This is an appeal from a final order of the district court dismissing the plaintiff's discrimination claim, brought under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d et seq. (1976) (Title VI), for failure to exhaust his administrative remedies. Chowdhury v. Reading Hospital and Medical Center, 520 F. Supp. 134 (E.D.Pa.1981). The crucial operative language in the district court's opinion is:

"Plaintiff's failure to seek administrative redress of his Title VI claims requires dismissal of the present complaint.... If the parties cannot amicably resolve their differences and other administrative remedies prove ineffective, plaintiff may return to the courts for relief. Accordingly, defendant's motion to dismiss will be granted."

Id. at 135 (citations omitted). This court has jurisdiction under 28 U.S.C. § 1291 (1976).

Because we believe this conclusion to be inconsistent with expressions found in previous opinions of this court and the Supreme Court, we will reverse.

These facts are alleged in the complaint:1 The plaintiff is a physician licensed to practice medicine and surgery in the Commonwealth of Pennsylvania and Board certified in internal medicine and gastroenterology. He is not of the Caucasian race.

The defendant is a non-profit corporation operating a hospital in West Reading, Pennsylvania. It has received various sorts of federal financial assistance within the meaning of section 601 of Title VI, 42 U.S.C. § 2000d (1976) (section 601). See 45 C.F.R. § 80.13 & app. A (1980).

The plaintiff sought and was denied courtesy staff privileges at the defendant hospital. He alleges that this denial was based upon his race and thus violated section 601. As a result of this denial, and without contacting the hospital's federal funding agency or otherwise seeking an administrative remedy, the plaintiff brought this action. As set forth above, the district court dismissed the complaint for failure to exhaust administrative remedies. 520 F. Supp. at 135.

This appeal followed.

Section 601 states a broad and sweeping rule of non-discrimination in any program receiving federal financial assistance:

"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."

42 U.S.C. § 2000d (1976). Its twin purposes are clear: "to avoid the use of federal resources to support discriminatory practices ... (and) to provide individual citizens effective protection against those practices." Cannon v. University of Chicago, 441 U.S. 677, 704, 99 S. Ct. 1946, 1961, 60 L. Ed. 2d 560 (1979);2 Regents of the University of California v. Bakke, 438 U.S. 265, 284-87, 98 S. Ct. 2733, 2745-46, 57 L. Ed. 2d 750 (1978) (opinion of Powell, J.). In furtherance of the first of these purposes, Congress explicitly provided for an administrative enforcement mechanism, contained in section 602,3 by which the funding agency attempts to secure voluntary compliance and, failing that, is empowered to terminate the violator's federal funding. Under the regulations promulgated pursuant to this section, an aggrieved individual may file a complaint with the funding agency4 but has no role in the investigation or adjudication, if any, of the complaint.5 The only remedies contemplated by the language of the Act and the Regulations are voluntary compliance and funding termination. There is no provision for a remedy for the victim of the discrimination, such as injunctive relief or damages.6 Section 603 of the Act provides for judicial review of funding termination decisions.7

Since the enactment of Title VI, the courts have found that Congress intended to protect the interests of individual discriminatees by implying a private cause of action for injunctive relief under section 601. Cannon v. University of Chicago, 441 U.S. at 706 n.40, 99 S. Ct. at 1962 n.40 (citing cases).8 This court explicitly recognized such a cause of action in N.A.A.C.P. v. Medical Center, Inc., 599 F.2d 1247, 1250-58 (3d Cir. 1979).9 In doing so, we specifically rejected the argument that the rights conferred by section 601 are dependent upon or limited by the funding termination procedure of section 602 or the judicial review provisions of section 603. Id. at 1253-55.10 The court made a detailed analysis of the legislative history and concluded that, while there was little or no dispute over section 601, there was substantial disagreement over the propriety of using funding termination as an enforcement tool because of its potential for abuse. Thus, the court found that

"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.

"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. 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."

Id. at 1254-55 (footnotes and citations omitted).

