Court Opinion

ID: 2964603
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:28:09.727241+00
Date Added: 2024-06-11T11:42:58.044767
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USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                              _________________________

          No. 96-1460

                         ASTRID L. PORTELA-GONZALEZ, ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                            SECRETARY OF THE NAVY, ET AL.,

                                Defendants, Appellees.

                              _________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                 [Hon. Jaime Pieras, Jr., Senior U.S. District Judge]
                                          __________________________

                              _________________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________

                           Selya and Stahl, Circuit Judges.
                                            ______________

                               _______________________

               Alex  Gonzalez, with whom  Gonzalez & Vilella  was on brief,
               ______________             __________________
          for appellants.
               Isabel Mu oz Acosta, Assistant  United States Attorney, with
               ___________________
          whom Guillermo  Gil, United  States Attorney,  was on  brief, for
               ______________
          appellees.

                               _______________________

                                    March 26, 1997
                               _______________________

                    SELYA,  Circuit  Judge.   In  this  appeal,  plaintiff-
                    SELYA,  Circuit  Judge.
                            ______________

          appellant  Astrid  L.  Portela-Gonzalez  (Portela)  challenges  a

          summary judgment entered  in favor  of the Navy.1   Although  our

          reasoning differs in  one salient respect  from that employed  by

          the court below, we affirm the  judgment.  See Hachikian v. FDIC,
                                                     ___ _________    ____

          96  F.3d 502, 504 (1st  Cir. 1996) (explaining  that an appellate

          court  is not committed to  the trial court's  rationale, but may

          affirm on any alternative ground made manifest by the record). 

          I.  BACKGROUND
          I.  BACKGROUND

                    The  facts  essential   to  our   review  are   largely

          uncontested.    Portela worked  for  nearly  three decades  as  a

          civilian employee  at the Roosevelt  Roads Naval  Station.   From

          1985 forward, she occupied  the position of sales manager  at the

          Navy Exchange.    She had  an unblemished  employment record  and

          achieved consistently high performance ratings.

                    On  December 14,  1989, Portela  placed 28  articles of

          clothing on layaway at  the Exchange, 25 of which  were clearance

          sale  items  (known  colloquially  as  "red  tag"  items).    The

          anticipated purchase price of the merchandise was $484.10.   When

          the Exchange slashed  the prices of  all red tag items  even more

          drastically  during  the  post-Christmas lull,  Portela  spied an

          opportunity   for   increased  savings,   canceled   her  layaway

          arrangement   (paying  a   $5.00  penalty),   and  simultaneously
                              
          ____________________

               1Portela's  husband,  Juan  Enrique  Del  Valle,  and  their
          conjugal partnership  are also  plaintiffs; the Secretary  of the
          Navy and the Naval Resale and Services Support Office (NRSSO) are
          additional  defendants.  For simplicity's sake, we treat the case
          as involving only Portela and the Navy.

                                          2

          repurchased the articles she had removed from layaway status  for

          a price of $330.79.  Portela contends that these machinations did

          not  transgress any policy, rule, or  regulation of the Exchange;

          the Navy contends otherwise.

          II.  THE AFTERMATH
          II.  THE AFTERMATH

                    On April  9, 1990, L.H.  Arcement, Jr., the  Officer in

          Charge (OIC) of the Navy Exchange,  suspended Portela without pay

          pending  anticipated disciplinary  action.   On May  29, Arcement

          notified Portela  that she would  be terminated for  "applying an

          unauthorized 40% price reduction to red tagged clothing items you

          had  placed on  layaway in  violation of  the Exchange's  layaway

          policy,  resulting  in  a  loss  to  the  Exchange of  $197.32."2

          Pursuant to the  controlling administrative procedure,  contained

          in a Secretary of the  Navy Instruction (SECNAVINST), the  letter

          informed Portela  of the  charges against  her  and outlined  her

          procedural rights.

