Opinion ID: 149671
Heading Depth: 1
Heading Rank: 4

Heading: Stock Price, Brand Value, and Cost of Financing

Text: GE contends that, in addition to potential cleanup costs, fines, and damages, issuance of a UAO immediately tag[s] a PRP with a massive contingent liability, Appellant's Br. 14, which in turn depresses its stock price, harms its brand value, and increases its cost of financing. According to GE, these adverse impacts are irreparable and cannot be remedied through a later, delayed challenge to [a] UAO. Id. at 34. Perhaps so, but we must first address an antecedent question: does the Due Process Clause protect PRPs' interest in the market's assessment of their stock, brand, and credit worthiness? See supra at 9-10. As the Supreme Court has repeatedly stated, the range of interests protected by procedural due process is not infinite. E.g., Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 570, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Moreover, [p]roperty interests ... are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state lawrules or understandings that secure certain benefits and that support claims of entitlement to those benefits. Id. at 577, 92 S.Ct. 2701; see also Paul v. Davis, 424 U.S. 693, 710, 96 S.Ct. 1155, 47 L.Ed.2d 405 (1976). For due process purposes, then, it is not enough that one has an abstract need or desire for the asserted property; to merit due process protection, [h]e must ... have a legitimate claim for entitlement to it. Roth, 408 U.S. at 577, 92 S.Ct. 2701. GE points to no independent source such as state law, id., for its purported property interests. Nor does it deny, as EPA points out, that the company's claimed injuries are consequential, i.e., that they result not from EPA's extinguish[ing] or modify[ing] a right recognized by state law, but rather from independent market reactions to the issuance of a UAO. Appellees' Br. 26. GE argues only that the Supreme Court and this court have repeatedly held that consequential impacts can constitute a deprivation. Reply Br. 6. In support, GE relies primarily on Connecticut v. Doehr, 501 U.S. 1, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991), in which the Supreme Court held that a state statute authorizing ex parte prejudgment attachment of real estate violated due process. GE emphasizes the Court's statement that [T]he property interests that attachment affects are significant.... [A]ttachment ordinarily clouds title; impairs the ability to sell or otherwise alienate the property; taints any credit rating; reduces the chance of obtaining a home equity loan or additional mortgage; and can even place an existing mortgage in technical default where there is an insecurity clause. Id. at 11, 111 S.Ct. 2105. According to GE, because [e]very one of the deprivations identified by the Court ... entailed nothing but consequential market reactions to the attachment, Reply Br. 6, Doehr stands for the proposition that consequential injuries merit due process protection. GE also relies on the Court's statement that although the effects of attachment do not amount to a complete, physical, or permanent deprivation of real property [,] ... the Court has never held that only such extreme deprivations trigger due process concern. 501 U.S. at 12, 111 S.Ct. 2105. Indeed, the Court continued, even the temporary or partial impairments to property rights that attachments, liens, and similar encumbrances entail are sufficient to merit due process protection. Id. This language, GE argues, demonstrates that PRPs are entitled to procedures that satisfy due process before EPA can issue a UAO that results in temporary or partial impairments to stock price, brand value, or cost of financing. We disagree with GE's reading of Doehr 's discussion of consequential injuries. The quoted text comes not from the Court's analysis of whether attachment requires due process protection, but instead from the portion of its opinion weighing the significance of the private interests at stakethe first of the three factors Mathews instructs courts to consider when determining what process is due in situations where a constitutional deprivation has in fact occurred. See id. at 11, 111 S.Ct. 2105. The Court addressed this latter question only after finding that real property attachments qualify as deprivations within the meaning of the Due Process Clause. Id. at 9, 111 S.Ct. 2105 (With this case we return to the question of what process must be afforded by a state statute enabling an individual to enlist the aid of the State to deprive another of his or her property by means of prejudgment attachment or similar procedure.). Although the Court devoted few words to this threshold inquiry, it