Thus, the argument in favor of an exhaustion requirement-potential interference with the administrative enforcement scheme of sections 602 and 603-is precisely the argument rejected by this court in Wilmington Medical Center. Indeed, the court explicitly stated that "we hold that there exists a private cause of action under section 601 of Title VI which may be asserted without preliminary recourse to agency remedial procedures...." 599 F.2d at 1250 n.10. See also id. at 1249 n.6. While it might be possible to narrowly distinguish this case on the ground that the exhaustion issue was not before the Wilmington Medical Center court, we are satisfied that the exhaustion principle announced there is a sound one. Further, the Supreme Court in Cannon treated Title IX as identical in both structure and policy to Title VI11 and went on to discuss at length, although arguably in dictum, that administrative exhaustion is not required under Title IX. The Court observed:

"It has been suggested that, at least in the absence of an exhaustion requirement, private litigation will interfere with HEW's enforcement procedures under § 902 of Title IX. The simple answer to this suggestion is that the Government itself perceives no such interference under the circumstances of this case, and argues that if the possibility of interference arises in another case, appropriate action can be taken by the relevant court at that time....

"In addition, Congress itself was apparently not worried about such interference when it passed Title IX....

"True, this Court has sometimes refused to imply private rights of action where administrative or like remedies are expressly available.... But it has never withheld a private remedy where the statute explicitly confers a benefit on a class of persons and where it does not assure those persons the ability to activate and participate in the administrative process contemplated by the statute.... As the Government itself points out in this case, Title IX not only does not provide such a mechanism, but the complaint procedure adopted by HEW does not allow the complainant to participate in the investigation or subsequent enforcement proceedings. Moreover, even if those proceedings result in a finding of a violation, a resulting voluntary compliance agreement need not include relief for the complainant.... Furthermore, the agency may simply decide not to investigate-a decision that often will be based on a lack of enforcement resources, rather than on any conclusion on the merits of the complaint.... In that case, if no private remedy exists, the complainant is relegated to a suit under the Administrative Procedure Act to compel the agency to investigate and cut off funds.... But surely this alternative is far more disruptive of HEW's efforts efficiently to allocate its enforcement resources under Title IX than a private suit against the recipient of federal aid could ever be.

"For these same reasons, we are not persuaded that individual suits are inappropriate in advance of exhaustion of administrative remedies. Because the individual complainants cannot assure themselves that the administrative process will reach a decision on their complaints within a reasonable time, it makes little sense to require exhaustion."

441 U.S. at 706-08 n.41, 99 S. Ct. at 1962-63 n.41 (citations omitted). This fairly clear indication from the Supreme Court serves to reinforce our conclusion that the current state of the law does not require the exhaustion of the agency funding termination procedures and avenues of judicial review contained in sections 602 and 603 as a prerequisite to a private action for individual injunctive relief under section 601.12 We must therefore conclude that the decision of the district court is inconsistent with the statements found in Wilmington Medical Center and the teaching of the Supreme Court in Cannon.13 Similarly, the district court decisions14 holding to the contrary which were relied upon by the district court must no longer be followed to the extent that they are inconsistent with our decision today. We believe this conclusion to be in accord with recent decisions in other circuits construing section 504 of the Rehabilitation Act of 1973.15 See Pushkin v. Regents of the University of Colorado, 658 F.2d 1372 (10th Cir. 1981); Camenisch v. University of Texas, 616 F.2d 127 (5th Cir. 1980), vacated on other grounds and remanded, 451 U.S. 390, 101 S. Ct. 1830, 68 L. Ed. 2d 175 (1981). Pushkin relied impliedly and Camenisch explicitly upon the same language from Cannon as this court did in Wilmington Medical Center. Pushkin, 658 F.2d at 1381-82; Camenisch, 616 F.2d at 134-35.

For the foregoing reasons, the judgment of the district court will be reversed and the case remanded for further proceedings consistent with this opinion.16

ALDISERT, Circuit Judge, dissenting.

