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Liff v. Office of Inspector General for U.S. Department of Labor

United States District Court, District of Columbia

November 7, 2016

STEWART LIFF, et al., Plaintiffs,
v.
OFFICE OF THE INSPECTOR GENERAL FOR THE U.S. DEPARTMENT OF LABOR, et al., Defendants.

          MEMORANDUM OPINION

          JAMES E. BOASBERG, UNITED STATES DISTRICT JUDGE

         In poker parlance, sometimes it's better to fold at the turn than to toss in more chips to see the river. After a round of motion-to-dismiss briefing, the Court largely sided with Plaintiffs Stewart Liff and his eponymous business, Stewart Liff & Associates, Inc., leaving intact their procedural-due-process claim against several government agencies and their Bivens claim against those agencies' officers. The gist of Liff's Complaint was that Defendants had sullied his good name and precluded him from his chosen profession after they investigated and then outed him for wasting government resources while serving as a public-sector consultant. The Court, in allowing the claims to proceed, deferred ruling on Defendants' statute-of-limitations defense to the Bivens cause of action. Because of less-than-comprehensive briefing on a particularly thorny issue, the Court left it on the table.

         The Government now requests that the Court flip over that last card. In Defendants' Motion to Reconsider, they ask to have their limitations-period argument resolved. Like many a bettor, seeing another card does not improve the outcome, as the Court ultimately denies the Motion and concludes that at least some of Liff's Bivens claim is timely.

         I. Background

         As the present Motion concerns an issue addressed in the prior Opinion on Defendants' Motion to Dismiss, the Court presumes that the reader is familiar with that decision. See Liff v. OIG for the U.S. Dep't of Labor, 156 F.Supp.3d 1 (D.D.C. 2016).

         A. The Case Unfolds

         As described there, Liff was a civil-service retiree who then pursued a follow-on career in government consulting. Id. at 5-6. In late 2009, through a contact at the U.S. Department of Labor - Ray Jefferson - Liff and his company began work as a subcontractor on various DOL projects. Id. at 6. (For ease of reference, the Court will refer to Liff in the singular, although his company is also a Plaintiff.) Then, in 2011, he started consulting with the Office of Personnel Management. Id.

         These relationships were short lived. Following an eight-month investigation into contracting improprieties, DOL's Office of Inspector General issued a report in July 2011, concluding that Jefferson had disregarded federal-procurement rules, ethics principles, and fiscal responsibilities in retaining Liff. Id. That report also effectively implied that the government had not obtained good value for Plaintiff's services. Id. at 7. The bad news streamed forth, as OIG then held a press conference and issued a follow-up memorandum reiterating much of the same allegations; then, in early 2013, OPM proceeded with its own investigation, report, and memorandum. Id. at 7-9. During and after this time, Plaintiff lost various federal-government clients and speaking opportunities, and his consulting revenue dwindled to a tiny fraction of what it had been. Id.

         In July 2014, Liff and Jefferson filed separate lawsuits, which were designated in this Court as related cases. See Jefferson v. Harris, No. 14-1247 (D.D.C.). As for Liff, he asserted in Count I that the agencies at issue had degraded his professional reputation, which effectively barred him from government contracting, without adequate process as guaranteed by the Fifth Amendment's Due Process Clause. In Count II, he brought similar claims in a damages action against several individual officers pursuant to Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971). (Last, in Count III, he asserted the same variety of process violations against the agency Defendants under the Administrative Procedure Act, although those claims would later be dismissed.)

         B. Motion-to-Dismiss Proceedings

         Defendants then sought to dismiss the Complaint. The Government first argued that Plaintiff had not staked out a plausible procedural-due-process claim that Defendants had deprived him of any liberty interest without notice and an opportunity to be heard on the issue. Specifically, Defendants asserted that Count I housed only a defamation claim, which alone would be insufficient to trigger due-process protections. See ECF No. 17 (Motion to Dismiss) at 9 (citing Siegert v. Gilley, 500 U.S. 226, 233 (1991) (“[I]njury to reputation by itself [is] not a ‘liberty' interest protected under the [Due Process Clause.]”)).

