Regulating Privatized Government through § 1983

Richard Frankel Earle Mack School of Law at Drexel University

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My article, Regulating Privatized Government through § 1983,1 argues that courts are improperly interpreting 42 USC § 1983 to grant private entities subject to the statute an exemption from respondeat superior liability.  This problem has arisen in the increasingly common context where governments contract out core public functions to private companies, and when, consequently, constitutional torts are committed by employees of the private company rather than of the government entity.  One need look no further than the recent Blackwater situation in Iraq to see the problems that can result when governments contract out public functions—including very sensitive public functions—to private entities.

Although the Blackwater incident occurred abroad, this same form of privatization is occurring increasingly often at the state and local levels.  Governments have privatized a wide array of programs, including prison management, sanitation, welfare administration, and security services.  When employees of those entities are accused of violating constitutional rights in the process of performing those services, the entities have attempted to cloak themselves in the same immunities and protections from liability that courts have traditionally afforded to governments.

This article focuses on one particular liability exemption under § 1983, the exemption from respondeat superior liability.  Currently, private entities, just like public entities, typically are not subject to respondeat superior liability under § 1983.  The availability of respondeat superior liability for constitutional torts is particularly important, however, because in many tort contexts, it may be the only way that injury victims can get relief, as individual defendants often are judgment proof, not indemnified, protected by immunity doctrines, or uninsured.  Although the overwhelming majority of courts have held to the contrary, this article argues that private parties that perform public functions and therefore are subject to § 1983 should be held liable for the constitutional torts of their employees under a respondeat superior theory.

Section 1983 provides a cause of action for individuals who suffer violations of their federal statutory and constitutional rights by persons acting under color of state law.  Although § 1983 typically is limited to government actors, private companies that perform public functions also are subject to the Act by virtue of the state action doctrine.2 One of the core principles that the Supreme Court has applied in interpreting § 1983 is that Congress enacted the statute against the backdrop of the common law and therefore intended to incorporate existing common law tort liability rules absent specific evidence to the contrary.  At the time § 1983 was enacted, just as now, respondeat superior for private entities—that is, holding an employer responsible for the torts of employees committed within the scope of their employment—was a well-settled and commonly recognized tort principle.

Nevertheless, more than thirty years ago, in Monell v Department of Social Services,3 the Supreme Court addressed municipal liability under § 1983 and held that municipalities could be sued for damages, but not under a respondeat superior theory.4 Rather, a plaintiff must show that a municipal custom or policy caused the violation.  Although Monell dealt exclusively with municipalities, lower courts have almost universally, and with relatively little analysis, reflexively extended Monell’s protections to private entities performing public functions.5 At first blush, this seems sensible.  After all, if private entities are subject to § 1983 only because they perform the same tasks as municipalities, then perhaps they should be provided the same liability protections.

I believe, however, that this conclusion is misguided and that even if municipalities are protected from respondeat superior liability, private parties that perform public functions should not be so protected, for two main reasons.  First, as a matter of statutory interpretation, extending Monell to private entities is unjustified, because Monell rested on federalism concerns that do not apply to private parties.  Second, as a matter of policy, there may be important asymmetries in the ways that government actors and private actors behave with respect to tort incentives such that private actors should be subject to respondeat superior liability even if we accept that public entities will be exempt.

    I. Statutory Interpretation

First, Monell’s rationale, which was based on a theory similar to the statutory canon of constitutional avoidance, does not apply to, and should not be extended to, private parties.  The Monell Court interpreted the statute’s requirement that a state actor “cause” a violation to mean “directly cause,” which it construed to imply a rejection of vicarious liability.  The Court implicitly acknowledged, however, that the term “cause” itself is ambiguous. This makes sense because there is no inherent inconsistency between causation and respondeat superior, as causation is an element of all torts, including those that permit respondeat superior liability.

