Prager v. LaFaver , 180 F.3d 1185 ( 1999 )

F I L E D
United States Court of Appeals
Tenth Circuit
JUN 15 1999
PUBLISH
PATRICK FISHER
UNITED STATES COURT OF APPEALS Clerk
TENTH CIRCUIT
DAVID PRAGER, III,
Plaintiff-Appellee,
v.
No. 98-3116
JOHN D. LaFAVER, Secretary of the
Kansas Department of Revenue, In His
Personal Capacity,
Defendant-Appellant,
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 97-CV-4216-DES)
Thomas V. Murray (Cheryl L. Jackson and Terence E. Leibold, with him on the
briefs) of Barber, Emerson, Springer, Zinn & Murray, L.C., Lawrence, Kansas,
for Defendant-Appellant.
Alan V. Johnson of Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C.,
Topeka, Kansas, for Plaintiff-Appellee.
Before SEYMOUR, Chief Judge, MAGILL, * and EBEL, Circuit Judges.
SEYMOUR, Chief Judge.
*
The Honorable Frank J. Magill, Senior United States Circuit Judge,
United States Court of Appeals for the Eighth Circuit, sitting by designation.
John LaFaver, the Secretary of the Kansas Department of Revenue, fired
David Prager, III, a former attorney with that organization, after Mr. Prager wrote
several letters critical of the Department to Governor William Graves. Mr. Prager
sued Mr. LaFaver for depriving him of his First and Fourteenth Amendment rights
in violation of 42 U.S.C. § 1983. Mr. LaFaver filed a motion to dismiss based on
qualified immunity and attached several documents thereto, including a letter
from Mr. Prager to the Governor and several letters from Mr. LaFaver to Mr.
Prager. The district court refused to consider the additional materials and treated
defendant’s motion as a motion to dismiss under Fed.R.Civ.P. 12(b)(6). It denied
the motion as to the First Amendment claim and granted the motion with leave to
amend as to the Fourteenth Amendment claim. Mr. LaFaver appeals, claiming
that the district court erred by refusing to consider the materials appended to his
motion to dismiss, and by denying him qualified immunity. We affirm.
I.
Mr. Prager was employed as senior tax attorney with the Kansas
Department of Revenue. 1 In that capacity, he believed that the Department of
1
Because this appeal arises from a motion to dismiss pursuant to rule
12(b)(6), we accept all well-pleaded factual allegations in the complaint as true,
and view them in the light most favorable to the nonmoving party. GFF Corp. v.
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Revenue was erroneously interpreting a Kansas statute, resulting in a significant
illegal tax abatement to a corporation. On October 31, 1996, he wrote a
memorandum to his supervisor, Richard Oxendale, General Counsel for the
Department of Revenue, analyzing the legal issue, explaining the mistake, and
requesting a meeting with Mr. Oxendale and Mr. LaFaver to discuss the matter.
Mr. Oxendale never arranged the requested meeting.
On December 18, 1996, Mr. Prager sent a letter to Governor Graves
discussing several problems within the Department of Revenue. He asserted that
a tax abatement in a well-publicized case involving La Siesta Foods, Inc. was
illegal. 2 He also addressed the role of political influence in the Department of
Revenue’s administrative process. Finally, he discussed the public’s negative
perception of the Department.
Because of this letter, Mr. LaFaver wrote to Mr. Prager on January 8, 1997,
suspending him from his employment with pay. Mr. LaFaver opened by saying, “I
am in receipt of your unfortunate correspondence to the Governor regarding an
array of tax issues at the Department of Revenue.” Aplt. App. at 3. He
continued, “That you chose to send such a letter to the Governor without
discussing it with the General Counsel or me reflects poorly upon your judgment
Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997).
2
Mr. Prager’s October memorandum to Mr. Oxendale did not pertain to
the La Siesta Food abatement.
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and your willingness and ability to work as member of this team.” Id. Mr. Prager
appealed his suspension, claiming that Mr. LaFaver retaliated against him for
reporting the illegal tax abatement, thereby violating Kan. Stat. Ann.§ 75-2973
(West 1996 Supp.), the Kansas whistle-blower statute.
In March 1997, Mr. Prager wrote another letter to Governor Graves
expressing the concerns voiced in the October 1996 memorandum to Mr.
Oxendale. He sent copies to Mr. LaFaver and Mr. Oxendale. Mr. LaFaver
responded on May 9 advising Mr. Prager that he would be terminated from his
employment with the Department of Revenue effective May 16. After his
termination, Mr. Prager filed this action.
