UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 96-2225

VOLVO GM HEAVY TRUCK

CORPORATION,

Plaintiff- Appellant,

v.

UNITED STATES DEPARTMENT OF

LABOR; ROBERT B. REICH, SECRETARY

OF LABOR; SHIRLEY WILCHER, Deputy

Assistant Secretary for Federal

Contract Compliance Programs,

Defendants- Appellees.

Appeal from the United States District Court

for the Western District of Virginia, at Roanoke.

Jackson L. Kiser, Senior District Judge.

(CA- 96- 40001- R)

Argued: May 5, 1997

Decided: July 1, 1997

Before MURNAGHAN and HAMILTON, Circuit Judges, and

LEGG, United States District Judge for the

District of Maryland, sitting by designation.

_________________________________________________________________

Affirmed by published opinion. Judge Murnaghan wrote the opinion,

in which Judge Hamilton and Judge Legg joined.

_________________________________________________________________

COUNSEL

ARGUED: James Marion Powell, HAYNSWORTH, BALDWIN,

JOHNSON & GREAVES, P.A., Greensboro, North Carolina, for

Appellant. Samuel Robert Bagenstos, UNITED STATES DEPART-

MENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF:

Gregory P. McGuire, HAYNSWORTH, BALDWIN, JOHNSON &

GREAVES, P.A., Greensboro, North Carolina, for Appellant. Deval

L. Patrick, Assistant Attorney General, Dennis J. Dimsey, UNITED

STATES DEPARTMENT OF JUSTICE, Washington, D.C.; J. Davitt

McAteer, Acting Solicitor, James D. Henry, Associate Solicitor,

Debra A. Millenson, Senior Trial Attorney, Belinda Reed Shannon,

Trial Attorney, UNITED STATES DEPARTMENT OF LABOR,

Washington, D.C., for Appellees.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

On December 18, 1995, the Department of Labor's Office of Fed-

eral Contract Compliance Programs (OFCCP) filed an administrative

complaint under Executive Order 11246 alleging that in 1988 Volvo

GM Heavy Truck Corporation had discriminated against female

applicants for assembler positions in its Dublin, Virginia plant. In

response, Volvo GM filed a complaint in district court seeking a

declaratory judgment on the basis that OFCCP's seven- year delay in

bringing the enforcement action barred the action. The OFCCP filed

a motion to dismiss on ripeness and exhaustion grounds. On August

9, 1996, the district court granted OFCCP's motion on exhaustion

grounds. For the following reasons, we affirm.

I.

FACTS AND PROCEDURAL HISTORY

Appellant, Volvo GM Heavy Truck Corporation (Volvo GM), a

contractor with the federal government, operates a heavy duty truck

assembly plant in Dublin, Virginia. The plant employs approximately

1500 people. As a federal contractor, Volvo GM is subject to Execu-

tive Order 11246. Executive Order 11246 prohibits discrimination on

the basis of race, color, religion, sex, or national origin by federal

contractors. Exec. Order 11246 § 202, 3 C.F.R. 167, 168 (1965

2

Supp.), as amended, Exec. Order No. 11,375, 3 C.F.R. 320, 321 (1967

Comp.). Executive Order 11246 is administered by the Office of Fed-

eral Contract Compliance Programs (OFCCP) in the Department of

Labor. 41 C.F.R. 60- 1.2 (1996). As part of its administration of Exec-

utive Order 11246, the OFCCP periodically conducts compliance

checks to assess whether federal contractors are in compliance with

the Executive Order. 41 C.F.R. 60- 1.20 (1996). If a compliance

review discloses a violation and the parties are unable to reach a con-

ciliated position, the OFCCP may initiate administrative enforcement

proceedings. 41 C.F.R. 60- 1.26(a)(2) (1996).1

On December 23, 1988, the OFCCP informed Volvo GM that its

Dublin plant had been selected for a compliance review. The OFCCP

conducted the review in early 1989. In a letter sent August 7, 1989,

the OFCCP informed Volvo GM of its prima facie finding that Volvo

GM had discriminated against women in hiring for entry- level posi-

tions during 1988. In the letter, the OFCCP noted that Volvo GM's

selection process appeared to be "highly subjective." Volvo GM was

required to provide a written response to the prima facie finding

within 20 days.

On November 1, 1989, the OFCCP issued a notice of violation reit-

erating its prior finding of gender discrimination.2 On January 26,

1990, the OFCCP's regional director issued a notice to show cause,

which stated that the Department would initiate enforcement proceed-

ings if Volvo GM did not take corrective action within 30 days. As

a result, representatives of Volvo GM and the OFCCP met in an

attempt to conciliate the dispute. Those conciliations efforts proved

unsuccessful and ceased as of June 1, 1990.

