Petition — Inglis v. Feinerman

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83-565 (“Tres

OCT 3 1983

No.

Ai EXANDER L. STEVAS,

CLERK

In the Supreme Co

OF THE

United States

Octoser TerRM 1983

James G. INGLIs,

Petitioner,

VS.

Mixton FErnerMay, in his individual capacity as

President of Federal Home Loan Bank of San Francisco;

and Federal Home Loan Bank of San Francisco,

a corporation,

Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

Euizaseto G. Leavy*

RusseELu LErsson

CarRoLL, Burpick & McDonovcH

One Ecker Building, Suite 400

Ecker and Stevenson Streets

San Francisco, CA 94105

Telephone: (415) 495-0500

Attorneys for Petitioner,

James G. Inglis

*Counsel of Record

; BOWNE OF SAN FRANCISCO, INC. * 190 NINTH ST. © S.F., CA 94103 © (415) 864-2300

QUESTIONS PRESENTED

> Whether employers governed

by at-pleasure statutes who officially

adopt employee manuals which state that

employment may be terminated only for

certain causes are bound by these manuals;

and

y Whether employees >

federal banking institution, whose enabl-

ing statute contains dismissal-at-pleasure

language, may be terminated for any reason

or for no reason at all, even if that

reason violates important public policy;

notwithstanding decisional law to the

contrary in most jurisdictions with sim-

ilar at-pleasure statutes.

PARTIES

The parties to the proceedings

in the Ninth Circuit and the district

court appear wholly in the caption.

TABLE OF CONTENTS

Questions Presented

Parties

Opinions Below

Jurisdiction

Statutes

Statement of Case

Reasons For Granting The writ

A. The Ninth Circuit's holding

that representations in

an officially promulgated

manual of a Federal Banking

Institution are unenforceable

conflicts with decisions in

other circuits and goes beyond

the Ninth Circuit's previous

holding in Bollow v. Federal

Reserve Bank of San Francisco,

658 F.2d 1093 (1981)

B. No authority supports the

holding that an employee

employed pursuant to an

at-pleasure provision ina

National Banking Act

statute may be terminated

for reasons contrary to

public policy

Conclusion

ao WwW W NY FH

iii

TABLE OF CONTENTS (continued)

Appendix A - Opinion of the United

States Court of Appeals for the

Ninth Circuit, entered March 4,

1983. A-1

Appendix B - Order of the United

States Court of Appeals for the

Ninth Circuit Denying Petitions

for Rehearing, filed July 5, 1983. Be-l

Appendix C = Memorandum Decision and

Order of the United States District

Court for the Northern District of

California, filed April 21, 1982. C-1

Appendix D - Statutes Relied Upon. D-1

TABLE OF AUTHORITIES CITED

Cases

Associated Builders v. U.S. Depart-

ment of Energy, 451 F.Supp. 281,

286-287 (1978)

Bollow v. Federal Reserve Bank

of Sar Francisco, 650 F.2d 1093

(9th Cir. 1981), Cert denied,

102 S.Ct. 1149 (1982) 7, 8, 9, 13,

16, 18

Healdsburg Police Officers

Association v. City of

Healdsburg, 57 Cal. App.

3d 444 (1976) 9, 10,

Mazaleski v. Treusdell, 562 F.2d

TOL aueGe Gar. 2etr

Petermann v. International

Brotherhood of Teamsters,

174 Cal. App. 2d 184 (1959)

Tameny v. Atlantic Richfield Co.,

27 Cal. 3d 167, 172 (1980)

Vitarelli v. Seaton, 359 U.S. 535

(1950)

TABLE OF AUTHORITIES CITED

Statutes

12 U.S.C. sections 24 (Fifth)

341 (Fifth), 1421, 1432

28 U.S.C. Section 1254(11), 1441

Inglis1R

No.

IN THE SUPREME COURT

OF THE

UNITED STATES

OCTOBER TERM 1983

JAMES G. INGLIS,

Petitioner,

vs.

MILTON FEINERMAN, in his individual

Capacity as President of Federal

Home Loan Bank of San Francisco;

and FEDERAL HOME LOAN BANK OF

SAN FRANCISCO, a corporation,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

' fe. SG

Petitioner, James Inglis, respectfully

petitions that a writ of certiorari

be issued to review the judgment

and opinion of the United States Court

of Appeals for the Ninth Circuit,

Entered on March 8, 1983

OPINIONS BELOW

The opinion of the United States

Court of Appeals for the Ninth Circuit,

not yet reported, appears in the Appendix

attached hereto, as does the Court of

Appeals' order of July 5, 1983 denying the

petition for rehearing and suggestion for

a rehearing en banc.

Neither the memorandum decision

and order of April 20, 1982 of the United

States District Court for the Northern

District of California, granting Defend-

ants' motion for summary judgment, nor the

Court's judgment is officially reported.

Copies of these documents are attached

hereto.

JURISDICTION

The judgment of the Court of

Appeals for ‘the Ninth Circuit was entered

on March 8, 1983, affirming the District

Court's grant of Respondents' Motion for

Summary Judgment dated April 20, 1982. A

timely petition for rehearing and sugges-

tion of rehearing en banc was denied July

5, 1983 and this petition for certiorari

was filed within 90 days of that date.

Petitioner invokes jurisdiction

of this Court under 28 U.S.C. section

1254(1).

STATUTES

The relevant statutes“ are: 12

U.S.C. sections 341 (Fifth), 1421, 1432

and 28 U.S.C. Section 1441.

STATEMENT OF CASE

The present litigation arose out

of the discharge of Plaintiff James Inglis

from his employment as Vice President and

Internal Auditor with the Federal Home

Loan Bank of San Francisco on September l,

1981. (C.T. 12) Plaintiff (Petitioner

herein) filed his Complaint for damages on

October 9, 1981 in San Francisco County

Superior Court against the Federal Home

Loan Bank of San Francisco (hereinafter

"Bank" ) and Milton Feinerman, the Bank

president, alleging that Defendants (Re-

spondents herein) wrongfully terminated

Plaintiff from his employment with the

Bank.

