Frock v. U.S. R. R. Retirement Bd.

• Decision Date: 06 August 1982
• Docket Number: Nos. 81-2187,81-2637,s. 81-2187
• Citation: 685 F.2d 1041
• Parties: Clinton T. FROCK and Charles L. Stribling, Petitioners, v. UNITED STATES RAILROAD RETIREMENT BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1041

685 F.2d 1041

Clinton T. FROCK and Charles L. Stribling, Petitioners, v. UNITED STATES RAILROAD RETIREMENT BOARD, Respondent.

Nos. 81-2187, 81-2637.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 12, 1982.

Decided Aug. 6, 1982.

Newton G. McCoy, Friedman, Weitzman & Friedman, P.C., St. Louis, Mo., Gill DeFord, Los Angeles, Cal., for petitioners.

Thomas W. Sadler, U. S. R. R. Retirement Bd., Chicago, Ill., for respondent.

Before SPRECHER ^* and BAUER, Circuit Judges, and BONSAL, Senior District Judge. ^**

BAUER, Circuit Judge.

These petitions involve the applicability of section 3(h)(6) of the Railroad Retirement Act, 45 U.S.C. § 231b(h)(6), to railroad workers applying for dual benefits following this court's decision in Gebbie v. United States Railroad Retirement Board, 631 F.2d 512 (7th Cir. 1980), and the constitutionality of that section if it is applied to these workers. Because we find that section 3(h)(6) was correctly applied and is constitutional, we uphold the Railroad Retirement Board's decisions denying dual benefits to the petitioners.

I

Clinton T. Frock and Charles L. Stribling (collectively "petitioners") are retired railroad workers entitled to annuities under the Railroad Retirement Act of 1974, 45 U.S.C. § 231 et seq. ("RRA"). Both men are married to spouses who were fully insured under the Social Security Act, 42 U.S.C. § 301 et seq., prior to January 1, 1975. Social security benefits and railroad retirement annuities are distributed to railroad workers and their families by the Railroad Retirement Board ("Board"). 45 U.S.C. § 231f(b)(2).

In 1977, Frock and Stribling became eligible to receive spousal social security benefits as a result of the Supreme Court's decision in Califano v. Goldfarb, 430 U.S. 199, 97 S.Ct. 1021, 51 L.Ed.2d 270 (1977). There the Court held that a provision in the Social Security Act requiring husbands, but not wives, to prove dependency on their insured spouse in order to receive spousal social security benefits violated the Fifth Amendment. In response to Goldfarb, the Board provided all workers with spousal social security benefits. At the same time, however, the Board reduced the railroad annuity benefits of the workers by an amount equal to their spousal social security benefits. This action was based on 45 U.S.C. § 231b(m), which precludes "dual" or "windfall" benefits to retired railroad workers; the Board considered the receipt of both a railroad retirement annuity and spousal social security benefits to constitute such "dual" or "windfall" benefits. ¹ The Board then read 45 U.S.C. §§ 231b(h)(3) and (4) to mandate the restoration of dual benefits to female railroad retirees and male railroad retirees able to prove dependency upon their wives. Under those sections, persons whose spouses were "permanently insured under the Social Security Act on December 31, 1974" were to receive an increase in annuity benefits equal to the social security benefits to which they "would have been entitled ... under the provisions of the Social Security Act as in effect on December 31, 1974." Thus, those who were entitled to dual benefits in 1974 would still be entitled to them. The Board interpreted "as in effect on December 31, 1974" to mean that eligibility for dual benefits was to be based on social security eligibility standards in effect before the Supreme Court's 1977 Goldfarb decision.

This court, in Gebbie v. United States Railroad Retirement Board, 631 F.2d 512 (7th Cir. 1980), held that the Board's interpretation of this eligibility standard was incorrect. Although not reaching any constitutional issues, we found that it was improper to read 45 U.S.C. §§ 231b(h)(3) and (4) as evincing a design to base receipt of dual benefits upon the dependency requirements invalidated in Goldfarb. We declined, however, to certify a class in Gebbie, so that only the petitioner there became entitled to collect dual benefits.

Following Gebbie, Frock sent a letter to the Board on February 27, 1981, requesting dual benefits in light of that decision. Frock had been denied the benefits in 1977. On March 18, 1981, the Board sent Frock a letter in which it refused to reopen his administrative claim on the basis that Frock had failed to file a timely administrative complaint after the 1977 denial of benefits. See 45 U.S.C. § 231g. Frock then filed a Petition for Review with this court on July 27, 1981.

