UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
No. 96-1460
ASTRID L. PORTELA-GONZALEZ, ET AL.,
Plaintiffs, Appellants,
v.
SECRETARY OF THE NAVY, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., Senior U.S. District Judge]
Before
Torruella, Chief Judge,
Selya and Stahl, Circuit Judges.
Alex Gonzalez, with whom Gonzalez & Vilella was on brief,
for appellants. Isabel Mu oz Acosta, Assistant United States Attorney, with
whom Guillermo Gil, United States Attorney, was on brief, for
appellees.
March 26, 1997
SELYA, Circuit Judge. In this appeal, plaintiff- SELYA, Circuit Judge.
appellant Astrid L. Portela-Gonzalez (Portela) challenges a
summary judgment entered in favor of the Navy.1 Although our
reasoning differs in one salient respect from that employed by
the court below, we affirm the judgment. See Hachikian v. FDIC,
96 F.3d 502, 504 (1st Cir. 1996) (explaining that an appellate
court is not committed to the trial court's rationale, but may
affirm on any alternative ground made manifest by the record).
I. BACKGROUND I. BACKGROUND
The facts essential to our review are largely
uncontested. Portela worked for nearly three decades as a
civilian employee at the Roosevelt Roads Naval Station. From
1985 forward, she occupied the position of sales manager at the
Navy Exchange. She had an unblemished employment record and
achieved consistently high performance ratings.
On December 14, 1989, Portela placed 28 articles of
clothing on layaway at the Exchange, 25 of which were clearance
sale items (known colloquially as "red tag" items). The
anticipated purchase price of the merchandise was $484.10. When
the Exchange slashed the prices of all red tag items even more
drastically during the post-Christmas lull, Portela spied an
opportunity for increased savings, canceled her layaway
arrangement (paying a $5.00 penalty), and simultaneously
1Portela's husband, Juan Enrique Del Valle, and their conjugal partnership are also plaintiffs; the Secretary of the Navy and the Naval Resale and Services Support Office (NRSSO) are additional defendants. For simplicity's sake, we treat the case as involving only Portela and the Navy.
repurchased the articles she had removed from layaway status for
a price of $330.79. Portela contends that these machinations did
not transgress any policy, rule, or regulation of the Exchange;
the Navy contends otherwise.
II. THE AFTERMATH II. THE AFTERMATH
On April 9, 1990, L.H. Arcement, Jr., the Officer in
Charge (OIC) of the Navy Exchange, suspended Portela without pay
pending anticipated disciplinary action. On May 29, Arcement
notified Portela that she would be terminated for "applying an
unauthorized 40% price reduction to red tagged clothing items you
had placed on layaway in violation of the Exchange's layaway
policy, resulting in a loss to the Exchange of $197.32."2
Pursuant to the controlling administrative procedure, contained
in a Secretary of the Navy Instruction (SECNAVINST), the letter
informed Portela of the charges against her and outlined her
procedural rights.
Portela contested the proposed disciplinary action. On
June 22, 1990, the OIC overrode Portela's grievance and
terminated her employment as of July 3, 1990. The Navy advised
Portela of her right to appeal this decision and she proceeded to
do so. Her first appeal was heard pro forma by the OIC who, not
surprisingly, affirmed his original determination. Her second
appeal culminated in a full evidentiary hearing, following which
2While simple arithmetic indicates that this figure is in the vicinity of 40% of the original purchase price, the record sheds no further light on its genesis. We need not probe the point, however, because Portela does not challenge the amount.
Michael F. O'Brien, the Commanding Officer of the Roosevelt Roads
Naval Station, upheld her termination.
Portela pursued the appellate process to the next
level. On March 25, 1991, Rear Admiral H.D. Weatherson,
Commander of the NRSSO, headquartered at Staten Island, New York,
affirmed her termination. This decision informed Portela of her
right to take a final administrative appeal to the Deputy
Assistant Secretary of the Navy, Civilian Personnel Policy, Equal
Employment Opportunity Office, in Washington, D.C. Rather than
pursue this fourth level of administrative redress, Portela filed
suit.
After some preliminary skirmishing, not relevant here,
the district court addressed the Navy's motion for summary
judgment. The court ruled that Portela had failed to exhaust
available administrative remedies but nonetheless reached the
merits of her suit in the exercise of its perceived discretion.
See Portela Gonzalez v. Secretary of Navy, 913 F. Supp. 122, 126-
28 (D.P.R. 1996). Portela's victory proved ephemeral, however,
as the court concluded that the Navy's actions were neither
arbitrary nor capricious. See id. at 128. This appeal ensued.
III. DISCUSSION III. DISCUSSION
We agree with the district court that Portela
impermissibly failed to exhaust her administrative remedies. We
disagree, however, that the court had discretion, in the
circumstances of this case, to relieve her of the onus of her
omission.
