Volvo GM Heavy Truck Corp. v. United States Department of Labor

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
VOLVO GM HEAVY TRUCK
CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES DEPARTMENT OF
No. 96-2225
LABOR; ROBERT B. REICH, SECRETARY
OF LABOR; SHIRLEY WILCHER, Deputy
Assistant Secretary for Federal
Contract Compliance Programs,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Virginia, at Roanoke.
Jackson L. Kiser, Senior District Judge.
(CA-96-40001-R)
Argued: May 5, 1997
Decided: July 1, 1997
Before MURNAGHAN and HAMILTON, Circuit Judges, and
LEGG, United States District Judge for the
District of Maryland, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Judge Hamilton and Judge Legg joined.
_________________________________________________________________
COUNSEL
ARGUED: James Marion Powell, HAYNSWORTH, BALDWIN,
JOHNSON & GREAVES, P.A., Greensboro, North Carolina, for
Appellant. Samuel Robert Bagenstos, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF:
Gregory P. McGuire, HAYNSWORTH, BALDWIN, JOHNSON &
GREAVES, P.A., Greensboro, North Carolina, for Appellant. Deval
L. Patrick, Assistant Attorney General, Dennis J. Dimsey, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C.; J. Davitt
McAteer, Acting Solicitor, James D. Henry, Associate Solicitor,
Debra A. Millenson, Senior Trial Attorney, Belinda Reed Shannon,
Trial Attorney, UNITED STATES DEPARTMENT OF LABOR,
Washington, D.C., for Appellees.
_________________________________________________________________
OPINION
MURNAGHAN, Circuit Judge:
On December 18, 1995, the Department of Labor's Office of Fed-
eral Contract Compliance Programs (OFCCP) filed an administrative
complaint under Executive Order 11246 alleging that in 1988 Volvo
GM Heavy Truck Corporation had discriminated against female
applicants for assembler positions in its Dublin, Virginia plant.
In
response, Volvo GM filed a complaint in district court seeking a
declaratory judgment on the basis that OFCCP's seven-year delay in
bringing the enforcement action barred the action. The OFCCP filed
a motion to dismiss on ripeness and exhaustion grounds. On August
9, 1996, the district court granted OFCCP's motion on exhaustion
grounds. For the following reasons, we affirm.
I.
FACTS AND PROCEDURAL HISTORY
Appellant, Volvo GM Heavy Truck Corporation (Volvo GM), a
contractor with the federal government, operates a heavy duty truck
assembly plant in Dublin, Virginia. The plant employs approximately
1500 people. As a federal contractor, Volvo GM is subject to Execu-
tive Order 11246. Executive Order 11246 prohibits discrimination on
the basis of race, color, religion, sex, or national origin by
federal
contractors. Exec. Order 11246 § 202, 3 C.F.R. 167, 168 (1965
2
Supp.), as amended, Exec. Order No. 11,375, 3 C.F.R. 320, 321 (1967
Comp.). Executive Order 11246 is administered by the Office of Fed-
eral Contract Compliance Programs (OFCCP) in the Department of
Labor. 41 C.F.R. 60-1.2 (1996). As part of its administration of
Exec-
utive Order 11246, the OFCCP periodically conducts compliance
checks to assess whether federal contractors are in compliance with
the Executive Order. 41 C.F.R. 60-1.20 (1996). If a compliance
review discloses a violation and the parties are unable to reach a
con-
ciliated position, the OFCCP may initiate administrative
enforcement
proceedings. 41 C.F.R. 60-1.26(a)(2) (1996). 1
On December 23, 1988, the OFCCP informed Volvo GM that its
Dublin plant had been selected for a compliance review. The OFCCP
conducted the review in early 1989. In a letter sent August 7,
1989,
the OFCCP informed Volvo GM of its prima facie finding that Volvo
GM had discriminated against women in hiring for entry-level posi-
tions during 1988. In the letter, the OFCCP noted that Volvo GM's
selection process appeared to be "highly subjective." Volvo GM was
required to provide a written response to the prima facie finding
within 20 days.
On November 1, 1989, the OFCCP issued a notice of violation reit-
erating its prior finding of gender discrimination.2 On January 26,
1990, the OFCCP's regional director issued a notice to show cause,
which stated that the Department would initiate enforcement
proceed-
ings if Volvo GM did not take corrective action within 30 days. As
a result, representatives of Volvo GM and the OFCCP met in an
attempt to conciliate the dispute. Those conciliations efforts
proved
unsuccessful and ceased as of June 1, 1990.
_________________________________________________________________
1 Administrative enforcement proceedings are heard by an
administra-
tive law judge (ALJ), who issues a recommended decision. 41 C.F.R.
60-
30.27 (1996). Following a period for both parties to file
exceptions, the
Department of Labor's Administrative Review Board issues a final
administrative order. 41 C.F.R. 60-30.29 & 60-30.30 (1996).
