Opinion ID: 3049466
Heading Depth: 2
Heading Rank: 3

Heading: jurisdiction

Text: Before we consider whether the district court reasonably interpreted the Consent Decree, we must examine our own subject matter jurisdiction over the underlying motion for clarification and the instant appeal. The VA contends that the district court did not have subject matter jurisdiction to entertain the plaintiff class’s motion, because the motion challenges a VA regulation and 38 U.S.C. § 502 provides that such challenges may be brought only in the Federal Circuit. If the district court did not have subject matter jurisdiction over the motion for that reason, then neither do we, the VA 8748 NEHMER v. USDVA correctly argues. We reject the VA’s contention that the district court lacked jurisdiction.5 [1] Ordinarily, when a district court incorporates the terms of a settlement agreement or a stipulation into an order, it retains subject matter jurisdiction to interpret and enforce the contents of that order. Flanagan v. Arnaiz, 143 F.3d 540, 544 (9th Cir. 1998) (stating that although the “[e]nforcement of a settlement agreement . . . ‘requires its own basis for jurisdiction’ . . . a basis for jurisdiction may be furnished ‘by separate provision (such as a provision ‘retaining jurisdiction’ over the settlement agreement) or by incorporating the terms of the 5 We also reject the plaintiff class’s argument that we lack appellate jurisdiction over the VA’s appeals from the two orders of the district court. Although we do not have appellate jurisdiction under 28 U.S.C. § 1292(a)(1) because neither order grants, continues, modifies, refuses or dissolves an injunction, id.; United States v. Oakland Cannabis Buyers’ Coop., 190 F.3d 1109, 1112 (9th Cir. 1999), rev’d on other grounds by 532 U.S. 483 (2001) (citing Public Serv. Co. of Colo. v. Batt, 67 F.3d 234, 236-37 (9th Cir. 1995)); Batt, 67 F.3d at 236-38 (citing In re Complaint of Ingram Towing Co., 59 F.3d 513, 516 (5th Cir. 1995)); Motorola, Inc. v. Computer Displays Int’l, 739 F.2d 1149, 1155 (7th Cir. 1984); cf. Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1037 (9th Cir. 1998), we do have such jurisdiction pursuant to 28 U.S.C. § 1291, on the basis of the practical finality doctrine. See Gillespie v. U.S. Steel Corp., 379 U.S. 148, 152-53 (1964). The district court’s order in this post-final judgment proceeding involves an unsettled issue of national significance, and also is marginally final given that the proceedings that remain pending before the court have little substance and will not affect the central issue of the meaning of the Consent Decree. In addition, the exercise of appellate jurisdiction furthers the policies underlying 28 U.S.C. § 1292(b) and the final judgment rule of § 1291, and prevents the harm to both the veterans and the VA that a delay in appellate review of the district court’s clarification order in this now twenty-one year old case would likely cause. See SEIU, Local 102 v. County of San Diego, 60 F.3d 1346, 1349-50 (9th Cir. 1994) (citing Gillespie, 379 U.S. at 152-53); Zucker v. Maxicare Health Plans, 14 F.3d 477, 483-84 (9th Cir. 1994); Wabol v. Villacrusis, 958 F.2d 1450, 1454 (9th Cir. 1990); So. Cal. Edison Co. v. Westinghouse Elec. Corp. (In re Subpoena Served on Cal. Pub. Utils. Comm’n), 813 F.2d 1473, 1479-80 (9th Cir. 1987); Stone v. Heckler, 722 F.2d 464, 467-68 (9th Cir. 1983). NEHMER v. USDVA 8749 settlement agreement in the order.’ ”) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378, 381 (1991)); see also Sandpiper Vill. Condo. Ass’n v. La.-Pac. Corp., 428 F.3d 831, 841 (9th Cir. 2005) (citing Flanagan, 143 F.3d at 544). Because Judge Henderson incorporated the terms of the Stipulation and Order into the order that he entered on May 17, 1991, he concededly retained jurisdiction to interpret and enforce the terms of the Stipulation and Order, and, therefore, he ordinarily would plainly have jurisdiction to consider the plaintiff class’s motion for clarification and enforcement of the Stipulation and Order. See Flanagan, 143 F.3d at 544. The VA accepts this “unexceptionable proposition” and “does not dispute that the district court retained jurisdiction to supervise implementation of the consent decree.” The VA, however, rests its argument regarding subject matter jurisdiction on its contention that in light of the Federal Circuit’s exclusive jurisdiction to entertain direct challenges to VA regulations under 38 U.S.C. § 502 the district court has been divested of its jurisdiction to interpret the Consent Decree, at least with respect to “service-connected” determinations made after September 30, 2002. Its argument is as follows: following the district court’s issuance of the Consent Decree, the VA enacted a regulation which in effect declared that the decree did not intend to incorporate the terms of the Benefits Expansion Act amending the sunset date of the pertinent provision of the Agent Orange Act. 68 Fed. Reg. at 50968-70; 38 C.F.R. § 3.816. Any challenge to that regulation, must be brought in the Federal Circuit. [2] 38 