Schlegel v. Bebout
| Decision Date | 08 March 1988 |
| Docket Number | No. 86-3551,86-3551 |
| Parties | Diana G. SCHLEGEL; and Central Pacific Freight Lines, an Oregon Corporation, Plaintiffs-Appellees, v. William BEBOUT; and Bob Russell, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael D. Reynolds, Salem, Or., for defendants-appellants.
Elden M. Rosenthal, Portland, Or., for plaintiffs-appellees.
Appeal from the United States District Court for the District of Oregon.
Before ANDERSON, TANG and NOONAN, Circuit Judges.
The mandate is recalled and the Opinion filed November 3, 1987 and reported at 831 F.2d 881 is withdrawn.
The attached Opinion shall be filed and substituted for the withdrawn Opinion.
Circuit Judge NOONAN continues to adhere to his dissent and the clerk is instructed to refile that dissent simultaneously with this Opinion.
William Bebout and Bob Russell (appellants) appeal the district court's denial of their motion to dismiss Schlegel's complaint, pursuant to Fed.R.Civ.P. 12(b). Appellants alleged that they were entitled to absolute immunity from suit for claims brought under 42 U.S.C. Sec. 1983 based on their status as a Public Utilities Commission (PUC) Assistant Commissioner (Bebout) and a PUC Deputy Commissioner (Russell). We affirm.
The basis of Schlegel's claim is that appellants initiated and participated in irregular and discriminatory actions during the time period in which an administrative hearing on intrastate trucking applications was in progress. Appellee Dana Schlegel owns and operates Central Pacific Freight Lines, an intrastate trucking corporation. She alleges that appellants interfered in the evidence-producing process, had repeated ex parte contacts with the hearing officer for the purpose of influencing the outcome of the hearing, and continued the irregular and discriminatory actions after the hearing was over in an attempt to harass appellees.
In October, 1983, miscellaneous applications for regular route intrastate trucking authority within Oregon were consolidated for a hearing. This hearing ran until June, 1984. When such a hearing is convened, the Oregon Administrative Rules (OAR) provide that the hearing shall be conducted by a presiding officer. OAR 860-12-035, OAR 860-14-030, et seq. In the normal hearing for route authority, the order of procedure is that the applicant or petitioner presents evidence, followed by protestants, participants, the Commissioner's staff, and then rebuttal. OAR 860-14-035(1)(c). In consolidated hearings, the presiding officer shall designate the order of procedure. OAR 860-14-035(2). At a hearing for route authorities, and at all other hearings before a presiding officer, all relevant evidence which the presiding officer holds is the "best evidence reasonably obtainable, having due regard to its necessity, availability and trustworthiness" is admissible. The presiding officer is given certain grants to take official notice of evidence. Resolutions, exhibits, depositions and interrogatories are admissible. Written testimony is admissible, as are records from other proceedings and stipulations as to facts. Briefs and oral arguments may be submitted to the presiding officer. In addition, parties have the right to object to evidence. OAR 860-14-045, et seq. It is also required that if any ex parte contact occurs between parties to a proceeding and the Commissioner or members of the commissioner's staff, reasonable notice is required to be given to all parties of such conference. OAR 860-12-015.
After the hearing, the presiding officer issues a proposed order. If parties, or the Commissioner's staff, disagree with the proposed order, they may take exceptions. The Commissioner himself may then modify, reject, or adopt the proposed order as his own. OAR 860-14-092.
In short, hearings to determine the granting or denial of applications for intraroute authorities envision an independent presiding officer accepting evidence. The PUC Commissioner may act only after this hearing. However, the Commissioner may not act unless his actions are supported by the record as developed at the hearing. Or.Rev.Stat. Secs. 756.580, 756.598.
It is the actions by appellants which occurred during and after this hearing that form the basis for Schlegel's complaint. According to appellees, as alleged in their complaint:
In November, 1983, with the intention of influencing the outcome of the hearing, appellants circulated false financial information regarding Schlegel and her trucking company. This conduct was not the type of conduct usually performed by the PUC and was done for the sole purpose of damaging appellees. (Complaint p 10).
