Petition — Butz v. Economou

nes

reme Court Ue S,

Sup

6-709 3 leit a

No. ie “

SL MCRMET TOD J CLERK |

OCTOBER TERM, 1976

EARL L. BUTZ, ET AL., PETITIONERS

Uv.

ARTHUR N. ECONOMOU, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

ROBERT H. BORK,

Solicitor General,

REX E. LEE,

Assistant Attorney General,

STEPHEN L. URBANCZYK,

Assistant to the Solicitor General,

ROBERT E. Kopp,

; BARBARA L. HERWIG,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

INDEX

Page

Opinions below 2

Jurisdiction 2

Question presented 5. : 2

Statement 2

Reasons for granting the writ... 7

Conclusion Seem eee ca 21

I no ates la

ES eS a CRE:

RS ee

Appendix D Ags CARE SR ee MOLLE

CITATIONS

Cases:

Air East, Inc. vy. National Transportation

Safety Board, 512 F.2d 1227, certio-

rari denied, 423 U.S. 863 si sti 20

Apton v. Wilson, 506 F.2d 83 Sia fates 9

Barr v. Matteo, 360 U.S. 564. _ _ 6,7, 8, 9, 10,

11, 12, 13, 14, 19

Bivens v. Six Unknown Named Agents,

456 F.2d 1339 | i)

Bradley v. Fisher, 13 Wall. 335 16,17

Conley v. Wilson, 538 F.2d 323 8

David vy. Cohen, 407 F.2d 1268 2 8

Economou v. Department of Agriculture,

ea aCe 4

II

Cases—Continued Page

Expeditions Unlimited Aquatic Enter-

prises, Inc. v. Smithsonian Institution,

C.A.D.C., decided June 28, 1976 (No.

74-1899), vacated and petition for re-

hearing en bane granted October 20,

eal eR 2502 Soh SRS: Or 9,13

George Steinberg & Son, Inc. v. Butz, 491

SRE REE SS EE SGI Os os one 20

Gregoire v. Biddle, 177 F.2d 579, certio-

rari denied, 339 U.S. 949 —_ > 5

Howard v. Lyons, 360 U.S. 593 —-. 10

Imbler v. Pachtman, 424 U.S. 409 8, 10, 11,

12, 16, 17, 18, 19

Mandel v. Nouse, 509 F.2d 10381, certio-

rari denied, 422 U.S. 1008. 8-9

Mark v. Groff, 521 F.2d 1376. 9

Monroe v. Pape, 365 U.S. 167 10

Nadiak v. Civil Aeronautics Board, 305

F.2d 588, certiorari denied, 372 U.S.

913 20

Norton v. McShane, 332 F. 2d 855, certio-

rari denied, 380 U.S. 981 - = i)

Ove Gustavsson Contracting Co. v. . Floete,

299 F.2d 655, certiorari denied, 374

oS 2 j= ce ee

Paul v. Davis, 424 U.S. 693 7 . 13, 14

Peterson v. Weinberger, 508 F.2d 45,

certiorari denied, 423 U.S. 8380 9

Pierson v. Ray, 386 U.S. 547 9, 10, 16, 18

Scheuer v. Rhodes, 416 U.S. 232 _ 6, 9, 10, 11,

13, 14, 15

Scott v. Stansfield, L.R. 3 Ex. 220... 16

Spalding v. Vilas, 161 U.S. 483 } »

States Marine Lines, Inc. v. Shultz, 498

een halabiaantsailasivnecinath g

Ill

Cases—Continued Page

United States v. Karathanos, 531 F.2d

26, certiorari denied, July 6, 1976 (No.

75-1402 ) 13

Wood v. Strickland, 420 USS. 308 ; 6, 9,10, 11

Yaselli v. Goff, 275 U.S. 503, affirming

per curiam 12 F.2d 396 16,17

Statutes and regulations:

Commodity Exchange Act, Section 6(b),

7 U.S.C. 9 ... 3,4

Federal Aviation Act, 79 Stat. 779, as

amended, 49 U.S.C. (Supp. V) i429

(a) | 20

Federal Insecticide, Fungicide and Ro-

denticide Act, 86 Stat. 985, 7 U.S.C.

(Supp. V) 136d(c) (2) 20

Occupational Safety and Health Act, 84

Stat. 1596, 29 U.S.C. 655(c) 20

42 U.S.C. 1983 10, 11, 13, 15, 16

17 C.F.R. 1.10 3

17 C.F.R. 1.17 3

Iu the Supreme Court of the United States

OCTOBER TERM, 1976

No.

EARL L. BUTZ, ET AL., PETITIONERS

Vv.

ARTHUR N. ECONOMOU, ET AL.

PLi{TION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

The Solicitor General, on behalf of Earl L. Butz.

et al. (the individual appellees in the court of ap-

peals),’ petitions for a writ of certiorari to review

that portion of the judgment of the United States

Court of Appeals for the Second Circuit in this case

that reversed the dismissal of the complaint as to

petitioners.

? Due to an apparent oversight, the caption of the opinion

and the judgment of the court of appeals does not include

Donald A. Campbell, the Judicial Officer of the Department

of Agriculture, who was named as a defendant in this action.

We are informed that the court of appeals is in the process

of amending the judgment to currect this mistake.

(1)

2

OPINIONS BELOW

The opinion of the court of appeals (App. A, infra,

pp. la-22a) is reported at 535 F.2d 688. The opinion

of the district court (App. B, infra, pp. 23a-28a) is

not reported.

JURISDICTION

The judgment of the court of appeals (App. C,

infra, pp. 29a-30a) was entered on April 23, 1976.

A timely petition for rehearing with a suggestion for

rehearing en bane was denied on July 23, 1976 (App.

D, infra, pp. 3la-32a). On October 14, 1976, Mr.

Justice Marshall extended the time within which to

file a petition for a writ of certiorari to and including

November 19, 1976. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

QUESTION PRESENTED

Whether federal government officials have an ab-

solute rather than a qualified immunity from suit

for damages based upon their performance of of-

ficial duties in connection with administrative en-

forcement proceedings.

STATEMENT

This is a suit seeking damages of $32 million from

employees of the Department of Agriculture based

upon their actions in initiating and conducting, al-

legedly wrongfully and maliciously, an administrative

enforcement proceeding for violations by respondent

of the Commodity Exchange Act. The district court

dismissed the suit, holding that the employees had

absolute immunity from suit for acts done as par‘

of their official duties. The court of appeals re-

versed, ruling that the employees’ immunity was

only qualified, not absolute.

1. Respondent Arthur N. Economou Co., Inc.,

which is controlled by respondent Economou (re-

spondents are hereinafter referred to as “‘respond-

ent’), was registered with the Department of Agri-

culture as a trader in commodities futures (C..A.

App. 12a).* As such it was required to maintain the

minimum capital balance prescribed by the Secretary

of Agriculture. 17 C.F.R. 1.17; see id. at 1.10.

In February 1970, following a routine audit of re-

spondent by the Commodity Exchange Authority, pe-

titioner Lyng, Assistant Secretary of Agriculture,

issued an administrative complaint pursuant to Sec-

tion 6(b) of the Commodity Exchange Act, 7 U.S.C.

9, alleging that respondent, while a registered fu-

tures commission merchant, willfully failed to main-

tain that balance (C.A. App. 12a-13a), and direct-

ing respondent to show cause why its registration

should not be revoked. Following another audit, an

amended complaint was issued alleging additional

failures to meet the minimum capital requirements

(id. at 13a). After a hearing, petitioner Bain, the

2“C A. App.” refers to the appendix to the appellees’ brief

in the court of appeals, a copy of which we are lodging with

the Clerk of the Court.

4

Chief Hearing Examiner of the Department, sus-

tained the complaint in August 1971 (ibid.).

On January 15, 1973, petitioner Campbell, the Ju-

dicial Officer of the Department, to whom the Secre-

tary has delegated his authority to decide enforce-

ment proceedings under the Commodity Exchange Act

(C.A. App. 3a; see 7 U.S.C. 9), affirmed the hear-

ing examiner’s decision and suspended respondent’s

registration for 90 days (see Economou v. Depart-

ment of Agriculture, 494 F.2d 519 (C.A. 2)). In

March 1974, the court of appeals vacated the order

of the Judicial Officer on the ground that “the es-

sential finding of willfulness * * * was made in a

proceeding instituted without the customary warn-

ing letter,” which rendered the finding of willfulness

“erroneous on the record taken as a whole, and the

sanctions im;sed unwarranted.” Ibid.

2. During the pendency of respondent’s adminis-

trative appeal to the Judicial Officer from the hear-

ing examiner’s decision, respondent filed the present

suit seeking $32 million damages. The defendants

were the Department of Agriculture and the Com-

modity Exchange Authority, and the petitioners here,

who are the former Secretary of Agriculture, the As-

sistant Secretary of Agriculture, various officials and

auditors of the Authority who were involved in the

administrative enforcement action, and the Chief

Hearing Officer and Counsel of the Department (C.A.

App. 10a-19a). An amended complaint added as a

defendant petitioner Campbell, the Department’s Ju-

dlicial Officer.

PA ES em

5

The amended complaint alleges principally that the

defendants conspired to deprive respondent of prop-

erty without due process of law by wrongfully and

maliciously instituting the administrative proceedings

against him.’ The complaint alleges that respondent

had not willfully violated the Act, that he had not

been given notice and an opportunity to correct the

alleged deficiencies prior to the institution of en-

forcement proceedings, and that the proceedings

should not have been instituted since respondent had

ceased operating as a futures commission merchant.

The complaint also alleges that the defendants know-

ingly issued false and deceptive press releases in con-

nection with the administrative proceedings. The

complaint asserts that the defendants took these ac-

tions for the purpose of ruining respondent’s busi-

ness, in retaliation for his outspoken criticism of the

regulatory activities of the Authority.

