Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-93-04189/USCOURTS-ca10-93-04189-0/pdf.json

Nature of Suit Code: 385
Nature of Suit: Property Damage - Product Liability
Cause of Action: 

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PUBLISH 

FILED 

United States Court ot Appeals Tenth Circuit 

FEB 14 1995 

UNITED STATES COURT OF APPEALS PATRICK FISHER 

Clerk TENTH CIRCUIT 

BARBARA W. RICHMAN, 

Plaintiff-Appellant, 

v. 

M. JOHN STRALEY; DAVID D. BIRD; 

JOHN E. LOGAN; UNITED STATES 

OF AMERICA, by and through the 

the Justice Department, Office of 

United States Trustee, 

Defendants-Appellees. 

No. 93-4189 

Appeal from the United States District Court 

for the District of Utah 

(D.C. No. 92-C-602-JB) 

Barbara W. Richman (Glen M. Richman, with her on the briefs), of 

Richman & Richman, Salt Lake City, Utah, for Plaintiff/Appellant. 

Carlie Christensen, Assistant United States Attorney (Scott M. 

Matheson, Jr., United States Attorney, with her on the brief), 

Salt Lake City, Utah, for Defendants/Appellees. 

Before SEYMOUR, Chief Judge, LOGAN, and EBEL, Circuit Judges. 

SEYMOUR, Chief Judge. 

Appellate Case: 93-4189 Document: 01019280501 Date Filed: 02/14/1995 Page: 1 
Barbara w. Richman brought an action against the United 

States and three federal officials, asserting that defendants' 

appointment of a new standing trustee in the District of Utah and 

assignment of all new cases to the new trustee constituted a de 

facto removal of Ms. Richman as the standing trustee in violation 

of her right to due process under the Fifth Amendment to the 

Constitution. Because we conclude that Ms. Richman did not have 

the requisite property interest to support a due process claim, we 

agree with the district court that she failed to allege a due 

process violation. We also affirm the court's dismissal of Ms. 

Richman's related state tort claims. 

I. 

From January 20, 1988 to the present, Ms. Richman has been a 

standing trustee in the district of Utah pursuant to 28 U.S.C. § 

586(b). In that capacity, she serves as the trustee in federal 

bankruptcy cases filed under chapters twelve and thirteen of the 

bankruptcy code. The individual defendants are officials in the 

United States Trustee program.1 

1 M. John Straley is the Assistant United States Trustee for 

the district of Utah. David D. Bird serves as the United States 

Trustee for the judicial districts of Colorado, Utah, and Wyoming. 

John E. Logan is the Executive Director of the Executive Office 

for United States Trustees. 

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On June 29, 1992, John Straley and David Bird informed Ms. 

Richman that they would appoint a new standing trustee for the 

district of Utah and assign to her all new bankruptcy cases 

arising under chapters twelve and thirteen. The next day, Mr. 

Straley made the promised appointment, which John Logan ratified 

and approved. Mr. Straley subsequently filed a motion to remove 

Ms. Richman as a standing trustee in her existing cases. Upon 

stipulation of the parties, however, the court dismissed the 

removal proceedings. 

Ms. Richman filed this suit in federal district court 

alleging unlawful deprivation of property without due process of 

law,2 tortious interference with prospective economic relations, 

and libel and slander. The district court granted defendants' 

motions to dismiss the complaint for failure to state a claim. 

II. 

Ms. Richman first asserts on appeal that defendants' refusal 

to assign her any new cases constitutes a deprivation of her 

property without due process. A plaintiff has a property interest 

in those things to which she has "a legitimate claim of 

entitlement." Board of Regents v. Roth, 408 U.S. 564, 577 (1972). 

2 Ms. Richman bases her due process claims upon both the Fifth 

Amendment of the United States Constitution and Article I Sections 

1 and 7 of the Utah Constitution. 

