Chapter 3: The Case or Controversy Requirement and Other Preliminary Hurdles IV. Exhaustion and Preclusion This section discusses the circumstances under which a federal plaintiff may be required to exhaust judicial or administrative remedies before filing in federal court, and the preclusion implications of having such remedies available and/or pursuing such remedies when they are not statutorily mandated. IV.A. Whether Exhaustion Is Required To determine whether exhaustion is required, first examine the federal statute that provides the right sought to be enforced for explicit or implicit exhaustion requirements. If exhaustion is required, determine whether one of the recognized exceptions to enforcement of exhaustion applies to the circumstances of the case. When exhaustion of remedies is not required, as in Section 1983 actions,/222/ consider whether to pursue, nevertheless, available local or state administrative remedies./223/ This entails an assessment of the needs of the client, the certainty and speed of such relief, opportunities to obtain useful information for a subsequent judicial appeal, and the expense of litigation of a case through trial in federal court. Furthermore, and of particular importance, the possibility that pursuing such remedies will have claim or issue preclusive effect in any subsequent federal action should also be assessed. The prospect of litigating multiple federal claims or combining federal and state law claims, which have different exhaustion requirements, adds another layer of complexity to the assessment. Many legal aid programs are structured so that frontline paralegals and attorneys, who do not typically practice in federal court, make the initial strategic decisions regarding the filing of federal claims. Decisions made by these staff members may foreclose the federal forum as a viable option because of the preclusion doctrines. Thus, early in the representation of the client, it is important to have experienced federal litigators collaborate with staff who represent clients in local, state, and federal administrative hearings. IV.B. Statutory Duty of Exhaustion Exhaustion of federal or state administrative remedies is required when Congress explicitly requires exhaustion as a prerequisite to bringing an action in federal court./224/ Such an expression must be specific and clear./225/ For example, 42 U.S.C. § 1997e(a), part of the Prison Litigation Reform Act, provides: “No action shall be brought with respect to prison conditions … until such administrative remedies are exhausted.” The Supreme Court has held that this language reflected Congress’ intent to require exhaustion in all cases and to eliminate any discretion to permit exceptions./226/ The interpretive question in cases with an explicit exhaustion requirement is the breadth of statutory exhaustion provisions./227/ For example, the Individuals with Disabilities Education Act provides that, “before the filing of a civil action ...seeking relief that is also available under [the Act], the procedures ...of this section shall be exhausted.”/228/ The circuits are split on whether this provision requires the exhaustion of administrative remedies that cannot supply the particular relief (money damages) sought in the federal action./229/ An exception may also apply when an agency adopts a policy or pursues a practice of general applicability contrary to law./230/ Without an explicit statutory requirement for exhaustion, “courts are guided by congressional intent in determining whether application of the doctrine would be consistent with the statutory scheme.”/231/ Thus, implicit exhaustion requirements are often determined by resort to statutory interpretation and legislative history./232/ In these circumstances, “courts play an important role in determining the limits of an exhaustion requirement and may impose such a requirement even where Congress has not expressly so provided.”/233/ Statutory exhaustion requirements may vary even within the same statute or program. For example, Title I, but not Title III, of the Americans with Disabilities Act has an exhaustion requirement./234/ Furthermore, combining claims from a federal statute that does not require exhaustion with one that does have an exhaustion requirement can result in enforcement of an exhaustion requirement for both statutory claims./235/ IV.C. Common-Law Duty of Exhaustion When “Congress has not clearly required exhaustion, sound judicial discretion governs.”