State ex rel. Ormet Corp. v. Industrial Com'n of Ohio

• Decision Date: 17 October 1990
• Docket Number: No. 89-1472,89-1472
• Citation: 561 N.E.2d 920,54 Ohio St.3d 102
• Parties: The STATE, ex rel. ORMET CORPORATION, Appellee, v. INDUSTRIAL COMMISSION OF OHIO, Appellant, et al.
• Court: Ohio Supreme Court

Page 102

54 Ohio St.3d 102

561 N.E.2d 920

The STATE, ex rel. ORMET CORPORATION, Appellee, v. INDUSTRIAL COMMISSION OF OHIO, Appellant, et al.

No. 89-1472.

Supreme Court of Ohio.

Submitted July 31, 1990.

Decided Oct. 17, 1990.

In late 1987, claimant Edward L. Abbott's application for compensation for permanent total disability was heard by Commissioners Lancaster, Huguelet, Trout, and McAllister of the five-member Industrial Commission of Ohio, appellant.

No transcript or other record of the proceedings was made. After the hearing, claimant's motion was held in abeyance and the claim was referred to Trout's office "for review and discussion with all members and for order without further hearing."

On January 4, 1988, Warren Smith replaced Lancaster on the commission. One month later, Smith voted to grant claimant's application. His vote broke a two-to-two deadlock and compensation was awarded accordingly.

Appellee-employer, Ormet Corporation, filed a complaint in mandamus in the Court of Appeals for Franklin County, asserting that Smith's voting participation violated due process, as Smith had neither attended claimant's permanent total disability hearing nor read a transcript thereof. The appellate court agreed and granted the writ.

This cause is before this court upon an appeal as of right.

Vorys, Sater, Seymour & Pease, Russell P. Herrold, Jr., and Bradley K. Sinnott, Columbus, for appellee.

Anthony J. Celebrezze, Jr., Atty. Gen., and Gerald Waterman, Columbus, for appellant.

PER CURIAM.

Although Commissioner Smith did not attend claimant's permanent total disability hearing or review any transcript or summary of the proceedings, he nonetheless voted on claimant's application for permanent total disability benefits. We must determine whether his participation violated due process. For the reasons to follow, we find that it did.

The parties concentrate on Morgan v. United States (1936), 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288, which arose from a Department of Agriculture ("USDA") inquiry under the Packers and Stockyards Act ("Act") into market agencies' rates for buying and selling livestock. In that case, in a lengthy transcribed hearing before an examiner, voluminous testimony and exhibits were introduced. Afterwards, an "acting" Secretary of Agriculture (a delegate of the Secretary) heard oral argument. At its conclusion, elaborate findings of fact were prepared by the USDA's Bureau of Animal Industry and forwarded to the Secretary of Agriculture. Sometime later, the Secretary signed a rate order that was purportedly based on his "careful consideration of the entire record in this proceeding." Id. at 477, 56 S.Ct. at 910.

Plaintiffs sought an injunction, alleging, inter alia, that they had not received the "full hearing" mandated by Section 310 of the Act. Specifically, they contended that the Secretary signed the order without having heard or read evidence presented at the hearing, and without having heard, read or considered plaintiffs' oral argument or briefs. The district court, however, struck these allegations.

On appeal, the United States Supreme Court found that the lower court erred by striking plaintiffs' allegations and remanded the cause for the court to address the allegations and determine whether plaintiffs received the "full hearing" that the Act required. The United States Supreme Court stressed that consideration of all evidence by the Secretary, as ultimate decision-maker, was imperative to the Act's "full hearing" requirement. The court wrote:

" * * * [T]he weight ascribed by the law to the findings--their conclusiveness when made within the sphere of the authority conferred--rests upon the assumption that the officer who makes the findings has addressed himself to the evidence and upon that evidence has conscientiously reached the conclusions which he deems it to justify. That duty cannot be performed by one who has not considered evidence or argument. It is not an impersonal obligation. It is a duty akin to that of a judge. The one who decides must hear." Id. at 481, 56 S.Ct. at 912.

The phrase, "the one who decides must hear," summarizes appellee's argument. Appellee's reliance on Morgan, raises three questions: (1) Does Morgan expound due process principles? (2) If so, what procedural safeguards are required? and (3) Did the commission in this case comply?

We note initially that Morgan was decided on statutory, not constitutional grounds. As the court stated:

" * * * [N]or is it necessary to go beyond the terms of the statute in order to consider the constitutional requirement of due process as to notice and hearing. For the statute itself demands a full hearing and the order is void if such a hearing was denied. * * * " Id. at 477-478, 56 S.Ct. at 910.

Appellant contends that, unlike Morgan, no comparable statutory requirement for a "full hearing" exists for applications to determine permanent total disability. While we agree with appellant's observation, we reject its assertion that Morgan is thus inapplicable.

