Opinion ID: 691017
Heading Depth: 1
Heading Rank: 6

Heading: Menendez and Plaisance

Text: 24 Menendez and Plaisance argue that the district court erred in granting summary judgment in favor of the government, asserting that the ALJ's refusal to grant them a hearing constituted a denial of their due process rights and violated the APA, the ESA, and the NOAA regulations. In response, the government proffers three reasons for affirming the judgment of the district court: that Menendez and Plaisance failed to exhaust their administrative remedies, that they waived their due process arguments, and that the ALJ properly denied their requests for a hearing.
25 Section 10(c) of the APA bears the caption Actions reviewable and contains the APA's exhaustion requirement: 26 Except as otherwise expressly required by statute, agency action otherwise final is final for the purposes of this section whether or not there has been presented or determined an application for a declaratory order, for any form of reconsideration, or, unless the agency otherwise requires by rule and provides that the action meanwhile is inoperative, for an appeal to superior agency authority. 5 U.S.C. Sec. 704. 27 Except as otherwise provided by law, the APA judicial review provisions apply to all federal agency actions unless a statute precludes judicial review or agency action is committed by law to agency discretion. APA Sec. 10; 5 U.S.C. Sec. 701(a). Neither condition applies here. Because NOAA is an agency of the United States government, and because the ESA does not specifically address the exhaustion of administrative remedies, section 10(c) of the APA applies. 5 U.S.C. Secs. 551(1), 559. The government does not question this, and indeed argues that the APA is applicable. The fact that this suit is one brought by the government for judicial enforcement rather than one brought by a citizen to challenge agency action, does not mean that judicial review of the agency's action in this suit is not pursuant to the APA. The ESA contains no provision for judicial review of penalties assessed under section 1540(a) other than in an enforcement action under that section. Section 10(b) of the APA, 5 U.S.C. Sec. 703, provides that [e]xcept to the extent that prior, adequate, and exclusive opportunity for judicial review is provided by law, agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement. 28 In Darby v. Cisneros, --- U.S. ----, 113 S.Ct. 2539, 125 L.Ed.2d 113 (1993), the Supreme Court discussed the statutory exhaustion requirement codified in section 10(c) of the APA. Darby involved proceedings before a Department of Housing and Urban Development (HUD) ALJ. In those proceedings, the ALJ rendered a decision debarring a real estate developer, Darby, from participating in federal programs for eighteen months. Under the applicable HUD regulations, the ALJ's decision became final unless the Secretary decided as a matter of discretion to review the ALJ's decision within thirty days. Any party could request such a review within fifteen days of the ALJ's decision. Neither party pursued discretionary review within the agency. Thereafter, Darby filed suit in federal district court seeking injunctive and declaratory relief from the ALJ's decision. Reversing the Fourth Circuit's holding that Darby had failed to exhaust his administrative remedies, the Court relied on the plain language of section 10(c): 29 When an aggrieved party has exhausted all administrative remedies expressly prescribed by statute or agency rule, the agency action is 'final for the purposes of this section' and therefore 'subject to judicial review' under the first sentence [of section 10(c) ].... If courts were able to impose additional exhaustion requirements beyond those provided by Congress or the agency, the last sentence of Sec. 10(c) would make no sense.... Section 10(c) explicitly requires exhaustion of all intra-agency appeals mandated either by statute or by agency rule; it would be inconsistent with the plain language of Sec. 10(c) for courts to require litigants to exhaust optional appeals as well. Id. --- U.S. at ---- - ----, 113 S.Ct. at 2544-45. 30 The facts of Darby are similar to the facts of Menendez's and Plaisance's cases. Like the HUD regulations involved in Darby, the NOAA regulations permit parties to seek wholly discretionary review within the agency, but do not require this as a prerequisite to judicial review. Moreover, the NOAA regulations provide that the ALJ's decision becomes final unless discretionary review is undertaken. There is, however, one factual distinction between the instant cases and Darby. In Darby, the individual affected by the agency action filed suit under the APA in district court to set aside the agency action. Here, the government filed suit in district court against Menendez and Plaisance under section 1540 to collect civil penalties assessed by the agency. This distinction affords no apparent basis to deviate from the holding of Darby and its interpretation of the plain language of section 10(c), as (subject to exceptions not applicable here) the same APA judicial review is equally available in both instances. See 5 U.S.C. Sec. 703. 