Banneker Ventures, LLC v. Jim Graham

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 21, 2015 Decided August 18, 2015
No. 14-7030
BANNEKER VENTURES, LLC,
APPELLANT
v.
JIM GRAHAM, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:13-cv-00391)
Mark A. Grannis argued the cause for appellant. With
him on the briefs were Mark D. Davis and Anne K. Langer.
Brian K. McDaniel entered an appearance.
Douglas M. Bregman argued the cause for appellee
Washington Metropolitan Area Transit Authority. Daniel P.
Golden, Assistant General Counsel, Office of the General
Counsel for the Council of the District of Columbia, argued
the cause for appellee Jim Graham. With them on the joint
brief were Geoffrey T. Hervey, Gerard J. Stief, V. David
Zvenyach, General Counsel, Office of the General Counsel for
the Council of the District of Columbia, John R. Hoellen,
Deputy General Counsel, and Manasi Venkatesh, Assistant
General Counsel, Brian L. Schwalb, Seth A. Rosenthal, and
2
Moxila A. Upadhyaya. Bruce P. Heppen entered an
appearance.
Before: MILLETT and PILLARD, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge PILLARD.
PILLARD, Circuit Judge: The Washington Metropolitan
Area Transit Authority (WMATA), like many transit
authorities across the country, does more than build and run
transit systems. WMATA is empowered to acquire, own, and
convey real property to promote transit-oriented development.
One way it does so is through a program that invites
developers to submit proposals to develop WMATA property,
and then grants the competitively selected developer an
exclusive period during which to negotiate for a final
development contract to carry out its proposal.
Plaintiff in this case, real estate developer Banneker
Ventures, LLC, alleges that WMATA signed a contractually
binding Term Sheet preliminarily selecting Banneker to
develop property above a Metrorail station and giving
Banneker the exclusive right to negotiate a final development
agreement. Banneker further alleges that one of WMATA’s
Board Members, Jim Graham, abused his Board position and
his seat on the Council of the District of Columbia to work
behind the scenes with one of Banneker’s rival bidders,
LaKritz Adler Development, to derail WMATA’s
negotiations with Banneker. According to Banneker,
Graham sought to steer the development job to LaKritz Adler,
a Graham supporter and campaign contributor. WMATA
dragged out its negotiating period with Banneker for many
months during which, the complaint alleges, Banneker met
WMATA’s every shifting demand. WMATA then let the
3
Term Sheet expire without consummating a final
development agreement. WMATA eventually sold the
property to another developer.
Banneker raises several distinct claims arising from its
dashed opportunity. It asserts that WMATA, through
Graham, breached the Term Sheet’s exclusivity provision and
obligation to negotiate in good faith, and that Graham and
LaKritz Adler conspired to interfere with Banneker’s contract
(the Term Sheet) and prospective business advantage. The
complaint exhaustively chronicles the facts underlying those
claims and, for the reasons discussed below, we conclude that
the district court erred in dismissing them.
Banneker also asserted tort claims against WMATA and
Graham. We affirm the district court’s dismissal of
Banneker’s fraud claim against WMATA as barred by
sovereign immunity. Graham’s asserted absolute official
immunity from suit for tortious interference requires further
consideration. The district court evaluated the complaint at
too high a level of generality and failed to place the burden on
Graham to establish his entitlement to official immunity.
Because the absolute official immunity questions have yet to
be analyzed by the district court at the requisite level of
factual specificity, we vacate the dismissal of the tort claims
against Graham and remand for further proceedings consistent
with this opinion.
4
I. Background
A. Allegations 1
In the spring of 2007, WMATA invited bids to redevelop
its property above the Shaw-Howard/Florida Avenue
Metrorail station. Banneker, Defendant LaKritz Adler
Development, and ten other developers submitted bids.
Banneker proposed building “The Jazz at Florida Avenue,” a
mixed-use development that would include 103 new
residential units and 11,750 square feet of retail space. At
first, things seemed to go Banneker’s way. Its bid received
the support of the local neighborhood commission, investors
expressed interest, and Banneker’s presentation to WMATA
staff was well received. WMATA made its initial selection of
Banneker to develop the site, and the parties negotiated a
Term Sheet that contained many of the material terms of the
deal and a contractually guaranteed, exclusive, five-month
negotiating period for Banneker and WMATA to arrive at a
final development agreement. See Term Sheet, J.A. 111 §§ 4,
7, 12. Banneker paid WMATA $100,000 in exchange for the
exclusive negotiation right, which fee was in addition to the
$100,000 it had already paid as a “proposal deposit.”
After its preliminary success, Banneker soon met
resistance. Defendant Jim Graham was a member of the D.C.
Council and one of the District’s two voting members on
1
This factual account is based on the allegations of the Amended
Complaint. J.A. 10. At the pleading stage, we accept all the well-
pleaded factual allegations of the complaint as true and draw all
reasonable inferences from those allegations in the plaintiff’s favor.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The question is
whether Banneker will have an opportunity to try to prove in court
what it has alleged. We express no opinion as to the truth of what
is recited here as fact.
5
WMATA’s Board of Directors. 2 LaKritz Adler and its
principals Joshua Adler and Robb LaKritz (collectively,
LaKritz Adler) were major contributors to Graham’s
campaigns and projects, whereas Graham believed that
Banneker contributed to his political opponents. From the
start, Graham opposed Banneker and favored LaKritz Adler
for the Florida Avenue project. Graham and LaKritz Adler
colluded for the next two years to engineer an opportunity for
LaKritz Adler to wrest the contract or some of its benefits
from Banneker. That alliance was only half successful:
Banneker ultimately lost the project, but a different developer,
not LaKritz Adler, took its place.
Starting while WMATA’s staff was negotiating the Term
Sheet with Banneker, Graham sought to derail the process.
Graham told one of Banneker’s principals, Warren Williams,
that Graham would cast his D.C. Council vote in favor of
Williams on a lottery contract he sought if Williams would
pull Banneker out of the WMATA project. Graham solicited
campaign contributions and substantial financial support from
another Banneker principal in exchange for Graham’s support
of the Banneker bid. Graham also pressured two of
Banneker’s development partners to drop off of the project in
an effort to cause WMATA staff to abandon negotiations with
Banneker and give the project to LaKritz Adler instead.
Meanwhile, Banneker was in negotiations with Howard
University over a parcel adjacent to the WMATA Florida
2
WMATA is governed by a Board of Directors composed of eight
members, two from each signatory of the interstate compact that
formed it—the District of Columbia, Maryland, Virginia—and two
from the federal government. D.C. Code § 9-1107.01 ¶ 5(a). The
Board acts through majority vote but, in order for a vote to carry,
the majority must contain at least one member of each contributing
jurisdiction. Id. ¶ 8(a).
 6
Avenue property that Banneker wanted to develop at the same
time as the WMATA project. LaKritz Adler falsely told
Howard University that WMATA had already selected it to
develop the Florida Avenue property, not Banneker. Graham
also pressed Banneker at a lunch meeting to add LaKritz
Adler to its development team, claiming that doing so would
be a precondition of Board approval of the Term Sheet.
Immediately following the lunch, Banneker received
unsolicited calls and e-mail messages from LaKritz Adler
proposing transfer of Banneker’s option on the adjacent parcel
to LaKritz Adler—timing that Banneker alleges shows
Graham’s collusion with LaKritz Adler.
In June 2008, WMATA’s Board of Directors approved
the Term Sheet and Banneker executed it. But Graham did
not give up. He pressured his fellow WMATA Directors in a
closed-door session to impose an affordable housing
requirement on Banneker that, based on his experience,
Graham anticipated would “delay, interfere with or otherwise
scuttle Banneker’s efforts during the” negotiation period to
follow. Am. Compl. ¶ 88. Graham also directed WMATA
staff to “stop or delay negotiations” so as to “delay or destroy
Banneker’s ability to fully realize the benefit of its period of
exclusive negotiation.” Id. ¶ 127.
Upon becoming Chairman of the WMATA Board in
January 2009, Graham “me[t] with WMATA’s staff to
pressure the WMATA staff to find a way for LaKritz Adler to
be included” in Banneker’s development plan. Id. ¶ 131.
LaKritz Adler also called WMATA staff to tell them that
now-Chairman Graham had asked LaKritz Adler to “make a
deal” with Banneker. Id. ¶ 133. During the same period,
Graham shared Banneker’s confidential bid information with
LaKritz Adler to provide the rival firm with a competitive
advantage. Graham also forced a third Banneker
7
development partner to drop out of the deal through delay,
and demanded that Banneker replace it with LaKritz Adler.
