Avocados Plus Inc v. Veneman, Ann M.

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 13, 2004 Decided June 18, 2004

No. 03-5086

AVOCADOS PLUS INCORPORATED, ET AL.,

APPELLANTS

v.

ANN M. VENEMAN, IN HER OFFICIAL CAPACITY AS SECRETARY

OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(02cv01798)

Dale E. McNiel argued the cause for appellants. With him

on the briefs was Tracey M. Price.

Julie M. Carpenter was on the brief for amicus curiae

DKT Liberty Project in support of reversal.

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

2

August E. Flentje, Attorney, U.S. Department of Justice,

argued the cause for federal appellees. With him on the brief

were Peter D. Keisler, Assistant Attorney General, Roscoe C.

Howard, Jr., U.S. Attorney, and Douglas N. Letter, Counsel.

Richard T. Rossier was on the brief for appellees Charlie

Wolk, et al.

Before: EDWARDS, RANDOLPH, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: The Hass Avocado Promotion,

Research, and Information Act, 7 U.S.C. §§ 7801-7813, au-

thorizes the Department of Agriculture to collect assessments

from avocado growers and importers and to transfer the

assessments to a board charged with promoting domestic

consumption of avocados of the Hass variety. Two importers

of avocados and two importers of avocado products sued in

district court alleging that the Act violated their First

Amendment right to be free of compelled speech.1 The

district court dismissed the complaint because the importers

had not exhausted the administrative remedies the Act pro-

vides.

I.

The Avocado Act, one of more than a dozen federal statutes

aimed at promoting the sale of various agricultural commodi-

ties, requires the Secretary of Agriculture to issue an imple-

menting order that takes effect if the majority of affected

growers and importers approve it in a referendum. § 7805.

The order establishes a Hass Avocado Board consisting of

1 Two of the plaintiffs – Avo-King International, Inc. and Sunny

Avocado, Ltd. – import only processed or frozen avocado products.

The Secretary has not imposed assessments on such products, and

it is not clear she ever will. We therefore affirm the dismissal of

the complaint with respect to these plaintiffs on the ground that

their claims are, so to speak, not ripe. See Clean Air Implementa-

tion Project v. EPA, 150 F.3d 1200 (D.C. Cir. 1998). This opinion

only concerns the remaining two importers – Avocados Plus, Inc.

and LGS Specialty Sales Ltd.

3

industry representatives. § 7804. The function of the Board

is to ‘‘administer the order,’’ § 7804(c)(1), ‘‘develop budgets

for the implementation of the order,’’ § 7804(c)(5), and ‘‘devel-

op’’ and ‘‘implement plans and projects for Hass avocado

promotion, industry information, consumer information, or

related research[.]’’ § 7804(c)(5)-(6). The Board may not

implement any budget, plan or project without the prior

approval of the Secretary, but these are ‘‘deemed to be

approved’’ if the Secretary does not act within 45 days.

§ 7804(d)(3).

The Act also requires the Secretary to impose assessments

on growers and importers to pay for the Board’s activities.

§ 7804(h). The Board must pay 85 percent of a grower’s

assessments to its state grower organization, if such an

organization exists. § 7804(h)(8). If an importer belongs to

an importers’ association, the Board must pay 85 percent of

its assessment to that group. § 7804(h)(9). The Board must

also reimburse the Secretary for expenses incurred conduct-

ing the referendum and supervising the Board. § 7804(i).

The rest of the money pays for Board programs, although at

least some of it must fund a promotion program conducted by

the California Avocado Commission. See § 7804(e)(1) (re-

quiring Board to enter contract with ‘‘avocado organization

TTT in a State with the majority of Hass avocado production

in the United States’’); § 7801(a)(2) (stating that ‘‘virtually all

domestically produced avocados for the commercial market

are grown in the State of California’’).

Under the § 7806 of the Act, any ‘‘person subject to an

order’’ may file a petition with the Secretary ‘‘stating that the

order, any provision of the order, or any obligation imposed in

connection with the order is not in accordance with the law;

and TTT requesting a modification of the order or an exemp-

tion from the order.’’ § 7806(a)(1). The Secretary must rule

on the petition after a hearing. § 7806(a)(3). The Act fur-

ther provides that the ‘‘district courts of the United States

TTT shall have jurisdiction to review the ruling of the Secre-

tary on the petition[,]’’ § 7806(b)(1), and must remand it if it

‘‘is not in accordance with law[.]’’ § 7806(b)(3).

