Joelson v. U.S.

• Decision Date: 24 June 1996
• Docket Number: No. 95-3458,95-3458
• Citation: 86 F.3d 1413
• Parties: , 29 Bankr.Ct.Dec. 338 Philip R. JOELSON, Plaintiff-Appellant, v. UNITED STATES of America, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1413

86 F.3d 1413

65 USLW 2014, 29 Bankr.Ct.Dec. 338

Philip R. JOELSON, Plaintiff-Appellant, v. UNITED STATES of America, et al., Defendants-Appellees.

No. 95-3458.

United States Court of Appeals, Sixth Circuit.

Argued May 9, 1996.

Decided June 24, 1996.

Philip R. Joelson (briefed), Toledo, OH, Anthony J. Calamunci (argued), Law Office of Philip R. Joelson, Toledo, OH, for Plaintiff-Appellant.

Mark B. Stern (argued and briefed), U.S. Department of Justice, Civil Division, Washington, DC, for Defendant-Appellee.

Before: MARTIN, JONES, and NELSON, Circuit Judges.

BOYCE F. MARTIN, Jr., Circuit Judge.

In 1978, Congress passed the Bankruptcy Reform Act, which "sought to separate the administrative duties in bankruptcy from the judicial tasks, leaving the bankruptcy judges free to resolve disputes untainted by knowledge of administrative matters unnecessary and perhaps prejudicial to an impartial judicial determination." H.R.Rep. No. 764, 99th Cong., 2d Sess. 18 (1986), reprinted in 1986 U.S.C.C.A.N. 5227, 5230. As part of this process, Congress created the U.S. Trustee Pilot Program within the Department of Justice to "aid in the administration of bankruptcy cases, a task which the courts had previously performed." In re Revco D.S., Inc., 898 F.2d 498, 500 (6th Cir.1990). By 1986, a permanent nationwide program was in place. Under that program, the United States Attorney General appoints a U.S. Trustee in each of twenty-one regions across the country. 28 U.S.C. § 581(a). Each U.S. Trustee is, in turn, responsible for establishing, maintaining, and supervising a panel of private trustees who are eligible and available to serve as trustees in cases filed under Chapter 7 of the Bankruptcy Code. 28 U.S.C. § 586(a)(1).

Philip R. Joelson, the plaintiff in this case, served as a member of the Panel of Chapter 7 Bankruptcy Trustees for the Northern District of Ohio for many years. Joelson began serving as a Chapter 7 Trustee in July of 1966, and served continuously in that position until his reappointment in September of 1979 by the Administrative Office of the U.S. Courts. After the U.S. Trustee Program was certified in the Northern District of Ohio on April 5, 1988, the U.S. Trustee for the Districts of Ohio and Michigan (Region 9) appointed Joelson to the region's Chapter 7 Trustee Panel effective May 4, 1988. In a notice of provisional appointment which preceded final approval of Joelson's appointment, the U.S. Trustee informed Joelson that his appointment was subject to discretionary termination "at any time for reasons associated with [his] application or background check, or for unsatisfactory performance." Joelson served as a member of the panel until March 12, 1992, the date on which he apparently was removed from active case rotation.

Joelson viewed his removal from active case rotation as arbitrary, and asked the U.S. Trustee to resume appointing him as an interim trustee in newly-filed Chapter 7 cases. The Acting U.S. Trustee met with Joelson on September 2, 1993 to discuss his status, and subsequently declined to reverse the prior decision removing Joelson from active case rotation. The U.S. Trustee advised Joelson of his decision in a letter dated November 16, 1993, which stated:

I have received your letter of October 27, 1993 requesting that you be placed back on the draw of newly assigned Chapter 7 bankruptcy cases. I have considered this request in conjunction with your other correspondence, my personal meeting with you on September 2, 1993, and detailed discussion with the Cleveland U.S. Trustee staff.

Upon review of your prior case administration, adherence to procedures, and interaction with creditors, debtors, and our office, there continue[ ] to be numerous concerns. As a result, I am unable to return you to the active case rotation.

On February 25, 1994, Joelson filed a pro se complaint in district court, challenging the U.S. Trustee's decision on statutory and constitutional grounds. Joelson's complaint named the United States of America, the Attorney General of the United States, the Acting Director of the Executive Office for the U.S. Trustees, the Acting U.S. Trustee for Region 9, and the Assistant U.S. Trustee for Cleveland as defendants. In his complaint, Joelson asserted that the defendants: (1) violated Administrative Procedure Act, 5 U.S.C. §§ 551, et seq., due process provisions; (2) violated his Fifth Amendment due process rights; and (3) tortiously interfered with his constitutional and statutory rights. Joelson also claimed that the U.S. Trustee Program is unconstitutional in that it violates the separation of powers doctrine and the Uniformity Clause, U.S. Const., art. I, § 8, cl. 4. Joelson sought declaratory and injunctive relief, as well as damages, attorney's fees, and costs from the defendants.

