United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 12, 2000 Decided March 13, 2001
No. 99-5326
Dynaquest Corp., d/b/a A.C.L., et al.,
Appellants
v.
United States Postal Service,
Appellee
Appeal from the United States District Court
for the District of Columbia
(No. 98cv00564)
Max Kravitz argued the cause for appellants. With him on
the briefs was David B. Smith.
David T. Smorodin, Assistant U.S. Attorney, argued the
cause for appellee. With him on the brief were Wilma A.
Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S.
Attorney.
Before: Henderson, Randolph and Garland, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Garland.
Garland, Circuit Judge: Dynaquest Corp. seeks the re-
lease of funds held in escrow in connection with administra-
tive proceedings brought against the company by the United
States Postal Service. Various incarnations of Dynaquest's
claims have been heard by numerous courts--including this
court and the United States Court of Appeals for the Sixth
Circuit--over a period spanning ten years. We conclude that
Dynaquest's present efforts to obtain the funds are barred by
the doctrine of res judicata and affirm the district court's
dismissal of Dynaquest's complaint.
I
Dynaquest, an Ohio corporation, buys and sells discontin-
ued lines, unwanted special order items, liquidated goods, and
other "distressed merchandise." It also mails unsolicited
advertisements for a training program, which includes a
manual entitled Liquidate Your Way to a Fortune, instruct-
ing purchasers in the business of asset location and liqui-
dation.
On June 7, 1990, the Postal Service filed an administrative
complaint against the company before a Postal Service Ad-
ministrative Judicial Officer (AJO) in Washington, D.C. The
complaint charged Dynaquest with "conducting a scheme for
obtaining money or property through the mail by means of
false representations," in violation of 39 U.S.C. s 3005. Post-
al Service Compl. at 1 (J.A. at 54). The complaint alleged
that the company's mailings contained eleven false represen-
tations.1 Eight days later, the Postal Service filed a separate
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1 As discussed below, three of the eleven allegations were
ultimately upheld on appeal. Dynaquest Corp. v. United States
Postal Serv., 12 F.3d 1144 (D.C. Cir. 1994). Those allegations
charged that Dynaquest falsely represented it would: (1) "assist
purchasers of [its] program to earn ... thousands of dollars without
the need ... to make any additional payments to [Dynaquest]," (2)
action in the United States District Court for the Southern
District of Ohio, pursuant to 39 U.S.C. s 3007, seeking a
temporary restraining order and preliminary injunction di-
recting the detention of Dynaquest's mail pending the resolu-
tion of the s 3005 administrative proceedings. Section 3007
authorizes the district court in the district in which a defen-
dant receives its mail to enter such interim relief. 39 U.S.C.
s 3007(a).
The Ohio district court issued a temporary restraining
order under s 3007, directing the Postal Service to hold all
checks and accompanying information mailed in response to
the Dynaquest advertisements, and scheduled a hearing on
the Postal Service's motion for a preliminary injunction for
June 21, 1990. Prior to commencement of the hearing, the
parties entered into--and the court approved--an "Agreed
Order." The Agreed Order required that all checks and
applications be returned to prospective customers, along with
a "bounce-back" letter "clarifying" Dynaquest's offer and
asking whether the customers still wished to purchase Dyna-
quest's services. Agreed Order at 1-2 (J.A. at 51-52). The
Order further directed the Postal Service to forward any
checks sent by customers who had received bounce-back
letters to a co-administered escrow account. Finally, the
parties stipulated that the Agreed Order would remain in
effect until "the final disposition of the administrative com-
plaint," id. at 1 (J.A. at 51), which would "be deemed to occur
after the conclusion of any appeal by [Dynaquest] from the
... decision of the Postal Service Judicial Officer," id. at 2-3
(J.A. at 52-53).
Following entry of the Agreed Order, the parties proceeded
to litigate the s 3005 proceeding in Washington, D.C., and
then returned to Ohio to litigate the s 3007 proceeding. In
1996, Dynaquest once again went to Washington to file the
pleadings that led to the instant appeal. We describe each of
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"pay a hundred dollars ($100.00) in cash to any addressee who
purchases [the] program," and (3) "provide purchasers of the pro-
gram with comprehensive training in the merchandise liquidation
field." Postal Service Compl. pp 10(d), (g), (i) (J.A. at 56-57).
these three courses of litigation below, in order to provide the
background necessary to understand our disposition of this
case.
A
During the summer of 1990, the AJO conducted a full trial-
type hearing in the s 3005 proceeding in Washington, D.C.