14 31 The government's argument that Darby has no bearing on this case is unavailing. In support of its argument, the government relies on the following language in Darby: [F]ederal courts may be free to apply, where appropriate, other prudential doctrines of judicial administration to limit the scope and timing of judicial review. Id. --- U.S. at ----, 113 S.Ct. at 2544. Based on this phrase, the government asserts that Menendez and Plaisance should be required to exhaust their administrative remedies. This argument ignores the remainder of the very sentence on which it is based: Sec. 10(c), by its very terms, has limited the availability of the doctrine of exhaustion of administrative remedies to that which the statute or rule clearly mandates. Id. Because Menendez and Plaisance have exhausted all administrative remedies required by statute or agency rule, and neither the ESA nor its regulations require further exhaustion as a condition to judicial review, the government's argument must fail. As the Court in Darby stated, [c]ourts are not free to impose an exhaustion requirement as a rule of judicial administration where the agency action has already become 'final' under Sec. 10(c). Id. --- U.S. at ----, 113 S.Ct. at 2548. 15
32 Alternatively, the government argues that the district court correctly held that Menendez and Plaisance waived their right to appeal all procedural issues related to the conduct of the administrative proceedings by not pursuing the two avenues of discretionary appeal provided by the NOAA regulations. See United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 37-38, 73 S.Ct. 67, 69, 97 L.Ed. 54 (1952) (Simple fairness to the those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body has ... erred against objection made at the time appropriate under its practice.); see also Massachusetts Dep't of Pub. Welfare v. Secretary of Agric., 984 F.2d 514, 523 (1st Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 81, 126 L.Ed.2d 49 (1993) (discussing waiver doctrine in administrative law under the label of the procedural default doctrine). 33 In L.A. Tucker Truck Lines, a trucker applied to the Interstate Commerce Commission (ICC) for a certificate of public convenience and necessity to authorize an extension of his existing truck route. 344 U.S. at 34-38, 73 S.Ct. at 67-68. Several trucking companies and railroads, including L.A. Tucker Truck Lines, intervened in the agency proceedings to oppose the trucker's application, but an examiner appointed by the ICC ultimately granted the extension. After exhausting all discretionary appeals within the ICC without avail, L.A. Tucker Truck Lines filed suit in the district court to set aside the order of the ICC, arguing for the first time that the ICC had no jurisdiction because the examiner had not been appointed in accordance with the procedures set forth in the APA. The district court agreed and invalidated the agency's order. Reversing, the Supreme Court held that L.A. Tucker Truck Lines had waived its jurisdictional argument by failing to raise it before the agency. Id. 344 U.S. at 34-36, 73 S.Ct. at 68. 34 The First Circuit has applied this administrative law doctrine of waiver in several recent cases. In Massachusetts Dep't of Pub. Welfare, the state of Massachusetts sought judicial review of punitive sanctions imposed by the Food and Nutrition Service, arguing for the first time that the agency had violated its own regulations by considering an oversampling of food stamp cases. 984 F.2d at 518. Analogizing the administrative law doctrine of waiver to the rule that an appellate court will not consider arguments not raised in the trial court, the First Circuit held that the state had waived any oversampling argument by failing to raise it before the ALJ. Id. at 522-23. In Eagle Eye Fishing Corp. v. United States Dep't of Commerce, 20 F.3d 503, 504 (1st Cir.1994), NOAA charged a fishing company with violating the Magnuson Fishery Conservation and Management Act of 1976 and regulations prohibiting the capture or possession of blue marlin shoreward of this country's Exclusive Economic Zone. The fishing company denied the charges at the proceeding before the ALJ, but the ALJ rendered a decision in favor of NOAA. Thereafter, the fishing company sought discretionary review pursuant to 15 C.F.R. Sec. 904.273, raising for the first time the argument that NOAA had violated its own confidentiality regulations by publicly disclosing information from the fishing company's logbook. After the NOAA Administrator refused to consider this contention because the fishing company never raised it before the ALJ, the company sought judicial review, again arguing that NOAA violated its confidentiality regulations. Affirming the district court's dismissal of the suit, the First Circuit held that the fishing company's failure to raise the argument before the ALJ constituted a waiver. Id. at 505. 35 In holding that Menendez and Plaisance waived their due process arguments by failing to pursue discretionary review within NOAA, the district court misapplied the waiver doctrine. The district court based its waiver holding on Menendez's and Plaisance's failure to pursue their due process arguments within NOAA through the available avenues of discretionary appeal. It is, however, clear that Menendez and Plaisance raised their due process arguments before the ALJ by twice requesting hearings. Indeed, the district court stated that Menendez and Plaisance requested hearings on two separate occasions. 