Administrative Law Prof Blog

Seidenfeld on Chevron deference

New on SSRN: "Chevron's Foundation" by Mark Seidenfeld (Florida State). Abstract:

How can a court justify deferring to an administrative agency interpretation of a statute under the Chevron doctrine given the accepted understanding that Article III of the Constitution makes the judiciary the ultimate decider of the meaning of law in any case or controversy that is properly before a court? That is the question this article addresses. It further considers the ramifications of the answer to that question on the potential forms that any doctrine of interpretative deference may assume.

This article first rejects congressional intent to delegate interpretative primacy to agencies as the basis for Chevron. It argues that such intent is an unsupportable fiction that distracts attention from judicial responsibility for the Chevron doctrine. Instead, it posits that Chevron is better viewed as a doctrine of judicial self-restraint under the courts’ Article III responsibilities. It then analyzes how this view of Chevron doctrine given the accepted understanding that Article III of the Constitution makes the judiciary the ultimate decider of the meaning of law in any case or controversy that is properly before a court? That is the question this article addresses. It further considers the ramifications of the answer to that question on the potential forms that any doctrine of interpretative deference may assume. might influence when and how the doctrine should operate.

EMM

Theory: Schauer on the Obligation to Obey the Law

On his Legal Theory Blog, Lawrence Solum (Illinois) has posted the abstract for and an extract from Frederick Schauer's (Virginia) John A. Sibley Lecture at the University of Georgia, "When and How (If at All) Does Law Constrain Official Action?" with the comment "Highly recommended. Download it while its hot!" Rather than me wasting electrons copying what Prof. Solum has already done, just go to "Schauer on the Obligation to Obey the Law" to download it. EMM

Administrative review by agreement?

This is more of a civil procedure issue than an administrative law issue, but it is still a useful administrative practice lesson. In an agreement between a developer and a county, paragraph twenty-one reads in part:

Any dispute between Developer and County arising from the failure of either party to comply with material terms and conditions of the Development Plan or this Agreement after an impasse has been reached, shall be resolved by a review hearing by the Board. ... The Board's decision shall be subject to appeal and judicial review in the Superior Court of the State of Arizona in and for Pinal County pursuant to [the Administrative Review Act or ARA] ...

The parties reached in "impasse" and the Developer sued the County alleging, inter alia, that the ARA did not apply to this matter and, even if it did, the County hadn't followed it. The trial judge decided that the ARA did apply, but that there was no final order arising from a properly noticed hearing to be reviewed, sending it back to the County. The Developer brought a Special Action (interlocutory) appeal on this issue to the Court of Appeals. The Court of Appeals found that the ARA did not apply to this matter, and remanded the case back to the trial court for it to be treated as a normal civil action.

¶16 Nothing in the ARA states or suggests that parties to a contract can agree to its application and confer jurisdiction on the superior court when the ARA is otherwise inapplicable. On the contrary, the statute’s applicability provision, § 12-902, and its definitions section, § 12-901, clearly and unambiguously limit the scope of the ARA's application. The legislature has made clear that the ARA applies to final decisions of an administrative agency only, § 12-902(A), and that the terms "administrative agency" or "agency" do "not include an agency in the judicial or legislative departments of the state government, any political subdivision or municipal corporation or any agency of a political subdivision or municipal corporation." § 12-901(1). Had the legislature intended to include within the ARA's purview decisions by boards otherwise excluded by the definition of administrative agency, it could have done so. And, had it intended to permit excluded entities to render the ARA applicable by agreement, it could have done so as well. ...

¶21 Thus, there is no statutory authority supporting the portion of paragraph twenty-one that provides for judicial review of the Board's decision pursuant to the ARA. Absent such authority, the County and [the Developer] could not agree to confer such jurisdiction on the superior court. ... Parties cannot, by agreement or consent, confer subject matter jurisdiction on a court where it would not otherwise exist. Nor can parties limit the court's jurisdiction, which is the effect of the respondent judge's consideration of petitioners' complaint as nothing more than a request for review under the ARA rather than a de novo complaint.

While this opinion is applying a statute in one particular jurisdiction, the principal holds generally. Without explicit statutory authority, parties cannot by agreement add or subtract from the authority of the courts. One might suspect that the boilerplate language of this dispute resolution provision was copied from some other contract or from a form book, the drafter failed to make sure that it would work in a development agreement with an Arizona county, and nobody on either side of the negotiating table noticed. Lesson for contract drafters: Boilerplate isn't.

