Date: 04-11-2002

Case Style: The Kroger Company v. Regional Airport Authority of Louisville and Jefferson County

Case Number: 00-6552

Judge: Farris

Court: United States Court of Appeals for the Sixth Circuit

Plaintiff's Attorney: Charles G. Middleton III, MIDDLETON REUTLINGER, Louisville, Kentucky, for Appellant.

Defendant's Attorney: Michael D. Risleym of STITES & HARBISON, Louisville, Kentucky, for Appellee

Description: The Kroger Company appeals the district court's affirmance of the Regional Airport Authority of Louisville and Jefferson County's decision to partially reimburse Kroger for relocation expenses under the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (URA), 42 U.S.C.A. §§ 4621-4638 (West 1995 & Supp. 2001). Kroger contends (1) that the district court applied the incorrect standard of review, (2) that Kroger was inappropriately denied an evidentiary hearing, and (3) that the denial of certain expenses was unsupported by the record. We affirm.

I.

In 1992, the Regional Airport Authority, a quasi-municipal entity implementing a relocation program pursuant to the URA, purchased Kroger's Crittenden Drive property for $9.1 million. As a result, Kroger moved its distribution center operations to a new facility and applied for over $4 million in relocation benefits. The RAA approved $727,692. This appeal involves an additional $325,626 to which Kroger alleges it is entitled.

Kroger continues to seek reimbursement for seven items: (1) Permits and Licenses ($51,275); (2) Management Wages ($16,074); (3) Dixie Costs and Product Move to Peyton ($122,379); (4) Trailer Rental ($13,593); (5) Forklift Expense and Equipment Rental ($5,190); (6) Telephone and Data Cabling ($13,115); and (7) Consulting Fees ($104,000). The RAA denied these expenditures either because they were ineligible expenses, in excess of the reasonable and necessary amount, or submitted without sufficient documentation.

Before making this determination, the RAA met with Kroger several times, permitted Kroger to amend its claim twice, and reviewed seventy-six volumes of material submitted in support of the application. The RAA determination contained two detailed tables: a cost comparison that illustrated where the RAA's evaluation differed from Kroger's; and a summary of the claim for relocation expenses, which listed the reasons why particular expenses were approved or denied.

Kroger administratively appealed this determination to the RAA's General Manager, Robert S. Michael. In addition to reviewing the existing documentation, Michael considered Kroger's oral presentation and a written position statement. He informed Kroger that it was free to supplement the record with additional materials or legal authorities, but Kroger did not do so. In June 1995, Michael affirmed the RAA's determination.

Kroger sought review of the RAA determination at the district court. As an initial matter, the court found that the RAA did not err in denying Kroger's request for an evidentiary hearing, and that the determination was subject to the arbitrary or capricious standard of review. Later, the district court granted RAA's motion for summary judgment on all categories of expenses except four.(1) At the parties' request, those issues were remanded to the RAA for further development of the administrative record. When the matter returned, the district court affirmed the RAA's subsequent determination to deny relocation expenses for the remaining issues.

Kroger here contends that the district court erred by not reviewing the RAA's determination de novo or for substantial evidence, by affirming the RAA's denial of an evidentiary hearing, and by affirming the RAA's denial of full reimbursement for the challenged seven items.

The APA requires hearings only where an on-the-record adjudication is required by the appropriate substantive statute. See 5 U.S.C.A. §§ 551(13), 553-57, 704, 706; Florida Power & Light Co., 470 U.S. at 744 ("The APA specifically contemplates judicial review on the basis of the agency record compiled in the course of informal agency action in which a hearing has not occurred."). The URA states only that the head of an agency must establish regulations to ensure that a person whose claim for benefits is not approved in full may have the denial "reviewed by the head of the . . . agency having authority over the applicable program or project." 42 U.S.C.A. § 4633(b)(3) (emphasis added). In promulgating the relevant URA regulations, the United States Department of Transportation acknowledged an agency's broad discretion to determine its review procedures: "The appeal process is an entirely internal process of an agency. The decision by the agency about the process must only conform to these regulations and whatever other administrative rules which the agency must follow." 54 Fed. Reg. 8912, 8918 (Mar. 2, 1989). The regulations provide simply that an agency determination be made "[p]romptly after receipt of all information submitted by a person in support of an appeal." 49 C.F.R. § 24.10(g).

The RAA allowed Kroger to submit any relevant information it wished to tender. The RAA's general manager reviewed the voluminous record and permitted an oral presentation, a written position statement, and supplementation of the record. Kroger received all the process it was due under the URA, the APA, and the Constitution, and it was not entitled to an evidentiary hearing at any level. See, e.g., Camp, 411 U.S. at 483 n.3; United States v. 131.68 Acres of Land, Etc., 695 F.2d 872, 876 (5th Cir. 1983); Starke, 454 F. Supp. at 483 n.2.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Kroger received all the process it was due under the URA, the APA, and the Constitution, and had ample opportunity to present arguments and documentation in support of its reimbursable relocation expenses. The district court did not err in finding that the RAA had not acted arbitrarily or capriciously in denying the challenged expenditures. Affirmed

Plaintiff's Experts: Unavailable

Defendant's Experts: Unavailable

Comments: None