                    Portela contested the proposed disciplinary action.  On

          June  22,   1990,  the  OIC  overrode   Portela's  grievance  and

          terminated her employment  as of July 3, 1990.   The Navy advised

          Portela of her right to appeal this decision and she proceeded to

          do so.  Her first  appeal was heard pro forma by the OIC who, not
                                              ___ _____

          surprisingly, affirmed  his original  determination.   Her second

          appeal culminated in a  full evidentiary hearing, following which

                              
          ____________________

               2While simple  arithmetic indicates  that this figure  is in
          the  vicinity of 40% of  the original purchase  price, the record
          sheds  no further light  on its genesis.   We need  not probe the
          point, however, because Portela does not challenge the amount.

                                          3

          Michael F. O'Brien, the Commanding Officer of the Roosevelt Roads

          Naval Station, upheld her termination.

                    Portela  pursued  the  appellate  process to  the  next

          level.    On  March  25,  1991,  Rear  Admiral  H.D.  Weatherson,

          Commander of the NRSSO, headquartered at Staten Island, New York,

          affirmed her  termination.  This decision informed Portela of her

          right  to  take  a  final  administrative appeal  to  the  Deputy

          Assistant Secretary of the Navy, Civilian Personnel Policy, Equal

          Employment Opportunity  Office, in Washington, D.C.   Rather than

          pursue this fourth level of administrative redress, Portela filed

          suit.

                    After some preliminary  skirmishing, not relevant here,

          the  district  court  addressed  the Navy's  motion  for  summary

          judgment.  The  court ruled  that Portela had  failed to  exhaust

          available  administrative remedies  but  nonetheless reached  the

          merits of her suit  in the exercise of its  perceived discretion.

          See Portela Gonzalez v. Secretary of Navy, 913 F. Supp. 122, 126-
          ___ ________________    _________________

          28 (D.P.R.  1996).  Portela's victory  proved ephemeral, however,

          as  the  court concluded  that  the Navy's  actions  were neither

          arbitrary nor capricious.  See id. at 128.  This appeal ensued.
                                     ___ ___

          III.  DISCUSSION
          III.  DISCUSSION

                    We  agree   with  the   district  court   that  Portela

          impermissibly failed to exhaust  her administrative remedies.  We

          disagree,  however,  that  the   court  had  discretion,  in  the

          circumstances  of this case,  to relieve her  of the  onus of her

          omission.

                                          4

                             A.  The Exhaustion Doctrine.
                             A.  The Exhaustion Doctrine.
                                 _______________________

                    Starkly  contoured, the exhaustion  doctrine holds that

          "no  one is  entitled  to  judicial  relief  for  a  supposed  or

          threatened injury until the prescribed administrative  remedy has

          been exhausted."  Myers v. Bethlehem Shipbuilding Corp., 303 U.S.
                            _____    ____________________________

          41, 50-51 (1938).   In  practice, the doctrine  has softer  edges

          than this  language implies.  See Kenneth Culp Davis & Richard J.
                                        ___

          Pierce,  Jr., II Administrative Law  Treatise   15.2,  at 307 (3d
                           ______________ ___  ________

          ed.  1994).   Although exhaustion  of administrative  remedies is

          absolutely  required  if  explicitly  mandated by  Congress,  see
                                                                        ___

          McCarthy v. Madigan, 503  U.S. 140, 144 (1992), courts  have more
          ________    _______

          latitude in  dealing with exhaustion questions  when Congress has

          remained  silent, see  Darby v.  Cisneros, 509  U.S.  137, 153-54
                            ___  _____     ________

          (1993); McCarthy, 503 U.S. at  144.  In such purlieus, the  court
                  ________

          of  first instance possesses a modicum of discretion to relax the

          exhaustion  requirement.   See  Salus  v.  GTE Directories  Serv.
                                     ___  _____      ______________________

          Corp., 104 F.3d 131, 138 (7th Cir. 1997).
          _____

                    The  Court's  opinion in  McCarthy  is  integral to  an
                                              ________

          understanding  of the  parameters of  this discretion.   Although

          recognizing that the  exhaustion doctrine ordinarily  "serves the

          twin purposes of protecting  administrative agency authority  and

          promoting judicial efficiency," and,  thus, should customarily be

          enforced, the Court identified "three broad sets of circumstances

          in which  the interests of  the individual weigh  heavily against

          requiring administrative exhaustion."  McCarthy, 503 U.S. at 145,
                                                 ________

          146.