Graham used his power on the Board to delay and
undermine negotiations between Banneker and WMATA staff
over a final agreement. Repeatedly, when Banneker and
WMATA staff reached agreement on material terms, and
WMATA staff recommended that the Board approve a final
agreement, Graham initiated changes or otherwise prevented
closure. He delayed Board consideration of a final
agreement, directed staff to stop negotiations, switched the
deal from a lease to a sale and then back to a lease again, and
ordered the staff to re-appraise the property, giving rise to a
new round of negotiations.
It was in the midst of that extended back and forth that
Banneker learned Graham had instructed the WMATA staff
to “obtain Best and Final Offers from Banneker and the two
other firms who WMATA [had already] considered before
selecting Banneker,” including LaKritz Adler. Id. ¶ 155.
WMATA’s General Counsel prepared a memo at Graham’s
request regarding whether WMATA had the authority to
solicit “Best and Final” offers from other developers during
the period that the Term Sheet set for exclusive negotiations
between WMATA and Banneker. (The memo, however,
concluded that WMATA could not do so until Banneker’s
exclusivity period expired.)
In January 2010, the Board instructed WMATA staff to
negotiate a larger up-front fee from Banneker to develop the
site, and extended the negotiation period again. Banneker
agreed to the Board’s terms. By March, “all material terms of
the Revised Term Sheet, including price, were agreed to by
Banneker and WMATA staff at which time the WMATA
staff, for the final time, recommended that the WMATA
8
Board approve the agreement.” Id. ¶ 166; see also id. ¶ 213.
But, rather than approve the final agreement as the staff had
negotiated it with Banneker, the Board indefinitely tabled
approval of the deal “for the purpose of allowing Banneker’s
exclusive right to ‘time out.’” Id. ¶ 174. WMATA then re-
issued a solicitation for bids, this time for a sale of the site,
and sold the property to another developer. WMATA
returned half of the $200,000 in deposits Banneker had paid
it.
After The Washington Post began reporting allegations
that Graham tried to barter his D.C. Council vote and
pressured Banneker and its development partners to drop out
of the project, WMATA retained the law firm Cadwalader,
Wickersham & Taft, LLP, to conduct an investigation. (The
parties dubbed the resulting report the Bondi Report, after the
Cadwalader partner Bradley J. Bondi, who was its lead
investigator and author.) The Bondi Report concluded that
Graham failed to remain impartial, showed favoritism toward
a competing vendor, appeared to barter a WMATA project for
his vote on the D.C. Council, and attempted to circumvent the
WMATA Board by pressuring Banneker to drop out of the
project. A separate report by the Director of the Office of
Integrity and Oversight in the office of the District of
Columbia Chief Financial Officer concluded that Graham’s
offer to support Williams to obtain the lottery contract was
“inappropriate.” Id. ¶¶ 9 & n.3, 109. The District of
Columbia Board of Ethics and Government Accountability
also investigated, and found sufficient evidence to conclude
that Graham violated applicable ethical guidelines. As a
result, the Council reprimanded Jim Graham—making that
only the second time in the D.C. Council’s thirty-eight-year
history of home rule that the Council formally reprimanded
one of its members.
9
B. Procedural History
Banneker filed this lawsuit in 2013, alleging that
WMATA breached the Term Sheet and the implied covenant
of good faith and fair dealing by violating the exclusivity
provision and negotiating without genuine intention of
reaching agreement. Banneker also claims that WMATA
staff defrauded Banneker by repeatedly telling Banneker’s
principals that a deal was close when staff members knew or
should have known that the WMATA Board would not
approve it. It further claims that Graham, LaKritz Adler, and
that firm’s principals engaged in civil conspiracy and tortious
interference with Banneker’s prospective business advantage
and its contract with WMATA. 3
The district court dismissed all of Banneker’s claims at
the pleading stage. The court held that Banneker had failed to
state a claim against WMATA for breach of the contract or
the implied covenant because, it concluded, Banneker did not
adequately allege that WMATA negotiated with LaKritz
Adler, and because the Term Sheet did not bind WMATA to
execute a final development agreement. See Banneker
Ventures, LLC v. Graham, 20 F. Supp. 3d 184, 198-201
(D.D.C. 2013) (Banneker I). The court also held that
WMATA and Graham were immune from suit on the tort
claims, and that Banneker failed adequately to state a claim
against LaKritz Adler for tortious interference. Id. at 192-98;
Banneker Ventures, LLC v. Graham, 19 F. Supp. 3d 231, 245-
51 (D.D.C. 2014) (Banneker II). Banneker filed a timely
notice of appeal. Our jurisdiction rests on 28 U.S.C. § 1291.
3
The complaint also asserted claims for unlawful restraint of trade
and unjust enrichment, and a civil conspiracy claim against
WMATA, but Banneker does not press those claims on appeal.
10
II. Legal Standards
We review de novo the district court’s Rule 12(b)(6)
dismissal of Banneker’s claims. Fed. R. Civ. P. 12(b)(6);
Muir v. Navy Fed. Credit Union, 529 F.3d 1100, 1108 (D.C.
Cir. 2008). The Federal Rules of Civil Procedure require that
a complaint contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). Except for allegations of fraud or mistake, see Fed.
R. Civ. P. 9(b), we do not require “detailed factual
allegations” for a claim to survive a motion to dismiss.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). We accept all
the well-pleaded factual allegations of the complaint as true
and draw all reasonable inferences from those allegations in
the plaintiff’s favor. Id. Nevertheless, “[t]hreadbare recitals
of the elements of a cause of action, supported by mere
conclusory statements, do not suffice,” nor do we assume the
truth of legal conclusions. Id. Thus, “[t]o 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.’” Id. (quoting Twombly, 550 U.S. at 570).
Plausibility requires “more than a sheer possibility that a
defendant has acted unlawfully,” but it is not a “probability
requirement.” Id. (quoting Twombly, 550 U.S. at 556). A
claim crosses from conceivable to plausible when it contains
factual allegations that, if proved, would “allow[] the court to
draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Id.
The Twombly Court stated that a well-pleaded complaint
should be allowed to proceed “even if it strikes a savvy judge
that actual proof of [the alleged] facts is improbable, and that
a recovery is very remote and unlikely.” 550 U.S. at 556
(internal quotation marks omitted). A complaint survives a
11
motion to dismiss even “[i]f there are two alternative
explanations, one advanced by [the] defendant and the other
advanced by [the] plaintiff, both of which are plausible.”
Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). It is
inevitable that the defendant’s version will sometimes prove
to be the true one, but that does not relieve defendants of their
obligation to respond to a complaint that states a plausible
claim for relief, and to participate in discovery.
Defendants moved to dismiss certain tort claims based on
sovereign immunity. As it must on motions to dismiss for
failure to state a claim, a district court considering a motion to
dismiss for lack of subject matter jurisdiction accepts the
allegations of the complaint as true. Herbert v. Nat’l Acad. of
Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992). Where
necessary to resolve a jurisdictional challenge under Rule
12(b)(1), “the court may consider the complaint supplemented
by undisputed facts evidenced in the record, or the complaint
supplemented by undisputed facts plus the court’s resolution
of disputed facts.” Id. Here, however, the district court did
not purport to resolve any disputed facts, nor did it give notice
to the parties of any intention to do so. We therefore review
de novo the district court’s dismissal on jurisdictional
grounds, taking the allegations of the complaint as true. Id.
III. Contract Claims
Banneker claims that WMATA breached its Term Sheet
because Graham, acting as WMATA’s agent, negotiated with
LaKritz Adler in violation of Banneker’s exclusivity rights.
Banneker also asserts that WMATA violated the implied
covenant of good faith and fair dealing by unilaterally
abandoning negotiations before a final agreement was
12
reached. 4 We hold that Banneker adequately stated both
claims and accordingly reverse.
A. Breach of the Exclusivity Provision
WMATA concedes that the Term Sheet bound it to
negotiate exclusively with Banneker, but argues that it never
negotiated with LaKritz Adler and so never breached the
agreement. The complaint’s allegations make a powerful
circumstantial case to the contrary: WMATA, through
Graham, communicated frequently and in detail with LaKritz
Adler concerning the Florida Avenue site. Graham leaked to
LaKritz Adler confidential information about Banneker’s
plans so that LaKritz Adler could develop a competitively
attractive alternative to Banneker’s proposal. LaKritz Adler
called WMATA staff directly and, during that call, pressed its
interest in the project subject to the Term Sheet and discussed
Banneker’s confidential bid information. Am. Compl. ¶ 261.
