1

United States Court of Appeals,

Fifth Circuit.

No. 94-50702.

Harlan D. VANDER ZEE, Plaintiff-Appellant,

v.

Janet RENO, Attorney General, The Honorable Attorney General of

the United States, et al., Defendants,

United States of America, et al., Defendants-Appellees.

Feb. 2, 1996.

Appeal from the United States District Court for the Western

District of Texas.

Before GARWOOD, DUHÉ and PARKER, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant Harlan D. Vander Zee (Vander Zee) appeals

the district court's dismissal of his Bivens action against federal

prosecutors and claims for declaratory and injunctive relief

against the United States based upon alleged violations of due

process arising from a settlement agreement entered into between

the Department of Justice and his former employer. We affirm.

Facts and Proceedings Below

Vander Zee was formerly employed as an executive

vice-president at Stone Oak National Bank (Stone Oak) in San

Antonio, Texas. During his tenure at Stone Oak, Vander Zee became

aware of large cash deposits being made by Mario Alberto SalinasTrevino (Salinas). After consulting with the bank's president,

Herbert E. Pounds, Jr. (Pounds), Vander Zee properly reported these

deposits to federal authorities and apparently continued to do so
2

throughout the period in question.

In March 1989, Salinas was indicted and arrested on drug

trafficking charges, although he subsequently escaped from custody.

On May 10, 1990, the United States Attorney obtained a superseding

indictment naming Pounds and Vander Zee, which alleged violations

of federal money laundering statutes relating to the handling of

the Salinas deposits. After his indictment, Vander Zee tendered

his resignation to Stone Oak by letter dated May 22 pursuant to a

formal resolution by the Board of Directors. Although the charges

lodged against Pounds and Vander Zee proceeded to trial, the

district court granted a Motion for Judgment of Acquittal by Vander

Zee and Pounds at the close of the government's case-in-chief.

However, the government continued to pursue five related civil

forfeiture actions against assets seized at the time of Salinas'

arrest. Although Salinas' interest in these assets was defaulted

at the time of his escape from custody, Stone Oak remained a party

to the forfeiture actions by virtue of having filed a lienholder's

claim. Among these assets were nine certificates of deposit held

by Stone Oak with a principal face value of $850,000 that had been

pledged as security for loans made by the bank. Stone Oak retained

possession of the certificates of deposit pending the outcome of

the litigation. Ultimately, these forfeiture actions were

consolidated for purposes of settlement, and the government and

Stone Oak entered into a "Stipulation and Settlement Agreement and

Hold Harmless Agreement" (Agreement) and Addendum. The Agreement

and Addendum provided that Stone Oak would retain the certificates
 

1For instance,

"[t]he Bank asserts its innocence to the forfeiture of

its interests in the Respondent Properties of the five

(5) civil forfeiture cases in claiming that the Bank

had no knowledge of and gave no consent to the

allegedly unlawful money laundering activities

performed by Herbert E. Pounds, Jr. and Harlan D.

Vanderzee [sic], former employees of the Bank, which

allegedly unlawful activities involved the Respondent

Properties."

While the Agreement acknowledged the acquittal of

Pounds and Vander Zee, it further noted,

"their acquittal in that criminal case does not

3

of deposit to apply towards its recapitalization "in order to

achieve and satisfy the capital and financial requirements as set

forth by the Office of the Comptroller of the Currency (OCC) in

order to remain and maintain itself as a viable, financial and

banking institution in the community." In exchange, Stone Oak

released any claim to the assets sought in the remaining forfeiture

actions.

However, the Agreement and Addendum contained additional

recitals and conditions which are relevant to the present action.

Among these conditions was that

"Stone Oak National Bank in recognition of the allegations

concerning the conduct of Herbert E. Pounds, Jr. and Harlan D.

Vanderzee [sic], as set forth in the verified complaint for

forfeiture in United States v. U.S. Currency Including Nine

(9) Certificates of Deposit, et al, SA-90-CA-113, agrees to

provide no further attorney fees nor other forms of financial

assistance to Herbert E. Pounds, Jr. and Harlan D. Vanderzee

[sic] except for such within the normal and usual course of

any other banking customer's business, or unless the Bank

becomes legally obligated to do so."

The Agreement contained additional recitals impugning the conduct

of Pounds and Vander Zee.1 The Addendum further required Stone Oak
establish Stone Oak National Bank as an innocent

lienholder in either of the five (5) civil forfeiture

cases which are the subject of this Agreement. The

acquittal in that criminal case merely established that

the trier of fact in that case had reasonable doubt as

to their alleged criminal conduct as set forth in the

criminal indictment against them." 