In order to resolve that potential ambiguity, the Court said that the text of § 1983 could not be read in a vacuum but must be read “against the background of the [statute’s] legislative history.”6 The Court focused on Congress’s rejection of the “Sherman Amendment,” which would have imposed vicarious liability on municipalities not for violations of their employees but for the riotous acts of the citizenry.  Congress objected to the amendment on constitutional federalism grounds, believing that imposing such extreme vicarious obligations on municipalities as a federal mandate would interfere with the states’ ability to control their municipalities, which would violate the then-prevailing constitutional doctrine of dual sovereignty.  The Monell Court therefore concluded that Congress’s rejection of the only form of municipal vicarious liability presented to it when combined with the absence of any clear language overcoming that rejection means that Congress did not intend to impose respondeat superior liability on municipalities.
But that constitutional concern has no bearing on regulating private parties, which does not present any federalism concern.  Consequently, § 1983’s textual ambiguity pushes in the opposite direction when applied to private entities.  Just as Monell found the statute’s language too ambiguous to read in respondeat superior liability for municipalities over Congress’s specific constitutional objection, it is similarly too ambiguous to read out the general default rule of respondeat superior liability for private entities in the absence of any similar constitutional concern.  In a sense, Monell can be seen as an application of the statutory canon of interpreting a statute narrowly to avoid any constitutional implications.  But once the federalism-specific constitutional concern disappears, as it does when addressing private-entity liability, there is no reason to give § 1983 the same narrow construction for private entities as for public entities.

That Congress may not have intended to overturn the traditional respondeat superior rule for private parties is further supported by the fact that courts have recognized respondeat superior liability under §§ 1981 and 1982, Reconstruction Era Civil Rights Acts that were passed around the same time as § 1983 and that courts have interpreted to apply to private parties.7 There is little reason to think that Congress would have intended a different result in § 1983.

    II. Policy

While statutory construction principles on their own justify imposing respondeat superior liability on private entities subject to § 1983, policy concerns also support even if public entities are exempt. Important differences may exist between municipalities and private entities that should be considered in addressing the reach of Monell.   While it is not fully clear how strong these differences are, they are certainly worthy of consideration, and courts have ignored them when reflexively extending Monell to private parties.

A.     Deterrence

A primary purpose of § 1983 is to deter future civil rights violations.  Respondeat superior liability may be more effective in deterring private entities than public entities.  Private entities, even when performing public functions, are profit-driven institutions and are considered to be rational wealth-maximizers that respond to the bottom line.  Thus, additional tort liability through respondeat superior can alter incentives and encourage private parties to be more protective of civil rights by devoting more resources to employee training, taking more care in employee hiring, and instituting other rewards and penalties that can encourage employees to respect constitutional rights.  That deterrence effect is in fact a primary justification for respondeat superior liability for private parties in other tort contexts.

Government entities, on the other hand, are created to serve the public benefit, are not profit motivated, and are governed by political rather than financial constraints.  As a result, it is much less clear that tort liability is effective in inducing governmental bodies to change their behavior.8 As a result, even if the justification for respondeat superior liability in the public sector is weaker, it may still be strong in the private sector because it will deter more effectively.

In addition to focusing strictly on deterrence, there also is a fairness rationale for treating public entities and private entities differently regarding respondeat superior liability.  One main rationale for respondeat superior is that a business that enjoys the profits of its employees’ labor also should bear the risk of their job-related misbehavior.  That rationale applies with particular strength in the private context, but less so in the public context because public entities are not motivated by profit and because it is the public that ultimately is rewarded from public employees’ labor, not a group of private investors and shareholders.  Thus, from both a practical and a moral perspective, the deterrence purpose of § 1983 gives much stronger support to imposing respondeat superior on private parties than on public ones.

