Court Opinion

ID: 185367
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:10+00
Date Added: 2024-06-11T17:26:15.289155
License: Public Domain

242 F.3d 1070 (D.C. Cir. 2001)
Dynaquest Corp., d/b/a A.C.L., et al.,  Appellantsv.United States Postal Service,  Appellee
No. 99-5326
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 12, 2000Decided March 13, 2001

Appeal from the United States District Court  for the District of Columbia (No. 98cv00564)
Max Kravitz argued the cause for appellants.  With him on  the briefs was David B. Smith.
David T. Smorodin, Assistant U.S. Attorney, argued the  cause for appellee.  With him on the brief were Wilma A.  Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S.  Attorney.
Before:  Henderson, Randolph and Garland, Circuit  Judges.
Opinion for the Court filed by Circuit Judge Garland.
Garland, Circuit Judge:

1
Dynaquest Corp. seeks the release of funds held in escrow in connection with administrative proceedings brought against the company by the United  States Postal Service.  Various incarnations of Dynaquest's  claims have been heard by numerous courts--including this  court and the United States Court of Appeals for the Sixth  Circuit--over a period spanning ten years.  We conclude that  Dynaquest's present efforts to obtain the funds are barred by  the doctrine of res judicata and affirm the district court's  dismissal of Dynaquest's complaint.

2
* Dynaquest, an Ohio corporation, buys and sells discontinued lines, unwanted special order items, liquidated goods, and  other "distressed merchandise."  It also mails unsolicited  advertisements for a training program, which includes a  manual entitled Liquidate Your Way to a Fortune, instructing purchasers in the business of asset location and liquidation.

3
On June 7, 1990, the Postal Service filed an administrative  complaint against the company before a Postal Service Administrative Judicial Officer (AJO) in Washington, D.C.  The  complaint charged Dynaquest with "conducting a scheme for  obtaining money or property through the mail by means of  false representations," in violation of 39 U.S.C. § 3005.  Postal Service Compl. at 1 (J.A. at 54).  The complaint alleged  that the company's mailings contained eleven false representations.1  Eight days later, the Postal Service filed a separate action in the United States District Court for the Southern  District of Ohio, pursuant to 39 U.S.C. § 3007, seeking a  temporary restraining order and preliminary injunction directing the detention of Dynaquest's mail pending the resolution of the § 3005 administrative proceedings.  Section 3007  authorizes the district court in the district in which a defendant receives its mail to enter such interim relief.  39 U.S.C.  § 3007(a).

4
The Ohio district court issued a temporary restraining  order under § 3007, directing the Postal Service to hold all  checks and accompanying information mailed in response to  the Dynaquest advertisements, and scheduled a hearing on  the Postal Service's motion for a preliminary injunction for  June 21, 1990.  Prior to commencement of the hearing, the  parties entered into--and the court approved--an "Agreed  Order."  The Agreed Order required that all checks and  applications be returned to prospective customers, along with  a "bounce-back" letter "clarifying" Dynaquest's offer and  asking whether the customers still wished to purchase Dynaquest's services.  Agreed Order at 1-2 (J.A. at 51-52).  The  Order further directed the Postal Service to forward any  checks sent by customers who had received bounce-back  letters to a co-administered escrow account.  Finally, the  parties stipulated that the Agreed Order would remain in  effect until "the final disposition of the administrative complaint," id. at 1 (J.A. at 51), which would "be deemed to occur  after the conclusion of any appeal by [Dynaquest] from the  ... decision of the Postal Service Judicial Officer," id. at 2-3  (J.A. at 52-53).

5
Following entry of the Agreed Order, the parties proceeded  to litigate the § 3005 proceeding in Washington, D.C., and  then returned to Ohio to litigate the § 3007 proceeding.  In  1996, Dynaquest once again went to Washington to file the  pleadings that led to the instant appeal.  We describe each of these three courses of litigation below, in order to provide the  background necessary to understand our disposition of this  case.

