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ECONOMOU v. BUTZ

March 13, 1979

Arthur N. ECONOMOU and Arthur Economou & Co., Inc., Plaintiffs,
v.
Earl L. BUTZ, Secretary of Agriculture, Richard T. Lyng, Assistant Secretary of Agriculture, Alex C. Caldwell, Acting Administrator, Commodity Exchange Authority, Charles E. Robinson, Director, Compliance Division, Commodity Exchange Authority, Richard E. Kirchhoff, Deputy Director, Registration and Audit Division, Commodity Exchange Authority, Jack W. Bain, Chief Hearing Examiner, U. S. Department of Agriculture, Richard W. Davis, Jr., Counsel, U. S. Department of Agriculture, T. Reed McMinn, Regional Administrator, New York Regional Office, Commodity Exchange Authority, Clement Gross, Auditor, Commodity Exchange Authority, Murray A. Wolkis, Auditor, Commodity Exchange Authority, Edward F. Fitzpatrick, Auditor, Commodity Exchange Authority, and Donald A. Campbell, Judicial Official, U. S. Department of Agriculture, Defendants



The opinion of the court was delivered by: MACMAHON

Defendants move to dismiss the verified amended complaint for failure to state a claim upon which relief can be granted, or, in the alternative, for summary judgment. Rules 12(b)(6), 56(b), Fed.R.Civ.P. Plaintiffs move for an order compelling answers to interrogatories and precluding defendants from introducing evidence for wilful failure to attend a deposition and produce documents. Rules 37(a)(2), 37(b)(2), Fed.R.Civ.P.

On February 2, 1972, plaintiffs commenced this action against the United States Department of Agriculture ("USDA"), the Commodities Exchange Authority ("CEA") and twelve individual employees of the USDA and the CEA. Plaintiffs, Arthur N. Economou, a former registered futures commission merchant, and Arthur N. Economou & Co., Inc., *fn1" had been the subjects of a disciplinary proceeding commenced by the CEA on February 19, 1970. On appeal from the administrative order, the sanctions imposed at the CEA proceeding were set aside on the ground that plaintiffs had not wilfully violated the CEA rules and regulations. *fn2" Plaintiffs now allege that the CEA proceeding was maliciously commenced and continued in violation of their constitutional and common law rights.

 We dismissed the complaint on May 22, 1975 as to all defendants on grounds of sovereign and executive immunity. Our Court of Appeals affirmed with respect to the USDA and the CEA but reversed with respect to the individual defendants on the ground that they were not entitled to absolute immunity for so-called constitutional torts. *fn3" The Supreme Court subsequently vacated the decision of the Court of Appeals and remanded the case, holding that "in a suit for damages arising from unconstitutional action, federal executive officials exercising discretion are entitled only to the qualified immunity specified in Scheuer (V. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)), subject to those exceptional situations where it is demonstrated that absolute immunity is essential for the conduct of the public business." *fn4"

 We dismiss the complaint as to defendant Butz. Butz did not become Secretary of Agriculture until December 2, 1971, more than twenty-one months after the CEA proceeding was commenced, and plaintiffs neither allege nor show that Butz personally participated in the commencement or continuation of the CEA proceeding or that he ratified the actions of the other defendants in any way. Since a plaintiff may not rely on the general doctrine of respondeat superior in actions against government officials, *fn5" we conclude that plaintiffs have failed to allege or show any connection between Butz and their alleged injury.

 Defendant Bain died during the pendency of this action, and the parties have stipulated to discontinue the action as to him. We, therefore, dismiss the complaint as to defendant Bain.

 Defendants' Motion for Summary Judgment

 Plaintiffs' complaint alleges six claims for violation of their common law rights and four for violation of their constitutional rights. All of the remaining defendants ("defendants") seek summary judgment on the common law claims on the ground of official immunity *fn6" and, except for defendants Gross and Fitzpatrick, seek the same relief for the same reason on the constitutional claims.

 All public officials enjoy absolute immunity from suit for common law torts provided their acts were discretionary and within the outer perimeter of their line of duty. *fn7" Malice is immaterial. *fn8" The absolute immunity for constitutional torts, however, is limited according to the teaching of the Supreme Court in this case to three classes of federal officials: (1) "persons . . . performing adjudicatory functions within a federal agency;" *fn9" (2) "agency officials performing . . . functions analogous to those of a prosecutor;" *fn10" and (3) "agency (attornies) who (arrange) for the presentation of evidence on the record in the course of an adjudication." *fn11"

 Our initial inquiry is thus directed to the nature of defendants' acts, and this is so as to both the common law and constitutional claims asserted here.

