No. 96-2041 IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1996 DOROTHY BOYD, ET AL., PETITIONERS v. CAROL M. BROWNER, ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY, ET AL., ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT BRIEF FOR THE RESPONDENTS IN OPPOSITION SETH P. WAXMAN Acting Solicitor General FRANK W. HUNGER Acting Assistant Attorney General BARBARA BIDDLE JEFFREY CLAIR Attorneys Department of Justice Washington, D.C. 20530-0001 (202)514-2217 ---------------------------------------- Page Break ---------------------------------------- QUESTION PRESENTED Whether the court of appeals erred in rejecting petitioners' claim for rescission of their contracts for sale of real property to the government because of petitioners' unwillingness to tender back the pay- merits they received under the contract. (I) ---------------------------------------- Page Break ---------------------------------------- TABLE OF CONTENTS Opinions below . . . . 1 Jurisdiction . . . . 1 Statement . . . . 2 Argument . . . . 6 Conclusion . . . . 10 TABLE OF AUTHORITIES Cases: Erie Telecommunications, Inc. v. City of Erie, 853 F.2d 1084(3d Cir. 1988) . . . . 9 Financial Timing Publications, Inc. v. Compu- graphic Corp., 893 F.2d 936 (8th Cir. 1990) . . . . 10 Hibiscus Associates, Ltd. v. Board of Trustees of the Policemen & Firemen Retirement System, 50F.3d 908 (11th Cir. 1995) . . . . 9 Hogue v. Southern Ry., 390 U.S .516 (1968) . . . . 7, 8 Lummus Co. v. Commonwealth Oil Refining Co., 280 F.2d 915 (lst Cir.), cert. denied, 364 U.S. 911 (1960) . . . . 9 Oberg v. Allied Van Lines, Inc., ll F.3d 679 (7th Cir. 1993), cert. denied, 511 U.S. 1108 (1994) . . . . 7 United States v. Texarkana Trawlers, 846 F.2d 297 (5th Cir.), cert. denied, 488 U.S. 943 (1988) . . . . 8, 9 Constitution and statutes: U. S. Const. Amend. V . . . . 3, 5 Administrative Procedure Act, 5 U.S.C. 701 et seq . . . . 3 Age Discrimination in Employment Act of 1967, 29 U. S. C.621et seq. . . . 7 29 U. S. C. 626(f) . . . . 7 Comprehensive Environmental Response, Compen- sation, and Liability Act of 1980, 42 U.S.C. 9601 et seq. . . . 2 Fair Housing Act, 3 804(a), 42 U.S.C. 3604(a) . . . . 3, 5 ---------------------------------------- Page Break ---------------------------------------- IV Statutes-Continued: Page Federal Employers' Liability Act, 45 U.S.C. 51 et seq . . . . 7 Little Tucker Act. 28 U. S. C .1346 . . . . 5 Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. 4601 et seq . . . . 2, 3, 4, 28 U. S. C. 1295(a)(2) . . . . 5 ---------------------------------------- Page Break ---------------------------------------- In the Supreme Court of the United States OCTOBER TERM, 1996 No. 96-2041 DOROTHY BOYD, ET AL., PETITIONERS v. CAROL M. BROWNER, ADMINISTRATOR; ENVIRONMENTAL PROTECTION AGENCY, ET AL. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT BRIEF FOR THE RESPONDENTS IN OPPOSITION OPINIONS BELOW The opinion of the court of appeals (Pet. App. 10a- 19a) is not published, but the judgment is noted at 107 F.3d 922 (Table). The opinion of the district court (Pet. App. la-9a) is reported at 897 F. Supp. 590. JURISDICTION The judgment of the court of appeals was entered on October 29, 1996. A petition for rehearing was denied on March 28, 1997. Pet. App. 20a-21a. The petition for a writ of certiorari was filed on June 25, 1997. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). (1) ---------------------------------------- Page Break ---------------------------------------- 2 STATEMENT 1. a. Petitioners are African-Americans who owned single-family houses located on a tract of chemically contaminated land in Texarkana, Texas. Pet. App. 1a, 12a. In 1991, Congress, pursuant to its authority under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. 9601 et seq., appropriated $5 million to the Environ- mental Protection Agency (EPA) for acquisition of the contaminated property and permanent relocation of the site's residents. Pet. App. 2a, 12a; Pet. 2-3. In 1992, Congress appropriated an additional $612,000 for that purpose. Pet. App. 2a. The EPA, through its agent, the U.S. Army Corps of Engineers (Corps), negotiated the purchase of peti- tioners' property based upon appraisals at its pre- contamination value, i.e. the value of the property as if it were not contaminatecl. Pet. App. 2a-3a, 12a-13a. When making purchase offers, the Corps sent individ- ual letters to the petitioners stating that, if negotia- tions of a direct purchase failed, the property would have to be acquired through condemnation proceed- ings after a reappraisal based on the actual value which would likely be lower then the appraised value. Id. at 12a-13a. The letter specified that that informa- tion should not be considered a threat because it was