Malicious Prosecution Claim Against DHS Agents Can Go Forward

From Myles v. U.S., decided Friday by the Ninth Circuit (Judge Marsha Berzon, joined by Judge Carlos Bea and District Judge Richard Bennett), here is the court's summary of the procedural history and of plaintiff's allegations:

After she was discharged from her position as an Immigration and Customs Enforcement … agent, plaintiff Kui Z. Myles brought national origin discrimination and retaliation charges before the Equal Employment Opportunity Commission …. Following a multi-day trial, the EEOC upheld the charges and ordered that Myles be reinstated with backpay. Myles then worked at ICE for several years without incident. In 2013, however, she reported to ICE that she was again experiencing harassment. In response, she alleges, Department of Homeland Security … agents—including ICE officers, DHS special agents, and other high-ranking DHS officials—invented baseless criminal wage theft charges against her….

Myles is a naturalized United States citizen born in China. In 2005, she applied for and accepted a position as an Immigration Enforcement Agent at ICE, an agency within DHS. Before beginning her official work duties, Myles attended a mandatory federal training program. During the program, she was subjected to a hostile work environment by her co-workers and instructors on account of her Chinese national origin. After raising concerns about this treatment, Myles was denied access to certain computer systems, was not issued pepper spray, was not permitted to work in the field, was denied bus driving training, was erroneously charged with "absence without leave," and was ultimately terminated. After a multi-day trial, Administrative Law Judge … Kathleen Mulligan found DHS liable for discriminatory and retaliatory conduct against Myles based on her Chinese national origin, and ordered Myles reinstated with an award of back pay and benefits, compensatory damages, compensation for emotional distress, and attorneys' fees and costs.

Following her reinstatement, Myles consistently received "[e]xcellent" and "[o]utstanding" performance evaluations. But, after several years of uneventful service, Myles reported to ICE that she was again experiencing harassment, this time at the hands of her direct supervisor Armando Lares. As a result, Lares was subject to disciplinary action, including "being placed on administrative duty status" and temporarily losing overtime privileges and the "right to carry a firearm."

About one month after Lares' disciplinary action went into effect, he falsely reported to DHS that Myles was illegally housing undocumented Chinese nationals. A team of at least five DHS agents—including David Gassmann and Steven Lovett, both defendants in this case—surveilled Myles for eight months, taking extensive video footage of Myles and her family. When the surveillance revealed that Myles was not illegally housing any undocumented individuals, Gassmann was encouraged by Lovett and other DHS officers, including defendants Brian DeMore, Francis Jackson, and David Marin, to manufacture evidence that would support a criminal case against Myles for wage theft and presented the manufactured evidence to federal law enforcement officials.

Upon review of the evidence the DHS officials had marshalled against Myles, the United States Attorney's Office refused to press charges. According to Myles's complaint, the Office concluded that the evidence appeared to be "fabricated" and observed that "the matter [was] an employment issue and not a criminal one." Undeterred, Gassmann presented the case to the Orange County District Attorney's Office ("OCDA"); his presentation included knowingly false statements and intentional misrepresentations. The OCDA then filed a criminal complaint against Myles in California state court, alleging one count of grand theft by an employee under California Penal Code § 487(b)(3).

In December 2014, Gassmann and another DHS agent asked Myles to meet with them "for a talk." When she arrived, they arrested her and transported her to the Santa Ana jail, where she was booked and detained. In connection with the arrest, the OCDA released several press statements "in which false statements were published about [Myles] stating she acted illegally, took advantage of her public position, and was unethical." About one month later, Jackson, Deputy Field Officer for ICE, recommended that Myles be either suspended indefinitely without pay or terminated. Marin, an ICE Deputy Field Officer, subsequently placed Myles on indefinite suspension without pay, a status that continued until late November 2017.

The state criminal case against Myles was pending for almost three years. During that period, DHS agents tampered with witnesses and committed perjury and obstruction. Myles "underwent significant financial hardship" including selling her property, exhausting her savings, and withdrawing retirement funds to support her family and to pay for her defense. She experienced "significant emotional and physical distress, humiliation, shame, despair, embarrassment, depression, physical and mental pain and suffering and anguish, loss of earnings, loss [of] pay grade, loss of security clearance at her job, loss of the right to carry service-issued and personal firearms as a law enforcement officer, loss of status[ ] and future status, and loss of other benefits."

OCDA Deputy District Attorney Nichols, who was assigned to prosecute the state criminal case, "became convinced" upon reviewing the evidence—including the 2008 EEOC decision; a Government Accountability Office report detailing widespread defects in overtime oversight within DHS; and video footage demonstrating that Myles was "working longer hours than many of her counterparts" and that the individual clocking out early was not Myles— that the criminal case against Myles "was without merit and filed in bad faith." On November 13, 2017, Nichols moved to dismiss the criminal case because "she had come to the conclusions that [Myles] was being unlawfully discriminated against"; that Myles was innocent of any wrongdoing; that some of the evidence against Myles had been fabricated; and that DHS was "abusing the office of the OCDA" by using it as a tool "to unfairly prosecut[e]" Myles. The state court granted Nichols's motion and the case was dismissed….

