                              In the

United States Court of Appeals
                For the Seventh Circuit

No. 08-1634

M AUREEN R EYNOLDS,
                                                  Plaintiff-Appellant,
                                  v.

U NITED S TATES OF A MERICA,
                                                 Defendant-Appellee.


             Appeal from the United States District Court
      for the Southern District of Indiana, Indianapolis Division.
       No. 1:07-cv-00171-SEB-TAB—Sarah Evans Barker, Judge.



   A RGUED S EPTEMBER 12, 2008—D ECIDED D ECEMBER 9, 2008




  Before R IPPLE, R OVNER, and E VANS, Circuit Judges.
  R OVNER, Circuit Judge. In August 2003 a security guard
with General Security Services Corporation stood on the
roof of the Minton-Capehart Federal Building in Indianap-
olis, Indiana—inexplicably naked, alone, and locked out of
the building. Later that day Maureen Reynolds, a General
Security officer, learned of the incident, but not the nudity,
and wrote up a report. The Federal Protective Service (FPS)
launched an investigation as well, which culminated in a
2                                                No. 08-1634

state prosecution against Reynolds for false reporting.
Reynolds’s bench trial resulted in an acquittal. But the state
criminal proceedings cost Reynolds her job, so she sued the
United States under the Federal Tort Claims Act (FTCA),
28 U.S.C. §§ 1346(b)(1), 2671-80, asserting that FPS investi-
gators had initiated a malicious prosecution by submitting
knowingly false information to the Marion County prose-
cutor and the Marion County Superior Court. The district
court dismissed Reynolds’s complaint for lack of subject-
matter jurisdiction, see F ED. R. C IV. P. 12(b)(1), citing
various grounds, including that the discretionary-function
exception to the FTCA shielded the actions of FPS investi-
gators, see 28 U.S.C. § 2680(a). We disagree and remand for
further proceedings.


                              I.
  For purposes of this appeal, we accept the allegations in
Reynolds’s complaint as true and draw all reasonable
inferences in her favor. See Palay v. United States, 349 F.3d
418, 425 (7th Cir. 2003). During the relevant period General
Security contracted with the Department of Homeland
Security to protect the Minton-Capehart building. In
August 2003 a naked General Security guard locked
himself out on the roof of the building. Eventually he was
able to get the attention of another guard, who unlocked
the door and let him inside. When Reynolds arrived for her
shift that evening, both guards approached her and related
the incident, though neither one mentioned the nudity.
Shortly thereafter Reynolds filed an incident report detail-
ing what she had learned about the episode.
No. 08-1634                                                 3

  Six weeks later FPS opened an investigation. FPS officers
Mark Lambert and Mark Fullerton questioned the two
security guards, and both admitted that one of them had
been naked on the roof that day. Three days later Lambert
and Fullerton interviewed Reynolds, who relayed only
what she knew at the time—that a security guard had
locked himself out of the building and that one of his peers
had let him back in. Although Lambert and Fullerton knew
that Reynolds was unaware of the nudity, they neverthe-
less approached the Marion County prosecutor’s office and
supplied an affidavit of probable cause averring that
Reynolds had lied to them. That affidavit became the basis
for an information charging Reynolds with false—i.e.,
incomplete—reporting. In light of the criminal charge,
General Security placed Reynolds on an indefinite and
unpaid leave-of-absence. Reynolds was eventually acquit-
ted after a bench trial, but General Security still fired her
after the verdict because of the allegations of criminal
activity.
   After losing her job, Reynolds sued the United States
under the FTCA, see 28 U.S.C. §§ 1346(b)(1), 2671-80,
claiming that Lambert and Fullerton, acting in their
capacity as federal law enforcement officers, had “insti-
gated and initiated” a malicious prosecution. The FTCA
authorizes suits against the United States for torts commit-
ted by federal officials if the same acts would create
liability for private persons under applicable state tort law.
See 28 U.S.C. § 1346(b)(1). But the FTCA contains various
exceptions to the waiver of sovereign immunity; there is no
governmental liability, for example, for claims arising from
4                                                No. 08-1634

