Opinion ID: 493669
Heading Depth: 2
Heading Rank: 2

Heading: Bank Examiners

Text: 16 The district court granted summary judgment in favor of state defendants Bitterman, Hong, Wee, and Lebb. They enjoyed qualified immunity, the court ruled, because McCarthy failed to allege that they did anything beyond the scope of their discretionary authority. Because he alleged malice, McCarthy argues, their acts were beyond the scope of their discretion and they are therefore not entitled to qualified immunity. 17 An act within an official's discretion does not necessarily entitle that individual to section 1983 immunity. See Haygood v. Younger, 769 F.2d 1350, 1354 (9th Cir.1985) (en banc), cert. denied, --- U.S. ----, 106 S.Ct. 3333, 92 L.Ed.2d 739 (1986). But a governmental official has immunity for discretionary acts so long as those acts do not violate a clearly established constitutional right. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982); Davis v. Scherer, 468 U.S. 183, 191, 104 S.Ct. 3012, 3017, 82 L.Ed.2d 139 (1984); see Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) (qualified immunity available where the right violated was not clearly established at the time the act took place). 18 McCarthy alleges that the defendants' conspiracy to maliciously prosecute him deprived him of due process. Malicious prosecution, normally a state law cause of action, rises to a constitutional due process violation only where the prosecution is conducted with the intent to deprive a person of a constitutional right. Bretz v. Kelman, 773 F.2d 1026, 1031 (9th Cir.1985) (en banc). McCarthy alleges that the prosecution was intended to defame him. Defamation without more, is not a constitutional violation. See Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155, 47 L.Ed.2d 405 (1976); Johnson v. Barker, 799 F.2d 1396, 1399 (9th Cir.1986). 19 McCarthy also alleges that the prosecution interfered with his freedom to contract. The Constitution protects freedom of contract only by limiting the states' power to modify or affect contracts already formed. See U.S. Const. Art I, Sec. 10, cl. 1; United States Trust Co. v. New Jersey, 431 U.S. 1, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977) (addressing the purpose and limits of the contract clause). McCarthy alleges nothing more than the state law claims of intentional interference with prospective economic advantage or intentional interference with contractual relations. The civil rights statutes are not intended to federalize state tort law. Paul, 424 U.S. at 701, 96 S.Ct. at 1160. McCarthy also claims that the defendants' activities violated his first amendment rights of freedom of speech and association because his ability to conduct both his business and personal affairs was curtailed. This allegation also implicates only state tort law and not the Constitution. 20 To the extent that McCarthy alleges an invasion of privacy, he attempts to extend the right of privacy to include having to appear and defend court proceedings. The Supreme Court has declined to extend the right of privacy beyond the privacy implicated by such specific constitutional guarantees as unreasonable searches, or rights fundamental to the concept of ordered liberty such as marriage, procreation, contraception, and family relationships. See Paul, 424 U.S. at 712-13, 96 S.Ct. at 1165-66. A court is a public tribunal, and witnesses can be compelled to attend. McCarthy's claim that defense of a lawsuit or criminal proceeding implicates a privacy right is unfounded. 21 McCarthy also contends that his right to due process was violated because the grand jury indictment was the result of conspiracy-induced prosecutorial mischief. Undoubtedly there is a constitutional right to be indicted by a fair grand jury. United States v. Sears, Roebuck & Co., 719 F.2d 1386, 1391 (9th Cir.1983), cert. denied, 465 U.S. 1079, 104 S.Ct. 1441, 79 L.Ed.2d 762 (1984) (Dismissal of an indictment is therefore warranted on constitutional grounds if prosecutorial misconduct has undermined the grand jury's ability to make an informed and objective evaluation of the evidence presented to it.). The only cognizable interest a defendant has in a grand jury proceeding is to have a legally constituted grand jury make an informed and independent evaluation of the evidence