In his complaint, Plaintiff

alleged that he was terminated in viola-

tion of public policy, in that he was

terminated because of his insistence that

the Bank and its officers comply with

various federal laws and Bank regulations.

Plaintiff also contended that he was

terminated in violation of provisions of a

Bank Employee handbook which, although

adopted after his initial hire, was in

effect for many years prior to his term-

inatiyjn, The handbook set forth certain

specific causes for termination, provided

that samployment was based upon good faith,

and provided for a hearing before the

taking of disciplinary action.

The action was removed by Re-

spondents to the United States District

Court for the Northern District of Cali-

fornia on November 20, 1981, pursuant to

28 U.S.C. section 1441. (c.f. €) On

November 30, 1981, Respondent Federal Home

Loan Bank of San Francisco filed a Cross-

Complaint against Plaintiff James Inglis.

(c.f. 6)

On April 21, 1982, following a

hearing on a motion brought by Defendants

the District Court granted Summary Judg-

ment on substantially all of Plaintiff's

claims holding that Plaintiff's claims

were preempted by the at-pleasure language

of the Federal Home Loan Bank Act, and

that any rights created under the Employee

Manual were void and unenforceable. The

Court's decision was based primarily on an

opinion in which the Ninth Circuit had

affirmed the discharge of a Federal Re-

serve Bank employee pursuant to similar

“at pleasure" language in the Federal

Reserve Bank Act. Bollow v. Federal

Reserve Bank of San Francisco, 650 F.2d

1093 (9th Cir. 1981), Cert denied, 102 s.

Ct. 1149 (1982).

A final judgment’ dismissing:

Plaintiff's entire Complaint with pre-

judice was entered on June 22, 1982 (C.T.

41).

The judgment of the Court of

Appeals for the Ninth Circuit was entered

on March 8, 1983, affirming the District

Court decision.

REASONS FOR GRANTING THE WRIT

A. The Ninth Circuit's holding

that representations in

an officially promulgated

manual of a Federal Banking

Institution are unenforceable

conflicts with decisions in

other circuits and g@es beyond

the Ninth Circuit's previous

holding in Bollow v. Federal

Reserve Bank of San Francisco,

658 F.2d 1093 (1981)

Rejecting Plaintiff's contention

that certain rights were created by the

Federal Home Loan Bank Employee Manual,

despite the existence of at-pleasure

language in the Federal Home Loan Bank,The

Honorable David Williams, United States

District Judge for the Central District of

California, sitting by designation, wrote:

[W]je follow Bollow and hold that

attempts to create employment

rights from independent sources

such as the Employment Manual

are void under the Federal Home

Loan Bank Act.

Opinion, p. 3, lines 9-12

With all due respect, it is

submitted that Bollow does not compel such

a holding. Bollow involved a representa-

tion by president of the Federal Reserve

Bank that Bollow would enjoy continued

employment so long as his pxceformance

remained satisfactory. The Ninth Circuit

held that such representations by the bank

president were ultra vires, and that

Bollow was not entitled to rely upon such

representations since they contravened the

at-pleasure language of the Federal Re-

serve Bank Act. Bollow specifically left

open the question of whether or not the

Bank's Personnel Manual, which provided

certain procedural guarantees prior to

termination, limited the Bank's otherwise

unbridled discretion to discharge its

employees at will. Thus, the Ninth Cir-

cuit stated:

Bollow also argues that, not-

withstanding Sections 4, Fifth,

the Bank was required to comply

with its published personnel

manual, and that it failed to do

so. The district judge found

that the Bank’ substantially

complied with the manual pro-

cedures for discharging em-

ployees for misconduct. This

finding is adequately supported

by their record. Thus, even if

we assume that the Bank's au-

thority t to discharge employees

ursuant to Eection 4, Sth, is

somehow limite py, She ed by the Personnel

t th

Manua, we find e Bank has

complied with the requirements

of the Manual. (emphasis added)

Bollow v. Federal Reserve Bank

of San Francisco, supra, at

1098.

Moreover, the Ninth Circuit

opinion in the instant action did not even

address the estoppel arguments raised in

Appellant's Brief or the cases in which

such estoppel arguments had been raised.

Thus, for example, in a California Court

of Appeal's decision in Healdsburg Police

Officers Association v. City of Healds-

burg, 57 Cal. App. 3d 444 (1976), the

Court of Appeal found that, notwith-

standing the existence of California

Government Code section 36506, which

expressly provides that peace officers

serve at the pleasure of the city council,

predisciplinary procedural protection set

forth in the Healdsburg police department

manual are enforceable, and compliance

with the manual is required. Healdsburg

Police Officers Association v. City of

Healdsburg, supra, at 449.

In Healdsburg the court specifi-

cally rejected the City's argument that

the protections afforded by the manual

were ultra vires and void, invoking the

theory of equitable estoppel against the

City:

It is black-letter law that

where justice requires it, the

doctrine of equitable estoppel

may be invoked against a...

governmental agency [citations].

This doctrine, of course, pre-

cludes the consenting or acqui-

escing party from disputing the

validity of acts which were

beyond the legitimate powers of

the parties when done pursuant

to, or in reliance upon, such

consent or acquiescence ([cita-

tions]. Therefore, Appellants'

claim that the enactment of the

manual constituted an ultra

vires act automatically failed.

We are likewise at a loss to

discern any substance to Appel-

lant's contention that the

theory of equitable estoppel may

not be relied upon by respon-

dents because it was not raised

in the proceedings below. It is

axiomatic that although estoppel

is generally a question of fact,

where, as here, the evidence is

not in conflict and is suscep-

tible of only one reasonable

inference, the existence of

estoppel becomes a question of

law [citations]. Healdsburg

Police Officers Association v.