After respondent twice sought unsuccessfully to

enjoin the Department’s administrative proceeding

(C.A. App. la-7a, ?0a-21a) and following the court

of appeals’ vacation of the Judicial Officer’s order

(see supra, p. 4), the defendants moved to dismiss

the complaint on the grounds that the individual de-

fendants were immune from suit and that the action

* We are lodging a copy of the second amended complaint

(see App. A, infra, p. 5a) with the Clerk of the Court. It

includes a claim for trespass, but the allegations are con-

clusory (see App. B, infra, pp. 23a-24a n. 1), and peripheral

to the principal thrust of respondent’s case. The trespass

claim was not mentioned by the court of appeals in its de-

scription of the complaint (see App. A, infra, pp. 3a-4a).

6

against the Department of Agriculture and the Com-

modity Exchange Authority was barred by sovereign

immunity. As a part of the government’s opposition

to one of the earlier motions for an injunction, a

detailed affidavit had been filed describing the ac-

tions taken by each individual defendant in the ad-

ministrative proceedings that formed the basis of the

judicial complaint (C.A. App. 10a-19a).* On May 22,

1975, the district court dismissed the suit, holding

that the individual defendants were absolutely im-

mune and that sovereign immunity barred the suit

against the Department of Agriculture and the Com-

modity Exchange Authority (App. B, infra, pp. 23a-

28a).

The court of appeals affirmed the dismissal as to

the Department and the Authority but reversed as

to the individual defendants (petitioners here) and

remanded for further proceedings (App. A, infra,

pp. la-22a). The court stated with respect to official

immunity (id. at 8a) that “[{h]ad Barr [v. Matteo,

360 U.S. 564] represented the last word in this evolv-

ing area, we might be inclined, as was the district

court, to follow it in this case.” But the court of

appeals, relying largely upon its reading of Scheuer

v. Rhodes, 416 U.S. 232, and Wood v. Strickland, 420

U.S. 308, concluded (App. A, infra, p. 20a) that

“the individual defendants do not require and are

not entitled to absolute immunity * * *.” Instead,

the court held (ibid.) that petitioners could “avaii

* With respect to petitioner Butz, the affidavit states (C.A.

App. 14a) that “[h]Je has not been directly involved in any

of the actions alleged in the complaint herein.”

te cs te ee

7

themselves of the defense of qualified ‘good faith, rea-

sonable grounds’ immunity of the type approved by

the Supreme Court in Scheuer and Wood.”

REASONS FOR GRANTING THE WRIT

This case presents important questions concerning

the scope of the immunity from suit for damages that

federal government officials have for alleged torts

committed in the performance of their official duties.

In Barr v. Matteo, 360 U.S. 564, this Court held that

those officals have absolute immunity. The question

is whether, as the court of appeals ruled, subsequent

decisions of this Court holding that state officials

sued under the Civil Rights Act have only a qualified

immunity have so undermined Barr as to require

that federal officials also have only that immunity.

The case also presents the related question whether

government officials engaged in the preparation, trial

and adjudication of administrative proceedings have

absolute immunity from suit similar to that of judges

and prosecutors.

The government submits that, contrary to the view

of the court of appeals, Barr has not been under-

mined by the subsequent decisions involving state

officials, and that its rationale is no less compelling

today than when it was decided. Accordingly, we

urge that federal officials should continue to have

the absolute immunity recognized in Barr. We also

contend that the basis of the traditional absolute

immunity of judges and prosecutors is no less ap-

plicable to officials performing substantially identical

8

functions in administrative proceedings; they also

require absolute immunity in order to insure “the

vigorous and fearless performance of * * * [their]

duty that is essential to the proper functioning of

the * * * [regulatory] system” (Jmbler v. Pachtman,

424 U.S. 409, 427-428).

1. a. In Barr v. Matteo, supra, the plurality opin-

ion held that the acting director of an agency had

an absolute immunity from a suit for damages ¢ ris-

ing out of a defamatory press release that he had

issued in his official capacity. The rationale was that

it is “important that officials of government should

be free to exercise their duties unembarrassed by

the fear of damage suits in respect of acts done in

the course of those duties—suits which would con-

sume time and energies which would otherwise be

devoted to governmental service and the threat of

which might appreciably inhibit the fearless, vigorous,

and effective administration of policies of govern-

ment” (360 U.S. at 571).

The doctrine of official immunity recognized in

Barry rests upon long standing precedent (360 U.S.

at 570-574; see Spalding v. Vilas, 161 U.S. 488;

Gregoire v. Biddle, 177 F.2d 579 (C.A. 2), cer-

tiorari denied, 339 U.S. 949). It has been generally

followed by the lower courts, which have applied it

in a wide variety of contexts. E.g., Conley v. Wilson,

538 F.2d 323 (C.A. 4), petitions for a writ of cer-

tiorari pending, Nos. 76-206 and 76-381; David v.

Cohen, 407 F.2d 1268 (C.A.D.C.); Mandel v. Nouse,

509 F.2d 1031 (C.A. 6), certiorari denied, 422 U.S.

9

1008; Norton v. McShane, 332 F.2d 855 (C.A. 5),

certiorari denied, 380 U.S. 981; Ove Gustavsson Con-

tracting Co. v. Floete, 299 F.2d 655 (C.A. 2), cer-

tiorari denied, 374 U.S. 827; Peterson v. Weinberger,

508 F.2d 45 (C.A. 5), certiorari denied, 423 U.S.

830. There have.been a few exceptions. See Expedi-

tions Unlimited Aquatic Enterprises, Inc. v. Smith-

sonian Institution (C.A.D.C.), decided June 28, 1976

(No. 74-1899), vacated and petition for rehearing

en bane granted October 20, 1976; Apton v. Wilson,

506 F.2d 883 (C.A.D.C.); Bivens v. Six Unknown

Named Agents, 456 F.2d 1339 (C.A. 2); Mark v.

Groff, 521 F.2d 1876 (C.A. 9); States Marine Lines,

Ine. v. Shultz, 498 F.2d 1146 (C.A. 4).

The court of appeals here stated (App A, infra,

p. 8a) that it “might be inclined, as was the district

court, to follow [Barr] in this case * * *,” “[h]ad

Barr represented the last word in this evolving area

** *” But the court of appeals concluded that Barr

had been sub silentio overruled or limited to its spe-

cific facts by the subsequent decisions in cases such

as Scheuer v. Rhodes, 416 U.S. 232, Wood v. Strick-

land, 420 U.S. 308, and Pierson v. Ray, 386 U.S. 547.

Thus, although the court left undisturbed the dis-

trict court’s finding (App. B, infra, p. 28a) that the

allegedly tortious conduct of petitioners was “both

within the scope of their authority and discretion-

ary,” it ruled that petitioners had only a qualified

immunity of the kind applied in Scheuer and Wood.

Contrary to the assumption of the court of ap-

peals, the subsequent decisions of this Court have not

10

overruled or undermined Bary. Scheuer, Wood, and

Pierson involved suits against state executive officials

sued under 42 U.S.C. 1983. In determining the scope

of those officials’ immunity in that context, the Court

had “to take into account * * * the purposes of 42

U.S.C. 1983” (Scheuer v. Rhodes, supra, 416 U.S.

at 243), a statute explicitly intended to give a remedy

to one who is deprived of a constitutional right by

state officials (see Monroe v. Pape, 365 U.S. 167).

Those considerations were not present in Barr and are

not present in this case.’

Recognizing that it did not “write on a clean

slate’ with respect to 42 U.S.C. 1983, the Court in

Scheuer v. Rhodes, supra, 416 U.S. at 243, began its

analysis by stating: “It can hardly be argued, at

this late date, that under no circumstances can the

officers of state government be subject to liability

under this statute.” See also /mbler v. Pachtman,

supra, 424 U.S. at 433-434 (concurring opinion of

Mr. Justice White); Wood v. Strickland, supra, 420

U.S. at 315." In contrast, as the Court in Scheuer

°In cases against state officials the Court has looked ini-

tially to state common law in determining their immunity,

see Imbler v. Pachtman, supra, 424 U.S. at 418-424; Pierson

v. Ray, supra, 386 U.S._at 555, whereas the immunity of

federal officials depends upon federal law, see Barr v. Matteo,

supra; Howard Vv. Lyons, 360 U.S. 593.

“In Imbler v. Pachtman, supra, the Court held that a state

prosecutor was absolutely immune from a suit under 42

U.S.C. 1983 arising out of the performance of his duty to

initiate and pursue a criminal prosecution. However, as Mr.

Justice White pointed out in his concurring opinion: “It is

manifest * * * that all state officials as a class cannot be im-

11

pointed out (416 U.S. at 247), Barr v. Matteo arose

“ijn a context other than a § 1983 suit.” Neither

Barr nor this case involves a cause of action under

a statute, like 42 U.S.C. 1983, that is intended to pro-

vide a remedy against individual government officials.

Thus, in this ease, unlike Scheuer and Wood, the Court

does not have to “take into account” a legislative

enactment that is inconsistent with absolute im-

munity.

The reasoning that underlies Barr continues to be

valid and supports absolute immunity for petitioners.