                                          5

                    First,  a court  may  consider relaxing  the rule  when

          unreasonable or  indefinite delay  threatens unduly  to prejudice

          the subsequent bringing of a judicial action.  See id. at 146-47.
                                                         ___ ___

          And,  relatedly,  if the  situation  is such  that  "a particular

          plaintiff  may  suffer  irreparable  harm  if  unable  to  secure

          immediate judicial consideration of his claim," exhaustion may be

          excused even though  "the administrative decisionmaking  schedule

          is otherwise reasonable and definite."  Id. at 147.
                                                  ___

                    Second, McCarthy acknowledges that  it sometimes may be
                            ________

          inappropriate for a court to require exhaustion if a  substantial

          doubt  exists about  whether  the agency  is  empowered to  grant

          meaningful redress.   See id. at 147-48, 154;  see also Gibson v.
                                ___ ___                  ___ ____ ______

          Berryhill,  411  U.S.  564, 574  n.14  (1973).    An agency,  for
          _________

          example,  may  lack  authority  to  grant  the   type  of  relief

          requested.  See, e.g.,  McNeese v. Board of Educ.,  373 U.S. 668,
                      ___  ____   _______    ______________

          675 (1963).

                    Finally, McCarthy teaches that the  exhaustion rule may
                             ________

          be relaxed where there  are clear, objectively verifiable indicia

          of administrative taint.  Thus, if the potential decisionmaker is

          biased or can be  shown to have predetermined the  issue, failure

          to exploit  an available  administrative remedy may  be forgiven.

          See McCarthy, 503 U.S. at 148.
          ___ ________

                           B.  Application of the Doctrine.
                           B.  Application of the Doctrine.
                               ___________________________

                    Congress has excluded Navy Exchange  personnel from the

          strictures of the  Administrative Procedure Act,  see 5 U.S.C.   
                                                            ___

          2105(c),  and  has not  otherwise  mandated  that such  employees

                                          6

          always  must  exhaust  administrative  remedies  as  a  condition

          precedent to  suit.   Accordingly, Portela's admitted  failure to

          exercise the  final level  of available administrative  review is

          not  necessarily fatal to her  claim; the effect  of her omission

          depends  instead upon whether  the circumstances of  her case can

          justify that omission.

                    1.  The Availability of Fourth-Level  Review.  We start
                    1.  The Availability of Fourth-Level  Review.
                        ________________________________________

          this phase  of our  analysis by addressing  Portela's halfhearted

          argument,  raised for  the first  time on  appeal, that  a fourth

          level  of review was not in fact  available to her.  The argument

          is bogus.

                    The facts are as  follows.  The original administrative

          procedure, SECNAVINST 5300.22A, did not mention a fourth level of

          review.  On November 15, 1989, however, the Secretary of the Navy

          promulgated SECNAVINST 5300.22B,  directing subordinate  commands

          to implement it within  120 days.  The new  regulation (5300.22B)

          explicitly canceled the old regulation (5300.22A).  Nevertheless,

          on January 24, 1990, the  Director, Officer of Civilian Personnel

          Management,  granted an  extension  to the  NRSSO, deferring  the

          effective date of SECNAVINST 5300.22B until July 15, 1990.  Thus,

          the notice of  suspension issued to Portela on April 9, 1990, the

          notice of proposed disciplinary  action issued to her on  May 29,

          1990,  and  the  notice of  decision  dated  June  22, 1990,  all

          referenced SECNAVINST 5300.22A as the controlling regulation.

                    From  that  point  forward,  however,  Portela  clearly

          understood    indeed,  urged    that  SECNAVINST 5300.22B,  which

                                          7

          unarguably  contains a  fourth  level  of administrative  review,

          governed her case.   She mentioned it in her second appeal, dated

          August  12, 1990,  and  at the  ensuing  evidentiary hearing  her

          counsel insisted that 5300.22B, rather than  5300.22A, controlled

          her  case.   While  the  hearing  officer  did  not rule  on  the

          question,   the  ultimate   decisionmaker  at  that   level  (the

          Commanding Officer of the Roosevelt Roads Naval Station) accepted

          Portela's  argument  and  reviewed   the  hearing  transcript  in

          accordance with SECNAVINST 5300.22B.  Throughout the remainder of

          the  administrative  process,  both  sides proceeded  under  that

          regulation.3

                    We do  not aspire  to add  hues to a  rainbow.   By its

          terms, SECNAVINST  5300.22B applies  here.  And,  moreover, since

          Portela consistently argued for its application during the latter

          stages  of the administrative process, she cannot now be heard to

          complain  that   the  agency  surrendered  to   her  exhortation.

