Bakersfield City School Dist. of Kern County v. Boyer, s. 77-2625

• Decision Date: 20 November 1979
• Docket Number: Nos. 77-2625,78-1459,s. 77-2625
• Citation: 610 F.2d 621
• Parties: BAKERSFIELD CITY SCHOOL DISTRICT OF KERN COUNTY, Plaintiff-Appellant, v. Ernest BOYER et al., Defendants-Appellees. BAKERSFIELD CITY SCHOOL DISTRICT, Plaintiff-Appellant, v. Ernest BOYER et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 621

610 F.2d 621

BAKERSFIELD CITY SCHOOL DISTRICT OF KERN COUNTY, Plaintiff-Appellant, v. Ernest BOYER et al., Defendants-Appellees.

BAKERSFIELD CITY SCHOOL DISTRICT, Plaintiff-Appellant, v. Ernest BOYER et al., Defendants-Appellees.

Nos. 77-2625, 78-1459.

United States Court of Appeals, Ninth Circuit.

Nov. 20, 1979.

Rehearing Denied in No. 77-2625 Jan. 18, 1980.

Ralph B. Jordan, Bakersfield, Cal., on brief; John E. Loomis, Staniford, Harris, Loomis & Home, Fresno, Cal., for plaintiff-appellant.

Elisa B. Vela, Atty., Dept. of Justice, Washington, D. C., for defendants-appellees.

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

Before DUNIWAY and ELY, Circuit Judges, and PORT, ^* District Judge.

DUNIWAY, Circuit Judge:

In No. 77-2625, the plaintiff Bakersfield City School District appeals from a district court judgment dismissing its action for failure to exhaust administrative remedies in an administrative proceeding under Title VI of the Civil Rights Act of 1964. In No. 78-1459, the District appeals from a post judgment Protective Order. We affirm both the judgment and the order.

I. Facts.

In June, 1975, administrative proceedings were begun by the Department of Health, Education and Welfare's Office of Civil Rights (the Department) against the District. The Department alleged that the District was violating Title VI of the Civil Rights Act of 1964. The Department's position was that the substantially disproportionate racial composition of the student body in some of the District's schools supported an inference that the District was employing discriminatory practices and was not implementing available programs effectively. The Department concluded that voluntary compliance with Title VI could not be achieved. The District was notified on June 2, 1975, that payment of federal funds not yet approved was "deferred" pending the outcome of the proceedings. The District had applied for approximately $220,000 from the Department, but it never received those funds.

On June 3, the District received from the Department a "Notice of Opportunity for Hearing." The District responded to the Notice on June 26, denying the charges and requesting a hearing. July 28 was set as the hearing date and a prehearing conference was scheduled immediately before the hearing. At the conference, the administrative law judge (AL Judge) determined that the District's inadequate responses to the Department's requests disabled the Department from presenting its case at that time. The hearing was ordered "continued and rescheduled to begin on October 6, 1975." There were no objections to the continuance. The Department called its first witness on October 6, 1975, and continued to present testimony through December 18, 1975. The District then began its presentation of testimony and completed it in April 1976.

Following the hearing, the AL Judge, the District and the Department began the process of correcting the official transcript of the hearing. Early in the proceedings, the District had decided that the reporter's transcript of the proceeding was inaccurate. It objected to the method of transcription with no success. Concern about the accuracy of the transcript led it to tape-record 109 of the 111 sessions held. On the basis of the tapes, it claimed that the transcript contained over 9,000 "serious mistakes." Applying the standard of 45 C.F.R. § 81.91, the AL Judge limited corrections to those involving "matters of substance" and required that proposed corrections be submitted by way of errata sheets. By January 27, 1977, all objections had been heard and 225 pages of transcript corrections had been authorized by the AL Judge, to become effective February 4, 1977. The Department filed proposed findings of fact and conclusions of law on March 7, 1977. The District was allowed until March 28, 1977 to file.

However, on March 24, 1977, the District filed its Complaint in this action for injunctive and declaratory relief and relief in the nature of mandamus, naming as defendants the Department and the AL Judge, and obtained, Ex parte, a temporary restraining order enjoining the use of the transcript, tolling any time limits in the administrative hearings and preventing the further dispersal of deferred funds. The order effectively removed the deadline for the filing of the District's final brief in the administrative proceedings and prevented the AL Judge from rendering a final decision. The complaint requested that the Department be compelled to pay monies unlawfully deferred and to prepare an accurate transcript of the proceedings. The Department and the AL Judge moved for summary judgment and dismissal of the complaint.

