UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 97-10895
AMERICAN AIRLINES, INC.
Plaintiff-Appellee;
VERSUS
ALEXIS M. HERMAN, SECRETARY OF LABOR, UNITED STATES
DEPARTMENT OF LABOR
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Texas
May 17, 1999
Before Herman G. GARZA, POLITZ, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The district court granted summary judgment declaring that the
Secretary of the United States Department of Labor (“the
Secretary”) does not have authority under § 503 of the
Rehabilitation Act of 1973 (“the Act”) to enforce an agreement by
American Airlines, Inc. (“American”) not to discriminate against
persons with disabilities as required by its contract with the
government. Correlatively, the district court denied the
Secretary’s motion to dismiss American’s declaratory judgment
action because it failed to exhaust its administrative remedies
under § 10(c) of the Administrative Procedures Act (“APA”). The
Secretary appealed. We reverse the district court’s judgments and
dismiss American’s suit for lack of jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
In February 1989, the Office of Federal Contract Compliance
Programs (“the OFCCP”) of the Department of Labor (“the DOL”)
conducted a random compliance review of American’s employment
practices at its Nashville, Tennessee hub to evaluate American’s
compliance with its government contract under § 503 of the
Rehabilitation Act of 1973, 29 U.S.C. § 793 (1988). Since its
original enactment, § 503 has required covered federal contractors
to “take affirmative action to employ and advance in employment”
qualified disabled individuals. 29 U.S.C. § 793(a), Pub. L. No.
93-112, 87 Stat. 355, 393 (1973). The Secretary’s 1974 regulations
implementing § 503 require, inter alia, that every covered
government contract include a clause providing that “[t]he
contractor will not discriminate against any employee or applicant
for employment because of physical or mental handicap1 in regard to
any position for which the employee or applicant is qualified. The
contractor agrees to take affirmative action to employ, advance in
1
The Rehabilitation Act Amendments of 1992, Pub. L. No. 102-
569, 106 Stat. 43444 (Oct. 29, 1992), amended the 1973 Act, 29
U.S.C. §§ 701-797b, substituting the term “individuals with
disabilities” for “individuals with handicaps.”
2
employment and otherwise treat qualified handicapped individuals
without discrimination based upon their physical or mental
handicap. . . .” 39 Fed. Reg. 20566, 20567 (1974).
Based on the OFCCP’s compliance review, in November 1989,
OFCCP issued a Notice of Violations alleging that American had
unlawfully discriminated against 96 applicants for non-flight
positions on the basis of their mental or physical disabilities.
Although none of the applicants filed a complaint, the OFCCP
in April 1994 filed an administrative complaint against American,
alleging that it had “failed or refused to comply with Section 503
and the Secretary of Labor’s rules and regulations” by implementing
certain hiring practices, and therefore had violated American’s
contractual obligations to the federal government. The OFCCP’s
administrative complaint prayed for an injunction declaring
American ineligible for government contracts until it complied with
the provisions of § 503, DOL regulations, and the government
contract; and an order requiring American to provide relief to each
of the 96 alleged victims of discrimination, including back pay,
front pay, lost benefits, instatement, and retroactive seniority.
In the administrative proceeding, American moved for summary
judgment on four grounds, urging that: (1) § 503 only requires
affirmative action, and does not prohibit discrimination (the “no
anti-discrimination authority” issue); (2) § 503 does not authorize
back pay or other individual relief (the “back pay” issue); (3) §
503 does not authorize the OFCCP to conduct compliance reviews (the
3
“compliance review” issue); and (4) the OFCCP’s administrative
action was untimely as being filed after the 180-day filing period
(the “timely filed” issue).
In September 1995, the Administrative Law Judge (“ALJ”): (1)
granted summary judgment to American on the “compliance review”
issue, concluding that neither § 503 nor its implementing
regulations authorize the OFCCP to initiate investigative and
enforcement proceedings in the absence of a written complaint by a
disabled applicant; (2) denied American’s motion on the “no anti-
discrimination authority” issue, concluding that the DOL’s
interpretation of the affirmative action requirement of § 503 as
including an obligation not to discriminate was reasonable and
within the grant of authority from Congress; (3) denied American’s
motion on the “back pay” issue, concluding that § 503 authorizes
the OFCCP to seek relief for individual victims of discrimination;
and (4) concluded that the “timely filed” issue was moot.
Based on the ALJ’s conclusion that the OFCCP’s administrative
action against American was founded on an unauthorized compliance
review, the ALJ recommended dismissal of the administrative
complaint against American.
