Appendix — Benoit v. Department of Agriculture

LPPENDIX

PABLE OF CONTENTS

APPENDIX A

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 08-5434

Argued September 21, 2009

Decided June 11, 2010

KIRK BENOIT, ET AL...

APPELLANTS

UNITED STATES DEPARTMENT

OF AGRICULTURE, ET AL.,

APPELLEES

— ~~ _ — — —_— ~— —— ~—

Appeal from the United States District Court

for the District of Columbia

(No. 1:03-cv-01917)

Ben Whaley Le Clercq argued the cause and filed

the briefs for appellants. Stephen A. Bogorad entered

an appearance.

Benjamin M. Shultz, Attorney, U.S. Department of

Justice, argued the cause for appellees. With him on

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the brief was Marleigh D. Dover, Assistant Director. R.

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

appearance.

Before: GINSBURG and GRIFFITH, Circuit Judges,

and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Ctrcuit Judge

GINSBURG.

GINSBURG, Circuit Judge: Fourteen African

American farmers allege the United States

Department of Agriculture discriminated against them

on the basis of race (and, in one case, gender) in

administering the agency’s federally funded credit and

benefit programs. They assert claims under the Equal

Credit Opportunity Act, 15 U.S.C. §§ 1691 et seg.

(KCOA); the Civil Rights Act of 1866, 42 U.S.C.§ 1981;

the Administrative Procedure Act, 5 U.S.C. §§ 551 et

seq.; the common law; and the Fifth and Fourteenth

Amendments to the Constitution of the United States.

In this appeal we consider not the merits of the

plaintiffs’ claims but only whether the district court

erred by entering summary judgment against the

plaintiffs on their claims under the ECOA because

they failed to exhaust their administrative remedy or

by dismissing the plaintiffs’ other claims as barred by

sovereign immunity.

I. Background

The plaintiffs’ discrimination claims are decades

old and were long ago submitted to the USDA, which

never resolved them. At one time the plaintiffs could

have sued the USDA under the ECOA, but their

claims under that statute were barred by the running

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of the two-year limitations period. See 15 U.S.C.

§ 1691e(fN.

In 1998 the Congress passed legislation reviving

[fSCOA claims of discrimination that had been filed

with the USDA from 1981 to 1996 but were barred by

the statute of limitations. Section 741 of the

Department’s 1999 Supplemental Appropriations Act’

created a two-year window within which farmers who

had filed such complaints could pursue their claims in

court notwithstanding the statute of lhmitations.

Sections 741(a) and (b) each gave affected farmers a

distinct option: Either file the claim (a) directly in

federal district court or (b) with the USDA and, if the

USDA denies the claim, then seek review of the agency

decision in district court, as provided in § 741(c). Of

course, a farmer who chooses option (a) “foregoles|”

option (b), Garcia v. Vilsack, 563 F.3d 519, 523 (D.C.

Cir. 2009), and vice versa, see § 714(b) (“The

complainant may, in lieu of filing a civil action, seek a

determination on the merits [by the USDA]”).

The plaintiffs in this case chose option (b) and duly

filed their claims, styled “Section 741 Complaint

Requests” by the USDA, which considers such matters

in two stages. The first 1s an informal settlement

process overseen by the Director of the Office of Civil

Rights (OCR). 7 C.F.R. § 15f.9. The Director may

consider documents submitted by the complainant,

review documents in the Department’s files, and refer

Omnibus’ Consolidated and Emergency Supplemental

Appropriations Act, Pub. L. No. 105-277, § 741, 112 Stat. 2681,

2681-30 to -31 (Oct. 21, 1998) (codified at 7 U.S.C. § 2279

Historical and Statutory Notes).

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the case for investigation. Jd. Ultimately the Director

cither negotiates a settlement with the complainant or

sends him a letter stating that the OCR will not settle

the complaint and informing him of his “options,

including [the] right to request formal proceedings

before an ALJ.” Id.

Some three to five years after filing their complaint

requests, 12 of the present plaintiffs received letters

from the Director declining to settle their complaints

and informing them of their options. Messrs. Pearson

and McDonald, each having waited several years when

this suit was filed, had not yet received letters from

the Director.

The second stage of the USDA’s review process

begins when a complainant requests a_ formal

on-the-record hearing pursuant to § 741(b)(1). Any

complainant may do so at any time after filing a

“complaint request” and until 30 days after receiving

a letter from the Director of the OCR declining to

settle his complaint. 7 C.F.R. §§ 15f.9—.11. The hearing

is conducted by an Administrative Law Judge. The

Director provides to the ALJ and to the complainant a

copy of the complaint file, along with a report stating

his position concerning the complaint. Jd. § 15f.15. The

judgment of the ALJ becomes final after 35 days

unless either the complainant requests review by the

Assistant Secretary for Civil Rights or the Assistant

Secretary sua sponte decides to review it. 7d.

8 15f.24(a).

The plaintiffs in this case had not requested a

formal hearing when they filed this suit in 2003. The

Government moved to dismiss their claims under the

ECOA for failure to exhaust their administrative

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remedies and to dismiss their claims for damages

under the Civil Rights Act, the APA, the common law,

and the Constitution as barred by sovereign immunity.

With respect to the claims under the ECOA, because

the parties submitted and rehed upon materials

outside the pleadings, the district court converted the

Government’s motion to dismiss into a motion for

summary judgment, Benoit v. United States Dep't of

Agriculture, 577 F. Supp. 2d 12, 22—23 (2008), which it

trranted. Id. at 23-26. The court dismissed the other

claims for lack of subject matter jurisdiction, holding

that the plaintiffs could not invoke the waiver of

sovereign immunity for common law tort claims in the

Federal Tort Claims Act (FTCA) because they had not

satisfied the exhaustion requirement in that statute

and that the United States had not waived its

sovereign immunity to claims for damages under the

Civil Rights Act, the APA, or the Constitution. Jd. at

26-27.

I]. Analysis

We review de novo an order of the district court

dismissing a claim for lack of subject matter

jurisdiction and a grant of summary judgment. See

Cope v. Scott, 45 F.3d 445, 450 (D.C. Cir. 1995).

Because we come independently to the same

conclusions as did the district court, we affirm the

order and judgment in all respects.

A. Sovereign Immunity

The plaintiffs wisely take no issue with the district

court’s holding that suits for damages against the

United States under the Civil Rights Act, the APA,

and the Constitution are barred by sovereign

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immunity and that suits for damages against the

United States under the common law must be brought

pursuant to the limited waiver of sovereign immunity

in the FTCA, which requires that the claimant have

exhausted his administrative remedy before filing suit.

Brookens v. Solis, 2009 WL 2414420, at *1 (D.C. Cir.

2009); United States v. Timmons, 672 F.2d 1373, 1380

(11th Cir. 1982) (“the United States has not waived its

immunity to suit under [§ 1981]”); Hubbard ov.

Administrator, EPA, 982 F.2d 531 (D.C. Cir. 1992) (en

banc) (suit for money damages not within limited

waiver of sovereign tmmunity in APA); Clark vu.

Library of Cong., ‘750 F.2d 89, 103-05 (D.C. Cir. 1984)

(constitutional claims solely for monetary damages

against federal official in his official capacity are

barred by sovereign immunity); McNeil v. United

States, 508 U.S. 106, 113 (1993) (The FTCA bars

claimants from bringing suit in federal court until they

have exhausted their administrative remedies’).

The plaintiffs make two attempts to sidestep

sovereign immunity by reframing their case on appeal.

First, they contend the exhaustion requirement in the

FTCA does not apply to claims challenging agency

procedures and, in any event, their failure to exhaust

was caused by their counsel’s excusable neglect. These

arguments are forfeit, however, because the plaintiffs

did not raise them in the district court. See, e.g.,

Bryant v. Gates, 532 F.3d 888, 898 (D.C. Cir. 2008).

Second, the plaintiffs argue the district. court

should have granted them leave to amend their

complaint to include a prayer for equitable relief

because they suggested, in opposing the Government’s

motion to dismiss, that “if the Court its otherwise

inclined to dismiss [the non-ECOA] counts, Plaintiffs

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should be granted leave to amend these counts.” The

district court noted their suggestion but declined to

grant leave to amend “in the absence of a formal

motion.” 577 F. Supp. 2d at 27. We review the district

court’s decision denying the plaintiffs’ request for leave

to amend for abuse of discretion. See Beltzan v.

Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006).

We can hardly say the district court abused its

discretion when we have previously held “a request for

leave [to amend] must be submitted in the form of a

written motion,” Belizan, 434 F.3d at 582, and Federal

Rule of Civil Procedure 7(b) provides the motion must

“state with particularity the grounds for seeking the

order f{and] state the relief sought.” The plaintiffs’

unwritten, one-sentence, conditional suggestion docs

neither. See Calderon v. Kansas Dep't of Soc. & Rehab.

Serus., 181 F.3d 1180, 1186-87 (10th Cir. 1999)

(affirming district court’s refusal to consider similar

one-sentence request, made in opposition to motion to

dismiss, for want of “notice to the district court and the

opposing party of the basis of the proposed

amendment’).

