Park Dean Kauffman Gaila M. Kauffman v. Anglo-American School of Sofia, an Unincorporated Association

28 F.3d 1223, 307 U.S. App. D.C. 356, 1994 U.S. App. LEXIS 17008, 1994 WL 326786

• Court: Court of Appeals for the D.C. Circuit
• Decided: July 12, 1994
• Docket: 92-5302
• Status: Published

Opinions

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

Concurring Opinion filed by Circuit Judge SENTELLE.

Dissenting Opinion filed by Chief Judge MIKVA.

STEPHEN F. WILLIAMS, Circuit Judge:

Park Dean Kauffman and Gaila M. Kauffman appeal the district court’s dismissal of their suit against the Anglo-American School of Sofia. Our disposition is controlled by FDIC v. Meyer, — U.S. -, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), which holds that a federal agency — even one as to which Congress has waived sovereign immunity — is not subject to liability in damages under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). We conclude that an entity that is not a federal agency, but that is constrained by the Constitution in some or all of its acts solely because of lesser links to the federal government, is equally exempt from Bivens liability. Because the Kauffmans’ only federal claims against the School rest on Bivens, we affirm the dismissal of the action.

‡ sj* # ❖ ❖

The Anglo-American School of Sofia was established in 1967 to provide elementary-level instruction to the children of American and British diplomats stationed in Sofia, Bulgaria. Though it was allegedly set up at the initiative of the U.S. Department of State, its amended charter proclaims that it is “a private and independent organisation” and “is not a subsidiary” of either the British or the American government. Still, the American and the British ambassadors to Bulgaria each appoint three members of the School’s 7-person governing board,¹ and all three of the American ambassador’s appointees are State Department employees. The School also receives part of its funding from the State Department.

Beginning in August 1984, Park Dean Kauffman served as Director of the School. Gaila M. Kauffman, his wife, was a teacher at the School. According to their complaint, both Kauffmans were under contract with the School through June 15, 1991. But in June 1989, the School’s governing board fired Mr. Kaufman. Mrs. Kauffman resigned her employment in order to remain with her husband.

Both Kauffmans filed suit in the United States District Court for the District of Columbia against the School and the three individual board members who had been appointed by the American ambassador. Their initial complaint raised no federal questions; jurisdiction was based instead on diversity of citizenship. Claiming breach of contract, tor-tious interference with contractual relations, wrongful discharge, and defamation, the Kauffmans sought compensatory damages of $300,000 and punitive and exemplary damages of $100,000.

In suing the School, however, the Kauffmans had failed to take account of its status as an unincorporated association. Under Federal Rule of Civil Procedure 17(b), an unincorporated association’s capacity to be sued “shall be determined by the law of the state in which the district court is held”. The one exception to this principle — that any unincorporated association “may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or laws of the United States” — was not triggered because the Kauffmans had raised no federal claims. And the District of Columbia does not allow unincorporated associations to be sued in their own names, at least over matters of local law. Pritchett v. Stillwell, 604 A.2d 886, 889 (D.C.1992); Lenkin v. Beckman, 575 A.2d 273, 277-78 (D.C.1990); Day v. Avery, 548 F.2d 1018, 1022-23 (D.C.Cir.1976); cf. Rules of Civil Procedure of the Superior Court of the District of Columbia, Rule 17(b). Accordingly, the School moved to dismiss the action against it.

The Kauffmans then amended their complaint. By this time, the U.S. Attorney’s Office for the District of Columbia had certified that the individual defendants “were acting within the scope of their employment as employees of the United States” at the time of Mr. Kauffman’s firing, with the result that the United States had been substituted as the party defendant with respect to the Kauffmans’ tort claims against the individual board members. See 28 U.S.C. § 2679(d)(1). The Kauffmans’ amended complaint added no new claims against the United States or the individual board members. But the complaint now alleged that the School “is controlled by the U.S. Government” and that its firing of Mr. Kauffman had violated the First and Fifth Amendments. Since the Kauff-mans continued to seek only damages and not any equitable relief, their federal claims thus rested on Bivens.²

The district court dismissed the Kauff-mans’ suit against all defendants. As to the School, the court held that it could not be considered a “government actor” under Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982). Mem.Op. at 5, 10. The Kauffmans appealed, but they expressly did not oppose the motion of “the federal appellees” — that is, the United States and the three individual board members — for summary affirmance, A panel of this court granted the unopposed motion on April 6, 1993. All that remains of this case, then, is the Kauffmans’ suit against the School itself.

