United States Court of Appeals,
Fifth Circuit.
No. 95-50067
Summary Calendar.
The STATE OF TEXAS, Plaintiff,
v.
Jesse THOMPSON, Defendant-Third Party Plaintiff-Appellee,
Chris HANGER and Benny Fisher, Third Party-Defendants-Appellants.
Dec. 8, 1995.
Appeal from the United States District Court for the Western District of Texas.
Before KING, SMITH and BENAVIDES, Circuit Judges.
PER CURIAM:
The sole issue in this interlocutory appeal is whether the
magistrate judge properly denied appellants' motion for summary
judgment based upon qualified immunity. We reverse in part and
dismiss in part.
FACTUAL AND PROCEDURAL BACKGROUND
The genesis of this controversy is a state court action filed
by the State of Texas seeking injunctive relief against appellee
Jesse Thompson. Thompson is a licensed aerial applicator of
chemicals. The State of Texas sought to compel Thompson to
relinquish application records to assist in an investigation of
citizen complaints about crop damage. In response, Thompson filed
a counterclaim asserting, inter alia, a § 1983 action against
1 Commissioner of the Texas Agriculture Department Rick Perry,1 Chris
Hanger, and Benny Fisher. This counterclaim led to the removal of
the case to federal district court.
Thompson's § 1983 claim grew out of an investigation by the
Texas Department of Agriculture ("TDA") into cotton crop damage in
Bogota, Texas. Thompson alleges that Fisher, the TDA investigator
handling the complaint, engaged in a "crusade" telling former and
potential customers that Thompson was a habitual law violator who
should not be allowed to continue in business. Thompson alleges
that Hanger, then assistant general counsel to TDA, was a
participant in this campaign by personally communicating to
Thompson's customers false assertions concerning Thompson's
habitual violations. Thompson contends that as a result of this
defamation, he was forced out of business and into bankruptcy, thus
depriving him of a liberty interest.
Fisher and Hanger moved for summary judgment on the § 1983
claim based upon qualified immunity. By agreement, the matter was
heard by the magistrate judge. Following a hearing, the court
denied the motion. This interlocutory appeal ensued pursuant to
Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S.Ct. 2806, 2817-18, 86
L.Ed.2d 411 (1985).
DISCUSSION
We review a denial of summary judgment based upon qualified
immunity in a § 1983 action de novo under well-established
1 By agreement of the parties, the magistrate judge granted judgment in favor of Perry leaving only the claims against Fisher and Hanger.
2 standards. See Reese v. Anderson, 926 F.2d 494, 498 (5th
Cir.1991). Summary judgment is proper if, when viewing the
evidence in the light most favorable to the nonmovant, the moving
party establishes that there is no genuine issue as to any material
fact and that it is entitled to judgment as a matter of law.
Fraire v. City of Arlington, 957 F.2d 1268, 1273 (5th Cir.1992),
cert. denied, --- U.S. ----, 113 S.Ct. 462, 121 L.Ed.2d 371.
The first step in assessing a claim of qualified immunity is
to ascertain whether the plaintiff has alleged the violation of a
clearly established constitutional right. Siegert v. Gilley, 500
U.S. 226, 231, 111 S.Ct. 1789, 1792-93, 114 L.Ed.2d 277 (1991).
Allegations of damage to one's reputation or the impairment of
future employment prospects fail to state a claim of denial of a
constitutional right. Id. at 233-34, 111 S.Ct. at 1793-94.
However, damage to an individual's reputation as a result of
defamatory statements made by a state actor, accompanied by an
infringement of some other interest, is actionable under § 1983.
See Paul v. Davis, 424 U.S. 693, 710-12, 96 S.Ct. 1155, 1164-66, 47
L.Ed.2d 405 (1976). We have described this as a
"stigma-plus-infringement" test. San Jacinto Sav. & Loan v. Kacal,
928 F.2d 697, 701 (5th Cir.1991). To meet the stigma prong, a
plaintiff must show that the stigma was caused by concrete, false
factual assertions by a state actor. Id. To establish the
infringement prong, a plaintiff must show that the state sought to
remove or significantly alter a life, liberty, or property interest
recognized and protected by state law or one of the incorporated
3 provisions of the Bill of Rights. Id. at 701-02. Appellants
concede that there are material issues of fact concerning the
stigma prong, but contend that Thompson cannot meet the
infringement prong. Fisher and Hanger maintain that the
deprivations alleged by Thompson are outside the scope of those
deprivations stating a viable liberty interest claim under the
Fourteenth Amendment.
In this case, Thompson asserts a liberty interest in
operating his business as an aerial applicator. This Court
recognizes that there is a liberty interest in operating a
legitimate business. Id. at 702; see Pogue v. City of Dallas, No.
93-1881, slip op. at 11-12, 1994 WL 574733 (5th Cir. Oct. 14,
1994). Appellants argue that Kacal is distinguishable contending
that their actions do not rise to the level of state action in that
case. In Kacal, summary judgment evidence reflected that the
police had a plan to shut-down a video arcade by harassing
customers with the specific intent of discouraging patronage. 928
F.2d at 699. This plan included physically blocking the entrance
to discourage customers, verbal harassment, and unlawful automobile
searches. Id. at 699-700. Fisher and Hanger maintain that for
Kacal to control, Thompson must show that they physically prevented
people from using Thompson's services or that their activities were
so widespread that none of Thompson's customers would use him.
