Opinion ID: 3158926
Heading Depth: 2
Heading Rank: 2

Heading: issue preclusion and chenery

Text: Next, Canonsburg argues that the district court violated the Chenery doctrine by considering the Secretary’s issue preclusion defense even though issue preclusion was not raised during the administrative proceedings. We disagree. In SEC v. Chenery Corp. (Chenery I), 318 U.S. 80 (1943), the Supreme Court explained that “the courts cannot exercise their duty of review unless they are advised of the 11 Our analysis does not encompass agency adjudications that require, by express regulation, that affirmative defenses be raised before the agency. See, e.g., Canady v. SEC, 230 F.3d 362, 365 (D.C. Cir. 2000) (failure to raise statute of limitations affirmative defense before SEC constituted waiver based on pleading requirements set forth in SEC regulations). 17 considerations underlying the action under review.” Id. at 94. When an agency action rests upon “an exercise of judgment in an area which Congress has entrusted to the agency . . . the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained.” Id.; see also id. at 88 (“If an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgment.”). The Supreme Court further elucidated the Chenery doctrine in SEC v. Chenery Corp. (Chenery II), 332 U.S. 194 (1947): [A] reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis. To do so would propel the court into the domain which Congress has set aside exclusively for the administrative agency. Id. at 196. Neither Chenery I nor Chenery II addressed judicial doctrines such as issue preclusion. The Court did explain, however, that Chenery applies to “a determination or judgment which an administrative agency alone is authorized to make,” Chenery II, 332 U.S. at 196 (emphasis added); in other words, to an agency’s “exercise of judgment in an area which Congress has entrusted to the agency,” Chenery I, 318 U.S. at 94. Issue preclusion is not a determination specially entrusted to an agency’s expertise; it is instead the sort of 18 antecedent determination that a court usually makes. Simply put, Chenery does not apply to legal principles like issue preclusion. See Chenery II, 332 U.S. at 196; Chenery I, 318 U.S. at 94. Our precedent is in accord. We have explained that Chenery only limits judicial review of “factual determination[s] or . . . policy judgment[s] that [the agency] alone is authorized to make.” Shea v. Dir., Office of Workers’ Comp. Programs, 929 F.2d 736, 739 n.4 (D.C. Cir. 1991). 12 Indeed, we held in Horne v. Merit Systems Protection Board that “[t]he rule established in Chenery only applies to agency actions that involve policymaking or other acts of agency discretion.” 684 F.2d 155, 158 n.4 (D.C. Cir. 1982); cf. Athlone Indus., Inc. v. Consumer Prod. Safety Comm’n, 707 F.2d 1485, 1489 (D.C. Cir. 1983) (explaining that exhaustion of administrative remedies should not apply where “strictly a legal issue” is in dispute, “[n]o factual development or application of agency expertise will aid the court’s decision” and “a decision by the court [will not] invade the field of agency expertise or discretion” (citations omitted)). Moreover, other circuits have declined to interpret Chenery as Canonsburg would have it. See, e.g., In re Comiskey, 554 F.3d 967, 974 (Fed. Cir. 2009) (“In [Chenery I], the Supreme 12 In USPS, we relied on Chenery I in denying an intervenor’s attempt to press an issue preclusion defense on appeal. See 969 F.2d at 1069 (“[W]e reject [the intervenor’s] endeavor to achieve disposition of this case on a rationale [not] set forth by the agency itself.” (internal quotation marks omitted) (some alteration in original) (citing, inter alia, Chenery I, 318 U.S. at 93–95)). But the USPS intervenor attempted to raise preclusion for the first time on appeal. See U.S. Postal Serv., 303 N.L.R.B. 463 (1991) (declining to address any potential issue preclusion argument). Here, the Secretary, not an intervenor, timely asserted the defense in district court. For this reason, we find USPS inapposite. 19 Court made clear that a reviewing court can (and should) affirm an agency decision on a legal ground not relied on by the agency if there is no issue of fact, policy, or agency expertise.”); RNS Servs., Inc. v. Sec’y of Labor, 115 F.3d 182, 184 n.1 (3d Cir. 1997) (explaining that Chenery I does not apply if “no factual or other determination that Congress sought to exclusively entrust to the [Federal Mine Safety and Health Review] Commission is being intruded upon by the courts.” (internal quotation marks omitted)). 13 Canonsburg claims that the only recognized exception to the Chenery doctrine applies to the agency reaching a result mandated by statute but for the wrong reason. See United Video, Inc. v. FCC, 890 F.2d 1173, 1190 (D.C. Cir. 1989) (“Hence, Chenery reversal is not necessary where, as here, the agency has come to a conclusion to which it was bound to 13 The Federal Circuit stated in dicta in an unpublished opinion, Cabrera v. OPM, 980 F.2d 743, 1992 WL 279390, at  n.1 (Fed. Cir. 1992) (per curiam) (unpublished table disposition), that it “appear[ed]” that an agency’s decision could not be upheld on res judicata grounds because the defense had not been raised before the agency. But that decision, besides being nonprecedential, conflicted with an earlier precedential Federal Circuit decision. See Spears v. Merit Sys. Prot. Bd., 766 F.2d 520, 523 (Fed. Cir. 1985) (Chenery doctrine did not prevent court from dismissing appeal on res judicata grounds even though agency did not analyze res judicata in first instance because “any action by the MSPB would not involve policymaking or discretion”); see also Deckers Corp. v. United States, 752 F.3d 949, 964 (Fed. Cir. 2014) (“[A] panel of this court . . . is bound by the precedential decisions of prior panels unless and until overruled by an intervening Supreme Court or en banc decision.”). Cabrera thus has little, if any, persuasive power. In addition, the Sixth Circuit’s similar treatment of the Chenery doctrine in Municipal Resale Service Customers, supra at 16, contained little analysis. See 43 F.3d at 1052 n.4. 20 come as a matter of law, albeit for the wrong reason, and where, as here, the agency's incorrect reasoning was confined to that discrete question of law and played no part in its discretionary determination.”). But Canonsburg fails to recognize that the court’s consideration of a judicial doctrine like issue preclusion does not constitute an exception to Chenery—Chenery simply does not apply to the issue in the first place. See Horne, 684 F.2d at 158 n.4 (“The rule established in Chenery only applies to agency actions that involve policymaking or other acts of agency discretion.” (emphasis added)). In light of the Supreme Court’s plain language in Chenery I and II, our own construction of the Chenery doctrine and no persuasive case law to the contrary, we conclude that the Chenery doctrine does not prohibit raising issue preclusion as an affirmative defense in district court even if the party raising the defense was not a party to the administrative proceeding or was otherwise unable to assert the defense at the administrative stage.