Grosvenor Holdings v. Pinal County, No. 2 CA-SA 2009-0050 (Ariz. App. Oct. 22, 2009). EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Rector, Emily M. Removing from state administrative agencies. 84 Notre Dame L. Rev. 2269-2311 (2009). [H]|[L]|[W]
• Rousseau, Sandra. The use of warnings in the presence of errors. 29 Int'l Rev. L. & Econ. 191-201 (2009). [H]|[L]|[W]

EMM

Serial professional discipline

On his California License Law Blog, Fredrick M. Ray (Orange, CA) draws attention to the serial effects of professional discipline in "The Domino Effect of License Discipline":

A phenomenon we observe in our law firm every day is the Domino Effect of license discipline.  Simply put, discipline against one's license, a license denial, or a criminal conviction, can in turn result in discipline against out of state licenses, other agency licenses, and affect employment, memberships, clearances and registrations. ... The worst part of the Domino Effect is the pernicious manner in which negative public records available over the internet can damage one's career and reputation.  Most licensing agencies will make derogatory information available on a license record, in a website listing of disciplinary actions and even in an agency newsletter.  Thusfar licensing agencies see it as their duty to publicize one's license discipline on the websites and in their publications.  It remains to be seen if the law will curb these practices by requiring that old or irrelevant disciplinary cases be stricken from a licensing agency's website.

It's a bit biased, but after all he does represent respondents. It happens in other aspects of administrative law as well, such a transportation, insurance, and securities. If you are representing respondents, it is vital to make them understand that they have to fight the first regulatory action, even though it might not seem that important in and of itself. EMM

Catch-22

William Lee Logan of Dykema Gossett PLLC (Chicago, inter alia) reviews a scary Fair Debt Collection Practices Act (FDCPA) case in "Damned If You Do and Damned If You Don't: FDCPA Requires Debt Collectors to Make Complete Disclosures on Answering Machine Messages Directed to Debtors". In Edwards v. Niagara Credit Solutions, Inc., No. 08-17006 (11th Cir. Oct. 14, 2009),

[T]he debtor's past due accounts had been assigned to the collector for collection. As part of its collection efforts, the collector left several messages over a 4-month period on the debtor's answering machine. The messages left requested the debtor to return the call and to use a certain file number when returning the call.  The message did not specify that it was a debt collector who had called nor that the purpose of the call was to collect on a debt as is required under Section 807(11) of the Act, 15 U.S.C. §1692e(11). The collector's reason for not leaving the identifying information was that it did not want to take the risk that someone other than the debtor would hear the message. The collector was concerned that if someone else heard the message regarding the debt collection, the collector could be found to have violated Section 805(b).

The debt collector asserted that trying to avoid this conflict within the statute constituted a "bona fide error" under 15 U.S.C. §1692k(c), a complete defense to the debtor's claim.

[T]he Court held that there could be no bona fide error since it was not reasonable for the collector to violate one section of the Act in order to avoid the possibility that some of the messages might lead to a violation of another portion of the Act. The Court stated, "Just as it is not reasonable to destroy a village in order to save it, neither is it reasonable to violate an Act in order to comply with it." The collector had also argued that if it were not permitted to leave out the disclosures required by Section 807(11), then it would never be allowed to leave any messages on answering machines when attempting to reach a debtor. The Court of Appeals responded to this argument by stating that even if the collector's assumption were correct, "the answer is that the Act does not guarantee a debt collector the right to leave answering machine messages."

Whoa! Thanks to Lexology for the pointer. EMM

Arizona: Public records - metadata

Usually we don't post substantive stuff about specific agencies and jurisdictions, but here is a new Arizona Supreme Court opinion that may be of interest. It opens with:

¶ 1  Arizona law provides that “[p]ublic records and other matters in the custody of any officer shall be open to inspection by any person at all times during office hours.” Ariz. Rev. Stat. (“A.R.S.”) § 39-121 (2001).  The City of Phoenix denied a public records request for metadata in the electronic version of a public record.  We today hold that if a public entity maintains a public record in an electronic format, then the electronic version, including any embedded metadata, is subject to disclosure under our public records laws.