Both parties appealed from the ALJ’s ruling to the then-
highest authority within the DOL, the Assistant Secretary for
Employment Standards (“Assistant Secretary”).2 In April 1996, the
2
The authority to issue final DOL decisions under § 503 has
since been transferred from the Assistant Secretary to the
4
Assistant Secretary issued a Decision and Remand Order, ruling
against American and in favor of OFCCP on all four issues,
concluding that: (1) the term “affirmative action to employ and
advance in employment qualified individuals with handicaps”
includes a duty not to discriminate against members of the class
protected by § 503; (2) the Act and its implementing regulations
authorize the DOL to investigate a contractor’s compliance with §
503 in addition to investigating individual complaints; (3) § 503
authorizes the Secretary to enforce the Act to obtain individual
relief for victims of discrimination, including back pay; (4) the
regulations implementing the Act provide no time limits for filing
formal administrative complaints by the Secretary arising out of
compliance reviews. The Assistant Secretary remanded the case to
the ALJ for further proceedings.
In September 1994, American filed this action in federal
district court against Robert B. Reich, Secretary of the Department
of Labor, seeking declaratory and injunctive relief pursuant to 28
U.S.C. §§ 2201 and 2202,3 challenging the OFCCP’s authority under
§ 503 to bring an administrative action against American based on
Administrative Review Board. See 61 Fed. Reg. 19982 (1996).
3
When this action was filed, Mr. Reich was the Secretary of
Labor, and his name was included in the caption of the complaint
instead of the present Secretary of Labor, Alexis Herman. During
the interim period between Mr. Reich’s resignation and the
confirmation of Ms. Herman, Cynthia Metzler was Acting Secretary of
Labor, and the federal court action was captioned American
Airlines, Inc. v. Metzler.
5
its discrimination against disabled job applicants.
The DOL filed a motion for summary judgment seeking dismissal
of American’s complaint on the grounds that American had failed to
exhaust its administrative remedies. The district court denied the
motion.
In February 1997, the DOL filed a motion for summary judgment
seeking an order declaring that § 503 authorizes the OFCCP to
conduct random compliance reviews. Thereafter, American filed a
motion for summary judgment declaring that § 503 does not authorize
the OFCCP to seek individual remedies from American, such as back
pay.
On April 8, 1997, the district court granted partial summary
judgment to American, issuing a declaratory judgment ruling that
“although § 503 does not authorize the DOL to prosecute American
for disability discrimination, it does authorize the DOL to enforce
American’s contractual obligations.” American Airlines, Inc. v.
Metzler, 958 F. Supp. 273, 277 (N.D. Tex. 1997). According to the
district court, this section “neither requires affirmative action
nor prohibits discrimination. Section 503 simply mandates that
federal departments and agencies insert a contractual provision
into certain federal contracts with outside contractors. It places
the onus on the government, not on the private contractor.” Id. at
276.
On July 24, 1997, the district court entered final judgment
6
for American. American Airlines, Inc. v. Herman, 971 F. Supp. 1096
(N.D. Tex. 1997). The court decreed that: (1) § 503 does not
authorize the DOL to seek individual remedies, including back pay
and reinstatement, for alleged discrimination by American; (2) §
503 does not authorize the DOL to subject American to random
compliance review for alleged discrimination against individuals
with disabilities at American’s Nashville facility; (3) the
Assistant Secretary’s April 1996 Decision and Remand Order in the
ongoing administrative proceedings is set aside insofar as it
conflicts with the court’s July 24 or the April 8 orders; (4) the
DOL is permanently enjoined from administratively prosecuting
American; and (5) the issue of whether the administrative complaint
was timely is rendered moot. The Secretary timely appealed.
II. DISCUSSION
A. Final Agency Action and
Exhaustion of Administrative Remedies
The Secretary argues that the district court erred in denying
the Secretary’s motion for summary judgment based on American’s
failure to exhaust administrative remedies. Specifically, the
Secretary argues that because only four of American’s 24
affirmative defenses have been addressed in the administrative
proceeding, and because there has been no hearing and no
adjudication of liability or remedy, there has been no “final
agency action” under § 10(c) of the APA. Therefore, according to
the Secretary, the district court, and hence, this court, lack
7
subject matter jurisdiction.
