Appeal
from the United States District Court for the Northern
District of Alabama D.C. Docket No. 7:17-cv-01445-LSC
Before
MARCUS, JULIE CARNES, and KELLY, [*] Circuit Judges.
MARCUS, CIRCUIT JUDGE
John
Dee Carruth, the former CEO of Alabama One Credit Union, sued
former Governor of Alabama Robert Bentley and his legal
advisor, David Byrne, after Alabama One was taken into
conservatorship by a state agency and he was terminated.
Carruth alleged that the Governor and his counsel conspired
with others to improperly exert regulatory pressure on the
credit union, in order to induce Alabama One to settle
lawsuits brought by a friend and former law partner of Byrne.
Carruth filed an array of constitutional claims against
Bentley and Byrne under § 1983 -- including violations
of the Equal Protection Clause, a substantive due process
claim, a Takings Clause claim in violation of the Fifth
Amendment, the denial of his First Amendment right to
petition government, retaliation for exercising his right to
petition the courts, and conspiracy to violate his rights,
along with three supplemental state law claims. The district
court dismissed all of the civil rights claims on qualified
immunity grounds and declined to entertain the supplemental
claims.
Carruth
now appeals the dismissal of his complaint. After thorough
review, we affirm. The first defect in the complaint is that
Carruth does not plausibly allege that the Governor or his
legal advisor was responsible for causing his injuries. The
decision to place Alabama One in conservatorship and the
concomitant decision to terminate Carruth's employment
were made by Sarah Moore, the Administrator of the Alabama
Credit Union Administration (ACUA), and approved by the ACUA
Board of Directors. Carruth has pled no facts plausibly
establishing that the Governor and Byrne made the decisions
causing Carruth harm. What's more, even if we could
assume away the basic causation problem permeating the entire
complaint, Carruth also has failed to plausibly allege that
Bentley and Byrne violated his clearly established
constitutional rights. From the face of the complaint, it is
clear that he cannot defeat their entitlement to qualified
immunity. The district court did not err in dismissing the
federal claims.
I.
John
Dee Carruth served as the Chief Executive Officer of Alabama
One Credit Union from 1998 until 2015. Like all other credit
unions in the state, Alabama One was regulated by the Alabama
Credit Union Administration, an independent state agency. In
December 2011, the ACUA and the National Credit Union
Association (NCUA), an agency of the federal government,
determined that Alabama One was in violation of a regulatory
cap placed on the percentage of loans that could be made to
any one member of the credit union. The violation related to
a series of "Member Business Loans" made to a
used-car broker named Danny Butler, a long-time member of
Alabama One. The ACUA and NCUA issued a joint Letter of
Understanding and Agreement (LUA) requiring Alabama One to
reduce its concentration of Member Business Loans, directed
an outside investigation by a law firm into the actions of
Carruth and other senior management officials, and ordered an
accounting audit. The investigations did not turn up evidence
of wrongdoing and the LUA was lifted in April 2013.
On July
16, 2013, a group of attorneys that Carruth refers to as the
"Smyth Group" -- Jay Smyth, his firm Lewis Smyth
Winter Ford LLC, Albert Lewis, and Bobby Cockrell -- filed
four lawsuits against Alabama One and various employees,
including Carruth. The plaintiffs were past business
associates of Butler, who claimed that Alabama One was
responsible for the losses they sustained in connection with
the loans made to Butler. A fifth lawsuit followed in March
2015. Carruth characterizes these cases as an
"old-fashioned 'stick-up, '" pursued in the
hope that Alabama One would choose to "pay off" the
plaintiffs in order to avoid extended litigation.
Finding
little success in these lawsuits, the Smyth Group allegedly
hatched a plot "to improperly increase the regulatory
pressure on and governmental and public scrutiny of Alabama
One and Carruth in order to coerce Alabama One to settle the
Smyth Lawsuits." Smyth reached out to his former law
partner and friend David Byrne, Jr., the chief legal advisor
to then-Governor Bentley. On November 25, 2013, Smyth, Byrne,
Governor Bentley, State Senator Gerald Allen, and former
Alabama Supreme Court Justice Bernard Harwood allegedly held
a meeting at the state capitol. According to an email from
Smyth, the meeting's purpose was to allow the parties to
"speak freely" on "Alabama One Issues" in
order to decide "what actions would seem to be most . .
. appropriate for the State of Alabama." Smyth told
Senator Allen in a separate email that he hoped Governor
Bentley would direct the ACUA to "pick up where it left
off," claiming that "conditions at Alabama One have
only deteriorated."
According
to the complaint, on January 24, 2014 another meeting took
place at the state capitol, which was attended by Smyth,
Byrne, Carrie McCollum (another legal advisor to Governor
Bentley), ACUA Administrator Larry Morgan, NCUA and ACUA
officials, and a disgruntled former Alabama One employee
named Lori Baird. At this meeting, Smyth led Baird through a
presentation that provided "inside information" on
wrongdoing within Alabama One. Eleven days later, Smyth sent
a memorandum to State Senator Allen, copying Byrne and
McCollum, claiming that Alabama One "has become so
impaired that the only responsible action would be for the
[ACUA] to take prompt remedial action." He requested
that certain Alabama One employees be suspended and that
Alabama One be placed into conservatorship.