II.
We must first address whether the district court is required to consider
materials that a defendant attaches to his motion to dismiss. Mr. LaFaver
attached Mr. Prager’s December 18 letter to Governor Graves and Mr. LaFaver’s
January 8, May 9, May 16, and July 30 letters to Mr. Prager. Mr. LaFaver did not
attach Mr. Prager’s October 31 memorandum to Mr. Oxendale nor his March 17
letter to the Governor. The district court refused to consider any of the attached
materials, deciding the motion on the basis of the complaint and answer.
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Mr. LaFaver asserts that the court was required to consider the documents
attached to its rule 12(b)(6) motion, and that its failure to do so constitutes
reversible error. Specifically, he argues that because Mr. Prager referred to and
quoted from several of the letters in the complaint, those material should be
considered part of the pleadings. Mr. LaFaver recognizes that some of the
attached letters were not referenced in Mr. Prager’s complaint but contends that
those materials are necessary to “complete the entire documentation surrounding
the termination.” Aplt. Br. at 12 n.8.
Mr. LaFaver primarily relies on GFF Corp. v. Associated Wholesale
Grocers, Inc., 130 F.3d 1381 (10th Cir. 1997), to support this argument. In GFF
Corp., this court upheld the district’s court consideration of a letter that the
plaintiff alleged satisfied the statute of frauds but did not attach to its amended
complaint. Id. at 1385. We noted that, in general, a motion to dismiss should be
converted to a summary judgment motion if a party submits, and the district court
considers, materials outside the pleadings. Id. at 1384. 3 We then continued:
3
In fact, Fed.R.Civ.P. 12(b) specifically provides:
If, on a motion asserting the defense numbered (6) to
dismiss for failure of the pleading to state a claim upon
which relief can be granted, matters outside the pleading
are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment
and disposed of as provided in Rule 56, and all parties
shall be given reasonable opportunity to present all
material made pertinent to such a motion by Rule 56.
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Notwithstanding these general principles, if a plaintiff does not
incorporate by reference or attach a document to its complaint, but
the document is referred to in the complaint and is central to the
plaintiff’s claim, a defendant may submit an indisputably authentic
copy to the court to be considered on a motion to dismiss.
Id.; see also Wright v. Associated Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir.
1994) (noting that documents are not “outside the pleadings” if they are “referred
to in the plaintiff’s complaint and are central to his claim”).
We find nothing in GFF Corp. that requires the district court to consider
the materials Mr. LaFaver attached to his motion. We agree that GFF Corp.
supports the proposition that the district court could have considered those
documents Mr. Prager referred to in his complaint which were central to his claim
without converting Mr. LaFaver’s motion into one for summary judgment.
Nevertheless, GFF Corp. did not purport to decide whether consideration of
materials appended to a motion to dismiss is mandatory or discretionary.
Numerous other circuits use language indicating district court’s have discretion in
deciding whether to consider such materials. See, e.g., Brooks v. Blue Cross and
Blue Shield of Florida, 116 F.3d 1364, 1369 (11th Cir. 1997) (“[W]here the
plaintiff refers to certain documents in the complaint and those documents are
central to the plaintiff’s claim, then the Court may consider the documents part of
the pleadings for purposes of Rule 12(b)(6) dismissal . . . .”) (emphasis added);
Wright, 29 F.3d at 1248 (“[D]ocuments attached to a motion to dismiss [that] are
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referred to in the plaintiff’s complaint and . . . central to his claim . . . may be
considered by a district court ruling on the motion to dismiss.”) (emphasis added);
Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) (“[W]e hold that documents
whose contents are alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the pleading, may be
considered in ruling on a 12(b)(6) motion to dismiss.”) (emphasis added); Pension
Benefit Guar. Corp. v. White Consol. Indus. Inc., 998 F.2d 1192, 1196 (3d Cir.
1993) (“We now hold that a court may consider an undisputedly authentic
document that a defendant attaches as an exhibit to a motion to dismiss if the
plaintiff’s claims are based on that document.”) (emphasis added); Cortec Indus.,
Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991) (“[T]hough the district
court . . . declined to consider these exhibits, it could have viewed them on the
motion to dismiss because there was undisputed notice to plaintiffs of their
contents and they were integral to plaintiff’s claim.”) (emphasis added). We
agree with our sister circuits that if a defendant attaches to a 12(b)(6) motion
materials referred to by the plaintiff and central to his claim, the court has
discretion to consider such materials.