City of Healdsburg, supra, at

454.

The Healdsburg court's reasoning

applies with equal force in the present

case. The Bank's employee handbook ex-

pressly stated that Bank employees were

afforded certain procedural safeguards

prior to termination or other disciplinary

measures. The employee handbook stated

that Bank employees were expected to abide

by the rules and regulations published

therein and that failure to do so would

result in disciplinary action. Thus,

under general equitable principles, the

Bank should be estopped to deny the va-

lidity and enforceability of the pro-

cedural guarantee of a hearing prior to

discharge and the substantive guarantee

that the employment would be based on good

faith.

Finally it is well-established

that agencies are under an obligation to

follow their own regulations, proceedings,

and precedents, or provide a rational

explanation for their departure. See,

e.g., Vitarelli v. Seaton, 359 U.S. 535

(1950); Associated Builders v. U.S. De-

partment of Energy, 451 F.Supp. 281,

286-287 (1978); Mazaleski v. Treusdell,

562 F.2d 701 (D.C. Cir. 1977), (termina-

tion found to be illegal because the

Public Health Service failed to follow the

procedure for involuntary terminations set

forth in its personnel manual. )

The principles and authorities

outlined above apply with equal force to

the instant case. Notwithstanding section

1432(a) of the Federal Home Loan Bank Act,

12 U.S.C. 1421, et seg., which entitles

the Bank to dismiss employees at pleasure,

the Bank has set forth certain pretermi-

nation procedural safeguards in its Em-

ployee Handbook. In so doing, the Bank

"contracted" with its employees, and

Claims seeking to enforce that contract

are not foreclosed.

Nor does Bollow v. Federal

Reserve Bank of San Francisco, 650 F.2d

1093 (9th Cir. 1981) hold otherwise. The

Bollow court did not decide whether or not

a cause of action based on failure to

comply with personnel regulations would

withstand a motion to dismiss, since it

found there had been substantial compli-

ance with the personnel regulations.

Bollow, supra, at 1098. This distinction

is clear from the following passage in

Bollow:

Bollow also argues that, not-

withstanding Section Four,

Fifth, the bank was required to

comply with its published per-

sonnel manual, and that it

failed to do so. The District

Judge found that the bank sub-

stantially complied with the

manual procedures for discharg-

ing employees for misconduct.

This finding is adequately

supported by the record. Thus,

even if we assume that the

bank's authority to discharge

employees pursuant to Section

Four, Fifth, is somehow, limited

by the personnel manual, we find

that the bank has complied with

the requirements of the manual.

(emphasis added)

Bollow v. Federal Reserve Bank

of San Francisco, 650 F.2d 1093,

1098.

B. No authority supports the hold-

ing that an employee employed

pursuant to an at-pleasure

provision in a National Banking

Act statute may be terminated

for reasons contrary to public

policy.

As is indicated above, provi-

sions in the Federal Reserve Bank Act (12

U.S.C. section 341) and the National

Banking Act (12 U.S.C. section 24 Fifth),

as well as the applicable provision in the

Federal Home Loan Bank Act (12 U.S.C.

section 1432), provide for termination at

will of banking employees. Thus, the

Ninth Circuit ruling in this case, by

implication, bestows upon all Federally

regulated Banking Institutions in the

United States a right that is denied to

any other employer, whether public or

private -- i.e. the right to terminate an

employee for reasons contrary to public

policy.

Such a holding is clearly not

mandated by Bollow. Similar claims of

termination in violation of public policy

were raised in Bollow and addressed on the

merits. Thus, the Ninth Circuit stated:

Finally, Bollow . . . [alleged]

that he was terminated because

he exposed Bank and Board irreg-

ularities in the handling of a

certain regulatory matter. He

now contends that the district

court erred in granting the

Bank's and Board's motions for

summary judgment on these

Claims. Regarding the Board, it

is clear that the Board was not

legally or factually implicated

in the Bank's decision to ter-

minate Bollow. With respect to

the Bank, there was offered in

support of its motion Reilly's

sworn declaration that the deci-

sion to terminate Bollow was

based solely on the latter's

inability to get along with his

co-workers. Bollow offered no

evidence in response; he merely

repeated the allegations of his

complaint. A party cannot

withstand a motion for summary

judgment merely by asserting

that the facts are disputed; he

must present sufficient evidence

to the court to show that there

is indeed a genuine. issue of

material fact. {citation ]

Eollow's evidence consisted ex-

Cclusively of disjointed and

conclusory allegations based on

mere suspicion and belief. He

brought nothing before the court

to show that he would be able to

support his allegations with

evidence at trial. Accordingly,

we affirm the district court's

grant of summary judgment on

these claims in favor of the

Bank and Board.

Bollow v. Federal Reserve Bank

of San Francisco, supra, at

1102-3.

Moreover, the Ninth Circuit

opinion is not only inconsistent with

Bollow, but, in addition, contrary to the

weight of authority in all jurisdictions.

Thus, in addition to decisional law in

California, e.g., Tameny v. Atlantic

Richfield Co., 27 Cal. 3d 167, 172 (1980),

Petermann v. International Brotherhood of

Teamsters, 174 Cal. App. 2d 184 (1959)

courts have sustained the maintainability

of such claims, despite employment-at-will

statutes, in nearly every other state of

the union. 2/ Clearly the absence of

federal decisions springs from the fact

that virtually all federal employees have

long been subject to elaborate protections

against discharges in violation of public

policy under the Civil Service Reform Act

and other iegislation. There is absolute-

ly no authority for the proposition that

banking empioyees should be singled out so

that they are afforded none of the protec-

tions that have been afforded by statute

to employees in the public sector and by

judicial interpretation to employees in

the private sector.

