Court Opinion

ID: 9464724
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:40:57.544408+00
Date Added: 2024-06-11T17:38:47.016369
License: Public Domain

WILKEY,
dissenting:
I am unable to join in the court’s decision for two reasons. First, in my view, SMHA has not established its standing to bring this suit; it has failed in its responsibility clearly to allege facts demonstrating that it is a proper party to invoke the exercise of the court’s remedial powers. Second, assuming for the sake of argument that appellant has established standing, I would affirm the District Court’s judgment, because I agree on the merits with Judge Flannery that SMHA was not entitled to a hearing before the Grant Appeals Board either under HEW regulations or the Due Process Clause.
I. THE PROBLEM OF STANDING
SMHA has presumably brought this action because it believes that it has sustained *529a judicially redressable injury as a result of HEW’s withdrawal of support. However, I am unable to discern from SMHA’s original and amended complaints in the District Court, from its briefs in this court, or from its counsel’s statements at oral argument just what redressable injury SMHA purports to have sustained. Because I agree with Judge Tamm that the subject of grantee rights is a “slumbering giant” that should be awakened cautiously, I do not think it is too much to ask that the complaining party specifically identify for this court the precise interests and rights that it is attempting to vindicate.
The real interest at stake in this case can-best be identified by tracing the flow of grant money as it funnels down from the Congress through various levels of administration, to the ultimate beneficiaries — the migrant workers and their families. That real interest is a public interest, the welfare of the ultimate beneficiaries, not the private interest of SMHA attempted to be asserted here.
At the highest level of grant administration is the Department of Health, Education and Welfare, which each year receives from Congress funds specifically appropriated for the improvement of migrant worker health care. The Secretary of HEW is authorized to use these funds in making grants to public agencies or private nonprofit organizations which, in turn, are to establish and operate health care facilities for migrant workers. These grants are made expressly on the condition that the grantee provide persons broadly representative of the target population an opportunity to participate in developing and implementing the funded health care programs.
At the next level of grant administration are the grantees themselves — the public agencies or private non-profit organizations. As far as I am able to tell from the record, these entities are essentially conduits for the funds. The employees of the public agencies and the board members of the non-profit organizations do not derive salaries or otherwise profit from grant money; they have no economic stake in it. Rather, these organizations perform a managerial function with respect to the funds. They plan and implement health care services, ensuring that grant monies are properly applied in their provision. Congress’ specification of public agencies and nonprofit organizations was purposeful, the theory being that, because such entities have no interest in the grant money and are motivated solely by altruism, they will encourage the target populations’ participation in the administration of the funds. This participation, in turn, is supposed to assure program responsiveness. Thus, the very reason organizations such as SMHA receive grant money is their supposed economic disinterest and self-abnegating spirit.
At the final level of grant administration are the health delivery systems — the clinics themselves. It is at this level that grant money is expended for capital construction, equipment, and salaries for medical personnel and other staff. These clinics are the line entities, providing health care services directly to the migrant workers and their families.
As I read the record in this case, all that has happened is that one group of non-salaried volunteer welfare workers (SMHA) has been replaced in its management role by another group of non-salaried volunteer welfare workers (TAB). It is just as if HEW shifted a grant award from one state agency to another state agency. When SMHA’s grant was not renewed for a fourth year, HEW simply granted the available money to TAB, another qualified nonprofit organization, which then replaced SMHA in its managerial role over the health care clinic. The grant money is now being funneled through that organization to the clinic. Thus the basic health care structure and staff established by SMHA at the outset of the grant is still intact and, although now under the management of TAB, still serves the same area. The migrants — the beneficiaries of the program— have lost nothing, the people who staff the clinics have lost nothing, and it appears to me that SMHA has lost nothing except perhaps the opportunity to help others by administering federal monies.
*530Nevertheless, SMHA has brought this action in the belief that it has sustained some injury in fact which this court is capable of remedying. It is evident from the complaint that SMHA is not in court to represent and assert the personal rights of its members.1 It does not therefore have standing as an association in a representative capacity. Nor is SMHA here on the behalf of the migrant workers to represent public interests and vindicate public rights. Therefore, it does not have standing as a “private attorney general”. Rather, it appears from the pleadings that SMHA has brought this action to redress its own private claims, to protect its own organizational rights. There is no question that an association may have standing in its own right to seek judicial relief from injury to itself and to vindicate whatever rights the association itself may enjoy.
In order to establish such standing in its own right, however, an association must allege that it has suffered an injury in fact, economic or otherwise. The injury must be alleged with particularity; the association must plead specific and concrete facts indicating that it has sustained an injury. The existence of an injury cannot be left to the imagination of the court.2 Moreover, the injury alleged must be distinct and palpable; it cannot be abstract, remote, or speculative.3 Finally, the association must allege that the injury was caused by the challenged agency action and is likely to be redressed by a favorable judicial decision.4
