author: ESTES, Judge.

text:
    CONSUMERS UNION OF UNITED STATES, INC., et al., Plaintiffs-Appellants, v. COST OF LIVING COUNCIL et al., Defendants-Appellees, The Business Roundtable, Defendant-Intervenor.
    No. DC-17.
    Temporary Emergency Court of Appeals.
    Jan. 11, 1974.
    Rehearing Denied Feb. 4, 1974.
    Certiorari Denied May 13, 1974.
    See 94 S.Ct. 2387.

      Alan M. Silbergeld, Consumers Union, Washington, D. C. (Peter H. Schuck, Consumers Union, Washington, D. C., and of counsel, Lobel, Novins & Lamont, Washington, D. C., with him on the brief), for appellants.
    James Elkins, Atty., U. S. Dept. of Justice, Washington, D. C. (Irving Jaffe, Acting Asst. Atty. Gen., William E. Nelson and William White, Attys., U. S. Dept. of Justice, with him on the brief), for the Government-appellees.
    John G. DeGooyer, Hamel, Park, Mc-Cabe & Saunders, Washington, D. C., for intervenor.
    Before TAMM, Chief Judge, and HASTIE and ESTES, Judges.
   ESTES, Judge.

This is an appeal under Section 211 of the Economic Stabilization Act of 1970, as amended (the Act), by plaintiffs, Consumers Union of United States, Inc., William D. Hathaway, and Peter J. Petkas, from orders of the United States District Court for the District of Columbia denying plaintiffs’ motion for summary judgment and granting the motions for summary judgment made by the defendants, the Cost of Living Council (CLC), Dr. John T. Dunlop, its Executive Director, and William N. Walker, its Acting Deputy Director, and by defendant-intervenor, The Business Roundtable.

On July 17, 1973 plaintiffs filed their complaint in the district court seeking a declaratory judgment that certain of the CLC’s public disclosure regulations, 6 C. F.R. §§ 102.50 et seq., were illegal, and seeking an injunction rescinding those regulations and requiring the issuance of new regulations which comply with Section 205 of the Act. On August 22, 1973 plaintiffs filed an amended complaint to reflect the fact that Phase IV regulations had replaced the Phase III regulations challenged by the original complaint. On October 15, 1973 the motion of The Business Roundtable to intervene as a defendant was granted with defendants’ approval but over plaintiffs’ objection. The district court granted the defendants’ and the defendant-intervenor’s motions for summary judgment on November 2, 1973. Plaintiffs filed their notice of appeal with this Court on November 6, 1973.

Three principal issues are involved in this appeal. One of these issues, which has not been raised by any of the parties or the court below, will be considered first.

EXHAUSTION OF ADMINISTRATIVE REMEDIES

Part 102 of the CLC’s regulations is entitled “Public Access to Records.” Plaintiffs are challenging the legality of those parts of Subpart F (6 C.F.R. §§ 102.51-102.56) of Part 102 which declare what information submitted to the CLC shall or shall not be subject to public disclosure. Subparts B and C provide an administrative procedure whereby requests for information may be filed with the CLC’s Assistant Director for Public Affairs. Subpart E provides that adverse determinations made by the Assistant Director may be appealed within 30 days to the Director of the CLC.

In this case no information was requested of the CLC until August 17, 1973, one month after the original complaint had been filed in the district court. On that date the CLC Assistant Director received from Mark Silbergeld, an attorney for plaintiff Consumers Union, a letter request for certain information. The reply of the Assistant Director, received by the plaintiff on October 19, 1973, summarized the provisions of Subpart F and pursuant thereto refused to make available most of the information sought. On November 6, 1973, the same day that a notice of appeal was filed with this Court from the November 2, 1973 district court orders, Consumers Union wrote to the CLC Director, Dr. John T. Dunlop, to appeal from the October 19, 1973 determination by the Assistant Director. The record does not reflect that Dr. Dunlop has made a determination of the administrative appeal.

This Court follows the well-known rule requiring exhaustion of administrative remedies. City of New York v. New York Telephone Co., 468 F.2d 1401 (T.E.C.A.1972). Clearly, plaintiffs did not exhaust their administrative remedies before filing the action below. Strict application of the doctrine would require us to dismiss this case. In determining whether to apply the doctrine, it is appropriate to consider whether the policies that give rise to the doctrine would be furthered by its application to the circumstances of the case, and whether exceptions to the rule are present.

One reason often given for requiring exhaustion is that after a dispute has been determined by all available administrative procedures, the issues in dispute between the parties will be better framed and thus more susceptible of judicial determination. In the present dispute, however, there are no factual issues in dispute, and the question involved is a purely legal one as to whether the CLC’s public disclosure regulations are in violation of Section 205 of the Act. That question was adequately framed by the pleadings and exhibits in the district court, which ruled for the defendants on their motions for summary judgment. Since there is no question as to the nature of the issues in dispute between the parties, this policy reason behind requiring exhaustion does not favor application of the doctrine to this case.

A second reason for the doctrine is that requiring exhaustion will insure that the agency is given an opportunity to apply its particular administrative expertise to the question being reviewed. This policy is usually applied to the determination of technical factual disputes or to the determination of disputes involving the agency’s interpretation of its own regulations or orders. In both situations the reviewing court would be aided by having the informed opinion of the agency. In this case, however, there is neither a technical factual dispute nor a dispute involving the CLC’s interpretation of its orders or regulations. Instead, as mentioned above, the dispute is a legal one only, and there is no question as to the interpretation of the CLC’s regulations. Those regulations are clear; the dispute is whether they are in excess of the authority given by Section 205 of the Act. We find that this policy reason for exhaustion would not be furthered by application of the doctrine to these circumstances.

A third reason for requiring exhaustion is that if, through the administrative review process, the agency is made aware of the faults of its policies; it may change them on its own volition, thus removing the need for judicial review or making moot a pending judicial proceeding. “In this respect we have noted in our cases to date a healthy trend towards amendment of regulations when error or oversight has been pointed out to the [agency].” City of New York v. New York Telephone Company, 468 F.2d 1401, 1403 (T.E.C.A.1972). Were it not for the fact that plaintiffs’ views as to the illegality of these regulations have been repeatedly made known to the CLC since May 30, 1973, we might consider this an appropriate case for the application of this policy. On May 8, 1973 the CLC issued its proposed regulations for the implementation of Section 205, inviting interested persons to participate in the proposed rule making by submitting written data, views, or comments. On May 30, 1973 plaintiff Hathaway filed comments contending that the proposed regulations were illegal in violation of Section 205. On May 29, 1973 and June 4, 1973 plaintiff Petkas filed comments of the same import. On May 18, 1973 the CLC announced the scheduling of a hearing for June 6, 1973, for the purpose of hearing comments on the proposed regulations by interested parties. Plaintiffs Hathaway and Petkas attended the hearing and testified in opposition to the proposed regulations. On June 15, 1973 the CLC promulgated as final regulations the proposed regulations which had been the subject of the hearings and comments above. Under these circumstances it would not appear likely that the CLC would now decide to replace its regulations because of plaintiff Consumers Union’s administrative appeal.

Thus we decide that under the exceptional circumstances of this case the doctrine of exhaustion of administrative remedies does not prevent our consideration of this appeal. We emphasize, however, that in the usual case arising under the Economic Stabilization Act, policies favoring exhaustion will no doubt apply, and plaintiffs should be extremely wary of commencing actions in court when an adequate administrative remedy lies open to them but has not been pursued.

WHICH FIRMS MUST DISCLOSE?

Under Phase III of the Economic Stabilization Program, quarterly reports to the CLC were required of all firms with annual sales or revenues of $250 million or more. [6 C.F.R. § 130.-21(b)]. Public disclosure was required of all such firms. (6 C.F.R. § 102.50). Under Phase IV regulations, the number of firms required to report has been extended to include all firms with annual sales or revenues of $50 million or more (6 C.F.R. § 150.161), but the regulations retain the Phase III requirement that public disclosure applies only to those firms with annual sales or revenues of $250 million or more. (6 C.F.R. § 102.-51). Plaintiffs contend that this Phase IV requirement is in violation of Section 205(b)(1), which provides in relevant part that “Any business enterprise subject to the reporting requirements under section 130.21(b) of the regulations of the Cost of Living Council in effect on January 11, 1973, shall make public any report. . . .”

The public disclosure section in question, Section 205 of the Act, was added to the statute during Phase III as a part of the Economic Stabilization Act Amendments of 1973, P.L. 93-28, April 30, 1973. Thus Congress considered the question of public disclosure in light of which firms were required under Phase III to report and to disclose, and explicitly required that the firms which would be required to disclose under the new Section 205 were those which were required to file quarterly reports “under section 130.21(b) of the [CLC] regulations in effect on January 11, 1973 .,” that is, those with annual sales or revenues of $250 million or more. Plaintiffs would have us find that Congress did not mean what it said, but meant instead that disclosure was to be required of whichever firms were required to report to the CLC by the successor regulations to the Phase III regulation mentioned in Section 205 of the statute. They would have us require the CLC to issue new regulations requiring public disclosure of all firms of $50 million or more annual sales or revenues, since those firms are now required under Phase IV to file quarterly reports to the CLC.