The Bivens claims are the linchpin of the Kauffmans’ entire suit. Because the School is an unincorporated association, Rule 17 bars any suit in the absence of a federal claim. (Indeed, even with a viable federal claim, we might have no jurisdiction over the non-federal claims; federal courts lack pendent jurisdiction over claims that could not be brought in state court, see Promisel v. First Amer. Artificial Flowers, Inc., 943 F.2d 251, 257 (2d Cir.1991); cf. Local 20, Teamsters, Chauffeurs & Helpers Union v. Morton, 377 U.S. 252, 257, 84 S.Ct. 1253, 1257, 12 L.Ed.2d 280 (1964), and it is not clear whether an unincorporated association may be sued in its own name in District of Columbia courts on non-federal claims even when those claims are appended to a federal claim.)

In the initial round of briefing the parties argued about whether the district court had erred in cutting short this litigation by finding that the School was not sufficiently linked to the federal government to subject its treatment of the Kauffmans to constitutional limitations. The day after oral argument, however, the Supreme Court unanimously ruled that Bivens liability does not run against a federal agency, but only against individual federal agents. FDIC v. Meyer, — U.S. -, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). We requested supplemental briefing on whether a Bivens action may be brought against an entity like the School or only against the individual board members. Cf. United States Nat’l Bank of Oregon v. Independent Ins. Agents of America, — U.S. -, -, 113 S.Ct. 2173, 2178-79, 124 L.Ed.2d 402 (1993).

Of course, no Bivens action could conceivably lie unless the School is a federal actor, in the sense that its termination of Mr. Kauffman’s employment can be attributed to the federal government for purposes of the First and Fifth Amendments. Even if the School is a federal actor, however, it is not a federal agency: it is plainly a different sort of entity than the FSLIC, the agency at issue in Meyer. Still, the differences between a federal agency and an artificial person that is a federal actor seem to weaken, rather than strengthen, the case for a Bivens remedy. The remedy exists solely as a response to the problem of unconstitutional federal action. The presence of federal action here would be crystal clear if the School were part of a federal agency, but Meyer makes plain that even then a Bivens action would lie only against the offending individuals and not the School (even if the School had the capacity to sue and be sued, like the FSLIC). That the School’s link to federal authority is more tenuous does not make a Bivens remedy against it any more appropriate.

We do not think it matters whether the School is portrayed as an “all-purpose” federal actor or only as a federal actor with respect to the termination decision at issue here. Under either theory, the Kauffmans enjoy a constitutional claim only to the extent that the School’s decision to terminate Mr. Kauffman’s employment can be analogized to the decision of a federal agency. We think it untenable to draw this analogy for purposes of Bivens but not for purposes of Meyer.

To be sure, a panel of this court—albeit without an opinion that commanded a majority—once permitted a Bivens action to be brought against a private corporation whose agents had allegedly taken actions at the behest of, and in conjunction with, the federal government. See Reuber v. United States, 750 F.2d 1039, 1053-60 (D.C.Cir.1984) (opinion of Wald, J.); id. at 1063-65 (opinion of Bork, J.). Other circuits have allowed similar suits. See Schowengerdt v. General Dynamics Corp., 823 F.2d 1328, 1337-38 (9th Cir.1987); Dobyns v. E-Systems, Inc., 667 F.2d 1219 (5th Cir.1982); Yiamouyiannis v. Chemical Abstracts Serv., 521 F.2d 1392 (6th Cir.1975) (per curiam). Even the most thorough of these opinions, however, focused entirely on the question of whether Bivens could be extended from suits against conventional federal agents to ones against ostensibly “private” parties who are alleged to be federal actors—a topic of some controversy, see, e.g., Fletcher v. Rhode Island Hosp. Trust Nat’l Bank, 496 F.2d 927, 932 n. 8 (1st Cir.1974) (refusing to allow such actions); DeVargas v. Mason & Hanger-Silas Mason Co., Inc., 844 F.2d 714, 720 n. 5 (10th Cir.1988) (reserving this question). Having answered that question in the affirmative, Reu-ber and its fellow cases simply assumed without analysis that private entities were no less susceptible to Bivens actions than private individuals. See, e.g., Reuber, 750 F.2d at 1058 (Wald, J.) (“private status ... is not alone sufficient to counsel hesitation in implying a damages remedy”). Even before Meyer, other courts had rejected this assumption. See Shannon v. General Electric Co., 812 F.Supp. 308, 323 (N.D.N.Y.1993) (dismissing Bivens complaint because it was filed against private corporation instead of against individual corporate officers). But whatever its intrinsic appeal, Reuber’s assumption does not survive Meyer.