However, Kacal is not so narrow as to embrace only those
situations where there are physical acts or complete cessation of
business. Rather, in Kacal we held that the plaintiff could
4 succeed in a § 1983 claim by showing that the officers, acting
under color of law, "sought to remove or significantly alter" the
plaintiff's liberty and property interests in operation of a
business. Id. at 704. In this case, Thompson's allegation is
similar to the one in Kacal—state actors, Fisher and Hanger, had a
plan to put Thompson out of business by telling customers that he
was a habitual law-breaker. Therefore, to avoid summary judgment
it is sufficient for Thompson to show that Fisher and Hanger's
actions were the direct cause of the failure of Thompson's
business. See id. at 704; Pogue, No. 93-1811, slip op. at 11.
Due to the state of the summary judgment evidence, the outcome of
this appeal differs for each appellant.
As for Fisher, issues of material fact exist regarding
whether Fisher's factual representations to third parties resulted
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United States Court of Appeals,
Fifth Circuit.
No. 95-50067
Summary Calendar.
The STATE OF TEXAS, Plaintiff,
v.
Jesse THOMPSON, Defendant-Third Party Plaintiff-Appellee,
Chris HANGER and Benny Fisher, Third Party-Defendants-Appellants.
Dec. 8, 1995.
Appeal from the United States District Court for the Western District of Texas.
Before KING, SMITH and BENAVIDES, Circuit Judges.
PER CURIAM:
The sole issue in this interlocutory appeal is whether the
magistrate judge properly denied appellants' motion for summary
judgment based upon qualified immunity. We reverse in part and
dismiss in part.
FACTUAL AND PROCEDURAL BACKGROUND
The genesis of this controversy is a state court action filed
by the State of Texas seeking injunctive relief against appellee
Jesse Thompson. Thompson is a licensed aerial applicator of
chemicals. The State of Texas sought to compel Thompson to
relinquish application records to assist in an investigation of
citizen complaints about crop damage. In response, Thompson filed
a counterclaim asserting, inter alia, a § 1983 action against
1 Commissioner of the Texas Agriculture Department Rick Perry,1 Chris
Hanger, and Benny Fisher. This counterclaim led to the removal of
the case to federal district court.
Thompson's § 1983 claim grew out of an investigation by the
Texas Department of Agriculture ("TDA") into cotton crop damage in
Bogota, Texas. Thompson alleges that Fisher, the TDA investigator
handling the complaint, engaged in a "crusade" telling former and
potential customers that Thompson was a habitual law violator who
should not be allowed to continue in business. Thompson alleges
that Hanger, then assistant general counsel to TDA, was a
participant in this campaign by personally communicating to
Thompson's customers false assertions concerning Thompson's
habitual violations. Thompson contends that as a result of this
defamation, he was forced out of business and into bankruptcy, thus
depriving him of a liberty interest.
Fisher and Hanger moved for summary judgment on the § 1983
claim based upon qualified immunity. By agreement, the matter was
heard by the magistrate judge. Following a hearing, the court
denied the motion. This interlocutory appeal ensued pursuant to
Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S.Ct. 2806, 2817-18, 86
L.Ed.2d 411 (1985).
DISCUSSION
We review a denial of summary judgment based upon qualified
immunity in a § 1983 action de novo under well-established
1 By agreement of the parties, the magistrate judge granted judgment in favor of Perry leaving only the claims against Fisher and Hanger.
2 standards. See Reese v. Anderson, 926 F.2d 494, 498 (5th
Cir.1991). Summary judgment is proper if, when viewing the
evidence in the light most favorable to the nonmovant, the moving
party establishes that there is no genuine issue as to any material
fact and that it is entitled to judgment as a matter of law.
Fraire v. City of Arlington, 957 F.2d 1268, 1273 (5th Cir.1992),
cert. denied, --- U.S. ----, 113 S.Ct. 462, 121 L.Ed.2d 371.
The first step in assessing a claim of qualified immunity is
to ascertain whether the plaintiff has alleged the violation of a
clearly established constitutional right. Siegert v. Gilley, 500
U.S. 226, 231, 111 S.Ct. 1789, 1792-93, 114 L.Ed.2d 277 (1991).
Allegations of damage to one's reputation or the impairment of
future employment prospects fail to state a claim of denial of a
constitutional right. Id. at 233-34, 111 S.Ct. at 1793-94.
However, damage to an individual's reputation as a result of
defamatory statements made by a state actor, accompanied by an
infringement of some other interest, is actionable under § 1983.
