William J. Brady, M.D., Cross-Appellant v. Kristine M. Gebbie, Director, Human Resources, Administrator, Health Division of the State of Oregon, Cross-Appellee
Docket: 87-3839
Court: Court of Appeals for the Ninth Circuit; October 30, 1988; Federal Appellate Court
Kristine M. Gebbie appeals a district court ruling that denied her motions for a directed verdict and judgment notwithstanding the verdict (JNOV) regarding William J. Brady, M.D.'s liberty interest claim. Gebbie contends that the evidence shows she did not violate Brady's constitutional rights, that he received due process, and that she is entitled to qualified immunity. She also challenges the denial of her motion for a new trial or remittitur, arguing that the jury's damage award was excessive and unsupported by evidence.
Brady cross-appeals the district court's directed verdict favoring Gebbie on his property interest claim, asserting a constitutionally protected property interest in his position as State Medical Examiner and the right to return to classified service after termination. He also contests partial summary judgment on his reinstatement rights. The court affirmed the district court's decisions on all issues.
Brady, who became State Medical Examiner in 1969, had his position transitioned from classified to unclassified service in 1977. He consistently received satisfactory evaluations and was engaged in various professional activities. A pivotal event occurred on June 20, 1985, when Brady was questioned by a reporter about alleged misconduct. Following this, he informed Gebbie about the inquiry and discussed a bank account he maintained, which was used for office amenities and was known to his colleagues. Gebbie did not accept Brady's resignation at that time, opting to confer with the State Attorney General first.
On June 21, 1985, Gebbie was informed by the Attorney General about a pending criminal investigation involving Dr. Brady, particularly related to an account they had discussed. Later that day, Gebbie met with Brady, who declined to resign, leading her to issue a suspension letter without pay due to allegations of misuse of public funds. A press release stated that Brady was suspended pending a Department of Justice investigation into claims that fees to the Medical Examiner's office were misappropriated for office amenities. Brady claimed the fund had been established for office expenses for years, and the investigation was described as impartial.
Following his suspension, Brady faced negative media coverage. On September 17, 1985, the Attorney General determined that criminal charges against him were unwarranted. Subsequently, on September 25, Brady, his attorneys, and Dr. Homer Harris met with Gebbie, who, after Brady's refusal to resign, presented a proposed termination letter. This letter accused Brady of violating state policies by: 1) creating a "slush fund" from reimbursements; 2) conducting private autopsies for personal gain using state resources; and 3) causing the state to incur expenses for toxicological reports related to his private autopsies. Brady was informed he could respond to the charges on October 2, 1985.
Before the meeting, Brady's attorney requested a continuance, which was denied by Hirst, who noted that witnesses could not be summoned. During the October 2 meeting, Brady requested more time to gather information to respond to the charges, but Gebbie denied this and also his request for a fair hearing. On October 3, 1985, Gebbie discharged Brady, citing the same charges as in the suspension letter, and issued a press release asserting that Brady had systematically diverted public funds over 16 years, violating public trust and confidence.
Gebbie's press release outlined findings from an Attorney General investigation that identified four key violations leading to Brady's dismissal: (1) Brady operated a private autopsy business using state resources and employees, diverting payments to his personal accounts; (2) he collected payments from federal agencies for autopsies that should have been conducted at state expense; (3) he misappropriated $16,000 of state funds for unauthorized personal expenses; and (4) he utilized state laboratory services for his private business while billing the state. Following these allegations, Brady's attorney submitted a response, but Gebbie confirmed the decision to terminate him. Brady then filed a lawsuit under 42 U.S.C. Sec. 1983, claiming his dismissal violated his due process rights regarding property and liberty interests. The district court granted partial summary judgment to Gebbie regarding reinstatement and later directed a verdict on property interest claims, while allowing the liberty interest claim to proceed to jury verdict, which awarded Brady $300,000. Gebbie's motions for JNOV, a new trial, and remittitur were denied, leading to an appeal. Brady argued that he had a constitutionally protected property interest based on an implied contract and a right to return to classified service, but the court found these arguments unpersuasive. The review of directed verdicts by the appellate court is conducted under the same standards as the district court, favoring the evidence of the non-movant.