CONCLUSION

The Ninth Circuit's holdings

that Banking institutions operating pur-

Ingl/T

suant to at-pleasure employment statutes

(1) are not bound by representations made

in officially promulgated employee manu-

als, and (2) may terminate employees for

reasons violative of public policy, is

contrary to the weight of decisional law,

and goes beyond the Ninth Circuit's hold-

ing in Bollow v. Federal Reserve Bank,

supra. Guidance from this Court is

clearly mandated in order to define the

scope of employment rights afforded to

employees in federally regulated banking

institutions. Accordingly, it is respect-

fully submitted that Petitioner's Petition

for Writ of Certiorari should be granted.

Dated: This 29th day of Septem-

ber, 1983.

Respectfully submitted,

CARROLL, BURDICK & MCDONOUGH

1/ Other jurisdictions have similarly

held that where an employee attempts to

exercise rights afforded by statute, a

right of action for wrongful discharge

will lie. See, Frampton v. Central In-

diana Gas Co., 297 N.E.2d 425 (Ind. 1973)

(recognized public policy exception for

statutorily conferred personal rights);

Svento v. Kroger Co., 245 N.W.2d 151

(Mich.App. 1376) (cause of action for

wrongful discharge where employee filed

Claim against employer under state work-

er's compensation statute).

2/ See, Lampe v. Presbyterian Medical

Center, 590 P.2d 513 (Colo. 1978) (employ-

er's motivation for discharge must contra-

vene clear mandate of public policy);

Sheets v. Teddy's Frosted Foods, Inc., 427

A.2d 385 (Conn. 1980) (retaliatory dis-

missal of employee who insisted on com-

pliance with state licensing and labeling

law); Jackson v. Minidoka Irrigation

District, 563 P.2d 54 (Idaho 1977) (em-

ployer's motivation for discharge must

contravene clear mandate of public pol-

icy); Kelsay v. Motorola, 384 N.E.2d 353

(Ill. 1978) (cause of action for wrongful

discharge based on employee's exercise of

statutory rights); Palmateer v. Interna-

tional Harvester, Inc., 421 N.E.2d 876

(Ill. 1981) (action for retaliatory dis-

charge where employee terminated for

"whistle-blowing" ) ; Abrisz Vv. Pulley

Freight Lines, Inc., 270 N.W.2d 454 (Iowa

1978) (termination viclative of clear

public policy may be actionable); Murphy

v. City of Topeka, 630 P.2d 186 (Kan. App.

1981) (adopts tort of retaliatory dis-

2/ (continued)

charge in at-will setting); Scroghan v.

Krafco Corp. 551 S.W.2d 811 (Ky. 1977)

(motivation for discharge actionable if

contravenes clear public policy of state);

Adler v. America Standard Corp., 432 A.2d

464 (Md. 1981) (discharge actionable if

violative of clear mandate of public

policy); Keneally v. Orgain, 606 P.2d 127

(Mont. 1980) (motivation for discharge

must contravene clear mandate of public

policy); Monge v. Beebe Rubber Co., 316

A.2d 549 (N.H. 1974) (cause of action for

retaliatory discharge for refusal to date

foreman); Pierce v. Ortho Pharmaceutical

Corp., 417 A.2d 505 (N.J. 1980) (discharge

actionable if violative of clear mandate

of public policy); Ness v. Hocks, 536 P.2d

512 (Or. 1975) (wrongful discharge where

employee terminated for serving jury

duty); Brown v. Transcon Lines, 588 P.2d

1087 (Ore. 1978) (cause of action for

wrongful discharge for filing workmen's

compensation claim against employer);

Reuther v. Fowler & Williams, 386 A.2d 119

(Pa. 1978) (employee stated cause of

action for wrongful discharge where term-

inated for serving jury duty); Perks v.

Firestone Tire and Rubber Co., 611 F.2d

1361 (3rd Cir. 1979) (cause ot action for

wrongful discharge where employee refused

polygraph test); Jones v. Keogh, 409 A.2d

581 (Vt. 1979) (actionable right where

discharge violates "clear and compelling"

public policy); Ward v. Frito-Lay, Inc.,

290 N.W.2d 536 (Wis. App. 1980) (cause of

action maintainable where employee exer-

cises statutorily or constitutionally

guaranted right).

Ingl/M

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JAMES G. INGLIS,

Plaintiff-Appellant, No. 82-4404

D.C. #

Vv. Cv. 81-4429 MHP

MILTON FEINERMAN, in his OPINION

individual capacity as

President of Federal Loan

Bank of San Francisco; and

Federal Home Loan Bank of

San Francisco, a corporation,

Defendants-Appellees.

me me ee ee ee ee ee ee ee ee ee ee ee”

Appeal From the United States District Court

For the Northern District of California,

Honorable Marilyn H. Patel,

Judge Presiding.

Argued and Submitted: February 18, 1983

Before: CHOY and ALARCON, Circuit Judges,

and D. WILLIAMS*, District Judge

WILLIAMS: District Judge

* The Honorable David W. Williams, United

States District Judge for the Central

District of California, sitting by desig-

nation.

A-2

Appellant James G. Inglis [Inglis]

appeals a District Court grant of summary

judgment which upheld his termination of

employment from appellee Federal Home Loan

Bank of San Francisco [Bank] without a

disciplinary hearing as outlined in the

Bank's personnel manual. The Bank claims

it terminated Inglis for an admitted

breach of employee confidentiality.

The Bank was created under the

Federal Home Loan Bank Act, 12 U.S.C.