Lake v. City of Phoenix, No. CV-09-0036-PR (Ariz. Oct. 29, 2009), vacating in part 220 Ariz. 472, 207 P.3d 725 (App. 2009), available at http://www.supreme.state.az.us/opin/pdf2009/CV090036PR.pdf.

¶ 15  Our decision is unlikely to result in the “administrative nightmare” that the City envisions.  A public entity is not required to spend “countless hours” identifying metadata; instead, it can satisfy a public records request merely by providing the requestor with a copy of the record in its native format.  Additionally, not every public records request will require disclosure of the native file.  Public entities may provide paper copies if the nature of the request precludes any need for the electronic version.  Public records requests that are unduly burdensome or harassing can be addressed under existing law, which recognizes that disclosure may be refused based on concerns of privacy, confidentiality, or the best interests of the state. Cf. Griffis, 215 Ariz. at 5 ¶ 13, 156 P.3d at 422 (balancing interests to determine if the state’s privacy or confidentiality concerns outweigh the presumption of disclosure).

The key word is "if" in ¶ 1. The Court explicitly declines to rule on whether or not any particular records must be maintained in electronic form.

¶ 16  We do not here decide when a public entity is required to retain public records in electronic format.  That a public record currently exists in an electronic format, and is subject to disclosure in that format, does not itself determine whether there is a statutory obligation to preserve it electronically. 

EMM

A practical lesson in litigating with the government

In his Bank Lawyer's Blog, Kevin Funnell describes the federal government as "The Everyready Energizer Defendant". While he is discussing a shareholder derivative action, he points out a good general administrative law lesson, quoting Arnold & Porter attorney Michael Johnson:

But he cautions private parties now contracting with the government to be careful. When the crisis ends, he says, politics can come into play and "hindsight can make the deals look a little different. Government is uniquely situated to alter the terms of the deals everyone thought were good at the time. Hopefully the lesson learned here is that the government does need to keep its promises. If it chooses not to, there are consequences," he says. "Another lesson for the private parties is the wheels of justice can turn a little slowly."

In my experience, federal regulatory agencies have (and, through the Department of Justice, have access to) many skilled, experienced, and dedicated attorneys. If pushed, they can fight back. Mr. Funnell quotes another source describing litigating with the government as dancing with a bear - you stop dancing when the bear gets tired. EMM

Evidence you must have

Yes, Master Yoda. Without evidence on the record, administrative decision-makers face the embarrassment of reversal by a reviewing court. Dean Patty Salkin (Albany), on her Law of the Land blog, describes a Massachusetts wireless antenna case where the town failed to substantiate its decision in "Denial of Permit for Antenna on Extension to Smokestack Already Housing Two Antennas Violates Telecommunications Act". Five years earlier, the town had approved two antennas on an existing smokestack. When a competitor sought to add a third antenna, the town denied the needed permit and approval, expressing concern about their appearance.

The court held that the denial unreasonably discriminated among functionally equivalent providers and was not supported by substantial evidence, in violation of the Telecommunications Act, 47 U.S.C. § 332(c). While the proposed antenna would be slightly higher than the existing antennas, the board did not discuss the significance of the difference. Even applying the waiver requirement would amount to different treatment, to the disadvantage of a provider of equivalent services. While a negative aesthetic impact can be a sufficient basis for denial, aesthetic judgments must be based on specifics; the record included only conclusory statements of disapproval without explanation of how the addition would make the existing situation worse. The board rejected the company’s evidence without having any competing evidence on which to base its decision.

EMM

Standards of review

Are often established by statute. In a recent Arizona Court of Appeals decision, Coplan v. Ariz. St. Bd. of Appraisal, 1 CA-CV 08-0545 (October 22, 2009), the Court reversed a Superior Court decision overturning a disciplinary decision by the Board. The Superior Court said that the sanction imposed by the Board was “so disproportionate to the offense as to shock one’s sense of fairness”. The Board appealed. Unfortunately for Ms. Coplan, the correct standard of review is whether the action “is not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion.” ARIZ. REV. STAT. § 12-910(E) (2003). And according to the Arizona Supreme Court in Maricopa Cty. Sheriff’s Office v. Maricopa Cty. Employee Merit System Comm., 211 Ariz. 219, 119 P.3d 1022 (2005), they are not the same. The Court of Appeals reviewed the Board's decision de novo and found that it was supported by substantial evidence, was not contrary to law, was not arbitrary or capricious, and was not an abuse of discretion.