 

2Other original defendants who are not before this Court for

the purposes of the present appeal due to the severance below of

the actions against them are private defendants Stone Oak

National Bank, Stone Oak Bankshares, Inc., and Fidelity & Deposit

Company of Maryland. The United States was substituted below for

governmental defendants Janet Reno, Attorney General; Eugene

Ludwig, Comptroller of the Currency; and Lloyd Bentsen,

Secretary of the Treasury; each sued in their official

capacities, pursuant to the Federal Tort Claims Act (FTCA). 

4

to provide "assurances in writing that Stone Oak National Bank

shall not rehire Herbert E. Pounds, Jr., or Harlan D. Vander Zee

[sic] in any capacity, because of the poor judgment they exercised

in dealing with Mario Salinas." The Agreement and Addendum were

expressly made contingent upon approval by the district court,

which was obtained, and an order accepting the settlement was

entered by the district court on August 14, 1992.

On August 13, 1993, Vander Zee filed this suit against a host

of governmental and private defendants. However, we are now

concerned only with Vander Zee's claims against the federal

officials sued in their individual capacities and certain claims

against the United States as these claims presently before us on

this appeal were dismissed and severed from the original action.2

The individual defendants to the claims now before us are former

Assistant Attorney General Robert S. Mueller, III, former United

States Attorney Ronald Ederer, former Assistant United States

Attorney Jack C. Frels, and United States Attorney Helen M.
 

3The district court determined that all claims against

United States Attorney Eversberg should be dismissed not only

pursuant to the United States' Motion to Dismiss, but also

because there were no Bivens claims asserted against her

individually and because she had never been properly served. In

the present appeal, Vander Zee does not complain of the dismissal

of the claims against Eversberg. 

5

Eversberg.3 Vander Zee brought Bivens actions against these

individual defendants claiming that the recitals and conditions

contained in the Agreement and Addendum operated to deprive him of

protected liberty and property interests in violation of the Due

Process Clause of the Fifth Amendment. Vander Zee also asserted

state law tort claims against the individual defendants and the

United States pursuant to the Federal Tort Claims Act (FTCA).

Finally, Vander Zee asserted claims under the Administrative

Procedure Act (APA) as well as seeking various forms of declaratory

and injunctive relief against the United States.

The defendants filed motions to dismiss pursuant to

Fed.R.Civ.P. 12(b)(1) and 12(b)(6), which were granted by the

district court by order of June 6, 1994. The district court held

that (1) Vander Zee's APA claims should be dismissed because the

Agreement and Addendum were settlement decisions within the

"exclusive discretion" of the Department of Justice, and therefore

were not reviewable pursuant to § 701(a)(2) of the APA; (2) the

Bivens claims should be dismissed because Vander Zee failed to

allege the violation of any constitutionally protected interest, or

alternatively, the individual defendants were entitled to qualified

immunity because the interests allegedly infringed were not

"clearly established;" and (3) the FTCA claims should be dismissed
 

4Vander Zee presents no points of error with respect to his

claims under the APA or the FTCA. Accordingly, the district

court's disposition of these claims is affirmed. 

 

5The government suggests in its brief that this Court lacks

jurisdiction to hear this appeal because the district court

failed to certify a final judgment pursuant to Fed.R.Civ.P.

54(b). However, Rule 54(b) certification is required only when

the district court directs the entry of a final judgment with

respect to less than all of the parties or claims presented in a

single action. When the district court severed the claims

against the individual defendants and the United States from the

original action, it created two separate actions. The district

court then entered a judgment dismissing all of the claims before

us today. Therefore, no Rule 54(b) certification was required to

render the judgment final and appealable. See United States v.

O'Neil, 709 F.2d 361, 368-69 (5th Cir.1983). 

6

for lack of subject matter jurisdiction because Vander Zee had

failed to first present the claims to the Department of Justice as

required by 28 U.S.C. § 2675, and additionally because the claims

for defamation and interference with contractual rights fell within

the sovereign immunity reserved by § 2680(h).4 These claims, which

are those now before us, were subsequently severed from the

original action, and a final judgment was entered on August 26,

1994.5

Discussion

We review the district court's dismissal under Rules 12(b)(1)

and 12(b)(6) de novo, taking the allegations of the complaint to be

true. Carney v. Resolution Trust Corp., 19 F.3d 950, 854 (5th

Cir.1994). The district court's dismissal will be affirmed only if

it appears beyond doubt that the plaintiff can prove no set of

facts which would entitle him to relief. Id.