2 Specifically, the letter stated:
Volvo GM Heavy Truck Corporation exhibited disparate impact
in the hiring of females for the assembler position during the
period of January 1, 1988 through December 31, 1988. This is
a violation of [41 C.F.R. 60-3.3 and 60-1.4(a)(1) (1996)].
3
Four years passed. On August 30, 1994, the Solicitor of Labor
informed Volvo GM that the OFCCP had "referred the case to the
Solicitor's Office for filing of administrative enforcement
proceed-
ings." The Solicitor's letter offered to "make a final attempt to
resolve
this matter without contested litigation." Volvo GM rejected the
offer.
On December 18, 1995, the OFCCP filed an administrative complaint
against Volvo GM under Executive Order 11246 seeking backpay for
an affected class of females from March 7, 1987 to the present,
injunctive relief, and an order cancelling Volvo GM's current con-
tracts with the federal government and barring Volvo GM from par-
ticipating in contracts with the federal government until Volvo GM
complied with Executive Order 11246.
On January 5, 1996, Volvo GM filed the instant action for judicial
review of the OFCCP's actions in the United States District Court
for
the Western District of Virginia. The complaint asserted four
causes
of action. In the first count, Volvo GM sought a declaratory
judgment,
pursuant to 28 U.S.C. § 2201, that the OFCCP's administrative
enforcement actions were subject to the statute of limitations in
Va.
Code. § 8.01-2483 because Executive Order 11246 provides no statute
of limitations period. The second count alleged that the OFCCP's
delay in bringing the enforcement action violated the
Administrative
Procedure Act, 5 U.S.C. § 555(b).4 The third count alleged that
the
_________________________________________________________________
3 § 8.01-248, amended in 1995, now provides:
Every personal action accruing on or after July 1, 1995, for
which no limitation is otherwise prescribed, shall be brought
within two years after the right to bring such action has
accrued.
Va. Code § 8.01-248 (Michie 1992 and Supp. 1996) (emphasis added).
Prior to the 1995 amendment of § 8.01-248, the same section pro-
vided:
Every personal action for which no limitation is otherwise
pre-
scribed, shall be brought within one year after the right to
bring
such action has accrued.
Va. Code § 8.01-248 (Michie 1992).
Since the OFCCP brought this action in 1995 based on Volvo GM's
alleged sex dicrimination in the hiring of women in 1988, arguably,
the
one-year statute of limitations, if applicable, would apply to this
action.
4 Section 555(b) requires federal agencies to conclude matters
"with
due regard to convenience and necessity of the parties or their
represen-
tatives and within a reasonable time."
4
OFCCP's delay in bringing the enforcement proceedings violated the
Due Process Clause of the Fifth Amendment. The fourth count
alleged a violation of the Freedom of Information Act (FOIA), 5
U.S.C. § 552.5
On March 11, 1996, the OFCCP moved to dismiss the complaint
on the grounds that Volvo GM had failed to exhaust administrative
remedies, or alternatively, the case was not ripe for judicial
review.
On April 4, 1996, Volvo GM filed its response to the motion, and
the
OFCCP filed its reply on April 26, 1996. On May 16, 1996 Volvo
GM filed a motion for summary judgment on Count One (statute of
limitations). After denying the OFCCP's motion to stay
consideration
of Volvo GM's motion for summary judgment, the OFCCP filed its
opposition to the motion on June 19, 1996, and Volvo GM filed its
reply on June 28, 1996.
On July 15, 1996, the district court held a hearing on both
motions.
Thereafter, on August 9, 1996, the district court entered an order
granting OFCCP's motion to dismiss on exhaustion grounds, and dis-
missed without prejudice as moot Volvo GM's motion for summary
judgment on Count One. The instant appeal followed.
II.
DISCUSSION
Volvo GM challenges the district court's decision on the grounds
that Executive Order 11246 does not require exhaustion of adminis-
trative remedies as a prerequisite to seeking judicial review. In
requir-
ing Volvo GM to exhaust its administrative remedies, Volvo
contends, the district court abused its discretion. In the
alternative,
Volvo GM contends that exhaustion should not be required because
exhaustion would be "futile", exhaustion would not serve the
purpose
of promoting judicial economy, and their complaint raises constitu-
tional issues which are exempt from an exhaustion requirement.
In a shift from its litigating position before the district court
to a
_________________________________________________________________
5 The fourth count is not at issue in the instant appeal.
5
related position, the OFCCP primarily maintains that the district
court
should be affirmed because the case is not "ripe" because the
filing
of an administrative complaint is not "final agency action."