There is another, more practical lesson in this case. It seems this was not the first time Ms. Coplan had appealed the Board's decision. The first time she appealed and won, the Board basically cut her penalties in half rather than appeal the Superior Court's decision. Then she made her big mistake: She appealed the reduced sanctions. Not only did the Court of Appeals reverse the Superior Court decision, but it ruled that the original sanctions imposed by the Board where correct as well. She also lost large statutory awards of attorneys' fees. "Ya' gotta know when to hold 'em, know when to fold 'em, ..." EMM

You cannot repair stupid

From Patty Salkin's (Albany) Law of the Land blog - "Lesson: Research Chain of Title and Zoning Regulations Prior to Purchasing Property at Auction":

The Connecticut Superior Court, following a trial, rejected a taking claim by a developer who purchased a non-conforming, unbuildable lot at a tax sale and was subsequently denied two minor variances to develop the lot. The court noted that all bidders had been advised in the publication that it was not guaranteed that the property they were bidding on was buildable, and the Town made no representations as to the suitability and character of the property. The plaintiffs purchased the property for $38,000 and had it appraised as a buildable lot at $150,000.  However, the plaintiffs did not research the chain of title nor the applicable zoning regulations prior to purchasing the lot. The court ruled that the Lucas claim failed because, even if the lot was unbuildable, there was some evidence that the lot would have value to neighboring owners.  The Court also ruled that the Penn Central claim failed because the plaintiff purchased the property with the regulatory restrictions already in place and failed to conduct any investigation prior to making the purchase into how the regulations might limit development.

OMG. EMM

Object early and often

On his firm's New York Zoning and Municipal Law Blog, Steven M. Silverberg (Silverberg Zalantis LLP, White Plains, NY and Westport, CT) has posted an interesting review of a recent zoning case of administrative law interest, New York Court of Appeals Expands Criteria for Standing to Bring a SEQRA Challenge. Citizens who visited a nearby wild area challenged a zoning change for a nearby hotel under New York's State Environmental Quality Review Act on the grounds that the municipality had failed to consider the impact of the hotel on three of five rare species in the wild area. The city's environmental review had covered two species, finding no significant impact (actually, they couldn't find any of the two butterflies). A comment from the State environmental office mentioned the other three but made no objection to the results of the review, so the city didn't follow up on them.

The Court of Appeals said that the plaintiffs had standing to challenge the decision, even though they did not live near the wild area.

In finding that Petitioners in this case had standing the Court held "people who visit the Pine Bush, though they come from some distance away, seem much more likely to suffer adverse impact from a threat to wildlife in the Pine Bush than the actual neighbors of the proposed hotel development — the owners and occupants of the nearby office buildings and shopping malls. The neighbors may care little or nothing about whether butterflies, orchids, snakes and toads will continue to exist on or near the site. The City asks us to adopt a rule that environmental harm can be alleged only by those who own or inhabit property adjacent to, or across the street from, a project site; that rule would be arbitrary, and would mean in many cases that there would be no plaintiff with standing to sue, while there might be many who suffered real injury."

Although the plaintiffs got in to court, they lost on the merits. The Court of Appeals found that the city had complied with the Review Act's requirements.

[W]ith respect to the other species the Court found that while the "[state environmental agency] did identify them in a letter commenting on the scoping checklist, it offered no particular reason to believe that the project would threaten them, and no other commenter in the SEQRA process mentioned them at all. When they were omitted from the [final study] neither [the state agency] nor anyone else called attention to the omission....While it is essential that public agencies comply with their duties under SEQRA, some common sense in determining the extent of those duties is essential too....That it chose not to investigate some matters of doubtful relevance is an insufficient reason for prolonging the process further, and for adding to the expense. A "rule of reason" (Matter of Jackson v New York State Urban Development Corp., 67 NY2d at 417) is applicable not only to an agency's judgments about the environmental concerns it investigates, but to its decisions about which matters require investigation."

Thus, the Court's decision on the merits should serve as a warning to those challenging a review that they must do more than just raise an issue. Rather, to sustain a challenge under SEQRA they should articulate the basis for the concerns and object to any failure by a lead agency to address those concerns.