B. Failure to Exhaust Administrative Remedy

As noted, the district court entered summary

judgment for the Government on the plaintiffs’ claims

under the ECOA because the plaintiffs did not exhaust

their administrative remedy under § 741 by requesting

a formal hearing before an ALJ. 577 F. Supp. 2d at 23.

On appeal the plaintiffs argue they did not fail to

exhaust their administrative remedy or, if they did,

then the court should have excused their failure.

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1. Did the plaintiffs exhaust?

The plaintiffs say yes because each had filed a

§ 741 Complaint Request and, with the exception of

Messrs. Pearson and McDonald, received a letter from

the Director before suing. On this view, the letter was

a determination subject to judicial review pursuant to

§ 741(c). As the district court stated, the plaintiffs’

argument “cannot be squared with the language and

structure of the regulations” implementing § 741. 577

F. Supp. 2d at 24.

The Director’s letter is not judicially reviewable

because § 741(c) provides for judicial review only

insofar as a claim is “denied administratively.” The

letter does not do that; it merely informs the

complainant of the Director’s decision not to negotiate

a settlement. 7 C.F.R. § 15f.9. A decision to deny a

complaint can be issued only to a claimant who

requested a formal hearing. 7 C.F.R. §§ 15f.9—.16.

Therefore, in order to exhaust their administrative

remedy the plaintiffs would have had to request a

formal hearing before an ALJ. Although they could

* The plaintiffs also suggest a hearing before an ALJ was merely

an optional appeal they were free to take or to leave under Darby

v. Cisneros, 509 U.S. 137, 147 (1993). In that case the Court

explained that § 704 of the APA “by its very terms” prevents a

court from requiring a= party to exhaust his optional

administrative appeal in order to bring an APA challenge to final

agency action unless exhaustion is mandated by a statute or a

rule. /d. at 146. That case is doubly inapplicable here: the

plaintiffs’ suit is under § 741(c), not under the APA, see Darby,

509 U.S. at 153 (“the exhaustion doctrine continues to apply as a

matter of sound judicial discretion in cases not governed by the

APA”), and as the plaintiffs concede, § 741 requires exhaustion,

Oral arg. at 8:45

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have done so at any time after they filed their

complaints with the OCR and for 30 days after

receiving notice of the Director’s decision, the plaintiffs

filed this suit without first having requested a formal

hearing. Their failure to exhaust that administrative

remedy bars judicial review of their claims under the

ECOA unless, as they argue, the court has, and it is

appropriate in this case to exercise, discretion to

excuse that omission.

2. Is the plaintiffs’ failure to exhaust excusable?

The plaintiffs argue it is because, quoting

McCarthy v. Madigan, 503 U.S. 140, 146 (1992), their

“interests in immediate judicial review outweigh the

government’s interests in the efficiency and

administrative autonomy that the exhaustion

requirement is designed to further.” According to the

Government, however, we lack the power to excuse

exhaustion and, in any event, doing so is_ not

warranted in this case.

The parties agree both that § 741(c) implicitly

requires exhaustion and that the plaintiffs’ failure to

exhaust did not deprive the district court of

jurisdiction. What they dispute is whether exhaustion

in this case is “mandatory” — either by virtue of § 741

or by virtue of 7 U.S.C. § 6912(e), which requires

Section 741(c) provides: “if an eligible claim is denied

administratively, the claimant shall have at least 180 days to

commence a cause of action in a Federal court of competent

jurisdiction seeking review of such denial.”

Section 6912(e) of 7 U.S.C. provides “a person shall exhaust all

administrative appeal procedures... before the person may bring

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exhaustion in suits against the USDA generally,

Munsell v. Dep't of Agriculture, 509 F 2d 572,579 (D.C.

‘ir. 2007) — and, if so, whether the court can excuse

these plaintiffs’ failure to exhaust. See id. (even “a

mandatory exhaustion requirement may be excused in

appropriate circumstances, whereas a jurisdictional

exhaustion requirement never may be excused by a

court”) (dictum). Furthermore, if exhaustion is

mandatory in this case, then the court’s power to

excuse the plaintiffs’ failure to exhaust may be more

limited, as the Government suggests, than is our

power to excuse compliance with a non-mandatory

exhaustion requirement. See McCarthy, 503 U.S. at

144 (“Of paramount importance to any exhaustion

inquiry is congressional intent” (internal quotation

marks omitted)).

Interesting as these issues are, we can decide this

case without resolving them. For even if we have

discretion to excuse a plaintiffs failure to exhaust

their administrative remedy, a balancing of interests

pursuant to McCarthy v. Madigan does not support

our doing so in this case.

First, as the district court pointed out, the

Government has a significant interest in having the

plaintiffs exhaust their administrative remedy. 577 F.

Supp. 2d at 23 n.16. The process of review within the

USDA gives the Department “the opportunity ‘to

correct its own errors,” Boivin v. U.S. Atrways, Inc.,

446 F.3d 148, 155 (D.C. Cir. 2006) (quoting McCarthy,

503 U.S. at 145), and thereby to avoid unnecessary

an action... against (1) the Secretary; (2) the Department; or

(3) an agency, office, officer, or employee of the Department.”

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litigation. ven if litigation is not avoided, the formal

hearing before an ALJ “may produce a useful record

for subsequent judicial consideration.” McCarthy, 503

U.S. at 145-46.

There are, to be sure, limited circumstances “in

which the interests of the individual [plaintiff] weigh

heavily against requiring administrative exhaustion”

and in favor of immediate judicial review. /d. at

146-47. The Supreme Court has identified at least

three such circumstances — where “requiring resoivt to

the administrative remedy may occasion undue

prejudice to subsequent assertion of a court action,” or

there is “some doubt as to whether the agency was

empowered to grant effective relief,” or “the

administrative body is shown to be biased or has

otherwise predetermined the issue before it.” Jd. at

146-149.

The present plaintiffs allege none of these

circumstances; instead they stress the importance of

their cause, involving as it does allegations of

“unlawful racial discrimination in violation of their

constitutional, statutory, and common law rights,” Br.

of Appellants at 28, and the history of “undue delay” in

the USDA’s handling of their Complaint Requests.

That the plaintiffs’ interest in redressing the harm

allegedly done them by racial discrimination is

weighty and comes squarely within the zone of

interests protected by the ECOA is undoubtedly true.

Those features of the case, however, do not evidence

“the litigant’s interests in immediate judicial review”

of the sort considered in McCarthy. 503 US. at 147,

citing Bowen v. City of New York, 476 U.S. 467, 483

(1986) (disability benefit claimants “would be

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irreparably injured were the exhaustion requirement

now enforced against them”). The weight or intensity

of a plaintiff's interest in his cause might in some

circumstances indicate that exhaustion would

prejudice the plaintiff or be unproductive, but in this

case the plaintiffs’ failure to request a formal hearing

at any point during the administrative settlement

process indicates the opposite.

furthermore, there is neither logical nor empirical!

support for the plaintiffs’ suggestion a formal hearing,

had they elected to have one, would not have

proceeded expeditiously. Logically, the Director of the

OCR’s delay of several years before responding to the

plaintiffs’ complaints is irrelevant; the plaintiffs could

have opted for a formal hearing before an ALJ at any

time while their claims were pending before the

Director but, except Messrs. Pearson and McDonald,

who requested review by an ALJ since filing this suit,

they chose instead to wait. They suggest no other

reason to think a formal hearing would not have

proceeded expeditiously.

Empirically, the agency’s response when Messrs.

Pearson and McDonald filed their requests for review

by an ALJ belies the plaintiffs’ claim. According to a

post-argument letter the Government submitted

pursuant to Federal Rule of Appellate Procedure 28(j),

the accuracy of which plaintiffs have given us no

reason to doubt, within a few months of Pearson’s and

McDonald’s requests for a hearing an ALJ was

assigned to their cases and pre-hearing conferences

were scheduled.

We conclude the district court properly granted

summary judgment in favor of the Government on the

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plaintiffs’ claims under the ECOA because they failed

to exhaust their administrative remedy. Applying the

criteria prescribed by the Supreme Court in McCarthy,

that failure is not excusable.

Ill. Conclusion

The district court properly dismissed for lack of

subject matter jurisdiction the plaintiffs’ claims arising

under the Civil Rights Act, the APA, the common law,

and the Constitution. The district court also properly

granted summary judgment for the Government with

respect to their claims under the ECOA, because the

plaintiffs failed to exhaust the administrative remedy

provided in § 741. The judgment of the district court is

in all respects, therefore,

Affirmed.