4

Rather than invoking § 7806, the importers filed a com-

plaint in district court claiming that the mandatory assess-

ments were unconstitutional and seeking an injunction

against enforcement of the Act.2 The importers relied princi-

pally on United States v. United Foods, Inc., 533 U.S. 405

(2001), in which the Supreme Court ruled that an identical

provision in the Mushroom Promotion, Research, and Con-

sumer Information Act, 7 U.S.C. §§ 6101-6112, violated the

free speech rights of mushroom growers by forcing them to

pay for speech with which they disagreed.

The government had argued in United Foods that the

mushroom promotion program was government speech, and

that the government therefore could force growers to pay for

it. The Supreme Court refused to consider the argument

because the government had not raised it in the court of

appeals. 533 U.S. at 416-17. United Foods triggered a

series of challenges against other agricultural commodity

promotion programs. In each case the government relied on

the government speech defense and in each case the court of

appeals rejected it. See Cochran v. Veneman, 359 F.3d 263

(3d Cir. 2004) (dairy); Michigan Pork Producers Ass’n v.

Veneman, 348 F.3d 157 (6th Cir. 2003) (pork); Livestock

Mktg. Ass’n v. USDA, 335 F.3d 711 (8th Cir. 2003), cert.

granted, 2004 WL 303634 (May 24, 2004) (beef); see also

Pelts & Skins, LLC v. Landreneau, 365 F.3d 423 (5th Cir.

2004) (striking down state alligator products promotion pro-

gram); but see Charter v. USDA, 230 F. Supp. 2d 1121 (D.

Mont. 2002) (sustaining beef program as government speech).

The avocado importers moved for a preliminary injunction.

The government opposed the motion, arguing that the avoca-

do program was government speech. The government also

moved to dismiss the complaint for failure to exhaust adminis-

trative remedies. The district court initially addressed the

importers’ First Amendment claims, holding that they were

2 It is unclear whether, if the importers can go forward with their

suit, they should be relegated to an as-applied rather than a facial

challenge to the Act.

5

not required to exhaust the administrative remedy provided

in § 7806. Then, in response to a government motion, the

court reconsidered its decision, ruled that importers must

exhaust their administrative remedy, and dismissed the com-

plaint for lack of subject matter jurisdiction.

II.

The word ‘‘exhaustion’’ now describes two distinct legal

concepts. The first is a judicially created doctrine requiring

parties who seek to challenge agency action to exhaust avail-

able administrative remedies before bringing their case to

court. See generally 2 RICHARD J. PIERCE, JR., ADMINISTRATIVE

LAW TREATISE § 15.2 (4th ed. 2002). We will call this doctrine

‘‘non-jurisdictional exhaustion.’’ Non-jurisdictional exhaus-

tion serves three functions: ‘‘giving agencies the opportunity

to correct their own errors, affording parties and courts the

benefits of agencies’ expertise, [and] compiling a record ade-

quate for judicial review[.]’’ Marine Mammal Conservancy,

Inc. v. Dep’t of Agric., 134 F.3d 409 (D.C. Cir. 1998); McCar-

thy v. Madigan, 503 U.S. 140, 145-46 (1992).

Occasionally, exhaustion will not fulfill these ends. There

may be no facts in dispute, see McKart v. United States, 395

U.S. 185, 198 n.15 (1969), the disputed issue may be outside

the agency’s expertise, see id. at 197-98, or the agency may

not have the authority to change its decision in a way that

would satisfy the challenger’s objections, see McCarthy, 503

U.S. at 147-48. Also, requiring resort to the administrative

process may prejudice the litigants’ court action, see id. at

146-47, or may be inadequate because of agency bias, see id.

at 148-49. In these circumstances, the district court may, in

its discretion, excuse exhaustion if ‘‘the litigant’s interests in

immediate judicial review outweigh the government’s inter-

ests in the efficiency or administrative autonomy that the

exhaustion doctrine is designed to further.’’ Id. at 146 (quot-

ing West v. Bergland, 611 F.2d 710, 715 (8th Cir. 1979)).

