IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-40610
WILLIAM J. BARAN, ET AL.,
Plaintiffs-Appellees,
v.
PORT OF BEAUMONT NAVIGATION DISTRICT
OF JEFFERSON COUNTY TEXAS, ET AL.,
Defendants-Appellants,
and
STATE OF TEXAS,
Intervenor-Defendant-Appellant.
Appeals from the United States District Court
for the Eastern District of Texas
(June 21, 1995)
Before VAN GRAAFEILAND,* JOLLY and WIENER, Circuit Judges.
WIENER, Circuit Judge:
Defendants-Appellants, the public Ports of Beaumont, Port
Arthur, and Orange ("Ports"), and Intervenor-Appellant the State of
Texas ("State"), (collectively "Appellants"), appeal a district
*
Circuit Judge of the 2nd Circuit Court of Appeals, sitting by
designation.
court order granting summary judgment in favor of Plaintiffs-
Appellees the Sabine Pilots Association ("Pilots"), declaring that
the second sentence of Article 8267(C)(5) of the Texas Revised
Civil Statutes violates the Due Process Clause.
The Pilots filed suit against the Ports in federal district
court, complaining that Art. 8267(C)(5) violates both the Due
Process and Equal Protection clauses of the United States
Constitution. The second sentence of that article, which is
contained in the statutory framework for authorizing and fixing
pilotage rates for the Sabine-Neches Waterway ("Waterway"),
essentially grants the Ports the power to veto the pilotage rates
for the Waterway as set by the Texas State Pilot Commission for the
Sabine Bar, Pass and Tributaries (the "Commission"). The Pilots
claim that this "veto provision" permits the Ports to veto the
pilotage rates at their own rate-approval proceedings after
opposing the proposed increases at the Commission hearings, thereby
denying the Pilots the right to a fair and impartial tribunal in
which to present their rate increase proposals. The Pilots also
insist that the authority of the Ports to veto any pilotage rate
increase effectively establishes a dual pilotage rate-making system
between the public and private ports in the Waterway, in violation
of the Equal Protection Clause. The private ports are not parties
to this appeal.
Concluding that the district court erred as a matter of law
in granting summary judgment in favor of the Pilots on the due
process issue, we reverse and vacate that summary judgment and
2
render summary judgment in favor of Appellants.
I
FACTS AND PROCEEDINGS
All ships entering and leaving Texas ports must hire pilots to
navigate the passages of the state's coastal waterways between
those ports and the Gulf of Mexico. Each waterway in Texas is
under the authority of its own pilot commission, which has
jurisdiction over all facets of pilotage on the waterway in
question, including the authority to set the fee schedule for
pilots that navigate the passages into the waterway for the ships
that enter and leave the waterway's ports. Any party interested in
changing the pilotage rates for a waterway (pilots, consignees,
owners, or ports) may submit a written application to the cognizant
commission requesting a change in the fee schedule. To approve any
rate changes, however, that commission must act in compliance with
the statutory procedures, which require notice and hearings on the
proposal, and must consider the effect of new rates on all
legitimately interested parties.1 Additionally, pursuant to
Article 8267(C)(5), "no increase of rates to either the public
ports . . . shall ever be set, established or granted unless the
[boards of the ports] so affected shall approve the same."2
1
See TEX. REV. CIV. STAT. art. 8267(C)(1),(2),(3),(4), and
(6)(a) (West 1994). The commission is directed to consider the
effect that its decision to grant, deny, or modify rates will have
on the ports and citizens living within the commission's
jurisdiction. TEX. REV. CIV. STAT. art. 8267(C)(6)(a) (West 1994).
2
TEX. REV. CIV. STAT. art. 8267(C)(5) (West 1994).
3
The Ports are navigation districts created pursuant to the
Texas constitution and acts of the state legislature. The Ports
operate in accordance with Chapters 60-62 of the Texas Water Code,
and are defined as "governmental agencies and bodies politic and
corporate with the powers of government and with the authority to
exercise the rights, privileges, and functions which are essential
to the accomplishment of those purposes."3 Generally, navigation
districts are given substantial powers over the improvement,
preservation, and conservation of inland and coastal waters and
other purposes incidental to the navigation of those waters.4
In September 1992, the Pilots filed an application requesting
a pilotage rate increase with the Commission. In accordance with
the prescribed procedures, the Commission held public hearings on
the Pilots' proposal. Representatives of the Ports attended the
Commission hearings as parties legitimately interested in - and
opposed to - the proposed rate increase. Only the Port of
Beaumont, however, presented testimony at the hearing; and although
that port's "evidence" was deemed to be time-barred by the
Commission, Beaumont's materials were included in the reports
submitted by the West Gulf Maritime Association, another group
opposing the increase. The data from the Port of Beaumont
supported the Ports' concern that the increased rates proposed
were too high and would adversely affect the Ports' competitive
positions.