_________________________________________________________________

1 Administrative enforcement proceedings are heard by an administra-

tive law judge (ALJ), who issues a recommended decision. 41 C.F.R. 60-

30.27 (1996). Following a period for both parties to file exceptions, the

Department of Labor's Administrative Review Board issues a final

administrative order. 41 C.F.R. 60- 30.29 & 60- 30.30 (1996).

2 Specifically, the letter stated:

Volvo GM Heavy Truck Corporation exhibited disparate impact

in the hiring of females for the assembler position during the

period of January 1, 1988 through December 31, 1988. This is

a violation of [41 C.F.R. 60- 3.3 and 60- 1.4(a)(1) (1996)].

3

Four years passed. On August 30, 1994, the Solicitor of Labor

informed Volvo GM that the OFCCP had "referred the case to the

Solicitor's Office for filing of administrative enforcement proceed-

ings." The Solicitor's letter offered to "make a final attempt to resolve

this matter without contested litigation." Volvo GM rejected the offer.

On December 18, 1995, the OFCCP filed an administrative complaint

against Volvo GM under Executive Order 11246 seeking backpay for

an affected class of females from March 7, 1987 to the present,

injunctive relief, and an order cancelling Volvo GM's current con-

tracts with the federal government and barring Volvo GM from par-

ticipating in contracts with the federal government until Volvo GM

complied with Executive Order 11246.

On January 5, 1996, Volvo GM filed the instant action for judicial

review of the OFCCP's actions in the United States District Court for

the Western District of Virginia. The complaint asserted four causes

of action. In the first count, Volvo GM sought a declaratory judgment,

pursuant to 28 U.S.C. § 2201, that the OFCCP's administrative

enforcement actions were subject to the statute of limitations in Va.

Code. § 8.01- 2483 because Executive Order 11246 provides no statute

of limitations period. The second count alleged that the OFCCP's

delay in bringing the enforcement action violated the Administrative

Procedure Act, 5 U.S.C. § 555(b).4 The third count alleged that the

_________________________________________________________________

3 § 8.01- 248, amended in 1995, now provides:

Every personal action accruing on or after July 1, 1995, for

which no limitation is otherwise prescribed, shall be brought

within two years after the right to bring such action has accrued.

Va. Code § 8.01- 248 (Michie 1992 and Supp. 1996) (emphasis added).

Prior to the 1995 amendment of § 8.01- 248, the same section pro-

vided:

Every personal action for which no limitation is otherwise pre-

scribed, shall be brought within one year after the right to bring

such action has accrued.

Va. Code § 8.01- 248 (Michie 1992).

Since the OFCCP brought this action in 1995 based on Volvo GM's

alleged sex dicrimination in the hiring of women in 1988, arguably, the

one- year statute of limitations, if applicable, would apply to this action.

4 Section 555(b) requires federal agencies to conclude matters "with

due regard to convenience and necessity of the parties or their represen-

tatives and within a reasonable time."

4

OFCCP's delay in bringing the enforcement proceedings violated the

Due Process Clause of the Fifth Amendment. The fourth count

alleged a violation of the Freedom of Information Act (FOIA), 5

U.S.C. § 552.5

On March 11, 1996, the OFCCP moved to dismiss the complaint

on the grounds that Volvo GM had failed to exhaust administrative

remedies, or alternatively, the case was not ripe for judicial review.

On April 4, 1996, Volvo GM filed its response to the motion, and the

OFCCP filed its reply on April 26, 1996. On May 16, 1996 Volvo

GM filed a motion for summary judgment on Count One (statute of

limitations). After denying the OFCCP's motion to stay consideration

of Volvo GM's motion for summary judgment, the OFCCP filed its

opposition to the motion on June 19, 1996, and Volvo GM filed its

reply on June 28, 1996.

On July 15, 1996, the district court held a hearing on both motions.

Thereafter, on August 9, 1996, the district court entered an order

granting OFCCP's motion to dismiss on exhaustion grounds, and dis-

missed without prejudice as moot Volvo GM's motion for summary

judgment on Count One. The instant appeal followed.

II.

DISCUSSION

Volvo GM challenges the district court's decision on the grounds

that Executive Order 11246 does not require exhaustion of adminis-

trative remedies as a prerequisite to seeking judicial review. In requir-

ing Volvo GM to exhaust its administrative remedies, Volvo

contends, the district court abused its discretion. In the alternative,

Volvo GM contends that exhaustion should not be required because

exhaustion would be "futile", exhaustion would not serve the purpose

of promoting judicial economy, and their complaint raises constitu-

tional issues which are exempt from an exhaustion requirement.

