McCarthy v. Del Toro

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

JACKSONVILLE DIVISION

DR. JOHN DANIEL MCCARTHY,

Plaintiff,

v. Case No. 3:18-cv-1213-J-34JRK

JAMES E. MCPHERSON,

Acting Secretary of the Navy,1

Defendant.

ORDER

THIS CAUSE is before the Court on Defendant’s Dispositive Motion to Dismiss;

Alternatively, Motion to Stay Pending Administrative Exhaustion (Doc. 54; Motion), filed on

February 7, 2020. Plaintiff filed a response in opposition to the Motion on February 21,

2020. See Plaintiff Dr. John D. McCarthy’s Response in Opposition to Defendant’s

Motion to Dismiss; Alternative, Motion to Stay Pending Administrative Exhaustion (Doc.

56; Response). With leave of Court, see Order (Doc. 59), Defendant filed a reply to the

Response on March 16, 2020, see Defendant’s Reply Memorandum in Support of

Dispositive Motion to Dismiss or Stay (Doc. 60), and Plaintiff filed a sur-reply on March 30,

2020, see Plaintiff Dr. John D. McCarthy’s Surreply in Response to Defendant’s Reply

Memorandum in Support of Defendant’s Motion to Dismiss or Stay (Doc. 61).

1 James E. McPherson became the Acting Secretary of the Navy on April 7, 2020.

Pursuant to Rule 25(d), Federal Rules of Civil Procedure, James E. McPherson is substituted for

Thomas B. Modly as Defendant in this suit.

Plaintiff initiated this action on October 12, 2018, by filing a five-count Complaint

(Doc. 1; Original Complaint) for declaratory relief against the Secretary of the Navy in his

official capacity. In general, Plaintiff challenges Defendant’s decision to honorably

discharge him from the Navy Reserves and withdraw him from the Armed Forces Health

Professional Scholarship Program (AFHPSP), through which Plaintiff received medical

school scholarship funds in exchange for subsequent active duty service as a Navy doctor.

In the Original Complaint, Plaintiff asked the Court to declare that Defendant: (1) wrongfully

withdrew him from the AFHPSP (Count I); (2) wrongfully separated him from the Navy

without following the procedures set forth in 10 U.S.C. § 12683 (Count II); (3) wrongfully

denied him written discovery regarding his adversarial proceeding with the Navy (Count

III); (4) wrongfully attempted to recoup the cost of Plaintiff’s medical school (Count IV); and

(5) violated the Florida Consumer Collection Practices Act.

On December 21, 2018, Defendant moved to dismiss the Original Complaint or in

the alternative to stay the case. See Defendant’s Dispositive Motion to Dismiss;

Alternatively, Motion to Stay Pending Administrative Exhaustion (Doc. 14). On April 2,

2019, the Court referred the motion to the Honorable James R. Klindt, United States

Magistrate Judge, for the preparation of a report and recommendation regarding an

appropriate resolution of the motion. See Order (Doc. 32). Thereafter, on July 19, 2019,

the Magistrate Judge entered a Report and Recommendation (Doc. 36; Report)

recommending that the Original Complaint be dismissed without prejudice for failure to

exhaust administrative remedies before commencing this action. See generally Report.

Upon review of the Report as well as Plaintiff’s and Defendant’s objections thereto, the

Court determined that a hearing was necessary to resolve the matter, see Order (Doc. 44),

and ultimately heard argument from the parties on November 5, 2019, see Clerk’s Minutes

(Doc. 48); Motion Hearing Transcript (Doc. 62; Transcript). At the hearing, the Court

dismissed Count I of the Original Complaint without prejudice for lack of subject matter

jurisdiction. See id. at 48. In addition, because Plaintiff expressed a desire to amend his

claims, see id. at 18-21, 44-46, the Court gave Plaintiff a deadline to file an amended

complaint, see id. at 53. On January 10, 2020, Plaintiff filed the operative Amended

Complaint for Declaratory Judgment (Doc. 51; Amended Complaint), in which he reasserts

the claims raised in Counts I through IV of the Original Complaint and adds a claim

pursuant to the Administrative Procedure Act (APA) (Count V) and a claim under the Equal

Access to Justice Act (Count VI).