         Although Defendants then acknowledged that an individual could bring a so-called “reputation-plus claim, ” they argued, among other things, that such a claim was only actionable if reputational damage arose from defamatory statements and was accompanied by an adverse employment action, such as termination (the “plus” element). Id. at 10-12. Neither was present here, they contended. Id.

         In response, Plaintiff attempted to clear the air. Liff explained that two types of procedural-due-process claims were available to litigants in his position: reputation-plus and stigma-plus. See ECF No. 20 (MTD Opposition) at 7; see also O'Donnell v. Barry, 148 F.3d 1126, 1140-41 (D.C. Cir. 1998) (differentiating between the two theories). Although Defendants had framed the action as a reputation-plus case, Liff argued that his “due process claims are grounded principally in the ‘stigma-plus' line of cases.” MTD Opp. at 8, 15-23. The “plus” in the latter cases was not any adverse employment action but rather that a government-imposed stigma had effected a tangible change in the individual's status under the law, which stigma effectively closed the gates on his future career opportunities. In making this clarification, Plaintiff also retorted that such “stigma-plus claims do not require defamatory statements.” Id. at 19 n.5.

         Following this briefing, the Court sided with Liff's theory of the case and determined that he had made out a procedural-due-process claim against the agency Defendants. See Liff, 156 F.Supp.3d at 10-12. The Court first concluded that the investigations and statements relating to Liff's services sufficiently suggested a stigma - that is, “a pall had been cast over Plaintiffs' honesty and integrity.” Id. at 12.

         Recognizing that such a reputational cloud, without more, was not enough, the Court then proceeded to analyze whether this stigma had worked a “tangible change in status” for Liff. Id. In the Court's view, Liff had alleged enough: OPM's actions had effectively barred him from future work with the agency, as Plaintiff contended that OPM “took steps” to immediately conclude business ties with him, canceled an outstanding task order, and suggested Liff “would not be used again by OPM for consulting services.” Id. at 14 (quoting Compl., ¶ 50). As to DOL, the Court commented that it was plausible that the agency's public report put Plaintiff out of business, as his disqualification from DOL work could affect his overall employability, given that other agencies might need to investigate his past performance before they retained him. Id. at 15-16 (citing 48 C.F.R. § 9.105-1(c)(5)).

         As to Liff's Bivens claim that the individual Defendants should be liable for violating his procedural-due-process rights, the Court addressed a number of defenses. It first disposed of the Government's qualified-immunity position and then deferred ruling on its argument that no Bivens remedy existed for reputational-harm cases. Id. at 18-21.

         As particularly relevant here, the Court also held off on deciding Defendants' statute-of-limitations defense. The Government argued that the D.C. Circuit had, in Doe v. DOJ, 753 F.2d 1092 (D.C. Cir. 1985), held that in reputation-based procedural-due-process actions, the District of Columbia's one-year limitations period for defamation applied. Plaintiff retorted that, four years after Doe, the Supreme Court in Owens v. Okure, 488 U.S. 235 (1989), had scaled back on state-law borrowing of particular statutes of limitations and instead instructed courts to rely on the residual period, which was three years in the District. Because the briefing was lacking on the continuing vitality of Doe, this Court set aside the statute-of-limitations defense for a later time. See Liff, 156 F.Supp.3d at 18.

         C. Further Procedural Developments

         What followed from that Opinion procedurally is somewhat tricky. First the individual Defendants filed the present Motion to Reconsider the Bivens statute-of-limitations question, asking the Court to decide the issue in the first instance. On February 25, 2016, before the Court could resolve the Motion, however, they filed a Notice of Appeal to challenge the Court's decision on qualified immunity. See ECF No. 29 (Notice of Appeal); see also No. 16-5045 (D.C. Cir.). This Court stayed the case pending that appeal.

         The Government swiftly requested a lift of the stay so that this Court could resolve the instant Motion. Following further briefing on the stay question, this Court obliged. See Liff v. OIG for the U.S. Dep't of Labor, No. 14-1162, 2016 WL 4506970 (D.D.C. Aug. 26, 2016). In doing so, it reasoned that a resolution could benefit the parties and ultimately expedite the proceedings. Id. at *3. If the Court now ruled on the limitations-period question, it might be possible for the Court of Appeals to resolve both the already-appealed qualified-immunity issue and the timeliness issue together, as opposed ...


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