Opposition Brief — Acura of Bellevue v. Reich

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Supreme Court, U.S,

Bee oe Ate aa

y JAN 16 {997

No. 96-770

In the Supreme Court of the United States

OCTOBER TERM, 1996

ACURA OF BELLEVUE, ET AL., PETITIONERS

Vv.

CYNTHIA A. METZLER, ACTING SECRETARY OF LABOR,

ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

WALTER DELLINGER

Acting Solicitor General

FRANK W. HUNGER

Assistant Attorney General

JEFFREY CLAIR

ANNE M. LOBELL

Attorneys

Department of Justice

Washington, D.C. 20530-0001

202) 514-2217

QUESTIONS PRESENTED

1. Whether the pendency of an administrative

appeal from an agency administrator’s initial decision

renders that decision nonfinal for purposes of judi-

cial review under Section 10(c) of the Administrative

Procedure Act, 5 U.S.C. 704.

2. Whether an agency administrator’s decision is

not ripe for judicial review where collection of the

penalties imposed by the decision is suspended until

the completion of a pending administrative review of

the penalties, and where no showing of immediate

hardship is made.

(I)

TABLE OF CONTENTS

Page

ELE ole ML Ra a 1

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RCA a EEE 2

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SEC RSEER ali Lia 14

TABLE OF AUTHORITIES

Cases:

Abbott Laboratories v. Gardner, 387 U.S. 136

American Trucking Ass’ns, Inc. v. ICC, 697 F.2d

I 11, 12

Darby v. Cisneros, 509 U.S. 187 (1998) .......ccccccc.. 4-5, 7,

9, 10, 11

Dietary Supplemental Coalition, Inc. v. Sullivan,

978 F.2d 560 (9th Cir. 1992), cert. denied, 508 U.S.

SSIS GS ae eS 8

FTC vy. Standard Oil Co. of California, 449 U.S. 232

SUIT ilssdiniiseenschiiibashidtinhdideinnaeicaniecninemstantiaddaiedeadiiiecsenis 13

Franklin v. Massachusetts, 505 U.S. 788 (1992) .... 12

ICC v. Brotherhood of Locomotive Engineers,

ES ee 7, 10, 11

Marshall v. Jerrico, Inc., 446 U.S. 238 (1980) ........ 13

Northside Sanitary Landfill, Inc. v. Thomas,

BOE FBS STE Cte Cir, 29BG) .nnccevcccererccescevececscevecesess 12

Stone v. INS, 115 S. Ct. 1537 (1995) ............ 7, 9, 10, 11

United Transportation Union v. ICC, 871 F.2d 1114

I 11

West Penn Power Co. v. United States Envtl.

Protection Agency, 860 F.2d 581 (3d Cir. 1988) .... 11, 12

Winter v. ICC, 851 F.2d 1056 (8th Cir.), cert.

denied, 488 U.S. 925 (1988) ............cccccccccccsoesecseceeees 12

(111)

Statutes and regulations: Page

Administrative Procedure Act, 5 U.S.C. 701 et seq. ... 4

Fair Labor Standards Act of 1938, 29 U.S.C. 201

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Immigration and Nationality Act, 8 U.S.C. 1101

CB BOG. .ccrcoccoccesccrcvcececevorcorsosescesovesccssoesoosooscosssessosceeee

29 C.F.R.:

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RT TED ccccccusninisccnstidagintniuidnanteaiininitidemmaiit

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NwWANAIAN AAH PL

In the Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-770

ACURA OF BELLEVUE, ET AL., PETITIONERS

Vv.

CYNTHIA A. METZLER, ACTING SECRETARY OF LABOR,

ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-15)

is reported at 90 F.3d 1403. The opinion of the district

court (Pet. App. 20-38) is not reported.

