The opinion of the court was delivered by: Kessler, District Judge.
This matter comes before the Court upon Defendants' Motion to
Dismiss [# 12]. Plaintiff, Trifax Corporation, brings suit
against the District of Columbia, various agencies of the
District of Columbia,*fn1 and various District of Columbia
officials in both their official and individual capacities,*fn2
alleging Constitutional and common law violations. Count I of
Plaintiff's Complaint alleges a violation of Plaintiff's
Constitutional right to due process. Plaintiff further alleges
Count II for common law defamation and Count III for common law
negligence. Upon consideration of Defendants' Motion, Plaintiff's
Opposition, Defendants' Reply, and the entire record herein, for
the reasons set forth below, Defendant's Motion to Dismiss is
granted in part and denied in part.
I. Factual Background*fn3
Plaintiff, Trifax Corporation, a District of Columbia-based
government contractor, provides health care and nursing services
to residents of the District of Columbia and other jurisdictions.
In April 1995, Plaintiff entered into a contract with the
Department of Health ("DOH") to provide pre-natal care services.
The contract specified a term of one year, with options for DOH
to renew. In April 1997, DOH exercised its renewal option and
extended the contract term to August 26, 1998.
In December 1996, Plaintiff entered into a separate contract
with the District of Columbia General Hospital ("DCGH") to supply
nurses and medical assistants to various clinics. That contract
specified a one year term as well, with an option for DCGH to
renew. In December 1997,
DCGH extended the contract term to January 29, 1998.*fn4
In May 1997, the Office of the Inspector General ("OIG")
initiated an investigation of Plaintiff's operations under its
contracts with the District of Columbia, allegedly at the request
of a District of Columbia Council Member. In November 1997, OIG
released a report entitled "Review of the Department of Human
Services and the District of Columbia General Hospital Contracts
with the Trifax Corporation" ("OIG Report"). The OIG Report
charged Plaintiff with various statutory and regulatory
violations, as well as business improprieties, and ultimately
recommended that Plaintiff be barred from competing for future
contracts with the District of Columbia.
Plaintiff alleges that the OIG Report was both procedurally
deficient and contained numerous erroneous factual findings.
Specifically, Plaintiff alleges that the OIG failed to perform an
"exit interview", and failed to provide Plaintiff an opportunity
to review or comment on a draft of the OIG Report, as mandated by
the Generally Accepted Government Audit Standards ("GAGAS")
promulgated by the Comptroller General of the United States.
Plaintiff also alleges that officials within OIG specifically
released a copy of the OIG Report to the Washington Post at the
same time they released it to the public. The Post then relied
upon the OIG Report to publish a critical and allegedly erroneous
article about Trifax's operations on November 28, 1997. Other
news agencies followed suit with similarly critical articles and
Plaintiff alleges that, as a direct result of the dissemination
of the OIG Report, DCGH allowed its contract with Plaintiff to
lapse on January 29, 1998, and declined to exercise its option to
renew. Similarly, DOH requested that Plaintiff cease all
operations with relation to its contract on August 25, 1998, one
day prior to the expiration date of the contract. Another
contract with the District of Columbia Health and Hospitals
Public Benefit Corporation ("PBC") was terminated as of September
Defendant Prettyman, former Inspector General for the District
of Columbia, contacted Plaintiff by mail on March 20, 1998, and
offered to issue a revised report upon submission of further
documentation. Although Plaintiff submitted a letter with
documentation of errors in the OIG Report, the OIG has, to date,
not released a revised report.
Plaintiff first alleges that Defendants violated Plaintiff's
right to due process by denying it the right to compete for
contracts on a fair and equitable basis. Plaintiff further
alleges that Defendants' publication of the erroneous OIG Report
constitutes common law defamation. Finally, Plaintiff charges
Defendants with common law negligence for issuing the OIG Report
without regard for generally accepted auditing standards.
In the interest of clarity, the Court will distinguish between
two classes of defendants. Although Plaintiff has not
specifically designated two separate groups of defendants, it is
readily apparent from the Complaint that two separate classes do
indeed exist — a critical factor to consider in deciding which
claims survive dismissal. One class is comprised of individuals
involved in the preparation and dissemination of the OIG Report.
That class ("Class I") properly includes the District of
Columbia, the mayor, Defendant Prettyman, the OIG, Defendant
Thomas, Defendant Brown, and Defendant Gaskins. The second class
is comprised of individuals who allegedly violated Plaintiff's
rights by improperly terminating or declining to renew existing
contracts. This class ("Class II") also includes the District of
the mayor, as well as Defendant Kelly, Defendant Arrindell,
Defendant Mileo, Defendant Williams, Defendant Oppedisano,
Defendant Davis, Defendant Fite, Defendant Fairman, Defendant
Wade, and their respective agencies.
