Opinion ID: 422287
Heading Depth: 2
Heading Rank: 2

Heading: probability of success on the merits and the existence of serious legal questions.

Text: 26 The Secretary makes two principal arguments regarding the merits of her appeal from the order granting the preliminary injunction. First, the Secretary attempts to defend her policy of nonacquiescence with federal court decisions. This defense, presented in a footnote to the government's brief, is far from persuasive. To begin with, other circuits that have considered the question have already rejected the Secretary's argument that a federal agency can legitimately ignore federal appeals court precedents. See, e.g., Jones & Laughlin Steel Corp. v. Marshall, 636 F.2d 32, 33 (3d Cir.1980); ITT World Communications v. FCC, 635 F.2d 32, 43 (2d Cir.1980); Ithaca College v. NLRB, 623 F.2d 224, 228-29 (2d Cir.), cert. denied, 449 U.S. 975, 101 S.Ct. 386, 66 L.Ed.2d 237 (1980); Mary Thompson Hospital, Inc. v. NLRB, 621 F.2d 858, 864 (7th Cir.1980); Allegheny General Hospital v. NLRB, 608 F.2d 965, 970 (3d Cir.1979). See also Chee v. Schweiker, 563 F.Supp. 1362, 1364-65 (D.Ariz.1983); Siedlecki v. Schweiker, 563 F.Supp. 43, 46-48 (W.D.Wash.1983); Hillhouse v. Harris, 547 F.Supp. 88, 93 (W.D.Ark.1982). Moreover, the cases cited by the Secretary to support her position appear to be inapposite. In short, our review of the relevant case law indicates that there is little chance that the Secretary will succeed in her argument that nonacquiescence is a legitimate policy, or, to put it more precisely, that she will persuade us that the district court committed a legal error in concluding that there was a strong probability that the plaintiffs would ultimately prevail on this fundamental issue. 27 Second, it should be obvious that, even if the Secretary's issuance of nonacquiescence rulings regarding Finnegan and Patti does not violate the Constitution, each of her department's decisions based on those rulings will be rejected summarily whenever challenged in this circuit. We see little chance that the Secretary will convince this Court to the contrary. 8 28 The majority of the Secretary's attention is devoted to her second argument: that the district court improperly exercised jurisdiction over some members of plaintiffs' class. The district court premised its jurisdiction on 42 U.S.C. § 405(g), which provides a limited avenue of judicial review upon the filing of a complaint within 60 days of a final decision of the Secretary. 9 29 In order to satisfy the section 405(g) requirements, plaintiffs must overcome several procedural obstacles. First, plaintiffs must have presented a claim for benefits to the Secretary. Contrary to the Secretary's assertion, there is substantial authority for the proposition that this requirement is satisfied once the Secretary has had an opportunity to act and benefits have actually been terminated. See Ellison v. Califano, 546 F.2d 1162, 1164 (5th Cir.1977). 30 The second requirement under section 405(g) is that a final decision must have been made by the Secretary. This requirement may be waived by the Secretary or excused or deemed complied with by the court. See, e.g., Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976); Jones v. Califano, 576 F.2d 12, 18-19 (2d Cir.1978); Liberty Alliance for the Blind v. Califano, 568 F.2d 333, 346 (3rd Cir.1977). Some of the named plaintiffs and an unknown number of the plaintiff class have exhausted all administrative remedies and obtained final decisions; these plaintiffs indisputably are properly before the district court. The Secretary argues, however, that there is no jurisdiction over the other plaintiffs. The district court evaluated the Secretary's arguments and decided that the plaintiffs' failure to exhaust their administrative remedies was excusable because it would have been futile to require plaintiffs to pursue administrative remedies in the face of the Secretary's announced policy of nonacquiescence. The district court's analysis finds strong support in two decisions that were thoroughly considered and discussed by Judge Gray in his opinion: Weinberger v. Salfi, 422 U.S. 749, 765-66, 95 S.Ct. 2457, 2466-67, 45 L.Ed.2d 522 (1975); and Ringer v. Schweiker, 697 F.2d 1291 (9th Cir.1983), cert. granted, --- U.S. ----, 103 S.Ct. 3535, 77 L.Ed.2d 1386 (1983). 