Although I agree with the majority that whether appellant is entitled under Title VI to assert a private cause of action for employment discrimination was not settled by NAACP v. Medical Center, Inc., 599 F.2d 1247 (3d Cir. 1979), see maj. op. at 320 n.9, and still is an open question, I would affirm the district court's dismissal of the complaint for failure to exhaust the conciliation procedures provided by regulations of the Department of Health and Human Services.

I cannot agree that this case is controlled by either Medical Center or Cannon v. University of Chicago, 441 U.S. 677, 99 S. Ct. 1946, 60 L. Ed. 2d 560 (1979), and I conclude that the rule announced by the majority conflicts with public policy as expressed by Congress and with sound principles of judicial administration, a conclusion shared by every reported decision of the district courts in this circuit. See Chowdhury v. Reading Hospital and Medical Center, 520 F. Supp. 134 (E.D.Pa.1981) (Troutman, J.); Santiago v. City of Philadelphia, 435 F. Supp. 136 (E.D.Pa.1977) (Lord, C. J.); NAACP v. Wilmington Medical Center, Inc., 426 F. Supp. 919 (D.Del.1977) (Latchum, C. J.), rev'd on other grounds, 599 F.2d 1247 (3d Cir. 1979); Johnson v. County of Chester, 413 F. Supp. 1299 (E.D.Pa.1976) (Luongo, J.). I believe that the four district judges in this circuit who have considered this issue are right, and that the majority in this case are wrong.

The majority would follow bare dictum set forth in this court's first Medical Center decision. That case required us to decide whether individuals in a protected class, intended beneficiaries of a federal funding program aiding the hospital, possessed a private cause of action under Title VI and its analog in the Rehabilitation Act, 29 U.S.C. § 794. By the time that case reached this court, the plaintiffs had already exhausted their administrative remedies, as they were ordered to do by Chief Judge Latchum. See NAACP v. Wilmington Medical Center, 426 F. Supp. at 924. Even though the question of exhaustion was moot, the Medical Center panel of this court stated at note 10 that "we hold that there exists a private cause of action under section 601 of Title VI which may be asserted without preliminary recourse to agency remedial procedures ...," 599 F.2d at 1250 n.10, and at note 6, that "recourse to the administrative remedy is not in any event a prerequisite to the assertion of the plaintiffs' private cause of action," id. at 1249 n.6, citing in both instances Cannon v. University of Chicago, 441 U.S. at 706 n.41, 99 S. Ct. at 1962 n.41.

Gratuitous statements such as these bind neither the trial courts nor subsequent panels of this court. See United States Court of Appeals for the Third Circuit, Internal Operating Procedures, Ch. VIII C. They are classic obiter dictum: "statement(s) of law in the opinion which could not logically be a major premise of the selected facts of the decision."1 Dictum is the antithesis of precedent. As we have explained,

The essence of the common law doctrine of precedent or stare decisis is that the rule of the case creates a binding legal precept. The doctrine is so central to Anglo-American jurisprudence that it scarcely need be mentioned, let alone discussed at length. A judicial precedent attaches a specific legal consequence to a detailed set of facts in an adjudged case or judicial decision, which is then considered as furnishing the rule for the determination of a subsequent case involving identical or similar material facts and arising in the same court or a lower court in the judicial hierarchy.

Allegheny Gen. Hospital v. NLRB, 608 F.2d 965, 969-70 (3d Cir. 1979). See also Addonizio v. United States, 573 F.2d 147, 151 (3d Cir. 1978), rev'd on other grounds, 442 U.S. 178, 99 S. Ct. 2235, 60 L. Ed. 2d 805 (1979); Institute for Scientific Information, Inc. v. United States Postal Service, 555 F.2d 128, 130 (3d Cir. 1977).