3
TEX. WATER CODE ANN. § 62.102 (West 1988).
4
TEXAS WATER CODE ANN. § 62.101 (West 1988).
4
Despite strong opposition to the proposed rate increases, the
Commission approved the new rates, which went into effect at all
private ports on the Waterway in November 1992. The rate increases
did not go into effect at the Ports, however, as Art. 8267(C)(5)
establishes that no rate increase affecting public ports can ever
be set, established, or granted unless approved by the ports
affected. In an effort to obtain such approval, the Pilots
presented their proposal to the Ports, which thereafter denied the
rate increases in their own proceedings.
After bringing suit against the Ports in federal court, the
Pilots filed a motion for a summary judgment declaring that the
veto permitted by Art. 8267(C)(5) violated the Due Process and
Equal Protection clauses. Important to this appeal is the Pilots'
claim that the second sentence of Art. 8276(C)(5) permits an
"interested party" to adjudicate and veto pilotage rate
applications, thereby denying the Pilots' their right to a fair
hearing before an impartial tribunal.
The district court granted the Pilots' motion for summary
judgment, declaring that the veto sentence does violate the Due
Process Clause. In reaching this holding, the court determined
that the Ports have a pecuniary interest in the flow of vessels
through their ports that is affected by the pilot rates. As such,
the court determined that the Ports' interest, when combined with
the their veto power, denies the Pilots their right to a fair and
impartial tribunal. The court then proceeded to "sever" the second
sentence from Art. 8267(C)(5), declaring that the balance of the
5
statute remained operable. Nevertheless, the court declined to
enforce the Commission-approved rate increase at the Ports, leaving
the "individual ports with the state court recourse provided by
section 62.078 of the Texas Water Code." The court also declined
to address the Pilots' equal protection claim. The Ports timely
filed this appeal.
II
DISCUSSION
A. STANDARD OF REVIEW
We review a grant of summary judgment using the same standards
that guide the district court.5 Summary judgment is appropriate
when no issue of material fact exists and the movant is entitled to
judgment as a matter of law.6 Questions of law are reviewed de
novo.7
B. THRESHOLD ISSUE: ABSTENTION
Appellants argue on appeal that the district court erred in
not abstaining from exercising its jurisdiction in what Appellants
describe as an "on-going" state law dispute. If we were to
determine that abstention is appropriate in this instance, we would
not need to review the merits of the district court's grant of
summary judgment. Thus we first focus our attention on abstention.
The Ports raised abstention as an affirmative defense in a
5
Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.
1988).
6
Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986).
7
Walker, 853 F.2d at 358.
6
somewhat cursory manner in their answer to the Pilots' complaint.
In that answer the Ports asserted that abstention was appropriate
because the dispute against them was not a constitutional dispute,
arguing instead that the dispute was a local rate-making dispute
over pilotage fees. The Ports also argued that, as the statute was
fairly susceptible of an interpretation that would avoid the
constitutional challenge, the district court should abstain from
reaching the constitutional question until the Texas state courts
had had an opportunity to render a definitive interpretation of the
veto provision. The Ports' final argument in favor of abstention
by the district court was that the case presents complex and
significant issues of local policy that have been committed to the
State legislative and executive branches.
The State too urged the district court to abstain from
exercising its jurisdiction in this case. In its response to the
Pilots' motion for summary judgment the State observed that "when
the validity of a state statute or regulatory action is challenged
in federal court by plaintiffs who have not first asserted their
complaints in state court, the federal court should abstain from
deciding the constitutionality of the statute pending review by a
state tribunal." Even though the issue of abstention was raised
once more in Appellants' post-hearing brief,8 we note that the
Ports did not reassert their abstention defense in responding to
the Pilots' motion for summary judgment; neither did Appellants
8
There the Appellants merely observed that notions of
federalism require the confinement of federal court intervention in
state judicial processes.
7
argue the issue of abstention at the summary judgment hearing.
