Vinyard v. King, 728 F.2d 428 (10th Cir. 1984)

McKAY, Circuit Judge.

We are asked to decide whether the district court properly granted summary judgment on the issue of whether plaintiff, Eda-leen Vinyard, had a property interest in her continued employment with a municipal hospital.

I. Background

Mrs. Vinyard was hired as the hospital’s Director of Volunteer Services in 1972. She served in that capacity until 1978, when Robert J. King, the hospital’s administrator, fired her for allegedly violating his policy concerning the confidentiality of personnel communications. Mrs. Vinyard has consistently denied that allegation. Both parties stipulate, however, that plaintiff was given no hearing prior to being fired. Record, vol. 2, at 201. At the time she was hired, there was no formal employees’ manual in effect. However, in 1976, Mrs. Vinyard was given a copy of the hospital’s Employee Handbook (“handbook”) which provided information concerning the policies and benefits applicable to hospital employees. Record, vol. 2, at 282.

Mrs. Vinyard filed this suit under 42 U.S.C. § 19831 against Mr. King and the

members of the hospital’s board of directors, in their official and individual capacities. She sought, inter alia, reinstatement, compensatory damages, punitive damages against Mr. King, costs and attorney’s fees. She alleged that her termination was state action depriving her of a property interest in her continued employment without due process of the law, in violation of the fourteenth amendment.2 U.S. Const. amend. XIV, § 1. The district court in Vinyard I invoked the Pullman3 abstention doctrine. We reversed4 and remanded for the district court to decide whether the facts surrounding Mrs. Vinyard’s employment gave rise to a property interest under Oklahoma law.5 On remand, defendant filed a motion for summary judgment. Mrs. Vinyard appeals the district court’s grant of defendants’ motion for summary judgment, holding that under Oklahoma law, she does not have a property interest in her continued employment. She claims that there are genuine issues of material fact surrounding her employment contract with the hospital, precluding an award of summary judgment. Fed.R.Civ.P. 56(c).

As we must do, we have considered all factual inferences in the light most favorable to the existence of issues of material fact, and in the light most favorable to the plaintiff, Mrs. Vinyard — the party opposing the summary judgment motion. Exnicious v. United States, 563 F.2d 418, 423 (10th Cir.1977). We reverse the decision of the district court on the ground that as a matter of Oklahoma law, Mrs. Vinyard has a constitutionally protected property interest in her employment with the hospital. We remand for the district court to determine the appropriate award of damages, costs and attorney’s fees.

II. Section 1983 Claim

When bringing a section 1983 action, a public employee must show that she possesses a property or liberty interest in her employment in order to trigger the due process protections afforded by the fourteenth amendment. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). In the case before us, Mrs. Vinyard advances two theories in an attempt to support the sufficiency of her property interest claim. First, despite the fact that she had no written employment contract, Mrs. Vinyard alleges that there were special circumstances and considerations giving rise to an implied employment contract with the hospital. Mutually explicit understandings can create a property interest in continued employment by means of an implied contract. Bishop v. Wood, 426 U.S. 341, 344 & n. 6, 96 S.Ct. 2074, 2077 & n. 6, 48 L.Ed.2d 684 (1975) (citing with approval Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 2699, 33 L.Ed.2d 570 (1972)). If we thought that plaintiff’s property interest existed by means of an implied annual contract with her employer, we would remand for a factual determination of whether the facts and special circumstances alleged by plaintiff do indeed give

rise to such a contract.6 However, the existence and sufficiency of Mrs. Vinyard’s property interest is governed by the terms set forth in the hospital’s handbook.

Mrs. Vinyard’s second theory is that a property interest in her continued employment was created when the hospital issued its employee handbook in 1976.7 Record, vol. 2, at 211-82. She argues that the handbook creates a property interest because it provides that permanent employees, such as herself, could only be discharged for cause.8 See Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974).

