Court Opinion

ID: 9484039
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:38:53.032251+00
Date Added: 2024-06-11T17:49:58.933234
License: Public Domain

MIKVA, Chief Judge,
dissenting:
The majority holds today that on a motion to dismiss under Rule 12(b)(6), a district court may properly review the entire administrative record upon which a complaint is based without converting the motion to dismiss into a motion for summary judgment. The majority reasons that since courts are allowed to take “judicial notice” of facts on the public record when reviewing 12(b)(6) motions to dismiss, courts may also engage in a full review of the administrative record at the pleading stage. I am concerned that this decision will substantially blur an important functional distinction between motions to dismiss under Rule 12(b)(6) and the summary judgment procedure. Rule 12(b) specifically intended for the two procedures to remain separate, even in cases where the two procedures would achieve identical results. These two procedures serve important and different purposes in federal law, and we do mischief in justifying their conflation. Accordingly, I dissent.
The appellants in this case filed pleadings in the district court alleging that the Secretary of Health and Human Services arbitrarily and capriciously refused to exercise his statutory authority to grant exceptions to the MSA classification scheme adopted by Congress. The Secretary filed a motion to dismiss under Rule 12(b)(6), asserting that the appellants did not state a claim upon which relief could be granted. After reviewing the entire record of the related rulemaking proceeding, the district court granted the motion to dismiss. Marshall County Health Care Auth. v. Sullivan, Civ. Act. No. 91-0208, Mem. Op. at 4 (D.D.C. Nov. 12, 1991). The district court specifically stated that “[o]n examination of the published responses, the Court finds that the Secretary did not act arbitrarily and capriciously.” Id. at 5.
It is well settled that a district court, when appraising the sufficiency of a complaint under Rule 12(b)(6), should look only within the four corners of the complaint, and should accept the plaintiff’s allegations as true and construe those allegations in the light most favorable to the pleader. See, e.g., Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). When matters outside the pleadings are considered by the court on a motion to dismiss, courts are required by Rule 12(b) to convert the motion to dismiss into a motion for summary judgment. See Fed. R.Civ.P. 12(b); Tele-Communications of Key West v. USA, 757 F.2d 1330 (D.C.Cir.1985).
Generally speaking, under Rule 12(b), “matters outside the pleadings” include “any written or oral evidence in support of or in opposition to the pleading that provides some substantiation for and does not merely restate what is said in the pleadings.” 5A C. Wright & A. Miller, Federal *1228PRACTICE AND Procedure § 1366 at 499 (2d ed. 1990). Clearly, the administrative record of a rulemaking constitutes “matters outside the pleadings,” and judicial review of the administrative record may not be had without converting the motion to dismiss into a motion for summary judgment. See Tenneco Oil Co. v. Dept. of Energy, 475 F.Supp. 299, 304 (D.C.Del.1979) (motion to dismiss converted to summary judgment motion “[bjecause defendant’s motion reference^] portions of the administrative record of the proceedings”); Roberts v. Morton, 389 F.Supp. 87 (D.C.Colo.1975), affirmed, 549 F.2d 158 (10th Cir.1976), cert. denied, 434 U.S. 834, 98 S.Ct. 121, 54 L.Ed.2d 95 (1977) (administrative record compiled by agency constituted “matters outside the pleadings”).
A narrow exception to this general rule has been crafted, however, to allow courts to take “judicial notice” of facts on the public record. See, e.g., Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir.1986). This exception has made it possible for courts to avoid unnecessary proceedings when an undisputed fact on the public record makes it clear that the plaintiff does not state a claim upon which relief could be granted.
Of course, taking “judicial notice” of facts in an administrative record is something quite different from reviewing the entire record upon which an agency decision was based and concluding that, in light of the entire record, the plaintiff could never demonstrate that the agency abused its discretion. By making this logical leap, the majority has transformed the narrow “judicial notice” exception into a new standard of review for complaints alleging arbitrary and capricious agency action under the APA. The majority acknowledges that “[i]t is probably better practice for a district court to always convert to summary judgment” but holds that nothing requires a district court to do so. Maj. op. at 1226 n. 5. In reaching this conclusion, the majority ignores the plain language of Rule 12(b) and skirts over the court’s duty to refrain from making “factual assumptions which appear reasonable or even obvious from the record but which cannot properly be drawn from the plaintiff’s complaint.” Tele-Communications, 757 F.2d at 1335.
The purpose behind the conversion requirement in Rule 12(b) should not be lightly brushed aside. The conversion requirement was added as an amendment to the rules in 1946, as federal courts were beginning to allow parties to submit extraneous material on 12(b)(6) motions even though “notice pleading” was all that was required under the rules. See, Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (“notice pleading” does not require a plaintiff “to set out in detail the facts upon which he bases his claim”). The Advisory Committee on the Rules believed that district courts should have the latitude to accept affidavits, depositions, and the like, even at the pleading stage, but that the parties should not be deprived of a full opportunity to present their view of the case. See Fed.R.Civ.P. 12(b), Notes of Advisory Committee on Rules, 1946 Amendment, Subdivision (b). Thus, Rule 12(b), as amended, requires a district court to convert a motion to dismiss into a motion for summary judgment when the court decides to consider matters outside the pleadings.
The 1946 amendment to Rule 12(b) is significant because it seeks to preserve the distinction between “notice pleading” and the full blown merits analysis which is often appropriate in motions for summary judgment. Since the “notice pleading” format does not provide a meaningful opportunity for plaintiffs to flesh out their legal arguments, Rule 12(b) ensures that plaintiffs will have this opportunity, by proceeding to summary judgment, so long as a cognizable claim exists on the face of the complaint. Most importantly, Rule 12(b) explicitly recognizes that if courts are allowed to look beyond the four corners of a complaint when reviewing motions to dismiss, “notice pleading” will no longer suffice.
Still, the majority suggests that these concerns are not relevant in this context, where the only question presented to the court is a legal one. In the majority’s view, since the district court is not a fact-finder when reviewing agency action, the *1229court is free to decide whether the agency was arbitrary or capricious at the 12(b)(6) stage — even if that determination requires a thorough review of the entire administrative record and precludes the plaintiff from fully explaining his view of the facts contained therein.
Admittedly, the standard of review articulated in Rule 12(b)(6) is somewhat inapplicable to the role the district court plays when it reviews agency action under the APA. Under Rule 12(b)(6), a motion to dismiss should not be granted “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley, 355 U.S. at 45, 78 S.Ct. at 101. This rule may appear inappropriate where, technically at least, there are no “facts” to be proved. But to say, as the majority does, that the only question presented at the pleading stage is a purely legal one, is too simplistic. APA review is, after all, a review of whether the agency acted arbitrarily and capriciously under the circumstances or engaged in reasoned decisionmaking in light of the record. In these cases, the parties inevitably have different views of the public record and draw different legal conclusions based on those differing views. While it is true that a district court sits basically as an appellate court in APA cases, the majority overlooks the fact that at the pleading stage, plaintiffs are not afforded the luxury of presenting their arguments in full as they may when seeking review in an appellate tribunal. If parties are required to convince a court in their pleadings that their view of the record is the most persuasive, the 12(b)(6) standard of review is a formidable one indeed.