Anne Powers v. John T. Lightner, D/B/A Lightner Auto Sales, Third-Party Plaintiff v. Barry Jones and Bruce White, Third-Party
820 F.2d 818
3rd Cir.
1987
Check Treatment

*1 ly, ants did not violate 29 1106 when discharged U.S.C. defendants will have § they transferred trust assets from Sal- Cyclops’ guaran- duties under ERISA. plan. aried Plan New Boston’s Section tee of benefits is therefore fulfilled 1106(a)(1)(D) prohibits plan fiduciary a payment pension. of the engage causing plan in a trans- Appendix Joint at If on 406. remand it is action he knows or should know con- which plaintiffs decided that are not entitled plan direct or indirect use of the stitutes a pensions, shutdown dispute this factual will party for the assets benefit a interest. have to be resolved. If on remand District Court determines plaintiffs that were entitled to shutdown V. pensions, this issue will be resolved. If the Accordingly, we AFFIRM the District plaintiffs Court finds were not entitled judgment part, Court’s and REMAND however, pensions, to such then defend- for proceedings further consistent purely ants’ transfer of the assets was a opinion. with this give ministerial act would not rise to which liability under section. of our remand for view factual deter-

minations, express opinion plain- we no on remaining

tiffs’ allegations two of error. granted summary judg-

The District Court plaintiffs’ request

ment to defendants on pay, for noting “plaintiffs severance POWERS, Plaintiff, Anne admit in their Brief in Opposition to De- Summary Judgment fendants’ Motion for LIGHTNER, John T. Lightner d/b/a prevail they at that if on their claims Sales, Defendant, Auto Third-Party benefits, for of 65 they Rule and 70/80 are Plaintiff-Appellee, pay.” not entitled to severance Ap- Joint pendix at 404.6 It did pass thus not on plaintiffs whether were entitled to sever- Barry White, JONES and Bruce Third- pay they if ance did not receive shutdown Party Defendants-Appellants. pensions. If it is determined on remand plaintiffs are to plan entitled shut- No. 84-2312. pensions, down the District will Court United States Appeals, Court of plaintiffs need to address this issue. If Seventh Circuit. benefits, however, not entitled to such pass District Court should this issue in Argued Nov. 1984. the first instance. Decided May 1987. alleged Plaintiffs also Cyclops’ Di- .Rehearing and Rehearing En Banc Corporate rector of represented Insurance 3,1987. Aug. Denied them that bankrupt McLouth went years sale, five after within all them

would revert Salaried Plan. The granted summary

District Court issue,

to defendants on this noting:

Cyclops obligated is under the Salaried plaintiffs

Plan to pen- full immediate plant

sion on a benefits shutdown basis 21, 1980,

as of November which includes

medical Consequent- insurance benefits. Cyclops’ pay policy: 6. Under severance company plan 1.2.3 Retirement under oth- employee eligible pension. 1.2 is er than a deferred An vested sever- Appendix ance he allowance if terminated under Joint following conditions: *2 Letter, Justice,

Douglas Dept, of Civ. Div., D.C., Washington, third-party de- fendants-appellants. Dienner, III, Lydon

John A. Pierce Grif- Montana, 111., defendant, Chicago, fin & third-party plaintiff-appellee. FLAUM, Judge, Before Circuit PELL, WISDOM* and Circuit Senior Judges.

PER CURIAM. the result reached in accordance with respective opinions Judge Flaum and Pell, Judge of the district court is reversed and the cause is remand- proceedings ed for further in accordance following opinions. with the PELL, Judge. Senior Circuit appeal federal officials from an or- Two denying their mo- der of the district court summary judgment tion for * Wisdom, Circuit, designation. Judge sitting by Judge John Minor Senior Circuit Fifth Appeals Court of for the the United States