§ 1421, et seg. In 12 U.S.C. § 1432(a),

the Act provides in pertinent part:

the bank shall have the power

to -=- select, employ and fix the

compensation of such officers,

employees, attorneys, and agents

. and to dismiss at pleasure

such officers, empoyees and

agents; (Emphasis added. )

These provisions are similar to

language in 12 U.S.C. § 341 (Fifth) of the

Federal Reserve Act which gives Federal

Reserve Banks the power to "dismiss at

A-3

pleasure such officers or employees." In

Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d 1093 (9th Cir. 1981),

this court construed that section as

preempting employee claims of wrongful

discharge based on state law.

The plaintiff in Bollow was

terminated by a Federal Reserve Bank after

eleven years of employment. He sued for

reinstatement, but the bank contended it

had authority to fire him by virtue of the

"dismiss at pleasure" provision of 12

U.S.C. § 341 (Fifth).

On appeal, the Ninth Circuit

held that (1) federal law preempted Cali-

fornia law and allowed the Federal Reserve

Bank to dismiss its employees "at plea-

sure," and (2) a letter from the bank

president to plaintiff assuring him of

continued employment was ultra vires under

the Federal Reserve Act and thus void.

A-4

In the instant case, Inglis

argues that since the Bank adopted an

employee manual which stated that employ-

ment was based on "good faith" and estab-

lished procedures for disciplinary ac-

tions, the Bank should not be permitted to

dismiss him except for certain causes.

First, we note that this manual was not

adopted by the Bank until well after

Inglis was hired. Notwithstanding this

difficulty with appellant's claim, we

follow Bollow and hold that attempts to

create employment rights from independent

sources such as the employment manual are

void under the Federal Home Loan Bank Act.

Inglis next urges us to follow

Tameny v. Atlantic Richfield Co., 27

Cal.3d 167 (1980), which limited an em-

ployer's right under Cal. Lab. Code § 2922

to terminate an employee "at will." The

Tameny court held that, despite § 2922,

Atlantic Richfield wrongfully discharged

A-5

plaintiff for refusing to participate in

an illegal price fixing scheme. Appellant

argues that 12 U.S.C. § 1432(a) should be

Similarly limited and claims that the real

reason for his termination was his insis-

tence that the Bank conform its practices

to federal law. We hold that § 1432(a)

permits no inroads into the "dismiss at

pleasure" language.

Inglis' constitutional claims

are equally without merit. Inglis did not

have a sufficient property interest in

continued employment to invoke due process

guarantees, and the Bank's termination of

Inglis did not deprive him of any cogni-

zable liberty interest.

The decision of the District

Court is affirmed.

Ingl/O

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JAMES G. INGLIS,

No.

Plaintiff-Appellant, 82-4404

Vv. Dist. of

No. Calif.

MILTON FEINERMAN, in his

individual capacity as

President of Federal Loan ORDER

Bank of San Francisco; and

Federal Home Loan Bank of

San Francisco, a corporation,

Defendants-Appellees.

me me ee ee ee ee ee ee ee ee ee ee”

Before: CHOY and ALARCON, Circuit Judges,

and WILLIAMS*, District Judge.

The panel as constituted in the

above case has voted to deny the petition

for rehearing, and a majority of the panel

has voted to reject the suggestion for

rehearing en banc.

* The Honorable David W. Williams, United

States District Judge for the Central

District of California, sitting by desig-

nation.

B-2

The full court has been advised

of the suggestion for rehearing en banc

and no judge of the court has voted to

grant rehearing an banc. Fed.R. App.P.

35(b).

The petition for rehearing is

denied and the suggestion for rehearing en

banc is rejected.

Ingl/Q

APPENDIX C

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JAMES G. INGLIS, )

)

Plaintiff, )

) No. C-81-4429 MHP

vs. )

) MEMORANDUM DECISION

MILTON FEINERMAN, ) AND ORDER

)

Defendants. )

)

AND RELATED )

CROSS-ACTION. )

)

This matter comes before the court on

defendants' motion for summary judgment.

Plaintiff's complaint sets forth several

causes of action arising from the termi-

nation of his employment. They comprise

Claims for breach of contract, tort

claims, and constitutional claims of

"liberty" and "property" due process

violations. Defendants have moved for

summary judgment. Plaintiff has agreed

C=-2

to the dismissal without prejudice of his

second and ninth causes of action.

BACKGROUND

Plaintiff was terminated from

his employment as a Vice President and

Internal Auditor of defendant Federal Home

Loan Bank of San Francisco. Defendants

Bank and Bank President Feinerman allege

that plaintiff was terminated for failure

to adequately carry out his duties as an

officer of the Bank. More specifically,

defendants assert that plaintiff committed

a serious breach of confidentiality in

disclosing certain information to a fellow

employee. Plaintiff admits this dis-

closure, but contends it did not amount to

a breach of confidentiality; and further

he asserts that he was actually terminated

due to his repeated insistence over the

years that the Bank and its officers

C-3

comply with various federal laws and Bank

regulations.

Plaintiff was terminated without

a formal hearing. The Bank's Employee

Handbook, in very general terms, provides

that employment is based upon "good faith"

and outlines various remedial and disci-

plinary approaches that could be taken in

confronting employee problems.

CONTRACT CLAIMS

Plaintiff's first, third, and

fifth causes of action allege breaches of

both express and implied contractual

duties. Plaintiff claims that the terms

of the Bank's “Employee Handbook" pro-

viding for good faith, equitable treat-

ment, and fair hearings, formed part of

his express employment contract; and that

the Bank had also made an implied covenant

of continued employment and termination

only upon just cause.

C-4

However, a reading of the

controlling statutes and Ninth Circuit

authority has convinced this court that

any express or implied employment con-

tracts entered into by the Bank or its

agents with plaintiff are void and un-

enforceable.

Federal Home Loan Banks were

created, and are governed by, the Federal

Home Loan Bank Act, 12 U.S.C. § 1421, et

seg. (the "Act"). Section 1432(a) of the

Act provides that Federal Home Loan Banks

shall have the power "to dismiss at plea-

sure such officers, employees, attorneys,

and agents" as they see fit (emphasis

added).