In a shift from its litigating position before the district court to a

_________________________________________________________________

5 The fourth count is not at issue in the instant appeal.

5

related position, the OFCCP primarily maintains that the district court

should be affirmed because the case is not "ripe" because the filing

of an administrative complaint is not "final agency action." Alterna-

tively, the OFCCP argues that the district court should be affirmed

because Volvo GM must exhaust its administrative remedies before

seeking judicial review. The district court's grant of the OFCCP's

motion to dismiss is reviewed de novo. See Tillman v. RTC, 37 F.3d

1032, 1034 (4th Cir. 1994). We now address the district court's deci-

sion requiring Volvo GM to exhaust its administrative remedies.6

A. Exhaustion

A wealth of Supreme Court guidance exists within the area of

exhaustion of administrative remedies. In McCarthy v. Madigan, 503

U.S. 140 (1992), the Supreme Court discussed the fundamentals of

the exhaustion doctrine and the interplay between Congressional

intent and the federal judiciary. The Court stated:

The doctrine of exhaustion of administrative remedies is one

among related doctrines - - including abstention, finality,

and ripeness - - that govern the timing of federal court deci-

sionmaking. Of "paramount importance" to any exhaustion

inquiry is congressional intent. Where Congress specifically

mandates, exhaustion is required. But where Congress has

not clearly required exhaustion, sound judicial discretion

governs .... Nevertheless even in this field of judicial discre-

tion, appropriate deference to Congress' power to prescribe

the basic procedural scheme under which a claim may be

heard in federal court requires fashioning of exhaustion

principles in a manner consistent with congressional intent

and any applicable statutory scheme.

_________________________________________________________________

6 A review of the district court's decision reveals that the district court

granted the OFCCP's motion on the basis of Volvo GM's failure to

exhaust administrative remedies. While the district court did address the

"ripeness" issue in a footnote, the OFCCP is stretching it a bit to suggest

the court also ruled on the ripeness grounds. Although we may affirm on

any ground supported in the record, see Jackson v. Kimel, 992 F.2d 1318,

1322 (4th Cir. 1993), the district court ruled on the exhaustion grounds

and that grounds provides an adequate avenue for affirmance of the dis-

trict court. Hence, this opinion only addresses the exhaustion grounds.

6

This Court has long acknowledged the general rule that par-

ties exhaust prescribed administrative remedies before seek-

ing relief from the federal courts. Exhaustion is required

because it serves the twin purposes of protecting administra-

tive agency authority and promoting judicial efficiency.

Id. at 144 (internal citations omitted).

The exhaustion requirement provides an agency with an opportu-

nity to "correct its own mistakes with respect to programs it adminis-

ters before it is haled into federal court." Id. at 145; see also McKart

v. United States, 395 U.S. 185, 195 (1969) ("frequent and deliberate

flouting of administrative processes could weaken" an agency's effec-

tiveness "by encouraging" disregard of "its procedures."). Moreover,

the exhaustion requirement serves to prevent "piecemeal appeals."

McCarthy, 503 U.S. at 145. "In determining whether exhaustion is

required, federal courts must balance the interest of the individual in

retaining prompt access to a federal judicial forum against counter-

vailing institutional interests favoring exhaustion." McCarthy, 503

U.S. at 146; see also Bowen v. City of New York, 476 U.S. 467, 484

(1986) ("application of exhaustion doctrine is`intensely practical' ....

The ultimate decision of whether to waive exhaustion... should be

guided by the policies underlying the exhaustion requirement.")

The Supreme Court, however, in Darby v. United States, 509 U.S.

137 (1993), stated that "with respect to actions brought under the

APA, Congress effectively codified the doctrine of exhaustion of

administrative remedies in [5 U.S.C. § 704]". Id. at 153; see also

Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50- 51 (1938)

("the long settled rule of judicial administration [is] that no one is

entitled to judicial relief for a supposed or threatened injury until the

prescribed administrative remedy has been exhausted."). Thus, the

Court stated that an action brought pursuant to the APA "explicitly

requires exhaustion of all intra- agency appeals mandated either by

statute or by agency rule." Darby, 509 U.S. at 147.

Darby, however, did not completely remove judicial discretion,

recognized in McCarthy, to impose an exhaustion requirement when

a statute does not explicitly require exhaustion. Rather, the Court

noted that "[o]f course, the exhaustion doctrine continues to apply as

7

a matter of judicial discretion in cases not governed by the APA."

Darby, 509 U.S. at 154- 55 (emphasis added). Guided by the Supreme

Court's decisions in McCarthy and Darby, we now turn our attention

to Volvo GM's contentions with respect to exhaustion.

In its complaint, Volvo GM asserted three causes of action with

respect to the OFCCP's seven- year delay in pursuing administrative

enforcement proceedings against Volvo GM. The first cause of action

sought a declaratory judgment that the OFCCP's enforcement pro-

ceedings were subject to a one- year Virginia statute of limitations

period; the second, challenged the seven- year delay as a substantive

violation of the APA; and the third alleged that the OFCCP's seven-

year delay violated the Fifth Amendment's Due Process Clause. A

proper analysis of the instant case requires the court to address each

of Volvo GM's asserted causes of action to determine whether

exhaustion is required.