The second form of exhaustion arises when Congress re-

quires resort to the administrative process as a predicate to

judicial review. This ‘‘jurisdictional exhaustion’’ is rooted, not

6

in prudential principles, but in Congress’ power to control the

jurisdiction of the federal courts. See EEOC v. Lutheran

Soc. Servs., 186 F.3d 959, 963-64 (D.C. Cir. 1999). Whether a

statute requires exhaustion is purely a question of statutory

interpretation. See McCarthy, 503 U.S. at 144. If the stat-

ute does mandate exhaustion, a court cannot excuse it. See

Shalala v. Illinois Council on Long Term Care, 529 U.S. 1,

13 (2000).3

While the existence of an administrative remedy automati-

cally triggers a non-jurisdictional exhaustion inquiry, jurisdic-

tional exhaustion requires much more. In order to mandate

exhaustion, a statute must contain ‘‘ ‘[s]weeping and direct’

statutory language indicating that there is no federal jurisdic-

tion prior to exhaustion, or the exhaustion requirement is

treated as an element of the underlying claim.’’ Weinberger

v. Salfi, 422 U.S. 749, 757 (1975); 2 PIERCE, ADMINISTRATIVE

LAW TREATISE § 15.3, at 986. We presume exhaustion is non-

jurisdictional unless ‘‘Congress states in clear, unequivocal

terms that the judiciary is barred from hearing an action until

the administrative agency has come to a decision,’’ I.A.M.

Nat’l Pension Fund Benefit Plan C v. Stockton Tri Indus.,

727 F.2d 1204, 1208 (D.C. Cir. 1984).

For example, the Supreme Court decided that the Social

Security Act mandated exhaustion in light of this statutory

language: ‘‘No findings of fact or decision of the Commission-

er of Social Security shall be reviewed by any person, tribu-

nal, or governmental agency except as herein provided. No

action against the United States, the Commissioner of Social

Security, or any officer or employer thereof shall be brought

under section 1331 or 1346 of title 28 to recover on any claim

3 General federal question jurisdiction under 28 U.S.C. § 1331

does not empower the court to proceed to the merits in a jurisdic-

tional exhaustion case. See Heckler v. Ringer, 466 U.S. 602, 616

(1984). In a non-jurisdictional exhaustion case, if the court decides

not to require exhaustion, the case may proceed under § 1331. If

the court rules that the plaintiff must exhaust, and the plaintiff

proceeds to do so, judicial review of the agency’s decision will be

under the relevant provision for review of that agency’s action.

7

arising under this subchapter.’’ 42 U.S.C. § 405(h). See

Salfi, 422 U.S. at 756-67. Similarly, we found jurisdictional

exhaustion in the following language from the Federal Power

Act: ‘‘No proceeding to review any order of the Commission

shall be brought by any person unless such person shall have

made application to the Commission for a rehearing there-

onTTTT No objection to the order of the Commission shall be

considered by the court unless such objection shall have been

urged before the Commission in the application for rehearing

unless there is reasonable ground for failure so to do.’’ 16

U.S.C. § 8251. See Platte River Whooping Crane Critical

Habitat Maint. Trust v. FERC, 876 F.2d 109, 112–13 (D.C.

Cir. 1989).

The Avocado Act contains no comparable ‘‘sweeping and

direct’’ language. It neither mentions exhaustion nor explic-

itly limits the jurisdiction of the courts. It merely creates an

administrative procedure for challenging the Secretary’s or-

ders. In this respect, the Avocado Act is therefore more like

the statute we considered in Lutheran Social Services. In

that case, we excused a party challenging an EEOC subpoena

from exhausting administrative remedies, even though the

statute creating the subpoena power provided such a remedy.

We rejected the EEOC’s argument that exhaustion was juris-

dictional, observing that ‘‘nowhere does [the statute] even

imply, much less expressly state, that courts lack jurisdiction

to hear objections not presented to the Commission.’’ 186

F.3d at 963.

The government argues that United States v. Ruzicka, 329

U.S. 287 (1946), compels the opposite conclusion. In Ruzicka,

the Supreme Court ruled that milk handlers challenging

marketing orders issued pursuant to the Agricultural Market-

ing Agreement Act of 1937, ch. 296, 50 Stat. 246, must

exhaust administrative remedies before coming to court. The

relevant provisions of the AMAA are nearly identical to those

in the Avocado Act. Compare 7 U.S.C. § 608c(6) & (15) with

7 U.S.C. §§ 7806-7807(a). To the government, it follows that

the Avocado Act mandates exhaustion.

8

Two unstated premises are behind the government’s argu-

ment. The first is that when Congress uses the language of

one statute in another statute it usually intends both statutes

to have the same meaning. See Energy Research Found. v.

