USCA1 Opinion
[Not for Publication]
United States Court of Appeals
For the First Circuit
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No. 95-2227
GERALD W. CLEMENTE,
Plaintiff, Appellant,
v.
ROBERT Q. CRANE, ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Cyr and Lynch, Circuit Judges.
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Richard E. Bachman, with whom John A. King and Hale, Sanderson,
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Byrnes & Morton were on brief, for appellant.
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Salvatore M. Giorlandino, Assistant Attorney General, with whom
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Scott Harshbarger, Attorney General, and Phyllis N. Crockett,
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Assistant Attorney General, were on brief, for appellees.
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OCTOBER 09, 1996
OCTOBER 09, 1996
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LYNCH, Circuit Judge. The Commonwealth of
LYNCH, Circuit Judge.
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Massachusetts State Board of Retirement terminated plaintiff
Gerald W. Clemente's disability retirement and group
insurance benefits because of his conviction of a crime four
years earlier. Clemente had been federally prosecuted and
convicted for his involvement in the theft and sale of police
promotional exams, a scheme popularly known as the "Exam
Scam." See generally United States v. Doherty, 867 F.2d 47
___ _________ _____________ _______
(1st Cir.), cert. denied, 492 U.S. 918 (1989). Clemente's
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crime, the Board reasoned, involved the funds or property of
a state agency and so justified the termination of Clemente's
benefits under Mass. Gen. L. ch. 32, 15(1), (3). Clemente
did not receive prior notice of the impending termination of
benefits; nor was he given an opportunity to be heard. Four
years after the termination, after Clemente had appealed the
decision through the state administrative process, the Board
finally held a hearing. It then determined that Clemente was
not entitled to receive the benefits the Board had earlier
stopped paying. The Board also determined that Clemente owed
an agency of the Commonwealth, the Metropolitan District
Commission ("MDC"), sums in restitution for his crime.
In the interim, Clemente had filed this action
alleging procedural and substantive due process violations.
The district court held that the Board's initial termination
of Clemente's benefits violated Clemente's constitutional
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right to procedural due process and that the defendant Board
members were individually liable. The court determined that
Clemente's federal damages were the payments he would have
received up to the time of an adequate hearing and then
"offset" the damages by the restitutionary amount the Board
had determined Clemente owed to the MDC on account of his
crimes, an amount apparently greater than the damages
suffered. Clemente appeals from the judgment, complaining
primarily of the offset. We affirm.
I. Background
Clemente worked as a police officer with the MDC
until May 28, 1983, when the Board granted him an accidental
disability retirement due to his hypertension, which
prevented him from working. Clemente thereafter received a
monthly allowance from the State Retirement System as well as
group medical insurance benefits for himself and his wife.
In November 1986, Clemente pleaded guilty to a federal
racketeering charge. He had participated in a scheme to
defraud the Commonwealth by stealing police promotional
exams, giving or selling them to others, and altering scores.
In 1988, the Board requested an opinion from the State
Attorney General as to the effect of the conviction on
Clemente's entitlement to pension benefits. The Attorney
General responded in June 1990, advising the Board that the
Exam Scam scheme, to the extent that it actually succeeded,
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was a crime that involved MDC funds or property within the
meaning of Mass. Gen. L. ch. 32, 15.1
In July 1990, without giving Clemente notice that
such an action was contemplated, the Board voted to terminate
his benefits based upon its determination that his
racketeering conviction was for an offense which involved the
funds or property of the MDC. The Board then notified
Clemente of its action and ceased paying benefits.
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1. The relevant portions of Mass. Gen. L. ch. 32, 15 read
as follows:
(1) Misappropriation of Funds. Any
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member who has been charged with the
misappropriation of funds or property of
any governmental unit in which or by
which he is employed or was employed at
the time of his retirement or termination
of service . . . and who files a written
request therefor shall be granted a
hearing by the board . . . . If the
board after the hearing finds the charges
to be true, such member shall forfeit all
rights . . . to a retirement allowance or
to a return of his accumulated total
deductions . . . to the extent of the
amount so found to be misappropriated and
to the extent of the costs of the
investigation, if any, as found by the
board. . . .