to determine if there is probable cause.... Id. at 1391 n. 7. McCarthy's allegations of prosecutorial misconduct during the grand jury proceedings, however, are vague and conclusory. See id. at 1391 (dismissal of an indictment only warranted in flagrant cases of prosecutorial misconduct). In addition, the person directly responsible for any fifth amendment violation, the prosecutor, is absolutely immune from suit. Finally, to state a claim against the other defendants, McCarthy would have to allege that those individuals controlled the decision-making process of the prosecutor. See Mann v. City of Tucson, 782 F.2d 790, 793 (9th Cir.1986). The complaint contains neither an allegation of control nor the facts to support such an allegation. McCarthy has therefore failed to state a claim under section 1983 against the bank examiner defendants for any prosecutorial misconduct during the grand jury proceedings. 3. Non-Governmental Defendants 22 The district court dismissed McCarthy's amended complaint as to the non-governmental defendants because: the amended complaint failed to state a claim upon which relief could be granted under sections 1983 and 1985; it failed to state a claim for malicious prosecution since it failed to allege that the prosecution terminated in McCarthy's favor; and it failed to allege satisfactorily that those defendants controlled the prosecution. McCarthy claims that he did allege race-based animus and a favorable termination of criminal prosecutions. He also claims that he alleged sufficient facts to prove control of the criminal prosecutions by the nongovernmental defendants and that a disputed question of material fact exists on the issue of control. We have carefully reviewed the record. Conclusory allegations with nothing more are insufficient to defeat the motion to dismiss. North Star International v. Arizona Corporation Commission, 720 F.2d 578, 583 (9th Cir.1983). 4. State Law Claims A. Malicious Prosecution 23 McCarthy contends that the district court erred in dismissing his state law claim for malicious prosecution. Hawaii law identifies three elements in a claim for malicious prosecution: termination of prior proceedings in plaintiff's favor; initiation of those proceedings without probable cause; and initiation of those proceedings with malice. Myers v. Cohen, 67 Haw. 389, 688 P.2d 1145 (1984). McCarthy's complaint does allege that all prior proceedings terminated in his favor. But his claim lacks the requisite element of lack of probable cause. In a federal prosecution, a grand jury determines whether probable cause exists. See United States v. Sells Engineering, Inc., 463 U.S. 418, 423, 103 S.Ct. 3133, 3137, 77 L.Ed.2d 743 (1983). McCarthy was indicted by a grand jury, and his allegations of prosecutorial misconduct during the grand jury proceedings are insufficient to state a claim that the indictment was constitutionally infirm. The grand jury's determination of probable cause is a barrier to McCarthy's ability to state a claim of malicious prosecution based on the fact of his federal prosecution. 24 Under Hawaii law, a grand jury also functions to determine whether probable cause exists. See State v. Jenkins, 1 Haw.App. 430, 620 P.2d 263, 267 (1980). There is also a presumption that the grand jury acted upon sufficient and legal evidence. Id.; see also State v. Apao, 59 Haw. 625, 637-38, 586 P.2d 250 (1978) (burden is on the defendant to present evidence that the grand jury deliberations were so infected as to invalidate the indictment). McCarthy's allegations of prosecutorial misconduct during the state grand jury proceedings are wholly vague, conclusory, and insufficient to overcome the presumption that the state grand jury's determination of probable cause was correct. B. Pendent Claims 25 McCarthy set forth approximately fifteen other claims for relief in his amended complaint, many of which constitute state law claims. All of the claims for relief rely on the same facts as his federal claim, and are merely alternative theories of recovery. The pendent state claims were properly before the district court. See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). The issue then is whether the district court properly exercised its discretion in reaching the merits of the state law claims after dispensing with the federal claims on their merits. See Rosado v. Wyman, 397 U.S. 397, 404-05, 90 S.Ct. 1207, 1213-14, 25 L.Ed.2d 442 (1970) (distinguishing this situation from a dismissal for lack of subject matter jurisdiction); Bale v. General Telephone Co., 795 F.2d 775, 778 (9th Cir.1986). 