STATEMENT OF THE CASE
A. Factual Background
John E. Malesko is a former federal prisoner who served the last four months of his sentence at Le Marquis Community Corrections Center, a halfway house operated by Correctional Services Corporation ("CSC"), and, after suffering the injuries that gave rise to this action, in the hospital. In December 1992, at the age of 58, Mr. Malesko was convicted of securities fraud and sentenced to eighteen months' imprisonment under the supervision of the Federal Bureau of Prisons ("BOP"). Pet. App. 2a. While in prison, Mr. Malesko was diagnosed with congestive heart failure. This condition required Mr. Malesko to take prescription medication and to refrain from physical exertion such as climbing stairs. Jt. App. 10-11.
In February 1994, BOP transferred Mr. Malesko to Le Marquis. CSC, a publicly traded corporation, operated Le Marquis for profit.(1) Despite his medical condition, CSC assigned Mr. Malesko to a fifth-floor room. On March 1, 1994, CSC instituted a policy requiring Le Marquis inmates to take the stairs to their rooms if they lived below the sixth floor, but because of his illness, Mr. Malesko was allowed to continue using the elevator. Jt. App. 11.
On March 18, Mr. Malesko informed CSC that he had run out of his heart medication. CSC did not refill the prescription. Id. at 12. Ten days later, a CSC guard compelled Mr. Malesko to take the stairs to his room quickly even though Mr. Malesko reminded him that, because of his heart condition, he was allowed to use the elevator. Id. As Mr. Malesko was hurrying up the stairs so that he could be in his room in time for a head count, he suffered a heart attack and fell. Pet. App. 20a; Jt. App. 12. The fall injured his ear and caused ongoing difficulty with balance. Mr. Malesko's injuries have left him unable to work and in need of continuing medical care. Jt. App. 12-13.
B. Proceedings Below
Mr. Malesko filed this action pro se on March 27, 1997, in the United States District Court for the Southern District of New York, against petitioner CSC and ten "John Doe" defendants. The complaint has been treated throughout this case as alleging claims only under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). On February 2, 1999, Mr. Malesko, who had since retained counsel, filed an amended complaint naming Jorge Urena, the guard who denied him use of the elevator, as one of the John Doe defendants. CSC filed a motion to dismiss, which the district court granted on July 28, 1999. In that decision, the district court held that, because Mr. Malesko's identification of Mr. Urena in the amended complaint did not relate back to the filing of the original complaint, it was time-barred. Pet. App. 22a-24a. The Second Circuit affirmed this holding, Pet. App. 18a, and Mr. Malesko does not challenge it now. With no explanation of its reasoning, the district court also held that under FDIC v. Meyer, 510 U.S. 471 (1994), a Bivens action can be maintained only against an individual, Pet. App. 20a, even though Meyer held only that no Bivens action lies against federal government agencies.
The Second Circuit reversed as to CSC, holding that a Bivens action may lie against a private corporation acting under color of federal law. The court first noted that, before Meyer, it was settled law among the federal circuits that Bivens claims could be asserted against private corporations. Although several circuits had not addressed the question, all those that had, had held that the cause of action was available. Pet. App. 5a-6a (citing Schowengerdt v. General Dynamics Corp., 823 F.2d 1328 (9th Cir. 1987); Gerena v. Puerto Rico Legal Serv., Inc., 697 F.2d 447 (1st Cir. 1983); Dobyns v. E-Systems, Inc., 667 F.2d 1219 (5th Cir. 1982); Yiamouyiannis v. Chemical Abstracts Serv., 521 F.2d 1392 (6th Cir. 1975) (per curiam)). The Second Circuit noted that Meyer did not address these cases or suggest that it was overruling them. Id. at 12a. Since Meyer was decided in 1994, only three courts of appeals have addressed the question presented here. The Sixth Circuit, in reasoning largely adopted by the Second Circuit below, held that Bivens does encompass claims against private corporations. Hammons v. Norfolk Southern Corp., 156 F.3d 701 (6th Cir. 1998). Using broad language, the D.C. Circuit has held that Meyer shielded from Bivens liability a school with very close ties to the U.S. and British governments, an entity that was in the Second Circuit's view "arguably a federal government agency." Kauffman v. Anglo-American School of Sofia, 28 F.3d 1223 (D.C. Cir. 1994); Pet. App. 11a n.3.