The Fourteenth Amendment safeguards individuals from property or liberty deprivation without procedural due process. A protected property interest in employment requires a reasonable expectation or a legitimate claim of entitlement, not merely a unilateral expectation. Such entitlement is defined by existing rules or understandings from state law. In Oregon, state employees are categorized as either classified or unclassified. Classified employees who complete a probationary period can only be terminated for cause, thereby establishing a protected property right. Conversely, unclassified employees lack job security and can be dismissed without cause, as there are no statutory provisions ensuring they can only be fired for cause. Brady, as an unclassified employee, acknowledges that he has no statutory right against dismissal and asserts that he should demonstrate a property interest through implied contracts or mutual understandings. However, Oregon law stipulates that tenure rights for public employees must derive solely from statutes or regulations, negating Brady's argument. Only classified employees possess a property right to continued employment under Oregon law.
The court determined that public employees in Oregon cannot establish property interests based solely on implied or express employment contracts without a supporting statute or regulation. Even if Brady could demonstrate an implied contract stipulating termination for cause, this would not confer a property right unless it was authorized by law. The court’s analysis also clarified that mutual understandings could not create property interests without statutory backing. Brady's argument hinged on the interpretation of Or.Rev.Stat. Sec. 240.240, which he claimed allowed for implied contracts, but the statute must be viewed within the broader statutory scheme, which distinguishes between classified (protected) and unclassified (at-will) employees. The legislative intent indicated that unclassified employees, like Brady, could be dismissed without cause, undermining his claims.
Additionally, the reclassification of the State Medical Examiner position from classified to unclassified service in 1977 eliminated the associated protections, indicating that administrators like Gebbie lacked the authority to create binding agreements that would counteract this legislative action. As a result, Brady's claims regarding property interests based on mutual understanding or implied contracts were rejected.
Furthermore, Brady's assertion that Or.Rev.Stat. Sec. 240.570 granted him a property right to return to classified service after his unclassified discharge was also dismissed. The statute indeed provides such a property right but applies specifically to employees transitioning from classified to unclassified service, not the other way around. Therefore, while the statute acknowledges property rights for classified employees returning from unclassified roles, it does not extend those rights to Brady's situation.
Brady asserts that the statute applies to employees whose positions have been reclassified from classified to unclassified service. However, the language of the statute suggests that it excludes such employees, as it states that only classified employees can fill unclassified positions. The legislative history of Or.Rev.Stat. Sec. 240.570, particularly in conjunction with the now-repealed Or.Rev.Stat. Sec. 240.572, supports this interpretation. In 1977, the Oregon legislature transitioned several positions to unclassified service and enacted Or.Rev.Stat. Sec. 240.572, which granted a right to return to classified service for those employees. In contrast, Or.Rev.Stat. Sec. 240.570, which remained in effect, applies to classified employees moving to unclassified positions, not to those like Brady, whose roles were reclassified. After the repeal of Or.Rev.Stat. Sec. 240.572 in 1979, Or.Rev.Stat. Sec. 240.570 was amended but did not include any protections similar to those in the repealed statute. Consequently, when Brady filed his lawsuit, only Or.Rev.Stat. Sec. 240.570 was applicable, which did not afford him a right to return to classified service. Therefore, he lacked a constitutionally protected property interest in his unclassified position as State Medical Examiner and did not have a statutory right to return to classified service following his discharge. The district court correctly directed a verdict for Gebbie on this property interest claim. Additionally, Brady contends that the court erred in ruling that reinstatement was not a legally appropriate remedy for a due process violation, without arguing that there were factual issues warranting a jury's consideration.
A district court's summary judgment is reviewed de novo, meaning the appellate court will consider the case anew, without deference to the lower court's decision. Summary judgment is appropriate when, viewing the evidence favorably for the non-moving party, there are no genuine material factual disputes and the moving party is entitled to judgment as a matter of law. The interpretation of state and federal law by the district court is also subject to de novo review.
In cases involving deprivation of liberty or property interests without due process, courts have consistently ruled that the appropriate remedy is to provide the due process that was denied and any resulting damages. In employment discharge cases where stigmatization occurs, a name-clearing hearing is the mandated remedy. Although Brady argues for the possibility of reinstatement as a remedy for property deprivation without due process, his reliance on precedents involving intertwined First Amendment claims is deemed misplaced. The cases he cites, Cain and Burton, involve additional substantive rights that Brady has not asserted in his claim, which solely focuses on due process. Consequently, the court upheld the district court's decision that reinstatement was not an available remedy for Brady's claims.