Defendants would like us to believe, however, that the hospital was not restricted to dismissing its employees solely for cause. They argue that classification as a “permanent” employee does not give rise to a contract other than one for an indefinite period of time — terminable at will. The district court, citing to Edwards v. Kentucky Utilities Co., 286 Ky. 341, 150 S.W.2d 916 (1941), and Garza v. United Child Care, Inc., 88 N.M. 30, 536 P.2d 1086 (App.1975), cases cited by the Oklahoma Supreme Court in Singh v. Cities Service Oil Co.,9 554 P.2d 1367, 1369 n. 3 (Okl.1976), concluded that under Oklahoma law the parties’ employment relationship was terminable-at-will and that the handbook did not restrict the hospital to discharge its permanent employees only for cause. Vinyard v. King, No. C-79-185-W, slip op. at 4-5 (W.D.Okla. January 27, 1982). We disagree.

Both the district court’s decision and defendants’ argument place unnecessary reliance on the significance of whether Mrs. Vinyard had an at-will or definite duration employment contract. They ignore the importance of the employee handbook10 — the

pivotal point in Mrs. Vinyard’s section 1983 claim — which is determinative of a property interest under Oklahoma law. See Langdon v. Saga Corp., 569 P.2d 524, 526-28 (Okl.Ct.App.1976). Whether Mrs. Vinyard has a property interest under Oklahoma law sufficient to trigger the protections of the fourteenth amendment is not necessarily determined by what type of contract she was employed under. Rather her property interest is determined by whether the terms of employment created by contract, federal statute,11 city charter,12 or an employee manual13 “create a sufficient expectancy of continued employment to constitute a property interest, which must be afforded constitutionally guaranteed due process.” Hall v. O’Keefe, 617 P.2d 196, 200 (Okl.1980). Therefore, we turn to Oklahoma law, Bishop, 426 U.S. at 344, 96 S.Ct. at 2077, to determine whether Mrs. Vinyard had a “legitimate claim of entitlement” to her job rather than a mere “unilateral expectation” of continuing in her position. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972).

III. Existence of Property Interest

In Oklahoma the provisions of an employee handbook can constitute a contract between the employer and employee and define the employer-employee relationship for as long as those provisions are in effect and the employee provides consideration for the benefits provided by the handbook. The consideration can be quite small and can even consist of the employee continuing to work and foregoing the option of quitting. Langdon v. Saga Corp., 569 P.2d 524, 526-28 (Okl.App.1976). In Langdon, the employee handbook provided for severance and vacation pay upon termination. In holding that those provisions constituted part of the employment contract, the court held that “the [personnel [mjanual ... became a . .. contract which defined the employer-employee relationship during the period the policy was in effect and the employee performed.” Langdon, 569 P.2d at 528. See also Smith v. Kerrville Bus Co., 709 F.2d 914, 919-20 (5th Cir.1983) (reasons for discharge enumerated in employee handbook restricted employer to discharge only for cause). The Oklahoma Supreme Court has since recognized that “the terms of employment established with an employer ... may create a sufficient expectancy of continued employment to constitute a property interest, which must be afforded constitutionally guaranteed due process.” Hall v. O’Keefe, 617 P.2d 196, 200 (Okl. 1980).

Here both parties stipulate that there is no written employment contract. The only writing evidencing an agreement is the employee handbook, signed by both Mrs. Vinyard and the hospital’s personnel assistant. The handbook was designed “to acquaint [the employee] with the policies and benefits which apply to ... employee[s]”. Record, vol. 2, at 211. It specifically states that a permanent employee may not be discharged without cause.14 The fact that the handbook does not provide for review procedures15 is no bar to our holding that under these circumstances we believe the Oklahoma Supreme Court would find a property interest in continued employment protected by the fourteenth amendment. See Perry v. Sindermann, 408 U.S. 593, 601-03, 92 S.Ct. 2694, 2699-2700, 33 L.Ed.2d 570 (1972); Poolaw v. City of Anadarko, 660 F.2d 459 (10th Cir.1981). As a public employee, Mrs. Vinyard retained the right, re

gardless of its omission from the handbook, to seek review of the hospital’s policies and to seek redress for the violation of her constitutional rights.

