decided: June 4, 1979.
NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, 107 EAST NINTH STREET, WILMINGTON, DELAWARE, PUERTO RICAN CIVIL RIGHTS LEAGUE, INC., 1030 WEST THIRD STREET, WILMINGTON, DELAWARE, OLDER AMERICANS COALITION, 1300 NORTH BROOM STREET, WILMINGTON, DELAWARE, WILMINGTON UNITED NEIGHBORHOODS, 1300 NORTH BROOM STREET, WILMINGTON, DELAWARE, BRANDYWINE TRINITY UNITED METHODIST CHURCH, TWENTY-SECOND AND MARKET STREETS, WILMINGTON, DELAWARE, ON BEHALF OF THEIR MEMBERS AND OTHERS SIMILARLY SITUATED, AND SARAH BRATCHER, RAYMOND W. BROWN, MARIA GALINDEZ, FOR HERSELF AND AS PARENT AND GUARDIAN FOR HER MINOR CHILDREN, REYNALDO GALINDEZ, AND PEDRO GALINDEZ, MILAGRO QUINONES, DENISE SMOKES, MARIA MIRAN, ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, CITY OF WILMINGTON, APPELLANTS,
THE MEDICAL CENTER, INC.; DAVID MATHEWS, U.S. SECRETARY OF HEALTH, EDUCATION, AND WELFARE; AMOS BURKE, DIRECTOR OF THE BUREAU OF COMPREHENSIVE HEALTH PLANNING; WILLIAM C. GORDON, DIRECTOR OF THE HEALTH PLANNING COUNCIL, INC. APPELLEES
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE D.C. Civil No. 76-298
Before Hunter and Garth, Circuit Judges, and Brotman,*fn* District Judge.
Opinion OF THE COURT
Appellants brought this action under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (1976), and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1976), contending that a proposed health facility relocation would have a discriminatory impact. The district court directed appellants to pursue the administrative remedy provided by section 602 of Title VI. The court subsequently found that Title VI and section 504 do not create private rights of action to seek declaratory and injunctive relief for violations of the statutes, found that the administrative remedy was the sole remedy available to appellants, and then affirmed HEW's administrative decision that the proposed relocation would not have a discriminatory impact. Because we find that Title VI and section 504 create private rights of action for plaintiffs who seek relief other than funding termination,*fn1 we reverse and remand the case to the district court for a trial on the merits.*fn2
Appellants are five organizations and six individuals representing minority and handicapped persons who reside in Wilmington, Delaware.*fn3 Defendants are the Wilmington Medical Center ("WMC"), the Secretary of the United States Department of Health, Education, and Welfare ("HEW"), the Director of the Bureau of Comprehensive Health Planning of Delaware ("BCHP"), and the Chairman of the Health Planning Council, Inc. ("HPC").*fn4
This case arises from the controversy surrounding the decision of the Wilmington Medical Center to relocate major tertiary care components of its medical system from existing inner-city divisions to an outlying suburban location. Plaintiffs contend that the relocation (pursuant to a proposal denominated "Plan Omega") will cause disparities in the accessibility and quality of medical care available to urban and suburban residents.*fn5 This action was commenced on September 10, 1976, in the United States District Court for the District of Delaware. Plaintiffs contended that Title VI and section 504 created private causes of action to seek enforcement in federal court of the rights guaranteed by those statutes. They sought: 1) a judgment declaring that the proposed relocation would subject plaintiffs to discrimination in violation of Title VI and section 504 of the Rehabilitation Act; and 2) an injunction against construction of the proposed suburban facilities pending a review by HEW of the compliance of Plan Omega with Title VI and section 504.
On November 3, 1976, HEW filed alternative motions to dismiss or for summary judgment. HEW argued that the Complaint should be dismissed because of plaintiffs' failure to exhaust the administrative remedy provided by section 602 of Title VI. Plaintiffs responded that resort to agency procedures would be futile, alleging that HEW had insufficient resources available to conduct an adequate compliance review.*fn6 On January 19, 1977, the district court denied HEW's motion to dismiss plaintiffs' action. Rather, the court directed HEW to treat the plaintiffs' Complaint as "information" sufficient to require HEW to initiate the compliance investigation and review mandated by section 602.*fn7 In its Opinion of April 7, 1978, affirming HEW's ultimate determination, the district court reviewed its January 19 Order and explained:
The decision to instruct the Secretary to develop the factual record on plaintiffs' complaint and to exercise his discretion in reviewing Plan Omega, reflected the Court's view that such a process would "carry out the Congressional expectation that Title VI be administered by the appropriate agency and that judicial review of the agency's decision follow traditional paths.'
