Court Opinion

ID: 8976458
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:58:19.637381+00
Date Added: 2024-06-11T17:10:33.560794
License: Public Domain

FLAUM, Circuit Judge,
dissenting.
The majority would have this Court permit the Veteran’s Administration (“VA”) to deny a pre-termination hearing to an employee based on the VA’s own subsequent determination that his appointment was initially in violation of VA regulations. Because Congress mandated in 38 U.S.C. §§ 4106 and 4110 that such determinations be made at a pre-termination hearing and not by ensuing administrative fiat, I respectfully suggest that a contrary result is warranted.
The Supreme Court, in Cleveland Bd. of Educ. v. Loudermill considered the termination of an employee of the Cleveland Board of Education who was fired from his job as a security guard. The employee had falsified his job application by stating that he had never been convicted of a felony when in fact he had been convicted of grand larceny. As part of their argument before the Supreme Court, the Cleveland Board of Education maintained that Loud-ermill had no property right in his continued employment because he had obtained the job by lying on his application. They argued that “had Loudermill answered truthfully he would not have been hired.” Loudermill, 470 U.S. at 539 n. 5, 105 S.Ct. at 1491 n. 5. This is the same argument relied on by the majority. The majority holds that Dr. Hannon’s appointment was void ab initio because he never held the qualifications necessary for the job. In other words, had the VA known of his lack of qualifications, Dr. Hannon could not have been hired.
The Supreme Court in Loudermill, however, firmly rejected this approach. The Court held:
[T]he argument reliefs] on a retrospective fiction inconsistent with the undisputed fact that Loudermill was hired and did hold the security job. The Board cannot escape its constitutional obligations by rephrasing the basis for termination as a reason why Loudermill should not have been hired in the first place.
Id. Dr. Hannon, like Loudermill was hired, paid, evaluated, and promoted. He performed work for the VA in exchange for benefits. Perhaps his hiring was in error, but the fact remains that he was hired and held a job. As an employee of the VA, he was entitled to the same rights and benefits as other employees, including his expectation of continued employment absent a hearing. The majority has, contrary to Loudermill, allowed the VA to “rephras[e] the basis for termination as a reason why [he] should not have been hired in the first place.” Id.
This is not to say that the VA could not terminate Dr. Hannon on the grounds that he failed to hold an unrestricted medical license or because he lied on his application. The requirement of a hearing merely allows him to contest these allegations before termination. If, for example, these allegations were untrue, then Dr. Hannon would have been wrongfully terminated. Yet the majority distinguishes this case from Loudermill by stating that in this case, as opposed to Loudermill, there is no dispute over whether Dr. Hannon was improperly hired. But the very purpose of a hearing would be to determine if there is such a dispute. Simply put, the VA could not have denied a hearing knowing there was no dispute until a hearing has been held to determine if there was a dispute.
The majority attempts to distinguish *662Loudermill on three factual grounds.1 First, the majority states that the issue of whether the plaintiffs had property interests in their positions is squarely before this Court but was not in Loudermill. While the question of property interests was not the principal issue in Loudermill, the holding by the Court that there was such an interest was not dicta. It is a necessary holding of the case and was argued before the Court. As such, I would not minimize it.
Second, the majority attempts to distinguish Loudermill on the basis that Louder-mill was fired for lying while Dr. Hannon was fired for not having the necessary job qualifications. Respectfully, with the record in this case, and the Court’s opinion in Loudermill, I cannot support this reading of the facts. In the present case, we cannot be certain why Dr. Hannon was fired and as we are not triers of fact, it is inappropriate for us to make this determination. An affidavit filed by the defendants points to a General Counsel’s [of the VA] memo as setting forth the grounds for Dr. Hannon’s termination. The memorandum expressly lists Dr. Hannon’s falsification of his application as an alternative grounds for termination. Dr. Hannon asserts that this was the ground for termination, and factual disputes in a motion for summary judgment are to be construed in favor of the non-moving party, in this case Dr. Hannon. United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam).
Even if we accept that Dr. Hannon was terminated because he lacked the necessary qualifications rather than for lying, the reasons for termination, in my judgment, cannot be distinguished from those in Louder-mill. In Loudermill, all we are told is that Loudermill would not have been hired had he not lied on his job application. Id. We are never informed that he was fired because he lied rather than for not having the qualifications. Indeed, the fact that he would not have been hired had he not lied indicates otherwise because Loudermill could have told the truth and still not have been hired. We cannot, therefore, successfully distinguish the cases on the reasons for the employee’s termination.
Finally, the majority further attempts to distinguish Loudermill by arguing that the appointment of Dr. Hannon in the instant case was illegal, whereas the appointment of the plaintiff in Loudermill might have been legal. On this basis, the majority argues that Dr. Hannon’s appointment was void while Loudermill’s appointment was valid. I find the majority’s reasoning flawed, however, because we do not know whether Loudermill’s appointment was illegal or merely imprudent. The Supreme Court in Loudermill did not examine Ohio law. More importantly, such an examination was not relevant to the Court’s inquiry because either way, the fact remains that the plaintiffs in both cases actually held the jobs, legally or otherwise. In addition, Dr. Hannon’s and Loudermill’s expectations of continued employment were virtually identical regardless of whether Dr. Hannon’s initial appointment was illegal. Arguably, both Dr. Hannon and Loudermill must have known that had their “secret” been discovered, their jobs would be in peril. Both would have had to realize that they obtained their jobs through less than accurate applications. And both had reason to believe that they might not be terminated if their secret got out: Loudermill could have believed this if the majority is correct that his appointment was not illegal; Dr. Hannon could have believed this because he possessed an unrestricted license at the time of his termination so it was legal for him to hold the job at that time.
I believe that the majority’s attempt to distinguish Loudermill falls short of the mark. Based on the facts of these cases, it is my conclusion that Loudermill cannot be distinguished. Both plaintiffs could have been fired for lying or for failing to have the necessary qualifications for the job. In both cases, the government at*663tempted to state that the employee had never been properly hired in the first place. In both cases, it is clear that the employee held the job and performed the work. And finally, in both cases, the government attempted to label the reason for termination as a reason they should not have been hired. In my view, Loudermill cannot be convincingly distinguished and we are bound to follow it as controlling Supreme Court precedent.
Dr. Hannon’s expectations of continued employment absent a hearing are based on 38 U.S.C. §§ 4106 and 4110. Section 4106 provides for pre-termination hearings for employees during their two year probationary period. Subsection 4106(b) provides that a board shall review all appointments and all persons judged not to be fully qualified shall be separated from employment. Dr. Hannon was not separated during this period. After completion of the probationary period, Section 4110 governs dismissal from the VA. Section 4110 provides for a hearing when termination is for inaptitude, inefficiency, or misconduct, presumably the only times someone who had passed the probationary period could be fired. The term “inaptitude” arguably includes lack of qualifications. In addition, Section 4110 has been interpreted to cover any disciplinary action taken against a VA employee. See Neal v. Walters, 750 F.2d 347, 350 (5th Cir.1984). Even if Section 4110 does not cover Dr. Hannon, it certainly does not allow the VA to avoid the necessity of a board determination. A board determination of lack of qualifications would have been necessary had the VA found he lacked the necessary qualifications in the time Congress set forth for it to review qualifications, i.e., the probationary period. It would be anomalous to allow the VA to avoid a board determination simply because the VA failed to find Dr. Hannon not qualified during the period set aside for such findings.
The policy behind the Supreme Court’s holding in Loudermill is especially compelling here. The majority would invite the government to avoid its constitutional and statutory obligations. All a federal agency would need to do to evade a Bivens action under the majority’s holding, is to categorize the reasons for firing employees as reflecting why they could not be hired in the first place. No hearing would ever be necessary though the agency was bound by the statutory assurances, such as those in sections 4106 and 4110, of job security. Even if one accepts the majority’s distinguishing of Loudermill on the facts, in my view the policy behind Loudermill and sections 4106 and 4110 dictate a different result. The VA here made its own determination that Dr. Hannon was not qualified. Yet this is exactly the reason why a hearing is required: a hearing would permit Dr. Hannon to refute these charges. The majority, in effect, would allow the VA to fashion a legal fiction that enables it to avoid the statutes governing its administration. I respectfully dissent.2