Alterna-
tively, the OFCCP argues that the district court should be affirmed
because Volvo GM must exhaust its administrative remedies before
seeking judicial review. The district court's grant of the OFCCP's
motion to dismiss is reviewed de novo. See Tillman v. RTC, 37 F.3d
1032, 1034 (4th Cir. 1994). We now address the district court's
deci-
sion requiring Volvo GM to exhaust its administrative remedies. 6
A. Exhaustion
A wealth of Supreme Court guidance exists within the area of
exhaustion of administrative remedies. In McCarthy v. Madigan, 503
U.S. 140 (1992), the Supreme Court discussed the fundamentals of
the exhaustion doctrine and the interplay between Congressional
intent and the federal judiciary. The Court stated:
The doctrine of exhaustion of administrative remedies is one
among related doctrines -- including abstention, finality,
and ripeness -- that govern the timing of federal court deci-
sionmaking. Of "paramount importance" to any exhaustion
inquiry is congressional intent. Where Congress specifically
mandates, exhaustion is required. But where Congress has
not clearly required exhaustion, sound judicial discretion
governs .... Nevertheless even in this field of judicial
discre-
tion, appropriate deference to Congress' power to prescribe
the basic procedural scheme under which a claim may be
heard in federal court requires fashioning of exhaustion
principles in a manner consistent with congressional intent
and any applicable statutory scheme.
_________________________________________________________________
6 A review of the district court's decision reveals that the
district court
granted the OFCCP's motion on the basis of Volvo GM's failure to
exhaust administrative remedies. While the district court did
address the
"ripeness" issue in a footnote, the OFCCP is stretching it a bit to
suggest
the court also ruled on the ripeness grounds. Although we may
affirm on
any ground supported in the record, see Jackson v. Kimel, 992 F.2d
1318,
1322 (4th Cir. 1993), the district court ruled on the exhaustion
grounds
and that grounds provides an adequate avenue for affirmance of the
dis-
trict court. Hence, this opinion only addresses the exhaustion
grounds.
6
This Court has long acknowledged the general rule that par-
ties exhaust prescribed administrative remedies before seek-
ing relief from the federal courts. Exhaustion is required
because it serves the twin purposes of protecting administra-
tive agency authority and promoting judicial efficiency.
Id. at 144 (internal citations omitted).
The exhaustion requirement provides an agency with an opportu-
nity to "correct its own mistakes with respect to programs it
adminis-
ters before it is haled into federal court." Id. at 145; see also
McKart
v. United States, 395 U.S. 185, 195 (1969) ("frequent and
deliberate
flouting of administrative processes could weaken" an agency's
effec-
tiveness "by encouraging" disregard of "its procedures.").
Moreover,
the exhaustion requirement serves to prevent "piecemeal appeals."
McCarthy, 503 U.S. at 145. "In determining whether exhaustion is
required, federal courts must balance the interest of the
individual in
retaining prompt access to a federal judicial forum against
counter-
vailing institutional interests favoring exhaustion." McCarthy, 503
U.S. at 146; see also Bowen v. City of New York, 476 U.S. 467, 484
(1986) ("application of exhaustion doctrine is``intensely practical'
....
The ultimate decision of whether to waive exhaustion... should be
guided by the policies underlying the exhaustion requirement.")
The Supreme Court, however, in Darby v. United States, 509 U.S.
137 (1993), stated that "with respect to actions brought under the
APA, Congress effectively codified the doctrine of exhaustion of
administrative remedies in [5 U.S.C. § 704]". Id. at 153; see also
Myers v. Bethlehem Shipbuilding Corp. , 303 U.S. 41, 50-51 (1938)
("the long settled rule of judicial administration [is] that no one
is
entitled to judicial relief for a supposed or threatened injury
until the
prescribed administrative remedy has been exhausted."). Thus, the
Court stated that an action brought pursuant to the APA "explicitly
requires exhaustion of all intra-agency appeals mandated either by
statute or by agency rule." Darby, 509 U.S. at 147.
Darby, however, did not completely remove judicial discretion,
recognized in McCarthy, to impose an exhaustion requirement when
a statute does not explicitly require exhaustion. Rather, the Court
noted that "[o]f course, the exhaustion doctrine continues to apply
as
7
a matter of judicial discretion in cases not governed by the APA."
Darby, 509 U.S. at 154-55 (emphasis added). Guided by the Supreme
Court's decisions in McCarthy and Darby, we now turn our attention
to Volvo GM's contentions with respect to exhaustion.
In its complaint, Volvo GM asserted three causes of action with
respect to the OFCCP's seven-year delay in pursuing administrative
enforcement proceedings against Volvo GM. The first cause of action
sought a declaratory judgment that the OFCCP's enforcement pro-
ceedings were subject to a one-year Virginia statute of limitations
period; the second, challenged the seven-year delay as a
substantive
violation of the APA; and the third alleged that the OFCCP's seven-
year delay violated the Fifth Amendment's Due Process Clause. A
proper analysis of the instant case requires the court to address
each
of Volvo GM's asserted causes of action to determine whether
exhaustion is required.
