NO. 92-610
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
VESTER A. WILSON, 11,
and SUE E. WILSON,
Plaintiffs and Respondents,
-v -
DEPARTMENT OF PUBLIC SERVICE
REGULATION: and PUBLIC SERVICE
COMMISSION OF THE STATE OF MONTANA,
Defendants and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Timothy N. Sweeney, Montana Public Service
Commission, Helena, Montana
For Respondent:
Neil E. Ugrin, Gary M. Zadick, Ugrin, Alexander,
Zadick & Slovak, Great Falls, Montana
Submitted on Briefs: April 30, 1993
Decided: nugust 2 6 , 1993
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
This is an appeal from a Memorandum and Order of the First
Judicial District granting, inter alia, Vester A. Wilson, I1 and
Sue Wilson (Wilsons) immediate judicial review of action taken
against them in a matter presently pending before the Public
Service Commission (PSC). We affirm.
We restate the issue on appeal as whether, under Section 2-4-
701, MCA, the District Court properly granted immediate review of
the agency's action in this case.
The following facts are taken from the District Court's
Memorandum and Order dated October 20, 1992, and, for purposes of
this opinion, will be deemed controlling.
The Wilsons, d/b/a Bitter Root Disposal hold a Class D Motor
Carrier Certificate of Public Convenience and Necessity issued by
the PSC (the certificate). Under the certificate, Wilsons are
authorized to transport garbage and other materials defined in 5
69-12-301(5), MCA, in the area of Hamilton, Montana.
On April 17, 1992, the PSC issued a notice of complaint and
order to show cause (the notice) to the Wilsons pursuant to 5 69-
12-327, MCA, on the basis of three complaints of alleged
intimidation and harassment of customers and competitors by the
Wilsons in the operation of their business. The notice stated:
A certificate of authority is granted by order of
the Commission and is contingent upon carrier fitness to
provide for hire motor carrier service to the public.
"Carrier fitness" refers to a carrier's character,
financial strength, and equipment base. Conduct of the
type described in the complaints is inconsistent with a
finding of carrier fitness and therefore in violation of
the order granting the certificate of authority.
On April 29, 1992, the Wilsons filed their answer to the
notice and requested a hearing with full opportunity for discovery
and contested case procedures. In their answer, the Wilsons
asserted that the notice was beyond the scope of the PSC's
authority and that the complaints did not relate to service or
fitness under the provisions of Title 69.
The PSC, by subsequent notice, scheduled the matter for public
hearing in July 1992 and provided dates certain in June for
requesting and responding to discovery. Wilsons moved to dismiss,
timely requested discovery from the PSC and also moved for the
appointment of an independent hearing examiner.
Prior to the date set for responding to discovery, a staff
attorney for the PSC advised the Wilsons by letter that, at a work
session, the PSC denied their motion to dismiss, denied their
request for an independent hearing examiner and denied their
request for discovery, and, further, advised that the actions of
the PSC would not become final until it issued an order or notice
of Commission action.
Shortly thereafter, Wilsons filed with the District Court
their application for alternate writs including a writ of review of
the PSC's jurisdiction in the case, a writ of mandamus to appoint
an independent hearing examiner and a writ to compel discovery by
the PSC. That same day the District Court issued an order staying
the proceedings pending a hearing on the application. Subsequently,
the Wilsons moved to amend their application to include a request
for immediate review under 9 2-4-701, MCA.
Later in June, at a hearing before the District Court to
determine whether the court's order staying the proceedings should
remain in effect, Wilsons and their counsel first learned from the
PSC attorney that the proposed PSC witness list had been expanded
by approximately 200 people who had been invited to offer testimony
and to present evidence at the PSC hearing.
After a hearing in August 1992, the District Court issued its
Memorandum and Order granting the Wilsons' motion to amend their
application to request immediate judicial review, denying their
application for the appointment of an independent hearing examiner
and remanding the matter to the PSC with directions that the agency
either dismiss the proceeding or give the Wilsons notice of the
alleged bases for revocation under § 69-12-327, MCA, of their
certificate, that the PSC follow procedures which insure that the
Wilsons receive due process and that the PSC respond to the
discovery requests served by the Wilsons. This appeal followed.
Section 2-4-701, MCA, provides:
Immediate review of agency action. A preliminary,
procedural, or intermediate agency action or ruling is
immediately reviewable if review of the final agency
decision would not provide an adequate remedy.
