Court Opinion

ID: 3018029
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:18:30.073715+00
Date Added: 2024-06-11T18:08:03.289060
License: Public Domain

United States Court of Appeals

                        FOR THE EIGHTH CIRCUIT
                              ___________

                         Nos. 96-1325/1658
                            ___________

Warren C. Hartje; Jean E.          *
Hartje; Warren Hartje Sales        *
Company Employees' Pension         *
Plan & Trust,                      *
                                   *
     Plaintiffs/Appellants,        *
                                   *
Philip F. Florence; Audrey K.      *
Florence; Scott W. Florence;       *   Appeals from the United States
Empire Paper Company Profit        *   District Court for the District
Sharing Trust,                     *   of Minnesota.
                                   *
          Plaintiffs,              *
                                   *
     v.                            *
                                   *
Federal Trade Commission;          *
Bennett Rushkoff; United           *
States of America,                 *
                                   *
     Defendants/Appellees.         *

                              ___________

                  Submitted:     November 21, 1996

                        Filed: February 13, 1997
                             ___________

Before BEAM and LOKEN, Circuit Judges, and MOODY,1 District Judge.
                            ___________

BEAM, Circuit Judge.

     Appellants Warren and Jean Hartje and the Hartje Sales Company
Employees' Pension Plan (Hartje plaintiffs) and Philip, Audrey and
Scott Florence and the Empire Paper Company Profit Sharing Plan

     1
      The Honorable James M. Moody, United States District Judge
for the Eastern District of Arkansas, sitting by designation.
(Florence plaintiffs) appeal the district court's2 dismissal of
their       actions   against   the   United     States,    the   Federal     Trade
Commission (FTC), and Bennett Rushkoff, counsel for the FTC.                    We
affirm.

I.   BACKGROUND

     The Hartje and Florence plaintiffs invested money in rare
coins sold by T. G. Morgan, Inc. (TGM).               Michael Blodgett, TGM's
chief executive officer, personally made the coin sales to the
plaintiffs.      Blodgett, however, was in the habit of selling single
coins to multiple customers, greatly overstating the value of such
coins, and using coins he had already sold as collateral to obtain
loans for his personal use.            In connection with these and other
coin sales, Blodgett was eventually convicted of twenty-two counts
of fraud.

     In response to these fraudulent actions, the FTC initiated a
civil enforcement action against TGM and Blodgett.                    A temporary
restraining order (TRO) was later entered in federal district
court, freezing the assets of TGM.               A consent order, prohibiting
TGM and Blodgett from further selling or purchasing coins without
court       approval,   followed   the    TRO.     The     district   court   then
appointed Armen R. Vartian as interim receiver to handle the
disposition of TGM's assets.          Vartian was given control over TGM's
property and was charged with liquidating the assets to cover the
attorney fees of TGM and Blodgett and to defray Blodgett's living
expenses.       The district court also instructed Vartian to return
coins to bona fide owners with uncontested ownership claims and to
consider and document contested ownership claims.

     The receiver liquidated many coins from TGM's collection, some
of which allegedly belonged to the Hartje and Florence plaintiffs.

        2
      The Honorable Paul A. Magnuson, Chief Judge, United States
District Court for the District of Minnesota.

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Plaintiffs claim they received no notice of the coin liquidation
and that the FTC and its counsel Rushkoff knew, or should have
known, of the existence of their ownership claims.            Plaintiffs
further assert that once they notified the FTC about their claims,
the FTC and Rushkoff informed the receiver that such claims were
meritless and that liquidation should continue.     According to the
plaintiffs, this advice amounts to illegal interference with their
property rights.

      Initially,   plaintiffs   tried   to   intervene   in    the    FTC
enforcement action.     Their motion was denied as untimely.         They
then sued the receiver in federal district court.    That action was
dismissed based on official immunity.   In addition, plaintiffs have
been involved in TGM's bankruptcy proceedings.     Still displeased,
plaintiffs brought actions against the United States, the FTC and
Rushkoff under the Employee Retirement Income Security Act (ERISA),
the Federal Tort Claims Act (FTCA), and Bivens v. Six Unknown Named
Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971).              The
district court dismissed the actions for failure to state a claim
upon which relief could be granted.       Fed. R. Civ. P. 12(b)(6).
Plaintiffs appeal only the dismissal of their FTCA and Bivens
actions.   We affirm.

