NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS AUG 18 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

VAN POUNDS, No. 20-35154

Plaintiff-Appellant, D.C. No. 6:19-cv-00420-MK

v.

MEMORANDUM*

CAMERON SMITH, individually and in his official capacity; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the District of Oregon Ann L. Aiken, District Judge, Presiding

Argued and Submitted July 6, 2021 Portland, Oregon

Before: M. MURPHY,** PAEZ, and BENNETT, Circuit Judges.

Plaintiff-Appellant Van Pounds appeals the district court’s order dismissing

his complaint with prejudice for failing to state a claim upon which relief can be

granted. The district court adopted the magistrate judge’s findings and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Michael R. Murphy, United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation. recommendation, which found that Pounds failed to plausibly allege First and

Fourteenth Amendment claims,1 and denied Pounds leave to amend his complaint.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse in part, affirm in

part, and remand.

Pounds was an attorney employed by the Oregon Department of Consumer

and Business Services (“DCBS”). In March 2018, he decided to run for election to

the Oregon Supreme Court. After he filed to run, a reporter made two public records

requests for certain of Pounds’s employment files. The first request sought

documents pertaining to Pounds’s job titles, “job classifications[,] and salaries from

Jan[uary] 1, 2015 until now.” The records first produced showed Pounds had

changed jobs at least once, and also reflected a small salary reduction. The second

request sought “written communication including but not limited to emails,

correspondence, investigative reports or other documentation that explains the

reasons for Mr. Pounds’ demotion and pay cut.”

In 2015, the DCBS, unbeknownst to Pounds, investigated Pounds while he

was a DCBS supervisor. The 2015 investigation generated a report (“Report”),

which stated that “overwhelmingly, employees generally do not trust [Pounds],” and

that Pounds “is generally found to be the least credible person in the unit.” The State

1 The district court also dismissed Pounds’s state law and Fair Credit Reporting Act claims. Pounds does not challenge those rulings on appeal, and thus may not reassert them on remand.

2 says that Pounds was not demoted or subject to any adverse employment action,

either as a result of the investigation or for any other reason.

The State released the Report in response to the second records request. When

Pounds asked individual defendant Brian Light why DCBS would disclose such a

report, he was allegedly told: “That’s what you get when you file for public office.”

DCBS allegedly offered Pounds an opportunity to request a “name-clearing hearing”

prior to the release of the Report, but then allegedly released the report before the

deadline offered to request the hearing had passed. When DCBS disclosed the

Report to the requesting reporter, DCBS wrote: “We believe this investigative report

contains the information you are wanting. If, after reading this report, you still want

emails, let me know.” Soon after, the reporter’s newspaper ran an article with the

headline: “A state investigation of a candidate for the Oregon Supreme Court found

him ‘the least credible person in the unit.’” Pounds later lost the election, garnering

26.5% of the vote.

1. The district court erred in adopting the magistrate judge’s finding and

recommendation that Pounds’s First Amendment claim did not allege state action

“reasonably likely to deter [Pounds] from engaging in his First Amendment speech”

and thus that he failed to plead an adverse employment action. Reviewing de novo,

Curtis v. Irwin Indus., Inc., 913 F.3d 1146, 1151 (9th Cir. 2019), we hold that

DCBS’s disclosure of the Report, which Pounds alleged to contain false stigmatizing

3 information, can constitute an adverse employment action that impermissibly chills

protected speech.

We begin by addressing whether there was an adverse employment action.

Our circuit has adopted the “reasonably likely to deter” test, where we ask whether

Pounds can establish that the actions taken by the defendants were “reasonably likely

to deter employees from engaging in constitutionally protected speech.” Coszalter

v. City of Salem, 320 F.3d 968, 970, 976 (9th Cir. 2003). “To constitute an adverse

employment action, a government act of retaliation need not be severe and it need

not be of a certain kind. Nor does it matter whether an act of retaliation is in the

form of the removal of a benefit or the imposition of a burden.” Id. at 975.

Taking Pounds’s allegations as true, we hold that disclosure of a report like

this one, allegedly containing false information of this type, prepared by a

government agency, regarding a public employee candidate for judicial office, can

constitute an adverse employment action for First Amendment purposes. This, after

all, was a report finding that state employees overwhelmingly viewed their attorney

coworker as untrustworthy and not credible. We reject the DCBS’s position that this

case involves “[m]ere threats and harsh words” like those in Nunez v. City of Los

Angeles, 147 F.3d 867, 875 (9th Cir. 1998).2

2 That DCBS’s email producing the Report can be read to falsely affirm that Pounds was demoted as a result of the investigation adds to the already sufficient “reasonably likely to deter” allegations.

4 Because we find an adverse employment action, we proceed to a “sequential

five-step series of questions”:

(1) whether [plaintiff] spoke on a matter of public concern; (2) whether [plaintiff] spoke as a private citizen or public employee; (3) whether [plaintiff’s] protected speech was a substantial or motivating factor in the adverse employment action; (4) whether the state had an adequate justification for treating [plaintiff] differently from other members of the general public; and (5) whether the state would have taken the adverse employment action even absent the protected speech.

