Patten v. Dist. of Columbia, 19-7074

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Parties: DERWIN PATTEN, ET AL., APPELLANTS v. DISTRICT OF COLUMBIA, APPELLEE
• Docket Number: 19-7074
• Decision Date: 13 August 2021

DERWIN PATTEN, ET AL., APPELLANTS
v.
DISTRICT OF COLUMBIA, APPELLEE

No. 19-7074

United States Court of Appeals, District of Columbia Circuit

August 13, 2021

Argued November 23, 2020

Appeal from the United States District Court for the District of Columbia (No. 1:18-cv-00732)

Thomas T. Ruffin Jr. argued the cause and filed the briefs for appellant.

Carl J. Schifferle, Deputy Solicitor General, Office of the Attorney General for the District of Columbia, argued the cause for appellee. With him on the brief were Karl A. Racine, Attorney General, Loren L. AliKhan, Solicitor General, and Caroline S. Van Zile, Deputy Solicitor General.

Before: ROGERS, KATSAS, and RAO, Circuit Judges.

OPINION

KATSAS, CIRCUIT JUDGE:

The Randolph-Sheppard Act creates state-administered programs for blind individuals to operate vending facilities on federal property. The Act also creates a grievance scheme for vendors to challenge a state's operation of its program. This case presents the question whether a vendor may bypass that scheme when challenging the operation of a Randolph-Sheppard program under other statutes that prohibit discrimination based on disability.

I

A

The Randolph-Sheppard Act (RSA) gives licensed blind individuals a priority to operate vending facilities on federal property. 20 U.S.C. § 107(b). State and federal agencies share responsibility for administering the RSA. On the federal level, the Secretary of Education promulgates implementing regulations and designates a state agency to administer the program within each state and the District of Columbia. Id. § 107a(a). The designated state agency licenses eligible vendors, seeks appropriate placements for them, promulgates further regulations, and monitors vendors for compliance. Id. § 107a(b), (c). The state agency must give vendors training materials and access to financial data regarding its operation of the program. 34 C.F.R. §§ 395.11-.12.

The RSA sets forth a grievance scheme for vendors to challenge a state's operation of its Randolph-Sheppard program. The statute provides that "[a]ny blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program may submit to a State licensing agency a request for a full evidentiary hearing." 20 U.S.C. § 107d-1(a); see also id. § 107b(6) (state licensing agency must provide "an opportunity for a fair hearing"). A licensee dissatisfied with the results of that hearing may seek further review before the Secretary, who must "convene a panel to arbitrate the dispute." Id. § 107d-1(a). The panel consists of two arbitrators designated by the licensee and the state agency respectively, and a third arbitrator jointly designated by the other two. Id. § 107d-2(b). The panel's decision is subject to judicial review as final agency action under the Administrative Procedure Act. Id. § 107d-2(a).

In the District of Columbia, the designated licensing agency is the Rehabilitation Services Administration, a component of the District's Department on Disability Services. Its implementing regulations set forth both substantive rules and grievance procedures. The Administration must enter into an operating agreement with each licensed vendor, which must set forth both the duties of the vendor and the responsibilities of the Administration to provide various forms of assistance. 29 D.C. Mun. Reg. (DCMR) § 206. Regulations elaborate on how the Agency must train vendors, id. § 210, and what financial information it must make available to them, id. § 216. In addition, the Administration must give vendors various documents about the program's operation, id. § 217.1; must consult with a blind vendors' committee about program operations, id. § 211.1; and must equip and initially stock each covered vending facility, id. § 202.1. As to grievance procedures, a vendor "dissatisfied with any licensing agency action arising from the operation or administration of the Program" may seek either an informal meeting with an appropriate agency official or a hearing before the D.C. Office of Administrative Hearings (OAH). Id. § 218.2(b). The vendor may appeal an adverse OAH order either to the D.C. Court of Appeals, as permitted by D.C. law, or to the Secretary, as provided by the RSA. Id. § 218.2(c).