JURISDICTION

The judgment of the court of appeals was entered on

July 17, 1996. The petition for a writ of certiorari was

filed on October 15, 1996. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

(1)

STATEMENT

1. The Fair Labor Standards Act of 1938, 29 U.S.C.

201 et seq., generally prohibits the employment, other

than by a parent, of any employee under the age of 16

by an enterprise engaged in commerce, other than

agricultural and certain entertainment enterprises.

See 29 U.S.C. 203(1), 212(c), 213(c). The Act also

places such a prohibition on the employment of any

employee between 16 and 18 years of age “in any

occupation which the Secretary of Labor shall find

and by order declare to be particularly hazardous for

the employment of children between such ages or

detrimental to their health or well-being.” 29 U.S.C.

203(1); see 29 U.S.C. 212(c), 213(c). Pursuant to that

statutory authority, the Secretary of Labor has found

and declared, inter alia, that “the occupation[{] of

motor-vehicle driver * * * on any public road [or]

highway * * * [is] particularly hazardous for the

employment of minors between 16 and 18 years of

age.” 29 C.F.R. 570.52(a). The Secretary also has

provided, however, that that rule does not apply to

the operation of an automobile “if such driving is

restricted to daylight hours; provided, such opera-

tion is only occasional and incidental to the minor’s

employment,” the minor has a valid driver’s license

and has completed a driver education course, and the

vehicle is equipped with a seat belt or similar device

that the minor has been instructed to use. 29 C.F.R.

570.52(b)(1) (known as Hazardous Occupation Order

No. 2). Therefore, to comply with the child labor pro-

visions of the Act, employers must employ individuals

18 years old or older for any job in which driving an

automobile is more than “occasional and incidental”

to the employment.

2. Petitioners, automobile dealers in western

Washington State, each employed minors between 16

and 18 years of age as lot attendants. Pet. App. 6.

According to petitioners, the lot attendants’ primary

duties were to clean the cars and the dealership

premises. Jbid. Lot attendants’ duties also included,

however, “moving cars on the dealers’ premises,

moving cars to different lots, driving to get gas, and

transporting customers.” Ibid.

Following an investigation, the Administrator of

the Wage and Hour Division of the Department of

Labor issued a Notice of Assessments and Civil

Money Penalty to each petitioner in March 1994.

The Administrator found that each petitioner had

employed minors in a manner contrary to the child

labor provisions of the Act, citing specifically the

prohibition, in Hazardous Occupation Order No. 2,

against minor employees operating motor vehicles on

public roads unless such operating is only occasional

and incidental to that minor’s employment. Pet. App.

7; see also C.A. E.R. 18-21. The Administrator’s no-

tices identified each of the minor children employed in

violation of the Act and specified the amount of the

penalty assessed for each violation, imposing a pen-

alty of one thousand dollars for each 17-year-old, and

twelve hundred dollars for each 16-year-old, employed

in violation of the Act. Pet. App. 7. The notices also

informed each petitioner of its right to file an excep-

tion to the determination that any or all of the vio-

lations occurred and the procedures for filing such

an exception. Ibid. The notices specified that, if a

request for a hearing was not timely received, “the

determination of the Administrator shall become the

final and unappealable Order of the Secretary.” See,

e.g., C.A. E.R. 18.

Petitioners filed timely exceptions to the civil pen-

alty assessments. Pet. App. 7. On April 7, 1994, the

Department of Labor notified petitioners that their

exceptions had been received and that they would be

notified of a date for a hearing before an administra-

tive law judge (ALJ). Jbid.; see, e.g. C.A. E.R. 13. In

September, 1994, the cases were submitted to the

Department of Labor’s chief ALJ for hearing and a

final determination of the violations and the appropri-

ateness of the penalties assessed. Pet. App. 7-8; see,

e.g., C.A. E.R. 15-17.