U.S.C. § 502 provides that “[a]n action of the Secretary to which section 552(a)(1) or 553 of title 5 (or both) refers . . . is subject to judicial review. Such review shall be in accordance with chapter 7 of title 5 and may be sought only in the United States Court of Appeals for the Federal Circuit.” On two prior occasions, we have addressed the scope of 8750 NEHMER v. USDVA § 502. See Preminger v. Principi, 422 F.3d 815, 821 (9th Cir. 2005), and Chinnock v. Turnage, 995 F.2d 889, 893 (9th Cir. 1993). In Preminger, we explained that Section 502 gives the Federal Circuit exclusive jurisdiction to review challenges to most actions by the Secretary of Veterans’ Affairs. In particular, § 502 applies to (1) actions that require publication in the Federal Register, such as rules of procedure, substantive rules of general applicability, statements of general policy, and amendments, revisions, or repeals to those actions, under 5 U.S.C. § 552(a)(1); and (2) agency rulemaking, under 5 U.S.C. § 553. Thus, Congress explicitly has provided for judicial review of direct challenges to VA rules and regulations only in the Federal Circuit. . . . Accordingly, any direct challenge to [a regulation’s] validity must be brought in the Federal Circuit. Id. at 821 (emphasis added). In Preminger, we drew a distinction between facial challenges to VA regulations, which are subject to exclusive judicial review in the Federal Circuit, and as-applied challenges, which are subject to appellate review in this court, and we exercised our appellate jurisdiction over an as-applied challenge brought in a district court to a VA regulation that banned partisan activity on the VA’s property. Id. The VA contends that the veterans’ motion for clarification and enforcement is a facial challenge to 38 C.F.R. § 3.816, the regulation adopted by the VA in a final rule on August 25, 2003, 68 Fed. Reg. at 50968-70, as well as to the VA’s final rule that determined Chronic Lymphocytic Leukemia to be service-connected. 68 Fed. Reg. at 59540. Section 3.816 purports to set forth the “rules required by orders of” Judge Hen- derson in this case, 38 C.F.R. § 3.816(a), while the final rule determining Chronic Lymphocytic Leukemia to be serviceconnected contains the VA’s argument as to why it believes that the Consent Decree should not be interpreted to require NEHMER v. USDVA 8751 the payment of retroactive benefit payments to veterans with that disease: the service-connected determination was made after September 30, 2002, the original sunset date for the Agent Orange Act provision. The VA also argues that the motion is not an as-applied challenge to the regulations, a contention with which the plaintiff class agrees. The plaintiff class argues in opposition that its motion for clarification and enforcement of the Consent Decree does not fall within the exclusive jurisdiction of 38 U.S.C. § 502 because the motion does not directly challenge either the merits of the VA’s regulation or the VA’s rulemaking authority. See Preminger, 422 F.3d at 821 (“Congress explicitly has provided for judicial review of direct challenges to VA rules and regulations only in the Federal Circuit.”) (emphasis added). Nor, according to the veterans, does the motion urge the district court — or this court — to invalidate the regulations. Instead, they assert that the motion challenges the actions of the VA in failing to comply with the terms of the Consent Decree — irrespective of the existence of the VA regulations — given that in October 2003 the VA determined that Chronic Lymphocytic Leukemia was service-connected but then failed to take the actions of readjudicating past claims and paying retroactive benefits, which are explicitly mandated by Paragraphs 3 and 5 of the decree. [3] We agree with the veterans that their motion does not directly challenge the VA regulations. As the district court concluded, in addressing the motion for clarification and enforcement, it is only “the Stip[ulation] & Order that must be interpreted” to determine whether the plain language of Paragraphs 3 and 5 applies to the claims of veterans suffering from Chronic Lymphocytic Leukemia. Because the district court was neither asked nor required to engage in judicial review of the VA regulations in order to clarify the terms of the Consent Decree, 38 U.S.C. § 502 does not divest it of subject matter jurisdiction. 