The court below explained that Meyer is not dispositive in this case because "private entities acting on behalf of the federal government are not the equivalent of federal agencies." Id. at 10a. Nor did the court find the reasons underpinning Meyer compelling with respect to private corporations. As the court of appeals noted, Meyer did not address Bivens' central goal of providing a remedy for constitutional violations, and that goal can be achieved here only by allowing a Bivens claim against CSC. Id. at 10a-11a. Allowing the claim to go forward, the Second Circuit found, would also serve Bivens' deterrence purpose because "an employer facing exposure to such liability would be motivated to prevent unlawful acts by its employees." Id. at 11a. Meyer's concern with the direct impact that federal agency liability would have on fiscal policy is inapposite here, observed the court, where any fiscal impact on the government would be indirect at best. Id. Finally, the court saw no reason not to incorporate the law governing claims under 42 U.S.C. § 1983, which does impose liability on private corporations acting under color of state law. Id. at 12a.
SUMMARY OF ARGUMENT
Thirty years ago, this Court recognized in Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), that the Constitution itself limits the exercise of federal power and that damages are an appropriate remedy for those who have suffered constitutional violations under color of federal law. Bivens therefore recognized a cause of action for damages against those who violate constitutional rights under the color of federal authority. This principle is limited only by the doctrine of sovereign immunity, which bars suits against the United States and its agencies. As a private, for-profit corporation, CSC is decidedly not the federal government, so sovereign immunity does not shield it. Allowing CSC to enjoy the benefits of sovereign immunity would gratuitously insulate its shareholders against the cost of a judgment in Mr. Malesko's favor, and would disserve the twin purposes of Bivens -- compensation and deterrence.
There is no question here that CSC was responsible for Mr. Malesko's injuries. Either CSC's policies deprived Mr. Malesko of needed medication, assigned him to a fifth-floor room, and compelled him to take the stairs, or its failure to train and supervise its employees led them to disregard his life-threatening medical condition. In either case, the injuries Mr. Malesko suffered are plainly CSC's responsibility. Recognizing Mr. Malesko's claim against CSC fulfills Bivens' purposes of affording compensation to the victim of unlawfully exercised federal power, and deterring the unconstitutional abuse of federal authority.
As a private corporation contracting with the federal government, CSC performs much the same function as an intermediate to high-level federal employee. It sets policies for its employees who wield federal power and controls their hiring, training, and supervision. Its unconstitutional exercise of federal power is best deterred through the imposition of money damages. Because private corporations, unlike the federal government, are not accountable through the political process, penalizing CSC financially is the only effective way to control, not only its corporate behavior, but also the behavior of its employees. Moreover, private corporations, unlike government agencies subject to civil service laws, have great flexibility to impose financial incentives and deterrents on their employees. The federal government acknowledges the company's responsibility and control over its employees by requiring CSC to assume responsibility for litigation against its employees. Furthermore, the Bivens remedy itself is needed to deter the unconstitutional exercise of federal power. State law remedies, which are oriented toward different problems and do not address all unconstitutional misconduct, are inadequate.
Recognizing a Bivens claim directly against CSC imposes no greater risk of uncontrolled financial exposure on the government than does the routine availability of suits against federal officials under Bivens. The government is protected financially by its contract with CSC, which requires CSC to insure itself and its employees against damages awards, and by its freedom to choose less expensive contractors. The government already indemnifies its own employees for their Bivens liability. The financial effect on the government of Bivens awards against a contractor is much less direct than is the effect of Bivens awards against government employees. Finally, Bivens' purpose is to discourage constitutional violations by those cloaked with federal power. Holding CSC liable when it uses federal power to violate the Constitution fulfills this purpose by giving CSC a powerful financial incentive to obey the Constitution's dictates. CSC's success in following the law will in turn limit the insurance costs it may seek to pass on to the government.
Bivens' narrow exceptions, which make the remedy unavailable when Congress has created an equally effective substitute or there are special factors counseling hesitation, do not apply here. The characteristics that CSC calls "special factors" -- its corporate status, the possibility that its insurance rates will rise, and the fact that Congress allows some agencies to use contractors -- do not counsel any hesitation in allowing Mr. Malesko's claim to proceed.
CSC's hand-wringing over the possibility that its insurance rates might go up obscures its central contention: that private corporations, which have no claim to sovereign immunity and which are subject to section 1983 liability when they violate the constitutional rights of their state prisoners, should nonetheless be held immune from Bivens liability when they violate the constitutional rights of their federal prisoners. There is simply no reason to make this leap. CSC exercises federal power; it houses federal prisoners in closed institutions protected from public scrutiny; and it can easily force prisoners like Mr. Malesko into life-threatening situations. Bivens makes clear that CSC should be held liable when it uses federal power to violate the Constitution.
In Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), this Court explicitly recognized that the federal Constitution establishes a cause of action for damages against those who violate constitutional rights under color of federal authority. The foundation for Bivens, however, was laid in the earliest days of this Court. Two centuries ago, in Marbury v. Madison, 5 U.S. (1 Cranch) 137, 163 (1803), this Court declared that "[t]he government of the United States has been emphatically termed a government of laws, and not of men. It will certainly cease to deserve this high appellation, if the laws furnish no remedy for the violation of a vested legal right." This sentiment -- that remedies must follow the violation of constitutional rights -- was echoed again fifty-five years ago in Bell v. Hood, 327 U.S. 678, 684 (1946). There, while reserving the precise question decided in Bivens, the Court emphasized that "where federally protected rights have been invaded, it has been the rule from the beginning that courts will be alert to adjust their remedies so as to grant the necessary relief."
The Bivens cause of action -- and only this cause of action -- enforces our nation's paramount rights by providing a damages remedy for those whose constitutional rights are violated at the hands of federal officers or by those who are cloaked with federal power. The only limit this Court has recognized on Bivens' reach is for governmental entities, namely the United States itself and its agencies, entitled to invoke absolute sovereign immunity -- an immunity which is waivable only by Congress.(2) Never has this Court suggested that private individuals or corporations, exercising federal power while doing the government's bidding for a fee, are entitled to claim any sovereign immunity, much less an immunity that is absolute. Cf. Richardson v. McKnight, 521 U.S. 399 (1997) (holding that employees of a private prison are not entitled to qualified immunity in a section 1983 action). Therefore, CSC's claim that the Court should equate a private corporation with the United States or one of its agencies should be rejected out of hand. Immunity belongs to the government, not contractors with which it does business.
Moreover, prisoners and others in federal custody, like respondent Malesko, are uniquely vulnerable to the abuse of federal power. The Bivens remedy is often these individuals' last and only protection against the deliberate deprivation of their constitutional rights. Mr. Malesko is not asking this Court to establish any new cause of action. He is simply pursuing the remedy recognized in Bivens against an unconstitutional abuse of federal power by a defendant who has no legitimate claim to any sovereign immunity. The judgment below should be affirmed.
I. Bivens Encompasses Mr. Malesko's Claim Against CSC.
To best understand the flaws in petitioner's argument, it is useful to begin with a detailed examination of the cause of action recognized in Bivens. There, this Court answered a question that it had left open twenty-five years earlier in Bell v. Hood and held "[t]hat damages may be obtained for injuries consequent upon a violation of the Fourth Amendment by federal officials." Bivens, 403 U.S. at 395. Webster Bivens alleged that federal narcotics agents had arrested him and had searched his home without a warrant or probable cause and used unreasonable force in doing so. Id. at 389. This Court rejected defendants' argument that state tort law provided Bivens's sole remedy. Instead, it focused on defendants' exercise of federal power and held that citizens may invoke the Constitution's protection against the abuse of that power even in the absence of any Congressional action authorizing a remedy. Id. at 392.(3)
The theory of Bivens, which is crucial to this case, is that the Constitution itself "operates as a limitation upon the exercise of federal power regardless of whether the State in whose jurisdiction that power is exercised would prohibit or penalize the identical act if engaged in by a private citizen. It guarantees to citizens of the United States the absolute right to be free from" unconstitutional injury. Id. Where, as here, "federally protected rights have been invaded, it has been the rule from the beginning that courts will be alert to adjust their remedies so as to grant the necessary relief." Id. (quoting Bell v. Hood, 327 U.S. at 684 (footnote omitted)); accord Bemis Bros. Bag Co. v. United States, 289 U.S. 28, 36 (1933). Bivens suits have been allowed to proceed to redress violations not only of the Fourth Amendment, as in Bivens, but also the Eighth and Fifth Amendments. Carlson v. Green, 446 U.S. 14, 19-20 (1980); Davis v. Passman, 442 U.S. 228, 248-49 (1979). The only limitation on the basic Bivens principle is that the federal government itself is immune from liability and hence may not be sued under Bivens.
Thus, the rule of Bivens is that a cause of action lies against a party that has exercised federal power in a manner that has deprived the plaintiff of a constitutionally guaranteed right. Contrary to petitioner's argument, the Bivens cause of action is not defined by the potential list of defendants who may be subject to such claims. Rather, Bivens focuses on the abuse of federal power and seeks to remedy and deter that abuse without regard to the identity of the defendant. Nothing in the logic underlying Bivens or its holding suggests that the absolute immunity enjoyed by the federal government should be extended to a non-government, private corporation that exercises federal power for profit.