We find it unnecessary to consider this issue at length. Section 205(b)(1) on its face clearly and specifically calls for disclosure by those businesses that were required to report to the CLC by “section 130.21(b) of the regulations of the Cost of Living Council in effect on January 11, 1973.” The statute plainly calls for disclosure only by firms of more than $250' million annual sales or revenues, and the CLC Phase IV regulations being challenged do likewise.

WHAT INFORMATION MUST BE DISCLOSED?

Plaintiffs’ principal contention .below, and on this appeal, is that specified parts of the CLC’s regulations (Subpart F of Part 102, 6 C.F.R. §§ 102.51-102.56), determining what information reported to it is subject to public disclosure, are illegal because they are contrary to the requirements of Section 205(b)(3) of the Act. Section 205(b) (3) provides:

Immediately upon enactment of this subsection, the President or his delegate shall issue regulations defining for the purpose of this subsection what information or data are proprietary in nature and therefore excludable under paragraph (2), except that such regulations may not define as ex-cludable any information or data which cannot currently be excluded from public annual reports to the Securities and Exchange Commission pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 by a business enterprise exclusively engaged in the manufacture or sale of a substantial product as defined in paragraph (1). Such regulations shall define as excludable any information or data which concerns or relates to the trade secrets, processes, operations, style of work, or apparatus of the business enterprise.

This subsection thus operates as a limitation on the discretion of the CLC, granted by Section 205(b) (2), to exclude from public disclosure information or data that is proprietary in nature. Any information submitted to the CLC must fall into one of the three statutory categories: (1) information concerning trade secrets, etc., which must be excluded from public disclosure, (2) information which would have to be reported to the Securities and Exchange Commission (SEC) by a single product-line or single service-line company, which cannot be excluded from public disclosure, and (3) all other information, which the CLC may or may not define as proprietary and thus excludable from public disclosure.

The CLC’s regulations require the filing of quarterly reports on its forms CLC-2 (Phase III) or CLC-22 (Phase IV). The forms must contain the information specified therein. For the purposes of public disclosure, Section 102.-54(a)(3) provides that each firm shall submit with its quarterly report four extra, or “public disclosure” copies from which has been omitted all information or data defined as proprietary and excludable from public disclosure by Sections 102.55 or 102.56. Section 102.-54(c) provides that interested persons may examine the public disclosure copies of the reports at the appropriate Internal Revenue Service District Office.

Sections 102.55 and 102.56 specify which items on forms CLC-2 and CLC-22 are proprietary (excludable) information. A reading of those sections will reveal that the CLC has defined as proprietary all items which are, or are based on, annual sales or revenues, net sales, operating income, and sales by product line or service line. None of the parties disputes that such accounting items are required to be reported to the SEC. However, as the CLC points out in Section 102.55(a)(2), its definitions for net sales and operating income “are not the same as those used for SEC purposes because they exclude revenues from foreign operations, public utilities, farming activities and insurance activities. Since such general financial data, thus more narrowly defined, is not required for SEC purposes, it can be excluded from the public annual reports to the SEC and is, therefore, defined as proprietary data. . . . ” Annual sales or revenues is also defined as proprietary, on the basis that the CLC’s “special definition of annual sales or revenues results in a figure not disclosed in the SEC Form 10-K.” Section 102.-55(a)(1).

This dispute thus focuses upon the meaning of that clause of Section 205(b)(3) of the Act which prohibits the CLC from defining as proprietary and excludable from public disclosure “information or data which cannot currently be excluded from public annual reports . . . ” to the SEC. Plaintiffs contend that the words “information or data” mean “types of information or data,” that since annual sales or revenues, net sales, and operating income are required by the SEC, then the CLC is bound by the statute to define such items as nonproprietary information, and that the statutory command applies regardless of the variation in defining the items by the CLC and the SEC. The actual effect of the defendants’ argument, although disclaimed by intervenor, is that the words “information or data” mean “numerically identical information or data.” Defendants contend that since, for example, the net sales figure reported on the CLC form will not be the same figure as the net sales figure reported to the SEC, then the CLC form net sales figure is not SEC data, and the CLC is not prohibited by the statute from defining its net sales figures as proprietary and excludable from public disclosure. Defendants also argue that the CLC was bound to define very narrowly what information is nonproprietary because Section 205(a) makes reference to 18 U.S.C. § 1905, which provides criminal penalties for any officer of the government who “discloses, or makes known in any manner or to any extent not authorized by law” any information required to be filed with an agency. The plaintiffs respond by noting that in this case the defendants were not only authorized to disclose the information, but were forbidden by the statute from withholding it. Further, they note that Section 205(a) specifically excepts Section 205(b) from the reference to the applicability of 18 U.S.C. § 1905.

Although both plaintiffs and defendants have brought certain portions of the legislative history to our attention, we have found, and the parties do not argue othex-wise, that the legislative history as a whole is not clearly dispositive of the problems outlined above. The Congressional purpose in amending Section 205 was to grant access by interested members of the public to financial data on CLC reporting forms so that the public could better monitor the degree of compliance by business with the Economic Stabilization Program. The amendment's sponsor and principal supporters stated that it would give the public a basis for making independent judgments on reporting companies’ compliance with the rules of the program, and that it would put these companies on notice that price increases above 1.5 percent on any substantial product would subject them to public scrutiny. S.Rep.No.93-63, Senate Committee on Banking, Housing and Urban Affairs, 93d Cong., 1st Sess. 8 (1973). Plaintiff Senator Hathaway was the author of the original amendment, which is now Section 205(b)(1). Standing alone this amendment would apparently have made almost all information reported to the CLC subject to public disclosure. The Senate then adopted an amendment, now Section 205(b) (2), which was offered by Senator Tower. This amendment provides that proprietary information concerning income, profits, losses, and costs could be excluded from public disclosure. Senator Hathaway proposed another amendment, which was adopted and is now Section 205(b)(3). Cong.Rec., March 20, 1973, S 5314. As discussed above, it is Section 205(b)(3) that provides which information can or cannot be defined as proprietary.

The CLC argues that its regulations permit public access to sufficient information to monitor compliance with the program. The Business Roundtable argues that to require the public disclosure of the business information sought by plaintiffs would give an unfair competitive advantage to a reporting firm’s foreign and domestic competitors who are not required to report. Neither argument is responsive to the issue of whether the public disclosure regulations meet the terms of the statute requiring their promulgation. Whether the public is provided sufficient information to monitor compliance, and whether some adverse competitive advantages may result, are public policy considerations within the usual province of the Congress.

CLC gives no reasonable explanation related to the objectives of the Act, particularly Section 205 forbidding the CLC to “define as excludable any [SEC] information or data . . .,” as to why the CLC decided that the information in dispute was not SEC data and therefore should be withheld from public disclosure. The only reasons advanced are that the CLC and SEC definitions are not the same, thus the figures reported will not be the same, and that, therefore, the CLC contends, it may define the information as proprietary because it is not SEC data. We are not told on what basis the CLC decided that Congress intended public disclosure only of information or data which has been defined identically by both agencies. While there are generally recognized meanings for the accounting terms “sales,” “net sales,” “operating income,” etc., we think it is indisputable that different companies, and different government agencies, will use slightly varying methods of computing these figures to meet the needs of the companies or agencies. Indeed, it is probably the rule, rather than the exception, that one will find minor definitional differences between businesses and between agencies. Congress surely knew this when it enacted Section 205(b) (3), and, therefore, we find it unrealistic to assume, as defendants’ argument would have us do, that Congress intended “information or data” to mean “numerically identical information or data.” Instead, we think that when Congress, with knowledge that the SEC requires public disclosure of, for example, net sales figures reported to it, enacted Section 205(b)(3) forbidding the CLC to define as proprietary any information required to be reported to the SEC, Congress intended that any net sales figures reported to the CLC could not be defined as proprietary and ex-cludable.

The defendants’ position on this issue results in an anomaly. While Congress used the mandatory language “may not define as excludable,” which would seem to leave no discretion, the CLC’s rationale would permit it to avoid completely the effect of this provision of the statute by simply using definitions which differed from those of the SEC. We think Congress intended these words to have an effect, and that that intended effect was to withhold from the CLC any discretion to exclude from public disclosure business information required by the SEC.

