Moore v. U.S. Dept. of Agriculture on Behalf of Farmers Home Admin.

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 94-40945
LARRY W. MOORE and
NAOMI S. MOORE,
Plaintiffs-Appellants,
VERSUS
UNITED STATES DEPARTMENT
OF AGRICULTURE o/b/o
Farmers Home Administration,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Louisiana
( June 6, 1995 )
Before LAY1, DUHÉ and DEMOSS, Circuit Judges.
DEMOSS, Circuit Judge:
Nearly five years ago, Larry Moore and his wife, Naomi Moore,
sued the Farmers Home Administration (FmHA), alleging that FmHA's
refusal to extend them credit because they are white violated the
equal protection component of the Fifth Amendment and the Equal
Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691-1691f. The
district court originally dismissed the suit for lack of standing,
1
Circuit Judge of the Eighth Circuit Judge, sitting by
designation.
but we reversed and remanded the case for further proceedings.
Moore v. U.S. Dep't of Agric., 993 F.2d 1222 (5th Cir. 1993) (Moore
I). On remand, the district court once again dismissed the Moores'
suit, but for different reasons. The Moores appeal. We now vacate
the judgment below and render judgment for the Moores, but remand
the case for a determination of damages.
I.
The Agricultural Credit Act of 1987, Pub. L. No. 100-233,
authorizes the Department of Agriculture (DOA) to establish "target
participation rates" to ensure that members of "socially
disadvantaged groups" will receive loans to acquire DOA-held
farmland. 7 U.S.C. § 2003(a)(1). The Act defines a "socially
disadvantaged group" as "a group whose members have been subjected
to racial or ethnic prejudice because of their identity as members
of a group without regard to their individual qualities." Id. §
2003(d). As of December 1989, the FmHA, which is an agency within
the DOA, implemented § 2003's mandate by setting aside a certain
portion of DOA-held properties for "socially disadvantaged
applicants" (SDAs). The FmHA would then sell SDA-designated
properties exclusively to qualified minorities2 and sell non-SDA-
designated properties to any qualified applicant. The FmHA
required all applicants, regardless of SDA status, to produce
evidence of an "acceptable credit history."
2
Current regulations further define "socially disadvantaged
groups to consist only of Women, Blacks, American Indians, Alaskan
Natives, Hispanic, Asians, and Pacific Islanders." 7 C.F.R. §
1955.103, at 344 (1995).
2
In December 1989, Larry Moore, a white male, applied to
purchase an SDA-designated property, namely a 183-acre farm in
Rayville, Louisiana. Moore did not indicate whether he qualified
as an SDA, whereupon the FmHA requested further information. Moore
failed to do so. The FmHA formally denied his application in
December 1989, stating only that
"[y]ou have failed to provide proof that you meet the criteria
of SDA. (No Whites)."
The Moores filed an administrative appeal, which was summarily
dismissed in February 1990 on the basis that the FmHA could not
waive his unacceptable racial classification. The Moores then
applied for a non-SDA-designated property. The FmHA again denied
his application, this time on the basis of his poor credit history
as reflected in a January 1990 credit report. The report, among
other things, indicated that Larry Moore had been sporadically
employed since 1967, that the Moores had declared bankruptcy in
1982, and that their home had been foreclosed on in the late 1980s.
In September 1990, the Moores filed suit against the DOA and
the FmHA, alleging violations of their rights under the Fifth
Amendment and the ECOA.3 The Moores requested actual damages
(i.e., loss of income from farming operations and mental anguish
3
The ECOA broadly prohibits credit discrimination, stating
that
It shall be unlawful for any creditor to discriminate against
any applicant, with respect to any aspect of a credit
transaction --
(1) on the basis of race, color, religion, national
origin, sex or marital status, or age (provided the
applicant has the capacity to contract).
15 U.S.C. § 1691(a)(1).
3
and suffering), punitive damages, and attorneys fees, but made no
specific request for injunctive or declaratory relief. The
district court dismissed the Moores' suit on the ground that Larry
Moore had failed to complete the initial application. The Moores
appealed. In June 1993, we reversed and remanded the case for
further proceedings. Moore I, 993 F.2d 1222 (5th Cir. 1993). We
held that the Moores' failure to complete the application did not
deprive them of standing to sue.
On remand, the Moores never amended their pleadings. The FmHA
prior to trial offered alternative defenses to its actions: (1)
notwithstanding its board prohibition against discriminatory
lending, the ECOA exempts refusals to extend credit that are
pursuant to "any credit assistance program expressly authorized by
law for an economically disadvantaged class of persons," 15 U.S.C.
§ 1691(c)(1); and (2) the ECOA does not include a waiver of
sovereign immunity. At trial, however, the FmHA changed tack and
defended its actions on a third theory: the Moores failed to make
a prima facie case of discrimination.4
Providing alternative reasons, the district court dismissed
the Moores' suit in July 1994. The court first held that the ECOA
does not include a waiver of sovereign immunity, despite the fact
that the FmHA had proffered but eventually abandoned precisely the
same theory. The court alternatively held (as the FmHA argued at
trial) that the Moores failed to make out a prima facie case of
4
In particular, the FmHA argued that the Moores failed to
demonstrate that they were qualified for an extension of credit.