3. Meanwhile, on July 20, 1994, petitioners filed the

instant suit, under the Administrative Procedure Act

(APA), 5 U.S.C. 701 et seq., in the United States Dis-

trict Court for the Western District of Washington,

against the Secretary of Labor and other federal

officials. Pet. App. 7,22. Petitioners alleged that the

Administrator’s decision was based on an arbitrary

and capricious interpretation of the “occasional and

incidental” provision of the Hazardous Occupation

Order No. 2, and that the assessment of civil penalties

was invalid. Jbid. Petitioners sought declaratory and

injunctive relief. Ibid.

Respondents moved to dismiss the action on various

grounds, including petitioners’ failure to exhaust ad-

ministrative remedies, lack of finality of the agency

action, and lack of ripeness. Pet. App. 7-8, 22. After

initially denying respondents’ motion (id. at 17-19),

the district court, upon respondents’ motion for

reconsideration, dismissed the action (id. at 20-38).’

1 The district court initially declined to dismiss the case

because it concluded that the Act and the Secretary’s regula-

tions do not require an agency appeal prior to judicial review.

Pet. App. 18 (citing Darby v. Cisneros, 509 U.S. 137, 144 n.9

The court held that petitioners’ filing of exceptions to

the Administrator’s decision rendered the decision

nonfinal under the Secretary’s regulations, 29 C.F.R.

580.5,” and, therefore, not final for purposes of judicial

review under Section 10(¢c) of the APA. Pet. App. 32.°

(1993)). On reconsideration, the district court granted re-

spondents’ motion to dismiss on different grounds, finding the

agency action to be nonfinal and not ripe for judicial review.

Id. at 31-32. The court of appeals affirmed on those grounds

and did not address whether the Act or regulations mandate an

agency appeal prior to judicial review. Respondents maintain

that exhaustion of administrative remedies is required under

the Act and regulations in the instant case. Petitioners do not

present that question for this Court’s review, however.

2 Section 580.5 provides:

Finality of notice.

If the person charged with violation does not, within 15

days after receipt of the notice, take exception to the

determination that the violation or violations for which the

penalty is imposed occurred, the administrative determina-

tion by the Administrator of the amount of such penalty

shall be deemed final, and collection and recovery of the

penalty shall be instituted pursuant to § 580.19 [sic] of this

part.

8 Section 10(c) of the APA, 5 U.S.C. 704, provides:

Agency action made reviewable by statute and final

agency action for which there is no other adequate remedy

in a court are subject to judicial review. A preliminary,

procedural, or intermediate agency action or ruling not

directly reviewable is subject to review on the review of

the final agency action. Except as otherwise expressly

required by statute, agency action otherwise final is final

for the purposes of this section whether or not there has

been presented or determined an application for a declara-

tory order, for any form of reconsideration, or, unless the

agency otherwise requires by rule and provides that the

The court also noted that, under the Secretary’s

regulations,’ once exceptions are filed, the collection

and recovery of penalties is suspended pending a final

decision by the ALJ or, if further appeal is taken from

the ALJ decision, a final decision by the Secretary.

Id. at 37. The court emphasized that, because the

decision of the Administrator is nonfinal upon the

filing of exceptions, “it cannot be said that the Admin-

istrator’s decision represents the ‘definitive’ position

of the agency or that an obligation has been imposed

as a ‘consummation’ of the administrative process.”

Ibid.

4. The court of appeals affirmed. Pet. App. 1-15.

The court noted, as a threshold matter, that, because

the Fair Labor Standards Act does not itself author-

ize or preclude judicial review of final agency deci-

sions, such final decisions are reviewable in federal

court under Section 10(c) of the APA. Jd. at 11. The

court then held that petitioners’ appeal from the

action meanwhile is inoperative, for an appeal to superior

agency authority.

4 The court cited 29 C.F.R. 580.19 (which does not exist),

but appears to have been referring to 29 C.F.R. 580.18, which

provides, in relevant part:

Collection and recovery of penalty.