Turning to the second cause of action, Volvo GM alleges that the
OFCCP's seven-year delay in bringing enforcement actions violates
the APA. The analyis of Volvo GM's second cause of action need not
detain us long. Pursuant to Darby, Volvo GM must exhaust its APA
claim before proceeding in federal court. Volvo GM places great
reli-
ance on McCarthy and McKart, but we note that both of those cases
pre-dated the Court's pronouncement in Darby that all APA claims
are subject to an exhaustion requirement.
The regulations governing cases under Executive Order 11246 pro-
vide that agency action is not final until an appeal has been taken
to
the Administrative Review Board. See 41 C.F.R. 60-30.30 (1996).
Indisputedly, Volvo GM has not yet taken such an appeal. Although
an issue of first impression for the Fourth Circuit, other circuits
have
required exhaustion, within the APA context, with respect to Execu-
tive Order 11246. See St. Regis Paper Co., 591 F.2d 612, 613-15
(10th Cir.), cert. denied, 444 U.S. 828 (1979) (requiring
exhaustion
and finding that plaintiff did not fall within any exceptions to
the
exhaustion doctrine); Uniroyal, Inc. v. Marshall , 579 F.2d 1060,
1064-67 (7th Cir. 1978) (requiring exhaustion). Therefore, Volvo
GM's second cause of action alleging a violation of the APA must be
exhausted.
8
Volvo GM's two additional causes of action require more attention.
Our readings of the pleadings suggest that Volvo GM also argues
that
neither its first cause of action nor its third cause of action is
subject
to exhaustion of administrative remedies before proceeding in
federal
court. With respect to the first cause of action, Volvo GM states
that
it "merely seeks a declaration that an appropriate limitations
period
applies to the OFCCP's enforcement actions, and requests an injunc-
tion prohibiting [the OFCCP] from proceeding with the
administrative
action." The declaratory judgment, Volvo GM contends, "would pro-
vide the appropriate law to the [OFCCP] to be applied in the
adminis-
trative hearing process."
As such, Volvo GM argues that since Executive Order 11246 does
not specifically require that administrative remedies be exhausted
before proceeding in federal court, an exhaustion requirement may
only be imposed by the exercise of the district court's sound
judicial
discretion. But on those grounds we agree with the district court
that
Volvo GM's first and third causes of action must also be exhausted.
First, as we have noted in City Nat'l Bank v. Edmisten , 681 F.2d
942 (4th Cir. 1982), the Declaratory Judgments Act, 28 U.S.C.
§ 2201, is "remedial only, and is not itself a basis for federal
subject
matter jurisdiction." Id. at 945 n.6 (citing Skelly Oil Co. v.
Phillips
Petroleum Co., 339 U.S. 667, [671-72] (1950)). Moreover, analogi-
cally, as the Supreme Court recognized in Heckler v. Ringer, 466
U.S.
602 (1984), a party cannot "bypass the exhaustion requirements of
the
Medicare Act by simply bringing declaratory judgment actions in
fed-
eral court...." Id. at 621. Volvo GM's first cause of action is
based on
the same operative facts as Volvo GM's second cause of action, its
APA claim. In both causes of action, Volvo GM attacks the OFCCP's
seven-year delay in bringing enforcement actions against Volvo GM.
As the Declaratory Judgments Act does not provide a basis for
federal
subject matter jurisdiction, Volvo GM's first cause of action would
also be subject to the APA's exhaustion requirement.
Second, Volvo GM's third cause of action is based on an alleged
constitutional violation, and does provide a separate basis for
judicial
review,7 and would not be subject to the APA's exhaustion require-
_________________________________________________________________
7 As Volvo GM noted in its complaint, jurisdiction is vested in the
court pursuant to 28 U.S.C. § 1331 in that the instant action is
one "aris-
ing under the Constitution, laws, or treaties of the United States
...."
9
ment. Of course, pursuant to McCarthy, a non-APA case, the district
court may in its sound discretion impose an exhaustion requirement,
which in the instant case the district court did.
Guided by the Supreme Court's "repeated reference" in McCarthy
to "congressional intent and the statutory basis undergirding the
administrative process", the district court began its analysis of
the
exhaustion requirement by noting that a statutory basis existed for
both the promulgation of both the Executive Order 11246 and the
accompanying regulations. Federal Property and Administrative Ser-
vices Act of 1949, 40 U.S.C. § 471 provides:
It is the intent of the Congress in enacting this legislation
to
provide for the Government an economical and efficient
system for (a) the procurement and supply of personal prop-
erty and nonpersonal services, including related function
such as contracting ....
40 U.S.C. § 471 (1986).
No individual shall on the ground of sex be excluded from
participation in, be denied the benefits of, or be subjected
to
discrimination under any program or activity carried on or
receiving Federal assistance under this Act.
40 U.S.C. § 476 (1986).
The President may prescribe such policies and directives ...
as he shall deem necessary to effectuate the provisions of
[this] Act, which policies and directives shall govern the ...
executive agencies in carrying out their respective functions
hereunder.