The actions of petitiorers for which damages are

sought were all taken within the scope and as part

of their duties to enforve the Commodity Exchange

Act. Unlike Barr, where the question whether the

official’s act was “within the outer perimeter of [his]

line of duty” was considered “a close one” (360 U.S.

at 574, 575), the acts complained of here are at the

core of petitioners’ responsibilities. [Enforcement of

regulations is an essential function of the executive

branch.

mune absolutely from damage suits under 42 U.S.C. § 1985

and that to extend absolute immunity to any group of state

officials is to negate pro tanio the very remedy which it ap-

pears Congress sought to create. * * * Thus, * * * the

Court has not extended absolute immunity to such officials

in the absence of the most convincing showing that the im-

munity is necessary” (424 U.S. at 433-434, emphasis in orig-

inal; see id. at 436-437). Similarly in Wood v. Strickland,

supra, 420 U.S. at 322, the Court stated that the extension

of absolute immunity to the state officials in that case would

“deny much of the promise of § 1983.”

12

Judge Learned Hand explained the problem many

years ago in Gregoire v. Biddle, supra, 177 F.2d at

581 (quoted in Barr v. Matteo, supra, 360 U.S. at

571), when he stated that “an official, who is in fact

guilty of using his powers [maliciously] * * *, should

not escape liability for the injuries he may so cause;

and, if it were possible in practice to confine such

complaints to the guilty, it would be monstrous to

deny recovery.” * But there is no way in which un-

just complaints can be avoided. Often “it is im-

possible to know whether the claim is well founded

until the case has been tried * * *” (ibid.),° and even

then an official “may * * * find himself hard put to

it to satisfy a jury of his good faith” (ibid.). Con-

sequently, even the blameless official who is sued

would often be subjected “to the burden of a trial and

to the inevitable danger of its outcome” (ibid.).

It is easy for persons who believe they have been

unfairly treated by government officials to charge

that those officials acted “maliciously” in perform-

ing their duties. It is the threat of such claims that

* Although there must be means to punish and deter mis-

conduct by government officials, ‘other sanctions than civil

tort suits [are] available to deter the executive official who

may be prone to exercise his functions in an unworthy and

irresponsible manner” (Barr v. Matteo, supra, 360 U.S. at

576).

* As the Court explained in Jmbler v. Pachtman, svpra, 424

U.S. at 419, n. 13, absolute immunity “defeats a suit at the

outset,” whereas “[t]he fate of an official with qualified im-

munity depends upon the circumstances and motivations of

his actions, as established by the evidence at trial.”

13

is likely “appreciably [to] inhibit the fearless, vigor-

ous, and effective administration of policies of govern-

ment.” Barr v. Matteo, supra, 360 U.S. at 571. For

these reasons, “it has been thought * * * better to

leave unredressed the wrongs done by dishonest of-

ficers than to subject those who try to do their duty

to the constant dread of retaliation” (Gregoire v.

Biddle, supra, 177 F.2d at 581).

This Court has not overruled Barr; to the con-

trary, the Court recently cited it with seeming ap-

proval. See Scheuer v. Rhodes, supra; Paul v. Davis,

424 U.S. 693.° In the cases involving state officials

the Court has stressed that a qualified immunity

was necessary to protect the rights granted in 42

U.S.C. 1983 (see p. 10 and n. 6, supra). If Barr is

no longer viable, it is this Court, and not the court

of appeals, that should so announce."

b. The allegation in respondent’s complaint that

petitioners’ conduct deprived him of his property

without due process of law does not call for a dif-

* As Judge Leventhal concluded in his dissenting opinion in

Exrpesitions Unlimited Aquatic Enterprises, Inc. Vv. Smithso-

nian Institution, supra, slip op. 13: “There is too much to be

said for the Barr choice, there is too much hard work and

hard thought when the problem was faced squarely by great

judges like John Harlan and Learned Hand, to sweep it

aside as the detritus of a doctrine that has been nibbled away

sub _ silentio.”’

’” As the Second Circuit has stated on other occasions (e.g.,

United States v. Karathanos, 531 F.2d 26, 32 (C.A. 2), certio-

rari denied, July 6, 1976 (No. 75-1402)): “‘[WJe continue

to believe that the Supreme Court should retain the exclusive

privilege of overruling its own decisions * * *.’”

14

ferent result.'' Respondent’s complaint here involves

basically only a charge of malicious prosecution and

libel. The fundamental character of that claim is

not altered because respondent has added the al-

legation that the conduct constituting those torts de-

nied him due process. Such a charge can almost

always be made in any tort claims case, and the form

in which the pleading is drafted cannot obscure the

true nature of the claim.”

ce. If contrary to our submission, this Court’s sub-

sequent decisions have overruled or limited Barr v.

Matteo, then we submit that the qualified immunity

that state executive officials have under Scheuer v.

Rhodes provides inadequate protection for federal

officials, and that the Court should address the ques-

tion of the scope and meaning of qualified immunity

''Respondent does not identify the “property” interest

which he alleges the petitioners’ conduct denied him. He has

not been denied any property interest in his license to con-

duct business as a futures commission merchant, since the

court of appeals vacated the administrative order suspending

that license. To the extent respondent relies upon injury to

his business reputation, that is not a “property” interest pro-

tected by the due process clause. See Paul v. Davis, supra.

'* Respondent’s principal claim in his complaint appears to

be that the allegedly malicious conduct of government officials

damaged his business reputation to his economic detriment.

That interest is similar to, and certainly no greater than, that

involved in Barr, in which the complaint alleged that damage

to personal reputation resulted from a defamatory press re-

lease. Indeed, part of respondent’s claim here rests upon an

allegedly defamatory press release and, to that extent, is vir-

tually identical to the claim in Barr.

oo

15

in the federal context. The qualified immunity recog-

nized in Scheuer, which requires “the existence of

reasonable grounds for the belief formed at the time

and in light of all the circumstances, coupled with

good-faith belief” (416 U.S. at 247-248), would as

a practical matter frequently subject federal officials

to a full trial and possible liability whenever their

official actions are subsequently held erroneous.

That result would be inconsistent with the under-

lying reason for immunity in this area—‘‘the neces-

sity of permitting officials to perform their official

functions free from the threat of suits for personal

liability” (Scheuer v. Rhodes, supra, 416 U.S. at

239). Scheuer itself stated (id. at 249) that the

cases there “present[ed] no occasion for a definitive

exploration of the scope of immunity available to

state executive officials * * *.” A fortiori, Scheuer

did not definitively define the immunity of federal

officials. If those officials have only a qualified im-

munity, they require broader protection than the

Court outlined in Scheuer for state officials sued un-

der 42 U.S.C. 1983.

2. This case presents the additional important

question whether federal government officials have

absolute immunity from suits for damages for their

actions in prosecuting and adjudicating administra-

tive enforcement proceedings. Judges and prosecu-

tors traditionally have had absolute immunity for

acts done in the performance of their judicial and

prosecutorial functions. The same policy reasons that

underlie that immunity also require absolute immun-

16

ity for federal officials performing comparable func-

tions in administrative enforcement proceedings.

The absolute immunity of judges and prosecutors

is well settled. Bradley v. Fisher, 13 Wall. 335; Ya-

selli v. Goff, 275 U.S. 503, affirming per curiam 12

F.2d 396 (C.A. 2); see Pierson v. Ray, supra, and

Imbler v. Pachtman, supra (holding that judges and

prosecutors have absolute immunity even in suits

under 42 U.S.C. 1983). In Bradley v. Fisher, supra,

13 Wall. at 347, the Court explained that “it is a

general principle of the highest importance to the

proper administration of justice that a judicial of-

ficer, in exercising the authority vested in him, shall

be free to act upon his own convictions, without ap-

prehension of personal consequences to himself. Li-

ability to answer to every one who might feel himself

aggrieved by the action of the judge, would be in-

consistent with the possession of this freedom * * *.”

As this statement indicates, the immunity “is not for

the protection or benefit of a malicious or corrupt

judge, but for the benefit of the public” (Scott v.

Stansfield, L.R. 3 Ex. 220, 223, quoted in Pierson v.

Ray, supra, 386 U.S. at 554), which has a strong in-

terest in the independent and fearless performance

of duty by “judicial officer[s].”

The need for absolute, as opposed to qualified, im-

munity stems in part from the practical considera-

tion that the nature of the adjudicatory function—

the resolution of controversies, some of which involve

large personal or financial stakes as well as difficult

legal and factual questions—-makes the adjudicator a

17

particularly likely and vulnerable target for attack

by individuals who consider themselves aggrieved by

his judgment. See Bradley v. Fisher, supra, 13 Wall.

at 348,

The absolute immunity of prosecutors similarly “is

grounded on principles of public policy.” Yaselli v.

Goff, supra, 12 F.2d at 406. The Court in /moler v.

Pachtman, supra, was concerned that a qualified im-

munity, although it would permit redress for the

genuinely wronged, would expose “even * * * the

honest prosecutor” to a “substantial danger of liabil-

ity” (424 U.S. at 425), with consequences that would

“disserve the broader public interest” (id. at 427).

The likelihood of unfounded litigation and the ex-

posure to liability, the Court feared, “would cause

a deflection of the prosecutor’s energies from his pub-

lic duties, and the possibility that he would shade his

decisions instead of exercising the independence of

judgment required by his public trust” (id. at 423).

These considerations are equally applicable to of-

ficials performing prosecutorial and judicial func-

tions in administrative enforcement proceedings.

They, too, are likely to be deterred from the vigorous

and uninhibited initiation, prosecution and decision

of enforcement proceedings—which are essential to

the effective functioning of federal regulatory pro-

grams—by the threat of “harassment by unfounded

litigation” if their “case misfires’” (/mbler v. Pacit-

man, supra, 424 U.S. at 423, 421). As in the case

of judges and prosecutors, a qualified immunity—

under which the official would be “constrained in

18

making every decision by the consequences in terms

of his own potential liability in a suit for damages”

(id. at 424-425)—-would not be adequate to insure

“the vigorous and fearless performance” of duty (id.

at 427).

