Tibbetts v. Kulongoski

Citations: 567 F.3d 529; 29 I.E.R. Cas. (BNA) 129; 2009 U.S. App. LEXIS 11665; 2009 WL 1492156Docket: 07-36067

Court: Court of Appeals for the Ninth Circuit; May 29, 2009; Federal Appellate Court

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Oregon Governor Theodore Kulongoski appeals a district court's denial of his summary judgment motion, asserting qualified immunity in a lawsuit brought under 42 U.S.C. § 1983 by former State Accident Insurance Fund (SAIF) employees Cecil Tibbetts and David Thurber. The plaintiffs allege that Kulongoski violated their Fourteenth Amendment due process rights by making disparaging remarks in two press releases without granting them name-clearing hearings. The court finds that the legal standards for a name-clearing hearing under the Fourteenth Amendment were not clearly established at the time of Kulongoski's statements, indicating that a reasonable official would not have recognized the necessity for such hearings. Consequently, the court reverses the district court's decision and grants qualified immunity to Kulongoski.

SAIF, a public corporation within Oregon's executive branch, faced scrutiny due to alleged scandals involving its former President, Katherine Keene, which included ethics violations and public records lawsuits. Following Keene's resignation in December 2003, Tibbetts was appointed as SAIF's Interim President/Manager. The SAIF Board, appointed by the Governor, was responding to Kulongoski's demands for reports on SAIF's policies during this tumultuous period.

The Board raised concerns in a letter to Governor Kulongoski regarding SAIF's association with Associated Oregon Industries, particularly due to David Thurber's close ties to the organization. The relationship prompted calls from some Oregon senators for an independent review of SAIF's spending, coinciding with media reports of an investigation by the Oregon Government Standards and Practices Commission into potential under-reporting of lobbying expenses by SAIF. In June 2004, Mark Cohen, a former SAIF employee, alleged in an affidavit that Tibbetts ordered the destruction of records to evade disclosure in ongoing litigation. Cohen also claimed that Tibbetts was hiding documents at his home and office. SAIF officials dismissed Cohen's allegations as false and described him as disgruntled, while Tibbetts denied instructing anyone to destroy records. Governor Kulongoski condemned the unauthorized destruction of public records and called for an immediate investigation.

On August 12, 2004, Kulongoski announced the appointment of Brenda Rocklin as Interim President/Manager of SAIF, believing she could address the organization's issues. Although Board members reminded the Governor of their authority to appoint the President, they unanimously agreed to Rocklin's interim position. Kulongoski expressed ongoing concern about SAIF's management and tasked Rocklin with conducting a thorough review of the organization. Rocklin indicated that the Governor hoped to retain Tibbetts in some capacity following her appointment. In November 2004, Kulongoski urged the SAIF Board to cease its search for a permanent CEO and to appoint Rocklin permanently, threatening to remove Board members who opposed this decision. During a Board meeting, member Mathew Chapman resigned in protest of the Governor's attempts to install Rocklin as the permanent CEO.

At the November 2004 meeting, the Board did not appoint Rocklin to the permanent position. During this period, Board member Egge testified that Governor Kulongoski instructed SAIF Board members to support Rocklin and remove obstacles, specifically directing her to fire Cecil Tibbetts if he interfered. On January 27, 2005, Rocklin requested Tibbetts' resignation, which he refused, leading to his termination. On the same day, Rocklin also asked Plaintiff Dave Thurber to resign, which he accepted. The media inquired about the terminations, which SAIF confirmed occurred without severance, indicating they were part of a broader "housecleaning" directive from the Governor, amidst ongoing controversies surrounding SAIF's operations, including spending on lobbyists and allegations of public record destruction.

Nineteen days post-terminations, SAIF issued an "Initial Report to the Governor," highlighting operational deficiencies in public records management. The report referenced an affidavit from former employee Mark Cohen, who alleged he was instructed by Tibbetts to delete documents to evade public records requests. The investigation into these allegations was still ongoing. In a subsequent press release on February 15, 2005, Governor Kulongoski emphasized the importance of SAIF's ethical and accountable management for Oregon's economic future. The report outlined findings and recommendations in four key areas: Board oversight and transparency, workplace diversity, public records, and contracting, while asserting that SAIF operates efficiently with qualified staff. The Governor expressed appreciation for the report's transparency and indicated a commitment to implementing necessary changes to enhance accountability within SAIF. The report was made publicly available on the SAIF website.

In June 2006, the Marion County District Attorney's Office concluded an investigation into misconduct allegations from the Cohen affidavit, reporting that no credible evidence was found to support claims that individuals or the SAIF Corporation intentionally withheld or destroyed public records. The investigation raised concerns about Mr. Cohen's credibility. Following this, the Governor's office issued a press release expressing gratitude for the thorough investigation and highlighting the importance of SAIF to Oregon's economy. The Governor announced leadership changes at SAIF, appointing Brenda Rocklin as interim CEO to enhance accountability and transparency, and emphasized a new culture of honesty and commitment to public service within the agency.

Subsequently, Plaintiffs alleged violations of their Fourteenth Amendment rights under 42 U.S.C. § 1983 against SAIF, Rocklin, and Governor Kulongoski, claiming stigmatizing statements made in the 2005 and 2006 Releases denied them name-clearing hearings. Defendants sought summary judgment, asserting qualified immunity. The district court ruled against this motion, determining that Rocklin and Kulongoski indeed violated Plaintiffs' rights by failing to provide name-clearing hearings, which were clearly established rights at the time of the statements. The current appeal addresses the court's denial of qualified immunity for Governor Kulongoski, with jurisdiction established under 28 U.S.C. § 1291 and a standard of de novo review for the qualified immunity claim, limited to legal questions and not extending to disputes over material facts. Disputed facts are assumed in favor of the Plaintiffs as the non-moving party.

