Court Opinion

ID: 6935931
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:32:53.111732+00
Date Added: 2024-06-11T16:07:27.708049
License: Public Domain

WIDENER, Circuit Judge,
dissenting:
I respectfully dissent, because I believe that the County Executive’s decision at issue in this case was reviewable de novo by the district court and that even if this was not a de novo review, the federal courts should be permitted to sit in a ease such as this in *160diversity review of state administrative decisions.
I.
The majority recognizes that if the provisions of Virginia law at issue in this case permitted de novo judicial review of the agency’s decision, the district court would have jurisdiction of the action in diversity. But at the same time it fails to recognize that we have defined de novo so as to require the very review it now denies.
In Cross v. United States, 512 F.2d 1212 (4th Cir.1975) (en banc), this court construed the Food Stamp Act, 7 U.S.C. § 2022(c) (now § 2023(a)), which provides for “a trial de novo by the court” in review of a food-stamp-disqualification decision of the Food Stamp Review Office to “determine the validity of the questioned administrative action.” The en banc court, in both majority and dissenting opinions, held, on the same issue as here, “the scope of judicial review,” 512 F.2d at 1217, that our de novo review of the administrative decision was whether the Secretary had “abused his discretion by acting arbitrarily,” “on the de novo record as a whole.” 512 F.2d at 1218. See also Alcoa v. United States EPA, 663 F.2d 499, 502 (4th Cir.1981) (holding that under the various provisions of 28 U.S.C. § 636, which requires a district court to review a magistrate judge’s findings and recommendations de novo, in the light of the legislative history of the Act, a de novo determination “does not necessarily mean a de novo hearing.... Rather, the judge is to make ‘his own determination on the basis of [the] ... record [developed before the magistrate], without being bound to adopt the findings and conclusions of the Magistrate.’ ”) (alterations in original).
Thus, I am of opinion that the level of review at issue in this case is indistinguishable from that level of review provided in Cross, which was indisputably de novo as required by Section 2022. Accordingly, I believe that this case falls within the Horton exception to the rule of Stude and that the district court had jurisdiction under Horton to review the County Executive’s decision, because the level of review provided by Section 11-71 is essentially the same as we have defined a de novo review of an administrative decision in Cross.
Holding that de novo has a different meaning in this diversity case from the meaning the en banc court has placed on the same words in a federal-question case is hardly even-handed, I suggest.
II.
Even aside from the en bane court’s definition of de novo, I am of opinion that the district court properly exercised its diversity jurisdiction over the dispute, because the district court was exercising its original jurisdiction over a controversy between citizens of different States in which the amount in controversy exceeded $50,000.
The Supreme Court has never followed the holding of Stude, as depended upon by the majority, either before or since.1 Burford, cited by the majority, established the doctrine of abstention in equity from the enjoining of State administrative orders; its language regarding federal review of State administrative proceedings is dictum. Horton, although citing Stude, distinguished that case. Finally, in County of Allegheny v. *161Frank Mashuda Co., 360 U.S. 186, 195, 79 S.Ct. 1060, 1066-67, 3 L.Ed.2d 1163 (1959), the Supreme Court interpreted Stude to stand for the proposition that, “the defendant in [a condemnation] proceeding could remove in accordance with § 1441 and obtain a federal adjudication of the issues involved.”
The Supreme Court in Stude did not even cite, much less overrule, Madisonville Traction Co. v. St. Bernard Mining Co., 196 U.S. 239, 25 S.Ct. 251, 49 L.Ed. 462 (1905), which is directly contrary to the holding of Stude. See 196 U.S. at 246, 25 S.Ct. at 253-54 (“The case, as made in the county court, was, beyond question, a judicial proceeding.”); 196 U.S. at 250-51, 25 S.Ct. at 255 (“We cannot doubt, in view of the authorities, that the case presented in the county court was a ‘suit’ or ‘controversy between citizens of different states,’ within the meaning of the Constitution and the laws of the United States.”). In Madisonville Traction, the Court stated that the Judicial Power Clause of the Constitution, U.S. Const, art. Ill, sec. 2, cl. 1, permits the federal courts to hear any case “to the full extent of the Constitution, laws, and treaties of the United States, when any question respecting them shall assume such a form that the judicial power is capable of acting on it.” Madisonville Traction, 196 U.S. at 246, 25 S.Ct. at 254; see Guaranty Trust Co. v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079 (1945) (“[A] federal court adjudicating a State-created right solely because of the diversity of citizenship of the parties is, for that purpose, in effect, ... another court of the State .... ”); see also 14A Wright, Miller & Cooper, Federal Practice & Procedure § 3721, at 205-07 & n. 65 (“An appeal to a state court from an administrative agency may be in the form of a civil action and therefore be removable.”). It is evident that this case, upon reaching the state court, “assume[d] such a form that the judicial power [wa]s capable of acting on it,” because under 28 U.S.C. § 1332, there was diversity of citizenship and more than $50,-000 in controversy.
