Munsell v. Department of Agriculture

• Citation: 509 F.3d 572
• Decision Date: 11 December 2007
• Docket Number: No. 06-5261.,No. 06-5262.,06-5261.,06-5262.
• Parties: John W. MUNSELL, et al., Appellants/Cross-Appellees v. DEPARTMENT OF AGRICULTURE, et al., Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

509 F.3d 572

John W. MUNSELL, et al., Appellants/Cross-Appellees v. DEPARTMENT OF AGRICULTURE, et al., Appellees/Cross-Appellants.

No. 06-5261.

No. 06-5262.

United States Court of Appeals, District of Columbia Circuit.

Argued September 24, 2007.

Decided December 11, 2007.

Appeals from the United States District Court for the District of Columbia (No. 04cv01745).

Thad M. Guyer argued the cause and filed the briefs for appellants/cross-appellees. Joanne Royce entered an appearance.

Alisa B. Klein, Attorney, U.S. Department of Justice, argued the cause for appellees/cross-appellants. With her on the briefs were Peter D. Keisler, Assistant Attorney General, Jeffrey A. Taylor, U.S. Attorney, Jonathan F. Cohn, Deputy Assistant Attorney General, and Mark B. Stern, Attorney.

Before: GINSBURG, Chief Judge, GARLAND, Circuit Judge, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

EDWARDS, Senior Circuit Judge:

In October 2004, appellants, Montana Quality Foods and Processing, Inc. and its president John W. Munsell ("Munsell/MQF"), filed a lawsuit in District Court against the Department of Agriculture ("USDA"), the Secretary of Agriculture in his official capacity, and Nathaniel Clark, who was then the District Office Manager of USDA's Food Safety and Inspection Service ("FSIS") in Minneapolis, Minnesota, in his personal capacity. Munsell/MQF claimed that FSIS officials used USDA enforcement powers to retaliate against Munsell for statements he made concerning USDA's handling of an E. coli outbreak in 2002. In August 2005, appellants filed an amended complaint, adding as a plaintiff the American Association of Meat Processors ("AAMP"), a trade association representing small meat processors that are subject to USDA inspection and oversight. Munsell/MQF, on their own behalf, and AAMP, on behalf of its association members, each sought declaratory and injunctive relief, presumably under the Administrative Procedure Act ("APA"), challenging a USDA enforcement Directive and seeking protection from future acts of retaliation by FSIS officials. Munsell/MQF also sought a money damages remedy under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), on the grounds that Munsell's First Amendment rights were violated when agency officials retaliated against him.

In 2005, during the course of the litigation in the District Court, Munsell sold all of MQF's meat processing facilities, thereby eliminating all of MQF's business operations that were subject to USDA regulation and oversight. The Government filed a motion to dismiss, challenging appellants' standing, claiming that the action by Munsell/MQF was moot, and asserting that the entire action should be dismissed because appellants had failed to exhaust their administrative remedies. The District Court declined to rule on standing and mootness and instead granted the motion to dismiss on exhaustion grounds. The District Court first held that the governing statutory exhaustion requirement under 7 U.S.C. § 6912(e) is jurisdictional. The District Court then determined that appellants had failed to exhaust the applicable administrative appeal procedure prescribed by 9 C.F.R. § 306.5, concluded that the court lacked subject matter jurisdiction, and dismissed all of appellants' APA claims. The District Court also found that Munsell/MQF's Bivens action was barred due to their failure to exhaust administrative remedies. Munsell v. Dept. of Agric., 435 F.Supp.2d 149 (D.D.C.2006). Munsell/MQF and AAMP appealed the District Court's dismissal, and the Government parties cross-appealed on standing and mootness. Guided by the Supreme Court's decision in Arbaugh v. Y & H Corp., 546 U.S. 500, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), and other relevant precedent, we hold that 7 U.S.C. § 6912(e) does not impose a jurisdictional exhaustion requirement. We therefore conclude that the District Court erred in holding that plaintiffs' failure to exhaust their administrative remedies deprived the court of subject matter jurisdiction.

We affirm the judgment in favor of appellees on different grounds, however. First, we affirm the dismissal of Munsell/MQF's claims for injunctive and declaratory relief on standing and mootness grounds. Second, we affirm the dismissal of Munsell/MQF's Bivens action, because, even assuming that such an action might lie against USDA officials, Munsell/MQF failed to exhaust their administrative remedies before seeking judicial relief on their constitutional claims. Third, we dismiss for want of standing AAMP's action seeking protection for its members from future acts of retaliation by USDA, and dismiss AAMP's claims on behalf of Munsell/MQF as moot. Finally, although we find that the action filed by AAMP challenging USDA's enforcement Directive on behalf of its members is not moot and it does not fail for want of standing or exhaustion, we affirm the dismissal of AAMP's action for injunctive and declaratory relief because it is unripe for judicial review.

