Petition for Writ of Certiorari — Neu v. Corcoran

88 ~ d

woe : | yy: 11389

rye ee 7

fi. | . ¥ | e wit

IN THE ie

ue

Supreme Court of the United States

OcTOBER TERM, 1988

‘

wn

NICHOLAS NEU,

Petitioner,

vs.

JAMES P. CORCORAN, Individually and as Superintendent

of Insurance of the State of New York and JAMES W.

RANDOLPH, Individually and as Deputy Superintendent of

Insurance of the State of New York,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

ANDREW J. GOODMAN

(Counsel of Record)

ROSNER & GOODMAN

342 Madison Avenue

New York, New York 10173

(212) 661-2150

Counsel for Petitioner

Dated: June 1, 1989

QUESTIONS PRESENTED

1. In light of the decision in Meyer v. Nebraska, 262 U.S. 390

(1923), that Fourteenth Amendment liberty interests include the

right to engage in a “common occupation of life,” is the law

sufficiently settled so that a State government official should

reasonably know that stigmatizing statements which deprive an

individual of his chosen occupation violate that individual’s due

process liberty interests?

2. Does the grant of qualified immunity to a State official

on the grounds that the specific challenged action had not

previously been determined illegal in a factually identical case

conflict with this Court’s holding in Anderson v. Creighton, 483

US. , 107 S.Ct. 3034 (1987), that a specific action need not

have previously been held unlawful to fall without the protec-

tion of qualified immunity?

3. Does an interlocutory appeal from an order denying federal

qualified immunity lie under the “collateral order” doctrine

where it has been held (and not challenged on appeal) that the

State official is not entitled to immunity for state law violations

because his conduct was not made during the course of the per-

formance of his duties, and therefore is subject to a trial of the

same issues in any event?

LIST OF PARTIES

The parties to the proceedings below were the Petitioner

Nicholas Neu and the Respondents James P. Corcoran, in-

dividually and as Superintendent of Insurance of the State of

New York and James W. Randolph, individually and as Deputy

Superintendent of Insurance of the State of New York. There

were no additional parties to the proceedings below.

TABLE OF CONTENTS

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

STATEMENT OF THE CASE

REASONS FOR GRANTING THE WRIT

:

II.

THE SECOND CIRCUIT DECISION

GRANTING IMMUNITY IS IN CON-

FLICT WITH THIS COURT'S DECI-

SIONS ESTABLISHING THE SCOPE

OF AVAILABLE IMMUNITY AND WITH

OTHER CIRCUIT DECISIONS AS TO

THE SCOPE OF PROTECTABLE

LIBERTY INTERESTS

IN FAILING TO DISMISS THE APPEAL.

THE SECOND CIRCUIT EXPANDED

THE SCOPE OF THE COLLATERAL

ORDER DOCTRINE AS APPLIED TO

IMMUNITY BEYOND THAT INTENDED

BY THIS COURT

CONCLUSION

APPENDIX _

Opinion of United States District Court for the

Southern District of New York .

Opinion of United States Court of Appeals for

the Second Circuit .. eT eee ar

SPORE ID)

WEG § FT AOD BS

Pra ree dirirwt_

apt

>

Ae

TABLE OF AUTHORITIES

CASES Page

Anderson v. Creighton, 483 U.S. ___. 107 S.Ct.

Re MAUD bie Coe ee ree eae ee as 9, 12

Baden v. Koch, 799 F.2d 825 (2d Cir. 1986)...... ll

Board of Regents v. Roth, 408 U.S. 564 (1972).... ll, 14

Brandt v. Board of Cooperative Educational Ser-

vices, 820 F.2d 41 (2d Cir. 1987) ............. 1]

Campbell v. Pierce County, 741 F.2d 1342 (11th

Cir.), reh’g denied, 747 F.2d 710 (1984)........ 13

Clark v. McGee, 49 N.Y.2d 613 (1980) ........... 16

Colaizzi v. Walker, 542 F.2d 969 (7th Cir. 1976) .. 10

Conley v. Gibson, 355 U.S. 41 (1957)........ . 4

Cosme v. Town of Islip, 476 N.Y.S.2d 857 (1st

Dept.), affd, 63 N.Y.2d 908 (1984) ............ 16

Economic Development Corp. of Dade County,

Inc. v. Stierheim, 782 F.2d 952 (llth Cir. 1986) 13

Emory v. Peeler, 756 F.2d 1547 (11th Cir. 1985) .. 13

Espanola Way Corp. v. Meyerson, 690 F.2d 827

(1lth Cir. 1982), cert. denied, 460 U.S. 1034

‘1 _ RnDRE RT PrP an ost eer to LESS, go Pan) 13

Gardiner v. A.H. Robins Co., 747 F.2d 1180 (8th

eee NE ae eee he wale este ee ee er 13

Harlow v. Fitzgerald, 457 U.S. 800 (1982) ....... 9,17

Page

Havis vt. Thornton, 609 F.2d 372 (9th Cir. 1979) . 13

Hicks v. Feeney, 770 F.2d 375 (3d Cir. 1985) |. 9

Huntley v. Community School Board, 543 F.2d

979 (2d Cir. 1976), cert. denied, 430 U.S. 929

chic pants induaeereeeeues 1]

Lappe v. Loeffelholz, 815 F.2d 1173 (8th Cir.

re rrrer 9

Little v. City of North Miami, 805 F.2d 962 (11th

‘3 ere re ar fanaa es 13

Marrero v. City of Hialeah, 625 F.2d 499 (5th

Cir. 1980), cert. denied, 450 U.S. 913 (1981) .. 13

Meyer v. Nebraska, 262 U.S. 390 (1923) ........ 3, 10, 14

Mitchell v. Forsyth, 472 U.S. 511 (1985) ........ 4, 6, 9,

15

Monroe v. Pape, 365 U.S. 167 (1961) ........... 10

Moore v. Otero, 557 F.2d 435 (5th Cir. 1977) ... 10

Paul v. Davis, 424 U.S. 693 (1976) ............. passim

Poirer v. Hodges, 445 F.Supp. 838 (M.D.Fla.

1978) 0 occ cece vce eve vets essen. 10

Quinn v. Syracuse Model Neighborhood Corp.,

613 F.2d 438 (2d Cir. 1980) ................. 11, 12

Rudow v. City of New York, 822 F.2d 324 (2d

Che, ROT ian er es bs hehe s iteenins 1]

Page

S & D Maintenance Co., Inc. v. Goldin. 844

F.2d 962 (2d Cir. 1988)..................... 1]

Stretten v. Wadsworth Veterans Hospital, 537

P.26 36) (Oth Cir. 1078) ... 2... .............. 10

Sullivan v. Brown, 544 F.2d 279 (6th Cir. 1976) 10

STATUTES AND REGULATIONS

28 U.S.C. Section 1254(1)....... 2

swotion 120) ... wc cece. 3

Section 1292(c) ............. eae 3

Section 1292(d)............ Meee 3

section 1205 .............. See ae 3

42 U.S.C. Section 133] ............. aes ee 5

Section 1343 ........ ee eee 5

Section 1983 ....... Mea ee mati ae

Federal Rules of Civil Procedure Rule 12(b) ..... yy

New York Civil Practice Law and Rules

(McKinney 1988)................ Ae Be 6

No. 88-

IN THE

Supreme Court of the United States

OcroBER TERM, 1988

NICHOLAS NEU

Petitioner.

VS.

JAMES P. CORCORAN, Individually and as Superintendent

of Insurance of the State of New York and JAMES W.

RANDOLPH, Individually and as Deputy Superintendent of

Insurance of the State of New York.

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioner Nicholas Neu respectfully prays that a writ of cer-

tiorari issue to review the judgment and opinion of the United

States Court of Appeals for the Second Circuit, entered in the

above-entitled proceeding on March 3, 1989.

OPINIONS BELOW

The opinion of the Court of Appeals for the Second Circuit

is reported at 869 F.2d 662, and is reprinted in the appendix

herewith (Al11-24)!

The memorandum decision and order for the United States

District Court for the Southern District of New York (Sweet,

U.S.D.J.) is reported at 695 F.Supp. 1552, and is reprinted in

the appendix herewith (A1-10).

JURISDICTION

Invoking federal jurisdiction under 42 U.S.C. Section 1983,

the Petitioner brought this suit in the Southern District of New

York. On September 22, 1988, the Southern District denied in

its entirety Respondents’ motion to dismiss pursuant to

Fed.R.Civ.P. Rule 12(b) for failure to state a claim for which

relief may be granted, or, alternatively, for immunity under both

federal and state law, and for other interlocutory relief. See

Al-10.

Respondents appealed insofar as the district court’s order

denied federal immunity. On appeal, the Second Circuit on

March 3, 1989 entered a judgment and an opinion reversing the

Southern District’s order and directing that Petitioner’s com-

plaint be dismissed on the grounds that Respondents are entitl-

ed to immunity because prior cases had not clearly established

that Respondents’ conduct deprived Petitioner of a liberty in-

terest protected by the due process guarantees of the Fourteenth

Amendment. No petition for rehearing was sought.

The jurisdiction of this Court to review the judgment of the

Second Circuit is invoked under 28 U.S.C. Section 1254(1).

