677 F.2d 1271 (9th Cir. 1982), 80-5201, Scanlon v. Atascadero State Hosp.

Docket Nº:80-5201.
Citation:677 F.2d 1271
Party Name:Douglas James SCANLON, Plaintiff-Appellant, v. ATASCADERO STATE HOSPITAL, California Department of Mental Health, Defendants-Appellees.
Case Date:May 24, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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677 F.2d 1271 (9th Cir. 1982)

Douglas James SCANLON, Plaintiff-Appellant,

v.

ATASCADERO STATE HOSPITAL, California Department of Mental

Health, Defendants-Appellees.

No. 80-5201.

United States Court of Appeals, Ninth Circuit

May 24, 1982

Argued Sept. 15, 1981.

Submitted Oct. 15, 1981.

Marilyn Holle, Western Law Center for the Handicapped, Los Angeles, Cal., for plaintiff-appellant.

James E. Ryan, Deputy Atty. Gen., Los Angeles, Cal., for defendants-appellees; Prudence Kay Poppink, Employment Law Center, San Francisco, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before DUNIWAY and FERGUSON, Circuit Judges, and KELLAM, [*] District Judge.

DUNIWAY, Circuit Judge:

We affirm the dismissal of this action, brought under 29 U.S.C. § 794.

I. Facts.

Scanlon alleges that he suffers from diabetes mellitus and a lack of vision in one

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eye, that he was denied a job as a graduate student assistant at Atascadero State Hospital, and that this was discrimination in employment contrary to § 504 of the Rehabilitation Act, 29 U.S.C. § 794 and to various California statutes. The hospital moved for dismissal of the complaint, arguing (a) that § 794 does not apply to employment discrimination unless a primary objective of the federal financial assistance is to provide employment, and (b) that Scanlon's claims were barred by the Eleventh Amendment. The district court rejected argument (a) but accepted argument (b), and on that ground dismissed the § 794 claim and the pendent state claims.

II. Appealability of the Order.

The court's order merely dismissed the complaint; there is no judgment dismissing the action. Ordinarily, an order granting a motion to dismiss under rule 12(b)(6), F.R.Civ.P., carries with it a right to amend under rule 15(a), and thus is not an appealable final judgment. Here, however, the ruling was on a ground not curable by amendment, and it is clear that the court intended to dispose of the action. See Scott v. Eversole Mortuary, 9 Cir., 1975, 522 F.2d 1110, 1112. The order is appealable. However, the better practice would have been to enter a judgment of dismissal.

III. The Merits.

We affirm on the ground that the complaint does not and cannot state a claim upon which relief can be granted. We do not reach the question of the applicability of the Eleventh Amendment. Title 29 U.S.C. § 794 now reads in pertinent part as follows:

No otherwise qualified handicapped individual in the United States, as defined in section 706(7) of this title, shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance....

In Trageser v. Libbie Rehabilitation Center, Inc., 4 Cir., 1978, 590 F.2d 87, 89, the Fourth Circuit decided that a private action under § 794 to redress employment discrimination cannot be maintained unless a primary objective of the federal financial assistance is to provide employment. The Second and Eighth Circuits have followed. United States v. Cabrini Medical Center, 2 Cir., 1981, 639 F.2d 908; Carmi v. Metropolitan St. Louis Sewer District, 8 Cir., 1980, 620 F.2d 672. See also Simpson v. Reynolds Metals Co., Inc., 7 Cir., 1980, 629 F.2d 1226, 1232, 1234. For the reasons stated in Trageser, supra, we conclude that the order appealed from is correct.

Affirmed.

FERGUSON, Circuit Judge, dissenting:

My analysis of the Rehabilitation Act of 1973, of the 1978 Amendments to that Act, and of the legislative and administrative material which should guide our interpretation of that Act convinces me that the majority's decision in this case is in error. Accordingly, I dissent.

The issue in this case is whether Congress, by amending the Rehabilitation Act to "make available" the "remedies, procedures, and rights set forth in Title VI of the Civil Rights Act of 1964," 1 actually limited, in a drastic way, the remedies that were already available to persons aggrieved under § 504 of the Act. No support for such a view can be found in the Act, in the 1978 Amendments, or in the relevant legislative and administrative materials. Indeed, the only support that exists is the decision of the Fourth Circuit in Trageser v. Libbie Rehabilitation Center, 590 F.2d 87 (4th Cir. 1979). Neither that decision, nor those of the other courts that have followed it, can

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withstand scrutiny. The Trageser decision has been criticized by the Senate Committee on Labor and Human Resources, 2 by HEW, 3 by the Department of Justice, 4 and

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by commentators. 5 It should not be followed by this court.

