Western Gillette, Inc. v. Arizona Corp. Commission

• Decision Date: 30 January 1979
• Docket Number: No. 1,CA-CIV,1
• Parties: WESTERN GILLETTE, INC., and Arizona Tank Lines, Inc., Appellants, v. The ARIZONA CORPORATION COMMISSION and Kunkle Transfer & Storage Co., Appellees. 4073.
• Court: Arizona Court of Appeals

Page 375

592 P.2d 375

121 Ariz. 541

WESTERN GILLETTE, INC., and Arizona Tank Lines, Inc., Appellants, v. The ARIZONA CORPORATION COMMISSION and Kunkle Transfer & Storage Co., Appellees.

No. 1 CA-CIV 4073.

Court of Appeals of Arizona, Division 1, Department B.

Jan. 30, 1979.

Rehearing Denied March 7, 1979.

Norling, Rolle, King & Oeser by George S. Livermore, Phoenix, for appellant Western Gillette, Inc

Evans, Kitchel & Jenckes, P.C. by Earl H. Carroll, Phoenix, for appellant Arizona Tank Lines, Inc.

John A. LaSota, Jr., Former Atty. Gen. by Michael M. Grant, Asst. Atty. Gen., Phoenix, for appellee The Arizona Corp. Commission.

Shimmel, Hill, Bishop & Gruender, P.C. by Williby E. Case, Jr., Phoenix, for appellee Kunkle Transfer & Storage Co.

OPINION

SCHROEDER, Presiding Judge.

This is an appeal from the trial court's affirmance of a 1976 Corporation Commission order approving rates for the transportation of petroleum products by appellee, Kunkle Transfer & Storage Co. (Kunkle). Before the Corporation Commission, appellants, Arizona Tank Lines and Western Gillette, had unsuccessfully challenged Kunkle's authority to carry such products under its Certificate of Convenience and Necessity.

The principal issues before the Corporation Commission were whether Kunkle had ever had such authority under its certificate, whether any such authority should be deemed abandoned through dormancy, and the economic impact of Kunkle's entry into the field.

Although all these issues have been presented in this appeal, we find it unnecessary to reach their merits. Reversal is required because of flagrantly improper ex parte communications which occurred between Kunkle's counsel and Corporation Commission staff while the matter was pending before the Commission.

This was a quasi-judicial, adjudicatory proceeding before the Corporation Commission in which appellants and Kunkle were adverse parties. The Commission held full evidentiary hearings. While the matter was under advisement, Corporation Commission staff conferred with counsel for Kunkle. Staff requested and received two proposed forms of decision from that counsel. One of these forms was later issued in August, 1976, as the Commission's decision, which is the subject of this appeal.

Appellants raised the propriety of this conduct in a motion for rehearing following the issuance of the Commission's decision. The issue was also raised in the trial court and the parties stipulated to Kunkle's ex parte participation in the decision. Nevertheless, the Commission, despite a staff recommendation for rehearing, declined to reconsider the matter, and the trial court affirmed. In oral argument before this Court counsel for appellee Kunkle, who was not personally involved in the questioned proceedings before the Corporation Commission, forthrightly described the nature of the ex parte communications. While we approve of the candor which appellee's counsel has shown following the Commission's decision, we cannot condone the ex parte conduct which preceded it.

The participation in the actual decision making process by only one party to a controversy is inimical to the notions of fairness which underlie the due process of law. The United States Supreme Court has categorically stated that a "fair hearing" is denied in quasi-judicial administrative proceedings when the finder of fact reaches his decision after ex parte communications from one side. Morgan v. United States, 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 (1938). In condemning such a practice, the Court stated:

. . . (I)n administrative proceedings of a quasi-judicial character the liberty and property of the citizen shall be protected by the rudimentary requirements of fair play. These demand 'a fair and open hearing,' essential alike to the legal validity of the administrative regulation and to the maintenance of public confidence in the value and soundness of this important governmental process. 58...