The Ninth Circuit has recently

interpreted an identical provision of the

Federal Reserve Act, 12 U.S.C. § 341

(Fifth), to preclude Federal Reserve Banks

from entering into employment contracts

that grant any greater tenure rights to

C-5

employees, and to void any such contracts

entered into by the Banks. In Bollow v.

Federal Reserve Bank of San Francisco, 650

F.2d 1093 (9th Cir. 1981), the plaintiff,

an employee of the defendant Bank, was

terminated. He claimed a contractual

right to employment by virtue of a letter

he received from the Bank President assur-

ing him of employment as long as his work

was satisfactory. In interpreting the

"dismiss at pleasure" clause of the Fed-

eral Reserve Act, identical to the one

applicable in the case at bar, the court

held that "[n]Jo process rights are con-

ferred on reserve bank employees by [the

dismiss at pleasure clause], and efforts

to confer such rights--as, for example, by

contract--are void as violative of the

statute." Id. at 1097.

The Bollow court cited with ap-

proval Armano v. Federal Reserve Bank of

C-6

Boston, 468 F. Supp. 674 (D. Mass. 1979),

which held that

a contract that binds the Bank

by requiring just cause for

dismissal prevents the Bank from

exercising its express power to

dismiss an employee at pleasure.

By that’ provision, Congress

clearly sought to protect Fed-

eral reserve banks from un-

necessary restrictions in car-

rying out their financial re-

sponsibility. Neither the Act's

express powers nor incidental

powers thereto authorize federal

reserve banks to bind themselves

in employment contracts.

Id. at 676. See also Sims v. Fox, 505

F.2d 857 (Sth Cir. 1974) (en banc), cert.

denied, 421 U.S. 1011 (1975).

The same reasoning applies to

the “dismiss at pleasure" clause of §

1432(a) of the Federal Home Loan Bank-Act.

Thus, any express or implied employment

contracts allegedly made by the Bank with

plaintiff are void as violative of that

statute.

Further, while California law

grants “at will" employees certain process

C-7

and tenure rights, state law cannot pro-

vide any independent rights that would

contravene or hinder the Bank's federally

granted power to dismiss employees at

pleasure.

Attempts to create such rights

by reference to independent

sources are violative of the

statute and void thereunder.

Assuming that [plaintiff] would

indeed have been entitled to

certain process rights under

California law, such law when

applied to reserve bank em-

ployees conflicts with [the

"dismiss at pleasure" clause].

In such circumstances, the

federal statute must control.

Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d at 1098. This court

holds that 12 U.S.C. § 1432(a) likewise

preempts any California law that would

otherwise provide piaintiff with greater

process and tenure rights than are pro-

vided by that_ statute. Accordingly,

summary judgment for defendants is granted

on plaintiff's first, third, and fifth*

causes of action.

TORT CLAIMS

Plaintiff's fourth, sixth,

seventh, and eighth causes of action

assert claims sounding in tort. As pre-

sented, each of these claims is problem-

atic.

Plaintiff's fourth cause of

action alleges wrongful discharge in that

plaintiff's termination was against public

policy. Plaintiff acknowledges this claim

is made under California law which re-

quires that a termination be consistent

with public policy. See Tameny v. At-

lantic Richfield Co., 27 Cal.3d 167, 172

(1980).

However, by granting Federal

Home Loan Banks the power to dismiss

employees at pleasure, Congress clearly

sought to protect the Banks "from un-

necessary restrictions in carrying out

their financial responsibilities." Armano

v. Federal Reserve Bank of Boston, 468

C-9

F. Supp. at 676. To require compliance

with state public policy clearly would

impose additional restrictions upon Fed-

eral Home Loan Banks in carrying out their

responsibilities, contrary to congres-

Sional intent. Thus, a state created

cause of action for wrongful discharge in

violation of public policy must be pre-

empted by 12 U.S.C. § 1432(a). Accord-

ingly, summary judgment for defendants is

granted on plaintiff's fourth cause of

action.

Plaintiff's sixth and seventh

causes of action assert claims of inten-

tional and negligent infliction of emo-

tional distress, and general negligence.

However, as the court reads plaintiff's

amended complaint, the tortious conduct

alleged in these causes of action amounts

to nothing more than defendants' act of

discharging plaintiff. "His [alleged]

emotional distress was an incident of the

C-10

wrongful discharge. ... Every employee

who believes he has a legitimate grievance

will doubtless have some emotional anguish

occasioned by his belief that he has been

wronged. Artful pleading cannot conceal

the reality that the gravamen of the

complaint is wrongful discharge." Mag-

nusson v. Burlington Northern, Inc., 576

F.2d 1367, 1369 (9th Cir.), cert. denied,

439 U.S. 930 (1978). Insofar as these

tort claims assert only plaintiff's dis-

charge as the tortious conduct complained

of, they are likewise preempted by 12

U.S.C. § 1432(a). If the manner employed

by defendants in discharging plaintiff was

so egregious as to constitute a tort, or

if an act of a tortious nature was com-

mitted independent of the actual dis-

charge, plaintiff may have a cause of

action against defendants sounding in

tort. As presently framed, they are

insufficient to state tort claims. The

C-11

sixth and seventh claims are dismissed

without prejudice to the filing of amended

claims if plaintiff can allege the re-

quisite facts.

The court offers no opinion as

to whether the Federal Home Loan Bank is a

"federal instrumentality" for purposes of

the Federal Tort Claims Act, 28 U.S.C.

§§ 2671 et seg. Nor, consequently, is any

opinion offered as to whether proper tort

claims against the Bank would arise under

state or federal law.

Finally, plaintiff's eighth

cause of action asserts that defendants

intentionally interfered with his con-

tractual relationship with the Bank. Even

if this claim is viewed as sufficiently

independent of the discharge to survive

preemption, it is without merit. Under

California law, such a claim can only be

made against a non-party to the contract.