Following the hearing, the AJO concluded that Dynaquest
had violated the statute by making four of the materially false
representations alleged in the Postal Service's complaint. In
re A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv. Dec. 28,
1990). Dynaquest was ordered to cease and desist from
making those representations.
On March 18, 1991, Dynaquest moved for reconsideration
of the AJO's decision, challenging the false representation
findings and requesting the release of the funds held in
escrow. Resp't Mot. for Recons. (J.A. at 259). With respect
to the latter request, Dynaquest argued that because the
escrow funds were sent by customers who had received the
bounce-back letters, any initial misrepresentations had been
cured. Thus, Dynaquest argued, it would be unjust to de-
prive the company of those funds. Id. at 12-16 (J.A. at 270-
74).
The AJO denied Dynaquest's motion in its entirety. In re
A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv. May 15,
1991). He rejected the company's challenges to the false
representation findings, and dismissed the request for the
release of funds on the ground that the escrow accounts had
been established under the Agreed Order of the district court
in Ohio. Only that court, the AJO held, had jurisdiction over
the interpretation and enforcement of its own Order. Id. at
4.
Dynaquest sought review of the AJO's decisions in the
United States District Court for the District of Columbia,
pursuant to the Administrative Procedure Act, 5 U.S.C.
ss 701-706 (1994). It sought a declaratory judgment that the
false representation findings were not supported by substan-
tial evidence and an injunction against enforcement of the
AJO's order. Dynaquest did not, however, reassert its claim
that the bounce-back letters had cured any alleged misrepre-
sentations, nor did the company otherwise appeal the AJO's
determination that he lacked jurisdiction over the escrow
funds. On cross motions for summary judgment, the district
court affirmed the AJO's findings regarding three of the four
representations, vacated the fourth, and sustained the Postal
Service's order. Dynaquest Corp. v. United States Postal
Serv., No. 91-1582 (D.D.C. Mar. 5, 1992). Dynaquest appeal-
ed to this court, contending that two of the three findings
upheld by the district court were not supported by substantial
evidence. We affirmed the district court's decision on Janu-
ary 18, 1994. Dynaquest Corp. v. United States Postal Serv.,
12 F.3d 1144 (D.C. Cir. 1994). Dynaquest did not seek
further review.
B
In early 1994, the parties filed cross motions for summary
judgment in the still-pending s 3007 proceeding in the South-
ern District of Ohio, seeking to resolve the disposition of the
escrow funds. On June 2, 1994, the district court granted
judgment for the Postal Service and directed that the funds
be returned to Dynaquest's customers. United States Postal
Serv. v. Klass, No. C2-90-450, slip op. at 9, 11 (S.D. Ohio
June 2, 1994). The court interpreted the language of the
Agreed Order to require that, upon final disposition of the
administrative complaint, the funds were to go to the party
prevailing in the s 3005 proceeding in Washington. Id. at 9.
This interpretation was confirmed, the court said, by state-
ments of Dynaquest's counsel at a status conference held in
the s 3007 proceeding in February 1992. Id. at 9-10. In
light of this circuit's affirmance of the AJO's findings of
misrepresentation, and Dynaquest's failure to seek further
review, the Ohio district court concluded that final disposition
of the s 3005 administrative complaint had occurred and that
the Postal Service was the prevailing party. Id. at 8-9. The
court rejected as irrelevant Dynaquest's claim that the
bounce-back letters had cured the misrepresentations. Sec-
tion 3007 did not give it authority to make such a determina-
tion, the court said. Whether customers were misled was a
question for the s 3005 proceeding, and that proceeding was
now closed. Id. at 9-10.
Dynaquest appealed the Ohio district court's refusal to
award it the escrow funds to the United States Court of
Appeals for the Sixth Circuit. The company made two
principal points. First, it argued that the district court erred
in not determining whether the bounce-back letters cured the
misrepresentations. The Sixth Circuit rejected this argu-
ment, holding that the district court was indeed without
authority to decide, in a s 3007 proceeding, whether the
bounce-back letters violated the false representations statute.
That, the court said, could only have been decided in the
s 3005 proceeding in Washington, and Dynaquest should
have amended its administrative pleadings to raise the issue
there. United States Postal Serv. v. Klass, 74 F.3d 1241,
1996 WL 20504, at *2 (6th Cir. Jan. 18, 1996) ("Section 3007
specifies that the district court issuing the injunction has no
authority to 'determine any fact at issue in the statutory
proceeding.' " (quoting 39 U.S.C. s 3007(a) (repealed 1999))).
Second, Dynaquest argued that the district court erred in
construing the Agreed Order to require disposition of the
escrow funds to the victor in the s 3005 proceeding. More-
over, the company insisted, the court further erred in inter-
preting its counsel's statements as confirming that view.
