Dickinson v. Davis

• Decision Date: 24 March 1977
• Citation: 561 P.2d 1019,277 Or. 665
• Parties: Curtis Lyle DICKINSON, dba Curt's Parts Service Company and Woolwine Trucking Company, an Oregon Corporation, Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon, Petitioner.
• Court: Oregon Supreme Court

Page 1019

561 P.2d 1019

277 Or. 665

Curtis Lyle DICKINSON, dba Curt's Parts Service Company and Woolwine Trucking Company, an Oregon Corporation Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon, Petitioner.

Supreme Court of Oregon, In Banc.

Argued and Submitted Jan. 5, 1977.

Decided March 24, 1977.

Bruce DeBolt, Asst. Atty. Gen., Salem, argued the cause for petitioner. With him on the briefs were Lee Johnson, Atty. Gen., and W. Michael Gillette, Sol. Gen.

John R. Urquhart, Portland, argued the cause and filed a brief for respondents.

Before DENECKE, C.J., adn HOLMAN, TONGUE, HOWELL, BRYSON, LENT and LINDE, JJ.

LINDE, Justice.

Woolwine Trucking Company and Dickinson, respondents in this case, collaborated in an arrangement by which Dickinson would operate an automobile parts delivery service in Portland under an existing Public Utility Commissioner's permit held by Woolwine until Dickinson could determine whether the business would be profitable. When Dickinson applied for a PUC permit in his own name some seven months later, the commissioner learned of this arrangement and initiated proceedings under ORS 767.470, to impose civil penalties of $100 a day for 229 days of unlawful operation, or $22,900 against each respondent. Eventually both respondents exercised their statutory option to admit the violation and petition for mitigation of the penalty, ORS 767.470(4)(a), and the commissioner mitigated the penalties to $75 a day, or $17,175 against each.

Upon respondents' suit for judicial review under ORS 756.580, the circuit court found the order of mitigation to be unreasonable and reduced the penalties to 25 per cent, or $5,725. Both sides appealed, and the Court of Appeals affirmed. 26 Or.App. 285, 552 P.2d 1333 (1976). We granted review on the commissioner's petition to resolve issues concerning the nature of the commissioner's discretion over civil penalties and the scope of judicial review. Respondents did not pursue their cross-appeal in this court.

The two issues of the commissioner's statutory discretion and the reviewing court's scope of review are necessarily interrelated. Since the court in this case replaced the commissioner's decision with one of its own, we begin with the issue of the reviewing court's assignment under the PUC statutes. That assignment is not easy to ascertain.

Jurisdiction and venue for suits challenging PUC orders is placed in the circuit court in any one of three possible counties. The governing section provides:

ORS 756.580(1):

'A party to any proceeding before the commissioner, when aggrieved by any findings of fact, conclusions of law or order, including the dismissal of any complaint or application by the commissioner, may prosecute a suit against the commissioner to modify, vacate or set aside such findings of fact, conclusions of law or order.'

Subsequent sections deal with procedure in the circuit court. The following two sections speak directly to the scope of review:

ORS 756.594:

'In any suit referred to in ORS 756.580, the burden of proof is upon the party seeking to modify, vacate or set aside findings of fact, conclusions of law or the order to show by clear and satisfactory evidence that the order is unreasonable or unlawful.'

ORS 756.598(1):

'Court review of any findings of fact, conclusions of law or order referred to in ORS 756.580, shall be conducted by the court without a jury as a suit in equity but the court shall not substitute its judgement for that of the commissioner as to any findings of fact supported by substantial evidence. The review shall be confined to the record and no additional evidence shall be received except as provided in ORS 756.600 or except to show alleged irregularities in procedure before the commissioner not shown in the record. The court may affirm, modify, reverse or remand the order.' ¹