While the Secretary argues that the Supreme Court’s “finality
factors” should govern our decision,4 American argues that we
should apply the “exhaustion doctrine” to decide this issue.5
Courts often decline to review an agency action because it is
not final, it is not ripe, or the petitioner did not exhaust
available administrative remedies. In many circumstances, the
three doctrines are difficult to distinguish, because the same
considerations of timing and procedural posture often can support
a holding based on ripeness, finality, or exhaustion. KENNETH C.
DAVIS & RICHARD J. PIERCE, JR., 2 ADMINISTRATIVE LAW TREATISE § 15.1 at 305-
06 (3d ed. 1994) (citing Ticor Title Ins. Co. v. Federal Trade
4
According to the Secretary, these “finality” factors are:
(1) whether the challenged action is a definitive statement of the
agency’s position; (2) whether the action has the status of law
with penalties for noncompliance; (3) whether the impact on the
plaintiff is direct and immediate; and (4) whether immediate
compliance is expected. The Secretary cites Jobs, Training &
Services, Inc. v. East Texas Council of Governments, 50 F.3d 1318,
1324 (5th Cir. 1995) (citing “ripeness” factors in Abbott Labs. v.
Gardner, 387 U.S. 136, 149-53 (1967)).
5
American argues that none of the following purposes of
exhaustion are implicated in this case: (1) to avoid premature
interruption of the administrative process; (2) to allow the agency
to develop the necessary factual background upon which decisions
should be based; (3) to permit the agency to exercise its
discretion or apply its expertise; (4) to improve the efficiency of
the administrative process; (5) to conserve scarce judicial
resources; (6) to give the agency a chance to discover and correct
its own errors; and (7) to avoid the possibility that frequent and
deliberate flouting of the administrative processes could weaken
the effectiveness of an agency by encouraging parties to ignore its
procedures. American cites McKart v. United States, 395 U.S. 185,
193-95 (1969).
8
Comm’n, 814 F.2d 731 (D.C. Cir. 1987), in which each of the panel
judges relied on a different doctrine in reaching the same result).
“Finality and exhaustion are particularly difficult to distinguish.
Most cases can be resolved as easily through use of either of the
two doctrines. If the petitioner has not yet exhausted an
available administrative remedy, the agency’s action is not yet
final.” Id. at 306.
When, as here, the relevant administrative agency statutory
provisions do not directly provide for judicial review, the APA
authorizes judicial review only of “final agency action.” 5 U.S.C.
§ 704; Lujan v. Nat’l Wildlife Federation, 497 U.S. 871, 882
(1990). If there is no “final agency action,” as required by the
controlling statute, a court lacks subject matter jurisdiction.
Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir.
1994).
“Agency action” is defined by the APA as including “the whole
or a part of an agency rule, order, license, sanction, relief, or
the equivalent or denial thereof, or failure to act.” 5 U.S.C. §
551(13). “‘Order’ means the whole or a part of a final
disposition, whether affirmative, negative, injunctive, or
declaratory in form, of an agency in a matter other than rule
making but including licensing.” 5 U.S.C. § 551(6). See Federal
Trade Comm’n v. Standard Oil Co. of Calif., 449 U.S. 232, 238 n.7
(1980).
9
Although the APA’s finality requirement is “flexible” and
“pragmatic,” Abbott Labs., 387 U.S. at 149-50:
[a]s a general matter, two conditions must be
satisfied for an agency action to be “final”:
First, the action must mark the “consummation”
of the agency’s decisionmaking process[] -- it
must not be of a merely tentative or
interlocutory nature. And second, the action
must be one by which “rights or obligations
have been determined,” or from which “legal
consequences will flow[.]”
Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (emphasis added)
(quoting Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp., 333
U.S. 103, 113 (1948) (“[A]dministrative orders are not reviewable
unless and until they impose an obligation, deny a right or fix
some legal relationship as a consummation of the administrative
process.” (emphasis added)); Port of Boston Marine Terminal Ass’n
v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71 (1970)).
On the other hand, the Supreme Court has defined a nonfinal
agency order as one that “does not itself adversely affect
complainant but only affects his rights adversely on the
contingency of future administrative action.” Rochester Tel. Corp.
v. United States, 307 U.S. 125, 130 (1939). Under the APA, agency
action that is merely “preliminary, procedural, or intermediate” is
subject to judicial review at the termination of the proceeding in
which the interlocutory ruling is made. 5 U.S.C. § 7046; Standard
6
Section 10(c) of the APA provides in part: “ A preliminary,
procedural, or intermediate agency action or ruling not directly
reviewable is subject to review on the review of the final agency
10
Oil, 449 U.S. at 245. The APA also empowers a court with
jurisdiction to review a final agency action to “hold unlawful and
set aside agency action, findings and conclusions found to be . .
