Miscellaneous Federal Court Updates

Recent decisions from the federal courts involve a variety of issues focusing on claim preclusion from the First Circuit,  "administrative futility" standards from the Federal Circuit, wage issues and excavation rules from the D.C. Circuit, and a decision from the Southern District of Florida jam packed with ESA and CWA claims.

First Circuit Court of Appeals Rules Claim Preclusion Bars a Takings Claim

On February 21, 2006, the First Circuit Court of Appeals decided Torromeo, et al. v. Town of Fremont.  The court placed the property owners in the now-classic “Williamson Trap,” and decided that claim preclusion barred the plaintiffs from a federal adjudication of their takings claims following initial state court litigation.  For the First Circuit Court's Opinion, please click here.

Federal Circuit Applies New "Administrative Futility" Standards to Regulatory Takings Cases

In Anneheim Gardens v. United States, No. 01-5011-5012, the federal circuit remanded two recent regulatory takings cases, Anaheim Gardens v. United States, No. 93-655C, and Algonquin Heights v. United States, No .97-582C.  The Court of Federal Claims (CFC) had dismissed both cases because the parties failed to obtain a final administrative decision from the U.S. Department of Housing and Urban Development (HUD).  The CFC, however, did not allow the appellants to present evidence of “administrative futility.”  Such evidence would have exempted them from exhausting their administrative remedies with HUD.

The Federal Circuit remanded the cases in light of its recent decision in Cienega Gardens v. United States, 265 F.3d 1237 (Fed. Cir. 2001), which mandates that plaintiffs must be able to show evidence of administrative futility.  If there is prima facie evidence that exhaustion of administrative remedies would have been futile, the trial court must adjudicate their takings claims. 

Please click here for the full opinion:  http://www.fedcir.gov/opinions/01-5011.pdf

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Fifth Circuit Decision Makes it Easier to Consolidate Litigation Resulting From Disasters

A recent Fifth Circuit decision held that when lawsuits are removed to federal court pursuant to the Multiparty, Multiforum Trial Jurisdiction Act (MMTJA), those lawsuits are not subject to the mandatory abstention provisions of 28 U.S.C. § 1369(b).  Wallace v. Louisiana Citizens Property Ins. Corp., ___ F.3d ___ (5th Cir. March 31, 2006).  This case arose out of the Hurricane Katrina disaster.  Multiple class action lawsuits were filed against insurance carriers by hurricane victims who suffered flood damage.  The defendants in one of these lawsuits removed the case to federal court under the MMJTA, but the district court abstained and remanded the case back to state court.  The district court reasoned that it was required to abstain under 28 U.S.C. § 1369(b), which directs district courts to abstain where the “substantial majority” of the plaintiffs and the “primary defendants” are all from the same state and the laws of that state will largely govern the claims.  The Fifth Circuit overruled the district court, holding that the mandatory abstention provisions of § 1369(b) only apply in cases where the district court had original jurisdiction.  It does not apply to cases that are removed pursuant to the MMTJA because the MMJTA creates supplemental jurisdiction. 

Click here for the complete opinion: http://www.ca5.uscourts.gov/opinions/pub/06/06-9-CV0.wpd.pdf

D.C. Circuit Court of Appeals Holds Davis-Bacon Wage Determinations Are Judicially Reviewable Under The APA

Under a recent decision of the D.C. Circuit Court of Appeals, wage determinations that are made pursuant to the Davis-Bacon Act (40 U.S.C. § 3141 et seq.) are subject to judicial review under the Administrative Procedure Act.  Mistick PBT v. Chao, 440 F.3d 503 (D.C. Cir. 2006). 

Under the Davis-Bacon Act, when a contractor is awarded a construction project that is funded by the federal government, the contractor must pay workers specified minimum wages.  The Department of Labor determines these wages on the basis of the type of work being performed and the prevailing wages in the locality where the work is being performed.  The rates are made available to potential bidders so that all bidders have the same information when they make bids.  However, it is often the case that some classifications and the corresponding wage rates are left out during the bidding process.  In that case, a process referred to as “conformance” must be used to determine appropriate wage rates. 