immunity grounds. enterprises. We first held that the Operation Recoupe was de scribed in appealable Georgia Casualty order was not an Surety district court’s (E.D. order, F.Supp. Co. United interlocutory Lightner, Powers Mo.1984). operated FBI a vehicle sal light but in yard vage agents purchased in which auto 511, 105 Forsyth, Mitchell v. 472 U.S. wrecks with valid titles and vehicle identifi (1985), which held that 86 L.Ed.2d (VIN) tags cation number from cooperating deci appealable such an order is an final *3 companies. insurance These then notwithstanding sion the absence of a final sold the with wrecks the VINs and titles to judgment, judg earlier we vacated our targeted suspects allegedly who ran a “re- ment. the federal officials Because should tagging” suspects business. These distrib summary judgment to have been entitled uted the to cars auctioneers. The cars qualified immunity grounds, on we reverse bought by were then used cars and dealers the district court’s order and remand for ultimately to public. sold proceedings further consistent this with 1981, opinion. Special Agent In June FBI Barry provided tag Jones a YIN and for a title opinion, Light In I this do reach Lauck, Chevrolet Monte Carlo to David argument ner’s that the ac Government’s working used car dealer also FBI as a taking just tion was a for compensa which put tags informant. Lauck and title on required.1 tion would been have Further a stolen Monte Carlo which would subse- more, consistently while this circuit has quently through be auctioned the Tremont held that the Racketeer Influenced and trooper Auto Auction. An Illinois State Corrupt Organizations (RICO) Act must be car, noticed this independently suspecting given the by broad effect mandated its it might and a second car have see, plain language, e.g., Morgan v. Bank stolen, and took he the cars to his station. 970, (7th Waukegan, F.2d 974 Cir. 804 Jones, telephoned Lauck alerted who 1986), Lightner allege because failed to trooper and informed him the undercov- facts sufficient make out the element of operation. er The trooper returned the claim, criminal in his intent RICO claim cars Tremont and told the auctioneer should have been dismissed the district cars were not stolen. Martin, court. See Baucom v. F.2d 677 Lightner purchased Auto Sales 1346, (11th Cir.1982). I 1350 consider here Monte Carlo auction and then resold only immunity. issue Anne it to Powers. This car was seized at Operation Recoupe the end of and returned I. proper to its Lightner owner. Powers sued Because previously this court discussed court, for a refund in state Lightner original the facts of this case in opin- our party then filed a against third action ion, Powers, 1252-53, 752 F.2d at I need to auction, General, Attorney auto the U.S. repeat only those necessary facts our Jones, Lauck, U.S. Attorney Assistant disposition appeal. principal issue White, Bruce and several police Illinois of- us, before now that we know from Mitchell ficers, damages seeking 42 under U.S.C. appealable order, we have an is wheth- for deprivation 1983 of property without § er Jones White this case quali- had process. Lightner alleged due also a RICO immunity. my opinion, fied they did. against defendants, claim the federal who removed the district court. through 1982, From 1980 October March St. Louis FBI office granted conducted un- an The district court the motion to investigation, dercover criminal Attorney known dismiss the General but denied it Recoupe,” “Operation into stolen Lightner vehicle as to Jones and White. Tre- 1511, (1969). 1. The district court did not address this issue. 23 117 L.Ed.2d We refuse to cre- stop injury Yet the Government’s failure such Lightner’s ate a novel cause of action in property taking Allard, generally does constitute a under the case. See Andrus v. U.S. 444 64-68, 318, 326-28, Fifth Amendment. See National 100 Board S.Ct. 62 210 L.Ed.2d YMCA United 395 U.S. 89