(a) When the determination of the amount of any civil

money penalty provided for in this part becomes final

under § 580.5 in accordance with the administrative assess-

ment thereof, or pursuant to the decision and order of an

Administrative Law Judge-in an administrative proceed-

ing as provided in § 580.12, or the decision of the Secretary

pursuant to § 580.16, the amount of the penalty as thus

determined is immediately due and payable to the U-S.

Department of Labor. * * *

29 C.F.R. 580.18(a).

Administrator’s decision to an ALJ “renders the

initial Administrator’s decision nonfinal for purposes

of judicial review.” Ibid.; see also id. at 9-11 (quoting

29 U.S.C. 216(e)’ (addressing the finality of monetary

penalties), and 29 C.F.R. 580.5 and 580.18(a) (see notes

2 and 4, supra); and citing 29 C.F.R. 580.7, 580.12(c),

580.12(e), 580.16).

The court rejected petitioners’ argument that,

under Section 10(c) of the APA and Darby v. Cis-

neros, 509 U.S. 137 (1993), the filing of a nonmanda-

tory appeal to an ALJ and a request for a hearing

before an ALJ does not eliminate or delay their right

to seek judicial review. The court pointed to this

Court’s statement in JCC v. Brotherhood of Locomo-

tive Engineers, 482 U.S. 270 (1987), that the language

of Section 10(c) has long been construed “not to pre-

vent petitions for reconsideration that are actually

filed from rendering the orders under reconsideration

nonfinal.” Pet. App. 12 (quoting 482 U.S. at 284-285).

The court also noted that this Court recently had

again cited that interpretation of Section 10(c) with

approval in Stone v. INS, 115 S. Ct. 1537, 1542 (1995).

Thus, the court concluded that, under authority of

this Court, a motion for reconsideration renders an

agency action nonfinal under Section 10(c) of the

° Section 216(e) of Title 29 provides, in relevant part, that

“{aJny administrative determination by the Secretary of the

amount of any penalty under this subsection [regarding civil

penalties for child labor violations] shall be final, unless * * *

the person charged with the violation takes exception to the

determination that the violations for which the penalty is

imposed occurred, in which event final determination of the

penalty shall be made in an administrative proceeding after

opportunity for hearing in accordance with section 554 of title

5, and regulations to be promulgated by the Secretary.”

APA. It further reasoned that, because there is no

qualitative difference between a motion for reconsid-

eration and an appeal to a superior agency authority

as in this case, such an “intra-agency appeal to an

ALJ, who has de novo review of the Administrator’s

decision, must similarly render the Administrator’s

decision nonfinal under the APA.” Pet. App. 13. The

court of appeals explained that this Court’s ruling in

Darby was inapposite because the Court there mere-

ly held that an aggrieved party is not required to

exhaust nonmandatory administrative remedies; the

Court did not address the situation where an ag-

grieved party has filed an administrative appeal before

seeking judicial review. bid.

The court of appeals also ruled that petitioners’

suit is not otherwise ripe for judicial review because

the matter is not fit for judicial decision and petition-

ers’ alleged hardship is insufficient to justify a find-

ing of ripeness. Pet. App. 13-15 (applying factors set

forth in Abbott Laboratories v. Gardner, 387 U.S. 136,

148-149 (1967), and Dietary Supplemental Coalition,

Inc. v. Sullivan, 978 F.2d 560 (9th Cir. 1992), cert.

denied, 508 U.S. 906 (1993)). The court of appeals

relied on the fact that the Administrator’s initial

decision does not represent the final administrative

position because the ALJ will review that decision de

novo, and the agency thereby has the authority “to

consider, change, and eventually finalize its position.”

Id. at 14. The court found that petitioners’ alleged

financial hardship was insufficient because collection

of penalties is stayed pending a final agency decision

by the ALJ or the Secretary, the penalties may be

reduced or eliminated during the administrative

review process, and the possibility of imposition of

further monetary penalties is too speculative to ren-

der the matter ripe at this stage. Ibid.