40 U.S.C. § 486(a) (1986).
The district court also noted that "... every action for money dam-
ages brought by the United States or an officer or agency thereof
which is founded upon any contract express or implied in law or
fact,
shall be barred unless the complaint is filed within six years
after the
10
right of action accrues or within one year after final decisions
have
been rendered in applicable administrative proceedings required by
contract or by law, whichever is later ...." 28 U.S.C. § 2415(a)
(1994).
The district court stated that "[the above statutory passages]
leads
me to the inescapable conclusion that the Congress, specifically
when
it enacted 40 U.S.C. § 486, both reasonably intended and expected
the
President to promulgate Executive Orders relating to federal
contract-
ing or contractors and to delegate the tedium of their application
to
the Executive Branch." Hence, the court found that the exhaustion
doctrine applied to Volvo GM's claims, and that none of the excep-
tions to the exhaustion doctrine were applicable to Volvo GM's
claims.8
Volvo GM attacks the district court's reasoning on the basis that
in McCarthy, the Court noted that Congress' intent to require
exhaus-
tion must be "specific" and "clear", and here, "no indication
[exists]
in the statutory language of 40 U.S.C. § 486 that Congress intended
by granting the President authority to issue ``policies and
directives'
_________________________________________________________________
8 In McCarthy, the Court recognized three circumstances in which
the
interests of the individual weigh heavily against requiring
administrative
exhaustion, namely (1) resort to the administrative remedy may
prejudice
a subsequent court challenge of the contested agency action; (2)
the
agency's remedy may be inadequate; and (3) the administrative
remedy
may be inadequate where the administrative agency body is shown to
be
biased or to have otherwise predetermined the issues before it.
McCarthy, 503 U.S at 147-48. With respect to the bias issue, the
district
court concluded that "[w]hile Labor has been no doubt an
exasperating
adversary, [Volvo GM] has failed to demonstrate that it is a victim
of
Labor's bias." As for the second exception, the district court
noted that
the administrative law judge is capable of "entertaining a statute
of
laches or statute of limitation[s] argument," thus Volvo GM could
obtain
through the administrative process the relief sought. As for the
delay
associated with the OFCCP's initiation of administrative
proceedings,
the district court noted that while the delay is "appalling", the
district
court stated that the expenses incurred with the attenuated
administrative
process does not provide Volvo GM with a waiver from the exhaustion
requirement. Finally, the district court noted that Volvo GM had
not
demonstrated that the OFCCP acted with "brazen defiance," an
exception
to the waiver requirement recognized in Phillip Morris v. Block,
755
F.2d 368, 369-70 (4th Cir. 1985).
11
to authorize the Secretary of Labor to create a quasi-judicial
adminis-
trative enforcement scheme which a party is required to exhaust
prior
to initiating suit an action in court." Moreover, Volvo GM notes
that
the Solicitor of Labor's regulations issued pursuant to Executive
Order 11246 do not provide for judicial review following the
adminis-
trative process, nor do they require that the OFCCP's processes be
exhausted before proceeding in federal court.
We are unpersuaded by Volvo GM's argument. Contrary to Volvo
GM's protestations, Congress by granting the President authority to
issue "policies and directives" to carry out implementation of
Execu-
tive Order 11246 by the agencies, did speak "clearly" in requiring
exhaustion. By vesting the implementation of the Act in the
adminis-
trative agencies, Congress was aware that exhaustion is required
before a litigant may challenge final agency action in federal
court.9
Having now concluded that an exhaustion requirement is applicable
_________________________________________________________________
9 Volvo GM cites to this court's decision in Liberty Mutual Ins. v.
Friedman, 639 F.2d 164 (4th Cir. 1981), to argue that the
imposition of
an exhaustion requirement must have some nexus between the exhaus-
tion requirement and the "efficiency and economy of the Procurement
Act." Again, Volvo GM's argument is unavailing. In Liberty Mutual,
the
court, assuming that the Procurement Act provided the statutory
author-
ity for the President to issue Executive Order 11246, stated that
"any
application of the Order must be reasonably related to the
Procurement
Act's purpose of ensuring efficiency and economy in government pro-
curement ... in order to lie within the statutory grant." Id. at
170. Volvo
GM claims an exhaustion requirement does not serve the goals of the
Procurement Act "in a situation like this one, with its associated
lengthy
and costly administrative hearings and appeals, and would hinder
rather
than promote the economy and efficiency with which a federal
contrac-
tor, such as Volvo GM, performs its federal government contracts."
Of
course, Volvo GM's argument ignores another, at least as salient
purpose
of the Act, which is to ensure that federal contractors, such as
Volvo
GM, are not engaged in impermissible discrimination. Even if the
ratio-
nale of Liberty Mutual is applicable here, an exhaustion
requirement
which allows an agency, which is familiar with the Procurement Act
and
Executive Order 11246, to handle any such alleged discrimination
dem-
onstrates a sufficient nexus to the Procurement Act's goals.