"[A] complaint should not be dismissed for failure to state a
claim unless it appears beyond a doubt that plaintiff can prove
no set of facts in support of his claim which would entitle him
to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
2 L.Ed.2d 80 (1957). As previously stated, the factual
allegations of the complaint must be presumed true and liberally
construed in favor of the plaintiff. Shear, 606 F.2d at 1253.
A. Qualified Immunity of Individual Defendants
As a threshold issue, Defendants argue that those defendants
sued in their individual capacities are entitled to qualified
immunity on the due process claim, and that the Complaint must
therefore be dismissed against them in their individual
Courts have long held that "government officials are entitled
to some form of immunity from suits for damages. As recognized at
common law, public officers require this protection to shield
them from undue interference with their duties and from
potentially disabling threats of liability." Harlow v.
Fitzgerald, 457 U.S. 800, 806, 102 S.Ct. 2727, 73 L.Ed.2d 396
(1982).*fn5 Faced with the countervailing concern that immunity
offers a blanket protection for violating constitutional
guarantees, however, the Supreme Court settled on the proposition
that "government officials performing discretionary functions
generally are shielded from liability for civil damages insofar
as their conduct does not violate clearly established statutory
or constitutional rights of which a reasonable person would have
known." Id. at 818, 102 S.Ct. 2727 (emphasis added) (citations
The Supreme Court later clarified its holding in Harlow in
Anderson v. Creighton, 483 U.S. 635, 107 S.Ct. 3034, 97 L.Ed.2d
523 (1987). Addressing the standard by which a government
official's conduct must be evaluated, the Court wrote:
[T]he right the official is alleged to have violated
must have been "clearly established" in a more
particularized, and hence more relevant, sense: The
contours of the right must be sufficiently clear that
a reasonable official would understand that what he
is doing violates that right. This is not to say that
an official action is protected by qualified immunity
unless the very action in question has previously
been held unlawful, but it is to say that in light of
pre-existing law the unlawfulness must be apparent.
Id. at 640, 107 S.Ct. 3034 (citations omitted).
In the instant case, Plaintiff has sued seven agency officials
in their individual capacities. With respect to these seven
individuals, however, Plaintiff's Complaint is nearly devoid of
any allegations of improper conduct. Plaintiff alleges simply
that "[t]he conduct of Defendants Prettyman, Thomas, Brown and
Gaskins in formulating and disseminating the OIG Report and in
failing to issue a revised report, has caused and continues to
cause quantifiable and unquantifiable injury to Trifax." Compl.
at ¶ 59. The Complaint goes on to allege that the dissemination
of the OIG Report, "all of which was caused both directly and
proximately by the negligence or willful acts of Defendants Brown
and Gaskins", led DCGH and DOH to decline renewal of their
respective contracts. Compl. at ¶¶ 50, 51. Defendant Mileo is
alleged to have issued a letter directing Trifax to cease
operations on the DOH contract as of the date of expiration.
Compl. at ¶ 51.
Plaintiff seeks to correct, its pleading deficiency in its
Opposition Brief, arguing that:
Defendants Brown and Gaskins — issued an official OIG
Report that falsely accused Trifax of engaging in a
series of improprieties in violation of the law. . .
. Because these Defendants disregarded such well
established procedures for the proper preparation of
an audit, their conduct thereby seriously stigmatized
Trifax in a way that violated clearly established
principles of due process. Pl.'s Mem. of Points and
Authorities in Opp. to Mot. of Defs.' to Dismiss the
Compl. Filed by Pl. Trifax Corp., at 20.
Even more conspicuous, however, is the complete lack of any
allegations, other than their respective titles, with respect to
Defendants Arrindell, Oppedisano, Davis, and Wade. Plaintiff
simply states that "[t]hese violations have been compounded
further by a cabal of D.C. Contracting Officers (the other
individually sued defendants) who, without investigating Trifax,
have improperly relied upon the false statements and conclusions
of the OIG Report to thereby deny Trifax contracts to which it
was otherwise entitled." Id. at 21.
The first step of the qualified immunity analysis is to
determine whether the Defendants in this case performed
discretionary functions within their line of duty. Here, it is
beyond dispute that the OIG's investigation of Plaintiff falls
within the category of "discretionary functions". Unlike
"ministerial" functions, which accord a government agent no
immunity, the investigation of government contractors and
subsequent reporting of findings necessarily involve ...