Portela-Gonzalez v. Secretary of the Navy

Decision Date05 March 1997
Docket NumberNo. 96-1460,PORTELA-GONZALEZ,96-1460
Citation109 F.3d 74
PartiesAstrid L., et al., Plaintiffs, Appellants, v. SECRETARY OF THE NAVY, et al., Defendants, Appellees. . Heard
CourtU.S. Court of Appeals — First Circuit

Alex Gonzalez, San Juan, PR, with whom Gonzalez & Vilella was on brief, for Plaintiffs, Appellants.

Isabel Munoz Acosta, Assistant United States Attorney, Guaynabo, PR, with whom Guillermo Gil, United States Attorney, was on brief, for Defendants, Appellees.

Before TORRUELLA, Chief Judge, SELYA and STAHL, Circuit Judges.

SELYA, Circuit Judge.

In this appeal, plaintiff-appellant Astrid L. Portela-Gonzalez (Portela) challenges a summary judgment entered in favor of the Navy. 1 Although our reasoning differs in one salient respect from that employed by the court below, we affirm the judgment. See Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.1996) (explaining that an appellate court is not committed to the trial court's rationale, but may affirm on any alternative ground made manifest by the record).

I. BACKGROUND

The facts essential to our review are largely uncontested. Portela worked for nearly three decades as a civilian employee at the Roosevelt Roads Naval Station. From 1985 forward, she occupied the position of sales manager at the Navy Exchange. She had an unblemished employment record and achieved consistently high performance ratings.

On December 14, 1989, Portela placed 28 articles of clothing on layaway at the Exchange, 25 of which were clearance sale items (known colloquially as "red tag" items). The anticipated purchase price of the merchandise was $484.10. When the Exchange slashed the prices of all red tag items even more drastically during the post-Christmas lull, Portela spied an opportunity for increased savings, canceled her layaway arrangement (paying a $5.00 penalty), and simultaneously repurchased the articles she had removed from layaway status for a price of $330.79. Portela contends that these machinations did not transgress any policy, rule, or regulation of the Exchange; the Navy contends otherwise.

II. THE AFTERMATH

On April 9, 1990, L.H. Arcement, Jr., the Officer in Charge (OIC) of the Navy Exchange, suspended Portela without pay pending anticipated disciplinary action. On May 29, Arcement notified Portela that she would be terminated for "applying an unauthorized 40% price reduction to red tagged clothing items you had placed on layaway in violation of the Exchange's layaway policy, resulting in a loss to the Exchange of $197.32." 2 Pursuant to the controlling administrative procedure, contained in a Secretary of the Navy Instruction (SECNAVINST), the letter informed Portela of the charges against her and outlined her procedural rights.

Portela contested the proposed disciplinary action. On June 22, 1990, the OIC overrode Portela's grievance and terminated her employment as of July 3, 1990. The Navy advised Portela of her right to appeal this decision and she proceeded to do so. Her first appeal was heard pro forma by the OIC who, not surprisingly, affirmed his original determination. Her second appeal culminated in a full evidentiary hearing, following which Michael F. O'Brien, the Commanding Officer of the Roosevelt Roads Naval Station, upheld her termination.

Portela pursued the appellate process to the next level. On March 25, 1991, Rear Admiral H.D. Weatherson, Commander of the NRSSO, headquartered at Staten Island, New York, affirmed her termination. This decision informed Portela of her right to take a final administrative appeal to the Deputy Assistant Secretary of the Navy, Civilian Personnel Policy, Equal Employment Opportunity Office, in Washington, D.C. Rather than pursue this fourth level of administrative redress, Portela filed suit.

After some preliminary skirmishing, not relevant here, the district court addressed the Navy's motion for summary judgment. The court ruled that Portela had failed to exhaust available administrative remedies but nonetheless reached the merits of her suit in the exercise of its perceived discretion. See Portela Gonzalez v. Secretary of Navy, 913 F.Supp. 122, 126-28 (D.P.R.1996). Portela's victory proved ephemeral, however, as the court concluded that the Navy's actions were neither arbitrary nor capricious. See id. at 128. This appeal ensued.

III. DISCUSSION

We agree with the district court that Portela impermissibly failed to exhaust her administrative remedies. We disagree, however, that the court had discretion, in the circumstances of this case, to relieve her of the onus of her omission.