Defendants argue that they were required to define very narrowly what information is nonproprietary because Section 205(a) makes reference to 18 U.S.C. § 1905, which provides criminal penalties for any officer of the government who “discloses, or makes known in any manner or to any extent not authorized by law” any information required to be filed with an agency. While we understand that the CLC is conscientiously endeavoring to release only that information which it is authorized to release, in this case the CLC was not only authorized to release the information, it was forbidden by Section 205(b)(3) from defining the information as proprietary and preventing its release. Furthermore, the CLC apparently overlooked the fact that the reference to 18 U.S.C. § 1905 in Section 205(a) is preceded by the words “Except as provided in subsection (b) . ” We hold that for these reasons the members of the CLC have no need to fear prosecution under 18 U.S.C. § 1905 for defining information reported to the CLC as nonproprietary when the statute required them to do so.

Having found that the CLC regulations defining proprietary information, 6 C.F.R. § 102.55(a)(1), (2), and (4); 6 C.F.R. § 102.56(a)(1), (2), and (4), are illegal because in contravention of Section 205(b)(3) of the Act, we turn to the question of the relief to be given the plaintiffs. Considering the emergency nature of the stabilization program being administered by the defendants, we think it is not inappropriate to consider the impact that an invalidation of these regulations might have on administration. Fortunately it appears that in this case there will be very minimal, if any, disruptive effects caused by such a determination. The CLC will be required to issue new regulations in conformance with this opinion. Other than that, however, there will be no additional “red tape’’ for the defendants, reporting businesses, or the members of the public. The reporting businesses will continue to submit public disclosure copies of the reports, and the public will examine them as it has before. The only difference will be that the CLC, through its new regulations, will have reduced the number of items that may be omitted from the public disclosure copies.

Accordingly, it is ordered that this cause be remanded to the trial court for further proceedings in accordance with this opinion; that the trial court’s orders denying plaintiffs’ motion for summary judgment and granting defendants’ and intervenor’s motions for summary judgment be vacated, and that plaintiffs’ motion for summary judgment be granted only to the extent expressly indicated by this opinion; and that an injunction be issued ordering the CLC to prepare and issue new regulations in accordance with Section 205(b)(3) of the Act, as interpreted herein, to replace the existing Sections 102.55(a)(1), (2), and (4), and 102.-56(a)(1), (2), and (4) of its regulations, defining proprietary information, as soon as is practicable under the circumstances.

So ordered.

      . “Clearly then, in light of the policy considerations and the legislative history, exhaustion is required in the context of this proceeding unless we find the administrative remedy provided inadequate.” 468 F.2d at 1404. “Furthermore, we find none of the well-known exceptions to the exhaustion rule applicable here.” Id. n. 15.

      . In Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970) , cited in Richardson v. Belcher, 404 U.S. 78, 81, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971) , the Supreme Court stated: “The problems of government are practical ones and may justify, if they do not require, rough accommodations—illogical, it may be, and unscientific.”

      . Section 202 states that the objectives are “to stabilize the economy, reduce inflation, minimize unemployment, improve the Nation’s competitive position in world trade, and protect the purchasing power of the dollar. ...”

      . For the guidance of the court below and the parties, the above sections of the regulations (and their predecessors dealing with form CLC-2) are held illegal insofar as they define as proprietary the information required on lines 7 through 18, line 24 (column c), lines 27 through 33, and lines 35 through 39 of present form CLC-22. Section 205(b)(3) of the Act prohibits the CLC from defining as proprietary any information or data which would in fact be reported to the SEC by a single product-line manufacturer or seller. Slight definitional variances between CLC terms and SEC terms are not sufficient grounds for the CLC to define information as proprietary when that information is of the same nature as that required by the SEO. Unless a reasonable explanation, related to the objectives of the Act, is shown, the CLC may not use definitional variances as a justification for issuing regulations which restrict the effectiveness of Section 205 in furthering public disclosure to insure compliance with the Act.

      . We recognize, however, that for quarterly reports filed after the amendment of Section 205 on April 30, 1973, revised public disclosure copies, prepared in accordance with the regulations to be issued to replace those herein declared invalid, must be made available for examination by members of the public, in accordance with the “Disclosure procedure” prescribed by present 6 C.F.R. § 102.54.


source: Caselaw Access Project

author: STEVENS, Circuit Judge.

license: Public Domain

text:
    Dorothy JEFFRIES, Plaintiff-Appellant, v. TURKEY RUN CONSOLIDATED SCHOOL DISTRICT et al., Defendants-Appellees.
    No. 73-1535.
    United States Court of Appeals, Seventh Circuit.
    Argued Dec. 3, 1973.
    Decided Feb. 5, 1974.
    Richard J. Darko, Jonathan L. Birge, Indianapolis, Ind., for plaintiff-appellant.
    Jerdie D. Lewis, Shephen L. True-blood, Terre Haute, Ind., Clelland J. Han-ner, Rockville, Ind., for defendants-ap-pellees.
    Before CUMMINGS, PELL and STEVENS, Circuit Judges.
   STEVENS, Circuit Judge.

Fairly analyzed, the question presented by this appeal is whether a public employee, who has no right to any procedural safeguards in connection with the termination of her employment, and who does not claim that she was terminated for a constitutionally impermissible reason, nevertheless is protected against “arbitrary and capricious” discharge by the concept of “substantive due process.”

There are two aspects to plaintiff’s attack on the Board action as “arbitrary and capricious.” In part, she is attacking the written statement of reasons as either illogical or untrue; more fundamentally, she is attacking the actual decision of tl Board as illogical and lacking in reaso. . We consider the two aspects of her claim separately.

I.

The Supreme Court’s reversal of this court’s decision in Board of Regents v. Roth, makes it perfectly clear that plaintiff did not have a constitutional right to a hearing before the School Board in connection with its decision to terminate her employment. She had no tenure or other claim of entitlement to the position which would qualify as a property interest under the Court’s reasoning in Roth and in Perry v. Sindermann. Nor has she alleged an impairment of her “liberty” either by alleging sufficient facts to indicate that she was accused of dishonesty or immorality, or otherwise stigmatized, or by claiming that the termination of her employment was motivated by her exercise of rights protected by the Constitution or by a discriminatory purpose. Since she was not deprived of either “liberty” or “property,” as those terms are used in the Fourteenth Amendment, she had no constitutional right to have the Board accord her procedural due process when it decided not to renew her contract. She had no constitutional right to a hearing and, as we understand Roth, no constitutional right to a written statement of the reasons for her discharge.

In our opinion, the questions whether a nontenured teacher, whose contract is not renewed, has any right to a statement of reasons or to judicial review of the adequacy or accuracy of such a statement are matters of state law, not federal constitutional law. There are sound policy reasons to support either a statutory requirement, or an administrative practice, that a complete and accurate written statement of the reasons for such an important decision be promptly delivered to the teacher. But since, by hypothesis, no constitutionally protected property or liberty, interest of the teacher is impaired by the Board’s action, she has no federally protected right to a fair hearing or to a fair statement of reasons. The fact that a state, or a School Board, may voluntarily communicate more information to her,- or receive more information from her, than the Constitution requires, is not in itself sufficient to create a federal right that does not otherwise exist.

A written statement of reasons may have great significance as evidence, for example, that a particular Board decision was motivated by a constitutionally impermissible reason. And, of course, an adequate statement by the defendants would not foreclose a claim that the Board was, in fact, motivated by a forbidden purpose. But the statement itself is just evidence, not an aspect of the state’s legal process that is subject to federal supervision and control mandated by the United States Constitution.

II.

Putting the statement of reasons to one side, plaintiff alleges that the Board decision was itself completely without basis in fact or logic, and argues that such, an arbitrary and capricious action violates her constitutional right to “substantive due process.”

The claim that a person is entitled to “substantive due process” means, as we understand the concept, that state action which deprives him of life, liberty, or property must have a rational basis—that is to say, the reason for the deprivation may not be so inadequate that the judiciary will characterize it as “arbitrary.” Since standards of “irrationality” or “arbitrariness” vary from time to time and from judge to judge, applications of the concept — indeed, the concept itself — have generated serious criticism of the judiciary and the judicial function. In this case we need not appraise the viability of the concept, or the extent to which it authorizes federal judges to impose their own views about what is “unrelated to the educational process or to working relationships within the educational institution” upon locally elected school boards. For the same critical objection to any procedural due process claim by the plaintiff also forecloses her argument based on “substantive due process.”

The Fourteenth Amendment prevents the state from depriving any person of liberty or property without due process of law. As Roth squarely holds, the right to procedural due process is applicable only to state action which impairs a person’s interest in either liberty or property. Certainly the constitutional right to “substantive” due process is no greater than the right to procedural due process. Accordingly, the absence of any claim by the plaintiff that an interest in liberty or property has been impaired is a fatal defect in her substantive due process argument.

