Court Opinion

ID: 9461573
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:18:11.636282+00
Date Added: 2024-06-11T17:37:08.552399
License: Public Domain

DONALD RUSSELL, Circuit Judge
(concurring in dissenting opinion of Judge FIELD):
I concur in Judge Field’s dissent. I would add these further comments:
A critical fact m this case — and one the majority opinion I fear notices too little — is that at no time has the plaintiff-retailer sought a true de novo trial as provided in § 2022, 7 U.S.C., on the “validity” of the finding that he had violated the Food Stamp Act. The District Court properly emphasized this point at the beginning of its opinion. It stated “[t]he complaint (filed by the retailer-plaintiff) does not ask for a trial de novo.”1 And this is so because the plaintiff both in his presentation to the Secretary and in his complaint in the District Court conceded his violations of the Act.2 So far as his actual offense, i. e., the violations of the Act, the plaintiff was not denied a right to a de novo “hearing,” with the accompanying rights of confrontation of his accusers and cross-examination of adverse witnesses, as given him under § 2022 in the District Court or under any due process claim in the administrative proceedings; he effectively waived such right by his admission of guilt.3 There was accordingly no denial of procedural due process suffered by him in connection with the finding that the plaintiff had violated the Act, nor does the plaintiff claim any.
The claim of the plaintiff, as baldly stated in his complaint, relates exclusively to the sanction imposed by the Secretary by reason of his admitted violations. He charged that the “sanction levied * * * [was] unwarranted, overly harsh, and unprecedented” and he asks by way of relief only that the sanction *1222be “set aside * * * as being overly harsh, unreasonable, and unwarranted in the light of the minor infractions of the Food Stamp Program.”
The sole issue posed by this cause was accordingly the scope of review available in District Court over the sanction imposed by the Secretary, not the fact of violation of the Act, and that was the issue properly addressed by the District Court.
Turning now to the issue of scope of judicial review of the sanction imposed, it will be noted that the majority opinion concedes that “§ 2022, on its face, may be read either to limit the trial de novo to the fact of violation of the Food Stamp Act and its concomitant regulations, or to extend it to review also of the sanction imposed for violation.” It concludes, however, “that the scope of judicial review extends to the period of administrative sanction, notwithstanding that the Secretary did not impose a penalty exceeding that permitted by the statute or the regulations.” It arrives at this conclusion, not on the fair construction of the language of § 2022 or on its legislative history, both of which it finds ambiguous, but on the premise that due process requires that § 2022 be construed to give the district court “a measure of revisory power over the sanction if it determines that the fact of violation has been proved.”
The majority opinion reasons that, unless a “hearing” is accorded the retailer, who has admitted his violation, on the issue of the sanction to be imposed in the District Court, such individual will have been denied his due process right to a hearing where he may exercise his constitutional right of confrontation of accusers and of cross-examination of witnesses.4 Even were this conceded, it is, however, of no moment here because under the facts in this case the plaintiff was not entitled to such a fact-finding hearing, where he might exercise the right of confrontation and cross-examination, either at the administrative or court level. Actually, the statutory scheme contemplated this result and for that reason provided that the retailer accused of a violation of the Act could secure his due process right to a hearing under § 2022 — unless he waived it. And the plaintiff in this case waived it when he admitted his violation. His situation is no different from that of the criminal defendant who admits his offense and enters a plea of guilty; by his plea he has waived any right to an adjudicatory hearing or trial, with the right of confrontation and cross-examination. Due process gives the criminal defendant no right to a proceeding where he can have determined, after a full hearing, with cross-examination of witnesses, the “gravity” of his offense and possible mitigating circumstances. If the criminal defendant who pleads guilty has no right to an adjudicatory hearing or a full-dress hearing on the “gravity” of his offense, unquestionably a retailer who is subject only to civil penalties waives his right to such a hearing by his admission of guilt. And all this is so because there is a considerable difference, and one the majority opinion seems to overlook, between