Littell v. Morton, No. 15208.

• Decision Date: 14 July 1971
• Docket Number: No. 15208.
• Citation: 445 F.2d 1207
• Parties: Norman M. LITTELL, Appellant, v. Rogers C. B. MORTON, the Secretary of the Interior of the United States, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

445 F.2d 1207 (1971)

Norman M. LITTELL, Appellant, v. Rogers C. B. MORTON, the Secretary of the Interior of the United States, Appellee.

No. 15208.

United States Court of Appeals, Fourth Circuit.

Argued May 3, 1971.

Decided July 14, 1971.

Francis B. Delehanty, Jr., New York City (Corbin, Bennett & Delehanty, New York City, and Peter Parker, White, Page & Lentz, Baltimore, Md., on brief), for appellant.

Eva R. Datz, Atty., Dept. of Justice (Shiro Kashiwa, Asst. Atty. Gen., Herb ert Pittle, George R. Hyde, Attys., Dept. of Justice, and George Beall, U. S. Atty., and James Anderson, Asst. U. S. Atty., on brief), for appellee.

Before BRYAN, WINTER and BUTZNER, Circuit Judges.

WINTER, Circuit Judge:

This case involves close questions of application of the doctrine of sovereign immunity and permissible judicial review under the Administrative Procedure Act, 5 U.S.C.A. §§ 701, et seq. They are raised by litigation instituted by Norman M. Littell, Esq., a member of the bar, who was formerly counsel for the Navajo Tribe of Indians. Littell sought judicial review by mandamus of a determination of a previous Secretary of the Interior disallowing his claims for compensation for professional services rendered to the Tribe. The district court concluded that it lacked jurisdiction under the doctrine of sovereign immunity and, alternatively, that the Secretary, in disapproving Littell's claim, exercised a discretionary power not subject to review under the APA by application for mandamus. We conclude otherwise. We reverse the order dismissing the action and remand it for trial.

I

Littell's services as counsel were performed under a written contract, which was renewed and modified from time to time. He acted as general counsel, for which he received a fixed annual retainer, and he also acted as claims counsel. As claims counsel he was to be paid a contingent fee based upon an agreed percentage of any moneys or the value of any lands which he recovered for the Tribe in actions against the United States Government. To assist him in performing his function as general counsel, Littell was provided with legal assistants paid by the Tribe, but the contract explicitly provided that the legal assistants paid by the Tribe were not to participate in claims work. Any associates of Littell who worked on claims cases were to be paid by Littell personally. The contract, its renewals and modifications were all routinely approved by the Secretary pursuant to 25 U.S.C.A. § 81.

After the contract and its various renewals had been in existence for over sixteen years, the Secretary notified Littell, on November 1, 1963, that his contract as general counsel would be terminated effective December 1, 1963, unless Littell adduced evidence refuting specific charges that he had been guilty of misconduct in his relations with the Tribe. Although afforded an opportunity to present his defense to the Secretary administratively, Littell chose to institute an action to enjoin the Secretary from terminating the contract. At first Littell obtained a preliminary injunction restraining the Secretary from terminating the contract, and the order was affirmed on appeal. Udall v. Littell, 119 U.S.App.D.C. 197, 338 F.2d 537 (1964). After trial on the merits, the district court made the injunction permanent, but on appeal this order was reversed, and the prayer for relief dismissed. Udall v. Littell, 125 U.S.App.D.C. 89, 366 F.2d 668 (1966), cert. den., 385 U.S. 1007, 87 S.Ct. 713, 17 L.Ed.2d 545, reh. den., 386 U.S. 939, 87 S.Ct. 952, 17 L.Ed. 2d 812 (1967). In the second appeal, the Court of Appeals concluded that Littell had used Tribal staff attorneys on claims cases in violation of the contract and that the breach constituted adequate grounds for cancelling his contract as general counsel. 366 F.2d at 677.

