Takeaway
In short, this case distinguishes immunity from liability: a federal agency’s sue-and-be-sued clause may waive sovereign immunity for a constitutional claim, but Bivens itself supplies damages only against individual federal officers, not federal agencies.
After California seized Fidelity Savings and Loan Association in 1982, the Federal Savings and Loan Insurance Corporation (FSLIC) became its receiver under both state and federal law. Following its policy of removing senior management at failed thrifts, FSLIC, through special representative Robert Pattullo, summarily fired John H. Meyer, a senior Fidelity officer.
Meyer sued FSLIC and Pattullo, alleging that his discharge deprived him of a California-law property interest in continued employment without Fifth Amendment due process. A jury awarded Meyer $130,000 against FSLIC but found Pattullo protected by qualified immunity. The Ninth Circuit affirmed, holding that the Federal Tort Claims Act did not supply Meyer’s exclusive remedy, that FSLIC’s sue-and-be-sued clause waived immunity, and that Meyer had been denied due process. After FSLIC was abolished, the FDIC, its statutory successor, continued the appeal.
Issue #1
Whether Meyer’s constitutional-tort claim was “cognizable” under 28 U.S.C. § 1346(b), making the Federal Tort Claims Act his exclusive remedy and barring suit against FSLIC in its own name.
Holding
No. A constitutional-tort claim is not cognizable under § 1346(b) because that provision supplies a cause of action only where a private person would be liable under the law of the state where the conduct occurred.
Reasoning
Section 2679(a) makes the FTCA remedy exclusive only for claims “cognizable under section 1346(b).” The Court read “cognizable” according to its ordinary meaning: a claim is cognizable if it falls within, and is actionable under, the jurisdictional grant in § 1346(b).
To be actionable under § 1346(b), a claim must satisfy all of that provision’s elements, including the requirement that the United States would be liable as a private person under the “law of the place.” The Court has consistently construed that phrase to mean state law.
A claim alleging a deprivation of a federal constitutional right does not arise under state law, and a private person ordinarily cannot be liable for violating the Fifth Amendment. Thus, the United States has not rendered itself liable under the FTCA for constitutional torts. Meyer’s claim therefore was not cognizable under § 1346(b), and the FTCA did not displace suit against FSLIC under its own name.
Issue #2
Whether FSLIC’s statutory authority to “sue and be sued” waived sovereign immunity for Meyer’s constitutional-tort claim.
Holding
Yes. FSLIC’s broad sue-and-be-sued clause waived the agency’s sovereign immunity for this claim.
Reasoning
A waiver of sovereign immunity and the existence of a substantive cause of action are distinct questions. Because the FTCA did not make Meyer’s claim exclusively remediable against the United States, the Court next considered whether FSLIC’s own statutory waiver covered the suit.
FSLIC’s organic statute broadly authorized it to “sue and be sued, complain and defend, in any court of competent jurisdiction.” Such clauses are liberally construed and are presumed to waive immunity fully unless limiting the waiver is clearly necessary to avoid conflict with the statutory or constitutional scheme, grave interference with governmental functions, or another plainly demonstrated congressional purpose.
The FDIC argued that the clause should extend only to liabilities a private entity could incur. The Court rejected that proposed limitation. Earlier cases looking to private-enterprise liability established a floor: an agency with a sue-and-be-sued clause cannot avoid ordinary liabilities that private businesses bear. They did not establish a ceiling that excludes claims unique to governmental actors.
Congress expressly provided in § 2679(a) that FTCA-cognizable claims are excluded from suits against an agency in its own name. The Court declined to add further FTCA-style limitations to the separate sue-and-be-sued clause by implication. Because the FDIC did not make the required clear showing that constitutional claims were excluded, FSLIC’s immunity was waived.
Issue #3
Whether Bivens permits a damages action directly against a federal agency, rather than only against individual federal officers.
Holding
No. Bivens does not create a cause of action for damages directly against a federal agency.
Reasoning
The Ninth Circuit treated the sovereign-immunity waiver as sufficient to create a damages remedy. The Supreme Court held that this conflated two separate inquiries: whether the Government has consented to suit and whether the substantive source of law creates a right to relief. A waiver of immunity alone does not create a cause of action.
Bivens implied a damages remedy against individual federal officers who violate the Constitution. Meyer in fact brought the Bivens-type claim that Bivens supports when he sued Pattullo, the official who fired him. Bivens did not authorize a direct action against the federal agency itself.
Permitting agency liability would also undermine Bivens’s central purpose: deterring the individual officer responsible for the constitutional violation. If plaintiffs could sue an agency directly and avoid an officer’s qualified-immunity defense, they would have little reason to bring claims against individual officials, weakening the personal deterrent that Bivens was designed to provide.
Direct agency liability would expose the federal government to potentially enormous financial liability. That fiscal-policy decision is a special factor counseling hesitation in implying a remedy, and the Court concluded that Congress—not the judiciary—must decide whether to create such an action. Because Meyer had no Bivens cause of action against FSLIC, the Court reversed without reaching whether his discharge actually violated due process.