The present case compellingly illustrates the need

for absolute immunity. Two of the petitioners, Ju-

dicial Officer Campbell and Hearing Examiner Bain,

have been sued for their action in presiding over and

deciding the administrative action against respond-

ent.” The decision of the court of appeals, which

exposes these officials to the threat of multi-million

dollar personal liability, inevitably is likely to affect

adversely the actions of all government officials whose

function is to decide administrative cases."*

'® As in Pierson Vv. Ray, supra, 386 U.S. 553, there is no

indication that the petitioners played any role other than to

decide the case before them. To the extent that their decision

was erroneous, the error was subject to correction by the

court of appeals—as happened in this case (see p. 4, supra).

'* The court of appeals suggested (App. A, infra, pp. 18a-

19a) that administrative law judges generally exercise less

discretion than their counterparts in the judicial context, and

that the outcome of administrative proceedings has less of an

impact upon defendants. Administrative enforcement pro-

ceedings, however, frequently involve complex issues and re-

quire the exercise of considerable discretion by the adminis-

trative law judge. Moreover, such proceedings often involve

important and hotly contested issues. Administrative pro-

ceedings authorized by the Securities and Exchange Com-

mission against publicly-held companies, broker-dealers and

accountants for violations of the securities laws, proceedings

by the Food and Drug Administration against doctors and

drug companies for selling unsafe or ineffective products, and

actions by the Federal Trade Commission to remedy anti-

19

A similar analysis is applicable to those petitioners

who were involved in initiating and prosecuting the

enforcement proceeding.’’ They performed, in the

administrative proceeding, the same functions a

prosecutor performs in a judicial proceeding. These

trust violations or false advertising, are only a few examples

of administrative proceedings which are closely analogous,

both in their intensely adversarial context and in the effect

of the sanctions imposed, to criminal trials. These proceed-

ings often result in far-reaching and precedent-setting deci-

sions in such fields as antitrust, securities regulation, con-

sumer protection and public health, which are of major im-

portance to the regulation of the industries involved.

The court of appeals also seemed to suggest (id. at 19a-

20a) that the separation of powers principle is an additional

ground for the absolute immunity of judges which does not

apply to administrative law judges. But prosecutors, who are

members of the executive branch, have essentially the same

immunity as judges. The question of immunity is not to be

determined by “judicial fiat that officials in different branches

of government are differently amenable to suit” (Imbler Vv.

Pachtman, supra, 424 U.S. at 421) or by reference to the title

of an individual’s office; it is “the duties with which the par-

ticular officer * * * is entrusted * * * which must provide the

guide in delineating the scope of the * * * executive officer[’s]

* * * immunity from * * * suit{ ]” (Barr v. Matteo, supra,

360 U.S. at 573-574).

'° This includes netitioner Lyng, Assistant Secretary of

Agriculture for Marketing and Consumer Services, who issued

the complaint; petitioner Caldwell, who participated in the

initiation of prosecution; petitioner Davis, the administrative

prosecutor; and, to the extent they participated in the prose-

cution, petitioners Wolkis, Robinson, Kirchhoff, and McMinn

(C.A. App. 10a-19a). In addition, petitioners Caldwell, Reb-

inson, Kirchhoff, and McMinn, who participated in the deci-

sion to initiate the investigation, also may be entitled to this

immunity, since the decision to make an investigation is a

preliminary step looking to the administrative enforcement

proceedings.

20 21

Officials also must be free to make decisions—both CONCLUSION

in initiating and in conducting an enforcement ac-

; ; ' The petition fo writ of certi i should be

tion—based upon an independent exercise of judg- pecition s0r & WII OF Ceruorar! snou

: . ; ‘ ranted,

ment, without always having to consider the possi- s

bility of substantial personal liability if their deci- Respectfully submitted.

sions should ultimately prove to have been unwise or

erroneous.”

“4 OBERT H. BORK,

’ The court of appeals suggested (App. A, infra, p. 20 n. 8) R at 5 ;

: : : : Solicitor General.

that absolute immunity for those performing prosecutorial

functions in the administrative context is unnecessary since REX E. LEE,

administrative proceedings ‘of the type involved in the pres- Assistant Attorney General.

ent case ; * * usually turn more on documentary proof “9 STEPHEN L. URBANCZYK,

the veracity of witnesses, and involve fewer constraints ) Assistant to the Solicitor General,

time and * * * information” than a criminal prosecution. The

need for absolute immunity to allow administrative prosecu- ROBERT E. Kopp,

tors to act vigorously exists regardless of the type of evidence BARBARA L. HERWIG,

used or the time constraints involved. In any event, the Attorneys.

court’s suggestion rests on dubious factual assumptions. NovEMBER 1976.

While the issue in this particular administrative proceeding

—whether the respondent maintained the minimum capital

balance prescribed by regulation—may have involved largely

documentary proof, many, if not most, administrative en-

forcement proceedings involve extensive oral testimony. See,

e.g., Air East, Inc. v. National Transportation Safety Board,

512 F.2d 1227 (C.A. 3), certiorari denied, 423 U.S. 863;

George Steinberg & Son, Inc. v. Butz, 491 F.2d 988 (C.A.

2); Nadiak v. Civil Aeronautics Board, 305 F.2d 588 (C.A.

5), certiorari denied, 372 U.S. 913. Often they involve con-

straints of time comparable to those in criminal trials. See,

é.g., suspension proceedings under the Federal Insecticide,

Fungicide and Rodenticide Act, 86 Stat. 985, 7 U.S.C. (Supp.

V) 136d(c) (2), revocation of certification proceedings under

the Federal Aviation Act, 72 Stat. 779, as amended, 49 U.S.C.

(Supp. V) 1429(a), and proceedings for the issuance of emer-

gency temporary standards under the Occupational Safety

and Health Act, 84 Stat. 1596, 29 U.S.C. 655(c). On the other

hand, many criminal proceedings involve primarily documen-

tary evidence.

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 749-—September Term, 1975

(Argued February 26,1976 Decided April 23, 1976)

Docket No. 75-6050

ARTHUR N. ECONOMOU, PLAINTIFF-APPELLANT

—against—

UNITED STATES DEPARTMENT OF AGRICULTURE; EARL

L. Butz, Secretary of Agriculture; RICHARD T.

LYNG, Assistant Secretary of Agriculture; Com-

MODITY EXCHANGE AUTHORITY; ALEX C. CALD-

WELL, Act Administrator, Commodity Exchange

Authority; CHARLES E. RoBINSON, Director, Com-

pliance Division, Commodity Exchange Authority;

RICHARD E. KIRCHOFF, Deputy Director, Registra-

tion and Audit Division, Commodity Exchange

Authority; JACK W. BAIN, Chief Hearing Exam-

iner, United States Department of Agriculture;

RICHARD W. DAvIs, JR., Counsel, United States

Department of Agriculture; REED McMINN, Re-

gional Administrator, New York Regional Office,

Commodity Exchange Authority; CLEMENT GRoss,

Auditor, Commodity Exchange Authority; MURRAY

A. WoLKIs, Auditor, Commodity Exchange Au-

thority; EDWARD FITZPATRICK, Auditor, Com-

modity Exchange Authority,

DEFENDAN'TS-APPELLEES

2a

Before: MANSFIELD, TIMBERS and MESKILL, Circuit

Judges.

MANSFIELD, Circuit Judge:

Having long recognized the privilege of judges and

legislators as a complete defense to civil damage

actions based on their official conduct, see Bradley

v. Fisher, 80 U.S. (13 Wall.) 335 (1872) (judges) ;

Tenney v. Brandhove, 341 U.S. 367 (1951) (legis-

lators),' the Supreme Court in recent years has

focused more sharply upon the scope of the immunity

to be extended to those employed by the executive

branch of a government, including state prosecutors,

Imbler vy. Pachtman, U.S. , 44 US.L.W.

4250 (Mar. 2, 1976); school board members, Wood

v. Strickland, 420 U.S. 308 (1975); top state officers,

Scheuer v. Rhodes, 416 U.S. 282 (1974), and police-

men, Pierson v. Ray, 386 U.S. 547 (1967). This ap-

peal raises the issue with respect to the United States

Department of Agriculture, the Commodity Exchange

Authority (“CEA” herein), and various officials of

these agencies who were sued for damages based on

their alleged wrongful and malicious enforcement of

the Commedity Exchange Act, 7 U.S.C. $§ 1, et seq.,

against the plaintiffs. Judge Lloyd F. MacMahon of

the Southern District of New York dismissed the

damage suit on the ground that the defendants are

‘Members of Congress are expressly protected by Art. 1,

§ 6 of the Constitution, which provides that, “for any speech

or debate in either House, they shall not be questioned in any

other place.”

3a

entitled to absolute immunity from such liability. We

affirm the dismissal as to the administrative agencies

on the ground that federal! jurisdiction over the claims

against them is lacking. In all other respects the

district court’s order is reversed and the case re-

manded for further proceedings consistent with this

opinion.

On February 19, 1970, the Secretary of Agricul-

ture, as a result of a CEA audit of Arthur N.

Economou and his trading company, Arthur N.

Economou Co., Ine. (collectively referred to as “ap-

pellant” herein), issued an administrative complaint

pursuant to the Commodity Exchange Act, 7 U.S.C.

$9 (“the Act” herein), alleging that appellant, while

a registered futures commission merchant, had failed

to maintain the minimum prescribed capital balance

for such activity as required by rules promulgated

under the Act, see 17 C.F.R. $1.17, and directine

appellant to show cause why his registration should

not be revoked. Following another such audit, an

amended complaint was issued against appellant on

June 22, 1970. After a hearing before a Department

of Agriculture hearing examiner, at which appellant

appeared pro se, a report adverse to appellant was

issued by the examiner on August 17, 1971.