Before Banneker’s Term Sheet expired, Graham sought to
formally solicit bids from Banneker’s competitors, including
LaKritz Adler, during the exclusivity period. Though
WMATA did not follow through, it is reasonable to infer
from all of those allegations taken together that Graham
negotiated with LaKritz Adler regarding its possible
development of the Florida Avenue site, in violation of the
exclusivity term of WMATA’s agreement with Banneker.
WMATA seizes on separate allegations that Graham also
helped LaKritz Adler in its efforts to become part of
Banneker’s development team. WMATA argues that neither
Graham nor any other WMATA personnel entered into
negotiations with LaKritz Adler to replace Banneker—only to
4
In the district court, Banneker also claimed that the Term Sheet
was a contract for conveyance of the property, but it does not press
that claim on appeal.
13
see whether LaKritz Adler might join Banneker’s team.
Allegations pointing to Graham’s efforts to help LaKritz
Adler benefit by getting a piece of Banneker’s projected work
are not, however, inconsistent with allegations that Graham
simultaneously sought to help LaKritz Adler to displace
Banneker from the project altogether. Banneker is entitled to,
and does, allege that Graham did both.
B. Breach of the Implied Covenant of Good Faith and Fair
Dealing
Banneker’s second contract claim is that WMATA
breached its obligation under the Term Sheet to negotiate in
good faith by interposing terms and conditions extraneous to
the Term Sheet and unilaterally abandoning negotiations
toward a final agreement. The allegations of Banneker’s
complaint make clear that it had a contract that imposed on
the parties a duty to negotiate in good faith. The parties’
Term Sheet, although preliminary to any binding development
contract, was itself a binding contract to negotiate. That
acknowledged, contractually binding obligation to negotiate
carried with it the implied duty to do so in good faith. See
Allworth v. Howard Univ., 890 A.2d 194, 201 (D.C. 2006);
Restatement (Second) of Contracts § 205 (1981); 23 Williston
on Contracts § 63:22 (4th ed.).
Under an often-cited typology of preliminary agreements
to negotiate final agreements, the Term Sheet was a “Type II”
agreement, or one that “expresses mutual commitment to a
contract on agreed major terms, while recognizing the
existence of open terms that remain to be negotiated.”
Teachers Ins. & Annuity Ass’n of Am. v. Tribune Co., 670 F.
Supp. 491, 498 (S.D.N.Y. 1987) (Leval, J.); see Stanford
Hotels Corp. v. Potomac Creek Associates, L.P., 18 A.3d 725,
735-36 (D.C. 2011) (applying Tribune). In contrast to a Type
14
I agreement, which is “preliminary only in form” because the
parties have reached “complete agreement” and need only to
formalize it, Tribune, 670 F. Supp. at 498, parties to a Type II
agreement have not reached complete agreement, but “can
bind themselves to a concededly incomplete agreement in the
sense that they accept a mutual commitment to negotiate
together in good faith in an effort to reach final agreement
within the scope that has been settled in the preliminary
agreement,” id.
The Term Sheet on its face is manifestly a Type II
agreement. The Term Sheet recites that it is “intended to
summarize the principal terms of a proposal being considered
by” the parties, and to express the parties’ “wish to negotiate a
Definitive Agreement.” Term Sheet, Preamble. It states that
its “binding effect” is to give Banneker “the exclusive right to
negotiate a Definitive Agreement with WMATA.” Id. § 12.
And it sets forth many of the material terms of the deal,
including the definition of the property to be leased, the base
rent for the property, formulas for how the rent would change
based on time, occupancy, and the density of the
development, the security deposit Banneker would pay upon
execution of a final agreement, an outline of the
improvements Banneker intended to build on the property,
and the corporate structure of the development team.
Through the Term Sheet, Banneker and WMATA established
“a general framework within which they could proceed while
preserving flexibility in the face of future uncertainty,” Brown
v. Cara, 420 F.3d 148, 157-58 (2d Cir. 2005), and after
executing the Term Sheet at significant expense to Banneker,
they proceeded under that rubric.
As a Type II agreement, the Term Sheet did not
guarantee the parties would reach complete agreement, but it
was nonetheless binding. Type II agreements contemplate
15
that negotiations may fail, either because “good faith
differences in the negotiation of the open issues may prevent a
reaching of final contract” or because the parties mutually
abandon the negotiation. Tribune, 670 F. Supp. at 498. But a
duty to negotiate in good faith under a Type II agreement is
violated by a party unilaterally “renouncing the deal,
abandoning the negotiations, or insisting on conditions that do
not conform to the preliminary agreement.” Id.; see also
Stanford Hotels, 18 A.3d at 735-36 (quoting Tribune).
Banneker’s allegations that Graham directed cessation
of negotiations and interjected new terms and conditions that
were not part of Banneker’s Term Sheet suffice to show lack
of good faith. According to the complaint, Banneker and
WMATA staff reached final agreement on the open terms
multiple times over twenty months, but the WMATA Board
repeatedly altered the deal, delayed it, and ultimately tabled it
for the purpose of letting the negotiation period “time out”
with no final agreement. Those allegations show that
WMATA “simply refused to proceed further” in the
negotiations, even though it had no justification and no good
faith disagreement had arisen with Banneker—conduct
inconsistent with the duty of good faith. United House of
Prayer for All People v. Therrien Waddell, Inc., 112 A.3d
330, 344 (D.C. 2015); see also L-7 Designs, Inc. v. Old Navy,
LLC, 647 F.3d 419, 430-31 (2d Cir. 2011). Much of
Graham’s alleged misconduct occurred before Banneker and
WMATA executed the Term Sheet, but Graham also acted to
interfere with Banneker’s ability to secure a final agreement
during the twenty months of negotiations after the Term Sheet
was signed. He pressured Banneker to drop a development
partner in favor of LaKritz Adler, instructed WMATA staff to
stop or delay negotiations, and explored the possibility of
soliciting more bids.
16
The decisions in Tribune, Stanford Hotels, and United
House of Prayer are instructive. In Tribune, a prospective
borrower’s commitment letter established a Type II
agreement to negotiate. 670 F. Supp. at 496, 499. When the
borrower “broke off negotiations, declining to negotiate
further unless the lender agreed” to a new term not anticipated
by the commitment letter, the court found a breach. Id. at
491, 506. The court noted that the borrower had reserved to
its Board of Directors the right to approve or reject the loan,
but held that the borrower could not abuse that condition by
going through the motions of negotiating the loan to the
parties’ mutual satisfaction, only to “defeat its obligations
under the binding agreement of commitment merely by
having its Board do nothing.” Id. at 503. Similarly, in
Stanford Hotels, the parties entered an agreement to negotiate
the final purchase of a hotel. The seller thereby “obligated
itself to negotiate exclusively and in good faith with [the
purchaser] and to sign a Definitive Agreement if they were
able to agree on terms.” 18 A.3d at 734-35. When the
purchaser showed itself “willing to concede” on all of the
open issues “if necessary to close on the sale,” id. at 731 n.5,
the seller who responded by holding out for a more
advantageous alternative, stringing the purchaser along, and
ultimately abandoning the negotiations, was in breach, id. at
731-33. In United House of Prayer, a party violated an
enforceable Type II agreement when it “terminated
discussions . . . without offering any explanation of what
terms its lawyer purportedly found unacceptable and by
declining to negotiate . . . or even to discuss the matter,” even
though the counterparty communicated its willingness to
discuss any remaining issues or concerns. 112 A.3d at 344.
So too, here: Banneker’s allegations that Graham, in his
capacity as an agent of WMATA, acted to delay, interfere
with, and ultimately defeat a final development agreement
17
between WMATA and Banneker adequately state a claim for
breach of the implied covenant of good faith and fair dealing.
Further, we find no relevance, in the context of the agreement
at issue in this case, that WMATA’s Board reserved for itself
the right to approve or disapprove a final agreement.
WMATA’s Board approved the Term Sheet, which obligated
WMATA to negotiate in good faith. As in Tribune, because
WMATA had committed to negotiate the project to the
parties’ mutual satisfaction, it could not then “defeat its
obligations under the binding agreement of commitment
merely by having its Board do nothing.” Tribune, 670 F.
Supp. at 503.