Despite these requirements, SMHA has failed to allege specifically any facts, either in its original or in its amended complaints, indicating that it has sustained a redressa-ble injury as a result of HEW action. It alleges in its complaint that it has been deprived by HEW action of two years of funding amounting to approximately $700,-000 in grant money. At oral argument SMHA’s counsel was specifically asked what injury the association had sustained to support its standing. Counsel responded that SMHA had lost its “property interest” in two years of grant money. However, in my view, any such “property loss” is an illusion. SMHA was a conduit. The association itself did not profit from the grant money; it was essentially a board of directors administering the grant funds for the benefit of the migrant workers. Thus, the association had no financial or economic interest in this money. The only persons who are salaried and are being paid government money are the staff personnel actually operating the health clinics. These individuals have largely retained their jobs under the new management of TAB. The clinics are still in operation. In fact, then, SMHA has not “lost” anything.
Equally important is the fact that SMHA’s “loss” of funding for two years is simply not redressable. The funds putatively “lost” by SMHA were appropriated by Congress to carry out programs for specific beneficiaries during specific fiscal years — FY 1975 and FY 1976. The programs have been carried out; the funds have been spent; the true beneficiaries have already received the benefits which Congress intended that they receive. This court cannot require Congress to appropriate further funds so that appellant can have the pleasure of administering a redundant program. Nor can we require the Secretary of HEW to award to SMHA grant money appropriated by Congress in *531future fiscal years for future programs.5
6 Thus, SMHA’s claimed loss of $700,000 in grant money is not only illusory but unre-■dressable and, hence, cannot provide a basis for the Association’s standing.
There is another injury mentioned in SMHA’s complaint which does involve genuine economic loss to the Association. SMHA claims that, as a result of HEW’s withdrawal of support, it was forced to breach various contractual obligations for which it remains liable. It claims damages of $100,000. Certainly these forced breaches have resulted in an injury to SMHA; and certainly this is an injury which this court can remedy. But just as certainly these forced breaches were not caused by HEW’s non-renewal of funding. SMHA simply did-not have authority to obligate grant money by contract beyond a one year period. This limitation was clearly understood by SMHA. All of the contracts breached by SMHA were contracts running beyond a one year term. To the extent that these contracts purported to obligate grant monies, they were ultra vires, and were entered into solely oh the responsibility of SMHA. In no proper sense, then, did HEW’s withdrawal of support cause SMHA’s lingering liabilities.
What injury has SMHA sustained then as a result of HEW’s action? The majority has rested its finding of standing on the theory that SMHA has suffered an injury to its good name and reputation:
For an organization such as SMHA, dependent as it is upon grants for its very existence, a good reputation is perhaps its most valuable asset. Reputation, especially that established by past performance, is a key element in agency grant decisions, and an organization that acquires a bad reputation in the grant community based on poor performance will have a difficult burden to overcome in securing new grants, [footnote omitted] * * * * * *
The effect of HEW’s action in this case, therefore, is to endanger SMHA’s ability to obtain future grants, the very lifeblood of its existence. We believe this demonstrates that SMHA has been injured in fact, . . . . (Majority Opinion, - --of 187 U.S.App.D.C., 524 of 574 F.2d).
This is an interesting notion; the problem is that it represents the court’s own imaginative theory of how SMHA was actually injured.
There are no specific or concrete facts alleged in SMHA’s complaints, its brief, or oral argument, or elsewhere in the record which support this theory. Although there is in the original and amended complaints a request for $1,000,000 in damages for “injury to good name and reputation”, there are no specific and concrete facts regarding this asserted injury alleged in the complaints. This cryptic reference — and good round figure of One Million obviously picked out of thin air — is not sufficient to support the majority’s theory regarding appellant’s rep-utational injury.6 The majority, thén, can only be speculating as to the injury sustained by SMHA, just as was SMHA itself, although rather perfunctorily. These speculations seem in large part derived from assertions made in law review articles generally advocating grantee rights. Law reviews, though helpful at times, can not replace proper pleading.7
*532Overlooking for the moment appellant’s failure to allege with particularity any remediable injury in fact, there is something else which concerns me. The words “injury to reputation” are becoming almost talis-manic in our jurisprudence. A plaintiff utters these words once, and he has standing; the doors to federal courts fly open. He incants these words once more, and he has a “liberty interest”; the Due Process Clause of the Constitution descends upon him investing him with its procedural safeguards. Before we are ready to acknowledge that SMHA has sustained the injury in fact required for its standing purposes, we should consider precisely what this repu-tational injury amounts to in practical terms.8
It seems to me that if one follows the majority’s reasoning that the only redressa-ble injury sustained by SMHA has been the tarnishing of its image within HEW and other granting agencies, then one must conclude that this so-called “injury to reputation” really translates into the possibility that SMHA may be given fewer opportunities to administer federal grant money in the future. In other words, the gravamen of SMHA’s complaint, at least the only remaining part found tangible by the majority, is that it may have lost opportunities to help other people and have the government pay for it. This interest in being altruistic at the government’s expense strikes me as somewhat ephemeral, and I question whether the invasion of an interest of the kind suggested here constitutes a palpable enough injury to establish “injury in fact” under the doctrine of standing.