/236/ Exercise of this discretion involves balancing the interests of the plaintiff in accessing a federal forum promptly against the institutional interests advanced when exhaustion is required./237/ The Supreme Court in McCarthy v. Madigan, identified three circumstances which, if present, would weigh against requiring exhaustion. The first occurs when requiring exhaustion would unduly prejudice a subsequent court action, such as when the administrative process is either delayed or does not otherwise allow the plaintiff to avert irreparable harm./238/ In Bowen v. City of New York, the Court found that a class of social security disability insurance claimants would suffer irreparable injury if they were required to fully exhaust their administrative remedies with the Social Security Administration./239/ A second set of circumstances warranting waiver of the exhaustion requirement occurs when the administrative remedy is shown to be inadequate./240/ Such might be the case when the agency is unable to grant an effective remedy or is unable to consider the issues presented. Moreover, exhaustion is not required when the challenge is to the agency procedures themselves./241/ Third, the Court found a waiver of exhaustion appropriate when agency bias is shown./242/ Applying these factors, the Court in McCarthy held that a federal prisoner did not have to exhaust the Federal Bureau of Investigation’s administrative remedy procedure before filing a Bivens action in federal court./243/ IV.D. Preclusion Should exhaustion of judicial or administrative remedies not be required, the advocate has to assess whether to pursue such remedies voluntarily or to proceed with federal litigation. The reality of limited resources often strongly influences this decision. The cost of federal court discovery, accessing expert witnesses, and preparing the case for trial is often too high for legal services organizations. Administrative proceedings have financial advantages, such as free transcripts, agency experts, and may make exhausting a voluntary remedy a compelling choice. Often, the more complex decision is how the administrative proceeding can be utilized to best preserve an opportunity for later federal court review of the legal issues underlying the claim or agency action. Use of techniques such as the submission of Proposed Findings of Fact during the hearing process may help when the relatively quick and inexpensive administrative forum offers significant advantages, and the potential preclusion issues are deemed acceptable risks. In some types of matters, it may be appropriate to proceed to federal court. For instance, it may be necessary to first seek preliminary declaratory and injunctive relief in federal court in order to preserve the status quo or to resolve an issue about administrative process before going through a voluntary administrative remedy. The deferential standard of review of agency decisions has to be factored into the desirability of administrative proceedings in advance of federal court litigation. Finally, because final state court judgments or administrative decisions may have preclusive effect in subsequent federal litigation, voluntary exhaustion has potential dangers when there is a fair likelihood of losing on the administrative level. IV.D.1. Claim Preclusion In 28 U.S.C.§ 1738, the full-faith and credit statute, Congress “required all federal courts to give preclusive effect to state-court judgments whenever the courts of the State from which the judgments emerged would do so.”/244/ Federal courts apply state preclusion law to determine whether a state court judgment precludes a subsequent federal suit./245/ The Supreme Court has since held that final state court judgments bar Title VII actions/246/ and actions brought under 42 U.S.C. § 1983./247/ State court judgments affirming administrative decisions similarly have preclusive effect under Section 1738./248/ The preclusive effect of unreviewed administrative decisions is not governed by Section 1738./249/ Section 83(1) of the Restatement (Second) of Judgments outlines the basic principles:
The preclusive effect of administrative determinations raises three basic questions: (1) When does administrative adjudication have the essential elements of adjudication?/251/ (2) What claim did the administrative agency resolve (and thus preclude from re-litigation)? (3) Did Congress by statute direct courts to apply preclusion? The first question—the required degree of formality to the administrative hearing—is relevant to both claim and issue preclusion (discussed infra). When the agency engages in a trial-type proceeding, the resulting findings of fact are likely to have preclusive effect. Features of a trial-type proceeding include the following safeguards:
These safeguards go beyond the minimum due process requirements identified in Goldberg v. Kelly./253/ There is little consistency as to whether proceedings with fewer safeguards may have preclusive effect./254/ The preclusive effect of findings in Social Security Administration hearings, for example, has commanded no consistent opinion./255/ The second question concerns when a claim brought in a first action is sufficiently similar to one sought to be brought later in federal court to require preclusion. Section 24 of the influential Restatement of Judgments defines the “same” claim as one arising out of the same transaction or series of transactions. “Transactions,” in turn, “are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.”/256/ Put more practically, whether a second lawsuit is based upon the same claim litigated in a prior action “turns on the essential similarity of the underlying events giving rise to the various claims.”/257/ To determine whether causes of action are sufficiently similar to apply preclusion,“[c]ourts consider the similarity of the acts complained, the material factual allegations in each suit and the witnesses and documentation required to prove each claim.”/258/ The third question to apply in determining the preclusive effect of administrative determinations is whether Congress has required courts to apply preclusion to implement a particular statute. Congress may, by statute, overturn the presumptive application of preclusion of administrative determinations./259/ The leading case on this point is University of Tennessee v. Elliott./260/ In Elliott, the university fired an African American employee. He appealed the decision administratively, claiming that the termination was racially motivated. The administrative law judge disagreed. Elliott then filed a Title VII and Section 1983 suit in federal court. The university argued that the administrative law judge’s findings precluded re-litigation of the discrimination issue. With respect to the Title VII claim, the Court held that the language of the statute reflected Congress’ intent that unreviewed state administrative proceedings had no preclusive effect on such claims./261/ The Court, however, found no evidence of such intent in Section 1983. Moreover, the Court found, giving preclusive effect to administrative fact-finding in Section 1983 actions advances repose, conserves resources, and promotes federalism./262/ Even when all the requirements for claim preclusion appear to be satisfied, some courts do not apply it when important federal rights are at stake. For example, in Gjellum v. City of Birmingham, a Medicaid case, the Eleventh Circuit decided that the federal common law of preclusion did not require application of state claim preclusion rules to unreviewed state administrative decisions in a subsequent Section 1983 suit:/263/
In Dionne v. Mayor and City Council of Baltimore, a case challenging an adverse employment decision on procedural due process grounds, the Fourth Circuit agreed with this reasoning./265/ The court observed that the plaintiff could not have raised constitutional law theories or sought broader remedies available under Section 1983 before the local administrative agency./266/ The court concluded that the state court system could not have served as an adequate and unitary alternative forum for the assertion of all theories and remedies./267/ As a result, applying claim preclusion to unreviewed state agency determinations would discourage plaintiffs from pursuing the generally cheaper and more efficient route of seeking an administrative remedy in order to preserve their federal rights./268/ The Seventh Circuit has agreed with the Eleventh Circuit’s analysis for the proposition that there were limits to how far a court should go in enforcing preclusion. In Waid v. Merrill Area Public Schools, the Seventh Circuit reviewed a teacher’s suit brought under Section 1983 and Title IX of the Education Amendments Act of 1972 and held that claim preclusion did not prevent bringing the Title IX claim after going through a state administrative proceeding./269/ The Seventh Circuit concluded, based upon its examination of the state agency’s limited jurisdiction, that claim preclusion did not apply because “it is clear that she could not have consolidated all of her claims in a single lawsuit.”