Litigants should not totally disregard dictum, of course, because it indicates the direction or framework of an opinion writer's thought, and thereby serves as a tool for predicting what the court might do when the issue is properly presented. But dictum, unlike holding, does not have the strength of a decision "forged from actual experience by the hammer and anvil of litigation,"2 a fact to be considered when assessing its utility in the context of an actual controversy. Similarly, appellate courts must be cautious to avoid promulgating unnecessarily broad rules of law. As Lord Atkin observed,

(I)t is of particular importance to guard against the danger of stating propositions of law in wider terms than is necessary, lest essential factors be omitted in the wider survey and the inherent adaptability of ... law be unduly restricted. For this reason it is very necessary in considering reported cases in the law ... that the actual decision alone should carry authority, proper weight, of course, being given to the dicta of the judges.

Donoghue v. Stevenson (1932) A.C. 562, 584. The common law tradition is one that depends for its stability on the gradual, case-by-case method of developing rules and from the rules, broader legal precepts. Although I can indulge a litigant for relying on dictum when he does not have an otherwise persuasive argument, a court that accords dictum controlling weight drains that tradition of its strength and undermines its legitimacy.

Applying the foregoing precepts to the Medical Center opinion leads inexorably to the conclusion that it does not control this case. It is not a precedent for the rule that a doctor who has been denied courtesy staff privileges in a hospital receiving federal financial assistance may sue the hospital in federal court without exhausting available Title VI administrative remedies; at most, Medical Center holds that intended beneficiaries of a federal program who have exhausted their administrative remedies have a private cause of action for discrimination under Title VI and its Rehabilitation Act analog. Statements in the majority opinion in the instant case indicating that Medical Center settled both issues are simply incorrect.

Nor can I conclude that footnote 41 of Cannon v. University of Chicago, the putative precedent on which the majority and the Medical Center dictum rely, is of greater legitimacy. I concede that Cannon, like Medical Center, includes language which, considered in vacuo, supports the majority's assertion that non-exhaustion in this employment discrimination case is a "sound" rule. See maj. op. at 320-321. But there, as in Medical Center, the question of exhaustion was not before the court. Although Justice Stevens' opinion for the court noted that plaintiff had commenced but not exhausted available administrative procedures, 441 U.S. at 680 n.2, 99 S. Ct. at 1949 n.2, the narrow question presented for decision was whether an applicant excluded from a federally funded educational program solely because of her sex has a cause of action under Title IX, 20 U.S.C. § 1681.3 The narrow scope of that decision was underscored by the court of appeals' subsequent affirmance of the district court's second order dismissing the case for failure to state a claim, this time because it was evident that the plaintiff could not prove discriminatory intent. Cannon v. University of Chicago, 648 F.2d 1104 (7th Cir.), cert. denied, --- U.S. ----, 102 S. Ct. 981, 71 L. Ed. 2d 117 (1981). See Cannon, 441 U.S. at 680 n.2, 99 S. Ct. at 1949 n.2. Whether exhaustion should be a prerequisite to suit, like the question of the standard of proof, was never decided.

Moreover, Cannon arose in a materially different factual context. There the plaintiff was a medical school applicant alleging that she was denied acceptance at the defendant schools because of her sex. Title IX, on which she premised her cause of action, deals explicitly with admissions to graduate programs receiving federal funds, 20 U.S.C. § 1681, and thus the statute explicitly extended its protection to her and to the interest she alleged the grantees had infringed. In the present case, it is yet to be determined if Dr. Chowdhury is an intended beneficiary of either Title VI or the federal financial assistance received by the hospital. As the majority observe:

We note that other courts that have addressed the question of whether 601 provides a cause of action for employment discrimination have required proof that the primary purpose of the funding was to provide employment.