4
discrimination. The elements of an ECOA prima facie case,
according to the district court, are: (1) the applicant is a member
of the protected class; (2) the applicant in fact applied and was
qualified for credit; and (3) the applicant was denied credit
notwithstanding his qualifications.5 The court easily concluded
that the Moores could not establish the second element, i.e., that
they were qualified for credit, and therefore dismissed the Moores'
suit. The Moores, once again, appeal.
II.
We are obligated to satisfy ourselves that the jurisdiction of
both this court and the district court have been properly
established, "``even though the parties are prepared to concede
it.'" Mocklin v. Orleans Levee Dist., 877 F.2d 427, 428 n.3 (5th
Cir. 1989) (quoting Bender v. Williamsport Area School Dist., 475
U.S. 534, 541 (1986)). And because "[s]overeign immunity is
jurisdictional in nature," FDIC v. Meyer, 114 S. Ct. 996, 1000
(1994), we must now determine whether the ECOA contains a waiver of
the United States' sovereign immunity. As we mentioned, the
district court below concluded that Congress never "unequivocally
expressed" an intention to waive the United States' sovereign
immunity in ECOA claims. The court did concede that the plain
language of the ECOA provides that governmental entities are liable
under the Act. See 15 U.S.C. § 1691a(e),(f) (respectively defining
5
The court correctly noted that very little ECOA case law
exists. But given the similarity between an ECOA refusal-to-
extend-credit case and a Title VII refusal-to-hire case, the court
borrowed freely from the wealth of Title VII case law to craft the
elements of an ECOA prima facie case.
5
"creditor" to mean "person," and "person" to mean "government or
governmental subdivision or agency"). But the court construed this
to mean that Congress waived the liability of state governmental
entities only, leaving intact the United States' immunity.
There are two problems with the district court's reasoning.
First, as the FmHA points out, Congress has used identical language
in a closely related statute, yet inserted an additional provision
preserving the United States' immunity. Specifically, Congress
codified the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667e,
and the ECOA, 15 U.S.C. §§ 1691-1691f, as Subchapters I and IV of
the Consumer Credit Protection Act, respectively. The TILA defines
"person" to mean any "government or governmental subdivision or
agency," see id. § 1602(c),(d),(f), just as the ECOA does. Yet
Congress also expressly preserved the United States' sovereign
immunity against TILA claims. Id. § 1612(b). Clearly, TILA
indicates that Congress intended "government or governmental
subdivision or agency" to include the United States, because
otherwise it would not have specifically preserved the United
States' immunity unless it believed that such immunity had been
previously waived. Considering that ECOA was passed after TILA6
and does not include an express preservation of U.S. sovereign
immunity as did TILA, we conclude that Congress intended to waive
U.S. immunity in the ECOA.
6
The TILA was enacted in 1968, see Pub. L. No. 90-321, 82
Stat. 146, and the ECOA was enacted in 1974, see Pub. L. No. 93-
495, 88 Stat. 1521.
6
Second, and perhaps equally compelling, the district court's
conclusion creates a paradox. The courts have developed virtually
identical tests for determining whether Congress has waived the
United States' sovereign immunity and whether it has abrogated the
states' Eleventh Amendment immunity. That is, Congress' intention
must be either "unequivocally expressed" (when the United States'
immunity is at issue) or "unmistakably clear" (when the states'
immunity is at issue). In Interfirst Bank Dallas, N.A. v. United
States, 769 F.2d 299, 310 (5th Cir. 1985), we stated that a waiver
of the United States' sovereign immunity "must be expressly stated
by Congress and should not be inferred." For support, we cited
among other cases Atascadero State Hospital v. Scanlon, 473 U.S.
234 (1985), wherein the Supreme Court discussed the test for
determining whether Congress has abrogated the states' Eleventh
Amendment immunity. We purposely cited Scanlon in Interfirst Bank
for one reason: the two tests are extremely similar, if not
identical. See also United States v. Nordic Village, Inc., 112 S.
Ct. 1011, 1016 (1992) ("As in the Eleventh Amendment context, the
``unequivocal expression' of elimination of sovereign immunity that
we insist upon is an expression of statutory text.") (quoting
Hoffman v. Connecticut Dep't of Income Maintenance, 492 U.S. 96,
104 (1989)); Pennsylvania v. Union Gas Co., 491 U.S. 1, 31-32
(1989) (Scalia, J, concurring and dissenting) (states' Eleventh
Amendment immunity reflected "a consensus that the doctrine of
sovereign immunity, for States as well as the Federal Government,
7
was part of the understood background against which the
Constitution was adopted") (emphasis added).