(3) Forfeiture of Rights upon
________________________________
Conviction. In no event shall any member
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after final conviction of an offense
involving the funds or property of a
governmental unit . . . referred to in
subdivision (1) of this section, be
entitled to receive a retirement
allowance or a return of his accumulated
total deductions . . . unless and until
full restitution for any such
misappropriation has been made.
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Clemente appealed to the Contributory Retirement
Appeal Board, which, in September 1992, remanded the matter
to the Board and directed the Board to hold a hearing if
Clemente so requested. In 1994, the Board finally notified
Clemente of its intent to initiate misappropriation charges
and then held a hearing upon his request. On January 4,
1995, the Board issued a decision finding that Clemente had
misappropriated MDC funds and owed restitution to the MDC in
the amount of $239,146 plus interest and ordered forfeited
all his rights to his retirement allowance and accumulated
deductions.2
In 1993, while the state administrative action was
pending but before the Board had given him a hearing,
Clemente filed this federal action under 42 U.S.C. 1983
against the Commonwealth, the Board, and the members who
served on the Board when Clemente's benefits were terminated
in 1990. Clemente claimed that the defendants terminated his
disability retirement allowance and medical benefits without
notice or a hearing, thus violating his rights to both
substantive and procedural due process. He also claimed that
the termination constituted further punishment for his
participation in the Exam Scam, thus violating his right to
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2. The Board found that "Clemente misappropriated the amount
of $216,175.00 from the MDC, and that he is responsible for
$22,971.00 in costs of investigation. The total amount of
restitution due the MDC is the principal amount of
$239,146.00, plus interest."
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be free from double jeopardy. He requested damages for these
constitutional violations.3 The district court dismissed the
claims against the Commonwealth and the Board, as well as the
claims against the Board members in their official
capacities. The Board members in their individual capacities
are thus the only remaining defendants.
The district court withheld decision on the matter
until after the Board issued its January 1995 decision.
Thereafter, on cross motions for summary judgment, the
district court held that the Board had violated Clemente's
procedural due process rights by failing to give him notice
and a hearing before terminating his benefits. The
defendants did not dispute that Clemente had a
constitutionally protected property interest in the benefits,
and that, under state law, he was entitled to notice and an
opportunity to be heard before the Board terminated the
benefits. The district court rejected the defendants'
argument that the Board's actions were "random and
unauthorized" acts that could be cured by a post-deprivation
hearing under Parratt v. Taylor, 451 U.S. 527, 541 (1981),
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overruled in part on other grounds, Daniels v. Williams, 474
___________________________________ _______ ________
U.S. 327, 330 (1986), and rejected the defendants' claims of
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3. In his complaint, Clemente also sought prospective
relief, but after the Board held a hearing on the matter,
these prayers were not pursued, although they have not been
formally dismissed.
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qualified immunity. In addition, the court held that
Clemente's substantive due process rights had not been
violated, and it also rejected his double jeopardy claim,
holding that the termination of payments was not punitive,
and even if it were, that the Board's action was not
unconstitutional because the criminal prosecution and the
termination proceedings were brought by separate sovereigns.
The district court accepted Clemente's contention
that the "deprivation decision could have been made no faster
in a proper fashion." Therefore, the district court
calculated damages from the due process violation to be the
pension benefits Clemente would have received from the time
the benefits were terminated until the January 1995 decision,
as well as out-of-pocket medical expenses that would have
been covered under the health insurance plan. That amount
was $104,064.85, plus interest. However, the district court
also determined that "[t]his amount may be used to offset the
restitution amount Clemente owes as a result of the
defendants' January 4, 1995, decision." Clemente has
appealed both the award of the offset and the rejection of
his double jeopardy claim.4
II. Double Jeopardy
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4. Defendants have not appealed from the judgment.
