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Johnson v. Department of Agriculture

United States Court of Appeals, Eighth Circuit

August 18, 2016

Curtis Johnson Plaintiff- Appellant
Department of Agriculture, Tom Vilsack, Secretary (USDA); Gary Cochran; Hendra Woodfork; Shirley Moore; Dotson Collins; James G. Culpepper; Dianna Shook; Linda Newkirk; Dennis L. Stephens; Linda Baker; Thomas Brown; M. Terry Johnson; John Doe; Jane Does Defendants-Appellees

          Submitted: April 12, 2016

         Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

          Before GRUENDER and KELLY, Circuit Judges, and ERICKSEN, [1] District Judge.


         This appeal follows the district court's dismissal of Curtis Johnson's statutory and constitutional claims against the Department of Agriculture (USDA), the Secretary of Agriculture, and various Department of Agriculture employees. Although we agree with some of the district court's bases for dismissal, we disagree that taking advantage of the USDA's internal anti-discrimination complaint procedures can serve as a bar to later bringing federal-law claims in court, or that the existence of those procedures insulates the USDA from constitutional claims. We therefore affirm in part and reverse in part.

         I. Background

         As alleged in his complaint, the plaintiff, Curtis Johnson, ran a farm in Monroe and St. Francis Counties in Arkansas until 2000.[2] In 2000, he and his former wife, Rubye Johnson, took out a loan, secured by mortgages on their property, in the amount of $142, 185.47 from the USDA's Farm Service Agency (FSA). Because of a drought in 2000, Johnson had to stop farming and began to miss payments on his loans.

         Starting in July 2001, the FSA began intercepting Johnson's income tax refunds through administrative offsets.[3] Over the next several years, Johnson tried to settle his debts with the FSA - offering to pay $15, 500 in August and September 2003 and November 2004, $1, 500 in February 2006, and $100 in December 2006 or January 2007. The last two attempts included checks for the offered amounts, which the FSA applied towards the loans, but in each case the FSA either did not respond to his offers or only provided him with general information on debt settlement. In January 2008, the USDA began to intercept Johnson's post office salary and pension by administrative offset.

         Finally, in October 2009, Linda Newkirk, an FSA employee and a defendant in this case, sent Johnson a letter denying his debt settlement applications. Johnson then met with Dennis Stephens, another FSA employee and defendant, in December 2009 to ask for reconsideration, which was denied. In January 2010, Johnson filed an appeal with the USDA's National Appeals Division (NAD). After conducting a hearing, Thomas Brown, an NAD Hearing Officer, upheld the FSA's denial of Johnson's settlement applications. Johnson then requested a Director's Review, and on August 2010, defendant M. Terry Johnson upheld the FSA's decision.

         The allegations discussed so far can be found in the complaint, but the district court relied on additional information deduced from documents attached to the defendants' motion to dismiss Johnson's complaint.[4] The documents indicate that Johnson, who is African American, wrote a letter to USDA's Office of Adjudication & Compliance on August 27, 2010, claiming that the FSA's denials of his debt settlement applications were racially discriminatory, and similar to the discriminatory practices at issue in a class action called Pigford v. Glickman.[5]

         In response, the USDA's Office of Adjudication, part of its Office of the Assistant Secretary for Civil Rights (OASCR), wrote Johnson to say that it was treating his letter as an administrative complaint to be processed under the procedures codified at 7 C.F.R. Pt. 15d. The responsive letter assigned Johnson's complaint a number and stated that the "accepted issue" raised by the complaint was:

Whether the officials of the Farm Service Agency (FSA) discriminated against you on the basis of race (Black) when FSA allegedly on or about July 2010, denied you program servicing for debt relief pertaining to a [sic] operating and equipment loans.

         It explained that once a position statement was received from the FSA, an investigator would be assigned to the case, and that a Final Agency Decision would be issued after the investigation was complete.

         The letter from the Office of Adjudication noted that Johnson's administrative complaint "may be covered by the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (ECOA)." It also noted that ECOA had a two-year statute of limitations, [6]warned Johnson that "[f]iling an administrative complaint with USDA does not stop or suspend that time requirement, " and advised him that if he filed a suit in federal court, "USDA may no longer be able to process [his] administrative complaint."

         OASCR issued a fifteen-page final agency determination on February 29, 2012. The determination began its analysis by saying that the claim was "properly analyzed under ECOA." Applying a Third Circuit case that held that ECOA claims should be analyzed under a modified version of the framework for adjudicating civil rights complaints developed by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), the final agency determination concluded that the USDA had failed to work with Johnson to give him the chance to make a viable debt settlement offer. OASCR separately entered an order directing the FSA to pay Johnson damages of $30, 000, cancel his FSA debt, release its mortgages on Johnson's property, and implement comprehensive remedial action. The FSA has since complied. The final agency determination did not order the FSA to pay back the money it had already collected from Johnson through administrative offset.

         Johnson was apparently dissatisfied with OASCR's decision because it allowed FSA to keep the money it had already taken through administrative offset and because it did not award punitive damages. As a result, he filed the present lawsuit on December 21, 2012, against Secretary of Agriculture Tom Vilsack and eleven USDA employees whose names are listed in the caption above (the USDA employee defendants), each in their individual and official capacities. Johnson's complaint claimed that the defendants violated ECOA because they denied his debt settlement offers on the basis of his race and in retaliation for his being a member of the Pigford class-action litigation. He also alleged that the defendants engaged in a conspiracy under 42 U.S.C. § 1985(3) to interfere with his civil rights, and that they violated his rights under the Fifth and Thirteenth Amendments.

         On March 16, 2015, the district court granted the defendants' motion to dismiss all of Johnson's claims. Two of the defendants, Dotson Collins and Dianna Shook, were dismissed because Johnson had failed to timely serve them. The individual capacity claims against Vilsack were dismissed on the grounds that Johnson had not alleged his personal involvement in the actions taken with respect to his debt settlement offers. The constitutional claims against the defendants in their official capacities were dismissed on the grounds of sovereign immunity. The Thirteenth Amendment claims were dismissed on the grounds that that amendment does not create a private cause of action. The conspiracy claims were dismissed on the grounds that no agreement among the defendants had been alleged. Finally, and most significantly for purposes of this appeal, the ECOA claims were dismissed on the grounds that they were precluded by OASCR's administrative proceedings, and, with respect to the USDA employee defendants, on the alternative ground that Johnson had not adequately alleged that they were "creditors" for ECOA purposes.

         On appeal, Johnson does not challenge the dismissal of Tom Vilsack in his individual and official capacities, or the dismissal of Dotson Collins and Dianna Shook for failure of service. He also does not challenge the dismissal of his Fifth Amendment claims against the USDA employee defendants in their official capacities, or the Thirteenth Amendment claims against all defendants. He otherwise contends that the district court erred in dismissing his claims.

         II. Discussion

         We address first whether the USDA's decision pursuant to the administrative procedures at 7 C.F.R. Pt. 15d precluded Johnson's ECOA claims here. We then address in turn whether he adequately pleaded an ECOA claim, and ...

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