David A. Connelly v. Comptroller of the Currency

GARZA, Circuit Judge,

dissenting.

I must respectfully dissent from the analysis and the holding of the court. It is my opinion that one’s right to pursue a chosen career was and still is a clearly established liberty interest entitled to protection from arbitrary or unreasonable government interference; in this regard I feel the majority’s opinion is incorrect. I do not take issue here with the majority’s *1216 reasoning on the issues of whether Connelly’s contract gave him a property right or whether he suffered a stigma or reputa-tional injury.

The pivotal case, which the majority opinion fails to adequately distinguish, is Phillips v. Vandygriff, 711 F.2d 1217 (5th Cir.1983). In that case Phillips interviewed with agents of a savings and loan with an eye towards a position as a managing officer. He never received this position due to severe irregularities in the affairs of the savings and loan, which ultimately resulted in the indictment of two of its officers. Phillips, who was at no time an employee of the savings and loan, attempted to find other similar employment. These attempts were unsuccessful because of a custom in the industry of screening prospective managerial employees with Vandygriff, Commissioner of the Texas Savings and Loan Department. Vandygriff allegedly suspected Phillips of some kind of wrongdoing, and withheld his recommendation of Phillips for employment, which had the effect of excluding him from the industry.

Phillips filed a complaint against the Texas Savings and Loan Department, Vandy-griff, and several other defendants alleging, among other claims, an infringement of his constitutional rights in violation of 42 U.S.C. § 1983 . With respect to Phillips’ § 1983 claim, the jury returned a verdict in his favor, which the trial court overturned on judgment notwithstanding the verdict. The basis for the JNOV was that the judge had reconsidered an earlier ruling and had become convinced that Phillips’ claim for violation of a liberty interest required that he prove the falsity of Vandygriff’s statements. Since there was no real contention that Vandygriff’s refusal to recommend Phillips constituted a false statement, judgment in favor of Vandygriff on this issue was proper as a matter of law in the eyes of the trial court.

On appeal, the Fifth Circuit reversed this holding and granted a new trial on this issue. Central to its reasoning was that Phillips’ constitutionally protected liberty interest had two distinct prongs. One prong was the traditional “stigma-plus” § 1983 claim, which requires the plaintiff to prove that she suffered a stigma or reputational damage which was caused by a false communication. The other completely different theory of liberty infringement, which formed the basis for the order of a new trial, was termed by the court a “de facto licensing.” Vandygriff, 711 F.2d at 1223 . The court used this term to refer to the fact that Vandygriff, while not in an official position to deny Phillips or anyone else a managerial position, nonetheless had such political sway that his withholding of a recommendation had the effect of an outright denial.

The court next concluded that such a blanket denial had the effect of excluding Phillips from the savings and loan industry as a manager. This violated Phillips liberty interest, not on the basis of an asserted stigma, but separately by infringing upon Phillips constitutional right to pursue the occupation of his choice. Under this theory Phillips did not have to prove that Vandy-griff’s communications were false, but rather that Vandygriff’s (a state agent) actions unreasonably or arbitrarily excluded him from his chosen profession. Id. at 1224 .

In tracing the historical development of the right to engage in one’s chosen occupation, the court noted that “ ‘[i]t requires no argument to show that the right to work for a living in the common occupations of the community is of the very essence of the personal freedom and opportunity that it was the purpose of the [fourteenth] Amendment to secure.’ ” Id. at 1222 (quoting Truax v. Raich, 239 U.S. 33, 41 , 36 S.Ct. 7 , 60 L.Ed. 131 (1915)). “This Circuit has also repeatedly acknowledged the principle that a person has a liberty interest in pursuing an occupation.” Id. (citing Ferrell v. Dallas Independent School District, 392 F.2d 697, 707 (5th Cir.1968); Shaw v. Hospital Authority, 507 F.2d 625, 628 (5th Cir.1975); Daly v. Sprague, 675 F.2d 716, 727 (5th Cir.1982)). The court concluded its analysis of this theory of liability by noting that “[u]nder these Supreme Court and Fifth Circuit cases, it is clear that Phillips’ interest in that occupation is a liberty interest within the ambit of *1217 the fourteenth amendment. Id. (emphasis supplied).

In the face of this vivid and completely unambiguous statement of the prior law, the majority would assert that, if Connelly did have a protectable liberty interest in his chosen occupation as a bank president, it was not clearly established. I find this conclusion untenable. Rather than plod through a lengthy recitation of the abundant and perhaps overwhelming precedent from the Supreme Court and Fifth Circuit which clearly holds that there is a protecta-ble liberty interest in the freedom to pursue one’s chosen occupation (even if one is a bank manager, as the Vandygriff case illustrates), I will content myself with a brief citation to the more illustrious cases, leaving their perusal to my more interested and/or skeptical readers. See Greene v. McElroy, 360 U.S. 474, 492 , 79 S.Ct. 1400, 1411 , 3 L.Ed.2d 1377 (1959) (unreasonable denial of a security clearance to a defense contractor denied him the right to hold specific private employment and thus interfered with liberty and property interests protected by the Fifth Amendment); Schware v. Board of Bar Examiners, 353 U.S. 232 , 77 S.Ct. 752 , 1 L.Ed.2d 796 (1957) (state cannot exclude a person from the practice of law in contravention of the Due Process clause of the Fourteenth Amendment); Myer v. Nebraska, 262 U.S. 390, 399 , 43 S.Ct. 625, 626 , 67 L.Ed. 1042 (“Without doubt, [liberty in the fourteenth amendment] denotes not merely freedom from bodily restraint but also the right of the individual to contract, to engage in any of the common occupations of life....”); Sosa v. Board of Managers of Val Verde Memorial Hospital, 437 F.2d 173 (5th Cir.1971) (exclusion of a physician from hospital staff privileges also falls within the right to due process).