In closing, the court expressed the view that its

decision also is sound as a matter of policy. The court

emphasized that review of the same agency action by

two governmental bodies simultaneously would be

a waste of government resources and could result

in issuance of conflicting rulings, that judicial re-

view could unnecessarily interfere with the agency’s

authority to change its position during the adminis-

trative review process, and that completion of the

agency review process might eliminate the need for

judicial review. Pet. App. 15.

ARGUMENT

1.a. Petitioners contend (Pet. 7-12) that the

court of appeals’ ruling conflicts with Section 10(c) of

the Administrative Procedure Act (APA), 5 U.S.C.

704, and this Court’s rulings in Darby v. Cisneros,

509 U.S. 137 (1993), and Stone v. INS, 115 S. Ct. 1537

(1995). Petitioners argue (Pet. 12) that, under those

authorities, the pursuit of optional administrative

remedies does not render administrative action non-

final.

The court of appeals correctly held that the ruling

in Darby is inapposite here. The Darby case did not

involve a situation in which the aggrieved party had

actually sought further administrative agency review

and such action rendered the administrative decision

nonfinal under the agency’s regulations. Rather, the

parties in Darby conceded that the agency action was

final for purposes of Section 10(c) of the APA. 509

U.S. at 144. The only question before the Darby

Court was whether federal courts remained free in a

case involving final agency action to require exhaus-

tion of optional administrative remedies before re-

viewing the action under the APA.

Moreover, the Darby Court emphasized the concep-

tual distinctions between the doctrine of exhaustion

of administrative remedies, at issue there, and the

doctrine of finality, on which the court of appeals

relied in the instant case. See 509 U.S. at 144-145.

The Darby Court also observed that, although Sec-

tion 10(c) “limited the availability of the doctrine of

exhaustion of administrative remedies to that which

the statute or rule clearly mandates,” federal courts

“may be free to apply, where appropriate, other pru-

dential doctrines of judicial administration to limit

the scope and timing of judicial review.” Jd. at 146.

That observation immediately followed the passage on

which petitioners rely (Pet. 10) in contending that ex-

haustion of mandatory remedies renders an agency

action final, regardless of the pursuit of nonman-

datory administrative review. Thus, considered in

context, the discussion of exhaustion of remedies can-

not be read to undermine the Darby Court’s earlier

approving quotation of the passage in JCC v. Brother-

hood of Locomotive Engineers, 482 U.S. 270 (1987),

regarding finality for purposes of Section 10(c) of the

APA: “§ 10(c) ‘has long been construed by this and

other courts merely to relieve parties from the

requirement of petitioning for rehearing before seek-

ing judicial review * * *, but not to prevent petitions

for reconsideration that are actually filed from

rendering the orders under reconsideration non-

final.’” Darby, 509 U.S. at 145 (quoting Brotherhood

of Locomotive Engineers, 482 U.S. at 284-285)

(emphasis added in part).

The Court’s recent decision in Stone v. INS also

demonstrates that Darby did not undermine the valid-

ity of that longstanding judicial construction of Sec-

tion 10(c). The Stone Court again quoted the perti-

nent passage from Brotherhood of Locomotive Engi-

neers (see 115 S. Ct. at 1542), setting forth that

“construction of the APA language,” without any in-

dication that the construction had been, or should be,

rejected. The Stone Court simply observed that, be-

cause the case before it concerned judicial review

under the Immigration and Nationality Act, 8 U.S.C.

1101 et seq., it was not presented with the question

“whether an agency subject to either the APA or the

Hobbs Act [the judicial review statute at issue in

Brotherhood of Locomotive Engineers] has the

authority to specify whether the finality of its orders

for purposes of judicial review is affected by the filing

of a motion to reconsider.” 115 S. Ct. at 1543. The

Stone Court nowhere suggested that its decision in

Darby had construed Section 10(c) in a manner

inconsistent with the Court’s longstanding interpre-

tation quoted in Brotherhood of Locomotive Engi-

neers and in Stone itself.

b. Contrary to petitioners’ suggestion (Pet. 12-13),

this case does not present a conflict among the courts

of appeals warranting review by this Court. The

cases cited by petitioners as conflicting with the rul-

ing below predate the Court’s decisions in Brother-

hood of Locomotive Engineers, Darby, and Stone.