8752 NEHMER v. USDVA Notably, the plaintiff class’s motion that gave rise to this appeal solely challenged the VA’s non-regulatory failure to act, and not the VA’s regulations themselves. The motion stated that the VA had “failed” to follow Paragraph 3 because “[i]t has not identified and readjudicated CLL claims that were denied between September 25, 1985 and May 3, 1989 [the date of the district court’s order in Nehmer I], or CLL claims that were pending or filed between May 3, 1989 and the date of the CLL regulation[,]” and for “CLL claims that were pending on the date of the CLL regulation and thereafter granted, the VA has wrongfully assigned the publication date of the CLL regulation as the effective date instead of the date the CLL claim was filed, as required by paragraph 5 of the Consent Decree.” Moreover, the veterans made clear in their brief in support of the motion that they “merely seek to enforce the stipulated order” and ask only for an order requiring the VA to follow the terms of Paragraphs 3 and 5, and to permit discovery in order to identify which class members had been denied compensation under the decree. In granting the motion, the district court confirmed that the veterans’ motion was “based on [the VA’s] refusal to pay retroactive benefits to veterans whose diseases have been deemed ‘service connected’ after the original sunset date of the Agent Orange Act in 2002.” As the district court had previously concluded in its jurisdictional order, the “essence of the current motion is a request that the Court interpret, clarify, or construct particular terms of the Stip[ulation] and Order,” and not a request to review or invalidate a VA regulation. Moreover, when the VA briefed the merits regarding the interpretation of the Consent Decree in the district court, the VA did not argue that that court — or any other court — would be bound by the VA’s own interpretation of the decree espoused in its regulations. Instead, the VA’s argument relied on the “plain language” of the decree and additional extrinsic evidence, again suggesting that the district court was not called upon to engage in judicial review of a VA regulation. Still, even if the VA had raised the existence of the regulaNEHMER v. USDVA 8753 tions as a defense to the veterans’ motion for clarification, the assertion of that defense would not convert the veterans’ motion to a direct facial challenge to VA regulations. Furthermore, even if we were to construe the plaintiff class’s motion as a direct facial challenge to the VA regulations, we still could not accept the VA’s argument that 38 U.S.C. § 502 divests the district court of its continuing jurisdiction to interpret and enforce its decree. As the district court correctly concluded, the statements in the VA regulations expressing the VA’s view of the meaning of the Consent Decree that it entered into many years earlier does not constitute an exercise of the agency’s rulemaking function referred to in § 502, but rather of a function more akin to adjudication. Indeed, to put it more accurately, the VA’s expression of its position in a contested judicial matter is more like the function of advocacy, undertaken when the agency is a party to litigation, rather than of adjudication. Under such circumstances, the VA’s statement of its views does not fall within the scope of § 502. Cf. LeFevre v. Sec’y, Dep’t of Veterans Affairs, 66 F.3d 1191, 1196 (Fed. Cir. 1995) (stating that under § 502 the Federal Circuit may review “substantive rules of general applicability, statements of general policy and interpretations of general applicability because these are all actions to which section 552(a)(1) refers,” and that “rule making is legislative in nature, is primarily concerned with policy considerations for the future rather than the evaluation of past conduct, and looks not to the evidentiary facts but to policymaking conclusions to be drawn from the facts.”) (citations and internal quotations omitted); Griffin v. Dep’t of Veterans Affairs, 129 F. Supp. 2d 832, 838 (D. Md. 2001) (quoting LeFevre, 66 F.3d at 1196). The gravamen of the 2003 VA regulations is a legal argument that the 1991 Consent Decree — at its inception and based on its language and surrounding circumstances — did not intend to mandate readjudication or retroactive benefit payments for claims based on diseases that the VA determines 8754 NEHMER v. USDVA to be service-connected after the original sunset date of the Agent Orange Act, 38 U.S.C. § 1116(e), September 30, 2002. The VA’s analysis in the regulations almost entirely relies upon the application of generally applicable contract law principles to the then-twelve year-old Consent Decree, see 68 Fed. Reg. at 50968-70; Effective Dates of Benefits for Disability or Death Caused by Herbicide Exposure; Disposition of Unpaid Benefits After Death of Beneficiary, 68 Fed. Reg. 4132, 4138-39 (Jan. 28, 2003), and, thus, the VA engaged in the same exercise of interpretation of the court’s decree in which the court itself subsequently engaged when issuing the order from which the VA now appeals. See 68 Fed. Reg. at 4139 (stating that the “stipulation and order must be interpreted in accordance with general principles of contract law,” that “unless the parties provide otherwise, a contract is presumed to incorporate the law that existed at the time the contract was made,” and that any regulation service-connecting diseases after September 30, 2002 “are beyond the express scope of the Nehmer stipulation and order”) (emphasis added). This is a function for the court to perform, not the party appearing before it, even an administrative agency. The VA’s retrospective evaluation of past conduct, including an analysis of twelve-year-old evidentiary facts, does not constitute rulemaking, the