B

The plaintiffs are current and former vendors in the District's Randolph-Sheppard program. They claim that the District has discriminated against them, based on their blindness, in its administration of the program. As relevant here, they contend that the District conducts discriminatory inspections of vending facilities and that it fails to provide aids such as human or electronic readers. The plaintiffs did not challenge these alleged practices through the Randolph-Sheppard grievance procedure. Instead, they filed a lawsuit in federal district court, which alleged disability-based discrimination in violation of Title II of the Americans with Disabilities Act (ADA), section 504 of the Rehabilitation Act, and the District of Columbia Human Rights Act (DCHRA).

The district court dismissed the case for failure to exhaust administrative remedies under the RSA. The court reasoned that exhaustion was required because the claims challenged the District's operation or administration of its Randolph-Sheppard program, even if the claims also arose under the antidiscrimination statutes. Brooks v. District of Columbia, 375 F.Supp.3d 41, 44-48 (D.D.C. 2019). The court further rejected the plaintiffs' argument that exhaustion would be futile because the OAH assertedly lacks jurisdiction to hear claims under the RSA. Id. at 48-49.

After the plaintiffs appealed the dismissal, they moved for relief from judgment under Federal Rule of Civil Procedure 60(b)(3). The district court denied the motion, and the plaintiffs did not separately appeal that denial.

II

The principal question on appeal is whether the vendors were required to exhaust administrative remedies under the RSA before filing their discrimination claims in federal court. That is a legal question, which we review de novo. Artis v. Bernanke, 630 F.3d 1031, 1034 (D.C. Cir. 2011).

We first consider the RSA grievance scheme, and we then address how it interacts with the anti-discrimination statutes.

A

We begin with the RSA scheme. One of our cases described exhaustion under the RSA as a "jurisdictional" requirement for judicial review. Comm. of Blind Vendors of D.C. v. District of Columbia, 28 F.3d 130, 133 (D.C. Cir. 1994). But later Supreme Court decisions have clarified that an exhaustion requirement is jurisdictional only if Congress "clearly states" as much. Arbaugh v. Y&H Corp., 546 U.S. 500, 515-16 (2006). Section 107d-1(a) contains no such clear statement, so it is not jurisdictional.

Nonetheless, exhaustion under the RSA scheme is mandatory, as this Court held in Randolph-Sheppard Vendors of America v. Weinberger, 795 F.2d 90, 101-04 (D.C. Cir. 1986). As noted above, the RS A provides that "[a]ny blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program may submit to a State licensing agency a request for a full evidentiary hearing." 20 U.S.C. § 107d-1(a). Although the word "'may' is ordinarily ... permissive," we held that structural and contextual considerations "defeat[] any inference" that the grievance scheme is optional. Weinberger, 795 F.2d at 102 n.19. In particular, the RSA "establishes a clear and explicit system for resolution of disputes," it "specifically conditions resort to the Secretary on initial action by the state licensing agency," and it makes an arbitration decision judicially reviewable as final agency action. See id. at 102-03. We found it "unlikely" that "an aggrieved party could, whenever it chose, circumvent the system and seek de novo determination in federal court." Id. at 103. Thus, we held that the RSA exhaustion provision is mandatory for claims to which it applies. Id. at 104.

B

The RSA grievance scheme squarely covers the claims in this case. Again, the scheme extends to "[a]ny blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program." 20 U.S.C. § 107d-1(a). The double use of the word "any" signifies breadth. See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 219 (2008). And we have previously interpreted the phrase "arising from" to mean "originate or stem from." N. Am. Butterfly Ass'n v. Wolf, 977 F.3d 1244, 1260 (D.C. Cir. 2020) (cleaned up). The exhaustion requirement thus applies so long as the aggrieved parties are licensees and the challenged actions involve operation or administration of the program. The plaintiffs here are current or former licensees, and they challenge actions that involve program administration.

Counts 1 through 3 of the complaint have evolved during this litigation. Initially, the plaintiffs alleged that the District inspected their facilities through poorly trained Administration monitors instead of through the Department of Health. But the District proved that the Department did perform inspections. Then, the plaintiffs complained of having to endure inspections from both the Administration and the Department, whereas sighted proprietors were inspected only by the Department. Either way, these claims challenge the program's monitoring procedures or the quality of its monitors, which go directly to program operation or administration. Under the RSA, a state licensing agency must...