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Clemente appeals the district court's holding that
the Double Jeopardy Clause did not bar the termination of his
benefits. Even assuming arguendo that the Board's
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termination of Clemente's benefits constituted punishment,5
the doctrine of double jeopardy does not apply to suits
brought by separate sovereigns. Abbate v. United States, 359
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U.S. 187, 194 (1959); United States v. 40 Moon Hill Road, 884
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F.2d 41, 43 (1st Cir. 1989). Clemente was convicted of a
federal offense in federal court. The Double Jeopardy Clause
does not bar later action by the Commonwealth to terminate
benefits and thereby recover sums it lost due to the offense,
even if the termination were in part punitive.
III. The Offset
Clemente challenges the offset, arguing that it
should be reversed because it was not timely pleaded6 and
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5. The district court held that the termination of benefits
was purely remedial because it found that "[o]nce the MDC has
been fully reimbursed for the funds or property Clemente
allegedly misappropriated, Clemente will be entitled to
receive the remainder of his pension payments." This finding
was apparently based upon a 1990 letter written by the
Board's legal counsel. However, in its January 1995
decision, the Board stated that "[Clemente] is ineligible for
any retirement allowance under the provisions of sections 1-
28, regardless of whether he ever makes restitution or
whether the Board recovers misappropriated funds from the
other MDC co-conspirators." Because we affirm summary
judgment on the double jeopardy claim on the separate
sovereign theory, we need not decide whether the termination
was punitive in nature.
6. Defendants first raised the issue in pleadings filed
after the summary judgment motion. While the defendants ran
a risk in being so dilatory, the district court reached the
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because the Board's order did not establish a legally
enforceable debt for the amount of restitution. The
defendants counter by characterizing the district court's
judgment as a permanent injunction, warranted by the equities
in the case, and argue that the district court did not abuse
its equitable discretion in formulating such relief. The
defendants also argue that the offset was appropriate to
prevent a windfall to Clemente.7
As the Supreme Court said in Carey v. Piphus, 435
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U.S. 247, 258-59 (1978):
In order to further the purpose of
1983, the rules governing compensation
for injuries caused by the deprivation of
constitutional rights should be tailored
to the interests protected by the
particular right in question -- just as
the common-law rules of damages
themselves were defined by the interests
protected in the various branches of tort
law.
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issue and there was adequate opportunity for Clemente to be
heard. We reach the issue as well.
7. The defendants assert further that there was no
procedural due process violation, or alternatively, that
there were no actual damages. However, because the
defendants failed to file a cross-appeal, we do not consider
the argument as to liability. An appellee is not permitted
to urge reversal of a judgment. United States v. Lumbermens'
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Mut. Casualty Co., 917 F.2d 654, 658 n.6 (1st Cir. 1990);
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Bath Iron Works Corp. v. White, 584 F.2d 569, 573 n.2 (1st
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Cir. 1978); 15A Wright et al., Federal Practice and Procedure
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3904, at 196 (2d ed. 1992). Nor have the defendants
appealed from the measure of damages awarded before the
offset, and so we do not express any views on the propriety
ab initio of that award.
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Here, the district court was concerned about fashioning an
award to the plaintiff that would "redress," to use the
language of 1983, his actual injuries. The court's order
was intended to permit "judgment to be rendered that does
justice in view of the one transaction as a whole."
Rothensies v. Electric Storage Battery Co., 329 U.S. 296, 299
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(1946).
The remedial order is to be read as a whole and
provides:
The clerk is directed to enter
judgment for the plaintiff directing
defendants first to apply as an offset to
the restitutionary award made against
plaintiff by the defendants' decision of
January 4, 1995, an amount equal to the
[damages plaintiff suffered in terms of
pension benefits and medical expenses].
The order also establishes a mechanism that accommodates the
fact that Clemente has appealed the Board's January 4, 1995
decision in state court:
The Board's January 4, 1995 decision
recites that such an offset would be "far
exceeded by the principle [sic] amount of
restitution due." Under the
circumstances, it does not appear
necessary for this court to calculate the
precise offset in order to adjudicate the
issues between the parties in this
litigation. Of course, if there is such
a dispute, it may be resolved in light of
the principles developed in this
Memorandum, through the ordinary
administrative process.