The majority cites Stude for the proposition that under the circumstances of this case, the litigation in the district court was not in the nature of “original jurisdiction,” and thus that Section 1332 does not permit the federal courts to exercise their jurisdiction over such cases. I doubt that Stude justifies such a conclusion.
It is clear to me that the state court was exercising original jurisdiction in this case. As the court in Madisonville Traction found, the dispute did not become a civil action subject to any jurisdictional analysis until the complaint was filed in the state court, whether styled an appeal from an administrative determination or not. At that point, it is clear that the state court was exercising original jurisdiction, because no other court had yet exercised jurisdiction over the dispute.2’3
*162The majority quotes Stude for the proposition that “[a] state ‘legislature may not make a federal district court, a court of original jurisdiction, into an appellate tribunal.’ ” Op. at 157.1 do not believe that this is the result of federal review of state administrative proceedings. As I have argued, in such cases the district court does not exercise appellate jurisdiction but original jurisdiction with only the extent of the review subject to some limitations. In any setting, however, I am more concerned with the fact that the majority’s construction of Stude allows a state legislature, merely by limiting the scope of judicial review of administrative proceedings, to divest the federal courts of diversity jurisdiction over such disputes. This appears contrary to the intent of Section 1332. The power of a State to make unavailable any federal review whatsoever is, to my mind, a much more serious encroachment on federal jurisdiction than the power to limit the scope of that review to a greater or lesser extent. Along the same line, the destructive effect of the majority’s decision is shown by the case of W.M. Schlosser Co., Inc. v. Fairfax County, 975 F.2d 1075 (4th Cir.1992), which this same case is a part of on its first trip through this court. In the case involved in Part II of that opinion, as explained on page 1077 of the report, Schlosser had brought its action in the district court without exhausting its administrative remedies, but Virginia law provided that in such cases administrative remedies need not have been exhausted, so we permitted the case to proceed. Even the majority will concede that was proper. In the instant case, in which the contractor did resort to administrative remedies, which was an obvious and immense help to any court, state or federal, in compiling the record, and especially so in such cases arising out of construction contracts, the contractor is paid by a denial of its judicial review by a diversity court. Certainly the majority decision does not lend itself to encourage litigants to avail themselves of administrative remedies and thus avoid litigation.4
I believe that the district court would have had original jurisdiction over this case in the same manner as would the courts of the State, in line with Madisonville Traction and Guaranty Trust, and that the removal was appropriate. Professor Wright essentially recommends that the holding of Stude be limited to condemnation cases, see 12 Wright & Miller § 3055, at 154-56 & n. 64; see also Young, Federal Court Abstention and State Administrative Law from Burford to Ank-enbrandt: Fifty Years of Judicial Federalism Under Burford v. Sun Oil Co. and Kindred Doctrines, 42 DePaul L.Rev. 859, 949 n. 479 (1993) (“From time to time, the Supreme Court has taken th[e] position [that a federal court cannot hear what might be characterized as an appeal from a state administrative *163decision]_ See, e.g, [Stude ]. This, however, is an indefensible rationale (or absence of rationale) only erratically endorsed by the Court.”), and I would do the same. I would follow the holding in Madisonville Traction, which is inconsistent with Stude and rests on sounder logic, and would address the district court’s decision on the merits.
In conclusion, I am of opinion that whether we follow our own en banc decision in Cross as to the meaning of de novo, or whether we follow Madisonville Traction and Guaranty Trust, the district court properly exercised its diversity and removal jurisdiction in reviewing this dispute.
I further suggest that the action of the majority is Rule 12 run riot. With Stude and Madisonville Traction from which to choose, the parties having made no objection, the majority, on its own account, has chosen Stude.
I agree with Professor Wright’s suggestion, that Stude should be limited to condemnation cases, and with Professor Young, that the majority’s construction of Stude is an indefensible rationale only erratically endorsed by the Court. So I would follow Madisonville Traction and Guaranty Trust, and for that reason, I respectfully dissent.5