See Pet. 13-14. The courts of appeals have recognized

that those earlier lower court cases are no longer

persuasive. See United Transportation Union v.

ICC, 871 F.2d 1114, 1118 (D.C. Cir. 1989) (observing

that the ruling in American Trucking Ass’ns, Inc.

v. ICC, 697 F.2d 1146 (D.C. Cir. 1983), does not sur-

vive Brotherhood of Locomotive Engineers), West

Penn Power Co. v. United States Envtl. Protection

Agency, 860 F.2d 581, 587 (8d Cir. 1988) (concluding

that the reasoning in American Trucking Ass’ns and

Northside Sanitary Landfill, Inc. v. Thomas, 804

F.2d 371 (7th Cir. 1986), “is no longer persuasive in

light of the Supreme Court’s interpretation of sec-

tion [10(c)] in Locomotive Engineers”). As petition-

ers acknowledge, the lower court opinions they cite

that have been issued subsequent to Brotherhood of

Locomotive Engineers are in accord with the ruling

below. Pet. 13-14 (citing Winter v. ICC, 851 F.2d 1056,

1062 (8th Cir.), cert. denied, 488 U.S. 925 (1988); West

Penn Power, 860 F.2d at 582-583).

2. Petitioners contend (Pet. 14-19) that the court

of appeals also erred in concluding that their claim is

not ripe for judicial review. They assert (Pet. 15) that

the court’s ruling is only “another way of saying,”

erroneously in their view, that their request for

reconsideration rendered the agency action nonfinal.

Petitioners maintain (Pet. 15-19) that the case is ripe

for judicial review under Abbott Laboratories v.

Gardner, 387 U.S. 136 (1967), because the Adminis-

trator’s decision was a definitive statement of the

agency’s position and had an immediate impact on pe-

titioners.

The court of appeals correctly ruled that, under

Abbett Laboratories and Franklin v. Massachusetts,

505 U.S. 788 (1992), petitioners’ claim is not ripe for

judicial review. The Administrator’s notices of deter-

mination of penalty constituted only the initial deci-

sion of the agency. Upon petitioners’ filing of excep-

tions to the notices, the notices were given only “the

effect of a complaint” for purposes of the adminis-

trative proceeding, and petitioners’ exceptions and

requests for hearings were given the effect of an

answer to the complaint. See 29 C.F.R. 580.10. The

ALJ is required to conduct a de novo review of all

the factual and legal issues in the case. Marshall v.

Jerrico, Inc., 446 U.S. 238, 244-245 (1980). Thus, the

court of appeals properly characterized the chal-

lenged Administrator’s decision in this case as an

“interim determination” that initiated an administra-

tive review process, through which the agency would

“finalize its position.” Pet. App. 14; see FTC v. Stan-

dard Oil Co. of California, 449 U.S. 232, 238 (1980)

(agency’s issuance of a complaint is not final agency

action for purposes of Section 10(¢c) of the APA).

Petitioners’ claim that the agency action already

had an immediate, adverse effect on them because

they were required to terminate certain employees is

insufficient to render the case ripe for review. That

claim focuses on the hardship suffered by third par-

ties, not by petitioners, as required by this Court’s

ripeness doctrine. See Pet. App. 15. Petitioners con-

cede (Pet. 19) that the sanctions imposed directly on

them, i.e., the civil penalties, have had no immediate

effect because petitioners have not yet paid the penal-

ties (and need not pay them until the agency action

becomes final, see 29 C.F.R. 580.18).

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.