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Eves v. Lepage

United States Court of Appeals, First Circuit

November 22, 2016

MARK W. EVES, Plaintiff, Appellant,
v.
PAUL R. LEPAGE, Defendant, Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE [Hon. George Z. Singal, U.S. District Judge]

          David G. Webbert, with whom Carol J. Garvan and Johnson, Webbert & Young, LLP were on brief, for appellant.

          Patrick Strawbridge, with whom Bryan K. Weir and Consovoy McCarthy Park PLLC were on brief, for appellee.

          Before Lynch, Stahl, and Thompson, Circuit Judges.

          LYNCH, Circuit Judge.

         Paul LePage, the Republican Governor of Maine, has had deep political disagreements with members of the Maine Legislature, particularly those who are Democrats -- including the Speaker of the House, plaintiff Mark Eves. The Speaker, who is term-limited, obtained a contract of employment with Good Will-Hinckley ("GWH"), a Maine nonprofit that operates the MeANS charter school for at-risk children, which is largely funded by biennial grants from the state. Whether to disburse that grant money to GWH was left by the legislature to the discretion of the governor.

         Governor LePage conveyed to GWH his displeasure at the organization's decision to hire the Speaker and threatened to withhold GWH's discretionary funding when payment would ordinarily be due, assuming passage of Maine's budget for Fiscal Years ("FY") 2016 and 2017. Faced with the prospect of losing funding on which it depended, GWH terminated the Speaker's employment contract.

         The Speaker sued the Governor in federal court for damages and injunctive relief, asserting that the Governor, in violation of the U.S. Constitution, had retaliated against the Speaker's exercise of his First Amendment rights. The Speaker also sought relief under state tort law. The U.S. District Court for the District of Maine dismissed all claims. Eves v. LePage, No. 1:15-cv-300-GZS, 2016 WL 1948869 (D. Me. May 3, 2016).

         We affirm dismissal with prejudice of the Speaker's federal claims, on qualified immunity grounds. As for his state claim, we vacate, and direct the district court to dismiss it without prejudice.

         I.

         Background

         The issues in this case are ultimately issues of law, which receive de novo review. See United States v. Baird, 712 F.3d 623, 628 (1st Cir. 2013). Like the district court, we "assume[] the truth of the complaint's well-pleaded facts and draw[] all reasonable inferences in [Speaker Eves's] favor." Eves, 2016 WL 1948869, at *1 (citing Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012)).

         A. Maine's Government and Budget Process

         We begin with background information that is helpful in understanding the issues in this case.

         Serving in the Maine Legislature is not a full-time job for most representatives. The legislature typically sits twice during each two-year session: once from December to June in year one, and then again from January to April in year two. See Me. Rev. Stat. Ann. ("M.R.S.A.") tit. 3, § 2. A legislator's salary is $24, 056, spread across the two years, plus a $38 per diem, when the legislature is active, "for housing or mileage and tolls." Eves, 2016 WL 1948869, at *2. Most legislators have at least one other source of income, often in the private sector. Id. In fact, legislators from both parties agree that "[n]early all legislators depend on a career outside of the State House to provide for their families." Id. at *5 (relaying statement by Maine Senate President Mike Thibodeau, a Republican).

         Maine's biennial budget process starts when the Department of Administrative and Financial Services, after considering submissions from various agencies and policy committees, "prepare[s] and submit[s] . . . a state budget document" to the governor. M.R.S.A. tit. 5, § 1662. The governor reviews the draft budget, alters it, and then sends it to the legislature before the statutory deadline "in January of the first regular legislative session." Id. § 1666. The legislature must "enact a budget no later than 30 days prior to the date of adjournment prescribed" by law. Id. § 1666-A. The legislature's budget then returns to the governor, who has line-item veto power, permitting him to reduce "any dollar amount" in the budget. Me. Const. art. IV, pt. 3, § 2-A. The legislature can override any line-item veto with a simple majority of both the House and the Senate. Id. The governor can also veto the entire budget, like any other piece of legislation, in which case a 2/3 majority of both the House and the Senate is necessary to override the veto. Id. art. IV, pt. 3, § 2.

         The facts of this case, which occurred mostly in June 2015, arose in the midst of the biennial budget process and involved serious political conflict between Governor LePage and the legislature. In a press conference on May 29, 2015, the Governor stated that he planned to veto "every bill sponsored by a Democrat" for the rest of his term in office "unless the Legislature agreed to support his plan to have a referendum vote on eliminating Maine's income tax." Eves, 2016 WL 1948869, at *4. The Governor did, in fact, veto ten bills on June 8, 2015, stating that he had done so purely because of their Democratic sponsorship. After the legislature passed a budget on June 17, 2015, the Governor issued sixty-four line-item vetoes, each of which the legislature overrode on June 18 and 19, 2015.