821 Auction, Inc., F.Supp. 564 was “clearly Auto violation established” at mont (N.D.Ill.1983). 1112 Jones and White now the incidents time occurred. Wade v. Heg- portions appeal ner, those of the order 804 F.2d 70-71 request summary judg denying Closely analogous cases, those decided be- qualified immunity. ground of ment on the defendants act, fore the acted or failed to required to are find that a constitutional The two federal officials claim that right clearly Lojuk established. v. John- they qualified immunity, an entitled to son, cert. they carry defense on affirmative which — denied, -, 106 S.Ct. proof. Fitzger the burden of Harlow v. (1986). My L.Ed.2d 795 research has failed ald, 800, 815, 2727, 2737, 457 U.S. indicating Light- to disclose cases (1982). Qualified immunity 73 L.Ed.2d right had a ner to have the constitutional government liability “from shields officials notify two federal him that damages insofar conduct for civil as their he buying part Monte Carlo was was does not violate established statu *4 operation. right Nor did Lightner have a tory rights constitutional of which a or compensation to from them for the loss of person known.” reasonable would have his automobile. 818, 2738; Harlow, 457 U.S. at 102 S.Ct. at 183, 12, Scherer, 468 194 n. Davis v. The law controlling this issue has been 3012, 12, 104 3019 n. L.Ed.2d 139 82 quite unsettled. Breljc, Johnson v. 701 (7th Cir.1983). Therefore, F.2d 1201 “[i]n binding precedent, the absence of a court The standard that the federal offi look to should whatever decisional law is objective cials meet is an one. It is must to ascertain available whether the law is whether either defendant knew irrelevant clearly established under Harlow.” Ca- he acted or failed to act that his the time Reed, 1512, (9th v. poeman 754 F.2d 1514 actions violated someone’s constitutional Cir.1985). A review of these cases should rights. Stein, 883, Kompare v. 801 F.2d only rights on focus established in (7th Cir.1986); Jean, Bates 745 F.2d 887 v. contexts, respective Lash, their Crowder v. 1146, (7th particu 1151 Until (7th Cir.1982), F.2d 1007 687 and this right lar constitutional has stated so been expect govern- must not court reasonable reasonably competent that officers would recognize signifi- officials “to ment the agree application given its set of on to a dispar- of a few from cance scattered cases facts, “clearly it has not established” right just ate areas law for a that is purposes for of v. Harlow. See Benson evolving.” Lojuk, F.2d at 628. 770 No (7th Cir.), Allphin, 786 F.2d 275-76 — analagous point Lightner’s cases to of denied, U.S.-, cert. rights claimed or the federal officials’ cor- (1986). Moreover, 93 L.Ed.2d 109 as this responding duties. held, recently ‘clearly court “The words rights’ may established ... constitutional In Redmond v. 518 United F.2d immuni be used to read the defense of Cir.1975), (7th and 811 the Securities Ex- ty by out of federal tort law the facile change plaintiff Commission the permitted expedient stating rights in of constitutional defrauded to be a con man. This court The general possible the most terms. ... rejected plaintiff’s the that contention right sufficiently particularized must be government may “national held be liable put potential defendants on notice damages resulting from criminal con- probably their is Azeez conduct unlawful.” duct,” held is no “legally- and we that there (7th Fairman, v. 795 F.2d 1301 Cir. duty part on of the Govern- enforceable 1986); Pickett, Chapman see also or to compensate ment to warn victims of Cir.1986) (Easterbrook, Lightner’s activity.” criminal Id. at J., dissenting). remotely analogous is situation Red- light mond, is to law in for the Government here need not The task re-examine the sting compen- plaintiff’s allegations supporting ev- him of nor and have warned him for the the Monte Carlo. alleged idence to decide the constitutional sate loss of duty over, inquiry however, This lack comes the Govern- is for this apply ment’s as an enforcer the undercov- court must role Harlow standard to if the operation kept objec- er see defendants’ were which had be actions absolute- tively balancing reasonable. ly preserve sting’s inter- secret success. Lightner compensation ests receive Lightner has failed to demonstrate that the damages and loss of his car with potential Government could have notified the interests of the Government main- Lightner buyers such that the innocent taining a sting oper- successful undercover question was stolen without automobile ation, existing “facts case law jeopardizing operation. the entire See correspond closely must to the contested Georgia Casualty Surety Company, action before the defendant official sub- F.Supp. at 51. Here the enforce- law ject to liability Benson, under Harlow." appeared ment to choose alter- My 786 F.2d at 276. review of the case law presented by public private native versus closely analogous reveals no decisions result interests would the least which should have indicated to the officials harm, amount of States Inter- United conduct in the opera- undercover Inc., continental Industries 635 F.2d 1215 tion was unreasonable. (6th Cir.1980), they wisely recom- test, This trooper stop balancing hand, mended State Illinois the other “foregone reaches a intervening favoring in the conclusion” matter. parties injured in the “egre- event of an analogous A second case is Beard v. gious Benson, situation.” 786 F.2d at 276 Mitchell, where remains, however, n. 18. The *5 agent was whether an FBI alleged governmental whether the miscon- duty prevent had a to a murder. In that “truly outrageous” duct here was so as to action, plain Bivens the court held that the process indicate a due violation. United tiff to had demonstrate the defendant’s Kaminski, 1004, v. States 703 F.2d 1009 recklessness, i.e., the to defendant had act (7th Cir.1983). I do not it believe was. In knowledge with the that its was conduct to retagging operation, order detect the or culpable. unreasonable Id. at 495. The agents participate needed to in the unlaw- distinguished court the situation in Bonner practices. ful See United States v. Rus- Coughlin, v. 423, sell, 432, 1637, 1643, 411 U.S. 93 S.Ct. denied, 932, 1507, cert. 435 98 (1973). U.S. S.Ct. 55 36 L.Ed.2d 366 In the situation (1978), here, L.Ed.2d 529 where con presented intentional the law enforcement con- rights duct an of intervening prevent was element the civil to a trooper duct— Recently, perhaps frustrating claim. major this court has acknowl a investi- edged stops illogical gation certainly that “it short of violating would be to extend — good fairness, government shocking that “fundamental immunity faith to offi to justice,” the universal sense of cial mandated intentionally who has violated an indi by the Due Process Clause of the Fifth rights.” vidual’s Perry constitutional Amendment. Kinsella v. United Larson, 794 F.2d 284 n. 1 Cir. 234, 246, 297, 304, 80 361 U.S. 4 1986). I cannot hold that White and Jones (1960). 268 L.Ed.2d intentionally deprive Lightner tried to of property though his even it turned out that I recognize that a few While innocent sting operation. was the fallout of the The Lightner may such as citizens have suf- agents prevent did intervene to the Illinois Operation fered individual losses due to trooper State from impounding the automo Recoupe, I this believe court should refuse suspected biles he were stolen. This ac the FBI to hold Attorneys U.S. tion, however, was not put sufficient to good-faith for their in giving liable conduct case in involving the ambit of those an priority secrecy to the maintenance of intentional violation due process. of sting operation. See such an undercover City Joliet, Jackson v. investigation, F.2d 1200 may losses a few be nec- of (7th Cir.1983) (discussing essary important distinction be to obtain pre- evidence to negligent conduct). tween and intentional general future crimes suffered by vent prisons appealing, tionally precise The our public. manner which because this due filling overcrowding process question point previously to the of has not been graphically necessity by any court, of addressed demonstrates federal I conclude governmental procedures to that at that the officers involved are resort immune from deemed, join Judge suit. I therefore an earlier time would have been Pell in revers- intolerable, ing dignity at least beneath district court. might of the Government. One venture general is A