Thus, the claim cannot be made against

C-12

defendant Bank. Further, defendant

Feinerman, as Bank President, was privi-

leged with absolute authority in dis-

charging plaintiff. Under California law,

a manager cannot "be held liable for

inducing the breach for [his] action [is]

that of the corporation itself." Marin v.

Jacuzzi, 224 Cal. App. 2d 549 (1964).

Plaintiff's claim is without merit.

Accordingly, summary judgment for defen-

dants is granted on plaintiff's eight

cause of action.

DUE PROCESS--PROPERTY CLAIM

Plaintiff's tenth cause of

action alleges that defendants deprived

him of a property interest in continued

employment without due process of law in

violation of the fifth and fourteenth

amendments.

To have a property interest in a

governmental benefit, including employ-

C-13

ment, an individual must have an entitle-

ment to the benefit. Board of Regents v.

Roth, 408 U.S. 564, 577 (1972). Plaintiff

bases his alleged entitlement to continued

employment upon the provisions of the

Employee Handbook, which he claims formed

a part of his “employment contract" with

the Bank. However, as this court has

determined supra, any such provisions are

void and unenforceable in light of 12

U.S.C. § 1432(a). "A void contract is

clearly insufficient to support of claim

of entitlement to government employment."

Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d at 1099. Thus, plain-

tiff did not have a constitutionally

protected interest in continued employment

sufficient to invoke due process guaran-

tees of the Constitution. Summary judg-

ment is entered for defendants on plain-

tiff's tenth cause of action.

C-14

DUE PROCESS--LIBERTY CLAIM

Plaintiff's eleventh cause of

action alleges that defendants unconsti-

tutionally deprived him of "liberty" by

dismissing him without a hearing on

charges that reflect on his "good name,

reputation, honor and integrity."

The liberty protected by the due

process clause of the fifth and

fourteenth amendments encom-

passes an individual's freedom

to work and earn a living.

Thus, when the government dis-

misses an individual for reasons

that might seriously damage his

standing in the comnunity, he is

entitled to notice and a hearing

to clear his name.

Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d at 1100. See Board of

Regents v. Roth, 408 U.S. at 573 n.12.

For such a dismissal to reach

constitutional dinensions, however, the

reasons for the employee's dismissal must

be so serious as to "stigmatize" the

employee, by seriously damaging his or her

reputation or integrity or significantly

C-15

foreclosing his or her freedom to take

advantag of other employment. Jablon v.

Trustees of California State Colleges, 482

F.2d 997, 1000 (9th Cir. 1973), cert.

denied, 414 U.S. 1163 (1974). "{[A] charge

which infringes one's liberty can be

characterized as an accusation or label

given the individual by his employer which

belittles his worth and dignity as an

individual and, as a consequence is likely

to have severe repercussions outside of

professional life." Stretten v. Wadsworth

Veterans Hospital, 537 F.2d 361, 366 (9th

Cir. 1976).

Defendants claim that plaintiff

committed a breach of confidential trust,

which led to his termination. Such a

charge clearly implicates one's moral

character and "belittles his worth and

dignity as an individual."

However, the mere pressure of

charges that "stigmatize" an individual

C-16

does not infringe constitutional inter-

ests. The charges made against the em-

ployee must be publicly disclosed. "Un-

publicized accusations do not infringe

constitutional liberty interests because,

by definition, they cannot harm _ ‘'good

mame, reputation, honor or integrity.'"

Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d at 1101. Finally, no

liberty interest is infringed when the

allegations against the employee are true.

Sims v. Fox, 505 F.2d at 864.

The only allegations of publi-

cation made by plaintiff are based on his

assumptions. Defendants flatly deny them.

Plaintiff's declaration fails to "set

forth specific facts showing that there is

a genuine issue for trial" as to defen-

dants' publication of the reasons for his

discharge. Fed.R. Civ.P. 56(e). However,

the court will permit plaintiff to file

supplemental declarations setting forth

C-17

facts showing publication by defendants,

pursuant to Fed.R. Civ.P. 56(f), prior to

rendering a decision on this cause of

action.

THEREFORE, IT IS ORDERED THAT:

Defendants' motion for

summary judgment be and is hereby granted

as to plaintiff's first, third, fourth,

fifth, eighth, and tenth causes of action.

Plaintiff's second, sixth,

seventh, and ninth causes of action be and

are hereby dismissed without prejudice.

a. Plaintiff be and is hereby

granted leave to file supplemental decla-

rations in support of his eleventh cause

of action within twenty (20) days of the

date of this decision. Defendants shall

have ten (10) days to respond.

Marilyn Hall Patel

United States District Judge

DATED: 20 April 1982.

Ingl/P

APPENDIX D

12 U.S.C. § 341. General enumeration of

powers

Upon the filing of such [the

organization] certificate with the Comp-

troller of the Currency as aforesaid a

Federal reserve bank shall become a body

corporate and as such, and in the name

designated in such organization certifi-

cate, shall have power --

First. To adopt and use a

corporate seal.

Second. To have succession

after the approval of this Act

[Feb. 25, 1927] until dissolved

by Act of Congress or until

forfeiture of franchise for

violation of law.

Third. To make contracts.

Fourth. To sue and be sued,

complain and defend, in any

court of law or equity.

Fifth. To appoint by its board

of directors a president, vice

presidents, and such officers

and employees as are not other-

wise provided for in this Act,

to define their duties, require

bonds for them and fix the

D-2

penalty thereof, and to dismiss

at pleasure such officers or

employees. The president shall

be the chief executive officer

of the bank and shall be ap-

pointed by the board of direc-

tors, with the approval of the

Board of Governors of the Fed-

eral Reserve System, for a term

of five years; and all other

executive officers and all

employees of the bank shall be

directly responsible to him.