Although the notion of abstention was presented to the
district court,9 it did not address the issue in its opinion. As
the decision whether to abstain is generally one involving some
exercise of discretion by the district court, our first inclination
would be to remand to the district court for it to resolve the
abstention question before proceeding with the merits.10
In American Bank and Trust Company of Opelousas v. Dent,11 we
reviewed a district court order granting the defendant-appellee's
motion to dismiss based on the Eleventh Amendment. In his motion
to dismiss, the defendant urged the court in the alternative to
dismiss the case against him under any one of three abstention
doctrines: Younger, Burford, or Pullman. As the court granted the
motion to dismiss based on the Eleventh Amendment, it did not
address the abstention issue. On appeal the defendant-appellee
asked us to consider alternatively the abstention doctrines and to
affirm the dismissal on that basis. After concluding that the
district court erred in dismissing the case, we turned to the
alternative abstention arguments. We observed that the decision to
9
See, e.g., Portis v. First Nat'l Bank of New Albany, Miss.,
34 F.3d 325 (5th Cir. 1994) (noting that issue is presented to
trial court when party has raised it in pleadings or pretrial
order or if issue has been tried by consent of parties).
10
See, e.g., American Bank and Trust Co. of Opelousas v. Dent,
982 F.2d 917, 922 (5th Cir. 1993) (concluding that even if all
preconditions for abstention are present in case, decision to
abstain generally involves some exercise of discretion by district
court).
11
982 F.2d 917 (5th Cir. 1993).
8
abstain is generally one involving some discretion of the district
court, and concluded that, as the propriety of abstention under
Burford or Pullman was not absolutely clear on the record, it was
advisable to remand the issue to the district court.12
But our review of abstention in the instant context convinces
us that it would be inappropriate for the district court to abstain
from exercising its jurisdiction in this case. Moreover,
Appellants' own cursory treatment of abstention persuades us to
forego remand of this meritless issue to the district court if for
no other reason than that resolving the abstention issue is
generally within the discretion of that court. In National
Association of Government Employees v. City Public Service Board of
San Antonio, Tex.,13 we reiterated that, as a "trial court will not
rule on claims - buried in pleadings - that go unpressed before the
court," appellants' failure to urge their claims before the court
may be construed as an intent to abandon those claims.14 Although
this maxim pertains to a determination whether a judgment is final
for the purposes of appeal, we are satisfied that it supports our
conclusion that we need not remand a meritless issue to the
district court, particularly when the party urging that issue on
appeal failed to develop and argue it fully in that court.
We discuss briefly the three abstention doctrines here
12
Id. at 921-22.
13
40 F.3d 698 (5th Cir. 1994).
14
Id. at 705 (quoting Vaughn v. Mobil Oil Exploration and
Producing Southeast, Inc., 891 F.2d 1195, 1198 (5th Cir. 1990)).
9
implicated by the Appellants in their pleadings, illustrating why
abstention - which is generally the exception, not the rule - is
not appropriate in this dispute.15
1. Younger Abstention
Abstention under Younger v. Harris16 is appropriate when
federal court jurisdiction would interfere with pending criminal,
civil, or administrative state proceedings.17 For Younger
abstention to apply, the pending state proceedings must be ongoing
and judicial in nature.18 When no state proceedings are pending,
a federal action does not interfere with state processes, and the
policies on which the Younger abstention doctrine is premised are
unavailing.19
Clearly when, as here, no state judicial proceedings are
pending, abstention under Younger is unavailable. Appellants'
attempt to classify this dispute as a local rate-making controversy
does not satisfy the standard for Younger abstention. Even though
the rate-making dispute could possibly be classified as ongoing, it
is not judicial in nature. In fact, the only state proceedings
that could trigger abstention under Younger would be an action
15
Louisiana Debating and Literary Ass'n v. City of New Orleans,
42 F.3d 1483, 1491 (5th Cir. 1995).
16
401 U.S. 37 (1971).
17
Louisiana Debating and Literary Ass'n, 42 F.3d at 1489; Word
of Faith World Outreach Center Church, Inc. v. Morales, 986 F.2d
962, 966 (5th Cir. 1993), cert. denied, 114 S.Ct. 82 (1993).
18
Louisiana Debating and Literary Ass'n, 42 F.3d at 1490.
19
Id.
10
brought in state court by the Ports, challenging the Commission's
approval of the pilotage rates, or some state court action brought
by the Pilots challenging the Ports' rejection of the Commission-
approved rate increase. As neither party has initiated any such
state court action, there are pending no ongoing state judicial
proceedings to suggest that the district court should have
abstained from exercising its jurisdiction in this case.
