served the Attorney General by mail on December 31, 1987.
The individual defendants contend that the complaint should be dismissed against them because they have not been properly served. With respect to defendants Jack Pleasant and Bruce Pedersen, plaintiff concedes the inadequacy of service, and those two defendants are therefore dismissed from the case. Plaintiff contends that the remaining individual defendants were properly served pursuant to Fed. R. Civ. P. 4(c)(2)(C)(ii), which provides for service "by mailing a copy of the summons and of the complaint (by first-class mail, postage prepaid) to the person to be served, together with two copies of a notice and acknowledgment conforming substantially to form 18-A and a return envelope, postage prepaid, addressed to the sender."
Defendants argue that the attempted service did not comply with Rule 4(c)(2)(C)(ii) for three reasons. First, defendants contend that the envelope was not specifically addressed to the individual defendants. Defendants cite no case law or rationale in support of this argument. The Court finds that the failure to specifically address the envelope to the individual defendants does not render the service defective, especially in light of the fact that defendants received actual notice. Cf. Jaffe v. Federal Reserve Bank of Chicago, 100 F.R.D. 443, 445 (N.D. Ill. 1983) ("When notice is actually given a person, it matters not a whit whether he or she receives it at home, at work, at play or anywhere else.").
Second, defendants contend that plaintiff failed to enclose a stamped return envelope as required by Rule 4(c)(2)(C)(ii). The failure to include both the notice and acknowledgment forms and a return envelope is generally held to render service defective. See, e.g., Norlock v. City of Garland, 768 F.2d 654, 655-56 (5th Cir. 1985); Quann v. Whitegate-Edgewater, 112 F.R.D. 649, 652-53 (D. Md. 1986). But see Kitchens v. Bryan County National Bank, 825 F.2d 248, 255-56 (10th Cir. 1987) (despite omission of return envelope and notice and acknowledgment form, service complied with spirit of Rule 4; federal courts take a permissive attitude when defendants receive actual notice). However, of these two requirements, inclusion of the notice and acknowledgment is the more important. Where they are submitted and only the return envelope is omitted, service is not considered invalid in the absence of prejudice to the defendants. See United Services Auto Association v. Cregor, 617 F. Supp. 1053, 1055 (N.D. Ill. 1985).
Third, defendants argue that service was defective because it was delivered by certified mail rather than first-class mail. Congress considered an amendment to Rule 4 which would permit service by certified or registered mail, return receipt requested. There was a concern, however, that such a procedure would be inadequate to ensure actual notice. Congress therefore specifically rejected such a procedure, requiring instead the use of first-class mail with an enclosed notice and acknowledgment form and providing that mail service was not complete unless and until that form was signed and returned. See Bernard v. Strang Air, Inc., 109 F.R.D. 336, 337-38 (D. Neb. 1985); Fed.R.Civ.P. 4, Original Practice Commentary at C4-19 (reprinted at 28 U.S.C.A. Rule 4, 1988 Supp.). Thus where service is attempted by certified mail, without inclusion of the notice and acknowledgment form, service is improper. E.g., Bernard, 109 F.R.D. at 336-37. See also Chronister v. Sam Tanksley Trucking, Inc., 569 F. Supp. 464, 469-70 (N.D. Ill. 1983) (service improper where use of certified mail was one of several defects, including failure to enclose proper notice and acknowledgment form). Here, the notice and acknowledgment forms were enclosed and the recipients signed and returned them. In light of the completion of actual notice and the lack of prejudice to defendant from the use of certified rather than first-class mail, the Court finds that the defect is not grounds for dismissal.
With respect to defendant Gary Holloway, plaintiff has not submitted a completed notice and acknowledgment form. It is unclear whether this omission is due to Holloway's failure to return the form or to a clerical error on plaintiff's part. If Holloway did timely execute the form and return it to plaintiff, plaintiff may file the acknowledgment with the Court by April 12, 1989. If no such form is filed, Holloway will be dismissed from the case.
III. DUE PROCESS CLAIMS
Defendants argue that Count I of the complaint, which alleges deprivation of property and liberty without due process of law, fails to state a claim.
Defendants contend that plaintiff's claim for deprivation of property without due process fails because he did not have a property interest in his continued employment at the FDIC. Plaintiff's position fell in the category of excepted service. See 5 U.S.C. §§ 3301-02; 5 C.F.R. § 213. Defendants emphasize that the due process protections afforded to employees in the competitive service do not apply to employees in the excepted service. See United States v. Fausto, 484 U.S. 439, 108 S. Ct. 668, 98 L. Ed. 2d 830 (1988). Defendants also rely on Castro v. United States, 775 F.2d 399, 406 (1st Cir. 1985), which held that excepted service employees at the FDIC have no property interest in the renewal of their temporary appointments. Plaintiff distinguishes Castro on the ground that he was terminated prior to the expiration of his appointment rather than merely denied a renewal upon the expiration of his appointment. Furthermore, the cases cited by defendants address the issue of whether federal statutes create a property interest for excepted service employees; plaintiff, however, relies not on federal law but on oral "understandings" between himself and defendants to establish a property interest.
A property interest may "be created in one of two ways: (1) 'by an independent source such as state law securing certain benefits;' or (2) by 'a clearly implied promise of continued employment.'" Shlay v. Montgomery, 802 F.2d 918, 921 (7th Cir. 1986), quoting Munson v. Friske, 754 F.2d 683, 692 (7th Cir. 1985). Plaintiff relies on the second of these two methods. He alleges that there existed an "understanding" between himself and defendants "that he would have an opportunity to address the charges levelled against him." (Complaint, para. 17.) See Davis v. City of Chicago, 841 F.2d 186, 188 (7th Cir. 1988) (property interests may arise from mutually explicit understanding), citing Perry v. Sindermann, 408 U.S. 593, 601, 92 S. Ct. 2694, 2699, 33 L. Ed. 2d 570 (1972).
However, plaintiff's complaint is insufficient to allege the existence of a property interest because he does not allege facts which would establish that defendants had the authority to enter into such an understanding. As the court recognized in Fiorentino v. United States, 221 Ct. Cl. 545, 607 F.2d 963, 968 (Ct.Cl. 1979), cert. denied, 444 U.S. 1083, 100 S. Ct. 1039, 62 L. Ed. 2d 768 (1980), "if the government were not involved a case of apparent authority might be urged, but with claims against the government, the decisions agree authority must be actual." Thus in Shlay, supra, the Seventh Circuit held that an employee of the City of Chicago did not have a property interest in continued employment despite an alleged oral contract for career employment which provided for termination only for cause. The court stated:
[Plaintiff] cites to no source, and we can find none, which purports to give the corporation counsel the authority to create a career position for a person in Shlay's situation. Any promise for such a position would, therefore, be unenforceable since it is well-established that a city is generally not legally responsible for acts taken by its officers in excess of their authority. E.g., Ganley v. City of Chicago, 18 Ill. App. 3d 248, 309 N.E.2d 653, 658 (1st Dist. 1974). As the Ganley court recognized, "anyone dealing with a governmental body takes the risk of having accurately ascertained that he who purports to act for it stays within the bounds of his authority." Id. See Chicago Patrolmen's Association v. City of Chicago, 56 Ill. 2d 503, 309 N.E.2d 3, 6, cert. denied, 419 U.S. 839, 95 S. Ct. 68, 42 L. Ed. 2d 66 (1974).