the determination of a violation of law and the imposition of a sentence or penalty after the fact of violation has been established. The former involves an “adjudicatory proceeding” where fact-finding procedures must be observed. It is to this stage of the proceeding that due process attaches the right to a “hearing” in the constitutional sense, with the rights of confrontation and cross-examination. Camp v. Pitts (1973) 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106. But, after the violation has been established through the fact-finding procedures afforded by a “hearing” or *1223has been admitted, thereby waiving the right to such a hearing, the power of the court becomes discretionary, involving no fact-finding and requiring no “de novo” or constitutional “hearing”, where there is confrontation with the accusers or cross-examination of the witnesses. See Brennan v. Occupational Safety and Health Review Com’n (8th Cir. 1973) 487 F.2d 438, 442-443, n. 17; Save More of Gary, Inc. v. United States (7th Cir. 1971) 442 F.2d 36, 39, cert. dismissed 404 U.S. 987, 92 S.Ct. 535, 30 L.Ed.2d 549.5 The criminal defendant who has plead guilty is, it is true, generally given the right of “allocution”, the right to make a plea in mitigation,6 though the right is not “a constitutional right essential to fundamental fairness.” United States v. Leavitt (1st Cir. 1973) 478 F.2d 1101, 1104. That certainly was the extent of the right of the plaintiff, after he had admitted his violation and waived any right to a de novo fact-finding “hearing” or trial on his guilt. The plaintiff was accorded that right. After advising him of the violations charged, the plaintiff was given by the Secretary the opportunity to offer any statement he wished in mitigation and the plaintiff exercised that right, as evidenced by his letter of June 23, 1971, in which he claimed that the violations were committed contrary to instructions by an alcoholic clerk to whom plaintiff had entrusted the operation of his store. There is accordingly no violation of constitutional rights in the procedure provided in § 2022 nor was there any in the procedural disposition administratively of plaintiff’s case. The requirements of due process do not, therefore, compel any gloss upon § 2022 or mandate that the plaintiff be given a de novo hearing with rights of confrontation and cross-examination when the sole issue is the validity of the sanction imposed.
Actually, though, the majority opinion does not give the plaintiff a right to a de novo hearing or what might be described as a fact-finding adjudication. A de novo hearing would mean that the court would review the sanction “anew” and would enjoy the same unfettered rights as the Secretary to impose a sanction according to its sense of justice and fairness.7 The majority opinion, on the contrary, states that the court has merely “a measure of revisory power over the sanction.” And it proceeds to give meaning to this indefinite and ambiguous phrase, “a measure of revisory power, for which there is no provision in § 2022, by declaring that the scope of permissible judicial review authorized under this standard extends only to deciding “whether the administrative sanction is ‘arbitrary or capricious’.” There is no language in § 2022 to support that standard of review.8 What the majority opinion is doing in fixing these limits for judicial review, is not putting some con*1224stitutional gloss on § 2022; it is simply restating what has long been the accepted “narrow” rule for review of remedies or sanctions formulated by administrative agencies, a rule stated repeatedly in authoritative judicial opinions9 and incorporated expressly in the Administrative Procedure Act itself,10 and a rule that recognizes the manifest difference between the power of the court when reviewing the finding of a substantive violation and when reviewing an assessment of penalties or the imposition of sanctions.11
But when the majority opinion adopts this “abuse of discretion by acting arbitrary or capricious” standard, it is accepting a standard which has a well-defined meaning and definition in the law. The latest statement of this definition of what is meant by an “arbitrary and capricious” standard of judicial review, and one peculiarly appropriate here because it evolved in connection with the review of a sanction imposed by the Secretary of Agriculture, appears in Butz v. Glover Livestock Com’n Co. (1973) 411 U.S. 182, 93 S.Ct. 1455, 36 L.Ed.2d 142. In that case, Butz, a stockyard operator, after a hearing, had been found guilty by the Secretary of Agriculture of a violation of the Packers and Stockyards Act and its registration under that Act had been suspended by the Secretary for twenty days. From this administrative ruling, the petitioner had a right of appeal to the Circuit Court of Appeals, which, in turn, had jurisdiction to “affirm, set aside, or modify” the order of the Secretary. 