William J. Benson v. William J. Scott and Herbert Caplan

734 F.2d 1181

• Court: Court of Appeals for the Seventh Circuit
• Decided: July 2, 1984
• Docket: 83-1040
• Status: Published

Opinions

ESCHBACH, Circuit Judge.¹

The appellant, William J. Benson, initiated this action under 42 U.S.C. § 1983 in the district court alleging that William J. Scott, former Illinois Attorney General, and Herbert Caplan, former Illinois First Assistant Attorney General, violated Benson’s rights under the First and Fourteenth Amendments. The district court entered summary judgment for the defendants, finding that they were entitled to qualified immunity from liability for their actions. We affirm the district court’s finding of immunity with respect to Benson’s due process claim. However, we disagree with the district court that the defendants are immune from suit on Benson’s First Amendment claim. Accordingly, we reverse the judgment of the district court on that claim, and remand the case for further proceedings.

I.

Benson was employed by the Illinois Department of Revenue (“Department”) from 1971 until 1976. On November 1, 1974, Benson entered into a one-year written employment contract with the Department to “undertake projects requiring personal and technical services as assigned by the Department of Revenue concerning pending investigations.” The contract was terminable at the will of either party upon written notice, and provided that Benson was to be paid $750 per month. The contract further stated: “It is expressly agreed that for liability insurance purposes only, William Benson will be considered an employee rather than an independent contractor.” A similar contract was entered commencing November 1, 1975, and terminating June 30, 1976. Benson was terminated from his employment on June 24, 1976.

Pursuant to his employment contract, Benson was assigned to assist in the enforcement of the Illinois Cigarette Tax Act, 1981 Ill.Rev.Stat. ch. 120, §§ 453.1-.67, against persons purchasing cigarettes in Indiana and bringing them into Illinois. Beginning in March 1975, eight civil rights actions were filed in federal district court concerning the Department’s enforcement of the Act. Benson was named as a defendant in four of those suits.

Initially, the Attorney General’s office represented all of the defendants in the civil rights actions. On September 2, 1976, the Attorney General’s office sent letters to the civil rights defendants informing them that the office was withdrawing appearances in all of the actions for everyone except the Attorney General because of conflicts of interest. The letter instructed the defendants: “You should immediately make arrangements to obtain your personal counsel at your own expense and substitute appearances before the hearing dates.” On October 1, the Attorney General formally withdrew his appearances for all defendants except himself. Thereafter, the Department assumed the cost of substitute representation for all Department defendants except Benson.

Benson was without counsel for approximately one year. On October 3, 1977, counsel, at the direction of and paid for by the insurance company, appeared on Benson’s behalf in the four actions in which he was a defendant. On October 19, 1977, Benson engaged private counsel to represent him in the actions.

On December 3, 1977, the Illinois Representation and Indemnification of State Employees Act (“Indemnification Act”), 1981 Ill.Rev.Stat. eh. 127, §§ 1301-02, became effective.² The Indemnification Act provides for representation by the Attorney General for employees of the state sued for acts or omissions committed during the course of their employment. It also provides that in the event the Attorney General must withdraw because of a conflict of interest, the state will reimburse the employee for the costs incurred in obtaining his or her own counsel. The statute expressly excludes independent contractors from its coverage.

On October 28, 1977, Benson requested the Attorney General’s office to provide him with representation in the civil rights actions pursuant to the Indemnification Act. On February 22, 1978, defendant Herbert Caplan, responding by letter to Benson’s request, stated:

Your letter requesting representation pursuant to [the Indemnification Act] has been reviewed. We are informed that your relationship with the Illinois Department of Revenue was pursuant to contract.... [I]t appears that you were not an employee within the definition of section 1(b) of the act and would not be entitled to its provisions.

Beginning in December, 1978, the state liability insurer assumed the costs of Benson’s privately-retained counsel. On March 9, 1981, the claims against Benson were settled and dismissed with prejudice by the court. The settlement did not involve any payment by Benson. Benson did, however, incur the expenses of his counsel from October 19, 1977 to December, 1978.