. Stude's prohibition against federal appellate review of state administrative determinations has never been applied by this court, either. In fact, this court has effectively reviewed state administrative determinations on a number of occasions, even where the level of review was less-than-plenary, if required by Horton. See, e.g., Rowland v. Patterson, 882 F.2d 97, 98 (4th Cir.1989) (upholding jurisdiction in diversity to review the malpractice decision of the Maryland Health Care Arbitration Office (HCAO), which decision is by statute presumptively correct); Davison v. Sinai Hosp., 462 F.Supp. 778, 779 (D.Md.1978) (same), aff'd, 617 F.2d 361 (4th Cir.1980); see also Woods v. Holy Cross Hosp., 591 F.2d 1164, 1168-72 (5th Cir.1979) (reviewing the treatment by the federal courts of state statutory malpractice procedures similar to Maryland’s, and concluding that such a procedure must be applied in diversity). The level of judicial review at issue in this case is materially indistinguishable from the level of review provided for decisions of the Maryland HCAO. Dismissing the instant litigation on the basis of Stude, therefore, calls into question many cases wherein we have reviewed state administrative determinations in diversity.

. I note that it appears under the majority's reasoning that the case was improperly removed because Schlosser, the claimant before the County Executive, was under the majority's reasoning the plaintiff in this case, since the majority finds that the case originated at the County Executive level. Thus, the majority's reasoning creates the anomalous result that administrative claims against a governmental unit, even where judicial review is de novo under the majority definition here, and thus federal jurisdiction is proper under Horton, will never be subject to removal by a claimant but will always be subject to federal review at the instance of a governmental entity. Again, hardly even-handed.
Under my reasoning, the case did not begin until the complaint was filed originally in the state court, and thus Schlosser was properly the defendant and entitled to remove. Moreover, under my reasoning, any party hailed into state court wdsfd be entitled to the benefit of removal, provided "the other jurisdictional prerequisites are met. This result seems much more consistent with the purposes of removal jurisdiction.
In any event, any invalid removal was waived by the Authority's failure to move for remand within thirty days of removal. See 28 U.S.C. § 1447(c).

. Black's Law Dictionary defines jurisdiction as "embracing] every kind of judicial action. It is the authority by which courts and judicial officers take cognizance of and decide cases .... [or] the legal right by which judges exercise their authority.” (emphasis added). Jurisdiction is, quite literally, the power of a judge to decide. It defies logic to find otherwise than that original jurisdiction rests in the first judicial tribunal to confront a dispute, and I believe that this is precisely what the majority, in its construction of Stude, has done.

. Although the majority cites several court of appeals decisions as following Stude's prohibition on federal review of state agency determinations, none of those decisions is on point. In Trapp v. Goetz, 373 F.2d 380 (10th Cir.1967), the only cited court of appeals decision to discuss this holding of Stude, the Kansas legislature had provided no mechanism for state-court review of a determination of the Board of Trustees of the Firemen’s Pension Fund, see 373 F.2d at 382, and thus the only original jurisdiction available in the state courts was in the form of a writ of mandamus. Moreover, the discussion of Stude in Trapp was dictum, since the court there found that there was no decision of the Board of Trustees for any court to review. See 373 F.2d at 382.
None of the other cases cited by the majority followed the holding of Stude, and none in any event was on facts similar to those before us in the instant case. See FSK Drug Corp. v. Perales, 960 F.2d 6 (2d Cir.1992) (rejecting an Equal Protection challenge to a decision of the New York State Department of Social Services denying re-enrollment to a Medicaid provider, and holding that "[a] Section 1983 action is not an appropriate vehicle to consider whether a state or local administrative determination was arbitrary or capricious.” 960 F.2d at 11); Frison v. Franklin Cty. Bd. of Educ., 596 F.2d 1192 (4th Cir.1979) (holding that a demotion decision of a North Carolina school board did not violate Equal Protection or Due Process Clauses, and finding no pendent jurisdiction over the substance of the decision); Shell Oil Co. v. Train, 585 F.2d 408 (9th Cir.1978) (affirming the dismissal of a complaint against the EPA alleging that EPA controlled a state agency's action in denying a pollution discharge permit so that the action was effectively a federal agency decision reviewable under federal law); Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations Board, 454 F.2d 38 (1st Cir.1972) (holding that the Puerto Rico Labor Relations Board is a court for removal purposes).

. The majority states that the dissent "stat[es]” that Studs “was incorrectly decided” and that Stude is "unwise as a policy matter.” An examination of the dissenting opinion, however, does not disclose the use of the word “incorrectly” or “unwise” referring to Stude. The use of that adverb and adjective when referring to the Supreme Court's opinion is entirely that of the majority.