say that the welfare I. involved. frequent example is the use of informants Supreme recently spoken Court has themselves have a criminal back- who Harlow immunity. the area and, indeed, ground commit crimes while Fitzgerald, 457 U.S. 102 S.Ct. acting on of the Government. Yet behalf In Harlow 73 L.Ed.2d 396 fighting the success of these methods “government held per Court crime, including type the one of the here forming discretionary generally functions involved, repeatedly has demonstrat- liability damages are shielded from for civil consequence is an unfortunate ed. It insofar as their conduct does not violate achieving good is for the overall what statutory established or constitu may public property that some loss rights tional person which a reasonable presumably innocent individuals. occur would have known.” Id. at 2738. This above, Special cited

For reasons both recently court stated that “whenever a bal Attorney Agent Jones and Assistant U.S. ancing required of interests is the facts of qualified immunity White were entitled existing closely law must corre participation Operation for their Re- spond to the contested action before the coupe. plaintiff The standard that the at- subject liability defendant official is un tempted impose both officials was Allphin, ... Harlow.” Benson v. der — denied, “clearly existing under case- (7th Cir.), established” cert. -, law. The nature of undercover criminal 93 L.Ed.2d 109 investigations Recoupe Operation like (1986). Furthermore, for officials to lose given such that federal officials must be Harlow qualified immunity, requires *6 the freedom in which to exercise their dis- rights that the constitutional in ensuring in established; cretion the success of their must be this means sting operations. genuine There is no is- “right sufficiently particu that the must be fact, of and and sue material both Jones put potential no larized defendants on White were entitled to as a mat- probably tice that their conduct is unlaw Fairman, ter of law. Azeez v. ful.” Under Harlow’s objec standard, FLAUM, Judge, concurring any process rights in Circuit the tive due that Lightner may possessed judgment. have were not clearly established the time of the al precise presented appeal The issue in this leged injury in this case. federal officers is whether the involved Benson suit. To This court in noted that there qualifiedly immune from decide issue, obliged may “a situation in which the defend- this we are examine be egregious re- injuries to innocent victims of fed- ant’s actions are so that the whether investigations may balancing foregone test will a eral undercover violate sult be conclusion, though prior may the Fifth Amendment’s Due Process even caselaw unnecessary specific I that it is not facts at issue.” Clause. conclude address Benson, in- n. I definitively particular resolve this 786 F.2d at 276 do not in this Al- this is a case where the defend- quiry the context of case.1 believe that though Judge egregious strip Wisdom’s dissent is constitu- ants’ conduct is so as underlying fully repeated 1. The facts this suit are dis- here. Judge opinion cussed in Pell’s and will not be immunity. them of their How- The process right impli- substantive due ever, compelling balancing future case more cated in this requires a with a of arise, govern- facts than this situation should interests.- On the one hand might discovering prosecut- not so ment’s interest in defendants be shielded. and