453 F. Supp. 280, 290 (D.Del.1978), Quoting 426 F. Supp. 919, 925 (D.Del.1977).
HEW conducted the ordered compliance review. On July 5, 1977, in a Letter of Findings from its Office of Civil Rights, HEW determined that the relocation proposed by Plan Omega as then formulated would violate Title VI and section 504. The letter also enumerated 12 areas in which the Plan would have to be modified in order to be in compliance with those statutes and with the Secretary's regulations. Subsequently, the Secretary engaged in informal, voluntary efforts to secure the compliance of WMC. After more than three months of discussion HEW and WMC entered into a binding agreement on November 1, 1977, in which WMC agreed to cure those aspects of its proposal which, in HEW's opinion, constituted Title VI and section 504 violations. With this agreement executed, the Secretary concluded that Plan Omega, as modified, was in compliance with the statutes and regulations. Plaintiffs disagreed with the Secretary's conclusion, contending, Inter alia, that the modified plan was based on erroneous and inadequate findings and was not based on a consideration of the relevant factors. The case was presented to the district court on cross-motions for partial summary judgment filed by the plaintiffs and by HEW, and upon a motion for summary judgment filed by defendant WMC. The court concluded that the cross-motions called for what was essentially judicial review of the Secretary's informal administrative determination that the modified Plan Omega complied with Title VI and section 504.
The court also had before it a motion by plaintiffs to modify its Order of November 4, 1977, in which the court had determined that the scope of its review was to be governed by the arbitrary and capricious standard defined in the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A) (1976). By their motion, Plaintiffs sought judicial review under the trial De novo standard of the APA, 5 U.S.C. § 706(2)(F), contending that HEW's determination was "adjudicatory in nature." The court denied this motion. Accordingly, the court applied the arbitrary and capricious standard, and affirmed the Secretary's determination. In the course of its decision, the court found that the administrative remedy provided under section 602 was exclusive, and that, as a result, plaintiffs did not have a private cause of action under Title VI or section 504. Additionally, the court denied plaintiffs' motion to supplement the administrative record under review, and rejected plaintiffs' claim of a due process right to an evidentiary hearing before the agency.*fn8
On appeal, plaintiffs first contend that Title VI and section 504 create private causes of action, and that as a result the district court's initial referral of their complaint for administrative action was error.*fn9 Second, plaintiffs renew their contentions as to the appropriateness of the De novo review standard, the right to supplement the administrative record on review, and the right to a due process evidentiary hearing before the agency. Finally, they seek review of the district court's decision to affirm HEW's finding that Plan Omega is in compliance with Title VI and section 504.*fn10
Our analysis of Title VI begins with the language of the statute. Section 601 of Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (1976), declares:
No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.
The right established by section 601 is unequivocal, broad, and remedial in nature; in this respect it is quite similar to the later enacted Voting Rights Act, 42 U.S.C. § 1973 Et seq. (1976) from which the Supreme Court has inferred a private right of action. Allen v. Board of Elections, 393 U.S. 544, 556, 89 S. Ct. 817, 22 L. Ed. 2d 1 (1969).*fn11
Section 602 of Title VI,*fn12 42 U.S.C. § 2000d-1, directs federal grant making agencies to effectuate the provisions of section 601, provides the administrative mechanism by which government agencies are to take funding termination action, and requires that as a prerequisite to funding termination an agency determine that voluntary compliance cannot be secured. Finally, section 603 of Title VI, 42 U.S.C. § 2000d-2,*fn13 is a limit on the enforcement mechanism provided by section 602. It provides for judicial review of agency action taken pursuant to section 602.
The principles enunciated by the Supreme Court in Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), guide the determination of whether a private remedy is implicit in a statute not expressly providing such a remedy. The relevant factors are:
First, is the plaintiff "one of the class for whose Especial benefit the statute was enacted, . . . that is, does the statute create a federal right in favor of the plaintiff?
Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? . . .
Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? . . .
And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? . . .