A. The Exhaustion Doctrine. A. The Exhaustion Doctrine.
Starkly contoured, the exhaustion doctrine holds that
"no one is entitled to judicial relief for a supposed or
threatened injury until the prescribed administrative remedy has
been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S.
41, 50-51 (1938). In practice, the doctrine has softer edges
than this language implies. See Kenneth Culp Davis & Richard J.
Pierce, Jr., II Administrative Law Treatise 15.2, at 307 (3d
ed. 1994). Although exhaustion of administrative remedies is
absolutely required if explicitly mandated by Congress, see
McCarthy v. Madigan, 503 U.S. 140, 144 (1992), courts have more
latitude in dealing with exhaustion questions when Congress has
remained silent, see Darby v. Cisneros, 509 U.S. 137, 153-54
(1993); McCarthy, 503 U.S. at 144. In such purlieus, the court
of first instance possesses a modicum of discretion to relax the
exhaustion requirement. See Salus v. GTE Directories Serv.
Corp., 104 F.3d 131, 138 (7th Cir. 1997).
The Court's opinion in McCarthy is integral to an
understanding of the parameters of this discretion. Although
recognizing that the exhaustion doctrine ordinarily "serves the
twin purposes of protecting administrative agency authority and
promoting judicial efficiency," and, thus, should customarily be
enforced, the Court identified "three broad sets of circumstances
in which the interests of the individual weigh heavily against
requiring administrative exhaustion." McCarthy, 503 U.S. at 145,
146.
First, a court may consider relaxing the rule when
unreasonable or indefinite delay threatens unduly to prejudice
the subsequent bringing of a judicial action. See id. at 146-47.
And, relatedly, if the situation is such that "a particular
plaintiff may suffer irreparable harm if unable to secure
immediate judicial consideration of his claim," exhaustion may be
excused even though "the administrative decisionmaking schedule
is otherwise reasonable and definite." Id. at 147.
Second, McCarthy acknowledges that it sometimes may be
inappropriate for a court to require exhaustion if a substantial
doubt exists about whether the agency is empowered to grant
meaningful redress. See id. at 147-48, 154; see also Gibson v.
Berryhill, 411 U.S. 564, 574 n.14 (1973). An agency, for
example, may lack authority to grant the type of relief
requested. See, e.g., McNeese v. Board of Educ., 373 U.S. 668,
675 (1963).
Finally, McCarthy teaches that the exhaustion rule may
be relaxed where there are clear, objectively verifiable indicia
of administrative taint. Thus, if the potential decisionmaker is
biased or can be shown to have predetermined the issue, failure
to exploit an available administrative remedy may be forgiven.
See McCarthy, 503 U.S. at 148.
B. Application of the Doctrine. B. Application of the Doctrine.
Congress has excluded Navy Exchange personnel from the
strictures of the Administrative Procedure Act, see 5 U.S.C.
2105(c), and has not otherwise mandated that such employees
always must exhaust administrative remedies as a condition
precedent to suit. Accordingly, Portela's admitted failure to
exercise the final level of available administrative review is
not necessarily fatal to her claim; the effect of her omission
depends instead upon whether the circumstances of her case can
justify that omission.
1. The Availability of Fourth-Level Review. We start 1. The Availability of Fourth-Level Review.
this phase of our analysis by addressing Portela's halfhearted
argument, raised for the first time on appeal, that a fourth
level of review was not in fact available to her. The argument
is bogus.
The facts are as follows. The original administrative
procedure, SECNAVINST 5300.22A, did not mention a fourth level of
review. On November 15, 1989, however, the Secretary of the Navy
promulgated SECNAVINST 5300.22B, directing subordinate commands
to implement it within 120 days. The new regulation (5300.22B)
explicitly canceled the old regulation (5300.22A). Nevertheless,
on January 24, 1990, the Director, Officer of Civilian Personnel
Management, granted an extension to the NRSSO, deferring the
effective date of SECNAVINST 5300.22B until July 15, 1990. Thus,
the notice of suspension issued to Portela on April 9, 1990, the
notice of proposed disciplinary action issued to her on May 29,
1990, and the notice of decision dated June 22, 1990, all
referenced SECNAVINST 5300.22A as the controlling regulation.
From that point forward, however, Portela clearly
understood indeed, urged that SECNAVINST 5300.22B, which
unarguably contains a fourth level of administrative review,
governed her case. She mentioned it in her second appeal, dated
August 12, 1990, and at the ensuing evidentiary hearing her
counsel insisted that 5300.22B, rather than 5300.22A, controlled
her case. While the hearing officer did not rule on the
question, the ultimate decisionmaker at that level (the
Commanding Officer of the Roosevelt Roads Naval Station) accepted
Portela's argument and reviewed the hearing transcript in
accordance with SECNAVINST 5300.22B. Throughout the remainder of
the administrative process, both sides proceeded under that
regulation.3
We do not aspire to add hues to a rainbow. By its
terms, SECNAVINST 5300.22B applies here. And, moreover, since
Portela consistently argued for its application during the latter
stages of the administrative process, she cannot now be heard to
complain that the agency surrendered to her exhortation.