I. Qualified Immunity

 The qualified immunity defense affords government officials
7

not just immunity from liability, but immunity from suit. Mitchell

v. Forsyth, 472 U.S. 511, 525-26, 105 S.Ct. 2806, 2815, 86 L.Ed.2d

411 (1985). "Unless the plaintiff's allegations state a claim of

violation of clearly established law, a defendant pleading

qualified immunity is entitled to dismissal before the commencement

of discovery." Id. (citing Harlow v. Fitzgerald, 457 U.S. 800,

817-19, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982)). Even limited

discovery on the issue of qualified immunity "must not proceed

until the district court first finds that the plaintiff's pleadings

assert facts which, if true, would overcome the defense of

qualified immunity." Wicks v. Mississippi State Employment Serv.,

41 F.3d 991, 994 & n. 10 (5th Cir.1995) (emphasis in original).

However, "[a] necessary concomitant to the determination of whether

the constitutional right asserted by a plaintiff is "clearly

established' at the time the defendant acted is the determination

of whether the plaintiff has asserted a violation of a

constitutional right at all." Siegert v. Gilley, 500 U.S. 226,

232, 111 S.Ct. 1789, 1793, 114 L.Ed.2d 277 (1991). We agree with

the district court that Vander Zee failed to allege the violation

of any constitutionally protected interest, at least not of any

that was clearly established, and therefore, dismissal pursuant to

Rule 12(b)(6) was proper.

Vander Zee alleges that in drafting the conditions of the

Agreement and Addendum, the defendants acted to deprive him of

various liberty and property interests in violation of the Due

Process Clause of the Fifth Amendment. Specifically, Vander Zee
8

urges that he was deprived of: (1) his liberty interest in future

employment within the savings and loan industry; (2) his property

interest in his employment with Stone Oak because the defendants

both coerced his termination and prevented Stone Oak from re-hiring

him; and (3) his property interest in reimbursement for his

attorneys' fees in the criminal proceeding to which he was entitled

under Texas law.

A. Liberty Interest

Following Paul v. Davis, 424 U.S. 693, 710-11, 96 S.Ct. 1155,

1165, 47 L.Ed.2d 405 (1976), we have consistently required

plaintiffs alleging that the defamatory statements of a government

official operated to deprive them of a protected liberty interest

to satisfy what has sometimes been referred to as the "stigma plus

infringement" test. San Jacinto Savings & Loan v. Kacal, 928 F.2d

697, 701-702 (5th Cir.1991); Blackburn v. City of Marshall, 42

F.3d 925, 935 (5th Cir.1995). In order for a statement to be

sufficiently stigmatizing to satisfy the first prong of the test,

the statement must be both false and assert some serious wrongdoing

on the part of the plaintiff. See Kacal, 928 F.2d at 701;

Blackburn, 42 F.2d at 936. We doubt whether the statement that

Vander Zee and Pounds exercised "poor judgment" is sufficiently

condemnatory to satisfy the stigma prong of the test. While the

recitals regarding the "allegedly unlawful money laundering

activities" and "alleged criminal conduct" of Vander Zee carry the

suggestion of wrongdoing, they are clearly stated as allegations

not facts. Such allegations had been made in the indictment.
9

Moreover, the Agreement clearly states that Vander Zee was

acquitted of the criminal charges. Therefore, the necessary

element of falsity was not present. In any event, it is plain that

the law was not clearly established that statements such as those

here complained of satisfied the stigma prong, and hence the

individual defendants were entitled to qualified immunity. See

Noyola v. Texas Department of Human Resources, 846 F.2d 1021, 1024-

26 (5th Cir.1988).

Moreover, regardless of whether the stigma prong of the test

was satisfied, Vander Zee's Bivens claims were properly dismissed

because he failed to allege the deprivation of a protected

interest. To the extent that Vander Zee's claim rests on, to use

his own words, the loss of his "freedom of choice in the job

market," we are in agreement with the district court that his claim

is barred by the Supreme Court's decision in Siegert. Neither harm

to reputation nor the consequent impairment of future employment

opportunities are constitutionally cognizable injuries. Siegert,

500 U.S. at 233-35, 111 S.Ct. at 1794; State of Texas v. Thompson,

70 F.3d 390, 392 (5th Cir.1995). In Siegert, a psychologist

brought a Bivens action against his former supervisor at a

government hospital based upon the supervisor's highly unfavorable

remarks regarding Siegert's performance in a letter written in

response to inquiries from a subsequent employer. Siegert alleged

that the supervisor's letter had resulted in the loss of his

position at another hospital and in his inability to find similar

employment, thereby depriving him of a liberty interest protected
10

by the Fifth Amendment. In concluding that Siegert failed to state

a claim for the denial of a constitutional right, the Supreme Court

observed, "[t]he statements contained in the letter would

undoubtedly damage the reputation of one in his position, and

impair his future employment prospects ... [b]ut so long as such

damage flows from injury caused by the defendant to a plaintiff's

reputation, it may be recoverable under state tort law but it is

not recoverable in a Bivens action." Siegert, 500 U.S. at 234, 111

S.Ct. at 1794.

