Shark v. U.S. West Communications, Inc., 950407

Decision Date21 March 1996
Docket NumberNo. 950407,950407
Citation545 N.W.2d 194
CourtNorth Dakota Supreme Court
PartiesMyer SHARK and K.W. Simons, Appellants, v. U.S. WEST COMMUNICATIONS, INC., BEK Communications Cooperative, Consolidated Telephone Cooperative, Dakota Central Telecommunications Cooperative, Dickey Rural Telephone Cooperative, Griggs County Telephone Company, Inter-Community Telephone Company, Moore & Liberty Telephone Company, Midstate Telephone Company Northwest Communications Corporation, North Dakota Telephone Company, Polar Communications Mutual Aid Corporation, Red River Rural Telephone Association, Reservation Telephone Cooperative, United Telephone Mutual Aid Corporation, West River Telecommunications Cooperative, and their affiliates, Appellees and The Public Service Commission of North Dakota, Respondent. Civil

Myer Shark Law Office, Fargo, for appellants; argued by Myer Shark. Peterson Law Office, Fargo; appearance by Craig A. Peterson.

Zuger, Kirmis & Smith, Bismarck, for appellee U.S. West; argued by Daniel S. Kuntz. William P. Heaston (appeared), Senior Attorney, U.S. West Communications, Inc., Denver.

The Law Office, Ltd., Grafton, for appellee Independent Telephone Company Group; argued by Wallace R. Goulet.

MESCHKE, Justice.

Myer Shark and K.W. Simons appeal from a district court order dismissing their separate appeals from the North Dakota Public Service Commission's (PSC) approval of the sale and transfer of sixty-eight telephone exchanges by U.S. West Communications, Inc. (West) to fifteen cooperative and independent telephone companies. The court held Shark and Simons lacked standing for judicial review. We affirm the dismissals.

West and the Independent Telephone Company Group (ITCG) petitioned the PSC in November 1994 to approve West's sale of some of its local telephone exchanges in North Dakota, and to approve the transfer of each associated certificate of public convenience and necessity for each buyer or its affiliate to own and operate the acquired exchange. See NDCC ch. 49-03.1 & ch. 49-21. The five independent telephone companies and the ten rural telephone cooperatives in the ITCG agreed to purchase exchanges with 48,000 telephone customers in 68 communities.

The PSC held informal "public input" hearings between January 30 and February 14, 1995, in each of ten communities for telephone customers to discuss the proposed transfers. On March 8, the PSC published a notice of hearing that set a deadline of April 3, 1995, for interested persons to intervene, and scheduled a formal "technical hearing" for June 5, 1995. On March 20, 1995, the PSC amended the notice to reschedule the hearing to begin on May 1, 1995.

Myer Shark, a business and residential customer of West's Fargo telephone exchange (one not being sold), petitioned to intervene. On March 22, 1995, the PSC found "Shark does have an interest in this matter and his participation will not unduly broaden the issues or delay the proceeding," warned his "[a]dmission as an intervenor shall not be construed as recognition by the [PSC] that [he] might be aggrieved by an order ... in this case," and thus conditionally granted him intervention.

Though he did not petition to intervene, K.W. Simons, a customer of West's telephone exchange at Rolla, one being sold to an affiliate of United Telephone Mutual Aid Corporation, an ITCG member, wrote a letter to one PSC commissioner on April 17, 1995. The letter praised that commissioner's position and complained about the apparent position of the other two commissioners in scheduling the case.

After the "technical hearing" on May 1-3, 1995, post-hearing briefs, and other procedures, the PSC entered its findings, conclusions, and order on May 17, 1995. The order approved the sale of the exchanges and the transfers of the associated certificates of public convenience and necessity upon certain conditions that were agreeable to West and to the ITCG.

In June 1995, Shark appealed the order in Steele County, and Simons appealed it in Rolette County. Those two appeals and another were consolidated by agreement in Steele County. West and ITCG moved to dismiss the three appeals for lack of standing.

After the third appeal was settled, the district court ruled on November 15, 1995, that Shark "is not factually aggrieved" because the "challenged Order has not caused [him] injury in fact, economic or otherwise," that "Simons did not participate in the agency proceeding," and that, since both thereby lacked standing, "it is not necessary for the Court to consider the merits of their arguments on appeal." The court dismissed their appeals.