is well accepted that attachments themselves constitute property deprivations because, as EPA points out, they pluck a stick from the property owner's bundle and hold it as surety. Appellees' Br. 32; see Lugar v. Edmondson Oil Co., 457 U.S. 922, 932-33, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982) (noting that the Court has consistently held that constitutional requirements of due process apply to garnishment and prejudgment attachment procedures). Thus, although Doehr does hold that direct, partial impairments of property rights may well warrant due process safeguards, nothing in the opinion implies that consequential injuries, standing alone, merit due process protection. See Doehr, 501 U.S. at 29, 111 S.Ct. 2105 (Rehnquist, C.J., concurring in part and concurring in the judgment) (noting that the filing of a lis pendens may reduce the market value of property without triggering due process because it creates no additional right in the property); United States v. Register, 182 F.3d 820, 836-37 (11th Cir.1999) (same). Rather, Doehr stands for the proposition that consequential injuries can affect the significance of the private interests at stake and thus the nature of the procedures required. Stripped of its reliance on Doehr, GE's case boils down to this: by declaring that a PRP is responsible for cleaning up a hazardous waste site, a UAO harms the PRP's reputation, and the market, in turn, devalues its stock, brand, and credit rating. Viewed this way, GE's argument is foreclosed by Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155, 47 L.Ed.2d 405. There the Supreme Court held that a sheriff's inclusion of Davis's name and photograph on a flyer captioned Active Shoplifters implicated no due process interest. Although the poster alerted the public to a potentially damaging allegation about Davis and may have seriously limited his future employment opportunities, id. at 697, 96 S.Ct. 1155, the Court found that it extinguished none of Davis's previously held legal rightsstate law [did] not extend to [him] any legal guarantee of present enjoyment of reputation, id. at 711-12, 96 S.Ct. 1155. In so holding, the Court distinguished Wisconsin v. Constantineau, 400 U.S. 433, 91 S.Ct. 507, 27 L.Ed.2d 515 (1971), which ruled that a law allowing for posting forbidding the sale of alcoholic beverages to persons determined to have become hazards based on their excessive drinkingviolated due process. As the Court explained in Davis, the law at issue in Constantineau went beyond mere stigma, depriving the plaintiff of a right previously held under state law ... to purchase or obtain liquor in common with the rest of the citizenry. Davis, 424 U.S. at 708, 96 S.Ct. 1155. [I]t was that alteration of legal status which, combined with the injury resulting from the defamation, justified the invocation of procedural safeguards in Constantineau. Id. at 708-09, 96 S.Ct. 1155. Davis 's rule is thus clear: stigma alone is insufficient to invoke due process protections. See id. at 704-06, 96 S.Ct. 1155; see also Siegert v. Gilley, 500 U.S. 226, 234, 111 S.Ct. 1789, 114 L.Ed.2d 277 (1991) ([S]o long as ... damage flows from injury caused by the defendant to a plaintiff's reputation, no constitutional claim is alleged). Our cases elaborating on Davis 's so-called stigma-plus rule find it satisfied only where plaintiffs show, in addition to reputational harm, that (1) the government has deprived them of some benefit to which they have a legal right, e.g., the right to be considered for government contracts in common with all other persons, Doe v. United States Dep't of Justice, 753 F.2d 1092, 1108-09 (D.C.Cir.1985) (quoting Mosrie v. Barry, 718 F.2d 1151, 1161 (D.C.Cir.1983)) (internal quotation marks omitted); or (2) the government-imposed stigma is so severe that it broadly precludes plaintiffs from pursuing a chosen trade or business, Trifax Corp. v. District of Columbia, 314 F.3d 641, 644 (D.C.Cir. 2003). Here, although a UAO may well damage the PRP's reputation, GE alleges neither of these additional injuries. This case is thus controlled by Davis, not Constantineau. Our conclusion is unaffected by the fact that GE alleges property harm while Davis addresses a liberty claim. Like other circuits, we have applied the stigma-plus framework to property claims, requiring plaintiffs to show that alleged reputational harm completely destroys the value of their property. For example, in Industrial Safety Equipment Ass'n v. EPA, 837 F.2d 1115, 1121-22 (D.C.Cir.1988), we concluded that EPA's issuance of a report warning against the use of certain asbestos-protection respirators, but not prohibiting them, did not deprive manufacturers of their property interest