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Appellate Case: 93-4189 Document: 01019280501 Date Filed: 02/14/1995 Page: 3 
A claim of entitlement must stem from an independent source such 

as a state or federal law. Id. In order to invoke the 

protections of the Due Process Clause, Ms. Richman must prove that 

her appointment as a standing trustee created a claim of 

entitlement to serve as trustee in future cases. 

Ms. Richman contends that the federal statutory scheme 

governing the appointment and removal of standing trustees 

establishes her entitlement. In particular, she relies upon 28 

U.S.C. § 586(b) and 11 U.S.C. § 324(a). An analysis of the text 

and legislative history of each, however, reveals that standing 

trustees do not have a property right in the assignment of new 

cases. 

Section 586(b) gives the United States Trustee the power to 

appoint standing trustees subject to approval of the Attorney 

General. Generally, the power of removal is implicit in the power 

of appointment unless the appointment carries with it a definite 

term of office or a constitutional or statutory provision limits 

the removal power. See Carlucci v. Doe, 488 U.S. 93, 99 (1988). 

Although the standing trustee serves an indefinite term of office, 

Ms. Richman contends that 28 U.S.C. § 324 explicitly denies the 

United States Trustee the power of removal and places sole 

authority to remove in the hands of the district court. 

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Appellate Case: 93-4189 Document: 01019280501 Date Filed: 02/14/1995 Page: 4 
Section 324(a) provides that "[t]he court, after notice and a 

hearing, may remove a trustee . . . for cause. " Ms. Richman urges 

us to apply this requirement to future cases in which the standing 

trustee might serve. Legislative history suggests to the contrary 

that section 324(a) applies only to an individual case in which 

the standing trustee is currently serving. Congress added section 

324(b) to the statutory scheme to clarify that "unless the court 

orders otherwise, removal of a private trustee for cause in one 

case [pursuant to section 324(a)] constitutes removal of that 

trustee in all other cases in which the trustee is serving." H.R. 

Rep. No. 764, 99th Cong., at 5236 (1986) (emphasis added). 

Although Congress explicitly added the presumption that removal in 

one case would constitute removal in all current cases, it omitted 

any mention of future cases. This omission implies that no 

property right vests until actual assignment of the case. Because 

the standing trustee serves no definite term and Congress made no 

explicit provision to the contrary, the party with the power of 

appointment may terminate that appointment at any time by refusing 

to assign new cases to the standing trustee. 

Ms. Richman argues that allowing the United States Trustee to 

terminate a standing trustee's appointment is contrary to 

legislative intent. She asserts that Congress created this 

statutory scheme "to eliminate the cronyism and appearance of 

impropriety inherent in the [existing] procedure," which provided 

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Appellate Case: 93-4189 Document: 01019280501 Date Filed: 02/14/1995 Page: 5 
for appointment and removal by the bankruptcy court. Aplt. Reply 

Br., at 9. 

Although perceived cronyism was a concern, Ms. Richman has 

applied this concern to the wrong context. Congress did not view 

the fact that the same body both appointed and removed trustees as 

problematic. Instead, the existing system was tainted because the 

trustees "appeared in bankruptcy court before the very same judges 

who appointed them." H.R. Rep. 764, 99th Cong., at 5230. 

In such circumstances, a trustee would often be 

reluctant to take positions contrary to the judges who 

appointed the trustee, even though a trustee was 

supposed to be an impartial administrator of the estate. 

This awkward relationship between trustees and judges 

created an improper appearance of favoritism, cronyism, 

and bias, and generated great disrespect for the 

bankruptcy system. 

Id. Rather than creating a system of checks and balances as Ms. 

Richman claims, Congress sought to strip bankruptcy courts of 

their administrative role so that they could better perform their 

judicial tasks. Allowing the same nonjudicial body to both 

appoint and terminate the appointment of standing trustees is thus 

consistent with legislative intent.3 

3 Ms. Richman also relies upon the fact that Congress has twice 

declined to amend § 324 and transfer the power of removal from the 

bankruptcy court to the United States Trustee. Aplt. Br. at 16. 