II. THE MERITS
Assuming that SMHA has standing to bring this action, the issue presented is whether HEW regulations or the due process clause required that HEW provide SMHA with a hearing before withdrawing support for FY 1974 and FY 1975. The District Court concluded, first, that HEW regulations did not require a hearing and, second, that SMHA did not possess a “property interest” in future funding protected by the procedural guarantees of the due process clause. My colleagues, however, conclude that HEW regulations did entitle SMHA to a hearing and therefore find it unnecessary to reach the constitutional question. I am in agreement with the analysis in Judge Flannery’s opinion in the District Court and have only a few remarks by way of supplementation.
A. Due Process Clause
In its original and amended complaints, its brief in this court, and its oral argument, SMHA has insisted that it possesses a “property interest” in continued funding protected by the procedural guarantees of the Due Process Clause. Relying on Board of Regents v. Roth9 and Perry v. Sinder-*533mann,10 the District Court concluded that SMHA had “no claim of entitlement that rises to the level of a property interest protected by due process guarantees of the Fifth Amendment.” I agree with this conclusion.
The majority’s opinion, however, raises another possible Fifth Amendment issue. Relying on a supposed injury to SMHA’s reputation to confer standing on the Association, the majority raises the question whether this reputational injury implicates “liberty interests” sufficient to trigger due process protections. The District Court did not address this question because appellants have never even suggested, either in the District Court or before this Court, an invasion of their “liberty interests.” My own view is that any reputational injury sustained by SMHA did not amount to a deprivation of “liberty” within the protection of the Fifth Amendment, and recent Supreme Court decisions squarely support this position.11
B. HEW Regulations
The majority correctly points out that HEW regulations concerning the “termination” of grants are confusing and that it is an exceedingly close question whether these regulations did or did not require a hearing under the circumstances of this case. By applying the doctrine of contra proferen-tem, the majority construes the regulations against HEW and in favor of SMHA. I believe this is wrong for three reasons.
First, I think it appropriate for this court to defer to the Department’s interpretation of its own regulations. As far as we can tell the regulations were being interpreted for the first time, and the Department’s construction is a reasonable one.12
Second, I question whether the doctrine of contra proferentem should be used simply to penalize sloppy draftsmanship. The doctrine is most appropriate in situations where the non-drafting party is relatively inexperienced and has relied on the terms in dispute. In such a case, there is the danger that the more experienced drafter may be taking unfair advantage of the other party. However, these factors did not exist in the instant case.
Third, I believe that the Department’s construction of its regulations is most consistent with Congress’ intent in enacting the Migrant Health Act. The Department’s construction would give a grantee a hearing whenever the grantee had a tangible financial stake in the grant funds, that is, whenever a grant was terminated in mid-term. The appellant’s interpretation of the regulations, accepted by the majority, would provide a grantee with a hearing under circumstances where it had no real financial stake but only an ephemeral “reputation” interest to protect, that is, whenever the Department denies a grantee’s application for renewal of a grant.
It cannot be denied that Congress enacted the Migrant Health Act to benefit migratory workers and their families and not to benefit public agencies or non-profit organizations. Indeed, it was the very self-abnegating spirit of these organizations which commended them as appropriate vehicles for accomplishing Congress’ purpose. Congress might be surprised to see the spectacle of these presumably altruistic organizations squabbling over the grant funds in an attempt to vindicate ephemeral interests at the possible expense of the migrant workers themselves, the true beneficiaries of the Government’s largesse. There can be no question but that expanded procedural rights for grantees under this kind of grant program would have a tendency to interfere with the delivery of health services to the program’s beneficiaries by delaying, disrupting or degrading the quality of *534those services. For this reason I think it is important that we not broadly construe the Department’s regulation as providing expansive procedural guarantees and, thereby, perhaps superordinate the interests of the grantees over those of the beneficiaries.
One other point on overall public policy involved here should be recognized. It is bad enough for efficient government that we must put up with entrenched bureaucracies of government employees who frequently assert that they have a constitutionally given right to perpetuate both the programs and themselves in spending government funds. It is even worse to confer upon — not government agencies and persons who presumably are subject to direction by proper executive authority — but to confer upon miscellaneous private organizations not within government control rights in perpetuity in programs and persons. This is really entrenching a bureaucracy when we entrench private bureaucracies which are by definition beyond effective government control. Hence, if we permit this private non-profit organization standing to sue here by recognizing its claimed ephemeral damage to reputation, and award it a hearing by rejecting the responsible Department’s interpretation of its own regulations, we are in effect conferring upon organizations which are purely donee-trustees for the benefit of others a virtual perpetuity in government funds, with a right to challenge any cut-off of monies intended to be pure largesse for the benefit of persons other than this appellant.
First, because this rather peculiarly situated plaintiff-appellant lacks standing by the recognized constitutional requirement of injury in fact, and, second, because I would defer to the interpretation of the regulations made by both the responsible Department and the District Court, I cannot join in the majority’s remand for a hearing and therefore respectfully dissent.