Here, the district court acted well within its discretion in declining to
consider the documents attached to Mr. LaFaver’s motion to dismiss. The
attachments were both over-inclusive and under-inclusive. While Mr. LaFaver
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appended several documents referenced in Mr. Prager’s complaint, he excluded
two others, namely the October 31 memorandum to Mr. Oxendale and the March
17 letter to Governor Graves. In addition, Mr. LaFaver attached two documents,
the letters of May 16 and July 30, that Mr. Prager did not refer to in his
complaint. Given that state of the record, it was reasonable for the district court
to decide the motion without consideration of any of the appended materials.
III.
We now turn to the merits of Mr. LaFaver’s motion to dismiss on the basis
of qualified immunity. We review a district court’s decision to grant or deny a
motion to dismiss de novo. See GFF Corp., 130 F.3d at 1384. A defendant may
immediately appeal the denial of a 12(b)(6) motion based on qualified immunity
to the extent that denial turns on an issue of law. See Behrens v. Pelletier, 516
U.S. 299, 307 (1996). 4
“Under the doctrine of qualified immunity, ‘government officials
performing discretionary functions generally are shielded from liability for civil
4
Mr. Prager contends we lack subject matter jurisdiction over the qualified
immunity appeal because the district court merely held there were fact issues
precluding a dismissal. See Johnson v. Jones, 515 U.S. 304, 313-14 (1995). We
disagree. For the reasons set out infra, this appeal involves issues of law.
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damages insofar as their conduct does not violate clearly established statutory or
constitutional rights of which a reasonable person would have known.’” Ramirez
v. Oklahoma Dept. of Mental Health, 41 F.3d 584, 592-93 (10th Cir. 1994)
(quoting Harlow v. Fitzgerald, 457 U.S. 800, 818 (1994)); see also Workman v.
Jordan, 958 F.2d 332, 336 (10th Cir. 1992) (“If [defendants’] actions are those
that a reasonable person could have believed were lawful, defendants are entitled
to dismissal before discovery.”). Qualified immunity protects government
officials from being subjected to the burdens of discovery and trial in meritless
cases. See Harlow, 457 U.S. at 818.
Mr. LaFaver contends the law did not clearly establish that the First
Amendment protected Mr. Prager’s speech. Pickering v. Board of Educ., 391
U.S. 563 (1968), and its progeny set forth the applicable framework for
determining the First Amendment rights of public employees like Mr. Prager. See
Moore v. City of Wynnewood, 57 F.3d 924, 931 (10th Cir. 1995). Under this
framework, we must first decide whether the employee’s speech may be “fairly
characterized as constituting speech on a matter of public concern.” Connick v.
Myers, 461 U.S. 138, 146 (1983). We determine this “by the content, form, and
context of a given statement, as revealed by the whole record.” Id. at 147-48. If
the speech addressed a matter of public concern, we must next balance the
employee’s “interest in making [his] statement against ‘the interest of the State,
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as an employer, in promoting the efficiency of the public services it performs
through it employees.’” Rankin v. McPherson, 483 U.S. 378, 388 (1987) (quoting
Pickering, 391 U.S. at 568). These two steps in the inquiry present legal issues
to be resolved by the court. See Gardetto v. Mason, 100 F.3d 803, 811 (10th Cir.
1996). 5
We first address whether Mr. Prager’s speech touched on matters of public
concern. “Speech which discloses any evidence of corruption, impropriety, or
other malfeasance on the part of [public] officials, in terms of content, clearly
concerns matter of public import.” Conaway v. Smith, 853 F.2d 789, 796 (10th
Cir. 1988); see also Considine v. Board of County Comm’rs, 910 F.2d 695, 700
(10th Cir. 1990) (discussing Tenth Circuit cases in which whistle blowing activity
was held to touch on matters of public concern); cf. Ramirez, 41 F.3d at 595. We
must discern “whether the speech was calculated to disclose misconduct or dealt
with only personal disputes and grievances with no relevance to the public
interests.” Conaway, 853 F.2d at 796.
Mr. Prager’s letters discussed illegal tax abatements, the pervasive effect of
political influence in the state tax system, and the negative perception of the
5
The final two steps, whether the protected speech was a substantial or
motivating factor in the decision, and whether the employer would have reached
the same decision absent the protected conduct, present questions of fact to be
resolved by the jury, Gardetto, 100 F.3d at 811, and we do not consider them
here.
