Cal-Almond, Inc. v. Yeutter

• Decision Date: 14 February 1991
• Docket Number: No. CIV. S-90-1313-WBS.,CIV. S-90-1313-WBS.
• Citation: 756 F. Supp. 1351
• Court: U.S. District Court — Eastern District of California
• Parties: CAL-ALMOND, INC., Plaintiff, v. Clayton YEUTTER, as the Secretary of Agriculture; The United States Department of Agriculture; The Almond Board of California, an administrative agency, Defendants.

756 F. Supp. 1351

CAL-ALMOND, INC., Plaintiff, v. Clayton YEUTTER, as the Secretary of Agriculture; The United States Department of Agriculture; The Almond Board of California, an administrative agency, Defendants.

No. CIV. S-90-1313-WBS.

United States District Court, E.D. California.

February 14, 1991.

Brian C. Leighton, Fresno, Cal., for plaintiff.

Kevin M. Simpson, Thomas Millet, Dept. of Justice, Washington, D.C., Joyce A. Vermeersch, Asst. U.S. Atty., Sacramento, Cal., for defendants.

MEMORANDUM AND ORDER

SHUBB, District Judge.

This matter is before the court on defendants' motion to dismiss for lack of subject matter jurisdiction, pursuant to Fed.R. Civ.P. 12(b)(1), based on plaintiff's failure to exhaust its administrative remedies. The matter was heard and submitted on January 28, 1991.

I PROCEDURAL AND FACTUAL BACKGROUND

Plaintiff ("Cal-Almond") is an almond "handler" as defined in the Almond Marketing Order ("Order") 7 C.F.R. § 981.1 et seq. Defendants are the Secretary of the United States Department of Agriculture ("Secretary"), the United States Department of Agriculture ("USDA") and the Almond Board of California ("Board"). On October 19, 1990, Cal-Almond filed the underlying complaint for declaratory judgment, preliminary and permanent injunction, mandatory injunction, writ of mandamus, compensatory damages, and attorney's fees. Cal-Almond is subject to the Order which was promulgated by the USDA pursuant to the Agricultural Marketing Agreement Act of 1937 ("AMAA"), 7 U.S.C. §§ 601-674. Congress enacted the AMAA to stabilize the marketing conditions of food commodities. See 7 U.S.C. § 602. The Order is administered by the USDA and the Secretary through the Board which is composed of appointed representatives of the almond industry including handlers and producers. See 7 C.F.R. §§ 981.30-981.40.

The Order, among other things, requires the Board to make recommendations to the Secretary concerning the amount of annual reserve crop any handler is required to set aside. 7 C.F.R. § 981.49. If the Secretary approves the recommendation, the Order requires each handler to "withhold from handling a quantity of almonds having a kernel weight equal to the reserve percentage of the kernel weight of all almonds such handler receives for his own account during the crop year." 7 C.F.R. § 981.50. The final rule dictating the reserve amount is not published until some of the crop in question has been received by the handlers. In 1988, the Secretary ordered a twenty-five percent reserve for the 1988-89 crop year. In 1990, the Secretary ordered a thirty-five percent reserve for the 1990-91 crop year. A handler is subject to substantial penalties if found in violation of a reserve rule.

Plaintiff's complaint contains nine "causes of action." The first cause of action alleges violations of the due process clause of the fifth amendment because the reserve is enforced without providing plaintiff a "hearing at a meaningful time, and without providing monetary damages." The second cause of action alleges violations of the due process clause and the ex post facto prohibition based on the fact that the reserve requirement applies to almonds already received. The third cause of action alleges violations of the Administrative Procedure Act ("APA") based on the retroactivity of the reserve rule. Plaintiff's fourth cause of action is an action for injunctive relief seeking to enjoin defendants from imposing the reserve requirement for the 1990-91 crop year on plaintiff. Plaintiff's fifth cause of action requests injunctive, declaratory, and mandatory relief pursuant to 5 U.S.C. § 706 and 28 U.S.C. § 1361 to compel compliance with the APA. In the sixth cause of action, plaintiff alleges that the reserve constitutes a taking in violation of the fifth amendment. The seventh cause of action alleges a violation of the fourth amendment based on the contention that the reserve constitutes an illegal seizure. In its eighth cause of action, plaintiff seeks a declaration and order pursuant to 5 U.S.C. § 706 that the agency's administrative claims procedure violates the due process clause. Finally, plaintiff's ninth cause of action seeks judicial review of the agency's imposition of the 1990-91 reserve under the APA.

Plaintiff initiated an administrative complaint as to the 1988-89 reserve on February 2, 1989 (AMA Docket No. F & V 981-5, Exhibit 1 to Defendants' Points and Authorities). The ALJ issued a Decision and Order dated March 19, 1990, which rejected some of plaintiff's claims but which held that the USDA had violated the APA in publishing a final rule in 1988 which had retroactive effect on the entire crop year. Both Cal-Almond and the USDA appealed the ALJ's decision to the Judicial Officer who is designated by the Secretary to render the agency's final decision. The Judicial Officer has yet to issue a final decision on the merits. Cal-Almond has not pursued an administrative claim against the USDA as to the 1990-91 crop year reserve.

