Denberg v. U.S. R.R. Retirement Bd.

• Decision Date: 10 May 1983
• Docket Number: No. 81-2386,81-2386
• Parties: Frances Brahna DENBERG and Albert A. Denberg, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. UNITED STATES of America RAILROAD RETIREMENT BOARD and James L. Cowen, individually and as chairman of the United States of America Railroad Retirement Board, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1193

696 F.2d 1193

Frances Brahna DENBERG and Albert A. Denberg, on behalf of themselves and all others similarly situated Plaintiffs-Appellees, v. UNITED STATES of America RAILROAD RETIREMENT BOARD and James L. Cowen, individually and as chairman of the United States of America Railroad Retirement Board, Defendants-Appellants.

No. 81-2386.

United States Court of Appeals Seventh Circuit.

Argued May 25, 1982.

Decided Jan. 4, 1983.

As Modified Jan. 5, 1983.

As Amended on Denial of Rehearing and

Rehearing En Banc May 10, 1983.

Frank A. Rosenfeld, Dept. of Justice, Civ. Div., Washington, D.C., for defendants-appellants.

A. Raymond Randolph, Sharp, Randolph & Green, Washington, D.C., for plaintiffs-appellees.

Before WOOD and POSNER, Circuit Judges, and FOREMAN, ^* Chief Judge.

POSNER, Circuit Judge.

In 1975 Albert Denberg, whose wife Frances is a retired railroad worker, applied to the Railroad Retirement Board for spouse's benefits under the Railroad Retirement Act of 1974, 45 U.S.C. Secs. 231 et seq. The Act provides that a husband is eligible for spouse's benefits only if he was receiving at least one half of his support from his wife at the time that she began receiving benefits. 45 U.S.C. Sec. 231a(c)(3)(ii). There is no similar requirement if the applicant is a wife. Denberg's application was denied because he did not satisfy the one-half requirement. He could have appealed the denial to the Board's Bureau of Hearings and Appeals, see 20 C.F.R. Sec. 260.4, and then to the Board itself, see 20 C.F.R. Sec. 260.6, but instead he and his wife brought this suit in federal district court in 1976 challenging the differential treatment of husbands and wives under the statute as unconstitutional. (What standing his wife has to complain about the denial of benefits to him we do not understand, but we will not pursue the question because the answer would not affect our decision.) The suit was later certified as a class action, with Mr. Denberg as the class representative. The class consists of all husbands disentitled to spouse's benefits by virtue of section 231a(c)(3)(ii), whether or not like Denberg they made application to the Board.

While the case was pending in the district court, the Sixth Circuit, in Kalina v. Railroad Retirement Board, 541 F.2d 1204 (6th Cir.1976), held that section 231a(c)(3)(ii) was unconstitutional, and the Supreme Court affirmed summarily, 431 U.S. 909, 97 S.Ct. 2164, 53 L.Ed.2d 220 (1977), on the authority of Califano v. Goldfarb, 430 U.S. 199, 97 S.Ct. 1021, 51 L.Ed.2d 270 (1977), which had struck down a similar provision in the Social Security Act. After the Supreme Court's affirmance in Kalina, the main question left for decision in this case was how far back the plaintiffs could reach for benefits wrongfully denied them. The district court, in its final judgment, entered in June 1981, held they could reach back to April 7, 1974, one year before Mr. Denberg had filed his application. The court ordered that notice of its judgment be sent to the members of the class, telling them to file their claims with the Board no later than October 15, 1981. On October 1, the Board informed the court that 5,450 apparently meritorious claims had been received. The total amount due these claimants has not been calculated but the Board estimates that it could approach $60 million.

Since the statute was held unconstitutional by the Supreme Court in Kalina before the district court entered its judgment from which the government has appealed, section 1252 of the Judicial Code, which read in light of section 1291 gives the Supreme Court exclusive jurisdiction over appeals from any federal district court order holding an Act of Congress unconstitutional in a suit to which a federal agency is a party, is inapplicable. The judgment appealed from was not a judgment holding a statute unconstitutional--the statute had already been held unconstitutional by the Supreme Court in another case--but a judgment concerning the remedial consequences of the statute's unconstitutionality. Once the unconstitutionality of a statute has been authoritatively determined by the Supreme Court, there is no purpose in allowing an expedited appeal to the Court from a subsequent district court judgment merely premised on that determination.