Qualified immunity shields government officials from civil liability for actions that do not violate clearly established statutory or constitutional rights known to a reasonable person. This doctrine balances the need for accountability against the necessity of protecting officials from undue legal burdens while performing their duties. In assessing Governor Kulongoski's claim of qualified immunity, the analysis follows the Supreme Court's guidance in Pearson, which allows flexibility in addressing the two prongs of qualified immunity. Specifically, the court may prioritize whether the asserted right was "clearly established" over other considerations.

In the context of employment termination, a liberty interest arises if the dismissal includes charges that damage the individual's reputation for honesty or morality. The threshold for implicating constitutional liberty interests is that the reasons for termination must significantly stigmatize the individual, hindering their ability to secure future employment. The Supreme Court in Roth established that a public employer can violate an employee's rights if their actions impose a stigma that restricts the individual’s employment opportunities. If an employer's public statements damage an employee’s reputation, the employee has the right to contest these charges.

Plaintiffs cite two statements from Governor Kulongoski as stigmatizing. The first is a 2005 press release issued shortly after the Plaintiffs' terminations, which emphasized the need for ethical governance at SAIF and indicated progress in accountability and transparency, potentially implying issues with the Plaintiffs' conduct.

The report summarizes Cohen's affidavit, which alleges that Tibbetts directed improper document destruction, and addresses the 2006 press release issued after the SAIF criminal investigation. The Governor's release announced leadership changes at SAIF, emphasized a commitment to accountability and transparency, and assured Oregonians of a new culture focused on honesty and service, despite the DA's report highlighting troubling behaviors. 

The analysis of the Governor's qualified immunity claim focuses on whether the Plaintiffs' right to a name-clearing hearing was clearly established at the time of the press releases. Key considerations include: (A) the sufficiency of the Releases' statements in stigmatizing the Plaintiffs; (B) whether these statements were made during the Plaintiffs' terminations; and (C) whether the Governor altered the Plaintiffs' legal rights. 

Governor Kulongoski contends that the statements are not stigmatizing as they do not identify the Plaintiffs and do not imply dishonesty. He cites case law stating that only stigma related to dishonesty or moral turpitude creates a liberty interest. However, the statements in question relate to ethics and accountability, suggesting a culture of honesty, unlike cases of incompetence. 

Importantly, while neither Tibbetts nor Thurber is named in the Releases, legal precedent indicates that stigmatizing statements can still be actionable even if they do not identify an individual, provided that the context implies reference to them. The report refrains from concluding whether the statements were stigmatizing as a matter of law.

Plaintiffs are assumed to have been stigmatized by statements in the Releases for the sake of analysis. The focus shifts to whether these statements were made during the terminations. Case law requires a temporal nexus between an employer's statements and the termination. The Campanelli case established that statements must be closely related to the discharge to be considered stigmatizing. The 2006 Release, issued sixteen months after the Plaintiffs' terminations, is deemed too remote to establish this nexus. In contrast, the 2005 Release, issued nineteen days post-termination, presents a more complex issue. While this timeframe is shorter than in Campanelli, which found a week sufficient to establish a nexus, it is longer than the periods deemed insufficient in other cases like Martz and Hadley. The Governor argues that the longer interval negates any nexus, while Plaintiffs contend that the circumstances surrounding their terminations and subsequent media coverage suggest a close relationship. At the time of the Releases, it was unclear whether a statement made nineteen days after termination met the "temporal nexus" test, indicating that the legal parameters for a name-clearing hearing were not clearly established. Furthermore, even if the statements met the nexus requirement, it was not established whether the Governor could alter Plaintiffs' legal rights sufficiently to constitute a violation of due process under the Fourteenth Amendment.

The Governor argues that even if his statements were stigmatizing, he did not terminate the Plaintiffs' employment or change their legal status, as such actions were attributed to SAIF. He cites Hawkins v. Rhode Island Lottery Commission, where the court ruled that the Rhode Island governor did not impose a "plus" on the plaintiff because he lacked the authority to terminate employment. Similarly, Governor Kulongoski's authority over SAIF is limited to appointing and removing Board members, with no role in employment decisions. Plaintiffs claim that despite this, the Governor ordered their removal and influenced SAIF's management decisions, threatening Board members with removal if they did not comply. While the circuit has been flexible regarding causation in constitutional rights violations, there is no evidence that the Governor was aware that the Plaintiffs would be denied name-clearing hearings following their termination. Thus, it was not clearly established that the Governor's actions would deprive the Plaintiffs of their rights at the time of the alleged violations. Consequently, Governor Kulongoski is granted qualified immunity.

Qualified immunity protects government officials from liability if the legal parameters of a right are not clearly established, even if prior cases do not need to be "fundamentally similar" to provide notice of a violation. In Hope v. Pelzer, the Supreme Court emphasized this principle, allowing officials to err on the side of caution. The Third Circuit's ruling in Hill v. Borough of Kutztown further supports that qualified immunity is appropriate when the law's clarity is lacking, as seen when officials were found to have violated a constitutional right but still granted immunity due to insufficient legal clarity. In the case concerning Governor Kulongoski, a reasonable person in his position would not have known they were violating the Plaintiffs' Fourteenth Amendment due process rights. Even if the statements made were stigmatizing, it was unclear whether they met the necessary "temporal nexus" or if the Governor could be deemed to have caused the Plaintiffs' terminations. As a result, the district court's denial of summary judgment for Governor Kulongoski is reversed, and the case is remanded with instructions to enter judgment in his favor. Notably, SAIF's severance policy allows denial of severance pay for terminations due to misconduct, and Rocklin and SAIF are not involved in this appeal.