2. Burford Abstention
We have previously described abstention under Burford v. Sun
Oil Co.,20 as follows:
"[w]here timely and adequate state-court review is
available, a federal court sitting in equity must decline
to interfere with the proceedings or orders of state
administrative agencies: (1) when there are 'difficult
questions of state law bearing on policy problems of
substantial public import whose importance transcends the
result in the case then at bar'; or (2) where the
'exercise of federal review of the question in a case and
in similar cases would be disruptive of state efforts to
establish a coherent policy with respect to a matter of
substantial public concern.'" 21
The underlying lawsuit in Burford challenged a highly technical and
complicated regulatory scheme that affected the state's entire oil
and gas conservation system. In an effort to address this complex
scheme, the state had created a comprehensive centralized system
for judicial review of orders affecting the scheme. In light of
these circumstances, the Court in Burford determined that federal
court abstention was proper to protect the state's administrative
20
319 U.S. 315 (1943).
21
St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 588 (5th Cir. 1994)
(quoting New Orleans Public Serv., Inc. v. Council of City of New
Orleans, 491 U.S. 350, 361 (1989)).
11
process from undue federal influence.22 Although Burford abstention
is concerned with protecting complex state administrative processes
from undue federal interference, abstention is not mandated merely
because an administrative process exists, or even "in all cases
where there is a 'potential for conflict.'"23
In challenging Art. 8267(C)(5), the Pilots attack the very
fact that the Ports have the power to veto pilotage rate increases,
arguing that any veto power vested in the Ports is
unconstitutional. The Pilots do not claim that the Ports
misapplied their lawful authority or that they failed to consider
or balance properly the relevant factors in vetoing the pilotage
rates. Neither do the Pilots contend that the individuals who
comprise the Ports had any disqualifying personal interest that
would give rise to conflicts of interest in establishing the
pilotage rates for the Ports. Rather, the Pilots argue that, as
the Ports are inherently biased, the provision in Art. 8276(c)(5)
that grants the Ports a veto over the pilotage rates for the
individual ports violates due process. As the Pilots present a
facial challenge to the statute - disputing the constitutionality
of the Ports' authority to act at all - reaching the merits of this
challenge will not intrude into any particular state administrative
process or administrative order. Thus, the policy concerns of
Burford are not implicated and abstention under that doctrine would
22
Burford, 319 U.S. at 332.
23
St. Paul Ins. Co., 39 F.3d at 589.
12
be inappropriate.24
3. Pullman Abstention
Appellants suggest that a third basis for abstention is found
in Railroad Commission of Texas v. Pullman Company.25 Under this
abstention doctrine a federal court should abstain from exercising
its jurisdiction when difficult and unsettled questions of state
law must be resolved before a substantial federal question can be
decided.26 Generally, Pullman abstention is appropriate only when
there is an issue of uncertain state law that is "'fairly subject
to an interpretation [by a state court] which will render
unnecessary or substantially modify the federal constitutional
question.'"27
For a federal court adjudication to be stayed under Pullman,
more than an ambiguity in state law and a likelihood of avoiding a
constitutional ruling is required. Rather, the district court must
assess the totality of the circumstances presented by a particular
case, considering the rights at stake and the costs of delay
24
See New Orleans Pub. Serv., Inc. v. Council of City of New
Orleans, 491 U.S. 350, 363 (1989) (observing that federal court's
inquiry into administrative agency's rate-making authority was
limited to four corners of order denying rate increase and did not
unduly intrude into processes or policy of state government).
25
312 U.S. 496 (1941).
26
Louisiana Debating and Literary Ass'n, 42 F.3d at 1491
(citing Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 236 (1984)).
27
Id. at 1492 (quoting Harman v. Forssenius, 380 U.S. 528, 534-
35 (1965)).
13
pending state court adjudication.28 Even though a district court
must assess the totality of circumstances before deciding whether
to abstain, the decision to abstain under Pullman turns on the
existence of an ambiguous state law. In situations such as the one
we consider today, in which there is no question of ambiguous state
law - the interpretation of which will substantially modify or
eliminate the constitutional question - for a federal court to
abstain from exercising jurisdiction over the case would clearly be
inappropriate.29
Appellants suggest that Article 8267(C)(5) is fairly
susceptible of a reading that would avoid the constitutional issue,
yet they offer no credible argument or interpretation of that
statute to support their abstention argument. We read the plain
language of Article 8267(C)(5) to mean unambiguously that there can
be no increase of pilotage rates at the Ports unless the Ports
approve the increased rates. Even though it might be less than
pellucid whether the statute intended to grant the Ports the power
to veto the rates set by the Commission, or to permit a system of
dual pilotage rates as between the public and private ports to
28
Duncan v. Poythress, 657 F.2d 691, 697 (5th Cir. 1981), cert.
dismissed, 459 U.S. 1012 (1982).
29
See, e.g., Louisiana Debating and Literary Ass'n, 42 F.3d at
1491 and n.10 (affirming district court's decision declining to
abstain, noting that one of the bases on which court declined
abstention was fact that neither party had demonstrated that
chapter of city code was ambiguous); Word of Faith World Outreach
Center, 986 F.2d at 967 (observing that Pullman abstention is not
proper unless state law in issue is fairly susceptible of an
interpretation that might avoid or modify the federal
constitutional question).
