Butz v. Economo

438 U.S. 478 (1978)

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Nature of the Case

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Facts

The Department of Agriculture sought to revoke or suspend Economou's (P) company's registration as a commodity futures commission merchant. The Department claimed that P had willfully failed to maintain the minimum financial requirements prescribed by the Department. Administrative procedures were commenced against P, and while these were ongoing, P filed a suit in District Court. P's registration was revoked, but that was overturned by the Court of Appeals in that D failed to issue its warning letter and that there could be no finding of willfulness. In P's District Court action, P sought damages from the Secretary, the Assistant Secretary, the Judicial Officer, and the Chief Hearing Examiner, several officials in the Commodity Exchange Authority, the attorney in the Department of Agriculture who prosecuted the enforcement proceeding, and several auditors. P stated that prior to the issuance of the administrative proceedings against him, he had been sharply critical in a campaign for the reform of the Commodity Exchange Authority, that the administrative actions were issued against him without notice or warning required by law and that Ds had furnished their version of the complaint to interested parties without furnishing his answers as well, and then Ds issued deceptive press releases that falsely indicated that P's financial resources has deteriorated knowing that these statements were untrue. The District Court, relying on the plurality opinion in Barr v. Matteo, 360 U.S. 564 (1959), held that the individual defendants would be entitled to immunity if they could show that 'their alleged unconstitutional acts were within the outer perimeter of their authority and discretionary. The Court of Appeals for the Second Circuit reversed the District Court's judgment of dismissal with respect to the individual defendants. It held that principles governing the immunity of officials of the Executive Branch had been elucidated in later decisions dealing with constitutional claims against state officials. E. g., Pierson v. Ray, 386 U.S. 547 (1967); Scheuer v. Rhodes, 416 U.S. 232 (1974); Wood v. Strickland, 420 U.S. 308 (1975). Officials of the Executive Branch exercising discretionary functions did not need the protection of an absolute immunity from suit, but only a qualified immunity based on good faith and reasonable grounds. D appealed.