Court Opinion

ID: 197261
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Date Created: 2011-02-07 03:25:47+00
Date Added: 2024-06-11T10:17:14.855271
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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