16 Nevertheless, the district court held that they waived their due process arguments by failing to pursue these arguments by taking discretionary appeals. Although the Court in Darby expressly stated that federal courts remain free to apply other prudential doctrines of judicial administration, the district court's holding contradicts the import of Darby. Because Menendez's and Plaisance's requests for a hearing before the ALJ constituted sufficient objections to preserve their due process arguments, the district court erred in holding that their failure to pursue these arguments by taking discretionary appeal channels amounted to a waiver. The instant case is easily distinguishable from L.A. Tucker Truck Lines. There, the trucking company raised an argument about the illegal appointment of the examiner for the first time in the district court. By contrast, Menendez and Plaisance asked the ALJ for a hearing twice. Thus, this case does not involve a party waiting to raise an argument for the first time in the district court. 36 In Massachusetts Dep't of Pub. Welfare, the court noted the overlap between the doctrines of waiver and exhaustion in administrative law, but stressed that the two doctrines are not synonymous. 984 F.2d at 523 & n. 8. By focussing on the parties' failure to reassert their requests for a hearing through the discretionary appeals systems established by the NOAA regulations, the district court confused the waiver and exhaustion doctrines and created an end run around Darby. Although the Court in Darby held that parties are not required to exhaust discretionary appeals within an agency, the district court below essentially required Menendez and Plaisance to do so by making a failure to exhaust discretionary appeals a waiver. As the First Circuit reasoned in Massachusetts Dep't of Pub. Welfare and Eagle Eye Fishing Corp., the doctrine of waiver in administrative law parallels the well-established rule that appellate courts will not consider arguments not raised before the trial court. See Eagle Eye Fishing Corp., 20 F.3d at 504-05 (finding waiver where party failed to assert argument before the ALJ notwithstanding fact that party raised the argument in NOAA discretionary review). Because Menendez and Plaisance raised their right-to-a-hearing claims before the ALJ, the district court erred in holding that their failure to pursue discretionary review was a waiver. 17
37 Menendez and Plaisance argue that the district court erred in granting summary judgment in favor of the government because the ALJ improperly granted summary judgment in favor of NOAA. Section 7(c) of the APA provides that, [e]xcept as otherwise provided by statute, the proponent of a rule or order has the burden of proof. 5 U.S.C. Sec. 556(d). Because the ESA and the NOAA regulations do not shift the burden of proof for establishing the violation, 18 NOAA bears the burden of proof to establish a violation of the ESA before the ALJ. Under the NOAA regulation addressing summary decision, the ALJ has the authority to grant summary decision on his own motion when the entire record shows ... [t]hat there is no genuine issue as to any material fact and the moving party is entitled to summary decision as a matter of law. 15 C.F.R. Sec. 904.210. Here, the ALJ disbarred the parties' first representative after he requested a hearing for his clients and then issued an order directing the parties to show cause why their cases should not be dismissed in the same manner as the Tommy V. Nguyen case. Thereafter, the ALJ refused to consider the parties' response to his show cause order because it came from Margaret Mialjevich and directed that any future communications from her would be returned without action. Nothing in the record justifies this action by the ALJ. Because the parties never responded to his order to show cause, the ALJ then entered an order dismissing their request for a hearing and assessing the penalties proposed in the NOVAs. 38 It is undisputed that NOAA bears the burden of establishing a violation by Menendez and Plaisance. [T]he plain language of Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Thus, in order to grant summary decision for the government, the ALJ must have summary judgment evidence before him that would sustain a finding in favor of the government at trial. This summary judgment evidence must consist of more than the mere allegations contained in the NOVA; rather, the ALJ must have summary judgment evidence before him in the form of affidavits, depositions, answers to interrogatories, and/or admissions. Id., 477 U.S. at 323-25, 106 S.Ct. at 2553, Fed.R.Civ.P. 56(e). 39 When he entered summary decision in favor of the agency, the only evidence before the ALJ was the NOVAs. The government never moved for summary judgment before the ALJ. At oral argument, counsel for the government argued that the NOVA constituted sufficient summary judgment evidence to sustain the ALJ's summary decision. The NOVA, however, is an unsworn document signed by a NOAA staff attorney not claiming to have personal knowledge of the matters alleged and contains only the factual allegations of the charged violation. Thus it does not constitute any summary judgment evidence. See Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992) (Mere conclusory allegations are not competent summary judgment evidence, and they are therefore insufficient to defeat or support a motion for summary judgment.); see also 10A Charles Alan Wright et al., Federal Practice and Procedure Sec. 2738 (1983). Accepting the government's argument would shift the burden of proof to the party charged with the violation; thus, the government would prevail even when it produces no evidence as long as the charged party did not produce any evidence. Because the ALJ improperly shifted the burden of proof to the parties charged with the violations, we reverse the district court's judgment granting summary judgment in favor of the government.