6
* During the summer of 1990, the AJO conducted a full trial type hearing in the § 3005 proceeding in Washington, D.C. Following the hearing, the AJO concluded that Dynaquest  had violated the statute by making four of the materially false  representations alleged in the Postal Service's complaint.  In  re A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv. Dec. 28,  1990).  Dynaquest was ordered to cease and desist from  making those representations.

7
On March 18, 1991, Dynaquest moved for reconsideration  of the AJO's decision, challenging the false representation  findings and requesting the release of the funds held in  escrow.  Resp't Mot. for Recons. (J.A. at 259).  With respect  to the latter request, Dynaquest argued that because the  escrow funds were sent by customers who had received the  bounce-back letters, any initial misrepresentations had been  cured.  Thus, Dynaquest argued, it would be unjust to deprive the company of those funds.  Id. at 12-16 (J.A. at 27074).

8
The AJO denied Dynaquest's motion in its entirety.  In re  A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv. May 15,  1991).  He rejected the company's challenges to the false  representation findings, and dismissed the request for the  release of funds on the ground that the escrow accounts had  been established under the Agreed Order of the district court  in Ohio.  Only that court, the AJO held, had jurisdiction over  the interpretation and enforcement of its own Order.  Id. at  4.

9
Dynaquest sought review of the AJO's decisions in the  United States District Court for the District of Columbia,  pursuant to the Administrative Procedure Act, 5 U.S.C.  §§ 701-706 (1994).  It sought a declaratory judgment that the  false representation findings were not supported by substantial evidence and an injunction against enforcement of the AJO's order.  Dynaquest did not, however, reassert its claim  that the bounce-back letters had cured any alleged misrepresentations, nor did the company otherwise appeal the AJO's  determination that he lacked jurisdiction over the escrow  funds.  On cross motions for summary judgment, the district  court affirmed the AJO's findings regarding three of the four  representations, vacated the fourth, and sustained the Postal  Service's order.  Dynaquest Corp. v. United States Postal  Serv., No. 91-1582 (D.D.C. Mar. 5, 1992).  Dynaquest appealed to this court, contending that two of the three findings  upheld by the district court were not supported by substantial  evidence.  We affirmed the district court's decision on January 18, 1994.  Dynaquest Corp. v. United States Postal Serv.,  12 F.3d 1144 (D.C. Cir. 1994).  Dynaquest did not seek  further review.

B

10
In early 1994, the parties filed cross motions for summary  judgment in the still-pending § 3007 proceeding in the Southern District of Ohio, seeking to resolve the disposition of the  escrow funds.  On June 2, 1994, the district court granted  judgment for the Postal Service and directed that the funds  be returned to Dynaquest's customers.  United States Postal  Serv. v. Klass, No. C2-90-450, slip op. at 9, 11 (S.D. Ohio  June 2, 1994).  The court interpreted the language of the  Agreed Order to require that, upon final disposition of the  administrative complaint, the funds were to go to the party  prevailing in the § 3005 proceeding in Washington.  Id. at 9. This interpretation was confirmed, the court said, by statements of Dynaquest's counsel at a status conference held in  the § 3007 proceeding in February 1992.  Id. at 9-10.  In  light of this circuit's affirmance of the AJO's findings of  misrepresentation, and Dynaquest's failure to seek further  review, the Ohio district court concluded that final disposition  of the § 3005 administrative complaint had occurred and that  the Postal Service was the prevailing party.  Id. at 8-9.  The  court rejected as irrelevant Dynaquest's claim that the  bounce-back letters had cured the misrepresentations.  Section 3007 did not give it authority to make such a determination, the court said.  Whether customers were misled was a  question for the § 3005 proceeding, and that proceeding was  now closed.  Id. at 9-10.

