Frank Palacios v. Richard Spencer

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2018 Decided October 12, 2018

No. 17-5246

FRANK PALACIOS,

APPELLANT

v.

RICHARD V. SPENCER, SECRETARY OF THE NAVY,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:16-cv-02110)

Michael D.J. Eisenberg argued the cause and filed the briefs

for appellant.

Rachel F. Homer, Attorney, U.S. Department of Justice,

argued the cause for appellee. With her on the brief were Jessie

K. Liu, U.S. Attorney, and Alisa B. Klein, Attorney. R. Craig

Lawrence, Assistant U.S. Attorney, entered an appearance.

Before: GRIFFITH, Circuit Judge, and EDWARDS and

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

RANDOLPH.

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RANDOLPH, Senior Circuit Judge: Frank Palacios sought

judicial review of a decision of the Board for Correction of

Naval Records. The district court, after determining that it

lacked subject-matter jurisdiction, dismissed Palacios’s

complaint, denied his motion for leave to amend the complaint,

and rejected his motion to transfer the case to the United States

Court of Federal Claims. Palacios v. Spencer, 267 F. Supp. 3d

1 (D.D.C. 2017). Palacios appeals each of the district court’s

rulings.

Palacios served in the U.S. Marine Corps from 1992 to

1995. He received an other-than-honorable discharge stemming

from his pattern of misconduct. In about 2002 and 2009, he

sought an upgrade of his discharge on the basis that his

misconduct resulted from his mental and physical disabilities.

The Naval Discharge Review Board denied both of his requests.

Palacios then asked the Board for Correction of Naval Records

to correct his records. The Correction Board denied his request

in 2010.

In response, Palacios filed an action for judicial review of

the Correction Board’s decision in the Court of Federal Claims.

The Claims Court dismissed his suit as untimely under the

statute of limitations applicable to his wrongful-discharge claim.

Palacios v. United States, 100 Fed. Cl. 656 (2011). The Federal

Circuit affirmed. Palacios v. United States, No. 2012-5028,

2012 WL 2415348 (Fed. Cir. Mar. 8, 2012) (per curiam)

(unpublished order).

This appeal arises from Palacios’s request that the

Correction Board reconsider its decision. After the Board

denied this request in 2015, Palacios filed suit in the United

States District Court for the District of Columbia. He claimed

that the Board’s denial of reconsideration was arbitrary and

capricious, unsupported by substantial evidence, and contrary to

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law under the Administrative Procedure Act, 5 U.S.C. § 706(2).

His prayer for relief asked the district court to enter judgment

correcting his disability rating and discharge, awarding costs and

attorneys’ fees, and “[g]ranting Plaintiff appropriate back pay

and benefits that would natural[ly] flow from the upgrade in

discharge status.” In the alternative, he asked the district court

to remand to the Correction Board for consideration on the

merits.

The government moved to dismiss on the ground that

Palacios’s complaint fell outside the applicable statute of

limitations and that it asserted a claim under the Tucker Act over

which the Court of Federal Claims had exclusive jurisdiction. In

his opposition to the government’s motion to dismiss, Palacios

moved for leave to amend his complaint by dropping his request

for money damages or, in the alternative, to transfer the case to

the Court of Federal Claims.

When a party in the district court moves to transfer the case

to the Court of Federal Claims, see 28 U.S.C. § 1631, a statutory

procedure is triggered: “no further proceedings shall be taken in

the district court until 60 days after the court has ruled upon the

motion,” 28 U.S.C. § 1292(d)(4)(B). If the district court grants

or denies the motion, the Federal Circuit has “exclusive

jurisdiction of an appeal” from that order. 28 U.S.C.

§ 1292(d)(4)(A). If there is an appeal, the district court’s

“proceedings shall be further stayed until the appeal has been

decided.” Id. § 1292(d)(4)(B).

The district court in this case did not follow this statutory

procedure, perhaps because neither Palacios nor the government

brought the governing statutes to the court’s attention. The

district court, rather than staying its proceedings, denied

Palacios’s transfer motion, granted the government’s motion to

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dismiss, and denied Palacios’s motion for leave to amend his

complaint.

Because the Federal Circuit has exclusive jurisdiction over

appeals from orders granting or denying the transfer of an action

to the Court of Federal Claims, we dismiss for want of

jurisdiction Palacios’s appeal from that aspect of the district

court’s judgment. See Murthy v. Vilsack, 609 F.3d 460, 461–64

(D.C. Cir. 2010).

As to the district court’s dismissal of the complaint, we

agree that the court lacked subject-matter jurisdiction over

Palacios’s complaint.1 The complaint expressly demanded the

entry of a judgment including an award of back pay exceeding

$10,000. Under the Tucker Act, the Court of Federal Claims

therefore had exclusive jurisdiction over this claim.2 See 28

1

While the district court should have waited to rule on the

government’s motion to dismiss and Palacios’s motion for leave to

amend until 60 days after it denied the transfer motion, 28 U.S.C.