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 08-5434

September Term, 2009

FILED ON; JUNE 11, 2010

KIRK BENOIT, ET AL.,

APPELLANTS )

}

}

UNITED STATES DEPARTMEN'

OF AGRICULTURE, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:03-cv-01917)

Before: GINSBURG and GRIFFITH, Circuit Judges

and SILBERMAN, Senor Circuit Judge

JUDGMENT

This cause came on to be heard on the record on

appeal from the United States District Court for the

District of Columbia and was argued by counsel. On

consideration thereof, it 1s

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ORDERED and ADJUDGED that the judgment

of the District Court appealed from in this cause is

hereby affirmed, in accordance with the opinion of the

court filed herein this date

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

MaryAnne Lister

Deputy Clerk

Date: June 11. 2010

Opinion for the court filed by Circuit Judge Ginsburg

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 03-1917 (PLE)

[riled September 9, 2008]

KIRK BENOIT, et al.,

Plaintiffs

’

UNITED STATES DEPARTMENT

OF AGRICULTURE, et ai.,'

Defendants.

me meee eee

OPINION

This matter is before the Court on defendants’

motion to dismiss plaintiffs’ complaint for lack of

subject matter jurisdiction under Rule 12(b)(1) of the

‘The Second Amended Complaint named Ann Veneman, former

Secretary of the United States Department of Agriculture, as one

ofthe party defendants. The Court now substitutes her successor,

Hdward Schafer, pursuant to Rule 25(d) of the Federal Rules of

Civil Procedure

L7a

Federal Rules of Civil Procedure.’ Upon consideration

of defendants’ motion, plaintiffs’ opposition,

defendants’ reply, and the entire record in this case,

the Court will (1) grant summary judgment in favor of

the defendants on plaintiffs’ &qual Credit Opportunity

Act claims, and (2) dismiss for lack of subject matter

jurisdiction plaintiffs’ claims under the United States

Constitution, the Civil Rights Act of 1964, the

Administrative Procedure Act, and the common law.

L. OVERVIEW

This is a discrimination suit. Fourteen African

American farmers, all but two of whom opted out of

the so-called Pigford litigation, see Pigford _v.

Glickman, 185 F.R.D. 82(D.D.C. 1999), allege that the

United States Department of Agriculture (“USDA”)

has, over the course of many years, discriminated

against them on the basis of race (and, in the case of

plaintiff Dorothy Deloney, on the basis of sex as well)

in connection with the agency’s federally funded credit

and benefit programs.”

’ The papers submitted in connection with this motion include:

Defendants’ Motion to Dismiss Plaintiffs’ Complaint Or, in the

Alternative, to Transfer Venue (“Defs.”. Mot.”); Plaintiffs’

Opposition to Defendant USDA’s Motion to Dismiss (“Pls.’ Opp.”);

and Defendants’ Reply in Support of USDA’s Motion to Dismiss

Plaintiffs’ Complaint Or, in the Alternative, to Transfer Venue

(“Defs.’ Reply”). As its title implies, the USDA’s motion to dismiss

includes a request to transfer any claims over which the Court

concludes it has jurisdiction to the venues in which the surviving

claimants reside. The Court’s disposition of this matter makes it

unnecessary to consider that request.

“The plaintiffs are Kirk Benoit of St. Croix, United States Virgin

Islands; Eddie Cotton, Jr. of Pattison, Mississippi; Dorothy

J8a

All of the plaintiffs assert that the USDA’s

allegedly discriminatory conduct entitles them to

monetary damages under the Equal Credit

Opportunity Act, 15 U.S.C. §§ 1691 et seq. “ECOA”);

the Fifth and Fourteenth Amendments to the United

States Constitution; Section 1981 of the Civil Rights

Act of 1964, 42 U.S.C. § 198] (“Section 1981”); and the

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

Plaintiffs also assert common law tort claims. See

Second Amended Complaint 4] 775-801 (““Compl.”). As

discussed in more detail below, the defendants --

hereinafter referred to collectively as “the USDA”

maintain that all of the plaintiffs’ claims are barred by

the doctrine of sovereign immunity.

Il. STANDARDS OF REVIEW

The USDA moves to dismiss all of the plaintiffs’

claims for lack of subject matter jurisdiction under

Rule 12(b)(1) of the Federal Rules of Civil Procedure.

This is problematic as a procedural matter because, for

reasons discussed below, the Court concludes that the

USDA’s challenges to plaintiffs’ ECOA claims — unlike

the USDA’s challenges to plaintiffs’ other claims — are

not properly asserted under the rubric of Rule 12(b)(1)

but must be considered under the summary judgment

standard of Rule 56. The Court therefore sets forth

Deloney of Ashdown, Arkansas; Hezekiah Gibson of Manning,

South Carolina; Charles Harris and Ruth Harris of Brundidge,

Alabama; Alphonso James and Mariet James of St. Croix, United

States Virgin Islands; Charles McDonald of Manning, South

Carolina; Bruce Manigo of Charleston, South Carolina; Donnell

Manigo and Randolph Manigo of Walterboro, South Carolina;

fuchard Pearson of Freeman, Virginia; and John Simmons of

Williston, South Carolina.

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both the standard for resolving motions to dismiss for

lack of subject matter jurisdiction and the standard for

resolving motions for summary judgment.

A. Rule 12(b)(1): Motion to Dismiss for Lack of

Subject Matter Jurisdiction

Federal courts are courts of lhmited jurisdiction.

They therefore may hear only cases entrusted to them

by a grant of power contained in either the

Constitution or in an act of Congress. See, e.g.,

F.3d 939, 945 (D.C. Cir. 2005); Best v. United States,

522 IF. Supp. 2d 252, 254 (D.D.C. 2007); Srour v.

Barnes, 670 F. Supp. 18, 20 (D.D.C.1987) (citing City

of Kenosha v. Bruno, 412 U.S. 507, 511, (1973)). The

United States may be sued for money damages only

when it has expressly waived its immunity from suit.

see FDIC v. Meyer, 510 U.S. 471, 475 (1994) (citing

Loeffler v. Frank, 486 U.S. 549, 554 (1988)).

Under Rule 12(b)(1), the plaintiffs bear the burden

of establishing subject matter jurisdiction. See

Kokkonen v. Guardian Life Insurance Co., 511 U.S.

375, 377 (1994); Moms Against. Mercury v. FDA, 482

F.3d 824, 828 (D.C. Cir. 2007) (citing Georgiades v.

Martin-Trigona, 729 F.2d 831, 833 n.4 (D.C. Cir.

1984)). In determining whether to grant a motion to

dismiss for lack of subject’ matter jurisdiction, the

Court must accept all of the factual allegations in the

complaint as true, but may, in appropriate cases,

consider certain materials outside the pleadings. See

Jerome Stevens Pharmacies, Inc. v. FDA, 402 F.3d

1249, 1253-54 (D.C. Cir. 2005). The Court may cither

consider the complaint alone, or “the complaint

supplemented by undisputed facts evidenced in the

20a

record, or the complaint supplemented by undisputed

facts plus the court’s resolution of disputed facts.”

Herbert v. Nat'l Academy of Sciences, 974 F.2d 192,

197 (D.C. Cir. 1992). While the complaint is to be

construed liberally, the Court need not accept factual

inferences drawn by plaintiffs if those inferences are

not supported by facts alleged in the complaint. Nor

must the Court accept plaintiffs’ legal conclusions. See

Best v. United States, 522 F. Supp. 2d at 255; Primax

Recoveries, Inc. v. Lee, 260 F. Supp. 2d 43, 47 (D.D.C.

inn

2003).

B. Rule 56: Motion for Summary Judgment

Summary judgment may be granted only if “the

pleadings, the discovery and disclosure materials on

file, and any affidavits {or declarations] show that

there is no genuine issue as to any material fact and

that the movant is entitled to judgment as a matter of

law.” FED. R. Civ. P. 56(c); see also Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 247-48 (1986): Holcomb v.

Powell, 433 F.3d 889, 895 (1).C. Cir. 2006). “A fact is

‘material’ if'a dispute over it might affect the outcome

ofa suit under the governing law; factual disputes that

are ‘irrelevant or unnecessary do not affect the

summary judgment determination.” Holcomb _v.

Powell, 433 F.3d at 895 (quoting Anderson v. Liberty

Lobby, Inc., 477 U.S. at 248). An issue is “genuine” if

the evidence is such that a reasonable jury could

return a verdict for the non-moving parties. See

Anderson v. Liberty Lobby, Inc., 477 U.S. at 248;

Holcomb v. Powell, 433 F.3d at 895. When a motion for

summary judgment is under consideration, “the

evidence of the non-movant is to be believed, and all

justifiable inferences are to be drawn in [his or her]

favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. at

2la

255; see also Mastro v. Potomac Electric Power Co.,

447 F.3d 843, 849-50 (D.C. Cir. 2006); Aka_v.

Washington Hospital Center, 156 F.3d 1284, 1288

(1).C. Cir. 1998) (en banc); Washington Post Co. v.

Dep’t_of Health and Human Services, 865 F.2d 320,

325 (D.C. Cir. 1989). On a motion for summary

judgment, the Court must “eschew making credibility

determinations or weighing the evidence.” Czekalski v.

Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).

The non-moving parties’ opposition, however, must

consist of more than mere unsupported allegations or

denials and must be supported by affidavits,

declarations or other competent evidence setting forth

specific facts showing that there is a genuine issue for

trial. See Fen. R. Civ. P. 56(e)(2); Celotex Corp. v.

Catrett, 477 U.S. 317, 324 (1986). The non-moving

parties are “required to provide evidence that would

permit a reasonable jury to find” in their favor.

Laningham v. U.S. Navy, 813 F.2d 1236, 1242 (D.C.