WMATA responds, relying exclusively on the Bondi
Report, that it was not required to extend the negotiation
period any further because the parties had reached an
intractable, good faith impasse over contract terms. WMATA
attached the Bondi Report to its motion to dismiss. In
WMATA’s view, the Bondi Report exonerates it of any claim
of failure to negotiate in good faith because the report pegged
the parties’ failure to reach agreement under the Term Sheet
on “business reasons.” In particular, the report concluded
that, while Graham acted unethically, there were good faith
disagreements between Banneker and WMATA and other
business reasons that prevented them from reaching a final
development agreement. See, e.g., Bondi Rpt., J.A. 140, at
50.
Defendants argue that we must assume the veracity of the
Bondi Report, even at the pleading stage, by virtue of the
incorporation-by-reference doctrine. Banneker’s complaint
refers to the Bondi Report, commissioned by WMATA and
released in 2012, as a source of Banneker’s knowledge of
certain facts, such as Defendants’ “behind-the-scenes and
closed-door actions.” Am. Compl. ¶ 81. Banneker did not
18
attach the report to its complaint or purport to endorse its
overall analysis. Defendants contend that we must treat the
report as adopted in toto by Banneker. We disagree.
Federal Rule of Civil Procedure 10(c) permits a plaintiff
to attach an exhibit to the complaint, rendering the exhibit
“part of the pleading for all purposes.” Incorporation by
reference can also amplify pleadings where the document is
not attached by the plaintiff, but is “referred to in the
complaint and [] integral to [the plaintiff’s] claim.” Kaempe
v. Myers, 367 F.3d 958, 965 (D.C. Cir. 2004). A district court
may consider a document that a complaint specifically
references without converting the motion into one for
summary judgment. See id.; 5A Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1327 (4th
ed. 2014); see also Fed. R. Civ. P. 12(d).
The prototypical incorporation by reference occurs where
a complaint claims breach of contract, and either party
attaches to its pleading an authentic copy of the contract itself.
Because the contract is a legally operative document that is a
necessary element of the claim, the contract is “integral” to
the plaintiff’s claim—it “form[s] the basis for a claim or part
of a claim.” Carroll v. Yates, 362 F.3d 984, 986 (7th Cir.
2004) (internal quotation marks omitted). 5 A pleading’s
5
Defendants cite several cases similarly involving incorporation of
documents upon which the plaintiffs’ claims were based, the
authenticity of which was not in question. See Clorox Co. Puerto
Rico v. Proctor & Gamble Commercial Co., 228 F.3d 24, 32 (1st
Cir. 2000) (incorporating advertising copy alleged to have been
misleading); In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1426 (3d Cir. 1997) (incorporating annual report where
plaintiffs’ claim rested on report’s failure to disclose facts); Kramer
v. Time Warner Inc., 937 F.2d 767, 773-74 (2d Cir. 1991)
(incorporating documents alleged to contain misrepresentations
19
reference to even a part of a fully integrated and authentic
contract thus incorporates the contract as a whole into the
complaint.
The incorporation by reference doctrine has limits,
however. If a document itself comes before the court only as
an attachment to the defendant’s motion to dismiss, it may not
be appropriate for the court to treat the entire document as
incorporated into the complaint. Some of our sister circuits
have rejected the “fantastic argument” that “all facts
contained in any attachments to a complaint are automatically
deemed facts alleged as part of the complaint.” Carroll, 362
F.3d at 986 (internal quotation marks and alterations omitted).
Rule 10(c) “does not require a plaintiff to adopt every word
within the exhibits as true for purposes of pleading simply
because the documents were attached to the complaint to
support an alleged fact.” N. Ind. Gun & Outdoor Shows, Inc.
v. City of South Bend, 163 F.3d 449, 454-56 (7th Cir. 1998);
see also Jones v. City of Cincinnati, 521 F.3d 555, 561 (6th
Cir. 2008); West-Anderson v. Missouri Gaming Co., 557 F.
App’x 620, 622 (8th Cir. 2014). For example, the Second
Circuit has explained that a written contract “will defeat
invocation of the Statute of Frauds, and a document that
discloses what the complaint alleges it concealed will defeat
the allegation of concealment,” but a libel plaintiff who
attaches to her complaint the allegedly libelous writing does
not adopt the libelous statement as true, thereby defeating her
own claim. Gant v. Wallingford Bd. of Educ., 69 F.3d 669,
674 (2d Cir. 1995). When considering incorporation, it is
necessary to consider “why a plaintiff attached the
forming basis of plaintiff’s claim); Hinton v. Corrections Corp. of
Am., 624 F. Supp. 2d 45, 47 (D.D.C. 2009) (incorporating contract
where plaintiff’s case rested on breach of contractual duty).
20
documents, who authored the documents, and the reliability of
the documents.” N. Ind. Gun, 163 F.3d at 455.
In evaluating Banneker’s claims, we will not rely on
those portions of the Bondi Report not adopted by Banneker.
Banneker’s claims here are not based on the Bondi Report.
The report is not necessary to Banneker’s claims. It was
commissioned by a defendant and its reliability is unknown. 6
Banneker referred to some of the report’s recitations to show
how it learned some facts in the complaint, but it did not
purport to and was not required to adopt the factual contents
of the report wholesale.
Ignoring, as we must at the pleading stage, the opinions
and conclusions of the Bondi Report, we find nothing in the
complaint substantiating WMATA’s position that Banneker
has failed to state a claim for breach of the duty to negotiate
in good faith.
IV. Tortious Interference and Conspiracy Claims against
LaKritz Adler
Banneker asserts claims against LaKritz Adler for
tortious interference with contract, tortious interference with
prospective business advantage, and civil conspiracy. To
state claims for tortious interference under District of
Columbia law, a plaintiff must allege the existence of a
6
Defendants would have been entitled to rely on the Bondi Report
to show any inaccuracy in Banneker’s allegations about its
contents, because a referenced document may always be read “to
evidence what it incontestably shows.” Gant, 69 F.3d at 674
(emphasis added). But that is not the same as treating the report’s
contents as though they were alleged by Banneker itself, and thus
taking them all as true. And Defendants do not assert, in any case,
that Banneker has mischaracterized the Bondi Report.
21
contract or business expectancy, the defendant’s knowledge
of the contract or business expectancy, intentional
interference causing the breach of the contract or termination
of the business expectancy, and damages. See Sturdza v.
United Arab Emirates, 281 F.3d 1287, 1305 (D.C. Cir. 2002);
Bennett Enters., Inc. v. Domino’s Pizza, Inc., 45 F.3d 493,
499 (D.C. Cir. 1995). Banneker argues that LaKritz Adler,
acting in concert with Graham, (1) interfered with its Term
Sheet by causing WMATA to breach its exclusivity and good
faith obligations, and (2) interfered with its business
expectancy in a final agreement by causing WMATA to
abandon negotiations. The district court dismissed both
tortious interference claims because it concluded that
Banneker had alleged neither a valid contract nor a valid
business expectancy. Banneker II, 19 F. Supp. 3d at 248-51.
We hold that Banneker adequately stated its claims and
therefore reverse.
First, our resolution of the contract claims establishes that
Banneker alleges the existence of a valid contract. The
district court held that the Term Sheet was not enforceable.
As we have discussed, however, the Term Sheet was a valid
Type II agreement that bound WMATA to negotiate
exclusively and in good faith with Banneker.
Banneker also alleges a valid business expectancy in the
completion of a final development agreement. A business
expectancy “must be commercially reasonable to anticipate”
before its loss may be actionable. Browning v. Clinton, 292
F.3d 235, 242 (D.C. Cir. 2002) (internal quotation marks
omitted). In holding that Banneker lacked a valid business
expectancy, the district court reasoned that, after signing the
Term Sheet, Banneker could “only hope[] to enter into a final
contract with WMATA” because the possibility that the
Board would approve a final deal “was too remote to establish
22
a valid business expectancy.” Banneker II, 19 F. Supp. 3d at
249. The district court relied extensively on Carr v. Brown,
395 A.2d 79, 82 (D.C. 1978). There, a real estate developer
applied for a permit to relocate a portion of an alley and for a
zoning variance that would enable him to develop his
property. When another property owner and his attorney
expressed their opposition and “incite[d] . . . area residents to
oppose the alley closing and relocation,” the developer sued
them for losses caused by the resultant delay in approval of
the permit. Id. at 83. The D.C. Court of Appeals held that the
developer’s business expectancy was “too remote, depending
as [it does] on governmental approval,” particularly because
the opponents to the permit were “participating in procedures
fixed by statute which specifically invite opposition.” Id. at
84. Carr itself distinguishes its facts from the type of
expectancy at issue here, as it expressly does not purport to
apply to “a claim by the plaintiff that he has an expectancy of
doing business with a governmental body and that expectancy
is unjustifiably interfered with by the defendant.” Id.