Turning to the second cause of action, Volvo GM alleges that the

OFCCP's seven- year delay in bringing enforcement actions violates

the APA. The analyis of Volvo GM's second cause of action need not

detain us long. Pursuant to Darby, Volvo GM must exhaust its APA

claim before proceeding in federal court. Volvo GM places great reli-

ance on McCarthy and McKart, but we note that both of those cases

pre- dated the Court's pronouncement in Darby that all APA claims

are subject to an exhaustion requirement.

The regulations governing cases under Executive Order 11246 pro-

vide that agency action is not final until an appeal has been taken to

the Administrative Review Board. See 41 C.F.R. 60- 30.30 (1996).

Indisputedly, Volvo GM has not yet taken such an appeal. Although

an issue of first impression for the Fourth Circuit, other circuits have

required exhaustion, within the APA context, with respect to Execu-

tive Order 11246. See St. Regis Paper Co., 591 F.2d 612, 613- 15

(10th Cir.), cert. denied, 444 U.S. 828 (1979) (requiring exhaustion

and finding that plaintiff did not fall within any exceptions to the

exhaustion doctrine); Uniroyal, Inc. v. Marshall, 579 F.2d 1060,

1064- 67 (7th Cir. 1978) (requiring exhaustion). Therefore, Volvo

GM's second cause of action alleging a violation of the APA must be

exhausted.

8

Volvo GM's two additional causes of action require more attention.

Our readings of the pleadings suggest that Volvo GM also argues that

neither its first cause of action nor its third cause of action is subject

to exhaustion of administrative remedies before proceeding in federal

court. With respect to the first cause of action, Volvo GM states that

it "merely seeks a declaration that an appropriate limitations period

applies to the OFCCP's enforcement actions, and requests an injunc-

tion prohibiting [the OFCCP] from proceeding with the administrative

action." The declaratory judgment, Volvo GM contends, "would pro-

vide the appropriate law to the [OFCCP] to be applied in the adminis-

trative hearing process."

As such, Volvo GM argues that since Executive Order 11246 does

not specifically require that administrative remedies be exhausted

before proceeding in federal court, an exhaustion requirement may

only be imposed by the exercise of the district court's sound judicial

discretion. But on those grounds we agree with the district court that

Volvo GM's first and third causes of action must also be exhausted.

First, as we have noted in City Nat'l Bank v. Edmisten, 681 F.2d

942 (4th Cir. 1982), the Declaratory Judgments Act, 28 U.S.C.

§ 2201, is "remedial only, and is not itself a basis for federal subject

matter jurisdiction." Id. at 945 n.6 (citing Skelly Oil Co. v. Phillips

Petroleum Co., 339 U.S. 667, [671- 72] (1950)). Moreover, analogi-

cally, as the Supreme Court recognized in Heckler v. Ringer, 466 U.S.

602 (1984), a party cannot "bypass the exhaustion requirements of the

Medicare Act by simply bringing declaratory judgment actions in fed-

eral court...." Id. at 621. Volvo GM's first cause of action is based on

the same operative facts as Volvo GM's second cause of action, its

APA claim. In both causes of action, Volvo GM attacks the OFCCP's

seven- year delay in bringing enforcement actions against Volvo GM.

As the Declaratory Judgments Act does not provide a basis for federal

subject matter jurisdiction, Volvo GM's first cause of action would

also be subject to the APA's exhaustion requirement.

Second, Volvo GM's third cause of action is based on an alleged

constitutional violation, and does provide a separate basis for judicial

review,7 and would not be subject to the APA's exhaustion require-

_________________________________________________________________

7 As Volvo GM noted in its complaint, jurisdiction is vested in the

court pursuant to 28 U.S.C. § 1331 in that the instant action is one "aris-

ing under the Constitution, laws, or treaties of the United States ...."

9

ment. Of course, pursuant to McCarthy, a non- APA case, the district

court may in its sound discretion impose an exhaustion requirement,

which in the instant case the district court did.

Guided by the Supreme Court's "repeated reference" in McCarthy

to "congressional intent and the statutory basis undergirding the

administrative process", the district court began its analysis of the

exhaustion requirement by noting that a statutory basis existed for

both the promulgation of both the Executive Order 11246 and the

accompanying regulations. Federal Property and Administrative Ser-

vices Act of 1949, 40 U.S.C. § 471 provides:

It is the intent of the Congress in enacting this legislation to

provide for the Government an economical and efficient

system for (a) the procurement and supply of personal prop-

erty and nonpersonal services, including related function

such as contracting ....

40 U.S.C. § 471 (1986).

No individual shall on the ground of sex be excluded from

participation in, be denied the benefits of, or be subjected to

discrimination under any program or activity carried on or

receiving Federal assistance under this Act.