We find Vander Zee's present claim to be indistinguishable.

To the extent that Vander Zee's ability to obtain other employment

as a bank officer has been impaired, this impairment is the result

of harm to his reputation rather than a result of any direct

restrictions placed upon him by the settlement drafted by the

defendants. The Addendum does not prevent Vander Zee from working

at any financial institution, but only from being re-hired by Stone

Oak. In this respect, Vander Zee's claim is distinguishable from

de facto licensing cases such as Phillips v. Vandygriff, 711 F.2d

1217, 1221-23 (5th Cir.1983), in which we recognized the impairment

of a protected liberty interest when a custom operated to exclude

an individual from holding any position within a given field.

Therefore, we conclude that Vander Zee failed to allege facts

sufficient to make out a deprivation of a protected liberty

interest under either the "stigma-plus-infringement" or the de

facto licensing analysis.

B. Property Interest
 

6Both in his brief and at oral argument, Vander Zee's

counsel maintained that the complaint had alleged that the

defendants had coerced Vander Zee's termination. However, this

assertion simply is not supported by the pleadings. Vander Zee's

First Amended Complaint, the only "live" pleading in this case,

alleges that Vander Zee's termination was coerced by two

individuals with the office of the Comptroller of the Currency

(OCC) who are not defendants in the present action. In addition,

the complaint alleges that Vander Zee's termination was

"mandated" by the Department of Justice. However, the complaint

contains no allegations that the individual defendants before us

today in any way coerced Vander Zee's termination.

We believe that the confusion stems from the highly

irregular procedural step taken by Vander Zee's counsel of

filing a Second Amended Complaint after the district court

had dismissed these defendants and severed the claims

against them. In addition, the district court specifically

denied Vander Zee's request for leave to amend, but instead

allowed Vander Zee to amend his pleadings in a related suit

pending before the district court to include any meritorious

claims that he believed he possessed. Although this

so-called Second Amended Complaint included allegations that

Frels had participated in coercing Vander Zee's termination,

this pleading is a nullity in the present appeal and is of

11

It has been stated that an individual's "right to hold

specific private employment and to follow a chosen profession free

from unreasonable governmental interference comes within the

"liberty' and "property' concepts of the Fifth Amendment." Greene

v. McElroy, 360 U.S. 474, 492, 79 S.Ct. 1400, 1411, 3 L.Ed.2d 1377

(1959); see also Fed. Deposit Ins. Corp. v. Mallen, 486 U.S. 230,

239-40, 108 S.Ct. 1780, 1787, 100 L.Ed.2d 265 (1988) (bank

president possessed property right to continue to serve as

president with which FDIC could not arbitrarily interfere).

Indeed, the district court noted in its order that had Vander Zee

alleged that the defendants had coerced his termination from his

position at Stone Oak he could have presented a claim which would

withstand a qualified immunity defense.6 However, Vander Zee's
no consequence to our resolution of it. 

12

complaint alleges that it was the defendants' participation in

drafting the Agreement and Addendum that interfered with his

property interest in his employment with Stone Oak. The defendants

could not have interfered with any protected property interest that

Vander Zee may have possessed in his former position with Stone Oak

as he had already resigned from the bank as of the date of the

settlement.

Unlike the cases cited above, Vander Zee's complaint does not

allege that the defendants caused him to be terminated from an

existing position. Instead, Vander Zee complains that the Addendum

preventing his rehiring interfered with his property interest in an

alleged oral agreement to rehire him at some unspecified time in

the future. The district court treated this claim as simply

another allegation of reputational harm to future employment

opportunities under Siegert, and therefore concluded that Vander

Zee failed to allege the invasion of a constitutionally protected

interest. While we reach the same ultimate result, we cannot

concur in this analysis.

Unlike the reputational due process claim in Siegert, Vander

Zee alleges a direct restriction on his rehiring at some point in

the future by Stone Oak. Therefore, Vander Zee's alleged

impairment of his future employment with Stone Oak stems from more

than harm to reputation. Nonetheless, while Vander Zee's

allegations may present a state law claim for interference with

contractual relations, they likely do not state a claim for the
13

invasion of any constitutionally protected property interest as he

fails to allege that the defendants caused his termination from an

existing position.