Here, by contrast, Banneker was doing business with
WMATA. LaKritz Adler is alleged to have interfered with a
prospective final agreement. We hold that it was
commercially reasonable for Banneker to anticipate the
consummation of the deal anticipated by the Term Sheet.
Banneker had far more than a “hope” of closing the deal; the
very purpose of the Term Sheet was to produce a final
agreement. Indeed, Banneker and WMATA staff reached
agreement many times. WMATA staff repeatedly
recommended approval. And the Board had in the past rarely
voted against a development agreement recommended by the
staff. On these facts, as alleged, Banneker had a justified
expectation that a development agreement would be finalized.
23
Banneker also adequately alleged the remaining elements
of tortious interference. Banneker alleged that LaKritz Adler
had knowledge of its Term Sheet, and therefore of its
exclusivity rights and expectancy in a final agreement, and
Banneker has also made the requisite “strong showing of
intent,” Bennett, 45 F.3d at 499 (internal quotation marks
omitted), or “bad faith,” Sorrells v. Garfinckel’s, Brooks
Bros., Miller & Rhoads, 565 A.2d 285, 292 (D.C. 1989)
(internal quotation marks omitted). The allegations that
LaKritz Adler and Graham embarked on a long campaign to
induce WMATA to partly or wholly displace Banneker
suffice to plead causation. And Banneker alleged that the
campaign to undermine its bid caused WMATA to breach its
exclusivity and good faith obligations, and ultimately cost
Banneker the project. 7
LaKritz Adler argues that Banneker failed adequately to
allege that LaKritz Adler’s conduct was the cause of any
breach of the Term Sheet or WMATA’s abandonment of
negotiations because it is Graham who is alleged to have been
the “primary wrongdoer in the entire affair.” Appellee Br. 53
(quoting Appellant Br. 32). We disagree. Banneker alleges
that LaKritz Adler “used [its] relationship with Graham to
induce Graham and WMATA’s staff and Board to breach its
contract to negotiate exclusively with Banneker,” Am. Compl.
¶ 270, and to cause WMATA to abandon negotiations.
District of Columbia courts have adopted the Restatement’s
7
We reject the argument made by Defendants that LaKritz Adler
could not have caused the failure of negotiations because WMATA
was an independent decision maker. The crux of Banneker’s claim
against LaKritz Adler is that its conspiracy with Graham, a
WMATA Board Member, impaired Banneker’s competitiveness
and prompted the Board to end the negotiations without
consummating a final agreement. The merits of that theory must
await the proof.
24
formulation of the claim of tortious interference. Havilah
Real Prop. Servs., LLC v. VLK, LLC, 108 A.3d 334, 345
(D.C. 2015). The Restatement recognizes Banneker’s
inducement theory:
One who intentionally and improperly interferes with
the performance of a contract . . . between another
and a third person by inducing . . . the third person
not to perform the contract, is subject to liability to
the other for the pecuniary loss resulting to the other
from the failure of the third person to perform the
contract.
Onyeoziri v. Spivok, 44 A.3d 279, 286-87 (D.C. 2012)
(second ellipsis added) (quoting Restatement (Second) of
Torts § 766 (1979) (“Restatement”)); see also Restatement §
766B (defining tortious interference with prospective business
advantage to include interference consisting of “inducing . . .
a third person not to enter into or continue the prospective
relation).
In support of its claim of tortious interference against
LaKritz Adler, Banneker alleges a circumstantial case that
LaKritz Adler, both by its direct actions and its inducement of
Graham, undermined the exclusivity term and helped to
scuttle any final development agreement with WMATA.
Banneker alleges that LaKritz Adler was in frequent
communication with Graham, that Graham leaked to LaKritz
Adler confidential bid information, that LaKritz Adler,
knowing that information to be confidential, used it in a
phone call with WMATA, and that Graham sought to re-open
the bidding process in the middle of Banneker’s exclusivity
period. In addition, Banneker alleges that LaKritz Adler was
a major contributor to Graham’s campaigns and projects, that
it made contributions during Banneker’s exclusivity period,
25
Am. Compl. ¶ 26, and that, despite knowing and
understanding the nature of WMATA’s exclusivity
obligations, LaKritz Adler exercised its financial influence
over Graham to induce WMATA to breach the exclusivity
clause of the Term Sheet. Finally, Banneker alleges that
LaKritz Adler made repeated calls to WMATA staff for the
purpose of disparaging Banneker, id. ¶ 272, that it interfered
in Banneker’s attempts to develop the Florida Avenue site
alongside a parcel owned by Howard University, and that it
formulated a plan with Graham to delay and obstruct
Banneker’s negotiations with WMATA. At the pleading
stage, those allegations, taken together, state a claim for
inducement of WMATA’s breach of the exclusivity term. See
supra Part III.A. (discussing breach of contract claim).
Banneker also alleges that LaKritz Adler’s conduct and its
inducement of Graham’s conduct resulted in WMATA’s
ultimate abandonment of negotiations. Given the minimal
showing required at this early procedural stage, those
allegations suffice to state a claim for tortious interference
with prospective business advantage.
Contrary to LaKritz Adler’s position, Banneker need not
allege inducement through egregious means, such as libel,
slander, coercion, or disparagement. See Appellee Br. 55.
“[I]nducement may be any conduct conveying to the third
person the actor’s desire to influence him not to deal with the
other.” Restatement § 766 cmt. k. Such conduct may include
“intimidation,” but it also includes “persuasion,” such as the
persuasion coupled with financial influence alleged here. Id.
§ 766 cmt. h. Even were egregious means required,
moreover, Banneker alleged not only that LaKritz Adler
stayed in frequent communication with Graham, but also that
it called WMATA staff “every few months to disparage
Banneker while attempting to convince WMATA” to give
LaKritz Adler the project. Am. Compl. ¶ 272.
26
Nor may LaKritz Adler claim as a defense that it was
merely pursuing its “financial interest.” Appellee Br. 57. In
the District of Columbia, the defendant bears the burden of
establishing legal justification or privilege for the inducement
of a breach. Onyeoziri, 44 A.3d at 287. Economic
competitors are free to use means that are not wrongful to
cause third parties not to enter into prospective contractual
relations “or not to continue an existing contract terminable at
will.” Restatement § 766B. “A party may not, however,
under the guise of competition actively and affirmatively
induce the breach of a competitor’s contract in order to secure
an economic advantage over that competitor.” Dunn v. Cox,
163 A.2d 609, 610 (D.C. 1960) (internal quotation marks
omitted); see also Restatement § 766B cmt. h (“[W]hen B is
legally obligated to deal with C, A is not justified by the mere
fact of competition in inducing B to commit a breach of his
legal duty.”).
Here, Banneker alleges that its contract with WMATA
was not terminable at will. The Term Sheet secured to
Banneker an exclusive negotiation period designed to bring
about a final agreement. LaKritz Adler allegedly knew of the
exclusivity term, but induced WMATA, through Graham, to
breach that term. And LaKritz Adler’s means of
inducement—financial influence and persuasion—would, if
substantiated, suffice to make out a claim against LaKritz
Adler. See Chaves v. Johnson, 335 S.E.2d 97, 103 (Va.
1985); cf. Angle v. Chicago, St. P., M. & O. Ry. Co., 151 U.S.
1, 14 (1894) (citing Lumley v. Gye, 2 El. & Bl. 216, 118, Eng.
Rep. 749 (Q.B. 1853)); Beekman v. Marsters, 80 N.E. 817,
819 (Mass. 1907).
We conclude that Banneker, at this early procedural
stage, has stated claims for interference with contract and
27
prospective business advantage. 8 We therefore reverse the
district court’s dismissal of Banneker’s tortious interference
claims against LaKritz Adler. Because LaKritz Adler does
not argue that the conspiracy claim is otherwise inadequately
stated, we also reverse the dismissal of that claim.