/270/ If the state administrative forum were adequate in allowing all claims to be brought, state preclusion law, the opinion suggests, could be applied. However, the Seventh Circuit also cited the Eleventh Circuit’s decision in Gjellum for the proposition that deference to state administrative process and state preclusion law is limited when that would impair enforcement of federal rights./271/ On the other hand, other courts have expanded application of the preclusion doctrine beyond findings of fact to encompass preclusion of subsequent litigation of conclusions of law. In Miller v. County of Santa Cruz, the Ninth Circuit held that unreviewed state agency determinations were entitled to be given preclusive effect in subsequent Section 1983 litigation./272/ The Ninth Circuit recognized that, based upon its assessment of the adequacy of the state administrative forum, it was going farther than the Supreme Court required federal courts to go in Elliott:
The Eighth Circuit has followed the Ninth. In Plough v. West Des Moines Community School District, the Eighth Circuit concluded that both claim and issue preclusion applied to an unreviewed state agency determination./274/ The plaintiff opposed a defense of claim preclusion in his Section 1983 action, contending that Elliott required issue preclusion only for fact-finding, and the state agency’s determination of a legal question (that his due process rights had not been violated) was not entitled to be given preclusive effect under federal law. The court concluded that plaintiff had a full and fair opportunity to litigate his claims in the administrative process, and, therefore, state law on claim preclusion should be applied to the questions of law as well as the findings of fact. IV.D2. Issue Preclusion The Restatement (Second) of Judgments, Section 27, provides:
The Supreme Court has approved application of the federal common-law principle of issue preclusion to litigation of federal claims between parties as well as expansion to non-mutual defensive and offensive use of issue preclusion./275/ However, the Court has declined to employ issue preclusion when the party against whom it was asserted did not have a “full and fair opportunity to litigate the issue” in the earlier case./276/ Application of issue preclusion to federal litigation is probably most relevant to legal services practice when the fact finding of an administrative agency is proposed to be given preclusive effect in a subsequent Section 1983 action./277/ The Court in University of Tennessee v. Elliott held that sound policy considerations warranted the application of issue preclusion to the fact-finding of administrative bodies acting in a judicial capacity to the same extent as the findings would receive in state court./278/ As discussed above, Congress has the authority expressly or implicitly to limit the usual preclusive effect given to unreviewed agency decisions./279/ If Congress does not limit enforcement of preclusion, the federal court applies state law preclusion doctrine. Such applications of preclusion are highly fact-dependent and not susceptible to generalization. Typically litigated questions are whether the issues decided administratively are the same as those at stake in the subsequent federal case, whether the applicable administrative process afforded the party potentially subject to preclusion a full and fair opportunity to litigate,/280/ and whether the burden of proof in the administrative hearing is the same as that applied in a subsequent Section 1983 case./281/ 222. For further discussion of exhaustion in the § 1983 context, see Chapter 5, I.A.5. 223. Patsy v. Bd. of Regents, 457 U.S. 496, 501 (1982). 224. McCarthy v. Madigan, 503 U.S. 140, 144 (1991). 226. See Jones v. Bock, 127 S. Ct. 910, 919-20 (2007) (failure to exhaust is an affirmative defense; inmates need not plead exhaustion in their complaints); Porter v. Nussle, 534 U.S. 516 (2002); Booth v. Churner, 532 U.S. 731 (2001). See also Woodford v. Ngo, No. 05-416, 2006 U.S. LEXIS 4891 (U.S. Jun. 22, 2006) (Prison Litigation Reform Act’s exhaustion requirement is not satisfied by filing an untimely or procedurally defective administrative grievance or appeal). 