This lesson applies to many other challenges to administrative actions as well, due to short statutes of limitation and "rule of reason" findings as in this case. EMM

New administrative law articles

From the University of Washington's Current Index to Legal Periodicals:

• Barnet, Todd. Massachusetts v. Environmental Protection Agency: checks and balances in disarray. 17 Penn St. Envtl. L. Rev. 329-353 (2009). [H]|[L]|[W]
• Michiels, Nicolas E.M. Comment. Should inmates be running the jailhouse?: affirming the constitutionality of enhanced archivist involvement in White House record-keeping policymaking. 58 Am. U. L. Rev. 1567-1609 (2009). [H]|[L]|[W]

EMM

The Fourth Amendment in administrative cases

From FourthAmendment.com, "Cal.2: Exclusionary rule not applied to employee disciplinary hearing".

The courts have seldom applied the exclusionary rule in administrative cases, even ones in which severe penalties are imposed based on the admission of illegally seized evidence. In administrative disciplinary proceedings, a balancing test must be applied, and consideration must be given to the social consequences of applying the exclusionary rule and to the effect thereof on the integrity of the judicial process. The court conducted a balancing test and determined that there were insufficient grounds for extending the exclusionary rule to the disciplinary proceeding because of the serious dangers arising from the employee's drug use on the job and possession of a readily accessible firearm.

Citing Department of Transportation v. State Personnel Bd., 2009 Cal. App. LEXIS 1690 (2d Dist. October 20, 2009). EMM

Judicial review: When collateral estoppel bars a second bite

There is a good review of how the doctrine of collateral estoppel applies in administrative decisions on the New York Public Personnel Law blog: "Collateral Estoppel may bar a lawsuit involving essentially the same issues earlier adjudicated in a quasi-judicial administrative hearing".

Sometimes an individual, unsuccessful in one lawsuit, will commence another legal action involving essentially the same issues and parties. However, applying the doctrine of collateral estoppel prevents a party from relitigating an issue which has already been decided by the courts involving the same parties and issues. ... [T]he doctrine may apply to bar relitigating issues decided by administrative agencies if those decisions are "quasi-judicial" in nature. According to the ruling, an administrative agency is quasi-judicial in nature if it is given express statutory authority to act adjudicatively.

In contrast, if an agency only invokes its executive powers under the governing statute in making its determination, it is not exercising "quasi-judicial powers." ... [C]hallenging the administrative agency's decision in court in situations where the agency did not arrive at its decision as a result of its acting in an adjudicative or judicial capacity would not be barred under the doctrine of collateral estoppel. ...

This action [Pisano v NYC Board of Education] arose after a medical arbitrator sustained the New York City Board of Education Medical Board's ruling that Pisano's absence from work did not result from her job-related injury. ... Pisano challenged the arbitrator's determination ... Her argument: the arbitrator's determination "was the result of misconduct by the Board and that the arbitrator failed to examine all of [her] medical records and thus did not conduct a thorough and exhaustive record."

A [state trial court] dismissed Pisano's petition, ruling that the arbitration award was proper notwithstanding her allegations, as the award was "rational and unambiguous." When Pisano filed second lawsuit based on the Medical Board's determination, the City asked the court to apply the doctrine of collateral estoppel and dismiss her petition. The court granted the City's motion, noting that the Medical Board is an agency within the meaning of [the New York statute], which provides for medical examinations, the creation of a medical board and the right to a hearing to challenge any adverse findings adopted by the Board.

The court said that "[t]hese procedures demonstrate that the determinations of these agencies are not merely the exercise of any rule-making or policy-making resolutions but are adjudications pursuant to their specific authority to actually decide cases. The court's conclusion: the Medical Board acted in a quasi-judicial capacity and its rulings bar any subsequent proceedings pursuant to the doctrine of collateral estoppel.