By this mechanism, we understand that should the state court
reject or revise the Board's decision, a corollary adjustment
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would be made in the amount, if any, recoverable under the
federal order. The issue here is whether such an order was
within the power of the court and represented a proper
exercise of its discretion.
Clemente is correct that this is not a classic
"set-off," within the technical meaning of the term. A "set-
off" is a "'counter-claim demand which defendant holds
against plaintiff, arising out of a transaction extrinsic of
plaintiff's cause of action.'" United Structures of Am.,
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Inc. v. G.R.G. Eng'g, S.E., 9 F.3d 996, 998 (1st Cir. 1993)
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(quoting Black's Law Dictionary 1230 (5th ed. 1979)). In
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this case, however, the debts were not reciprocal, as is
usually true in a set-off. Clemente's damages ran only
against the members of the Board in their individual
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capacities,8 while the restitution award was due the MDC, an
agency of the Commonwealth. Thus, the mutuality of debt
generally required to support a set-off was lacking.9 But
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8. The claims against the Commonwealth and the Board were
dismissed and the federal claims were dismissed insofar as
they sought retroactive damages against the members in their
official capacities.
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9. Some courts have held that there is an equitable
exception to the mutuality requirement when it "becomes
necessary to effect a clear equity or to prevent irremediable
injustice." Black & Decker Mfg. Co. v. Union Trust Co., 4
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N.E.2d 929, 930 (Ohio App. Ct. 1936). We find it unnecessary
to reach this issue.
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Clemente's argument that it is not a set off10 in the
end proves nothing.
Despite defendants' inappropriate characterization
of the relief as injunctive relief, we believe the district
court was exercising its equitable judgment in fashioning the
remedy. We start with the premise that "[t]he measure of
damages in section 1983 actions is a matter of federal common
law." Figueroa-Rodriguez v. Aquino, 863 F.2d 1037, 1045 (1st
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Cir. 1988); see also Sullivan v. Little Hunting Park, Inc.
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396 U.S. 229, 240 (1969) ("The rule of damages, whether drawn
from federal or state sources, is a federal rule responsive
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10. One response to Clemente's argument is that even the law
of damages recognizes in certain instances the
appropriateness of offsetting awards, under the guise of
"recoupment." A recoupment is "'a reduction or rebate by
the defendant of part of the plaintiff's claim because of a
right in the defendant arising out of the same transaction.'"
United Structures, 9 F.3d at 998 (quoting Black's Law
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Dictionary 1147 (5th ed. 1979)). Recoupment may only be
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asserted to diminish or defeat a plaintiff's claim. Reiter
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v. Cooper, 507 U.S. 258, 264 (1993); Nashville Lodging Co. v.
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Resolution Trust Corp., 59 F.3d 236, 246 (D.C. Cir. 1995); 6
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Wright et al., Federal Practice and Procedure 1401, at 10
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(2d ed. 1990). In United Structures, 9 F.3d at 999, then-
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Chief Judge Breyer pointed out the relevance of the doctrine
of recoupment to cases such as Clemente's:
Recoupment . . . is "in the nature
of a defense" and is intended to "permit
. . . judgment to be rendered that does
justice in view of the one transaction as
a whole."
Id. (quoting Rothensies, 329 U.S. at 299). The court in
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United Structures further commented that the plaintiff "has,
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in a sense, no right to funds subject to recoupment." Id. at
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998.
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to the need whenever a federal right is impaired."). We
review the exercise of equitable jurisdiction under an abuse
of discretion standard. Ferrofluidics Corp. v. Advanced
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Vacuum Components, Inc., 968 F.2d 1463, 1471 (1st Cir. 1992).