. One of the complaints by HEW against the administration of the plaintiffs group of nonsalaried workers was that this board of directors was employing some of their relatives in salaried positions at the clinic which was directly contrary to HEW regulations. This is hardly the kind of an interest — in keeping relatives illegally swilling at the public trough — for which this court should grant standing to vindicate.

. See, e. g., Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972); Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

. See, e. g., O’Shea v. Littleton, 414 U.S. 488, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974); Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973); Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

. See Warth v. Seldin, note 2 supra.

. The lack of redressability here may be demonstrated by analogy to the disappointed bidder in a government contract case. If an unqualified bidder were to be improperly awarded a building construction contract, this court would not and could not, at the instance of a disappointed qualified bidder, require Congress to appropriate funds for a duplicative building; nor could this court require the award to the disappointed bidder of a future contract for some other project.

. See, e. g., Sierra Club v. Morton, note 1 supra; Warth v. Seldin, note 1 supra.

. Since SMHA was warned in advance that the whole operation was subject to annual renewals and that it had no expectancy beyond one year, then by undertaking the first year SMHA put itself in the position of incurring a hypothetical damage to reputation, if at any time during the next four years the grant was not renewed. SMHA assumed this position and *532concomitant risk. This might be comparable to a law student who goes to law school on a scholarship for the first and second year and the scholarship is not renewed the third year. Does he have an actionable damage to reputation? The nonrenewal might hamper him in getting a job on graduation because his scholarship was not renewed. But certainly the university has an option as to whom it awards scholarships. There is no claim or enforceable expectancy from one year to the next unless the scholarship so provides. The HEW Grants Administration Manual refuted here any such expectancy by providing that HEW was under no obligation for continued funding in “succeeding budget periods” if HEW “determines that continued funding is not in the best interests of the Government.” # 1-85-10 (1972).

. The majority is correct that at least since Joint Anti-Fascist Comm. v. McGrath, injury to reputation is a sufficient injury in fact to give an organization standing. However, in his concurring opinion in McGrath, Justice Frankfurter carefully inquired into just what tangible consequences the alleged injury to reputation would have for the organization. He concluded that the designation of the committee as a “Communist” organization carried with it a threat to the employment interests of committee members who were or desired to become federal employees. It was on this tangible injury which Justice Frankfurter based his determination that the committee had established the requisite injury in fact to give it standing.

. 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).

. 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972).

. See, e. g., Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976); Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155, 47 L.Ed.2d 405 (1976).

. See XJdall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965).