review of which Congress placed in the exclusive province of the Federal Circuit. See LeFevre, 66 F.3d at 1196. In sum, even if the motion for clarification and enforcement constituted a direct challenge to the VA regulations, we would hold that because the regulations do not contain substantive rules, statements or interpretations of general applicability, they fall outside the scope of 38 U.S.C. § 502. Id. (citing 5 U.S.C. § 551(4) (defining the term “rule” under the Administrative Procedure Act)).6 6 The VA’s reliance on Suburban O’Hare Comm’n v. Dole, 787 F.2d 186 (7th Cir. 1986) (O’Hare II) and Suburban O’Hare Comm’m v. Dole, 603 F. Supp. 1013 (1985) (O’Hare I) is misplaced. The actions which gave rise to those judicial determinations involved a different jurisdictional statute, 49 U.S.C. § 1486(a), which required judicial review of NEHMER v. USDVA 8755 Finally, the VA cannot usurp the power of a district court to construe the provisions of an order it has issued or divest that court of its authority and transfer it to the Federal Circuit simply by issuing a regulation interpreting that order or declining to follow it. It is well established that the district court has the inherent authority to enforce compliance with a consent decree that it has entered in an order, to hold parties in contempt for violating the terms therein, and to modify a decree. See Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 381 & n.6 (1992); Spallone v. United States, 493 U.S. 265, 276 (1990); Holland v. New Jersey Dept. of Corr., 246 F.3d 267, 270-71, 281-82 (3rd Cir. 2001); Stone v. City and County of S.F., 968 F.2d 850, 856 (9th Cir. 1992); Keith v. Volpe, 784 F.2d 1457, 1461 (9th Cir. 1986); see also Fed. R. Civ. P. 60(b)(5); Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 441 (2004) (“Federal courts are not reduced to approving consent decrees and hoping for compliance. Once entered, a consent decree may be enforced.”). That the district court preserves such inherent authority presupposes that it, and not a party before it, is the principal and proper arbiter with the responsibility to interpret the decree and oversee the litigation. Although a party may ask the district court to issue an order clarifying, enforcing, or modifying a decree and suggest a favored interpretation, a party — whether a private or public entity — cannot dictate the meaning of the decree to the court or relieve itself of its obligations under the decree without the “[a]ny order” of the Federal Aviation Administration to be brought in the federal courts of appeals, as opposed to 38 U.S.C. § 502, which applies only to rulemaking and rules of general policy. In the O’Hare cases there was no doubt that the FAA had issued an order that was subject to the jurisdictional statute. Furthermore, unlike in the instant case, O’Hare I and II involved a direct challenge to the agency’s order. Finally, those cases did not involve an attempt by an agency to issue an order or regulation purporting to usurp the inherent authority of a court to construe its own decree — to interpret a decree that it had entered many years earlier, about which it had extensive knowledge from years of oversight. An executive agency possesses no such power to strip a federal court of its jurisdiction. 8756 NEHMER v. USDVA district court’s approval. Furthermore, the importance of the district court’s role in interpreting a consent decree is further evidenced by the discretion that we afford district courts in reviewing their interpretations, particularly when the district court has overseen a remedial decree for many years. See Nehmer III, 284 F.3d at 1160 (quoting Gates, 60 F.3d at 53031); Stone, 968 F.2d at 856. In this case, the VA urges us to hold that an executive agency that has been ordered by a district court to take various actions in order to comply with the law can remove itself from that court’s authority and ignore its orders simply by enshrining its interpretation of a consent decree in a regulation which only an appeals court in another circuit may review. But the substantive effect of such a holding would be to give the VA the right to unilaterally withdraw the jurisdiction of the district court and of this circuit. While Congress has the power under Article III of the U.S. Constitution to define the jurisdiction of the lower federal courts, Magana v. Northern Mariana Islands, 107 F.3d 1436, 1440 (9th Cir. 1997), an executive agency does not have that same authority. We are unwilling to read 38 U.S.C. § 502 as granting to the VA the power to unilaterally eliminate jurisdiction of a district court, to forfeit that court’s right to supervise and implement its own equitable orders, and to redirect what is effectively a motion to vacate an injunction from a district court to a court of appeals in another circuit. Finally, the VA’s proffered interpretation of § 502 would raise a most troubling question of separation of powers under the Constitution, a question that, because the VA’s argument fails for so many other reasons, we need not definitively answer today.