The Ninth Circuit held that Myles' malicious prosecution could go forward:

Myles's malicious prosecution claim was brought against the federal government. As a sovereign, the United States "is immune from suit save as it consents to be sued." In the FTCA, the federal government waived its sovereign immunity with respect to certain tort claims arising out of wrongdoing committed by federal employees acting within the scope of their employment.

The sovereign immunity waiver in the FTCA is subject to several exceptions, one of which is pertinent here: the federal government has retained sovereign immunity for claims that are "based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the" federal government….

Here, Myles alleges that federal government employees "knowingly made false allegations to the OCDA regarding [Myles's] conduct … that directly led to her criminal prosecution"; "instigated, encouraged, and were actively involved in causing [Myles] to be prosecuted … on the felony charge of grand theft"; and "committed perjury by lying under oath about the charge against [Myles]." She further alleges that, to ensure the criminal case against her would be maintained, DHS officials tampered with witnesses, provided false statements to the OCDA, and fabricated evidence. Myles also alleges that the DHS officials "did not have probable cause nor did they reasonably believe that [Myles] was guilty of the charge against her." "Their purpose was to retaliate against [Myles]" because she had reported internally that she was again experiencing national origin-based harassment in the workplace.

Getting into specifics, Myles alleges that DHS officials represented to the OCDA that she had "purposefully lied about overtime hours" in a manner that constituted "grand theft by an employee" under California Penal Code § 487(b)(3), even though they knew that she had not lied about her overtime hours. Video evidence, Myles alleges, demonstrated that she was "working longer hours than many of her counterparts" and "the person in the video who … was clocking out early was not, in fact," Myles. She also alleges that DHS officials doctored evidence that she was submitting false overtime requests, including during a period in which she could not have submitted such requests because she was absent from the office on unpaid administrative leave….

The discretionary function exception was designed to prevent "judicial 'second-guessing' of legislative and administrative decisions grounded in social, economic, and political policy." As decisions to knowingly lie under oath, tamper with witnesses, or fabricate evidence cannot be "grounded in" and are not "susceptible to" such analyses, the discretionary function exception does not provide refuge for such conduct. Put differently, the discretionary function exception "does not apply to law enforcement investigations when a federal employee's tactics during an investigation had 'no legitimate policy rationale.'" Conduct of the type alleged by Myles has no role to play in the legitimate functioning of government. Such conduct therefore is not protected by the discretionary function exception….

Our interpretation of the discretionary function exception is supported by the 1973 amendment to the list, in 28 U.S.C § 2680(h), of intentional torts exempted from the FTCA. Historically, the United States retained sovereign immunity for intentional torts committed by government agents, including malicious prosecution. But, following a string of botched drug raids in Collinsville, Illinois that captured national media attention, Congress amended 28 U.S.C. § 2680(h) to allow aggrieved persons to bring "assault, battery, false imprisonment, false arrest, abuse of process, or malicious prosecution" actions against the federal government arising from the "acts or omissions of investigative or law enforcement officers." …

As section 2680(h) broadened the application of the FTCA with respect to malicious prosecution actions arising out of the acts or omissions of federal investigative and law enforcement personnel but did not change the discretionary function exception, the two should not be read as coextensive. Yet, if the facts of this case—which, again, involve allegations of perjury, witness tampering, and fabrication of evidence—are insufficient to render Myles's malicious prosecution claim outside the scope of the discretionary function exception, it is hard to imagine any malicious prosecution action covered by the section 2680(h) carve-out that would survive application of the discretionary function exception.

Any malicious prosecution action against investigative and law enforcement personnel would involve "decision[s] how to investigate, who to investigate, and how to present evidence to the proper authorities." The district court's interpretation of the discretionary function exception would thereby render the 1973 addition to section 2680(h) meaningless, in contravention of the "well-established principle of statutory construction that 'legislative enactments should not be construed to render their provisions mere surplusage.'"

In sum, we conclude that in malicious prosecution cases in which the plaintiff alleges that an investigative or law enforcement official fabricated evidence, tampered with witnesses, lied under oath, or otherwise knowingly offered false testimony to induce criminal charges against the plaintiff, the discretionary function exception does not shield the United States government from liability, as such misconduct does not constitute a policy judgment susceptible to social, economic, or political analysis.

And the court concluded that Myles' allegations (while still allegations at this point) are sufficiently plausible for the case to go forward. Congratulations to David Zarmi, who represented Myles.