While that provision is not included in the Model
Administrative Procedures Act, the Compiler's Comments indicate
that this section was reinserted into the Montana Administrative
Procedures Act in 1971.
The PSC argues that the District Court improperly granted
immediate review in this case because the Wilsons failed to show
that review of the final agency decision would not provide an
adequate remedy. We disagree.
The PSC's April 17, 1992 notice was issued pursuant to 5 69-
12-327, MCA, which provides, in pertinent part:
Revocation of certificate --
right of review. ( 1 ) If
it appears that a certificate holder is violating or
refusing to observe any of the commission's orders or
rules or anv provision of Title 6 9 . as amended, the
commission may issue an order to the certificate holder
to show cause why the certificate should not be
revoked. ...
(Emphasis added).
While it is clear that the PSC has the authority to revoke a
certificate of public convenience and necessity, it is equally
clear that the revocation must be based upon the certificate
holder's violation of or refusal to observe any of the
"commission's orders or rules or any provision of Title 69, as
amendedtt.
Whether some order, rule or provision of Title 69 includes the
concept of "carrier fitness," as argued by the FSC, and whether
violation of that concept constitutes a "viola[tion] of or
refus [all to observe . . .any provision of Title 69, as amended, tt was
not finally decided by the District Court and is not the issue on
this appeal.
It is a well established principle of administrative law that
before a reviewing court considers the question of an agency's
jurisdiction, that sound judicial policy dictates that there be an
exhaustion of administrative remedies, part and parcel of which
requires that the agency be accorded an opportunity to determine
initially whether it has jurisdiction. Marshall v. Burlington
Northern, Inc. (9th Cir. 1979), 595 F.2d 511, 513; Marshall v. Able
Contractors, Inc. (9th Cir. 1978), 573 F.2d 1055, 1057.
The District Court followed that rule when it observed that
there was a question of jurisdiction that would ultimately have to
be decided by the court and that the Wilsons had challenged the
authority of the PSC to proceed on the basis of the cited statute.
The District Court's primary concern went to the failure of the PSC
to articulate to the Wilsons exactly how their alleged misconduct
related to the statutory basis for revocation. As the District
Court stated in its Memorandum and Order, "[blecause the Commission
has failed to point to any alleged violation of a statute or a
Commission order or rule, the Court concludes that the notice fails
to comply with the requirements of Section 69-12-327, MCA."
Additionally, the District Court was concerned that the
Wilsons requested in discovery and in various hearings that the PSC
specify the Commission's orders or rules or provisions of Title 69
which were alleged to have been violated, that the PSC had failed
to respond to the Wilson's discovery requests, and that the agency
had greatly expanded the service list well beyond that contained in
the original notice to include an additional 200 people who were
invited to testify. The latter was accomplished without notice to
the Wilsons, who, a week before the scheduled hearing, did not know
the witnesses against them or what such witnesses might say.
In Billings Assoc. Plumbing, Etc. v. State Bd. (1979), 184
Mont. 249, 253, 602 P.2d 597, 600, we stated that, "[tlhe right to
carry on a lawful business is a property right; due process
requires that it not be unreasonably or unnecessarily restricted,"
citing the U.S. Constitution, Amendment XIV, Section 1 and the 1972
constitution of Montana, Article 11, Section 17.
Inasmuch as the Wilsons may not carry on their business except
under the authority of a certificate of public convenience and
necessity issued by the PSC, it follows that if that agency intends
to take action which might result in the Wilsons' loss of their
certificate, and hence their right to do business, fundamental
fairness and due process require that they at a minimum be given
notice of the alleged bases for the possible revocation. Under the
governing statute, notice by the PSC necessarily requires
specification of the "commission's orders or rules or . . .
provision[s] of Title 69, as amended .. .," that they are alleged
to have violated or that they are alleged to have refused to
observe.
Furthermore, the Wilsons are entitled to procedural due
process which includes, among otherthings, the abilityto discover
information relevant to the case against them along with the
identity of the witnesses who are expected to testify and the
substance of the expected testimony.
We hold that, under the facts and circumstances of this case,
judicial review of the final agency decision is not an "adequate
remedy" where the record on which the final decision is to be based
contains no specification of the orders, rules or statutes which
the Wilsons are alleged to have violated; where the Wilsons have
been denied discovery; where the Wilsons, who are in jeopardy of
losing a valuable property right, have not been afforded adequate,
timely notice of the persons who will testify and of the nature of
the evidence that will be presented in support of the possible
agency action; and where, cumulatively, it appears that the agency
has failed to afford the Wilsons fundamental fairness and due
process.