Maj. op. at 320 n.9. Dr. Chowdhury would be in an entirely different position were he a patient alleging denial of services because of his race; instead, he is seeking employment as a member of the medical staff. Therefore, unlike Cannon, which implicated an express Congressional policy to protect applicants for admission to federally assisted graduate programs from sex discrimination, this case requires consideration of Congress' policy regarding claims of employment discrimination. Congress has expressly prohibited federal agencies and departments from interfering with employment practices under the guise of Title VI "except where a primary objective of the Federal financial assistance is to provide employment." 42 U.S.C. § 2000d-3. Every court of appeals that has considered the question has agreed that this section and its analogs bar private actions for employment discrimination as well. See, e.g., Ass'n Against Discrimination v. City of Bridgeport, 647 F.2d 256, 275 (2d Cir. 1981), cert. denied, --- U.S. ----, 102 S. Ct. 1611, 71 L.Ed.2d ---- (1982); Carmi v. Metropolitan St. Louis Sewer Dist., 620 F.2d 672 (8th Cir.), cert. denied, 449 U.S. 892, 101 S. Ct. 249, 66 L. Ed. 2d 117 (1980) (Rehabilitation Act); Trageser v. Libbie Rehabilitation Center Inc., 590 F.2d 87 (4th Cir. 1978), cert. denied, 442 U.S. 947, 99 S. Ct. 2895, 61 L. Ed. 2d 318 (1979) (Rehabilitation Act).4

I agree with these holdings and would extend them to denial of courtesy staff privileges a fortiori when, as in this case, the plaintiff has not alleged that providing staff privileges is relevant to the objective of the funding, let alone whether it is the primary objective of the federal assistance. Moreover, Congress has articulated clearly a policy favoring administrative conciliation over immediate private civil litigation in discrimination cases touching employment relationships. EEOC v. E. I. duPont de Nemours & Co., 516 F.2d 1297 (3d Cir. 1975); Fekete v. U. S. Steel Corp., 424 F.2d 331 (3d Cir. 1970). See Ostapowicz v. Johnson Bronze Co., 541 F.2d 394, 398 (3d Cir.), cert. denied, 429 U.S. 1041, 97 S. Ct. 741, 50 L. Ed. 2d 753 (1976). As this court has noted, the preliminary steps of a Title VII claim "are essential parts of the statutory plan, designed to correct discrimination through administrative conciliation and persuasion if possible, rather than by formal court action." Id. I simply cannot accept as consistent with the framework of discrimination law that a plaintiff may deliberately bypass available administrative remedies when claiming employment discrimination under Title VI, while he is required by the same facts to exhaust those procedures under Title VII. I am confident that Congress did not intend to allow Dr. Chowdhury to do under Title VI what he is barred from doing under Title VII.

I reject the majority's assertion that Dr. Chowdhury does not possess a meaningful remedy under 45 C.F.R. § 80.7. Indeed, congruent with the EEOC emphasis on administrative conciliation and persuasion, HHS Title VI regulations provide for institution of a complaint by any person who believes that he has been subjected to discrimination "not later than 180 days from the date of the illegal discrimination." 45 C.F.R. 80.7(b).5 Those regulations specifically provide for informal resolution of the dispute whenever possible. Id. at 80.7(d).6 Although the complainant is not expressly given a right to participate in the conciliation procedures, such a right does not exist under Title VII either. See 42 U.S.C. § 2000e-5. Rather, the emphasis in both schema is on informal resolution of disputes, with adversarial procedures regarded as a last resort.

My view in this case is consistent with what I have previously expressed regarding the relationship between employment discrimination cases brought under Title VII and those brought under 42 U.S.C. § 1981:

I believe that there will be more predictability and reckonability to the law of employment discrimination, more understanding and societal acceptability by the lay public, including putative employees, employees, and employers alike, if there is consistency in the judicial interpretation of the two statutes (implicating employment discrimination).

Croker v. Boeing Co., 662 F.2d 975, 1002 (3d Cir. 1981) (in banc) (Aldisert, J., dissenting in part).

In their rush to let Dr. Chowdhury into court, the majority have unnecessarily opened the doors to premature, and often needless, litigation. It is one thing for federal judges to complain that Congress has increased the federal jurisdiction unnecessarily, and that our caseload has increased astronomically,7 but it is quite another for that load to increase by means of self-inflicted wounds. By directing the plaintiff to ignore the opportunity for administrative resolution of this dispute, the majority are doing just that.

For all the foregoing reasons I dissent, and would affirm the judgment of the district court.