Acura of Bellevue v. Reich, No. 95-35509 (9th Cir. 1996)
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACURA OF BELLEVUE; ALDERWOOD
MOTORS INC.; ALLEY CHEVROLET;
ART GAMBLIN MOTORS; AURORA
TOYOTA; BELLEVUE LINCOLN
MERCURY; BELLINGHAM CHRYSLER
CENTER; BMW/SUBARU OF
BELLEVUE; BOWEN SCARFF FORD/
VOLVO; BREWER CHRYSLER
PLYMOUTH; BRIEN MOTORS INC.;
BROOKS BIDDLE CHEVROLET; BURIEN
NISSAN; BURIEN TOYOTA INC.;
CAPITOL COACHMAN; CORNFORTH--
CAMPBELL MOTORS; DWAYNE
LANE'S CHRYSLER PLYMOUTH;
EVERGREEN SPORTSCARS INC. dba
Everett Mazda; EVERGREEN FORD;
FUGATE FORD MERCURY; GLEN
GRANT CHEVROLET GEO MAZDA
INC.; GOOD CHEVROLET; GUBRUD
MOTOR CO. dba Gordon Nissan;
HARRINGTON CHEVROLET GEO;
HINTON CHEVROLET OLDS PONTIAC
NISSAN dba Hintons; HONDA OF
KIRKLAND; HONDA AUTO
CENTER OF BELLEVUE; HULING
BROS.; LEE JOHNSON CHEVROLET;
LEXUS OF SEATTLE; LYNNWOOD
DODGE; MOCERI'S PUYALLUP
CHRYSLER PLYMOUTH INC.;
NORTH SEATTLE CHRYSLER;
PERFORMANCE JEEP EAGLE; PONTIAC
GMC TRUCK OF LYNNWOOD;
PRESTIGE FORD; RODLAND TOYOTA;
SATURN OF BELLEVUE; SATURN OF
LYNNWOOD; SOUND FORD INC.;
S&K MOTORS INC. dba Sound
Mazda, Sound Hyundai, Sound
Suzuki and Buy Here Pay Here;
SEVEN MOTOR CORP. dba Sound
Subaru Peugeot & Mitsubishi;
SOUTHGATE FORD; TACOMA DODGE
INC.; THOMASON FORD TOYOTA;
WEST HILLS HONDA; WINNER
LINCOLN MERCURY; TOTEM HILL
PONTIAC GMC; KLEIN HONDA;
GREY CHEVROLET INC.; PIONEER
FORD INC.,
Plaintiffs-Appellants,
v.
ROBERT B. REICH, Secretary of the
Dep't of Labor; DEPARTMENT OF
LABOR, WAGE AND HOUR DIVISION;
WILLIAM BUHL, Administrator of
the Dep't of Labor, Wage & Hour
Division, Regions 9 & 10;
GORDON L. WILSON, District
Director of the Dep't of Labor;
UNITED STATES OF AMERICA,
Defendants-Appellees.
No. 95-35509
D.C. No.
CV-94-1078-TSZ
Appeal from the United States District Court
for the Western District of Washington
Thomas S. Zilly, District Judge, Presiding
Argued and Submitted
June 6, 1996--Seattle, Washington
Filed July 17, 1996
Before: James R. Browning and Thomas G. Nelson,
Circuit Judges, and Fern M. Smith, District Judge.*
Opinion by Judge Smith
COUNSEL
Richard P. Lentini, Ryan, Swanson & Cleveland, Seattle,
Washington, for the plaintiffs-appellants.
Jeffery Clair, United States Department of Justice, Washington, D.C., for the
defendants-appellees.
OPINION
SMITH, Judge:
Plaintiffs/appellants appeal the district court's dismissal of their action for
lack of subject matter jurisdiction. Appellants brought this action under the Administrative
Procedure Act ("APA"), 5 U.S.C. §§ 701-705, against the Secretary and
other personnel of the Department of Labor (collectively, "Department") challenging
both a Department Administrator's finding that appellants violated child labor laws and the
consequential assessment of monetary penalties. We affirm.
FACTS
Plaintiffs/appellants are forty-nine car dealers in western Washington state
("dealers"). Each dealer employed sixteen and seventeen year old minors as lot
attendants. According to the dealers, the lot attendants' primary duties were to clean cars and the
dealership premises. Other duties, however, included moving cars on the dealers' premises,
moving cars to different lots, driving to get gas, and transporting customers.