The cases upon which plaintiff relies are all readily distinguishable. In Wieman, Slochower, and Hostrop, public employees were dismissed during the terms of their contracts; their property interests were therefore impaired. See Roth, 408 U.S. at 576-577, 92 S.Ct. 2701. Moreover, in each of those cases the dismissal impaired a protected interest in liberty. Thus, for two reasons, neither of which is applicable here, those employees were entitled to due process. Schware v. Board of Bar Examiners of New Mexico, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796 held that the denial of a license to practice law on the ground that the applicant is not of good moral character is a deprivation of liberty; more narrowly, the Court held that such a denial must be supported by “evidence in the record which rationally justifies a finding that Schware was morally unfit to practice law.”

The cases from the First and Eighth Circuits on which plaintiff relies all stem from the analysis of the Due Process Clause in Judge Doyle’s opinion in Roth, which was approved by a majority of this court but rejected by a majority of the Supreme Court. There is nothing in any of the opinions from those circuits explaining why the absence of either a property or liberty interest should not be fatal to a substantive as well as a procedural due process claim. On the other hand, the reasoning which led to the conclusion that a public employee in plaintiff’s situation is not entitled to a hearing before the School Board to determine whether there is any basis in fact for a nonrenewal decision applies equally to a claim that a federal court must conduct a hearing to make precisely the same determination.

The judgment is

Affirmed.

      . That statement read as follows:
      “STATEMENT OF REASONS FOR NONRENEWAL OF 1972-73 TEACHER CONTRACT FOR MRS. DOROTHY JEFFRIES, BLOOMINGDALE ELEMENTARY SCHOOL:
      (1) That on repeated occasions Mrs. Jef-fries exhibited highly unethical conduct in her relationships with a fellow staff member, specifically, Miss Williams, which resulted in a loss of respect on the part of students for Miss Williams and which resulted in student behavioral problems for Miss Williams. By openly contradicting the directives given to students by Miss Williams, Mrs. Jeffries did in fact cause a disruption of the normal orderly school process for students and placed Miss Williams in a situation of duress from her students.
      “(2) That in the early part of the school year, Mr. Ward Fritzen, Turkey Run Consolidated School District Music Director, expressed a concern that more time be al-loted [sic] for instrumental music instruction in the Bloomingdale Elementary School. Whereupon, Mr. Fritzen and Bloomingdale Principal Davis agreed upon a schedule for Mrs. Jeffries which would have allowed additional time for such instrumental instruction. Upon being presented the revised schedule and upon being asked to follow such revised schedule, Mrs. Jeffries refused to follow the revised schedule. Mrs. Jeffries stated that she did not agree that the additional instructional time was needed and that following such a revised schedule would cause her to spend additional time at home in grading papers and in preparation for her other classroom duties. It should be pointed out that Mrs. Jeffries was not issued a direct order to follow the revised schedule but rather she was asked to do so willingly upon the recommendation of the Turkey Run Consolidated School District Music Director. However, her failure to comply with such a request and her disputing of the basis of a recommendation from a supervisor constitute a lack of cooperation, exhibits an unprofessional attitude, and reflects a neglect of duty in regards to the best interests of the students involved.
      “■Whereas the Turkey Run Consolidated School District School Board is legally charged with the duty of building up and maintaining an effective and efficient school system, it follows that this duty is therefore likewise the duty of those persons employed by the School Board and the School Board may reasonably expect its employees to carry out this duty to the best of their abilities. Whereas the preceding statements illustrate that Mrs. Jef-fries has not fulfilled her responsibilities, within the scope of her abilities, to her duty of building up and maintaining an efficient school system, such preceding statements constitute good and just cause that Mrs. Jeffries’ Teacher Contract for 1972-73 should not be renewed and that she be dismissed from employment by the Turkey Run Consolidated School District at the end of the 1971-72 school year.” App. 11-12.
      We agree with the district court’s holding that plaintiff was not deprived of “liberty” by this statement of reasons. See Shirck v. Thomas, 486 F.2d 691 (7th Cir. 1973).

      . Complaint, paragraph 16.

      . 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548, reversing 446 F.2d 806 (7th Cir., 1971). The district court’s opinion is reported at 310 F.Supp. 972 (W.D.Wis.1970).

      . 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570.

      . For example, in North Dakota State Board of Pharmacy v. Snyder’s Drug Stores, Inc., 414 U.S. 156, 94 S.Ct. 407, 38 L.Ed.2d 379, the Supreme Court referred to “that vintage of decisions which exalted substantive due process by striking down state legislation which a majority of the Court deemed unwise.” 414 U.S. 164, 94 S.Ct. 412 (December 5, 1973). Although the recent decision in Cleveland Board of Education v. LaFleur, 414 U.S. 632, 94 S.Ct. 791, 39 L.Ed.2d 52 (1974) may be characterized as a substantive due process holding, it is interesting to note that the Supreme Court carefully avoided use of that label.

      . The underlying objections to our use of the Fourteenth Amendment to prevent elected officials from deciding questions of economic policy are equally applicable to attempts to prevent elected officials from deciding other questions of social policy. Justice Holmes’ pithy comment on substantive due process in his dissent in Truax v. Corrigan is not merely relevant to economic issues: “I must add one general consideration. There is nothing that I more deprecate than the use of the Fourteenth Amendment beyond the absolute compulsion of its words to prevent the making of social experiments that an important part of the community desires, in the insulated chambers afforded by the several states, even though the experiments may seem futile or even noxious to me and to those whose judgment I most respect.” 257 U.S. 312, 344, 42 S.Ct. 124, 134, 66 L.Ed. 254.

      . See Drown v. Portsmouth School District, 451 F.2d 1106, 1108 (1st Cir. 1971).

      . At one point in her brief, plaintiff seems to argue that, entirely apart from her position as a teacher, as a citizen she has a “substantive right to be free from arbitrary and capricious governmental action.” (At 17.) She does not identify the source of any such right, but necessarily must be contending that it is an interest in “liberty” protected by the Fourteenth Amendment. Of course, if it were, she would be entitled to procedural due process. In practical terms, if her argument were valid, every time a citizen was affected by governmental action, he would have a federal right to judicial review. In view of contemporary reluctance to embrace the concept of substantive due process, see n. 5, supra, it would be anomalous indeed to conclude that the same element— “freedom from arbitrariness” — should at once entitle a person to due process and also be a part of the process which is due. See dissenting opinion in Shirck v. Thomas, 447 F.2d 1025, 1028-1029 (7th Cir. 1971).

      . Wieman v. Updegraff, 344 U.S. 183, 73 S.Ct. 215, 97 L.Ed. 216.

      . Slochower v. Board of Higher Education of New York City, 350 U.S. 551, 76 S.Ct. 637, 100 L.Ed. 692.

      . Hostrop v. Board of Junior College District No. 515, 471 F.2d 488 (7th Cir. 1973).

      . If it is accurate to characterize those decisions as substantive due process cases, it should be noted that the concept affects the analysis of the property interest and the liberty interest in different ways. Thus, if an employee who has a property interest in his job is discharged for exercising a constitutional right, sucli a reason is impermissible and therefore the equivalent of no reason at all — he may then have been deprived of property without substantive due process. Alternatively, if attention is focused on his First Amendment rights, for example, and if he is discharged for speaking out on an issue of public importance, even without a property interest in his job, the discharge is tantamount to punishment, and therefore is a deprivation of an interest in liberty. Recognizing that some deprivations of liberty can be justified by reasons acceptable to the judiciary, see Pickering v. Board of Education, 391 U.S. 563, 569-570, 88 S.Ct. 1731, 20 L.Ed.2d 811, the absence of an acceptable justification may be characterized as a denial of substantive due process.

      . In Roth the Supreme Court described the holding in Schware as follows: “The Court has held, for example, that a State, in regulating eligibility for a type of professional employment, cannot foreclose a range of opportunities ‘in a manner . . . that contravene [s] . • . . Due Process.’ Schware v. Board of Bar Examiners, 353 U.S. 232, 238, 77 S.Ct. 752, 1 L.Ed.2d 796, and, specifically, in a manner that denies the right to a full prior hearing. Willner v. Committee on Character, 373 U.S. 96, 103, 83 S.Ct. 1175, 10 L.Ed.2d 224” 408 U.S. at 574, 92 S.Ct. at 2707. (emphasis added).

      . 353 U.S. at 246-247, 77 S.Ct. at 760. Arguably, a requirement that the record must contain some evidence supporting a tribunal’s determination may properly be characterized either as “procedural” or as “substantive.” Cf. Vajtauer v. Commissioner of Immigration in which the Court recognized that “deportation without a fair hearing or on charges unsupported by any evidence is a denial of due process.” 273 U.S. 103, 106, 47 S.Ct. 302, 304, 71 L.Ed. 560. Cf. also Vachon v. New Hampshire, 414 U.S. 478, 94 S.Ct. 664, 38 L.Ed. 666 (1974).