In this case, classifications were not included for operators of backhoes, bobcats, excavators, hi-lifts, rollers, graders, and pavers.  The Department decided that bobcat operators would be paid $9.75 per hour, the wage rate applicable to drywall finishers, and that the rest of the positions would require a wage of $21.87, the rate applicable to bulldozer operators.  The contractor did not challenge the wage rate for bobcat operators, but did challenge the remaining wage rates under the Davis-Bacon Act and the Administrative Procedure Act.  The Department argued that the decision was not reviewable, but the court disagreed and held that while the Davis-Bacon Act did not provide a cause of action, the Department’s application of the conformance regulations was reviewable under the Administrative Procedure Act.  As such, the court analyzed the Department’s wage determinations to ascertain whether they were arbitrary and capricious and concluded that they were not because these positions required unique skill and therefore it was appropriate to assign the higher wage. 

For the opinion, please click here: http://pacer.cadc.uscourts.gov/docs/common/opinions/200603/04-5340a.pdf

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D.C. Circuit Holds NAHB's Challenge to Excavation Rule is Ripe

On February 3, 2006, the D.C. Circuit Court of Appeals upheld a challenge by NAHB, the National Stone, Sand and Gravel Association, the American Road and Transportation Builders Association and the Nationwide Public Projects Coalition that the EPA and Corps implementation of a regulation involving the definition of discharge of dredged material was ripe for review.  In National Ass'n of Home Builders v. U.S. Army Corps of Engr's, and National Stone, Sand & Gravel Ass'n v. U.S. Army Corps of Engr's, the court ruled in very clear terms that our challenge to the definition of discharge was ripe for review.

In 2001, NAHB challenged the U.S. Army Corps of Engineers' rule that regards all mechanized land clearing as creating a "discharge" under the Clean Water Act.  The district court dismissed NAHB's challenge to the regulation as unripe.  The D.C. Circuit Court of Appeals held NAHB's challenge to the regulation is ripe for review and accordingly remanded to the District Court.  In its opinion, the Court relied on another NAHB victory from 2005 and recognized that our members face a hardship because they face "the choice of applying for a permit for activities Industry claims are outside the scope of the Corps' or EPA's authority . . . or face civil or criminal enforcement penalties for failing to do so." 

For a copy of the D.C. Circuit Opinion, please click here.

187 Page Wetlands Decision Includes Just About Everything But The Kitchen Sink

In a weighty opinion involving mining and wetlands, the U.S. District Court for the Southern District of Florida handed down a 187 page wetland decision on March 22, 2006.  Sierra Club v. Flowers, ___ F. Supp. 2d ___ (S.D. Fla. March 22, 2006) (2006 WL 760489).  The plaintiffs, Sierra Club, Natural Resources Defense Council and others, alleged that the Army Corps of Engineers improperly permitted mining operations on 5,400 acres of wetlands over a ten year period.  Furthermore, they alleged that the Fish and Wildlife Service failed to protect the endangered wood stork.  

The court agreed with the plaintiffs. First, it found that the Corps Environmental Impact Statement (EIS) did not meet the requirements of NEPA and also violated the APA.  Second it held that the Corps should developed Supplemental EIS.  Third, the court found that the Corps did not conduct a valid alternative analysis, did not adequately consider whether the mining would be in the public interest and did not fairly include the public in the permit process; all of which is required by the Clean Water Act.  Next the Court addressed the Endangered Species Act (ESA).   It held that ESA compelled the Corps to formally consult with the FWS and that the Corps failed to use the best scientific evidence available in making is ESA decisions.  Finally, the Court also found the FWS had failed to comply with the ESA by not pushing for a formal consultation and preparing a biological opinion that complied with its own regulations. In the end, the Court said that the “Corps should not have issued these permits authorizing this mining.”

For the complete opinion, please click here:  http://www.flsd.uscourts.gov/default.asp?file=cases/index.html

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