In the instant Motion, in addition to asserting that the Amended Complaint is due to

be dismissed, Defendant alternatively requests that the Court stay the case “until Plaintiff

completes his administrative exhaustion obligations.” See Motion at 4. In response,

Plaintiff argues that “the matter is not required to be stayed” pending the outcome of the

proceedings before the United States Navy Board for Correction of Naval Records

(BCNR). See Response at 1. As relevant to this issue, on September 13, 2018, one

month before filing the Original Complaint, Plaintiff submitted a petition to the BCNR. See

Amended Complaint ¶ 161; see also id., Exhibit SS: Application for Correction of Military

Record Under the Provisions of Title 10, U.S. Code, Section 1552 (Doc. 51-54). In the

petition, Plaintiff “seeks appropriate corrections to [his] military record to bar the Navy’s

improper attempt to recoup the costs of the AFHPSP scholarship, and reimburse [Plaintiff]

for his lost career benefits, including lost wages, loss of creditable service toward

retirement, loss of medical and insurance benefits, emotional distress, injury to

professional reputation, and loss of professional opportunities.” See Amended Complaint

¶ 162. When asked about the status of the BCNR proceedings at the hearing, counsel

for Plaintiff represented that the BCNR website indicated only that Plaintiff’s petition, which

had been pending for 14 months, was “still pending and could be decided in the next 14

months.” See Transcript at 4. About three weeks later, on November 27, 2019, Plaintiff

received an email from a BCNR official “enclosing an advisory opinion from Navy

Personnel Command, dated January 25, 2019, which recommends denial of Dr.

McCarthy’s BCNR petition on the basis that he was afforded all due process to which he

was entitled.” Amended Complaint ¶ 163. The email invited Plaintiff to submit a

response, which he did on December 20, 2019. See id. ¶¶ 164-65. Plaintiff then

received a second advisory opinion from a BCNR official on January 23, 2020, in which

“Navy Personnel Command opin[es] that Dr. McCarthy’s six (6) prior years of service only

counted for pay purposes and that due to a break in service Dr. McCarthy was not entitled

to a separation board under 10 U.S.C. § 12683.” See Response at 8; see also id., Exhibit

1: Correspondence from Navy Personnel Command dated January 23, 2020 (Doc. 56-1).

Plaintiff responded to the second advisory opinion on February 18, 2020. See Response

at 8-9.

The Court has the inherent authority “to control the disposition of the causes on its

docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v.

N. Am. Co., 299 U.S. 248, 254-55 (1936); see also Clinton v. Jones, 520 U.S. 681, 706

(1997) (“The District Court has broad discretion to stay proceedings as an incident to its

power to control its own docket.”); Ryan v. Gonzales, 568 U.S. 57, 74 (2013) (“[T]he

decision to grant a stay . . . is generally left to the sound discretion of district courts.”

(internal quotations and citations omitted)). When addressing cases brought under the

Declaratory Judgment Act, the Court has particularly wide latitude to exercise this authority

because “‘[t]here is . . . nothing automatic or obligatory about the assumption of

‘jurisdiction’ by a federal court’ to hear a declaratory judgment action.” Wilton v. Seven

Falls Co., 515 U.S. 277, 288 (1995) (internal quotation marks and citation omitted).

Indeed, the Declaratory Judgment Act specifically provides that “[i]n a case of actual

controversy within its jurisdiction . . . any court of the United States . . . may declare the

rights and other legal relations of any interested party seeking such declaration, whether

or not further relief is or could be sought.” 28 U.S.C. § 2201(a) (emphasis added).

Since its inception, the Declaratory Judgment Act has been

understood to confer on federal courts unique and substantial

discretion in deciding whether to declare the rights of litigants.

. . . The statute’s textual commitment to discretion, and the

breadth of leeway we have always understood it to suggest,

distinguish the declaratory judgment context from other areas

of the law in which concepts of discretion surface.

Wilton, 515 U.S. at 286-87.

Here, in consideration of the record in this action and given the Court’s undisputed

broad discretion, the Court finds it appropriate to stay this action pending resolution of the

BCNR proceedings. Undoubtedly, the outcome of the BCNR proceedings has the

potential to affect this case. If the BCNR recommends correcting Plaintiff’s record such

that the Navy cannot attempt to recoup the cost of his medical school scholarship or

concludes that Plaintiff was entitled to a separation board under 10 U.S.C. § 12683, then

some of Plaintiff’s claims would likely be rendered moot or, at the very least, greatly

simplified. See generally Wilt v. Gilmore, 62 F. App’x 484, 488-89 (4th Cir. 2003)

(“Because Wilt has a claim pending before the [Army board of military corrections], on

which a result favorable to him could render his APA claim largely moot, consideration of

the claim in federal court at this point would be imprudent.”). On the other hand, if the

BCNR does not issue a recommendation favorable to Plaintiff, then the Court would have

the benefit of a more fully developed factual record from the BCNR, particularly with regard

to evaluating Plaintiff’s APA claim.