          Equitable  doctrines  of  estoppel  apply in  administrative  and

          judicial  fora, see generally Davis  & Pierce, supra,     13.1 to
                          ___ _________                  _____

          13.5,  and  a party  cannot take  one  position in  an underlying

          administrative proceeding  and then  disclaim it in  a subsequent

          suit arising out of the agency proceedings.  Cf. Patriot Cinemas,
                                                       ___ ________________

          Inc. v. General Cinema  Corp., 834 F.2d 208, 212 (1st  Cir. 1987)
          ____    _____________________

                              
          ____________________

               3We cite two episodes which confirm this conclusion.  In her
          third-level  notice of  appeal,  Portela  stated  expressly  that
          "[t]his appeal arises under SECNAVINST 5300.22B."  By like token,
          in  resolving  that  appeal   adversely  to  Portela,  the  NRSSO
          commandant  specifically  informed  Portela  of her  right  to  a
          fourth-level appeal under SECNAVINST 5300.22B.

                                          8

          (explaining that  the doctrine of judicial  estoppel "precludes a

          party  from asserting a position in one legal proceeding which is

          contrary to a position it has already asserted in another").

                    2.   The Futility  Exception.   The only  question that
                    2.   The Futility  Exception.
                         _______________________

          remains is whether Portela's  failure to mount the final  rung of

          the administrative ladder is fatal to the court case.  She argued

          below  that the  court should  excuse her  omission, asseverating

          that a final appeal to the Deputy Assistant Secretary of the Navy

          would have been a  futile gesture because it would  have resulted

          in an automatic affirmance of her dismissal.   In theory, this is

          a  good argument.  Consistent  with the exceptions  limned by the

          McCarthy Court,  we  have  recognized  the  inappropriateness  of
          ________

          requiring  exhaustion when  further agency  proceedings  would be

          futile.   See, e.g., Pihl v. Massachusetts Dep't of Educ., 9 F.3d
                    ___  ____  ____    ____________________________

          184,  190  (1st Cir.  1993);  Christopher W.  v.  Portsmouth Sch.
                                        ______________      _______________

          Comm.,  877  F.2d   1089,  1095  (1st  Cir.  1989);   Ezratty  v.
          _____                                                 _______

          Commonwealth of P.R., 648 F.2d 770, 774 (1st Cir. 1981).
          ____________________

                    But  the futility  exception is  not available  for the

          asking.    Reliance on  the  exception in  a  given case  must be

          anchored in demonstrable reality.  A pessimistic prediction  or a

          hunch   that  further   administrative  proceedings   will  prove

          unproductive is not enough to sidetrack the exhaustion rule.  See
                                                                        ___

          Christopher W., 877 F.2d  at 1095-96; see also Gilbert v. City of
          ______________                        ___ ____ _______    _______

          Cambridge, 932 F.2d 51, 61 (1st Cir. 1991) (admonishing that "the
          _________

          mere possibility,  or even the probability,  that the responsible

                                          9

          agency may deny [a]  permit should not  be enough to trigger  the

          [futility exception]").  Accordingly,  "[a]n essential element of

          the claim of futility . . . is  that all reasonable possibilities

          of   adequate   administrative  relief   have   been  effectively

          foreclosed."        Tucker    v.    Defense     Mapping    Agency
                              ______          _____________________________

          Hydrographic/Topographic  Ctr., 607  F. Supp. 1232,  1243 (D.R.I.
          ______________________________

          1985).  Indeed, the  Seventh Circuit has held that  claimants who

          seek  safe harbor under the futility exception "must show that it

          is certain that their claim will be denied on appeal,  not merely

          that they doubt an  appeal will result in a  different decision."