Collateral estoppel arises from concerns about abuse of the system, finality, comity - respect for other courts - and judicial economy. With the rise of the administrative state, many matters once decided by courts or altogether novel are now decided by executive agencies. It makes sense to apply the same doctrine to adjudicative decisions if - and this is a big "if" - the individual challenging the government decision has adequate procedural protections. New York leaves that decision to the legislature in its grant of authority. EMM

Theory: Mendelson on transparency in presidential oversight of agency decision making

Nina A. Mendelson (Michigan) has posted "Disclosing 'Political' Oversight of Agency Decision Making" on SSRN. Abstract:    

Scholars and courts have been divided on whether presidential supervision enhances the legitimacy of the administrative state. For some, that the president can supervise administrative agencies is key to arguing that agency action is legitimate, because the president’s accountability to the electorate. Others, however, have argued that such supervision may simply taint, rather than legitimize, an agency action. The reality is that presidential supervision of agency rule making, at least, appears to be both significant and opaque. This paper presents evidence from multiple presidential administrations suggesting that regulatory review conducted by the White House’s Office of Management and Budget is associated with high levels of changes in agency rules. Further, the paper documents the comparative silence regarding the effect of that supervision. Neither OMB nor the agencies generally report the content of supervision by presidential offices; nor do they report whether a particular agency decision is consistent with presidential preferences. Silence about content, the paper suggests, threatens to undermine the promise of presidential influence as a source of legitimacy for the administrative state. The paper then argues for greater transparency. Agencies should be required to summarize executive influence on significant rule making decisions. Such an ex ante disclosure regime is superior to proposals that judges be more receptive to “political reasons” in reviewing a particular agency action. Finally the paper suggests that some, but not all, “political reasons” for agency action are legitimate, but that only a more transparent system - by facilitating public dialogue and accountability to Congress - can fully resolve the question of which reasons are legitimate and which are not.

EMM

Giviti on "strategic" statutory interpretation by agencies

Yehonatan Givati (Harvard) has posted "Strategic Statutory Interpretation by Administrative Agencies" on SSRN. Abstract:    

Many statutes are administered by administrative agencies. This paper shows that, when interpreting an ambiguous statute, administrative agencies choose between two strategies of statutory interpretation: the risky strategy - a relatively aggressive interpretation that provokes an appeal by the firm - and the safe strategy - a relatively non-aggressive interpretation that the firm complies with. The paper also shows that a change in the level of judicial deference may result in a shift from the risky strategy to the safe one, or vice versa. Therefore, contrary to the commonly held view, an increase in the level of judicial deference may result in agencies choosing a less aggressive statutory interpretation, and in more court decisions reversing agencies' statutory interpretation.

EMM

Theory: Columbia profs amici brief for PCAOB case

While Free Enterprise Fund vs. Public Company Accounting Oversight Board, No. 08-861(before the U.S. Supreme Court this term) is primarily a Con Law case with political overtones (well, don't they all have political overtones?), the Brief for Constitutional and Administrative Law Scholars as Amici Curiae in Support of Respondents has some points of interest for Admin Law scholars as well. Here is the Statement of Interest:

Amici curiae Harold Bruff, Richard Fallon, Jerry Mashaw, Gillian Metzger, Henry Monaghan, Richard Revesz, Richard  Stewart, and David Strauss (see Appendix) are professors of constitutional law and administrative law with expertise in the area of separation of powers. Amici teach, research, and write on many of the issues presented in this case, including the scope of presidential appointment and removal powers, the structure of federal administrative government, and the scope of private regulatory schemes. Amici submit this brief to demonstrate that petitioners’ broad view of presidential authority is not constitutionally mandated and risks upending longstanding precedent and established governmental practice.

And the table of contents outline of the argument:

I.Unlimited Presidential Removal Authority Is Not Required by the Constitution and Is at Odds with Deeply Entrenched Precedent and Practice

A.Neither Constitutional Text Nor Constitutional Structure Compels Unlimited Presidential Removal Power

B.Unlimited Presidential Removal Power Is Inconsistent with Longstanding Precedent

C.Unlimited Presidential Removal Power Is Inconsistent with Government Practice and Modern Administrative Government

D.  Petitioners’ Challenge Threatens Congressional Efforts to Enhance the Accountability of Private Regulation

II.The Statutory Provisions Governing Removal and Appointment of Board Members Are Plainly Constitutional under this Court’s Governing Precedent

A.The Removal Provisions Are Clearly Constitutional In Light of the SEC’s Comprehensive Supervision of the Board

B.Board Members Are Inferior Officers and Their Appointment by SEC Commissioners Is Constitutional

Now, whenever I see the words "clearly" and "plainly" in an advocacy document, my eyebrows go up. Still, it's a crisply-written argument. Parts I.C. and I.D. are particularly interesting. EMM

Post-deprivation hearings and when allegations are sufficient

Daniel Ackman, Counsel for the Plaintiffs, sent me an interesting recent decision, Nnebe v. Daus, No. 06 Civ. 4991 (RJS), 2009 WL 3151809 (S.D.N.Y. 2009). Mr. Ackman comments:

I thought this decision might be of interest.