14
exist, resolving these ambiguities does not modify or eliminate the
constitutional questions presented: Whether the veto violates due
process, or the dual rate system violates equal protection, or
both. We conclude, therefore, that, as the state statute under
review is not fairly subject to an interpretation that will render
unnecessary or substantially modify the federal constitutional
questions raised by the Pilots, abstention under Pullman is not
appropriate.
It follows, then, that as abstention under any of the above
doctrines would not be appropriate in this dispute, the district
court did not err in exercising its properly invoked jurisdiction.
Thus, in the interest of judicial economy, and in an effort to move
this litigation forward expeditiously, we proceed to consider the
merits of this dispute.30
C. SUMMARY JUDGMENT BASED ON DUE PROCESS
Appellants challenge the district court's grant of summary
judgment in favor of the Pilots. Specifically, Appellants contend
that the court erred in concluding that the Ports have such a
pecuniary interest in the flow of vessels to and from their ports
that giving the Ports a final "veto" over the pilotage rates
30
See, e.g., Burns v. Watler, 931 F.2d 140, 147 (1st Cir. 1991)
(observing that, despite cases in which appellate court recognized
that district court was better positioned to perform abstention
analysis, simplicity of factual situation before appellate court
and potential prejudice to parties for further delay advised court
to perform evaluation itself). Cf. Snap-On Tools Corp. v. Mason, 18
F.3d 1261, 1267 n.7 (5th Cir. 1994) (reviewing district court's
dismissal of case on abstention grounds; noting that when
abstention is clearly unwarranted, rather than remand case back to
district court to consider substantive merits, appellate court
should consider merits of case and move litigation along).
15
deprives the Pilots of their due process right to a hearing before
a fair and impartial tribunal.
At the outset we note that the Pilots state repeatedly that
they are not challenging the quality or quantity of the Ports'
procedure for approving pilotage rate increases. We note further
that despite the fact that the Pilots' due process claim rests only
on the Ports' status as "interested parties," the Pilots do not
define "interest" with any particularity. Rather, they allege
simply and conclusionally that because the Ports are legitimately
interested parties which opposed the proposal for a pilotage rate
increase at the Commission hearing, the Ports cannot constitute a
fair and impartial tribunal before which the Pilots must present
the same proposal at the subsequent port proceedings.31 Implicit
in this argument is the contention that the Ports are biased by
virtue of their having prejudged the facts of the rate-making issue
prior to adjudicating that same issue at their own proceedings.
The Ports do not dispute that (1) they have an interest in the
economic viability of their respective ports, or (2) their
representatives attended the Commission hearings and opposed the
proposed rate increases.32 These undisputed facts relating to the
31
See TEX. REV. CIV. STAT. art. 8267(c)(4) (West 1994) (mandating
that all parties that have demonstrated a legitimate interest in
rate application shall have right to speak, present evidence, and
cross examine (to extent possible) at Commission hearings).
32
The Ports do argue, however, that as they were denied the
opportunity to present evidence at the Commission hearing, they
were not actually an interested party in the hearings. Arguably,
according to Pilots' definition of "interested party," only the
Port of Beaumont could qualify as an interested party, as it was
the only Port that testified at the Commission hearing.
16
Ports' "interest" apparently persuaded the district court to grant
summary judgment in favor of the Pilots. But, the district court
went beyond that simple conclusion, labeling the Ports' interest as
"pecuniary," and observing that the Ports' had a "pecuniary
interest in the flow of vessels through their ports which is
affected by the rates for pilot fees." In light of this perception
the district court concluded that, by granting the Ports a final
veto over the applications requesting an increase in pilotage
rates, the subject sentence of the statute deprived the Pilots of
their right to a fair and impartial tribunal. As we are satisfied
that the district court erred as a matter of law in reaching this
conclusion, we analyze the Ports' "interest" in light of the
relevant due process caselaw and distinguish it from the only two
categories of bias under which the Pilots' due process claim and
the district court's ruling could fall: (1) Actual bias or
probability of actual bias stemming from a pecuniary interest; or
(2) irrevocably closed minds as the result of prejudging the issue.
1. Actual Bias
A fair trial before a fair and impartial tribunal, whether a
court or administrative agency, is a basic requirement of due
process.33 "Not only is a biased decisionmaker constitutionally
unacceptable, but 'our system of law has always endeavored to
33
Withrow v. Larkin, 421 U.S. 35, 46-47 (1975) (citing In re
Murchison, 349 U.S. 133, 136 (1955)); Gibson v. Berryhill, 411 U.S.