In the meantime, while the examiner’s report, to

which appellant excepted, was under review by the

Judicial Officer of the Department of Agriculture,

appellant commenced the present action for $52,-

000,000 damages in the district court against some

13 defendants, including the Department of Agricul-

4a

ture, Commodity Exchange Authority, the Secretary

and Assistant Secretary of Agriculture. various ad-

ministrators, and officials and auditors of the CEA,

and the Chief Hearing Officer and Counsel of the

Department of Agriculture. The complaint alleged

in substance that defendants, acting outside their

discretionary duties and functions, had wrongfully

and maliciously instituted the proceedings against him

for the purpose of ruining his business reputation,

retaliating against him for his previous outspoken

criticism of the defendants’ activities, and causing

harm to his business. Appellant alleged that he had

not wilfully violated the Act, that he had not been

given notice and an opportunity to correct the alleged

violations of CEA rules before the institution of the

administrative proceedings against him, that the pro-

ceeding should have been terminated since he was

no longer engaged in the regulated activity, and that

in connection with their prosecution of that proceed-

ing the defendants had knowingly caused deceptive

press releases to be issued, which falsely indicated

to the public that appellant’s financial resources had

deteriorated. As a result, the complaint further al-

leged, some of appellant’s customers were no longer

willing to do business with him, his credit standing

was damaged, and appellant was forced to expend

large sums of money to defend himself against the

false charges.

The district court twice denied appellant’s applica-

tion for preliminary injunctive relief restraining the

CEA enforcement proceeding against him. There-

5a

after appellant chose to pursue his lawsuit in a desul-

tory fashion, taking little or no action for long per-

iods. While his damage action thus remained dor-

mant, the Agriculture Department’s Judicial Officer

affirmed the hearing examiner’s findings, whereupon

appellant petitioned us for review. On March 28,

1974, we granted appellant’s petition and set aside

the Department’s enforcement order on the ground -

that “the essential finding of wilfulness . . . was

made in a proceeding instituted without the cus-

tomary warning letter,” rendering it “erroneous on

the record taken as a whole, and the sanctions im-

posed unwarranted,” 494 F.2d 519 (2d Cir. 1974).

After another long period of inaction, broken only

by the district court’s indication that the case might

be dismissed for non-prosecution, the defendants’ mo-

tion to dismiss appellant’s second amended complaint

was granted by Judge MacMahon on May 22, 1975,

on the ground that the devendants were entitled to

absolute immunity. From this decision plaintiffs ap-

peal.

DISCUSSION

We need not tarry over the district court’s dismis-

sal of appellant’s claims against the Department of

Agriculture, and the Commodity Exchange Author-

ity, which was clearly correct. Congress has not au-

thorized either entity to be sued in its own name,

and thus we lack jurisdiction over them. See Black-

mar v. Guerre, 342 U.S. 512 (1952). Nor is there

any reason to accept appellant’s suggestion that the

complaint now be amended to name the United States

6a

of America as a defendant, since the “intentional

tort’ exclusion of the Federal Tort Claims Act, 28

U.S.C. § 2680(h), would deny us jurisdiction over

such claims against the United States, even though

appellant’s claims of malicious prosecution, abuse of

process, and libel be cast in constitutional termis.°

See Peterson v. Weinberger, 508 F.2d 45, 50 (5th

Cir. 1975), cert. denied, 44 U.S.L.W. 3201 (Oct. 6,

1975).

Turning to the claims against the individual de-

fendants, the district court based its dismissal mainly

upon principles expressed in the plurality opinion of

Justice Harlan in Barr v. Matteo, 360 U.S. 564

(1959), which we followed in Ove Gustavsson Con-

tracling Co. v. Floete, 299 F.2d 655 (2d Cir. 1962).

In Barr v. Matteo, the Supreme Court, by a 5 to 4

vote, held that the Acting Director of the Office of

Rent Stabilization, a federal agency, was entitled

to an absolute privilege against liability in damages

for a defamatory press release issued by him, once

it had been established that the action taken “was

within the outer perimeter of [his] line of duty,”

even though his action was not a duty imposed on

him but rather an exercise of discretion and was

alieredly prompted by sialice toward the plaintiff.

In an opinion shared by three other justices (Frank-

2 The acts of which appellant complains all occurred before

March 16, 1974 when § 2680(h) was amended by Pub. L. 93-

253, 88 Stat. 50, to allow suits against the United States on

the basis of certain intentional torts if committed by federal

“investigative or law enforcement officers.” In any event, the

defendants in this case do not appear to be such officers.

7a

furter, Clark and Whittaker), Justice Harlan rea-

soned that an absolute privilege was required for the

reason

“that officials of government should be free to

exercise their duties unembarrassed by the fear

of damage suits in respect of acts done in the

course of those duties—suits which would con-

sume time and energies which would otherwise

be devoted to governmental service and the

threat of which might appreciably inhibit the

fearless, vigorous, and effective administration

of policies of government.” 360 U.S. at 571.

Recognizing that “there may be occasional instances

of actual injustices which will go unredressed,” he

concluded that such a price is “a necessary one to

pay for the greater good, especially since “other sanc-

tions than civil tort suits [are] available to deter the

executive official who may be prone to exercise his

functions in an unworthy and irresponsible manner,”

360 U.S. at 576. Separate dissenting opinions were

filed by Chief Justice Warren (in which Justice Doug-

las concurred) and Justices Brennan and Stewart.

Accepting the view that an absolute privilege might

attach to intra-agen, reports or statements of Cabi-

net members, Justice Warren concluded that in the

case of lesser officials a qualified privilege would

suffice to enable them to perform their duties with-

out undue harassment and at the saiiie time protect

a victim of their maliciously wrongful conduct.

Concluding that the alleged conduct of the defend-

ants in the present case was “within the outer

perimeter of their authority” and involved the exer-

8a

cise of discretion, Judge MacMahon dismissed the

complaint on the ground that the defendants were

entitled to immunity. Had Barr represented the last

word in this evolving area, we might be inclined, as

was the district court, to follow it in this case, de-

spite the melange of differing views expressed by

various members of the Court on the subject in that

case, no one of which commanded a majority. How-

ever, the Court has since elucidated its views in a

series of decisions which were neither cited by the

government to the district court nor discussed by

Judge MacMahon. The principles developed in these

later cases lead us to the conclusion that the dis-

trict court’s summary dismissal cannot stand.

We start with Pierson v. Ray, 386 U.S. 547 (1967),

which posed the question of whether petitioners there,

black clergymen who were arrested by police for at-

tempting to use a segregated bus terminal waiting

room and tried before a municipal p<lice justice,

could recover damages in a civil action instituted by

them against the judge and the police under 42

U.S.C. $1983 after the conviction of one had been

set aside and the charges against the others dropped.

The Supreme Court held that the traditional absolute

immunity of judges survived Congress’ enactment of

§$ 1985, and that policemen, who had never enjoyed

an absolute and unqualified immunity at common

law, were limited to the qualified common law im-

munity which had been extended to them prior to

$ 1983, i.e., the defense that they acted in good faith

and with probable cause to believe the persons ar-

9a

rested had violated the law. Accordingly, the dis-

missal of the claims against the judge was upheld

and the claims against the policemen were remanded

for further proceedings.

In Scheuer v. Rhodes, 416 U.S. 232 (1974), the

governor of Ohio and other high state officials, who

had been sued for damages for their alleged con-

nection with the killing of several Kent State Uni-

versity students by the Ohio National Guard, con-

tended that they were entitled to absolute immunity

from civil damage liability. The Supreme Court re-

jected this contention, unanimously holding that they

were at most entitled to a qualified “good-faith, rea-

sonable erounds” immunity, the scope of which would

depend upon “the functions and responsibilities of

these particular defendants in their capacities as of-

ficers of the state government, as well as the pur-

poses of 42 U.S.C. § 1983,” 416 U.S. at 245. Speak-

ing for a unanimous court (except for Justice Doug-

las who took no part in the decision), Chief Justice

Burger traced the history of the development of the

law of immunity of government officials frem per-

sonal liability for their official acts, stating:

“This official immunity apparently rested, in its

genesis, on two mutually dependent rationales:

(1) the injustice, particularly in the absence of

bad faith, of subjecting to liability an officer

who is required, by the legal obligation of his

position, to exercise discretion; (2) the danger

that the threat of such liability would deter his

willingness to execute his office with the decisive-

/

a

10a

ness and the judgment required by the public

good.

* af * *

“Public officials, whether governors, mayors or

police, legislators or judges, who fail to make

decisions when they are needed or who do not

act to implement decisions when they are made

do not fully and faithfully perform the duties

of their offices. Implicit in the idea that officials

have some immunity—absolute or qualified—for

their acts, is a recognition that they may err.

The concept of immunity assumes this and goes

on to assume that it is better to risk some error

and possible injury from such error than not to

decide or act at all.” [Footnotes omitted] 416

U.S. at 239-42.

Of counterbalancing importance, the Court went on

to note, is the interest of the wronged individual in

being compensated for harm caused him by the public

official’s abuse of power and invasion of his rights,

for which $1983 was enacted to provide a remedy.

Noting that “It can hardly be argued, at this late

date, that under no circumstances can the officers

of state government be subject to liability under this

statute [42 U.S.C. § 1983]” the Court, although quot-

ing a portion of Justice Harlan’s Barr opinion with

approval, nevertheless concluded as follows on the

basis of its evaluation of the counterbalancing policy

coi.siderations:

“These considerations suggest that, in varying

scope, a qualified immunity is available to of-

ficers of the executive branch of government,

the variation being dependent upon the scope of

lla

discretion and responsibilities of the office and

all the circumstances as they reasonably ap-

peared at the time of the action on which li-

ability is sought to be based. [t is the existence

of reasonable grounds for the belief formed at

the time and in light of all the circumstances,

coupled with good-faith belief, that affords a

basis for qualified immunity of executive officers

for acts performed in the course of official con-

duct.”

