No. 83-1544, 762 F.2d 83 (10th Cir. 1985)

This matter seeks a review of a judgment of the United States District Court for the District of Utah. That court ordered a dismissal of plaintiff's complaint for failure to state a claim upon which relief could be granted.

The plaintiff was Director of Parks for the City of Logan, Utah. As the head of such a city department, he was classified as an employee at will and was subject to dismissal without cause. On May 11, 1982, he was suspended from his job by the Mayor of Logan. No reasons were given for the suspension, pending the outcome of an investigation. On June 7, 1982, the City concluded its investigation and terminated plaintiff. Again, no reasons were given for the City's actions. A great deal of publicity surrounded plaintiff's suspension and termination, including rumors of criminal misconduct.

Plaintiff then brought a Sec. 1983 suit against defendants City of Logan and the Mayor, claiming that they had violated his due process and equal protection rights by "willfully, knowingly and purposely [depriving him] of his right to a hearing prior to the termination of his employment * * *." Plaintiff also claimed the defendants' actions amounted to retaliation for exercising his right of free speech.

Defendants filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted. Fed. R. Civ. P. 12(b) (6). Two hearings were held on the motion. On October 14, 1982, the district court dismissed the complaint without prejudice, reasoning that because plaintiff had not requested a hearing, no deprivation had yet occurred. At this hearing, defendants indicated that they had always been willing to grant plaintiff a hearing if so requested; moreover, defendants stated they would still provide a hearing upon request. Plaintiff then filed a motion for reconsideration of the court's order, Fed. R. Civ. P. 59(e), arguing that he was being forced to exhaust administrative remedies. At the Rule 59 hearing on December 7, 1982, the district court again determined that plaintiff had failed to state a claim. The court also noted in addition that plaintiff's First Amendment allegation was conclusory and required expansion in order to set forth a claim. Plaintiff was given leave to amend his complaint. He took no action, and the court entered an order on March 31, 1983, dismissing the complaint without prejudice.

The matter presented has to do with the failure of plaintiff to state an actionable 42 U.S.C. § 1983 claim. The plaintiff states the issue differently. He argues that the district court erred in requiring him to exhaust administrative remedies as a condition precedent to bringing his Sec. 1983 action.

The district court did not require plaintiff to exhaust administrative remedies against the mandate of Patsy v. Board of Regents of the State of Florida, 457 U.S. 496, 102 S. Ct. 2557, 73 L. Ed. 2d 172 (1982). Rather, the district court found that plaintiff's failure to ask for a "name-clearing" hearing went to the issue of whether Logan City deprived him of his constitutional rights.

In reviewing the district court's dismissal for failure to state a claim for relief, we read the complaint in the light most favorable to the plaintiff. Ronsick v. Phariss, 286 F.2d 316 (10th Cir. 1960).

The question which is presented for determination is whether plaintiff had either a property or liberty interest in employment which would support a Sec. 1983 claim alleging a violation of constitutional rights stemming from his termination.

It is undisputed that plaintiff has no property interest in his job which warrants due process protection under Utah law. Section 10-3-1105 of the Utah Code. See Bishop v. Wood, 426 U.S. 341, 96 S. Ct. 2074, 48 L. Ed. 2d 684 (1976). When as here there is a liberty interest rather than a property interest, the due process remedy is "an opportunity to refute the charge." Board of Regents v. Roth, 408 U.S. 564, 573, 92 S. Ct. 2701, 2707, 33 L. Ed. 2d 548 (1972). The Supreme Court's decision in Board of Regents v. Roth, id., and Perry v. Sindermann, 408 U.S. 593, 92 S. Ct. 2694, 33 L. Ed. 2d 570 (1972), established the right to a name-clearing hearing for a government employee allegedly stigmatized in the course of his discharge. This right arises when there is a danger of foreclosure of the community, due to derogatory reasons for being fired. Clark v. Mann, 562 F.2d 1104 (8th Cir. 1977).

A liberal reading of plaintiff's complaint convinces us that plaintiff's allegation of a liberty interest violation was adequate to withstand defendants' motion for dismissal.¹  Plaintiff sufficiently alleged that defendants' words and actions stigmatized him, McGhee v. Draper, 639 F.2d 639, 642-43 (10th Cir. 1981); that the stigmatization affected a tangible employment interest, id. at 643; and that the defendants' remarks were untrue, Williams v. West Jordan City, 714 F.2d 1017, 1021 (10th Cir. 1983), citing Codd v. Velger, 429 U.S. 624, 97 S. Ct. 882, 51 L. Ed. 2d 92 (1977).²  Plaintiff's failure to earlier request a name-clearing hearing does not defeat his claim. He may still be entitled to a hearing if he can prove at trial that his liberty interest was indeed violated. McGhee v. Draper, 639 F.2d at 643.

The district court noted that the plaintiff's First Amendment claim might have had merit, but that it was too conclusory to allow a judgment on its merit. The court gave plaintiff ample opportunity to remedy the inadequacies of the complaint, which plaintiff failed to do. Under these circumstances, we are unable to say that the district court was in error in dismissing the First Amendment claim made by plaintiff.

We remand this case for trial only on the alleged violation of plaintiff's liberty interest.