Greisen v. Hanken, 925 F.3d 1097, 1108 (9th Cir. 2019). Pounds has the burden of

proving the answers to the first three questions are “yes.” Id. If he succeeds, the

burden shifts to the State for the final two steps. Id.

DCBS concedes that Pounds’s candidacy for the Oregon Supreme Court

satisfies the first two steps. As to the third, Pounds’s pleadings must show that he

can:

(1) introduce evidence that the speech and adverse action were proximate in time, such that a jury could infer that the action took place in retaliation for [his] speech; (2) introduce evidence that the employer expressed opposition to the speech; or (3) introduce evidence that the proffered explanations for the adverse actions were false and pretextual.

Anthoine v. N. Cent. Counties Consortium, 605 F.3d 740, 750 (9th Cir. 2010).

Pounds has sufficiently alleged at least two of the three. First, DCBS

disclosed the Report proximate in time to Pounds’s protected speech—his candidacy

5 for the Oregon Supreme Court. Pounds filed for the position on March 5, 2018, and

DCBS produced the Report on March 28, 2018.

And second, there is sufficient evidence of pretext. The government claims it

had to release the Report because of its obligation to comply with Oregon’s public

records law. But the Report fell outside the ambit of the requested documents. The

DCBS maintains that Pounds was never demoted. For that reason, the Report could

not “explain the reasons for” a demotion that never took place. This sufficiently

establishes a triable issue as to pretext.3

Turning to the final two questions, as to which the government bears the

burden, DCBS contends that it “had an adequate justification for treating [Pounds]

differently from any other member of the general public” on account of the public

records request. Id. at 752. We reject this argument because the Report fell outside

the ambit of the requested documents. Nor has DCBS established at the pleading

stage that it would have reached the same decision regarding disclosure absent

Pounds’s protected conduct. Even putting aside that the records request came about

only because of the protected speech, the State turned over damning documents that

the records request did not call for. Looking at the allegations in the light most

3 Having found sufficient allegations of temporal proximity and pretext, we need not decide whether the statement “[t]hat’s what you get when you file for public office” shows employer opposition to the protected speech.

6 favorable to Pounds, we can infer that the protected speech played a role in the

decision. See id.

The State argues the DCBS employee defendants were entitled to qualified

immunity. The district court did not reach this question, and neither do we, given

the underdeveloped record.

2. The district court correctly dismissed Pounds’s due process claim because

Pounds did not adequately plead allegations sufficient to satisfy the “stigma plus”

test. Ulrich v. City & Cnty. of San Francisco, 308 F.3d 968, 982 (9th Cir. 2002). To

state a due process claim under the Fourteenth Amendment, Pounds “must show the

public disclosure of [an alleged] stigmatizing statement by the government, the

accuracy of which is contested, plus the denial of ‘some more tangible interest[] such

as employment,’ or the alteration of a right or status recognized by state law.” Id.

(citation omitted). “Accusations of dishonesty or immorality are sufficiently

stigmatizing to implicate a liberty interest, but less severe accusations must be

analyzed on a case-by-case basis, and allegations of mere incompetence or inability

are not sufficient.” Blantz v. Cal. Dep’t of Corr. & Rehab., Div. of Corr. Health

Care Servs., 727 F.3d 917, 925 n.6 (9th Cir. 2013). An “interest in reputation alone”

is insufficient to meet the alteration of a right or status prong of the “stigma plus”

test. See Paul v. Davis, 424 U.S. 693, 711 (1976).

Pounds’s claim falters at the “plus” portion of the “stigma plus” test. His

7 claim boils down to alleging a harm to his reputation, which the Supreme Court has

soundly rejected as insufficient to meet the stigma plus test. See id. Pounds leans

on language in the Oregon Constitution to try to save his claim: “No court shall be

secret, but justice shall be administered, openly and without purchase, completely

and without delay, and every man shall have remedy by due course of law for injury

done him in his person, property, or reputation.” Or. Const. art. I § 10. But the

Oregon Supreme Court has made clear that “Article I, section 10, guarantees injured

persons a remedy in due course of law for their injuries [that have already occurred];

it is not a ‘due process’ clause.” State v. Hart, 699 P.2d 1113, 1120 (Or. 1985) (en

banc). Thus, Pounds’s allegations do not state a claim for a due process violation.

3. The district court did not err in denying Pounds an opportunity to amend

his due process claim because any “proposed amendment [would] either lack[] merit

or would not serve any purpose because to grant it would be futile in saving [his]

suit.” Universal Mortg. Co. v. Prudential Ins., 799 F.2d 458, 459 (9th Cir. 1986).

In sum, we reverse the district court’s dismissal of Pounds’s First Amendment

retaliation claim and remand for proceedings consistent with this disposition, but

otherwise affirm the district court.

REVERSED in part, AFFIRMED in part, and REMANDED.4

4 DCBS shall bear Pounds’s costs on appeal.

8