. in excess of statutory jurisdiction, authority, or limitations,
or short of statutory right.” 5 U.S.C. § 706; see also Standard
Oil, 449 U.S. at 245.
The ALJ, the Assistant Secretary, and the parties have treated
the administrative summary disposition procedures as analogous to
Rule 56 summary judgment practice in the federal district court.
In the civil context, denials of partial summary judgment are
generally considered interlocutory orders, not subject to immediate
review. See Aldy v. Valmet Paper Mach., 74 F.3d 72, 75 (5th Cir.),
cert. denied, 519 U.S. 817 (1996). Courts have analogized the
requirement of “final agency action” in § 10(c) of the APA to the
final judgment requirement of 28 U.S.C. § 1291. See DRG Funding
Corp. v. Secretary of Housing and Urban Dev., 76 F.3d 1212, 1220
(D.C. Cir. 1996) (Ginsburg, J., concurring) (“Our analysis of the
finality requirement imposed by the APA is properly informed by our
analysis of that requirement in § 1291. . . . ‘To effectuate
[their] common purpose, courts have permitted interlocutory appeals
under both statutes only in exceptional cases, a requirement that
partakes of similar meanings in both contexts.’”); State of Alaska
action.” 5 U.S.C. § 704.
11
v. Federal Energy Regulatory Comm’n, 980 F.2d 761, 763-64 (D.C.
Cir. 1992). See also Newport Shipbuilding & Repair, Inc. v.
Roundtree, 723 F.2d 399, 400 (5th Cir.) (en banc) (the required
finality for reviewability of order of Benefits Review Board under
LHWCA follows “the contours of the finality-requirement under 28
U.S.C. § 1291 for appealability of decisions of the district
courts”), cert. denied, 469 U.S. 818 (1984); Coca-Cola Co. v.
Federal Trade Comm’n, 475 F.2d 299, 304 (5th Cir.) (“If trial
courts are insulated from this kind of interference, . . .
certainly administrative tribunals ought to be and, indeed, they
generally have been immune from interlocutory review of procedural
rulings.”), cert. denied, 414 U.S. 877 (1973). While the Judicial
Code contains exceptions allowing appeals from interlocutory
district court orders (FED. R. CIV. P. 54(b), 28 U.S.C. § 1292(b)),
the APA has no such exception for interlocutory agency decisions.
See DRG Funding, 76 F.3d at 1215; State of Alaska, 980 F.2d at 764.
The Supreme Court has declared that the denial of judicial
review, where the order sought to be reviewed only affects rights
adversely “on the contingency of future administrative action,”
“does not derive from a regard for the special functions of
administrative agencies.” Rochester Tel., 307 U.S. at 130, 131.
Instead, such judicial abstention over tentative or interlocutory
administrative orders “is merely an application of the traditional
criteria for bringing judicial action into play. Partly, these
12
have been written into [the ‘Cases’ and ‘Controversies’ section of]
Article 3 of the Constitution. . . . Partly they are an aspect of
the procedural philosophy pertaining to the federal courts whereby,
ever since the first Judiciary Act, Congress has been loathe to
authorize review of interim steps in a proceeding.” Id. at 131.
The Assistant Secretary’s April 1996 Decision and Remand Order
ruling in favor of the OFCCP and against American on four of its
defenses did not decide the merits of the OFCCP’s administrative
complaint against American for discriminatory employment practices
in violation of § 503. The Assistant Secretary’s order did not
complete the administrative proceedings, nor was it meant to do so.
After rejecting four of American’s defenses, the Assistant
Secretary remanded to the ALJ for further proceedings on the merits
of the OFCCP’s complaint. Agency orders which remand to an
administrative law judge for further proceedings are not final
orders subject to judicial review. See Newpark Shipbuilding, 723
F.2d at 406. The DOL has not yet made a final determination on the
two issues which are at the heart of the present controversy:
whether American violated § 503 and its implementing regulations by
discriminating against qualified disabled job applicants; and, if
so, whether sanctions are appropriate, and whether American is
liable for make-whole relief for individual victims of disability-
based discrimination. See Pennzoil Co. v. Federal Energy
Regulatory Comm’n, 742 F.2d 242, 244 (5th Cir. 1984). Guided by
13
the foregoing authorities, we conclude that the Assistant
Secretary’s disposition was tentative or otherwise interlocutory in
nature. Therefore, the decision is not a final agency action
because it did not “mark the ‘consummation’ of the agency’s
decisionmaking process.” See Spear, 520 U.S. at 177-78.
