Committee of Blind Vendors of District of Columbia v. District of Columbia

• Decision Date: 15 September 1994
• Docket Number: Nos. 90-5280 and 92-5059,s. 90-5280 and 92-5059
• Citation: 28 F.3d 130
• Parties: COMMITTEE OF BLIND VENDORS OF the DISTRICT OF COLUMBIA, et al., Appellees, v. DISTRICT OF COLUMBIA, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 130

28 F.3d 130

307 U.S.App.D.C. 263

COMMITTEE OF BLIND VENDORS OF the DISTRICT OF COLUMBIA, et

al., Appellees, v. DISTRICT OF COLUMBIA, et al., Appellants.

Nos. 90-5280 and 92-5059.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 14, 1993.

Decided July 5, 1994.

Rehearing and Suggestion for Rehearing

In Banc Denied Sept. 15, 1994. ^*

Appeals from the United States District Court for the District of Columbia (Civil Action No. 88-142).

James C. McKay, Jr., Asst. Corp. Counsel, Washington, DC, argued the cause for the appellants. On brief were John Payton, Corp. Counsel, and Charles L. Reischel, Deputy Corp. Counsel, Washington, DC.

Robert R. Humphreys, Washington, DC, argued the cause for the appellees.

Before BUCKLEY, GINSBURG and HENDERSON, Circuit Judges.

Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.

Dissenting opinion filed by Circuit Judge BUCKLEY.

KAREN LeCRAFT HENDERSON, Circuit Judge:

The District of Columbia (District) appeals the district court's decision awarding the plaintiff class compensatory damages and attorney's fees for the District's alleged violations of the Randolph-Sheppard Act (Act), 20 U.S.C. Secs. 107 et seq. The District argues that the district court was without jurisdiction because the class failed to exhaust its administrative remedies and exhaustion would not have been futile. The District also challenges the damages and attorney's fees awards. For the reasons set forth below, we reverse the judgment below and remand with instructions to dismiss the action.

I.

Congress enacted the Act in order to provide the blind with employment, to increase their economic opportunities and to encourage their economic self-sufficiency. 20 U.S.C. Sec. 107(a). The Act achieves these goals by authorizing blind persons to operate vending facilities on federal property and by granting blind vendors licensed under the Act priority in the operation of the facilities. 20 U.S.C. Secs. 107(a)-(b). The Act further benefits blind vendors by entitling them to a percentage of all income generated by vending machines operating on federal property whether or not the machines are operated by program participants. 20 U.S.C. Sec. 107d-3.

State and federal agencies share responsibility for administering the statutory program. On the federal level, the Secretary of the United States Department of Education (Secretary) is responsible for interpreting and enforcing the Act's provisions. In addition, the Secretary designates a state licensing agency (SLA) to administer the Act within each state. 20 U.S.C. Sec. 107a(a)(5).

Blind persons interested in participating in the program must apply to their SLA for a license to operate as a blind vendor. 20 U.S.C. Sec. 107a(b). The SLA then applies to the federal government seeking to place the licensee on federal property. 20 U.S.C. Sec. 107a(c). When the SLA and the federal government have agreed on a suitable location for the vending facility, the SLA equips the facility and furnishes the initial stock and inventory. 20 U.S.C. Sec. 107b(2). From this point forward, the blind vendor operates as the sole proprietor of the vending facility. He is entitled to its profits and presumably absorbs its losses. See 20 U.S.C. Sec. 107d-3 (income from licensee's vending machine accrues to licensee).

The Act sets forth a grievance procedure for blind vendors. "Any blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program" can request a full evidentiary hearing before his SLA. 20 U.S.C. Sec. 107d-1(a). If he is dissatisfied with the results of the hearing, he can file a complaint with the Secretary who then convenes an ad hoc arbitration panel to address the grievance. Id. The arbitration panel's decision is binding and subject to judicial review as final agency action under the Administrative Procedure Act (APA). 20 U.S.C. Sec. 107d-2(a). The Act further protects the vendors by requiring each SLA to establish a Committee of Blind Vendors (CBV), elected biennially by all vendors and responsible for representing them, addressing their grievances and acting as their advocate. 20 U.S.C. Sec. 107b-1.

II.