On March 18, 1994, after an investigation by the Wage and Hour Division
of the Department of Labor, a Department Administrator issued a Notice of Assessments and
Civil Money Penalty to each of the dealers ("the Administrator's decision"). The
notices stated that the dealers had employed minors in a manner contrary to the child labor
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201-219
("FLSA"). The dealers were found to have violated Hazardous Occupation Order No.
2, which prohibits minor employees from operating motor vehicles on public roads except when
"such operation is only occasional and incidental to the minor's employment." 29
C.F.R. § 570.52. The notices identified the names of minors employed in violation of
FLSA and assessed a civil monetary penalty of one thousand dollars for each seventeen year old
and twelve hundred dollars for each sixteen year old employed in violation.
The notices also advised each dealer of its option to file an
"exception" to the Administrator's decision, which would initiate a referral to an
Administrative Law Judge ("ALJ") for hearing. The dealers timely filed exceptions
on April 1, 1994. On April 7, 1994, the Department notified the dealers that their exceptions had
been received and that they would be notified of a hearing date.
On July 20, 1994, before the Department had assigned the cases to an ALJ,
the dealers filed the action below in federal district court against the Secretary of the Department
of Labor and other agency personnel. The complaint sought judicial review under the APA and
requested declaratory and injunctive relief from the Administrator's decision and the assessment
of civil penalties. The complaint alleged that the decision was based on an arbitrary and
capricious interpretation of the "occasional and incidental" language of Hazardous
Occupation Order No. 2.
In September 1994, the Department referred the dealers' exceptions to an
ALJ for administrative hearings. On September 20, 1994, the Department moved to dismiss the
district court action for failure to exhaust administrative remedies, lack of finality in agency
action, and lack of ripeness. Although initially ruling in favor of the dealers, the district court
granted the Department's motion upon reconsideration. The district court rejected the
Department's argument that the resolution of administrative appeals was a prerequisite to judicial
review, but found, nonetheless, that the dealers' claims were not properly before it:
"[P]laintiffs' filing of exceptions of the Administrator's decision rendered that decision
nonfinal for purposes of judicial review, and thus the Court lacks jurisdiction over plaintiffs'
claims." The dealers filed a Notice of Appeal on May 18, 1995, seeking review of the
district court's dismissal.
LEGAL STANDARDS
I. Standard of Review
A district court's dismissal for lack of subject matter jurisdiction is
reviewed de novo. Dietary Supplemental Coalition, Inc. v. Sullivan, 978 F.2d 560, 562 (9th Cir.
1992), cert. denied, 508 U.S. 906 (1993).
II. Statutory and Regulatory Framework: Oppressive Child Labor
A. Fair Labor Standards Act
The Fair Labor Standards Act prohibits commerce involving oppressive
child labor. 29 U.S.C. § 212. The FLSA defines "oppressive child labor" as
hiring employees between the ages of sixteen and eighteen in any occupation that the Department
of Labor "shall find and by order declare to be particularly hazardous." 29 U.S.C.
§ 203(l)(2). In Hazardous Occupation Order No. 2, the Secretary found and declared that
"the occupation[ ] of motor-vehicle driver . . . on any public road [or] highway . . . [is]
particularly hazardous for the employment of minors between 16 and 18 years of age." 29
C. F. R. § 570.52(a). The regulation provides an exemption if the driving is restricted to
daylight hours and is only "occasional and incidental to the minor's employment." 29
C.F.R. § 570.52(b)(1). Civil monetary penalties for violations of child labor laws or
regulations may be imposed, not to exceed $10,000 per employee in violation. 29 U.S.C. §
216(e).
Title 29 U.S.C. § 216(e) also addresses the finality of a monetary
penalty imposed at the initial administrative level:
Any administrative determination by the Secretary
of the amount of any penalty under this subsection shall be final, unless within fifteen
days after receipt of notice thereof by certified mail the person charged with the violation
takes exception to the determination that the violation for which the penalty is imposed
occurred, in which event final determination of the penalty shall be made in an
administrative proceeding after opportunity for hearing in accordance with [5 U.S.C.
§ 554], and regulations to be promulgated by the Secretary.
B. Administrative Procedures
Once an Administrator determines that there has been a violation of the
child labor laws or of the regulations promulgated thereunder, he or she is required to issue a
notice to the employer setting forth, inter alia, the amount of the penalty, the reasons for the
penalty, and the aggrieved party's right to take exceptions to the penalties and request a hearing.
