Opposition Brief — Easton v. Sundram

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IN THE = | 7 «|

Supreme Court of the United States ——

OCTOBER TERM, 1991

KARL EASTON, M.D.,

Petitioner,

—againsi—

CLARENCE J. SUNDRAM, PAUL STAVIS, WALTER E.

SAURACK, JOHN J. RYBALTOWSKI, BRUCE E. FEIG,

FRANCINE COURNOS, PAUL GLICKMAN, LOUIS J.

PATACK, KATHLEEN SWEENEY and ILENE MARGOLIN,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

ROBERT ABRAMS

Attorney General of the

a State of New York

Attorney for Respondents

120 Broadway

New York, New York 10271

(212) 416-8648

JERRY BOONE >

Solicitor General of

the State of New York

LAUREL WEINSTEIN EISNER*

Assistant Attorney General

Of Counsel

*Counsel of Record

TABLE OF CONTENTS

BABA CF ARTIBORITIES 6 ic cc sca ccccecuswscaces

Ee ae yo en er rn

REASONS FOR DENYING THE WRIT............

A. The Court Below Correctly Ruled That Peti-

tioner’s Allegations Of Malicious Civil Prose-

cution Fail To State A Claim Under 42 U.S.C.

DP We CNAs ee hv sceeee wa saeoeineued ensues

B. The Court Below Correctly Declined To

Expand The Definition Of A Constitutional

Claim Based On Defamation As Set Forth By

This Court in Paul v. Davis, Board of Regents

v. Roth And Siegert v. Gilley...............

ee ee Pere eee Serer TTT eer rrr rrr

PAGE

TABLE OF AUTHORITIES

Cases PAGE

Blum v. Yaretsky, 457 U.S. 991 (1982).............. 10

Board of Regents of State Colleges v. Roth, 408 U.S.

SOR CBFTS) oan vc vvcnciycekesthesstas ene 2,9

Friedman v. Village of Skokie, 763 F.2d 236 (7th Cir.

FOBT. onc dascveuentecne been the oeeee eee 7

Harlow vy. Fitzgerald, 457 U.S. 80 (1982)............ 7

Huffman v. Pursue, Ltd., 420 U.S. 592 (1975)....... 7,8

Juidece v. Vall, 490 U.S. 3b0 CUOVED cvcncciccncidaes 8

Lebbos v. Judges of the Superior Court, Santa Clara

County, 883 F.2d 810 (9th Cir. 1989) ............. 10

Middlesex County Ethics Committee v. Garden State

Bar Association, 457 U.S. 423 (1982) ............. 8

Neu v. Corcoran, 869 F.2d 662 (2d Cir.), cert. denied,

Ga WS. BS Clee hanes seeaeenevaseweetariees 5, 6, 9

Northern Westchester Professional Park Associates v.

Town of Bedford, 60 N.Y.2d 492 (1983) .......... 2

Parratt v. Taylor, 451 U.S. 527 (1981) .............. 6

Paul v. Davis, 424 U.S. G3 CISTG)... occ cc cccccnsees passim

Poopte ¥. GRRE, NO. DEGREE osc cs ccsvececdusasss 2, 4

Siegert v. Gilley, __ U.S. __, 111 S.Ct. 1789 (1991).. 9

Torres v. Superintendent of Police of Puerto Rico, 893

wo kb?) oe Ae, | Prey Te eer ee ee 7

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

Younger v. Harris, 401 U.S. 37 (1971) ..........00-:. 8

ill

PAGE

Constitutional and Statutory Provisions

eae S65) Wek 00's 40 ness aaodseenceva 4

| passim

New York Mental Hygiene Law § 31.28............. 3, 10

New York Mental Hygiene Law Article 45 .......... 3

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-1460

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KARL EASTON, M.D.,

Petitioner,

—against—

CLARENCE J. SUNDRAM, PAUL STAVIS, WALTER E.

SAURACK, JOHN J. RYBALTOWSKI, BRUCE E. FEIG,

FRANCINE COURNOS, PAUL GLICKMAN, LOUIS J.