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In federal courts, law and equity jurisdictions are
merged. Fed. R. Civ. P. 2. Thus, Clemente's legal argument
on set off does not cut back on the court's equitable
remedial power. One commentator has noted that "[a]fter
merger, a court having both law and equity powers may give
the plaintiff any remedy justified by pleading and proof." 2
Dobbs, Law of Remedies 2.6(1), at 150 (2d ed. 1993). The
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ancient distinctions between law and equity, helpful in some
contexts, see Beacon Theatres, Inc. v. Westover, 359 U.S. 500
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(1959), are less so here. "[W]ith the merger of law and
equity it is difficult to see why equitable defenses should
be limited to equitable suits anymore, and of course many are
not so limited . . . ." Byron v. Clay, 867 F.2d 1049, 1052
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(7th Cir. 1989) (Posner, J.).11 Courts also have articulated
the broader principle "that adjures a court to consider the
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11. Upholding in Byron the dismissal of a 1983 action
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brought by a former government employee who had been
discharged for political reasons and who sought reinstatement
to a "ghost job" (a job for which no work was required but
for which a salary was paid), Judge Posner noted: "It is
enough to observe that a highwayman who decided to sue his
partner for common law damages as well as for an equitable
accounting for profits would surely have gotten no further
with his 'legal' claim than with his 'equitable' one." Id.
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third party effects of equitable relief and to shape that
relief accordingly." Id. at 1051.
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In fashioning a remedy under 1983, trial judges
may consider the equities of the matter. "[T]he hallmark of
equity is the ability to assess all relevant facts and
circumstances and tailor appropriate relief on a case by case
basis." Rosario-Torres v. Hernandez-Colon, 889 F.2d 314, 321
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(1st Cir. 1989) (en banc) (whether to reinstate a public
employee fired in violation of 1983 is within the
discretion of trial court); see also Walker v. Waltham Hous.
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Auth., 44 F.3d 1042, 1048 (1st Cir. 1995) (trial judge was
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"unquestionably within her authority in holding that the
equities did not warrant [reinstatement to public job]").
"The substantive scope of relief available is a matter of the
equitable powers of the federal courts. Accordingly, courts
have exercised broad remedial power in civil rights actions."
Knecht v. Gillman, 488 F.2d 1136, 1140 (8th Cir. 1973).
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Whatever the limits of a federal court's equitable remedial
power in an action under 42 U.S.C. 1983, we believe the
"restitution" order here is well within that scope and was
proper. Restitution orders requiring criminals to restore
the victim to the victim's original position are of venerable
origin. See Note, Victim Restitution in the Criminal
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Process; A Procedural Analysis, 97 Harv. L. Rev. 931, 933
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(1984).
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Here, due to the mechanisms implementing Eleventh
Amendment guaranties, the damages were awarded against
individual defendants, and the restitution was owed not to
these defendants, but to a state agency. See Hafer v. Melo,
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502 U.S. 21, 26-30 (1991). However, we think the district
court was entitled to consider the close relationship between
the individual defendants -- state officials -- and the
state. In fact, defendants were exercising their
responsibilities as state officials in the very activities
that gave rise to this litigation.
Despite the distinction between the individual
defendants and the state agency, the district court could
look to the underlying reality of the situation. "The
essence of equity jurisdiction has been the power . . . to
mould each decree to the necessities of the particular case."
Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944). This is an
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unusual case, with a fact pattern not likely to recur, and we
think the district court was sensitive to the realities. The
alleged procedural due process violation and the basis for
the assertion of the setoff arise from related questions as
to what plaintiff is in fact due by way of benefits,
questions arising from the statutory scheme the Commonwealth
has created in Gen. L. ch. 30. These are not unrelated
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parties or unrelated matters.12 Indeed, the order was
entered against a backdrop in which the Board, after giving
Clemente the hearing to which he was entitled, found that he
was not entitled to benefits.
Clemente argues strenuously that reversing the
offset will produce no windfall because there is no right of
recoupment unless he wishes to have his pension rights
reinstated under Mass. Gen. L. ch. 32, 15.13 The state
courts will address the state law issues here on Clemente's
appeal from the Board's order. The district court order
provides a mechanism for adjustment which, depending on the
outcome of that appeal, should avoid the problem of
overpayment to either side. In any event, the state law
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12. As a result, we express no views on whether such a
restitutionary order in favor of a truly independent third
party, or based on unrelated transactions, could be used to
set off a judgment.