          Smith v.  Blue Cross & Blue Shield United, 959 F.2d 655, 659 (7th
          _____     _______________________________

          Cir. 1992).4

                    Portela  cannot surmount  this  hurdle.   The claim  of

          futility   is  merely   a  self-serving   pronouncement   in  the

          circumstances of  this case.  The evidence is uncontradicted that

          the Deputy Assistant Secretary  is an impartial official  who has

          reversed termination decisions affecting Navy  Exchange personnel

          in  the  past.    Though   the  prognosis  for  Portela's  unused

          administrative  appeal may  have been  poor and  her expectations

          modest,  neither  courts  nor  litigants are  allowed  to  equate

          pessimism with futility.   See  Hodges v. Callaway, 499 F.2d 417,
                                     ___  ______    ________

          424  (5th Cir. 1974).  Because there  is nothing in the record to

                              
          ____________________

               4For  our part, we are tempted to set the benchmark slightly
          below absolute certainty, cf.  Gilbert, 932 F.2d at 61  ("To come
                                    ___  _______
          within the exception, a  sort of inevitability is required:   the
          prospect  of refusal must be  certain (or nearly  so)."), but the
          case  at hand  does not  require us to  choose between  these two
          formulations.

                                          10

          suggest  that Portela's lack of success at the previous levels of

          review necessarily signified that the final level of review would

          be  an  empty  gesture,  her  failure  to  exhaust  an  available

          administrative  remedy  cannot be  overlooked  on  the ground  of

          futility.

                    3.   The District Court's Rationale.  To this point, we
                    3.   The District Court's Rationale.
                         ______________________________

          are in agreement with the court below.  See Portela, 913 F. Supp.
                                                  ___ _______

          at  126-27  (declaring  that  alleged  futility  did  not  excuse

          Portela's nonexhaustion).  After finding the plaintiff's futility

          argument futile, however, the district  judge nonetheless elected

          to  relax  the  exhaustion  requirement "[i]n  the  interests  of

          minimizing cost and delay in the judicial system and avoiding the

          waste  of resources."   Id. at  127.   The judge  reasoned that a
                                  ___

          perceived waste  of  resources, in  and  of itself,  can  justify

          excusing  nonexhaustion of  administrative  remedies.   We  think

          not.5

                    Were  we  to adopt  the  lower  court's reasoning,  the

          resulting exception would swallow the exhaustion rule in a single

          gulp.  Once  an aggrieved party has brought suit,  forcing her to

          retreat  to any  unused administrative appeal  potentially wastes
                      ___

                              
          ____________________

               5To  be  sure, we  stated  in Ezratty  that  "[s]ometimes to
                                             _______
          require exhaustion  will not only  waste resources but  also work
          severe harm  upon  a litigant."    648 F.2d  at  774.   Taken  in
          context, this  statement is  entirely compatible with  the "undue
          prejudice/irreparable   harm"   consideration  outlined   by  the
          McCarthy Court in its discussion of the first potential exception
          ________
          to the exhaustion rule.  503 U.S. at 146-47.  In the case at bar,
          there is no  hint that taking  an appeal to the  Deputy Assistant
          Secretary would have caused Portela irreparable harm or otherwise
          seriously prejudiced her rights.

                                          11

          resources.   The  Supreme Court has  disavowed such  a resupinate

          approach.  In McKart  v. United States, 395 U.S. 185, 193 (1969),
                        ______     _____________

          the Court  explained that a  "primary purpose" of  the exhaustion

          doctrine  is  "the avoidance  of  premature  interruption of  the

          administrative  process."      Consequently,  it   is   generally

          inefficient to permit a  party to seek judicial recourse  without

          first exhausting her  administrative remedies.   See id. at  194.
                                                           ___ ___

          Following this train of thought, the Court has concluded that, by

          and large,  concerns regarding  efficiency militate in  favor of,

          rather  than  against,  strict  application   of  the  exhaustion

          doctrine.  See  McCarthy, 503 U.S.  at 145;  McKart, 395 U.S.  at
                     ___  ________                     ______

          195;  see also Ezratty, 648  F.2d at 774  (acknowledging that the
                ___ ____ _______

          exhaustion  doctrine "serves  interests of  accuracy, efficiency,

          agency autonomy and judicial economy").

