Opinion
Editorial Note:
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)
Argued and Submitted March 12, 1996.
Appeal from the United States District Court for the Northern District of California, No. CV-93-03449-WHO; William H. Orrick, Jr., District Judge, Presiding.
Before: THOMPSON, KLEINFELD, and TASHIMA, Circuit Judges.
MEMORANDUM
This case raises a state wiretapping law issue, and due process issues by persons contracting with the government.
FACTS
Mr. and Mrs. Gensburg provided foster care for troubled children in California for about 10 years. As state licensed foster care providers, they contracted with San Mateo County for about six years. Subsequently the County of San Francisco placed children with them for about two and a half years. Mr. and Mrs. Gensburg evidently make their living by providing foster care to a large number of children, a half dozen or so at a time, amounting to about 400 over the years.
The San Francisco Department of Social Services personnel and the Gensburgs had a hostile relationship for most of this period. The department tried to get the Gensburgs' license revoked in 1991 based on an extensive list of charges. An administrative law judge held lengthy hearings, and determined that most of the charges were unfounded. For the remaining ones, he found some basis, but balanced them against the Gensburgs' "ability to relate quickly and positively" with these very troubled children, which he judged to be "excellent." His proposed decision would have ordered that the charges against the Gensburgs be dismissed and that the temporary suspension of their license be dissolved. However, the interim director ordered that the Gensburgs' license be revoked, but that the revocation be stayed and the Gensburgs put on probation for two years, after which the license would be fully restored if no cause for disciplinary action had occurred. The superior court of the State of California then granted the Gensburgs a writ of mandate, and vacated the revocation of the Gensburgs' license altogether. The superior court determined that the few negative findings which the administrative law judge had made were "unsupported by the weight of the evidence presented at the administrative hearing."
In the spring of 1992, the mother of a child placed at the Gensburgs' appears to have believed that Mrs. Gensburg was attempting to extort money from her, in exchange for a favorable recommendation regarding her daughter's custody. The mother's husband worked in a downtown San Francisco restaurant, and asked for advice from a lawyer who regularly ate there. The lawyer suggested that a detective might assist in recording conversations between the mother, Mrs. Merdita, and Mrs. Gensburg, to determine whether they were indeed extorting. Detective Harold K. Lipset provided equipment and instructions so that when Mrs. Merdita talked to Mrs. Gensburg on the telephone, Mrs. Merdita could cause their conversation to be tape recorded.
Mrs. Merdita tape-recorded multiple conversations with Mrs. Gensburg, but it is hard to say what they signify. In the conversations, Mrs. Merdita, who appeared to be very poor, was offering to lend Mrs. Gensburg significant sums of money, and was also talking about how much she wanted her daughter to come back home to live with her. Mrs. Gensburg says "that's fine" and similar affirming statements repeatedly. Mr. Lipset's office turned the tapes over to the police for them to exercise their own judgment and do whatever they thought best. The police inspector called the doctor listed in the detective's notes, and learned that Mrs. Merdita was schizophrenic. Mrs. Gensburg stated in her declaration that Mrs. Merdita had told her she was a Yugoslavian princess, had many millions of dollars in Swiss bank accounts, that the real father of the child was not her husband, who bussed tables at a restaurant, but instead a famous movie actor, and that there was a great deal of money connected with the child through the actor. He also concluded that the taped conversations were indeterminate, and did not show that Mrs. Gensburg was demanding money in exchange for a favorable recommendation. He therefore terminated his investigation.
The Department of Social Services was disappointed with the administrative law judge's decision and with the consequent order by the interim director, in August, which had the practical affect of leaving the Gensburgs their license. The department decided to remove all the foster children from the Gensburgs' home. The Gensburgs demanded a hearing, pursuant to department regulations. The department decided that it could save administrative resources by seeking court ordered removal instead of making an administrative removal. But the children living at the Gensburgs' home, through their own independent counsel, sought and obtained a temporary restraining order, enabling them to stay there. The Gensburgs thus won another battle, sitting on the sidelines while the children prevailed against the department.
In July, when the department proposed to take the children out of their home, it gave the Gensburgs a handwritten list of its reasons for doing so. Here is the list:
1. 21-year old living in home, 21-year old child care.
2. Peanut butter and jelly diet, no allowances.
3. Minimal and/or inappropriate clothing--not clean.
4. Child allowed overnight visit in another child's parent's home with alleged perpetrator in residence.
5. Child given his RX on weekend visit and not monitored--child overdosed.
The Gensburgs' lawyer promptly provided a detailed letter rebutting or partially rebutting these allegations. These five charges had all been considered in the license revocation proceedings, or at least the department had the information on which they were based at that time, but no mention of them had been made in the interim director's decision.