Regarding Gebbie's denial of a motion for a directed verdict or judgment notwithstanding the verdict (JNOV), the court found her arguments unpersuasive. She contended that Brady, as an at-will employee, could not have a protected liberty interest in termination and that he received all due process required. The standards for reviewing such motions require consideration of the evidence in favor of the non-moving party, and the existence of substantial evidence supporting a verdict for that party precludes a directed verdict.
A liberty interest arises in employment termination cases when charges harm an individual's reputation for honesty or morality. To invoke due process protections related to a liberty interest, a plaintiff must demonstrate: 1) the accuracy of the charges is disputed; 2) there has been public disclosure of the charges; and 3) the charges are linked to employment termination. These criteria were included in the jury instructions for Brady's case, which required the jury to find the charges against him were false.
Gebbie argued that Brady, being an at-will employee in the unclassified service, could not claim a liberty interest or due process protections upon being stigmatized during his termination. This argument is flawed, as the precedent set in Paul v. Davis states that reputation alone does not constitute a liberty interest but does not address at-will employees' rights to assert such claims. Subsequent rulings affirm that a nontenured government employee has a liberty interest and is entitled to a name-clearing hearing if false and defamatory impressions are created about them in connection with termination.
While Brady's at-will status negates a property claim, it does not eliminate his liberty claim. The jury could reasonably conclude, based on trial evidence, that Brady's discharge implicated a liberty interest, warranting procedural due process. Brady presented evidence of serious charges against him, including violations of public trust and misappropriation of funds, which constituted accusations of dishonesty sufficient to implicate a liberty interest.
Sufficient evidence was presented for a jury to infer that the charges against Brady were contested and likely false. Brady claimed the charges in his termination letter were unfounded, asserting that the so-called 'slush fund' was used for state, not private purposes, and was maintained transparently. He indicated that he did not cause the state to be billed for toxicology reports related to his private autopsies and only billed the federal government for autopsies conducted under federal jurisdiction. Colleague Dr. Lewman corroborated that he performed private autopsies without knowledge of a conflict of interest violation and that staff were instructed to draft private autopsy reports on their own time. Dr. Krasselt suggested that any toxicology billing issues could be due to inadvertent errors. Collectively, this evidence allowed a jury to rationally conclude that some or all charges against Brady were false.
Moreover, there was strong evidence that Gebbie publicly charged Brady in connection with his suspension and termination, disseminating these charges through press releases. A jury could infer that Gebbie's actions impaired Brady's reputation for honesty and that these charges were linked to his employment termination. Consequently, the district court correctly denied Gebbie's motions for a directed verdict and judgment notwithstanding the verdict (JNOV), as there was a basis for Brady's claim of a constitutionally protected liberty interest.
Additionally, the court rejected Gebbie's argument that she provided Brady with due process, affirming that due process requires an opportunity to be heard at a meaningful time and in a meaningful manner. The court referenced the Mathews v. Eldridge test to determine the necessary due process, which involves balancing the affected private interest, the risk of erroneous deprivation through the procedures used, and the costs of additional procedures. A hearing with an opportunity for Brady to rebut the charges was required, but the timing and specific procedural protections were to be assessed on a case-by-case basis.
A deprivation of liberty interest without due process necessitates a hearing that allows the affected party to clear their name. In this case, there was ample evidence for a jury to conclude that Gebbie failed to provide Brady with even minimal due process, as he was not given a meaningful opportunity to be heard. Testimonies indicated that Gebbie had already made her decision regarding Brady’s termination prior to the October 2, 1985 meeting, suggesting any defense Brady might present would be disregarded. Witnesses reported Gebbie’s statements indicating she could not conceive of any reasons that would alter her decision and her refusal to grant continuances for more preparation time for Brady. This refusal to allow sufficient preparation time, combined with the lack of formal procedures and the timing of the meeting, led to reasonable inferences that the meeting was a mere formality rather than a genuine opportunity for Brady to defend himself. The overall circumstances indicated that the hearing lacked a meaningful opportunity for Brady to respond to the charges against him.