Defense Nuclear Facilities Safety Bd., 917 F.2d 581, 582-83

(D.C. Cir. 1990). The second is that Congress knew of the

interpretation given the earlier statute in Ruzicka. For this

proposition, the government could have cited Cannon v. Univ.

of Chicago, 441 U.S. 677, 694-98 (1979), in which the Court

endorsed the assumption that Congress knows ‘‘the law’’– by

which the Court meant judicial decisions. See Miles v. Apex

Marine Corp., 498 U.S. 19, 32 (1990). The government’s

argument has some force but we believe there is an equally

forceful argument on the other side. If we are to assume

that Congress knew of the law handed down in Ruzicka, we

should also assume that Congress knew of the law set forth in

Salfi, McCarthy, I.A.M., and other cases distinguishing non-

jurisdictional and jurisdictional exhaustion. In other words,

Congress’ failure to include in § 7806 of the Avocado Act the

sort of ‘‘sweeping and direct’’ language mandating exhaustion

and thereby depriving the courts of jurisdiction tends to

indicate that we are dealing here with non-jurisdictional

exhaustion.

The most telling point against the government’s position is

that the Ruzicka Court did not find the exhaustion require-

ment in the text of the AMAA’s provisions cited above and

duplicated in § 7806. Standing alone that text was, as the

Court saw it, inconclusive, which is why the Court stated that

‘‘Congress did not say in words’’ that exhaustion was manda-

tory. 329 U.S. at 292. In nevertheless requiring exhaustion,

the Court looked elsewhere, relying on the complex statutory

enforcement scheme in the AMAA, a scheme Congress would

not have wanted disrupted by ‘‘the contingencies and inevit-

able delays of litigation,’’ id. at 292-93. Unlike the AMAA,

the Avocado Act does not provide for comprehensive market

regulation that could be disrupted by ill-timed judicial inter-

9

ference. It simply transfers money from growers and im-

porters to the Board. Cf. United Foods, 533 U.S. at 411-12

(distinguishing the AMAA, where ‘‘the mandated assessments

for speech were ancillary to a more comprehensive program

restricting marketing autonomy,’’ from the Mushroom Act,

where ‘‘advertising itself TTT is the principal object of the

regulatory scheme’’). One therefore cannot conclude much of

anything about exhaustion from the apparent fact that Con-

gress decided to use the language of the AMAA review

provisions as a model for the Avocado Act.

We also question the Secretary’s characterization of Ruzic-

ka as a case in which the statutory language made exhaustion

jurisdictional. Certainly, under the modern precedents dis-

cussed above, the AMAA’s lack of anything close to explicit

jurisdictional language would render any exhaustion require-

ment non-jurisdictional. The fact that Ruzicka focused on

congressional intent tells us little, for even in non-

jurisdictional exhaustion cases courts owe ‘‘appropriate defer-

ence to Congress’ power to prescribe the basic procedural

scheme under which a claim may be heard in a federal court.’’

McCarthy, 503 U.S. at 144. The Ruzicka Court did not

distinguish between jurisdictional and non-jurisdictional ex-

haustion because the current doctrinal framework did not

exist at the time. The Court itself recognized the limited

precedential effect of its holding: ‘‘Certainly the recent

growth of administrative law counsels against generalizations

regarding what is compendiously called judicial review of

administrative action. And so we deem it desirable, in a case

like this, to hug the shore of the precise problem before us in

relation to the provisions of the particular Act immediately

relevant.’’ 329 U.S. at 295.

The district court relied primarily on Gallo Cattle Co. v.

USDA, 159 F.3d 1194 (9th Cir. 1998), which construed lan-

guage in the Dairy and Tobacco Adjustment Act of 1983, 7

U.S.C. § 4509 (‘‘the Dairy Act’’), identical in all relevant

respects to § 7806. The court of appeals found that the

language mandated exhaustion and that the district court had

10

no jurisdiction to consider the plaintiff’s challenge until it

exhausted administrative remedies. 159 F.3d at 1197–98.

Despite the Ninth Circuit’s terminology, Gallo Cattle was not

so much an exhaustion case as a case about finality. See 2

PIERCE, ADMINISTRATIVE LAW TREATISE § 15.1, at 966 (‘‘Finality

and exhaustion are particularly difficult to distinguish.’’).

The plaintiffs had already filed a petition with the Secretary

challenging the order. A judicial officer had denied the

petition, and the plaintiffs were asking the court for interim

relief pending their appeal to the Secretary. Under the

statute, only the Secretary’s ruling was final and subject to

judicial review. See 7 U.S.C. § 4509(a)-(b). The court there-

fore ruled that there was no jurisdiction to consider the

challenge to the judicial officer’s ruling pursuant to § 4509.