40 U.S.C. § 476 (1986).

The President may prescribe such policies and directives ...

as he shall deem necessary to effectuate the provisions of

[this] Act, which policies and directives shall govern the ...

executive agencies in carrying out their respective functions

hereunder.

40 U.S.C. § 486(a) (1986).

The district court also noted that "... every action for money dam-

ages brought by the United States or an officer or agency thereof

which is founded upon any contract express or implied in law or fact,

shall be barred unless the complaint is filed within six years after the

10

right of action accrues or within one year after final decisions have

been rendered in applicable administrative proceedings required by

contract or by law, whichever is later ...." 28 U.S.C. § 2415(a) (1994).

The district court stated that "[the above statutory passages] leads

me to the inescapable conclusion that the Congress, specifically when

it enacted 40 U.S.C. § 486, both reasonably intended and expected the

President to promulgate Executive Orders relating to federal contract-

ing or contractors and to delegate the tedium of their application to

the Executive Branch." Hence, the court found that the exhaustion

doctrine applied to Volvo GM's claims, and that none of the excep-

tions to the exhaustion doctrine were applicable to Volvo GM's claims.8

Volvo GM attacks the district court's reasoning on the basis that

in McCarthy, the Court noted that Congress' intent to require exhaus-

tion must be "specific" and "clear", and here, "no indication [exists]

in the statutory language of 40 U.S.C. § 486 that Congress intended

by granting the President authority to issue `policies and directives'

_________________________________________________________________

8 In McCarthy, the Court recognized three circumstances in which the

interests of the individual weigh heavily against requiring administrative

exhaustion, namely (1) resort to the administrative remedy may prejudice

a subsequent court challenge of the contested agency action; (2) the

agency's remedy may be inadequate; and (3) the administrative remedy

may be inadequate where the administrative agency body is shown to be

biased or to have otherwise predetermined the issues before it.

McCarthy, 503 U.S at 147- 48. With respect to the bias issue, the district

court concluded that "[w]hile Labor has been no doubt an exasperating

adversary, [Volvo GM] has failed to demonstrate that it is a victim of

Labor's bias." As for the second exception, the district court noted that

the administrative law judge is capable of "entertaining a statute of

laches or statute of limitation[s] argument," thus Volvo GM could obtain

through the administrative process the relief sought. As for the delay

associated with the OFCCP's initiation of administrative proceedings,

the district court noted that while the delay is "appalling", the district

court stated that the expenses incurred with the attenuated administrative

process does not provide Volvo GM with a waiver from the exhaustion

requirement. Finally, the district court noted that Volvo GM had not

demonstrated that the OFCCP acted with "brazen defiance," an exception

to the waiver requirement recognized in Phillip Morris v. Block, 755

F.2d 368, 369- 70 (4th Cir. 1985).

11

to authorize the Secretary of Labor to create a quasi- judicial adminis-

trative enforcement scheme which a party is required to exhaust prior

to initiating suit an action in court." Moreover, Volvo GM notes that

the Solicitor of Labor's regulations issued pursuant to Executive

Order 11246 do not provide for judicial review following the adminis-

trative process, nor do they require that the OFCCP's processes be

exhausted before proceeding in federal court.

We are unpersuaded by Volvo GM's argument. Contrary to Volvo

GM's protestations, Congress by granting the President authority to

issue "policies and directives" to carry out implementation of Execu-

tive Order 11246 by the agencies, did speak "clearly" in requiring

exhaustion. By vesting the implementation of the Act in the adminis-

trative agencies, Congress was aware that exhaustion is required

before a litigant may challenge final agency action in federal court.9

Having now concluded that an exhaustion requirement is applicable

_________________________________________________________________

9 Volvo GM cites to this court's decision in Liberty Mutual Ins. v.

Friedman, 639 F.2d 164 (4th Cir. 1981), to argue that the imposition of

an exhaustion requirement must have some nexus between the exhaus-

tion requirement and the "efficiency and economy of the Procurement

Act." Again, Volvo GM's argument is unavailing. In Liberty Mutual, the

court, assuming that the Procurement Act provided the statutory author-

ity for the President to issue Executive Order 11246, stated that "any

application of the Order must be reasonably related to the Procurement

Act's purpose of ensuring efficiency and economy in government pro-

curement ... in order to lie within the statutory grant." Id. at 170. Volvo

GM claims an exhaustion requirement does not serve the goals of the

Procurement Act "in a situation like this one, with its associated lengthy

and costly administrative hearings and appeals, and would hinder rather

than promote the economy and efficiency with which a federal contrac-

tor, such as Volvo GM, performs its federal government contracts." Of

course, Volvo GM's argument ignores another, at least as salient purpose

of the Act, which is to ensure that federal contractors, such as Volvo

GM, are not engaged in impermissible discrimination. Even if the ratio-

nale of Liberty Mutual is applicable here, an exhaustion requirement

which allows an agency, which is familiar with the Procurement Act and

Executive Order 11246, to handle any such alleged discrimination dem-

onstrates a sufficient nexus to the Procurement Act's goals.