We hold that termination by the hospital, without a hearing to determine whether cause existed, was a violation of section 1983. Since it is not disputed that no procedural process was provided in this case, we do not need to discuss the question of what processes would satisfy procedural due process in a case like this. We reverse the decision of the district court and hold, as a matter of law, Mrs. Vinyard had a property interest in her continued employment with the hospital. We remand for a determination of damages.

IV. Damages, Costs and Attorney’s Fees

A. Damages

Having held that the hospital’s termination of Mrs. Vinyard, without a hearing, was in violation of her fourteenth amendment rights, we turn next to the question of damages against the hospital for a section 1983 violation. In her complaint Mrs. Vin-yard requested compensatory damages in addition to reinstatement. She also seeks punitive damages in the amount of $75,000 against the defendant, Mr. King.

Local governing bodies are liable for constitutional deprivations when the improper action stems from “decision[s] officially adopted and promulgated by that body’s officers.” Monell v. Department of Social Services of New York, 436 U.S. 658, 690, 98 S.Ct. 2018, 2035, 56 L.Ed.2d 611 (1978); Miller v. City of Mission, 705 F.2d 368 (10th Cir.1983). As a municipal hospital, the hospital is liable under section 1983 if it “was in a position of responsibility, knew or should have known of the misconduct, and yet failed to act to prevent future harm.” McClelland v. Facteau, 610 F.2d 693, 697 (10th Cir.1979). Personal participation is not the only predicate for liability under section 1983. Anyone who under col- or of state law, subjects, or causes to be subjected, any citizen to a constitutional deprivation will be liable.

Here the hospital is liable for its failure to provide a pretermination hearing to determine if cause was present before Mrs. Vinyard’s discharge. Since this case is before us after a grant of summary judgment, we remand to the district court to compute compensatory damages and to consider her request for reinstatement. See Keyer v. Civil Service Commission of New York, 397 F.Supp. 1362, 1370 (E.D.N.Y.1975); Vega v. Civil Service Commission of New York, 385 F.Supp. 1376 (S.D.N.Y.1974); Lyman v. Swartley, 385 F.Supp. 661 (D.Idaho 1974).

B. Punitive Damages

Mrs. Vinyard seeks punitive damages in the amount of $75,000.00 against defendant Mr. King for knowingly, willfully and wantonly discharging her from her employment and requests a jury trial on this issue.

Punitive damages may be awarded in a section 1983 action to deter or punish violations of constitutional rights. Miller v. City of Mission, 705 F.2d 368 (10th Cir.1983). Although punitive damages will not lie against a municipal organization itself, McKee v. Heggy, 703 F.2d 479 (10th Cir.1983), they will lie against a municipal official, based on his personal financial resources, if such official conduct was prompted by an “evil motive or intent, or when it [the conduct] involves reckless or callous indifference to the federally protected rights of others.” Smith v. Wade, — U.S. —, 103 S.Ct. 1625, 1640, 75 L.Ed.2d 632 (1983).

We remand for a determination of whether Mr. King’s actions rose to the required level.

C. Costs and Attorney’s Fees

The Civil Rights Attorney’s Fees Awards Act of 197616 provides that in federal civil rights actions “the court, in its discretion, may allow the prevailing party other than the United States, a reasonable attorney’s fee as part of the costs,” 42 U.S.C. § 1988 (Supp. V 1981), and as such applies to an action brought pursuant to section 1983.

As a “prevailing party”, Mrs. Vinyard will be entitled to recover under section 1988. On remand we direct the district court to Hensley v. Eckerhart,— U.S. —, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (prevailing party’s section 1988 fee award must be calculated in relation to the degree of success obtained) for an appropriate determination of attorney’s fees, including attorney’s fees for the successful prosecution of this appeal.