PATACK, KATHLEEN SWEENEY and ILENE MARGOLIN,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

INTRODUCTION

Petitioner, a psychiatrist charged by the State of New York

with Medicaid and real estate fraud, seeks review of the deci-

sion of the United States Court of Appeals for the Second

Circuit affirming a decision of the District Court for the

Southern District of New York dismissing his complaint. The

opinion, reported at 947 F.2d 1011 (2d Cir. 1991) and repro-

duced in Appendix A to the Petition (Pet. la-14a), held, inter

alia, that petitioner’s allegations of malicious civil prosecu-

tion failed to rise to the level of a constitutional violation

under 42 U.S.C. § 1983. The court further held that respon-

dents were entitled to qualified immunity from petitioner’s

claim that he was deprived of a protected liberty interest

under the Fourteenth Amendment, in view of the court’s

prior interpretations of Paul v. Davis, 424 U.S. 693 (1976)

and Board of Regents of State Colleges v. Roth, 408 U.S.

564 (1972).

The petition should be denied because the decision of the

Court of Appeals was correct in all respects and the petition

raises no significant or important questions worthy of review

by this Court. The decision below was consistent with this

Court’s rulings on the limited circumstances in which a state

tort claim asserts a deprivation of constitutional magnitude,

and petitioner does not claim otherwise. He seeks, rather,

this Court’s opinions on broad constitutional questions

which, the court below concluded, were not necessary to the

decision in this case and whose resolution by this Court will

have no impact on the parties to this dispute, since respon-

dents are entitled to qualified immunity with respect to both

claims.

In addition, the petition neglects to advise the Court that

the dismissal of the underlying New York State civil enforce-

ment action,’ upon which petitioner’s claims here are based

(A. 319-411)’, is presently scheduled for an expedited appeal

to the Appellate Division, Second Department. That court is

authorized to review the facts de nuvo, particularly after a

bench trial. See Northern Westchester Professional Park

Associates v. Town of Bedford, 60 N.Y.2d 492 (1983).

Should the dismissal of the State’s complaint be reversed, all

of petitioner’s claims will become moot, thus further militat-

ing against issuance of the writ.

1 People of the State of New York, New York State Office of Mental

Health and New York State Department of Social Services v. Brooklyn

Psychosocial Rehabilitation Institute, 3 Lafayette Avenue Corpora-

tion, Cobble Hill Center Corporation, Dr. Karl Easton, Jacqualine

Easton, Irving Link and Theodore Rosten, App. Div. Index No. 91-

06269 (‘‘People v. BPRI’’).

2 Second Circuit Appendix, hereinafter ‘‘A’’.

STATEMENT OF THE CASE

Petitioner commenced this federal civil rights suit after a

State civil enforcement action charged that he had enriched

his family-owned realty corporations by fraudulently billing

Medicaid for non-existent services while operating a danger-

ously sub-standard mental health facility (BPRI) and improp-

erly retaining patient personal funds. (SA. 121-146).° The

civil suit was bused upon evidence of fiscal and patient abuse

uncovered by the State agency plaintiffs. (SA. 9, 36-72).

Upon app’ication by the plaintiffs, two justices of the New

York Supreme Court authorized the appointment of a

receiver to protect the mentally ill clients of the facility, pur-

suant to New York State Mental Hygiene Law (‘‘MHL’’)

§ 31.28. Following a lengthy trial before a Judicial Hearing

Officer (‘‘JHO”’’), the case was dismissed on the grounds that

the plaintiffs had failed to prove their allegations. As noted,

that determination is currently on appeal.

Before the JHO issued a decision in the State case, peti-

tioner brought this action in the United States District Court

for the Southern District of New York seeking $40 million in

damages against respondents in their individual and official

capacities. The pro se complaint, consisting of 310 para-

graphs of allegations and 1100 pages of exhibits from the

trial, alleged that ten officials from four State agencies,

including attorneys, psychiatrists, mental health and fiscal

analysts, agency administrators and consultants,* conspired to

3 Second Circuit Supplementary Appendix, hereinafter ‘‘SA.’’.

4 The defendants and their affiliations are as follows:

1) Clarence Sundram, Chairman of the New York State Com-

mission on Quality of Care for the Mentally Disabled (an indepen-

dent oversight agency established by Article 45 of the New York

Mental Hygiene Law) (‘‘CQC’’).

2) Paul Stavis, Counsel to CQC.

3) Walter E. Saurack, Chief of Fiscal Investigations/Cost

Effectiveness Bureau, CQC.

(Foctnote continued on next page)

intentionally lie about petitioner’s activities, persecute him,

defame him, deprive him of his property and of his job at

BPRI, and thus violate his constitutional rights and the pro-

visions of the ‘‘Civil RICO’’ statute, 18 U.S.C. § 1961 ef seq.