The foregoing general rules are tempered by the Supreme
Court’s “pragmatic” and “flexible” finality analysis. In Federal
Trade Commission v. Standard Oil of California, 449 U.S. 232
(1980), the Supreme Court reworked its rigid test for judicial
review of agency decisions established in Abbott Laboratories,
replacing it with a new “finality” analysis for determining the
reviewability of interlocutory agency decisions. In Standard Oil,
the Federal Trade Commission (“FTC”) filed an administrative
complaint against the respondent, Standard Oil of California
(“Socal”), alleging that the company had violated the Federal Trade
Commission Act (“FTC Act”) by conspiring with other oil producers
to fix gasoline prices. Id. at 234. While an adjudication of the
complaint’s charges were pending before an administrative law
judge, Socal unsuccessfully moved to have the FTC withdraw its
complaint. Id. at 234-35 & n.4. Thereafter, Socal filed a
complaint against the FTC seeking an order declaring that the
issuance of the complaint was unlawful and requiring that the
complaint be withdrawn. Id. at 235.
The Supreme Court in Standard Oil found the exhaustion
14
doctrine to be of only limited usefulness in the context of
deciding the reviewability of interlocutory agency decisions.
According to the Court, exhaustion requires only that a party
seeking review appeal the decision at issue through all available
administrative channels. Id. at 243. The Court noted that the
respondent, Socal, which argued that it had exhausted its
administrative remedies by moving in the adjudicatory proceedings
for dismissal of the complaint, had “mistaken exhaustion for
finality.” Id. According to the Court, while Socal admittedly may
have exhausted its administrative remedies, the FTC’s refusal to
dismiss its complaint “d[id] not render the complaint a
‘definitive’ action” because it did not “augment the complaint’s
legal force or practical effect upon Socal[,] [n]or d[id] the
refusal diminish the concerns for efficiency and enforcement of the
Act.” Id. The Court reasoned that the averments in the
administrative complaint served only as a “prerequisite” to the
“definitive agency position,” which would be “whether Socal
violated the Act.” Id. at 241-42.
The Court concluded that the issuance of the complaint
alleging that Socal violated the FTC Act was not a “final agency
action” under the APA because: (1) it was not a definitive ruling
or regulation; (2) it had no legal force or practical effect on
Socal’s daily business other than the disruptions that accompany
any major litigation; and (3) immediate review would serve neither
15
efficiency nor enforcement of the FTC Act. Id. at 243.
The Court then proceeded to address Socal’s additional
arguments that: (1) without immediate judicial review it would be
irreparably harmed, and its challenge would be insulated from any
review if considered along with the FTC’s decision on the merits;
and (2) its claim of illegality in the issuance of the complaint
was a “collateral order” subject to immediate review.
The Standard Oil Court disagreed with Socal’s assertion that
it would be irreparably harmed by the expense and disruption of
defending itself in protracted adjudicated proceedings. Id. at
244. While the Supreme Court had no doubt “that the burden of
defending this proceeding [would] be substantial,” it declared that
“‘the expense and annoyance of litigation is “part of the social
burden of living under government.”’” Id. (quoting Petroleum
Exploration, Inc. v. Public Service Comm’n of Ky., 304 U.S. 209,
222 (1938)). The Court reiterated that “‘[m]ere litigation
expense, even substantial and unrecoupable cost, does not
constitute irreparable injury.’” Id. (quoting Renegotiation Bd. v.
Bannercraft Clothing Co., 415 U.S. 1, 23 (1974)).
The Court also pointed out that because § 10(c) of the APA (5
U.S.C. § 704) provides that “preliminary, procedural, or
intermediate agency action” that is not directly reviewable is
subject to review on the review of final agency action, and because
§ 10(e) (5 U.S.C. § 706) empowers a court of appeals to “hold
16
unlawful and set aside agency action . . . found to be . . .
without observance of procedure required by law,” a court of
appeals reviewing any cease and desist order “has the power to
review alleged unlawfulness in the issuance of a complaint.” Id.
at 245.7
Finally, the Court rejected Socal’s argument that its claim
that the FTC unlawfully filed a complaint against it was subject to
review under the “collateral order doctrine” of Cohen v. Beneficial
Loan Corp., 337 U.S. 541 (1949).8 According to the Court, issuance
of the complaint by the FTC “is a step toward, and will merge in,
the Commission’s decision on the merits. Therefore, review of this
preliminary step should abide review of the final order.” Standard
Oil, 449 U.S. at 246.