In November, 1983, at appellants' direction, auditors performed, for the second time that year, a compliance audit at appellees' headquarters. This audit was irregular and discriminatory, not in the ordinary course of business for the PUC, was done to harass appellees, and resulted in information leaking to certain participants in the hearing and to the hearing officer that appellees were guilty of twelve violations of state transportation laws. A cease and desist letter was issued by appellants although they knew appellees were not guilty of any such violations. (Id. p 11).
In January, 1984, appellant Bebout, in an informal conversation with Schlegel, detailed proposed results of the pending hearing and threatened Schlegel that if she did not cooperate in his proposed resolution of all pending route authority issues, he would make sure she would be denied route authorities critical to her business. She refused and the hearing continued. (Id. p 12).
In February, 1984, again at appellants' direction, a third compliance audit was performed. This audit was illegal and discriminatory in that it, too, was designed to influence the outcome of the hearing. After reviewing 14,000 freight bills, one violation was found. (This involved a $23 pick-up and delivery). A formal complaint was issued. This was the first time in PUC history that a formal complaint was issued based on a finding of one freight movement violation. This complaint was issued to harass and discriminate against appellees and to influence the outcome of the hearing. (Id. p 13).
In February, 1984, appellants threatened to put Schlegel out of business unless she changed her corporate attorney and went along with proposed settlement as outlined by Bebout in January. She refused. (Id. p 14).
The hearing results were announced in June, 1984. The results were substantially similar to the proposed settlement Bebout had presented in January. (Id. p 15).
In August, 1984, appellants caused a complaint to be filed against appellees, alleging that the company violated PUC regulations due to a particular interline connection it had entered into with an interstate carrier. Appellants caused a press release to be distributed which claimed that the alleged violation was "probably the most serious violation in the history of Oregon trucking." This statement was not true and was released as part of the continuing harassment and singling out of appellees for the purpose of causing economic injury. Appellant Bebout also threatened legal action against any shipper utilizing Schlegel's trucking company's services. (Id. p 16).
As directed by appellants, PUC inspectors appeared and inspected the Portland yards of Central Pacific Freight Lines. The chief inspector told appellants that the company passed with excellent results. With the intention to harass, intimidate, single out, and cause economic harm to appellees, appellants ordered an unannounced, re-inspection at the Portland and Eugene yards. (Id. p 17).
On this foundation, Schlegel strives to build a federal civil rights (42 U.S.C. Sec. 1983) claim and pendent state law claims for defamation and interference with economic relationships. Under the 42 U.S.C. Sec. 1983 claim, Schlegel alleges that the defendants' actions violated the equal protection clause of the fourteenth amendment because facially valid laws were applied in an unjust, discriminatory manner against them and other persons similarly situated.
Appellants, who claim they are entitled to absolute immunity, moved for dismissal pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim and for lack of subject matter jurisdiction. Appellants further alleged that since Schlegel was not entitled to relief under 42 U.S.C. Sec. 1983, the pendent state law claims should be dismissed for lack of jurisdiction. On December 26, 1985, the district court denied the motion to dismiss and granted appellants' request for the right to an interlocutory appeal as to the prosecutorial immunity issues since they involved a controlling question of law as to which there is a substantial ground for difference of opinion, and an immediate appeal may materially advance the ultimate termination of the litigation.
On July 9, 1986, a two-judge motions panel of this court denied Schlegel's motion to dismiss the appeal for lack of jurisdiction. It found that denial of a motion to dismiss based on absolute immunity is an appealable interlocutory order.
While we give deference to motions panel decisions made in the course of the same appeal, this court has an independent duty to decide whether we have jurisdiction. See United States v. Houser, 804 F.2d 565, 568 (9th Cir.1986). However, we agree with the motions panel and find that a denial of a motion to dismiss based on a claim of absolute immunity is an appealable interlocutory order. Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985); Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982).
A ruling on a motion to dismiss for failure to state a claim is a ruling on a question of law and is reviewed de novo. See Fort...
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