Benson filed this action on November 24, 1981, against defendants Scott and Caplan. The complaint alleges that the defendants refused to reimburse Benson for his legal expenses in retaliation for Benson’s dissemination to the news media and law enforcement agencies of information and evidence concerning Department officials’ selective enforcement of the Cigarette Tax Act and improprieties in state court proceedings. The complaint further alleges that the denial of reimbursement violated, after 1977, the Indemnification Act, and was contrary to an established state custom and practice of the Attorney General’s office prior to 1977 of representing employees in civil rights actions. The custom was alleged to include allowing state agencies to engage private counsel at state expense when the Attorney General did not appear. Benson sought damages under 42 U.S.C. § 1983 for violations of his First and Fourteenth Amendment rights.

The defendants filed a motion to dismiss, interposing the defense of qualified immunity. The motion was converted into one for summary judgment, and was granted. The court held that the defendants were entitled to qualified immunity from suit for their refusal to reimburse Benson for his legal expenses as their actions were objectively reasonable under the Illinois Indemnification Act. The court further held, recognizing that it did not need to reach the issue, that Benson’s due process rights were not violated because state law remedies were available which satisfied the due process clause.

II.

A. Due Process Claim

Benson claims that the grant of summary judgment on his due process claim was erroneous because a material issue of disputed fact remained; that is, whether Benson was an employee or an independent contractor. Benson reasons that so long as his employment status remains disputed, his right to the state benefit also remains disputed, and no decision can be made about whether the defendants’ denial of that right was objectively reasonable for purposes of qualified immunity.³

The usual analysis of a due process claim proceeds sequentially. First, one determines, as Benson would have us require the district court do here, whether a protected property interest exists at all. If such an interest is 'found, one determines what procedures must be followed before the government may take action adversely affecting that interest. See, e.g., Devine v. Cleland, 616 F.2d 1080 (9th Cir.1980); Larry v. Lawler, 605 F.2d 954 (7th Cir.1978). In this case we may assume, given the discussion of the issue by the district court, that state employees have a right to be represented by the state in civil actions against them arising out of their employment. However, finding a protected interest in substitute representation will not end the inquiry, for Benson’s claim is that his procedural rights were violated. Since the defendants have interposed a defense of qualified immunity, we must ask whether the Attorney General, in making the determination that Benson was not qualified to receive benefits under the statute or custom of the state, violated clearly established procedures of which a reasonable person should have been aware. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982).

As the Supreme Court has recognized, “ ‘due process’ has never been, and perhaps can never be, precisely defined.” Lassiter v. Dept. of Soc. Services of Durham Cty., 452 U.S. 18, 25, 101 S.Ct. 2153, , 68 L.Ed.2d 640 (1981). While the requirements of due process have been settled by the case law for a variety of situations, see, e.g., Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972) (pretermination hearing required before de facto tenured teacher may be fired); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) (hearing required before welfare benefits may be terminated), the process that is due in any given case varies according to the factual circumstances of the case and the nature of the interests involved. See Matthews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Here, the Attorney General was asked to determine whether Benson qualified for state-provided representation under a statute which the parties concede codifies prior state practice. Accordingly, he contacted the Department of Bevenue, which informed him that Benson was employed as an independent contractor. Since the statute by its express terms denies representation to independent contractors, the Attorney General notified Benson that his office was precluded from providing such representation. Perhaps the Attorney General should have used more elaborate procedures in making this determination, but it is not clear even today that the Constitution required him to do so. Since the law establishing which procedures are constitutionally-mandated is uncertain or unclear, the Attorney General is entitled to qualified immunity from Benson’s claim that his right to procedural due process has been violated. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982).

B. First Amendment Claim

The district court also found that the defendants were entitled to qualified immunity from Benson’s First Amendment claim. Benson alleged that the defendants had refused to provide him with substitute representation, or to reimburse him for his legal expenses, in retaliation for his exercise of First Amendment rights. The district court held that the defendants’ conduct in refusing to reimburse Benson was objectively reasonable, because the statute upon which Benson premised his claim to reimbursement excludes independent contractors.