This court in Pennzoil Co. v. Federal Energy Regulatory
Commission, 742 F.2d 242 (5th Cir. 1984), used a similar analysis
in addressing the “finality” requirement in its context as one of
7
The Court also pointed out that because “one of the
principal reasons to await the termination of agency proceedings is
‘to obviate all occasion for judicial review,’ . . . the
possibility that Socal’s challenge may be mooted in adjudication
warrants the requirement that Socal pursue adjudication, not
shortcut it.” Id. at 244 n.11.
8
A collateral order is a conclusive decision by a trial judge
on an important issue completely separate from the merits of the
case, such as a procedural or evidentiary question, that is
effectively unreviewable on appeal from a final judgment. Coopers
& Lybrand v. Livesay, 437 U.S. 463, 468 (1978).
17
the four “ripeness” factors outlined in Abbott Laboratories.9 In
Pennzoil, a case procedurally similar to the present case, this
court refused to review an “interlocutory order” of the FERC,
denying summary judgment in a proceeding under the National Gas Act
because the Commission’s order was not “ripe” for review under the
Abbott test. Although Pennzoil applied a “ripeness” test, it is
instructive because the court examined one of the criteria for
determining whether an issue is ripe for review, i.e., whether the
challenged agency action constitutes “final agency action” within
the meaning of the APA. Id. at 244. This court concluded that
review was inappropriate because:
[t]he Commission has not yet made a final
determination on the two issues which are at
the heart of the present controversy. . . . At
this point in the proceeding the Commission
has, at most, simply denied Pennzoil’s Motion
For Summary Judgment. The Commission will
have another opportunity to rule on Pennzoil’s
contentions when it reviews the ALJ’s decision
at the conclusion of the proceeding before
him. Were we to intervene with judicial
review at this stage in the proceeding, we
would be “den[ying] the agency an opportunity
to correct its own mistakes and to apply its
9
Because “finality” is only one of the four “ripeness”
factors, an agency action may be final without being ripe. Dow
Chem. v. United States Envtl. Protection Agency, 832 F.2d 319, 324
n.30 (5th Cir. 1987). Thus, even when an interlocutory agency
decision is “final,” this court has long imposed a ripeness
requirement, even where the statute authorizing its review did not
do so. See Texas v. United States Dept. of Energy, 764 F.2d 278,
283 (5th Cir.), cert. denied, 474 U.S. 1008 (1985). Because we
conclude that the Assistant Secretary’s Decision and Remand Order
is not a “final agency action,” we need not address whether the
decision is ripe for our review.
18
own expertise.” Moreover, such piecemeal
judicial review before the agency has an
opportunity to express its final views would
contravene the sound policies favoring
judicial and administrative economy.
Id. at 244-45 (internal citation omitted) (quoting Standard Oil,
449 U.S. at 242).
In light of these authorities, we now turn to American’s
arguments in support of judicial intervention in the ongoing
administrative proceeding, applying the Standard Oil “pragmatic”
factors to be used in assessing finality, which include: (1) the
legal and practical effect of the agency action; (2) the
definitiveness of the ruling; (3) the availability of an
administrative solution; (4) the likelihood of unnecessary review;
and (5) the need for effective enforcement of the Act. Standard
Oil, 449 U.S. at 242-43.
American argues that forcing it to wait to litigate “seminal
issues” until the parties try 96 cases of alleged disability
discrimination is “outrageous” and a “huge waste of agency and
judicial resources.” However, as the Supreme Court has emphasized,
the expense and annoyance of litigation does not constitute
irreparable injury that would justify an exception to the finality
rule. Id. at 244; see also Pennzoil, 742 F.2d at 244 (“‘[T]he only
impact which [Pennzoil] . . . would suffer if [the order] . . . is
not now reviewed is delay in final resolution of the . . .
proceedings now in progress.’ We do not believe that the burden of
19
participating in the proceeding before the ALJ is sufficient to
constitute the requisite irreparable harm to Pennzoil.”).
Furthermore, because the administrative proceedings are ongoing,
the effect of judicial review “is likely to be interference with
the proper functioning of the agency and a burden for the courts.