13. This may or may not be a correct reading of state law.
For example, Mass. Gen. L. ch. 32, 15(1) provides that
"[i]f the Board after the hearing finds the charges [of
misappropriation] to be true, such member shall forfeit all
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rights . . . ." Id. (emphasis added); see also DeLeire v.
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Contributory Retirement Appeal Bd., 605 N.E.2d 313, 316
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(Mass. App. Ct. 1993) ("In accordance with G.L. c. 32
10(4), [plaintiff] is entitled to the return of his
accumulated total deductions. That right is qualified,
however, by G.L. c. 32 15(3), which provides that, upon
conviction of an offense involving misappropriation of any
funds of the governmental unit in which the person was
employed, such return is conditioned upon the making of full
restitution of the funds misappropriated."), rev. denied, 617
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N.E.2d 640 (Mass. 1993).
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issues, while informing the federal court's exercise of
discretion, do not define the limits of that discretion.
Each side cites to us the Eighth Circuit decisions
in Hankins v. Finnel, 964 F.2d 853 (8th Cir.), cert. denied,
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506 U.S. 1013 (1992) and Beeks v. Handley, 34 F.3d 658 (8th
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Cir. 1994). While neither Hankins nor Beeks is on point (and
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each raises issues extraneous to this case), we agree with
the Eighth Circuit that 1983 relief must be consistent with
the deterrence goal inherent in 1983. An important purpose
of 1983 is "to serve as a deterrent against future
constitutional deprivations." Owen v. City of Independence,
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445 U.S. 622, 651 (1980). Along with the Beeks court we
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conclude that "victim restitution does not defeat 1983's
deterrence goal.14 Beeks, 34 F.3d at 661; see also Doe v.
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Morgenthau, 871 F. Supp. 605, 611 (S.D.N.Y. 1994) ("Any claim
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. . . on behalf of plaintiff's victims would be an offset to
plaintiff's claims against the People and could be asserted
as of right.").
Ultimately, the deterrence argument must also
accommodate "the factual permutations and the equitable
considerations they raise" on a case by case basis. McKennon
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14. Indeed, Clemente was awarded attorney's fees, not
subject to the offset. Attorney's fee awards are themselves
a deterrent. Congress must have believed so when, in a
related area of law, it enacted the 1991 Civil Rights Act,
which provides for recovery of attorney's fees in mixed
motive cases even when actual damages are unavailable. 42
U.S.C. 2000e-5(g)(2)(B).
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v. Nashville Banner Pub. Co., 115 S. Ct. 879, 886 (1995).
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While McKennon was an ADEA action, the related deterrence
________
argument there did not trump a damages remedy which fairly
accounts for a plaintiff's own wrongdoing. McKennon holds
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that where after-acquired evidence demonstrates an employer
would have terminated plaintiff anyway, even though the
employer had a discriminatory motive, the plaintiff, as a
general rule, is not entitled to front pay or reinstatement,
nor to back-pay damages extending beyond the time the
employer learned about the employee wrongdoing that would
have led to legitimate discharge.15 Id. The compensation
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analysis here fairly accounted for plaintiff's own wrongdoing
and does not undermine the deterrent effect of the statute.
IV. Conclusion
We conclude that the district court properly
granted summary judgment in favor of the defendants on the
plaintiff's double jeopardy claim and did not abuse its
discretion in fashioning the remedial order. We affirm the
judgment.
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15. It is not difficult to imagine a situation where, under
McKennon, an illegally discharged employee might win a civil
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rights suit, yet still walk away empty-handed, as Clemente
does in this case. For instance, if the employer discovers
the after-acquired evidence which would justify termination
on the same day as the illegal discharge, or shortly
afterwards, plaintiff's back-pay damages would be nonexistent
or minimal.
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