Petitioner also alleged that respondents committed numerous

common law torts including negligence, defamation and mali-

cious prosecution.

On July 12, 1990, in an unreported decision, the district

court (Sweet, J.) dismissed the complaint for failure to state

a federal claim. (Pet. 15a-29a). After the JHO dismissed the

State complaint, petitioner forwarded the decision to the dis-

trict court and moved for reargument. The court denied the

motion on January 14, 1991. (A. 412).

Petitioner raised several issues on appeal to the Second Cir-

cuit Court of Appeals, only two of which are relevant to this

petition: (a) whether petitioner’s claim of ‘‘malicious civil

prosecution,’’ based on People v. BPRI, rises to the level of

a constitutional violation, and (b) whether allegedly defama-

tory statements in a State agency report, combined with the

receiver’s termination of petitioner from his position at

BPRI, constituted ‘‘deprivation of liberty without due pro-

cess of law.”’

The Court of Appeals affirmed the district court’s dis-

missal of the complaint. The court acknowledged that a crim-

inal prosecution that ends in acquittal may, in some cases,

give rise to a cause of action under 42 U.S.C. § 1983, but

4) John J. Rybaltowski, Program Cost Analysi, CQC.

5) Bruce E. Feig, Executive Deputy Commissioner, New York

State Office of Mental Health (‘‘*OMH”’’).

6) Louis J. Patack, Assistant Counsel, OMH.

7) Francine Cournos, M.D., Psychiatric Consultant, OMH.

8) Kathleen Sweeney, Standards Compliance Analyst, OMH.

9) lene Margolin, former Special Assistant to the Governor of

the State of New York.

10) Paul Glickman, former Assistant Attorney General of the

State of New York.

found no precedent and no grounds for extending the consti-

tutional claim to a civil enforcement action.° Stating that to

the best of its knowledge ‘‘no other court to have considered

the question has [so] held’’ (Pet. App. 12a), the court noted

that ‘‘criminal malicious prosecution typically implicates con-

stitutional rights secured by the fourteenth amendment, such

as deprivation of liberty, that are not automatically impli-

cated in a malicious civil suit.’’ (Pet. 12a). Such rights

include freedom from extreme and shocking official miscon-

duct such as physical abuse, detention, unequal protection of

the law or invasion of privacy, none of which are alleged

here. Nor is such conduct generally implicated in a civil regu-

latory action, ‘‘even if broad-based and aggressive.”’

Pet. 13a.

Absent deprivation of such fundamental rights, the court

below rejected the argument that the alleged malicious civil

prosecution in this case was anything more than an action-

able state tort claim. It found that petitioner was not ‘‘sub-

jected to a misuse of the legal process so egregious as to

work a deprivation of a constitutional dimension.”’ (Pet. 13a-

14a).

With respect to petitioner’s claim that he was deprived of

liberty without due process of law, the court held that defen-

dants were entitled to qualified immunity since ‘‘the law of

this Circuit has not clearly established that the conduct that

Easton complains of rises to the level of a constitutional vio-

lation, rather than simply a state tort.’’ (Pet. 9a). Analyzing

its prior opinions, including Neu v. Corcoran, 869 F.2d 662

(2d Cir.), cert denied, 493 U.S. 816 (1989), in light of this

Court’s definition of ‘‘stigma plus’’ in Paul v. Davis, 424

U.S. at 701, the court adhered to its prior conclusion that

‘our cases have not ‘clearly established that defamation

5 The court also reiterated the necessity that a claimant allege all the

necessary elements of the state tort of malicious prosecution (Pet. Ila),

i.e., (1) initiation of a criminal action against the plaintiff, (2) with

malice, (3) without probable cause and 4) termination of the criminal

proceedings in plaintiff’s favor. See White v. Frank, 855 F.2d 956,

959, n.2 (2d Cir. 1988).

occurring other than in the course of dismissal from a gov-

ernment job or termination of some other legal right o[r] sta-

tus will suffice to constitute a deprivation of a liberty

interest.’ ’’ (Pet. 9a, quoting Neu v. Corcoran, 869 F.2d at

667).

The court additionally rejected petitioner’s ‘‘strained argu-

ment’’ that his termination by a court-appointed receiver con-

stituted loss of government employment. Questioning whether

the receiver was a state actor in this context, the court noted

that, in any event, petitioner was terminated from private,

not public employment. (Pet. 10a-1] 1a).