We have already concluded that the removal authority contained in 

§ 324 pertains only to existing cases. We thus reject the notion 

that any congressional inaction regarding § 324 bears upon the 

United States Trustee's inherent authority to terminate the 

appointment of a standing trustee and to preclude her from serving 

as trustee in future cases. 

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Appellate Case: 93-4189 Document: 01019280501 Date Filed: 02/14/1995 Page: 6 
Ms. Richman concedes she would not have had a property 

interest under the prior statutory scheme because the bankruptcy 

court could decline to give a trustee additional cases for 

arbitrary reasons. See, ~, In the Matter of Chapter 13. 

Pending and Future Cases, 19 B.R. 713, 714-15 (Bankr. W.O. Wash . 

. 1982) (court order terminating standing trustee as to new cases 

without notice and hearing is "entirely proper"). Under the 

normal rules of statutory construction, "if Congress intends for 

legislation to change the interpretation of a judicially created 

concept, it makes that intent specific." In re Schollett, 980 

F.2d 639, 641 (lOth Cir. 1992) (citing Midatlantic Nat'l Bank of 

New Jersey v. Dep't of Envtl. Protection, 474 U.S. 494, 501 

(1986)). Congress failed to express any intent to expand due 

process protections to future cases, and in fact made no changes 

at all to section 324(a), the removal provision upon which Ms. 

Richman relies. We therefore conclude that the statutory scheme 

does not create a property right in the assignment of future 

cases. 

Ms. Richman also claims that her alleged property right stems 

from rules and explicit understandings created by defendants which 

may be the sources of such rights, see generally Perry v. 

Sinderman, 408 U.S. 593 (1972). We find no rules or 

understandings here which entitle Ms. Richman to due process 

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protections, however. Ms. Richman asserts that none of the 

regulations pertaining to standing trustees provide authority for 

their termination. As noted above, such authority is implicit in 

the statutory power of appointment. Ms. Richman also claims that 

the order fixing her compensation at a maximum annual amount 

provides a guarantee of continued employment. We disagree. While 

the order imposes a cap on the amount a standing trustee may earn, 

it does not create a right to that amount. Ms. Richman has failed 

to offer one rule or understanding which explicitly confers upon 

her an expectancy of appointment in future cases. 

On the contrary, other documents explicitly reserve the 

termination power implicit in section 586. Ms. Richman's official 

Designation of Appointment as a standing trustee provides that 

"[t]his appointment ... may be terminated at any time." Aplt. 

App. at 69. The Ratification and Approval of her appointment 

contains a caveat that "this approval may be withdrawn at any 

time." Id. Finally, The Legal Manual for United States Trustees 

provides, "If the standing trustee is not performing in a manner 

acceptable to the United States Trustee and in conformity with 

these guidelines, then the United States Trustee may remove the 

standing trustee, subject to the approval of the Director." Id. 

at 385. These documents support our conclusion that Ms. Richman 

does not have a claim of entitlement to future cases and therefore 

does not have a constitutionally protected property right. 

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III. 

Ms. Richman also appeals the district court's dismissal of 

her state law claims. The court substituted the United States as 

the sole defendant with respect to those claims under the Federal 

Employees Liability Reform and Tort Compensation Act (FELRTCA) , 28 

U.S.C. § 2679 (1994), and thereafter found the claims barred by 

sovereign immunity under the Federal Tort Claims Act (FTCA) , 28 

U.S.C. §§ 2671-2680 (1994). Ms. Richman appeals the substitution 

of the government as sole defendant as to all claims, and the 

determination that sovereign immunity bars her claim for tortious 

interference with prospective economic relations.4 We review de 

novo a district court's dismissal of a complaint for failure to 

state a claim. Mock v. T.G.& Y. Stores Co., 971 F.2d 522, 528-29 

(lOth Cir. 1992). 

Under section 2679(d) (1) of FELRTCA, any civil action against 

an individual defendant who is a government employeeS acting 

within the scope of his employment is deemed an action against the 

4 Ms. Richman does not appeal the district court's conclusion 

that the intentional tort exception to the Federal Tort Claims 

Act, 28 U.S.C. § 2680(h), bars her libel and slander claims 

against the United States if it has been properly substituted as 

sole defendant. 