B.     Democratic Accountability

On the flip side, while tort liability may be less effective in deterring public actors than private actors, other forms of accountability may constrain government actors from violating civil rights in ways that do not apply as strongly to private actors.  First, public officials are electorally accountable, and officials who allow routine violations of civil rights risk being thrown out of office.  Second, it may be easier to shed light on government misconduct than on private misconduct.  For example, open records laws allow people to find out about how government is acting, but such laws typically do not apply to private parties.  Third, there is some reason to believe that public actors are more sensitive than public actors to press reports and negative publicity arising from unlawful conduct.  Government agency officials may not be seriously worried about tort judgments, because those judgments often do not affect their specific budgets, but they often are very worried about a scandal coming out in the press.  Although those same constraints could also indirectly affect private entities contracting with the government based on the risk that the government will not contract with habitual rights violators, that is unlikely to be the case because, as a practical matter, governments have not proven effective at monitoring the companies with which they contract.

Of course, these incentives are not always working at cross-purposes.  Financial penalties, especially when they put the government at risk of not being able to provide other essential services, may induce government action.  Similarly, private actors probably are neither completely unconcerned about their public image nor totally immune to press reports about misconduct.  But the important point is that these incentives operate asymmetrically.  In the private context, the primary motivator is money, and image concerns are relevant only instrumentally in terms of how they affect a company’s bottom line.  In the public context, the primary motivator is the election, and damages liability has an effect only to the extent that it translates to electoral results.  Those asymmetries may create differences between governmental and private behavior, which should be taken into account in deciding whether to impose respondeat superior liability on private parties under § 1983.

C.     Specialization

Governments provide a wide array of services and have to choose how to distribute scarce resources among their various programs. Additional tort liability for governments may result not in fewer civil rights violations but instead in a decision to cut other necessary, but politically unpopular, government services.  That risk may be heightened where the program or service responsible for the violation is a particularly popular one—such as policing.  This concern is less salient in the private sphere, however, because private companies, at least currently, typically specialize in a particular service rather than the range of government services, and therefore there is less potential for costly tradeoffs.

    Conclusion

Regardless of whether one thinks privatization is good or bad, as private companies continue to perform public functions designed to fulfill public goals and promote public values, it is important to establish the proper rules that govern how privatization will take place.  Critical to ensuring that privatization takes place in a way that shows the proper respect for public values is ensuring the availability of respondeat superior liability, both in terms of promoting deterrence and ensuring compensation for injury victims.  Extending Monell to private entities undermines those values both because its rationale does not apply to private parties and because policy reasons may favor treating public entities and private entities differently.  To be sure, imposing respondeat superior liability to private entities under § 1983 will make privatization more expensive, but that is true of any liability rule applied to private parties.  Whether society places greater value on privatization than on ensuring compliance with the Constitution may not be fully clear, but considering that we generally are comfortable making private entities liable for the torts of their employees, applying the same rule in the § 1983 context seems consistent with societal values.  Consequently, private parties that perform public functions should be subject to respondeat superior liability under § 1983.


Acknowledgments:

Richard Frankel is an Associate Professor of Law at the Earle Mack School of Law, Drexel University.

Copyright © 2010 University of Chicago Law Review.

  1. Richard Frankel, Regulating Privatized Government through § 1983, 76 U Chi L Rev 1449 (2009).
  2. Id at 1543 n 26.
  3. 436 US 658 (1978).
  4. Id at 691.
  5. See, for example, Harvey v Harvey, 949 F2d 1127, 1129–30 (11th Cir 1992); Rojas v Alexander’s Department Store, Inc, 924 F2d 406, 408–09 (2d Cir 1990); Powell v Shopco, 678 F2d 504, 506 (4th Cir 1982).
  6. Monell, 436 US at 658.
  7. See Frankel, 76 U Chi L Rev at 1472 n 110 (cited in note 1).
  8. See Daryl J. Levinson, Empire-Building Government in Constitutional Law, 118 Harv L Rev 915, 965–66 (2005); Michael J. Trebilcock and Edward M. Iacobucci, Privatization and Accountability, 116 Harv L Rev 1422, 1424 (2003); William A. Niskanen, Jr, Bureaucracy and Representative Government 36–42 (Aldine 1971).

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