REASONS FOR DENYING THE WRIT

A. The Court Below Correctly Ruled That Petitioner’s Alle-

gations Of Malicious Civil Prosecution Fail To State A

Claim Under 42 U.S.C. § 1983.

This Court has consistently refused to elevate state com-

mon law torts to injuries of a constitutional magnitude. As

stated in the oft-quoted comment in Paul v. Davis, 424 U.S.

at 701, the Court should not ‘‘make of the Fourteenth

Amendment a font of tort law to be superimposed upon

whatever systems may already be administered by the

States. . . . [T]he procedural guarantees of the Due Process

Clause cannot be the source for [a body of general federal

tort] law.’’ Accord Parratt v. Taylor, 451 U.S. 527, 544

(1981).

Notwithstanding these decisions, petitioner seeks certiorari

expressly for the purpose of creating and defining a new fed-

eral cause of action in which an unsuccessful civil action by

state officials, allegedly brought with malice and without

probable cause, would provide the basis for a federal civil

rights remedy as well as a state common law tort claim for

damages, despite the absence of physical abuse or incarcera-

i i

tion. As the court below stated, no reported decision has

recognized such a federal claim.°

Petitioner’s assertion that there is a conflict among the cir-

cuit courts is thus inaccurate. It is only with respect to crimi-

nal malicious prosecution that any such differences exist.

Thus, some courts have recognized such a claim based on the

due process clause where the plaintiff has alleged the loss of

physical liberty, through false arrest or imprisonment. See

e.g., White v. Frank, 855 F.2d at 957. As petitioner correctly

notes, however, several courts have refused to elevate this

tort to a constitutional claim, see Friedman v. Village of Sko-

kie, 763 F.2d 236, 239 (7th Cir. 1985), or have done so only

in the face of abusive criminal proceedings so egregious as to

shock the conscience. See Torres v. Superintendent of Police

of Puerto Rico, 893 F.2d 404, 409 (ist Cir. 1990). In this

case, in contrast, petitioner alleges no loss of physical liberty

and no analogous deprivation of fundamental constitutional

rights. He therefore presents no basis for this Court to

‘‘examine and elucidate’ the contours of a constitutional

claim for civil malicious prosecution in this case. (Pet. 12).

In an effort to cure this defect, petitioner asserts that the

loss of his job and his professional reputation ‘‘had an enor-

mous negative effect upon him’’ which was ‘‘at least as great

as if he had been arrested and falsely charged by state crimi-

nal authorities.’’ (Pet. 10-11). Petitioner fails to articulate,

however, how this ‘‘negative effect’’ implicated rights guar-

anteed by the Constitution, except by reference to petitioner’s

proposed expansion of this Court’s and the lower court’s def-

inition of ‘‘stigma plus’’ to include loss of a private job.

Without a State deprivation of such protected rights, peti-

tioner’s argument for a federal cause of an action under sec-

tion 1983 for malicious civil prosecution remains flawed.

Petitioner’s analogy to Huffman v. Pursue, Ltd., 420 U.S.

592 (1975) and its progeny to bridge the gap between civil

6 The respondents in this case accordingly would be entitled to quali-

fied immunity from suit even if such a new cause of action were to be

established by this Court. Harlow v. Fitzgerald, 457 U.S. 800 (1982).

and criminal prosecutions misreads the significance of those

cases. Huffman extended the abstention doctrine of Younger

v. Harris, 401 U.S. 37 (1971) to certain state civil proceed-

ings. For the limited purpose of determining the propriety of

federal intervention in on-going state court proceedings,

Huffman recognized that civil and criminal actions alike

serve important state purposes and that considerations of

comity and federalism dictate federal judicial restraint in

both instances. 420 U.S. at 604.

Huffman noted the similarity between the civil and crimi-

nal statutes at issue in that particular case. It did not base its

holding primarily on that likeness, however, or minimize the

differences between criminal and civil proceedings for all pur-

poses, as petitioner seeks to do. Indeed, the Court later

applied the Huffman doctrine to civil proceedings without

regard to any resemblance to a criminal or quasi-criminal

action, based so/ely on the determination that the ‘‘federal-

court interference’’ would ‘‘ ‘unduly interfere[] with the

legitimate activities of the Stat[e].’’’ Juidice v. Vail, 430

U.S. 327, 335-336 (1977), quoting Younger v. Harris, 401

U.S. at 44; see also Middlesex County Ethics Committee v.