7 U.S.C. § 194. On appeal, the Circuit Court, while sustaining the finding of a violation, voided the suspension because it was “unconscionable” under the circumstances of the case and contrary to the Secretary’s practice of not imposing “suspensions for negligent or careless violations.” In reversing that decision, the Supreme Court referred first to the well-established proposition that an administrative choice of sanction “ ‘is peculiarly a matter for administrative competence,’ ”12 and then stated that sanctions administratively imposed are “to be overturned” on judicial review only if “ ‘unwarranted in law or * * * without justification in fact * * *.’ ”13 The Court proceeded to approve a statement in the opinion of the Circuit Court that “so long as the remedy [or sanction] selected does not exceed the agency’s statutory power to impose and it bears a reasonable relation to the practice sought to be eliminated, a reviewing court may not interfere * * *.”14 Specifically, it held that, “[T]he employment of a sanction within the authority of an administrative agency is thus not rendered invalid in a particular case because it is more severe than sanctions imposed in other cases.” 15 *1225And it concluded with the blunt statement, “[T]he fashioning of an appropriate and reasonable remedy is for the Secretary, not the court. The court may decide only whether under the pertinent statute and relevant facts, the Secretary made ‘an allowable judgment in [his] choice of the remedy’ ” and to go beyond this will constitute “an impermissible intrusion into the administrative domain.” 16
Butz cites with approval G. H. Miller & Company v. United States (7th Cir. 1958) 260 F.2d 286, 296, cert. denied 359 U.S. 907, 79 S.Ct. 582, 3 L.Ed.2d 572 (1959), which also involved the scope of judicial review over a sanction imposed by the Secretary of Agriculture. There, the petitioner was charged with a violation of the Commodity Exchange Act by the Secretary of Agriculture. It was found guilty of a violation and was suspended by the Secretary from trading for sixty days to one year. The petitioner appealed both the finding of violation and the sanction imposed. Under the Act the petitioner was entitled on appeal to “obtain a review of such order or such other equitable relief as to the court may seem just” and the appeal court had “jurisdiction to affirm, to set aside, or modify the order of the Secretary of Agriculture * * * 7 U.S.C. § 9. After concluding that the finding of violation of the Act was valid, the Court refused to review the suspension imposed, saying:
“It is, therefore, clear to us that if the order of an administrative agency finding a violation of a statutory provision is valid and the penalty fixed for the violation is within the limits of the statute the agency has made an allowable judgment in its choice of the remedy and ordinarily the Court of Appeals has no right to change the penalty because the agency might have imposed a different penalty (Italics in opinion).” (260 F.2d at 296).17
*1226The majority opinion recognizes and accepts the definition of “arbitrary and capricious” as declared in Butz, which fixes the limits of judicial review in this case. It states that “a sanction is arbitrary and capricious if it is unwarranted in law or without justification in fact.” It is when the majority opinion proceeds to apply this standard to find the sanction herein invalid that it, in my opinion, falls into error. Contrary to the view of the majority, I think it abundantly clear that the sanction imposed in this case met fully and completely the Butz test and that the District Court was correct in dismissing the proceeding to review.
If the rule is that a remedy determined by the administrative agency is only to be voided on judicial review under the “arbitrary and capricious rule,” provided it is “unwarranted in law or without justification in fact” or provided it is not “an allowable judgment in choice of the remedy” or provided it “exceed[s] the agency’s statutory power to impose and it bears [no] reasonable relation to the practice sought to be eliminated,” then there is, by the conclusions of the majority opinion itself, no basis or warrant for invalidating the Secretary’s sanction or for reversing the action of the District Court in dismissing the proceeding. The majority opinion states “that the Secretary did not impose a penalty exceeding that permitted by the statute or regulations.” That is tantamount, I submit, to declaring that the sanction imposed was “an allowablé judgment in choice of the remedy” and under those circumstances, any attempt by the court to invalidate such a sanction would be “an impermissible intrusion into the administrative domain”.18 But if we go beyond this and look at the record as prepared and submitted by the parties there can be no basis for remanding this proceeding or