Defendants argue that the complaint must be dismissed for failure to exhaust statutorily prescribed administrative remedies. Cal-Almond contends that the facts and issues presented in the instant case warrant an exception to the exhaustion requirement. In the alternative, if the court dismisses the claims pending before the agency, Cal-Almond requests the court to grant relief pursuant to 5 U.S.C. § 706.

The court is persuaded that defendants' motion should be granted in part. To the extent the first, second, third, fourth, sixth, seventh, eighth and ninth causes of action relate to the 1990-91 reserve, those claims shall be dismissed pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. To the extent those same causes of action relate to the 1988-89 reserve, those claims shall be dismissed pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiff may proceed with its fifth cause of action under the APA for the limited purpose of determining whether it is entitled to compel agency action pursuant to 5 U.S.C. § 706(1).

II DISCUSSION

Defendants' central contention is that the statutory and regulatory scheme requires complete exhaustion of administrative remedies, and that, absent exhaustion, the court is without subject matter jurisdiction. The applicable statute provides:

Any handler subject to an order may file a written petition with the Secretary of Agriculture, stating that any such order or any provision of any such order or any obligation imposed in connection therewith is not in accordance with law and praying for a modification thereof or to be exempted therefrom. He shall thereupon be given an opportunity for a hearing upon such petition, in accordance with regulations made by the Secretary of Agriculture, with the approval of the President. After such hearing, the Secretary shall make a ruling upon the prayer of such petition which shall be final, if in accordance with law.

7 U.S.C. § 608c(15)(A). This statutory remedy is the exclusive method of redress available to handlers. Pescosolido v. Block, 765 F.2d 827, 831 (9th Cir.1985) (citing United States v. Ruzicka, 329 U.S. 287, 292-95, 67 S.Ct. 207, 209-11, 91 L.Ed. 290 (1946)). Section 608c(15)(B) provides for district court review of the final agency action. See 7 C.F.R. § 900.64 ("No decision shall be final for the purpose of judicial review except a final decision issued by the Secretary pursuant to an appeal by a party to the proceeding."). Defendants also assert that the AMAA limits the jurisdiction of the court solely to petitions for judicial review brought pursuant to § 608c(15)(B), thus precluding the court from considering plaintiff's APA claims.

A. Jurisdiction as to Claims Pending Before the Secretary.

There appears to be a split of authority within the Ninth Circuit as to whether the exhaustion requirement is jurisdictional. In one case, strict exhaustion was required based on facts similar to the instant case. Saulsbury Orchards & Almond Processing v. Yeutter, 917 F.2d 1190, 1194 (9th Cir.1990) (citing Ruzicka, 329 U.S. 287, 67 S.Ct. 207); see also United States v. Riverbend Farms, Inc., 847 F.2d 553, 559 (9th Cir.1988).

In Saulsbury, the almond handler filed a complaint against the Secretary as well as several individual defendants including members of the Board, alleging that the Order violated its first amendment rights by "forcing it to advertise." Saulsbury, 917 F.2d at 1193. The district court dismissed the action holding that the handler had failed to exhaust its administrative remedies. Id. At the time, the handler had not appealed the decision of the ALJ to the Secretary and thus there was no final agency decision. Id. The Ninth Circuit affirmed. Id. at 1196-97. While the opinion did not state whether the dismissal had been entered pursuant to Fed.R.Civ.P. 12(b)(1) or 12(b)(6), the court of appeals noted that the exhaustion requirement cannot be waived since it is imposed by statute and is, therefore, a jurisdictional requirement. Saulsbury, 917 F.2d at 1194 (citing Reid v. Engen, 765 F.2d 1457, 1462 (9th Cir.1985)). Thus, Saulsbury suggests that a dismissal for failure to exhaust administrative remedies should be entered pursuant to Fed.R.Civ.P. 12(b)(1).

In another case, the court of appeals stated that it would "not imply from section 608c(15) a requirement that plaintiffs exhaust clearly inadequate administrative remedies." Wileman Bros. & Elliott, Inc. v. Giannini, 909 F.2d 332, 338 (9th Cir. 1990) (citing Coit Independence Joint Venture v. Federal Sav. & Loan Ins. Corp., 489 U.S. 561, 567, 109 S.Ct. 1361, 1365-66, 103 L.Ed.2d 602 (1989) ("Administrative remedies that are inadequate need not be exhausted.")). Thus, Wileman suggests that courts have limited discretion to decide whether to require complete exhaustion. If a court has such discretion, a dismissal for failure to exhaust cannot be based on lack of...