. I recognize that the majority relies heavily on Kauffman v. Puerto Rico Telephone Co., 841 F.2d 1169 (1st Cir.1988) which distinguishes Loudermill on facts very similar to ours. To the extent I disagree with the majority, I also find Kauffman unpersuasive.

. Because I disagree with the majority’s holding that the requirements for qualified immunity are met, I must consider the defendant’s alternative grounds for dismissal, namely that defendants Turnage and Gronvall, both Dr. Hannon’s superiors at the VA, took no personal action against Dr. Hannon and therefore cannot be held liable. See e.g. Moore v. Marketplace Restaurant, Inc., 754 F.2d 1336, 1356 (7th Cir.1985) (dismissing a section 1983 claim because the plaintiff did not allege the defendant had actually participated). This claim was made to the district court during the motion for summary judgment although it is not mentioned in the district court’s opinion. I believe that this claim is not subject to interlocutory appeal. Where a defendant seeks a review of a denial of a motion for summary judgment on the issue of qualified immunity, "review ... is limited to the legal question of whether the law was well-established at the time of the conduct. Conner v. Reinhard, 847 F.2d 384, 388 (7th Cir.1988). This claim is, therefore, not part of the qualified immunity claim. It goes, instead to the merits of Dr. Hannon’s claim. Therefore, in my view, the defendant’s second basis for dismissal is not properly before this court.