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Kirk v. Office of Navajo and Hopi Indian Relocation

United States District Court, D. Arizona

February 12, 2019

Esther Kirk, Plaintiff,
Office of Navajo and Hopi Indian Relocation, Defendant.


          Honorable Susan M. Brnovich United States District Judge

         At issue is Defendant Office of Navajo and Hopi Indian Relocation's (“ONHIR”) Motion to Dismiss Count II of the Complaint (Doc. 12, “Mot.”), to which Plaintiff Esther Kirk Responded (Doc. 14, “Resp.”), and ONHIR replied (Doc. 16, “Reply”). ONHIR has also filed the administrative record. (Doc. 13, the “AR”). Neither party requested oral argument on the motion, and the Court does not believe it is necessary to resolve the motion.

         I. Background

         This is a Navajo-Hopi Land Settlement Act (the “Settlement Act”) case. 25 U.S. §§ 640d-640d-31 (repealed 1974); see also Bedoni v. Navajo-Hopi Indian Relocation Comm'n, 878 F.2d 1119, 1121-22 (9th Cir. 1989) (explaining the history leading up to the Settlement Act); Herbert v. Office of Navajo and Hopi Indian Relocation, CV06-03014-PCT-NVW, 2008 WL 11338896, at *1 (D. Ariz. Feb. 27, 2008) (same). ONHIR denied Ms. Kirk relocation benefits in December 2011. (AR 378). Ms. Kirk's Complaint alleges two counts: (1) ONHIR's final decision denying eligibility was “unsupported by evidence or arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]” (citing 5 U.S.C. § 706 (2)(A), (E)); and (2) ONHIR breached its “fiduciary obligation” to her by failing to inform her of relocation benefits and delaying its decision. (Doc. 1, “Complaint”). She brings both claims under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701-706. (Complaint at ¶¶ 39, 45). In the Motion, ONHIR argues that this Court does not have jurisdiction over Ms. Kirk's second count because she did not raise it in the administrative proceeding and, therefore, there is no “final agency action” to review.

         The relevant facts from the AR and the pleadings are as follows. Ms. Kirk was born July 6, 1969. (AR 337). She is a member of the Navajo Nation who relocated from Hopi Partition Land (“HPL”) to Navajo Partition Land (“NPL”) on June 2, 1986. (Complaint ¶ 15; AR 239, 337). She did not apply for relocation benefits prior to the July 7, 1986 deadline. (AR 23; Resp. at 2). She first contacted ONHIR for relocation benefits in February 1991, but she was turned away. (AR 7-12; Resp. at 2). In 2005, ONHIR contacted her to inform her that the Office would begin accepting late applicants. (AR 18). Ms. Kirk timely applied for Relocation benefits at that time, and ONHIR denied her application on December 19, 2005. (AR 36-40; AR 61-64). She then appealed on January 9, 2006. (AR 66-69; Complaint ¶ 26). On appeal, ONHIR waived the time limits for holding hearings and taking final agency action pursuant to 25 C.F.R. § 700.13(b). (AR 73).

         Ms. Kirk's appeal was heard by the Independent Hearing Officer (“IHO”) on June 17, 2011. (AR 238). The IHO denied her appeal in August 2011, concluding that Ms. Kirk was unable to prove she was a self-supporting head of household when she relocated to the NPL. (AR 336-343). She asked the IHO to reconsider his ruling, which he denied on September 23, 2011. (AR 372-73). The Executive Director of ONHIR issued a letter on December 9, 2011, affirming the denial of benefits. (AR 378). Included in the letter was that the Director determined the IHO recommended decision was correct and that the letter constituted final agency action in the matter. (AR. 378).

         In her Response, Ms. Kirk argues she was not required to exhaust administrative remedies in order to bring this claim, ONHIR cannot rule on its breach of trust, ONHIR is biased, and she raised fiduciary issue before the agency resulting in final agency action. In alleging she raised the issue, she points to the IHO's decision explaining there was no written evidence of her 1985 summer employment. (Resp. at 15; AR 342). She also says her request for reconsideration raised the delay claim but does not specifically cite to where in the request. (Resp. at 15). There is nothing in the IHO's Findings of Fact, Conclusions of Law, and Decision addressing an alleged breach of obligation. (AR 336-343). The same goes for his Order denying her request for reconsideration. (AR. 372-73).