564, 579 (1973).
17
prevent even the probability of unfairness.'"34 In an effort to
prevent "even the probability of unfairness," courts have
identified situations in which the probability of actual bias on
the part of the judge or decisionmaker is too high to be
constitutionally tolerable. Such situations include circumstances
in which the adjudicator has a direct, personal, substantial, and
pecuniary interest in the outcome of the case or in which the
adjudicator has been the target of personal abuse or criticism from
the party before him,35 or "situation[s] . . . which would offer
a possible temptation to the average . . . judge to . . . lead him
not to hold the balance nice, clear and true."36 These identified
situations, as applied to due process claims, represent the
standard for reviewing allegations of bias against judicial and
quasi-judicial decision-makers.37
34
Withrow, 421 U.S. at 47.
35
Aetna Life Ins. Co., 475 U.S. at 825-26; Withrow, 421 U.S.
at 47; Tumey, 273 U.S. at 523; United States v. Couch, 896 F.2d 78,
81 (5th Cir. 1990).
36
Couch, 896 F.2d at 81 (quoting Aetna Life Ins. Co., 475 U.S.
at 822); Brown v. Vance, 637 F.2d 272, 278 (5th Cir. 1981) (citing
Tumey v. State of Ohio, 273 U.S. 510, 532 (1927)).
37
See Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 826 (1986)
(holding that state supreme court justice's failure to recuse
himself from case in which he had direct stake in outcome of case
violated due process; holding that, while remaining justices may
have had slight pecuniary interest in case, interest could not be
classified as direct, personal, substantial, and pecuniary, thus
participation of remaining justices did not violate due process);
Gibson v. Berryhill, 411 U.S. 564, 578-79 (1973) (affirming
district court's holding that substantial pecuniary interest of
administrative adjudicators was sufficient to disqualify them from
adjudicating state law complaints against competitors); Ward v.
Village of Monroeville, Ohio, 409 U.S. 57, 59-61 (1972) (holding
that mayor's dual responsibilities for village finances - derived
18
The Supreme Court has determined, however, that the strict
requirements of neutrality imposed on these types of decision-
makers are not applicable to situations involving nonjudicial
decision-makers.38 In Marshall v. Jerrico, Inc.,39 the Supreme Court
determined that a federal administrator, who, despite the
enforcement aspects of his position, performed no judicial or
quasi-judicial function, heard no witnesses, and ruled on no
disputed factual or legal questions in carrying out his enforcement
tasks. The Court concluded that the administrator functioned in a
capacity more akin to that of a prosecutor or civil plaintiff than
a judge.40 In light of the noted distinctions between the
administrator's functions and those of a judge, the Court held that
the rigid due process requirements imposed on individuals
in part from fines levied by mayor's court - and presiding over
mayor's court violated due process rights of defendants appearing
before mayor's court); In re Murchison, 349 U.S. 133, 139 (1955)
(holding that judge who functioned as grand jury and judge for same
defendants violated due process by virtue of fact that judge was
not wholly disinterested in conviction or acquittal of accused);
Tumey v. State of Ohio, 273 U.S. 510, 523 (1927) (observing that it
violates due process to subject defendant to judgment of court in
which judge has direct, personal, substantial, and pecuniary
interest in reaching a conclusion against defendant).
38
See, e.g., Concrete Pipe and Products of Cal., Inc. v.
Construction Laborers Pension Trust for S. Cal., 113 S.Ct. 2264,
2277 (1993) (observing that rigid requirements for officials
performing judicial or quasi-judicial functions are not applicable
to those acting in prosecutorial or enforcement-like capacity);
Marshall v. Jerrico, Inc., 446 U.S. 238, 243 (1980) (concluding
that strict requirements of neutrality under Tumey and Ward are not
applicable to administrative determinations made by government
administrator, whose functions resemble those of prosecutor more
closely than those of judge).
39
446 U.S. 238 (1980).
40
Id. at 247.
19
performing judicial or quasi-judicial functions are not applicable
to individuals acting in a prosecutorial or plaintiff-like
capacity.41 Thus, according to the Supreme Court, an administrator
who functions in a prosecutorial or plaintiff-like capacity is not
held to the strict requirements of impartiality imposed on those
whose functions are essentially judicial in nature. This is not to
say that there are no due process limits on those who perform
prosecutorial or plaintiff-like functions: As public officials,
these individuals still must "serve the public interest" and not be
"motivated by improper factors" or otherwise act "contrary to
law."42
Clearly the Ports are more akin to administrative prosecutors
than to those who perform judicial or quasi-judicial functions.