On May 16, 1977, the district court entered its order granting the motion to dismiss, finding that the District had failed to exhaust administrative remedies and that its objections, including those based upon errors in the transcript, could be raised in review proceedings. Judgment was entered dismissing the action on May 20, 1977. No. 77-2625 is the District's appeal.

On November 1, 1977, on the District's motion, the district court entered a protective order to preserve the transcript and the District's tape recordings for "future review in any administrative or judicial processes." The order did not completely prevent the use of the transcript in its uncorrected form. Feeling that the order was too narrow, the District appeals in No. 78-1459. The Department has not cross-appealed.

The Department tells us that there have been further proceedings, as follows: The AL Judge has rendered a decision in the administrative proceeding, finding the District in violation of Title VI. The District has filed objections with the Reviewing Authority (Civil Rights) contesting the findings and conclusions of the AL Judge on the grounds, Inter alia, that the official transcript is defective. After the AL Judge's finding of noncompliance, the Department imposed a new deferral on the District's applications for federal financial assistance.

II. Judicial Intervention in Uncompleted Administrative Proceedings.

The district court dismissed the District's action because the District had failed to exhaust its administrative remedies. The District argues that it should be relieved of the exhaustion requirement on three theories: denial of due process in the conduct of the administrative proceedings, rendering the proceedings void, denial of due process in the preparation of a transcript of the proceedings, and Res judicata as a bar to the administrative proceedings. We reject all three theories.

A. Claimed Denial of Due Process in the Proceedings.

Title VI of the Civil Rights Act of 1964, § 601, 42 U.S.C. § 2000d, prohibits discrimination on the basis of "race, color, or national origin" in "any program or activity receiving Federal financial assistance." Comprehensive procedural requirements must be met before Federal financial assistance can be terminated for noncompliance with § 601. As it applies to this case, 42 U.S.C. § 2000d-1 requires that, before terminating federal assistance, the Department must have: (1) advised the District of its failure to comply with § 601; (2) determined that voluntary compliance cannot be secured; and (3) made an express finding on the record, after an opportunity for a hearing, that the District is not in compliance with § 601. Termination does not become effective until 30 days after the Secretary of the Department files a full written report with the relevant Congressional committees detailing the reasons for the termination.

After these procedures are completed, a person aggrieved by the agency action may obtain judicial review in the United States Court of Appeals under the Administrative Procedure Act. 42 U.S.C. § 2000d-2. The agency or the court may postpone or stay agency action pending such judicial review. 5 U.S.C. § 705.

The Department has adopted regulations implementing the requirements of § 2000d-1. These provide for an internal appeals process. The initial decision is by an administrative law judge who presides over the administrative hearing. His decision is reviewable by the Department's Reviewing Authority (Civil Rights) and by the Secretary of the Department. 45 C.F.R. §§ 81.104, 81.106. The decision of the Secretary or, if no exceptions to the decision or requests for review are filed, the decision of the administrative law judge, or the Reviewing Authority, is a final decision within the meaning of 5 U.S.C. § 704, reviewable in the court of appeals under 42 U.S.C. § 2000d-2.

In addition to the provisions of § 2000d-1, allowing the termination of or refusal to grant or to continue assistance, 42 U.S.C. § 2000d-5 (the Fountain Amendment) allows the Department to defer the approval of federal funds not yet authorized for new programs or activities on the ground of noncompliance with Title VI, pending administrative proceedings to determine compliance. The Fountain Amendment provides that such deferral cannot exceed 60 days unless within that time the recipient is given notice of an opportunity for a hearing. Such hearing must be held within 60 days of the notice unless the parties extend the time by mutual consent. No provision limits the time during which deferral may continue while the hearing is being held, ¹ but the deferral may not continue for more than 30 days after the close of the hearing, absent an express finding on the record of noncompliance with Title VI. No provision limits the permissible length of a deferral after a decision of noncompliance has been entered.

The District argues that 20 U.S.C. § 1232i(b) (the Eshleman Amendment), rather than the Fountain Amendment, controls this case. The Eshleman Amendment requires (1) at least 30 days prior written notice of a deferral, (2) the opportunity for a hearing before an administrative law judge within a 60 day period from commencement of a deferral, and (3) the...