Equitable doctrines of estoppel apply in administrative and
judicial fora, see generally Davis & Pierce, supra, 13.1 to
13.5, and a party cannot take one position in an underlying
administrative proceeding and then disclaim it in a subsequent
suit arising out of the agency proceedings. Cf. Patriot Cinemas,
Inc. v. General Cinema Corp., 834 F.2d 208, 212 (1st Cir. 1987)
3We cite two episodes which confirm this conclusion. In her third-level notice of appeal, Portela stated expressly that "[t]his appeal arises under SECNAVINST 5300.22B." By like token, in resolving that appeal adversely to Portela, the NRSSO commandant specifically informed Portela of her right to a fourth-level appeal under SECNAVINST 5300.22B.
(explaining that the doctrine of judicial estoppel "precludes a
party from asserting a position in one legal proceeding which is
contrary to a position it has already asserted in another").
2. The Futility Exception. The only question that 2. The Futility Exception.
remains is whether Portela's failure to mount the final rung of
the administrative ladder is fatal to the court case. She argued
below that the court should excuse her omission, asseverating
that a final appeal to the Deputy Assistant Secretary of the Navy
would have been a futile gesture because it would have resulted
in an automatic affirmance of her dismissal. In theory, this is
a good argument. Consistent with the exceptions limned by the
McCarthy Court, we have recognized the inappropriateness of
requiring exhaustion when further agency proceedings would be
futile. See, e.g., Pihl v. Massachusetts Dep't of Educ., 9 F.3d
184, 190 (1st Cir. 1993); Christopher W. v. Portsmouth Sch.
Comm., 877 F.2d 1089, 1095 (1st Cir. 1989); Ezratty v.
Commonwealth of P.R., 648 F.2d 770, 774 (1st Cir. 1981).
But the futility exception is not available for the
asking. Reliance on the exception in a given case must be
anchored in demonstrable reality. A pessimistic prediction or a
hunch that further administrative proceedings will prove
unproductive is not enough to sidetrack the exhaustion rule. See
Christopher W., 877 F.2d at 1095-96; see also Gilbert v. City of
Cambridge, 932 F.2d 51, 61 (1st Cir. 1991) (admonishing that "the
mere possibility, or even the probability, that the responsible
agency may deny [a] permit should not be enough to trigger the
[futility exception]"). Accordingly, "[a]n essential element of
the claim of futility . . . is that all reasonable possibilities
of adequate administrative relief have been effectively
foreclosed." Tucker v. Defense Mapping Agency
Hydrographic/Topographic Ctr., 607 F. Supp. 1232, 1243 (D.R.I.
1985). Indeed, the Seventh Circuit has held that claimants who
seek safe harbor under the futility exception "must show that it
is certain that their claim will be denied on appeal, not merely
that they doubt an appeal will result in a different decision."
Smith v. Blue Cross & Blue Shield United, 959 F.2d 655, 659 (7th
Cir. 1992).4
Portela cannot surmount this hurdle. The claim of
futility is merely a self-serving pronouncement in the
circumstances of this case. The evidence is uncontradicted that
the Deputy Assistant Secretary is an impartial official who has
reversed termination decisions affecting Navy Exchange personnel
in the past. Though the prognosis for Portela's unused
administrative appeal may have been poor and her expectations
modest, neither courts nor litigants are allowed to equate
pessimism with futility. See Hodges v. Callaway, 499 F.2d 417,
424 (5th Cir. 1974). Because there is nothing in the record to
4For our part, we are tempted to set the benchmark slightly below absolute certainty, cf. Gilbert, 932 F.2d at 61 ("To come
within the exception, a sort of inevitability is required: the prospect of refusal must be certain (or nearly so)."), but the case at hand does not require us to choose between these two formulations.
suggest that Portela's lack of success at the previous levels of
review necessarily signified that the final level of review would
be an empty gesture, her failure to exhaust an available
administrative remedy cannot be overlooked on the ground of
futility.