an employee’s performance of a discretionary function. See
28 U.S.C. § 2680(a).
  At the government’s urging, the district court dismissed
the complaint for lack of subject-matter jurisdiction,
see F ED. R. C IV. P. 12(b)(1), citing three separate grounds.
First, the court concluded that the actions of Lambert and
Fullerton were “clearly discretionary” under 28
U.S.C. § 2680(a) because “the decisions they made and the
actions they took were tied to their own view of what
public policy required.” The court elaborated:
    The guidelines governing the work of the FPS leave[]
    room for independent judgment on the part of the
    officers and the exercise of discretion in deciding what
    evidence to gather and credit and whom to investigate
    and so forth. Indeed, law enforcement judgment is the
    quintessential discretionary activity, requiring the
    performance and weighing of a wide array of subjec-
    tive factors in order to protect the safety and security
    of the federal facility.
Second, the court asserted, Lambert and Fullerton are
government contractors, not “employees of the govern-
ment,” and therefore Reynolds could not sue the United
States under the FTCA. See 28 U.S.C. § 2671. Third, the
court reasoned, an FTCA claim for malicious prosecution
requires allegations of misconduct by “investigative or law
enforcement officers”—and Lambert and Fullerton did not
fit that description “because the actions of which Reynolds
complains did not entail any searches or seizures or . . .
arrests.” See 28 U.S.C. § 2680(h) (defining “investigative or
law enforcement officer” as “any officer of the United
No. 08-1634                                                     5

States who is empowered by law to execute searches, to
seize evidence, or to make arrests for violations of Federal
law”).
  This appeal followed.


                               II.
  Reynolds contends that all three reasons for dismissal are
faulty. Before reaching her arguments, though, we must
address the district court’s decision to dismiss her com-
plaint under Rule 12(b)(1). In Palay v. United States, 349 F.3d
418, 424-25 (7th Cir. 2003), we questioned whether statu-
tory exceptions to the FTCA limit the jurisdictional grant
or, as recent cases had suggested, the scope of the right to
recover. And in Parrott v. United States, 536 F.3d 629, 634
(7th Cir. 2008), we held that “[t]he statutory exceptions
enumerated in § 2680(a)-(n) to the United States’s waiver
of sovereign immunity (found in § 1346(b)) limit the
breadth of the Government’s waiver of sovereign immu-
nity, but they do not accomplish this task by withdrawing
subject-matter jurisdiction from the federal courts.” Thus,
the government’s filing in the district court was, despite its
label, more properly a motion to dismiss for failure to state
a claim. See F ED. R. C IV. P. 12(b)(6); Parrott, 536 F.3d at 634;
Clark v. United States, 326 F.3d 911, 913 (7th Cir. 2003). That
designation governs our de novo review of whether
Reynolds has stated a claim for relief. See Palay, 349 F.3d at
424-25.
  Reynolds’s chief argument on appeal—and the only one
that the government responds to—is that the alleged
6                                                  No. 08-1634

misconduct of Lambert and Fullerton falls outside of the
FTCA’s discretionary-function exception. The FTCA
permits suits against the United States for personal injuries
caused by the wrongful acts of federal employees acting
within the scope of their employment under circumstances
in which a private person would be liable to the plaintiff.
See 28 U.S.C. § 1346(b)(1). Although the FTCA’s waiver of
sovereign immunity is broad, Congress has excepted
certain claims from its purview, including “[a]ny
claim . . . based upon the exercise or performance or the
failure to exercise or perform a discretionary function or
duty on the part of a federal agency or an employee of the
Government, whether or not the discretion involved be
abused.” 28 U.S.C. § 2680(a); see Berkovitz v. United States,
486 U.S. 531, 535 (1988). The purpose of this discretionary-
function exception is to “prevent judicial ‘second-guessing’
of legislative and administrative decisions grounded in
social, economic, and political policy through the medium
of an action in tort.” United States v. Varig Airlines, 467 U.S.
797, 814 (1984).
  The discretionary-function exception has two require-
ments. First, the conduct alleged must involve an element
of judgment or choice. United States v. Gaubert, 499 U.S. 315,
322 (1991); Berkovitz, 486 U.S. at 536; Palay, 349 F.3d at 427.
Conduct cannot be discretionary if “a federal statute,
regulation, or policy specifically prescribes a course of
action for an employee to follow” because “the employee
has no rightful option but to adhere to the directive.”
Berkovitz, 486 U.S. at 536; see Palay, 349 F.3d at 427. Second,
given that the exception “protects only governmental
actions and decisions based on considerations of public
No. 08-1634                                                    7