I. BACKGROUND.

A. The Rehabilitation Act.

Section 504 of the Act prohibits discrimination against the handicapped in "any program or activity receiving Federal financial assistance." 29 U.S.C. § 794. Prior to the enactment of the 1978 Amendments, this section had been held to create a private right of action for individuals aggrieved by employment discrimination on the basis of handicap. See, e.g., Whitaker v. Board of Higher Education, 461 F.Supp. 99, 106-08 (E.D.N.Y.1978); Drennon v. Philadelphia Gen. Hosp., 428 F.Supp. 809, 815-16 & n.6 (E.D.Pa.1977). The Department of Health, Education, and Welfare had issued regulations implementing § 504 which prohibit employment discrimination against the handicapped by all recipients of federal financial assistance. E.g., 45 C.F.R. § 84.11 (1977). 6 HEW also noted, in the analysis of its regulations, the existence of case law holding that § 504 creates a private right of action. 45 C.F.R. § 84 App. A subpar. 8 (1977). The conclusion reached by all of these authorities, that § 504 prohibits employment discrimination against the handicapped by every recipient of federal financial assistance, is supported by the language and clear intent of the Act itself. Section 504 provides:

No otherwise qualified handicapped individual in the United States, as defined in section 706(7) of this title, shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subject to discrimination under any program or activity receiving Federal financial assistance.

29 U.S.C. § 794 (emphasis added). Notably, the statute does not read "... or be subject to discrimination other than employment discrimination," nor does it include any words of limitation characterizing the purpose which the federal funding must have before the rights guaranteed by § 504 are available. Furthermore, a primary focus of the Rehabilitation Act was employment for the handicapped. Its purpose was "to see that these (handicapped) individuals do receive the services that they need, particularly that maximum efforts are made to develop a vocational goal for them." S.Rep.No.318, 93d Cong., 1st Sess. 18, reprinted in (1973) U.S.Code Cong. & Ad.News 2076, 2092. The achievement of that goal is plainly impeded by the existence of discriminatory hiring practices in either the public or the private sector, and it would be odd indeed for Congress to condone such discrimination in programs administered with the help of federal funds.

B. The 1978 Amendments and Title VI

The courts recognized, under Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), that Congress had intended a private right of action to enforce the substantive rights specified in § 504. 7 Lloyd v. Regional Transp. Authority, 548 F.2d 1277, 1284-87 (7th Cir. 1977). However, the 1973 Act did not spell out federal department and agency procedures adequate to secure the enforcement of the rights it guaranteed, and federal agencies were slow to enforce

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those rights. See Comment, Employment Discrimination Against the Handicapped, 54 N.Y.U.L.Rev. 1173, 1192 (1979) (hereinafter cited as "Employment Discrimination"). See also Linn, Uncle Sam Doesn't Want You: Entering the Federal Stronghold of Employment Discrimination against Handicapped Individuals, 27 De Paul L.Rev. 1047 (1978). As a result, first Congress, and then President Ford, directed federal agencies to promulgate enforcing regulations. Employment Discrimination, supra, at 1192. The resulting regulations did not distinguish among federally funded programs on the basis of the purpose of the federal funding. Instead, employment discrimination against the handicapped is prohibited in all such programs. See, e.g., 45 C.F.R. § 84.11 (1977). Congress subsequently enacted the 1978 amendments, which were intended to codify as a statutory requirement the "existing HEW practice" embodied in its regulations at 45 C.F.R. parts 84, 85. S.Rep.No.890, 95th Cong., 2d Sess. 19 (1978), U.S.Code Cong. & Admin.News 1978, p. 7312. As already noted, the language of that enactment "made available" the procedures of Title VI to aid in the enforcement of § 504.

Title VI, which prohibits racial discrimination in federally funded programs, provides as its most dramatic remedy a cutoff of federal funds to an offending program. 42 U.S.C. § 2000d-1. Title VI also contains a provision which limits enforcement by a federal agency or department in the event of employment discrimination based on race: "Nothing contained in this subchapter shall be construed to authorize action under this subchapter by any department or agency with respect to any employment practice of any employer, employment agency, or labor organization except where a primary objective of the Federal financial assistance is to provide employment." Section 604 of the Civil Rights Act of 1964, 42 U.S.C. § 2000d-3.

The principal issue presented to us today is whether the 1978 Amendments, in addition to explicitly making available to §...

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