      . In Drown v. Portsmouth School District, supra n. 7, the court quoted both decisions in this circuit in Roth in reaching its result. 451 F.2d at 1108. In McEnteggart v. Cataldo, 451 F.2d 1109, 1110-1111 (1971), the same court relied upon its decision in Drown. In Fisher v. Snyder, 476 F.2d 375, 377 (1973), the Eighth Circuit relied on McEnteggart for the proposition that a teacher may not be discharged for an arbitrary or capricious reason. The dicta in Cook County College Teachers Union, Local 1600, A.F.I. v. Byrd, 456 F.2d 882, 889 (7th Cir. 1972) similarly relied upon Judge Doyle’s opinion in Roth.

      Other circuits, also writing before Roth, suggested by way of dicta that a similar result should obtain. See Johnson v. Branch, 364 F.2d 177, 181 (4th Cir. 1966); Lucas v. Chapman, 430 F.2d 945, 948 (5th Cir. 1970). Dicta in a case involving a public employee who was not a teacher is similar. See Norton v. Macy, 135 U.S.App.D.C. 214, 417 F.2d 1161, 1164 (1969).

      . The dissenting opinion in Shirck v. Thomas, supra, n.8, pointed out that the original holdings in Roth necessarily rested on the same concept of substantive due process on which plaintiff relies in this case.


author: SWYGERT, Chief Judge.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Anthony ESPOSITO, Defendant-Appellee.
    No. 72-1825.
    United States Court of Appeals, Seventh Circuit.
    Argued April 11, 1973.
    Decided June 12, 1973.
    Certiorari Denied Jan. 7, 1974.
    See 94 S.Ct. 879.

      James R. Thompson, U. S. Atty., William T. Huyck, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellant.
    Thomas P. Sullivan, Chicago, Ill., for defendant-appellee.
    Before SWYGERT, Chief Judge, KILEY, Circuit Judge, and BARNES, Senior Circuit Judge.

       Senior Circuit Judge Stanley N. Barnes of the United States Court of Appeals for the Ninth Circuit, sitting by designation.

   SWYGERT, Chief Judge.

Defendant-appellee, Anthony Esposito was charged in a two count indictment with the possession and distribution of 206.5 milligrams of cocaine in violation of 21 U.S.C. § 841. Following a trial before a jury, he was found guilty on both counts. Esposito then moved for a new trial or, in the alternative, for an arrest of judgment on the ground that the Government had failed to prove any connection between the offense charged and interstate commerce. The district court denied the motion for a new trial but granted the motion for arrest of judgment, holding that the “offense of which this defendant stands convicted is not one against the federal government, or one which Congress has power to prohibit in the manner attempted by 21 U.S.C. § 841.” The Government appeals.

I

The threshold question is one of ap-pealability: Under the 1971 amendment to the Criminal Appeals Act, 18 U.S.C. § 3731, can the Government appeal from the district court’s order ?

Section 3731 provides:

In a criminal case an appeal by the United States shall lie to a court of appeals from a decision, judgment, or order of a district court dismissing an indictment or information as to any one or more counts, except that no appeal shall lie where the double jeopardy clause of the United States Constitution prohibits further prosecution.

The government’s right to appeal trial orders terminating criminal prosecutions is limited by § 3731 and the double jeopardy clause of the fifth amendment. The jeopardy clause stands as an absolute prohibition against government appeals where jeopardy is found to have attached. Although Congress has no power to expand the government’s right to appeal beyond the prohibition of the jeopardy clause, it does have the power to further limit it. That being true, the question of appealability in cases such as this is best approached by a two part inquiry. Initially the question is whether jeopardy in fact attached. If it did, the prosecution is at an end and no appeal is available to the Government; if it did not, the second inquiry, involving the interpretation of § 3731 and its application to the specific facts of the case, is required.

For jeopardy purposes the question to be decided is whether the trial court “bottomed” his order “on factual conclusions not found in the indictment” or “on the basis of evidence adduced at trial.” United States v. Sisson, 399 U.S. 267, 288, 90 S.Ct. 2117, 2129, 26 L.Ed.2d 608 (1970). If the court’s order “arresting judgment” is based upon evidence produced at trial, it is in the nature of an acquittal and is not appeala-ble under the double jeopardy clause.

A review of the record here shows that the trial judge did not base his order on the evidence adduced at trial. Jeopardy did not, therefore, attach and this appeal is not constitutionally barred. The challenged order was limited to the court’s conclusion that unless adequate connection between the conduct sought to be regulated and interstate commerce is alleged and proved, prosecution under the statute is an invalid exercise of federal power. The court, in arriving at that conclusion, did not need to, and indeed did not, rely on the evidence produced by either party. The indictment contained a narrative of virtually every fact recited in the order and there was neither allegation nor proof of a connection with interstate commerce. Further, it is clear from the order that the court concluded that the fatal defect in the prosecution lay in the indictment’s failure to state and the statute’s failure to require a nexus with interstate commerce which would justify federal regulation. The fact that the prosecution failed to prove such a connection, though alluded to in the order, was of no significance to the actual basis for the decision. The order was neither based upon nor limited in application to the facts of the case. Appeal, therefore, is not barred by the double jeopardy clause of the fifth amendment.

The defendant also argues that this appeal is barred by the clear and unambiguous language of § 3731. We disagree.

The predecessor of the present Appeals Act, Pub.L. 90-351 (1968), contained express provisions that permitted appeals by the government from various trial court orders which “terminated" prosecutions, including “arrests of judgment.” The present section contains no such provision. It is limited to dismissals of indictments. The Government argues that appeals are permissible under the present § 3731 from any order except an acquittal. The language of the statute, its legislative history, and the well established rule of construction that the Criminal Appeals Act is to be strictly construed against the Government, Will v. United States, 389 U.S. 90, 97, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967), all compel the rejection of that expansive interpretation. Nevertheless, the fact that we read § 3731 as permitting appeals only from dismissals of indictments does not resolve the question that is presented here. Although the trial judge labelled his order an “arrest of judgment,” it remains for us to determine whether that characterization is correct and, if so, whether an arrest of judgment under the circumstances of this case is equivalent to the dismissal of an indictment. We answer both questions in the affirmative.

The order in question was properly designated an arrest of judgment. As noted above, it was based exclusively upon allegations made in the indictment and was entered because of deficiencies in the charge against the defendant. As such, it was an “arrest of judgment” as that term was recently defined by the Supreme Court in Sisson.

In using that phrase [arrest of judgment] in the Criminal Appeals Act, Congress did not, of course, invent a new procedural classification. Instead, Congress acted against a common-law background that gave the statutory phrase a well-defined and limited meaning. An arrest of judgment was the technical term describing the act of a trial judgé refusing to enter judgment on the verdict because of an error appearing on the face of the record that rendered the judgment invalid,
* * * * * *
For the purpose of this case the critical requirement is that a judgment can be arrested only on the basis of error appearing on the “face of the record,” and not on the basis of proof offered at trial. 399 U.S. at 280-281, 90 S.Ct. at 2125.

Congress, in using the phrase in the former § 3731, defined it in a manner which would encompass the instant order. Senator Nelson of Wisconsin, one of the bill’s sponsors, noted that “[t]he arrest of judgment ... is not a general motion covering all the grounds on which a judgment may be arrested. It is simply for arrest of judgment because of the insufficiency of the indictment — that is, the failure of the indictment to charge a criminal offense.” 41 Cong.Rec. 2756.

Not only was the instant order an arrest of judgment, it was tantamount to the dismissal of an indictment. It comes, therefore, within the meaning of “dismissal” as used in § 3731, and is ap-pealable.

II

Having decided that the Government may prosecute this appeal, we turn to the merits. The district court concluded that Congress had no power to regulate the use and distribution of cocaine without requiring proof in each prosecution of some connection with interstate commerce. We hold that it erred in so doing.

The arguments made by the defendant and accepted by the trial court have previously been rejected by both the Fifth and Sixth Circuits. United States v. Scales, 464 F.2d 371 (6th Cir. 1972); United States v. Lopez, 459 F.2d 949 (5th Cir. 1972). We concur in the reasoning of those cases and reject the conclusion of the district court in this case.

For this reason, the order of the district court is reversed and vacated and the cause is remanded for entry of judgment in accordance with the jury’s verdict.

      . Referring to the original Criminal Appeals Act of 1907, Act of March 2, 1907, c. 2564, 34 Stat. 1246, the majority in United States v. Sisson, 399 U.S. 267, 90 S.Ct. 2117, 26 L.Ed.2d 608 (1970), noted Congress’ intent to “restrict” the Government’s right to appeal in criminal cases to “enumerated circumstances”:
      In this regard, the legislative history reveals a strong current of congressional solicitude for the plight of a criminal defendant exposed to additional expense and anxiety by a government appeal and the incumbent possibility of multiple trials. Criminal appeals by the Government “always threaten to offend the policies behind the double-jeopardy prohibition,” Will v. United States, supra, 389 U.S. at 96, [88 S.Ct. 269, at 274, 19 L.Ed.2d 305] even in circumstances where the Constitution itself does not bar retrial. Out of a collision between this policy concern, and the competing policy favoring review, Congress enacted a bill that fully satisfied neither the Government nor the bill’s opponents. For the Criminal Appeals Act, thus born of compromise, manifested a congressional policy to provide review in certain instances but no less a congressional policy to restrict it to the enumerated circumstances. 399 U.S. at 298-299, 90 S.Ct. at 2134.