The SLA for the District of Columbia ¹ is the District of Columbia Rehabilitation Services Administration (DCRSA), a subdivision of the District's Department of Human Services. On October 23, 1985, CBV and several individual blind vendors filed a grievance with DCRSA complaining of the District's mismanagement of the Randolph-Sheppard program. DCRSA requested that the District of Columbia Office of Fair Hearings (OFH) ² conduct an evidentiary hearing on the vendors' grievance. Committee of Blind Vendors v. District of Columbia, 695 F.Supp. 1234, 1237 (D.D.C.1988). The OFH scheduled the hearing for September 2, 1987. ³

While the vendors' grievance was pending, the District of Columbia Superior Court decided Schlank v. Williams, No. 1164-85 (D.C.Super.Ct. July 16, 1987). In Schlank, an aggrieved vendor sought injunctive relief and a declaratory judgment under the Act. The District moved to dismiss based on the plaintiff's failure to exhaust her administrative remedies. Schlank, slip op. at 6. The court disagreed, concluding that exhaustion would have been futile. The court relied on two factors: (1) DCRSA had failed to comply with the rulemaking procedures of the District of Columbia Administrative Procedure Act, which in turn meant that it had not properly adopted procedures to govern Randolph-Sheppard hearings as it was required to do under the Act, ⁴ and therefore a DCRSA hearing could not have provided effective relief; and (2) the OFH's jurisdiction does not extend to vendor grievances. Id. at 7-11.

Based on the D.C. Superior Court's decision in Schlank, the vendors concluded that their hearing before the OFH would not result in enforceable relief. Accordingly, they obtained an indefinite continuance of their case and attempted to progress to the next level of the grievance process by requesting arbitration before a panel convened by the Secretary. The Acting Commissioner of the Department of Education (Department) informed the vendors that arbitration was available only to vendors dissatisfied with the results of a DCRSA hearing. According to the Acting Commissioner, because the vendors had not aired their grievances before DCRSA, they could not request arbitration. He further explained:

... Federal arbitration is not available to the vendors under the unique circumstances presented in the District. The Department has no choice but to ... decline to entertain direct arbitration requests from District vendors until local hearing procedures have been promulgated.

(reproduced in Committee of Blind Vendors, 695 F.Supp. at 1234).

Concluding that neither a legally sufficient DCRSA hearing nor arbitration was available, the CBV and several individual blind vendors ("plaintiff class" or "class") began a class action in the United States District Court for the District of Columbia, alleging that the District, through DCRSA and other District agencies, mismanaged the Randolph-Sheppard program in a number of ways. The class sought compensatory damages as well as a writ of mandamus compelling the District to comply with the Act's requirements. Joint Appendix (J.A.) at 17.

The District moved to dismiss the plaintiff class's action or, in the alternative, for summary judgment. The District argued, inter alia, that the court was without jurisdiction because the plaintiff class had not exhausted its administrative remedies. The court rejected the District's exhaustion argument, stating that "[t]he Court finds this to be a compelling case for invoking the futility exception to the exhaustion doctrine because resort to administrative remedies would be useless." Committee of Blind Vendors v. District of Columbia, 695 F.Supp. 1234 (D.D.C.1988).

After a five-day bench trial, the court awarded the plaintiff class both compensatory damages and attorney's fees. Committee of Blind Vendors v. District of Columbia, 736 F.Supp. 292, 310-11, 317 (1990). The court denied the requested mandamus relief. Id. at 317. Subsequently, the District moved to alter or amend the judgment and the district court denied the motion.

On appeal the District makes the same jurisdictional challenge as well as a challenge on the merits regarding the damages and attorney's fees awards. We now reverse the judgment below.

III.

We first address the exhaustion issue because of its jurisdictional nature. See Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946). The premise of the exhaustion doctrine is "that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938). The doctrine benefits administrative agencies by: (1) affording them the opportunity to apply their expertise and exercise their discretion; (2) giving them the opportunity to correct their own errors without judicial intervention; and (3) discouraging "frequent and deliberate flouting of administrative processes." See McKart v. United States, 395 U.S. 185, 194-95, 89 S.Ct. 1657, 1663, 23 L.Ed.2d 194 (1969). Likewise, the doctrine benefits the courts. Requiring exhaustion can preserve judicial resources by obviating the need for judicial review. As the Supreme Court explained in McKart, "A complaining party may be successful in vindicating his rights in the administrative process. If he is required to pursue his administrative remedies, the courts may never have to intervene." Id. at 195, 89 S.Ct. at 1663. Even if the court eventually reviews the agency's decision, requiring exhaustion simplifies the court's task by providing it with a factual record developed by the agency. Id. at 194, 89 S.Ct. at 1663.

The class argues--and the district...