12

to Volvo GM's claims, we will now address Volvo GM's arguments

that the exhaustion requirement should be waived.10

B. Exceptions to Exhaustion

First, Volvo GM argues that imposition of an exhaustion require-

ment on its statutory and constitutional claims does not serve the

underlying purposes of the exhaustion doctrine. Volvo GM contends

that the narrow issue it seeks the court to address is a purely statutory

issue, namely the statute of limitations issue. A decision on the appli-

cable statute of limitations does not require application of any experi-

ence or expertise which the OFCCP may possess regarding

"enforcement of non- discrimination provisions or other requirements

of the Executive Order." Nor would resolution of the statute of limita-

tions issue require judicial intervention into the"sacrosanct areas of

agency discretion", Volvo maintains.

For its argument, Volvo GM principally relies upon McCarthy,

Bowen, McKart and United States ex rel. Brooks v. Clifford, 412 F.2d

1137 (4th Cir. 1969) (relying on McKart to conclude that exhaustion

was unnecessary). A synthesis of those cases reveals a central theme.

The courts concluded that the purpose of the exhaustion doctrine

would not be served by requiring the plaintiff to exhaust administra-

tive remedies. Importantly to the issue at hand, however, in none of

those cases was the APA the basis for judicial review. McCarthy

involved an action by a federal prisoner seeking money damages

under Bivens v. Six Unknown Named Fed. Narcotics Agents, 403 U.S.

388 (1971). Bowen involved the statute providing for judicial review

of social security disability determinations, 42 U.S.C. § 405(g).

_________________________________________________________________

10 We also note that Volvo GM's"constitutional claim" appears to be

nothing more than clever pleading of its APA claim so as to avoid the

exhaustion requirement. The substance of the APA claim and the consti-

tutional claim are identical, i.e. 1) the seven- year delay, which Volvo

GM terms "extraordinary," by the OFCCP in bringing the enforcement

action violated 5 U.S.C. § 555(b) in that the delay was "unreasonable",

and 2) that same "extraordinary" seven- year delay violated its due pro-

cess rights under the Fifth Amendment. Thus, Volvo GM should not be

able to escape the exhaustion requirements of the APA merely by real-

leging and repackaging its APA claim, as a constitutional claim.

13

McKart involved a direct appeal from a criminal conviction, and

Brooks arose on a petition for habeas corpus. Volvo GM has not

pointed to any case, involving a challenge under the APA, since

Darby, that has subjected the exhaustion requirement to judicial dis-

cretion.

As the OFCCP notes, Volvo GM's statutory and constitutional

claims based on the seven- year delay will involve a "fact- specific

assessment that cannot be undertaken until the administrative process

is completed." Although the OFCCP concedes that the statute of limi-

tations claim raises a question of law, the OFCCP argues that "the

answer to that question may involve an inquiry into the federal poli-

cies served by the Executive Order", and exhaustion would be partic-

ularly helpful in that situation. OFCCP cites as support for its

argument Toilet Goods Ass'n, Inc. v. Gardner, 387 U.S. 158 (1967),

wherein the Court required a party to exhaust a statutory challenge to

the agency's regulations reasoning that exhaustion would throw some

light on the agency's "statutory and practical justifications for the reg-

ulation." Id. at 166.

Volvo GM has failed to demonstrate that requiring Volvo GM to

exhaust its administrative remedies will not serve the underlying pur-

poses of the exhaustion doctrine. Volvo GM's case is readily distin-

guishable from the cases upon which it seeks to rely. Unlike in

McKart, which involved a criminal defendant to whom all administra-

tive remedies were closed; or in Brooks, where the court found that

the exhaustion of administrative remedies would impose harm that

could not be redressed on judicial review, here Volvo GM's only

asserted harm is the burden of defending itself in an administrative

proceeding. Such a burden has been found to be wholly insufficient

to warrant a waiver of the exhaustion requirement. See Toilet Goods

Ass'n, 387 U.S. at 164- 66; Myers, 303 U.S. at 51- 52.

Furthermore, Volvo GM asserts that exhaustion would be "futile"

in the present case because the Secretary of Labor has already

asserted its position that statute of limitations cannot be applied to

OFCCP enforcement actions. Volvo GM bases its argument on the

fact that in response to interrogatories requesting identification of the

statute of limitations that applies to the underlying action, the Depart-

ment of Labor replied "[t]here is no applicable code or statutory cita-

14

tion." In addition, Volvo GM relies upon the fact that the Assistant

Secretary for Employment Standards recently issued a final adminis-

trative decision that held that no statute of limitations applies to an

action brought by OFCCP under § 503 of the Rehabilitation Act.