26 It is usually appropriate to dismiss pendent state claims when federal claims are dismissed before trial. See Schultz v. Sundberg, 759 F.2d 714, 718 (9th Cir.1985); Jones v. Community Redevelopment Agency, 733 F.2d 646, 651 (9th Cir.1984). Dismissal is not required, however. See Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970); Aydin Corp. v. Loral Corp., 718 F.2d 897, 903 (9th Cir.1983); State of Arizona v. Cook Paint & Varnish Co., 541 F.2d 226 (9th Cir.1976), cert. denied, 430 U.S. 915, 97 S.Ct. 1327, 51 L.Ed.2d 593 (1977). We recognize that the better procedure is to let the state court rule on pendent state claims, but where, as here, the propriety of the pendent state claims turns on questions about the federal grand jury indictment, the district court did not abuse its discretion in dismissing those claims with prejudice. 5. Post-Judgment Relief 27 On July 31, 1986, the district court entered an order regarding McCarthy's objections to the language in the previously entered orders 2 and McCarthy's amended 59(e) motion, which the court construed as a Rule 60(b) motion. The district court held that the language in the previous orders was inappropriate, because it was in the form of a judgment, and had the orders stricken from the record. The court denied Rule 60(b) relief because the plaintiff has failed to make any showing why relief should be granted pursuant to Rule 60(b). 28 In his Rule 60(b) motion, McCarthy alleged that new developments had occurred after the hearing. One new development was the judge's exclusion of an affidavit at the hearing because it had not been served on the opposing parties. (In making his ruling, the judge stated that even if he had considered the affidavit he would still have granted the motion.) Other new developments included: an affidavit of McCarthy's which alleged that in 1982 Ichinose and Yempuku had inappropriately approached a federal witness to offer immunity, which resulted in a letter to the Chief Disciplinary Counsel of the Hawaii State Bar 3 an affidavit that Mayo gave in a criminal proceeding involving McCarthy's prior business associates; and the dismissal on double jeopardy grounds of federal criminal proceedings against McCarthy's former business associates. 29 Rule 60(b) cannot be used as a substitute for an appeal. Benny v. Pipes, 799 F.2d 489, 494 (9th Cir.1986), as amended, 807 F.2d 1514 (9th Cir.1987), petition for cert. filed (June 9, 1987). McCarthy's contention regarding the exclusion of the affidavit is nothing more than dissatisfaction with a ruling of the court. As such, it would be appropriate for appellate review as opposed to Rule 60(b) relief. See Plotkin v. Pacific Tel. & Tel. Co., 688 F.2d 1291, 1293 (9th Cir.1982) (legal error alone does not warrant Rule 60(b) relief). Moreover, Rule 60(b)(2) addresses newly discovered evidence which by due diligence could not have been discovered.... McCarthy's motion dealt with evidence that had been in existence for years. He gave no explanation of why it had not been discovered earlier. We find no abuse of discretion in the court's denial of the 60(b) motion. 6. Sanctions 30 The government defendants seek attorney's fees on appeal. We may award attorney's fees and single or double costs to the prevailing party when an appeal is frivolous. See Fed.R.App.P. 38; 28 U.S.C. Secs. 1912, 1927; Olson v. United States, 760 F.2d 1003, 1005 (9th Cir.1985). Title 42 U.S.C. Sec. 1988 also allows an award of attorney fees to prevailing defendants in an action brought under 42 U.S.C. Sec. 1983 when the action is groundless, without foundation, frivolous, or unreasonable. Hughes v. Rowe, 449 U.S. 5, 14, 101 S.Ct. 173, 178, 66 L.Ed.2d 163 (1980). An appeal is frivolous when the result is obvious and the arguments on appeal wholly lack merit. Grimes v. Commissioner, 806 F.2d 1451 (9th Cir.1986). An appeal that lacks merit is not necessarily frivolous. Id. at 1454. Not all of the issues raised by McCarthy were completely without substance. We reject the request for sanctions. 31 AFFIRMED.