To be sure, Bivens acknowledges the possibility that Congress might establish an alternative remedy that would displace the Bivens action or that some cases might present "special factors counseling hesitation" in the recognition of a cause of action. 403 U.S. at 396-97. But Bivens rejected the idea that any of the factors cited by the United States (and resurrected here by both CSC and the United States) -- including the potential drain on the public fisc -- counseled against its holding or constituted "special factors." Id. This suit does not fall within either of Bivens' exceptions. Rather, it falls within the heartland of Bivens cases exemplified by the Court's recent decision in Wilson v. Layne, 526 U.S. 603 (1999), which recognized Bivens and section 1983 claims against federal and state officers who allowed newspaper reporters and photographers to accompany them into a suspect's home in violation of the Fourth Amendment.
Earlier cases also illustrate Bivens' scope. In Davis, a former Congressman's assistant brought a Fifth Amendment Bivens claim against him when she was fired because of her gender. The Court held that Bivens encompassed the claim, despite Title VII's specific exclusion of Congressional employees and despite the possible constitutional difficulties in discerning whether the Speech and Debate Clause protected the Congressman's action. 442 U.S. at 245-48. In Carlson v. Green, the plaintiff's son had died of an asthma attack while in federal prison, allegedly because the defendants failed to provide competent medical treatment and in fact took counterproductive measures. This Court held that Bivens encompassed Eighth Amendment claims and that the Federal Tort Claims Act, while available to the plaintiff as a parallel remedy, did not displace the Bivens action. 446 U.S. at 19-23.
This case falls at the core of Bivens' holding. Petitioner CSC, an entity exercising federal power, has allegedly violated the constitutional rights of a person in its custody. As in Bivens, state tort law cannot guarantee an adequate remedy, there are no special factors counseling hesitation, and a damages award will achieve both deterrence of the wrongdoers and compensation for the victim. The corporate status of the entity does nothing to alter the Bivens analysis; indeed, the fact that this defendant cannot hide behind the shield of sovereign immunity makes this case straightforward.
A. As a Private Entity, CSC Is Not Entitled to Immunity When It Violates The Constitution Under Color of Federal Law.
CSC's position boils down to a claim that, because it is a corporation, rather than an individual, it may not be sued under Bivens. In making this argument, CSC does not point to any passage in Bivens or in any subsequent cases that suggests that the status of the defendant (individual or corporate) matters one whit. Nor could it. The only entities found outside of the ambit of Bivens have been the federal government itself, or entities this Court has held to be the federal government for purposes of immunity. Thus, unless CSC can demonstrate that it, a private, for-profit corporation that is beholden only to its shareholders and not the American people, is somehow entitled to invoke the protective mantle of sovereign immunity, its argument fails.
The law of sovereign immunity in Bivens suits parallels that in suits under 42 U.S.C. § 1983; if anything, section 1983 immunity law is more protective of the government. As this Court explained in Butz v. Economou:
438 U.S. at 500-01 (emphasis in original). This Court has held that private defendants are not entitled even to qualified immunity from section 1983 suits. McKnight, 521 U.S. 399; Wyatt v. Cole, 504 U.S. 158 (1992). It is well-established that both private and public corporations can be sued under section 1983, and neither may raise a qualified immunity defense. Lugar v. Edmonson Oil Co., 457 U.S. 922 (1982); Owen v. Independence, 445 U.S. 622 (1980). Contractors who provide services to state prisons can also be held liable under section 1983. West v. Atkins, 487 U.S. 42 (1988). Absolute immunity has never been thought to bar a section 1983 claim paralleling Mr. Malesko's; indeed, insofar as respondent can determine, no corporation subject to a section 1983 action has ever sought to invoke absolute immunity, let alone succeeded in doing so.