The Ports function as policymakers who are authorized by state law
to establish the rates for pilotage into and out of the individual
ports. In establishing the pilotage rates, the Ports hear no
witnesses (in a judicial sense) and issue no findings or rulings on
factual or legal questions. Thus, under Marshall, to avoid
judicial scrutiny of their individual port hearings, the Ports need
only act according to their public interests, within the confines
of the law and untainted by any substantial personal interest.
The burden of establishing a disqualifying interest on the
part of the Ports is on the Pilots.43 In this instance, a "port"
41
Id. at 248.
42
Id. at 249.
43
Schweiker v. McClure, 456 U.S. 188, 196 (1982).
20
is a navigational district, an entity whose identity is inseparable
from the individuals who comprise the district. Thus, in
challenging the Ports' role as "adjudicator" over pilotage rates,
the Pilots of necessity challenge those individuals who are the
Ports. It is therefore the "interest" of those individuals that
determines the "interest" of the Ports. And, unless those natural
persons have a disqualifying interest, there is no disqualifying
interest on the part of the artificial or juridical person they
comprise, i.e., the Ports.
As noted above, the Pilots challenge the Ports' status as
"interested parties" but do not allege with particularity any
"disqualifying interest." The Pilots offer no evidence that the
Ports were not acting according to their public interest in vetoing
the pilotage rate proposal. And our de novo review of the record
reveals nothing to suggest that the Ports qua Ports cannot hold the
balance between the role of a decisionmaker on behalf of the public
and the ports on the one hand and the Pilots' request for rate
increases on the other.44 We assume, in such balancing, that the
Ports, through their individual members, recognize that shipping is
the lifeblood of the ports; that the Pilots are indispensable to
ship traffic; and that the pilotage rates are of vital importance
to the Pilots. Likewise, we assume that the Ports are aware that
pilotage rates that are too low will result in a dearth of pilots,
whereas rates that are too high will make the Ports noncompetitive.
44
See Couch, 896 F.2d 78, 81 (5th Cir. 1990) (citing Aetna Life
Ins. Co., 475 U.S. at 822)).
21
We surmise that in an effort to reconcile these two extremes, the
Ports do in fact hold the balance on behalf of the public, seeking
a happy medium in which both the ports and the Pilots can co-exist
and function.
We observe that the Pilots do not contend on appeal that the
Ports violated Texas law or that the Ports' decision to veto the
rate increase was motivated by any substantial personal interest.
And, as we noted above, our de novo review of the record reveals
nothing to suggest that there would have been any support for such
allegations had they been presented. We conclude, therefore, that
the Pilots have failed to state any constitutional due process
violation based on a "disqualifying interest" of the Ports.
Accordingly, we hold that the district court erred as a matter of
law in granting summary judgment in favor of the Pilots on the
basis of the Ports' interest.45
2. Irrevocably Closed Minds
45
As we conclude that the Pilots' failed to allege a
constitutional violation based on a disqualifying interest, we need
not discuss the district court's specific conclusion that the
pecuniary interest of the Ports in the flow of vessels through
their ports rendered unconstitutional the Ports' power to veto the
pilotage rates. We do note, however, that, despite the fact that a
financial or personal interest could in some circumstances render
an administrator's authority unconstitutional, the Ports' economic
interest in their respective ports is too remote to violate the
constraints applicable to the financial or personal interests of
officials charged with prosecutorial or plaintiff-like functions.
See, e.g., Marshall v. Jerrico, Inc., 446 U.S. 238, 250-51 (1980)
(declining to define with precision what limits there may be on a
financial or personal interest of one who performs prosecutorial
function, concluding that disqualifying interest alleged was too
remote to impose bias); Hortonville Joint Sch. Dist. No. 1 v.
Hortonville Educ. Ass'n, 426 U.S. 482, 491-92 (1976) (concluding
that board members did not have kind of personal or financial stake
in challenged decision that might create a conflict).
22
We also conclude that the Pilots' implicit allegation that the
Ports' "minds" were irrevocably closed to the proposed pilotage
rates by having prejudged the facts of the rate-making "dispute"
prior to adjudicating that same "dispute" at their own proceedings
is without merit. The contention that a tribunal is
unconstitutionally biased because it has prejudged the facts of a
particular dispute carries a more difficult burden of persuasion
than a claim based on actual bias.46 Allegations of bias based on
the prejudgment of the facts or outcome of a dispute generally stem
from the fact that an administrative body or hearing officer has
dual roles of investigating and adjudicating disputes and
complaints. In situations in which this type of bias is raised,
the honesty and integrity of those serving as adjudicators is
presumed.47 In addition, "there is a presumption that those making
decisions affecting the public are doing so in the public
interest."48 Thus, a party challenging this presumption of honesty
must convince the court that "under a realistic appraisal of
psychological tendencies and human weakness, conferring
investigative and adjudicative powers on the same individuals poses
such a risk of actual bias or prejudgment that the practice must be
forbidden if the guarantee of due process is to be adequately
46
Withrow, 421 U.S. at 47.