      . The court’s order, which deals in length with Congress’ attempt to regulate cocaine without requiring proof of a connection with interstate commerce, summarizes:
      The court finds and concludes that the offense of which this defendant stands convicted is not one against the Federal government or one which Congress has power to prohibit in the manner attempted by 21 U.S.C. § 841. The defendant’s Motion in Arrest of Judgment is therefore granted.

      . The defendant’s contention that the court’s detailing of the amount and percentage of cocaine involved shows reliance on the evidence, and thus, jeopardy, does not convince us that this case is controlled by Sisson. In denying the Government the right to appeal the trial court’s arrest of judgment in Sisson’s trial for refusing induction, the Supreme Court stated:
      The court below clearly went beyond the “face of the record” in reaching its decision. As noted earlier, the opinion explicitly relies upon the evidence, adduced at the trial, including demeanor evidence, for its findings that Sisson was “sincere” and that he was “as genuinely and profoundly governed by his conscience” as a religious conscientious objector. 399 U.S. at 283, 90 S.Ct. at 2126.
      The trial court’s use of the factual allegations of the indictment is considex-ably diffex'ent in the instant case. Given the nature of the court’s holding we are persuaded that the recitation of the facts was merely designed to provide a framework for the decision on the constitutionality of the statute. As such, this case is more akin to United States v. Brewster, 408 U.S. 501, 92 S.Ct. 2531, 33 L.Ed.2d 507 (1972). There, the district court dismissed certain counts charging Senator Brewster with bribex-y on the theory that the speech and debate clause of the Constitution shielded the defendant from prosecution. The Government appealed and the defendant responded that jeopardy prohibited appeal because the trial judge had explicitly relied on the facts of the case. Despite the fact that the trial judge stated in his order, “based upon the facts of this case,” the Supreme Court held the dismissal appealable:
      Appellee contends that the statement “based on the facts of this case,” used by the District Judge in announcing his decision, shows reliance on the Government’s outline of its case. We read the Disti-ict Judge’s reference to “facts,” in context, as a reference to the facts alleged in the indictment, and his ruling as holding that Meinbers of Congress are totally immune from prosecution for accepting bribes for the performance of official, i. e., legislative, acts by virtue of the Speech or Debate Clause. Under that interpretation of § 201, it cannot be applied to a Member of Congress who accepts bribes that relate in any way to his office. We conclude, therefore, that the District Court was relying only on facts alleged in the indictment and that the dismissal of the indictment was based on a determination that the statute on which the indictment was drawn was invalid under the Speech or Debate Clause. As a consequence, this Court has jurisdiction to hear the appeal. 408 U.S. at 507, 92 S.Ct. at 2535.
      The facts as they are set forth in the order appealed here were taken from the indictment and cannot be used as a vehicle to invoke jeopardy protections where the true gravamen of the decision is limited to the constitutionality of a particular criminal statute. Cf. United States v. Knox, 396 U.S. 77, 79, 90 S.Ct. 363, 24 L.Ed.2d 275 (1969).

      . The most logical interpretation of the legislative history of the present § 3731 is that Congress, while intending to eliminate the “technical” distinctions in pleading, sought to limit the Government’s right to appeal cases in which the indictment had been dismissed. The bills initially proposed in both the House and Senate, H.R. 14588, 91st Cong., 1st Sess. (1969) and S. 3132, 91st Cong., 1st Sess. (1969), contained a provision for appeal from dismissals of indictments and any order “terminating a prosecution in favor of a defendant. . . . ” The bill which was ultimately enacted, however, contained no such provision.


author: ELY, Circuit Judge; BROWNING, Circuit Judge

text:
    Florin DENTE, Appellee, v. INTERNATIONAL ORGANIZATION OF MASTERS, MATES AND PILOTS, LOCAL 90, an unincorporated labor organization, Appellant.
    No. 72-2499.
    United States Court of Appeals, Ninth Circuit.
    Dec. 5, 1973.
    Certiorari Denied May 28, 1974.
    See 94 S.Ct. 2607.

      Donald S. Richardson, of Green, Richardson, Griswold & Murphy, Portland, Or., John Paul Jennings (argued), of Jennings, Gartland & Tilly, San Francisco, Cal., for appellant.
    Carl R. Neil (argued), of Lindsay, Nahstoll, Hart, Duncan, Dafoe & Krause, Portland, Or., for appellee.
    Before CHAMBERS, BROWNING, and ELY, Circuit Judges.
   OPINION

ELY, Circuit Judge;

Florin Dente, a member of Local 90 of the International Organization of Masters, Mates and Pilots (hereinafter “MMP”), filed a grievance with the Local in December, 1969, against his employer for wrongful discharge. Since the Local was involved in contract rene-gotiations, this grievance, as well as many others, was not arbitrated until September, 1970. At that time, Dente was reinstated, but the arbitrator declined to award back pay.

Dente then initiated this damage action against his union, asserting that the delay between his grievance and the arbitration effectively deprived him of wages during the intervening period. The District Court held that under section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a), as construed, Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), the union was liable to Dente for damages arising out of the delay in arbitration.

The threshold question is whether jurisdiction here exists under section 301(a), which vests jurisdiction in district courts over “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . .”

Appellant contends that since MMP represents only “supervisory” employees, and since section 2(3) of the National Labor Relations Act, as amended, 29 U.S.C. § 152(3), and section 501(3) of the Labor Management Relations Act, 29 U.S.C. § 142(3), operate to exclude MMP from definition as a “labor organization representing employees” (emphasis added), jurisdiction cannot be predicated upon section 301(a). This rather mechanical approach to the statutory interpretation has found some judicial adherents. See Masters, Mates & Pilots Union v. NLRB, 351 F.2d 771 (D.C.Cir. 1965); Pharmacists, Local 330 v. Lake Hills Drug Co., 255 F.Supp. 910 (W.D.Wash. 1964) (dictum). We, however, agree with the Second Circuit that Congress, by eliminating supervisory employees from the bargaining and organizational protection of subchapter II, did not intend to deprive members of “supervisory unions” of the rights secured by section 301. E. g., National Marine Eng’rs Beneficial Ass’n v. Globe Seaways, Inc., 451 F.2d 1159, 1160 n. 1 (2d Cir. 1971); United States v. National Marine Eng’rs Beneficial Ass’n, 294 F.2d 385 (2d Cir. 1961); Isbrandtsen Co. v. District 2, Marine Eng’rs Beneficial Ass’n, 256 F.Supp. 68 (E.D. N.Y.1966); see United States v. National Marine Eng’rs Beneficial Ass’n, 292 F.2d 190, 192 (2d Cir. 1961). We thus conclude .that the complaint stated a claim within the District Court’s jurisdiction.

The above notwithstanding, the decision below cannot stand. Examining the entire record, we find no evidence that the union “unfairly represented” Dente in a manner for which compensation is available under Vaca v. Sipes, supra. We can perceive no union conduct that was performed in bad faith or that could be characterized as arbitrary or discriminatory. 386 U.S. at 190, 87 S.Ct. 903. The worst that can be said of the union’s conduct is that it was negligent, and this of course is not enough. For whatever can be said of the union’s delay in processing the grievance and moving to arbitration, it was not that kind of “arbitrary abuse” giving rise to damages under section 301. Id. at 193, 87 S.Ct. 903.

The judgment is reversed and, upon remand, the complaint will be dismissed.

Reversed and remanded, with directions.

BROWNING, Circuit Judge

(concurring in the result):

It is unnecessary to decide whether section 301(a) extends to suits for violation of a contract between an employer and an organization representing supervisory personnel, a problem more difficult for me than the opinion of the court would suggest. It is also unnecessary to decide the extent to which the statutory duty of fair representation bars conduct that might be characterized as negligent in traditional tort law; certainly the duty may be breached by conduct neither hostile nor malicious. Vaca v. Sipes, 386 U.S. 171, 191, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967); Retana v. Local 14, Elevator Operators, 453 F.2d 1018, 1023 n. 8, 1024 n. 10 (9th Cir. 1972). The judgment should be reversed, but upon other grounds.

