Opinion ID: 199835
Heading Depth: 2
Heading Rank: 3

Heading: Dismissal of Federal Claims Against Escrow Defendants

Text: 40 Tomaiolo alleged that the escrow defendants acted under color of state law and thus could be reached under 42 U.S.C. § 1983. Unless the escrow defendants were state actors, either directly or by a close enough nexus to the state in defined ways, there is neither a § 1983 claim nor a claim against them for violation of constitutional rights. See Yeo v. Town of Lexington, 131 F.3d 241, 248-49 & n. 3 (1st Cir.1997) (discussing the requirement of state action for claims under the Fourteenth Amendment and § 1983). We do not reach the question whether Tomaiolo otherwise asserts a cognizable claim that her constitutional rights and those of her class were violated. 41 We summarize briefly the relevant facts. On a grant of summary judgment, these facts are read in the light most favorable to Tomaiolo. McCarthy, 56 F.3d at 314. HUD issued the amendments to Regulation X relevant to this action in October 1994. TRETS then or shortly thereafter realized that the amendments would change the way it handled escrow accounts across the country. Mark Williams, who managed TRETS operations across several New England states, directed James Houghton, who worked for TRETS in Rhode Island, to determine the position of Rhode Island's municipal tax collectors as to whether their municipalities required annual payment of property taxes, or permitted quarterly payment. Williams and Houghton, together with Beni Osuna, a TRETS employee in Dallas who led the TRETS task force working on Regulation X, appear at that time to have believed that Rhode Island state law left this choice to each municipality. 42 Houghton visited many of the municipal defendants, explaining the content and effects of the amendments to Regulation X, and distributing to at least some of them a two-page summary of the amendments prepared by TRETS. He also told them that unless they issued letters requiring annual payment of property taxes from escrow accounts, TRETS would make quarterly payments. Shortly thereafter, over thirty of the municipal defendants sent out a total of thirty-three letters of the sort Houghton had mentioned. Some of the letters are substantially the same; Houghton appears to have carried copies from one municipality to another. 43 Tomaiolo argues that the escrow defendants themselves misinterpreted Rhode Island law, communicated that misinterpretation to the municipal defendants, and then induced the sending of some thirty-three virtually identical letters from the municipal defendants back to the escrow defendants adopting that misinterpretation, thus leading to the constitutional violations. This is a form of entwinement state action theory, under which nominally private action becomes so mixed and intermingled with state action that it can no longer be called truly private. 44 The latest Supreme Court cases to address whether apparently private actors may be considered state actors on an entwinement theory are Brentwood Academy v. Tennessee Secondary School Athletic Ass'n, 531 U.S. 288, 121 S.Ct. 924, 148 L.Ed.2d 807 (2001), and National Collegiate Athletic Ass'n v. Tarkanian, 488 U.S. 179, 109 S.Ct. 454, 102 L.Ed.2d 469 (1988). Brentwood held that the activities of an athletic association within a single state could fairly be treated as those of the state itself, because [t]he nominally private character of the Association [was] overborne by the pervasive entwinement of public institutions and public officials in its composition and workings, and there is no substantial reason to claim unfairness in applying constitutional standards to it. 531 U.S. at 298, 121 S.Ct. 924. In contrast, in Tarkanian, the activities of a multistate athletic association were those of a collective membership, and the association was not the surrogate of any state. 488 U.S. at 193-94, 109 S.Ct. 454. 45 Here, to be sure, enforcement of state tax laws and collection of state taxes is emphatically a state function. But the classic indicia of entwinement, much less pervasive entwinement, are missing. There is no financial support from the state to the escrow defendants, much less any support that interplays with the decisions taken; nor is there any allocation of traditional state functions to the private entities. Also lacking is any evidence that the government is the real actor behind a private facade, joining in a charade designed to evade constitutional prohibitions. 8 46 At most there is an argument that the escrow defendants somehow caused or induced the municipal actors to take the steps they did. An inducement theory is a particularly weak and problematic theory of state action, often rejected. See Roche v. John Hancock Mut. Life. Ins. Co., 81 F.3d 249, 253-54 (1st Cir.1996) (affirming a grant of summary judgment for a corporate employer whose agents reported to the police their suspicions that a laid-off employee had made harassing phone calls); Alexis v. McDonald's Rests. of Mass., Inc., 67 F.3d 341, 351-52 (1st Cir.1995) (affirming a grant of summary judgment for a restaurant manager who called the police to remove a patron); see also Tarkanian, 488 U.S. at 192, 109 S.Ct. 454 (observing that such a claim mirrors the traditional state-action case). It has sometimes been accepted on particularly compelling facts. See, e.g., Wagenmann v. Adams, 829 F.2d 196, 210-11 (1st Cir.1987) (affirming a jury verdict against a private citizen on a record that enabled the jury to find that because of the citizen's influence the ... police felt constrained to jail the plaintiff notwithstanding the absence of any legal basis to do so). 47 The inducement theory of state action is problematic for at least two reasons. First, it assumes that state actors do not exercise their independent judgment in the face of requests from private citizens, but merely act as puppets. Second and more importantly, the theory may impose burdens on the rights of private citizens to communicate with government officials on topics of concern. Cf. Yeo, 131 F.3d at 255 (Where, as here, there are First Amendment interests on both sides of the case, the analysis of whether there is state action must proceed with care and caution.). 48 Here, there is insufficient evidence that the town officials abandoned their best judgment as to the meaning of state law. Tomaiolo produced evidence that many of the letters sent by the municipal defendants contained similar or identical language, and that many of the letters were sent soon after Houghton's visits. She also argues that the municipal defendants shared an incentive to adopt the reading of state law that they did. From this, a jury could find that some of the municipal defendants saw letters written by the others, that Houghton had carried the letters from one defendant to another, and even that Houghton had suggested that the defendants send the letters out. Such findings would not support the degree of substitution of private judgment for public judgment required to convert the escrow defendants' acts into state action. 49 The second problem with the inducement theory of state action is very real here. The escrow defendants had every reason to contact the town officials to obtain clarification of state law. Indeed, Regulation X by its terms required more favorable treatment only if state law permitted it. It was thus in order to comply with a federal law, Regulation X, that they initiated the contact. A finding that these private actors were state actors, even if they can arguably be said to have induced the particular statutory interpretations by the state actors, might well chill the exercise of their own rights to communicate with government. Several circuits have held, and this one has at least hinted, that in view of the First Amendment the courts should avoid an interpretation of § 1983 so broad as to encompass petitions for government action. See Tarpley v. Keistler, 188 F.3d 788, 793-95 (7th Cir.1999) (collecting cases); 9 cf. Munoz Vargas v. Romero Barcelo, 532 F.2d 765, 766 (1st Cir.1976) ([T]here is no remedy ... against private persons who urge the enactment of laws, regardless of their motives.). 50 In sum, the inducement theory, acceptable only on extreme facts, requires far more than Tomaiolo has shown. As a matter of law, her claim that the escrow defendants engaged in state action fails.