The only other question we need consider is whether the district court had jurisdiction of the subject matter of this suit. Section 1337 of the Judicial Code, on which the district court relied for jurisdiction, gives the district courts original jurisdiction over "any civil action or proceeding arising under any Act of Congress regulating commerce ...." The Railroad Retirement Act is an act regulating commerce, Finnerty v. Cowen, 508 F.2d 979, 983 (2d Cir.1974), and this suit arises under the Railroad Retirement Act because it is a suit for benefits provided by the Act although it challenges the constitutionality of one of the Act's provisions. However, section 5(f) of the Railroad Unemployment Insurance Act, 45 U.S.C. Sec. 355(f), incorporated by reference into the Railroad Retirement Act of 1974, see 45 U.S.C. Sec. 231g, provides that "any claimant ... may, only after all administrative remedies within the [Railroad Retirement] Board have been availed of and exhausted, obtain a review of any final decision of the Board by filing a petition for review" in a federal court of appeals. Therefore, if 28 U.S.C. Sec. 1337 gives the district court jurisdiction of this case, an applicant for railroad retirement benefits either can exhaust his remedies within the Board and then seek judicial review in a court of appeals under section 5(f)--the route taken by Kalina--or like Denberg can forget about his remedies within the Board and go directly into a district court under 28 U.S.C. Sec. 1337 with, of course, a right of appeal to a court of appeals should he lose in the district court.

It would be surprising if Congress had wanted to give applicants for railroad retirement benefits such a choice. Cf. Oljato Chapter of Navajo Tribe v. Train, 515 F.2d 654, 660 (D.C.Cir.1975). A purpose to do so cannot be inferred from the general grant of jurisdiction in section 1337 of the Judicial Code, which so far as relevant here dates back to 1911 (see 36 Stat. 1093), long before the enactment of the first Railroad Retirement Act in 1934 (see 48 Stat. 1283); and in any event seems foreclosed by section 10(b) of the Administrative Procedure Act, 5 U.S.C. Sec. 703. This section provides that "the form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action ... in a court of competent jurisdiction." In other words, if there is a special statutory review proceeding, it is exclusive. City of Rochester v. Bond, 603 F.2d 927, 935 (D.C.Cir.1979); S.Rep. No. 752, 79th Cong., 1st Sess. 44 (1945). There is one here--the proceeding in section 5(f) of the Railroad Unemployment Insurance Act.

The district court conceived section 5(f) differently: not as a specification of a section 10(b) "special statutory review proceeding" but as a requirement that administrative remedies be exhausted before the claimant can get judicial review. This distinction is relevant because the requirement of exhaustion is waived when exhaustion would be futile--when an applicant could not possibly get the initial denial of his application reversed within the agency. See, e.g., Continental Can Co., U.S.A. v. Marshall, 603 F.2d 590, 597 (7th Cir.1979). Exhaustion would have been futile here because the Railroad Retirement Board does not have the authority to declare statutes that it administers unconstitutional. Cf. Weinberger v. Salfi, 422 U.S. 749, 765-66, 95 S.Ct. 2457, 2466-67, 45 L.Ed.2d 522 (1975). But this conclusion does not, as the district court believed, eliminate section 5(f) as an obstacle to the district court's jurisdiction. The section does two things, and requiring exhaustion of administrative remedies is only one; the other is creating a special statutory review proceeding. See Weinberger v. Salfi, supra, 422 U.S. at 776, 95 S.Ct. at 2472, where this distinction is clearly stated. In a case like this where exhaustion of administrative remedies is futile, the initial decision of the agency denying benefits becomes the final decision to which section 5(f) refers, and the disappointed applicant can go directly to court for review of the denial. See id. at 766-67, 95 S.Ct. at 2467. But unless section 10(b) of the Administrative Procedure Act is to be ignored, it is to the court of appeals that he must go.

The plaintiffs admit in their brief that Mr. Denberg could have gone to the court of appeals directly after the denial of his application. There was no problem of "absence or inadequacy" of the special statutory review proceeding of section 5(f). They thus are asserting a right to choose whether to go to the district court or the court of appeals. But it is against common sense that a disappointed claimant should have a choice whether to seek judicial review in a district court with a right of appeal to the court of appeals, or in a court of appeals in the first place, see Sun Enterprises, Ltd. v. Train, 532 F.2d 280, 287 (2d Cir.1976); and section 10(b) of the Administrative Procedure Act makes clear that it is the latter forum, and the latter forum alone, in which review may be sought.

Confining judicial review to the courts of appeals is not some mindless, irksome technicality that we should try to construe our way around. It is the use of the district courts to review administrative action that does not make sense when there is review jurisdiction in the courts of appeals. Not only are the district courts trial rather than review courts; but to allow someone seeking judicial review of administrative action to get that review in the district court with...