Massengale v. Oklahoma Bd. of Examiners in Optometry

• Decision Date: 26 July 1994
• Docket Number: Nos. 93-5039,93-5108,s. 93-5039
• Citation: 30 F.3d 1325
• Parties: Curt MASSENGALE, O.D., and Derrick Skaggs, O.D., Plaintiffs, and Larry Greenhaw, O.D., Philip Miller, O.D., Lenscrafters, Inc., and Pearle Vision, Inc., Plaintiffs-Appellants, v. OKLAHOMA BOARD OF EXAMINERS IN OPTOMETRY, V. Duane Moore, O.D., George E. Foster, O.D., and Lloyd Peck, O.D., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1325

30 F.3d 1325

Curt MASSENGALE, O.D., and Derrick Skaggs, O.D., Plaintiffs, and Larry Greenhaw, O.D., Philip Miller, O.D., Lenscrafters Inc., and Pearle Vision, Inc., Plaintiffs-Appellants, v. OKLAHOMA BOARD OF EXAMINERS IN OPTOMETRY, V. Duane Moore O.D., George E. Foster, O.D., and Lloyd Peck O.D., Defendants-Appellees.

Nos. 93-5039, 93-5108.

United States Court of Appeals Tenth Circuit.

July 26, 1994.

Myron L. Dale (Gregory A. Keyser and Steven L. Smith, also of Frost & Jacobs, Cincinnati, OH, Mark K. Blongewicz and Ronald A. White of Hall, Estill, Hardwick, Gable, Golden & Nelson, Tulsa, OK, William J. Calore, Lenscrafters, Inc., Cincinnati, OH, and Kevin J. Rogan, Pearle Health Services, Dallas, TX, with him on the briefs), for plaintiffs-appellants.

Wellon B. Poe, Asst. Atty. Gen., Litigation Div. (Susan B. Loving, Atty. Gen., with him on the brief), and Daniel J. Gamino of Daniel J. Gamino & Associates, Oklahoma City, OK, for defendants-appellees.

Before LOGAN and MOORE, Circuit Judges, and OWEN, District Judge. ^*

LOGAN, Circuit Judge.

Plaintiffs Larry Greenhaw, O.D., Philip Miller, O.D., Lenscrafters, Inc. (Lenscrafters) and Pearle Vision, Inc. (Pearle), have appealed the district court's dismissal of their underlying complaint filed against the Oklahoma Board of Examiners of Optometry (Board) and the individual Board members Duane Moore, O.D., George E. Foster, O.D., and Lloyd Peck, O.D., sued in their individual and official capacities (No. 93-5039). Plaintiffs' federal claims were dismissed as unripe for failure to exhaust state administrative remedies. The district court also invoked the abstention doctrine of Railroad Comm'n v. Pullman Co., 312 U.S. 496, 500-01, 61 S.Ct. 643, 645, 85 L.Ed. 971 (1941), to afford Oklahoma state courts the first opportunity to interpret and apply the relevant Oklahoma statutes.

Shortly after the dismissal, plaintiffs sought injunctive relief to prevent any Board action pending resolution of their appeal, and a month later filed motions pursuant to Fed.R.Civ.P. 15(d) and 60(b) to amend their complaint and for relief from judgment. The district court granted the injunction but denied the other motions. Plaintiffs have appealed those adverse procedural rulings (No. 93-5108). The two appeals were consolidated for oral argument in this court.

The issues on appeal in No. 93-5039 are whether the district court correctly determined that plaintiffs' claims were not ripe for failure to exhaust their administrative remedies, or, alternatively, that abstention was justified to permit state proceedings to first interpret "fundamental and important" Oklahoma state law questions. The issues in appeal No. 93-5108 are whether the district court abused its discretion in denying Rule 60(b) relief and in refusing to allow plaintiffs to amend their complaint pursuant to Rule 15(d).

I

Plaintiff-optometrists Greenhaw and Miller ¹ have contracts with Lenscrafters and Pearle, respectively, to sublease space for their office practice near those retail optical locations. The Board alleges that these business arrangements are in violation of Oklahoma law, see Okla.Stat.Ann. tit. 59, Secs. 596, 944, as interpreted by the Attorney General of Oklahoma.

The Board asked three of the individual plaintiffs to appear informally before the Board in November 1990. The stated purpose of the meeting was to discuss the optometrists' business agreements, including subleases, with optical establishments such as Lenscrafters. Apparently at that time the plaintiff-optometrists all had contracts with Lenscrafters. The Board took no action following that meeting.

In May 1991, the Board asked these optometrists to meet again with the Board. The letter indicated that the optometrists would not be disciplined for any violations of state law that might have already occurred regarding sublease arrangements, but that penalties or discipline could be imposed if suspected violations continued after the proposed May 17 meeting. Plaintiffs Greenhaw, Massengale and Skaggs did not attend the meeting.