in the respirators' EPA certifications. Although the report would surely make the respirators less popular and therefore less profitable, and although there was no question that [the manufacturers] possess[ed] cognizable property interests in their respirator certifications, [t]his indirect effect ... [could] hardly be said to constitute a constitutional deprivation of property deserving fifth amendment protection because it in no way ... rendered valueless plaintiffs' certifications. Id. at 1122; see also WMX Techs., Inc. v. Miller, 197 F.3d 367, 373-76 (9th Cir.1999) (en banc) (damage to business goodwill did not implicate the Due Process Clause because the asserted injury affected only reputation); Wells Fargo Armored Serv. Corp. v. Ga. Pub. Serv. Comm'n, 547 F.2d 938, 941 (5th Cir.1977) (indirect injuries to property right in state motor carrier license implicate the Due Process Clause only where they effectively render the property valueless). The Second Circuit's application of Davis to a statutory scheme quite similar to CERCLA provides additional support for our conclusion. In Asbestec Construction Services v. EPA, 849 F.2d 765, 767, 769 (2d Cir.1988), the court considered a due process challenge to a Clean Air Act compliance order that, like a UAO, found that the recipient had violated federal law, ordered specified compliance actions, and threatened an EPA court action for relief if the recipient failed to comply. According to the recipient, the compliance order implicated its property and liberty rights under the Fifth Amendment by inhibit[ing] its ability to obtain asbestos removal contracts. Id. at 769. The Second Circuit rejected both arguments. As to the property claim, the court noted that the recipient had pointed to no certain benefits, such as government contracts, from which the order excluded it. Id. at 770. As to the recipient's liberty argument, the court concluded that [t]he possible adverse effect of the order on petitioner's future business prospects is insufficient by itself to give rise to a claim that one has been deprived of a liberty interest. Id. at 769. Attempting to distinguish Asbestec, GE points out that the compliance order at issue there required no remedial action, but this difference is irrelevant because the property interest alleged in Asbestec a right to a positive business reputation and the profits it yieldsis, in essence, the same interest GE alleges here. GE nonetheless insists that this court has held that consequential impacts can constitute a deprivation. Reply Br. 6. The cases GE cites, however, simply reiterate Davis 's stigma-plus principle. Thus, in Doe v. United States Department of Justice, we found that a government employee's liberty rights were implicated by a discharge [ ] from government employment amidst stigmatizing allegations which have effectively foreclosed future employment opportunities with the government as well as private employers. 753 F.2d at 1110. Similarly, in Reeve Aleutian Airways, Inc. v. United States, we held that the government's suspension of an airline from a military airlift transportation program based on stigmatizing charges that the airline was unsafe did affect its liberty interest. 982 F.2d 594, 598 (D.C.Cir.1993). Here, even assuming UAOs are stigmatizing, their consequences fall far short of completely foreclosing employment ( Doe ), or suspending a government contract ( Reeve Aleutian Airways ). Finally, seeking to distinguish UAOs from government actions like filing a complaint or issuing a policy report, Reply Br. 8 (quoting Appellees' Br. 19) (internal quotation marks omitted), GE insists that the issuance of a UAO triggers due process protections because it follows a factfinding, adjudicatory proceeding. In support, the company cites two cases, Jenkins v. McKeithen, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969) (plurality opinion), and Hannah v. Larche, 363 U.S. 420, 80 S.Ct. 1502, 4 L.Ed.2d 1307 (1960). GE, however, failed to make this argument or discuss these cases until its reply brief, thus depriving EPA of an opportunity to respond. To prevent this sort of sandbagging..., we have generally held that issues not raised until the reply brief are waived. Bd. of Regents of Univ. of Wash. v. ERA, 86 F.3d 1214, 1221 (D.C.Cir.1996) (citations omitted). We do so here as well. That said, given the extent to which GE emphasized this argument both in its reply brief and at oral argument, it is worth pointing out that Hannah and Jenkins are not nearly as broad as the company claims. In Hannah, the Supreme Court upheld the Civil Rights Commission's rules of procedure, finding that the Commission's refusal to identify those who submitted complaints or