422 U.S. at 78, 95 S. Ct. at 2088 (citations omitted).
The first and fourth factors are not in dispute. Plaintiffs are members of the class for whose benefit the statutes were enacted.*fn14 Being beneficiaries of government supported programs and facilities, plaintiffs are clearly "persons" for whose "especial benefit" Title VI and section 504 were enacted. It is the right not to be "excluded from participation in (or to be) denied the benefits of . . . any program or activity receiving Federal financial assistance", "on the ground of race, color, . . . national origin" or handicap, which is the essence of Title VI and section 504, and which plaintiffs are in a position to assert. The fourth question asked in Cort whether the cause of action is one traditionally relegated to state law is also readily answered. The right of participants in federally funded programs to be free from unlawful discrimination on account of race or handicap, is preeminently the province of federal, not state, law. The parties below have conceded these issues, the lower court has so concluded, and we concur. The second and third factors present more difficult issues, and upon these factors our decision turns.
Under Cort, an explicit statement of congressional intent to deny a private cause of action would preclude our implying such an action. However there is no explicit indication of legislative intent either to create or to deny a private cause of action in the legislative history of Title VI. At best, it may be said that the legislative references to a private cause of action are inconclusive. WMC has directed our attention to statements made on the floor during debate by Congressman Gill*fn15 and Senators Kuchel*fn16 and Keating.*fn17 These statements constitute the clearest evidence of explicit intent that can be adduced.
However, Congressman Gill's comments were apparently directed toward the question of who may go to court to challenge funding termination decisions. Senator Kuchel's comments were directed toward the availability of judicial review for terminated funding recipients. Only Senator Keating was speaking to the issue when he noted in passing that an explicit right to sue was considered but not included in the bill. This comment on the failure to include an explicit provision for a private action, without more, is not enough to make out a controlling legislative intent to deny a private right. See e.g., Tennessee Valley Authority v. Hill, 437 U.S. 153, 98 S. Ct. 2279, 57 L. Ed. 2d 117 (1978). Stronger evidence of a purposeful rejection of a private cause of action is required for the court to refuse to consider whether such an action may be implied.*fn18
Since we do not find an explicit congressional intent to create or deny a private cause of action, we must proceed to determine if an implicit intent to create or deny such an action can be found in the legislative history of Title VI. The district court canvassed that history and concluded that the implicit intent was to deny a private cause of action. The court arrived at this conclusion after determining that section 602 and section 603 of Title VI are primarily administrative, that section 602 does not allow a private right of action to seek funding termination, and that section 603 provides for only limited judicial review of agency funding decisions. Whether or not these three determinations are correct, they do not necessarily compel or even support the district court's conclusion that section 601 does not create a private cause of action.
Section 601 was probably the least controversial of these three sections of Title VI.*fn19 There was little dispute over the correctness of the moral principles embodied in the section, and no dispute over the validity and vitality of the fundamental principles of substantive law which it proclaimed.*fn20 The debate in Congress turned initially on the appropriateness of using the power of the federal purse as a means of effectuating compliance with the otherwise undisputed direction of section 601.*fn21 Having determined to use funding termination as an enforcement tool, the controversy then moved to how the funding sanction was to be imposed. Many Congressmen feared an overbroad intrusion by government into the manner in which states and localities could administer programs which were supported in part by federal funds.*fn22 Others feared that wholesale funding terminations might follow isolated instances of discriminatory administration.*fn23 Some felt that funding termination served merely to harm the beneficiaries of the terminated programs, and that, as a result, section 602's enforcement thrust was misguided.*fn24 There was widespread discomfort with the prospect of arbitrary and capricious determinations emanating from Washington, especially if those orders could be backed by the threat of funding termination. Further, out of a desire to provide procedural fairness to funding recipients whose conduct might be challenged,*fn25 there was strong sentiment in favor of limiting the role of third parties in the funding termination process by denying them a private cause of action to seek funding termination.
These considerations led to the enactment of sections 602 and 603. Congress was concerned with limiting the power of federal agencies to bring about compliance with section 601, not with limiting private rights under section 601. That sections 602 and 603 are limits on agencies, and not on rights, is repeatedly made clear in the legislative proceedings.*fn26
To imply a private cause of action, we must find that such a cause would be consistent with the underlying purposes of the legislative scheme. A private cause of action under Title VI to seek declaratory and injunctive relief is entirely consistent with the legislative scheme. We find it impossible to square the plaintiffs' peripheral role in the section 602 and 603 process with their critical status as protected beneficiaries under section 601, unless section 601 is read to include a right of action distinct from the limitations of sections 602 and 603.*fn27 The very fact that private parties are normally precluded from advancing their section 601 rights before the administrative agency makes more compelling the implication of a private remedy under Title VI. As the Supreme Court has noted, when there is a legal right without a legal remedy, the right has little meaning. Sullivan v. Little Hunting Park, 396 U.S. 229, 238, 90 S. Ct. 400, 24 L. Ed. 2d 386 (1969); Jones v. Mayer Co., 392 U.S. 409, 88 S. Ct. 2186, 20 L. Ed. 2d 1189 (1968).