Stribling had filed a timely objection when he was denied dual benefits in 1978, and was pursuing his administrative remedies at the time of the Gebbie decision. One year after Gebbie, however, by a letter dated July 27, 1981, Stribling was notified that his appeal had been denied. The Board's letter stated that it had declined to apply Gebbie to any other cases. Having exhausted his administrative remedies, Stribling filed his Petition for Review with this court on October 15, 1981. ²

While Frock's petition was pending before this court, and shortly after the Board's final disposition of Stribling's claim, Congress added section 3(h)(6) to the RRA. ³ This section eliminated dual benefits for anyone whose entitlement to those benefits had not been "determined" by August 13, 1981. Section 3(h)(6) forms the basis of the dispute in this case. The Board asserts that this provision bars the claims at issue here, because in neither case has the petitioner been determined by a court or by the Board to be entitled to dual benefits. The petitioners argue that the provision does not apply to them because their positions are indistinguishable from that of the plaintiff in Gebbie, and therefore that Gebbie determined their entitlement to dual benefits. In the alternative, they argue that section 3(h)(6) is unconstitutional.

II

Initially, we face a jurisdictional question. Although the Board concedes that Stribling's claim is properly before this court, the Board argues that this court lacks jurisdiction over Frock's claim because of Frock's failure to exhaust his administrative remedies and his lack of timeliness in filing a claim. We reject both these contentions, and find that Frock has properly invoked this court's jurisdiction.

The Board contends that, despite the fact that the Board unequivocally denied dual benefits to Frock, he was nevertheless required to pursue his administrative remedies before bringing this action. Under the regulations in effect when Frock's annuity benefits were first reduced, Frock was authorized to appeal any adverse decision by the Board through an extensive administrative appeals system. 20 C.F.R. §§ 260.2, 260.3 (1977). Failure to file a final administrative appeal forfeited any right to further review of the decision. 20 C.F.R. § 260.3(c) (1977). These regulations continue in effect today. 20 C.F.R. §§ 260.4, 260.6 (1982). Finally, section 8 of the RRA provides for court review of Board decisions "only after all administrative remedies within the Board will have been availed of and exhausted." 45 U.S.C. § 231g (incorporating section 5(f) of the Railroad Unemployment Insurance Act, 45 U.S.C. § 355(f)). Frock, however, did not begin to seek review of the Board's denial of dual benefits to him until 1981, and that administrative process has never been completed. Thus, the Board argues, this court lacks jurisdiction over Frock's claim because Frock has failed to exhaust his administrative remedies.

We disagree. First, Frock's case falls within an exception to the general exhaustion rule for cases in which exhaustion would have been "a futile gesture." Porter County Chapter of Izaak Walton League of America, Inc. v. Costle, 571 F.2d 359, 363 (7th Cir.), cert. denied, 439 U.S. 834, 99 S.Ct. 115, 58 L.Ed.2d 130 (1978). Here, the Board clearly indicated in a letter to Mr. Frock's counsel that "(t)he Board is not applying the decision in the Gebbie case on a class basis," meaning that the Board did not consider anyone in Frock's position to be entitled to dual benefits under 45 U.S.C. §§ 231b(h)(3) and (4). Under such circumstances, pursuing administrative "remedies" would indeed have been a futile gesture.

Furthermore, courts have not required parties to exhaust administrative remedies where the purposes of exhaustion would not be served. "The basic purpose of the exhaustion doctrine is to allow the administrative agency to perform functions within its special competence-to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies." Continental Can Co. v. Marshall, 603 F.2d 590, 597 (7th Cir. 1979). Accord, Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975). None of these purposes would be served by requiring exhaustion here. There is no need for development of a factual record, for the facts are not in dispute. No application of agency expertise is involved, and a formal decision by the Board not to follow Gebbie effectively precludes the Board from mooting the controversy. ⁴

The Board argues, however, that even if Frock was not required to exhaust his administrative remedies, this court still lacks jurisdiction because Frock failed to protest the Board's action within the statutorily required time period. The Board argues that, under 45 U.S.C. § 231g, Frock was required to object to the reduction of his annuity within one year of the date it was reduced. Thus, the Board argues, Frock's failure to protest his annuity reduction within one year of September 1977, the date the Board decided to reduce his annuity, precludes any further review of the Board's actions.

Once again, we disagree. At the very least, Frock is entitled to bring this action as an appeal from the Board's refusal to reinstate his annuity benefits after Gebbie. Frock's letter of February 27, 1981, requested reinstatement of his reduced annuity, which the Board permits pursuant to 20 C.F.R. § 200.1(vi) (1981). When the Board, by its letter of March 18, 1981, refused to...