. . . Intervention also leads to piecemeal review which at the
least is inefficient and upon completion might prove to have been
unnecessary.” Standard Oil, 449 U.S. at 242. See also Pennzoil,
742 F.2d at 244-45.
American also argues that it would be futile for it to pursue
the administrative process because the DOL already has “finally and
definitively rejected each of American’s challenges to its
statutory and regulatory authority.” However, “[t]he requirement
that the reviewable order be ‘definitive’ in its impact on the
rights of the parties is something more than a requirement that the
order be unambiguous in legal effect. It is a requirement that the
order have some substantial effect which cannot be altered by
subsequent administrative action.” Atlanta Gas Light Co. v.
Federal Power Comm’n, 476 F.2d 142, 147 (5th Cir. 1973) (emphasis
added); Pennzoil, 742 F.2d at 245 (“We are disinclined to review
the Commission’s order at this point since it has no direct and
immediate impact on Pennzoil that cannot be altered by subsequent
Commission action. . . .”). In the present case, American may
prevail on the merits in the administrative action, thereby mooting
20
its judicial challenge. This possibility warrants the requirement
that American pursue administrative adjudication, not shortcut it.
See Standard Oil, 449 U.S. at 244 n.11.10
Moreover, as the Supreme Court reasoned in applying an
analogous statutory requirement of a final agency decision (§
205(g) of the Social Security Act), “a ‘final decision’ is a
statutorily specified jurisdictional prerequisite. The requirement
is, therefore, . . . something more than simply a codification of
the judicially developed doctrine of exhaustion, and may not be
dispensed with merely by a judicial conclusion of futility. . . .”
Weinberger v. Salfi, 422 U.S. 749, 766 (1975) (emphasis added).11
10
“[O]ne of the principal reasons to await the termination of
agency proceedings is ‘to obviate all occasion for judicial
review.’” Id.
11
In an earlier case, the Supreme Court elaborated on
practical reasons for rejecting specious futility arguments based
on probabilities rather than on certainty:
It is urged in this case that the Commission
had a predetermined policy on this subject. .
. . While this may well be true, the
Commission is obliged to deal with a large
number of like cases. Repetition of the
objection in them might lead to a change of
policy, or, if it did not, the Commission
would at least be put on notice of the
accumulating risk of wholesale reversals being
incurred by its persistence.
United States v. Los Angeles Tucker Truck Lines, Inc., 344 U.S. 33,
37 (1952) (quoted in Power Plant Div., Brown & Root v. Occupational
Safety and Health Review Comm’n, 673 F.2d 111, 115 (5th Cir. Unit
B 1982) (noting that “we are dealing with a case of only ‘probable’
futility, that is, a case where the Commission is empowered to
accept the omitted argument but is unlikely to do so. Where the
Commission would be without power or authority to act on the
objection, however, an extraordinary circumstance might exist.”)).
21
Other than imposing on American the burden of defending itself
in the administrative proceeding, American has not explained how
the Assistant Secretary’s order has had a “direct and immediate
impact” upon American by affecting or determining its rights and
obligations. The intermediate decision of the DOL has no “legal
force or practical effect” on American’s daily business other than
the disruption of litigation. See Standard Oil, 449 U.S. at 243.
This is not a case in which “no further administrative proceedings
are contemplated.” See Abbott Labs., 387 U.S. at 149. Further
proceedings are required before the DOL can issue an order which
has conclusive legal consequences. The pending administrative
proceedings which American seeks to have courts short-circuit will
determine American’s ultimate rights and obligations, and, may
avert judicial review altogether.
Hence, the Assistant Secretary’s interlocutory order denying
American’s motion for summary judgment is not a “final agency
action” necessary to invoke immediate review under the APA.
B. The Leedom v. Kyne Exception to Finality
Although the requirement of a “final agency action” in APA §
10(c) is a statutory bar to judicial review, American asks that we
apply the narrow exception set forth in Leedom v. Kyne, 358 U.S.
184 (1958), that permits judicial intervention -- even when the
relevant statutory language precludes jurisdiction -- when an
agency exceeds the scope of its delegated authority or violates a
22
clear statutory mandate. See Kirby Corp. v. Pena, 109 F.3d 258,
268 (5th Cir. 1997). American argues that under Kyne, this court
has jurisdiction to decide American’s challenge that the DOL has
exceeded its statutory authority under § 503 by administratively
prosecuting American for discriminatory employment practices.