Refers to pages in the Appendix submitted herewith

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

United States Constitution, Fourteenth Amendment. Section ]

All persons born or naturalized in the United States, and sub-

ject to the jurisdiction thereof, are citizens of the United States

and of the State wherein they reside. No State shall make or

enforce any law which shall abridge the privileges or immunities

of citizens of the United States; nor shall any State deprive any

person of life, liberty, or property without due process of law:

nor deny to any person within its jurisdiction the equal protec-

tion of the laws.

28 U.S.C. Section 1291

The courts of appeals (other than the United States Court

of Appeals for the Federal Circuit) shall have jurisdiction of ap-

peals from all final decisions of the district courts of the United

States, the United States District Court for the District of the

Canal Zone, the District Court of Guam, and the District Court

of the Virgin Islands, except where a direct review may be had

in the Supreme Court. The jurisdiction of the United States

Court of Appeals for the Federal Circuit shall be limited to the

jurisdiction described in sections 1292(c) and (d) and 1295 of

this title.

STATEMENT OF THE CASE

This is a civil rights action pursuant to 42 U.S.C. Section 1983

(1982), for deprivation of Petitioner’s Fourteenth Amendment

liberty interest without due process of law. The liberty interest

lost was Petitioner’s right to engage in his chosen “common oc-

cupation of life.” Meyer v. Nebraska, 262 U.S. 390, 399 (1923).

The deprivation resulted from false statements made by

Respondents to insurance regulatory officials at a national con-

vention, falsely accusing in words or substance that, inter alia.

Petitioner was a swindler, operated a scam, associated with

criminals, knowingly violated the law, and did not honor con-

tractual obligations.

The complaint also avers a pendent state law defamation

claim.

Background of Dispute

Accepting the complaint as true for the purposes of this peti-

tion,’ Petitioner and Respondents have for many years been

engaged in continuing legal battles concerning the jurisdictional

reach of the New York Department of Insurance over automobile

service businesses of which Petitioner was an officer and direc-

tor. In the most recent case, involving the American Motor Club,

Inc. (“AMC”), the Department of Insurance obtained a judg-

ment which was reversed by the Appellate Division of New York

State Supreme Court for violation of Petitioner’s procedural due

process rights.

During the pendency of the AMC proceedings, Petitioner was

terminated as an AMC officer and director, and immediately

so advised the New York Attorney General’s office. As a conse-

quence, the Attorney General and Respondent Corcoran were

able to obtain the appointment of Respondent Randolph as

AMC'’s Receiver, although the court had declined to appoint a

receiver while Petitioner was an AMC officer and director.

Respondent Randolph immediately took control of AMC.

While Petitioner was an AMC officer and director, AMC

honored bona fide claims and repaired member vehicles in ac-

cordance with its contractual obligations, with a consumer com-

plaint record comparing favorably to industry standards. Com-

mencing after Petitioner's employment terminated, and while

Respondent Randolph was AMC’s Receiver, AMC ceased repair-

ing vehicles, and abandoned vehicles previously delivered for

repair. While Petitioner was an AMC officer and director, AMC’s

* In accordance with Conley v. Gibson, 355 U.S. 41 (1957), the district court

assumed the truth of the complaint for purposes of determining Respondents’

Fed.R.Civ.P. Rule 12(b) motion for failure to state a claim. On appeal, the

Second Circuit also presumed true the facts stated in the complaint (A14),

since an interlocutory appeal from denial! of qualified immunity lies only if

solely on the law. Mitchell v. Forsyth. 472 U.S. 511 (1985).

assets far exceeded its liabilities but, two months later, after

Respondent Randolph's tenure, AMC filed a petition under the

United States Bankruptcy laws.

Stigmatization of Petitioner

Having once abused Petitioner's constitutional due process

rights in wrongfully obtaining a judgment subsequently vacated,

Respondents again violated those rights by a course of conduct

intended to, and in fact, ruining Petitioner’s reputation and mak-

ing it likely that he will be unable to earn a living in the

automobile repair industry, which was his sole livelihood.

Specifically, in June 1987, at a convention of Insurance Com-

missioners, Respondents wrongly accused Petitioner of not

honoring contractual obligations or repairing vehicles, and of

driving AMC into bankruptcy; this notwithstanding that it was

during Respondent Randolph’s stewardship that AMC aban-

doned its members and their vehicles, and that AMC was sol-

vent when Petitioner left its employ. Also at the convention,

Respondent Randolph, without foundation or merit, labeled

Plaintiff a swindler and accused him of operating a scam and

associating with criminals. The complaint additionally alleges

communication of these allegations to other Insurance Depart-

ments throughout the country.

As a consequence of Respondents’ statements, the California

Department of Insurance successfully undertook, and continues,

action to force Petitioner out of the automobile service businesses

he had started in California after leaving AMC.

The Proceedings Below

This action followed, alleging two claims — one pursuant to

42 U.S.C. Section 1983 for depriving Plaintiff without due pro-

cess of law of his liberty interest in his good name and reputa-

tion thus foreclosing a range of professional opportunities, and

the other for state law defamation.

Subject matter jurisdiction is predicated on federal question

grounds pursuant to 42 U.S.C. Sections 1331 and 1343, and

pendent jurisdiction.

6

By April 14, 1988 Notice of Motion and supporting affidavit,

Respondents moved pursuant to Fed.R.Civ.P. Rule 12(b) to

dismiss the complaint for failure to state a claim on which relief

can be granted. As to the civil rights count, Respondents argued

that the complaint failed to state a claim because their conduct

did not deprive Petitioner of a constitutionally protected interest,

and alternatively sought qualified immunity on grounds that

at the time of their statements the law was unclear that the right

to practice a chosen career was constitutionally protected. As

to the pendent state claim, Respondents postulated absolute im-

munity under state law for acts in connection with their official

duties and in reporting judicial decisions, and that defamation

Was not averred with the particularity required by New York’s

Civil Practice Law & Rules (“C.P.L.R.”).

By September 22, 1988 Opinion and Order (A1-10), the district

court denied the motion. Regarding the civil rights cause, the

lower court determined that at all relevant times the law was

clearly established that stigmatizing government defamation

resulting in deprivation of the ability to engage in a chosen oc-

cupation makes out a claim for loss of liberty without due pro-

cess of law. As to the pendent state law cause, the court held

that the statements were neither made in connection with of-

ficial duties nor in report of a judicial proceeding, and that the

federal pleading rules — not the New York C.P.L.R. — governed

here, and those applicable rules were satisfied.

Respondents then appealed the district court’s decision only

insofar as it rejected their claim to federal qualified immunity.

Petitioner moved both to dismiss the appeal as improperly taken

from an interlocutory order and to oppose the substance.

By Decision and Judgment dated and entered March 3, 1989

(All-24), the Second Circuit Court of Appeals reversed and

remanded with instructions to dismiss the complaint. As to ap-

pealability, the circuit held that for purposes of the appeal the

allegations of the pleading were deemed true, the issues were

thus purely of law, and the denial of immunity was therefore

within the “collateral order” doctrine and appealable on auth-

ority of Mitchell v. Forsyth, 472 U.S. 511. On substance, the

a |

Second Circuit analyzed the facts of each of its prior qualified

immunity decisions; determined that as a factual matter none

of them had found due process violations by stigmatization in

the absence of a loss of public employment or a state created

property right; and held that, as a result, the law was not clear

that stigmatization absent in any other circumstance implicates

due process property or liberty rights. Thus, the court of ap-

peals reversed, and remanded to the district court with instruc-

tions to dismiss.

This petition follows.

REASONS FOR GRANTING THE WRIT

i.

THE SECOND CIRCUIT DECISION GRANTING

IMMUNITY IS IN CONFLICT WITH THIS

COURT'S DECISIONS ESTABLISHING THE SCOPE

OF AVAILABLE IMMUNITY AND WITH OTHER

CIRCUIT DECISIONS AS TO THE SCOPE OF

PROTECTABLE LIBERTY INTERESTS

This petition presents two important constitutional issues fre-

quently recurring in civil rights litigation. First, under what.

circumstances does damage to business and reputation implicate

protected liberty interests satisfying the “plus” element of Paul

v. Davis, 424 U.S. 693 (1976), so as to give rise to a Fourteenth

Amendment due process claim for stigmatizing statements by

government officials? This is an issue on which the circuits are

in conflict. Second, in affording Respondents immunity here,

the court of appeals applied a standard so restrictive as to essen-

tially require a prior four-square holding before subjecting a

government official to adjudication of a claim against him. This

dangerous precedent, in conflict with this Court’s prior deter--—

minations, threatens to freeze the evolutionary development of

constitutional principles.

Public officials are immune from liability under the civil rights

statutes only if their conduct is not reasonably framed in light

of the law then extant.

[O]ur cases establish that the right the official is alleg-

ed to have violated must have been “clearly establish-

ed” in a more particularized, and hence more rele-

vant sense: The contours of the right must be suffi-

ciently clear that a reasonable official would under-

stand that what he was doing violates that right. This

is not to say that an official action is protected by

qualified immunity unless the very action in question

has previously been held unlawful, but it is to say that

in the light of preexisting law the unlawfulness must

be apparent.

Anderson v. Creighton, 483 U.S. . 107 S.Ct. 3034, 3039

(1987)(emphasis added) (citations omitted). See also Mitchell v.

Forsyth, 472 U.S. at 535, n.12 (“We do not intend to suggest that

an official is always immune from liability or suit for a war-

rantless search merely because the warrant requirement has

never explicitly been held to apply to a search conducted in iden-

tical circumstances.”).

