Lawsuit based on alleged government targeting of tea party group organizer can go forward

From Zherka v. Ryan, 2014 WL 4928956 (S.D.N.Y. Sept. 30, 2014):

Plaintiff Selim Zherka filed this … action claiming that employees of the Internal Revenue Service hindered his application for tax exempt status and initiated an investigation against him as part of a broader effort to penalize members of the Tea Party for their political activities….

Beginning in 2009, plaintiff published newspaper articles and held rallies criticizing government officials for political corruption and "confiscatory tax policies." Plaintiff organized and supported the creation of the Tea Party, a political party that received extensive publicity in the news media. At some point, plaintiff sought tax-exempt status for an organization he and others used primarily for educational purposes. However, plaintiff claims that defendant Lois Lerner …, an IRS employee, subjected his application to an inordinately high level of scrutiny, forcing him to abandon his efforts to obtain tax-exempt status. [The case against Lois Lerner was dismissed because "Plaintiff has not satisfied its burden of showing that [he] served defendant Lerner with a copy of the summons and complaint."—EV]

Plaintiff alleges that in 2011, agent Ryan of the Federal Bureau of Investigation … and agent Ashcroft … of the IRS began an investigation into his commercial real estate dealings. Plaintiff claims these defendants issued over 75 subpoenas to his business associates, threatening them with criminal prosecution should they withhold information incriminating plaintiff. Plaintiff alleges that as a result, many of these business associates terminated their relationship with him out of a fear of "running asunder of federal agencies." He asserts that defendants' conduct was part of a broader government strategy to penalize Tea Party members for their political speech.

Plaintiff claims to have lost business as a result of the ongoing investigation. Moreover, he claims that defendants' actions have chilled his political activities, damaged his reputation, and caused emotional injuries….

Plaintiff alleges First Amendment retaliation …. To state a claim for First Amendment retaliation, a plaintiff must show: (1) that the speech or conduct at issue was protected, (2) that the defendant took adverse action against the plaintiff, and (3) that there was a causal connection between the protected speech and the adverse action." …

[P]laintiff alleges that defendants intentionally targeted him for investigation because of his active membership in a new political party. The First Amended Complaint indicates that defendants initiated their broad investigation solely against plaintiff because of his political efforts, and did not pursue similar investigations against apolitical businesses and taxpayers. Plaintiff's activities centered on advocating for a reduction in local, state, and federal tax levies. Plaintiff claims that as a result of his political activities, defendants issued over 75 subpoenas to his business associates, and contacted dozens of them individually in a search for incriminating information. Defendants' alleged conduct appears to have significantly damaged plaintiff's business prospects and "curtailed his public advocacy."

Plaintiff has made a plausible showing on his First Amendment and equal protection claims. His speech, which is directed at reforming government spending, is clearly protected. He has alleged facts showing that defendants targeted him for a wide-ranging investigation because of this speech, and that he was treated differently than other taxpayers and businessmen who did not espouse anti-taxation beliefs. Thus, plaintiff has pleaded sufficient facts to state a plausible claim for relief on his First Amendment [claim] ….

Plaintiff [also] alleges that defendants' conduct is so shocking as to amount to a violation of his substantive due process rights…. Only "the most egregious official conduct" meets this threshold.

The question of whether conduct is shocking in a constitutional sense is highly context specific. In Rochin v. California, the Supreme Court held that the forced pumping of a suspect's stomach was sufficiently shocking to constitute a substantive due process violation. However, in County of Sacramento v. Lewis, the Supreme Court held that a police officer's decision to commence a high speed chase of a motorcyclist that resulted in his death did not "shock the conscience." Similarly, in Cox v. Warwick Valley Central School District, the Second Circuit affirmed denial of a substantive due process claim against a school administrator who reported unfounded suspicions of child abuse to state officials. Likewise, in Lombardi v. Whitman, the Second Circuit affirmed dismissal of the plaintiff's substantive due process claim where federal officials made public statements erroneously indicating that the air at the site of the September 11, 2001 terrorist attacks was safe to breathe.

Here, plaintiff alleges that he has been subjected to more than two years of investigation by defendants. He claims that defendants have threatened his business associates with criminal prosecution in order to secure their cooperation in the investigation. Moreover, he claims that defendants have inquired into his political activities and political affiliations, demonstrating a motivation to retaliate against him for his political speech. Plaintiff claims that defendants' conduct has severely damaged his reputation and harmed his business relationships.

These allegations are disturbing and sufficiently shocking to allow plaintiff's claim to go forward. While defendants did not subject plaintiff to forced-stomach pumping or other physical deprivations, they have allegedly investigated him for nearly two years based solely on his political message. Defendants' alleged conduct appears to have jeopardized many if not most of plaintiff's business relationships, causing him dramatic and permanent harm. Given plaintiff's low burden at this stage in the litigation, he has alleged facts egregious enough to shock the conscience in a constitutional sense….

I'm skeptical about the substantive due process theory. When an express Bill of Rights provision "provides an explicit textual source of constitutional protection against [some] sort of … conduct," "that Amendment, not the more generalized notion of 'substantive due process,' must be the guide for analyzing these claims." That is what the Court held as to claims arising out of allegedly excessive force during seizures in Graham v. Connor (1989) (holding that the Fourth Amendment, not substantive due process, should be the guide for such claims). And the Second Circuit has applied this to substantive due process claims in free speech cases as well. But the First Amendment theory sounds viable, assuming of course that the plaintiff can prove what at this point he is only alleging.