1. There was no breach of a federal duty of fair representation. This federal duty is a concomitant of the right of exclusive representation conferred by section 9(a) of the National Labor Relations Act; no other source of the duty has been suggested. See, e. g., Ford Motor Co. v. Huffman, 345 U.S. 330, 337, 73 S.Ct. 681, 97 L.Ed. 1048 (1953); Vaca v. Sipes, supra, 386 U.S. at 177, 87 S.Ct. 903, 17 L.Ed.2d 842; Retana v. Local 14, Elevator Operators, supra, 453 F.2d at 1021-1022; Richardson v. Communications Workers of America, 443 F.2d 974, 980 (8th Cir. 1971). But the appellant union was not granted exclusive bargaining power by section 9(a). Section 9(a) grants such power only to “representatives designated or selected for the purposes of collective bargaining by the majority of employees” (emphasis added). The members of appellant union are not “employees” for the purposes of secton 9(a); they are all supervisors. Cf. Hanna Mining Co. v. MEBA, 382 U.S. 181, 188-189, 86 S.Ct. 327, 15 L.Ed.2d 254 (1965). Since no duty of fair representation is imposed upon appellant union by federal law, any duty with regard to representation owed to appellee by appellant union must be based upon state law and, absent an independent ground for federal jurisdiction, could be enforced only in state courts.

2. Even if a federal action would be maintainable against appellant union under section 301(a) for simple breach of the collective bargaining agreement, as distinguished from breach of- a federal duty of fair representation, no such breach was shown. The collective bargaining agreement only required the Licensed Personnel Board to meet promptly to consider grievances; no provision of the agreement imposed a duty upon the union to present grievances promptly to the Board.

      . ‘‘The term ‘employee’ . . . shall not include . . . any individual employed as a supervisor. ...”

      . “‘(E)mployee’ . . . shall have the same meaning as when used in subehapter II of this chapter (the original National Labor Relations Act) as amended by this chapter.”

      . This, in effect, was the holding in Vaca v. Sipes, 386 U.S. 171, 190, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), and the Supreme Court upheld that construction of ’ Vaca in a later case, Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971). There the Court, citing Vaea, again found that “arbitrary or bad-faith conduct on the part of the Union” must be proved, and further held there must be “substantial evidence of fraud, deceitful action or dishonest conduct.” Id. at 299, 91 S.Ct. at 1924. Certainly, “fraud, deceitful action or dishonest conduct” cannot be equated with any concept of mere negligence.

      . The appellee argues that he has a separate ground for his claim against the union, based upon the union’s alleged breach of the collective bargaining agreement. That agreement provides that grievances shall be settled “promptly”. The right of an employee to sue his union under section 301(a) is limited to those cases wherein there has been a breach of duty of fair representation by the union. Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967); Note, Individual Control Over Personal Grievances Under Vaca v. Sipes, 77 Yale L.Rev. 559, 560 (1968). Collective bargaining agreements are unique in nature, and the current limitations on the employee’s right to sue under section 301(a) are not so restrictive as substantially to impair his protective remedies. See Shulman, Reason, Contract and Law in Labor Relations, 68 Harv.L.Rev. 999, 1004-1005 (1955); Cox, The Legal Nature of Collective Bargaining Agreements, 57 Mich.L.Rev. 1 (1958); Blumrosen, Legal Protection For Critical Job Interests: Union-Management Authority Versus Employee Autonomy, 13 Rutgers L.Rev. 631, 653-57 (1959).


author: JAMES HUNTER, III, Circuit Judge: GARTH, Circuit Judge

text:
    Virginia L. GOGER, Appellant, v. H. K. PORTER COMPANY, INC., Appellee.
    No. 73-1348.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 5, 1973.
    Decided Jan. 31, 1974.

      John A. Craner, Craner & Brennan, Ronald J. Nelson, Elizabeth, N. J., for appellant.
    Thomas W. Budd, Clifton, Budd & Burke, New York City, William J. Kil-berg, Solicitor of Labor, Carin Ann Clauss, Associate Solicitor, Donald S. Shire, Atty., Washington, D. C., Francis V. LaRuffa, New York City, Regional Solicitor, for appellee.
    Before VAN DUSEN, HUNTER and GARTH, Circuit Judges.
   OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

This appeal involves a suit by appellant Goger against her former employer for terminating her employment allegedly on account of her age in violation of the Age Discrimination in Employment Act of 1967 (hereinafter “the Act or 1967 Act”). The district court dismissed the action for failure to have jurisdiction, holding that under the 1967 Act appellant was required to submit a complaint to the appropriate agency of the State of New Jersey at least sixty days prior to instituting an action in the federal courts. Appellant appeals pursuant to 28 U.S.C. § 1291.

Appellee is a New Jersey corporation with its principal place of business in New Jersey. Shortly after appellant was dismissed, counsel for appellant notified the Secretary of Labor that appellant intended to file a civil action under the 1967 Act and requested that the Secretary fulfill his mediation obligations. The Secretary, acting through his Area Director, Hugo C. Sica of the Wage and Hour and Public Contracts Divisions of the United States Department of Labor, acknowledged receipt of the complaint and referred the matter to a compliance officer. All attempts by the compliance officer to reach a satisfactory solution proved fruitless so he advised appellant’s counsel that appellant was free to institute her contemplated civil action under the Act. At no time prior to the institution of this suit did appellant file a complaint with the Division on Civil Rights of the Department of Law and Public Safety, the New Jersey State Agency responsible for the elimination of unlawful discrimination in employment based on age. Such a complaint is now barred under New Jersey law, which requires all complaints to be filed within 180 days of the alleged act of discrimination.

Since a state agency existed in New Jersey having authority to grant appellant relief from the alleged discrimination, the central issue before us is whether section 683(b) of the 1967 Act requires an aggrieved individual initially to seek redress from the state agency before instituting suit in federal district court. Appellant and the Secretary of Labor in an amicus curiae brief argue that under the Act an aggrieved individual has the choice of pursuing either federal or state remedies; only if he chooses the latter is the sixty-day limitation of section 633(b) applicable. In their view section 633(b) does not deal with the situation where no state proceedings “have been commenced.”

We agree with the district court, however, that although the Act does not require an aggrieved person to exhaust state remedies as a condition precedent to the institution of a federal suit, it does require that the State be given a threshold period of sixty days in which it may attempt to resolve the controversy, normally by voluntary compliance.

Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (hereinafter “1964 Act”) specifically prohibited discrimination on the grounds of race, color, religion, sex or national origin. Congress recognized that the 1964 Act left untouched a major problem — age discrimination — and consequently directed the Secretary of Labor to make a study of the full magnitude of this problem. From this common origin arose the 1967 Act.

A comparison of these two statutes reveals that section 633(b) is virtually identical to the language of the parallel provision of the 1964 Act, and courts have repeatedly interpreted the latter as requiring that appropriate state agencies be given a prior opportunity to consider discrimination complaints before resorting to the federal courts. Love v. Pullman Co., 404 U.S. 522, 92 S.Ct. 616, 30 L.Ed.2d 679 (1972); Crosslin v. Mountain States Tel. & Tel. Co., 422 F.2d 1028 (9th Cir. 1970), vacated and remanded, 400 U.S. 1004, 91 S.Ct. 562, 27 L.Ed.2d 618 (1971); Electrical Workers, Local 5 v. EEOC, 398 F.2d 248 (3d Cir. 1968), cert. denied, 393 U.S. 1021, 89 S.Ct. 628, 21 L.Ed.2d 565 (1968).

The minor differences between section 633 and its counterpart under the 1964 Act are insignificant and provide no support for an interpretation of the former which is contrary to the Supreme Court’s construction in Love v. Pullman, supra. Moreover, the legislative history of the 1967 Act, though largely couched in terms identical to that of the statute, nonetheless is devoid of any intention of Congress to deviate from the basic philosophy of the 1964 Act of initially giving state agencies sixty days to resolve the problem. Indeed, at the public hearings before the Senate Subcommittee on Labor at least two individuals suggested to the Subcommittee the desirability of retaining Title VII’s feature of deferring in the first instance to state agencies for a limited period of time. We therefore conclude that section 633(b) required appellant to seek relief from the appropriate New Jersey agency prior to instituting her suit in the federal district court.

Lastly, appellant and the Secretary of Labor argue that notwithstanding our interpretation of section 633(b) appellant should not be barred from seeking relief under the Act since appellant filed her federal complaint only after a Department of Labor compliance officer had advised her counsel that the Department’s efforts to reach a satisfactory settlement had failed and that appellant was thus free to institute an action under the Act. See Love v. Pullman, 404 U.S. 522, 92 S.Ct. 616, 30 L.Ed.2d 679 (1972); Crosslin v. Mountain States Tel. & Tel. Co., 400 U.S. 1004, 91 S.Ct. 562, 27 L.Ed.2d 618 (1971); Parker v. General Telephone Co., 476 F.2d 595 (9th Cir. 1973); Mitchell v. Mid-Continent Spring Co., 466 F.2d 24 (6th Cir. 1972); Sanchez v. Standard Brands, Inc., 431 F.2d 455 (5th Cir. 1970); Choate v. Caterpillar Tractor Co., 402 F.2d 357 (7th Cir. 1968).

