USAA Federal Sav. Bank v. McLaughlin, 87-5062

• Decision Date: 24 June 1988
• Docket Number: No. 87-5062,87-5062
• Citation: 849 F.2d 1505
• Parties: 47 Fair Empl.Prac.Cas. 229, 46 Empl. Prac. Dec. P 38,078, 270 U.S.App.D.C. 376 USAA FEDERAL SAVINGS BANK, Appellant v. Ann D. McLAUGHLIN, Secretary of Labor, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1505

849 F.2d 1505

47 Fair Empl.Prac.Cas. 229,

46 Empl. Prac. Dec. P 38,078, 270 U.S.App.D.C. 376

USAA FEDERAL SAVINGS BANK, Appellant v. Ann D. McLAUGHLIN, Secretary of Labor, et al.

No. 87-5062.

United States Court of Appeals, District of Columbia Circuit.

Argued May 9, 1988.

Decided June 24, 1988.

Kalvin M. Grove, with whom Jeffrey S. Goldman, Chicago, Ill., and Robert F. McDermott, Jr. were on the brief, for appellant. Andrew M. Kramer, Washington, D.C., also entered an appearance for appellant.

Lisa J. Stark, Attorney, Dept. of Justice, for appellees. James D. Henry, Associate Sol., Dept. of Labor, William Bradford Reynolds, Asst. Atty. Gen., and Debra A. Millenson, Attorney, Dept. of Labor, Washington, D.C., were on the brief for appellees.

Before STARR, SILBERMAN and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

This appeal raises questions concerning the finality of agency action. USAA Federal Savings Bank, a federally chartered and insured savings bank, brought suit in federal district court seeking declaratory and injunctive relief against the Secretary of Labor, the Director of the Office of Federal Contract Compliance Programs (OFCCP), and an Area Office Director of OFCCP. The gravaman of the complaint was that OFCCP had improperly sought to assert jurisdiction over the Bank as a federal contractor solely by virtue of the Bank's status as a subscriber to the deposit insurance program administered by the Federal Savings and Loan Insurance Corporation. The District Court dismissed the action, finding that the Bank had failed to exhaust administrative remedies. This appeal followed. For the reasons that follow, we affirm.

I

The pertinent facts can be briefly stated. In December 1985, an OFCCP area office notified the Bank that it had been selected for an equal opportunity compliance review pursuant to Executive Order 11246, which prohibits discriminatory employment practices by federal contractors. See Exec. Order No. 11,246, 3 C.F.R. 258 (1964-1965), reprinted in 42 U.S.C. Sec. 2000e App. at 28 (1982). In a series of communications to OFCCP, the Bank asserted that it was not in fact a federal contractor so as to fall within the ambit of the Executive Order and OFCCP's concomitant jurisdiction. The exchange of correspondence eventuated in a letter from OFCCP's Director setting forth OFCCP's view that the Bank's contract for deposit insurance with the FSLIC sufficed to bring it within the Executive Order's reach. With the agency demanding that the Bank accede to the compliance review request, the Bank repaired to federal district court. The Bank sought a judgment declaring that the institution is not a government contractor and that, consequently, the Secretary of Labor and OFCCP are without authority to require compliance with the Executive Order's strictures.

The complaint was destined to be short-lived. The defendants promptly filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for failure to exhaust administrative remedies. Following oral argument, the District Court granted the motion without opinion.

II

Resolution of this appeal turns on whether the Bank's pre-enforcement suit is premature. The precise conceptual box into which prematurity concerns are most appropriately fitted has evolved into a lively issue in administrative law, with the Government in this case now featuring ripeness as its principal objection to judicial intervention at this juncture. The alert reader will have readily discerned that this represents a conceptual shift from the position championed in the trial court, where the Government relied exclusively on exhaustion. Stirring the prematurity pot further, the Government emphasizes that the Bank is but part of a larger corporate family and that contractual ties between the Bank's parent and the federal leviathan may well exist, thereby providing the requisite jurisdictional predicate for coverage under the Executive Order. The unknowns of the USAA-federal relationship, the Government contends, further counsel in favor of judicial forebearance.

The Bank maintains that for almost 20 years OFCCP has relied on the existence of deposit insurance to assert jurisdiction over federally insured financial institutions. Latter-day expressions of government interest in the possible existence of other federal contracts within the USAA corporate family are, the Bank assures us, merely a litigation-inspired diversion, as evidenced by OFCCP's hitherto firm position that FSLIC insurance, standing alone, sufficed to trigger the Bank's federal contractor status. The consistency of OFCCP's position, the Bank suggests, renders fruitless recourse to the agency's compliance enforcement proceedings, which have been stayed pending disposition of this appeal. See OFCCP v. USAA Fed. Sav. Bank, No. 87-OFC-27 (Dec. 4, 1987) (order staying administrative action).