necessary so that petitioners would be fully informed of the relevant law and procedures, and because the Corps would make every effort to negotiate a fair settlement with them. Ibid. By the end of 1992, peti- tioners all executed contracts selling their property to the Corps. Many of them also received relocation benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 ---------------------------------------- Page Break ---------------------------------------- 3 (Relocation Act), 42 U.S.C. 4601 et seq., to assist with moving expenses and the cost of replacement housing. Pet. App. 13a. All but $207,059 of the appropriated funds have been spent. Id. at 2a n.1. b. After accepting the government's purchase pay- ments and relocation benefits, petitioners filed suit, in the United States District Court for the District of Columbia, against respondents, the administrator of the EPA and an Army Corps of Engineers official, challenging the validity of the contracts conveying their property to the Corps. Petitioners alleged, inter alia, that the contracts violated the Adminis- trative Procedure Act (APA), 5 U.S.C. 701 et seq., because respondents acted arbitrarily and capri- ciously and abused their discretion by threatening to condemn their properties at post-contamination val- ues, contrary to congressional intent. Pet. App. 13a- 14a. Petitioners also claimed that they were entitled to higher payments for replacement housing under the Relocation Act. Ibid. They also alleged that the contracts violated the Fifth Amendment's guarantee of due process and equal protection, as well as Section 804(a) of the Fair Housing Act, 42 U.S.C. 3604(a), because the threatened post-contamination value con- demnation was racially discriminatory in that resi- dents of seven white communities, whose contami- nated properties had been acquired by the EPA, were treated differently. Pet. App. la, 14a. Petitioners sought rescission of the sales contracts and addi- tional compensation. Id. at 2a. 2. The district court granted respondents' motion for summary judgment. Pet. App. la-9a. For pur- poses of the summary judgment motion, the court accepted as true petitioners' factual allegations, including their contention that they understood the ---------------------------------------- Page Break ---------------------------------------- 4 language in- the Corps' letter to be threatening anti their assertion that, from 1978 to 1994, "the EPA re- located at least seven non-minority communities exposed to hazardous chemicals and that offer letters sent to residents of those communities were substan- tially similar" to those sent petitioners, "except that they did not advise homeowners that the properties would have to be condemned based on their contami- nated value if negotiations failed." Id. at 3a-4a. The court held that petitioners' challenges to the contracts under the APA were not subject to judicial review because the government letters containing the alleged threats did not amount to final agency action. Pet. App, 4a-5a. It further ruled that, even if the let- ters constituted final agency action, petitioners had not shown that such a ruling would have been unlaw- ful because "[t]he condemnation process does meas- ure just compensation' by fair market value." Id. at 5a (citations omitted). And, petitioners conceded that the statutory provision directing the EPA's acquisi- tion of the land did not specify whether the purchase should be at pre- or post-contamination value. Ibid. The court ruled that petitioners' claim under the Relocation Act must fail because they had not ex- hausted administrative remedies. Id. at 6a. The district court also held that petitioners could not establish a valid claim of racial discrimination because they had not shown that they were similarly situated to the residents in the non-minority commu- nities involved with federal acquisition of properties over hazardous waste sites, who allegedly had been treated differently. Pet. App. 6a. Petitioners had con- ceded that there were "differences in offers, acquisi- tion practices or other dissimilarities that might well exist based on a variety of factors at different sites. " ---------------------------------------- Page Break ---------------------------------------- 5 Id. at 7a. The court further ruled that, even if the residents of the non-minority communities were found to be "similarly situated," petitioners could not prevail absent a showing of a discriminatory purpose or intent, and petitioners had not offered or identified evidence of any such purpose or intent. The only evidence proffered was the Corps' letter which, in the court's view, was "appropriate and nonthreatening." The court noted that, in fact, the Corps "may have been on shaky