The question arises why Congress would explicitly provide for a funding termination sanction, yet leave the remainder of the enforcement scheme to inference. The answer appears to be that at the time of the passage of Title VI, the power of the executive to terminate funding, and the principles which served to limit that power, were subject to intense dispute.*fn28 Having established a principle of non-discrimination based on the jurisdictional predicate of government funding, Congress was compelled to make explicit how federal power to terminate funding could and should be exercised.*fn29 That Congress would feel the need to define explicitly the outlines of funding termination does not support the conclusion that funding termination was somehow intended to be an exclusive remedy. The notion that a private action for injunctive or declaratory relief is inconsistent with a federal statute that authorizes termination of funds has been rejected by the Supreme Court.*fn30 See Rosado v. Wyman, 397 U.S. 397, 420, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970).
It is also persuasive evidence of intent that Congress has repeatedly enacted attorneys' fee legislation implicitly predicated on the fact that Title VI may be enforced in a private action.*fn31 While this legislation does not amount to a conclusive demonstration that a private cause of action exists, the fact that Congress has explicitly provided for attorneys' fees under Title VI, coupled with the fact that Congress has had the opportunity to foreclose a private action but has not done so,*fn32 supports our interpretation of legislative intent and our construction of the legislative scheme envisaged by the enacting Congress.*fn33
Our analysis of Title VI is supported by prior judicial interpretation. "To date the courts, including (the Supreme Court), have unanimously concluded or assumed that a private action may be maintained under Title VI." Regents of University of California v. Bakke, 438 U.S. 265, 419, 98 S. Ct. 2733, 2814, 57 L. Ed. 2d 750 (1978) (Justice Stevens, joined by Justices Burger, Stewart and Rehnquist) (footnote omitted). In Lau v. Nichols the Supreme Court held that failure to provide language instruction to non-English speaking children of Chinese ancestry was a violation of Title VI. In the case now before us, the district court, recognizing that Lau was brought under § 1983, distinguished Lau as merely assuming, but not actually deciding, that Title VI created a private cause of action. This overlooks the fact that, in finding that the plaintiffs' "right to participate" had been violated, the Court firmly based its decision on Section 601.*fn34 Further, this case has been read consistently by the courts as authority for the proposition that Title VI creates a private cause of action. See Lloyd v. Regional Transport Authority, 548 F.2d 1277 (7th Cir. 1977); Gurmankin v. Costanzo, 556 F.2d 184 (3d Cir. 1977) (dicta).
In Bossier Parish School Board v. Lemon, 370 F.2d 847 (5th Cir.), Cert. denied, 388 U.S. 911, 87 S. Ct. 2116, 18 L. Ed. 2d 1350 (1967), the panel expressly found that Title VI created a private cause of action. While Lau had emphasized the contractual agreement between a federal agency and a federal funding recipient as the basis for importing section 601's proscription to the funding recipient, the court in Bossier found a Title VI cause of action distinct from any "contract" action which might arise. Merely by accepting federal support the School Board became "bound" by section 601 and "Obligated to provide (benefits) without racial discrimination." 370 F.2d at 851 (emphasis in the original). The court concluded:
The defendants argue that this section (601) is a mere statement of policy, and that section 602's administrative remedies are the only means by which it may be enforced. Section 601 states a reasonable condition that the United States may attach to any grant of financial assistance and may enforce by refusal or withdrawal of federal assistance. But it also states the law as laid down in hundreds of decisions, independent of the statute. In this sense, the section is a prohibition, not an admonition. In the absence of a procedure through which the individuals protected by section 601's prohibition may assert their rights under it, violations of the law are cognizable by the courts.