Ohio Bell Tel. Co. v. Pub. Util. Comm. of Ohio (1937), 301 U.S. 292, 304-305, 57 S.Ct. 724, 730-731, 81 L.Ed. 1093, discussed the procedural safeguards required of quasi-judicial administrative agencies:

"Regulatory commissions have been invested with broad powers within the sphere of duty assigned to them by law. Even in quasi-judicial proceedings their informed and expert judgment exacts and receives a proper deference from courts when it has been reached with due submission to constitutional restraints. * * * Indeed, much that they do within the realm of administrative discretion is exempt from supervision if those restraints have been obeyed. All the more insistent is the need, when power has been bestowed so freely, that the inexorable safeguard * * * of a fair and open hearing be maintained in its integrity. * * * The right to such a hearing is one of 'the rudiments of fair play' * * * assured to every litigant by the Fourteenth Amendment as a minimal requirement. * * * " (Citations omitted.)

These principles have been applied equally to nonregulatory administrative agencies. See, e.g., Goldberg v. Kelly (1970), 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287; State, ex rel. Canter, v. Indus. Comm. (1986), 28 Ohio St.3d 377, 28 OBR 437, 504 N.E.2d 26; State, ex rel. Finley, v. Dusty Drilling Co. (1981), 2 Ohio App.3d 323, 2 OBR 366, 441 N.E.2d 1128. Thus, statutory procedural provisions aside, a requirement to conduct a "hearing" implies a "fair hearing."

Ohio Bell provokes a second response to appellant's claim that Morgan does not apply. The litigation in Morgan v. United States comprised four decisions of the United States Supreme Court: (1936), 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 ("Morgan I "); (1938), 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 ("Morgan II "); (1939), 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211 ("Morgan III "); and (1941), 313 U.S. 409, 61 S.Ct. 999, 85 L.Ed. 1429 ("Morgan IV "). Morgan II equated Ohio Bell's "fair and open" hearing requirement with the "full hearing" directive in the Packers Act. Id. 304 U.S. at 15, 58 S.Ct. at 775. By expressly relying on Ohio Bell, Morgan II implies that the Morgan cases also announce a due process standard.

Others share this view. Southern Garment Mfrs. Assn. v. Fleming (C.A.D.C.1941), 122 F.2d 622, for example, speculated that Morgan I "may have determined that the requirements of a statutory full hearing coincided with those of due process and hence the discussion of one was the discussion of the other. * * * " Id. at 625. As another commentary aptly noted:

" * * * [T]he Morgan case has been interpreted by most courts as declaring a rule of due process. Indeed, where a statute does not by its terms deal with the question as to whether an officer who was not present when the evidence was taken may make or participate in a decision, it is difficult to differentiate for that purpose between a fair hearing as a matter of due process and one as a matter of statute." Annotation (1951), 18 A.L.R.2d 606, 607. See, also, Ostrowski v. New York (C.A. 2, 1979), 601 F.2d 629; Natl. Labor Relations Bd. v. Baldwin Locomotive Works (C.A. 3, 1942), 128 F.2d 39; Riverside Press, Inc. v. Natl. Labor Relations Bd. (C.A.5, 1969), 415 F.2d 281; Pittsburgh S.S. Co. v. Natl. Labor Relations Bd. (C.A. 6, 1948), 167 F.2d 126; S. Buchsbaum & Co. v. Fed. Trade Comm. (C.A. 7, 1946), 153 F.2d 85; Natl. Labor Relations Bd. v. Allied Distr. Co. (C.A. 10, 1961), 297 F.2d 679.

We find that Morgan's principles apply even without an express statutory requirement for a "full" or "fair" hearing. Having approved Morgan's applicability here, we turn to the procedural safeguards required. Appellee urges us to construe narrowly the requirement that "the one who decides must hear," and argues that Morgan I is satisfied only by personal attendance at a hearing or review of a transcript. We disagree.

Morgan I anticipates more flexibility than appellee concedes. Chief Justice Hughes qualified his controversial admonition by also writing:

"This necessary rule does not preclude practicable administrative procedure in obtaining the aid of assistants in the department. Assistants may prosecute inquiries. Evidence may be taken by an examiner. Evidence thus taken may be sifted and analyzed by competent subordinates. Argument may be oral or written. The requirements are not technical. But there must be a hearing in a substantial sense. And to give the substance of hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determination must consider and appraise the evidence which justifies them. * * * " (Emphasis added.) Id. 298 U.S. at 481-482, 56 S.Ct. at 911-912.

Thus, the method used is secondary to the overall requirement that all evidence be considered and appraised.

Morgan II and IV reinforce this interpretation. In Morgan II the district court, pursuant to the United...