Cir. 1987). If the evidence is “merely colorable” or “not

significantly probative,” summary judgment may be

granted. Anderson v. Liberty Lobby, Inc., 477 U.S. at

249-50; see Scott v. Harris, 127 S. Ct. 1769, 1776

(2007) (“[W]here the record taken as a whole could not

lead a rational trier of fact to find for the non-moving

party, ‘there is no genuine issue for trial.””) (quoting

Matsushita Electric Industrial Co. v. Zenith Radio

Corp., 475 U.S 574, 587 (1986)). To defeat summary

judgment, plaintiffs must produce more than “a

scintilla of evidence to support [their] claims.”

Freedman v. MCI Telecommunications Corp., 255 F.3d

840, 845 (D.C. Cir. 2001).

22a

Hl. FQUAL CREDIT OPPORTUNITY ACT CLAIMS

A. Background

All fourteen plaintiffs assert that the USDA

violated the ECOA by discriminating against them in

connection with the USDA’s credit and non-credit

benefit programs for farmers.‘ Generally speaking,

plaintiffs have little in common except that they are all

parties to this lawsuit. Plaintiffs reside in five states

and the United States Virgin Islands; they are or were

engaged in very different farming enterprises; and,

with a few exceptions, all of their claims are based on

different factual allegations.” Nevertheless, the

plaintiffs’ similarities are more important than their

differences for purposes of this Opinion. Two

similarities are most relevant. First, all plaintiffs

distill from their distinct factual allegations the same

legal claim: that is, that the USDA discriminated

against them in violation of the ECOA by, at various

times and in various ways, (1) purposely losing or

failing to act on their loan applications;

Specifically, plaintiffs assert that they were discriminated

against in connection with programs administered by the Farmers

Home Administration or its successor agency, the Farm Service

Agency. “The former Farmers Home Administration ... was a

credit agency within USDA that was authorized, as its successor

the Farm Service Agency is now, to make loans to farmers who

are generally unable to obtain credit from commercial sources.”

Defs.’ Mot. at 3.

° “Charlie and Ruth Harris, Alphonso and Mariet James, and

brothers Bruce, Donnell and Randolph Manigo... are related and

sue based on the same factual allegations, [but] the plaintiffs’

claims otherwise rest on completely distinct sets of facts.” Defs.’

Mot. at 14.

(2) unreasonably delaying the processing of their loan

applications; (3) denying their loan applications on the

basis of race and (in one case) sex; (4) withholding loan

funds for which they were approved; (5) requiring

them to utilize supervised bank accounts; and/or

(G) failing to inform them that local USDA decisions

could be appealed. See Compl. {| 787. Second, all of the

plaintiffs seek to assert ECOA claims that are timely

only if they fall within the ambit of Section 741, a

provision of law that waives the ECOA’s generally

applicable two-year statute of limitations for certain

individuals. See Agriculture, Rural Development, Food

and Drug Administration, and Related Agencies

Appropriations Act of 1999, Pub. L. 105-277, § 741,112

Stat. 2681 (Oct. 21, 1998) (codified at 7 U.S.C. § 2279

Historical and Statutory Notes) (hereinafter “Section

741”)

After setting forth the legal framework within

which plaintiffs’ ECOA claims must be considered, the

Court (1) explains why the USDA’s motion to dismiss

plaintiffs’ ECOA claims for lack of subject matter

jurisdiction under Rule 12(b)(1) of the Federal Rules of

Civil Procedure is in fact properly resolved as a motion

for summary judgment under Rule 56, and

(2) concludes that the USDA is entitled to summary

judgment on plaintiffs’ ECOA claims

B. Legal Framework

1. The Equal Credit Opportunity Act

The ICOA creates a private right of action against

a creditor who discriminates against any applicant

“with respect to any aspect of a credit transaction ...

on the basis of race, color, religion, national origin, sex

24a

or marital status, orage....”. 15 U.S.C. § 1691(a); see

Garcia v. Johanns, 444 F.3d 625, 629 n. 4 (D.C. Cir.

2006). The statute defines the term “creditor” to

include the United States government, see 15 U.S.C.

§§ 169 1la(e), (f), and thereby waives the United States’

sovereign immunity for claims brought under the

ECOA. See Moore v. USDA, 55 F.3d 991, 994-95 (5th

Cir. 1995); Williams v. Conner, 522 F. Supp. 2d 92, 99

(D.D.C. 2007).

A plaintiff must bring any claim under the ECOA

within two years of the date of the alleged violation.

See 15 U.S.C. § 1691e(f). All of plaintiffs’ ECOA claims

are based on allegedly discriminatory conduct that

occurred before 2000, see Compl. { 34-774, but

plaintiffs did not file this suit until September 15,

2003. Thus, their claims are time-barred under the

ECOA’s generally applicable statute of lhmitations.

Plaintiffs argue, however, that their claims are

properly before this Court pursuant to a limited waive~

of the ECOA’s statute of limitations contained 1

Section 741. See Garcia v. Johanns, 444 F.3d at 620

n.4.

Enacted in 1998, Section 741 was a response to a

fundamental breakdown in the USDA’s system for

processing discrimination complaints. The civil rights

office of the USDA was essentially “dismantled” in the

early 1980s and, as a result, many administrative

complaints of discrimination filed with the USDA

between 1981 and 1996 “were never processed,

investigated or forwarded to the appropriate agencies

for conciliation.” Pigford v. Glickman, 185 F.R.D. at 88.

The agency’s failure to properly process these

complaints effectively denied a large number of

complainants the right to seek relief under applicable

25a

anti-discrimination statutes —- such as the ECOA

because the limitations periods for those statutes

expired while the complainants waited for a response

from the USDA. See Administrative Civil Rights

Adjudications Under Section 741, 63 Fed. Reg. 67392,

67392 (Dec. 4, 1998) (explaining the genesis of Section

741).

Congress addressed this problem by enacting

Section 741, which retroactively waived the ECOA’s

two-year statute of limitations for all individuals who

had filed “eligible complaints” with the USDA.

Congress defined an “eligible complaint” as “a

nonemployment related complaint that was filed with

the Department of Agriculture before July 1, 1997 and

alleges discrimination at any time during the period

beginning on January 1, 1981 and ending December

31, 1996” — that is, during the period when USDA’s

complaints processing system was_ virtually

nonexistent — “in violation of the Equal Credit

Opportunity Act ...in administering ... a farm

ownership, farm operating, or emergency loan... .”. 7

U.S.C. § 2279 Historical and Statutory Notes, §74 le).

Congress also specified two avenues of relief for those

who had filed eligible complaints. First, these

complainants were permitted to bring their claims of

discrimination directly to federal court, provided they

did so by October 21, 2000. Id. § 741(a). Second, in lieu

of proceeding directly to court, these complainants

were permitted to “seek a determination on the merits

of [their] eligible complaint[s]” by the USDA in the

first instance, id. § 741(b), and then obtain judicial

review in federal court “if [their] eligible claim|s]

26a

[were] denied administratively.” Id. § 741(c).° Congress

instructed the USDA to render administrative

decisions on complaints submitted under Section

741(b) within 180 days “to the maximum extent

practicable.” Id. § 741(b)(3).

All of the plaintiffs now before the Court chose the

latter route — that is, they sought administrative

review by the USDA in the first instance under Section

741(b)

2. USDA’s Implementing Regulations

USDA regulations govern the internal agency

review process contemplated by Section 741(b). See 7

C.F.R. Pt. 15F (“Adjudications Under Section 741”).’

Under those regulations, individuals who choose to

obtain an administrative determination in the first

instance must begin by filing a Section 741 Complaint

Request with the USDA’s Office of Civil Rights. See 7

C.F.R. § 15f.5. The purpose of a Section 741 Complaint

Request is to notify the agency that the person

submitting the request would like to have his or her

underlying complaint considered under the procedures

* Section 741(c) provides, in pertinent part, that “if an eligible

claim is denied administratively, the claimant shall have at least

180 days to commence a cause of action in a Federal court of

competent jurisdiction seeking a review of such denial.” 7 U.S.C.

§ 2279 llistorical and Statutory Notes, § 741(c). Section 74 1(d)(2)

vests federal courts with jurisdiction over such actions. Id

§ 741(d 2) (giving federal courts jurisdiction over “any civil action

for judicial review of a determination in an administrative

proceeding in the Department of Agriculture under this section”).

Notably, plaintiffs do not challenge the validity of these

regulations. See Defs.’ Reply at 18

27a

set forth in Part 15F. See id. § 15f.4. The mere

docketing of a Section 741 Complaint Request does not

establish that the underlying complaint is itself an

“eligible complaint” within the meaning of Section 741.

See Defs.’ Mot. at 10 (“Even though [an underlying

complaint] enters the Section 741 process when a

Section 741 Complaint Request is docketed, the

regulations provide that an ALJ may, later in the

process, dismiss the complaint upon finding that it

does not meet § 741’s ‘eligible complaint’ definition.”).