         On June 29, 2015, the Governor vetoed the entire budget. The legislature also overrode that veto, on June 30, and enacted the budget for FY2016 and FY2017 into law. That budget included discretionary funding for GWH.

         B. Good Will-Hinckley and Speaker Eves

         GWH is a private nonprofit organization, located in Fairfield, Maine, which aims to provide services to at-risk children throughout the state. Founded in 1889 as a "farm, school and home for needy boys, " GWH now has a broader mission and portfolio encompassing a "college step-up program, " a "Learning Center for youth with emotional or behavioral challenges, " a nutrition program, a library, and a museum. Id. at *2. The organization has long depended on both private donations and government grants.

         Since 2009, GWH has been designated by Maine "to serve as the nonprofit charitable corporation with a public purpose to implement the Center of Excellence for At-risk Students." Id. at *3; see M.R.S.A. tit. 20-A, § 6951. Fulfilling this responsibility, GWH opened a charter school in 2012, called the Maine Academy of Natural Sciences ("MeANS"). MeANS has its own board and its own principal; it also relies in large part on discretionary state funding.

         The Maine state budget for FY2014 and FY2015 -- which covered the period from July 1, 2013 to June 30, 2015 -- allocated $1, 060, 000 in discretionary funding to GWH for the purpose of operating MeANS. In that period of time, the LePage Administration chose to disburse all of that money. The proposed budget for FY2016 and FY2017, under debate in spring 2015, contained an identical appropriation of $1, 060, 000, to be paid to GWH in quarterly installments, as in previous years.

         Glenn Cummings, formerly a Speaker of the Maine House of Representatives, resigned as president of GWH in September 2014, having served for approximately four years. GWH began searching for a successor, and plaintiff Mark Eves was one of nineteen applicants. Eves, Maine's current Speaker, has served in that role since 2012 and as a representative since 2008. Because he is term-limited, see M.R.S.A. tit. 21-A, § 553(2), he must leave the House entirely in December 2016, when his fourth term expires. Speaker Eves also has fifteen years of professional experience as a marriage and family therapist. Since moving from California to Maine in 2003, the Speaker has worked in that field, even while serving in the legislature.

         GWH's eight-member search committee interviewed Speaker Eves on April 24, 2015. He visited the campus as one of three finalists, and on April 30, the GWH Senior Leadership Team unanimously recommended him as the best of the three. The Team's memo "cited his 'extensive clinical experience, ' his 'balance of executive administration and fundraising experience, ' and his 'leadership style and polished approach' as reasons for their conclusion." Eves, 2016 WL 1948869, at *3. After Speaker Eves interviewed with the full boards of GWH and MeANS on May 15, both voted unanimously to offer him the job of GWH President.

         On June 5, 2015, Speaker Eves and GWH entered into a two-year employment agreement, which contained a "for-cause termination provision" and "no conditions or contingencies" related to any actions or funding decisions by the State. Id. at *4. GWH announced the Speaker as its new President on June 9.

         C. Governor LePage's Intervention

         On June 5, 2015, Governor LePage learned that GWH had decided to hire Speaker Eves. The Governor promptly called GWH's Interim President, stating "that he was extremely upset" about the news and "us[ing] profanity to describe [Speaker Eves] and his work." Id. That same day or "soon after, " LePage sent a handwritten note to GWH's Board Chair, which "referred very negatively to Eves" and called the Speaker a "hack." Id. The Board Chair's belief, after reading the note, was "that GWH would lose $1, 060, 000 in state funding if it retained Eves as its new President." Id.

         On June 8, Governor LePage sent a public letter to the Board Chairs of GWH and MeANS, "urging that they reconsider." Id. The letter characterized Speaker Eves as "a longtime opponent of public charter schools" who had fought against "every effort to reform Maine's government." Id. The GWH Board, "which includes people of various political affiliations, " discussed the letter and "agreed that their selection of Speaker Eves [had been] well-supported and . . . not based on political considerations." Id.

         Also on June 8, the Governor received a call from Gregory Powell, the Board Chair of the Harold Alfond Foundation ("the Foundation"), who was responding to a June 5 voicemail from the Governor. During their conversation, Powell learned that the Governor was "withdrawing all support, including financial support, from GWH as long as Eves remained as President of the organization." Id. Responding to that news, Powell sent a letter to GWH's Board on June 18, warning them that the Foundation had "serious concern[s] . . . regarding [GWH's] future financial viability" if the Governor were to follow through on his threat to withhold the $1, 060, 000 of state funding. Id. Those concerns, he further warned, made the Foundation uneasy about committing to a $2, 750, 000 grant that the Foundation had been planning to give to GWH.

         On or about June 9, Governor LePage told the Acting Commissioner of the Department of Education not to send any more payments to GWH that were not required by law. The Commissioner duly froze $132, 500 in discretionary funds scheduled to be sent to GWH for the next quarter (beginning on July 1). At that point, having passed no new budget, the ...


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