11
Dynaquest appealed the Ohio district court's refusal to  award it the escrow funds to the United States Court of  Appeals for the Sixth Circuit.  The company made two  principal points.  First, it argued that the district court erred  in not determining whether the bounce-back letters cured the  misrepresentations.  The Sixth Circuit rejected this argument, holding that the district court was indeed without  authority to decide, in a § 3007 proceeding, whether the  bounce-back letters violated the false representations statute. That, the court said, could only have been decided in the  § 3005 proceeding in Washington, and Dynaquest should  have amended its administrative pleadings to raise the issue  there.  United States Postal Serv. v. Klass, 74 F.3d 1241,(6th Cir.1996) ("Section 3007  specifies that the district court issuing the injunction has no  authority to 'determine any fact at issue in the statutory  proceeding.' " (quoting 39 U.S.C. § 3007(a) (repealed 1999))).

12
Second, Dynaquest argued that the district court erred in  construing the Agreed Order to require disposition of the  escrow funds to the victor in the § 3005 proceeding.  Moreover, the company insisted, the court further erred in interpreting its counsel's statements as confirming that view. Once again, the Sixth Circuit disagreed, this time on the  merits:

13
[F]orwarding the money to Dynaquest would violate the intent of the parties when they entered into the agreement.  Statements from the injunction hearing indicate the parties' understanding that Dynaquest would not receive the funds unless it prevailed on all of the claims of misrepresentation.  The record clearly demonstrates Dynaquest's expectation that it would not receive the escrowed funds unless it prevailed.

14
Id. (citation omitted).  By the terms of the Agreed Order, the  Sixth Circuit held, Dynaquest could not obtain the escrow  funds unless it defeated all of the allegations of misrepresentation.  Id. Because Dynaquest had not, the court affirmed  the award of the escrow funds to the Postal Service.  Id. at  *3.2

C

15
On June 19, 1996, Dynaquest returned to Washington to  file a motion with the AJO seeking, inter alia, an order  directing release of the escrow funds.  Dynaquest argued  that the Postal Service did not have authority under the  AJO's original order to return remittances to those who had  received bounce-back letters.  Dynaquest Mot. at 16 (J.A. at  35).  Dynaquest also argued that it had never received a  hearing on the merits of its claim that it was entitled to the  escrow funds because the bounce-back procedures had cured  any misrepresentations in its initial solicitations.  Id.

16
On December 30, 1997, the AJO denied Dynaquest's request.  In re A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv.  Dec. 30, 1997).  The AJO held that "the disposition of the  escrowed funds is essentially a question of interpreting the  provisions of the Agreed Order that was negotiated by the  parties and issued by the United States District Court for the  Southern District of Ohio."  Id. at 5.  That court, the AJO  said, had concluded that Dynaquest "had failed to prevail in  the § 3005 proceedings, and that under the terms of the  Agreed Order the funds held in escrow were to be returned  to the consumers who had ordered [Dynaquest's] materials."  Id.  Moreover, the AJO stressed, the Sixth Circuit had  affirmed the district court's order, concluding that Dynaquest  was "precluded from receiving the escrowed funds by the  terms of the Agreed Order that [it] entered into."  Id. at 5-6. Dynaquest's current motion was, therefore, "in effect, a collateral attack on the judgments of those two courts and seeks  to have the Judicial Officer overrule the courts and direct that  the funds held in escrow be paid" to Dynaquest.  Id. at 6. That, the AJO concluded, he did "not have the authority to  do."  Id.