In fact, Reuber’s own logic counsels the rejection of this assumption in light of Meyer. The driving principle behind Reuber was that when a defendant is sufficiently connected to the government that his acts are subject to constitutional constraints, the availability of the Bivens remedy should not turn on the defendant’s nominal status as “private” or “public”. When that reasoning is combined with Meyer’s conclusion that public federal agencies are not subject to Bivens liability, it follows that equivalent private entities should not be liable either. Despite the dissent’s claims then, our holding respects rather than erodes Reuber’s basic principle: it affords the Kauffmans precisely the same Bivens remedies that they would have if the School were really a federal agency, as they claim it effectively was for purposes of its decision to fire Mr. Kauffman.

The dissent is on slightly firmer ground when it attempts to distinguish Meyer’s reasoning from the case at hand. As it observes, Meyer asserted that the purpose of the Bivens remedy is to deter unconstitutional actions by federal actors. See Meyer, — U.S. at -, 114 S.Ct. at 1005. But see Bivens, 403 U.S. at 397, 91 S.Ct. at 2005; id. at 407-08, 91 S.Ct. at 2010-11 (Harlan, J., concurring). Meyer argued that if given a choice, plaintiffs would have every reason to sue a federal agency instead of its individual officials, because this tactic would circumvent the qualified-immunity defenses that the individuals might be expected to raise. To the extent that aggrieved parties no longer brought damages actions against individual officers, Meyer continued, “the deterrent effects of the Bivens remedy would be lost”. — U.S. at -, 114 S.Ct. at 1005. Accordingly, to recognize Bivens actions against federal agencies would undermine Bivens itself.

The dissent contends that this reasoning does not apply in the context of private entities like the School, because we have afforded those entities the same qualified immunity as their agents enjoy. See Reuber, 750 F.2d at 1057 n. 25 (opinion of Wald, J.); id. at 1063-64 (opinion of Bork, J.). This argument has some force. But the premise of Meyer is that individual agents are not deterred by the threat of suit against their employers. If so, and if Meyer is correct about the purpose of Bivens remedies, then there would seem to be no affirmative reason to allow Bivens actions against entities of any sort, private or public. Further, on Meyer’s logic, provision of a damages remedy against a private entity would actively diminish the deterrent value of the remedy against the individual (though less than would a remedy against a federal agency enjoying no immunity at all). If such additional defendants were available (often with deeper pockets than the individual offenders), plaintiffs might make the same choice as the Kauffmans, who brought their Bivens actions only against the private entity and not against the individual board members. Even if plaintiffs sued both entity and individuals, they would likely focus collection efforts against the entity, with effects only partly blunted by the entity’s rights to contribution. To the extent that plaintiffs make such choices with any regularity, Meyer indicates that the deterrent effect of the Bivens remedy would be weakened. In sum, on Meyer’s deterrence rationale there is no affirmative reason to recognize Bivens actions against private entities, and there is some reason not to do so.

Meyer, moreover, advanced an independent ground for its decision. According to the Court, it was up to Congress to decide the questions of federal fiscal policy raised by the prospect of direct actions for damages against federal agencies; the potentially large financial drain on the government constituted a “special factor[] counselling hesitation” against the judicial creation of such a damages remedy. Meyer, — U.S. at -, 114 S.Ct. at 1005-06 (quoting Bivens, 403 U.S. at 396, 91 S.Ct. at 2004). The Kauffmans are wrong to claim that this rationale is inapplicable here. According to Mr. Kauffman’s own affidavit, the School was established primarily to serve the federal government’s interest in meeting the educational needs of its diplomats’ families; it is this same interest that explains the federal government’s continuing grants to the School. See 22 U.S.C. § 2701. If funds are diverted from the School’s coffers to liability payments, the government presumably will have to choose between allowing its interest to be served less well and spending more money to make up the shortfall — precisely the same choice that it would confront if Bivens actions could be brought against federal agencies. In other words, diversion of resources from a private entity created to advance federal interests has effects similar to those of diversion of resources directly from the Treasury.

