Uniroyal, Inc. v. Marshall
| Decision Date | 05 July 1978 |
| Docket Number | No. 77-1970,77-1970 |
| Citation | 579 F.2d 1060 |
| Parties | 17 Fair Empl.Prac.Cas. 1207, 17 Empl. Prac. Dec. P 8418 UNIROYAL, INC., Plaintiff-Appellant, v. F. Ray MARSHALL, Secretary of the Department of Labor, and Weldon J. Rougeau, Deputy Assistant Secretary and Director of the Office of Federal ContractCompliance Programs, and Cecil D. Andrus, Secretary of the Department of theInterior,Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Harry N. Turk, New York City, for plaintiff-appellant.
Deborah M. Seymour, Atty. of Civ. Rights Div., Dept. of Justice, Washington, D. C., for defendants-appellees.
Before PELL and BAUER, Circuit Judges, and MARSHALL, District Judge. *
In this appeal, we are asked to decide whether Executive Order 11246, which prohibits discriminatory employment practices by all government contractors, grants sufficient rulemaking authority to the Department of Labor to permit the use of pre-hearing discovery techniques and administrative subpoenas in administrative enforcement proceedings. Appellant Uniroyal, Inc., brought this collateral pre-enforcement action in the district court challenging these procedures. The district court denied Uniroyal's motion for a preliminary injunction and granted summary judgment for the government. We affirm upon the limited ground that plaintiffs' action was premature because of the "long settled rule of judicial administration 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 Corp., 303 U.S. 41, 51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938); Frey v. C.E.A., 547 F.2d 46 (7th Cir. 1976).
Uniroyal, Inc., a manufacturer of chemical, rubber and plastic products, holds numerous contracts with the federal government. All government contractors are required by Executive Order 11246 (the Order) to include in each contract a clause which obligates them to take affirmative action to ensure that employees are treated without regard to race, color, sex, religion or national origin. See 41 C.F.R. § 60-1.4. The Order is administered by the Secretary of the Department of Labor (the Secretary), who is authorized to issue implementing rules and regulations. Under these regulations, the Secretary has delegated his enforcement responsibilities to the Office of Federal Contract Compliance Programs (OFCCP). 41 C.F.R. § 60-1.2.
Specific responsibility for monitoring a contractor's compliance with the Order is entrusted to a compliance agency, which conducts periodic reviews to determine whether the contractor is adhering to the terms of the equal opportunity clause in his contract. 41 C.F.R. § 60-1.3 and § 60-1.20. In the case of Uniroyal, the compliance agency is the Department of the Interior (Interior). In January, 1976 Interior conducted an on-site review of Uniroyal's Mishawaka, Indiana plant and found a number of deficiencies in its adherence to the terms of its contract. These included the failure to supply complete and accurate data to Interior investigators, the failure to identify areas in the work force where women and minorities were underrepresented, the failure to set goals and timetables for an affirmative action program, and the assignment of women and minorities to lower-paying jobs than those held by male and white employees of comparable qualifications and seniority. Interior gave Uniroyal thirty days to show cause why contract termination and debarment proceedings should not be initiated.
Over the next several months, repeated attempts were made to reach a negotiated settlement of the dispute. Those efforts proved unproductive, and in July, 1976 the Director of OFCCP issued a formal complaint which commenced the administrative enforcement proceeding. Uniroyal denied the charges of non-compliance with the Order, and the case was set for a hearing before an administrative law judge.
Formal pre-hearing discovery began in November, 1976, when the government filed interrogatories and requests for production of documents. The implementing regulations, which were promulgated in 1972 and 1977, authorize an array of pre-hearing discovery devices, including interrogatories, requests for admissions, requests to produce documents, requests to enter and inspect property, and depositions on oral examination. 41 C.F.R. § 60-30.9 through § 60-30.11. Over the next eight months, the government filed about fifteen discovery requests, including deposition notices directed to six Uniroyal officials. Uniroyal filed two discovery requests of its own during this period.