voiding the sanction imposed. The record shows that the plaintiff had been involved in violations of the Act on two occasions prior to those that prompted this proceeding. In both instances he was warned; the regulations were reviewed with him. In at least one of the instances ineligible items had been exchanged for food coupons. The plaintiff offered as an excuse in one case that a clerk had acted against instructions. In connection with that violation the plaintiff was cautioned about his responsibility for his clerks. On the occasions when the five purchases were made that gave rise to the disqualification, the plaintiff again sought to excuse his offenses by claiming that they were the fault of a clerk who was an alcoholic.19 These five purchases, however, were spread over three days. There is no claim that the clerk was under the influence on any one of the days. The ineligible items sold for food stamps were items easily identifiable as ineligible: wine, beer, cigarettes, snuff, razor blades, shaving cream, shoes, toothpicks, panty hose. In fact, every purchase made included ineligible items and almost half of the items purchased were ineligible items. Cash in varying amounts was given in change in the case of four of the purchases. On the basis of this record the Secretary concluded that the plaintiff “as a matter of store policy” was engaged in selling ineligible items for coupons. The majority opinion states that “there may be room to question the validity of the sanction” and adds in a footnote by way of explanation that “it is possible that plaintiff’s explanation of his difficulties with an alcoholic clerk might negate this factor and might indicate the propriety of a lesser sanction as specified in the memorandum.” It will be noted that the majority opinion does not say that the conclusion reached by the Secretary was not a legitimate inference to be drawn from the undisputed record; it merely states *1227that “it is possible” to take another view and to regard the plaintiff’s violations more leniently. The difficulty with this reasoning, however, is that it is for the Secretary, not the court to make the choice among the possible inferences to be deduced from the plaintiff’s conduct. See Fairbank v. Hardin, supra (429 F.2d at 269); Hyatt v. United States (10th Cir. 1960) 276 F.2d 308, 312. “The court is not empowered [under the authority to review for ‘arbitrary and capricious’ judgment] to substitute its judgment for that of the agency.” Citizens to Preserve Overton Park v. Volpe (1971) 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 136. When the violation as admitted authorizes a disqualification that is “allowable” under both the Act and the administrative regulations (including guidelines, for sake of argument), and the Secretary has imposed that disqualification (which is this case since “the Secretary did not impose a penalty exceeding that permitted by the statute or regulations”), a Court has no right to inquire into “the * * * gravity of the violations” so as “to substitute its judgment for that of the agency.” After all, whether a violation of the Act is to be excused or not is for the Secretary and not the Courts.
In my opinion, the majority opinion errs, too, in concluding that, if the Secretary has committed error, it is “incumbent on the district court to prescribe an alternate penalty.” That is a power the Court, in reviewing a sanction under the “arbitrary and capricious” standard, may not exercise. If, in its judgment, the Secretary has violated the law or gone against his own regulations in the sanction he imposed, the remedy is to remand to the Secretary for further consideration. Should, however, the Court find there is no justification in fact for a sanction (i. e., there has been no violation), then the Court should vacate the proceedings in toto.20 But the District Court has no right to make its own determination, even if that determination is to be made under the Secretary’s guidelines. See, Gulf States Utilities Co. v. FPC (1973) 411 U.S. 747, 763-764, 93 S.Ct. 1870, 36 L.Ed.2d 635; SEC v. Chenery Corp. (1943) 318 U.S. 80, 95, 63 S.Ct. 454, 87 L.Ed. 626; Friendly, Chenery Revisited: Reflections on Reversal and Remand of Administrative Order, 1969 Duke L.Journal 199.
Finally, it should be noted that this decision will give violators of the Act in this Circuit a right of judicial review of sanctions imposed by the Secretary under the Act not enjoyed by violators in any other Circuit where the issue has been considered. Moreover, if the majority opinion’s application of the phrase “arbitrary and capricious” is upheld, it opens wide all administratively formulated remedies to judicial review.
I think the District Court was correct in its holding. The sanction imposed by the Secretary was not “unwarranted in law” or “without justification in fact”. I accordingly join in the dissent of my Brother Field.