Since the Court could not dispose of the case without

a factual record based on evidence of each defend-

ant’s good faith and of the scope of his authority,

it yeversed the dismissal of the complaints and re-

manded the case for “{F ]urther proceedings, either

by way of summary judgment or by trial on the

merits,” 416 U.S. 250.’

The qualified “good-faith, reasonable grounds”

standard was more recently reaffirmed by the Su-

*Since Scheuer, several circuits have followed the “good

faith-reasonable grounds” standard as governing the scope

of immunity available to executive government officials. See

Jones V. Diamond, 519 F.2d 1090, 1100-01 (5th Cir. 1975)

(local elected officials) ; Apton v. Wilson, 506 F.2d 88 (D.C.

Cir. 1974) (Justice Department officials); Rowley v. Me-

Millan, 502 F.2d 1326, 1335 (4th Cir. 1974) (Secret Service

director) ; States Marine Lines Vv. Shultz, 458 F.2d 1146 (4th

Cir. 1974) (Treasury Secretary); Burkhart v. Sarbe, 297

F. Supp. 499 (E.D. Pa. 1975) (Attorney General). The de-

fendants’ reliance on our decision in Gallela v. Onassis, 487

F.2d 986, 993-94 (2d Cir. 1973), which predates Schever, is

misplaced, since in Gallela the Secret Service defendants

proved they had reasonable grounds for their action. See id.

at 993.

12a

preme Court in Wood y. Strickland, 420 U.S. 308

(1975), as the standard for defining the scope of

immunity available to officials of the executive branch

—=in that case state school administrators and school

board members—from civil damage liability. The is-

sue arose when students expelled from school, claim-

ing that the expulsion had violated their constitu-

tional rights, sued the administrators and board

members for damages. Rejecting the school officials’

contention that they were entitled to absolute im-

munity, the majority of the Court, in an opinion by

Justice White, pointed out that while legislators and

judges had traditionally enjoyed such immunity at

common law, the common law immunity of public

schoo! officials had been limited to “good-faith, non-

malicious action taken to fulfill their official duties,”

even though such board members “function at dif-

ferent times in the nature of legislators and adju-

dicators in the school disciplinary process and, like

the state executive officers in Scheuer v. Rhodes,

supro, must often act promptly on the basis of in-

formation supplied by others.” 420 U.S. at 318-19.

The Court concluded that while some immunity was

essential to prevent the conscientious school decision-

maker from being deterred in exercising his judgment

independently, forcefully and in the school’s interest

and to avoid discouraging the most capable candidates

for school board position from serving because of the

risk of heavy damages which they could not afford

to pay, a qualified immunity would suffice. Absolute

immunity, on the other hand, “would not sufficiently

l3a

increase the ability of school officials to exercise their

discretion in a forthright manner to warrant the ab-

sence of a remedy for students subjected to inten-

tional or otherwise inexcusable deprivations,” 420

U.S. at 320. The immunity, said Justice White, “must

be such that public school officials understand that

action taken in the good-faith fulfillment of their

responsibilities and within the bounds of reason un-

der all the circumstances will not be punished and

that they need not exercise their discretion with un-

due timidity,” 420 U.S. at 321.'

The latest chapter in the development of principles

governing the immunity of governmental officials of

the executive branch is to be found in the Supreme

‘The Supreme Court’s rejection of absolute immunity for

school board officials in Wood was unanimous. However, the

Court split on the subject of what standard would govern in

defining good faith. The majority concluded that in deter-

mining whether a school board member acted in good faith he

would be charged with knowledge of a student’s clearly estab-

lished constitutional rights. Four members of the Court dis-

sented from this aspect of the qualified immunity standard

on the ground that it imposed an excessive burden on the of-

ficial. Instead, the minority would have held an official im-

mune if “in the light of the discretion and responsibilities of

his office, and under all the circumstances as they appeared

at the time, the officer acted reasonably and in good faith,”

420 U.S. 308, even though he may have been unaware of the

legal principles which governed the rights of the disciplined

student.

For purposes of the present appeal, this difference is im-

material. Application to this case of the qualified immunity

standard of either the majority or of the minority in Wood v.

Strickland would call for reversal in the present posture of

the case.

l4a

Court’s very recent decision in Jmbler v. Pachtman,

U.S. , 44 U.S.L.W. 4250 (Mar. 2, 1976).

There ihe Cowit upheld the traditional absolute im-

munity of a state prosecuting attorney acting within

the scope of his duties from civil damage liability

under $1983 based on the allegation that he had

knowingly used false testimony in the criminal prose-

cution of Imbler, who later brought the civil damage

suit against him. The Court, noting that various

courts of appeal had been “virtually unanimous that

a prosecutor enjoys absolute immunity from § 1983

suits for damages when he acts within the scope of

his official duties,” ° indicated that a decision re-

garding the immunity of an executive official must

be “predicated upon a considered inquiry into the

immunity historically granted the relevant official at

common law and the interests behind it,” 42 U.S.L.W.

at 4254. In the case of the public prosecutor, his

common law absolute immunity, grounded on the

same principles underlying the immunity of judges

and grand jurors, had been firmly established.

Speaking for 5 out of 8 members of the Court in.

Imbler,’ Justice Powell reasoned that a qualified im-

munity would not give sufficient protection to the

° The Supreme Court cited Fanale v. Sheehy, 385 F.2d 866,

868 (2d Cir. 1967), and Yaselli v. Goff, 12 F.2d 396 (2d Cir.

1926). It also quoted with approval statements by Judge

Learned Hand from his oft-cited decision in Gregoire Vv.

Biddle, 177 F.2d 579 (2d Cir. 1949), cert. denied, 339 U.S.

949 (1950).

* Justice Stevens took no part in the consideration or deci-

sion of the case.

l5a

prosecutor to enable him to engage in the independent

and fearless performance of his duties which are

essential to the functioning of the criminal justice

system, since the prosecutor would face great dif-

ficulty in meeting a qualified immunity standard be-

cause he frequently must act under constraints of

time and information, he of necessity deals with wit-

nesses of doubtful veracity, and he must be given

wide latitude in the trial of a criminal case. To

expose him to the possibility of years later being

required to justify his conduct or face liability in

damages would unduly inhibit his performance of his

duties and disserve the public. Balancing the in-

terests at stake, the Court reasoned that the public

interest in deterring misconduct would adequately be

protected through criminal and professional discipli-

nary sanctions and that Congress did not intend in

enacting $1983 to repeal “absolute immunities so

firmly rooted in the common law and supported by

strong policy reason.”

In a concurring opinion Justice White reasoned

that, while certain absolute immunities had sur-

vived Congress’ enactment of $1988, others, which

related principally to officers and employees in the

executive branch, had not continued for the reason

that they were not considered essential to enable the

officer to perform his duties effectively. He agreed

that, while absolute immunity for prosecutors is

necessary to protect the judicial process and to avoid

discouraging the prosecutor from performing his im-

portant duty of initiating and conducting criminal

lea

prosecutions, it should not extend to damage suits

based on his withholding or suppression of evidence,

since this should not adversely affect his incentive

to prosecute and would therefore not injure the ju-

dicial process.

From this recent development of the law of govern-

ment officials’ immunity certain conclusions may be

drawn. Damage suits against government officials for

abuse of governmental power frequently serve the

public interest by deterring official misconduct and

assuring the individual’s freedom to exercise his con-

stitutional rights, including his right to criticize his

government. On the other hand, such suits may also

have the purpose or effect of harassing conscientious

public officers, undermining or inhibiting fearless ex-

ecutive performance, and deterring competent per-

sons from accepting or continuing to hold public

service positions. Since the effect of a grant of im-

munity is to “negate pro tanto the very remedy which

Congress sought to create [by enactment of 42 U.S.C.

§ 1983}... the Court has not extended absolute im-

munity to such officials in the absence of a showing

that the immunity is necessary,” Imbler v. Pachtman,

U.S. , 44 US.L.W. at 4258 (concurring

opinion of Justice White, citing Wood v. Strickland,

supra; Scheuer v. Rhodes, supra; and Pierson v. Ray,

supra) “notwithstanding the fact that, at least with

respect to high executive officers, absolute immunity

from suit for damages would have applied at com-

17a

mon law. Spaulding y. Vilas, 161 U.S. 483; Alzua

v. Johnson, 231 U.S. 106,” id., 44 U.S.L.W. at 4258.’

While officials engaged in initiating and hearing

administrative proceedings such as those in the pres-

ent case did enjoy a considerable measure of immun-

ity at common law, its scope was not as settled or

as clear as that enjoyed by judges, legislators and

prosecutors. Although federal courts leaned toward

affording such officials an absolute immunity, see

Spaulding v. Vilas, supra; Gregoire v. Biddle, 177

F.2d 579 (2d Cir. 1949), cert. denied, 339 U.S. 949

(1950), state courts persistently indicated, at least

in dicta, that even formal action taken by an ad-

ministrative tribunal could give rise to tort liability

*The defendants’ attempted distinction of Scheuer and

similar cases on the ground that 42 U.S.C. § 1983, under

which they were brought, is by its own terms a “substantial

disavowal of a state official’s right to claim immunity” must

be rejected. This court has already recognized that it would

be “incongruous and confusing, to say the least” to develop

different standards of immunity for state officials sued under

$ 1983 and federal officers sued on similar grounds under

causes of action founded directly on the Constitution. Bivens

v. Sir Unknown Named Agents of the Federal Bureau of

Narcotics, 456 F.2d 1339, 1346-47 (2d Cir. 1972). Other cir-

cuits have also concluded that the Supreme Court’s develop-

ment of official immunity doctrine in § 198° suits against state

officials applies with equal force to federal officers sucd on a

cause of action derived directly from the Constitution, since

both types of suits serve the same function of protecting citi-

zens against violations of their constitutional rights by gov-

ernment officials. See Apton v. Wilson, supra, 506 F.2d at

92-92: States Marine Lines Inc. Vv. Shultz, supra, 498 F.2d

at 1159: Bethea v. Reid, 445 F.2d 1163, 1166 (3d Cir. 1971),

cert. denied, 404 U.S. 1061 (1972).

a

18a

for the officials involved if the act had been under-

taken with malice. See, e.g., Paoli v. Mason, 325 IIl.