A. The Exhaustion Doctrine.

Starkly contoured, the exhaustion doctrine holds that "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938). In practice, the doctrine has softer edges than this language implies. See Kenneth Culp Davis & Richard J. Pierce, Jr., II Administrative Law Treatise § 15.2, at 307 (3d ed.1994). Although exhaustion of administrative remedies is absolutely required if explicitly mandated by Congress, see McCarthy v. Madigan, 503 U.S. 140, 144, 112 S.Ct. 1081, 1086, 117 L.Ed.2d 291 (1992), courts have more latitude in dealing with exhaustion questions when Congress has remained silent, see Darby v. Cisneros, 509 U.S. 137, 153-54, 113 S.Ct. 2539, 2548, 125 L.Ed.2d 113 (1993); McCarthy, 503 U.S. at 144, 112 S.Ct. at 1086. In such purlieus, the court of first instance possesses a modicum of discretion to relax the exhaustion requirement. See Salus v. GTE Directories Serv. Corp., 104 F.3d 131, 138 (7th Cir.1997).

The Court's opinion in McCarthy is integral to an understanding of the parameters of this discretion. Although recognizing that the exhaustion doctrine ordinarily "serves the twin purposes of protecting administrative agency authority and promoting judicial efficiency," and, thus, should customarily be enforced, the Court identified "three broad sets of circumstances in which the interests of the individual weigh heavily against requiring administrative exhaustion." McCarthy, 503 U.S. at 145, 146, 112 S.Ct. at 1086, 1087.

First, a court may consider relaxing the rule when unreasonable or indefinite delay threatens unduly to prejudice the subsequent bringing of a judicial action. See id. at 146-47, 112 S.Ct. at 1087-88. And, relatedly, if the situation is such that "a particular plaintiff may suffer irreparable harm if unable to secure immediate judicial consideration of his claim," exhaustion may be excused even though "the administrative decisionmaking schedule is otherwise reasonable and definite." Id. at 147, 112 S.Ct. at 1087.

Second, McCarthy acknowledges that it sometimes may be inappropriate for a court to require exhaustion if a substantial doubt exists about whether the agency is empowered to grant meaningful redress. See id. at 147-48, 154, 112 S.Ct. at 1087-88, 1091; see also Gibson v. Berryhill, 411 U.S. 564, 575 n. 14, 93 S.Ct. 1689, 1696 n. 14, 36 L.Ed.2d 488 (1973). An agency, for example, may lack authority to grant the type of relief requested. See, e.g., McNeese v. Board of Educ., 373 U.S. 668, 675, 83 S.Ct. 1433, 1437-38, 10 L.Ed.2d 622 (1963).

Finally, McCarthy teaches that the exhaustion rule may be relaxed where there are clear, objectively verifiable indicia of administrative taint. Thus, if the potential decisionmaker is biased or can be shown to have predetermined the issue, failure to exploit an available administrative remedy may be forgiven. See McCarthy, 503 U.S. at 148, 112 S.Ct. at 1088.

B. Application of the Doctrine.

Congress has excluded Navy Exchange personnel from the strictures of the Administrative Procedure Act, see 5 U.S.C. § 2105(c), and has not otherwise mandated that such employees always must exhaust administrative remedies as a condition precedent to suit. Accordingly, Portela's admitted failure to exercise the final level of available administrative review is not necessarily fatal to her claim; the effect of her omission depends instead upon whether the circumstances of her case can justify that omission.

1. The Availability of Fourth-Level Review. We start this phase of our analysis by addressing Portela's halfhearted argument, raised for the first time on appeal, that a fourth level of review was not in fact available to her. The argument is bogus.

The facts are as follows. The original administrative procedure, SECNAVINST 5300.22A, did not mention a fourth level of review. On November 15, 1989, however, the Secretary of the Navy promulgated SECNAVINST 5300.22B, directing subordinate commands to implement it within 120 days. The new regulation (5300.22B) explicitly canceled the old regulation (5300.22A). Nevertheless, on January 24, 1990, the Director, Officer of Civilian Personnel Management, granted an extension to the NRSSO, deferring the effective date of SECNAVINST 5300.22B until July 15, 1990. Thus, the notice of suspension issued to Portela on April 9, 1990, the notice of proposed disciplinary action issued to her on May 29, 1990, and the notice of decision dated June 22, 1990, all referenced SECNAVINST 5300.22A as the controlling regulation.

From that point forward, however, Portela clearly understood--indeed, urged--that SECNAVINST 5300.22B, which unarguably contains a fourth level of administrative review, governed her case. She mentioned it in her second appeal, dated August 12, 1990, and at the ensuing evidentiary hearing her counsel insisted that 5300.22B, rather than 5300.22A, controlled her case. While the hearing officer did not rule on the question, the ultimate decisionmaker at that level (the Commanding Officer of the Roosevelt Roads Naval Station) accepted Portela's argument and reviewed the hearing transcript in accordance with SECNAVINST 5300.22B...

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