WASHINGTON - The United States Supreme Court is poised to decide whether to hear the case of former Miami budget director Michael Boudreaux, whose attorneys are urging the nation's top court to decide the important question of how exposed municipal officials should be to federal government lawsuits.
Boudreaux's attorneys and the Securities and Exchange Commission have each filed briefs with the Supreme Court, with the government asking the Justices to refrain from taking up the case.
At issue is the question of whether a municipal official can claim a "qualified immunity" defense against a lawsuit brought by a federal agency seeking monetary penalties.
Boudreaux's attorneys claim he is entitled to immunity from a lawsuit the SEC filed against him in 2013. The commission is seeking monetary penalties against Boudreaux for allegedly making materially false and misleading statements, as well as omissions, about interfund transfers designed to cover up a growing fund deficit and get more favorable ratings for bond offerings in May, July and December 2009.
The U.S. Court of Appeals for the Eleventh Circuit in Atlanta sided with the lower court and SEC in ruling that the lawsuit against Boudreaux could continue in the U.S. District Court for the Southern District of Florida in Miami. But the lawsuit has been on hold in that court for more than a year while the appeals process plays out on the question of immunity.
The district court dismissed Boudreaux's claim of qualified immunity, saying the SEC is seeking monetary penalties that would be paid to the U.S. Treasury rather than traditional monetary damages, as would be sought in private litigation.
Boudreaux's brief, submitted by University of California Irvine law school dean Erwin Chemerinsky and Miami defense attorney Benedict Kuehne, told the Supreme Court that it needs to decide the case because it hinges on issues important to municipal officials that have either never been decided before or that have been decided conflicting ways in lower courts.
"The government asserts that this 'court repeatedly has described the qualified immunity defense as extending only to suits for money damages,'" Boudreaux's attorneys wrote. "But the government cites no case from this court that ever has held that qualified immunity is not available in suits for monetary penalties. That is because no such case exists. This is an issue that never has been addressed by this court, which is why review of this case is warranted."
Qualified immunity is a well-established legal doctrine that protects government officials performing discretionary functions when their actions do not violate someone's clearly-established statutory or constitutional rights. Lower courts around the nation have sometimes allowed qualified immunity as a defense under alleged violations of various federal laws. At other times, the courts have held that qualified immunity is only available as a defense to claims brought under Section 1983 of the U.S. Code for violations of civil rights.
"The split among the circuits is entirely a result of a lack of clarification from this court as to whether and when qualified immunity is available as a defense to federal statutory claims," Boudreaux's attorneys wrote.
The International Municipal Lawyers Association filed a friend of the court brief warning that refusing to allow Boudreaux's defense could prevent municipalities from recruiting talented employees and could prevent municipal officials from making necessary discretionary decisions.
The government brief, signed by a slew of SEC lawyers and U.S. Solicitor General Donald Verrilli, said that Boudreaux's defense fails at the district court level because in considering a motion to dismiss charges the court must assume the allegations in the SEC's complaint are true.
"That complaint alleges the sort of deliberate wrongdoing for which qualified immunity is never a valid defense, even in private damages actions," the government lawyers wrote. "Further review is not warranted."
The government further told the court that this case is not an opportunity to decide these far-reaching questions for municipal officials facing U.S. government lawsuits.
"Even if that defense were generally available in such actions, petitioner (Boudreaux) could not successfully assert it here," the government said.
Boudreaux's brief disagreed with that reasoning.
"The issue presented by this case is entirely a question of law: may defendants sued for monetary penalties by the Securities and Exchange Commission raise qualified immunity as a defense? The resolution of this question does not and should not entail consideration of whether Mr. Boudreaux will succeed in his claim of qualified immunity."
Under Supreme Court rules, four of the nine justices must vote to accept a case.
