On September 30, 2011, the Fifth Circuit Court of Appeals decided an issue of first impression in the case of Juarez v. Aguilar, concluding that liability exists when a school board makes an informal decision about employment. Decision makers, such as school district board members, city councils, housing authority board of commissioners, and others with authority to make employment decisions, should be aware of this recent ruling.
The defendants were members of the Brownsville Independent School District Board of Trustees. The suit was brought by the District's CFO ("Juarez") who had recommended a certain stop loss insurance coverage contract to the Board. Certain Board members accused Juarez of misinforming the Board about the details of his insurance contract recommendation. Soon after, a BISD employee initiated a grievance against Juarez, contending he had lied to the Board. In the lawsuit, Juarez alleged that the grievance was filed at the Board's behest, consistent with BISD's practice of "setting one employee to grieve against another."
Next, the superintendent offered Juarez a new position as Grants Administrator. Juarez resigned as CFO and accepted the reassignment. After his resignation and before the hearing on the employee grievance against him, Juarez recorded conversations with a district employee and a former member of the Board, who told Juarez that the district had engaged in bidding irregularities and that district employees routinely used the filing of grievances as a way of advancing their careers.
Juarez went to the FBI to report that the Board was manipulating the bidding process for the district's stop loss insurance coverage. Neither Juarez's original contract as CFO, nor his reassignment as Grants Administrator was renewed.
Juarez filed suit, alleging that the Board had retaliated against him for exercising his First Amendment right to report illegal activity to law enforcement. The suit named Board members in their official and individual capacities, and alleged that the Board had conspired to manipulate the insurance bidding procedures.
The defendants sought dismissal of the Section 1983 retaliation claims based on qualified immunity, which protects governmental employees as long as they are not violating clearly established rights. The district court denied summary judgment, ruling that genuine issues of fact existed with respect to whether the Board's actions violated Juarez's rights under the First Amendment and whether those rights were clearly established at the time Appellants allegedly violated them.
On appeal, the Board members argued, among other things, that the district court erred in determining that a school board can make an "adverse employment decision" in the absence of a formal vote. The district court found that an issue of fact existed as to whether Appellants entered into a secret, informal agreement to refuse to renew Juarez's contract. The Board members argued that would be irrelevant because they were not acting as the "final decision-maker."
In support of its holding that informal government action can support a Section 1983 retaliation claim, the Fifth Circuit reasoned as follows:
[D]eprivations subject to § 1983 liability do not result only from formal government actions. Additionally, a rule that punishes formal retaliation but foregoes punishment when the same end is accomplished informally would undercut the purpose of § 1983. Such a rule would only encourage municipalities to conduct their business off-the-record. Given that such an incentive structure would likely make state abuses of power more common rather than less, the Appellants' proposed rule does not promote the purposes envisioned by Congress when it enacted liability under § 1983.
The Fifth Circuit summarized its decision as follows, "[e]ven if an adverse governmental decision does not result from a formal vote, the 'final decisionmaker' responsible for that adverse employment decision is subject to individual liability if her decision was motivated by impermissible considerations."
The court next considered whether the Board members were entitled to qualified immunity. Under the qualified immunity doctrine, officials are shielded from liability for civil damages as long as their conduct "does not violate clearly established statutory or constitutional rights of which a reasonable person would have known."
The Fifth Circuit held that the Board members had not shown their entitlement to qualified immunity because Juarez's retaliation claim was "straightforward." Juarez alleged that because he informed the FBI of illegal activities, the Board members entered into an agreement not to extend his contract. Assuming his allegations were true, such conduct would fall well within the clearly established elements of retaliation in violation of his First Amendment rights. The court noted that "the only distinction between this case and the previous cases we have decided is the fact that Appellants did not formally vote when making the alleged adverse employment decision. That this court has not previously considered an identical fact pattern does not mean that a litigant's rights were not clearly established."
The Fifth Circuit explained further that it would have been unreasonable for the Board members to believe that the absence of a formal vote would absolve them of liability. Thus, the Board members were on notice that even an informal decision to retaliate against Juarez would violate his First Amendment rights, and potentially subject them to liability under Section 1983.
After the Juarez opinion, it is now clear that government officials are not shielded from liability simply because they make adverse employment decisions informally, rather than through official vote or other official action. The Juarezopinion should serve as an important reminder to decision makers that adverse employment decisions should always be considered carefully, as decisions motivated by impermissible purposes, regardless of how they are made, always have potential to result in individual liability for the decision makers under Section 1983.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