The majority tries to distinguish Vandygriff on two bases. First, they point out that the case “may be taken as a licensing case. Phillips alleged that he could not find a managerial position in any savings and loan because of Vandygriff s repeated slander against him to each savings and loan to which he applied.” First, the “slander” aspect of the case is irrelevant, since the central holding of Vandygriff-was that one needs to show falsity only under a stigma-plus theory of liberty infringement, but not under an interference with occupation theory. Under this latter theory, it is sufficient to show that the state unreasonably or arbitrarily interfered with a person’s right to pursue a chosen occupation. The case is also more than just a licensing case, although I am not sure exactly what distinction the majority is trying establish with that characterization. Certainly, Van-dygriff involved licensing elements, but so does this case. In fact, the case at hand presents an even clearer case of government interference than did the Vandygriff case. In Vandygriff , the alleged state interference was as a result of the desire on the part of savings and loan officers to curry favor with Vandygriff, whose official duties did not actually allow him to pass on the merits of candidates for positions. The court termed this situation “de facto licensing,” which basically meant that Vandy-griff had the influence to exclude persons from positions in banks, although this power did not derive directly from his official duties but rather from his position of power and discretion. However, in this case, the Comptroller’s Office is specifically authorized to investigate the qualifications of proposed officers, and reject an application for charter if they are deemed unqualified. In effect, they have direct licensing authority. Although, technically, the Comptroller’s Office cannot veto an individual, but rather must deny or approve the application for charter as a whole, it is patently ridiculous to expect Westwood or any other bank to blindly submit Connelly’s name as president when they knew the Comptroller’s Office considered him unqualified and would therefore reject the application on that basis. Moreover, a charter applicant is usually anxious to avoid even the hint of controversy that may spark a more stringent examination of the charter application, and thus will take great pains to avoid associating itself with controversial persons such as Connelly (just as the savings and loan officers in Vandygriff were anxious to please Mr. Vandygriff and thus *1218 avoided associating themselves with Phillips).

The second distinction between this case and Vandygriff urged by the majority is that Connelly has not been deprived of a position as a bank manager or officer, but only as a bank president. “Connelly has accepted an executive banking position since the Westwood Bank application was rejected, hence, he cannot argue that the defendants’ actions amounted to a de facto revocation of a license to work as a bank manager.... Without deciding the issue, we simply note that the Comptroller’s evaluation of Connelly’s qualifications did not entirely disable him from prusuing banking or related financial careers.” Connelly is presently employed as a bank vice-president. Initially, I question the majority’s assumption that these positions are similar: my own opinion is that they are worlds apart in terms of prestige, responsibility, and compensation. But my opinion of the degrees of distinction within the banking world, as well as the opinion obviously held by the majority, must yield to the standard of review that we are bound to employ in cases such as this. In ruling on a motion for summary judgment, we are bound to give the non-moving party, Connelly, the benefit of every reasonable inference from the evidence and pleadings. Connelly has alleged in his complaint and submitted affidavits to the effect that the Houston banking community is closely knit, and it is widely known that the reason the charter for Westwood National Bank was rejected is because Connelly was nominated. This rejection occurred as the direct result of a shoddy and improper investigation of Con-nelly’s qualifications by Comptroller’s Office investigators. Mr. Lawrence Fraser submitted an affidavit stating that Connelly’s “ability to secure employment in the banking industry, particularly as the President of a bank, has been severely impaired because of the Comptroller’s disapproval of Mr. Connelly’s nomination.” (emphasis added). These allegations are sufficient to support a claim of violation of Connelly’s liberty interest in pursuing his chosen occupation. The government has failed to draw this court’s attention to anything in the record that tends to show that a position as vice-president of a bank is substantially the same as being president of a bank.

Lastly, I would like to point out in passing that the majority opinion does not make it sufficiently clear that their holding that the Comptroller’s Office investigators are entitled to qualified immunity does not affect Connelly’s suit against the investigators in their official capacities.

The majority opinion ignores the clear language and implications of the Vandy-griff case. I feel that Vandygriff controls the case before us, and we, as a panel, must follow it unless it is overruled en banc.

For the reasons and analysis above, I am of the opinion that the Comptroller’s investigators did violate a clearly established right, and therefore I dissent from the majority’s holding.