Therefore, the official’s conduct is tested by an objective

reasonableness standard:

The public interest in deterrence of unlawful conduct

and in compensation of victims remains protected by

a test that focuses on the objective legal reasonableness

of an official’s acts. Where an official could be ex-

pected to know that certain conduct would violate

statutory or constitutional rights, he should be made

to hesitate; and a person who suffers injury caused

by such conduct may have a cause of action.

Harlow v. Fitzgerald , 457 U.S. 800, 819 (1982). Thus, existing

precedent need not be precise if a reasonable official should have

related its principles to the situation at issue; a factual wrinkle

does not defeat a Civil Rights Act claim. See also Hicks v. Feeney,

770 F.2d 375 (3d Cir. 1985); Lappe v. Loeffelholz, 815 F.2d 1173

(8th Cir. 1987).

This principle is founded on sound policy, for to require fac-

tual precision to escape immunity protection would create a

“Catch 22” forever precluding the evolution of constitutional

boundaries on official conduct. Any action without a previous

four-square factual precedent would be dismissed at its incipient

stages on immunity grounds; no new precedent could develop.

Here, the unlawfulness of Respondents’ conduct is apparent

in the light of preexisting law.

In Paul v. Davis, 424 U.S. 693, the Court determined that

stigmatization by government officials of itself did not implicate

due process guarantees, but that the stigmatizing statement

must result in the deprivation of a liberty or property interest

10

cognizable under the Fourteenth Amendment. Consequently,

the Paul v. Davis formulation established what is now widely

termed the “stigma-plus” test, leaving it to the circuits in the

first instance to contour the additional elements necessary to

convert stigmatizing statements into violations of constitutional

proportion. See, e.g., Moore v. Otero, 557 F.2d 435, 437 (5th

Cir. 1977); Sullivan v. Brown, 544 F.2d 279, 283-84 (6th Cir.

1976); Colaizzi v. Walker, 542 F.2d 969, 973-74 (7th Cir. 1976);

Stretten v. Wadsworth Veterans Hospital, 537 F.2d 361, 365-66

(9th Cir. 1976); Poirer v. Hodges, 445 F.Supp. 838, 843 (M.D.

Fla. 1978).

Paul v. Davis did not purport to delineate each circumstance

constituting deprivation of a liberty interest:

There are other interests, of course, protected not by

virtue of their recognition by the law of a particular

State but because they are guaranteed in one of the

provisions of the Bill of Rights which has been “in-

corporated” into the Fourteenth Amendment. Section

1983 makes a deprivation of such rights actionable in-

dependently of state law. See Monroe v. Pape, 365 U.S.

167 (1961).

Our discussion in Part III is limited to consideration

of the procedural guarantees of the Due Process Clause

and is not intended to describe those substantive

limitations upon state action which may be encom-

passed within the concept of “liberty” expressed in the

Fourteenth Amendment. Cf. Part IV, infra.

424 US. at 710-11, n.5 (emphasis added). Accordingly, whether

the Paul “plus” element is satisfied in stigmatization claims alleg-

ing loss of a Fourteenth Amendment “liberty” interest is deter-

mined by reference to other decisions defining “liberty”.

The decisions of this Court have long established that the right

to pursue one’s livelihood is a protected liberty interest.

Specifically, in Meyer v. Nebraska, 262 U.S. 390 (1923), the Court

defined liberty as including “the right of the individual . . . to

engage in any of the common occupations of life.” Jd. at 399.

1]

Meyer’s vitality in this regard was confirmed more recently in

Board of Regents v. Roth, 408 U.S. 564 (1972), quoting Meyer

for this very proposition. Id. at 572.°

Nevertheless, in conflict with the established precedent of this

Court, the court of appeals here dismissed, holding that the law

is not settled that stigmatizing statements foreclosing the right

to pursue a chosen career is a constitutional violation. To

navigate the shoals of conflicting controlling authority, the cir-

cuit court justified its decision by a detailed factual analysis of

each of its prior precedents (see n.3 below), holding that no case

had specifically found a constitutional violation in the absence

of termination of public employment. Indeed, the court’s minute

factual distinctions compelled it to distinguish Quinn v. Syracuse

Model Neighborhood Corp., 613 F.2d 438, on the ground that

there the private employment terminated was in fact “quasi-

public” because the Defendant, although private, was publicly

funded. See A20-21.

But this analysis misperceives the thrust and import of this

Court’s line of qualified immunity cases, culminating most

‘ Moreover, the Second Circuit itself in dicta repeatedly recognized that the

liberty interest, as defined by this Court, includes the right to pursue a chosen

occupation. Huntley v. Community School Board, 543 F.2d 979 (2d Cir. 1976),

cert. denied, 430 U.S. 929 (1977)(public school principal’s due process rights

were violated when in the process of his termination, public remarks were

made stigmatizing him and making it unlikely that he would find future

employment in a similar capacity in education); Baden v. Koch, 799 F.2d 825

(2d Cir. 1986)(citing Meyer to effect that stigmatizing statements foreclosing

other employment opportunities are entitled to constitutional redress); Rudow

v. City of New York, 822 F.2d 324, 330 (2d Cir. 1987)(claims of constitutional

dimension arising from false administrative prosecution for sexual harassment

dismissed because Plaintiff had not “been prevented from practicing his pro-

fession”); Brandt v. Board of Cooperative Educational Services, 820 F.2d 41

(2d Cir. 1987)(upholding complaint where state employee dismissed with

stigmatizing statements placed in his file); S & D Maintenance Co., Inc. v.

Goldin, 844 F.2d 962, 971 (2d Cir. 1988)(government contractor’s complaint

dismissed as to stigmatization allegations solely because of failure to allege

that stigmatizing charges were false); Quinn v. Syracuse Model Neighborhood

Corp., 613 F.2d 438, 446 (2d Cir. 1980)(stigmatizing dismissal of quasi-public

emplovee, citing Meyer).

|

12

recently in Anderson v. Creighton, 107 S.Ct. 3034. The point

of the Second Circuit’s cases should not be to require factual

precision of prior analysis, but rather to require only that “[t]he

contours of the right must be sufficiently clear that a reasonable

official would understand that what he is doing violates that

right.” Id., 107 S.Ct. at 3039. Accordingly, that no prior case

had specifically found for a Plaintiff demonstrating that his

career was foreclosed does not mean that no such Plaintiff can

succeed, or that qualified immunity attaches against all such

claims. Otherwise, case law development would be foreclosed,

a result against which the Second Circuit itself has cautioned:

The “liberty” protected by the Fourteenth Amendment

against arbitrary governmental interference is a

necessarily amorphous concept, which continues to

evolve as courts apply it to the specific circumstances

of individual cases.

Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d at

441-42.

Thus, although paying lip service to the Anderson v. Creighton

qualified immunity standard, the Second Circuit in fact deter-

mined this action in utter derogation of that standard. Not-

withstanding that for purposes of the appeal Petitioner had con-

clusively demonstrated that Respondents’ conduct foreclosed his

chosen career (see p.4, n.2, supra), and that established authority

included the right to pursue a chosen career within the ambit

of Fourteenth Amendment liberty protection, the court of ap-

peals afforded qualified immunity to the stigmatizing conduct

depriving Petitioner of his chosen career. In so doing, the cir-

cuit court engaged in the detailed factual analysis abjured by

this Court in Anderson. Thus, to permit the Second Circuit's

analysis to stand is to permit dangerous precedent threatening

the evolutionary development of constitutional parameters.

Moreover, not only did the Second Circuit’s analysis conflict

with qualified immunity standards established by this Court,

it also conflicted with other circuits’ correct determinations that

stigmatization resulting in damage to business reputation and

goodwill is constitutionally actionable. For example, the Eleventh

13

Circuit in Little v. City of North Miami, 805 F.2d 962 (1986),

reversed dismissal of Plaintiff's due process stigmatization case

arising from a law professor's public censure by the Defendant's

City Council. The court of appeals there relevantly noted:

Experience has proven that personal reputation, stand-

ing alone, is not a property or liberty interest which

may serve as the basis of a Section 1983 claim. Paul,

424 USS. at 712, 96 S.Ct. at 1165; Campbell v. Pierce

County, 741 F.2d 1342, 1344 (llth Cir. 1984), reh‘g.

denied, 747 F.2d 710 (1984). This Court has

acknowledged and reaffirmed, however, that business

reputation/goodwill is both a property and a liberty

interest which is protectable under the scope of Sec-

tion 1983. Marrero v. City of Hialeah, 625 F.2d 499,

514-16 (5th Cir. 1980), cert. denied, 450 U.S. 913, 101

S.Ct. 1353, 67 L.Ed.2d 337 (1981); Economic Develop-

ment Corp. of Dade County, Inc. v. Stierheim, 782

F.2d 952, 954-55 (llth Cir. 1986); Emory v. Peeler,

756 F.2d 1547, 1554 (11th Cir. 1985); Espanola Way

Corp. v. Meyerson, 690 F.2d 827, 829 (11th Cir. 1982),

cert. denied, 460 U.S. 1034, 103 S.Ct. 1431, 75 L.Ed.2d

791 (1983). —

805 F.2d at 969 (emphasis in original). See also Gardiner v. A.H.

Robins Co., 747 F.2d 1180, 1191 (8th Cir. 1984)(A judge’s com-

ments from the bench concerning the conduct of officers of a

corporate party “constituted an infringement on the officers’

liberty interests because it was a governmental attack on their

good name, reputation, honor and community standing.”).