In these two sections the legislature has presented the court with contradictory directives. They result from superimposing on a provision for De novo review that dates back to the original Railroad Code, Oregon Laws 1907, ch. 53, § 32, a modern addition that gives finality to agency findings of fact when supported by substantial evidence in an adjudicatory agency record. Oregon Laws 1971, ch. 655, § 60. Under the resulting statute, a party challenging the agency order is to carry In court the 'burden of proof . . . to show by clear and satisfactory evidence that the order is unreasonable or unlawful.' Yet judicial review is to be confined to the record made before the agency. Thus a plaintiff must carry his assigned burden of proof on the basis of 'clear and satisfactory evidence' in the administrative record. Moreover, the court is not to exercise independent judgment on the facts if the agency's findings are supported by substantial evidence. Thus a plaintiff cannot prevail even on evidence that the reviewing court considers clear and satisfactory as long as there is a contrary finding supported by substantial evidence. On the other hand, even if a finding lacks support in substantial evidence (which is ordinarily sufficient to invalidate an order on conventional judicial review) the literal consequence of the 1971 decision to retain ORS 756.594 is that the plaintiff still has an independent burden to 'prove' invalidity by evidence in the agency record, insofar as that conclusion depends on facts. ² The two sections seem to leave only one other situation in which the evidentiary standard of ORS 756.594 applies alone, without a prior search for 'substantial evidence' supporting the commissioner. That is in a challenge to an agency order which is predicated on facts, but facts about which agency findings have been neither made nor required.

We turn to an examination of the commissioner's mitigation order to determine what type of agency action it presented to the circuit court.

It is agreed that ORS 767.470, under which the present order was made, delegates some discretion to the commissioner in imposing a penalty for violations of the Motor Carrier Act. The imposition of penalties for statutory violations and the authorization of executive officers or agencies to determine such violations and penalties pose old constitutional issues that are currently enjoying a flourishing revival. A recent study concludes that 'chaos abounds in the area of administrative crimes.' ³ For that reason we take care to state what is not involved in the present case. No claim is before us that the statute violates the separation of powers, or is an unlawful delegation, or denies alleged violators the safeguards of criminal procedure or a civil jury. ⁴ The legislature itself has mandated a penalty of $100 a day for every violation in addition to all other applicable penalties. ⁵ The commissioner determines the violation in an adjudicatory proceeding, but collection is by a separate suit by the attorney general after prior opportunity for judicial review of the commissioner's order. ORS 767.470(3), (5). However, subsection (4) provides that the commissioner 'may mitigate any penalty provided for in this section on such terms as he considers proper'. It is only the proper exercise of this discretionary authority, and more specifically the scope of the circuit court's review of that discretion if properly exercised, that we are called upon to decide.

The commissioner argues that his decision on mitigation of the statutory penalty is constrained only by the test of 'manifest abuse of discretion,' which he equates with 'arbitrary and capricious action.' Respondents, on the other hand, contend that the commissioner is obliged to exercise his discretion according to standards which should be established by prior rulemaking, that in the absence of such standards his orders are Per se 'unreasonable or unlawful' within the meaning of ORS 756.580, and that in any event the circuit court was right to find the magnitude of the penalties after mitigation 'unreasonable' on the facts of this case and to mitigate them further. We hold that the commissioner's discretion is not as unconstrained as he claims, nor does it require the prior promulgation of standards that respondents demand.

When the legislature in 1951 created a civil penalty subject to mitigation rather than one set by the commissioner in the first instance, its choice may have been influenced by constitutional doubts about administrative penalties. See K. C. Davis, Administrative Law 69 (1951) citing Tite v. State Tax Comm'n, 89 Utah 404, 57 P.2d 734 (1936) and similar cases. Whether or not that is so, we do not believe mitigation was meant to be simply an act of executive clemency any more than agency discretion to set the penalty would have meant to authorize aimless or unconsidered action. Indeed, it can be contended that precisely because an agency may see mitigation or remission as acts of grace, and by its mere inaction may impose the maximum penalty, these decisions represent greater threats of irrationality, inequality, and misuse. See W. Gellhorn, Administrative Prescription and Imposition of Penalties, 1970 Wash.U. L.Q. 265, 279--283; Nelson, Administrative Blackmail: The Remission of Penalties, 4 West Pol. Q. 610 (1950). In any event, what the legislature has authorized the commissioner to do is not to grant such mitigation as he thinks proper, but to mitigate 'on such terms' as he considers proper. Without making too much of the words, they certainly suggest that the commissioner be prepared to articulate the terms of his consideration.

The terms for mitigation need not be stated in advance as rules, though of course they may be. Their importance is not to give notice to potential violators. It is to identify the factors to which the commissioner, in his view of the statutory policies, attaches relatively more or less importance in exercising his discretion, so as to lead to a rational evaluation of the facts in the specific case. Moreover, articulation of...