All Section 741 Complaint Requests’ are

automatically referred to the Director of the USDA’s

Office of Civil Rights (hereinafter the “Director”). See

7 C.F.R. § 15f.8. If the Director decides that a

complainant’s underlying complaint is “eligible,” and

if he decides that the individual’s underlying

complaint is appropriate for informal resolution, he

may offer to negotiate a settlement of the underlying

complaint. See id. §§ 15f.8, 15f.9. If the parties

successfully negotiate a settlement, then the Director

will issue a “final determination” disposing of the

underlying complaint. See id. § 15f.9. If, however, the

Director decides that a complaint does not meet the

eligibility requirements of Section 741, or if the

Director chooses not to settle an underlying complaint,

or if the parties’ settlement efforts are unsuccessful,

the Director issues a letter to the complainant

explaining the Director’s decision and informing the

complainant of his right “to request formal

proceedings” before an Administrative Law Judge. See

id.” To obtain ALJ review a complainant must file a

® According to the USDA, this particular review structure is

mandated by Section 741, which incorporates the APA provisions

2ha

“request for a hearing” with the USDA within 30 days

of receiving a decision letter from the Director, and in

the case of those who received such a letter before

February 14, 2003, within 90 days of that date. See

Defs.’ Mot. at 12; see also 7 C.F.R. § 15f.9.%

If the complainant does timely request a hearing

before an ALJ, then the ALJ will review the

complainant’s case, conduct a hearing and issue a

proposed determination. See 7 C.F.R. § 15f.13. The

ALJ’s proposed determination will become the agency's

“final determination” as to that complainant 35 days

after it is issued — unless the ALJ’s decision is

appealed to the USDA’s Assistant Secretary for Civil

Rights or the Assistant Secretary sua sponte decides to

review the ALJ decision. Id. § 15f.24. In the event of an

appeal to the Assistant Secretary, the Assistant

Secretary's decision becomes the agency’s final

determination. See id. If the complainant does not

timely request ALJ review, then the agency wil!

administratively close the complainant’s file. See id.

§ 15f.9 (“Any request for formal proceedings [before an

governing formal adjudications. See 7 U.S.C. § 2279 Historical and

Statutory Notes, § 741(b\1) (requiring the USDA to offer

complainants an “opportunity for a hearing on the record”); 5

U.S.C. § 554(a) (providing that the APA provisions governing

formal adjudications “applly] . . . in every case of adjudication

required by statute to be determined on the record after

opportunity for an agency hearing”); id. § 554(c)1) (permitting

offers of settlement)

* A complainant may also choose to interrupt or forego altogether

the Director's informal review and proceed directly to formal Al

review. See 7 C.F.R. § 15f.10. None of the plaintiffs currently

before the Court chose this option, although Mr. McDonald and

Mr. Pearson may still choose to do so

29a

ALJ] received by USDA after the deadlines set forth in

this section will not be accepted.”); see also Defs.’ Mot.

at 34.

C. The Parties’ Arguments

Plaintiffs maintain that they sought administrative

determinations of their discrimination complaints

under Section 741(b); obtained final determinations

denying their claims; and are now entitled to assert

their ECOA claims in this Court under Section 741(c)

(which, to repeat, permits individuals to seek judicial

review of an agency decision “if an administrative

claim [of discrimination] ts denied administratively”).

See Pls.’ Opp. at 22-32.

Specifically, Mr. Benoit, Mr. Gibson, Mr. and Mrs.

Harris and Mr. Simmons argue that their claims were

“denied administratively” when they received letters

from the Director declining to settle their claims. See

Compl. 49 66 (Mr. Benoit), 254 (Mr. Gibson), 377 (Mr.

and Mrs. Harris), 770 (Mr. Simmons). Mr. and Mrs.

James argue that their claims were denied when Mr.

James received a letter from the Director informing

him that the USDA’s attempts to resolve his complaint

through alternative dispute resolution had failed. See

id. I 4] 442-43. Ms. Deloney argues that her claim was

denied when she received a letter from the Director

informing her that the USDA would not engage in

settlement negotiations with her because it had

concluded that she never filed an “eligible complaint”

within the meaning of Section 74 1(e). See id. J 154; see

also Defs.’ Mot., Ex. 6, Letter from USDA to Dorothy

Deloney at 2. Mr. Cotton and the three Manigo

brothers, it seems, argue that their claims were denied

when they received letters offering to settle some but

30a

not all of their claims. See id. 74] 99-100 (Mr. Cotton),

599 (Manigo brothers); see also Defs.’ Mot. at 17. Mr.

McDonald and Mr. Pearson, who have not received

letters from the Director declining to settle their

claims, sue on the theory that their underlying

complaints “have effectively been denied by the

USDA’s unreasonable delay in making a final

determination on their complaints.” Id. J 28."°

The USDA argues that this Court may not exercise

subject matter jurisdiction over plaintiffs’ ECOA

claims for two reasons. First, the USDA argues that

Section 741 waives the ECOA’s statute of limitations

only for those who filed “eligible complaints,” and that

the filing of an eligible complaint therefore is a

jurisdictional prerequisite to judicial review under

Section 741(c). The USDA further argues that

“|blecause § 741(c)’s ‘eligible complaint’ requirement is

jurisdictional, plaintiffs must allege in their pleading

the facts necessary to meet it.” Defs.’ Mot. at 21. But,

says the USDA,

none of the plaintiffs allege ... that [they filed]

“eligible compiaints” within the meaning of

§ 741. Moreover, based on their {Office of Civil

' According to the USDA, Mr. McDonald has not received a letter

from the Director because the Director has not finished informally

reviewing his claim, and Mr. Pearson has not received a letter

because Mr. Pearson’s claim was referred to an alternative

dispute resolution proceeding that has not yet concluded. See

Defs.’ Mot. at 18. Plaintiffs have attached a letter suggesting that

settlement discussions between Mr. Pearson and the USDA have

effectively concluded, and that those efforts were unsuccessful.

See Pls.” Opp., Ex. 11, Letter from Plaintiffs’ Counsel to USDA at

2 (January 16, 2004).

3Sla

Rights] files, it appears that only two plaintiffs

{- Mr. McDonald and Mr. Pearson —] could

prove this jurisdictional element even were it to

be properly pled.

Id. at 20. In other words, the USDA contends that the

ECOA claims of Mr. Benoit, Mr. Cotton, Ms. Deloney,

Mr. Gibson, Mr. and Mrs. Harris, Mr.and Mrs lames,

the Manigo brothers and Mr. Simmons must be

dismissed for lack of subject matter jurisdiction on the

ground that they have not and cannot “allege facts

sufficient to show that their administrative

complaints” — that is, the underlying complaints on

which their Section 741 Complaint Requests are based

“meet the specifications of § 741’s ‘eligible complaint’

definition.” Id. at 22.

Second, the USDA argues that this Court lacks

subject matter jurisdiction over plaintiffs’ ECOA

claims because none of the plaintiffs obtained a final

administrative determination of their claims before

filing suit. See Defs.’ Mot. at 28-36. Specifically, the

USDA argues that if a complainant chooses to proceed

under Section 741(b), “Section 741(c) permits judicial

review only where an ‘eligible complaint’ has been

‘denied administratively’ by USDA, 7.e., only after

USDA has issued its final determination disposing of

the matter.” Id. at 28. And under the USDA's

interpretation of its regulations, only ALJs (and, on

appeal from AL.J decisions, the Assistant Secretary for

Civil Rights) are authorized to issue final

determinations of disputed complaints; the Director of

the Office of Civil Rights is not. See Defs.’ Reply at 17

(“The Director’s review is by definition informal and

his role is limited to deciding whether to undertake

ce . . . ” 11

settlement negotiations with the complainant.”).

The USDA argues that the letters the Director

sends to Section 741(b) complainants upon completing

his initial review do not constitute final

determinations or “denials” opening the door to judicial

review under Section 74 l(c); rather, the only way that

Section 741(b) claims are “denied administratively” is

by way of formal ALJ rulings. See Defs.’ Mot. at 30.

Stated differently, the USDA argues that ALJ review

is a prerequisite to judicial review of the agency’s

decisions for those who seek an administrative

determination of their claims in the first instance. See

Defs.’ Reply at 14-16.'* According to the USDA, all of

the plaintiffs filed suit without seeking or obtaining

formal ALJ review. See Defs.’ Mot. at 30; see also id. at

16 (“The farthest that any of plaintiffs pursued the

Section 741 process [before filing suit] was to wait for

the Director to complete his informal review of their

complaints to assess whether they were candidates for

settlement.”). Thus, says the USDA, the plaintiffs

divested this Court of jurisdiction over their ECOA

" The Director is explicitly authorized to issue a “final

determination” only if settlement efforts are successful. See 7

C.F.R. § 15f.9

' Both sides seem to assume that this exhaustion requirement

arises from the interaction of Section 741(b), Section 74 1(c), and

7C.F.R. Pt. 15F. That may be true. Even if it is not, however,

another provision of law requires administrative exhaustion here.

See 7 U.S.C. § 6912(e); see also Munsell v. United States Dep't of

‘mposes a mandatory, but non-jurisdictional, exhaustion

requirement).

33a

claims by “abandonl{ing|” the Section 741 process

without exhausting it. Id. at 2."

D. The USDA’s Jurisdictional Challenges

As noted, USDA argues that the Court lacks

subject matter jurisdiction for two separate reasons:

(1) none of the plaintiffs filed “eligible complaints”

under Section 741, and none of the plaintiffs obtained

a final administrative determination from the USDA

and therefore none of the plaintiffs exhausted their

administrative remedies. In the Court’s view, neither

of these arguments should have been asserted in a

motion to dismiss for lack of subject matter

jurisdiction. As explained below, the eligible complaint

argument and the exhaustion argument relate to the

viability of plaintiffs’ claims under Section 741 and the

ICOA; they do not call into question the jurisdiction of

this Court. The Court therefore will not address these

arguments under Rule 12(b)(1).