V. Tort Claims and Sovereign and Official Immunity
Defenses
Banneker asserts a fraud claim against WMATA,
alleging it misled Banneker as to its chances of securing
Board approval. Banneker also asserts claims for tortious
interference and civil conspiracy against Graham for his
attempts to undermine Banneker’s bid. The district court
8
We also reject LaKritz Adler’s argument that its conduct is
shielded by the Noerr-Pennington doctrine, “under which
petitioning the Government for redress of grievances, whether by
efforts to influence legislative or executive action or by seeking
redress in court, is immune from liability.” Covad Commc’ns Co.
v. Bell Atl. Corp., 398 F.3d 666, 677 (D.C. Cir. 2005). To our
knowledge, we have never applied the Noerr-Pennington doctrine,
which arose in the context of the antitrust laws, to bar liability for
common law torts; Defendants cite no case to the contrary. Cf.
Whelan v. Abell, 48 F.3d 1247, 1254 (D.C. Cir. 1995). Even were
we to do so now, and we take no position on the matter, the
doctrine does not apply to parties “engaged in private commercial
activity, no element of which involved seeking to procure the
passage or enforcement of laws.” Cont’l Ore Co. v. Union Carbide
& Carbon Corp., 370 U.S. 690, 707 (1962). “Private efforts to
influence governmental bodies acting in an economic rather than a
political framework, e.g., a governmental procurement agency,
have been held unprotected” because they are business, not
political, activity. Fed. Prescription Serv., Inc. v. Am. Pharm.
Ass’n, 663 F.2d 253, 263 (D.C. Cir. 1981); see also George R.
Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 424 F.2d 25, 33
(1st Cir. 1970).
28
dismissed those claims for lack of subject matter jurisdiction
on the ground that WMATA and Graham enjoy immunity
from suit. We affirm as to WMATA but vacate and remand
as to Graham.
A. WMATA’s Sovereign Immunity From Claims of Fraud
During Negotiations
Banneker alleges that it relied to its detriment on
WMATA’s rosy predictions of Banneker’s chances of
securing a final deal, and that WMATA should have disclosed
Graham’s attempts to prevent the deal from closing. 9 The
district court held that Banneker’s fraud claim against
WMATA was barred by sovereign immunity. We affirm.
WMATA, a quasi-governmental entity created by an
interstate compact, is protected against common law tort
actions by sovereign immunity. See KiSKA Construction
Corp., N.S.A. v. WMATA, 321 F.3d 1151, 1158 (D.C. Cir.
2003). District courts lack subject matter jurisdiction to enter
judgment against WMATA unless its limited waiver of
immunity applies. Id. Section 80 of the WMATA Compact
waives immunity for contract claims and claims of torts
“committed in the conduct of any proprietary function,” but
not torts committed “in the performance of a governmental
function.” D.C. Code § 9-1107.01(80); see also KiSKA, 321
F.3d at 1158. “Because it is difficult to distinguish between
public and private sector functions with any precision,” we
ask whether the claim seeks to impose liability for conduct
that is discretionary, in which case the claim is barred by
immunity, or ministerial, in which case the claim may
proceed—a dichotomy we have imported from the Federal
9
Banneker’s fraud claim against WMATA below was broader. We
address here only the narrowed theory of liability for fraud that
Banneker presses against WMATA on appeal.
29
Tort Claims Act. Beebe v. WMATA, 129 F.3d 1283, 1287
(D.C. Cir. 1997); see also Burkhart v. WMATA, 112 F.3d
1207, 1216 (D.C. Cir. 1997). 10 Discretionary duties generally
“involve[] judgment, planning, or policy decisions” and are
immunized as reflecting sovereign choices. KiSKA, 321 F.3d
at 1159 n.9 (internal quotation marks omitted). Merely
ministerial duties, which can “involve[] enforcement or
administration of a mandatory duty at the operational level,
even if professional expert evaluation is required,” are treated
as not exercising distinctively sovereign powers and so are
not immunized. Id. (internal quotation marks omitted).
We apply a two-part test to determine whether
WMATA’s conduct is immunized as discretionary. Because
“sovereign immunity does not bar suits based on an
employee’s failure to follow [a] prescribed course of
conduct,” we ask first whether “any statute, regulation, or
policy specifically prescribes a course of action for an
employee to follow.” Id. at 1159 (internal quotation marks
omitted). If the tort claim arises from a WMATA employee’s
failure to act as the law specifically prescribes, the conduct is
not shielded by immunity. If the law leaves the conduct in
question to the official’s discretion, we then ask “whether the
exercise of discretion is grounded in social, economic, or
political goals.” Id. (internal quotation marks omitted). Only
actions grounded in such discretion retain “governmental
function” immunity.
Our decision in KiSKA governs Banneker’s fraud claim
against WMATA. There, a contractor on a tunnel project
10
We have also held that “quintessential” governmental functions
such as law enforcement are entitled to immunity. See Beebe, 129
F.3d at 1287. WMATA concedes that Banneker’s fraud claim is
not directed at the performance of a quintessential government
function.
30
sued WMATA for fraud, claiming that WMATA’s Invitation
for Bids (IFB) failed to disclose the report of a technical
expert that WMATA had retained in developing the IFB’s
requirements. Id. at 1154-55. The contractor alleged that its
project cost double its bid, and that it would have bid
differently had WMATA disclosed the expert’s report
recommending more extensive measures for keeping the
tunnel dry. Id. at 1155-56. In the absence of “any statute,
regulation or policy that ‘specifically prescribe[d]’ the content
of WMATA’s IFBs,” and because the duties of good faith and
fair dealing and of accurate project description did not
“specifically prescribe” that content, the court held that
WMATA retained “broad discretion to determine the contents
of the tunnel project’s bid package.” Id. at 1160. WMATA
was thus immune.
The same is true here. The parties agree that WMATA
has broad discretion to select appropriate bidders and to
negotiate final agreements. Banneker argues only that
WMATA lacked the discretion to lead bidders to believe they
would receive approval from the Board when, in fact, one of
its Board Members was actively working to prevent it.
Nothing of which we are aware, however, so limits
WMATA’s discretion. See also Greenbelt Ventures LLC v.
WMATA, 481 F. App’x 833, 839-40 (4th Cir. 2012) (holding
no statute, regulation, or policy governed WMATA’s course
of conduct while negotiating joint development agreement);
Monument Realty LLC v. WMATA, 535 F. Supp. 2d 60, 78
(D.D.C. 2008). Banneker invokes the WMATA Standards of
Conduct for Board Members, but it does not argue that those
standards apply to WMATA staff. It is only the conduct of
the staff that Banneker challenges with its fraud claim.
Banneker does not contend that WMATA’s challenged
conduct, if discretionary, is nonetheless not immunized.
31
Banneker apparently accepts that whatever discretion
WMATA exercises in selecting bidders and negotiating
agreements is the kind of discretion that is “susceptible to
policy judgment,” and so immunized. We therefore affirm
the district court’s dismissal of Banneker’s claim for fraud
against WMATA because it is barred by sovereign immunity.
B. Graham’s Official Immunity Defense to Tort and
Conspiracy Claims
Graham’s immunity is a more complicated matter. As it
does against LaKritz Adler, Banneker asserts claims against
Graham personally for tortious interference with prospective
business advantage and contract, and for civil conspiracy. 11
By virtue of his role as a member of WMATA’s Board,
Graham enjoys absolute official immunity for discretionary
conduct within the scope of his office. The district court
dismissed all of Banneker’s claims against Graham as barred
by immunity. We find that the district court committed three
errors: The court failed to apply federal common law to
Graham’s claim of immunity, it failed to place the burden on
Graham to establish his entitlement to immunity, and it
analyzed Graham’s conduct at too high a level of generality.
Because the record and briefing before us do not enable us
definitively to apply the correct immunity analysis to the
claims against Graham, we vacate the district court’s
dismissal of the claims against Graham and remand for
further proceedings.
“When officials are threatened with personal liability for
acts taken pursuant to their official duties, they may well be
induced to act with an excess of caution or otherwise to skew
their decisions in ways that result in less than full fidelity to
11
Banneker asserted the same claims against Graham in his official
capacity, but does not press those claims on appeal.
32
the objective and independent criteria that ought to guide their
conduct.” Forrester v. White, 484 U.S. 219, 223 (1988).
Absolute official immunity is thus meant “not to protect an
erring official, but to insulate the decisionmaking process
from the harassment of prospective litigation.” Westfall v.
Erwin, 484 U.S. 292, 295 (1988). Even so, immunity “comes
at a great cost,” as it contravenes “the basic tenet that
individuals be held accountable for their wrongful conduct.”