370 F.2d at 852.
The most recent Supreme Court consideration of Title VI supports our conclusion. Immediately prior to the filing of this opinion, the Supreme Court announced its decision in Cannon v. University of Chicago, 441 U.S. 677, 99 S. Ct. 1946, 60 L. Ed. 2d 560 (1979). In Cannon, the Supreme Court was not called upon to decide whether a private cause of action could be implied under Title VI, but rather whether such an action could be implied under Title IX of the Educational Amendments of 1972, 20 U.S.C. § 1681 Et seq. Since Title IX was expressly intended by Congress to track the previously enacted Title VI,*fn35 it was necessary for the Court to determine what remedies Congress thought Title VI provided before it could decide what remedies Congress intended under Title IX. Accordingly, in Cannon, the Court did not consider whether Title VI actually created a private cause of action, but rather whether Congress thought that this was so, eight years later, when it modeled Title IX's remedies on those available under Title VI.*fn36
Developments subsequent to the enactment of Title VI which the Supreme Court thought might have influenced or impressed Congress at the time of Title IX's enactment were: the numerous decisions of the federal courts after 1964 explicitly finding a private cause of action under Title VI;*fn37 the decisions of the Supreme Court which implicitly recognized the existence of such actions;*fn38 the inclusion of Title VI in such attorneys' fees acts as § 718 of the Emergency School Aid Act of 1972;*fn39 the debates on § 718, Title IX, and the other Titles of the Educational Amendments of 1972;*fn40 the "Executive Branch's apparent understanding of Title VI at the time" of Title IX's passage;*fn41 and Congress' apparent "acquiescence" in and "affirm(ation)" of the assumption that a private cause of action existed.*fn42
The Supreme Court, in Cannon, concluded that in 1972 Congress Believed that it had created a private right of action under Title VI.*fn43 We have concluded that Congress Intended that there be a private right of action when it enacted Title VI in 1964. The reasoning of the Supreme Court supports our conclusion, for the post-enactment treatment of Title VI by Congress is persuasive evidence of what the Congressional intent was at the time of that Title's passage. The unusual manner in which the Supreme Court was called upon to discuss Title VI barred it from making any explicit determination as to whether that Title actually created a private cause of action. However, the Court's discussion of Title VI indicates to us that were this question before it, the answer would be in the affirmative.*fn44 In the same vein, in Bakke four Justices expressed the opinion that there is a private cause of action under Title VI, 438 U.S. at 418, 98 S. Ct. at 2814, while four other Justices assumed that there was a private cause of action without deciding the question, 438 U.S. at 341, 98 S. Ct. at 2745 and 438 U.S. at 327, 98 S. Ct. at 2768.*fn45
Our holding that there is a private cause of action under Title VI compels a similar holding in respect to section 504 of the Rehabilitation Act of 1973,*fn46 29 U.S.C. § 794 (1976). Section 504 is virtually identical to Title VI and was consciously intended by Congress to track that statute.*fn47 More than in the case of Title VI, the legislative history of the Rehabilitation Act Amendments of 1974, Pub.L. 93-516, 88 Stat. 1617, evidences an explicit Congressional intent to create a private cause of action.*fn48 As stated in the Committee Report to the Senate, the legislature anticipated that a private right of action would be available as a means of enforcing section 504:
This approach to implementation of Section 504, which closely follows (Title VI), would ensure administrative due process (right to hearing, right to review), provide for administrative consistency within the Federal government as well as relative ease of implementation, and Permit a judicial remedy through a private action. (Emphasis supplied).
S.Rep.No. 93-1297, 93 Cong., 2d Sess. 39-40, Reprinted in 4 U.S.Code Cong. & Admin.News, pp. 6373, 6391 (1974).
We agree with the Cort analysis of section 504 undertaken in Lloyd v. Regional Transportation Authority, 548 F.2d 1277, 1284-86 (7th Cir. 1977), in which the court found an explicit congressional intent to create a private action and concluded that such an action was consistent with the underlying purposes of the legislative scheme. This Court relied on Lloyd in Gurmankin v. Costanzo, 556 F.2d 184 (3d Cir. 1977), when it supported, in dicta, the holding we make today, and reached the same conclusion, without discussion, in Doe v. Colautti, 592 F.2d 704 at 708 n. 8 (3d Cir. 1979), Amended (Feb. 23, 1979).
We hold that under the principles enunciated in Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), a private cause of action is implicit in section 601 of Title VI and section 504 of the Rehabilitation Act of 1973 for plaintiffs who seek declaratory and injunctive relief. Because we find that both statutes do create private causes of action for the benefit of the classes protected by the respective statutes, and because we find that these plaintiffs have not had an opportunity to try their cause in federal court, we remand the case to the district court for a trial on the merits of plaintiffs' section 601 and section 504 claims against WMC.*fn49