Kleenwell Biohazard Waste and General Ecology Consultants, Inc. v. Nelson, s. 93-35546

• Citation: 48 F.3d 391
• Decision Date: 09 February 1995
• Docket Number: 93-35897,Nos. 93-35546,s. 93-35546
• Parties: , 63 USLW 2520, 25 Envtl. L. Rep. 20,867 KLEENWELL BIOHAZARD WASTE AND GENERAL ECOLOGY CONSULTANTS, INC., a corporation, Plaintiff-Appellant, v. Sharon L. NELSON, Chairman; Richard D. Casad, Commissioner; A.J. Pardini, Commissioner; Acting in Their Official Capacity as Members of the Washington Utilities and Transportation Commission, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 391

48 F.3d 391

40 ERC 1289, 63 USLW 2520, 25 Envtl.

L. Rep. 20,867

KLEENWELL BIOHAZARD WASTE AND GENERAL ECOLOGY CONSULTANTS INC., a corporation, Plaintiff-Appellant, v. Sharon L. NELSON, Chairman; Richard D. Casad, Commissioner A.J. Pardini, Commissioner; Acting in Their Official Capacity as Members of the Washington Utilities and Transportation Commission, Defendants-Appellees.

Nos. 93-35546, 93-35897.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 6, 1994.

Decided Feb. 9, 1995.

James T. Johnson, Seattle, WA, and Mark E. Kauffelt, Charleston, WV, for plaintiff-appellant.

Steven W. Smith, Asst. Atty. Gen., Olympia, WA, for defendants-appellees.

Appeals from the United States District Court for the Western District of Washington.

Before: WRIGHT, TANG and REINHARDT, Circuit Judges.

REINHARDT, Circuit Judge:

Kleenwell Biohazard Waste and General Ecology Consultants, Inc. ("Kleenwell") appeals the district court's denial of a preliminary injunction and subsequent grant of summary judgment in favor of Sharon Nelson, Richard Casad, and A.J. Pardini, members of the Washington Utilities and Transportation Commission (collectively "the WUTC" or "the Commission"), in this 42 U.S.C. Sec. 1983 action. Kleenwell claims that the state requirement that it obtain a certificate of public convenience and necessity from the WUTC in order to collect and transport medical waste violates the Commerce Clause because Kleenwell engages in interstate waste transportation.

We reject Kleenwell's contention that the state may not impose a certification requirement upon a firm engaged in interstate commerce. Accordingly, we affirm the district court's decision to deny Kleenwell's request for a preliminary injunction and to grant the WUTC's motion for summary judgment.

FACTS

Kleenwell is a Washington corporation with all of its facilities located within the state. From 1989 to 1993, Kleenwell operated a medical waste collection and disposal service in the King County area, the most densely populated region of Washington. Kleenwell collected medical waste from customers and transported it to a rented warehouse, where the company stored it for up to 90 days before disposing of it.

In 1990 Kleenwell applied to the WUTC for a certificate of public convenience and necessity pursuant to RCW 81.77.040. As part of a comprehensive statutory scheme designed to ensure universal waste collection service in the state of Washington, all common carriers that collect, haul, and transport solid waste must obtain such a certificate. ¹ Kleenwell's application was denied.

At the time that Kleenwell applied for the certificate, it disposed of waste within Washington state. After the denial, Kleenwell began transporting waste to California for disposal. In January 1992, the WUTC imposed a penalty assessment of $6,000 against Kleenwell for sixty violations of the rule against operating without the required certificate. Kleenwell asserted that the assessment was invalid, stating that "the transportation in question is interstate in nature."

In April 1992, the WUTC served Kleenwell with a complaint, order, and notice of hearing initiating a "classification proceeding" pursuant to RCW 81.04.510 to determine (1) whether Kleenwell was operating a solid waste removal company without the required certificate, and (2) whether Kleenwell was exempt from state regulation because it engaged in interstate commerce. The proceedings were adversarial and conducted before an Administrative Law Judge ("ALJ") from the State Office of Administrative Hearings, an independent state agency. After hearing testimony from both parties, as well as from intervenor waste disposal companies, the ALJ entered an initial order stating that the requirement that Kleenwell obtain a certificate of convenience and necessity did not violate the Constitution. Finally, on January 25, 1993, the WUTC ordered Kleenwell to cease and desist operations until it obtained a certificate.