3. The District Court's Rationale. To this point, we 3. The District Court's Rationale.
are in agreement with the court below. See Portela, 913 F. Supp.
at 126-27 (declaring that alleged futility did not excuse
Portela's nonexhaustion). After finding the plaintiff's futility
argument futile, however, the district judge nonetheless elected
to relax the exhaustion requirement "[i]n the interests of
minimizing cost and delay in the judicial system and avoiding the
waste of resources." Id. at 127. The judge reasoned that a
perceived waste of resources, in and of itself, can justify
excusing nonexhaustion of administrative remedies. We think
not.5
Were we to adopt the lower court's reasoning, the
resulting exception would swallow the exhaustion rule in a single
gulp. Once an aggrieved party has brought suit, forcing her to
retreat to any unused administrative appeal potentially wastes
5To be sure, we stated in Ezratty that "[s]ometimes to
require exhaustion will not only waste resources but also work severe harm upon a litigant." 648 F.2d at 774. Taken in context, this statement is entirely compatible with the "undue prejudice/irreparable harm" consideration outlined by the McCarthy Court in its discussion of the first potential exception
to the exhaustion rule. 503 U.S. at 146-47. In the case at bar, there is no hint that taking an appeal to the Deputy Assistant Secretary would have caused Portela irreparable harm or otherwise seriously prejudiced her rights.
resources. The Supreme Court has disavowed such a resupinate
approach. In McKart v. United States, 395 U.S. 185, 193 (1969),
the Court explained that a "primary purpose" of the exhaustion
doctrine is "the avoidance of premature interruption of the
administrative process." Consequently, it is generally
inefficient to permit a party to seek judicial recourse without
first exhausting her administrative remedies. See id. at 194.
Following this train of thought, the Court has concluded that, by
and large, concerns regarding efficiency militate in favor of,
rather than against, strict application of the exhaustion
doctrine. See McCarthy, 503 U.S. at 145; McKart, 395 U.S. at
195; see also Ezratty, 648 F.2d at 774 (acknowledging that the
exhaustion doctrine "serves interests of accuracy, efficiency,
agency autonomy and judicial economy").
This view is steeped in real-world wisdom. Insisting
on exhaustion forces parties to take administrative proceedings
seriously, allows administrative agencies an opportunity to
correct their own errors, and potentially avoids the need for
judicial involvement altogether. Furthermore, disregarding
available administrative processes thrusts parties prematurely
into overcrowded courts and weakens an agency's effectiveness by
encouraging end-runs around it. See McCarthy, 503 U.S. at 145;
McKart, 395 U.S. at 195.
4. The Bottom Line. To sum up, the futility exception 4. The Bottom Line.
is unavailable to Portela and the district court's professed
reason for excusing her failure to exhaust administrative
remedies neither passes muster on its own terms nor falls within
any of the hallmark McCarthy exceptions.6 Those conclusions
dictate the result we must reach. The plaintiff left an
available administrative remedy untapped and the record in this
case, howsoever construed, reveals no sufficiently excusatory
circumstances to warrant spurning that remedy.
First, there is no indication that full exhaustion
would have caused undue prejudice, irreparable harm, or unusual
hardship of any sort. Although Portela had already pursued a
fairly lengthy administrative process, it had moved celeritously
the pavane began when the OIC terminated Portela's employment
as of July 3, 1990, and ended when the NRSSO, in the person of
Rear Admiral Weatherson, denied her penultimate administrative
appeal on March 25, 1991 and the Deputy Assistant Secretary
would have been required to respond to her final appeal "within
60 calendar days of receipt of the official record." SECNAVINST
5300.22B Ch.V (9)(d)(3). Second, the agency (here, the Navy) was
fully capable of granting all the relief that Portela originally
sought, namely, reinstatement, reassignment, and quashing the
charges against her. Third, there is no meaningful indication of
any institutional bias. Fourth, the plaintiff has not identified
any other special circumstance warranting relaxation of the
6We do not suggest that the three exceptions to the exhaustion rule delineated by the McCarthy Court comprise an
exclusive compendium. But to the extent that other exceptions appropriately may lie, they must be on a par with the exceptions described by the Court. As explained in the text, the record here contains nothing which suggests a plausible basis for a further exception.
exhaustion rule, and our careful perlustration of the record
reveals none. It follows that the district court should have
dismissed the complaint for failure of the plaintiff to exhaust
available administrative remedies.
IV. CONCLUSION IV. CONCLUSION
It may seem hypertechnical to some that a person who
believes herself aggrieved by agency action must jump through a
series of hoops before she can seek out a judicial forum. But
long-recognized concerns regarding agency autonomy and judicial
efficiency weigh heavily in favor of requiring complete
exhaustion of administrative remedies. When all is said and
done, our system of justice depends on litigants' adherence to
well-defined rules. Where, as here, a party decides unilaterally
to forsake those rules, she does so at her peril.
We need go no further. The short of it is that Portela
lacked a legally sufficient reason for leaping prematurely to a
judicial venue. Thus, the district court should have dismissed
her complaint for failure to exhaust available administrative
remedies. In the end, however, the district court's error is of
no moment; though the court entered judgment in favor of the Navy
on an inappropriate ground, the Navy is nonetheless entitled to
judgment.
Affirmed. Affirmed.