ing criminals. On the other hand is the right citizen’s not to the victim of be a II. wholly by crime created government. I therefore that conclude we need not of FBI long Officials have known that any Lightner’s or resolve of whether during their conduct opera- an. undercover guaranteed possible process rights, due as may process rights tion invade the due of Amendment, by the Fifth have violat- in citizens involved investigation. For I possible process ed. find that due example, targets investigation may rights Lightner may have under the facts entrapped.4 not be FBI The knew civil established,” “clearly of this case were liability may egre- attach particularly required Harlow; thus, the defend- gious entrapment conduct in cases. ants are immune from suit in this case. I am in my confirmed conclusion handling FBI’s of Operation or Recoupe WISDOM, Judge. Senior Circuit Recoup “truly outrageous” by was the crit- respectfully I dissent. generated icism it has public in the and government’s discretion to conduct Congress. Recoupe operations and other investigations, although undercover neces- subject similar to it have been the of crit- broad, sarily is not due unlimited. The newspaper ical congressional articles and process protects clause even criminal de- hearings.5 The Subcommittee on Civil and against “truly outrageous” fendants Rights Constitutional of the Judicial Com- government Supreme misconduct.1 As the Representatives mittee of the House of in- Stanley Illinois,2 Court observed “one vestigated Operation Recoup among other might fairly say Rights Bill operations. undercover The subcommittee general, and the Due Process Clause had to say sting operation: about the particular, they designed pro- were Operation Recoup investiga- a 1981 fragile tect the a values of vulnerable citi- tion of racketeering stolen car in the zenry overbearing from the concern Midwest, South and appar- Bureau efficiency efficacy may character- ently used up its own to set government praiseworthy ize no bogus business, used car Mo- Le Blanc less, more, perhaps than mediocre tors, in which wrecked cars were sold to ones.”3 “retaggers” replaced who then the motor

I FBI would hold that the tags exceeded vehicle identification on stolen auto- limits its discretion. Had the FBI not mobiles with those of the wrecked ve- *7 directly, intervened the car in operated hicle. FBI also in- as would not have sold to an innocent termediaries in several sales of stolen purchaser. This case retagged therefore differs automobiles to used car from the more usual case which the FBI dealers. Those sales were made with the simply participates ongoing knowledge an criminal that the cars be would subse- enterprise causing without quently purchasers additional resold innocent crime. who ultimately would lose title to them.6 Kaminski, Post, 3, 1985, A3; Washington August 1. United States v. 703 F.2d 1004 5. The at States-Item, Times-Picayune/The June 1986, A-14; Operations, at FBI Undercover H.R. 2. 31 L.Ed.2d 551 98-267, Cong., (1984). Doc. No. 98th 2nd Sess. investigation op- 6. "Asked after the whether the Id. 3. 92 S.Ct. at 1215. people, eration could not but harm innocent Kaminski, Agent 4. Special Charge See United States Assistant the St. (7th Cir.1983). responded affirmatively. Louis FBI office 1982 more than 250 cars As of October pur- from innocent

had been confiscated addition, course,

chasers.7 of the dealers who reputations

business irrepara- have been

sold the automobiles Recoup has

bly injured. Operation claiming

spawned a number of lawsuits damages by innoct

millions of dollars purchasers of stolen automo-

sellers and

biles.8 98-267, Cong., 2nd Doc. 98th Sess.

H.R.

(1984), p. 22. Operation Recoupe fact is that in

The sad by innocent citizens

the FBI victimized selling cars and now re-

knowingly stolen purchasers. The

fuses to reimburse the operation should be borne

costs of such an government,

by the United States

the innocent victims. LEU, al., Individually et

James W. Class, Representative of a

Plaintiffs-Appellants, & RAILWAY

NORFOLK WESTERN

COMPANY, Defendant-Appellee.

No. 86-1377. Appeals, States Court of

United

Seventh Circuit.

Argued Sept. 1986. 8,May Decided Schum, Schum, Randolph Ed- E. Blunt &

wardsville, 111., plaintiffs-appellants. Whitehead, Austin, Sidley James S. & 111., Chicago, defendant-appellee. *8 Star, (December (Ill.) Register p. covery the FBI’s role. 1983 tele- Rockford 1a”. H.R. Doc. 98-267, (1984), Cong. p. attorney 22 n. phone 98th 2nd Sess. conversation with for the de- fendant, party third defendant in Powers v. Journal, 7, 1982, p. 1. 7. Wall Street October Court, Lightner, District Northern District Illinois, Western Div. 82 C and Powers $47 million have been 8. Claims excess Lightner, Judicial Cir- v. cuit, Court of the Fifteenth against filed the United States as a result of Illinois, 16.) County, Lee No. 22-LM H.R. Operation Recoup, none of which have been Activities,” 98-267, (1984), (see Cong., p. supra, 2nd Sess. Doc. 98th settled “FBI Undercover Here, too, 457). Department of Justice n. 52. through efforts to disclose dis- has resisted all