policy,” the challenged discretionary conduct must amount
to a permissible exercise of policy judgment. Berkovitz, 486
U.S. at 537; see Gaubert, 499 U.S. at 323; Palay, 349 F.3d at
427-28. The government actor’s intent is of no consequence
to our analysis, “[n]or must the actor belong to the
policymaking or planning ranks of government in order for
the exception to apply.” Palay, 349 F.3d at 428. All that
matters is “the nature of the actions taken and . . . whether
they are susceptible to policy analysis.” Gaubert, 499 U.S. at
325; see Varig Airlines, 467 U.S. at 814; Palay, 349 F.3d at 432.
   Reynolds insists that the “malicious and bad faith
conduct” of Lambert and Fullerton does not fall within the
discretionary-function exception. Those labels do nothing
for her cause, though, and the government correctly points
out that subjective intent is irrelevant to our analysis. See
Gaubert, 499 U.S. at 325. Still, the government misses a
more subtle strand of Reynolds’s argument when it
maintains that this is a “classic” example of the
discretionary-function exception. As we understand it,
Reynolds asserts—under the umbrella of “malicious and
bad faith conduct” and consistent with her complaint—that
Lambert and Fullerton submitted a knowingly false
affidavit to the Marion County prosecutor and, ultimately,
the state court in an “effort to corrupt the fairness of the
prosecution.” She concedes that the decision to prosecute
her was discretionary; her point is that providing know-
ingly false information en route to a criminal prosecution
is “ ’sufficiently separable’ from the ‘protected discretion-
ary decision.’ ” At oral argument we asked the government
whether a law-enforcement officer involved in a criminal
investigation has discretion to report information that the
8                                                 No. 08-1634

officer knows to be false. To our surprise, counsel an-
swered yes and directed us to Gray v. Bell, 712 F.2d 490
(D.C. Cir. 1983). But that cannot be right, as a close reading
of Gray and related cases shows.
  In Gray the D.C. Circuit considered whether prosecutors
who failed to call certain witnesses before a grand jury,
omitted mention of exculpatory evidence, and misrepre-
sented dates in a timeline of criminal activity had neverthe-
less engaged in activities that were not “separable from a
protected discretionary function.” 712 F.2d at 494, 513-16.
The court concluded that the alleged misconduct was
“inextricably tied to the decision to prosecute and the
presentation of evidence to the Grand Jury,” and that there
was “no meaningful way in which the allegedly negligent
investigatory acts could be considered apart from the
totality of the prosecution.” Id. at 516. The case before us is
distinguishable, however. Gray proposes that if the deci-
sion to prosecute is discretionary, so too are the many
small decisions that accompany a prosecution—how much
evidence to present, whether to call certain witnesses,
etc.—even if those decisions inadvertently mislead a grand
jury. For that reason, challenges to the quality of an
investigation or prosecution are generally barred by the
discretionary-function exception. See, e.g., Pooler v. United
States, 787 F.2d 868, 871 (3d Cir. 1986). But this is an
altogether different scenario. Reynolds alleges that Lam-
bert and Fullerton fueled her prosecution with knowingly
false information. And how can that be a discretionary
decision when it is proscribed by Indiana law? See IND.
C ODE §§ 35-44-2-1(a)(1), 35-44-2-2(d)(1). It cannot; a federal
investigator’s decision to lie under oath is separable from
No. 08-1634                                                  9

the discretionary decision to prosecute. See Moore v. Valder,
65 F.3d 189, 197 (D.C. Cir. 1996) (“Disclosing grand jury
testimony to unauthorized third parties . . . is not a discre-
tionary activity nor is it inextricably tied to matters requir-
ing the exercise of discretion.”); Limone v. United States, 271
F.Supp.2d 345, 356 (D. Mass. 2003) (rejecting argument that
law-enforcement officers had discretion to suborn perjury
or falsify evidence); Tri-State Hosp. Supply Corp. v. United
States, 142 F.Supp.2d 93, 100-01 (D.D.C. 2001) (“With
respect to Tri-State’s claims that Customs officials falsified
records and lied to bring about a prosecution, . . . [l]ying
under oath to preserve barred claims is not a protected act
under the discretionary function exception.”), rev’d on other
grounds, 341 F.3d 571 (D.C. Cir. 2003); Wang v. United States,
No. 01-1326, 2001 WL 1297793, at *4 (S.D.N.Y. Oct. 25, 2001)
(“To be actionable as malicious prosecution, the investiga-
tor’s conduct must be independent or quasi-independent
from the non-actionable decision to prosecute and must
constitute the kind of wrongful conduct that is designed to
corrupt the fairness of a prosecution.”). There can be no
argument that perjury is the sort of “legislative [or] admin-
istrative decision[] grounded in social, economic, and
political policy” that Congress sought to shield from
“ ’second-guessing.’ ” Varig Airlines, 467 U.S. at 814. There-
fore, the discretionary-function exception has no applica-
tion here.
  Reynolds also contends that the district court incorrectly
characterized Lambert and Fullerton as contractors, see
28 U.S.C. § 2671, and the government does not attempt to
defend the district court on that point. As FPS investiga-
tors, Lambert and Fullerton are undoubtedly government
10                                                  No. 08-1634