App. 197, 59 N.E.2d 499 (1945); State ex rel. Rob-

ertson v. Farmers’ State Bank, 162 Tenn. 499, 39

S.W.2d 281 (1931); Jennings, Tort Liability of Ad-

ministrative Officers, 21 Minn. L. Rev. 263, 276-80

(1937). But see Sweeney v. Young, 82 N.H. 159,

131 Atl. 155 (1925). In some instances, adminis-

trative officiais were even held liable for good faith

mistakes in judgment, on the paradoxical theory that

their mistake in judgment amounted to action wholly

outside their jurisdiction. See, e.g., Miller v. Horton,

152 Mass. 540, 26 N.E. 100 (1891), where Justice

Holmes held that a board of officials’ authority to

destroy diseased horses did not render them immune

from damages for their destruction of a healthy

horse.

The contrast between the absolute immunity clear-

ly available at common law to judges, prosecutors,

and legislators, and the somewhat confused state of

the common law in regard to administrative officials

reflects distinctions in the character of their respec-

tive functions. The traditional common law absolute

immunity of those directly connected with the ju-

dicial and legislative processes from civil damage

liability has been upheld because the possible bene-

ficial effects of civil damage suits in deterring official

misconduct on the part of such officials and in insur-

ing free exercise of constitutional rights would be

heavily outweighed by the erosion of these vital

processes that such suits would engender. Because

19a

they are frequently called upon to exercise wide dis-

cretionary powers which can have serious personal

impact upon individuals and thus create an incentive

to sue, judges and prosecutors would be particularly

vulnerable to damage suits for malicious prosecution.

Judges further would face serious personal problems

in the defense of such suits. The judge would be

forced either personally to bear the expense of his

own defense or be put in the uncomfortable position

of being defended by some other branch of the gov-

ernment, which might appear before him frequently

as an adversary. Similarly the legislator exercises

the widest of discretionary powers, the performance

of which was thought important enough by the

Founding Fathers to warrant a constitutional grant

of immunity. To force a judge, prose?utor or legis-

lator to assume the burden of establishing a “good

faith, reasonable grounds” defense would impose an

excessive burden on the functioning of the judicial

and legislative process.

When it comes to suits against officials of the ex-

ecutive branch of a government, however, there does

not appear to be any such obvious need for absolute

immunity, as distinguished from a qualified im-

munity, to insure performance of their essential

government functions. For the most part the dis-

cretionary powers of officials in the executive branch

are more circumscribed than are those of legislators,

prosecutors or grand jurors. Unlike the judge, the

official or employee of a department of the executive

branch of a state or federal government, upon being

20a

sued for damages, would not face a conflict of inter-

est if the state or federal government followed its

usual practice of agreeing to provide him with rep-

resentation by counsel drawn from the executive

branch. For these reasons the trend, as reflected in

Scheuer v. Rhodes, supra, and Wood vy. Strickland,

supra, has been toward the view that a qualified

rather than absolute immunity is sufficient to insure

the functioning of the executive branch and at the

same time to protect the public against abuse of

official power.

Applying these principles here, we are satisfied

that the individual defendants do not require and

are not entitled to absolute immunity in order to

enable them to perform their duties. We believe that

they and the performance of their executive duties

are adequately protected by permitting them to avail

themselves of the defense of qualified “good faith,

reasonable grounds” immunity of the type approved

by the Supreme Court in Scheuer and Wood.’ If, in-

* While some of the Agriculture Department officials may be

analogized to criminal prosecutors, in that they initiated the

proceedings against appellant, and presented evidence there-

in, the reasons why the Supreme Court felt the public prose-

cutor “would face greater difficulty in meeting the standards

of qualified immunity than other executive or administrative

officials” do not seem applicable to them. In administrative

proceedings of the type involved in the present case the is-

sues (e.g., whether the respondent maintained the minimum

capital balance prescribed by regulation) usually turn more

on documentary proof than the veracity of witnesses, and

generally do not involve the “serious constraints of time and

even information” sometimes present in criminal cases. The

administrative proceedings against appellant, for instance,

centered on an analysis of his financial records.

2la

deed, the plaintiff has evidence to the effect that the

proceedings against him were instituted and prose-

cuted maliciously and without reasonable grounds, or

that the defendants knowingly caused the defamatory

press releases to be issued regarding him or his com-

pany, the policy against abuse of official power re-

quires that he be given an opportunity to prove his

claim." If, on the other hand, the plaintiff’s claims

are baseless, as defendants maivztain, our holding

does not necessarily require them to face an expen-

sive, protracted or wasteful trial. Should the defend-

ants by affidavit set forth undisputed facts demon-

strating the reasonableness_of their action, buttressed

by affidavits of their good faith, and the plaintiff

then fail to respond under oath with “specific facts

showing that there is a genuine issue for trial” re-

garding the defendants’ good faith or the existence

of reasonable grounds for their action, summary

judgment dismissing the complaint might be appro-

priate.” Rule 56(e), F.R.Civ.P. See Donnelly v.

Guion, 467 F.2d 290, 293-94 (2d Cir. 1972), where

we stated:

° Of course mere proof that the Department of Agriculture

failed to issue a customary warning letter, which was the

basis of our refusal to enforce the order, see 494 F.2d 519

(2d Cir. 1974), would not suffice to show bad faith or lack of

reasonable grounds.

1° Nor would summary judgment be precluded by our recent

decisions in Heyman v. Commerce & Industry Insurance Co.,

524 F.2d 1317 (2d Cir. 1975), and Judge v. City of Buffalo,

524 F.2d 1321 (2d Cir. 1975), where genuine issues as to

material facts precluded a grant of summary judgment.

22a

“A party opposing a motion for summary judg-

ment simply cannot make a secret of his evi-

dence until the trial, for in doing so he risks

the possibility that there will be no trial. A

summary judgment motion is intended to ‘smoke

out’ the facts so that the judge can decide if

anything remains to be tried. See Applegate v.

Top Associates, Inc., 425 F.2d 92 (2d Cir.

1970); Dressler v. MV Sandpiper, 331 F.2d

130 (2d Cir. 1964); Radio City Musie Hall

Corp., supra; 6 Moore, Federal Practice § 56.11

[3] at 2171-75.” [Footnote omitted |

We mention this remedy not to indicate any views

on the merits of such a motion, which would turn

on the record before the district court, but to respond

to the contention that an absolute privilege is essen-

tial to save the defendants from an excessive burden."'

The order is affirmed as to the claims against the

Department of Agriculture and Commodity Exchange

Authority. In all other respects the order is reversed

and the case remanded for further proceedings con-

sistent with this opinion.

''See James, Tort Liability of Governmental Units and

Their Officers, 22 U. Chi. L. Rev. 610, 647 (1955) (criticizing

view that “the mere inquiry into malice would have worse

consequences than the possibility of actual malice.’’)

23a

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

{Filed, The District Court, May 22, 1953]

72 Civ. 478

ARTHUR N. ECONOMOU ET AL., PLAINTIFFS

—against—

UNITED STATES DEPARTMENT OF AGRICULTURE ET AL.,

DEFENDANTS ;

MEMORANDUM

MacMAHON, District Judge.

Defendants move, pursuant to Rule 12(b), Fed.

R.Civ.P., to dismiss the second amended complaint on

the ground that it is barred as to the governmental

agencies by the doctrine of sovereign immunity and

as to the individual governmental employees by the

doctrine of official immunity.

At first blush, plaintffs’ lengthy second amended

complaint appears to allege ten “causes of action.”

Upon close examination of the second amended com-

plaint, however, we conclude that it only makes three

claims that defendants deprived plaintiffs Arthur

N. Economou (ANE) and Arthur N. Economou &

Co., Inc. (ANE, Inc.)' of their constitutional rights:

‘In the second amended complaint, American Board of

Trade, Inc. (AMT, Inc.) appears as a plaintiff. The only

24a

(1) defendants’ decision to initiate disciplinary pro-

ceedings against plaintiffs under §9 of the Com-

modity Exchange Act (Act) without first issuing a

warning letter; (2) defendants’ decision to continue

disciplinary proceedings against plaintiffs even though

they were no longer in business as futures commis-

sion merchants under the Act; and (3) defendants’

issuance of inaccurate press releases concerning

plaintiffs.

The defendants, the United States Department of

Agriculture and the Commodity Exchange Author-

ity, as agencies of the United States, can invoke the

doctrine of sovereign immunity as a bar to suit un-

less congress has authorized them to be used [sic]

in their own name.’ Since it is undisputed that con-

gress has not authorized either agency to be sued, we

dismiss the complaint as to them.

The individual defendants, all officials of the United

States Department of Agriculture or the Commodity

Exchange Authority, contend that they are protected

from suit by the doctrine of official immunity. In

reference to this plaintiff is in paragraphs 25 and 26 of

the second amended complaint, wherein it is alleged that

defendants’ acts vis-a-vis plaintiffs ANE and ANE, Inc.

caused AMT, Inc. emotional burdens and resulted in tres-

pass on its land. Those vague and conclusory allegations

completely fail to establish a causal link between defend-

ants’ acts and the alleged harm to AMT, Inc. We, there-

fore, grant defendants’ Rule 12(b) motion as to AMT, Inc.

and reference to “plaintiffs” in the text will mean ANE and

ANE, Inc. only.