See Paul v. Davis, 424 U.S. 693, 710-12, 96 S.Ct. 1155, 1164-66, 47
L.Ed.2d 405 (1976). We have described this as a
"stigma-plus-infringement" test. San Jacinto Sav. & Loan v. Kacal,
928 F.2d 697, 701 (5th Cir.1991). To meet the stigma prong, a
plaintiff must show that the stigma was caused by concrete, false
factual assertions by a state actor. Id. To establish the
infringement prong, a plaintiff must show that the state sought to
remove or significantly alter a life, liberty, or property interest
recognized and protected by state law or one of the incorporated
3 provisions of the Bill of Rights. Id. at 701-02. Appellants
concede that there are material issues of fact concerning the
stigma prong, but contend that Thompson cannot meet the
infringement prong. Fisher and Hanger maintain that the
deprivations alleged by Thompson are outside the scope of those
deprivations stating a viable liberty interest claim under the
Fourteenth Amendment.
In this case, Thompson asserts a liberty interest in
operating his business as an aerial applicator. This Court
recognizes that there is a liberty interest in operating a
legitimate business. Id. at 702; see Pogue v. City of Dallas, No.
93-1881, slip op. at 11-12, 1994 WL 574733 (5th Cir. Oct. 14,
1994). Appellants argue that Kacal is distinguishable contending
that their actions do not rise to the level of state action in that
case. In Kacal, summary judgment evidence reflected that the
police had a plan to shut-down a video arcade by harassing
customers with the specific intent of discouraging patronage. 928
F.2d at 699. This plan included physically blocking the entrance
to discourage customers, verbal harassment, and unlawful automobile
searches. Id. at 699-700. Fisher and Hanger maintain that for
Kacal to control, Thompson must show that they physically prevented
people from using Thompson's services or that their activities were
so widespread that none of Thompson's customers would use him.
However, Kacal is not so narrow as to embrace only those
situations where there are physical acts or complete cessation of
business. Rather, in Kacal we held that the plaintiff could
4 succeed in a § 1983 claim by showing that the officers, acting
under color of law, "sought to remove or significantly alter" the
plaintiff's liberty and property interests in operation of a
business. Id. at 704. In this case, Thompson's allegation is
similar to the one in Kacal—state actors, Fisher and Hanger, had a
plan to put Thompson out of business by telling customers that he
was a habitual law-breaker. Therefore, to avoid summary judgment
it is sufficient for Thompson to show that Fisher and Hanger's
actions were the direct cause of the failure of Thompson's
business. See id. at 704; Pogue, No. 93-1811, slip op. at 11.
Due to the state of the summary judgment evidence, the outcome of
this appeal differs for each appellant.
As for Fisher, issues of material fact exist regarding
whether Fisher's factual representations to third parties resulted
in the loss of Thompson's business. The summary judgment evidence
is conflicting. While past customers of Thompson stated in their
depositions that they would use Thompson notwithstanding Fisher's
statements, Thompson himself has sworn that he has lost business as
a result of the comments and has been unable to remain financially
viable because he cannot maintain sufficient client base. In
addition, one former customer stated that he did not believe that
area farmers would use Thompson again. Whether Fisher's comments
directly caused Thompson to lose his business is a material fact
issue. Since disputed factual issues material to qualified
immunity are present, the denial of summary judgment sought on the
basis of qualified immunity is not appealable. Hale v. Townley, 45
5 F.3d 914, 918 (5th Cir.1995).
Hanger's appeal, however, resolves differently. Thompson
alleges that Hanger also participated in the defamation campaign by
contacting potential customers. Hanger submitted a sworn affidavit
that he did not specifically recall contacting Thompson's
customers. Thompson's only summary judgment evidence as to
Hanger's alleged false communications was stricken by the
magistrate judge.2 It is well-settled that the nonmoving party may
not rest upon mere allegations, but must designate specific facts
showing the existence of a genuine issue for trial. Anderson v.
Liberty Lobby, 477 U.S. 242, 250, 256-57, 106 S.Ct. 2505, 2511,
2514-15, 91 L.Ed.2d 202 (1986). In the absence of any competent
summary judgment evidence to support Thompson's claim against
Hanger, the denial of the summary judgment motion must be
reversed.3
2 The court's order does not reflect the grounds for granting the motion to strike. Presumably, the magistrate judge accepted the grounds Hanger asserted in his motion to strike. That is, the proffered evidence was an excerpt from a deposition in an unrelated case to which Hanger was not a party. He did not have notice of the deposition or opportunity to cross-examine the deponent. 3 Thompson's complaint also alleges that Hanger communicated with the Federal Aviation Administration concerning suspension of his flight privileges and that Hanger drafted a criminal complaint for Fisher against Thompson. The only summary judgment evidence concerning these two allegations comes from Hanger's own affidavit. Hanger explained that it was agency practice to make a courtesy referral to the FAA and that to his knowledge no action was taken by the FAA. As for the criminal complaint, he stated that he drafted the complaint after learning that Thompson had threatened Fisher with physical violence in the presence of a local deputy sheriff. This criminal complaint, however, was never filed. Consequently, there is no summary judgment evidence that these two actions had any effect on Thompson's business.
6 CONCLUSION
We DISMISS Fisher's appeal from the denial of summary judgment
based on qualified immunity for lack of jurisdiction. We REVERSE
the magistrate judge's denial of summary judgment for Hanger on
qualified immunity. This case is REMANDED to the court for further
proceedings consistent with this opinion.