Here, Petitioner has alleged far more than damage to his

business or reputation: he has (for present purposes) conclusively

affirmed his total preclusion from pursuit of his livelihood. A

fortiori, under Little and Gardiner, Petitioner would be entitled

to pursue his claim through discovery and trial.

Consequently, the Second Circuit’s decision dismissing the

complaint and affording qualified immunity is in conflict with

——————=====7~E

the Eleventh and Eighth Circuits. Concededly, the court of ap-

peals’ decision here is in accord with Havas v. Thornton, 609

F.2d 372 (9th Cir. 1979), but this only serves to highlight the

conflict among the circuits on a recurrent and important issue:

the extent of economic damage necessary to satisfy the Paul v.

Davis “plus” element to assert a constitutional due process

stigmatization claim.

Here, the damages are as severe as can be, resulting in com

plete deprivation of Petitioner's right to pursue his chosen career,

thus violating Petitioner’s liberty interest as defined in Meyer

vu. Nebraska, 262 U.S. 390, as reaffirmed in Board of Regents

v. Roth, 408 U.S. 564. To establish beyond peradventure that

the law is settled that this is a liberty interest protected against

governmental stigmatization, to resolve any doubt among the

circuits on this frequently recurring issue, and to reject the

dangerous Second Circuit extension of qualified immunity in

conflict with this Court’s prior determinations, Petitioner

respectfully requests that this petition be granted.

Il.

IN FAILING TO DISMISS THE APPEAL, THE

SECOND CIRCUIT EXPANDED THE SCOPE OF

THE COLLATERAL ORDER DOCTRINE AS

APPLIED TO IMMUNITY BEYOND THAT

INTENDED BY THIS COURT

Mitchell v. Forsyth, 472 U.S. 511, established the general in-

terlocutory appealability of the denial of immunity to govern-

ment officials under the collateral order doctrine. This Court

reasoned that the import of immunity is to shield against the

expense and burden of litigation and its concommitant chilling

effect on the exercise of official discretion. Jd. at 524-29. Here,

however, neither relevant policy consideration is applicable since

Respondents’ conduct was not in the exercise of official duties

and Respondents will necessarily be subject to litigation in the

state courts if this petition is denied.*

In their initial motion, Respondents prayed dismissal of the

pendent state claims even if federal immunity was denied, argu-

ing that New York State law afforded Respondents immunity

here. The district court rejected Respondents’ contentions, and

stated in pertinent part:

The Defendants next contend that as state officials

they are absolutely immune from suit for defamation

stemming from statements made “in connection with”

their official duties. However, the standard applied

by the New York Court of Appeals is somewhat

stricter. That court has stated that an official is

absolutely immune from liability for allegedly

defamatory remarks related to his responsibilities

and made during the course of the performance

of his duties.

‘ This issue was preserved by Petitioner's motion to dismiss the appeal (on the

grounds that factual determinations were necessarily involved), and in his brief

insofar as it argued the absence of policy justification for immunity here

16

This does not mean, however, that absolute im-

munity attaches to every statement made by a[n

official]. Both the subject of the statement and

the circumstances in which it is made are of im-

portance in determining whether a particular

statement was privileged.

Clark v. McGee, 49 N.Y.2d 613, 404 N.E.2d 1283, 427

N.Y.S.2d 740, 744 (1980)(emphasis added).

In this case, the Defendants allegedly made the of-

fending statements not in the course of their duties

as Commissioner and Deputy Commissioner for the

State of New York, but at a convention of other in-

surance commissioners. The complaint sets forth that

the statements were made to discrete attendants at

the convention and not in the discharge of duties by,

for example, warning all commissioners of the alleged

wrongful deeds of individuals who could potentially

practice in any of the fifty states. That is, the com-

plaint seemingly indicates that the statements were

made in social conversation. This does not satisfy the

requirements of Clark.

Moreover, some of the statements allegedly made by

Randolph were that Neu was a swindler, operated a

scam in New York, and associated with criminals.

These are not necessarily relevant to the auto repair

business or the insurance business, the Defendants’

field of regulation, and thus would not fall under the

privilege as enumerated by Clark. See also Cosme v.

Town of Islip, 102 A.D.2d 717, 476 N.Y.S.2d 857 (1st

Dept.), affd, 63 N.Y.2d 908, 472 N.E.2d 1033, 483

N.Y.S.2d 205 (1984).

(Emphasis in original) A7-8.

Respondents’ appeal was limited to the issue of federai

qualified immunity, and the Second Circuit dismissed the state

claim solely because the federal claims were dismissed (A22).

17

Therefore, the district court’s determination rejecting state im-

munity stands, and Respondents are consequently subject to trial

in the state courts regarding the very same transactions for which

they have received federal immunity.

Thus, the Mitchell rationale for permitting collateral appeal

from denial of immunity — that is, to shield officials from litiga-

tion — is inapposite here. Regardless of the federal immunity

afforded, Respondents will be subject to litigation of the same

issues, albeit in a state forum. Consequently, to allow collateral

appeal in these circumstances is to constitute federal qualified

immunity as a forum selection device. Once it is determined

that Respondents should stand trial somewhere for their

challenged conduct, the rationale underlying interlocutory ap-

peals on qualified immunity no longer attends.

This is especially true here, where the immunity claim is based

not on the propriety of Respondents’ actions, but on whether

the consequences of their conduct were sufficiently severe to

found a cognizable constitutional claim. Respondents’ argument

below was premised entirely on Paul v. Davis, in which the sole

issue was to what extent the Constitution federalized state tort

violations. 424 U.S. at 699-701. The question was not whether

a state law violation was committed in the first instance. Here,

the unchallenged district court determination is that the com-

plaint properly states claims for state law violations not im-

munized under state law.

Thus, in relying exclusively on Paul, Respondents posit en-

titlement to immunity even if they objectively should know that

their conduct subjects them to liability for state law violations,

and the only arguably open question is whether it also violated

the Constitution. Public policy is not served by this circumstance.

The immunity claimed here is qualified, as opposed to absolute,

to retain a deterrent effect against unlawful conduct by public

officials. Harlow v. Fitzgerald, 457 U.S. at 819. State officials

should be deterred from all unlawful conduct — state and

federal — for the public has the right to expect that its govern-

ment, at all levels, will act in an entirely lawful manner.

18

Accordingly, extending the collateral order doctrine beyond

the Mitchell rationale to allow interlocutory appeals where State

officials nevertheless must submit to adjudication of state law

violations runs contrary to the public interest. Therefore, this

petition should be granted to reject the unwarranted extension

of the collateral order doctrine as applied to immunity in con-

travention of the general rule disfavoring interlocutory appeals.

CONCLUSION

For the foregoing reasons, Petitioner respectfully requests that

a writ of certiorari be granted for review of the judgment of

the Second Circuit Court of Appeals.

Respectfully submitted,

ANDREW J. GOODMAN

(Counsel of Record)

ROSNER & GOODMAN

342 Madison Avenue

New York, New York 10173

(212) 661-2150

Counsel for Petitioner

Dated: June 1, 1989

APPENDIX

A-1l

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

NICHOLAS NEU,

Plaintiff,

— against —

JAMES P. CORCORAN, individually, and as Superintendent

of Insurance of the State of New York and JAMES W. RAN-

DOLPH, individually and as Deputy Superintendent of the

State of New York,

Defendants.

OPINION

88 Civ. 1495 (RWS)

APPEARANCES:

ROSNER & GOODMAN, Esoas.

Attorneys for Plaintiff

342 Madison Avenue

New York, New York 10173

By: ANDREW J. GoopMan, Esq.

Of Counsel

Hon. RoBEeRT ABRAMS

Attorney General of the State

of New York

Attorney for Defendants

120 Broadway

New York, New York 10271]

By: ANN Horowitz, Esq.

Aucust L. Frerkau, Esq.

Assistant Attorney General

Of Counsel

A-2

Sweet, D.J.

Defendants James P. Corcoran, individually and as

Superintendent of Insurance of the State of New York (“Cor-

coran’), and James W. Randolph, individually and as Deputy

Superintendent of Insurance of the State of New York (“Ran-

dolph”) (collectively the “defendants”) have moved pursuant to

Rule 12(b)(6), Fed.R.Civ.P. to dismiss the claim filed against them

by Nicholas Neu (“Neu”) for failure to state a claim upon which

relief may be granted. For the reasons set forth below, the mo-

tion is denied.

Facts

From February 1985 through March 11, 1987, Neu was presi-

dent of the American Motor Club, Inc. (“AMC”), a New York

corporation engaged in selling pre-paid automobile collision con-

tracts to the public. In 1985, the New York Insurance Depart-

ment commenced a proceeding against AMC and an individual

defendant in the Supreme Court of the State of New York. Neu

was deemed a party to that action by the court on April 8, 1987

and was deemed to have answered by October 31, 1985. The

petition in that proceeding alieged that AMC was selling in-

surance to the public in violation of the law of the State of New

York.

Based on the evidence adducea at that trial, the New York

Supreme Court rendered a decision holding that AMC was

engaged in the illegal sale of insurance but that the respondents

did not willfully violate the law. The judgment of April 8, 1987

assessed sanctions against Neu and another and appointed Ran-

dolph receiver of AMC. That judgment was appealed by Neu.

In October 1987, the Appellate Division, First Department af-

firmed the court below insofar as it held that AMC was engaged

in the unauthorized sale of insurance but reversed the judgment

to the extent it imposed monetary sanction against Neu based

on the ground that Neu’s procedural due process rights had been

violated.