31 There is much additional support for the district court's conclusion that the section 405(g) exhaustion requirement does not apply in this case. First, plaintiffs have raised constitutional challenges to the Secretary's nonacquiescence policies. The Second Circuit has held that the exhaustion requirement should be waived where constitutional challenges similar to the ones in this case are raised. See Jones v. Califano, 576 F.2d at 18-19. See also Mathews v. Eldridge, 424 U.S. at 330, 96 S.Ct. at 900, 47 L.Ed.2d at 30 (It is unrealistic to expect that the Secretary would consider substantial changes in the current administrative review system at the behest of a single aid recipient raising a constitutional challenge in an adjudicatory context. The Secretary would not be required to even consider such a challenge.). Second, the Third Circuit has decided that, even as to statutory rather than constitutional issues, the exhaustion requirement can be waived whenever the Secretary has taken a final position on a question. See Liberty Alliance for the Blind v. Califano, 568 F.2d at 346 (The test for exhaustion of a statutory issue in an individual case ... should be whether the Secretary has taken a final position on that issue. In the class context the test should be no different.). See also Jones v. Califano, 576 F.2d at 19 (waiver of exhaustion requirement when the Secretary had had ample opportunity ... to modify his position.). 32 Finally, the district court emphasized the obvious undesirability, as well as the due process and equal protection implications, of the dual system of benefit review created by the Secretary's nonacquiescence policy. As the district court noted, 33 [t]he policy of nonacquiescence announced by the Secretary creates two standards governing claimants whose disability benefits are terminated as a result of such nonacquiescence. If such a claimant has the determination and the financial and physical strength and lives long enough to make it through the administrative process, he can turn to the courts and ultimately expect them to apply the law as announced in Patti and Finnegan. If exhaustion overtakes him and he falls somewhere along the road leading to such ultimate relief, the nonacquiescence and the resulting termination stand. Particularly with respect to the types of individuals here concerned, whose resources, health and prospective longevity are, by definition, relatively limited, such a dual system of law is prejudicial and unfair. 34 The Second Circuit expressed a similar view in Jones v. Califano, 576 F.2d at 19. 10 35 The third requirement under section 405(g) is that plaintiffs' appeals must have been brought within 60 days of the Secretary's final decision. The Secretary argues that all decisions not challenged within 60 days are unappealed and thus have a res judicata effect in later proceedings. Because the 60 day requirement can be waived by the parties, Mathews v. Eldridge, 424 U.S. at 328 n. 9, 96 S.Ct. at 899 n. 9 (1976); Weinberger v. Salfi, 422 U.S. at 763-64, 95 S.Ct. at 2465-66, it need not be taken into consideration on appeal if not raised before the district court. Id. See also Rowland v. Califano, 588 F.2d 449 (5th Cir.1979). There is no indication in the record currently before us that the 60 day requirement was raised by the Secretary below; nor is there any mention of the requirement in the district court's decision. In any event, the administrative res judicata bar is ordinarily not applied when an agency's decision is challenged on constitutional grounds. Califano v. Sanders, 430 U.S. 99, 109, 97 S.Ct. 980, 986, 51 L.Ed.2d 192 (1977). 36 In a recent decision cited in a footnote in the government's brief, the Second Circuit dismissed, for lack of jurisdiction, a class action complaint filed by persons whose disability benefits had been terminated. Smith v. Schweiker, 709 F.2d 777 (2d Cir.1983). The disabled persons argued, inter alia, that specific evidence of medical improvement was required before benefits could be terminated. In Smith, however, all the named individuals had successfully appealed their terminations and were actually receiving the benefits in question at the time of the litigation. Moreover, no constitutional challenge similar to that made by plaintiffs here was raised. While the government may take some comfort from some of the analysis and comments contained in the Second Circuit's opinion, and while the opinion may have the effect of limiting Jones v. Califano, supra, to some extent, Smith appears unlikely to affect significantly our view of the issues before us. 11 37 Although the Secretary may have raised serious legal questions, she has failed to make a showing of probability of success on the merits. Considered both individually and collectively, the Secretary's arguments do not persuade us that there is a probability that this court will reverse the district court's decision to grant a preliminary injunction.