About a
week later, on February 12, 2014, Smyth sent another
memorandum to Byrne and Senator Allen, and in an email to
Byrne's assistant he wrote:
Thanks for your help, Pam. I believe now that everyone
(perhaps with the notable exception of Larry Morgan) is on
the same page re Alabama One issues. I have confidence the
Governor will act decisively on this. David (Byrne) is
providing good leadership, as usual.
Smyth
sent another email to Byrne, Allen, and others the following
day, in which he discussed a lawsuit two of his clients had
filed against Alabama One. He wrote:
[The plaintiffs] continue to hope for prompt and effective
remedial action against Alabama One by the ACUA acting in
concert and coordination with the Governor's office. They
are, quite literally, depending on the Bentley
administration's showing up like the cavalry in a John
Wayne movie. While we all expect these civil plaintiffs to
ultimately prevail in their various lawsuits, the results
from the courthouse will not materialize soon enough to save
them from suffering serious -- and wholly unnecessary --
damages in the meantime.
During
a break in a deposition in one of the Smyth-Alabama One
lawsuits, on February 27, 2014, Smyth said to an Alabama One
attorney, "If you don't settle our lawsuits today
and pay us money today, the regulators will do bad things to
Alabama One tomorrow." The next day, Carruth and three
other Alabama One employees were suspended by the ACUA.
Administrator Morgan later said that "both Mr. Byrne and
Governor Bentley wanted something to happen at Alabama One,
they wanted suspensions," and that Bentley told Morgan
to suspend the Alabama One employees or resign. Morgan said
that he did not know who prepared the suspension letters.
That evening, Smyth sent an email to Byrne with the subject
line "Alabama One" expressing his appreciation.
The
ACUA allowed the suspended employees to return to work on
March 21, 2014, after they agreed to release all claims
against the ACUA. The next day, Morgan resigned from his
position as Alabama Credit Union Administrator. On April 15,
2014, Bentley appointed Sarah Moore as the new Administrator.
Moore had no professional experience in credit union
regulation. Prior to her appointment, she was an executive at
Colonial Bank in Montgomery, Alabama, where she worked with
Byrne while he was the bank's general counsel. During the
interview process, Byrne told her that Alabama One was a
"large problem" that she'd have to deal with.
Ms.
Moore officially took office on July 1, 2014 as the new
Administrator of the Alabama Credit Union Administration. A
few days later, she met with Carruth and told him she was
ordering an examination of Alabama One by an outside auditing
firm. ACUA and NCUA conducted a joint examination in August,
and they then issued a Preliminary Warning Letter directing
Alabama One to stop making Member Business Loans. In March
2015, the ACUA informed Alabama One that it would be
receiving a Cease and Desist Order, a more severe sanction
requiring Alabama One to undergo more extensive outside
review of its lending activities and its management.
In June
2015, Alabama One and Carruth filed their first lawsuit in
federal district court against the Smyth Group, Byrne, Moore,
and others, alleging violations of various constitutional
provisions and several claims under Alabama law. On August
26, the complaint was amended to add Governor Bentley as a
defendant. The following day, on August 27, 2015, some
sixteen months after Sarah Moore had taken the reins, the
ACUA placed Alabama One in conservatorship and removed
Carruth as CEO. The ACUA appointed itself conservator of
Alabama One and delegated its authority to Moore to run
Alabama One. Moore, in turn, denied Carruth indemnification
for his legal expenses related to his challenge to the
conservatorship order.
Carruth
then commenced this lawsuit in federal district court against
Bentley and Byrne under § 1983 on August 25, 2017. He
claimed that (1) his termination and the denial of
indemnification was a taking in violation of the Fifth
Amendment, (2) the defendants violated his right to the equal
protection of the laws, (3) they violated his substantive due
process rights, (4) they interfered with his First Amendment
right to petition the courts, (5) they retaliated against him
because of the lawsuit he filed against the Smyth Group in
2015, and, finally, (6) they conspired to deprive him of his
rights. Carruth added three state law claims, for tortious
interference, intentional infliction of emotional distress,
and civil conspiracy.
In a
lengthy order, the district court granted Bentley and
Byrne's motion to dismiss, concluding that they were
entitled to qualified immunity on each of Carruth's
§ 1983 claims. Having dismissed all of the federal
claims, the court declined to exercise supplemental
jurisdiction over the state law claims and dismissed them
without prejudice.
This
timely appeal followed.[1] Carruth now challenges the district
court's conclusion that Bentley and Byrne are entitled to
qualified immunity and that his equal protection, takings,
due process, retaliation, and conspiracy claims should be
dismissed. He also says that the district court erred by not
granting leave to amend his complaint.
II.
We
review the dismissal of a complaint under Rule 12(b)(6) de
novo. Gates v. Khokhar, 884 F.3d 1290, 1296 (11th
Cir. 2018). We accept all facts alleged in the complaint as
true and draw all inferences in the plaintiff's favor.
Id. "To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to relief that is plausible on
its face.'" Ashcr ...