12
to Volvo GM's claims, we will now address Volvo GM's arguments
that the exhaustion requirement should be waived. 10
B. Exceptions to Exhaustion
First, Volvo GM argues that imposition of an exhaustion require-
ment on its statutory and constitutional claims does not serve the
underlying purposes of the exhaustion doctrine. Volvo GM contends
that the narrow issue it seeks the court to address is a purely
statutory
issue, namely the statute of limitations issue. A decision on the
appli-
cable statute of limitations does not require application of any
experi-
ence or expertise which the OFCCP may possess regarding
"enforcement of non-discrimination provisions or other requirements
of the Executive Order." Nor would resolution of the statute of
limita-
tions issue require judicial intervention into the"sacrosanct areas
of
agency discretion", Volvo maintains.
For its argument, Volvo GM principally relies upon McCarthy,
Bowen, McKart and United States ex rel. Brooks v. Clifford, 412
F.2d
1137 (4th Cir. 1969) (relying on McKart to conclude that exhaustion
was unnecessary). A synthesis of those cases reveals a central
theme.
The courts concluded that the purpose of the exhaustion doctrine
would not be served by requiring the plaintiff to exhaust
administra-
tive remedies. Importantly to the issue at hand, however, in none
of
those cases was the APA the basis for judicial review. McCarthy
involved an action by a federal prisoner seeking money damages
under Bivens v. Six Unknown Named Fed. Narcotics Agents , 403 U.S.
388 (1971). Bowen involved the statute providing for judicial
review
of social security disability determinations, 42 U.S.C. § 405(g).
_________________________________________________________________
10 We also note that Volvo GM's"constitutional claim" appears to be
nothing more than clever pleading of its APA claim so as to avoid
the
exhaustion requirement. The substance of the APA claim and the
consti-
tutional claim are identical, i.e. 1) the seven-year delay, which
Volvo
GM terms "extraordinary," by the OFCCP in bringing the enforcement
action violated 5 U.S.C. § 555(b) in that the delay was
"unreasonable",
and 2) that same "extraordinary" seven-year delay violated its due
pro-
cess rights under the Fifth Amendment. Thus, Volvo GM should not be
able to escape the exhaustion requirements of the APA merely by
real-
leging and repackaging its APA claim, as a constitutional claim.
13
McKart involved a direct appeal from a criminal conviction, and
Brooks arose on a petition for habeas corpus. Volvo GM has not
pointed to any case, involving a challenge under the APA , since
Darby, that has subjected the exhaustion requirement to judicial
dis-
cretion.
As the OFCCP notes, Volvo GM's statutory and constitutional
claims based on the seven-year delay will involve a "fact-specific
assessment that cannot be undertaken until the administrative
process
is completed." Although the OFCCP concedes that the statute of
limi-
tations claim raises a question of law, the OFCCP argues that "the
answer to that question may involve an inquiry into the federal
poli-
cies served by the Executive Order", and exhaustion would be
partic-
ularly helpful in that situation. OFCCP cites as support for its
argument Toilet Goods Ass'n, Inc. v. Gardner, 387 U.S. 158 (1967),
wherein the Court required a party to exhaust a statutory challenge
to
the agency's regulations reasoning that exhaustion would throw some
light on the agency's "statutory and practical justifications for
the reg-
ulation." Id. at 166.
Volvo GM has failed to demonstrate that requiring Volvo GM to
exhaust its administrative remedies will not serve the underlying
pur-
poses of the exhaustion doctrine. Volvo GM's case is readily
distin-
guishable from the cases upon which it seeks to rely. Unlike in
McKart, which involved a criminal defendant to whom all administra-
tive remedies were closed; or in Brooks, where the court found that
the exhaustion of administrative remedies would impose harm that
could not be redressed on judicial review, here Volvo GM's only
asserted harm is the burden of defending itself in an
administrative
proceeding. Such a burden has been found to be wholly insufficient
to warrant a waiver of the exhaustion requirement. See Toilet Goods
Ass'n, 387 U.S. at 164-66; Myers, 303 U.S. at 51-52.
Furthermore, Volvo GM asserts that exhaustion would be "futile"
in the present case because the Secretary of Labor has already
asserted its position that statute of limitations cannot be applied
to
OFCCP enforcement actions. Volvo GM bases its argument on the
fact that in response to interrogatories requesting identification
of the
statute of limitations that applies to the underlying action, the
Depart-
ment of Labor replied "[t]here is no applicable code or statutory
cita-
14
tion." In addition, Volvo GM relies upon the fact that the
Assistant
Secretary for Employment Standards recently issued a final adminis-
trative decision that held that no statute of limitations applies
to an
action brought by OFCCP under § 503 of the Rehabilitation Act.