In June 1987, after the Supreme Court ruling but before the

Appellate Division ruling, while Neu was engaged in the prepaid

A-3

collision service business in California, the Defendants allegedly

made disparaging remarks regarding Neu at a convention of In-

surance Commissioners. The Defendants allegedly stated to the

California and Louisiana Insurance Commissioners that Neu

did not honor contracts, did not repair vehicles, and that he

drove AMC into bankruptcy and associated with criminals. Neu,

however, contends that it was during Randolph’s stewardship

that AMC abandoned its members and their vehicles, and that

AMC was solvent when he left its employ. Thus, as a result of

the Defendants’ allegedly false statements “eu claims that his

reputation was ruined and that he was forced out of the in-

surance business.

Prior Procedure

Neu filed this action on March 4, 1988 alleging deprivation

of liberty without due process of law pursuant to 42 U.S.C.

§ 1983 and common law defamation. The defendants filed this

motion to dismiss Neu’s claims on April 15, 1988. This court

heard oral argument and deemed the motion fully submitted

on June 24, 1988.

Discussion

Federal Liability

42 U.S.C. § 1983 creates a cause of action against

Every person who, under color of any statute, or-

dinance, regulation, custom, or usage of any State or

Territory, subjects, or causes to be subjected, any

citizen of the United States or other person within the

jurisdiction thereof the deprivation of any rights,

privileges, or immunities secured by the Constitution

and laws....

Thus, in examining a section 1983 claim, a court must deter-

mine “(1) whether the conduct complained of was committed

by a person acting under color of state law; and (2) whether

this conduct deprived a person of rights, privileges, or im-

munities secured by the Constitution or laws of the United

A-4

States.” Parratt v. Taylor, 451 U.S. 527, 535 (1980). For the pur-

poses of this motion, the defendants do not challenge that their

alleged actions were committed under color of state law.

However, they contend that the complaint does not allege the

deprivation of a liberty right entitling Neu to a right of action

in federal court.

In Paul v. Davis, 424 U.S. 693 (1976), cert. denied, 430 U.S.

929 (1977), the Supreme Court held that defamation of an in-

dividual by a public official did not deprive that individual of

a libertv interest secured by the Constitution. The Court held

that while damage to reputation constituted a state law cause

of action for defamation, section 1983 could not be utilized to

transform all such actions into federal claims through the four-

teenth amendment thereby rendering that amendment a “font

of tort law.” Id. at 701. The Court, in examining older cases,

determined that to be actionable, damage to reputation must

be accompanied by damage of some tangible interest, such as

loss of government employment, id. at 706, or loss of a right

or status previously recognized by state law, id. at 711.

Cases in this circuit have reaffirmed Paul’s requirement of

“reputation plus” for setting forth a claim of deprivation of liber-

ty under the fourteenth amendment based on defamation.

In Huntley v. Community School Board, 543 F.2d 979 (2d

Cir. 1976), cert. denied, 430 U.S. 929 (1977), the Second Cir-

cuit held that a public school principal’s due process rights were

violated when in the process of his termination, public remarks

were made stigmatizing him and making it unlikely that he

would find future employment in a similar capacity in the public

schools or elsewhere.

In Baden v. Koch, 799 F.2d 825 (2d Cir. 1986), the court held

that a Chief Medical Examiner’s demotion to Deputy Chief

Medical Examiner with accompanying damaging public an-

nouncements did not set forth a claim under section 1983 because

the state actions did not result in his being foreclosed from a

range of opportunities. Baden quotes from Meyer v. Nebraska,

262 U.S. 390, 399 (1923), which states that fourteenth amend-

ment liberty interests include the right “to engage in any of the

A-5

common occupations of life.” Baden, supra, 799 F.2d at 829.

However, the court went on to discuss how the Supreme Court

has “refined the parameters of liberty,” citing such cases as Paul

v. Davis, and Board of Regents v. Roth, 408 U.S. 564 (1972) (no

property or liberty interest implicated when state fails to rehire

non-tenured teacher absent charges against him amounting to

stigma or foreclosing other employment). Moreover, the Second

Circuit in Baden stated that Baden’s interest was less signifi-

cant than many asserted in Supreme Court cases in that Baden

was not terminated and “not ‘not rehired’ ” but was merely

demoted. 799 F.2d at 830. Thus, since Baden was able to con-

tinue to work in his chosen profession, he did not suffer a

deprivation of liberty.

Recently, in Rudow v. City of New York, 822 F.2d 324 (2d

Cir. 1987), the court held that an executive who suffered loss

of job, poor health, and public humiliation based on charges

of sexual harassment did not set forth a cause of action under

section 1983 against the state’s attorney. That attorney had pro-

secuted the action without discovering that the victim had

fabricated evidence. The court held that Rudow had failed to

satisfy the “reputation plus” test as he had not suffered the loss

of public employment nor had he been prevented from prac-

ticing his profession. 822 F.2d at 330. The court held that “[h is

loss of the top job at his firm is an inadequate addendum to

his reputation claim... . He has not been prevented from engag-

ing in the everyday activities of life... . The collateral conse-

quences of his being adjudged guilty of sexual harassment do

not abridge a property right to his business reputation, as they

might if that right were based on a statute.” Jd. (citations omit-

ted); see also Brandt v. Board of Cooperative Educational Ser-

vices, 820 F.2d 41 (2d Cir. 1987) (upholding the complaint in

case where state employee was dismissed and stigmatizing

statements were placed in employment file).

These cases stand for the proposition that in order to make

out a claim for loss of liberty without due process of law stem-

ming from governmental defamation, the plaintiff must allege

damage to reputation, plus deprivation of the ability to engage

> ———————— eee ee

A-6

in the everyday activities of his life, apparently construed to

mean his chosen occupation. Taking the allegations in the com-

plaint to be true for the purposes of this motion, Conley v. Gib-

son, 355 U.S. 41, 45 (1957), Neu alleged such loss. His complaint

states that because of the Defendants’ defamatory statements,

he was precluded from engaging in his chosen profession, name-

ly, the auto repair contract business. Under Huntley, Baden,

and Rudow, allegations of foreclosure from practicing one’s

chosen profession together with stigmatizing remarks constitute

a cause of action under 42 U.S.C. § 1983.

Federal Immunity

The Defendants next assert that even if Neu has stated a cause

of action based on deprivation of liberty, they are entitled to

immunity under federal law. The parties agree that the Supreme

Court case of Anderson v. Creighton, 107 S. Ct. 3034 (1987) is

controlling on this question. The Court in that case held that

public officials are entitled to qualified immunity unless the ac-

tions taken were clearly proscribed by law. Thus, the court

stated:

The contours of the right must be sufficiently clear

that a reasonable official would understand that what

he is doing violates the right. This is not to say that

an official action is protected by qualified immunity

unless the action in question has previously been held

unlawful,. . . but it is to say that in light of preexisting

law the unlawfulness must be apparent.

Id. at 3039 (citations omitted).

The Defendants rely on Paul v. Davis to stand for the prop-

osition that there is no preexisting law making it evident that

the statements allegedly made by the Defendants violated Neu’s

constitutional rights. However, as set forth above, this circuit

has held that an individual has a liberty interest in maintain-

ing reputation plus the right to engage in his chosen profession.

Both Huntley and Baden were decided before the Defendants

made the allegedly defamatory statements. Therefore law for-

bidding such conduct was extant, and the Defendants can not

avail themselves of qualified immunity.

Pleading a State Cause of Action

Corcoran and Randolph have next moved to dismiss Neu’s

state cause of action on the ground that Neu has failed to plead

the allegedly defamatory remarks in haec verba, as required by

New York Civil Practice Law and Rules § 3016(a). However, as

this action was commenced in federal court, the Federal Rules

of Civil Procedure control the applicable pleading standards.

Thus, “the mode of pleading defamation is governed by Rule

8, Fed.R.Civ.P., which requires only that plaintiff's charges be

set forth in a short and concise statement, detailed only to the

extent necessary to enavle defendant to respond and to raise the

defense of res judicata if appropriate.” Geisler v. Petrocelli, 616

F.2d 636, 640 (2d Cir. 1980).

Immunity under State Law

Official Immunity

The Defendants next contend that as state officials, they are

absolutely immune from suit for defamation stemming from

statements made “in connection with” their official duties.

However, the standard applied by the New York Court of Ap-

peals is somewhat stricter. That court has stated that an official

1S

absolutely immune from liability for allegedly

defamatory remarks related to his responsibilities and

made during the course of the performance of his

duties.

This does not mean, however, that absolute im-

munity attaches to every statement made by a(n of-

ficial]. Both the subject of the statement and the cir-

cumstances in which it is made are of importance in

determining whether a particular statement was

privileged. -

OO

A-§

Clark v. McGee, 49 N.Y.2d 613, 404 N.E.2d 1283, 427 N.Y.S.2d

740, 744 (1980) (emphasis added).

In this case, the Defendants allegedly made the offending

statements not in the course of their duties as Commissioner and

Deputy Commissioner for the State of New York, but at a con-

vention of other insurance commissioners. The complaint sets

forth that the statements were made to discrete attendants at

the convention and not in the discharge of duties by, for exam-

ple, warning all commissioners of the alleged wrongful deeds

of individuals who could potentially practice in any of the fifty

states. That is, the complaint seemingly indicates that the

statements were made in social conversation. This does not satisfy

the requirements of Clark.