Once again, the Sixth Circuit disagreed, this time on the
merits:
[F]orwarding the money to Dynaquest would violate the
intent of the parties when they entered into the agree-
ment. Statements from the injunction hearing indicate
the parties' understanding that Dynaquest would not
receive the funds unless it prevailed on all of the claims
of misrepresentation. The record clearly demonstrates
Dynaquest's expectation that it would not receive the
escrowed funds unless it prevailed.
Id. (citation omitted). By the terms of the Agreed Order, the
Sixth Circuit held, Dynaquest could not obtain the escrow
funds unless it defeated all of the allegations of misrepresen-
tation. Id. Because Dynaquest had not, the court affirmed
the award of the escrow funds to the Postal Service. Id. at
*3.2
C
On June 19, 1996, Dynaquest returned to Washington to
file a motion with the AJO seeking, inter alia, an order
directing release of the escrow funds. Dynaquest argued
that the Postal Service did not have authority under the
AJO's original order to return remittances to those who had
received bounce-back letters. Dynaquest Mot. at 16 (J.A. at
35). Dynaquest also argued that it had never received a
hearing on the merits of its claim that it was entitled to the
escrow funds because the bounce-back procedures had cured
any misrepresentations in its initial solicitations. Id.
On December 30, 1997, the AJO denied Dynaquest's re-
quest. In re A.C.L., P.S. Docket No. 36/90 (U.S. Postal Serv.
Dec. 30, 1997). The AJO held that "the disposition of the
escrowed funds is essentially a question of interpreting the
provisions of the Agreed Order that was negotiated by the
parties and issued by the United States District Court for the
Southern District of Ohio." Id. at 5. That court, the AJO
said, had concluded that Dynaquest "had failed to prevail in
the s 3005 proceedings, and that under the terms of the
Agreed Order the funds held in escrow were to be returned
to the consumers who had ordered [Dynaquest's] materials."
Id. Moreover, the AJO stressed, the Sixth Circuit had
affirmed the district court's order, concluding that Dynaquest
was "precluded from receiving the escrowed funds by the
terms of the Agreed Order that [it] entered into." Id. at 5-6.
Dynaquest's current motion was, therefore, "in effect, a col-
__________
2 Although the Southern District of Ohio stated that the escrow
funds should be returned to Dynaquest's customers, the Sixth
Circuit described the district court's order as awarding the funds to
the Postal Service. The Postal Service has indicated that once it
gains possession of the funds, it intends to release them to the
customers. Further action regarding release of the funds has been
stayed, however, pending resolution of this appeal.
lateral attack on the judgments of those two courts and seeks
to have the Judicial Officer overrule the courts and direct that
the funds held in escrow be paid" to Dynaquest. Id. at 6.
That, the AJO concluded, he did "not have the authority to
do." Id.
On March 5, 1998, Dynaquest sought review of the AJO's
decision in the United States District Court for the District of
Columbia. On August 2, 1999, the district court found that
Dynaquest's motion for release of the escrow funds was
barred by the res judicata effect of the initial, 1990 proceed-
ing before the AJO. "Dynaquest's claim that any false
representations in its solicitations were cured by the bounce-
back letters," the court said, "was within the purview of the
[1990] administrative proceeding. Dynaquest's failure to liti-
gate this issue constitutes a waiver of its right to raise it in
subsequent proceedings." Dynaquest Corp. v. United States
Postal Serv., No. 98-0564, slip op. at 5-6 (D.D.C. Aug. 2,
1999) (citations omitted). On September 27, 1999, Dynaquest
filed a notice of appeal.3
II
Although the course that led the parties to this court was a
tortuous one, disposition of this appeal is not equally difficult.
The United States District Court for the Southern District of
Ohio concluded that, by the terms of the Agreed Order
approved by that court, Dynaquest was not entitled to the
escrow funds. The Sixth Circuit agreed, holding that "the
intent of the parties when they entered into" the Agreed
Order was that "Dynaquest would not receive the [escrow]
funds unless it prevailed on all of the claims of misrepresenta-
tion." Dynaquest, 1996 WL 20504, at *2. Because Dyna-
quest had not prevailed on all of the misrepresentation
__________
3 We note that 39 U.S.C. s 3007 was subsequently amended on
December 12, 1999, effective 120 days later, to provide: "If any
order is issued under [s 3007(a)] and the proceedings under section
3005 are concluded with the issuance of an order under that section,
any judicial review of the matter shall be in the district in which the
order under [s 3007(a)] was issued." 39 U.S.C. s 3007(b).
claims, the Sixth Circuit affirmed the award of the funds to
the Postal Service. Id. at *3. Dynaquest sought no further
review.