So, given the uniformity with which courts must assess any
governmental immunity, the district court's reasoning cannot
withstand scrutiny. The ECOA either waives federal and state
immunity together, or waives none at all. But it certainly cannot,
as the district court concluded, abrogate the states' immunity and
preserve the United States' immunity. We, like the parties, read
the ECOA to include a broad waiver of governmental immunity. The
plain language of the ECOA unequivocally expresses Congress'
intentions: governmental entities are liable under the Act. See 15
U.S.C. § 1691a(e),(f) (respectively defining "creditor" to mean
"person," and "person" to mean "government or governmental
subdivision or agency").7 We therefore have jurisdiction to hear
the Moores' appeal.
III.
The Moores allege that the FmHA violated their rights under
both the equal protection component of the Fifth Amendment and the
ECOA. We will address each claim separately.
A.
With regard to the equal protection claim, the Moores' amended
complaint names only the FmHA as a defendant and requests only
monetary relief (e.g., actual damages, punitive damages, attorneys
fees). The Moores never made any specific request for any type of
7
See also 15 U.S.C. § 1691e(b) (limiting ECOA claims against
governmental entities to actual damages only).
8
injunctive or declaratory relief. In doing so, the Moores have
failed to properly state an equal protection claim. We suggested
in Moore I that "the Moores' allegations pose more than a
possibility of recovery under a Bivens-type action founded in the
equal protection component of the Fifth Amendment." Moore I, 993
F.2d at 1223. But, as the district court below noted, the Supreme
Court's intervening decision in FDIC v. Meyer, 114 S. Ct. 996(1994), forecloses the Moores from bringing a Bivens claim. The
Moores have sued only the FmHA. And because Meyer established that
Bivens-type claims cannot be brought against federal agencies (as
opposed to federal officers), id. at 1004-05, the Moores cannot
rely on Bivens. Their equal protection claim fails.
B.
Thus, the Moores' only basis for relief is the ECOA.
Interestingly, the FmHA concedes liability in this instance.
Specifically, the FmHA argues that its only viable defense would
have been to argue that the SDA program is exempted from the ECOA's
broad prohibition against credit discrimination. See 15 U.S.C. §
1691(c) (exempting from liability any "credit assistance program
expressly authorized by law for an economically disadvantaged class
of persons"). The FmHA admits, however, that it abandoned this
defense at trial when it chose to argue, in lieu of a § 1691(c)
defense, that the Moores failed to make a prima facie case of
discrimination.
But the FmHA on appeal has abandoned that defense, too. The
agency concedes that its December 1989 letter to Larry Moore,
9
wherein it stated that "[n]o whites" could qualify for SDA-
designated properties, constitutes direct evidence of racial
discrimination. As such, the Moores are entitled to bypass the
McDonnell Douglas burden-shifting framework commonly applied in
discrimination cases and proceed directly to the question of
liability. Trans World Airlines, Inc. v. Thurston, 469 U.S. 111,
121 (1985) ("the McDonnell Douglas test is inapplicable where the
plaintiff presents direct evidence of discrimination"). As we have
stated before, "``In the rare situation in which the evidence
establishes that an employer openly discriminates against an
individual it is not necessary to apply the mechanical formula of
McDonnell Douglas to establish an inference of discrimination.'"
Kendall v. Block, 821 F.2d 1142, 1145 (5th Cir. 1987) (quoting
Ramirez v. Sloss, 615 F.2d 163, 168 (5th Cir. 1980)). In short,
the FmHA has no defense to the Moores' ECOA claim. The FmHA
acknowledges this fact and thus concedes the claim. We accept the
FmHA's concession and render judgment for the Moores as to their
ECOA claim.
The question of damages, however, still remains. The Moores
requested actual damages (i.e., loss of income from farming
operations and mental anguish and suffering), punitive damages, and
attorneys fees. The FmHA counters that the Moores' damages, at
most, are nominal given that their poor credit history inde-
pendently precludes them from qualifying for a non-SDA-designated
property. In fact, the FmHA notes, the Moores' second application
for a DOA-held property was denied solely on the basis of their
10
poor credit history. Either way, the district court is the
appropriate venue for determining the Moores' damages, if any. We
note only that, while the after-acquired evidence of the Moores'
poor credit history cannot defeat the FmHA's liability, the
evidence can aid the court in assessing the Moores' damages. See
McKennon v. Nashville Banner Publish. Co., 115 S. Ct. 879, 883-87
(1995) (after-acquired evidence of wrongdoing by an employee
terminated for unlawful reasons does not relieve the employer of
liability for the unlawful termination, but it is useful in
fashioning the appropriate remedy).
IV.
The district court erred in concluding that the ECOA does not
include a waiver of the United States' sovereign immunity.
Furthermore, we accept as correct the FmHA's concession on appeal
that it is liable to the Moores under the ECOA. However, the
Moores' damages, if any, must be determined by the district court.
Accordingly, we VACATE the judgment of the district court, RENDER
judgment for the Moores as to their ECOA claim, and REMAND the case
for a determination of damages.
11