OFCCP v. American Airlines , No. 94-OFC-9 (Apr. 26, 1996). 11
In response, OFCCP maintains that the positions taken by the
Department in defending itself are merely "litigating positions"
and
"[do] not necessarily reflect a deliberative adjudication of [Volvo
GM's] claims." A litigating position, the OFCCP argues, can not be
determinative of subsequent final agency action because "agency
pol-
icy is to be made, in the first instance, by the agency itself --
not by
the courts, and not by agency counsel." Harmon v. Thornburgh, 878
F.2d 484, 494 (D.C. Cir. 1989), cert. denied, 493 U.S. 1056 (1990).
As for the American Airlines decision, the OFCCP argues that the
American Airlines decision involved § 503 of the Rehabilitation
Act,
not Executive Order 11246. Moreover, the decision was issued by the
Assistant Secretary for Employment Standards, not the Administra-
tive Review Board. While acknowledging that the similarities
between § 503 and Executive Order 11246 may mean that the ratio-
nale of the American Airlines decision could be applied in the
Execu-
tive Order 11246 context, the OFCCP argues that an adverse ruling
against Volvo GM is not a "certainty." See Thetford Properties IV
Ltd. Partnership v. HUD, 907 F.2d 445, 450 (4th Cir. 1990).
Finally,
the OFCCP notes that even if the Department has decided that a
stat-
ute of limitations does not apply to the OFCCP's actions, Volvo GM
may still prevail on either of its claims based on the seven-year
delay
associated with OFCCP bringing the instant action. Thus, OFCCP
maintains that Volvo GM has failed to satisfy the futility
exception.
The most helpful case on the instant issue is Thetford Properties.
In that case, the plaintiffs challenged the district court's
dismissal of
its claim for failure to exhaust administrative remedies.
Plaintiffs
sought a declaratory judgment that HUD's Emergency Low Income
Housing Preservation Act of 1987 (Act), 12 U.S.C.§ 17151, violated
_________________________________________________________________
11 In response to Volvo GM's motion for summary judgment, the
OFCCP argued that the rationale of American Airlines fully applies
to
cases arising under Executive Order 11246.
15
their due process rights because of the Act's abrogation of their
unconditional contractual right to prepay their federally insured
mort-
gages.
Addressing plaintiffs' argument that exhaustion was futile in their
case because they could not meet the Act's requirements for prepay-
ment, Judge Hall, writing for the court, stated:
Absent a clear showing that an administrative agency has
taken a hard and fast position that makes an adverse ruling
a certainty, a litigant's prognostication that he is likely to
fail before an agency is not a sufficient reason to excuse the
lack of exhaustion.
Id. at 450. Moreover, Judge Hall stated that"[w]hile HUD cannot
allow [plaintiffs] to unconditionally prepay and withdraw from the
program, it is possible that prepayment on conditions acceptable to
[plaintiffs] may be allowed." Id. Finally, Judge Hall noted that
"[t]o
allow [plaintiffs] to avoid the administrative process on their
unsup-
ported allegation of futility would allow the futility exception to
swal-
low the exhaustion rule." Id.
In the instant case, Volvo GM has the Secretary's litigating posi-
tion that no applicable statutory code or citation applies to OFCCP
enforcement actions. Stronger, but still not enough, Volvo GM
relies
upon the American Airlines decision. As the OFCCP noted, the
American Airlines decision does not address Executive Order 11246,
nor has the final decisionmaker, i.e. the Administrative Review
Board, endorsed the decision.12 Thus, using the rationale of
Thetford,
Volvo GM has failed to demonstrate that an adverse decision is a
cer-
_________________________________________________________________
12 For case support, Volvo GM also relies upon Houghton v. Shafer,
392 U.S. 639 (1968), and Cinderella Career & Finishing Schools,
Inc.
v. FTC, 425 F.2d 583 (D.C. Cir. 1970). In Houghton, the Court held
that
a prisoner was not required to exhaust his administrative remedies
before
challenging a rule that deprived him of legal books and materials
because
the ultimate decision maker, the Attorney General of Pennsylvania,
had
already made his position clear. Houghton, 392 U.S. at 640. ("In
light of
this [Attorney General's decision] it seems likely that to require
peti-
tioner to appeal ..., would be deemed a futile act." In Cinderella,
the
court concluded that disqualification of the administrative
decisionmaker
was warranted where the decision maker had prejudged the issue of
the
case. Cinderella, 425 F.2d at 590-91. Unlike in Houghton and
Cinderella, the final decisionmaker has not made a decision. Thus,
Volvo GM's reliance on those cases is misplaced.
16
tainty. Under these circumstances, exhaustion of its claims is not
futile.
Also, Volvo GM claims that it should not have to exhaust its APA
claim based on the OFCCP's seven-year delay, pursuant to 5 U.S.C.
§ 555(b), because the APA vests authority for enforcing its
provisions
"in a court of competent jurisdiction." The difficulty with Volvo
GM's argument is its circular reasoning. Volvo GM's argument is
based on the premise that the seven-year delay is unreasonable, and
now all a court must do is dismiss the case based on the
unreasonable
delay. As OFCCP notes, the APA does not prohibit, and in fact
encourages, agencies from addressing the statute's procedural
require-
ments in the first instance.
