Griffith v. Bell-Whitley Community Action Agency

Decision Date31 January 1980
Docket NumberNo. 77-1675,BELL-WHITLEY,77-1675
Citation614 F.2d 1102
PartiesMillard GRIFFITH, John Baker and Bernice Mays, Plaintiffs-Appellants, v.COMMUNITY ACTION AGENCY et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Laura Bowers Vandergraw, Appalachian Research & Defense Fund of Kentucky, Inc., Lexington, Ky., for plaintiffs-appellants.

Lloyd R. Edens, Denham, Nagle & Edens, Middlesboro, Ky., for defendants-appellees.

Before WEICK and LIVELY, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

HARRY PHILLIPS, Senior Circuit Judge.

The plaintiffs-appellants allege that the defendant, Bell-Whitley Community Action Agency (BWCAA), violated their constitutional rights by discharging and refusing to rehire them because they had opposed the election of L. David Stone as BWCAA's Executive Director. The district court held that it lacked subject matter jurisdiction and dismissed the complaint. We affirm on the ground that the complaint does not state a cause of action on which relief can be granted.

I.

BWCAA is a non-profit community action agency incorporated in Kentucky to serve the residents of Bell and Whitley counties. The agency was formed in 1969 for the stated purpose of developing a program to eliminate poverty in those counties. BWCAA's programs are funded by the federal government pursuant to Title II of the Economic Opportunity Act of 1964, 42 U.S.C. §§ 2781-2837. As a concomitant of its grantee status, the agency is subject to an extensive statutory (Title II of the EOA) and administrative (945 C.F.R. §§ 1060-78) regulatory program.

The appellants are three former employees of BWCAA who claim the agency discriminated against them in retaliation for their opposition to L. David Stone's attempts to become BWCAA's Executive Director. Stone was appointed Acting Director on July 22, 1974 and became Executive Director on August 29, 1974. The plaintiffs were terminated in September and October of 1974, ostensibly because reductions in federal funding necessitated cut-backs in BWCAA programs. However, all three plaintiffs had worked four to five years for the agency and they assert that under ordinary circumstances, they would not have been laid off as a result of funding reductions. Moreover, the plaintiffs contend that even after its funding was restored, and despite their experience, BWCAA refused to rehire them or offered them only lower status positions at reduced salaries. This, appellants argue, violated their first and fifth amendment constitutional rights.

On December 18, 1974, the appellants filed written complaints with BWCAA's Executive Director and were informed that the agency's Board of Directors would review their cases at its January 27, 1975 meeting. The Board apparently considered appellants' contentions, but took no action on the matter. The appellants also contacted various federal agencies, but were unable to obtain a formal hearing on their complaints.

In their complaint, as amended, appellants seek damages, mandamus to compel BWCAA's employees to reinstate them, and an order requiring the agency to institute defunding termination procedures which conform to the requirements of the Administrative Procedure Act (APA). They alleged jurisdiction pursuant to 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1361 (mandamus), and 5 U.S.C. § 702 (APA). 1 The defendants moved to dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted.

On August 3, 1977, District Judge Eugene E. Siler, Jr. entered an order dismissing the complaint for lack of subject matter jurisdiction. Relying on United States v. Orleans, 425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976) and Hines v. Cenla Community Action Committee, Inc., 474 F.2d 1052 (5th Cir. 1973), Judge Siler held that "BWCAA is not a federal agency nor are its employees federal employees."

This appeal followed.

II.

The plaintiffs-appellants argue that dismissal for lack of subject matter jurisdiction was improper because neither Orleans nor Hines forecloses a finding that BWCAA is a federal agency bound by the limitations of the Constitution on federal action. Under appellants' construction of those cases, the question whether BWCAA was engaged in federal action when it discriminated against them can be answered only by "sifting facts and weighing circumstances" (Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45 (1961)) in a trial on the merits.

The appellants point out that Orleans dealt only with the question whether community action agencies are federal instrumentalities or agencies for purposes of the Federal Tort Claims Act. They argue that the Tort Claims Act is a limited waiver of sovereign immunity applicable only where the government supervises the tortfeasor's daily operations. By contrast, they say, to hold a private enterprise bound by constitutional limitations on federal action a court need only find that the enterprise is involved in a "symbiotic relationship" with the federal government (cf. Burton v. Wilmington Parking Authority, supra (state action)) or that there is a "nexus" between the federal government's regulatory scheme and the entity's challenged action (cf. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974) (state action)). The appellants urge this court to construe Orleans narrowly to permit a finding that BWCAA, even though not a federal instrumentality for tort purposes, is a federal agency bound by constitutional and APA limitations and subject to mandamus.

Appellants further assert that Hines, the district court's other authority, is not controlling. In Hines, the Fifth Circuit held that a community action agency is not engaged in federal action and therefore is not limited by the fifth amendment. However, appellants point out, the same circuit's subsequent decision in Robison v. Wichita Falls and North Texas Community Action Corp., 507 F.2d 245 (5th Cir. 1975) read Hines to hold only that the Cenla agency is a private corporation, not that all community action agencies are private.

The thrust of the appellants' argument is that, since neither Orleans nor Hines controls their case, they are entitled to attempt to show that BWCAA's discrimination was federal action. They urge this court to reverse the district court's dismissal and remand the case for a trial on the merits.

The appellees urge that Orleans and Hines stand for the proposition that community action agencies can never be engaged in federal action. They point out that the Orleans Court cited Hines (425 U.S. at 818 n. 8, 96 S.Ct. at 1978) as support for its holding that such agencies are private, not federal, employers. The appellees view the citation to Hines as evidence that the Court approved the Fifth Circuit's holding that community action agencies are not engaged in federal action. Thus, the appellees reason, Orleans established not only that community action agencies are not arms of the federal government, but that such agencies are never engaged in federal action for constitutional purposes. Accordingly, they conclude, the district court lacked subject matter jurisdiction and its dismissal should be affirmed.

III.

The threshold issue is whether the district court properly dismissed the appellants' complaint for lack of subject matter jurisdiction. Our resolution of that issue depends on the distinction between lack of jurisdiction and failure to state a claim on which relief can be granted.

This is an area of some disagreement among the circuits. For example, compare Robinson v. Bergstrom, 579 F.2d 401, 404 (7th Cir. 1978) (holding that the proper ground for dismissal of a § 1983 action in which the plaintiff has failed to establish state action is lack of jurisdiction) with Meredith v. Allen County War Memorial Hospital Comm., 397 F.2d 33, 35 (6th Cir. 1968) (holding that the correct approach in a nonfrivolous but unmeritorious § 1983 case is to dismiss for failure to state a claim).

We quote at some length from the Supreme Court's discussion in Bell v. Hood, 327 U.S. 678, 681-83, 66 S.Ct. 773, 775-776, 90 L.Ed. 939 (1946) of the distinction between lack of jurisdiction and failure to state a claim:

Before deciding that there is no jurisdiction, the District Court must look to the way the complaint is drawn to see if it is drawn so as to claim a right to recover under the Constitution and laws of the United States. . . . (W)here the complaint, as here, is so drawn as to seek recovery directly under the Constitution or laws of the United States, the federal court, but for two possible exceptions later noted, must entertain the suit. . . . The reason for this is that the court must assume jurisdiction to decide whether the allegations state a cause of action on which the court can grant relief as well as to determine issues of fact arising in the controversy.

Jurisdiction, therefore, is not defeated as respondents seem to contend, by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction.

. . . The previously carved out exceptions are that a suit may sometimes be dismissed for want of jurisdiction where the alleged claim under the Constitution or federal statutes clearly appears to be...

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