29 C.F.R. § 580.4.
The regulation defining "Finality of Notice" is contained in 9
C.F.R. § 580.5, which provides:
If the person charged with violation does not, within
15 days after receipt of the notice, take exception to the determination that the violation
or violations for which the penalty is imposed occurred, the administrative determination
by the Administrator of the amount of such penalty shall be deemed final, and collection
and recovery of the penalty shall be instituted . . . .
If exceptions are timely filed, the case is referred to the Chief
Administrative Law Judge for assignment to an ALJ for hearing. At the hearing, the aggrieved
party and the Department have the opportunity to present documentary and live evidence.
See 29 C.F.R. § 580.7. The Department has the burden of establishing that its
interpretation of the law is correct. See Marshall v. Jerrico, Inc., 446 U.S. 238, 247-48
(1980). The ALJ's decision may "affirm, deny, reverse, or modify, in whole or in part, the
determination of the Administrator." 29 C.F.R. § 580.12(c).
The regulations provide that the ALJ's decision constitutes the final
decision of the Department unless there is a timely appeal to the Secretary, in which case the
Secretary's decision is the final decision of the Department. 29 C.F.R. §§ 580.12(e),
580.16. The collection of monetary penalties is not commenced until there is a final decision by
the Department:
When the determination of the amount of any civil money penalty
provided for in this part becomes final under § 580.5 in accordance with the
administrative assessment thereof, or pursuant to the decision and order of an [ALJ] in an
administrative proceeding as provided in § 580.12, or the decision of the Secretary
pursuant to § 580.16, the amount of the penalty as thus determined is immediately
due and payable to the U.S. Department of Labor.
29 C.F.R. § 580.18(a).
III. Judicial Review of Agency Decisions
The FLSA does not authorize or preclude judicial review of final agency
decisions. The final decisions of the Department are therefore reviewable pursuant to Section
10(c) of the APA, which provides:
Agency action made reviewable by statute and final
agency action for which there is no other adequate remedy in a court are subject to
judicial review. A preliminary, procedural, or intermediate agency action or ruling not
directly reviewable is subject to review on the review of the final agency action. Except
as otherwise expressly required by statute, agency action otherwise final is final for the
purposes of this section whether or not there has been presented or determined an
application for a declaratory order, for any form of reconsideration, or, unless the agency
otherwise requires by rule and provides that the action meanwhile is inoperative, for an
appeal to superior agency authority.
5 U.S.C. § 704.
DISCUSSION
I.
We hold that exercise of an optional appeal to a Department ALJ renders
the initial Administrator's decision nonfinal for purposes of judicial review under the APA.
The dealers argue that filing optional exceptions and a request for an ALJ
hearing does not eviscerate or delay their right to judicial review of the Administrator's decision,
relying primarily on the language of Section 10(c) of the APA and on Darby v. Cisneros,
509 U.S. 137 (1993). Their argument fails as a matter of law.
The language of Section 10(c) of the APA states: "[A]gency action
otherwise final is final for the purposes of this section whether or not there has been presented or
determined an application for . . . any form of reconsideration . . . ." Although this
language might appear to support the dealers' position, the Supreme Court has found otherwise.
Addressing precisely this language, the Court stated:
Th[is] language has long been construed by this and
other courts merely to relieve parties from the requirement of petitioning for rehearing
before seeking judicial review (unless, of course, specifically required to do so by statute
. . .), but not to prevent petitions for reconsideration that are actually filed from rendering
the orders under reconsideration non-final.
Interstate Commerce Comm'n v. Brotherhood of Locomotive Engineers , 482 U.S. 270,
284-85 (1987). In Stone v. Immigration and Naturalization Service , 115 S. Ct. 1537
(1995), the Court cited the statutory interpretation as stated in Locomotive Engineers as
the "longstanding construction of the APA language." Stone , 115 S. Ct. at
1542.1
1In Stone , the Court held
that under the Immigration and Nationality Act ("INA"), a timely motion for
reconsideration of a Board of Immigration Appeals decision does not toll the running of the
statute of limitations for filing an appeal to federal court. The Court clarified that its ruling
"depart[ed] from the ordinary judicial treatment of agency orders under
reconsideration," because Congress intended the INA to be different from
other judicial review statutes. 115 S. Ct. at 1543. The Court confirmed that
a motion for reconsideration of an agency action under an ordinary judicial review statute, such
as the APA, would render the action nonfinal and would toll the statute of limitations. Id.
at 1542-43.
2Because the dealers did file an
administrative appeal, the court is not required to decide whether filing an administrative appeal
was required under the FLSA or under the Department's regulations promulgated thereunder.