Burns v. Ariz. Pub. Serv. Co.
| Decision Date | 27 September 2022 |
| Docket Number | CV-21-0080-PR |
| Citation | 80 Arizona Cases Digest 19,517 P.3d 624 |
| Parties | Robert BURNS, Plaintiff/Appellant, v. ARIZONA PUBLIC SERVICE COMPANY, et al., Defendants/Appellees. |
| Court | Arizona Supreme Court |
William A. Richards (argued), Richards & Moskowitz PLC, Phoenix, Attorneys for Robert Burns
Mary R. O'Grady, Joseph N. Roth, Matthew J. Stanford, Osborn Maledon, P.A., Phoenix; Matthew E. Price (argued), Jenner & Block LLP, Washington, DC, Attorneys for Arizona Public Service Company, et al.
Edward F. Novak, Jonathan G. Brinson (argued), Polsinelli PC, Phoenix, Attorneys for Arizona Corporation Commission, et al.
Sarah L. Barnes, Broening Oberg Woods & Wilson, P.C., Phoenix, Attorneys for (Former) Commissioner Boyd Dunn
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¶1 In this case we hold that the Arizona Corporation Commission ("Commission") acting by a majority of its commissioners may not prevent an individual commissioner from exercising investigatory powers pursuant to article 15, section 4 of the Arizona Constitution ; and that a commissioner aggrieved by such action may seek judicial recourse by way of declaratory judgment pursuant to A.R.S. §§ 12-1831 to -1846.
¶2 During the 2014 primary and general elections for the Commission, allegations were made that two elected commissioners received anonymous campaign contributions from Pinnacle West, using funds derived from Arizona Public Service Co. ("APS"). Pinnacle West is the holding company of APS, a public service corporation ("PSC"). In November 2015, Robert Burns, then a member of the Commission, requested spending reports from APS regarding the 2014 election cycle. APS did not comply. Subsequently, Burns requested and received an opinion from the Attorney General, who concluded that A.R.S. § 40-241 confers power on individual commissioners to "gather information regarding a PSC's political and charitable contributions, and lobbying expenditures, by inspecting the books and records of a PSC, and examining under oath PSC personnel." Op. Ariz. Att'y Gen. I16-005 at 9 (2016).
¶3 In August 2016, the four other commissioners voted to refuse to fund Burns’ investigation into APS's records for its pending rate-making case before the Commission (the "Rate Case"). In turn, later that month Burns issued two subpoenas to APS in his capacity as a single commissioner. Both subpoenas sought information regarding donations made to independent expenditure groups to support Commission candidates in the 2014 election. In February 2017, Burns again issued two similar subpoenas to APS during a new Commission proceeding (the "Rule-Making Case"). APS did not fully comply with either the 2016 or 2017 subpoenas.
¶4 Shortly after, in March 2017, Burns sued APS for declaratory relief, arguing that individual commissioners have authority to demand compliance with subpoenas without the approval from other commissioners. APS moved to dismiss, arguing that Burns failed to exhaust his administrative remedies as to both sets of subpoenas. Ruling in favor of APS, the superior court stayed both proceedings so that Burns could first exhaust his administrative remedies.
¶5 During the Rate Case, Burns attempted to call six witnesses, including APS and Pinnacle West's president and board chairman. The administrative law judge ("ALJ") declined to call the witnesses without approval from the other Commission members. In response, Burns sought emergency relief from the ALJ. He also moved to disqualify two commissioners, alleging they had received "dark money" from APS and Pinnacle West during the 2014 election. The ALJ did not rule on either motion.
¶6 Burns next sought compliance with his issued subpoenas. On June 20, 2017, the Commission held a public meeting to consider his motions. An interlocutory order was issued on June 27, 2017 on behalf of the Commission and approved by the four other commissioners. The order denied Burns’ motions. In the interlocutory order, the other commissioners found that Burns’ motions sought information that was irrelevant to the Rate Case; the subpoenas were overly broad, burdensome, and would not produce admissible evidence; and Burns’ requests for witnesses were irrelevant and would not lead to admissible evidence.
¶7 In response, Burns sought leave to amend his superior court complaint to challenge the interlocutory order and add the Commission and the four other individual commissioners as defendants. The superior court granted Burns’ motion to amend, and on August 4, 2017, he timely filed his First Amended Complaint. Burns also filed a special action with this Court on August 20, 2017. The special action challenged the denial of Burns’ motion to suspend the Rate Case to investigate grounds for disqualifying the other commissioners. This Court declined jurisdiction.