II.   DISCUSSION

      The plaintiffs assert numerous claims against the United
States under the FTCA, alleging, among other things, that the
United States:     (1) deprived them of their property without due
process or adequate compensation in violation of the Minnesota
Constitution; (2) illegally interfered with their property rights;
and (3) negligently failed to supervise the receiver or require the
receiver to be bonded.

      By waiving sovereign immunity for certain injuries and losses,
the FTCA provides a remedy for torts committed by federal officers.
28 U.S.C. § 1346(b).    However, the discretionary function exception

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to the FTCA prohibits the maintenance of claims which are "based
upon the exercise or performance or the failure to exercise or
perform a discretionary function or 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).      See
Berkovitz v. United States, 486 U.S. 531, 535 (1988).                          This
exception shields the United States from liability in this case.

     The     district    court    correctly        found   that    Rushkoff    was
performing    a   discretionary     function       while   conducting    the   FTC
enforcement action in his position as FTC Counsel.                  This finding
encompassed Rushkoff's actions in advising the receiver as to
specific ownership claims.        As the district court stated:

     Making judgments and recommendations about potential TGM
     customer claims was within [Rushkoff's] role as FTC
     Counsel. The possibility that Rushkoff's recommendations
     to the receiver were mistaken does not take his actions
     to the level of an unconstitutional taking or denial of
     due process, nor does it remove them from the
     discretionary function exception.

Hartje v. FTC, No. 3-94-1288, mem. order at 10 (D. Minn Dec. 4,
1995).

     Furthermore, the decision-making responsibility in the coin
liquidation activities of which plaintiffs complain rested with the
receiver and not with the FTC or Rushkoff.             The receiver, in turn,
was appointed by the district court and was not responsible to
either the FTC or Rushkoff.       Consequently, plaintiffs' theories for
imposing liability on the United States simply do not fit the facts
of this case or the framework of the FTCA.

     Plaintiffs' real dispute is with the receiver's handling of
their ownership claims.        Plaintiffs had an opportunity to reach the
receiver in their prior district court action.                     Additionally,
plaintiffs had the chance to intervene in the enforcement action
and have been involved in the bankruptcy action.                 Plaintiffs' lack

                                      -4-
of success in other actions simply does not justify imposing
liability on the defendants in the present suit.

       In their Bivens action, plaintiffs argue that the liquidation
proceedings      operated   as     an   unconstitutional      taking    of   their
property without adequate compensation and a denial of their due
process rights under the Fifth Amendment.                A Bivens action, which
provides a cause of action for a constitutional violation, is only
available     against    federal    officers,      not    government   entities.
Bivens, 403 U.S. at 397.         Therefore, the United States and the FTC
are not proper Bivens defendants because of sovereign immunity.
Phelps v. U.S. Fed. Gov't, 15 F.3d 735, 739 (8th Cir. 1994).

       Even    against   Rushkoff,      however,    this     Bivens    action   is
untenable because Rushkoff is protected by qualified immunity.
See, e.g., Butz v. Economou, 438 U.S. 478, 507 (1978) (officials
are entitled to qualified immunity unless actions knowingly violate
a clearly established constitutional right).                Qualified immunity
protects Rushkoff from liability for mistakes in judgment.                None of
the actions alleged here either rise above the level of a mistake
or to the level of a due process violation.                 Id.   Therefore, we
agree with the district court that plaintiffs simply offered no
evidence which would deny Rushkoff qualified immunity.                   We have
considered the remainder of plaintiffs' claims and find them to be
without merit.

III.    CONCLUSION

       The district court's order dismissing plaintiffs' actions is
affirmed.

       A true copy.

              Attest:

                   CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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