Brady was denied a meaningful opportunity to be heard at his termination hearing, leading to a potential finding of minimal due process violation by a jury. The district court correctly denied Gebbie's motion for a directed verdict on this basis. Gebbie contended that she was entitled to qualified immunity, arguing that the law regarding Brady's right to a liberty interest hearing was not clearly established. Qualified immunity protects government officials performing discretionary functions, provided their actions do not violate clearly established rights that a reasonable person would recognize. The determination of whether a law was clearly established is a legal question, while assessing a reasonable official's knowledge of such law is a jury question. The district court's denial of Gebbie's motion implied that the jury could reasonably conclude that she should have known her conduct violated Brady's constitutional rights. At the time of Gebbie's actions in 1985, case law indicated that an employee's liberty interest is implicated when they face public stigma from charges leading to discharge. Due process requires a meaningful opportunity to contest such charges, particularly when their accuracy is disputed and the charges are publicly disclosed.
The excerpt examines the legal framework regarding the due process required when a liberty interest, such as employment termination, is implicated, particularly concerning stigmatization. It cites established case law indicating that an employee is entitled to a hearing to clear their name (Codd v. Dorr). The process due is assessed using the Mathews v. Eldridge three-pronged test, which balances private interests, the risk of erroneous deprivation, and the costs of additional procedures. Gebbie contends that the law was not clearly established in Brady's situation, but the court clarifies that explicit binding precedent is not necessary to demonstrate the clarity of a right for qualified immunity. The district court concluded that Gebbie's actions violated Brady's constitutional rights, and evidence suggested a reasonable official would recognize Brady's liberty interest. Gebbie's argument regarding absolute privilege for her statements was deemed waived because it was not adequately presented in her briefs. Lastly, the court upheld the jury's award of $300,000 to Brady for damages, stating that such awards will only be disturbed if they lack evidentiary support or are deemed grossly excessive.
Ample testimony from Brady and his psychiatrist, Dr. Morgenstern, established the emotional distress and psychological damages Brady experienced, linking these injuries to the deprivation of due process. Dr. Morgenstern noted that Brady was deeply affected by his employment issues, leading to severe symptoms such as insomnia, anxiety, suicidal thoughts, and lasting psychological harm necessitating years of treatment. Brady's inability to present his side of the story exacerbated his emotional turmoil, providing sufficient evidence for compensable psychological harm.
Brady also demonstrated a loss of employment opportunities as an expert witness, supported by testimonies from legal and academic professionals who indicated that his reputation had suffered due to his discharge. In response, Gebbie argued that the damages were unsupported, claiming only one of her statements was "arguably inaccurate," and that Brady's psychiatric issues predated her statements. She contended there was no causal link between her statement and Brady's psychological problems, nor evidence of lost business opportunities or future income loss. However, the trial presented evidence that countered these claims, and the jury's determination of damages was upheld as not unreasonable or unsupported by the evidence. The district court's denial of Gebbie's motion for judgment notwithstanding the verdict (JNOV) or remittitur was affirmed.
Additionally, the text illustrates nuances regarding state law creating property interests and the constitutional protection of those interests under the Due Process Clause, referencing key legal precedents.
Probationary employees, as defined in the context of Brady's case, include both temporary and permanent probationary employees. Unclassified employees, like Brady, do not receive permanent job security and are subject to specific laws regarding leave and salary plans, with exceptions for those transitioning from classified to unclassified service. Brady's situation differs from those who may return to classified service after being discharged from unclassified positions. His reliance on cases concerning private employment contracts is misplaced, as they do not apply to public employees governed by statutory provisions. Additionally, the court found no merit in Brady's claim regarding mutual understanding due to its inapplicability. The jury was properly instructed on due process, specifically regarding the necessity for a fair hearing and the relevant factors to consider, and no objections were raised to these instructions. There was sufficient evidence for the jury to conclude that Brady was entitled to more than the minimum procedural safeguards as outlined in Mathews v. Eldridge.
Brady did not receive the minimum required legal process, and Gebbie objected at trial regarding the jury instruction on qualified immunity, claiming the judge should have explained that it includes both subjective and objective components. However, her interpretation was flawed since the law, as established in Harlow, only permits an objective test. Additionally, Gebbie submitted a letter of "supplemental authorities" after oral argument, referencing absolute privilege. Yet, since she had previously included this issue in her pretrial order and trial memorandum, which cited some of the same authorities, it suggests she was aware of these authorities before her briefs were filed. Consequently, she cannot use Rule 28(j) to introduce this issue now, as it was not raised in her directed verdict, JNOV, or new trial motions. Furthermore, while Brady contested the charges in his termination letter, sufficient evidence existed for the jury to conclude that some statements were false. The jury was instructed that any stigmatizing information published by third parties was not attributable to Gebbie, making it improbable that they based their damage award on a single inaccurate remark.
