Burns v. Ariz. Pub. Serv. Co.

• Decision Date: 04 March 2021
• Docket Number: No. 1 CA-CV 19-0183,1 CA-CV 19-0183
• Citation: 250 Ariz. 607,483 P.3d 229
• Parties: Robert BURNS, Plaintiff/Appellant, v. ARIZONA PUBLIC SERVICE COMPANY, et al., Defendants/Appellees.
• Court: Arizona Court of Appeals

250 Ariz. 607

483 P.3d 229

Robert BURNS, Plaintiff/Appellant,

v.ARIZONA PUBLIC SERVICE COMPANY, et al., Defendants/Appellees.

No. 1 CA-CV 19-0183

Court of Appeals of Arizona, Division 1.

FILED March 4, 2021

Richards & Moskowitz PLC, Phoenix, AZ, By William A. Richards, Counsel for Plaintiff/Appellant

Jenner & Block LLP, Washington, DC, By Matthew E. Price, Osborn Maledon PA, Phoenix, AZ, By Mary R. O'Grady, Joseph N. Roth, Co-Counsel for Defendants/Appellees Arizona Public Service Company, Pinnacle West Capital Corporation, and Donald Brandt

Polsinelli PC, Phoenix, AZ, By Edward F. Novak, Jonathan G. Brinson, Counsel for Defendant/Appellee Arizona Corporation Commission

Broening Oberg Woods & Wilson PC, Phoenix, AZ, By Sarah L. Barnes, Counsel for Defendant/Appellee Commissioner Boyd W. Dunn

Judge Kent E. Cattani delivered the opinion of the Court, in which Presiding Judge Paul J. McMurdie and Judge Jennifer B. Campbell joined.

CATTANI, Judge:

¶1 Arizona Corporation Commissioner Robert Burns challenges the dismissal of his two amended complaints against Arizona Public Service Company ("APS"), its parent company, Pinnacle West Capital Corporation ("Pinnacle West"), and their president and board chairman (collectively, the "APS Parties"), and against the Commission and other Commission members (collectively, the "ACC Parties"). For reasons that follow we affirm, holding that a member of the Corporation Commission lacks authority to individually enforce an investigatory subpoena in a rate-making case over the opposition of the majority of the Commission.

FACTS AND PROCEDURAL BACKGROUND

¶2 On August 25, 2016, Burns issued two subpoenas to the APS Parties in a rate-making case pending before the Commission (the "Rate Case"). The subpoenas sought information relating to whether the APS Parties funneled donations through independent expenditure groups in support of other Commission candidates in the 2014 election. Burns also initiated a new Commission proceeding in February 2017 (the "Rule-Making Case"), in which he issued the same subpoenas.

¶3 The APS Parties did not comply fully with the subpoenas in either proceeding. In March 2017, Burns sued the APS Parties for declaratory relief, asking the court to declare that he was authorized to demand compliance with the subpoenas without the approval of other Commission members. On March 30, 2017, the APS Parties moved to dismiss on the basis that Burns had not exhausted his administrative remedies in either the Rate Case or the Rule-Making Case. Over Burns's objection, the superior court stayed both proceedings to allow Burns to do so.

¶4 Burns subsequently sought to call six witnesses in the Rate Case, including APS and Pinnacle West's president and board chairman. The administrative law judge ("ALJ") assigned to the case declined to call the witnesses absent direction from the Commission. Burns sought emergency relief from the ALJ and moved to disqualify two of his fellow commissioners, contending they had benefited from "dark money" from "APS and/or Pinnacle West." The ALJ did not consider either motion. Burns then sought to compel the APS Parties to comply with the subpoenas.

¶5 The Commission set a June 20, 2017, public meeting to consider Burns's motions. The other four commissioners voted to deny the motions in an interlocutory order issued on June 27, 2017 over Burns's dissent. The other commissioners concluded that: (1) the information Burns sought was not relevant to the Rate Case; (2) the subpoenas he issued were overly broad, unduly burdensome, and not reasonably calculated to lead to the discovery of admissible evidence; and (3) Burns's requests for witness interviews sought irrelevant information and were not reasonably calculated to lead to the discovery of admissible evidence.

¶6 Burns then sought leave to amend his superior court complaint to add the Commission and his fellow commissioners as defendants and to challenge the June 27, 2017 order. The superior court granted leave to amend, and Burns filed his first amended complaint on August 4, 2017. On August 20, 2017, Burns filed a special action in the Arizona Supreme Court challenging the denial of his motion to suspend the Rate Case to investigate potential grounds to disqualify other commissioners. The Arizona Supreme Court declined jurisdiction, and shortly thereafter, the ALJ approved a final settlement in the Rate Case, which the Commission voted to confirm, with Burns casting a dissenting vote.