The first vice president of the

bank shall be appointed in the

same manner and for the same

term as the president, and

shall, in the absence or dis-

ability of the president or

during a vacancy in the office

of president, serve as chief

executive officer of the bank.

Whenever a vacancy shall occur

in the office of the president

or the first vice president, it

shall be filled in the manner

provided for original appoint-

ments; and the person so ap-

pointed shall hold office until

the expiration of the term of

his predecessor.

Sixth. To prescribe by its

board of directors by-laws not

inconsistent with law, regu-

lating the manner in which its

general business may be con-

ducted, and the privileges

granted to it by law may be

exercised and enjoyed.

Seventh. To exercise by its

boards of directors, or duly

D-3

authorized officers or agents,

all powers specifically granted

by the provisions of this Act

and such incidental powers as

shall be necessary to carry on

the business of banking within

the limitatons prescribed by

this Act.

Eighth. Upon deposit with the

Treasurer of the United States

of any bonds of the United

States in the manner provided by

existing law relating to na-

tional banks, to receive from

the Comptroller of the Currency

circulating notes in blank,

registered and countersigned as

provided by law, equal in amount

to the par value of the bonds so

deposited, such notes to be

issued under the same conditions

and provisions of law as relate

to the issue of circulating

notes of national banks secured

by bonds of the United States

bearing the circulating privi-

lege, except that the issue of

such notes shall not be limited

to the capital stock of such

Federal reserve bank.

But no Federal reserve bank

shall transact any business except such as

is incidental and necessarily preliminary

to its organization until it has been

authorized by the Comptroller of the

D-4

Currency to commence business under the

provisions of this Act.

ha. U.S.C. .§ 1421. Short Title This Act

may be cited as the "Federal Home Loan

Bank Act."

12 U.S.C. § 1432. Incorporation of banks

and corporate powers

(a) The directors of each

Federal Home Loan Bank shall in accordance

with such rules and regulations as the

board may prescribe, make and file with

the board at the earliest practicable date

after the establishment of such bank an

organization certificate which shall

contain such information as the board may

require. Upon the making and filing of

such organization certificate with the

board, such bank shall become as of the

date of the execution of its organization

certificate, a body corporate, and as such

and in its name as designated by the board

D-5

it shall have the power to adopt, alter,

and use a corporate seal; to make con-

tracts; to purchase or lease and hold or

dispose of such real estate as may be

necessary or convenient for the trans-

action of its business, but, except with

the prior approval of the board, no bank

building shall be bought or erected to

house any such bank, or leased by such

bank under any lease for such purpose

which has a term of more than ten years;

to sue and be sued, to complain, and to

defend, in any court of competent juris-

diction, State or Federal; to _ select,

employ, and fix the compensation of such

officers, employees, attorneys, and agents

as shall be necessary for the trasnaction

of its business, subject to the approval

of the board; to define their duties,

require bonds of them and fix the penal-

ties thereof, and to dismiss at pleasure

such officers, employees, attorneys, and

D-6

agents; and, by its board of directors, to

prescribe, amend, and repeal by-laws,

rules, and regulations governing the

manner which its affairs may be admini-

stered; and the powers granted to it by

law may be exercised and enjoyed subject

to the approval of the board. The presi-

dent of a Federal Home Loan Bank may also

be a member of the board of directors

thereof, but no other officer, employee,

attorney, or agent of such bank, who

receives compensat.on, may be a member of

the board of directors. Each such bank

shall have all such incidental powers, not

inconsistent with the provisions of this

Act, as are customary and usual in corpo-

rations generally.

(b) Subject to such regulations

as may be prescribed by the Board, one or

more Federal home loans banks may acquire,

hold, or disposition by members of any

such bank of, housing project loans, or

eee

D-7

interests therein, having the benefit of

any guaranty under section 221 of the

Foreign Assistance Act of 1961 [ ], as now

or hereafter in effect, or loans, or

interests therein, having the benefit of

any guaranty under section 224 of such Act

{ }, or any commitment or agreement with

respect to such loans, or interests there-

in, made pursuant to either of such sec-

tions. This authority extends to the

acquisition, holding, and disposition of

loans, or interests therein, having the

benefit of any guaranty under section 221

or 222 of the Foreign Assistance Act of

1961 [ ], as amended by section 105 of the

Foreign Assistance Act of 1969 [ ] or as

hereafter amended or extended, or of any

commitment or agreement for any such

guaranty.

D-8

i § 1441. Actions removable

generally

(a) Except as otherwise ex-

pressly provided by Act of Congress, any

civil action brought in a State court of

which the district courts of the United

States have original jurisdiction, may be

removed by the defendant or the defend-

ants, to the district court of the United

States for the district and division

embracing the place where such action is

pending.

(b) Any civil action of which

the district courts have original juris-

diction founded on a claim or right aris-

ing under the Constitution, treaties or

laws of the United States shall be re-

movable without regard to the citizenship

or residence of the parties. Any other

such action shall be removable only if

none of the parties in interest properly

joined and served as defendants is a

D-9

citizen of the State in which such action

is brought.

independent claim or cause of action,

which would be removable if sued upon

alone, is joined with one or more other-

wise nonremovable claims or causes of

action, the entire case may be removed and

the district court may determine all

issues therein, or, in its discretion, may

remand all matters not otherwise within

its original jurisdiction.

(ad) Any civil action brought in

a State court against a foreign state as

defined in section 1603(a) of this title

{ ] may be removed by the foreign state to

the district court of the United States

for the district and division embracing

the place where such action is pending.

Upon removal the action shall be tried by

the court without jury. Where removal is

based upon this subsection, the time

D-10

limitations of section 1446(b) of this

chapter [ ] may be enlarged at any time

for cause shown.

Ingl1/S

"7 ‘

ea DAO AG

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.