In so holding, we do not in any way diminish the statutory
mandate of g 2-4-702, MCA, which requires exhaustion of
administrative remedies and states the rule that judicial review
will generally only be available to a person aggrieved by a final
agency decision. Persons seeking immediate review of interlocutory
administrative agency action or rulings under 3 2-4-701, MCA,
continue to bear a heavy burden to demonstrate that judicial review
of the final agency decision would not provide an adequate remedy.
In this case, the District Court did not rule on the ultimate
jurisdictional issue or on the merits of the PSC's notice to the
Wilsons. Instead, the District Court remanded to the PSC under a
narrowly drafted order requiring simply that in further proceedings
on this matter before the PSC the Wilsons be afforded notice of the
alleged bases for revocation of their certificate under the statute
authorizing such revocation; that they have the opportunity for
adequate discovery; and that the agency follow procedures that will
insure due process.
While not involving review of an interlocutory agency
decision, in Smail v. Al's Sales, Inc. (1990), 245 Mont. 18, 21,
797 P.2d 235, 237, we, nevertheless, required the District Court to
remand the case to the agency for further proceedings rather than
permitting the Court to exercise judicial review on the basis of an
inadequate record and, thereby, substitute its judgment for that of
the agency in violation of g 2-4-704, MCA.
In the instant case, by remanding and requiring that the final
agency decision be based upon an underlying proceeding grounded in
due process, the District Court simply insured, to the extent
possible, that any ultimate judicial review of the final agency
decision will, in fact, be an "adequate remedy" instead of the
meaningless exercise of reviewing an inadequate record formulated
on the basis of unfair procedures.
We affirm.
We Concur: rc-
Justices
Justice Karla M. Gray, dissenting.
I respectfully dissent. My objection is a procedural, rather
than a substantive, one. It relates, however, to the critical
importance of maintaining our system of administrative law and the
manner in which that system interrelates with the judicial system.
My concern with the Court's decision here is that 5 2-4-701,
MCA, permits immediate judicial review of an interlocutory agency
action or ruling only under the specified condition that review of
the final agency decision would not provide an adequate remedy.
The importance of this statute in our system of administrative law
cannot be overstated; thus, in my view, district courts must
address applications for immediate judicial review with
extraordinary care. To me, this means that the district courts
must perform a particularized analysis of a party's entitlement to
immediate judicial review under the facts of the case before it.
In turn, such an analysis would provide this Court with a
sufficient basis to review whether the district court's action in
granting immediate judicial review pursuant to 5 2-4-701, MCA, was
appropriate in a given case.
The District Court's bare conclusion here that "[ilt is
appropriate" to review the agency's action is insufficient. It
provides the appealing party with nothing to argue from and, at the
same time, provides this Court with an inadequate means of review.
In affirming the District Court without requiring an analysis
on this critical question, this Court undertakes to provide the
initial analysis of whether immediate judicial review was
available. Thus, we not only gut any requirement that the party
seeking immediate review affirmatively establish entitlement to
such review under 2-4-701, MCA, we also permit the district
courts to take entirely too cavalier an approach to this important
issue.
I do not suggest that the District Court here did not have in
mind the basis for its conclusion that immediate judicial review
was appropriate; I suggest only that it is not possible either to
know what that basis is or to properly perform this Court's review
function. I would require in this important area, as we require in
almost every conceivable situation, that the district courts both
perform and provide an analysis in support of the conclusion that
immediate judicial review is appropriate. I would remand this case
to the District Court and direct it to do so.
*. - ' - i
- -
\ +
,
c--_-J
.~--
. -./
, ) "
Justice John Conway Harrison joins in the foregoing dissent of
Justice Karla M. Gray.
August 26, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
TIMOTHY N. SWEENEY
Montana Public Service Commission
1701 Prospect Ave.
Helena, MT 59620-2601
Neil E. Ugrin
Gary M. Zadick
UGRIN, ALEXANDER, ZADICK & SLOVAK
P.O. Box 1746
Great Falls, MT 59403
Charles H. Recht
RECHT & RECHT
P.O. Box 149
Hamilton, MT 59840
ED SMITH
CLERK OF THE SUPREME COURT