American Airlines, Inc. v. Herman

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