17
On March 5, 1998, Dynaquest sought review of the AJO's  decision in the United States District Court for the District of  Columbia.  On August 2, 1999, the district court found that  Dynaquest's motion for release of the escrow funds was  barred by the res judicata effect of the initial, 1990 proceeding before the AJO.  "Dynaquest's claim that any false  representations in its solicitations were cured by the bounceback letters," the court said, "was within the purview of the  [1990] administrative proceeding.  Dynaquest's failure to litigate this issue constitutes a waiver of its right to raise it in  subsequent proceedings."  Dynaquest Corp. v. United States  Postal Serv., No. 98-0564, slip op. at 5-6 (D.D.C. Aug. 2,  1999) (citations omitted).  On September 27, 1999, Dynaquest  filed a notice of appeal.3

II

18
Although the course that led the parties to this court was a  tortuous one, disposition of this appeal is not equally difficult. The United States District Court for the Southern District of  Ohio concluded that, by the terms of the Agreed Order  approved by that court, Dynaquest was not entitled to the  escrow funds.  The Sixth Circuit agreed, holding that "the  intent of the parties when they entered into" the Agreed  Order was that "Dynaquest would not receive the [escrow]  funds unless it prevailed on all of the claims of misrepresentation."  Dynaquest, 1996 WL 20504, at *2.  Because Dynaquest had not prevailed on all of the misrepresentation  claims, the Sixth Circuit affirmed the award of the funds to  the Postal Service.  Id. at *3.  Dynaquest sought no further  review.

19
The Sixth Circuit's ruling is a final decision on the merits. The AJO correctly concluded that he was bound by that  decision under the doctrine of res judicata.  See Allen v.  McCurry, 449 U.S. 90, 94 (1980) ("Under res judicata, a final  judgment on the merits of an action precludes the parties or  their privies from relitigating issues that were or could have  been raised in that action.");  Commissioner v. Sunnen, 333 U.S. 591, 601 (1948).4  This court is likewise so bound. Although Dynaquest argues, vehemently, that the Sixth Circuit misconstrued both the language of the Agreed Order and  the statements of its counsel, those issues are foreclosed from  our consideration.  See Federated Dep't Stores, Inc. v. Moitie,  452 U.S. 394, 398 (1981) ("Nor are the res judicata consequences of a final, unappealed judgment on the merits altered  by the fact that the judgment may have been wrong...."). The place for Dynaquest to have raised those concerns was in  a petition for rehearing en banc to the Sixth Circuit, or in a  petition for certiorari to the United States Supreme Court. This circuit, however, has no authority to collaterally review  the decisions of a sister circuit.  See id. ("A judgment merely  voidable because based upon an erroneous view of the law is  not open to collateral attack, but can be corrected only by a  direct review...." (citation omitted));  Fort Sumter Tours,  Inc. v. Babbitt, 202 F.3d 349, 354 (D.C. Cir. 2000).

20
Dynaquest further contends that res judicata cannot bar its  claim regarding the curative effect of the bounce-back letters,  because neither the Sixth Circuit nor the Southern District of  Ohio decided that claim on the merits.  Rather, Dynaquest  notes, those courts merely held themselves without authority  to decide the claim, on the ground that only the AJO in the  § 3005 proceeding had such authority.  See 18 Wright, Miller, & Cooper § 4402, at 11 ("Dismissal of a suit for want of  federal subject matter jurisdiction, for example, should not  bar an action on the same claim in a court that does have  subject matter jurisdiction....").  Moreover, Dynaquest continues, both the Sixth Circuit and the district court in the  present litigation erred in stating that the company had not  raised the issue before the AJO.  As Dynaquest correctly  points out, it did raise the issue in its 1991 motion for  reconsideration, where it was met by the AJO's ruling that he  lacked jurisdiction to decide the question.  See In re A.C.L.,  P.S. Docket No. 36/90, slip op. at 4 (U.S. Postal Serv. May 15,  1991);  Resp't Mot. for Recons. at 16 (J.A. at 274).

