Dairylea Cooperative, Inc. v. Walkley

• Decision Date: 28 October 1975
• Citation: 38 N.Y.2d 6,377 N.Y.S.2d 451
• Parties: , 339 N.E.2d 865 In the Matter of DAIRYLEA COOPERATIVE, INC., Appellant, v. Frank WALKLEY, as Commissioner of the Department of Agriculture and Markets of the State of New York, et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 451

377 N.Y.S.2d 451

38 N.Y.2d 6, 339 N.E.2d 865

In the Matter of DAIRYLEA COOPERATIVE, INC., Appellant, v. Frank WALKLEY, as Commissioner of the Department of

Agriculture and Markets of the State of New York,

et al., Respondents.

Court of Appeals of New York.

Oct. 28, 1975.

John M. Freyer, David M. Garber, Syracuse and Robert J. Misenhelder, II, Liverpool, for appellant.

Dennis P. Buckley and Thomas G. Conway, Albany, for the Department of Agriculture and Markets of the State of New York, respondent.

Arthur Karger, New York City, for Glen and Mohawk Milk Association, Inc., respondent.

WACHTLER, Judge.

This is a proceeding under CPLR article 78 to review a determination of the Commissioner of Agriculture and Markets granting the respondent Glen and Mohawk Milk Association's application for an extension of its milk license to include a larger sales area. The facts are undisputed. Petitione Dairylea, is a licensed milk dealer authorized to sell milk in several counties of the State, including Rockland and Orange Counties. Respondent, Glen and Mohawk, is also a milk dealer licensed to sell milk in certain parts of New York State. Early in 1974, Glen and Mohawk applied to the Commissioner of Agriculture and Markets for an extension of its license to include all of Rockland County and the southern portion of Orange County. The commissioner granted Glen and Mohawk's request without conducting a hearing as permitted by statute (Agriculture and Markets Law, § 258--c). Shortly thereafter, Dairylea commenced this proceeding. The trial court concluded that Dairylea was not arguably within the zone of interests to be protected by section 258 of the Agriculture and Markets Law and consequently lacked standing (79 Misc.2d 707, 360 N.Y.S.2d 945). A divided court in the Appellate Division affirmed (48 A.D.2d 951, 368 N.Y.S.2d 877).

Whether a person seeking relief is a proper party to request an adjudication is an aspect of justiciability which must be considered at the outset of any litigation. Under traditional theory a party had standing only where he established that his legal rights had been invaded (see, e.g., Tennessee Power, Co. v. TVA, 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543). This approach, known as the 'legal interest' test has recently been disavowed because it focuses on the issues to be litigated rather than on the party bringing suit (see Data Processing Serv. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184; Columbia Gas of N.Y. v. New York State Elec. & Gas Corp., 28 N.Y.2d 117, 320 N.Y.S.2d 57, 268 N.E.2d 790; see also, Matter of National Organization for Women v. State Div. of Human Rights, 34 N.Y.2d 416, 358 N.Y.S.2d 124, 314 N.E.2d 867; New York State Bankers Assn. v. Albright, 46 A.D.2d 269, 361 N.Y.S.2d 949; Matter of Douglaston Civic Assn. v. Galvin, 36 N.Y.2d 1, 364 N.Y.S.2d 830, 324 N.E.2d 317; Boryszewski v. Brydges, 37 N.Y.2d 361, 372 N.Y.S.2d 623, 334 N.E.2d 579). The 'zone of interest' test was formulated to ascertain the petitioner's status without necessarily dealing with the merits of the litigation. A petitioner need only show that the administrative action will in fact have a harmful effect on the petitioner and that the interest asserted is arguably within the zone of interest to be protected by the statute.

In the case before us, there is no issue as to the deleterious effect on Dairylea of the commissioner's action; rather the dispute concerns the applicability and scope of the Agriculture and Markets Law. Dairylea contends that the statute is designed to regulate the milk producing industry by preventing practices which are unfair and destructive of competition Agriculture and Markets Law, § 258--c; Matter of Friendship Dairies v. Du Mond, 284 App.Div. 147, 153, 131 N.Y.S.2d 51, 55--56). In its petition and supplemental petition Dairylea alleges that in approving the respondent's application the commissioner failed to consider the effect which would tend to destructive competition in a market already adequately served. Having arguably come within the zone to be protected Dairylea asserts the right to challenge the commissioner's action. The respondents argue that the petitioner has neither a statutory nor constitutional right to be heard in opposition to the application of a prospective competitor. Relying on the premise that the Legislature may confer or deny standing as it sees fit (Data Processing, supra, 397 U.S. at p. 154, 90 S.Ct. 827; Sierra Club v. Morton, 405 U.S. 727, 732, n. 3, 92 S.Ct. 1361, 31 L.Ed.2d 636) they note that the Agriculture and Markets Law was amended in 1950 (L.1950, ch. 502, presently Agriculture and Markets Law, § 258--c) to limit specifically the requirement of notice and a hearing to an applicant or licensee who has been denied a license or renewal. Additionally they cite Matter of Dairymen League Co-op. Assn. v. Du Mond (282 App.Div. 69, 121 N.Y.S.2d 857, app. dsmd. 306 N.Y. 595, 115 N.E.2d 825), for the proposition that a petitioner who was not a party to the license proceeding, either as of right or by consent of the agency, may not seek review of the commissioner's determination pursuant to section 258--d of the Agriculture and Markets Law.