A third meeting followed in July 1991, during which several optometrists appeared and were questioned regarding the nature of their relationships with Lenscrafters. Board members expressed concern about possible violations of state law, but did not recommend or take any disciplinary action. The Board then solicited an opinion from the Oklahoma Attorney General. That opinion letter stated that under Okla.Stat.Ann. tit. 59, Secs. 593, 596 and 944 "a licensed optometrist may not lease or sublease office space from a retail merchandiser, including a retail optical supplier or seller." I Appellants' App. (No. 93-5108) 33. The Board then mailed notice of the opinion letter to all licensed optometrists in the state requesting compliance with its conclusions by May 14, 1992.

When plaintiff-optometrists did not comply, the Board voted at its May 14 meeting to conduct disciplinary hearings. Before those were held the three original plaintiff-optometrists, in addition to Lenscrafters and Pearle, filed suit in federal court against the Board. The complaint alleged conspiracy to restrain trade and to monopolize, equal protection and procedural due process violations (based primarily on the bias and self-interest of Board members), claims that the Oklahoma statute was void for vagueness and violated their right to free speech, and assertions that the Oklahoma statute had been misinterpreted and misapplied. Plaintiffs asked for declaratory and injunctive relief.

When suit was filed, the Board had not yet issued a formal disciplinary complaint, although a hearing date had been scheduled. ² The Board withheld further action during the pendency of the district court suit. When Miller entered into a lease agreement with Pearle, the court granted a joint motion by all parties to permit him to intervene. Four days later the district court dismissed the case.

Following dismissal, the Board reinstituted disciplinary action against the four plaintiff-optometrists. Plaintiffs moved in the district court for a stay of those proceedings, and when formally notified of impending disciplinary action, plaintiffs sought to disqualify the Board members for alleged bias. At a March 1993 meeting, the plaintiff-optometrists questioned each of the three Board members. Thereafter each Board member in turn was voted on by a quorum of the other two Board members concerning possible bias. No Board members were disqualified. See Okla.Stat.Ann. tit. 75, Sec. 316 (outlining procedures for disqualification hearing).

After plaintiffs' failed attempt to disqualify the Board members, they moved for Rule 60(b) relief, and under Rule 15(d) to amend their complaint, arguing that they had adequately exhausted their administrative remedies by using the state's disqualification procedures. During the motion's pendency, the Board appointed an independent hearing officer, as authorized under the Oklahoma Administrative Procedures Act (OAPA), to hear the case and provide findings of fact and conclusions of law. See Okla.Admin.Code (OAC) 505:1-7-7. The district court granted the plaintiff-optometrists' motion to stay that administrative hearing pending disposition of this appeal, but denied the Rule 60(b) and 15(d) motions.

II

A

The threshold question before us is whether plaintiffs should be required to exhaust their state administrative remedies before being allowed into federal court. The exhaustion requirement is not jurisdictional, but involves the exercise of judicial discretion. Rocky Mountain Oil & Gas Ass'n v. Watt, 696 F.2d 734, 743 n. 12 (10th Cir.1982). We review the district court's dismissal under the exhaustion doctrine for abuse of discretion. Park County Resource Council, Inc. v. United States Dep't of Agric., 817 F.2d 609, 619 (10th Cir.1987).

The general rule is to require parties to exhaust their administrative remedies before seeking judicial relief. The exhaustion requirement is judge-made and several exceptions to the doctrine have developed. The Supreme Court recently summarized the circumstances under which exhaustion is excused. McCarthy v. Madigan, --- U.S. ----, ---- - ----, 112 S.Ct. 1081, 1087-88, 117 L.Ed.2d 291 (1992). First, if pursuing an administrative remedy will impair an individual's ability to later seek judicial review, the exhaustion requirement may be excused--as when the likelihood of obtaining an administrative resolution within a reasonable time will result in prejudice to the individual.

Second, exhaustion is excused when the administrative remedy is inadequate--as when the agency lacks the "institutional competence," id. at ----, 112 S.Ct. at 1088 (citing Moore v. City of East Cleveland, 431 U.S. 494, 497 n. 5, 97 S.Ct. 1932, 1935 n. 5, 52 L.Ed.2d 531 (1977) (plurality opinion in which the issue concerned the constitutionality of a statute)), or is without authority to grant the relief sought, see, e.g., McNeese v. Board of Educ., 373 U.S. 668, 675, 83 S.Ct. 1433, 1437, 10 L.Ed.2d 622 (1963) (in school integration setting, students need not seek relief from public school administration when ultimately the state attorney general would be called upon to file suit). This exception also includes those instances when "the adequacy of the administrative remedy [is] for all practical purposes identical with the merits of [plaintiffs'] lawsuit." Gibson v. Berryhill, 411 U.S. 564, 575, 93 S.Ct. 1689, 1696, 36 L.Ed.2d 488 (1973).

The third basis for excusing exhaustion is when the "administrative body is shown to be biased or has otherwise predetermined the issue before it." McCarthy, --- U.S. at ----, 112 S.Ct. at 1088. Plaintiffs assert that their case falls within either the second or third exception.

B

At this early stage in the administrative process, plaintiff-optometrists have not availed themselves of the procedural safeguards contained in the statute and the OAPA that they argue are inadequate. They...