In Arbaugh v. Y & H Corp., 546 U.S. 500, 503

(2006), the Supreme Court observed that courts and

litigants too often confuse or conflate two distinct

concepts: subject matter jurisdiction over a controversy

and “the essential ingredients of a federal claim for

relief.” ‘To reduce the frequency of such unrefined

analyses, the Court articulated a “readily

administrable bright line” test for determining

whether a disputed issue concerns a Court’s subject

3 \ x > . - -

‘The USDA frequently articulates this argument in terms of

“finality,” but it is, in essence, an argument that Section 74 1(b)

complainants must exhaust administrative remedies.

34a

matter jurisdiction as contrasted with an essential

element of the plaintiff's claim:

If the Legislature clearly states that a threshold

limitation on a statute’s scope shall count as

jurisdictional, then courts and litigants will be

duly instructed and will not be left to wrestle

with the issue. ... But when Congress does not

rank a statutory limitation on coverage as

jurisdictional, courts should treat the restriction

as nonjurisdictional in character.

Id. at 515-16; see also Zipes v. Trans World Airlines,

Inc., 455 U.S. 385, 394 (1982) (statutory hmitations on

the scope of a federal cause of action are jurisdictional

in character if they “speak in jurisdictional terms or

refer ... to the jurisdiction of the district courts”);

Munsell v. United States Dep’t of Agriculture, 509

F.3d at 580 (same); Fernandez v. Centerplate/NBSE,

441 F.3d 1006, 1009 (D.C. Cir. 2007) (same); Jaeger v.

United States, 524 F. Supp. 2d 60, 63 (D.D.C.2007)

(same). Thus, in order to decide whether the eligible

complaint requirement and the exhaustion

requirement are jurisdictional in nature, the Court.

must determine whether Congress unequivocally

ranked them as such.

The USDA’s first principal argument — relating to

the eligible complaint requirement of Section 741 —

appears to progress as follows: (1) Section 741 waives

the United States’ sovereign immunity; (2) the eligible

complaint requirement limits the scope of that waiver;

and thus (3) the eligible complaint requirement

amounts to a jurisdictional limitation. Under Arbaugh,

this argument cannot succeed. Nowhere in Section 741

is the eligible complaint requirement stated in

35a

“jurisdictional terms.” Zipes v. Trans World Airlines,

Inc., 455 U.S. at 394. Nor is the eligible complaint

requirement incorporated directly into the jurisdiction-

conferring provisions of Section 741. See id.; see also 7

U.S.C. § 2279 Historical and Statutory Notes,

8§ 741(d)(1), 741(d)(2). The Court therefore concludes

that whiie Section 741 “specifies, as a prerequisite to

its application, the existence of a particular fact” —

namely, the filing of an eligible complaint — the

existence or non-existence of that fact was not

intended to have jurisdictional significance. Arbaugh

v.Y & H Corp., 546 U.S. at 5138. Rather, it appears

that Congress intended for the eligible complaint

requirement to be treated as an essential element of

plaintiffs’ ECOA claims when such claims are brought

under Section 741."

The USDA’s second principal argument — that the

exhaustion requirement is jurisdictional — is even less

persuasive. It is true, of course, that “the existence of

an administrative remedy automatically triggers a

non-jurisdictional exhaustion inquiry,” Avocados Plus,

Inc. v. Veneman, 370 F.3d 1248, 1248 (D.C. Cir. 2004)

(emphasis added), and that a piaintiff's claim may be

rejected if he or she faiis to exhaust administrative

remedies: See, e.g., Thompson v. DEA, 492 F.3d 428,

438 (D.C. Cir. 2007); Lowe v. DEA, Civil Action No.

06-1133, 2007 WL 2104309, at *3 (D.D.C. July 22,

‘* The Court is aware that this conclusion conflicts with the

conclusions — or at least the terminology — of other courts that

have discussed Section 741. See Ordille v. United States, 216 Fed.

App’x 160, 167 (3d Cir. 2007) (designated as non-precedential

pursuant to court rule); Allen v. United States, Civil Action No.

03-92C, 2005 WL 6112631, at *6 (Fed. Cl. May 10, 2005); Mients

v. United States, 50 Fed. Cl. 665, 670-71 ‘Fed. Cl. 2001).

36a

2007). But “[olnly when Congress states in clear,

unequivocal terms that the Judiciary is barred from

hearing an action until the administrative agency has

come to a decision .. . has the Supreme Court held

that exhaustion is a jurisdictional prerequisite.”

Hidalgo v. FBI, 344 F.3d 1256, 1258 (D.C. Cir. 2003)

(quoting LA.M. Nat'l Pension Fund Benefit Plan C v.

Stockton TRI Industries, 727 F.2d 1204, 1208 (D.C.

Cir. 1984) (emphasis added)); see also Avocados Plus,

Inc. v. Veneman, 370 F.3d at 1248 (noting that only

where “a statute ... contain{s] sweeping and direct

statutory language indicating that there is no federal

jurisdiction prior to exhaustion” may courts conclude

that an exhaustion requirement is jurisdictional).

Here, neither Section 741 nor the ECOA itself contains

“sweeping and direct” statutory language making

exhaustion jurisdictional. The Court therefore

concludes that, like the eligible complaint

requirement, the exhaustion requirement is not

jurisdictional in nature.

In short, plaintiffs have pled colorable causes of

action “arising under” the laws of the United States —

here, the ECOA and Section 741 — and thereby

properly invoked this Court’s jurisdiction under 28

U.S.C. § 1331. See Arbaugh v. Y & H Corp., 546 U.S.

at 513-14. The Court therefore has subject matter

jurisdiction over plaintiffs’ ECOA claims.

E. The USDA ts Entitled to Summary Judgment

on Plaintiffs’ ECOA Claims

Normally the legal sufficiency of the plaintiffs’

claims would be considered under the standards for

failure to state a claim set forth by Rule 12(b)(6) of the

Federal Rules of Civil Procedure. Here, however, that

37a

course would be inappropriate because both parties

attach and rely upon materials outside the pleadings

to support their arguments, and the Court has

determined not to exclude those materials. See

Williams v. Conner, 522 F. Supp. 2d at 99. Under such

circumstances, the proper course is to treat a putative

Rule 12(b)\(6) motion as a motion for summary

judgment, and to resolve it accordingly after giving all

parties “a reasonable opportunity to present all the

material that is pertinent to the motion.” FED. R. Civ.

P. 12(d); see also 2 MOORE’S FEDERAL PRACTICE

§ 12.34[3][a] at 12-72 (3d ed. 2002). In this case, there

is no question that both parties have had a reasonable

opportunity to present all materials pertinent to a

motion for summary judgment; indeed, both parties

have submitted and relied upon voluminous exhibits.”

The Court therefore will treat the USDA’s motion as a

motion to dismiss for failure to state a claim, and

convert the motion to dismiss for failure to state a

claim into a motion for summary judgment.

The Court concludes that the USDA is entitled to

summary judgment on all of the plaintiffs’ HCOA

claims because (1) plaintiffs were required to exhaust

'° See, e.g., Collier v. City of Chicopee, 158 F.3d 601, 603 (1* Cir.

1998) (noting that when parties attach and rely upon materials

outside the pleadings, they invite the Court to consider those

materials and are henceforth on constructive notice that the Court

may proceed under Rule 56); In re Rothery, 143 F.3d 546, 549 (9""

Cir. 1998) (no notice required when parties have had a “full and

fair opportunity to ventilate the jssues involved in the motion”).

Discovery and/or supplemental submisstons would not further

clarify the issues tne Court deems critical. See Taylor v. FDIC,

132 F.3d 753, 765-66 (D.C. Cir. 1997) (district courts have

discretion to decide that discovery is not necessary upon

conversion).

38a

their administrative remedies; (2) exhaustion requires

ALJ review; and (3) there is no genuine dispute that

plaintiffs failed to seek and obtain ALJ review.

Because plaintiffs’ failure to exhaust entitles the

USDA to summary judgment on plaintiffs’ ECOA

claims, the Court need not address the USDA’s eligible

complaint argument.

Even when, as in this case, exhaustion is not a

jurisdictional prerequisite to judicial review,

“{e]xhaustion of administrative remedies is generally

required ... ‘so that the agency has an opportunity to

exercise its discretion and expertise on the matter and

to make a factual record to support its decision.”

Wilbur v. CIA, 355 F.3d 675, 677 (D.C. Cir. 2004)

(quoting Oglesby v. United States Dep't of Army, 920

F.2d 57, 61 (D.C. Cir. 1990)); see also Avocados Plus,

Inc. v. Veneman, 370 F.3d at 1247. For that reason,

failure to exhaust precludes judicial review if “the

purposes of exhaustion’ and the ‘particular

administrative scheme’ support such a bar.” Hidalgo v.