On Sept 29, Judge Sullivan (SDNY), in a decision that was discussed on the front page of yesterday's New York Law Journal, held that the TLC [New York City Taxi and Limousine Commission] was within its rights to suspend the license of a taxi driver who is arrested-even on a misdemeanor and without knowledge of the substance or circumstances of the allegation (including whether the arrest had anything to with driving a taxi).  Judge Sullivan further held that at a post-deprivation hearing, the TLC need merely "prove" that the driver was arrested- the suspension could continue, again regardless of the facts or circumstances of the underlying alleged crime.  In short, the TLC, per Judge Sullivan, the TLC may summarily and indefinitely suspend the license an independent taxi driver, based on an arrest alone without regard to the substance of the charges.  The suspension ends once the taxi driver is exonerated on the criminal charges-which (Judge Sullivan omits, but it's the fact) happens 90% of the time.

The opinion addresses several issues, two of which are salient for administrative law.

There is a concise discussion of when post-deprivation notice and hearings satisfy due process. In this case, as soon as the Commission gets notified of the arrest of a cab driver, a Commission attorney reviews it, suspends the cab driver's license, and notifies the cab driver within five days. If the licensee requests a hearing it is held before an ALJ within ten days. The opinion relies on Mathews v. Eldridge, 424 U.S. 319 (1976), Ingraham v. Wright, 430 U.S. 651 (1972), Gilbert v. Homar, 520 U.S. 924 (1997), and Brody v. Vill. of Port Chester, 434 F.3d 121 (2d Cir. 2005) (quoting Fuentes v. Shevin, 407 U.S. 67, 88 (1972)). The fact is, there are circumstances that justify a post-deprivation hearing.

[A]n important government interest, accompanied by a substantial assurance that the deprivation is not baseless or unwarranted, may in limited cases demanding prompt action justify postponing the opportunity to be heard until after the initial deprivation.

Gilbert, 520 U.S. at 930-31, quoted in this opinion. In the Mathews opinion, the Supreme Court set out a balancing test involving three factors: The significance of the respondent's interest, the significance of the government's interest, and the risk of erroneous deprivation and the relative value of additional process.

With respect to the first Mathews factor, the private interest at stake here is undoubtedly significant, as the Supreme Court has consistently “recognized the severity of depriving someone of the means of his livelihood.”  Gilbert, 520 U.S. at 932....  At the same time, however, the Supreme Court has also noted that the deprivation of a protected interest is mitigated by the availability of prompt post-deprivation review.  Thus, “[s]o long as the suspended [party] receives a sufficiently prompt post-suspension hearing,” procedural due process is not offended. (citing to Gilbert).

In this case, the TLC is required by statute to act promptly following a pre-hearing suspension. ...

With respect to the second Mathews factor, the government's interest counsels strongly against requiring a pre-deprivation hearing. Among the most critical functions performed by the TLC are ensuring the safety of the taxi-riding public and maintaining the public's trust in the safety of taxis. ... A taxi passenger is in a uniquely vulnerable position, in a confined space with a stranger who may lock the doors, block egress, and limit the passenger's ability to summon police assistance.  Passengers consent to what would otherwise be a perilous situation because a TLC license reflects the TLC's opinion that a licensee meets the standard of fitness for licensure set forth in the TLC Rules. Accordingly, the TLC has a strong interest in ensuring both that passengers are not placed in a vulnerable position with possibly dangerous drivers and in ensuring that the public perceive the taxi industry to be safe. ...

The third and final Mathews factor — the risk of erroneous deprivation and the relative value of additional process — also weighs in favor of Defendants. As the Court explains below, the very existence of a criminal proceeding is a reason to suspend a driver, as pending criminal allegations — even if later dismissed — implicate the TLC’s interest as licensor. Thus, the suspension is not “erroneous” simply because the charges against the driver are eventually dropped. Rather, the suspension pending the resolution of the criminal case protects the TLC’s interest without regard to the ultimate disposition of the criminal charges.