In the spring of 1993, the department ceased placing children with the Gensburgs. Its letter explaining its decision mentioned one entirely new factor, a preference for in-county placements (the Gensburgs' home was in San Mateo County rather than San Francisco County), and second, alluded to some of the charges which had been raised in the license revocation proceedings, and third, said Mrs. Gensburg had used poor judgment discussing money with Mrs. Merdita:
This decision is based on two significant considerations. First, for the past two years this department has been under considerable pressure to place children in San Francisco based facilities. While various circumstances sometimes prevent this from happening we are committed to making placements within the city whenever possible. Second, after reviewing public record information and after consulting with staff and the city attorney an administrative decision has been made to no longer use this facility as a placement resource. This decision is based on a lack of confidence in the Gensburgs' ability to provide a safe and properly supervised operation for San Francisco children. Previous complaints about racial epithets, scapegoating of children, physical violence involving Mr. Gensburg, and inappropriate and poor judgment used by Mrs. Gensburg when she discussed money matters with a client's mother are some of the factors that led to this decision.
The Gensburgs sued the detective, Mr. Lipset, and the County of San Francisco. They lost on summary judgment in district court. The issues raised on appeal are whether Mr. Lipset violated a state wiretapping statute, and whether the city and county of San Francisco violated the Gensburgs' procedural due process rights.
ANALYSIS
I. Wiretapping.
The Gensburgs' theory against Lipset is that he engaged in unauthorized eavesdropping in violation of California Penal Code § 632(a). This section makes it a crime for a person to intentionally record a confidential telephone communication "without the consent of all parties."
We agree with the district court's conclusion, that the statutory exception in California Penal Code § 633.5 applied. That statute says that nothing in section 632.5 "prohibits one party to a confidential communication from recording the communication for the purpose of obtaining evidence reasonably believed to relate to the commission by another party to the communication of the crime of extortion...." This exception applies precisely. The Gensburgs argue that Mr. Lipset should not have the benefit of it, because had he called Mrs. Merdita's physician as the police inspector did, he would have learned she was schizophrenic and not proceeded further. This speculation is irrelevant, because the statutory exception includes no condition which would impose this duty on Mr. Lipset. All the statutory exception requires is that the purpose is "obtaining evidence reasonably believed to relate to the commission by the another party to the communication of the crime of extortion." Even if Mr. Lipset might have reason to be skeptical of Mrs. Merdita's account, he had no reason to doubt that recording her conversations with Mrs. Gensburg would "relate to" the commission by Mrs. Gensburg of the crime of extortion. It might relate by proving Mrs. Gensburg innocent, by proving her guilty, or by being indeterminate, but however the evidence turned out, it would be precisely for this statutorily permitted purpose.
We affirm the summary judgment in favor of Lipset and Lipset Services.
II. DUE PROCESS
A. Protected interest.
The Gensburgs procedural due process claim requires as a predicate a deprivation of liberty or property. What the County did was cease sending them foster care children. Thus the predicate issue is whether they had a liberty or property interest in the continued assignment of foster children to their home.
On de novo review of the record, we conclude that the Gensburgs established a genuine issue of fact as to whether they had a property interest in further assignments of children. Property interests, for purposes of the Fourteenth Amendment, generally arise out of state law, "rules or understandings that secure certain benefits and that support claims of entitlements." Board of Regents v. Roth, 408 U.S. 564, 577 (1972); see also Alaska Airlines, Inc. v. City of Long Beach, 951 F.2d 977, 986 (9th Cir.1991) (flight allocations are "a property interest closely associated with the pursuit of a livelihood" and were not to be taken away without procedural due process). A unilateral expectation does not establish a property interest, but procedural requirements intended as a significant substantive restriction do. Logan v. Zimmerman Brush Co., 455 U.S. 422 (1982); Wedges/Ledges of California. Inc. v. City of Phoenix, 24 F.3d 56, 62 (9th Cir.1994).
The Gensburgs are unable to cite a state law or regulation entitling them to continued assignments of foster children. A department regulation entitles a foster parent to at least seven days advance written notice of an intent to remove a child, and a right to request a grievance review, with exceptions for such reasons as imminent danger. California SDSS Manual § 30-348.1. But ceasing to assign new children is distinguishable from removing those who are already there.
But established law in the circuit provides that a "mutually explicit understanding" can suffice to establish a property interest. "The absence of a specific statute, regulation or written contract ... does not necessarily foreclose the possibility that a property interest might have been created." Doran v. Houle, 721 F.2d 1182, 1185 (9th Cir.1983). The conduct and representations of government officials can generate a legitimate claim of entitlement, when the officials' actions lead to the creation of a "mutually explicit understanding." Id. (citing Perry v. Sindermann, 408 U.S. 593, 601 (1972)); Hyland v. Wonder, 972 F.2d 1129, 1140 (9th Cir.1992).
The Gensburgs submitted cognizable evidence that there was an explicit understanding that the County would not cease using a foster care provider without notice and opportunity to be heard. They filed a declaration by a former child welfare worker in the San Francisco Department of Social Services. His sworn declaration says that the practice of the department was to investigate complaints and provide an opportunity to respond, before deleting a home from the placement list:
Unless homes asked to be deleted from this list, they were deleted only by decision of the shelter unit supervisor or higher officials in the SFDSS chain of command. At times, decisions were made to delete homes because of complaints relating to the quality of foster care being provided there. It was the general practice of SFDSS to investigate any such complaints, and to provide the involved homes with an opportunity to address or respond to the complaints, before reaching any decision to delete such a home from our list.
