Palacios v. Spencer
267 F. Supp. 3d 1
| D.D.C. | 2017Background
- Frank Palacios served in the Marines (1992–1995) and was discharged under other-than-honorable (OTH) conditions for a "pattern of misconduct." He alleges service-connected lumbar injury and that his discharge was improper.
- Palacios sought administrative relief: NDRB denied relief (2002); BCNR denied a 2009 application (2010); BCNR denied his 2013 request for reconsideration in a January 22, 2015 letter.
- In 2016 Palacios sued under the Administrative Procedure Act (APA), arguing the BCNR’s 2015 denial of reconsideration was arbitrary, capricious, unsupported by substantial evidence, and contrary to law.
- The government moved to dismiss for lack of subject-matter jurisdiction, arguing the APA claim was untimely and that the Tucker Act provides an adequate remedy for monetary relief.
- The district court held it lacked jurisdiction because Palacios expressly sought back pay and benefits (monetary relief exceeding $10,000), placing that portion of his claim within the exclusive jurisdiction of the Court of Federal Claims under the Tucker Act.
- The court also held the BCNR’s 2015 denial was not final agency action for purposes of the APA (the letter did not reopen the matter or rely on new evidence), and therefore amendment or transfer would be futile; the case was dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court has jurisdiction over Palacios’s APA challenge | Palacios challenged the BCNR’s 2015 denial and sought judicial review; any monetary relief would be incidental to non-monetary relief (upgraded discharge) | The Tucker Act provides an adequate remedy for monetary claims; district court lacks jurisdiction over claims primarily seeking money > $10,000 | Held: District court lacks jurisdiction because complaint explicitly seeks back pay and benefits; claim falls within Tucker Act exclusive jurisdiction of Court of Federal Claims |
| Whether the BCNR’s 2015 denial is final agency action under the APA | The 2015 letter denied reconsideration and addressed a new causal-connection argument; Palacios contends it is reviewable final action | Gov’t contends the denial was a non-final, summary refusal to reopen the prior decision | Held: 2015 denial is not final agency action—no new evidence presented and the letter did not clearly reopen the matter; APA review unavailable |
| Whether the suit is time-barred under the APA six-year statute of limitations | Palacios argues he challenges the 2015 denial (within six years) | Gov’t argued earlier decisions/timing could render claim untimely | Held: Court declined to resolve on timeliness because it lacked jurisdiction for other reasons (Tucker Act/monetary relief) |
| Whether leave to amend or transfer to Court of Federal Claims is appropriate | Palacios sought leave to amend to disclaim money claims or transfer the case | Gov’t opposed transfer/amendment as improper or futile | Held: Denied—amendment or transfer would be futile because the 2015 decision is not final agency action, and the monetary claim falls under Tucker Act jurisdiction |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (establishes plaintiff’s burden to show subject-matter jurisdiction)
- Gaubert v. United States, 499 U.S. 315 (court accepts factual allegations when jurisdiction is challenged on legal grounds)
- Trudeau v. FTC, 456 F.3d 178 (5 U.S.C. § 704 is not itself a jurisdictional grant for APA review)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (courts must resolve jurisdiction before reaching merits)
- Testan, United States v., 424 U.S. 392 (Tucker Act does not create substantive right; identifies scope of money-claim jurisdiction)
- Kidwell v. Dep’t of Army Bd. for Corr. of Mil. Records, 56 F.3d 279 (whether claim "in essence" seeks > $10,000 determines Tucker Act jurisdiction)
- Wolfe v. Marsh, 846 F.2d 782 (bright-line rule: courts look to complaint four corners to determine if monetary relief sought)
- Tootle v. Secretary of the Navy, 446 F.3d 167 (district court jurisdiction where complaint sought only non-monetary relief)
- Sendra Corp. v. Magaw, 111 F.3d 162 (denial of reconsideration is reviewable only if new evidence/changed circumstances or if agency clearly reopens the matter)
- Bennett v. Spear, 520 U.S. 154 (defines "final agency action" standard under APA)