have been undertaken by defendants in the disciplining of Mandelbaum are protected by absolute immunity.
First, despite plaintiff's protests to the contrary, it is clear that the disciplinary proceedings initiated against Mandelbaum are judicial in nature, and that the functions within that process performed by the defendants "share characteristics of the judicial process." Although the initial fine levied against Mandelbaum occurred pursuant to a summary proceeding, that proceeding nonetheless constituted a disciplinary proceeding of the type addressed in Austin, Bettencourt, and other instances in which absolute immunity has been extended to the actions of self-regulatory organizations. As in Austin, the proceeding was conducted pursuant to Congressionally prescribed and delegated authority and rules explicitly approved by the CFTC (by means of the Commodities Exchange Act). The disciplinary proceedings were also characterized by the kind of multi-stage administrative and judicial review that courts have found dispositive on this issue. Targets of such disciplinary proceedings have the right to counsel at all stages, along with an opportunity to make written submissions at each level of appeal. The process itself includes a NYMEX review of the summary action before the Floor Committee (Mandelbaum made a written submission at this stage), and the opportunity for review by the CFTC, the government agency that oversees NYMEX (Mandelbaum made a further submission to the CFTC) Finally, where, unlike here, the CFTC fails to vacate NYMEX's sanction, the target of the disciplinary action may seek judicial review by the United States Circuit Court of Appeals, pursuant to 7 U.S.C. § 21(i), and, ultimately, by the Supreme Court. As noted, the presence of a right to counsel and opportunities for review by independent authorities who have the power to correct the alleged wrongs of putatively immune officials has proven persuasive to courts as they determine whether to extend the doctrine of absolute immunity. See, e.g., Austin, supra; Bettencourt, supra; Watts v. Burkhart, 978 F.2d 269, 276 (6th Cir. 1992); United States v. Irving, 684 F.2d 494, 497 (7th Cir. 1982).
We similarly find them to suggest the appropriateness of immunizing the actions of defendants in this action.
That Mandelbaum's initial disciplinary proceeding did not constitute a full blown hearing is of no moment. First, the procedural protections discussed above attached regardless of whether the target of the disciplinary proceeding was initially fined in the context of a hearing. Second, as a matter of public policy, to limit the application of absolute immunity to matters in which a hearing or trial was held would severely hamper the administration of justice. Under plaintiff's formulation, immunity would fail to attach in any instance where a judicial officer resolved a matter at a preliminary stage, including, for example, by means of a summary judgment motion. Other courts have rejected such a truncated version of absolute immunity,
and we do so here.
The roles of defendants in the disciplinary proceedings against plaintiff clearly "share the characteristics of the judicial process," as that phrase has been defined by the courts in delineating the scope of absolute immunity. The individual defendants functioned as the advocates, witnesses, legal advisors, and investigators in the disciplinary proceedings at issue. See Butz, supra, 438 U.S. at 511-12 ("Absolute immunity is thus necessary to assure that judges, advocates and witnesses can perform their respective functions without harassment or intimidation.") Under the above cited authorities, if the other prongs of the Butz test are satisfied, absolute immunity will clearly attach to defendants' prosecution of the disciplinary actions against Mandelbaum and Walshak. E.g., Austin, supra; see also Ying Jing Gan v. City of New York, 996 F.2d 522, 530-531 (2d Cir. 1993) (immunity attaches to "decisions as to whether or not to institute a prosecution, and if so on what charges"); Forman v. Ours, 804 F. Supp. 864, 868 (E.D.La. 1992) (absolute immunity extends to employee of Bar disciplinary board who filed disciplinary charges and acted as assistant disciplinary counsel), aff'd. 996 F.2d 306 (5th Cir. 1993). It would similarly cover the submission and transmittal (by Smith and Oppenheimer) of Smith's affidavits as a witness in the disciplinary proceeding against plaintiff,
and the conduct of defendants (e.g., Oppenheimer and Thompson) who acted as supervisors or legal advisors of those persons directly involved in the disciplinary proceedings. Bettencourt, supra, 904 F.2d at 784-85 (extending "quasi-judicial immunity" to staff members of medical disciplinary board who functioned as legal or other advisors in "establishing the disciplinary policy involved."). Finally, if the other prerequisites of Butz are met, absolute immunity would extend to the conduct of defendants, such as Mr. Morrissey, in conducting investigations and initiating disciplinary actions.
Johnson, supra, 870 F.2d at 996; Ryan v. SEC, [1981 Transfer Binder] Fed. Sec. L. Rep. (CCH) P 97,999 at 91,136) (W.D. Wash. 1981) (granting absolute immunity to SEC staff disciplinary employees for their investigative activity).
The second prong of the Butz test-- whether the officials' activities are likely to result in recriminatory lawsuits by disappointed participants-- need not detain us long. We discuss this issue in the context of Austin supra at 7, and add only that precisely the same concerns mandate a similar finding here. See also, Butz, supra, 438 U.S. at 515, 98 S. Ct. at 2915 (noting the tendency of individuals subject to discipline to vindicate themselves in the courts).
With respect to the third Butz factor, viz. whether sufficient safeguards exist in the regulatory framework to control unconstitutional conduct, we will not reiterate the substantial procedural protections afforded Mandelbaum as the subject of NYMEX disciplinary proceeding. See, supra at 9-11. We simply conclude that they clearly satisfy the concerns embodied by the third prong of the Butz test. As this Court noted, in Trama, supra, CCH Fed. Sec. L. Rep. P 96,748 at p.94,920, the public interest in the efficient operation of self-regulatory bodies such as the NYSE (in Trama) and NYMEX militates in favor of extending absolute immunity to the disciplinary officials of those organizations where the Congressional scheme for such disciplinary proceedings provides for internal procedural protections (e.g., right to counsel and to make submissions at each stage) and appeals to overseeing administrative authorities such as the SEC or CFTC, as well as to federal judicial fora:
Absolute immunity is necessary to assure that judges, advocates, and witnesses can perform their respective functions without harassment or intimidation. Furthermore, the safeguards which are built into the judicial process reduce the need for private damage actions as a means of controlling unconstitutional conduct. In the instant case, if the action of the Exchange had been adverse to plaintiff, plaintiff could have ultimately appealed the sanctions imposed to the Court of Appeals in order to test the constitutionality of the procedure utilized by defendants in assessing plaintiff's guilt or innocence."