159 F.3d at 1198. This does not necessarily mean exhaustion

would be jurisdictional if the plaintiffs had brought their

challenge directly to district court. True, the Gallo Cattle

court stated in dicta that the Dairy Act mandated exhaustion,

citing a Ninth Circuit case interpreting the AMAA. Id. at

1197 (citing Rasmussen v. Hardin, 461 F.2d 595, 597-98 (9th

Cir. 1972)). But that case, like Ruzicka, did not say whether

the AMAA exhaustion requirement was jurisdictional or non-

jurisdictional.

While the matter is not free from doubt, we therefore

hold – particularly in light of our decision in Lutheran Social

Services – that the language of the Avocado Act does not

make exhaustion jurisdictional.

III.

Our precedent demands that we review non-jurisdictional

exhaustion decisions for abuse of discretion. See Ogden v.

Zuckert, 298 F.2d 312, 317 (D.C. Cir. 1961). Whether in this

case the district court thought it had discretion is not so clear.

The first part of the court’s analysis clearly states that the

Avocado Act ‘‘mandates exhaustion,’’ and that ‘‘Congress has

given the Court jurisdiction over only ‘the ruling of the

Secretary.’ ’’ J.A. 107-08 (italics added, underline in the

11

original). Having concluded that the Avocado Act mandated

exhaustion, the court could have stopped there, but did not.

In the next section of its opinion, the court – responding to

the importers’ argument that the constitutional nature of

their claim should excuse exhaustion – explained how requir-

ing exhaustion would serve the policies underlying the doc-

trine. In doing so, the court applied a portion of the non-

jurisdictional exhaustion analysis. This would have been

unnecessary if the court believed the statute mandated ex-

haustion as a jurisdictional matter. See Salfi, 422 U.S. at

762-64 (applying jurisdictional exhaustion to constitutional

claim). One could argue, therefore, that notwithstanding the

district court’s earlier absolute language, and its dismissal of

the complaint for lack of subject matter jurisdiction, it was

requiring exhaustion as a matter of discretion.

Despite these uncertainties we believe the district court

thought it had no power to excuse exhaustion. Otherwise

there is no explaining why the court did not complete the

non-jurisdictional exhaustion analysis by ‘‘balanc[ing] the in-

terest of the individual in retaining prompt access to a federal

judicial forum against the countervailing institutional inter-

ests favoring exhaustion.’’ McCarthy, 503 U.S. at 147. ‘‘Ap-

plication of this balancing principle is intensely practical TTT

because attention is directed to both the nature of the claim

presented and the characteristics of the particular administra-

tive remedy.’’ Id. (quotation marks and citations omitted).

We see no signs the district court attempted to make either

of these inquiries.

‘‘[T]he district court was entitled to determine, in the first

instance, whether exhaustion was required and, if so, wheth-

er, in its discretion, it should retain jurisdiction pending

exhaustion. Because the district [court] was apparently un-

aware that these decisions were open to [it], we find it

appropriate to vacate [its] order dismissing the action and to

remand the case so that [the court] may address them.’’

12

Montgomery v. Rumsfeld, 572 F.2d 250, 254 (9th Cir. 1978).

See also Ogden, 298 F.2d at 317.4

So ordered.

4 In many cases the time limits for challenging an order before

the agency may be relatively short. In non-jurisdictional (and

jurisdictional) exhaustion cases, those who bypass administrative

remedies and bring an action in court therefore run a substantial

risk. If the court decides that the plaintiff had to exhaust, by then

it may be too late for the plaintiff to seek relief from the agency.

While unusual circumstances may warrant dispensing with exhaus-

tion when the time limits have run, see Bowen v. City of New York,

476 U.S. 467, 482–86 (1986), we held in American Federation of

Government Employees v. Loy, 367 F.3d 932, 936 (D.C. Cir. 2004),

that the court will not ‘‘excuse non-compliance with the requirement

that one must exhaust administrative remedies on the basis that the

party failed to comply.’’ See Steadman v. Governor, U.S. Soldiers’

& Airmen’s Home, 918 F.2d 963, 968 (D.C. Cir. 1990).

The importers in this case are fortunate. The time limit in

§ 7806(a)(4) of the Avocado Act is generous. They have until early

September 2004 to file a petition with the Secretary challenging the

order. See § 7806(a)(4). They should be allowed to do so without

prejudicing their right to argue to the district court that exhaustion

should be excused.