227. In Equal Employment Opportunity Comm’n v. Lutheran Soc. Serv., 186 F.3d 959 (D.C. Cir. 1999), the D.C. Circuit wrestled with the question whether a Civil Rights Act provision providing that a recipient of a subpoena “may petition” the agency to revoke the subpoena required the recipient to so petition. In a 2-to-1 decision, the Court concluded that it did not. Id. at 965. 228. Individuals with Disabilities Education Act , 20 U.S.C. §1415(1). 229. Handberry v. Thompson, 436 F.3d 52, 60 (2d Cir. 2006); Blanchard v. Morton Sch. Dist., 420 F.3d 918, 920-22 (9th Cir. 2005); Covington v. Knox County Sch. Sys., 205 F.3d 912 (6th Cir. 2000); Witte v. Clark County Sch. Dist., 197 F.3d 1271 (9th Cir. 1999); W.B. v Matula, 67 F.3d 484 (3d Cir. 1996) (no exhaustion); Frazier v Fairhaven Sch. Comm., 276 F.3d 52 (1st Cir. 2002); Charlie F. v. Bd. of Educ., 98 F.3d 989 (7th Cir. 1996); N.B. v. Alachua County Sch. Bd., 84 F.3d 1376 (11th Cir. 1996) (requiring exhaustion). 230. Hoeft v. Tucson Unified Sch. Dist., 967 F.2d 1298, 1305 (9th Cir. 1992). 231. Patsy, 457 U.S. at 502, n.4. 232. Alacare Inc. v. Baggiano, 785 F.2d 963, 966 (11th Cir. 1986) (quoting Patsy, 457 U.S. at 501). 234. Moyer v. Showboat Casino Hotel, 56 F. Supp. 2d 498 (D. N.J. 1999). 235. See Hope v. Cortines, 872 F. Supp. 14 (E.D.N.Y 1995) (combining an Americans with Disabilities Act Title II claim with an Individuals with Disabilities Education Act claim required exhaustion). 236. McCarthy, 503 U.S. at 144. Such is the case in which there is only a regulatory exhaustion requirement. See also Cossio v. Hawk, Civ. No. 97-445, 1998 U.S. Dist. LEXIS 2433 (D.C. Cir. Feb. 25, 1998). 237. Those interests were summarized in Weinberger v. Salfi, 422 U.S. 749, 765 (1975): “Exhaustion is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for review.” 238. McCarthy, 503 U.S. at 146-47; Coit Independence Joint Venture v. Fed. Sav. & Loan Ins. Corp., 489 U.S. 561 (1989). 239. Bowen v. City of N.Y., 476 U.S. 467 (1986). The court noted that a “severe medical setback” might result from the “trauma of having disability benefits cut off” and “the ordeal of having to go through the administrative appeal process:” Id. at 483. 240. McCarthy, 503 U.S. at 147-48. 241. Gibson v. Berryhill, 411 U.S. 564, 575 (1973). 242. McCarthy, 503 U.S. at 148-149. 243. A common fourth exception is where the litigant raises a colorable constitutional claim that is collateral to her substantive claim of entitlement. See Clarinda Home Health v Shalala, 100 F.3d 526 (8th Cir. 1996); see also Mathews v. Eldridge, 424 U.S. 319 (1976). 244. Allen v. McCurry, 449 U.S. 90, 96 (1980). 245. Marrese v. American Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985). 246. Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466 (1982). 247. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75 (1984). In Migra, the Supreme Court discussed the difference between two distinct branches of the res judicata doctrine, “Issue preclusion refers to the effect of a judgment in foreclosing relitigation of a matter that has been litigated and decided. This effect is referred to as direct or collateral estoppel. . . . Claim preclusion refers to the effect of a judgment in foreclosing litigation of a matter that never has been litigated, because of a determination that it should have been advanced in an earlier suit. Claim preclusion therefore encompasses the law of merger and bar.” Id. at 77. 249. Univ. of Tenn. v. Elliott, 478 U.S. 788, 794(1986). 250. The general rule of res judicata is found in Section 24 of the Restatement (Second) of Judgments (1982). Generally, a final judgment on the merits precludes the same parties or parties in privity with them from litigating the same claim in a subsequent lawsuit. Claim preclusion bars the re-litigation in federal court of both claims subject to a final state court judgment and of claims which were not raised in state court. 251. See United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966) (putting the question “whether the parties had an adequate opportunity to litigate”). In Haring v. Prosise, 462 U.S. 306, 317-18 (1983), the Supreme Court further held that, “as a general matter, even when issues have been raised, argued, and decided in a prior proceeding, and therefore are preclusive under state law, re-determination of [the] issues [may nevertheless be] warranted if there is reason to doubt the quality, extensiveness, or fairness of procedures followed in prior litigation.” 