The Sixth Circuit's ruling is a final decision on the merits.
The AJO correctly concluded that he was bound by that
decision under the doctrine of res judicata. See Allen v.
McCurry, 449 U.S. 90, 94 (1980) ("Under res judicata, a final
judgment on the merits of an action precludes the parties or
their privies from relitigating issues that were or could have
been raised in that action."); Commissioner v. Sunnen, 333
U.S. 591, 601 (1948).4 This court is likewise so bound.
Although Dynaquest argues, vehemently, that the Sixth Cir-
cuit misconstrued both the language of the Agreed Order and
the statements of its counsel, those issues are foreclosed from
our consideration. See Federated Dep't Stores, Inc. v. Moitie,
452 U.S. 394, 398 (1981) ("Nor are the res judicata conse-
quences of a final, unappealed judgment on the merits altered
by the fact that the judgment may have been wrong....").
The place for Dynaquest to have raised those concerns was in
a petition for rehearing en banc to the Sixth Circuit, or in a
petition for certiorari to the United States Supreme Court.
This circuit, however, has no authority to collaterally review
the decisions of a sister circuit. See id. ("A judgment merely
voidable because based upon an erroneous view of the law is
not open to collateral attack, but can be corrected only by a
direct review...." (citation omitted)); Fort Sumter Tours,
Inc. v. Babbitt, 202 F.3d 349, 354 (D.C. Cir. 2000).
Dynaquest further contends that res judicata cannot bar its
claim regarding the curative effect of the bounce-back letters,
because neither the Sixth Circuit nor the Southern District of
Ohio decided that claim on the merits. Rather, Dynaquest
notes, those courts merely held themselves without authority
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4 We use "res judicata" in its generic sense to include the
concepts of both issue preclusion (also known as "collateral estop-
pel") and claim preclusion. Because the meaning and effect of the
Agreed Order were litigated by the parties and decided by the
court, issue preclusion is the specific concept at work here. See
Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1
(1984); 18 Charles Alan Wright, Arthur R. Miller, & Edward H.
Cooper, Federal Practice and Procedure s 4402, at 6-8 (1981).
to decide the claim, on the ground that only the AJO in the
s 3005 proceeding had such authority. See 18 Wright, Mil-
ler, & Cooper s 4402, at 11 ("Dismissal of a suit for want of
federal subject matter jurisdiction, for example, should not
bar an action on the same claim in a court that does have
subject matter jurisdiction...."). Moreover, Dynaquest con-
tinues, both the Sixth Circuit and the district court in the
present litigation erred in stating that the company had not
raised the issue before the AJO. As Dynaquest correctly
points out, it did raise the issue in its 1991 motion for
reconsideration, where it was met by the AJO's ruling that he
lacked jurisdiction to decide the question. See In re A.C.L.,
P.S. Docket No. 36/90, slip op. at 4 (U.S. Postal Serv. May 15,
1991); Resp't Mot. for Recons. at 16 (J.A. at 274).
Unfortunately for Dynaquest, whatever the validity of its
arguments about the merits of the bounce-back cure, or about
our jurisdiction to resolve that issue, those arguments are
now moot. Their only relevance in the present case is to the
question of whether the escrow funds should be released to
Dynaquest. But the Sixth Circuit has already construed the
Agreed Order to bar release of the escrow to Dynaquest--
irrespective of any bounce-back cure--because three of the
company's initial representations were found to have been
false. Accordingly, resolving the bounce-back question would
have no impact on disposition of the escrow funds. And
because a favorable judicial decision on the bounce-back
question would not bring Dynaquest the redress it seeks, we
are without authority to adjudicate the issue. See Iron
Arrow Honor Soc'y v. Heckler, 464 U.S. 67, 70 (1983) ("To
satisfy the Art. III case-or-controversy requirement, a liti-
gant must have suffered some actual injury that can be
redressed by a favorable judicial decision."); see also Spencer
v. Kemna, 523 U.S. 1, 7 (1998); United States Parole
Comm'n v. Geraghty, 445 U.S. 388, 404 (1980); FDIC v.
Kooyomjian, 220 F.3d 10, 14-15 (1st Cir. 2000).5
Finally, Dynaquest contends, for the first time on this
appeal, that the decision of the AJO below is invalid because
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5 Resolution of the bounce-back question is also barred by the
doctrine of res judicata as a result of Dynaquest's failure to appeal
Postal Service AJOs are appointed in violation of the Appoint-
ments Clause of the U.S. Constitution. U.S. Const. art. II,
s 2, cl. 2. Although we normally would not permit a litigant
to present a legal theory that it failed to raise below, see
Grant v. United States Air Force, 197 F.3d 539, 542 (D.C.