Thereafter, Littell filed a claim for compensation with the Secretary. He sought payment for services as general counsel for the period prior to the final determination of his litigation with the Secretary, and he sought his contingent fee with respect to five claims cases in which he had allegedly obtained substantial benefits for the Tribe. The Secretary denied his claim for payment for services as general counsel, ruling that notwithstanding that termination of the contract by the Secretary had been enjoined for a substantial period of time, the effective date of termination was December 1, 1963, so that Littell was not entitled to payment for services rendered thereafter. Littell's claims for compensation for claims cases were also rejected for a variety of reasons. First, the Secretary determined that three of the cases were not claims cases, so that Littell was not entitled to be paid a contingent fee for his services in regard to them but, rather, was obligated to handle them in consideration of his fixed annual retainer. The fourth case was deemed a claims case but payment was denied on the ground that Littell had breached his fiduciary duty to the Tribe and, hence, had forfeited his right to a fee. The same position was taken with respect to the fifth case, but, in addition, at the time of the determination, the case was still pending; and its lack of final resolution was asserted as reason not to approve payment since the fee had not yet been earned. Apparently, however, that case has now been concluded, resulting in a substantial recovery for the Tribe. Navajo Tribe v. United States, 23 Ind.Cl.Comm. 277.

Littell then sued the Secretary in the district court asserting jurisdiction under 28 U.S.C.A. §§ 1331 and 1391 (e). Since special statutory provisions to review the Secretary's determination do not exist, mandamus was sufficient to obtain judicial review of the Secretary's determination under the APA, 5 U.S.C.A. § 703, if the APA is otherwise applicable and if suit is not barred by sovereign immunity.

II

We consider first if the APA is applicable, because if it is not, manifestly, we need not consider the question of sovereign immunity.

The problem of the applicability of the APA arises because, by its terms, the APA does not apply to "agency action * * * committed to agency discretion by law." 5 U.S.C.A. § 701(a) (2). In rejecting Littell's claims for compensation, the Secretary was acting under the authority vested in him by 25 U.S. C.A. § 82 to approve payments for services to Indians. The text of § 82 is:

No money shall be paid to any agent or attorney by an officer of the United States under any such contract or agreement, other than the fees due him for services rendered thereunder; but the moneys due the tribe, Indian or Indians, as the case may be, shall be paid by the United States, through its own officers or agents, to the party or parties entitled thereto; and no money or thing shall be paid to any person for services under such contract or agreement, until such person shall have first filed with the Commissioner of Indian Affairs a sworn statement, showing each particular act of service under the contract, giving date and fact in detail, and the Secretary of the Interior and Commissioner of Indian Affairs shall determine therefrom whether, in their judgment, such contract or agreement has been complied with or fulfilled; if so, the same may be paid, and, if not, it shall be paid in proportion to the services rendered under the contract. (emphasis supplied.)

While nothing in § 82, or in any other statute relating to Indian affairs, explicitly precludes judicial review of a decision denying compensation under § 82, the argument of the Secretary is that since he and the Commissioner of Indian Affairs shall determine whether, "in their judgment," Littell is entitled to compensation for professional services, their determination is not subject to judicial review under the APA.

Although § 10(a) renders the APA inapplicable to "agency action * * * committed to agency discretion by law," § 10(e), defining the scope of judicial review, directs a reviewing court to hold unlawful and set aside agency action found to be "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law" (emphasis supplied), as well as that which is unconstitutional, in excess of statutory jurisdiction and, in certain instances, not supported by substantial evidence. 5 U.S. C.A. § 706. How to reconcile the withdrawal from judicial scrutiny of discretionary agency action in § 10(a) with the mandatory judicial review for abuse of discretion in § 10(e) has been the subject of sharp dispute.

Professor Davis has argued that these two sections are reconciled by saying that whenever a decision is committed to agency discretion by law, then a reviewing court can afford no review, not even for abuse of discretion. 4 K. Davis, Administrative Law Treatise, § 28.16 at 80 (1958). This view has also been adopted by other commentators. See, e. g., Saferstein, Nonreviewability: A functional Analysis of "Committed to Agency Discretion," 82 Harv.L.Rev. 367 (1968). On the other hand, Professor Jaffe has argued that § 10(e) permits a limited review to determine whether the agency has exercised its discretion within permissible bounds. L. Jaffe, Judicial Control of Administrative Action 359 (1965). This view in turn has its other supporters. See, e. g., Berger, Administrative Arbitrariness: A Synthesis, 78 Yale L.J. 965 (1969). While the controversy is far from settled, we prefer the latter rationale. In the first place, it is supported by the legislative history of the APA, as is demonstrated by Berger in his article in the Yale Law Journal. He points out that the leading Senate proponent of the APA, Chairman McCarran, said that "the thought upper-most in presenting this bill is that where an agency without authority or by caprice makes a decision, then it is subject to review." Senator McCarran further stated that "it must not be an arbitrary discretion. It must be a judicial discretion; it must be a discretion based on sound reasoning." 78...