 In support of their motion for summary judgment, defendants submit affidavits, answers to interrogatories and a statement of their version of undisputed facts, pursuant to local Rule 9(g). *fn12" It appears from these documents that, pursuant to an amendment to the Commodity Exchange Act in 1968, *fn13" the Secretary of Agriculture prescribed minimum financial requirements for all persons registered or seeking registration as futures commission merchants.

 On March 19, 1969, the CEA sent letters to all registered futures commission merchants requiring the filing of initial financial statements by March 31, 1969. On reviewing the financial statement submitted by plaintiff Arthur N. Economou & Co., Inc., the Director of the Registration and Audit Division of the CEA concluded that some of the current assets claimed by plaintiff were questionable and ordered that plaintiff be audited. *fn14"

 Plaintiff was audited in 1969 by defendant Fitzpatrick, a CEA auditor. *fn15" His audit report was then reviewed by defendants Wolkis, the Chief of the Registration and Audit Branch of the CEA for the Eastern Region; *fn16" McMinn, Director of the Eastern Region of the CEA; *fn17" Caldwell, Administrator of the CEA; *fn18" Kirchhoff, Deputy Director of the CEA Registration and Audit Division; *fn19" and Robinson, the Director of the CEA's Compliance Division, *fn20" all of whom recommended the commencement of a disciplinary proceeding.

 Defendant Lyng, Assistant Secretary of Agriculture, subsequently reviewed the audit report, found that plaintiff was in wilful violation of the financial requirements established for futures commission merchants and on February 19, 1970 commenced the disciplinary proceeding at issue in this case without issuing a prior warning letter. *fn21"

 Since nearly a year had elapsed since the initial audit of plaintiff's financial records, defendant Gross, another CEA auditor, was directed by the USDA's Office of General Counsel to audit plaintiff again in 1970. *fn22"

 A hearing was held on the complaint in August 1970 at which defendants Fitzpatrick, Gross, McMinn and Kirchhoff testified and defendant Davis, *fn23" an attorney from the USDA's Office of General Counsel, presented the government's case. Defendant Campbell, a USDA Judicial Officer, subsequently issued a final order and decision based on the Hearing Examiner's report. *fn24"

 The affidavits and the answers to the interrogatories are based on personal knowledge. Plaintiffs have not submitted an opposing Rule 9(g) statement giving their version of undisputed facts. We therefore deem the facts set forth in defendants' 9(g) statement as admitted. *fn25"

 Since defendants have made a factual showing that no genuine issue exists regarding the acts performed by them, plaintiffs must either come forward with evidence that tends to show that an issue of fact exists *fn26" or explain why they are presently unable to come forward with such evidence. *fn27" We find that plaintiffs have satisfied neither alternative.

 Plaintiffs submit two affidavits of Arthur N. Economou in which he complains that the disciplinary proceeding was commenced "without any prior warning to the plaintiffs, either written or otherwise." *fn28" He also avers that the auditors were "rude and insulting" *fn29" and states in conclusory language that defendants acted maliciously and for retaliatory reasons. Bald conclusions in response to defendants' definite statement of facts do not create a genuine issue of fact. Moreover, neither of the Economou affidavits makes any showing whatsoever that defendants performed any act other than those described above.

 Nor have plaintiffs made any showing that there is a reasonable probability that further discovery would disclose any evidence sufficient to create a genuine issue of fact regarding the acts performed by defendants, or that defendants' affidavits and answers to the interrogatories are untrue or incomplete, or that there are other witnesses who would have knowledge of the acts performed by defendants, or that the use of other discovery methods would disclose evidence sufficient to create a genuine issue of fact.

 Thus, defendants have presented uncontradicted evidence regarding the acts performed by them. Since a " "vague hope' " *fn30" that contradictory evidence will subsequently be discovered is insufficient to defeat a motion for summary judgment, we conclude that defendants have established that there is no genuine issue as to any fact material to defendants' defense of immunity.

 We turn now to determine whether defendants enjoy immunity as a matter of law.

 Immunity from Common Law Torts

 As was stated above, if defendants establish that their acts were within the outer perimeter of their lines of duty and discretionary, the privilege of absolute immunity is applicable to the common law claims whether or not plaintiffs' claims of malice are ...


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