While it is clear that Dairylea may not challenge the commissioner on due process grounds (e.g., Hegeman Farms Corp. v. Baldwin, 293 U.S. 163, 170--171, 55 S.Ct. 7, 79 L.Ed. 259; Matter of Bank v. Allen, 35 A.D.2d 245, 248, 315 N.Y.S.2d 323, 326) nor by specific statutory right since section 258--d refers solely to applicants and licensees (Agriculture and Markets Law, § 258--d; Matter of Sealtest Foods Div. of Nat. Dairy Prods. Corp. v. Wickham, 33 A.D.2d 51, 304 N.Y.S.2d 832) we do not believe that petitioner is barred from challenging the commissioner's action. A fundamental tenet of our system of remedies is that when a government agency seeks to act in a manner adversely affecting a party, judicial review of that action may be had (see Jaffe, Judicial Control of Administrative Action, p. 336; Davis, Unreviewable Administrative Action, 15 F.R.D. 411). The increasing pervasiveness of administrative influence on daily life on both the State and Federal level necessitates a concomitant broadening of the category of persons entitled to a judicial determination as to the validity of proposed action. In recent years the right to challenge administrative action has been enlarged by our court. (See, e.g., Boryszewski v. Brydges, 37 N.Y.2d 361, 372 N.Y.S.2d 623, 334 N.E.2d 579, Supra; Matter of Douglaston Civic Assn. v. Galvin, 36 N.Y.2d 1, 364 N.Y.S.2d 830, 324 N.E.2d 317, Supra; Matter of National Organization for Women v. State Div. of Human Rights, 34 N.Y.2d 416, 358 N.Y.S.2d 124, 314 N.E.2d 867, Supra; Columbia Gas of N.Y. v. New York State Elec. & Gas Corp., 28 N.Y.2d 117, 320 N.Y.S.2d 57, 268 N.E.2d 790, Supra.)

In doing so, however, we have carefully examined the relevant statutes and precedents, ascertaining the presence or absence of a legislative intention to preclude review. Only where there is a clear legislative intent negating review (Long Is. Coll. Hosp. v. Catherwood, 23 N.Y.2d 20, 36, n. 3, 294 N.Y.S.2d 697, 703, 241 N.E.2d 892, 896; Matter of Guardian Life Ins. Co. v. Bohlinger, 308 N.Y. 174, 183, 124 N.E.2d 110, 114) or lack of injury in fact (e.g., Matter of Sumpter v. White Plains Housing Auth., 29 N.Y.2d 420, 328 N.Y.S.2d 649, 278 N.E.2d 892, cert. den. 406 U.S. 928, 92 S.Ct. 1803, 32 L.Ed.2d 130) will standing be denied.

We find no such legislative intent in the situation before us. Merely because Dairylea lacks the right to intervene in the underlying agency proceedings does not necessarily preclude judicial review (cf. Matter of Village of Pleasantville v. Lisa's Cocktail Lounge, 33 N.Y.2d 618, 347 N.Y.S.2d 578, 301 N.E.2d 548). The determinative factor is the specific incorporation into the statute of the objective of preventing destructive competition (Agriculture and Markets Law, § 258--c). As was noted in Matter of Friendship Dairies v. Du Mond, 284 App.Div. 147, 153, 131 N.Y.S.2d 51, 55--56, Supra, 'It is plain on the face of the statute that the purpose of the Legislature was an all-embracing one and that it was the intention of the Legislature to stabilize the entire distribution structure of the milk industry.'

Of course, competitive injury, of itself, will not confer standing (e.g., Matter of Bank v. Allen, 35 A.D.2d 245, 315 N.Y.S.2d 323, Supra; Railroad Co. v. Ellerman, 105 U.S. 166, 26 L.Ed. 1015; Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108). In the Allen case a committee representing pharmacy owners and operators was denied standing to oppo administrative action because the relevant statute did not require that economic competition be considered by the board in approving such an application. However, where a statute reflects an overriding legislative purpose to prevent destructive competition, an injured competitor has standing to require compliance with that statute (see Hardin v. Kentucky Utilities Co., 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787; cf. Marine Space Enclosures v. Federal Mar. Comm., 137 U.S.App.D.C. 9, 420 F.2d 577, 591). This is particularly true where, as here, the agency is authorized to act without any hearing whatsoever. To deny petitioner standing would invite the subversion of the legislative goal of maintaining a healthy competitive atmosphere in the milk industry.

Having recognized Dairylea's standing to challenge the commissioner's action (CPLR 217), we note the limited scope of judicial scrutiny. The court reviewing such administrative action may consider only whether the agency exceeded its authority or disregarded the statutory standards (Matter of Guardian Life Ins. Co. v. Bohlinger, 308 N.Y. 174, 124 N.E.2d 110, Supra). This review will be limited in a case such as this considering the fact that the commissioner must issue a license or extension unless he finds by a preponderance of evidence that...