Moreover, some of the statements allegedly made by Randolph

were that Neu was a swindler, operated a scam in New York,

and associated with criminals. These are not necessarily rele-

vant to the auto repair business or the insurance business, the

Defendants’ field of regulation, and thus would not fall under

the privilege as enumerated by Clark. See also Cosme v. Town

of Islip, 102 A.D.2d 717, 476 N.Y.D.[sic] 2d 857 (1st Dep’t.), affd,

63 N.Y.2d 908, 472 N.E.2d 1033, 483 N.Y.S.2d 205 (1984).

In sum, the Defendants have not set forth a claim of privilege

sufficient to overcome the allegations set forth in the complaint.

As this court must take those allegations to be true for the pur-

poses of this motion, the motion to dismiss on these grounds is

denied.

Immunity in Reporting Judicial Decisions

Finally, the Defendants claim immunity for suit for defama-

tion under New York Civil Rights Law § 74. That section

provides:

A civil action cannot be maintained against any per-

son, firm or corporation, for the publication of a fair

and true report of any judicial proceeding, legislative

proceeding or other official proceeding, or any

heading of the report which is a fair and true head-

note of the statement published,

A-9

This section does not apply to a libel contained in

any other matter added by any person concerned in

the publication; or in the report of anything said or

done at the time and place of such a proceeding which

was not a part thereof.

The seminal case on the exception to this privilege is Williams

v. Williams, 23 N.Y.2d 592, 246 N.E.2d 333, 298 N.Y.S.2d 473

(1969), a case where a plaintiff had instituted a judicial pro-

ceeding alleging false and defamatory charges and then made

communications based on the proceeding. See Branca v. Mayesh.,

63 N.Y.2d 994, 473 N.E.2d 261, 483 N.Y.S.2d 1011 (1984). In

Williams, the New York Court of Appeals examined the

legislative history behind section 74, noting that the original

statute came about to protect public reporting of judicial pro-

ceedings, such as in newspapers and publications. It determin-

ed that

The purpose of section 74 of the Civil Rights

Law...is the protection of reports of judicial pro-

ceedings which are made in the public interest...

It would be contrary to reason to say that the

Legislature considered it necessary to protect such

defamation in order to implement the salutary aims

of the statute.

298 N.Y.S.2d at 479.

The statements alleged here do not fall under this statute.

They were not, as set forth in the complaint, remarks made for

the benefit of the general public, but remarks made for a few

select ears. They were not, in truth, reports of judicial pro-

ceedings. They were, as pleaded, personal comments about the

plaintiff. The complaint does not allege that the Defendants

said the “the court said X or held X about Neu.” The complaint

alleges that the Defendants said, for example, that Neu is a

swindler and that Neu does not perform his duties. This does

not constitute reporting on judicial proceedings. Thus, the

Defendants cannot avail themselves of the protection of this sec-

tion against the complaint.

4-10

Conclusion

For the reasons set forth above. Defendants’ motion to dismiss

the complaint for failure to state a claim upon which relief may

be granted pursuant to Rule 12(b)(6). Fed.R.Civ.P. is denied

It is so ordered

New York. N.Y

September 22, 1988 ROBERT W. SWEET

U.S.D.]

A-11

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 725 — August Term 1988

Argued: January 25, 1989 Decided: March 3, 1989

Docket No. 88-7914

NICHOLAS NEU,

Plaintiff-Appellee,

V,

JAMES P. CORCORAN, Individually and as Superintendent

of Insurance of the State of New York, and JAMES W. RAN-

DOLPH, Individually and as Deputy Superintendent of In-

surance of the State of New York,

Defendants-Appellants.

Before: NEWMAN, PIERCE, and MAHONEY, Circuit Judges.

Appeal from an order of the District Court for the Southern

District of New York (Robert W. Sweet, Judge) denying a mo-

tion to dismiss, on grounds of qualified immunity, a suit alleg-

ing defamation by state officials.

Reversed and remanded with directions to dismiss.

August L. Fietkau, Asst. Atty. Gen., New

York, N.Y. (Robert Abrams, Atty. Gen.,

Lawrence S. Kahn, Deputy Solicitor Gen.,

Frederic L. Lieberman, Asst. Atty. Gen.,

New York, N.Y., on the brief), for

defendants-appellants.

Andrew J. Goodman, New York, N.Y.

(Rosner & Goodman, New York, N.Y., on

the brief), for plaintiff-appellee.

A-12

JON O. NEWMAN, Circuit Judge:

The principal issue on this appeal is whether qualified im-

munity shields a state official who defames a private citizen and

thereby damages his career opportunities but without depriv-

ing the citizen of any legal right or status created by state law.

The issue arises on an appeal by James P. Corcoran and James

W. Randolph from an order of the District Court for the

Southern District of New York (Robert W. Sweet, Judge) deny-

ing their motion to dismiss a due process claim brought by

Nicholas Neu. Neu v. Corcoran, 695 F. Supp. 1552 (S.D.N-Y.

1988). We conclude that appellants are entitled to immunity

because our prior cases have not clearly established that ap-

pellants’ conduct deprived appellee Neu of a liberty interest pro-

tected by the due process guarantees of the Fourteenth Amend-

ment. We therefore reverse and remand.

Background

From February 1985 through March 11, 1987, plaintiff-

appellee Neu was president of American Motor Club, Inc.

(“AMC”), a New York corporation engaged in selling prepaid

automobile collision contracts to motorists in New York. The

New York State Insurance Department filed charges against

AMC in 1985, alleging that the company was engaged in the

selling of insurance without a license. The Supreme Court of

the State of New York upheld the charges in January 1987 and

enjoined AMC from continuing its activities in the state. The

Court also imposed monetary sanctions on Neu personally. In

October 1987, New York’s Appellate Division, First Department,

affirmed the ruling that AMC was engaged in the unauthorized

sale of insurance but reversed the fines against Neu. People v.

American Motor Club, Inc., 133 A.D.2d 593, 520 N.Y.S.2d 383

(Ist Dep’t 1987).

In March 1987, after the state Supreme Court’s ruling, Neu

began operating similar prepaid collision service companies in

California. Neu’s complaint in the pending litigation alleges that

in June 1987 Corcoran, New York’s superintendent of insurance,

and Randolph, deputy superintendent, made defamatory

remarks about Neu at a convention of insurance commissioners

A-13

in Chicago. Neu alleges that the New York officials falsely told

other commissioners, including California’s, that Neu did not

honor his contracts, did not repair vehicles, was responsible for

driving AMC into bankruptcy, knowingly violated the law, was

a swindler, operated a scam in New York, and associated with

criminals. Neu further alleges that as a result of those statements,

his reputation was ruined and he was forced out of the

automobile repair business, which was his sole livelihood. In

particular, he alleges that the California Department of In-

surance threatened to bring disciplinary action against insurance

companies and brokers that engaged in business transactions

with Neu’s companies and that he was forced to resign from

his California companies.

Neu’s suit against Corcoran and Randolph was brought in the

District Court for the Southern District of New York, pursuant

to 42 U.S.C. § 1983 (1982). He alleged that the state officials,

without due process, deprived him of a liberty interest by defam-

ing him and casting a stigma on him that foreclosed a range

of career opportunities and deprived him of the ability to engage

in his occupation. He also brought a pendent state law claim

for defamation.

Corcoran and Randolph moved, pursuant to Fed. R. Civ. P.

12(b)(6), to dismiss Neu’s claim for failure to state a claim upon

which relief may be granted and on the basis of official immunity

under federal and state law. The District Court issued an order

denying the motion. Corcoran and Randolph appeal from the

order to the extent that it denied their official immunity defense

to the federal claim.

Discussion

1. Appellate Jurisdiction. Although the denial of a motion to

dismiss is ordinarily not an appealable “final decision” within

the meaning of 28 U.S.C. § 1291 (1982), the “collateral order”

doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

541 (1949), has been construed to permit interlocutory appeals

from denials of substantial claims of qualified immunity. See

A-14

Mitchell v. Forsyth, 472 U.S. 511, 524-30 (1985). The entitle-

ment to qualified immunity is an immunity from suit, rather

than a mere defense to liability; therefore, it is effectively lost

if a case is erroneously permitted to go to trial. Jd. at 526. An

order denying a defense of qualified immunity is immediately

appealable, however, only where it can be decided as a matter

of law and does not turn on disputed questions of fact. Id. at

530; Lawson v. Abrams, -: (2d Cir. 1988);

White v. Frank, 855 F.2d 956, 958 (2d Cir. 1988).

Neu contends that Corcoran’s and Randolph’s qualified im-

munity defense turns on disputed questions of fact and that the

case is therefore not ripe for review under the collateral order

doctrine. Specifically, he contends that whether appellants’

alleged statements actually resulted in foreclosing Neu from

engaging in his chosen occupation is a factual question requir-

ing further inquiry in the District Court. We disagree. We think

that the validity of appellants’ qualified immunity defense to

Neu’s claims can be decided as a matter of law, accepting Neu’s

factual allegations as true for purposes of the appeal. We

therefore have jurisdiction to review the immunity ruling.

2. Qualified Immunity. Government officials performing

discretionary functions are not absolutely immune from liability

for civil damages, but they are protected by qualified, or good-

faith, immunity. Harlow v. Fitzgerald, 457 U.S. 800 (1982).

