Summary: The Court held that sovereign immunity does not bar jurisdiction of plaintiff’s claim, and plaintiff was not required to exhaust alleged available administrative remedies for its equal protection claim. Accordingly, defendants' motion to dismiss was DENIED. Defendant’s motion to strike plaintiff’s jury trial demand was GRANTED.

Case Name: United Power Association v. FEMA

Case Number: A2-99-180

Docket Number: 55

Date Filed: 8/14/01

Nature of Suit: 890

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NORTH DAKOTA

NORTHEASTERN DIVISION

MEMORANDUM AND ORDER

Before the Court is the defendants’ motion to dismiss for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(doc. #45). The defendants also move this court to strike plaintiff’s jury trial demand (doc. #45). Plaintiff resists these motions (doc. #50) and moves for oral argument on these motions (doc. #49). As explained below, the Court hereby DENIES the motion for dismissal and GRANTS the motion to strike plaintiff’s jury trial demand. The Court DENIES plaintiff’s request for oral argument.

I BACKGROUND

The facts relevant to this motion were fully disclosed in the Memorandum and Order denying the defendants’ initial motion to dismiss. See Memorandum and Order, September 13, 2000 (doc. #19). Briefly restated, Unified Power Association (UPA) allegedly sustained damage to its transmission lines following the 1995 flooding by Devils Lake. As a result, UPA applied for disaster relief benefits from the Federal Emergency Management Agency (FEMA). FEMA denied UPA’s request for disaster relief. Upon subsequent appeals within the agency, FEMA continued to deny UPA the benefits it requested. Thereafter, UPA brought suit in this Court on two claims. The first claim alleged that FEMA, by denying UPA’s claim, violated the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”), 42 U.S.C. §§ 5121 et. seq. The second claim alleged that FEMA’s decision denied UPA equal protection of the law in violation of the Fifth Amendment of the Constitution.

FEMA then made a motion to dismiss for lack of subject matter jurisdiction (doc. #4). This Court, in a Memorandum and Order dated September 13, 2000 (doc. #19), found that it lacked subject matter jurisdiction with regard to the first claim, but found that it had jurisdiction to hear the constitutional claim. FEMA then brought this second motion to dismiss for lack of subject matter jurisdiction.

II MOTION TO DISMISS

    FEMA bases its motion to dismiss on two grounds: (1) sovereign immunity precludes jurisdiction over non-facial constitutional challenges; and (2) UPA has failed to exhaust administrative remedies with regard to its denial of equal protection.

    1. Sovereign immunity

FEMA contends that sovereign immunity bars jurisdiction of UPA’s equal protection claim. However, this Court, in its Memorandum and Order filed September 13, 2000, has already determined that it has jurisdiction to hear the constitutional claim. In that decision, this Court indicated that section 702 of the Administrative Procedures Act (APA) provides a limited waiver of sovereign immunity by allowing “a person suffering legal wrong because of agency action within the meaning of a relevant statute [to seek] judicial review thereof.” This waiver is inapplicable in two situations: (1) the statute precludes judicial review; or (2) the agency action is committed to agency discretion by law. 5 U.S.C. § 701(a).

This Court found that the Stafford Act, 42 U.S.C. § 5148, which precludes judicial review of discretionary functions, does not preclude review of the constitutional claim. Citing Rosas v. Brock, 826 F.2d 1004, 1008 (11th Cir. 1987), this Court stated “adherence to constitutional guidelines is not discretionary; it is mandatory.” Accordingly, this Court found that the sovereign immunity defense to jurisdiction was inapplicable, and UPA was allowed to proceed with its constitutional claim.

FEMA disagrees, however, with this Court’s application of Rosas to the present case, claiming that Rosas involved a challenge to the constitutionality of a statute on its face, whereas this case involves the constitutionality of the agency’s action as applied to UPA. In essence, FEMA asks this court to overturn its prior decision by finding that only facial challenges to the constitutionality of an agency’s enabling statute may be judicially reviewed. The Court finds this argument without merit. FEMA’s argument ignores the Supreme Court’s decision in Webster v. Doe, 486 U.S. 592 (1988). In Webster, the Supreme Court found that the plaintiff’s constitutional challenges to the application of an agency rule were entitled to judicial consideration. Id. at 603. Thus, FEMA’s motion to dismiss based on sovereign immunity is DENIED.

2. Exhaustion of remedies

FEMA contends that judicial review should be precluded because of a failure to exhaust available administrative remedies, arguing that UPA never raised its equal protection claim before FEMA. UPA maintains that it has exhausted available administrative remedies with regard to its underlying substantive claim and is not required to exhaust remedies with regard to its equal protection claim. UPA relies on several cases for the proposition that exhaustion of remedies is generally not required for constitutional claims. Specifically, UPA cites Califano v. Sanders, which states that “constitutional questions obviously are unsuited to resolution in administrative hearing procedures.” 430 U.S. 99, 109 (1977). This proposition from Califano has been repeated in later cases, “Administrative agencies, although they may consider constitutional claims, lack the authority to deal with them dispositively; the final say on constitutional matters rests with the courts.” Singh v. Reno, 182 F.3d 504, 509 (7th Cir. 1999).

FEMA argues, however, that Califano only applies to facial challenges to the constitutionality of a statute and not to the constitutionality of a statute as applied to a particular claimant. A similar argument was made by the Department of Energy in Tenneco Oil Co. v. Dep’t of Energy, 475 F. Supp. 299, (D. Del. 1979). The court in that case found that there was “no indication in the Supreme Court’s . . . language [in Califano] that such a distinction is to be drawn.” Accordingly, UPA is not required to exhaust the alleged available administrative remedies for its constitutional claim. FEMA’s motion to dismiss for failure to exhaust administrative remedies is DENIED.

While UPA is not required to exhaust its administrative remedies to proceed to trial, this Court will allow FEMA additional time to reconsider its decision in light of the equal protection claim. Accordingly, this Court may grant a motion for a reasonable continuance of the trial date in order to accommodate FEMA’s reconsideration. This motion must be filed within ten days from the date of this order. Likewise, UPA may need additional time for discovery in light the Court’s present ruling. Magistrate Klein’s invitation for UPA to renew its motion for additional discovery (doc #42) is re-extended.

III MOTION TO STRIKE JURY DEMAND

    Secondary to its motion to dismiss, FEMA moves to strike UPA’s jury demand. UPA has conceded that it has no right to a jury trial under the Seventh Amendment. Although it has no right to a jury trial, UPA contends that an advisory jury is appropriate in this case. Rule 39(c) of the Federal Rules of Civil Procedure allows a court, in its discretion, to try an action with an advisory jury. This court, in its discretion, DECLINES to try this case with an advisory jury. Thus, FEMA’s motion to strike UPA’s jury demand is GRANTED. 

III CONCLUSION

    For the reasons given herein, IT IS ORDERED that defendants’ motion to dismiss (doc. #45) is DENIED. Defendants’ motion to strike plaintiff’s jury trial demand is GRANTED. Plaintiff’s request for oral argument (doc. #49) is DENIED.

    IT IS SO ORDERED.

Dated this ____ day of August, 2001.

RODNEY S. WEBB, CHIEF JUDGE

UNITED STATES DISTRICT COURT