employer is engaged in an ongoing contractual relationship with the federal government, but neither the extent of the employer’s entanglement nor the nature of the functions it is performing appears to satisfy the standards for state action set forth in cases such as Rendell-Baker v. Kohn, 457 U.S. 830 , 102 S.Ct. 2764 , 73 L.Ed.2d 418 (1982), and Blum v. Yaretsky, 457 U.S. 991 , 102 S.Ct. 2777 , 73 L.Ed.2d 534 (1982). Cancer research is not "a function that has been.‘traditionally the exclusive prerogative of the State.”’ Blum, 457 U.S. at 1011 , 102 S.Ct. at 2789 (citation omitted); similarly, while Reuber’s employer derived a significant amount of its business from its contract to operate the government-owned research facility at which Reuber worked, this "fiscal relationship with the State is not different from that of many contractors performing services for the government.” Rendell-Baker, 457 U.S. at 843 , 102 S.Ct. at 2772 . Hence, although Reuber’s employer is a state actor for purposes of a damages action, it has reverted to private status for the future — the period during which injunctive relief in the form of reinstatement would operate.