Shark and Simons each appealed to this court. Shark contends he has standing to challenge the application and constitutionality of legislation that became effective on April 18, 1995, which he claims "retroactively" diminished the scope of the hearing to his disadvantage. See 1995 N.D. Laws ch. 30, §§ 4, 5, & 8 (emergency measure amending NDCC 49-03.1-04 & 49-21-01.2). He principally argues that the new legislation was wrongly applied to revoke PSC power to consider whether "rates to be charged by [West] in the[ ] exchanges not being sold" were reasonable, and whether West should "be required to share profits from the sale with customers or be required to reinvest profits from the sale in its existing North Dakota service territory." Even if those facets of the proceeding were properly eliminated by the new legislation, Shark contends, with scant references, that "the District Court leaped over almost universally recognized case law and authoritative treatises" that support his standing as a customer of the seller to contest the proposed sale. He urges that any "West ... customer ... has a vital interest" for standing to contest the proposed transfer of part of West's property.

Simons contends that, although he did not intervene or actually participate in the "technical hearing," his prehearing letter to a PSC commissioner was sufficient participation for standing to appeal. He urges that "a liberal interpretation of the term 'participation' with a view to encouraging consumer review of agency decisions is necessary." His position on the merits of the appeal parallels Shark's.

"Any party to any proceeding heard by an administrative agency ... may appeal from the order...." NDCC 28-32-15(1). Under NDCC 28-32-14(1), only a party "who is aggrieved by the final order of the agency ... may file a petition for reconsideration with the agency." But the limits of judicial power to review agency and executive action are marked by several doctrinal boundaries, including the concept of standing.

"Standing" is necessary for judicial review through appeal of an administrative order, this court held in Application of Bank of Rhame, 231 N.W.2d 801 (N.D.1975). In that case, the Bank of Rhame challenged an appeal by First National Bank of Bowman, a competitor, from an order of the North Dakota Banking Board that allowed the Bank of Rhame to move to Bowman. This court had to decide "who are parties for purposes of seeking [judicial] review" of an administrative decision. Id. at 806.

Because the Administrative Agencies Practice Act, NDCC ch. 28-32, did not define "party" for any purpose, this court surveyed the subject and reasoned:

The question of who is a proper party should not be resolved on strict technical grounds which could result in the public being denied the opportunity to question the actions of the governing agency, body or board.... Any doubt on the question of standing involving a decision by an administrative body should be resolved in favor of permitting the exercise of the right of appeal by any person aggrieved in fact.

Bank of Rhame, 231 N.W.2d at 808 (footnote omitted). The court decided:

[A]ny person who is directly interested in the proceedings before an administrative agency who may be factually aggrieved by the decision of the agency, and who participates in the proceeding before such agency, is a "party" to any proceedings for the purposes of taking an appeal from the decision.

Id. The court concluded that First National Bank of Bowman had standing to appeal because it had a direct interest as a competitor in the same community, participated in the agency proceeding, and was "factually aggrieved." Id.

Since the decision in Bank of Rhame, the legislature defined "party" to an agency proceeding in NDCC 28-32-01(8) to mean "each person named or admitted as a party or properly seeking and entitled as of right to be admitted as a party." 1977 N.D. Laws ch. 284, § 1. Compare Model State Administrative Procedure Act, 1961 Act § 1(5), 15 U.L.A. 137, 148 (1990) (substantially identical wording). 1 While this definition helped identify a party for purposes of the agency proceeding, it added nothing to the distinct concept of standing for judicial review of an agency decision. The legislative history for this amendment does not imply an intention to overrule or replace the standing doctrine of Bank of Rhame, or to expand the right to judicial review to merely nominal parties who are not aggrieved.

In the context of an appeal for judicial review of an agency decision, standing is an aspect of the basic constitutional concept that confines the exercise of judicial power to actual cases and controversies. See 2 Am.Jur.2d Administrative Law § 438 (1994); III Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise § 16.2 (1994); 5 Jacob A. Stein, Glenn A. Mitchell, Basil J. Mezines & Joan D. Mezines, Administrative Law § 50.01 (1995). "[T]he question of standing is related only to whether the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution." Association of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 151-52, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970) (quoting Flast v. Cohen, 392 U.S. 83, 99-100, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968)). 64 Am.Jur.2d ...

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