After Joelson's complaint was filed, the defendants moved for dismissal pursuant to Fed.R.Civ.P. 12(b)(1), (2) and (6). In doing so, the defendants claimed that: (1) the district court lacked jurisdiction to hear Joelson's claim under the Administrative Procedure Act because the decision to remove a panel trustee is committed to agency discretion by law; (2) Joelson failed to state a valid constitutional claim; (3) Joelson's exclusive remedy for a common law tort is an action against the United States; (4) the district court lacked personal jurisdiction over the individual defendants; (5) the defendants are entitled to qualified immunity; and (6) the U.S. Trustee Program is constitutional.

On February 13, 1995, the district court dismissed Joelson's complaint pursuant to Rules 12(b)(1) and (6) for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted. This timely appeal followed.

I.

We review a district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction de novo. Madison-Hughes v. Shalala, 80 F.3d 1121, 1123 (6th Cir.1996). We also review a district court's dismissal of claims pursuant to Rule 12(b)(6) de novo, construing the complaint "in the light most favorable to the plaintiff, accept[ing] all factual allegations as true, and determin[ing] whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief." In re DeLorean Motor Co., 991 F.2d 1236, 1239-40 (6th Cir.1993) (stating also that "a complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory"). Applying these standards, we turn to a review of Joelson's claims.

II.

Counts I and II of Joelson's complaint alleged that the U.S. Trustee's decision to remove him from active case rotation violated the due process requirements of the Administrative Procedure Act. Specifically, Joelson claimed that his panel membership constituted a "license" under Section 551(8) of the Act, and that the defendants deprived him of that license without notice and an opportunity to cure any deficient conduct in violation of Sections 558(c)(1) and (2). The district court dismissed Joelson's Administrative Procedure Act claims for lack of subject matter jurisdiction on the ground that the U.S. Trustee's decision to remove Joelson from active case rotation was not subject to judicial review, and we agree with that conclusion. The court held that under Section 701(a)(2) of the Act, it did not have jurisdiction over the case because the governing statute and regulations provide "no judicial standard against which to evaluate a U.S. Trustee's exercise of discretion regarding membership in the Panel of Trustees," and because a decision regarding the removal of a trustee from the panel "requires the determination of factors ... within the unique expertise of the U.S. Trustee." Joelson challenges this determination on appeal, arguing that the U.S. Trustee's decision to remove him from active case rotation is subject to judicial review.

The judicial review provisions of the Administrative Procedure Act, 5 U.S.C. §§ 701-706, provide for judicial review for any person "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute." 5 U.S.C. § 702. Under the Act, there is a "general presumption that all agency decisions are reviewable ... at least to assess whether the actions were 'arbitrary, capricious, or an abuse of discretion.' " Heckler v. Chaney, 470 U.S. 821, 826, 105 S.Ct. 1649, 1653, 84 L.Ed.2d 714 (1985); Abbott Labs. v. Gardner, 387 U.S. 136, 140-41, 87 S.Ct. 1507, 1511-12, 18 L.Ed.2d 681 (1967) (stating that the "Administrative Procedure Act's 'generous review provisions' must be given a 'hospitable' interpretation"); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.Ed.2d 136 (1971) (reasoning that nonreviewability of agency action is the exception rather than the rule). The presumption favoring judicial review is overcome in only two instances: (1) where a statute precludes judicial review, and (2) where agency action is "committed to agency discretion by law." 5 U.S.C. §§ 701(a)(1) and (2). Both exceptions to judicial review of agency actions are to be narrowly construed, and courts should restrict access to judicial review "only upon a showing of 'clear and convincing evidence' of a contrary legislative intent." Abbott Labs., 387 U.S. at 141, 87 S.Ct. at 1512.

The parties to this case do not dispute that the U.S. Trustee's Office is an agency within the definition of the Administrative Procedure Act or that Joelson's removal from active case rotation constituted final agency action as defined by the Act. We must therefore only decide whether Joelson is able to "clear the hurdle of [Section] 701(a)," to be entitled to judicial review of the agency action at issue. Chaney, 470 U.S. at 828, 105 S.Ct. at 1654 (stating that, "as long as the action is a 'final agency action for which there...