                    This view  is steeped in real-world  wisdom.  Insisting

          on exhaustion  forces parties to take  administrative proceedings

          seriously,  allows  administrative  agencies  an  opportunity  to

          correct their  own errors,  and potentially  avoids the  need for

          judicial  involvement  altogether.     Furthermore,  disregarding

          available  administrative  processes thrusts  parties prematurely

          into overcrowded courts and  weakens an agency's effectiveness by

          encouraging end-runs around it.   See McCarthy, 503 U.S.  at 145;
                                            ___ ________

          McKart, 395 U.S. at 195.
          ______

                    4.  The Bottom Line.  To sum up, the futility exception
                    4.  The Bottom Line.
                        _______________

          is  unavailable to  Portela  and the  district court's  professed

          reason  for  excusing  her  failure  to  exhaust   administrative

                                          12

          remedies  neither passes muster on its own terms nor falls within

          any  of the  hallmark  McCarthy exceptions.6   Those  conclusions
                                 ________

          dictate  the result  we  must  reach.    The  plaintiff  left  an

          available administrative  remedy untapped and the  record in this

          case, howsoever  construed,  reveals no  sufficiently  excusatory

          circumstances to warrant spurning that remedy.

                    First,  there  is  no indication  that  full exhaustion

          would have  caused undue prejudice, irreparable  harm, or unusual

          hardship of any  sort.   Although Portela had  already pursued  a

          fairly lengthy administrative process, it  had moved celeritously

            the pavane  began when the OIC  terminated Portela's employment

          as  of July 3, 1990, and  ended when the NRSSO,  in the person of

          Rear  Admiral Weatherson,  denied her  penultimate administrative

          appeal on March  25, 1991    and the  Deputy Assistant  Secretary

          would have been required  to respond to her final  appeal "within

          60  calendar days of receipt of the official record."  SECNAVINST

          5300.22B Ch.V (9)(d)(3).  Second, the agency (here, the Navy) was

          fully capable of granting all  the relief that Portela originally

          sought,  namely,  reinstatement, reassignment,  and  quashing the

          charges against her.  Third, there is no meaningful indication of

          any institutional bias.  Fourth, the plaintiff has not identified

          any  other  special  circumstance warranting  relaxation  of  the
                              
          ____________________

               6We  do  not  suggest  that  the  three  exceptions  to  the
          exhaustion  rule delineated  by  the McCarthy  Court comprise  an
                                               ________
          exclusive compendium.   But to  the extent that  other exceptions
          appropriately may lie, they must be on a  par with the exceptions
          described by the  Court.  As  explained in the  text, the  record
          here  contains nothing  which suggests  a  plausible basis  for a
          further exception.

                                          13

          exhaustion  rule, and  our  careful perlustration  of the  record

          reveals none.   It follows  that the district  court should  have

          dismissed  the complaint for failure of  the plaintiff to exhaust

          available administrative remedies.

          IV.  CONCLUSION
          IV.  CONCLUSION

                    It may  seem hypertechnical to  some that a  person who

          believes herself aggrieved by  agency action must jump  through a

          series of  hoops before she can  seek out a judicial  forum.  But

          long-recognized concerns  regarding agency autonomy  and judicial

          efficiency  weigh  heavily   in  favor   of  requiring   complete

          exhaustion  of administrative  remedies.   When all  is said  and

          done, our  system of justice  depends on litigants'  adherence to

          well-defined rules.  Where, as here, a party decides unilaterally

          to forsake those rules, she does so at her peril.

                    We need go no further.  The short of it is that Portela

          lacked a legally sufficient  reason for leaping prematurely  to a

          judicial venue.   Thus, the district court should  have dismissed

          her complaint  for  failure to  exhaust available  administrative

          remedies.  In the end, however,  the district court's error is of

          no moment; though the court entered judgment in favor of the Navy

          on  an inappropriate ground, the Navy  is nonetheless entitled to

          judgment.

                    Affirmed.
                    Affirmed.
                    ________

                                          14