FBI, 344 F.3d at 1258-59 (citation omitted). Those

conditions clearly obtain here, because to permit

Section 741 complainants to seek judicial review

without first exhausting the administrative process set

forth by the USDA

would undercut “the purposes of exhaustion,

namely, ‘preventing premature interference

with agency processes, . . . afford{ing] the

parties and the courts the benefit of [the

agency's] experience and expertise, .. . [and]

compilling] a record which is adequate for

judicial review.” Ryan v. Bentsen, 12 F.3d 245,

247 (D.C. Cir. 1993) (quoting Weinberger v.

39a

Salfi, 422 U.S. 749, 765 (1975) (alteration in

original)).

Hidalgo v. FBI, 344 F.3d at 1259.

Plaintiffs argue that they Aave exhausted their

remedies, notwithstanding their admitted failure to

seek ALJ review.’ Specifically, they maintain that the

USDA misinterprets its own regulations when it

argues that exhaustion requires ALJ review. See Pls.’

Opp. at 22. According to the plaintiffs, the USDA’s

regulations give complainants “an either/or option:

either have the Director . .. determine the merits of

the claim or take the claim to an ALJ.” Id. at 23.

‘© Alternatively, plaintiffs (seem to) suggest that any failure to

exhaust should be excused. In their view, the agency’s undue

delay in rendering decisions on their complaints justifies excusing

any failure to exhaust. See Pls.’ Opp. at 29-33. Without passing on

whether the agency has moved too slowly with respect to

plaintiffs’ complaints, the Court concludes that excusing plaintiffs’

failure to exhaust would be inappropriate. Non-jurisdictional

exhaustion requirements may be excused if “the litigant’s

interests in immediate judicial review outweigh the government’s

interests in the efficiency or administrative autonomy that the

exhaustion doctrine is designed to further.” McCarthy v. Madigan,

503 U.S. 140, 145-46 (1992). Here, excusing the exhaustion

requirements would (1) undermine the “administrative autonomy

the exhaustion doctrine is designed to further,” McCarthy v.

Madigan, 503 U.S. at. 145-46; (2) frustrate other purposes of the

exhaustion doctrine, see Glisson v. United States Forest Service,

55 F.3d 1325, 1327 (7"" Cir. 1995) (noting that finality, exhaustion

and related doctrines help ensure that “when the administrative

proceeding does come before the court, the court will have before

it the mature, considered, and final articulation of the basis of the

agency’s action”); and (3) add another layer of cost, complexity and

uncertainty to the USDA’s Section 741 complaints process. The

Court therefore will not excuse plaintiffs’ failure to exhaust.

4V0a

Plaintiffs contend that they chose the former option;

that the letters they thereafter received from the

Director set forth final determinations as to their

claims; and that once they received those letters — or,

in the case of Mr. McDonald and Mr. Pearson, once

they had waited for such letters for an unreasonably

long time — their claims had been “denied

administratively” within the meaning of Section

741(c). At that point, say plaintiffs, they were entitled

to assert their ECOA claims in this Court. See id. at

22-30.

Plaintiffs’ argument must fail because their basic

theory — that is, that the letters they received from the

Director constitute final determinations’ or

administrative denials of their claims — cannot be

squared with the language and structure of the

regulations. The regulations make clear that the

administrative process is exhausted when the agency

issues its final determination, see 7 C.F.R. § 15f.26;

that the final determination means “the final USDA

decision made on your complaint under these rules,”

id. § 15f.4; and that, in the absence of a settlement

with the Director, a determination is final 35 days

after an ALJ issues a proposed decision (absent review

of that decision by the Assistant Secretary). Id.

§ 15f.24. If the parties do not settle, the Director is not

authorized to make a final determination. Rather, the

Director is only authorized to “seek to resolve the

complaint informally with the complainant,” id.

§ 151.8, and, if settlement is unsuccessful, to inform

the complainant of his “options, including [his] right to

request formal proceedings before an ALJ ... within

30 days of receipt of notice from the Director that

4la

[USDA] will not settle the complaint.” Id. § 15f.9."’ In

contrast, there are various circumstances under which

ALJs are authorized to issue proposed decisions which,

absent internal review by the Assistant Secretary, see

id. § 15f.24, become final after 35 days. See id. § 15f.12

(authorizing the issuance of a proposed decision if the

ALJ concludes that the complainant has not filed an

eligible complaint, or there is no genuine dispute of

fact); id. § 15f.13 (after a hearing); id. § 15f.16 (on the

record without a hearing).

In short, the language and structure of the

regulations offer no support for plaintiffs’ view that the

“informal review or negotiations” undertaken by the

Director can themselves produce a final determination

in the absence of settlement. Id. § 15f.10.’° Rather, the

'' Plaintiffs maintain that the language of 7 C.F_R. § 15f.9

supports their “either/or” theory of the administrative process in

one particular way. They argue that Section 15f.9 states that the

Director must inform complainants of their options “including”

ALJ review when he declines to settle their complaints, and that

the word “including” implies that complainants have another

option — namely, “the statutory right to sue in federal court under

Section 741(c) and (d).” Pls.’ Opp. at 24. Plaintiffs offer no

authority — or even analysis — for this interpretation, and the

Court rejects it. Rather, the Court agrees with the USDA that the

language and structure of Part 15} indicate that the “other

option” assumed by Section 15f.9 is that complainants might

choose not to proceed further with their claims on the view that

the additional time and expense would not be worthwhile. See

Defs.’ Reply at 16

Nor can plaintiffs argue that this interpretation wa

unforeseeable. See Pls.’ Opp., Ex. 10, Letter from USDA to

Plaintiffs’ Counsel at 2 (informing plaintiffs’ counsel that “the

purpose of the administrative review [by the Director] is to

A2a

regulations make clear that plaintiffs were obligated

to seek ALJ review if they desired to obtain a final

determination (in the form of an ALJ decision or a

decision by the Assistant Secretary for Civil Rights

upon review of an AlI.J decision) and thereby exhaust

19

their administrative remedies.

The USDA asserts, and the plaintiffs do not

dispute, that in 2003 “each of the plaintiffs except for

McDonald and Pearson received a letter from: [the

USDA| informing them that [USDA] had reviewed the

plaintiffs complaint and explaining the outcome of

that review.” Defs.’ Mot. at 16-17. These letters — “all

sent in care of plaintiffs’ counsel and includ|ing] a copy

of the Section 741 regulations,” id. at 18 — informed the

recipients that the Director would not engage in

informal settlement negotiations with them for various

facilitate [the Director's] decision as to whether we will settle a

piven case”)

'’ Even if the regulations were ambiguous on this point (in the

sense that they offered some support for plaintiffs’ “either/or”

theory) the Court would defer to the USDA's interpretations of its

own regulations because those interpretations are not plainly

erroneous. See, e.g.,S.A. Storer & Sons Co. v. Secretary of Labor,

360 F.3d 1363, 1368 (D.C. Cir. 2004) (An agency’s interpretation

of its own regulations is entitled to ‘substantial deference’ and

even receives ‘controlling weight unless it is plainly erroneous or

inconsistent with the regulation.) (quoting Thomas Jefferson

43a

reasons.”” All of these letters included the following

admonition:

Pursuant to [Section 741], if you disagree with

our decision you must request a hearing before

an administrative law judge (ALJ) within thirty

(30) days of receipt of this letter. Otherwise,

USDA will close your file in this matter. A copy

of the regulations governing this procedure is

enclosed for your convenience. .. . If you receive

the ALJ’s decision and you are not satisfied, you

may pursue your complaint by filing an action

in Federal District Court.

Pls. Opp., Ex. 13, Letter from USDA to Kirk Benoit at

1; see also id., Exs. 14, 15, 16, 17, 18, 19, 20 (letters

from the Director to Ms. Deloney, Mr. Gibson, the

Manigo brothers, Mr. Cotton, Mr. and Mrs. Harris,

and Mr. and Mrs. James, respectively); Defs.’ Mot., Ex.

18 (letter from the Director to Mr. Simmons). Thus,

these letters clearly advised the recipients that the

Director’s informal! decision did not constitute a final

determination; that they were obligated to seek ALJ

review to keep their Section 741 Complaint Requests

alive; and that ALJ review was a prerequisite to

judicial review. This message was reinforced by the

enclosure of the regulations setting forth the

administrative scheme in its entirety.

* Again, the letters sent to Mr. Cotton and the three Manigo

brothers, unlike the letters sent to the other plaintiffs, informed

them that the Director would be willing to engage in informal

settlement negotiations with respect to some of their claims.

44a

The USDA asserts that the plaintiffs who received

letters never requested ALJ review before or after

filing suit, and that those who did not receive letters

(Mr. McDonald and Mr. Pearson) have similarly failed

to request formal proceedings. See Defs.’ Mot., Ex. 1,

Declaration of Frederick D. Isler {J 10 (Mr. Benoit), 13

(Mr. Cotton), 17 (Ms. Deloney), 21 (Mr. Gibson), 25

(Mr. and Mrs. Harris), 29 (Mr. and Mrs. James), 34

(Manigo brothers), 39 (Mr. Simmons), 43 (Mr.

Pearson), 47 (Mr. McDonald) (“Isler Decl.”).”? Plaintiffs

do not contest this crucial factual assertion. See Pls.’