* Blackmar Vv. Guerre, 342 U.S. 512 (1952).

25a

order to establish this defense, defendants must show

that their alleged unconstitutional acts were within

the outer perimeter of their authority and discre-

tionary.°

Defendants can establish that their acts were with-

in the outer perimeter of their authority if they can

show that the acts had more or less connection with

the general matters committed by law to their con-

trol or supervision.‘

The initiation and maintenance of disciplinary

proceedings against commodity traders for violations

of the Act and the issuance of press releases concern-

ing such violations, defendants’ alleged unconstitu-

tional acts, were committed to defendants’ control by

$$ 9 and 12 of the Act. Moreover, plaintiffs admit

in their second amended complaint that defendants’

acts were connected to their duties under the Act. We

conclude, therefore, that the individual defendants’

acts were well within the scope of their authority.

Once defendants have established that their acts

were authorized, they can qualify for official im-

munity by showing that the acts involved the exercise

of discretion.’ Authorized acts of discretion by gov-

ernmental officials are immunized from suit so that

such officials can make decisions while performing

* Barr v. Matteo, 360 U.S. 564 (1959).

* Spalding Vv. Vilas, 161 U.S. 483 (1896). See also Bivens V.

Sir Unknown Named Agents of the Federal Bureau of Nar-

cotics, 456 F.2d 1339 (2d Cir. 1972).

° Barr V. Matteo, supra.

26a

their duties “without fear or threat of vexatious or

fictitious suits dr personal liability.” °

We turn to an examination of each act of defend-

ants alleged to be unconstitutional in light of these

principles of law to determine if the act was dis-

cretionary and, therefore, warrants immunity.

Plaintiffs contend that defendants’ decision to initi-

ate disciplinary proceedings against them for viola-

tions of the Act without first issuing a warning letter

was an unconstitutional ministerial act not entitled

to immunity.

The undisputed facts are that the Secretary of

Agriculture, afte examining a Commodity Exchange

Authority audit of ANE, Inc., exercised his judg-

ment and concluded that plaintiffs had wilfully vio-

lated the Act. He, therefore, took immediate action

against plaintiffs without first issuing a warning

letter.

The Secretary, in deciding whether to initiate pro-

ceedings against plaintiffs, was in a position anal-

ogous to that of a prosecutor in deciding whether

to bring criminal proceedings against a defendant.

Courts have uniformly held that the decision whether

to prosecute a defendant is discretionary because it

involves the evaluation of evidence and the exercise

of judgment.’ Since the Secretary evaluated the evi-

dence against plaintiffs and exercised his judgment

* Ove Gustavsson Contracting Co. v. Floete, 299 F.2d 655,

659 (2d Cir. 1962), cert. denied, 374 U.S. 827 (1963).

* Inmates of Attica Correctional Facility v. Rockefeller, 477

F.2d 375 (2d Cir. 1973).

27a

prior to proceeding against them, there can be no

doubt that his decision was discretionary and en-

titled to immunity.*

Plaintiffs next contend that defendants’ decision

to continue disciplinary proceedings against them

after they had withdrawn from doing business as

futures commission merchants unde: the Act was a

ministerial act which deprived plaintiffs of their

constitutional rights. Defendants contend that they

interpreted the Act to require them to complete pro-

ceedings against plaintiffs in order to prevent them

from obtaining a new license in the future.

In an analogous situation, it has been held that,

even though a securities broker-dealer had withdrawn

from doing business under the securities laws, the

SEC’s decision to bring public proceedings against

it was a discretionary act involving the SEC’s inter-

pretation of the securities laws which it was charged

with enforcing and would not be upset by the court.’

Since defendants’ decision to continue with the pro-

ceedings involved discretionary interpretation of the

‘ The court, in Economou v. U.S. Dep’t of Agriculture, 494

F.2d 519 (2d Cir. 1974), held that the Secretary of Agricul-

ture should have issued a warning letter to plaintiffs ANE and

ANE, Inc. before filing a complaint against them because

his conclusion that plaintiffs had wilfully violated the Act was

not warranted from the record as a whole. We have held that

the Secretary’s decision not to issue a warning letter was

within the scope of his authority and discretionary. As such,

it is still entitled to immunity even though it has been held

to be incorrect. Boruski v. Stewart, 381 F. Supp. 529 (S.D.

N.Y. 1974).

*M. G. Davis & Co. Vv. Cohen, 369 F.2d 360 (2d Cir. 1966).

28a

Act which they were charged with enforcing, the de-

cision is entitled to immunity.

The third act by defendants which plaintiffs claim

is ministerial is the issuance of several press releases

allegedly containing false and misleading information

about plaintiffs while defendants were proceeding

against them under the Act. The issuance of press

releases by governmental officials concerning admin-

istrative enforcement proceedings is a discretionary

act entitled to immunity.”

Since the individual defendants have shown that

their alleged unconstitutional acts were both within

the scope of their authority and discretionary, we

dismiss the second amended complaint as to them.

Accordingly, we grant defendants’ motion, pur-

suant to Rule 12(b), Fed.R.Civ.P., to dismiss the

second amended complaint as to all defendants. SO

ORDERED.

Dated: New York, N. Y.

May 22, 1975

/s/ Lloyd F.. MacMahon

LLoyD F. MACMAHON

United States District Judge

” Barr Vv. Matteo, supra; Federal Trade Comm’n vy. Cin-

derella Career & Finishing Schools, Inc., 404 F.2d 1308

(D.C. Cir. 1968).

29a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

At a stated Term of the United States Court of

Appeals for the Second Circuit, held at the United

States Courthouse in the City of New York, on the

twenty-third day of April one thousand nine hun-

dred and seventy-six.

Present: HON. WALTER R. MANSFIELD

Hon. WILLIAM H. TIMBERS

Hon. THOMAS J. MESKILL

Circuit Judges

75-6050

ARTHUR N. ECONOMOU, PLAINTIFF-APPELLANT

Vv.

UNITED STATES DEPARTMENT OF AGRICULTURE, EARL

L. Butz, Secretary of Agriculture, RICHARD T.

LYNG, Assistant Secretary of Agriculture, Com-

MODITY EXCHANGE AUTHORITY, ALEX C. CALDWELL,

Act Administrator, Commodity Exchange Author-

ity, CHARLES E. ROBINSON, Director, Compliance

Division, Commodity Exchange Authority, RICH-

ARD E. KircHOFF, Deputy Director, Registration

and Audit Division, Commodity Exchange Author-

ity, JAcK W. BAIN, Chief Hearing Examiner,

United States Department of Agriculture, RICH-

ARD W. DAVIS, JR., Counsel, United States Depart-

ment of Agriculture, REED MCMINN, Regional Ad-

30a

ministrator, New York Regional Office, Commodity

Exchange Authority, CLEMENT Gross, Auditor,

Commodity Exchange Authority, Murray A. WoL-

KIS, Auditor, Commodity Exchange Authority,

EDWARD FITZPATRICK, Auditor, Commodity Ex-

change Authority, DEFENDANT-APPELLEES

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

This cause came on to be heard on the transcript

of record from the United States District Court for

the Southern District of New York, and was argued

by counsel.

ON CONSIDERATION WHEREOF, it is now

hereby ordered, adjudged, and decreed that the order

of said District Court be and it hereby is affirmed

in part and reversed in part and that the action be

and it hereby is remanded to said District Court for

further proceedings consistent with the opinion of

this court.

A. DANIEL FUSARO

Clerk

By /s/ Vincent A. Carlen

Chief Deputy Clerk

3la

APPENDIX D

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a Stated Term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Court House, in the City of New York,

on the 23rd day of July, one thousand nine hundred

and seventy-six.

Present:

HON. WALTER R. MANSFIELD,

HON. WILLIAM H. TIMBERS,

HON. THOMAS J. MESKILL,

Circuit Judges.

[Filed Jul. 23, 1976, United States Court of Appeals,

Second Circuit, A. Daniel Fusaro, Clerk |

Docket No. 75-6050

ARTHUR N. ECONOMOU, PLAINTIFF-APPELLANT

v.

UNITED STATES DEPARTMENT OF AGRICULTURE; EARL

L. Butz, Secretary of Agriculture, etc., DEFEND-

ANTS-APPELLEES

A petition for a rehearing having been filed here-

in by counsel for the defendant-appellees, U.S. Dept.

of Agriculture, ete.

Upon consideration thereof, it is

Ordered that said petition be and hereby is denied.

/s’ A. Daniel Fusaro

A. DANIEL FUSARO

32a

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a stated term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Court House, in the City of New York,

on the 23rd day of July, one thousand nine hundred

and seventy-six.

[Filed Jul. 23, 1976, United States Court of Appeals,

Second Circuit, A. Daniel Fusaro, Clerk]

Docket No. 75-6050

ARTHUR N. ECONOMOU, PLAINTIFF-APPELLANT

Vv.

UNITED STATES DEPARTMENT OF AGRICULTURE; EARL

L. Butz, Secretary of Agriculture, etc., DEFEND-

ANTS-APPELLEES

A petition for rehearing containing a suggestion

that the action be reheard in banc having been filed

herein by counsel for the defendant-appellees, and no

active judge or judge who was a member of the panel

having requested that a vote be taken on said sug-

gestion,

Upon consideration thereof, it is

Ordered that said petition be and it hereby is

DENIED.

/s/ Irving R. Kaufman

IRVING R. KAUFMAN

Chief Judge

ov. 8. GCOVERNMEXT PRINTING OFFicE; 1975 222130 3