The second salient issue is the adequacy of the hearing when the only facts to be decided are (1) was the respondent actually arrested, and (2) does the charge relate "to a direct and substantial threat to the public health or safety" (language from the NYC Administrative Code). The respondent can try to show that the person arrested wasn't the respondent, but the match is based on fingerprints so this is difficult. With the criminal statute in hand, the ALJ can readily determine what danger the charge implies. What the respondent cannot argue is "I didn't do it". The TLC doesn't care.

As explained below, federal courts have held both (1) that an agency is entitled to suspend an employee on the basis of pending criminal proceedings against him, and (2) that because an agency may do so, a hearing that does no more than confirm the existence of such criminal proceedings does not violate the suspended employee’s rights.

The Opinion relies on Brown v. DOJ, 715 F.2d 662 (D.C. Cir. 1983), FDIC v. Mallen, 486 U.S. 230, 240 (1988), James A. Merritt & Sons v. Marsh, 791 F.2d 328 (4th Cir. 1986), and Cooke v. Social Security Administration, 125 F. App’x 274 (Fed. Cir. 2004), and distinguishes Krimstock v. Kelly  (Krimstock I), 306 F.3d 40 (2d Cir. 2002) and Spinelli v. City of New York, No. 07 Civ. 1237, 2009 WL 2413929 (2d Cir. Aug. 7, 2009).

A taxi license represents the TLC’s judgment that the licensee is qualified to drive a taxi and interact with passengers; as the District of Columbia Circuit noted in Brown, “public knowledge that an individual formally accused of job-related crimes is still on duty would undoubtedly erode public confidence in the agency.”  Brown, 715 F.2d at 667. As a result, every license issued by the TLC necessarily implicates its interest as a licensor.

The weakness I see in the Court's reliance on Brown, Mallen, and Cooke is that these cases all concern employees of the agency, where there is a direct relationship between public allegations and the reputation (and hence effectiveness) of the agency. James A. Merritt & Sons is closer - it concerns a defense contractor suspended upon charges of procurement misbehavior rather than an agency employee - but there is a substantial difference between cab drivers and a government contractor. One suspects that James A. Merritt & Sons was not completely out of business when it temporarily lost the federal government as a customer. The cab drivers lost their livelihoods. However, considering the decisions on asset forfeitures that have bubbled up over the last few years, I suspect this will be upheld as a matter of federal Constitutional law. It would be interesting to see what would happen in New York State courts applying the New York Constitution. EMM

History and theory: Ernst on Freund and Frankfurter

New from Daniel R. Ernst (Georgetown): "Ernst Freund, Felix Frankfurter and the American Rechtsstaat: A Transatlantic Shipwreck, 1894-1932". Abstract:

From the passage of the Interstate Commerce Act of 1887 through the New Deal, American legislators commonly endowed administrative agencies with broad discretionary power. They did so over the objections of an intellectual founder of the American administrative state. The American-born, German-educated lawyer and political scientist Ernst Freund developed an Americanized version of the Rechtsstaat—a government bound by fixed and definite rules—in an impressive body of scholarship between 1894 and 1915. In 1920 he eagerly took up an offer from the Commonwealth Fund to finance a comprehensive study of administration in the United States. Here was his chance to show that a Continental version of the Rule of Law had come to America. Unfortunately for Freund, the Commonwealth Fund yoked him to the Austrian-born, American-educated Felix Frankfurter, a celebrant of the enlightened discretion of administrators. Freund's major publication for the Commonwealth Fund, Administrative Powers over Persons and Property (1928), made little impression on scholars of administrative law, who took their lead from Frankfurter. Today the Rechtsstaat is largely the beau ideal of libertarian critics of the New Deal; few recognize that it is also part of the diverse legacy of Progressive reform. This is a preprint version of the essay, which was subsequently published on pp. 171-88 of volume 23, issue 2 (October 2009) of Studies in American Political Development.

A comment from the author on the Legal History Blog:

You'll note, if you make it all the way through, that I close with Willard Hurst's appreciation of Ernst Freund in The Growth of American Law (1950). After the article went to press, I stumbled upon another, quite interesting assessment of Freund by Hurst here.

EMM