Preservation, jurisdiction, futility and exhaustion


Once again, I have returned from wanderings about the globe.  Having done 3 out-of-country trips in 4 weeks, I'm pretty pooped – so let's talk about exhaustion! 

On Monday, the First Circuit decided Mayhew v. Burwell, Docket 14-1300, rejecting DHHS' argument that the State's inability to change its welfare eligiblity rules violated the U.S. Constitution.

This was the case that the AG declined to defend on behalf of DHHS (and in fact argued against it, along with the federal government and some amici).  DHHS was presented by independent counsel (ex PA-ites Cliff Ruprecht, Chris Roach and Gigi Sanchez).  The decision, by CJ Lynch, has interesting things to say about the spending clause and equal sovreignty doctrine.  But our topic of the day relates to a footnote in the decision, and the relationship of the point discussed in that footnote to a recent Maine SJC decision, Dubois Livestock, INc. v. Town of Arundel,

In Dubois, an 80B appeal, the SJC ruled that an ordinance was not preempted by state law.  In doing so, the Court, among other things, said that notices of violations may now be reviewed on appeal, ruling that its earlier decisions to the contrary were no longer good law.  But more to the issue of the day, Justice Alexander, writing for the unanimous court, ruled that the ZBA had lacked jurisdiction to hear the preemption argument, and  because the plaintiff was claiming ultra vires agency action, there was no timeliness issue or problem with arguing that the claim was a collateral attack on a previous decision. 

In Mayhew, DHHS had raised some but not all of its constitutional arguments before the federal agency, which had similarly said it had no jurisdiction to hear a constitutional challenge to the governing statute, and the First Circuit had the parties brief whether the constitutional issues could be raised in the petition for review before it.  The Court of Appeals answered that question in the affirmative, citing a Second Circuit decision that allowed a constitutional challenge to a governing statute in an agency petition for review for the first time on appeal:

In sum, it's pretty clear that (a) agencies can't rule on challenges to the statute under which they make their decision and (b) such challenges can be raised in a direct appeal of an agency decision.  But here's the question that wasn't answered in Dubois, and which continues to make me ponder – when the agency cannot rule on the constitutional issue presented, must the complaining party nevertheless raise that issue before the agency in order to preserve it for appeal?  The answer is unclear.

Before filing a Rule 80B or Rule 80C appeal, the claimant must first exhaust its administrative remedies or face dismissal of its appeal.  See Northeast Occupational Exch. v. Bureau of Rehabilitation, 473 A.2d 406, 409 (Me. 1984); Stanton v. Trustee. of St. Joseph’s College, 233 A.2d 718, 723-24 (Me. 1967). 

The decision in Stanton also made clear, however, that there is an exception to the exhaustion requirement when the complainant “alleges persuasive grounds for relief which are beyond the jurisdiction of the administrative agency, and when it thus would be futile for the plaintiffs to complete the administrative appeal process” and when “the question presented is solely one of law.”  Stanton, 233 A.2d at 724 (quotations omitted).  Certain decisions have adopted this line of reasoning in permitting challengers to raise constitutional challenges to statutes, or other purely legal arguments, when the challenger did not raise the issue before the administrative agency.  See, e.g., Caruso v. State Tax Assessor, 2000 WL 33675707, at *2 (Me. Super. Ct., Nov. 14, 2000) (permitting review of statutory authority of tax assessor where issue not raised before agency); Drake v. Maine Unemployment Ins. Co., 2000 WL 33675703, at *2 (Me. Super. Ct., Aug. 3, 2000) (permitting challenge to constitutionality of interest penalty where issue was not raised before agency).   

On the other hand, the SJC has held that “arguments … not specifically raised before the [agency] … are deemed unpreserved for appellate review,” including constitutional challenges.  Oronoka Rest., Inc. v. Maine State Liquor Comm’n, 532 A.2d 1043, 1045 n.2 (Me. 1987) (refusing to consider constitutional challenge where issue not raised below); see also Antler’s Inn & Rest., LLC v. Dept’ of Public Safety, 2012 ME 143, ¶ 9 (same); New England Whitewater Ctr. v. Dep’t of Inland Fisheries and Wildlife, 550 A.2d 56, 58-61 (Me. 1988) (same).

Some constitutional claims can be corrected before the agency – e.g. if someone claims that an agency is violating due process in the course of its review.  It makes sense to compel the claimant to raise the issue before the agency at the time, so the agency can fix the problem.  But what about situations like these, challenging the state statute, which the agency can't do anything about?  

I can see arguments both ways.  On the one hand, why make someone go through a futile act?  Stanton seems to say you don't.  On the other hand, deciding where to draw the line between a correctable fix and a challenge to the law itself can be pretty blurry – should the court try to apply a facial v. an applied test or just have a bright line test?  And if there could potentially be a constitutional interpretation, then shouldn't the claimant have to raise it before the agency, because the agency does have the power to interpret? 

Also, in an 80B or 80C appeal, the reviewing court needs a record.  If you don't raise the issue and create whatever record you want to support your position before the agency, then you either have to file a motion to take additonal evidence, or add an "independent" declaratory judgment action challenging the statute (and boy there's a swamp in itself), or have no evidence at all.  In Dubois, one issue relevant to the preemption question was whether the claimant was a "farm."  This required a review of facts.  Those facts have to get before the Court somehow.

I've been waiting for years for a decision from the SJC that definitively answers this exhaustion question.  In theory, the Court's "ultra vires" perspective would seem to nudge the Court closer to the view that such issues — at least those that truly cannot be decided by the agency — need not be raised before the agency.   But I'm not aware of any SJC decision in years that has relied on a futility claim to address an unpreserved constitutional argument, while many times it has rejected review of such arguments.

We will have to continue to wait and see.