Kleenwell did not appeal the WUTC's ruling to the Washington state courts and has not reapplied for certification. Instead, in April 1993, Kleenwell filed suit in federal district court, seeking preliminary and permanent injunctions to prohibit the WUTC from interfering with its waste transportation activities. ² The district court denied Kleenwell's motion for a preliminary injunction and subsequently granted the WUTC's motion for summary judgment. It ruled that the doctrine of collateral estoppel barred Kleenwell from relitigating the facts found by the WUTC in the earlier administrative proceedings and, on the basis of those facts, it held that the WUTC's imposition of a certificate requirement did not violate the Commerce Clause. Kleenwell timely appeals.

ANALYSIS

Before reaching the merits of Kleenwell's constitutional appeal, we must first address two threshold questions. First, should this court abstain from hearing Kleenwell's suit pursuant to the principles first set out in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971)? Second, did the district court err in holding that the factual findings of the administrative law judge have a preclusive effect upon the federal court proceeding?

I. Abstention

The WUTC asserts, for the first time on appeal, that Younger requires this court to abstain from considering Kleenwell's claim. Under Younger and its progeny, federal courts should abstain from intervening in pending state judicial proceedings out of deference to the interests of comity and federalism. See, e.g., Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc., 477 U.S. 619, 626-27, 106 S.Ct. 2718, 2722-23, 91 L.Ed.2d 512 (1986). Although Younger itself involved pending state criminal proceedings, later cases have extended its reasoning to require abstention in favor of certain state administrative proceedings. See id. Relying on such cases, the WUTC asserts that Kleenwell's decision to file a federal court action, rather than appealing the WUTC's adverse administrative decision to the Washington state courts, represents sufficient grounds for invoking Younger. The WUTC invites us to hold that Younger applies even when the relevant state administrative proceedings have been terminated, a holding that would conflict with the decisions of two other circuits. See CECOS Int'l, Inc. v. Jorling, 895 F.2d 66, 72 (2d Cir.1990); Thomas v. Texas State Bd. of Medical Examiners, 807 F.2d 453, 456 (5th Cir.1987).

We need not address the merits of the WUTC's Younger claim, however, because the Commission did not raise this issue before the district court. ³ The Supreme Court has explicitly stated that, even when state administrative proceedings are pending at the time, "[a] State may ... voluntarily submit to federal jurisdiction even though it might have had a tenable claim for abstention." Dayton Christian Schools, 477 U.S. at 626, 106 S.Ct. at 2722. ⁴ Indeed, the Court noted that a state waives its right to raise Younger on appeal when, as here, it "expressly urge[s] ... the District Court to proceed to an adjudication of the constitutional merits." Id. Accordingly, we hold that the state effectively waived its claim for Younger abstention, and we decline to address it.

II. The Preclusive Effect of the WUTC Factual Findings

Kleenwell asserts that we should not reach the merits of the district court's decision on the ground that the court erred in giving preclusive effect to the factual findings of the WUTC administrative proceeding. Kleenwell thus asserts that we should reverse the district court's decision and remand for further factual inquiry. We disagree.

The Supreme Court outlined the standard for determining whether the factual findings of a state administrative proceeding should be given preclusive effect in federal court. In ruling upon a section 1983 claim, the Court held that

when a state agency "acting in its judicial capacity ... resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate," federal courts must give the agency's factfinding the same preclusive effect to which it would be entitled in the State's courts.

University of Tennessee v. Elliott, 478 U.S. 788, 799, 106 S.Ct. 3220, 3226, 92 L.Ed.2d 635 (1986) (quoting United States v. Utah Constr. & Mining Co., 384 U.S. 394, 421-22, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966)).

It is clear that the WUTC hearing met the requirements of Elliott. The administrative proceeding concerned issues properly before the WUTC. See RCW 81.04.110 (authorizing the initiation of a complaint by the WUTC against a common carrier), 81.04.510 (providing that whether a person is conducting business in the state without the WUTC's approval is a question of fact to be determined by the WUTC), and 81.77.100 (allowing the WUTC to consider whether a regulation violates the Constitution and to construe it accordingly). In addition, the hearing was an adjudicative proceeding that provided an adequate opportunity for both parties to present their cases. It was conducted in accordance with the state APA guidelines for adjudicative proceedings and the WUTC's rules of practice and procedure, and it was presided over by an administrative law judge from the independent State Office of Administrative Hearings. Moreover, the parties were provided with proper notice and an opportunity to be heard, they were represented by counsel, briefs were filed, evidentiary objections were made, exhibits were admitted into evidence, and direct testimony and cross examination were allowed.

It is equally clear that the factual findings of the WUTC proceeding would be given preclusive effect in the state of Washington. In Shoemaker v. City of Bremerton, 109 Wash.2d 504, 745 P.2d 858 (1987), the Washington Supreme Court set forth the standard for determining when a state administrative agency's factual findings should bind the parties in a subsequent state court proceeding...