ground had they failed to accompany their offers with the information that sellers could expect only fair market value in the event of con- demnation." Id. at 7a-8a n.4. Finally, the court ruled that petitioners' Fair Housing Act claim was barred because the federal government had not waived its sovereign immunity against monetary relief under that Act. Pet. App. 8a- 9a. The court rejected petitioners' attempt to charac- terize the relief sought as "remediation" or "rescis- sion," because petitioners had made it clear that they were "not prepared to tender back the money they received when they sold their * * * properties with- out assurance that they would receive greater sums of money immediately." Ibid. 3. The court of appeals affirmed. Pet. App. 10a- 19a.1 The court ruled that, even if petitioners are ___________________(footnotes) 1 As a threshold matter, the court of appeals determined that it had jurisdiction over the appeal, notwithstanding 28 U.S.C. 1295(a)(2), which generally vests the Federal Circuit with jurisdiction over appeals from district courts w-here the jurisdiction of the district court was based in part on the Little Tucker Act, 28 U.S.C. 1346. Pet. App. 14a-16a. The court acknowledged that a claim for monetary relief because the Corps violated the APA, the Fair Housing Act, or the Fifth Amendment, would likely be based in part on the Little Tucker ---------------------------------------- Page Break ---------------------------------------- 6 correct in claiming that the Corps' acts rendered the sales contracts unlawful, the rescission sought by petitioners was not available to them. The court rea- soned that, because "rescission cannot be awarded where the plaintiff neither tenders what he received nor seeks the return of what he delivered," rescission was not available to petitioners who were not willing to tender back the money they had received from the government "without an assurance that they [would] receive greater compensation immediately," and who could not seek the return of their houses which had been demolished, Pet. App. 18a-19a. In light of its conclusion that the remedies sought by petitioners' lawsuit were unavailable, the court of appeals (lid not reach the merits of petitioners' claims. ARGUMENT 1. a. Petitioners contend (Pet. 10-12) that the in- stant case is closely analogous to the issue before the Court in (Oubre v. Entergy Operations, Inc., No. 96- 1291 (to be argued November 12, 1997), and that the Court, therefore, should either grant review now or delay ruling on the petition so that review can be ___________________(footnotes) Act (or the Tucker Act for amounts of $10,000 or more), but concluded that petitioners had abandoned any claim for damages under the contracts and had limited themselves to a request for rescission. Id. at 15a (citing district court argu- ment and petitioners' court of appeals brief). The court found that the Relocation Act claim did not alter the jurisdictional ruling because that claim was frivolous, in light of petitioners' failure to comply with the regulatory requirement of an administrative appeal. Id. at 15a-18a. The court also found that petitioners appeared to jettison their claim for declaratory relief-relief that would not be available, in any event, because it would only serve as a predicate to success in a later suit for damages. Id. at 19a. ---------------------------------------- Page Break ---------------------------------------- 7 granted and the case remanded following issuance of the Court's decision in Oubre The" question before the Court' in Oubre involves the validity of an employee's waiver of rights under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. 621 et seq., and whether retention of severance payments ratified the waiver, where the waiver did not satisfy specifically enumerated statu- tory prerequisites to a knowing and voluntary waiver of ADEA rights. The ADEA contains detailed pro- visions governing the validity of any purported waiver of the right to bring suit under that statute. 