Courts, however, generally have interpreted Kyne as
sanctioning the use of injunctive powers only in a very narrow
situation in which there is a “plain” violation of an unambiguous
and mandatory provision of the statute. See Boire v. Miami Herald
Pub. Co., 343 F.2d 17, 21 (5th Cir.), cert. denied, 382 U.S. 824
(1965). Under Kyne, access to the courts is accorded only if the
agency’s interpretation “is infused with error which is of a summa
or magna quality as contraposed to decisions which are simply cum
error. Only the egregious error melds the [agency’s] decision into
justiciability. Lesser malignancies thwart the jurisdiction of the
courts.” United States v. Feaster, 410 F.2d 1354, 1368 (5th Cir.
1969). Finally, the exception allowing review of an “agency action
allegedly ‘in excess of authority’ must not simply involve a
dispute over statutory interpretation. . . . [T]he agency’s
challenged action [must be] so contrary to the terms of the
relevant statute that it necessitates judicial review independent
of the review provisions of the relevant statute.” Kirby, 109 F.3d
at 269 (citing Kyne, 358 U.S. at 188).
In Kyne, moreover, the lawlessness of the agency’s action was
23
conceded by the agency itself. Kyne, 358 U.S. at 187.12 See also
Oestereich v. Selective Serv. Sys. Local Bd. No. 11, 393 U.S. 233,
237-38 (1968) (“We deal with conduct of a local [Selective Service]
Board that is basically lawless. . . . The case we decide today
involves a clear departure by the Board from its statutory
mandate.”). In the present case, American’s challenge to the
Assistant Secretary’s decision that § 503 and the DOL’s regulations
authorize the OFCCP to bring an administrative proceeding against
American for violations of the nondiscrimination obligations in its
government contract involves a dispute over whether an agency
charged with a statute’s implementation has interpreted it
correctly, which is not the sort of “egregious” error envisioned by
the Supreme Court in Kyne.
Moreover, an important element underlying the decision in Kyne
was the fact that the Board’s egregious disregard for the plain
words of the Act would wholly deprive the union of a meaningful and
adequate means of vindicating its rights. See MCorp, 502 U.S. at
43. Kyne is inapposite here because § 10(e) of the APA expressly
provides American with a meaningful and adequate opportunity for
judicial review of the validity of the DOL regulations. See 5
12
Kyne involved an action in district court challenging a
determination by the National Labor Relations Board that a unit
including both professional and nonprofessional employees was
appropriate for collective-bargaining purposes -- a determination
in direct conflict with an explicit provision of the National Labor
Relations Act. See Board of Governors of Fed. Reserve Sys. v.
MCorp Fin., Inc., 502 U.S. 32, 42 (1991).
24
U.S.C. § 706. If and when the Administrative Review Board finds
that American has violated the Act and its regulations, American
will have, in the court of appeals, “an unquestioned right to
review of both the regulation and its application.” See McCorp,
502 U.S. at 43-44.
For the foregoing reasons, American’s challenge does not fall
within the narrow Kyne exception to the rule precluding direct
review of nonfinal agency orders. Therefore, the district court’s
failure to dismiss American’s complaint for lack of subject matter
jurisdiction cannot be justified as a proper application of that
rarely invocable precedent.
III. CONCLUSION
Neither the ALJ, the Assistant Secretary, nor the
Administrative Review Board has ruled on the merits of the OFCCP’s
claim that American discriminated in employment on the basis of
disability. Thus while the Assistant Secretary tentatively has
affirmed the OFCCP’s authority to administratively enforce
American’s federal contractual obligation not to discriminate based
on disability, he has not yet considered whether American violated
its contractual duty, and if so, what sanctions or individual
remedies are appropriate. If the DOL’s administrative review ends
with the conclusion that American has not breached its contractual
obligation not to discriminate, American will have no reason to
seek a judicial determination of the OFCCP’s enforcement authority.
25
Grants of partial summary disposition by an agency are
generally considered interlocutory orders not subject to immediate
review. American has not demonstrated that it will suffer
irreparable injury that cannot be remedied by petitioning for
review at the conclusion of the administrative proceedings.
Accordingly, we reverse the district court’s judgment, and dismiss
the complaint for lack of subject matter jurisdiction.
REVERSED and DISMISSED FOR LACK OF JURISDICTION
26
American Airlines, Inc. v. Herman
Court: Court of Appeals for the Fifth Circuit
Date filed: 1999-05-18
Citations: 176 F.3d 283
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