Garden State Bar Association, 457 U.S. 423, 432 (1982)

(abstention from interference in proceedings ‘‘necessary for

the vindication of important state policies or the functioning

of the state judicial system’’).

Petitioner ignores this over-riding concern for the princi-

ples of federalism and urges the opposite result. Rather than

abiding by the spirit of these cases, which counsel deference

to legitimate state judicial procedures, see Juidice v. Vail, 430

U.S. at 336, he seeks a federal constitutional overlay on state

tort law, which, in this case, provides full avenues of relief

for petitioner’s claim.

Petitioner’s interpretation of Huffman has troublesome

practical implications. A federal claim for state civil mali-

cious prosecution necessarily would encompass thousands of

regulatory schemes in each state, and open the federal flood-

gates to claims by disgruntled subjects of local regulation.

Such expansion of federal litigation is unwarranted given the

panoply of remedies available under state law. Indeed, peti-

tioner himself has had more than one full and fair post-

deprivation hearing in New York State courts, and has

notified the State of his intent to pursue his tort law remedies

as well.

B. The Court Below Correctly Declined To Expand The Def-

inition Of A Constitutional Claim Based On Defamation

As Set Forth By This Court in Paul v. Davis, Board of

Regents v. Roth And Siegert v. Gilley.

In Paul v. Davis, 424 U.S. 693, this Court articulated a

clear test for determining when an injury to reputation may

constitute a breach of rights guaranteed by the Fourteenth

Amendment. The defamation by a state official must have

occurred in connection with ‘‘governmental action. . . [that]

deprived the individual of a@ right previously held under state

law.”’ Id. at 7-8. (emphasis supplied). The “‘right’’ may be a

government job, as in Board of Regents v. Roth, 408 U.S.

564, or a ‘‘status previously recognized by state law .

[which is] officially remov[ed] . . . from the recognition and

protection previously afforded by the State... .’’ Paul v.

Davis 424 U.S. at 711. In recently reaffirming this ‘*stigma

plus’’ test in Siegert v. Gilley, |} Swe | eee A

1789, 1794 (1991), this Court further noted that the alleged

defamation must be uttered ‘‘incident to’’ the termination of

the protected right.’

The court below has declined on several occasions, includ-

ing the decision below, to broaden this ‘‘stigma plus’’ test to

include injuries not expressly protected by state law, see Neu

y. Corcoran, 869 F.2d at 667, such as petitioner’s loss of pri-

vate employment and his alleged ‘‘professional injury.’’ The

7 It is unclear how petitioner could meet the ‘‘incident to’’ standard in

any event since he alleges different components of the ‘‘stigma plus’’

claim against different respondents and waived his conspiracy claim

below. See Complaint, §§ 241-246 and 261-263 (A. §1-53), charging

respondents Sundram, Stavis, Rybaltowski and Saurack with defama-

tion and respondent Feig with wrongful dismissal.

petitioner proffers no reasons for this Court to review the

determination below other than his argument that the ‘‘state

appointed receiver’? must be considered a ‘‘state actor.’’

Pet. 13. The receiver, however, was a not-for-profit agency

appointed by two members of the State judiciary. Although

the State executive agencies requested the appointment, the

receiver had independent statutory authority and was directly

accountable at all times to the State court. See New York

State Mental Hygiene Law § 31.28. It is therefore highly

doubtful that the conduct of the receiver can be attributed to

the State for the purposes of meeting the test of state action.

See Blum v. Yaretsky, 457 U.S. 991 (1982) (nursing home’s

eligibility determinations, although designed to meet state

regulatory mandates, not state action).®

Furthermore, since it is indisputable that the receiver termi-

nated petitioner from a private job, he was not deprived of

any right or ‘‘status previously recognized under state law.’’

Paul v. Davis, 424 U.S. at 711. Therefore, even under peti-

tioner’s theory, he has presented no ‘‘stigma plus’’ question

worthy of this Court’s attention.

8 Petitioner’s reliance on Lebbos v. Judges of the Superior Court,

Santa Clara County, 883 F.2d 810, 818 n.10 (9th Cir. 1989) is thus

inapposite. In that case, plaintiff sued both the receiver and the judge

who appointed him to enforce an allegedly unconstitutional state law.

CONCLUSION

For all the foregoing reasons, the Petition for a Writ of

Certiorari should be denied.

Dated: New York, New York

April 7, 1992

Respectfully submitted,