More generally, Meyer expressed considerable reluctance to extend Bivens remedies beyond the sort of situation involved in Bivens itself. “In our most recent decisions,” the Court noted, “we have ‘responded cautiously to suggestions that Bivens remedies be extended into new contexts.’” Meyer, — U.S. at -, 114 S.Ct. at 1005 (quoting Schweiker v. Chilicky, 487 U.S. 412, 421, 108 S.Ct. 2460, 2466, 101 L.Ed.2d 370 (1988)). Despite the one precedent in this circuit assuming that Bivens actions may be brought against private entities if they may be brought against private individuals, and the handful of eases from other circuits making the same assumption,³ we think the present case presents such a “new context[]”.

Ultimately, however, our view that Meyer controls this case springs less from Meyer’s reasoning than from its interaction with Bivens itself. As Judge Wald observed in Reuber, “It is axiomatic that a Bivens action can be brought only against one who is engaged in governmental ... action_” Reuber, 750 F,2d at 1054 (opinion of Wald, J.). The dissent’s position — that Bivens actions against private entities should be recognized precisely because those entities are not part of the government — theretore seems perverse.

The Kauffmans advance two additional arguments that are similarly unpersuasive. To the extent that they rely on principles of sovereign immunity to explain why private entities might be susceptible to Bivens actions even though federal agencies are not, they ignore Meyer; there, the Supreme Court explicitly stated that the FSLIC was not subject to Bivens liability even though Congress had waived its sovereign immunity. — U.S. at - - -, 114 S.Ct. at 1004-05. The Kauffmans also claim that Federal Rule of Civil Procedure 17(b), which appears to contemplate suits against unincorporated associations for the purpose of enforcing constitutional rights, presupposes the existence of Bivens remedies against entities like the School. But as Rule 17(b) is entirely understandable in terms of providing a forum for equitable relief, there is absolutely no basis for the inference the Kauffmans would draw. Indeed, Rule 17(b) was adopted in 1937, four decades, before Bivens and five before Reuber.

We affirm the district court’s dismissal of the Kauffmans’ suit.

So ordered.

1 . The School’s charter indicates that the board has only six members, but the parties seem to agree that in fact it has seven. There is some dispute as to whether the seventh member is appointed by the Chairman of the Board or elected by the parent-teacher association.

2 . These claims coexist uneasily with another aspect of the Kauffmans' complaint. Presumably in an effort to defeat claims of official immunity in their suit against the individual defendants, the Kauffmans specifically alleged that the board members served in their "private and individual capacity” rather than as agents of the federal government. Indeed, the Kauffmans initially had characterized their entire case as "involving] common law claims” rather than constitutional ones. "There is no plausible way,” they had said, "to read Plaintiffs’ Complaint as a Bivens action.” Memorandum in Opposition to Defendants’ Motions for a Protective Order (Mar. 13, 1990) at 2.

3 . Two of the four circuits listed in the dissent as allowing plaintiffs to bring Bivens actions against private entities, Dissent at 1228-29, do not seem to us to do so. As the dissent recognizes, Morast v. Lance, 807 F.2d 926, 930 n. 5 (11th Cir.1987), merely assumed such liability without deciding it, going on to reject plaintiff’s claim on other grounds. As for Yiamouyiannis v. Chemical Abstracts Service, 521 F.2d 1392 (6th Cir.1975) (per curiam), the Sixth Circuit subsequently seemed to reverse its field, suggesting that Bivens actions do not lie against private defendants of any sort. See Wagner v. Metropolitan Nashville Airport Auth., 772 F.2d 227, 230 (6th Cir.1985); cf. id. at 231 n. 1 (Martin, X, concurring).