Qualified immunity shields officials from liability for civil

damages “insofar as their conduct does not violate clearly

established statutory or constitutional rights of which a

reasonable person would have known.” Id. at 818. An official

is liable only if the contours of the right he is alleged to have

violated are “sufficiently clear that a reasonable official would

understand that what he is doing violates that right.” Ander-

son v. Creighton, 107 S. Ct. 3034, 3039 (1987). The very action

in question need not previously have been held unlawful, but

the unlawfulness must be apparent in light of preexisting law. Jd.

Neu alleges that appellants, acting under color of state law,

deprived him of a liberty interest without due process by mak-

ing defamatory statements that led to foreclosure of his ability

A-15

to engage in his chosen occupation, the auto repair contract

business. The District Court concluded that this adequately

stated a claim for relief under section 1983. Neu v. Corcoran,

695 F. Supp. at 1555. The District Judge also found that the

right to due process under such circumstances had been clearly

established by decisions of this Circuit. Jd. at 1556. The Court

cited two cases for this proposition, Huntley v. Community

School Board, 543 F.2d 979 (2d Cir. 1976), cert. denied, 430

U.S. 929 (1977), and Baden v. Koch, 799 F.2d 825 (2d Cir. 1986),

both of which were decided before the alleged defamation took

place

Whether or not the District Court is correct that Neu ade-

quately alleged deprivation of a liberty interest to state a claim

for relief under 42 U.S.C. § 1983, a matter we do not decide,

we do not agree that Huntley, Baden, or any of our other deci-

sions clearly established in 1987 that appellants’ alleged actions

constituted a deprivation of a protected liberty interest. Unlike

the case at bar, Huntley and Baden both involved defamation

of government employees who were allegedly defamed in the

course of being dismissed or demoted. To explain why this

distinction is significant, we must survey cases in the Supreme

Court and in this Circuit explicating the constitutional standards

concerning defamation by government officials.

In Wisconsin v. Constantineau, 400 U.S. 433 (1971), the

Supreme Court considered the constitutionality of a state statute

that provided for the posting in liquor stores of a list of persons

who tended to become violent after excessive drinking and who

were forbidden from purchasing alcohol for one year. The statute

did not provide the persons listed with notice or opportunity

for a hearing. The Court, finding that the State had attached

a “badge of infamy” to the plaintiff, concluded that due pro-

cess protections were required. Jd. at 437. The Court stated that

“[w]here a person’s good name, reputation, honor, or integrity

is at stake because of what the government is doing to him, notice

and an opportunity to be heard are essential.” Jd.

The Court again considered the issue of what constitutes a

constitutional deprivation the following year in Board of Regents

_

A-16

vu. Roth, 408 U.S. 564 (1972), a case involving a non-tenured

teacher at a state university who was not rehired after his one-

year contract expired. Roth held that the teacher had no prop-

erty interest in his job because state law did not guarantee him

a right to renew his contract.

In discussing whether the plaintiff in Roth had been deprived

of a liberty interest, the Court noted that liberty, as protected

by the Fourteenth Amendment, included a number of rights,

including the right “ ‘to engage in any of the common occupa-

tions of life” ” Id. at 572 (quoting Meyer v. Nebraska, 262 U.S.

390, 399 (1923). The Court said there might be cases “in which

a State refused to re-employ a person under such circumstances

that interests in liberty would be implicated” but that Roth was

not such a case. Id. at 573 (emphasis added). The Court also

said there was no suggestion that the State, “in declining to re-

employ the respondent, imposed on him a stigma or other

disability thai foreclosed his freedom to take advantage of other

employment opportunities.” Id. (emphasis added).

The Court revisited the issue of governmental defamation in

Paul v. Davis, 424 U.S. 693 (1976). In Paul, a local police chief

circulated flyers to area retail stores with “mug shots” of per-

sons deemed to be “active shoplifters.” The plaintiff, who had

been arrested for shoplifting but not yet tried, contended that

the flyers defamed him and that, under Wisconsin v. Constan-

tineau, supra, he was entitled to due process. He alleged that

as a consequence of the posters, he had received a warning from

his employer, although he had not been fired. The Court found

that the plaintiff had not been deprived of either a property

or liberty interest that would trigger due process protections.

The Court in Paul expressed the concern that the Fourteenth

Amendment not be interpreted so broadly as to turn every state-

law tort committed by a state official into a constitutional viola-

tion. Id. at 699. The Court said that its prior cases dealing with

“stigma” resulting from defamation by government officials did

“not establish the proposition that reputation alone, apart from

some more tangible interests such as employment, is either

A-17

‘liberty’ or ‘property’ by itself sufficient to invoke the procedural

protection of the Due Process Clause.” Jd. at 701.

The Court noted that Constantineau had said that due pro-

cess rights were triggered “ ‘[w]here a person's good name,

reputation, honor, or integrity is at stake because of what the

government is doing to him. ” Id. at 708 (quoting Wisconsin

v. Constantineau, supra, 400 U.S. at 437)(emphasis added by

Paul). The Court said the italicized phrase “referred to the fact

that the governmental action taken in that case deprived the

individual of a right previously held under state law” — the

right to purchase or obtain liquor. Jd. (emphasis added). Similar-

ly, the Court said that “[w]hile Roth recognized that govern-

mental action defaming an individual in the course of declin-

ing to rehire him could entitle the person to notice and an op-

portunity to be heard as to the defamation, its language is quite

inconsistent with any notion that a defamation perpetrated by

a government official but unconnected with any refusal to rehire

would be actionable under the Fourteenth Amendment.” Jd. at

709 (emphasis added). The Court quoted two other passages

from Roth, twice italicizing for emphasis the phrase “in declining

to rehire/re-employ the respondent.” Id.

The plaintiff's interest in his reputation, Paul said, “is simp-

ly one of a number [of interests] which the State may protect

against injury by virtue of its tort law, providing a forum for

vindication of those interests by means of damages actions.” Jd.

at 712. Since the defendant state official, although defaming

the plaintiff, had not deprived him of any right or status

previously recognized by state law, the injury did not rise to the

level of a constitutional deprivation. Jd:

Although Paul is the foundation for all subsequent cases deal-

ing with governmental defamation, its meaning is not unam-

biguous. See, e.g., 2 R. Rotunda, J. Nowak & J. Young, Treatise

on Constitutional Law § 17.4, at 230 (1986)(“One of the most

disputed aspects of liberty in recent years is the degree to which

the due process clauses protect the interest of an individual in

his reputation.”). Paul has been widely interpreted as holding

that “stigma plus” is required to establish a constitutional

A-18

deprivation, see. e.g.. Moore v. Otero, 557 F.2d 435, 437 (5th

Cir. 1977). but it is not entirely clear what the “plus” is.

On the one hand, Paul suggested that reputation, together

with “some more tangible interests such as employment,” could

constitute a liberty interest. 424 U.S. at 701. It did not say that

“employment” had to be government employment. Thus, Paul

might plausibly be interpreted as holding that any governmen-

tal defamation that causes a person to lose his job and impairs

his ability to pursue his chosen profession or occupation is enough

to constitute a deprivation of liberty, even if it does not occur

in the course of dismissal from government employment or

alteration of some other right or status recognized by state law.

The “plus.” in other words, might simply be that a consequence

of the defamation was deprivation of the right, recognized in

Meyer v. Nebraska, supra, “to engage in any of the common

occupations of life.”

On the other hand, Paul stressed that defamation alone did

not constitute deprivation of a protected liberty interest, ab-

sent impairment of a right or status previously recognized by

state law. The Court, commenting on Roth’s discussion of reputa-

tion as a liberty interest, emphasized the fact that Roth had been

discussing defamation by a state official in the course of declining

to rehire the plaintiff as a state employee — state employment

being a right or status recognized by state law. Id. at 709. Paul

thus strongly suggests that defamation, even if it leads to a signifi-

cant loss of employment opportunities, is not a deprivation of

a liberty interest unless it occurs in the course of dismissal or

refusal to rehire the individual as a government employee or

during termination or alteration of some other legal right or

status. Otherwise, Paul suggests, a defamation is merely a tort,

cognizable at state law, but not a constitutional deprivation.

Under this interpretation, the “plus” is not only significant

damage to a person’s employment opportunities but dismissal

from a government job or deprivation of some other legal right

or status.

Contrary to the District Court, we do not think our cases have

clarified this ambiguity left by Paul nor have they clearly

A-19

established that defamation occurring other than in the course

of dismissal from a government job or termination of some other

legal right of status will suffice to constitute a deprivation of

a liberty interest.

In Gentile v. Wallen, 562 F.2d 193 (2d Cir. 1977), a discharged

public school teacher alleged that the school board had made

defamatory statements about her to the state unemployment

office. We noted that the alleged communication occurred after

plaintiff had been terminated “and hence, in the absence of an

employment relationship, amounted to at most the type of simple

defamation that the Supreme Court held not to trigger due pro-

cess rights in Paul v. Davis.” Id. at 198 (emphasis added). The

plaintiff-in Gentile did not allege, however, that the defama-

tion had precluded her from working elsewhere as a teacher:

we therefore did not have occasion to determine whether that

sort of damage would have rendered the defamation actionable

as a deprivation of a liberty interest.

Huntley v. Community School Board, supra, involved a public

school principal who alleged that he had been defamed in the

course of his dismissal. We held that the plaintiff in Huntley

was entitled to due process protections because his situation was

the one contemplated hypothetically in Roth: “ ‘ “the State, in

declining to re-employ the respondent, imposed on him a stigma

or other disability that foreclosed his freedom to take advan-

tage of other employment opportunities.” * ” Jd. at 986 (quoting

Paul v. Davis, supra, 424 U.S. at 709 (quoting Board of Regents

v. Roth, supra, 408 U.S. at 573))(emphasis added).