OFCCP v. American Airlines, No. 94- OFC- 9 (Apr. 26, 1996).11

In response, OFCCP maintains that the positions taken by the

Department in defending itself are merely "litigating positions" and

"[do] not necessarily reflect a deliberative adjudication of [Volvo

GM's] claims." A litigating position, the OFCCP argues, can not be

determinative of subsequent final agency action because "agency pol-

icy is to be made, in the first instance, by the agency itself - - not by

the courts, and not by agency counsel." Harmon v. Thornburgh, 878

F.2d 484, 494 (D.C. Cir. 1989), cert. denied, 493 U.S. 1056 (1990).

As for the American Airlines decision, the OFCCP argues that the

American Airlines decision involved § 503 of the Rehabilitation Act,

not Executive Order 11246. Moreover, the decision was issued by the

Assistant Secretary for Employment Standards, not the Administra-

tive Review Board. While acknowledging that the similarities

between § 503 and Executive Order 11246 may mean that the ratio-

nale of the American Airlines decision could be applied in the Execu-

tive Order 11246 context, the OFCCP argues that an adverse ruling

against Volvo GM is not a "certainty." See Thetford Properties IV

Ltd. Partnership v. HUD, 907 F.2d 445, 450 (4th Cir. 1990). Finally,

the OFCCP notes that even if the Department has decided that a stat-

ute of limitations does not apply to the OFCCP's actions, Volvo GM

may still prevail on either of its claims based on the seven- year delay

associated with OFCCP bringing the instant action. Thus, OFCCP

maintains that Volvo GM has failed to satisfy the futility exception.

The most helpful case on the instant issue is Thetford Properties.

In that case, the plaintiffs challenged the district court's dismissal of

its claim for failure to exhaust administrative remedies. Plaintiffs

sought a declaratory judgment that HUD's Emergency Low Income

Housing Preservation Act of 1987 (Act), 12 U.S.C.§ 17151, violated

_________________________________________________________________

11 In response to Volvo GM's motion for summary judgment, the

OFCCP argued that the rationale of American Airlines fully applies to

cases arising under Executive Order 11246.

15

their due process rights because of the Act's abrogation of their

unconditional contractual right to prepay their federally insured mort-

gages.

Addressing plaintiffs' argument that exhaustion was futile in their

case because they could not meet the Act's requirements for prepay-

ment, Judge Hall, writing for the court, stated:

Absent a clear showing that an administrative agency has

taken a hard and fast position that makes an adverse ruling

a certainty, a litigant's prognostication that he is likely to

fail before an agency is not a sufficient reason to excuse the

lack of exhaustion.

Id. at 450. Moreover, Judge Hall stated that"[w]hile HUD cannot

allow [plaintiffs] to unconditionally prepay and withdraw from the

program, it is possible that prepayment on conditions acceptable to

[plaintiffs] may be allowed." Id. Finally, Judge Hall noted that "[t]o

allow [plaintiffs] to avoid the administrative process on their unsup-

ported allegation of futility would allow the futility exception to swal-

low the exhaustion rule." Id.

In the instant case, Volvo GM has the Secretary's litigating posi-

tion that no applicable statutory code or citation applies to OFCCP

enforcement actions. Stronger, but still not enough, Volvo GM relies

upon the American Airlines decision. As the OFCCP noted, the

American Airlines decision does not address Executive Order 11246,

nor has the final decisionmaker, i.e. the Administrative Review

Board, endorsed the decision.12 Thus, using the rationale of Thetford,

Volvo GM has failed to demonstrate that an adverse decision is a cer-

_________________________________________________________________

12 For case support, Volvo GM also relies upon Houghton v. Shafer,

392 U.S. 639 (1968), and Cinderella Career & Finishing Schools, Inc.

v. FTC, 425 F.2d 583 (D.C. Cir. 1970). In Houghton, the Court held that

a prisoner was not required to exhaust his administrative remedies before

challenging a rule that deprived him of legal books and materials because

the ultimate decision maker, the Attorney General of Pennsylvania, had

already made his position clear. Houghton, 392 U.S. at 640. ("In light of

this [Attorney General's decision] it seems likely that to require peti-

tioner to appeal ..., would be deemed a futile act." In Cinderella, the

court concluded that disqualification of the administrative decisionmaker

was warranted where the decision maker had prejudged the issue of the

case. Cinderella, 425 F.2d at 590- 91. Unlike in Houghton and

Cinderella, the final decisionmaker has not made a decision. Thus,

Volvo GM's reliance on those cases is misplaced.

16

tainty. Under these circumstances, exhaustion of its claims is not

futile.

Also, Volvo GM claims that it should not have to exhaust its APA

claim based on the OFCCP's seven- year delay, pursuant to 5 U.S.C.

§ 555(b), because the APA vests authority for enforcing its provisions

"in a court of competent jurisdiction." The difficulty with Volvo

GM's argument is its circular reasoning. Volvo GM's argument is

based on the premise that the seven- year delay is unreasonable, and

now all a court must do is dismiss the case based on the unreasonable

delay. As OFCCP notes, the APA does not prohibit, and in fact

encourages, agencies from addressing the statute's procedural require-

ments in the first instance.