In his response to the Motion, Plaintiff argues that “the matter is not required to be

stayed” pending the outcome of the proceedings before the BCNR because, among other

things, “no relevant statute or agency regulation requires exhaustion[.]” See Response

at 1. Notably, while arguing that a stay is “not required,” Plaintiff does not assert that a

stay would be unwarranted or improper. In this regard, the Court observes that in

Plaintiff’s objections to the Magistrate Judge’s Report, Plaintiff stated that he was not

opposed to a stay. See Plaintiff Dr. John D. McCarthy’s Objections to The Magistrate

Judge’s Report & Recommendation (Doc. 37; Objections) at 14 n.5.2 Moreover,

regardless of whether he was required to exhaust statutory remedies, by filing the BCNR

petition Plaintiff has in fact asked the Navy to review its decision to discharge him and seek

repayment of his scholarship.3 It would be an inefficient use of judicial recourses, as well

2 Specifically, Plaintiff stated that he was “not opposed to the Court staying the proceeding

until such time as the BCNR resolves Dr. McCarthy’s appeal as a stay will also preclude the

Defendant’s collection agency from further harassing Dr. McCarthy. A dismissal of the lawsuit,

even without prejudice, will permit Defendant to continue to harass Dr. McCarthy with collection

communications regarding the ever-increasing debt.” See Objections at 14 n.5. Thus, a stay of

this case would appear to be of benefit to Plaintiff at this time.

3 Without expressing a view on the merits, the Court notes the existence of authority

suggesting that, because Plaintiff filed a petition to the BCNR, there will be no final decision for this

Court to review under the APA until the BCNR decides Plaintiff’s petition. See Walsh v. Hagee,

900 F. Supp. 2d 51, 60 (D.D.C. 2012) (“[A] district court has jurisdiction to review a decision

regarding the correction of a military record under the [APA], see Kreis v. Sec. of the Air Force,

866 F.2d 1508, 1515 (D.C. Cir. 1989), only if there is a “final agency action for which there is no

other adequate remedy[.]” 5 U.S.C. § 704 (emphasis added). Here, Walsh states that he filed a

request to correct his record with the BCNR. However, he admits that the BCNR has yet to decide

his claim. . . . Because there is no final decision for this court to review, Walsh fails to state a

cause of action to review an agency decision relating to his request to correct his military record.”);

Acura of Bellevue v. Reich, 90 F.3d 1403, 1407 (9th Cir. 1996) (“We hold that exercise of an

as a waste of the parties’ time and energy, to address the merits of Plaintiff’s APA claim

before allowing the Navy to resolve its own administrative review of similar claims.

Plaintiff can challenge the Navy’s final decision with regard to his BCNR petition by

amending his complaint again, if necessary.4 Thus, consistent with the authority outlined

above, the Court is of the view that the proper course of action here is to stay this matter

pending resolution of the BCNR proceedings.

Accordingly, it is

ORDERED:

1. The Clerk of the Court is directed to correct the docket in this case by

substituting James E. McPherson, Acting Secretary of the Navy, for Thomas B. Modly as

Defendant in this suit.

2. Defendant’s Dispositive Motion to Dismiss; Alternatively, Motion to Stay

Pending Administrative Exhaustion (Doc. 54) is GRANTED in part and DENIED without

prejudice in part.

a. The Motion is GRANTED to the extent that this case is STAYED until

the BCNR proceedings have been resolved.

b. The Motion is DENIED without prejudice to the extent that

Defendant seeks to have this case dismissed.

optional appeal to a Department ALJ renders the initial Administrator's decision nonfinal for

purposes of judicial review under the APA.”).

4 Plaintiff also contends that “the Defendant conceded in Court, Dr. McCarthy was

wrongfully discharged from the United States Navy and thus the Navy’s adverse decision is

administratively final and there is no administrative record for the [BCNR] to review[.]” Id. (citing

Transcript at 39). These statements by counsel at the hearing appeared more to be defense

counsel’s opinion after a preliminary review of the matter, than a “final” decision of either the Navy

or the BCNR. See Transcript at 39-40, 50-51.

3. The parties are directed to file a status report with this Court August 14,

2020, and every 90 days thereafter, advising the Court of the status of the BCNR

proceedings.

4. Any party may move to lift the stay and re-open this case upon the resolution

of the BCNR proceedings.

5. Ruling on Defendant’s Motion to Redesignate Action as Track One and

Supporting Memorandum (Doc. 55) is DEFERRED until this case is reopened.

6. The Clerk of the Court is directed to administratively close this case pending

further order of the Court.

DONE AND ORDERED in Jacksonville, Florida on April 13, 2020.

United States District Judge

Lce23

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Counsel of Record