There is no policy reason to extend sovereign immunity to bar Mr. Malesko's constitutional claim against CSC. A defendant seeking absolute immunity "'must bear the burden of showing that public policy requires an exemption of that scope.'" Cleavinger v. Saxner, 474 U.S. 193, 201 (1985) (quoting Economou, 438 U.S. at 506); accord McKnight, 521 U.S. at 404. Defendants that were far more closely linked to the federal government than CSC have sought absolute immunity, only to have this Court reject their claims in case after case. For example, in Harlow v. Fitzgerald, 457 U.S. 800 (1982), this Court held that Presidential aides, like Executive Branch officials generally, are not generally entitled to absolute immunity. Saxner, 474 U.S. at 205, established that members of a federal prison's discipline committee were not entitled to absolute immunity despite the committee's adjudicatory function. Even the President of the United States himself is not immune to suit for his unofficial conduct. Clinton v. Jones, 520 U.S. 681, 694-95 (1997). Westfall v. Erwin, which reversed a holding that sovereign immunity barred certain state tort law claims, explains why absolute immunity is so rarely available:
484 U.S. 292, 295-96 (1988) (quoting Doe v. McMillan, 412 U.S. 306, 320 n.3 (1973)).
This Court in McKnight soundly rejected the argument that private prisons will suffer from "overly timid, insufficiently vigorous, unduly fearful, or 'non-arduous' employee job performance" if their employees are denied even qualified immunity from constitutional claims. 521 U.S. at 410. If individual employee liability does not pose a threat to private prison performance, it is hard to see why corporate liability would do so, and certainly CSC has made no such showing. Indeed, the "marketplace pressures" that prevent excess timidity in private prison guards operate even more directly on the private corporation that stands to make a profit or suffer a loss. The different rewards and constraints of the marketplace -- including the possibility of losing the prison contract, greater freedom in managing employees, and mandatory insurance coverage -- enable private corporate prison operators to function even when exposed to liability for their constitutional torts. Id. at 409-411. Government employees "act within a different system." Id. at 410 (emphasis in original). Unlike employees of a private firm, government employees are responsible through elected officials to voters. Multidepartment civil service rules often limit government supervisors' abilities to reward or punish their employees. Id. Private corporations like CSC are not similarly constrained. The policy reasons underlying the qualified immunity defense for public employees cannot justify denying Mr. Malesko the remedy to which the Constitution entitles him. Cf. id. at 412.
In light of these factors, CSC does not overtly make a claim to sovereign immunity. Rather, it makes immunity-like arguments to contend that it would be wrong for the Court to "extend" Bivens' coverage to corporations doing the government's business. This contention is without merit. Sovereign immunity doctrine is grounded principally in the desire to protect the public fisc, although this Court has also cited the government's interest in performing its functions smoothly and in not creating unwarranted timidity on the part of government officers. McKnight, 521 U.S. at 407-08; Erwin, 484 U.S. at 296-97 (citing Barr v. Matteo, 360 U.S. 564, 571 (1959)); Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 704 (1949). In this case, where the party seeking the shield of immunity is a corporation, not the government, none of these concerns is legitimate.
CSC's Bivens liability to Mr. Malesko likely poses less threat to the federal fisc than does the parallel Bivens action against a federal officer in CSC's position; surely it does not pose more risk. To begin with, CSC insures itself against a variety of business risks, including the risk of liability for torts, constitutional and otherwise. CSC Annual Report, SEC Form 10K at 12 (filed Apr. 2, 2001) (available at www.freeedgar.com, ticker symbol CSCQ); CSC Prospectus at 24 (Sept. 12, 1996), Joint Appendix in the United States Court of Appeals for the Second Circuit, at 142. Indeed, the federal government requires the private prisons with which it contracts to carry liability insurance. Id.; Bureau of Prisons, Statement of Work: Community Corrections Center 8 (Dec. 2000) [hereinafter "BOP Statement of Work"] (available at http://www.bop.gov/ccdpg/ccdccc.pdf). And it is CSC's "general practice to indemnify individual employees who are sued in connection with matters arising within the scope and course of their employment, and which are not criminal in nature." Letter from George P. Stasiuk to Steven Pasternak at 1 (Jan. 11, 1999), Joint Appendix in the United States Court of Appeals for the Second Circuit, at 153. Thus, like the private prison corporation at issue in McKnight, which had purchased insurance to protect itself and indemnify its employees who were subject to liability under section 1983, CSC's potential liability here is addressed fundamentally as a matter of insurance. For that reason, CSC's premiums will likely be influenced, if not directly affected, by how well it implements policies that prevent constitutional deprivations. The more damages actions resulting in compensatory damages awards, the greater the likely increase in its premiums. If those premiums climb to an unacceptable level (that is, where it is financially better for the United States not to contract with CSC), CSC will either lose its contracts to competitors that do a better job of avoiding constitutional tort actions and thus keeping their costs low, or the United States will conclude that the inability of private prisons to deter constitutional violations requires it to resume prison management responsibility itself. On the other hand, the better th