Court Opinion

ID: 8963919
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:59:23.344097+00
Date Added: 2024-06-11T17:10:17.258442
License: Public Domain

ROSENN, Circuit Judge,
dissenting.
The majority concludes that “[ajbsent any indication of due process violation or *1170vexatious prosecution,” Maj. op. at 1169, it finds no reason to frustrate the policies underlying the doctrine of exhaustion by enjoining the Department of Labor (DOL) debarment proceedings. I believe that the exceptions to the doctrine requiring exhaustion of administrative remedies are not nearly as limited as the majority paints them, but have a much broader and more flexible range. Absent a statutory mandate for exhaustion of administrative remedies, there is no judicial justification to relegate a party to administrative procedures when the issue involved is only a legal one, requiring neither the agency’s expertise nor any factual determinations. Because that is precisely the situation in this case, I respectfully dissent.
I.
The basic premises underlying the exhaustion of administrative remedies doctrine are that (1) judicial review may be facilitated by permitting the appropriate agency to proceed without interruption to develop a factual record and apply its expertise with respect to technical subject matter; (2) administrative autonomy requires that an agency be afforded an opportunity to proceed without interference from the courts when the decision involves the exercise of discretionary powers granted by the Congress or the agency’s expertise; and (3) judicial resources may be conserved should the agency grant the relief sought. McKart v. United States, 395 U.S. 185, 194-95, 89 S.Ct. 1657, 1662-1663, 23 L.Ed.2d 194 (1969).
However, the doctrine, like most judicial doctrines, is subject to numerous exceptions. McKart, 395 U.S. at 193, 89 S.Ct. at 1662. As the majority correctly observes, the exhaustion doctrine is not absolute and “exists within a court’s discretion rather than as a strict rule of law.” Maj. op. at 1167. Therefore, the court should balance the goals of the doctrine against the interests of the parties:
Except in those cases where exhaustion of administrative remedies is specifically required by statute, ... administrative remedies need not be pursued if the litigant’s interests in immediate review outweigh the government’s interests in the efficiency or administrative autonomy that the exhaustion doctrine is designed to further.
West v. Bergland, 611 F.2d 710, 715 (8th Cir.1979), cert. denied, 449 U.S. 821, 101 S.Ct. 79, 66 L.Ed.2d 23 (1980). The exceptional circumstances presented by this case demand exercise of the court’s discretion.
The only issue here is whether the HUD debarment had a preclusive effect on the later DOL debarment proceeding.1 This is merely a legal question involving two government agencies, the resolution of which requires no administrative findings or expertise on the part of the DOL. The facts have been stipulated and are neither technical nor complex. Nor does resolution of the legal issue depend on the interpretation or application of the agency’s own regulations. “It is well established that the courts need not defer to any agency where the issue involved is a strictly legal one, involving neither the agency’s particular expertise nor its fact finding processes.” Board of Educ. v. Harris, 622 F.2d 599, 607 (2d Cir.1979), cert. denied, 449 U.S. 1124, 101 S.Ct. 940, 67 L.Ed.2d 110 (1981). Accord Borden, Inc. v. FTC, 495 F.2d 785, 787 (7th Cir.1974); Consumers Union of United States v. Cost of Living Council, 491 F.2d 1396, 1399 (T.E.C.A.), cert. denied, 416 U.S. 984, 94 S.Ct. 2387, 40 L.Ed.2d 761 (1974). Because the failure of the appellants to submit their preclusion claim to the administrative processes of the agency only deprives the DOL of the opportunity to decide a pure legal issue, and does not deprive it of the opportunity to speak on matters within its realm of expertise, this case should be treated as an exception to the doctrine of exhaustion.
Moreover, resort to administrative remedies will probably only delay judicial resolution of this same issue, thereby frustrating the equally valid goals of judicial economy and expediency as well as imposing unnecessary additional expense and time on the *1171parties. The United States District Court has already ruled on the issue and it has been briefed and orally argued on appeal. Although the DOL has the power to sustain appellants’ preclusion claim, it is very unlikely that further proceedings before it would produce such a result. Inasmuch as the successful prosecution of the appellants by HUD for the underlying charges and HUD’s debarment proceeding were predicated upon the DOL’s own investigation, it is unlikely, in the very nature of human behavior, that the DOL will be wholly objective and impartial. When the agency has already evinced its special competence in a manner hostile to the appellants, “courts need not bow to the primary jurisdiction of the administrative body.” Board of Educ. v. Harris, 622 F.2d at 607.
Finally, in view of the history of the previous proceedings, I believe that compelling the appellants to respond to yet another administrative proceeding, before allowing judicial determination of the legal issue, serves ho purpose and is unduly harsh. The Court has recognized that, under certain circumstances, application of the exhaustion doctrine may be unacceptably harsh. In McKart, the petitioner had been convicted for failure to submit to induction into the Armed Forces of the United States. The district court held that the petitioner was barred from raising the defense of military exemption because he had failed to exhaust the administrative remedies provided by the Selective Service System. In holding that the failure to exhaust his administrative remedies did not bar McKart from challenging the validity of his classification as a defense to the criminal prosecution, the Court observed that “use of the exhaustion doctrine in criminal cases can be exceedingly harsh.” McKart, 395 U.S. at 197, 89 S.Ct. at 1664.
In the circumstances of this case, although civil, compelling appellants to submit to an additional agency proceeding only for a decision on a legal issue would also be harsh. The DOL completed its final investigation in 1984 but failed to initiate any debarment proceedings. Following their conviction on the basis of the DOL investigation, the individual defendants were sentenced to prison, fined, and ordered to make restitution. Appellants made restitution in the sum of $126,000 to their employees. They were then subjected to administrative proceedings by HUD and debarred. Less than three months before the HUD AU entered his debarment order, DOL at last decided to commence its own debarment proceeding. It now seeks to deprive appellants of a judicial inquiry. As in McKart, we too must ask then, “whether there is in this case a governmental interest compelling enough to outweigh the severe burden placed on [appellants].” Id. at 197, 89 S.Ct. at 1664-1665. I see none.
Accordingly, I would decide the legal issue of claim preclusion raised on this appeal and not require exhaustion of remedies before the DOL. I therefore dissent.

. I agree with the majority that “the HUD debarment was sufficiently adjudicatory and final to enable appellants to raise a preclusion defense in the later DOL debarment.... Moreover, the HUD ALJ filed a detailed opinion containing his factual findings and rulings.” Maj. op. at 1167.