. This is conceded by the plaintiff in his brief in this Court but sought to be excused with the statement:
“ * * * The Plaintiff-Appellant would interpret the Food Stamp Act to automatically grant a ‘trial de novo’ hearing before the court, without the necessity of a specific demand.” Note 11, p. 12, Appellant’s Brief.

. The majority opinion recognizes this fact:
“Of course, in the instant case, plaintiff does not contest the fact of violation of the Act and regulations * *

. As to the meaning and extent of a de novo trial under § 2022, see, J. L. Saunders, Inc. v. United States (D.C.Va.1971) 52 F.R.D. 570, 572.

. In support of this, the majority opinion cites the much criticized case of Crowell v. Benson (1932) 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598 which, “while”, as one commentator has remarked, “never expressly overruled has not been followed (although its ghosts still haunt the books),” Parker, Administrative Law, 112 (1952), and which Justice Frankfurter in Estep v. United States (1946) 327 U.S. 114, 142, 66 S.Ct. 423, 90 L.Ed. 567 declared had “earned a deserved repose.” See, also, Forkosch, Judicial De Novo Review of Administrative Quasi-Judicial Fact Determinations, 25 Hastings L. Journal 963, 972 (1974).

. In Brennan, the Court said:
“ * * * The reviewing court [having the power to affirm, modify or set aside in whole or in part the agency’s order] is thus bound to apply the substantial evidence test to the Commission’s findings of fact [that is, its finding of a violation of the Act]. The assessment of penalties is not a finding but the exercise of a discretionary grant of power. And while the court has jurisdiction to review and power to modify, the test of a penalty within the statutory range must be whether the Commission abused its discretion.” (Italics added).
In Save More of Gary, supra (442 F.2d at 39), the Court said:
“But implicit in the whole series of letters to the Food Stamp Review Officer, which were exhibits in the case, is an admission that the violations in fact did occur. There is a wealth of material offered in explanation and mitigation, but no clear denial of the violations. The District Court was thus left only with the disposition of legal issues.”

. See Rule 32(a), Federal Rules of Criminal Procedure, 18 U.S.C.

. See Note 3.

. The majority opinion, though it cites the dissenting opinion in Martin v. United States (6th Cir. 1972) 459 F.2d 300, 302-303, does not follow that dissent, which would have extended the de novo provision of § 2022 to the sanction imposed as well as to the fact of violation. Under the Martin dissent, judicial review of the sanction would, as we have seen, have been “anew,” as if the Secretary had imposed no sanction, and the power of the court would have been an unfettered one to provide its own concept of a just and proper sanction. The rule announced in the majority opinion, on the other hand, would allow only for a review under the “arbitrary *1224and capricious” standard, which has recently been described as a “narrow one,” [See Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc. (1974) 419 U. S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 decided December 23, 1974.] and even then one which would be, as we indicate infra, subject to the guidelines issued by the Secretary. This is no de novo trial, as contemplated under § 2022 for an adjudication of the fact of violation.

. See, Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra; NLRB v. Rutter-Rex Mfg. Co. (1969) 396 U.S. 258, 263, 90 S.Ct. 417, 24 L.Ed.2d 405 reh. denied 397 U.S. 929, 90 S.Ct. 895, 25 L.Ed.2d 109; Fed. Trade Com’n v. Ruberoid Co. (1952) 343 U.S. 470, 473, 72 S.Ct. 800, 96 L.Ed. 1081; United States v. Pierce Auto Lines (1946) 327 U.S. 515, 536, 66 S.Ct. 687, 90 L.Ed. 821; Re Standard Gas & Electric Co. (3d Cir. 1945) 151 F.2d 326, 331, cert. denied Slattery v. McDonald, 326 U.S. 787, 66 S.Ct. 480, 90 L.Ed. 478.

. 5 U.S.C. §§ 701-706.

. This difference was pointed out in Marcus v. United States Depart, of Agr., Food & Nut. Serv. (D.C.Pa.1973) 364 F.Supp. 374, 375; Eckstut v. Hardin (D.C.Pa.1973) 363 F.Supp. 701, 703, and Miller v. United States Dept. of Agriculture, F. & N. Serv. (D.C.Pa.1972) 345 F.Supp. 1131, 1132. See also, Brennan v. Occupational Safety and Health Review Com’n, supra (487 F.2d at 442).

. 411 U.S. 185, 93 S.Ct. 1458 (quoting from American Power Co. v. SEC (1946), 329 U.S. 90, 112, 67 S.Ct. 133, 91 L.Ed. 103).