21
Unfortunately for Dynaquest, whatever the validity of its  arguments about the merits of the bounce-back cure, or about  our jurisdiction to resolve that issue, those arguments are  now moot.  Their only relevance in the present case is to the  question of whether the escrow funds should be released to  Dynaquest.  But the Sixth Circuit has already construed the  Agreed Order to bar release of the escrow to Dynaquest-irrespective of any bounce-back cure--because three of the  company's initial representations were found to have been  false.  Accordingly, resolving the bounce-back question would  have no impact on disposition of the escrow funds.  And  because a favorable judicial decision on the bounce-back  question would not bring Dynaquest the redress it seeks, we  are without authority to adjudicate the issue.  See Iron  Arrow Honor Soc'y v. Heckler, 464 U.S. 67, 70 (1983) ("To  satisfy the Art. III case-or-controversy requirement, a litigant must have suffered some actual injury that can be  redressed by a favorable judicial decision.");  see also Spencer  v. Kemna, 523 U.S. 1, 7 (1998);  United States Parole  Comm'n v. Geraghty, 445 U.S. 388, 404 (1980);  FDIC v.  Kooyomjian, 220 F.3d 10, 14-15 (1st Cir. 2000).5

22
Finally, Dynaquest contends, for the first time on this  appeal, that the decision of the AJO below is invalid because  Postal Service AJOs are appointed in violation of the Appointments Clause of the U.S. Constitution.  U.S. Const. art. II,   2, cl. 2.  Although we normally would not permit a litigant  to present a legal theory that it failed to raise below, see  Grant v. United States Air Force, 197 F.3d 539, 542 (D.C.  Cir. 1999), courts have discretion to consider Appointments  Clause challenges raised for the first time on appeal, see  Freytag v. Commissioner, 501 U.S. 868, 878-79 (1991).6  But  as was true of the bounce-back issue, a victory on its Appointments Clause challenge would not advance Dynaquest's  cause.  In the decision presently on appeal, the AJO held  nothing more than that he was without authority to grant  Dynaquest's motion for release of the escrow funds.  He  based that holding on his conclusion that the Sixth Circuit's  ruling--that the district court's Agreed Order precluded such  release--bound him by the force of res judicata.  As we have  just held, the AJO's resolution of this legal question was  correct.  No AJO, regardless of the validity of his appointment, would have authority to decide the issue otherwise. Indeed, the same is true of this Article III court.  Accordingly, resolution of the Appointments Clause issue in Dynaquest's favor would bring the company no relief and would  amount to nothing more than an advisory opinion.  Issuance  of such an opinion is, of course, beyond our power under  Article III.  See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 101 (1998);  Hewitt v. Helms, 482 U.S. 755,  761 (1987).7

IV

23
The Sixth Circuit interpreted the district court's Agreed  Order as requiring that the escrow funds be awarded to the  Postal Service.  That holding is res judicata and may not be  collaterally attacked in this court.  Moreover, because that  holding leaves Dynaquest without a remedy even if it were to  obtain a favorable ruling on the additional claims it raises  here, we are without authority to adjudicate those claims. The district court's dismissal of Dynaquest's complaint is  therefore

24
Affirmed.

Notes:

1
  As discussed below, three of the eleven allegations were  ultimately upheld on appeal.  Dynaquest Corp. v. United States  Postal Serv., 12 F.3d 1144 (D.C. Cir. 1994). Those allegations  charged that Dynaquest falsely represented it would:  (1) "assist  purchasers of [its] program to earn ... thousands of dollars without  the need ... to make any additional payments to  [Dynaquest]," (2) "pay a hundred dollars ($100.00) in cash to any addressee who  purchases [the] program," and (3) "provide purchasers of the program with comprehensive training in the merchandise liquidation  field."  Postal Service Compl. pp 10(d), (g), (i) (J.A. at 56-57).

2
  Although the Southern District of Ohio stated that the escrow  funds should be returned to Dynaquest's customers, the Sixth  Circuit described the district court's order as awarding the funds to  the Postal Service.  The Postal Service has indicated that once it  gains possession of the funds, it intends to release them to the  customers.  Further action regarding release of the funds has been  stayed, however, pending resolution of this appeal.