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Department of Revenue. All of these issues, and in particular Mr. Prager’s
disclosure of governmental corruption, relate to matters of “political, social or
other concern to the community.” Connick, 461 U.S. at 146; see also Conaway,
853 F.2d at 796-97. Under the clearly established law of this circuit, Mr. Prager’s
speech, as described by this record, touched on matters of public concern.
We must next engage in the Pickering balancing test, weighing the
employee’s right to speak on matters of public concern against government-
employer’s interest in efficiency. 391 U.S. at 568. “When balancing the rights of
the employee against those of the employer, an employee’s First Amendment
interest is entitled to greater weight where he is acting as a whistle blower in
exposing government corruption.” Conaway, 853 F.2d at 797. In evaluating the
employer’s interest, courts consider “whether the statement impairs discipline by
superiors or harmony among co-workers, has a detrimental impact on close
working relationships for which personal loyalty and confidence are necessary, or
impedes the performance of the speaker’s duties or interferes with the regular
operation of the enterprise.” Rankin, 483 U.S. at 388. Nevertheless, an
employee’s speech will not be left unprotected simply because his “whistle
blowing might jeopardize the harmony of the office or tarnish the integrity of the
department.” Conaway, 853 F.2d at 798; see also Ramirez, 41 F.3d at 595.
Speculative assertions of workplace disruption are also insufficient, see Wulf, 883
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F.2d at 862; rather, the employer must show “‘actual disruption of services which
results from the employee[s’] speech.’” Ramirez, 41 F.3d at 594 (quoting Schalk,
906 F.2d at 496).
On this record, we must balance Mr. Prager’s constitutional right to expose
governmental misconduct against little evidence of governmental disruption. Mr.
Prager’s whistle blowing activity is entitled to substantial weight. See Conaway,
853 F.2d at 797. The only hint of governmental disruption comes from brief
portions of Mr. LaFaver’s letters quoted in the complaint. In the May 9
termination letter, Mr. LaFaver stated that Mr. Prager’s insubordination and
disclosure of privileged material, inter alia, “caused undue disruption of the
normal operation and proper functioning of this Department.” Aplt. App. at 5.
Given that Mr. Prager’s letters accused Mr. LaFaver of granting an illegal tax
abatement, it is unsurprising that it created office tensions; however, that in itself
does not render Mr. Prager’s speech unprotected. See Conaway, 853 F.2d at 798;
cf. Wulf, 883 F.2d at 862 (“In sum, there is simply insufficient evidence that the
letter itself interfered with effective functioning of the police department. Rather
the evidence supports the conclusion that Wulf’s letter was seeking to rectify
malfunctions already present in the department.”). Moreover, to the extent the
complaint alleges that Mr. LaFaver hid his true motivation for suspending and
terminating Mr. Prager behind the guise of promoting efficiency, we must accept
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that contention as true. We also note that Mr. Prager kept his speech within the
Kansas state government, and did not speak to the press or public. Cf. Conaway,
853 F.2d at 797-98. Not surprisingly, Mr. Prager’s First Amendment right
outweighs unsubstantiated claims of governmental disruption.
We turn to the question of whether this law was clearly established when
Mr. LaFaver acted against Mr. Prager. We recognize “a rule of law determined
by a balancing of interests is inevitably difficult to clearly anticipate.” Melton v.
City of Oklahoma City, 879 F.2d 706, 729 (10th Cir. 1989), overruled on other
grounds, 928 F.2d 920 (10th Cir. 1991) (en banc). Nevertheless, “to the extent
that courts in analogous (but not necessarily factually identical) cases have struck
the necessary balance, government officials will be deemed ‘on notice.’” Id. n.36.
Our decisions in Conaway, 853 F.3d at 797, and Ramirez, 41 F.3d at 595, clearly
established that an employee’s strong interest in disclosing governmental
corruption outweighs unsubstantiated assertions of workplace disruption, and put
Mr. LaFaver on notice that the conduct alleged in Mr. Prager’s complaint would
violate the law. We therefore hold the law was clearly established in Mr. Prager’s
favor at the time Mr. LaFaver suspended and terminated him.
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IV.
We AFFIRM the district court’s denial of Mr. LaFaver’s motion to
dismiss. 6
We note that Mr. LaFaver may raise the issue of qualified immunity again
6
on a motion for summary judgment after the record is more developed. See
Ramirez v. Oklahoma Dept. of Mental Health, 41 F.3d 584, 595 (10th Cir. 1994);
Workman v. Jordan, 958 F.2d 332, 336 (10th Cir. 1992).
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