Correctional Services Corp. v. Malesko, John E.

Questions presented: Should a cause of action for damages under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), for a constitutional violation be implied against a private corporation acting under color of federal law?

BY DAVE CLARKE, MEDILL NEWS SERVICE

John Malesko was sentenced in December 1992 to eighteen months in prison for federal securities fraud. He was moved in February 1994 to a halfway house operated by Correctional Services Corporation (CSC) in New York City to serve out his term.

While in prison, Malesko had been diagnosed with a heart condition that required medication. Because of this heart condition, he was allowed use of the elevator to get to and from his fifth floor room. Other residents of the halfway house were only allowed to use the elevator if they lived on the sixth floor or higher.

Malesko alleges that on March 28, 1994, an employee of the halfway house told him to use the stairs. During his climb he had a heart attack, fell and hurt his left ear, which has affected his balance, according to Malesko. CSC lawyer Carter Phillips says there is no medical evidence to suggest Malesko had a heart attack.

Malesko alleges his medication ran out ten days before the incident and no one at CSC had the prescription filled. Phillips says Malesko had the opportunity to fill the prescription himself.

According to his attorney, Steven Pasternak, Malesko did not have money for the medication and regardless, CSC promoted in its public offering that it provided medication for its residents.

Malesko filed suit, pro se, against CSC and ten "John Doe" employees on March 27, 1997.

In July 1999, his case was dismissed by the U.S. District Court for the Southern District of New York after Malesko, now represented by counsel, filed an amended complaint which named some of the John Does, including the employee who made him use the stairs.

The judge dismissed the case, finding that under principles set forth in the 1971 Supreme Court case, Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, Malesko had no case against CSC, a private corporation acting on behalf of the federal government, because private corporations are not liable for constitutional violations and because CSC could invoke government contractor immunity to such a claim even if he had a case.

The judge also dismissed Malesko's Bivens claims against individual CSC employees as untimely.

Malesko appealed and on Oct. 6, 2000, a unanimous 2nd Circuit Court of Appeals panel reversed as to Malesko's claim against CSC, but affirmed in finding that the claim against the company's employees was appropriately dismissed as beyond the statute of limitations.

In finding for Malesko, the court said that "the question of whether a Bivens claim may lie against a private corporation is an issue of first impression in this Circuit."

It disagreed with how the district court interpreted the 1994 Supreme Court opinion in FDIC v. Meyer, which held that Bivens claims may not be brought against agencies of the federal government. The appeals court concluded that the district court was wrong to compare a private corporation to a federal agency, and instead held "that a private corporation acting under color of federal law may be subject to a Bivens claim."

The appeals court noted that in Meyer, the Supreme Court was concerned that if it recognized "a direct action for damages against federal agencies, we would be creating a potentially enormous financial burden for the Federal Government."

Malesko is different, the court maintained because CSC is a private company contracted by the government, not a government agency.

Before Meyer, the appeals court noted, "no circuit court ever held that private entities were not subject to Bivens claims."

Post Meyer, however, there are differing opinions on how to fit government contractors into the Bivens line of cases.

For its part, the appeals court wrote, "the reasons the Supreme Court articulated in Meyer for declining to extend liability to federal agencies are not compelling with respect to the question of whether private corporations should be subject to Bivens liability."

The appeals court reasoned, "We believe that an employer facing exposure to such liability would be motivated to prevent unlawful acts by its employees."

While a government contractor may pass on some of the costs of Bivens liability, the appeals court wrote, this liability would not have the type of fiscal impact the Court was worried about in Meyer.

Ultimately, the appeals court supported its decision by reasoning that "extending Bivens liability to reach private corporations furthers Bivens's overriding purpose: providing redress for violations of constitutional rights."

In so finding, the court said it was joining appeals courts in the 1st, 5th, 6th, and 9th circuit in holding that a private corporation acting under color of federal law may be subject to liability under Bivens.

The court also held that CSC cannot avail itself of the government contractor immunity defense, concluding that although "it would be illogical to limit the availability of the defense solely to military contractors, as Malesko argued, the court declined to insulate CSC because the government played no role in the decisions that Malesko says caused his injuries.

On March 5, 2001 the U.S. Supreme Court accepted the case for review and allowed Malesko to proceed in forma pauperis.

"The impact [of the Supreme Court's decision] will be whether there is going to be accountability for private companies," says Malesko's attorney Pasternak.

Carter, CSC's attorney, argues that if the Court rules in favor of his client, money will be saved. "If we win I expect it will increase the amount of privatization the federal government pursues because it will be cheaper for them," he says. Either way, Carter anticipates, "I don't think there will be an explosion of law suits."

The case was set for oral argument on Oct. 1, 2001, the first case to be heard during the Court's 2001-02 term.

On Nov. 27, 2001, the Court, divided 5-4 along ideological lines, held that private firms that run federal prisons can't be sued for violating an inmate's constitutional rights as if they were government officials.

In writing the majority opinion for himself and Justices Clarence Thomas, Antonin Scalia, Sandra Day O' Connor and Anthony Kennedy, Chief Justice William Rehnquist framed the question squarely as one whether Bivens should be extended to allow recovery against a private corporation under contract with the Bureau of Prisons. The answer was no.

Characterizing the claim urged by Malesko as "fundamentally different from anything recognized in Bivens or subsequent cases," the majority concluded that in "30 years of Bivens jurisprudence we have extended its holding only twice, to provide an otherwise nonexistent cause of action against individual officers alleged to have acted unconstitutionally, or to provide a cause of action for a plaintiff who lacked any alternative remedy for harms caused by an individual officers unconstitutional conduct."

Neither being the case, the majority found, the Court declined to extend Bivens.

Noting that the purpose of Bivens was to deter individual federal officers from committing constitutional violations, Rehnquist rejected Malesko's argument as irrelevant to Bivens that "because corporations respond to market pressures and make decisions without regard to constitutional obligations, requiring payment for the constitutional harms they commit is the best way to discourage future harms."

In dissent, Justice John Paul Stevens wrote that "common sense, buttressed by all of the reasons that supported the holding in Bivens, leads to the conclusion that corporate agents should not be treated more favorably than human agents."

Stevens called it "a tragic consequence of todays decision" that a clear incentive is being given "to corporate managers of privately operated custodial institutions to adopt cost-saving policies that jeopardize the constitutional rights of the tens of thousands of inmates in their custody."

Justices David Souter, Ruth Bader Ginsburg and Stephen Breyer joined in the dissent, which concluded by saying: It is apparent ... that the driving force behind the Courts decision is a disagreement with the holding in Bivens itself. There are at least two reasons why it is improper for the Court to allow its decision in this case to be influenced by that predisposition. First ... Congress has effectively ratified the Bivens remedy; surely Congress has never sought to abolish it. Second, a rule that has been such a well-recognized part of our law for over 30 years should be accorded full respect by the Members of this Court, whether or not they would have endorsed that rule when it was first announced. For our primary duty is to apply and enforce settled law, not to revise that law to accord with our own notions of sound policy."

In crafting a two-paragraph concurrence in support of the majority opinion, Justice Antonin Scalia wrote for himself and Justice Clarence Thomas that he did not want the opinion to imply that he might on some later occasion extend Bivens' holding.

"I would not," Scalia wrote. "Bivens is a relic of the heady days in which this Court assumed common-law powers to create causes of actiondecreeing them to be 'implied' by the mere existence of a statutory or constitutional prohibition."