§ 1292(d)(4)(B), the court’s failure to follow that procedure poses no

obstacle to our review. As an initial matter, Palacios has forfeited any

argument about this statute. Moreover, the time for Palacios to appeal

the denial of his transfer motion to the Federal Circuit has long since

expired. See Fed. R. App. P. 4(a)(1)(B); Sanghi v. West, 168 F.3d

1318, 1998 WL 568814 (Fed. Cir. 1998) (unpublished table decision)

(declining jurisdiction over appeal under § 1292(d)(4) filed seven

months after the district court’s order issued). Requiring the district

court on remand to wait 60 days before reinstating these orders and

then requiring Palacios to once again appeal to this court would

further delay our review without providing Palacios any additional

benefit.

2

The district courts and the Court of Federal Claims generally

share jurisdiction over Little Tucker Act claims, i.e., those not

exceeding $10,000. See 28 U.S.C. § 1346(a)(2). Palacios alleged

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U.S.C. §§ 1346(a)(2), 1491(a); Schwalier v. Hagel, 734 F.3d

1218, 1220–22 (D.C. Cir. 2013); Sawyer v. United States, 930

F.2d 1577, 1580–81 (Fed. Cir. 1991); Van Drasek v. Lehman,

762 F.2d 1065, 1067–72 (D.C. Cir. 1985).

Palacios argues that primarily his complaint sought to

correct his military records and that the essence of his complaint

was therefore not monetary. We “look only to the essence of a

complaint in the absence of an explicit request for monetary

relief.” Schwalier, 734 F.3d at 1221. Our decisions examining

a complaint’s essence therefore do not apply. See, e.g., Tootle

v. Sec’y of the Navy, 446 F.3d 167, 169, 173–77 (D.C. Cir.

2006); Kidwell v. Dep’t of the Army, Bd. for Correction of

Military Records, 56 F.3d 279, 284–86 (D.C. Cir. 1995). It

follows that the district court correctly dismissed the complaint

for lack of subject-matter jurisdiction. See, e.g., Fisher-Cal

Indus., Inc. v. United States, 747 F.3d 899, 902–03 (D.C. Cir.

2014).

In opposing the government’s motion to dismiss, Palacios

sought leave to amend his complaint in order to drop his demand

for back pay. The district court properly denied his motion. The

amendment would have been futile. Aside from the Tucker Act

jurisdictional problem, the Board’s denial of Palacios’s request

for reconsideration is not subject to judicial review because

Palacios alleges only “material error” in the agency’s original

decision. Sendra Corp. v. Magaw, 111 F.3d 162, 166 (D.C. Cir.

1997) (quoting ICC v. Bhd. of Locomotive Eng’rs, 482 U.S. 270,

279 (1978)). As we explained in Sendra, when an agency

before the Claims Court that he is owed back pay in excess of

$10,000, and the district court properly read his complaint to seek an

amount above that threshold. See, e.g., Monk v. Sec’y of the Navy, 793

F.2d 364, 370 (D.C. Cir. 1986); Doe v. Dep’t of Justice, 753 F.2d

1092, 1101 (D.C. Cir. 1985).

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merely affirms its original decision in denying a petition for

reconsideration, it has not rendered a judicially reviewable

decision. Id. at 167. We have recognized two exceptions to this

general rule. Neither applies here.

First, a denial of reconsideration may be reviewable, albeit

under an especially deferential standard of review, when the

requesting party raises “‘new evidence’ or ‘changed

circumstances.’” Sendra, 111 F.3d at 166 (quoting Locomotive

Eng’rs, 482 U.S. at 278). This is so even when the governing

statute or regulation allows for reconsideration on other bases,

such as new argument or material error. See Locomotive Eng’rs,

482 U.S. at 277–78. Palacios concedes that his request for

reconsideration raised only a new argument, so this exception

does not apply.

Second, courts may review an agency’s decision if the

agency, despite denying reconsideration, “clearly states or

indicates that it has reopened the matter.” Sendra, 111 F.3d at

167. Otherwise, we do not “look behind the agency’s formal

disposition of the reconsideration request to see whether the

agency ‘in fact’ reopened its original decision.” Id. (quoting

Locomotive Eng’rs, 482 U.S. at 280). Here the Corrections

Board used boilerplate language in summarily denying

Palacios’s request.3 This falls far short of the clear indication of

reopening required to review an agency’s denial of

reconsideration.

3

“After careful and conscientious consideration of the entire

record, the Board found that the new argument made by your attorney

to the effect that the misconduct which resulted in your discharge was

causally connected to your ‘diminished physical and mental condition’

stemming from an injury to your lumbar spine, was insufficient to

warrant further consideration of your application. Accordingly, the

Board denied your request.”

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The district court lacked jurisdiction over Palacios’s

complaint, and it correctly determined that amendment to cure

the jurisdictional defect would have been futile. We therefore

dismiss the appeal with respect to the motion to transfer and

affirm with respect to the motions to dismiss and for leave to

amend.

Dismissed in part and affirmed in part.