In the instant case, a determination of whether the seven- year delay

is unreasonable will undoubtedly require a fact- intensive inquiry that

cannot take place before the administrative process has concluded. In

that manner, if, after the agency concludes its review, Volvo GM

appeals that decision, the district court will have a more complete fac-

tual record upon which to determine whether dismissal is warranted

due to the agency's seven- year delay. See American Fed'n of Gov't

Employees v. Nimmo, 711 F.2d 28, 29- 31 (4th Cir. 1983) (court

ordered dismissal, on exhaustion grounds, of plaintiffs' complaint

under the APA that certain Veteran Administration guidelines "were

promulgated in violation of [APA]").

Moreover, Volvo GM argues that it should not be required to

exhaust its constitutional claim, its third cause of action, because

"[c]onstitutional claims are ... unsuited to resolution in administrative

hearing procedures and, therefore, access to the courts is essential to

the decision of such questions." Essentially Volvo GM claims that

"due process is violated when a pre- deprivation hearing is delayed to

the extent that it prejudices the defendant's right to a meaningful

hearing because it significantly undercuts [Volvo GM's] ability to

present an adequate defense, particularly through the presentation of

witness testimony."13 In addition, Volvo GM alleges that the

_________________________________________________________________

13 Volvo GM alleged in its complaint that the seven- year delay by the

OFCCP in initiating enforcement proceedings severely prejudiced Volvo

GM's ability to defend itself because five of the seven key management

individuals who have personal knowledge of Volvo GM's hiring poli-

cies, practices, and procedures in 1987, 1988, and 1989 are no longer

with Volvo GM.

17

OFCCP's enforcement proceedings, which do not provide any time

limit for initiating administrative enforcement proceedings, also vio-

late due process. Hence, Volvo GM claims that its constitutional due

process claim cannot be resolved by the administrative process and

that Volvo GM should not be required to exhaust its administrative

remedies before proceeding in federal court.

The Fourth Circuit has recognized that exhaustion can be useful

even where a constitutional issue is presented. In Thetford, the court

held that the prudential considerations underlying the exhaustion doc-

trine are "no less weighty when an administrative litigant raises a con-

stitutional challenge to a statute which an agency is charged with

enforcing." Thetford, 907 F.2d at 448. Moreover, the court added that

"exhaustion is particularly appropriate when the administrative rem-

edy may eliminate the necessity of deciding constitutional questions."

Thetford, 907 F.2d at 448 (quoting Nimmo, 711 F.2d at 31). Further-

more, the court noted that "requiring exhaustion ... may very well lead

to a satisfactory resolution of [the] controversy without having to

reach appellant's constitutional challenge." Thetford, 907 F.2d at 448.

Therefore, the court stated that it "must reject appellant's argument

that, as a general rule, exhaustion is not necessary where administra-

tive litigants raise constitutional challenges." Id. The court did note,

however, that exhaustion may not be required "in the rare case when

a statute is patently unconstitutional or an agency has taken a clearly

unconstitutional position", or "[w]here it is clear that resort to admin-

istrative remedies would be incapable of affording due process...." Id.

at 448- 49.

In the instant case, Volvo GM should be required to exhaust its

administrative remedies before proceeding in federal court. First, as

noted above, Volvo GM's constitutional claim stems from the same

"unreasonable delay" as forms the basis of its statutory claim. Second,

as with Volvo GM's statutory claim, a fact- finding inquiry into the

reasons for the delay will be necessary for the ultimate resolution of

whether a seven- year delay violates the due process clause. Third, as

noted in Thetford, given the similarity between the statutory and con-

stitutional claims, the administrative process' resolution of the statu-

tory claim may well alleviate the necessity for the courts to pass on

the constitutional claim. Thus, Volvo GM has failed to demonstrate

18

that its combination of circumstances falls within any of the recog-

nized exceptions to the exhaustion doctrine. Accordingly, Volvo GM

must exhaust its claims before proceeding in federal court.14

III.

CONCLUSION

In conclusion, we hold that Volvo GM is required to exhaust its

claims in the administrative forum. Accordingly, the judgment of the

district court is

AFFIRMED.

_________________________________________________________________

14 We share the district court's and Volvo GM's frustration over the

OFCCP's seven- year delay in bringing enforcement proceedings against

Volvo GM. The OFCCP's seven- year delay is unsettling to say the least.

Nevertheless, we are satisfied that Volvo GM should be required to

exhaust its claims in the administrative forum. For the sake of the credi-

bility of the administrative process, we hope that the administrative pro-

cess will not suffer from the same appearance of lack of timeliness

seemingly evinced in the initiation of enforcement proceedings.

19