Id. The Supreme Court “has generally been quite sparing in
its recognition of claims to absolute official immunity,”
Forrester, 484 U.S. at 224, and has held absolute official
immunity “justified only when the contributions of immunity
to effective government in particular contexts outweigh the
perhaps recurring harm to individual citizens,” Westfall, 484
U.S. at 295-96 (internal quotation marks omitted). We are
careful not to “lose sight of the purposes of the official
immunity doctrine” when determining if an official is, in the
context of a particular case, entitled to absolute immunity. Id.
at 299-300.
We have repeatedly held that the federal common law of
absolute immunity governs the scope of immunity for
WMATA officials. E.g., Griggs v. WMATA, 232 F.3d 917,
920 (D.C. Cir. 2000); Beebe, 129 F.3d at 1288. The district
court here applied the law of the District of Columbia to
determine whether Graham is entitled to absolute immunity.
See Banneker II, 19 F. Supp. 3d at 246-48. That holding is in
error, and requires reversal to the extent that District of
Columbia immunity law produced a different result than that
which would have obtained under federal law.
33
In weighing claims of absolute immunity, we apply the
two-part test of Westfall v. Erwin. 12 WMATA officials enjoy
absolute immunity when their conduct falls “within the scope
of their official duties and the conduct is discretionary in
nature.” Westfall, 484 U.S. at 297-98; see also Beebe, 129
F.3d at 1289. The Supreme Court has endorsed a “functional”
approach to the inquiry. Forrester, 484 U.S. at 224; see also
Barr v. Matteo, 360 U.S. 564, 573-74 (1959). The burden of
establishing immunity must be borne by the official claiming
it. Westfall, 484 U.S. at 299.
1. Scope of Official Duties
Banneker asserts that all of Graham’s allegedly tortious
conduct fell beyond the scope of his official duties, and is thus
not immunized under Westfall. 13 Our inquiry into the scope
of an official’s duties depends “not [on] the title of [the]
office but the duties with which [the official] is entrusted.”
Barr, 360 U.S. at 573 (internal quotation marks omitted).
Conduct that is at least “within the outer perimeter of [an
official’s] line of duty” is shielded by absolute immunity. Id.
at 575; see also Griggs, 232 F.3d at 922. By contrast, an
official loses the protection of immunity when he crosses that
line and acts in a manner that is “manifestly or palpably
beyond his authority.” Simons v. Bellinger, 643 F.2d 774,
12
Westfall was superseded by statute for claims brought under the
Federal Tort Claims Act, but still applies to claims of personal
liability against WMATA officials. See Beebe, 129 F.3d at 1289.
13
Banneker acknowledges the apparent tension between its theories
that Graham acted within the scope of his employment for purposes
of the contract claims against WMATA and beyond the scope of his
official duties for purposes of immunity from his own personal
liability for tort. We need not resolve that tension now, at the
pleading stage, because Banneker is permitted to plead both in the
alternative.
34
786 (D.C. Cir. 1980) (quoting Spalding v. Vilas, 161 U.S.
483, 498 (1896)). One way that an official acts manifestly
beyond his authority is through the use of “manifestly
excessive means,” even if he does so in the conduct of duties
otherwise within his official purview. McKinney v. Whitfield,
736 F.2d 766, 769-70 (D.C. Cir. 1984) (emphasis omitted); cf.
Butz v. Economou, 438 U.S. 478, 495 (1978). 14
The district court considered all of Graham’s alleged
tortious conduct immune because it conceived of the inquiry
at too high a level of generality. Rather than analyzing each
challenged act, the district court read Banneker’s complaint as
attempting to impose liability on Graham for his
“involvement[] as a WMATA Board Member . . . in setting
contract terms for the development of the Site.” Banneker II,
19 F. Supp. 3d at 248. The appropriate focus, however, is on
the relationship between “the act complained of” and the
corresponding “matters committed by law to [the official’s]
control or supervision.” Barr, 360 U.S. at 573 (internal
quotation marks omitted). At a high enough level of
generality, almost any act that has any relationship to an
overarching duty, such as the duty to vote on real estate
projects, will be immunized. We must instead evaluate the
relationship of each of the challenged acts to Graham’s
relevant, official duties. With respect to each act, we ask
14
See also Griggs, 232 F.3d at 922 (officer empowered to make
arrests was not immunized because he used manifestly excessive
means when he commanded his dog to attack the plaintiff after the
plaintiff complied with the officer’s order, and failed to command
the dog to cease its attack); Bishop v. Tice, 622 F.2d 349, 359 (8th
Cir. 1980) (supervisors empowered to make employment decisions
were not immunized because they “did not simply misuse their
authority but went clearly beyond it by threatening [their employee]
with criminal charges [in order to force him to resign] instead of
attempting to dismiss him for cause”).
35
whether it was among those entrusted to Graham and, if so,
whether Graham’s means of accomplishing his official duties
were manifestly excessive. Graham is entitled to immunity
only if he persuades us that each alleged act was taken
appropriately in performance of a corresponding official duty.
Some of Banneker’s allegations are aimed at the core of
Graham’s official duties. For example, Banneker alleges that
Graham persuaded his fellow Board members to add an
affordable housing requirement to the project when approving
the original Term Sheet. That plainly constitutes an exercise
of Graham’s authority as a Board member to urge a Board
resolution to impose conditions on development projects, and
there is no allegation that Graham pursued the affordable
housing requirement through excessive means.
Other allegations challenge conduct manifestly beyond
Graham’s authority. Banneker alleged that Graham sought to
barter a vote in his capacity as member of the D.C. Council
for his vote as a WMATA Board member on the Florida
Avenue project, and attempted to extort Banneker. Those acts
are manifestly beyond the authority of a WMATA Board
Member and so not immunized.
That leaves allegations of particular acts by Graham that
do not fall clearly within or without the outer perimeter of his
official duties as we currently understand them. Banneker
alleges that Graham exceeded the scope of his authority by
leaking confidential bid information to LaKritz Adler in
violation of applicable regulations, pressuring Banneker’s
development partners to drop out, pressuring Banneker to add
LaKritz Adler to its team, seeking to steer the project to
LaKritz Adler in violation of Banneker’s exclusivity rights,
and giving direction to WMATA staff in connection with the
Florida Avenue project in violation of WMATA policy.
36
Banneker’s allegations, however, are not enough for us to
decide the question. The scope of Graham’s duties is
determined by “controlling law,” Butz, 438 U.S. at 489, which
here includes the WMATA Compact and the regulations
governing WMATA Board Members’ conduct. Graham bore
the burden of establishing his entitlement to official immunity
by reference to those sources of law and WMATA policy, but
he made no effort in the district court to do so. The record
does not contain, for example, any reliable information about
the authority of a Board Member to direct WMATA staff, or
to participate in or influence negotiations. Without that
information, the district court was left only with Banneker’s
allegations.
Although the immunity issue may be identified through a
motion directed to the pleadings, courts may, where
appropriate, answer the question of whether an official has
acted within the outer perimeter of official duties through
limited evidentiary analysis focusing on the nature and scope
of the job duties in question. The “functional analysis
governing absolute immunity” may call for a “limited factual
inquiry” to determine “in what role the challenged function
was exercised” and “preclud[e] on occasion disposition at the
Rule 12 stage.” Gray v. Bell, 712 F.2d 490, 496 (D.C. Cir.
1983) (internal quotation marks omitted). For example, in
some cases, affidavits from superiors elucidating an
employee’s duties are required to support “[t]his type of
limited inquiry.” Expeditions Unlimited Aquatic Enters., Inc.
v. Smithsonian Inst., 566 F.2d 289, 292 n.5 (D.C. Cir. 1977).
In the context of the Federal Tort Claims Act, scope-of-
employment questions sometimes are resolved in that manner.
We have held that, in cases in which factual disputes over the
scope of employment arise at the pleading stage, “limited
discovery” may be appropriate. See Stokes v. Cross, 327 F.3d
1210, 1214 (D.C. Cir. 2003). Such inquiries primarily
37
involve matters already known to the defendant official; they
tend to be discrete inquiries, the general prospect of which is
“unlikely to deter any official in the vigorous pursuit of his
responsibilities,” Expeditions, 566 F.2d at 292 n.5, and
comport with the essential character of official immunity
questions as ones that “should be decided at the earliest
opportunity,” Osborn v. Haley, 549 U.S. 225, 253 (2007).