         II. Standard of Review

         Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss a claim for lack of subject-matter jurisdiction. “Federal courts are courts of limited jurisdiction” and may only hear cases as authorized by the Constitution or Congress. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Because our jurisdiction is limited, it is to be presumed that a cause lies outside of it, and the burden of establishing jurisdiction is on the party asserting it. Kokkonen, 511 U.S. at 377. “A motion to dismiss for lack of subject mater jurisdiction under Rule 12(b)(1) may attack either the allegations of the complaint as insufficient to confer upon the court subject matter jurisdiction, or the existence of subject matter jurisdiction in fact.” Renteria v. United States, 452 F.Supp.2d 910, 919 (D. Ariz. 2006). “With a 12(b)(1) motion, a court may weigh the evidence to determine whether it has jurisdiction.” Autery v. United States, 424 F.3d 944, 956 (9th Cir. 2005). The burden of proof is on the party asserting jurisdiction to show that the court has subject matter jurisdiction. See Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990). “[B]ecause it involves a court's power to hear a case, ” subject matter jurisdiction “can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002).

         III. Analysis

         Unless Congress specifies otherwise, we review agency action under the APA, 5 U.S.C. § 706(2)(A). Hopi Tribe v. Navajo Tribe, 46 F.3d 908, 914 (9th Cir. 1995). A reviewing court can reverse an ONHIR decision if the decision is “arbitrary, capricious, an abuse of discretion, not in accordance with law, or unsupported by substantial evidence.” Bedoni, 878 F.2d at 1122. The court can only review “final agency action[s].” 5 U.S.C. § 704 (providing for judicial review of “final agency actions”); 25 C.F.R. § 700.303 (“No decision . . . subject to appeal to the Commission shall be considered final agency action subject to judicial review . . . .”). Generally, an agency action is final when it meets two conditions: (1) the action is the “consummation of the agency's decisionmaking process” and not “merely tentative or interlocutory” in nature; and (2) it is an action by which “rights or obligations have been determined, or from which legal consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (internal quotation marks and citations omitted).

         Courts will also generally decline to review issues not raised in administrative proceedings. Reid v. Engen, 765 F.2d 1457, 1460 (9th Cir. 2004). When a statute requires issue exhaustion in administrative proceedings, failure to raise an issue there prevents judicial review of that issue. Sims v. Apfel, 530 U.S. 103, 108 (2000); See also Darby v. Cisneros, 509 U.S. 137, 147 (1993) (The APA “explicitly requires exhaustion of all intra-agency appeals mandated either by statute or by agency rule[.]”). Courts will also “regularly” decline to hear issues not raised in the administrative proceedings when an agency's regulations require issue exhaustion in administrative appeals. Id. Requiring issue exhaustion prevents plaintiffs from bypassing the administrative scheme. Id.; Gonzalez v. Dep't of Homeland Security, 508 F.3d 1227, 1234 (9th Cir. 2007). Courts have also required issue exhaustion in the absence of a statute or regulation. Sims, 530 U.S. at 108. As Sims explains, judicially-imposed issue exhaustion is analogous to the rule that appellate courts will not consider arguments not raised before trial courts, because it allows all parties to offer all the evidence without being surprised on appeal by a final decision based on issues for which they have had no opportunity to introduce evidence. Id. at 108- 09 (quoting Hormel v. Helvering, 312 U.S. 552, 556 (1941)). Exhaustion also “serves the twin purposes of protecting administrative agency authority and promoting judicial efficiency. McCarthy v. Madigan, 503 U.S. 140, 145 (1992), superseded by statute on other grounds, as recognized in Booth v. Churner, 532 U.S. 731, 740 (2001).

         Exhaustion recognizes that agencies “ought to have primary responsibility for the programs that Congress has charged them to administer, ” and allows agencies “the opportunity to correct [their] own errors.” Id. “Exhaustion concerns apply with particular force when the action under review involves exercise of the agency's discretionary power or when the agency proceedings in question allow the agency to apply its special expertise.” Id. Exhaustion principles are also of special concern when flouting of administrative process would “weaken an agency's effectiveness by encouraging disregard of its procedures.” Id.

         There are instances where issue exhaustion is not desirable, but “[e]xceptions to exhaustion requirements are usually limited, and apply only in extraordinary circumstances, such as, when the arbitral process would be futile or would cause the plaintiff irreparable injury.” Bd. of Trustees of the Const. Laborers' Pension Trust for So. Ca. v. M.M. Sundt Const. Co., 37 F.3d 1419, 1420-21 (9th Cir. 1994). Another such instance is when administrative proceedings are not adversarial in nature. Sims, 530 U.S. at 109-10 (“Where the parties are expected to develop the issues in an adversarial administrative proceeding, it seems to us that the rationale for requiring issue exhaustion is at its greatest.”). Courts have also found exceptions when requiring resort to the administrative remedy would cause undue prejudice to subsequent court actions, when there is doubt the agency can grant effective relief, and when an administrative body is “biased or has otherwise predetermined the issue before it.” McCart ...

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