employees; the district court’s confusion on this point
stems from the uncontested contractor status of Reynolds’s
former employer, General Security. We need not dwell any
further on this issue.
  Reynolds attacks the district court’s third ground for
dismissal—that Lambert and Fullerton could not have
engaged in malicious prosecution because they did not
conduct a search, seizure, or arrest—as well. Again the
government has opted not to contest the point. Relying
indirectly on Pooler v. United States, 787 F.2d 868 (3d Cir.
1986), the district court interpreted the law-enforcement
officer proviso of 28 U.S.C. § 2680(h) to require a search,
seizure, or arrest in order to trigger tort liability. See Pooler,
787 F.2d at 872 (“We read the 1974 amendment to section
2680(h) as addressing the problem of intentionally tortious
conduct occurring in the course of the specified government
activities.” (emphasis added)). Yet the plain language
of § 2680(h) is not so restrictive:
     [W]ith regard to acts or omissions of investigative or
     law enforcement officers of the United States Govern-
     ment, the provisions of this chapter and section 1346(b)
     of this title shall apply to any claim arising [out of]
     malicious prosecution. For the purpose of this subsec-
     tion, “investigative or law enforcement officer” means
     any officer of the United States who is empowered by law
     to execute searches, to seize evidence, or to make
     arrests for violations of Federal law.
28 U.S.C. § 2680(h) (emphasis added). Pooler’s requirement
of a search, seizure, or arrest has largely escaped the
attention of other circuit courts, but numerous district
No. 08-1634                                                  11

courts have criticized the decision as “unduly narrow” and
lacking “any principled underpinning.” E.g., Murphy v.
United States, 121 F.Supp.2d 21, 24 (D.D.C. 2000); Ortiz v.
Pearson, 88 F.Supp.2d 151, 164-65 (S.D.N.Y. 2000) (collecting
cases). Indeed, even the case cited by the district court in
its order of dismissal, Employers Ins. of Wausau v. United
States, 815 F.Supp. 255 (N.D. Ill. 1993), does not strictly
require search, seizure, or arrest: “[T]he fair reading of the
Section 2680(h) proviso is that even if the FTCA action for
such intentional torts is not based on an actual search or
seizure of evidence or arrest, it must at a minimum charge
the government with wrongdoing based on ‘acts or omis-
sions of investigative or law enforcement officers’ while they
are engaged in investigative or law enforcement activities.” Id.
at 259. We, too, disagree with Pooler and the district court’s
interpretation. Section 2680(h) does not require that a law
enforcement officer commit the intentional tort while
executing a search, seizing evidence, or making an arrest.
Accord Sami v. United States, 617 F.2d 755, 764-65 (D.C. Cir.
1979).
  The FTCA to one side, we still must evaluate whether
Reynolds has stated a claim for relief under Indiana tort
law. See 28 U.S.C. § 1346(b)(1); Parrott, 536 F.3d at 635. In
order to prevail on a claim of malicious prosecution in
Indiana, a plaintiff must establish that the defendant,
acting with malice and without probable cause, instituted
or caused to be instituted a prosecution that terminated in
the plaintiff’s favor. See City of New Haven v. Reichhart, 748
N.E.2d 374, 378 (Ind. 2001); Glass v. Trump Indiana, Inc., 802
N.E.2d 461, 466-67 (Ind. Ct. App. 2004). Probable cause
exists if, following some reasonable investigation, a
12                                               No. 08-1634

reasonably intelligent and prudent person in the defen-
dant’s position would believe that the accused committed
the crime charged. Glass, 802 N.E.2d at 467. “[T]he element
of malice,” meanwhile, “may be inferred from a total lack
of probable cause, from the failure to make a reasonable or
suitable inquiry, and from a showing of personal animos-
ity.” Kroger Food Stores, Inc. v. Clark, 598 N.E.2d 1084, 1089
(Ind. Ct. App. 1992). Reynolds has alleged explicitly these
elements, and we see no further obstacle to her complaint
at this stage. We do not, of course, vouch for the accuracy
of Reynolds’s allegations; our holding is merely that she
has stated a claim for relief.
 For these reasons we V ACATE the district court’s dis-
missal and R EMAND for further proceedings.




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