to allow for cross-examination of witnesses did not violate the Due Process Clause. The Court relied on the fact that the Commission functioned as an investigative entity: It does not adjudicate. It does not hold trials or determine anyone's civil or criminal liability. It does not issue orders. Nor does it indict, punish, or impose any legal sanctions. It does not make determinations depriving anyone of his life, liberty, or property. In short, the Commission does not and cannot take any affirmative action which will affect an individual's legal rights. Hannah, 363 U.S. at 441, 80 S.Ct. 1502. Nine years later, in Jenkins, the Supreme Court reached the opposite result with respect to the constitutionality of a statute that created the Louisiana Labor-Management Commission of Inquiry, a body whose membersappointed by the Governor and empowered to act only upon his referralinvestigated possible criminal violations in the field of labor-management relations. The Commission was required to determine, in public findings, whether there [was] probable cause to believe violations of the criminal laws ha[d] occurred, Jenkins, 395 U.S. at 416, 89 S.Ct. 1843, and the plaintiff alleged that [its] very purpose ... [was] to find persons guilty of violating criminal laws without trial or procedural safeguards such as the right to present evidence or to confront witnesses, id. at 424, 89 S.Ct. 1843. Although noting that the structure and powers of the Commission [at issue in Jenkins ] [were] similar to those of the Civil Rights Commission upheld in Hannah, id. at 425, 89 S.Ct. 1843, the Jenkins plurality found that the Louisiana body exercise[d] a function very much akin to making an official adjudication of criminal culpability, i.e., find[ing] named individuals guilty of violating the criminal laws ... and ... brand[ing] them as criminals in public, id. at 427-28, 89 S.Ct. 1843. As a result, the Court concluded, the minimal requirements of due process applied. Id. at 428, 89 S.Ct. 1843. GE argues that Hannah and Jenkins, taken together, establish that where government action moves from investigatory to adjudicatory, the government must provide pre-deprivation hearings. Reply Br. 12. To be sure, some of Jenkins 's language, considered in isolation, might suggest such a rule. But we think the better reading is that in Jenkins the Court was addressing only adjudications of criminal culpability. In distinguishing Hannah, the Court relied heavily on the fact that the Louisiana Commission was concerned only with ... find[ing] named individuals guilty of violating the criminal laws ... and ... brand[ing] them as criminals in public. Jenkins, 395 U.S. at 427-28, 89 S.Ct. 1843. Indeed, in a discussion consuming only a single page of the U.S. Reports, the Court mentioned no fewer than six times that the Commission was charged with accusing individuals of criminal conduct. Id. The Court emphasized the same point in Davis when distinguishing Jenkins. Although the Davis majority and dissent disagreed as to whether Davis 's holding contradicted Jenkins, they found common ground in characterizing Jenkins as a case involving adjudications of criminal liability. The majority described the Louisiana Commission as an agency whose sole or predominant function, without serving any other public interest, is to expose and publicize the names of persons it finds guilty of wrongdoing. Davis, 424 U.S. at 706 n. 4, 96 S.Ct. 1155 (quoting Jenkins, 395 U.S. at 438, 89 S.Ct. 1843 (Harlan, J., dissenting)) (internal quotation marks omitted). Similarly, the dissent summarized Jenkins as holding that the official characterization of an individual as a criminal affects a constitutional `liberty' interest. 424 U.S. at 727, 96 S.Ct. 1155 (Brennan, J., dissenting). Moreover, in the forty years since the Court decided Jenkins, it has never cited the case for the broader proposition advocated by GE, i.e., that the Due Process Clause is implicated whenever the government uses an adjudicatory process to find facts with respect to a particular individual or corporation. Cf. Donaldson v. United States, 400 U.S. 517, 540, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971) (Douglas, J., concurring) ( Jenkins held that the commission exercised an accusatory function and was empowered to brand people as criminals. Therefore, due process required certain procedural protections) (citation omitted). Given this, and given Jenkins 's repeated emphasis on criminal culpability, the decision has no applicability to CERCLA's UAO procedures, which are not only entirely civil, but fall far short of transforming EPA into a body concerned only with labeling PRPs as polluters. Jenkins, 395 U.S. at 427, 89 S.Ct. 1843.