The Government does not, and indeed in reason cannot, deny that OFCCP's position on the coverage issue is consistent and of long standing. But appellees quickly add that OFCCP does not have the final word on the issue. Only the Secretary of Labor enjoys authority ultimately to speak for the Department on that question and, as the Government sees it, the Secretary has yet to speak.

The Bank contests the Secretary's alleged silence on this issue. Pointing to a responsive letter in 1986 from then-Secretary Brock to the president of the National Council of Savings Institutions, who had written to the Secretary to bring the coverage issue to his attention, the Bank maintains that "[t]he Secretary's support [of OFCCP's position] was unconditional and firm." Appellant's Brief at 17. In that letter, Secretary Brock set forth in brief compass the history of OFCCP's position vis-a-vis coverage of federally insured financial institutions. He stated as follows:

To the extent that OFCCP has identified financial institutions for investigation based on share or deposit insurance, such action is being taken pursuant to a long-standing policy of OFCCP that Federal deposit and share insurance constitutes contracts under Executive Order 11246; and, at least since 1972, OFCCP has maintained jurisdiction over savings and loan associations based on these kinds of contractual relationships.

Letter from William E. Brock, Secretary of Labor, to John H. Rousselot, President, National Council of Savings Institutions (June 27, 1986), Joint Appendix (J.A.) at 61A, quoted in Appellant's Brief at 17 (hereinafter Rousselot Letter). This, the Bank asserts, constitutes clear Cabinet-level approbation of OFCCP's position. Accordingly, to relegate it to the demands of an agency enforcement action is, in the Bank's view, to condemn it to an injurious exercise in futility. Relegating the Bank to such an unhappy fate would also be incompatible, the argument goes, with precedents granting pre-enforcement review of agency action. The Bank encapsulates this view in the following passage from its opening brief:

Pre-judgment review has been granted, as here, where the record demonstrated that the agency 'contemplated full and prompt compliance,' or the policy had been 'considered and reconsidered' by the agency, or where 'the claim of the businessman had been considered and rejected by the government officials who had primary responsibility for the application and implementation of the statute.' In the instant case, all three of the foregoing factors are present.

Appellant's Brief at 27 (citations and brackets omitted). Under the circumstances of this case, the Bank concludes, the agency's actions easily meet the finality standards articulated by the Supreme Court in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), and which were at issue in such recent decisions of this court as Ciba-Geigy Corp. v. EPA, 801 F.2d 430 (D.C.Cir.1986).

III

We find it unnecessary to plumb the depths of the closely related analytical doctrines that share the dual concerns of prematurity of judicial intervention in agency processes and the proper and principled exercise of judicial power. As the three separate opinions in Ticor Title Ins. Co. v. FTC, 814 F.2d 731 (D.C.Cir.1987), eloquently attest, prematurity concerns may find their way into one of three conceptual boxes: ripeness, finality, and exhaustion of administrative remedies. We need not undertake this challenging doctrinal exercise, because in our view this case is controlled by the Supreme Court's decision in FTC v. Standard Oil Co., 449 U.S. 232, 101 S.Ct. 488, 66 L.Ed.2d 416 (1980) ("SOCAL "). SOCAL is no stranger to the world of administrative law and the lawyers who ply this trade, and we therefore need only remind the reader of its basic holding: the mere issuance of an administrative complaint does not constitute final agency action. While adhering to the teaching of Abbott Laboratories that " 'the cases dealing with judicial review of administrative actions have interpreted the "finality" element in a pragmatic way,' " id. at 239, 101 S.Ct. at 493 (quoting Abbott Laboratories, 387 U.S. at 149, 87 S.Ct. at 1516) (brackets omitted), the SOCAL Court nonetheless concluded that the issuance of a complaint did not represent the "definitive statement" of the Trade Commission's position. Id. 449 U.S. at 241, 101 S.Ct. at 493. To the contrary, the Court found that the FTC's action represented only "a threshold determination that further inquiry is warranted." Id. at 241-42, 101 S.Ct. at 493-94.

In this case, we are satisfied that the agency's position on the coverage issue does not rise to the SOCAL-demanded level of a "definitive statement." In our view, the Secretary of Labor has, as yet, failed to speak specifically to the question with the formality and finality required of a "definitive statement" of position. For starters, the Government has specifically represented to us both in its brief and at oral argument that the...