Opp. at 30. That being the case, there is no genuine

dispute with respect to whether the plaintiffs failed to

exhaust their administrative remedies. As the Court

has already determined that exhaustion — although

not jurisdictional — is a prerequisite to judicial review

under Section 741(c), and that the plaintiffs have

offered no reason to excuse their failure to exhaust in

this case, the USDA is entitled to summary judgment

on plaintiffs’ ECOA claims.”

*! Mr. Isler is the USDA official charged with “overseeing and

supervising the program discrimination complaint process

administered by [the Office of Civil Rights].” Isler Decl. ¥ 1.

Plaintiffs argue that this Court should not consider Mr. Isler’s

declaration, mainly on the ground that it contains inadmissible

hearsay. See Pls.’ Opp. at 8. This argument is beside the point

here because plaintiffs do not dispute the only pertinent facts

that is, the facts relating to their failure to exhaust.

* To be clear, the Court grants summary judgment on plaintiffs’

ECOA claims only with respect to the issue disputed by the

parties: that is, whether the plaintiffs may seek judicial review of

the agency’s decisions and assert their ECOA claims before this

Court pursuant to Section 74 1(c). The Court need not, and does

not, express any view as to the merits of the plaintiffs’ underlying

complaints of discrimination.

45a

IV. PLAINTIFFS’ OTHER CLAIMS

Plaintiffs also bring claims under various

provisions of the United States Constitution, the civil

rights laws, the APA and the common law. These

claims do not require extended discussion. Briefly

stated, plaintiffs claim that the USDA’s allegedly

discriminatory conduct violated their rights to equal

protection of the laws and due process of law under the

Fifth and Fourteenth Amendments to the United

States Constitution; denied them their rights to “make

and enforce contracts” on the same terms as white

citizens under Section 1981 of the Civil Rights Act of

1964; and tortiously subjected them to “untold

emotional distress.” See Compl. {9 775-80

(constitutional claims), 789-94 (claims under Section

1981), 799-801 (claims for negligent infliction of

emotional distress). Plaintiffs also argue that they are

entitled to money damages under the APA for the

USDA’s unreasonable delay in _ processing their

complaints. See id. 9 795-98.

As noted above, the USDA has moved to dismiss al]

of these claims for lack of subject matter jurisdiction.

The USDA argues that the plaintiffs’ claims under the

Constitution, Section 1981 and the APA must be

dismissed because the United States has not waived

its sovereign immunity to damages actions under these

statutes. The USDA further argues that plaintiffs’

negligent infliction of emotional distress claims must

be dismissed because plaintiffs have failed to exhaust

the administrative process for pursuing such claims

under the Federal Tort Claims Act, 28 U.S.C. §§ 2671

et seq. See Defs.’ Mot. at 36-40.

46a

The United States has not waived its sovereign

immunity to damages claims under the Constitution,

see Jackson v. Bush, 448 F. Supp. 2d 198, 201 (D.D.C.

2006), Section 1981, see Hohri v. United States, 782

F.2d 227, 245 n.43 (D.C. Cir. 1986), vacated on other

grounds, 482 U.S. 64 (1987), or the APA. See 5 U.S.C.

§ 702. Moreover, it is established that the FTCA is the

exclusive avenue of relief for parties asserting tort

claims against the United States — and that the

FTCA’s exhaustion requirement is a jurisdictional

prerequisite to suit. See Simpkins v. District of

Columbia, 108 F.3d 366, 371 (D.C. Cir. 1997) (citing

Odin v. United States, 656 F.2d 798, 802 (D.C. Cir.

1981)); Hayes v. United States, 539 F. Supp. 2d 393,

398-99 (D.D.C. 2008).

Plaintiffs do not dispute that their claims for

monetary damages under the Constitution, Section

1981, or the APA are barred by sovereign immunity.

See Pls.’ Opp. at 33. Nor do they dispute that they

have failed to begin (let alene exhaust) the

administrative review process mandated by the FTCA.

See id. The Court therefore will dismiss all of the

plaintiffs’ claims under the Constitution, Section 1981,

the APA and the common law of torts for lack of

subject matter jurisdiction under Rule 12(b)(1).*°

* Plaintiffs have suggested that if“this Court agree[s] with USDA

[that sovereign immunity bars plaintiffs’ claims under the

Constitution, Section 1981 and the APAI, leave to amend to seek

equitable relief on these claims should be liberally granted.” Pls.’

Opp. at 33. The Court declines to grant permission to amend the

Second Amended Complaint in the absence ofa formal motion to

that effect. See Shane v. United States, Civil Action No. 07-577,

2008 WL 101739, *10 n.11(D.D.C. Jan. 9, 2008).

47a

V. CONCLUSION

For the reasons stated above, the Court will grant

summary judgment in favor of the USDA on plaintiffs’

ECOA claims and dismiss plaintiffs’ other claims for

lack of subject matter jurisdiction. An Order consistent

with this Opinion will issue this same day.

SO ORDERED.

/s/ eee

PAUL L. FRIEDMAN

United States District Judge

DATE: September 8, 2008

48a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 03-191. (PLF)

[Filed September 9, 2008]

KIRK BENOIT, et al.,

Plaintiffs,

Vs

UNITED STATES DEPARTMENT

OF AGRICULTURE, et al.,!

Defendants.

eee eee ee” —_— ~— eee ee”

ORDER AND JUDGMENT

lor the reasons stated in the Opinion issued this

same day, it is hereby

ORDERED that defendants’ Motion to Dismiss

Plaintiffs’ Complaint Or, in the Alternative, to

Transfer Venue [12] is GRANTED in part and

DENIED in part; it is

The Second Amended Complaint named Ann Veneman, former

Secretary of the United States Department of Agriculture, as one

of the party defendants. The Court now substitutes her successor,

Kdward Schafer, pursuant to Rule 25(d) of the Federal Rules of

Civil Procedure.

49a

FURTHER ORDERED that the defendants’ motion

to dismiss for lack of subject matter jurisdiction under

Rule 12(b)(1) of the Federal! Rules of Civil Procedure is

GRANTED with respect to plaintiffs’ claims under the

United States Constitution, Section 1981 of the Civil

Rights Act of 1964, the Administrative Procedure Act

and the common law of torts; it is

FURTHER ORDERED that the defendants’ motion

to dismiss for lack of subject matter jurisdiction is

converted into a motion for summary judgment under

Rule 56 with respect to plaintiffs’ claims under Section

741 and the ECOA,; it is

FURTHER ORDERED that judgment is entered in

favor of the defendants on all of the plaintiffs’ claims

under the Equal Credit Opportunity Act; and it is

FURTHER ORDERED that this case is dismissed

from the docket of this Court. This is a fina! appealable

order. See FED. Rt. APP. P. 4(a).

SO ORDERED.

_ eo Se

PAUL L. FRIEDMAN

United States District Judge

DATE: September 8, 2008

50a

APPENDIX C

[USDA logo|

United States

Department of

Agriculture

“ffice of the

Assistant Secretary

for Administration

Office of

Civil Rights

1400 Independence

Avenue SW

Washington, DC

20250

Mr. Kirk Benoit

c/o Louise Cobbs, Esquire

Holland & Knight

2099 Pennsylvania Ave., NW

Washington, DC 20006

Docket No. 2478

Dear Mr. Benoit

The Office of Civil Rights (CR), United States

Department of Agriculture (USDA), has reviewed your

5la

discrimination complaint. Our review was conducted

pursuant to Section 741 of the Agriculture, Rural

Development, Food and Drug Administration, and

Related Agencies Appropriations Act, 1999, enacted in

Division A section 101 (a) of the Omnibus Consolidated

and Emergency Supplemental Appropriations Act,

1999, Pub. L. 105-277 (Statute of Limitations Project).

Based on our review, we have determined that your

case 1s not appropriate for informal resolution because

you were not qualified for the benefits, which you

applied for. The record demons ‘rates that you were an

existing farmer at the time of your loan application.

The agency’s regulations required you to submit your

actual production and financial history for 5 years

immediately preceding the year of application. While

a proposed Farm and Home Plan was submitted, it

was not feasible. Thus, it did not meet the agency’s

requirements.

Pursuant to the Statute of Limitations Project, if you

disagree with our decision you must request a hearing

before an administrative law judge (ALJ) within thirty

(30) days of receipt of this letter. Otherwise, USDA

will close your file in this matter. A copy of the

regulations governing this procedure is enclosed for

your convenience.

To request a hearing before an ALJ, you should write

to:

U.S. Department of Agriculture

Office of Civil Rights

Program Adjudication Division

ATTN: SOL Project

300 7 Street, S.W

52a

Suite 400, Stop Code 9430

Washington, D.C. 20024

You may also fax your request to (202) 401-0214. If you

receive the ALJ’s final decision and you are not

satisfied, you may pursue your complaint by filing an

action in Federal District Court. Choosing to request

a hearing before an ALJ, will not preclude you from

going to Federal Court at a later time.

If you do not understand any of your rights as

explained in this letter and in the enclosed regulations,

we urge you to consult with an attorney as soon as

possible.

Sincerely,

/s/ Frederick D. Isler

l’'rederick D. Isler

Deputy Director

Office of Civil Rights

Enclosures