While the government has responded to Uniroyal's discovery requests, Uniroyal in turn has been largely uncooperative and dilatory. By securing several extensions of time, it delayed its response to the government's requests for more than three months. When it did respond, Uniroyal refused to supply large blocks of information, contending that the requested information was irrelevant, confidential, beyond the scope of the proceeding, or physically unavailable. The government subsequently procured several orders from the administrative law judge compelling Uniroyal to provide more complete answers. Uniroyal was still unwilling to accommodate, and on May 10, 1977 it raised for the first time the contention that the Secretary of Labor lacked authority to issue the pre-hearing discovery rules. It asked the administrative law judge to bar discovery and vacate the prior orders. In turn, the government moved for an order terminating Uniroyal's present contracts and declaring Uniroyal ineligible for future contracts due to its failure to engage in discovery.
The administrative law judge denied Uniroyal's motions to preclude discovery, stating that an administrative proceeding was not the proper forum to test the validity of the rules. Uniroyal has appealed this interlocutory ruling to the Secretary of Labor, and that appeal is still pending. The judge also enlarged the scope of a hearing scheduled for June 28, 1977 to consider evidence on whether Uniroyal's refusal to engage in pre-hearing discovery and its defiance of the judge's discovery orders constituted a violation of Executive Order 11246 and grounds for imposing sanctions, including contract termination. Finally, the judge ruled that unless the company answered outstanding requests to admit and interrogatories prior to the upcoming hearing, those requests would be deemed admitted.
One week before the scheduled June 28 hearing, Uniroyal filed its instant complaint in the district court against three government officials charged with administering the Order, 1 seeking to bar enforcement of the OFCCP's pre-hearing discovery rules. The challenged rules are published at 41 C.F.R. § 60-30.1 (last sentence), which provides that the Federal Rules of Civil Procedure shall control in the absence of a specific provision, § 60-30.9 through § 60-30.11, which authorize pre-hearing discovery, and § 60-30.17, which authorizes the issuance of administrative subpoenas to compel the attendance of witnesses and the production of documents at hearings. In its complaint, Uniroyal asserted that the rules were invalid because they were not expressly authorized by the Administrative Procedure Act, 5 U.S.C. § 701 Et seq., by Executive Order 11246, or by its statutory fountainhead, the Federal Property and Administrative Services Act of 1949, 40 U.S.C. § 486. Uniroyal also claimed that the government's efforts to terminate its contracts for non-compliance with the rules deprived it of property rights protected by the due process clause of the Fifth Amendment. In its prayer for relief, Uniroyal sought to enjoin the defendants from holding the scheduled administrative hearing and from imposing any sanctions for Uniroyal's non-compliance with pretrial discovery requests. It also sought a declaration that the discovery rules were an impermissible and unconstitutional exercise of defendants' authority.
The district court entered an Ex parte temporary restraining order on June 22, resulting in the cancellation of the June 28 administrative hearing. However, that order was subsequently dissolved, and on August 15 the district court denied plaintiff's motion for a preliminary injunction and entered summary judgment in favor of the defendants. 2 The court rested its ruling on several grounds. First, Uniroyal failed to show that it would suffer irreparable injury if a preliminary injunction were denied, since it was in no danger of losing government contracts prior to the completion of the scheduled administrative hearing. Second, Uniroyal had failed to exhaust the administrative procedures specified in its contracts with the government, because the issue of discovery sanctions was still pending before the administrative law judge. Third, the case met none of the requirements for pre-enforcement review of agency action, and therefore was not ripe for judicial decision. Finally, the regulations were valid, since they were lawful contract terms and were not in conflict with or in excess of their underlying authority.
On October 17, 1977 this court denied Uniroyal's motion for an injunction pending appeal in which it sought an order restraining defendants from proceeding with any administrative hearings until we ruled on Uniroyal's appeal.
On appeal, Uniroyal challenges each of the reasons offered by the district court. Because we agree with the district court that Uniroyal is precluded from maintaining its action because of its failure to exhaust an available administrative remedy, we affirm without reaching the merits of the validity of the rules.
The exhaustion doctrine is intended to defer judicial review until controversies have been channeled through the complete administrative process. The exhaustion requirement serves to avoid collateral, dilatory action of the likes of the instant action and to...
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