While we do not consider the failure to file a timely complaint with the appropriate state agency a mere “teehnical” omission, we nonetheless consider equitable relief to be appropriate in view of the total absence, to our knowledge, of any judicial decision construing section 633(b) during the period involved here and in view of the remedial purpose of the 1967 Act. In the future, however, we think the Congressional intent that state agencies be given the initial opportunity to act should be strictly followed and enforced. See Dubois v. Packard Bell Corp., 470 F.2d 973 (10th Cir. 1972). For the reason stated in the first sentence of this paragraph, we need not decide on this record whether a plaintiff must always proceed first before the state agencies.

The order of the district court of February 20, 1973 will be vacated and the cause remanded for a hearing on the merits of appellant’s complaint.

GARTH, Circuit Judge

(concurring):

I concur in the result reached by the majority opinion. However, I do not agree that merely because 29 U.S.C. § 633(b) of the Age Discrimination in Employment Act of 1967 (hereinafter “ADEA”) is similar in language to 42 U.S.C. § 2000e-5(b) of Title VII of the Civil Rights Act of 1964 (hereinafter “Title VII”), they are necessarily subject to the same construction. The various dissimilarities between the two Acts (and in particular the presence of § 633(a) in ADEA, which has no counterpart in Title VII) impel me to the conclusion that there is no requirement that a plaintiff must first attempt to utilize available state remedies before filing suit under the 1967 Act.

42 U.S.C. § 2000e-5(b) establishes the steps to be taken by a complainant before the filing of a Title VII suit. These procedures should be compared with 29 U.S.C. § 626(b) (not § 633(b) —the statute at issue here) which prescribes the jurisdictional prerequisites for filing suit under ADEA.

By contrast, 29 U.S.C. § 633, the statute with which we are here concerned, does not deal with jurisdictional prerequisites for instituting suit, but rather is concerned with Federal and State relationship. Thus, even though the language of § 633(b) is similar to that of § 2000e-5(b), its purpose and thrust is different, and in my opinion does not require resort to state courts prior to the filing of suit under ADEA.

Section 633(b) provides inter alia “. . .no suit may be brought under § 626 of this title [29] before the expiration of sixty days after proceedings have been commenced under the State law, unless such proceedings have been earlier terminated. . . . ” The Secretary of Labor in its amicus brief asserts that “. . . the limitation upon the right to file suit under the [ADEA] applies only if proceedings have already been initiated under existing State law. There is no requirement [in this language], however, that such State proceedings must first be initiated — i. e., that a complaint be made to the appropriate State agency — before suit may be filed under the [Federal ADEA].”

In support of that construction the Secretary of Labor asserts that the sole-Congressional purpose underlying the enactment of 29 U.S.C. § 633(b) was to give the State time to act on a complaint if an aggrieved individual chose to proceed there first. (That choice might well be made by a complainant if a State affords a greater remedy against age discrimination or imposes prohibitions against age discrimination greater or stricter than those provided under Federal law.)

The construction given this statute by the Secretary of Labor is persuasive, and as it is that agency which is charged with the administration of ADEA, it should be given great deference, Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1964).

I do not believe that it was the intent of Congress to require, prior to the institution of a Federal action, the commencement of a State proceeding which, under § 633(b), need not be concluded and which in any event would be superseded by the filing of the Federal action under § 633(a).

      . 29 U.S.C. § 621 et seq.

      . 29 U.S.C. § 626(d) provides:
      “No civil action may be commenced by any individual under this section until the individual has given the Secretary not less than sixty days’ notice of an intent to file such action. . . . Upon receiving a notice of intent to sue, the Secretary shall promptly notify all persons named therein as prospective defendants in the action and shall promptly seek to eliminate any alleged unlawful practice by informal methods of conciliation, conference, and persuasion.”

      . N.J.Stat.Ann. 10:5-1 et seq.

      . N.J.Stat.Ann. 10:5-18. Appellant states in her complaint that while this appeal was pending she also unsuccessfully sought to have the Attorney General of New Jersey relate her state cause of action back to the institution of her suit in the district court.

      . N.J.Stat.Ann. 10:5-6, 10:5-17, 10:5-19. Cf. Crosslin v. Mountain States Tel. & Tel. Co., 422 F.2d 1028 (9th Cir. 1970), vacated and remanded, 400 U.S. 1004, 91 S.Ct. 562, 27 L.Ed.2d 618 (1971).

      . 29 U.S.C. § 633(b) provides:

        “Limitation of Federal action upon commencement of State proceedings

      (b) In the case of an alleged unlawful practice occurring in a State which has a law prohibiting discrimination in employment because of age and establishing or authorizing a State authority to grant or seek relief from such discriminatory practice, no suit may be brought under section 626 of this title before the expiration of sixty days after proceedings have been commenced under the State law, unless such proceedings have been earlier terminated . . . .” (Emphasis added.)

      . 42 U.S.C. § 2000e-2.

      . Act of July 2, 1964, Pub.L. No. 88-352, § 715, 78 Stat. 265.

      . 42 U.S.C. § 2000e-5(b), as amended, 42 U. S.C. § 2000e-5(c) provides:
      “In the case of an alleged unlawful employment practice occurring in a State, which has a law prohibiting the unlawful employment practice alleged and establishing or authorizing a State . . . authority to grant or seek relief from such practice . . ., no charge may be filed ... by the person aggrieved before the expiration of sixty days after proceedings have been commenced under the State law, unless such proceedings have been earlier terminated. . . .” (Emphasis added.)

      . Moreover, under both acts an aggrieved individual is given a longer period of limitations within which to bring his federal action when there is an appropriate state agency available for resolving allegedly unlawful employment practices. 42 U.S.C. § 2000e-5(d), as amended, 42 U.S.C. § 2000e-5(e); 29 U. S.C. § 626(d).

      . E. g., 2 U.S.Code Cong. & Admin.News 1967 at pp. 2218-19 (1967).

      . For a discussion of the legislative history of Title VII of the 1964 Act, see Crosslin v. Mountain States Tel. & Tel. Co., 422 F.2d at 1030-1031.

      . Age Discrimination in Employment, Hearings before the Subcommittee on Labor of the Committee on Labor and Public Welfare, United States Senate 1, 102 & 234 (March 15-17, 1967), which states inter alia:

      “Mr. Biemiller.
      * !¡! !!: * *
      “It would seem to me it would be a far more practical and preferable solution if you would take the pattern that was developed by Senator Dirksen and Senator Humphrey, working in concert, in connection with Title VII of the Civil Rights Act of 1964 creating tiie Equal Employment Opportunities Commission. There, as I recall, when you have a State law that is substantially in agreement with the Federal law a matter of 60 days is given to the State fair employment agency to try to solve the problem.
      “At the end of that time, if the matter is not resolved, the case is moved to- the Federal agency.”
      “Mr. [Judge] Conway. The only thing that occurs to me in reference to this, Senator, is the fact that already a provision is set forth in the Civil Rights Act of 1964 that seems to work quite effectively and in respect to this matter it is not unlike the situation that you present.
      “That is to say, the Federal Government does have jurisdiction under the 1964 act but does defer to State agencies with power of enforcement and also provides for a time limit within which action must first be taken by the State where such cases are so deferred.”

      . Cf. Love v. Pullman, supra; Sanchez v. Standard Brands, Inc., supra; Choate v. Caterpillar Tractor Co., supra.

      . Compare Sanchez v. Standard Brands, Inc., 431 F.2d 455 (5th Cir. 1970). We note that following the Supreme Court’s remand in Crosslin v. Mountain States Tel. & Tel. Co., 400 U.S. 1004, 91 S.Ct. 562, 27 L.Ed.2d 618 (1971), the district court entertained a motion to dismiss because the appellant had acted too late in filing charges with the state agency. Crosslin v. Mountain States Telephone Co., Civil No. 6863 (D.Ariz. filed June 3, 1971). The court reasoned that since virtually the same arguments raised in the motion were before the Supreme Court, the motion had to be denied; otherwise the Supreme Court’s remand would have been a futile act.

      . § 633(a) provides:
      “Nothing in this chapter shall affect the jurisdiction of any agency of any State performing like functions with regard to discriminatory employment practices on account of age except that upon commencement of action under this chapter such action shall supersede any State action.”

      . Former Labor Secretary W. Willard Wirtz has stated that the preservation of the jurisdiction of State agencies in § 14 [29 U.S.C. § 633] will allow such agencies to impose prohibitions against age discrimination in employment stricter than those provided under the Federal law. Hearings on S830 Before the Subcommittee on Labor of the Committee on Labor and Public Welfare, U. S. Senate, 90th Cong., 1st Sess. 1967, page 48.