ATLANTA (CN) — An attorney for the ousted CEO of Alabama One Credit Union asked an 11th Circuit panel Thursday to reinstate a lawsuit against former Governor Robert Bentley and his ex-legal adviser accusing them of seizing control of the institution and forcing him out.
John Dee Carruth claimed that Bentley and his then-legal adviser David Byrne used their political power to unleash state regulators on him and the credit union, depriving him of his equal protection and due process rights.
An attorney representing Carruth told a three-judge 11th Circuit panel Thursday morning that the district court incorrectly ruled last year that Bentley and Byrne were entitled to immunity from the lawsuit.
“State governors are often entrusted with heavy and dangerous powers, but these powers are not absolute and that’s why we’re here,” Jeven Sloan of Loewinsohn Flegle Deary Simon argued on behalf of Carruth.
Representing Bentley and Byrne, attorney John Neiman, Jr. of Maynard Cooper & Gale urged the panel to affirm the dismissal, arguing that Carruth had not proved that the disgraced former governor and his legal advisor had anything to do with Carruth’s termination.
Carruth sued Bentley and Byrne in August 2017 after he was fired from his position when the Alabama Credit Union Administration issued an order of conservatorship over the credit union and took possession of the business and its $589 million in assets in 2015.
According to the order of conservatorship, the ACUA determined that executives and employees exploited their positions and jeopardized the assets and interests of members by engaging in misconduct.
The agency found that the credit union had lost over $7.8 million in 2014 and $3.18 million in the first six months of 2015 through a pattern of deficient underwriting and credit practices. Carruth and the credit union’s attorneys were also found to have made misrepresentations and allegedly failed to submit records for inspection.
After the takeover, Alabama One’s board members, attorneys and Carruth were all fired.
In April 2018, U.S. District Court Judge L. Scott Coogler dismissed Carruth’s complaint, finding that Bentley and Byrne are entitled to qualified immunity because they were acting within their discretionary authority when they allegedly directed Sarah Moore, the administrator of the ACUA, and the agency’s board to take over Alabama One and fire Carruth.
On Thursday, attorney Sloan argued that Byrne and Bentley engaged in misconduct.
“Even if they acted improperly, doesn’t the law say they still acted within their authority?” U.S. Circuit Judge Stanley Marcus asked.
“The district court agreed that [Moore’s predecessor] Larry Morgan’s administration was tainted and improperly influenced by the office of the governor… Bentley was within his authority to appoint Moore but the allegations in the complaint establish an uninterrupted continuum of coercion between Morgan and Moore,” Sloan said.
But attorney Neiman told the panel that there was no causal relationship between Carruth’s termination and his clients’ “autonomous and deliberate decision-making.”
“If Carruth wanted to allege Bentley and Byrne coerced Moore, he’d have to allege actual facts showing coercion. No facts are apparent in the complaint… [He] alleges no communications between Bentley and Byrne as to the conservatorship. There was no coercion and no extraordinary influence,” Neiman said.
Marcus was joined on the panel by Senior U.S. Circuits Judge Julie Carnes and Paul Kelly, Jr., the latter of whom sitting by designation from the 10th Circuit.
The judges did not indicate when they will reach a decision in the case.
Bentley resigned in April 2017 and was charged with violating campaign finance law by using state resources to facilitate and conceal an extramarital affair with a staffer. In a plea deal, he agreed never to seek public office in Alabama again.