252. Sokoya v. 4343 Clarendon Condo. Ass’n, No. 96 C 5278, 1996 U.S. Dist. LEXIS 17879, 1996 WL 699634 (N.D. Ill. 1996), citing Reed v. Amax Coal Co., 971 F.2d. 1295, 1300 (7th Cir. 1992). See also Kleenwell Biohazard Waste v. Nelson, 48 F.3d 391, 393 (9th Cir. 1995); Hall v. Marion Sch. Dist., 31 F.3d 183 (4th Cir. 1994). 253. Goldberg v. Kelly, 397 U.S. 254 (1970). 254. Johnson v. County of Nassau, 411 F. Supp. 171 (E.D.N.Y. 2006) is a recent example of a court struggling with this question in the context of the preclusive effect of a no discrimination finding by the New York State Division of Human Rights on subsequent § 1981 and 1983 claims. See also Clark v. Alexander, 85 F.3d 146 (4th Cir. 1996), holding that implementation of the Goldberg due process requirements ensured an adequate Section 8 certificate termination hearing. However, rather than give the hearing fact-finding issue preclusive effect in a later appeal to federal court, the court of appeals held that deference should be given to the findings: the fact-finding should be reviewed under a substantial-evidence standard and not be given preclusive effect. 255. See Drummond v. Comm’r, 126 F.3d 837 (6th Cir. 1997); Purter v. Heckler, 771 F.2d 682 (3d Cir. 1985); McGowen v. Harris, 666 F.2d 60 (4th Cir. 1981). 256. Restatement (Second) of Judgments § 24 (1982). 257. Churchill v. Star Enters., 183 F.3d 184, 194 (3d Cir. 1999). 258. Lubrizol v. Exxon Corp., 929 F.2d 960, 963 (3d Cir. 1991). 259. The Supreme Court directed the lower courts to assume that Congress intended the presumption of preclusive effect of administrative findings to apply unless Congress indicated otherwise. Astoria Fed. Sav. v. Solimino, 501 U.S. 104, 108 (1991). That indication, however, need not be clear and precise. Id. (language of Age Discrimination in Employment Act implies that Congress intended administrative findings not to have preclusive effect). 260. Univ. of Tenn. v. Elliott, 478 U.S. 788 (1986). 261. Id. at 795-96; see also Caver v. City of Trenton, 420 F.3d 243, 259 (3d Cir. 2005). 263. Gjellum v. City of Birmingham, 829 F.2d 1056 (11th Cir. 1987). 265. Dionne v. Mayor & City Council of Baltimore, 40 F.3d 677, 682 (4th Cir. 1994). 268. Dionne, 40 F.3d at 684. Edmundson v. Borough of Kennett Square, 4 F.3d 186, 192-93 (3d Cir. 1993) (constitutional determinations by administrative agency have no preclusive effect). 269. Waid v. Merrill Area Pub. Sch., 91 F.3d 857 (7th Cir. 1996). 272. Miller v. County of Santa Cruz, 39 F.3d 1030 (9th Cir. 1994). 274. Plough v. W. Des Moines Cmty. Sch. Dist., 70 F.3d 512 (8th Cir. 1995). 275. See Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) (offensive); Blonder-Tongue Labs. Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971) (defensive). 276. See Allen, 449 U.S. at 94-95. 277. See Univ. of Tenn. v. Elliott, 478 U.S. 788 (1986). 278. Id. at 798-99. Federal courts give the same preclusive effect to the decisions of state administrative agencies as the state itself would, subject to the procedural requirements of the Due Process Clause. Kremer v. Chem. Constr. Corp., 456 U.S. 461, 481-82 (1982). 279. See, e.g., Kosakow v. New Rochelle Radiology Ass’n, 274 F.3d 706, 728-29 (2d Cir. 2001) (no evidence that Congress intended to limit preclusion under the Family and Medical Leave Act). 280. See Burkybile v. Bd. of Educ., 411 F.3d 308, 312 (2d Cir. 2005) (since plaintiff had fair opportunity to litigate in administrative proceeding, findings of fact are given preclusive effect in subsequent § 1983 claim). Kosakow offers a particularly careful and thoughtful examination of these issues with respect to the Family Medical Leave Act and New York preclusion law. Kosakow concluded that the federal plaintiff did not have an adequate opportunity in the administrative hearing to litigate whether the decision to terminate her employment was made for legitimate business reasons. See also Swineford v. Snyder County, 15 F.3d 1258 (3d Cir. 1994) (unemployment compensation hearing). Unreviewed unemployment compensation hearing decisions are ordinarily not given preclusive effect because of the limited legal issues addressed and the particular nature of the forum. 281. See, e.g., Dias v. Elique, 436 F.3d 1125, 1129-31 (9th Cir. 2006). Chapter 4: Drafting and Filing the Complaint> |