Like Huntley, Brandt v. Board of Cooperative Educational

Services, 820 F.2d 41 (2d Cir. 1987), also involved allegations

of defamation of a public school teacher who had been dis-

charged and who alleged that the defamation imposed a stigma

on him that precluded him from finding other employment. We

ruled that in contrast to Gentile v. Wallen, supra, the defamatory

statements were made at the time of the plaintiff's termination,

820 F.2d at 45, and therefore he had sufficiently alleged depriva-

tion of a liberty interest.

A-20

Baden v. Koch, supra, also involved a due process claim by

a government employee. In Baden, the plaintiff alleged that he

had been defamed in the course of being demoted from a pro-

bationary position as New York City’s chief medical examiner

back to his position as deputy medical examiner. We ruled that

the plaintiff “asserted at best a weak liberty interest.” Jd. at 831.

We did not suggest that the plaintiff's liberty interests would

have been implicated if he had been defamed outside the con-

text of dismissal or demotion from his government job.

The only two cases of this Court that might arguably sup-

port Neu’s position are Rudow v. City of New York, 822 F.2d

324 (2d Cir. 1987), and Quinn v. Syracuse Model Neighborhood

Corp., 613 F.2d 438 (2d Cir. 1980).

Rudow involved alleged defamation of a private citizen —

not a government employee — by a city official. The plaintiff

lost his job as a result of the alleged defamation, but he did not

allege that he was foreclosed from finding other jobs in his field.

We held that the plaintiff “competently alleged damage to his

reputation, but has not offered a supplementary injury suffi-

cient to meet the ‘reputation-plus’ standard of Paul v. Davis.”

Id. at 330.

In making that ruling, however, we noted that the plaintiff

had not suffered a loss of public employment, “nor has he been

prevented from practicing his profession.” Id. (emphasis add-

ed). As Neu contends, the italicized phrase arguably suggests

that the plaintiff would have had a sufficient claim if he had

alleged that the stigma foreclosed him from practicing his pro-

fession, even though the defamation was not connected to any

loss of government employment or legal status. But we decline

to read this dictum from Rudow that broadly. The italicized

phrase is followed by a citation to Baden, which was a public

employee case. We do not think the panel in Rudow meant to

extend the doctrine elaborated in Baden.

In Quinn, the plaintiff was an official of a not-for-profit cor-

poration created to carry out urban redevelopment in Syracuse.

He alleged that the Mayor of Syracuse deprived him of a liberty

A-2]

interest without due process by defaming him and mounting

a campaign to have him fired. We ruled that the plaintiff's

allegations were sufficient to survive summary judgment, obser-

ving that “an individual’s liberty can be implicated when a

governmentally imposed stigma restricts his ability to seek and

obtain employment.” Quinn v. Syracuse Model Neighborhood

Corp., supra, 613 F.2d at 446. We also noted that it was clear

that the alleged defamation had occurred in the course of the

termination of employment, id. at 446, but we did not focus

on the issue of whether it was in the course of termination of

public employment. The plaintiff's job may have been considered

at least quasi-governmental, since his original appointment had

come at the behest of the Mayor, id. at 442, and the employing

corporation had received the vast majority of its funding from

the federal government, allocated through the City of Syracuse.

Id. at 442 n.1. Indeed, the District Court had assumed, for pur-

poses of summary judgment, that the corporation’s actions con-

stituted “state action” under the Fourteenth Amendment. Jd.

In any event, the circumstances of Quinn are sufficiently unclear

that we do not think it squarely establishes that governmental

defamation, outside the context of discharge from governmen-

tal employment or similar termination of a legal right or status,

can constitute a deprivation of a liberty interest.

This Court’s recent opinion in Walentas v. Lipper, 862 F.2d

414 (2d Cir. 1988), bolsters our reading of Rudow and Quinn.

In Walentas, the plaintiff was a real estate developer who had

received preliminary approval by New York City to develop a

stretch of waterfront land. He alleged that a city official defamed

him in the course of withdrawing his designation as a developer.

The city official asserted qualified immunity, and we upheld

that defense. We held that it was not clearly established in 1984

(the time of the alleged defamation) that governmental defama-

tion of a person seeking state employment (but not yet having

obtained it) is a deprivation of a liberty interest for Fourteenth

Amendment purposes, even if the defamation impairs the per-

son’s chances for other employment.

In light of these decisions, we do not think that the law of

this Circuit clearly establishes that the governmental defamation

4.99

alleged by Neu rises to the level of a constitutional violation.

rather than simply a state law tort.’ Neu alleges that the New

York officials made false statements about him that caused other

states to take action against him. But the alleged defamation

of Neu did not occur in the course of dismissal from a govern

ment job, nor did it come in the course of termination by New

York of any other legal right or status enjoyed by Neu.’ It would

not be clear to a reasonable government official that the defama

tion Neu has alleged is a deprivation of a protected liberty in

terest that triggers due process requirements. We therefore con

clude that Corcoran and Randolph are entitled to immunity with

respect to Neu’s federal claim. Since the federal claim encounters

an insurmountable threshold obstacle, it would be inappropriate

to exercise pendent jurisdiction over the state law claim.

We therefore reverse the order of the District Court and re

mand with directions to dismiss the complaint.

A-23

FOOTNOTES

' For a critique of the retrenchment in the scope of a protected

liberty interest from Wisconsin v. Constantineau, supra, to Paul

v. Davis, supra, see L. Tribe, American Constitutional Law §

10-11 (1988).

* Nor do cases from other circuits support Neu’s claim. See,

e.g., Goulding v. Feinglass, 811 F.2d 1099, 1103 (7th Cir.) (“[A]

liberty interest is not implicated merely by a reduction in an

individual's attractiveness to potential employers. There is no

legal barrier to [plaintiff's] pursuing his practice of law.”) (quota-

tion omitted), cert. denied, 107 S. Ct. 3215 (1987); Naegele Out-

door Advertising Co. v. Moulton, 773 F.2d 692, 702 (6th Cir.

1985) (“[ Paul v.] Davis holds that defamation alone will not suf-

fice, but must accompany the alteration of a recognized interest

or status created by the state”), cert. denied, 475 U.S. 1121 (1986);

Hadley v. County of Du Page, 715 F.2d 1238, 1246 (7th Cir.

1983) (“The key [to the ‘stigma-plus’ test] .. . is that the defama-

tion must ‘occur in the course of the termination of employ-

ment. ”)(quoting Paul v. Davis, supra, 424 U.S. at 710), cert.

denied, 465 U.S. 1006 (1984); Ray v. Tennessee Valley Authori-

ty, 677 F.2d 818, 824 (1lth Cir. 1982)(rejecting discharged public

employee's due process claim where the alleged defamation “did

not ‘occur in connection with’ the asserted deprivation of employ-

ment”), cert. denied, 459 U.S. 1147 (1983); Havas v. Thornton,

609 F.2d 372 (9th Cir. 1979) (holding that governmental defama-

tion unconnected with any refusal to rehire, or to alteration or

termination of a right or status previously recognized by state,

is not a constitutional violation); Rodriguez de Quinonez v.

Perez, 596 F.2d 486, 489 (1st Cir.)(“While defamation by a

governmental official, standing alone, does not work a depriva-

tion of liberty protected by the fourteenth amendment, govern-

mental action altering a right or status previously held under

state law combined with the injury resulting from the defama-

tion justifie[s] the invocation of procedural safeguards.”) (cita-

tion and quotation omitted), cert. denied, 444 U.S. 840 (1979);

Bundy v. Rudd, 58] F.2d 1126, 1131 (5th Cir. 1978) (“To establish

a liberty interest sufficient to implicate Fourteenth Amendment

safeguards, the individual must be not only stigmatized but also

A-24

stigmatized in connection with a denial of a right or status

previously recognized under state law.”)(quoting Dennis v. S &

S Consolidated Rural High School District, 577 F.2d 338, 34]

(5th Cir. 1978)), cert. denied, 441 U.S. 905 (1979).

One case that may support Neu’s position is Little v. City of

North Miami, 805 F.2d 962 (11th Cir. 1986). Little involved a

law professor at a state university who was publicly censured

by the City Council. The Eleventh Circuit said that the law pro-

fessor’s allegation that the Council’s defamation damaged his

business reputation met the “stigma plus” requirement of Paul

v. Davis, supra. Id. at 968-69.

Gardiner v. A.H. Robins Co., 747 F.2d 1180 (8th Cir. 1984),

also supports Neu’s position, but it relies on questionable authori-

ty. Gardiner stated that a judge’s comments from the bench con-

cerning the conduct of officers of a corporate party “constituted

an infringement on the officers’ liberty interests because it was

a governmental attack on their good name, reputation, honor,

and community standing.” Id. at 1191. Gardiner supports this

proposition by citing Wisconsin v. Constantineau, supra, but

fails to reckon with the Supreme Court’s reinterpretation of Con-

stantineau in Paul v. Davis, supra.

* Neu was not licensed to sell insurance in New York and New

York did not revoke such a license. Rather, New York prosecuted

him for selling insurance without having such a license. Neu

had no legally protected status entitling him to pursue his oc-

cupation in disregard of state law.