¶7 The APS Parties and the ACC Parties then moved to dismiss Burns's first amended complaint on numerous grounds, including: the Commission's final Rate Case order rendered it moot; Burns lacked authority to enforce the subpoenas over the Commission's vote not to do so; Burns could not sue the other commissioners; the subpoenas intruded on the Legislature's authority to establish the scope of mandatory disclosures in rate-making matters and the Commission's authority to establish reporting requirements for regulated entities; and the Commission's rulings were correct. The superior court ruled in Burns's favor on four issues, concluding: (1) the case was not moot; (2) a request for declaratory relief was an appropriate vehicle to consider disputes over the Commission's investigatory powers; (3) the subpoenas did not encroach on the Legislature's or the Commission's powers; and (4) Burns had the authority to issue the subpoenas.

¶8 The court ruled against Burns, however, on the issue of whether he could unilaterally enforce the subpoenas, finding that such authority rested solely with the Commission. The court reasoned that it "could not overrule the decision of a majority of the Commission about the proper scope of an ACC investigation without running afoul of the ‘separation of powers’ principles that are at the heart of our system of government." On that basis, the court dismissed the first amended complaint.

¶9 Burns sought leave to amend his complaint to request specific declaratory relief on the four rulings in his favor. He also contended he had a due process right to investigate and present facts relevant to the APS Parties’ financial support. of the campaigns of the Defendant Commissioners, or against the campaigns of any of their election opponents. The court granted leave to amend in part but denied Burns's requests for declaratory relief as to its prior four rulings.

¶10 After Burns filed a second amended complaint, the APS Parties and the ACC Parties moved to dismiss, contending (1) Burns had no constitutional authority to pursue an investigation over a vote of the Commission or to seek to disqualify other commissioners from ruling in the Rate Case; (2) Burns lacked standing to assert any due process claims stemming from the Rate Case; and (3) the resolution of the Rate Case and the "rule of necessity" rendered his contentions moot. The court granted the motions, concluding that Burns "lack[ed] standing to assert the due process rights of litigants to an unbiased adjudicative process" and "no other constitutional or statutory authority entitle[d] him to initiate and maintain an investigation into potential grounds for disqualification of his fellow Commission members." The court did not reach the APS Parties’ and ACC Parties’ other arguments.

¶11 Burns timely appealed, and we have jurisdiction under A.R.S. §§ 12-1837 and -2101(A)(1).

DISCUSSION

I. Mootness.

¶12 The APS Parties and the ACC Parties urge this court to dismiss the appeal as moot. We decline to do so. ¶13 Courts generally will not hear declaratory judgment cases that raise only moot questions. Thomas v. City of Phoenix , 171 Ariz. 69, 74, 828 P.2d 1210, 1215 (App. 1991). A case becomes moot when an event occurs that causes "the outcome of the appeal to have no practical effect on the parties." Sedona Priv. Prop. Owners Ass'n v. City of Sedona , 192 Ariz. 126, 127, ¶ 5, 961 P.2d 1074, 1075 (App. 1998). Mootness is not a constitutional concern under Arizona law but rather "a matter of prudential or judicial restraint subject to the exercise of our discretion." Cardoso v. Soldo , 230 Ariz. 614, 617, ¶ 5, 277 P.3d 811, 814 (App. 2012). And we may consider an otherwise moot appeal if it presents an issue of significant public importance or is likely to recur. Big D Constr. Corp. v. Ct. of Appeals , 163 Ariz. 560, 563, 789 P.2d 1061, 1064 (1990).

¶14 The APS Parties and the ACC Parties contend that Burns's appeal is moot because the Rate Case has concluded and the two commissioners elected in 2014 are no longer on the Commission. Additionally, in August 2019, the Commission adopted a revised Code of Ethics that imposes new reporting requirements for commissioners relating to campaign contributions. See Code of Ethics, Decision No. 77345, Docket No. AU-00000E-17=0079, at 7 (Aug. 7, 2019), https://docket.images.azcc.gov/0000199337.pdf?i=1609444846123. Nevertheless, the issues Burns raises are of significant public importance involving the rights and powers of commissioners to investigate matters relevant to rate-making proceedings and to enforce compliance with those investigations. Moreover, although the Rate Case has been resolved, similar issues could arise in future rate cases. Accordingly, we exercise our discretion to consider the merits of the appeal. See Arpaio v. Maricopa Cnty. Bd. of Supervisors , 225 Ariz. 358, 362, ¶ 14, 238 P.3d 626, 630 (App. 2010) (exercising discretion to hear an otherwise moot appeal because "a decision on the substantive issues could affect similar future legislative acts").

II. Motion to Dismiss.

¶15 We review de novo the dismissal under Arizona Rule of Civil Procedure 12(b)(6) of Burns's amended and second amended complaint. See Coleman v. City of Mesa , 230 Ariz. 352, 355, ¶ 7, 284 P.3d 863, 866 (2012). We accept all well-pleaded facts as true and will affirm only if Burns would not have been entitled to relief under any facts susceptible of proof. See Zubia v. Shapiro , 243 Ariz. 412, 414, ¶ 13, 408 P.3d 1248, 1250 (...