In any event, we are persuaded that the district court

correctly held that even if Vander Zee's allegations were

sufficient to allege the invasion of a protected property interest,

the interest was not so clearly established as to overcome the

defense of qualified immunity. We were confronted with similar

facts in Connelly v. Office of the Comptroller of the Currency, 876

F.2d 1209 (5th Cir.1989). In Connelly, the plaintiff brought suit

against the Comptroller and other OCC officials in both their

official and individual capacities alleging, inter alia, that they

had acted to deprive him of protected liberty and property

interests in violation of the Due Process Clause of the Fifth

Amendment. Connelly had signed a contract to become the president

of a proposed national bank in Houston, Texas. However, the OCC

District Administrator had sent a letter to the bank organizers

informing them that the bank's charter would not be approved as

long as Connelly was designated as president as the OCC was of the

opinion that Connelly did not possess the necessary qualifications.

As a result, Connelly's executory contract with the bank was

canceled. In response to Connelly's suit, the defendants raised

the defense of qualified immunity. Although we stopped short of

holding that Connelly had no protected property interest in his

prospective employment with the bank, we did hold that Connelly's

alleged property interest was "at best "arguable.' " Therefore, we
14

concluded that the facts did not present a violation of a clearly

established constitutional right which would overcome a qualified

immunity defense.

While Connelly involved the OCC as opposed to officials of the

Department of Justice, our disposition of the case turned not on

the authority of the OCC to regulate the employees of chartered

banks, but on the nature of the interest allegedly infringed.

Because Vander Zee also alleged that the defendants interfered with

an (oral) agreement to employ him (at some time unspecified) in the

future rather than causing him to be terminated from a position in

which he was serving at the time, we are similarly compelled to

conclude that Vander Zee has failed to allege the violation of a

clearly established constitutional right.

Finally, Vander Zee's claim that the defendants acted to

deprive him of attorneys' fees incurred in mounting his criminal

defense to which he was entitled under state law fails to state a

claim because there simply was no deprivation. The Agreement

expressly provided that Stone Oak was not to provide attorneys'

fees or other financial assistance to Pounds and Vander Zee "unless

the bank becomes legally obligated to do so." Therefore, contrary

to Vander Zee's contentions, the Agreement simply did not have the

effect of depriving Vander Zee of any attorneys' fees to which he

may have been entitled under state law.

II. Claims Against United States

Vander Zee also complains that the district court failed to

address his request for declaratory and injunctive relief against
 

7"The Parties further agree that this Agreement shall not be

final and become binding until this Agreement has been fully

accepted and approved by the United States Department of Justice

in accordance with the Code of Federal Regulation governing the

settlement authority regarding this Agreement and further

accepted, approved, granted, and ordered by the United States

District Court, Western District of Texas, San Antonio Division." 

15

the United States for violations of his constitutional rights

brought about as the result of the Agreement and Addendum. We

understand these claims to have been addressed by the district

court's holding that actions pertaining to the settlement of

litigation are within the "exclusive discretion" of the Department

of Justice, and therefore fall within one of the exceptions to the

APA's waiver of sovereign immunity for non-monetary claims against

the United States found at 5 U.S.C. § 701(a)(2). Without deciding

the question of whether the settlement authority of the Department

of Justice is so far reaching, we also conclude that Vander Zee's

claims for declaratory and injunctive relief were properly

dismissed. However, we find this result to be dictated by

different concerns.

Section 702 of the APA provides for judicial review of

"agency action," and waives sovereign immunity for claims "seeking

relief other than money damages." However, the federal courts are

specifically excluded from the APA's definition of "agency" by §

701(b)(1)(B). In the case at bar, the Agreement specifically

provided that it would not become effective and binding until

approved by order of the district court.7 Therefore, Vander Zee

seeks declaratory and injunctive relief not from an agency action,
 

8Should the district court in that proceeding deny

intervention or, although granting intervention, deny Vander Zee

relief, he could seek review of such order by direct appeal (or,

perhaps, mandamus, should direct appeal be for some reason

unavailable). 

16

but instead seeks to collaterally attack the district court order

approving the terms of the settlement. Should Vander Zee wish to

challenge the district court's order approving the term of the

settlement, the proper avenue would be to seek to intervene before

the district court which has retained jurisdiction in order to

enforce the terms of its order.8

For the foregoing reasons, the judgment of the district court

is

AFFIRMED.