As we noted above, Harlow dictates that a claim of qualified immunity by an executive official must be sustained if the official’s conduct “does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Harlow v. Fitzgerald, 102 S.Ct. at 2738. In determining whether the actions alleged by Benson violate clearly established law, however, the relevant legal framework is not the Illinois Indemnification Act, as the defendants and the district court believed. Benson’s claim is that the Attorney General violated his rights under the First Amendment. This claim does not require Benson to show that he had a right to reimbursement under the Act, for even where there is no right to a valuable government benefit, the denial of that benefit may not be premised on an employee’s exercise of his First Amendment rights. See Healy v. James, 408 U.S. 169, 180-81, 92 S.Ct. 2338, 2345-46, 33 L.Ed.2d 266 (1972); Pickering v. Board of Education, 391 U.S. 563, 568, 88 S.Ct. 1731, 1734, 20 L.Ed.2d 811 (1968); Hostrop v. Board of Junior College District No. 515, 471 F.2d 488, 491-93 (7th Cir.), cert. denied, 411 U.S. 967, 93 S.Ct. 2150, 36 L.Ed.2d 688 (1973). The right of employees to be free from retaliation for their exercise of First Amendment rights has been clear since at least 1968, when the Supreme Court decided Pickering v. Board of Education, supra. The defendants cannot claim that the law was unclear in 1977, when the events at issue in this case allegedly occurred.

However, the defendants attempt to avoid the impact of the cases cited above by analogizing this case to Egger v. Phillips, 710 F.2d 292 (7th Cir.), cert. denied, — U.S. -, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983). In Egger, this court held that Phillips, an FBI official, was immune from liability for transferring Egger, an employee who had complained to FBI supervisors about a co-worker. The court found that a reasonable person in Phillips’ position could not have been expected to know at the time he made the transfer that he was violating Egger’s First Amendment rights. Egger is clearly distinguishable. First, most of the doctrinal uncertainty which led the court to conclude that the law was unclear in Egger centered on the fact that Egger was a public employee whose criticisms were made in the workplace. The court noted that “until the Supreme Court’s decision in Givhan v. Western Line Consolidated School District, 439 U.S. 410, 99 S.Ct. 693, 58 L.Ed.2d 619 (1979), it was an open question whether public employees’ on-the-job expressions were entitled to constitutional protection.” 710 F.2d at 315. In the instant case, however, Benson alleges that it was his criticisms of the Department of Revenue to the news media and other law enforcement agencies which led to the retaliation. Second, Benson’s employment with the Department ended on June 24, 1976. The Attorney General did not withdraw representation until October of that year, and Benson's request for substitute representation was not denied until 1978. Thus, many of the uncertainties found in Egger which resulted from the continuing concern that the state as employer should be able, in certain circumstances, to regulate the public utterances of its employees are not present here. Benson was no longer a state employee at the time of the alleged violation.

We conclude that at least on the present record, the defendants are not entitled to qualified immunity with respect to Benson’s First Amendment claim. Of course, we express no opinion on whether Benson will be able to prove the allegations of his complaint. And we note that the defendants are still free to establish that they would have reached the same decision not to reimburse Benson even in the absence of protected conduct. Mt. Healthy City School District v. Doyle, 429 U.S. 274, 287, 97 S.Ct. 568, 576, 50 L.Ed.2d 471 (1977).

III.

For the reasons expressed in this opinion, the judgment of the district court on Benson’s due process claim is affirmed. The judgment on Benson’s First Amendment claim is reversed, and the case is remanded to the district court for further proceedings. Each party shall bear his own costs on appeal.

1 . The author acknowledges the substantial assistance of Judge Swygert to this opinion reflected in Section I and portions of Section II, B.

2 . The act provides:

Representation and indemnification of State employees, (a) In the event that any civil proceeding is commenced against any State employee, alleging the deprivation of a civil or constitutional right and arising out of any act or omission occurring within the scope of the employee's State employment, the Attorney General shall, upon timely and appropriate notice to him by such employee, appear on behalf of such employee and defend the action .... (b) In the event that the Attorney General determines that so appearing and defending an employee either (1) involves an actual or potential conflict of interest, or (2) that the act or omission that gave rise to the claim was not within the scope of the employee’s State employment or was intentional, willful or wanton misconduct, the Attorney General shall decline in writing to appear or defend or shall promptly take appropriate action to withdraw as attorney for such employee. Upon receipt of such declination or upon such withdrawal by the Attorney General on the basis of an actual or potential conflict of interest, the State employee may employ his own attorney to appear and defend, in which event the State shall pay the employee's court costs, litigation expenses and attorney's fees to the extent approved by the Attorney General as reasonable, as they are incurred.

An employee is defined as "any ... employee of the State ... but does not mean an independent contractor except as provided in this Section.’¹

3 . When the defendants raised the defense of qualified immunity, the district court stayed discovery pending resolution of the motion. Benson contends that the stay was erroneous. In Harlow, however, the Court concluded that discovery should not be allowed until the threshold issue of immunity is resolved. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 2739, 73 L.Ed.2d 396 (1982).