3
  We note that 39 U.S.C. § 3007 was subsequently amended on  December 12, 1999, effective 120 days later, to provide:  "If any  order is issued under [§ 3007(a)] and the proceedings under section  3005 are concluded with the issuance of an order under that section,  any judicial review of the matter shall be in the district in which the  order under [§ 3007(a)] was issued."  39 U.S.C. § 3007(b).

4
  We use "res judicata" in its generic sense to include the  concepts of both issue preclusion (also known as "collateral estoppel") and claim preclusion.  Because the meaning and effect of the  Agreed Order were litigated by the parties and decided by the  court, issue preclusion is the specific concept at work here.  See  Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1  (1984);  18 Charles Alan Wright, Arthur R. Miller, & Edward H.  Cooper, Federal Practice and Procedure § 4402, at 6-8 (1981).

5
  Resolution of the bounce-back question is also barred by the  doctrine of res judicata as a result of Dynaquest's failure to appeal  the AJO's jurisdictional ruling in 1991.  As Dynaquest notes, it  raised the bounce-back issue in its 1991 motion for reconsideration  before the AJO.  In his decision on that motion, the AJO ruled both  that Dynaquest's initial representations were false and that he  lacked jurisdiction over the bounce-back issue.  Although Dynaquest's appeal of the AJO's order challenged the former ruling, it  did not challenge the AJO's conclusion that he was without jurisdiction to decide the bounce-back question.  Accordingly, that issue is  now res judicata between the parties.  See Allen, 449 U.S. at 94  ("Under res judicata, a final judgment on the merits of an action  precludes the parties or their privies from relitigating issues that  were or could have been raised in that action." (emphasis added)); Dozier v. Ford Motor Co., 702 F.2d 1189, 1191 (D.C. Cir. 1983)  ("[T]he doctrine of res judicata applies to dismissal for lack of  jurisdiction as well as for other grounds....");  2 Kenneth Culp  Davis & Richard J. Pierce, Jr., Administrative Law Treatise  § 13.3, at 250 (3d ed. 1994) (noting that res judicata applies to  administrative as well as judicial adjudications, and to questions of  law as well as fact).

6
  We may not, however, consider challenges to the validity of  the AJO's 1990 and 1991 decisions, which were affirmed by this  court in 1994 and are no longer open to attack.  Cf. Baltimore S.S.  Co. v. Phillips, 274 U.S. 316, 325 (1927) ("A judgment merely  voidable because based upon an erroneous view of the law is not  open to collateral attack, but can be corrected only by a direct  review and not by bringing another action upon the same cause."); 18 Wright, Miller, & Cooper § 4428, at 282 ("[F]ederal court  judgments are binding notwithstanding a simple lack of subject  matter jurisdiction, without regard to whether the jurisdictional  question was litigated.");  id. at 282 n.29 ("An assertion of jurisdiction by an administrative tribunal is likely to be treated in the same  way as an assertion by a court if the decision has been subjected to  judicial review." (citing Sunshine Anthracite Coal Co. v. Adkins,  310 U.S. 381, 403 (1940))).

7
  Dynaquest asserts that this court's decision in Landry v.  FDIC, 204 F.3d 1125 (D.C. Cir. 2000), establishes that it is "unnecessary that Dynaquest demonstrate that it was directly harmed by  the Postal Service's unconstitutional appointments mechanism" in  order to obtain judicial review of an Appointments Clause challenge. Dynaquest Br. at 22.  In Landry, we entertained such a challenge  to the authority of an FDIC Administrative Law Judge (ALJ), even  though the FDIC had itself reviewed the ALJ's decision de novo,  arguably curing any harm that might have resulted from the  alleged unconstitutional appointment.  See 204 F.3d at 1132.  In  Landry, however, a properly-appointed ALJ would have had authority to decide Landry's case.  As noted above, in this case even a  properly-appointed AJO would lack authority to collaterally review  the Sixth Circuit's decision.