I. BACKGROUND

Congress enacted the Federal Meat Inspection Act in 1907 in response to unsanitary conditions in the nation's meat packing industry. The purpose of the Act is to assure that meat and meat food products are "wholesome, not adulterated, and properly marked, labeled, and packaged." 21 U.S.C. § 602. The Act directs USDA to inspect the sanitary conditions of meat processing plants and to "prescribe the rules and regulations of sanitation under which these establishments [are] maintained." Id. § 608. The Act grants the Secretary authority to "make such rules and regulations as are necessary for the efficient execution" of the Act. Id. § 621.

In 1996, USDA's FSIS issued a final rule requiring all meat processing plants to develop and implement controls to address food safety hazards that are likely to occur in their operation. See 61 Fed.Reg. 38,806 (July 25, 1996). This regulation is known as Hazard Analysis and Critical Control Point ("HACCP"). See 9 C.F.R. pt. 417. Under HACCP, plants are given considerable flexibility to design plans that achieve the ends of preventing food safety hazards. See id. § 417.2. FSIS inspectors evaluate plants' hazard prevention through direct observation and testing, and by examining plants' records. See id. § 417.8.

There are a range of enforcement actions that FSIS may take, including withholding the mark of inspection from meat products or suspending the assignment of inspectors to a plant. See 9 C.F.R. pt. 500. Without USDA approval, a meat processing plant is effectively expelled from the marketplace. These enforcement actions can be financially ruinous, especially for smaller firms.

FSIS actions regulating meat processors may be appealed administratively. Id. §§ 500.5(c)-(e). Enforcement actions that are not held "in abeyance" can be appealed through a formal hearing process. Id. § 500.5(d). However, when an enforcement action is held in abeyance, administrative appeals must be made to the "immediate supervisor" of the official making the enforcement determination. Id. §§ 306.5, 500.5(c).

Munsell's family first started operating a meat processing plant in Montana in 1946. Am. Compl. ¶ 14, Joint Appendix ("JA") 19. During the time frame relevant to this case, the processing plant was incorporated in the name of MQF, with Munsell as MQF's chief executive officer and owner. MQF's meat processing business typically bought ten-pound lots of coarse ground beef ("chubs") from larger meat suppliers and further processed the beef for sale to individual consumers. Id. ¶ 15, JA 19. The plant was subject to inspection and regulation by USDA under the Federal Meat Inspection Act.

For a time preceding the events leading to this litigation, Munsell had been displeased with USDA's oversight of MQF's meat processing operation. In September 2001, he urged agency officials to adopt two procedural changes that he believed would protect small meat processors from economic harm resulting from contamination at large meat facilities. In particular, Munsell suggested the segregation of large plant meat products and the creation of a record of source beef to facilitate the traceback of adulterated meat to contamination in large plants. Id. ¶ 30, JA 24. FSIS officials declined to adopt Munsell's recommendations.

Roughly five months later, on January 28, 2002, FSIS alerted Munsell that a ground beef sample taken from MQF's facilities five days prior tested positive for E. coli contamination. Id. ¶ 21, JA 21. Munsell voluntarily agreed to recall 270 pounds of ground beef he had provided to customers. Id. MQF was also required to reassess its HACCP and submit to 15 days of sampling of its products. Id. ¶ 22, JA 21-22.

Two days later, Munsell asked FSIS officials to test unopened chubs of beef that MQF had on hand from the two firms that had supplied the coarse ground beef that had tested positive for E. coli on January 28. But FSIS officials declined to test the unopened chubs of beef. Id. ¶ 25, JA 22. Based on his fear that a large supplier was distributing contaminated beef, Munsell began segregating his meat by supplier, to more readily facilitate traceback to identify the source of any new contamination. Id. ¶ 26, JA 22-23. Shortly thereafter, Munsell complained to Nathaniel Clark, the District Office Manager of the Minneapolis office of the FSIS, about how FSIS was handling the E. coli outbreak, and reiterated his belief that procedures needed to be put in place to traceback contaminated meat found at small processors. An FSIS official continued taking samples of MQF's meat between February 19 and 21, 2002, and again found E. coli contamination. Based on his earlier segregation of meat by supplier, Munsell determined that the source of the contamination was a large supplier, ConAgra. Id. ¶ 26, JA 23. The next day Munsell requested FSIS officials to test an unopened...