In the instant case, a determination of whether the seven-year
delay
is unreasonable will undoubtedly require a fact-intensive inquiry
that
cannot take place before the administrative process has concluded.
In
that manner, if, after the agency concludes its review, Volvo GM
appeals that decision, the district court will have a more complete
fac-
tual record upon which to determine whether dismissal is warranted
due to the agency's seven-year delay. See American Fed'n of Gov't
Employees v. Nimmo, 711 F.2d 28, 29-31 (4th Cir. 1983) (court
ordered dismissal, on exhaustion grounds, of plaintiffs' complaint
under the APA that certain Veteran Administration guidelines "were
promulgated in violation of [APA]").
Moreover, Volvo GM argues that it should not be required to
exhaust its constitutional claim, its third cause of action,
because
"[c]onstitutional claims are ... unsuited to resolution in
administrative
hearing procedures and, therefore, access to the courts is
essential to
the decision of such questions." Essentially Volvo GM claims that
"due process is violated when a pre-deprivation hearing is delayed
to
the extent that it prejudices the defendant's right to a meaningful
hearing because it significantly undercuts [Volvo GM's] ability to
present an adequate defense, particularly through the presentation
of
witness testimony."13 In addition, Volvo GM alleges that the
_________________________________________________________________
13 Volvo GM alleged in its complaint that the seven-year delay by
the
OFCCP in initiating enforcement proceedings severely prejudiced
Volvo
GM's ability to defend itself because five of the seven key
management
individuals who have personal knowledge of Volvo GM's hiring poli-
cies, practices, and procedures in 1987, 1988, and 1989 are no
longer
with Volvo GM.
17
OFCCP's enforcement proceedings, which do not provide any time
limit for initiating administrative enforcement proceedings, also
vio-
late due process. Hence, Volvo GM claims that its constitutional
due
process claim cannot be resolved by the administrative process and
that Volvo GM should not be required to exhaust its administrative
remedies before proceeding in federal court.
The Fourth Circuit has recognized that exhaustion can be useful
even where a constitutional issue is presented. In Thetford, the
court
held that the prudential considerations underlying the exhaustion
doc-
trine are "no less weighty when an administrative litigant raises
a con-
stitutional challenge to a statute which an agency is charged with
enforcing." Thetford, 907 F.2d at 448. Moreover, the court added
that
"exhaustion is particularly appropriate when the administrative
rem-
edy may eliminate the necessity of deciding constitutional
questions."
Thetford, 907 F.2d at 448 (quoting Nimmo, 711 F.2d at 31). Further-
more, the court noted that "requiring exhaustion ... may very well
lead
to a satisfactory resolution of [the] controversy without having to
reach appellant's constitutional challenge." Thetford, 907 F.2d at
448.
Therefore, the court stated that it "must reject appellant's
argument
that, as a general rule, exhaustion is not necessary where
administra-
tive litigants raise constitutional challenges." Id. The court did
note,
however, that exhaustion may not be required "in the rare case when
a statute is patently unconstitutional or an agency has taken a
clearly
unconstitutional position", or "[w]here it is clear that resort to
admin-
istrative remedies would be incapable of affording due process...."
Id.
at 448-49.
In the instant case, Volvo GM should be required to exhaust its
administrative remedies before proceeding in federal court. First,
as
noted above, Volvo GM's constitutional claim stems from the same
"unreasonable delay" as forms the basis of its statutory claim.
Second,
as with Volvo GM's statutory claim, a fact-finding inquiry into the
reasons for the delay will be necessary for the ultimate resolution
of
whether a seven-year delay violates the due process clause. Third,
as
noted in Thetford, given the similarity between the statutory and
con-
stitutional claims, the administrative process' resolution of the
statu-
tory claim may well alleviate the necessity for the courts to pass
on
the constitutional claim. Thus, Volvo GM has failed to demonstrate
18
that its combination of circumstances falls within any of the
recog-
nized exceptions to the exhaustion doctrine. Accordingly, Volvo GM
must exhaust its claims before proceeding in federal court. 14
III.
CONCLUSION
In conclusion, we hold that Volvo GM is required to exhaust its
claims in the administrative forum. Accordingly, the judgment of
the
district court is
AFFIRMED.
_________________________________________________________________
14 We share the district court's and Volvo GM's frustration over
the
OFCCP's seven-year delay in bringing enforcement proceedings
against
Volvo GM. The OFCCP's seven-year delay is unsettling to say the
least.
Nevertheless, we are satisfied that Volvo GM should be required to
exhaust its claims in the administrative forum. For the sake of the
credi-
bility of the administrative process, we hope that the
administrative pro-
cess will not suffer from the same appearance of lack of timeliness
seemingly evinced in the initiation of enforcement proceedings.
19