Cir. 1999), courts have discretion to consider Appointments
Clause challenges raised for the first time on appeal, see
Freytag v. Commissioner, 501 U.S. 868, 878-79 (1991).6 But
as was true of the bounce-back issue, a victory on its Appoint-
ments Clause challenge would not advance Dynaquest's
__________
the AJO's jurisdictional ruling in 1991. As Dynaquest notes, it
raised the bounce-back issue in its 1991 motion for reconsideration
before the AJO. In his decision on that motion, the AJO ruled both
that Dynaquest's initial representations were false and that he
lacked jurisdiction over the bounce-back issue. Although Dyna-
quest's appeal of the AJO's order challenged the former ruling, it
did not challenge the AJO's conclusion that he was without jurisdic-
tion to decide the bounce-back question. Accordingly, that issue is
now res judicata between the parties. See Allen, 449 U.S. at 94
("Under res judicata, a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that
were or could have been raised in that action." (emphasis added));
Dozier v. Ford Motor Co., 702 F.2d 1189, 1191 (D.C. Cir. 1983)
("[T]he doctrine of res judicata applies to dismissal for lack of
jurisdiction as well as for other grounds...."); 2 Kenneth Culp
Davis & Richard J. Pierce, Jr., Administrative Law Treatise
s 13.3, at 250 (3d ed. 1994) (noting that res judicata applies to
administrative as well as judicial adjudications, and to questions of
law as well as fact).
6 We may not, however, consider challenges to the validity of
the AJO's 1990 and 1991 decisions, which were affirmed by this
court in 1994 and are no longer open to attack. Cf. Baltimore S.S.
Co. v. Phillips, 274 U.S. 316, 325 (1927) ("A judgment merely
voidable because based upon an erroneous view of the law is not
open to collateral attack, but can be corrected only by a direct
review and not by bringing another action upon the same cause.");
18 Wright, Miller, & Cooper s 4428, at 282 ("[F]ederal court
judgments are binding notwithstanding a simple lack of subject
matter jurisdiction, without regard to whether the jurisdictional
question was litigated."); id. at 282 n.29 ("An assertion of jurisdic-
cause. In the decision presently on appeal, the AJO held
nothing more than that he was without authority to grant
Dynaquest's motion for release of the escrow funds. He
based that holding on his conclusion that the Sixth Circuit's
ruling--that the district court's Agreed Order precluded such
release--bound him by the force of res judicata. As we have
just held, the AJO's resolution of this legal question was
correct. No AJO, regardless of the validity of his appoint-
ment, would have authority to decide the issue otherwise.
Indeed, the same is true of this Article III court. According-
ly, resolution of the Appointments Clause issue in Dyna-
quest's favor would bring the company no relief and would
amount to nothing more than an advisory opinion. Issuance
of such an opinion is, of course, beyond our power under
Article III. See Steel Co. v. Citizens for a Better Environ-
ment, 523 U.S. 83, 101 (1998); Hewitt v. Helms, 482 U.S. 755,
761 (1987).7
IV
The Sixth Circuit interpreted the district court's Agreed
Order as requiring that the escrow funds be awarded to the
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tion by an administrative tribunal is likely to be treated in the same
way as an assertion by a court if the decision has been subjected to
judicial review." (citing Sunshine Anthracite Coal Co. v. Adkins,
310 U.S. 381, 403 (1940))).
7 Dynaquest asserts that this court's decision in Landry v.
FDIC, 204 F.3d 1125 (D.C. Cir. 2000), establishes that it is "unnec-
essary that Dynaquest demonstrate that it was directly harmed by
the Postal Service's unconstitutional appointments mechanism" in
order to obtain judicial review of an Appointments Clause challenge.
Dynaquest Br. at 22. In Landry, we entertained such a challenge
to the authority of an FDIC Administrative Law Judge (ALJ), even
though the FDIC had itself reviewed the ALJ's decision de novo,
arguably curing any harm that might have resulted from the
alleged unconstitutional appointment. See 204 F.3d at 1132. In
Landry, however, a properly-appointed ALJ would have had au-
thority to decide Landry's case. As noted above, in this case even a
properly-appointed AJO would lack authority to collaterally review
the Sixth Circuit's decision.
Postal Service. That holding is res judicata and may not be
collaterally attacked in this court. Moreover, because that
holding leaves Dynaquest without a remedy even if it were to
obtain a favorable ruling on the additional claims it raises
here, we are without authority to adjudicate those claims.
The district court's dismissal of Dynaquest's complaint is
therefore
Affirmed.