This declaration was given added force by the course of conduct of the department. It had tried to get the Gensburgs' license revoked, and then had tried to remove all the children from their home. If department officials had not had an established practice as described by the Gensburgs' declarant, then the only logical and sensible first step would have been to stop sending the Gensburgs new foster children. Also, when the department finally ceased placing children there, it would not have had any reason to send the Gensburgs a letter stating its official grounds, had its practice been to act on the basis of unfettered administrative discretion. Cf. Wedges/Ledges of California. Inc. v. City of Phoenix, 24 F.3d 56, 62 (9th Cir.1994) (property interest is created if procedural requirements are significant substantive restriction on decisionmaking authority). We do not conclude that the Gensburgs established a property right to the continued placement of children, but only that they established a genuine issue of fact as to whether there was an understanding which would create a property right.
The Gensburgs established a genuine issue of fact as to whether they had a property or liberty interest based on what some cases have called "blacklisting." The letter explaining why no additional foster care assignments would be made said that among the reasons were complaints of "racial epithets, scapegoating of children, physical violence." We need not decide whether the reasons in the letter are stigmatizing as a matter of law, for there is at a minimum a genuine issue of fact as to whether these accusations are stigmatizing. The record does not establish whether this letter would impair the Gensburgs' reputation because of publication or some other reason. The case at bar may be analogous to debarment cases. When contractors are barred from submitted further bids, they have been held to have a liberty interest for due process purposes, if debarred for stigmatizing reasons. See Erickson v. United States, 67 F.3d 858, 862 (9th Cir.1995); Vanelli v. Reynolds Sch. Dist. No. 7, 667 F.2d 773, 777 (9th Cir.1982); accord Transco Security. Inc. v. Freeman, 639 F.2d 318, 321 (6th Cir.1981); ATL, Inc. v. United States, 736 F.2d 677, 683 (Fed.Cir.1984); cf. Berlanti v. Bodman, 780 F.2d 296 (3d Cir.1985) (property, not liberty interest);
B. Procedure.
Because we have concluded that there was a genuine issue as to whether a property or liberty interest was taken, we must evaluate whether the Gensburgs received all the process that was due. They have established a genuine issue of fact as to this issue as well. Their termination was based on "two significant considerations," "pressure to place children in San Francisco based facilities," and "lack of confidence" based on "racial epithets, scapegoating of children, physical violence involving Mr. Gensburg, and inappropriate and poor judgment by Mrs. Gensburg when she discussed money matters with a client's mother."
Neither of these two "considerations" was among the five handwritten charges the department had given to the Gensburgs. The claim that the agency was under pressure to use San Francisco placements came out of the blue. This "pressure" had never been raised before, so far as the record shows. The Gensburgs submitted a declaration by a former child welfare worker at the department saying that "efforts were made during my tenure in the shelter unit to cultivate further homes within this County" because of a "relative paucity" of homes in San Francisco County but "we continued to make use of a considerable proportion of homes outside this County, not only because we had to do so, but also because the circumstances of particular children sometimes made such out-of-county placements preferable." The novelty of the claim that the agency was pressured to use homes in San Francisco County, coming as it did at the end of the department's long war with the Gensburgs, and its contradiction by evidence, raises a genuine issue of fact as to whether the "pressure" existed, and whether it was a pretext rather than among the actual reasons why the county ceased placing children there.
The other reason given was "a lack of confidence in the Gensburgs' ability to provide a safe and properly supervised operation for the San Francisco children." Whether Mrs. Gensburg showed poor judgment in talking to Mrs. Merdita about money was disputable, and the Gensburgs did not have an opportunity to dispute it. Were the Gensburgs given a fair opportunity to be heard, Mrs. Gensburg might be able to establish that she was unable to exercise her judgment about whether to talk to Mrs. Merdita about money, because Mrs. Merdita kept calling her and talking about money, and all she did was humor a difficult individual. As for the more serious charges of racial epithets, violence, and so forth, the record establishes that when neutral adjudicators, the Superior Court judge and the administrative law judge, heard these and other charges, they had found in favor of the Gensburgs. Had the Gensburgs been given a fair opportunity to be heard on these charges, they might have achieved the same result as before. Cf. Clements v. Airport Authority of Washoe Cty., 69 F.3d 321 (9th Cir.1995).
Thus, we conclude that the Gensburgs have established a genuine issue of fact as to whether they had a fair opportunity to confront the charges upon which the department eventually acted.
CONCLUSION
The summary judgment is AFFIRMED as to Harold K. Lipset and Lipset Services. It is REVERSED as to the City and County of San Francisco. Appellant does not state a question for review as to the judgment in favor of Maria Merdita, so as to her, the summary judgment is AFFIRMED.