29 U.S.C. 626(f). The Oubre case turns on matters of statutory construction related to those provisions, as well as the objectives underlying congressional enactment of the ADEA, including deterrence of employers from engaging in unlawful practices. No analogous statutory text or congressional purpose is at issue here. The steps necessary to avoid or rescind the sales contracts in the instant case are governed by principles of equity and common law, not the statutory requirements and remedial purposes of the ADEA. Cf. Oberg v. Allied Van Lines, Inc., 11 F.3d 679,683 n.5 (7th Cir. 1993), cert. denied, 511 U.S. 1108 (1994). For similar reasons, the Court's decision in Hogue v. Southern Ry., 390 U.S. 516 (1968), see Pet. 11, does not support petitioners' argument for review. The Hogue case involved the validity of a waiver of claims under the Federal Employers' Liability Act (FELA), 45 U.S.C. 51 et seq. The Court's ruling that the em- ployee could proceed with his suit under the FELA, without tendering back the consideration he had received from his employer, was based on the Court's conclusion that requiring tender back would be ---------------------------------------- Page Break ---------------------------------------- 8 "wholly incongruous with the general policy of the Act" to provide injured employees a right to recover for injuries negligently inflicted by their employer 390 U.S. at 518. In contrast to the situations in Hogue and Oubre, conditioning rescission of petition- ers' contracts on restoration of the benefits they have received would not arguably run afoul of a remedial statutory scheme. Rather, it would accord with the equitable principle that a party cannot seek to unmake a contract while simultaneously retaining the contract's benefits. Therefore, the Court's decision in Oubre is un- likely to have any bearing on the issues presented here, and there is thus no reason to defer considerat- ion of the petition or to grant the petition pending the outcome of that case. b. The decision below is consistent with the deci- sions of other courts of appeals holding that the eq- uitable remedy of rescission cannot be afforded to parties who are unable or unwilling to surrender the benefits of the challenged contract and restore the status quo ante. In United States v. Texarkana Trawlers, 846 F.2d 297, cert. denied, 488 U.S. 943 (1988), the Fifth Circuit explained why these princi- ples preclude a party seeking rescission from retain- ing money received under the challenged contract: Rescission, unlike termination, requires the par- ties to "unmake" the contract. Rescission * * * attempts to restore the parties to the rescinded contract to the status quo that existed before the contract was formed. The parties can restore each other to the status quo ante only if they can restore to each other what each took under the rescinded contract. If it is impossible to insure ---------------------------------------- Page Break ---------------------------------------- 9 that all property exchanged is returned, then the contract cannot be rescinded. Even the party seeking rescission must return whatever prop- erty it has received under the rescinded contract. Id. at 304 (citations omitted). Other courts of appeals have similarly held that rescission requires a return to the pre-contract status quo, and that rescission cannot be effected if return to the status quo is not feasible. See, e.g., Hibiscus Associates, Ltd. v. Board of Trustees of the Policemen and Firemen Retirement System, 50 F.3d 908, 917 (llth Cir. 1995); Erie Telecommunications, Inc. v. City of Erie, 853 F.2d 1084, 1092 (3d Cir. 1988); Lummus Co. v. Commonwealth Oil Refining Co., 280 F.2d 915, 928 (lst Cir.), cert. denied, 364 U.S. 911 (1960). 2. Petitioners assert (Pet. 12-13) that review also may be warranted because, in determining that re- scission is unavailable, the court of appeals relied in part on the fact that petitioners could not seek return of their houses because they had already been de- stroyed by respondents. Petitioners contend that re- spondents' actions should have no effect on petition- ers' legal rights to rescission. As petitioners appear to acknowledge (Pet. 12), the inability of petitioners to recover their homes does not appear to have been an independent ground for the court of appeals' ruling. Regardless of whether the government was willing or able to return petitioners' property, petitioners' refusal to tender back the pay- ments they received under the contracts precludes rescission of the contracts. In any event, respondents destroyed petitioners' homes, not to frustrate sub- sequent claims of rescission, but because the govern- ---------------------------------------- Page Break ---------------------------------------- 10 ment had sought the property for that specific purpose, as part of its plan to remedy the environ mental hazards on petitioners' land. Because respon- dents did not engage in any wrongful conduct, but only carried out the actions contemplated by the sales contracts, their conduct cannot support an equitable exception that would permit rescission without return to the pre-contract. status quo. Cf. Financial Timing Publications, Inc. v. Compugraphic Corp., 893 F.2d 946-947 (8th Cir. 1990). CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. SETH P. WAXMAN Acting Solicitor General FRANK W. HUNGER Acting Assistant Attorney General BARBARA BIDDLE JEFFERSON CLAIR Attorneys SEPTEMBER 1997