¶8 Shortly after, the other commissioners reached a settlement agreement that the ALJ approved over Burns’ opposition. Following the settlement, both APS and the Commission moved to dismiss Burns’ First Amended Complaint. The superior court held that (i) the case was not moot; (ii) the request for declaratory relief was appropriate to determine the commission's investigatory powers; (iii) the subpoenas did not improperly interfere with the legislature's or Commission's powers; and (iv) Burns had the authority to issue the subpoenas as an individual commissioner. However, the court also ruled that although individual commissioners may issue subpoenas, the power to enforce subpoenas rests with the Commission as a body. For that reason, the court dismissed Burns’ First Amended Complaint.
¶9 Following that decision, Burns sought leave to amend his complaint a second time to request specific declaratory relief on the superior court's rulings in his favor, and to argue his due process right to investigate and present facts about APS's financial support to the commissioners’ campaigns. The superior court granted leave to amend in part, denying Burns’ request for declaratory relief as to its prior rulings.
¶10 After Burns’ Second Amended Complaint was filed, APS and the Commission moved to dismiss it. On January 17, 2019, the superior court dismissed the case and entered judgment against Burns. The court held that Burns lacked standing to assert his due process argument. Additionally, the court held that Burns was not legally entitled to initiate and maintain an investigation to disqualify other commissioners.
¶11 Burns timely appealed to the court of appeals challenging the dismissal of his two amended complaints. The court of appeals affirmed the trial court's ruling, holding that individual commissioners lack authority to enforce investigatory subpoenas in rate-making cases because that authority rests solely with the Commission and a majority of its commissioners. Burns v. Ariz. Pub. Serv. Co. , 250 Ariz. 607, 614–15 ¶ 34, 483 P.3d 229, 236–37 (App. 2021).
¶12 We granted review on two issues. First, whether the Arizona Constitution allows a majority of commissioners to prevent any single commissioner from exercising the investigatory powers expressly granted to each in article 15, section 4. Second, whether the Arizona Uniform Declaratory Judgment Act ("UDJA") grants a commissioner standing to seek a declaration of his and his colleagues’ rights. These are significant issues of statewide concern. We have jurisdiction over the appeal pursuant to article 6, section 5 of the Arizona Constitution.
¶13 We note at the outset that the questions on which we granted review are narrow. Moreover, we focus only on the subpoenas issued by Burns in the Rate Case that the other commissioners effectively quashed. Therefore, we will neither resolve all the issues addressed in the courts below nor the appropriate scope of Commission rules and proceedings going forward. But we agree with the court of appeals that the questions as presented are important and that we should resolve them even though Burns and his colleagues are no longer commissioners. Burns , 250 Ariz. at 611 ¶ 14, 483 P.3d at 233. Because they present purely issues of law, we review them de novo. Johnson Utils. v. Ariz. Corp. Comm'n , 249 Ariz. 215, 219 ¶ 11, 468 P.3d 1176, 1180 (2020).
¶14 The Commission is established by article 15 of the Arizona Constitution. Its creation arose from the framers’ determination "to protect the public from corporate abuses and overreaching." Johnson Utils. , 249 Ariz. at 219 ¶ 13, 468 P.3d at 1180. The Commission has plenary authority to set rates for PSCs and permissive authority to regulate PSCs for the health, safety, comfort, and convenience of their customers, employees, and the public. Ariz. Const. art. 15, § 3 ; see also Johnson Utils. , 249 Ariz. at 220–21 ¶¶ 19, 21, 468 P.3d at 1181–82. As relevant here, the Commission also has authority to investigate records and affairs of publicly traded corporations and PSCs. Ariz. Const. art. 15, § 4. This Court has held that the Commission has "broad powers to conduct public or private investigations to determine whether any person or corporation has violated or is about to violate" Arizona laws and may "investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." Polaris Int'l Metals Corp. v. Ariz. Corp. Comm'n , 133 Ariz. 500, 506, 652 P.2d 1023, 1029 (1982) (quoting U.S. v. Morton Salt Co. , 338 U.S. 632, 642–43, 70 S.Ct. 357, 94 L.Ed. 401 (1950) ). Moreover, the legislature may add to the Commission's powers and responsibilities. See Ariz. Const. art. 15, § 6 (...
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