. 411 U.S. 185, 186, 93 S.Ct. 1458 (quoting from 329 U.S. at 112-113, 67 S.Ct. 133).

. 411 U.S. at 186, n. 3, 93 S.Ct. at 1458.

. 411 U.S. at 187, 93 S.Ct. at 1459.
The majority opinion, while conceding that Butz establishes that “ ‘[M]ere unevenness in the application of the sanction does not render its application in a particular case “un*1225warranted in law” ’ ”, proceeds to add that “excessive variance, something more striking than ‘mere unevenness,’ would be evidence of arbitrary or capricious action.” It is submitted that Butz does not allow for this gloss on its ruling. The claim in that case was that never had the Secretary imposed a sanction for merely a negligent or inadvertent violation, only for an “intentional and flagrant” violation. The claim of the petitioner set forth what must be considered under his contention an “excessive variance” in the sanction imposed, as compared with the Secretary’s uniform prior practice; and it was that claim of “excessive variance” that the Supreme Court dismissed. Moreover, how is a court to determine “excessive variance” in the sanctions imposed by the Secretary? Is there to be a hearing at which his various actions, in which he has imposed sanctions, are to be collated and compared? And if they are to be intelligently compared, how can it be done without analyzing the facts in each case so as to be sure a fair comparison of similar violations is being made? I am quite sure these practical problems represent a powerful influence in the Court’s decision in Butz that variance in sanctions, whatever its extent so long as it was within the statutory limits, is not a ground for voiding a sanction imposed by the Secretary.

. 411 U.S. at 188, 189, 93 S.Ct. at 1459.
Butz has become the accepted authority on the proper standard to be applied in the judicial review of administratively imposed sanctions. See, Miller v. Butz (5th Cir. 1974) 498 F.2d 1088, 1089; American Fed. of State, Cty. and M. Emp. v. City of Cleveland (6th Cir. 1973) 484 F.2d 339, 348; First National Bank of Chicago v. Richardson (7th Cir. 1973) 484 F.2d 1369, 1381; Brennan v. Occupational Safety and Health Review Com’n (8th Cir. 1973) 487 F.2d 438, 442, n. 17; Marcus v. United States Dept. of Agr., Food & Nut. Serv. (D.C.Pa.1973) 364 F.Supp. 374, 375; Eckstut v. Hardin (D.C.Pa.1973) 363 F.Supp. 701, 703. In American Fed., supra, 484 F.2d at 348, the Court said:
“In American Power & Light Co. v. SEC, 329 U. S. 90, 67 S.Ct. 133, 91 L.Ed. 103 (1946), it was held that the determination of the proper remedy is ‘peculiarly a matter for administrative competence’ where the choice of means of achieving a statutory policy is given to an administrative body. Id., at 112, 67 S.Ct. at 146. The only determination required of a reviewing court where the choice of remedy is entrusted to an administrator is whether, under the pertinent statute and relevant facts, ‘an allowable judgment’ has been made in the choice of the remedy. Butz v. Glover Livestock Commission Co., 411 U.S. 182, 93 S.Ct. 1455, 36 L.Ed.2d 142 (1973).”

. See, also, Fairbank v. Hardin (9th Cir. 1970) 429 F.2d 264, 269, cert. denied 400 U.S. 943, 91 S.Ct. 244, 27 L.Ed.2d 247; Eastern Produce Co. v. Benson (3d Cir. 1960) 278 F.2d 606, 610. In Fairbank, the Court said:
*1226“ * * * The administrative decision as to the remedy should be sustained unless the remedy selected has no reasonable relation to the unlawful practices found to exist” (429 F.2d at 269).

. See, Butz, supra (411 U.S. 182, 93 S.Ct. 1455, 36 L.Ed.2d 142).

. If a plea that the violation was the fault of a clerk could exculpate a retailer, there would be few instances where the Act would be enforced. The retailer must accept responsibility for the actions of his clerks, if the Act is to be made effective at all.

. This, of course, could arise only if the retailer contested the violation and demanded a de novo trial on that issue under § 2022.