47
Id. ; United States v. Batson, 782 F.2d 1307, 1313 (5th Cir.
1986), cert. denied, 477 U.S. 906 (1986).
48
Bakalis v. Golembeski, 35 F.3d 318, 326 (7th Cir. 1994)
(emphasis added).
23
implemented."49
Although courts have observed that an administrative body that
has prejudged the facts or the outcome of a dispute cannot render
a decision that comports with due process,50 we have held that we
will not infer bias when no evidence is presented to indicate that
a hearing officer's mind was irrevocably closed.51 Here, we are
satisfied that, even in light of the fact that the Ports attended
the Commission hearing, presumably in firm opposition to the
pilotage rate increase, there still is nothing in the summary
judgment record of this case to suggest that, at the subsequent
port proceedings, the Ports' minds were irrevocably closed
regarding the rate increase.
Indeed, the record supports just the opposite determination,
that the Ports' minds were not irrevocably closed. The summary
judgment evidence reflects that the Ports permitted the Pilots to
present testimony and evidence in support of their proposal,
including an opportunity for questions and answers. In addition,
rather than veto the rate increase "on the spot" - as one might
49
Withrow, 421 U.S. at 47.
50
See Bakalis, 35 F.3d at 326; Patrick v. Miller, 953 F.2d
1240, 1245 (10th Cir. 1992).
51
See, e.g., DCP Farms v. Yeutter, 957 F.2d 1183, 1188 (5th
Cir. 1992) (noting that even though appearance of bias was present,
standards governing administrative proceedings are more relaxed
than those controlling judicial proceedings: "[a]n administrative
decision will be overturned only when the hearing officers' mind is
irrevocably closed or there was actual bias"), cert. denied, 113
S.Ct. 406 (1992); Batson, 782 F.2d at 1315 (concluding that
appellant presented no evidence indicating that hearing officer's
mind was irrevocably closed or from which to infer bias).
24
expect from those whose minds are irrevocably closed - the Ports
assigned to board members or members of the ports' staffs the task
of studying the proposed rate increase, and instructed these
individuals and committees to address the issues relating to the
increase and to report back at the next meeting. On at least one
occasion a representative of the Pilots met separately with a
representative of the Ports to discuss the Pilots' proposal.
Clearly, this evidence supports our determination that there is no
credible suggestion that the Ports had irreversibly prejudged the
facts to the extent that their minds were permanently closed to the
issue of the rate increase or that the Ports' administrative
procedures posed an unacceptable risk of bias.52
III
CONCLUSION
Appellants assert on appeal that the district court erred in
failing to abstain from exercising its jurisdiction in this
dispute. As we determine that abstention is not appropriate in
this case, we do not remand this issue to the district court to
consider abstention, but instead hold that the district court did
52
See, e.g., Dell v. Board of Educ., TP High School Dist. 113,
32 F.3d 1053, 1067 (7th Cir. 1994) (relying on Roland, infra;
concluding that plaintiff-appellant failed to rebut presumption
that administrative decisionmaker had acted in a fair and impartial
manner by failing to allege a factual basis revealing bias or
prejudice); Roland M. v. Concord School Comm., 910 F.2d 983, 997-98
(1st Cir. 1990) (concluding that record was barren of any credible
suggestion that hearing officer had prejudged facts when party
raising claim of bias was permitted to present evidence, examine
witnesses, argue, and object, where objections were considered
fully and when rejected were explained), cert. denied, 499 U.S. 912
(1991).
25
not err in exercising its properly invoked jurisdiction.
We hold further that the Pilots have failed to allege a due
process violation to support their challenge to Art. 8267(c)(5).
We are satisfied that there is no disqualifying interest affecting
the judgment of the Ports regarding the pilotage rates. We are
equally satisfied that there is nothing to suggest that the Ports
had so prejudged the pilotage rate issue to the extent that they
were impermissibly biased. We hold, therefore, that the district
court erred as matter of law in concluding that the Ports'
"interest," in combination with the statutory veto permitted by
Article 8267(C)(5), violates due process, and therefore erred in
striking the "veto" provision in that statute as unconstitutional.
Accordingly, we reverse and vacate the district court's order
granting summary judgment in favor of the Pilots, and render
summary judgment in favor of Appellants, dismissing the Pilots'
action in this case.
REVERSED, VACATED, and RENDERED.
26