In light of these principles, we hold that Graham failed to
bear his burden to establish the scope of his official duties and
to situate his conduct within its outer perimeter. On the
limited record we have, we have little trouble concluding that
the allegations of extortion and the alleged attempt to barter a
D.C. Council vote for a WMATA vote manifestly exceeded
the scope of Graham’s official duties; we have equally little
trouble concluding that Graham’s attempt to add an affordable
housing requirement fell within the scope of his official
duties. The remaining allegations are more difficult,
however, and require more fact-specific inspection. We
therefore vacate the district court’s dismissal and remand for
the district court to consider in the first instance which of
Graham’s other actions fell beyond the outer perimeter of his
official duties and whether those actions that did fall beyond
the outer perimeter, taken together, state claims against
Graham for tortious interference and civil conspiracy.
2. Discretionary Conduct
Turning to the second part of the Westfall analysis,
Banneker argues that, even if all of Graham’s conduct was
within the bounds of his official duties, his conduct was not
discretionary, and therefore not immune, because it violated
the WMATA Standards of Conduct. As we have discussed in
connection with WMATA’s claim of sovereign immunity, we
apply a two-part test to determine whether a decision is
38
immunized as discretionary. See Beebe, 129 F.3d at 1289
(applying sovereign immunity discretionary/ministerial
dichotomy to claim of official immunity). First, we ask
whether “any statute, regulation, or policy specifically
prescribes a course of action for an employee to follow”; if so,
the conduct is not shielded by immunity because it is not
discretionary. KiSKA, 321 F.3d at 1159 (internal quotation
marks omitted). If not, and the official has room to exercise
discretion, we next ask “whether the exercise of discretion is
grounded in social, economic, or political goals,” making it an
exercise of governmental judgment and so immune. Id.
The district court held that Graham had discretion in
voting on Banneker’s project, and considered all of
Banneker’s allegations as seeking to impose liability for the
exercise of that discretion. Here, again, the district court
reviewed the complaint at too high a level of generality. The
correct analysis is whether “the alleged tortious conduct is
discretionary.” Westfall, 484 U.S. at 296 (emphasis added).
Banneker does not seek to impose liability for Graham’s vote
on the project, but for various actions relating to the vote that
Banneker alleges were prohibited by the regulations
governing Board Members’ conduct. The district court must
parse Banneker’s allegations at a finer level of specificity in
order to address those claims of prohibited action and resolve
Graham’s claim of immunity.
The district court also held that the Standards of Conduct
did not cabin Graham’s discretion for purposes of immunity
because they do not “prescribe” a course of action for
WMATA Board Members to follow: they “describe how not
to act, not how to act.” Banneker II, 19 F. Supp. 3d at 246.
We disagree. “[C]onduct cannot be discretionary unless it
involves an element of judgment or choice.” Berkovitz v.
United States, 486 U.S. 531, 536 (1988). “If [an] employee
39
violates [a] mandatory regulation, there will be no shelter
from liability because there is no room for choice and the
action will be contrary to policy.” United States v. Gaubert,
499 U.S. 315, 324 (1991). For example, we have observed
that the limitation of an officer’s judgment during a high
speed chase—such as the limitation of “the speed of a vehicle
in hot pursuit—indicates that the [police department] already
had made the decision to limit the officer’s exercise of
discretion.” Biscoe v. Arlington Cty., 738 F.2d 1352, 1363
(D.C. Cir. 1984). Consequently, “effective law enforcement
would not be hindered by enforced adherence to such
regulations” through civil liability. Id.; see also Keller v.
United States, 771 F.3d 1021, 1024 (7th Cir. 2014) (holding
Federal Tort Claims Act discretionary function exception
does not apply “if prison personnel violate a mandatory
regulation”). We see no difference between a prescription by
policy that leaves no room for choice and a proscription that
does the same. In both cases, the public official’s discretion
is cabined such that violation of the regulation cannot by
definition “involve[] judgment, planning, or policy
decisions.” KiSKA, 321 F.3d at 1159 n.9 (internal quotation
marks omitted). Imposition of liability for operational actions
that violate mandatory policies phrased as prohibitions, like
liability for violation of policies phrased as affirmative duties,
does not “pose threats to the quality and efficiency of
government.” Biscoe, 738 F.2d at 1363 (internal quotation
marks omitted).
The Standards of Conduct are absent from the record, but
Banneker alleges that the standards clearly prohibited Graham
from leaking confidential information. Banneker also alleges
that the Bondi Report concluded Graham violated the
Standards of Conduct when he (1) created a conflict of
interest by seeking to barter his D.C. Council vote on the
lottery contract for his WMATA vote on Banneker’s project,
40
and (2) showed favoritism to LaKritz Adler “by appearing to
continue to support LaKritz Adler’s proposal for, or inclusion
in, the Florida Avenue Project while at the same time
opposing Banneker Ventures.” Bondi Rpt. 6. The Bondi
Report’s conclusions relied on and quoted portions of the
Standards of Conduct that require Board Members to “strictly
avoid engaging in actions which create conflicts of interest or
the appearance of a conflict of interest” and state that it is
“imperative that Board Members act impartially in their
official conduct by avoiding any actions which might result in
favored treatment or appearances thereof toward any
individual, private organization, consultant, contractor or
potential consultant or contractor.” Id. at 2. Those portions
of the Standards of Conduct purport to cabin the discretion of
Board Members.
Graham’s alleged leaking of confidential information
manifestly violated the Standards. But, unlike the alleged
prohibition on the leaking of confidential information, the
conflict of interest standards quoted in the Bondi Report
capture a wide swath of conduct more susceptible of
contextual judgment. Some actions may fall clearly within
the prohibition, such that the prohibition leaves “no room for
choice,” while others may fall into a gray area that cannot
fairly be characterized as clearly “contrary to policy.”
Gaubert, 499 U.S. at 324. In the context of demarcating the
scope of official duties, we have held that only conduct that is
“manifestly or palpably beyond” the scope of official duties is
unprotected by official immunity. Simons, 643 F.2d at 786
(quoting Spalding, 161 U.S. at 498). We hold that the same
rule applies to the question of whether conduct is
discretionary: Only alleged conduct that manifestly violates
an ethical proscription or other statute, regulation, or policy
that constrains the exercise of discretion may be subject to
liability. Both the scope-of-duties and discretionary-conduct
41
inquiries thus leave unprotected only conduct that is plainly
unauthorized.
As we have noted, the complete Standards of Conduct are
not in the record. It may be that Graham’s attempts to steer
the project to LaKritz Adler manifestly contravened the
regulations governing his conduct as a Board Member. It is
also possible that the regulations were not so clear as to
render Graham’s conduct plainly beyond his discretion.
Because the burden was Graham’s to rebut Banneker’s
allegations, dismissal was inappropriate. See, e.g., Keller,
771 F.3d at 1024-25 (reversing grant of summary judgment in
FTCA suit on “scant record” of “what procedures and
regulations applied” to employees for purposes of
discretionary function exception because government bore
burden of establishing entitlement to immunity).
However, without the benefit of the full Standards of
Conduct and briefing from the parties, together with
appropriate factual development, if any, that would clarify the
scope of the relevant Standards and place Banneker’s
allegations in context, we cannot finally distinguish which of
Banneker’s allegations are barred by official immunity and
which are not. For the same reason, we cannot decide in the
first instance whether any allegations that are not barred by
official immunity, taken together, suffice to state a claim for
tortious interference and civil conspiracy. We therefore
vacate the district court’s dismissal of Banneker’s claims
against Graham and remand for further consideration in light
of the foregoing principles.
* * *
As we have discussed, Graham will not enjoy official
immunity for any actions that either fall beyond the scope of
his official duties or are not discretionary in nature. See
42
Westfall, 484 U.S. at 297-98; Beebe, 129 F.3d at 1289. On
remand, the district court should evaluate, for each action
complained of: (1) whether the alleged action, if established
at trial, would be one that manifestly exceeded the scope of
Graham’s official duties or was carried out through manifestly
excessive means; or (2) whether the alleged action, if
established at trial, would manifestly violate any statute,
regulation, or policy governing WMATA Board Members’
conduct. Any action that would be unauthorized under either
standard is unprotected by immunity. The district court
should therefore evaluate whether the actions that it concludes
would not be immunized, taken together, state a claim against
Graham for tortious interference or civil conspiracy.
VI. Conclusion
For the foregoing reasons, we reverse the district court’s
dismissal of Banneker’s contract claims against WMATA and
its tort claims against LaKritz Adler. We affirm the dismissal
of Banneker’s claim for fraud against WMATA, vacate the
dismissal of Banneker’s tort claims against Graham, and
remand for further proceedings consistent with this opinion.
So ordered.