5 Officers of federal agencies are treated as federal 

"employees" for purposes of the FELRTCA. See 28 U.S.C. § 2671. 

As officials in the United States Department of Justice, 

specifically the Executive Office for United States Trustees, Mr. 

Bird, Mr. Straley, and Mr. Logan are eligible for FELRTCA 

protection. 

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United States. The United States is then substituted as the sole 

defendant. Id. To invoke this provision, the Attorney General or 

her designee must certify that the defendant was acting within the 

scope of his employment at the time of the alleged tort. Id. The 

United States Attorney for the District of Utah, acting pursuant 

to his delegated authority, see 28 C.F.R. § 15.3 app. (1990), 

signed a certification of scope of employment for defendants. 

This certification, although subject to de novo review, is prima 

facie evidence that an employee's challenged conduct was within 

the scope of his employment. The plaintiff then bears the burden 

of rebutting the scope-of-employment certification with specific 

facts. See Green v. Hall, 8 F.3d 695, 698 (9th Cir. 1993), cert. 

denied, 115 S. Ct. 58 (1994); Brown v. Armstrong, 949 F.2d 1007, 

1012 (8th Cir. 1991); Hamrick v. Franklin, 931 F.2d 1209, 1211 

(7th Cir.), cert. denied, 502 U.S. 869 (1991). 

For purposes of the FELRTCA, "scope of employment" is defined 

by the respondeat superior law of the state where the incident 

occurred. Nichols v. United States, 796 F.2d 361, 365 n.4 (lOth 

Cir. 1986) (citing Williams v. United States, 350 U.S. 857 (1955) 

(per curiam)). Under Utah law, "scope of employment" includes: 

those acts which are so closely connected with what the 

servant is employed to do, and so fairly and reasonably 

incidental to it, that they may be regarded as methods, 

even though quite improper ones, of carrying out the 

objectives of the employment. 

Birkner v. Salt Lake County, 771 P.2d 1053, 1056 (Utah 1989) 

(quoting W. Keeton, Prosser & Keeton on the Law of Torts § 70, at 

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502 (5th ed. 1984)). Although determining whether an employee 

acted within the scope of employment is generally a factual issue, 

"[i]n situations where the activity is so clearly within or 

without the scope of employment that reasonable minds cannot 

differ, it lies within the prerogative of the trial judge to 

decide the issue as a matter of law." Clover v. Snowbird Ski 

Resort, 808 P.2d 1037, 1040 (Utah 1991). 

Utah courts have focused on three factors in defining when an 

employee's conduct falls within the scope of employment. First, 

the conduct must be generally related to that which the employee 

is employed to perform. Id. at 1040. The conduct must occur 

substantially within the hours and ordinary spatial boundaries of 

the employment. Id. Finally, the employee's conduct must be 

"'motivated, at least in part, by the purpose of serving the 

employer's interest.'" Id. (quoting Birkner, 771 P.2d at 1057). 

We have concluded that defendants had the statutory authority 

to terminate Ms. Richman's appointment as standing trustee, thus 

the action was clearly of the kind that defendants are employed to 

perform. Ms. Richman now claims that Mr. Straley met 

"surreptitiously" with her employees at his personal residence in 

the evening. Aplt. Br. at 40. She asserts that she made this 

claim below in her motion for new trial under a heading "Richman 

has constitutionally protected rights." See Aplt. App. at 421-22; 

Aplt. Reply Br. at 22 n.13. Ms. Richman never asserted below that 

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the alleged surreptitious meeting somehow undermined the 

certification that defendants' conduct was within the scope of 

their employment. The brief in support of the motion referred to 

an alleged "clandestine meeting," but it did not state the time or 

place at which it supposedly occurred. Aplt. App. at 422. In any 

event, Ms. Richman has made no claim that the actual conduct at 

issue here, i.e., her termination, occurred outside of the normal 

business environment. Furthermore, she has alleged no facts to 

support her conclusory allegation that defendants terminated her 

appointment for the purpose of securing her license for Mr. 

