## Facts

- Astrid L. Portela-Gonzalez was a long-serving civilian sales manager at the Navy Exchange, Roosevelt Roads Naval Station, Puerto Rico, with a strong performance history.
- On December 14, 1989, she placed 28 clothing items on layaway (25 clearance “red tag” items) for an expected total of $484.10.
- After post-Christmas further markdowns, she canceled the layaway (paying a $5 penalty) and repurchased the same items for $330.79.
- The Navy charged that she took an unauthorized 40% price reduction in violation of layaway policy, causing a $197.32 loss.
- The Officer in Charge suspended her without pay pending discipline and then notified her of proposed removal, identifying charges and procedural rights under governing Navy instructions.
- Portela contested the action through multiple internal grievance/appeal levels; each intermediate reviewer upheld termination.
- The administrative scheme allowed a final appeal to the Deputy Assistant Secretary of the Navy, but Portela did not pursue it and instead filed suit in federal court.

## Issues

1. Whether Portela was required to exhaust all available administrative remedies, including the final appeal to the Deputy Assistant Secretary of the Navy, before seeking judicial review.
2. Whether any exception to exhaustion, including futility, excused her failure to take the final administrative step.

## Decision

- The First Circuit affirmed summary judgment for the Navy on the alternative ground that Portela failed to exhaust administrative remedies.
- The court held that the Navy’s multi-tier grievance process required completion through the final available appeal before resort to federal court.
- The court rejected futility and other asserted grounds for excusing non-exhaustion because the record did not show bias, predetermined outcomes, undue delay, or inability to grant relief at the final level.
- The court declined to excuse exhaustion based on resource-saving considerations, concluding that such a rationale conflicts with the purposes of the exhaustion doctrine.
- Although the district court reached the merits and found the termination not arbitrary or capricious, the appellate court affirmed without relying on that merits analysis.

## Legal Principles

- Federal courts generally require full exhaustion of prescribed administrative remedies before permitting judicial review.
- Exhaustion protects agency authority by allowing the agency the first opportunity to correct errors and apply its expertise.
- Exhaustion promotes judicial efficiency by developing a complete administrative record and potentially resolving disputes without litigation.
- Where an administrative scheme provides a final, available level of review, a claimant must pursue it; stopping at intermediate steps is insufficient.
- Exceptions to exhaustion (including futility, bias, undue delay, or lack of meaningful relief) are applied narrowly and require concrete support, not speculation.
- An appellate court may affirm a judgment on any ground supported by the record, even if different from the district court’s reasoning.

## Conclusion

The court upheld judgment for the Navy because the employee bypassed the final administrative appeal required by the governing grievance process, and the record did not support applying any recognized exception to the exhaustion requirement.


Portela-Gonzalez v. Sec'y of the Navy, 109 F.3d 74 (1st Cir. 1997)