Straley or his designee. Instead, the termination of one standing 

trustee and appointment of another is the type of action that was 

most likely motivated at least in part by the purposes of the 

United States Trustee Program. Because Ms. Richman failed to 

allege facts sufficient to undermine the correctness of the scopeof-employment certification of the individual defendants, the 

substitution of the United States as sole defendant in Ms. 

Richman's claim for tortious interference with prospective 

economic relations was proper. 

Ms. Richman also appeals the certification that the 

individual defendants were acting within the scope of their 

employment when they allegedly libeled and slandered her by 

publishing both verbal and written statements accusing her of 

improperly administering cases assigned to her as a standing 

trustee. Because the allegedly defamatory statements were made in 

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connection with the removal proceeding filed in bankruptcy court, 

the action was consistent with the administrative and supervisory 

responsibilities of the individual defendants. Furthermore, Ms. 

Richman does not assert that the statements were made outside of 

defendants' normal business hours or location. Nor has she 

alleged facts demonstrating that defendants were not motivated at 

least in part by their duties to the United States Trustee 

Program. We therefore hold that the district court did not err in 

substituting the United States as sole defendant in the libel and 

slander claims. 

Once the United States is substituted as the defendant under 

FELRTCA, the FTCA is plaintif's sole remedy. See FELRTCA, 28 

U.S.C. § 2679 (d) (4). Ms. Richman appeals the trial court's 

determination that sovereign immunity barred her suit under the 

FTCA for tortious interference with prospective economic 

relations. It is well established that the United States is 

immune from suit unless it has consented to be sued, and its 

consent to be sued defines the terms and conditions upon which it 

may be sued. United States v. Mitchell, 445 u.s. 535, 538 (1979). 

Ms. Richman claims that the United States waived its immunity. We 

disagree. 

Section 2680 of the FTCA excepts from the waiver of sovereign 

immunity "[a]ny claim ... based upon the exercise or performance 

or the failure to exercise or perform a discretionary function or 

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duty on the part of a federal agency or an employee of the 

Government, whether or not the discretion involved be abused." 28 

U.S.C. § 2680(a). In determining the scope of the discretionary 

function exception, we apply the two-step test adopted by the 

Supreme Court in Berkovitz v. United States, 486 U.S. 531 (1988) . 

. See Kiehn v. United States, 984 F.2d 1100, 1102 (lOth Cir. 1993). 

First, we must determine whether the challenged conduct involves 

"'an element of judgment or choice'" or whether it involves "'a 

federal statute, regulation, or policy [that] specifically 

prescribes a course of action for an employee to follow.'" Id. 

(quoting Berkovitz, 486 U.S. at 536). The exception applies in 

the former but not the latter. See id. If the conduct survives 

the first step, then we must "'determine whether that judgment is 

the kind that the discretionary function exception was designed to 

shield.'" Id. at 1103 (quoting Berkovitz, 486 U.S. at 536). 

We concluded above that defendants had the authority to 

terminate Ms. Richman's appointment as standing trustee at any 

time. Decisions regarding employment and termination are 

inherently discretionary, especially where, as here, the relevant 

statutes provide no guidance or restrictions. See generally 

Williams v. Collins, 728 F.2d 721 (5th Cir. 1984). Such sensitive 

decisions are precisely the types of administrative action the 

discretionary function exception seeks to shield from judicial 

second-guessing. Consequently, Ms. Richman's claim against the 

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United States falls within the discretionary function exception to 

the FTCA and is therefore barred by sovereign immunity. 

In sum, we hold that the district court correctly dismissed 

Ms. Richman's due process claims because she did not have a 

property interest in her continued service as standing trustee. 

We also uphold the court's substitution of the United States as 

defendant in the state law claims and its application of the 

doctrine of sovereign immunity to bar those claims. Accordingly, 

the judgment of the district court is AFFIRMED. 

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