Findings of Fact in Formal Administrative Proceedings

1. Findings of Fact in Formal Administrative Proceedings • What are “formal administrative proceedings?” • Formal rulemakings ('553) or adjudications ('554) that must use further procedures set forth in '556/557, including: • Notice of proposed proceeding (§§553/554); right to submit evidence and to conduct cross-ex (§556(d)); initial decision by an ALJ, the agency or qualified agency employee (§556(b)/557(b)); no ex parte contacts (§557(d)); decision based on findings of fact, supported by substantial evidence in the record and conclusions of law (§557(c)); decision is appealable to the agency head(s) (§557(b)) • Trial-like procedures often result in typical fact findings: • “X was employed by Y company;” • “During working hours X was seen in a state of apparent inebriation by several employees”

2. What standard of review should courts use to review administrative fact findings in formal proceedings? • Court review of agency findings raises a number of questions • How does a court assimilate and weigh all of this evidence – what standard of review should it use? • And what weight should/does it give initial triers of fact who have already done the hard job of hearing first hand testimony, etc.? • To what extent does it matter that there may already be several layers of review within the agency? • And thus potentially conflictingviews of the facts on the record.

3. Universal Camera – put yourself in place of the trial examiner (initial trier of fact) The players T.E.’s fact findings • Chairman: fired employee • Politzer: Chairman’s immediate supervisor • Weintraub: the personnel manager • Kende : Chairman’s ultimate superior • Despite handshake between Chairman & Weintraub, Weintraub was angry at what he considered Chairman’s impermissible conduct during their 12/30 altercation • Chairman never told Politzer he intended to resign but Politzer told Weintraub that Chairman intended to resign. Politzer was motivated either by “honest mistake” or by the thought that the quarrel would be forgotten if action re firing was delayed. • The belief that Chairman would resign resulted in several week delay between 12/30 incident and Weintraub’s command that Chairman be fired.

4. Discussing the trial examiner’s findings • The trial examiner found: • “In view of all the facts and circumstances, the examiner is not persuaded that Kende based his decision on any animus toward Chairman for testifying rather than on an evaluation of Weintraub’s request based on it’s merits.” • What evidence (pp. 201-02) supports the trial examiner’s findings? What evidence detracts? How would you have ruled if you were in his shoes? • When the decision went up on “exceptions” through the administrative appeals process in the NLRB itself, how did the agency rule? • Does this trouble you? Should it?

5. Judicial review of the NLRB’s fact findings – “substantial evidence” standard • Assume now that the company has appealed the agency’s decision to the courts. You are the judge in Universal Camera charged with reviewing the NLRB’s findings of fact • Plus there is a conflict between the agency and the trial examiner’s findings of fact - Agency has now found that firing was retaliation for testimony • What is the applicable standard of review? • “The findings of the Board as to the facts, if supported by [substantial] evidence, shall be conclusive.” (Taft-Hartley Act) (also same standard as in the APA) – more on this in a little bit) • Standard raises a couple of questions: • What counts as “evidence” – i.e., what is the record the court can look at on review? • What does “substantial evidence” mean? • How do the different meanings of the term over time matter? What does SCT ultimately settle on?

6. What can the court review to determine if the findings are supported by substantial evidence? • Section 556(e) defines the record for formal proceedings: • The transcript of the testimony and exhibits, together with all the papers and requests filed in the proceeding, constitutes the exclusive record for decision in accordance with Sec. 557 … • When looking to see whether the agency’s findings of fact are supported by “substantial evidence” – the judge will look to the evidence in this available record • Does it involve observation of live witnesses? Unrecorded gestures, etc.?

7. What does “substantial evidence” mean? • What did “substantial evidence” mean in the courts’early approach (prior to APA/Taft-Hartley)? • Downsides to this approach? • Then Congress enacted: • APA '706(2)(E):Reviewing court shall ... set aside agency ... findings, ... unsupported by substantial evidence in a case subject to sections 556 & 557. ... [T]he court shall review the whole record or those parts of it cited by a party. • Taft-Hartley '10(e)– Findings shall be conclusive if “supported by [substantial] evidence on the record considered as a whole.” • What does the Supreme Court interpret these statutes to require? What does that mean?

8. Implementing the “whole record” version of the “substantial evidence” test • Substantial evidence under APA/Taft-Hartley requires a court to look at the whole record to determine whether the fact finding is based on substantial evidence (p. 206): • This test [doesn’t allow a court to ignore the agency’s expertise re a specialized area of knowledge – court should give those judgments “respect”] • “Nor does it mean that even as to matters not requiring expertise a court may displace a Board’s choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo.” • What should the appellate court have done in Universal Camera given the state of the evidence?

9. How should the appellate court have applied the substantial evidence test Order of events Questions • Trial examiner finds Chairman’s discharge was not retaliation. • Board disagrees; orders U.C. to reinstate Chairman; • On appeal, 2d Cir. upholds boards order; • SCT clarifies what “substantial evidence” mean; remands to 2d Cir. • 2d Cir. now rules that T. Ex. was right and Board’s order should be overturned • Given what we know about how the substantial evidence should be applied after the APA, was the 2d Cir’s first approach to applying that test basically right? • Then why the change-up the second time around? • How much weight should we give to a trial examiner’s findings? Especially if they conflict with the Board?

10. Standards of review and organic statutes • Taft-Hartley Act – technically this governed review in Univ. Camera • BUT SCT says that substantial evidence test was meant to apply the same as the test was defined in the APA • Organic statutes commonly contain standards of review, especially re fact findings – how do we deal with those vis-à-vis the APA? • Regarding FORMAL proceedings governed by APA Sec. 556/557, the APA standard applies. • As we discuss later, APA formal procedures are triggered by specific language found in organic statutes – Section 556/557 procedures & the APA standard of review are thus required.

11. Standards of review and organic statutes, cont’d • Standards of review in informal proceedings are different though. • Many proceedings don’t rise to the level of formal rulemakings or adjudications. • Especially with adjudications, organic statutes may require some procedural formality & require a standard of review for fact findings. But the proceeding formal adjudications. (This happens some with rulemakings too). • See, e.g., Beer Trade Act '9(a)(3) – “the finding of the Commission as to the facts, if supported by the evidence, shall be conclusive.” • Courts will interpret this language as best they can • Look to case law; leg. History; APA if the language is similar • If an organic statute has no standard of review and a court must review a fact finding coming out of these proceedings, they will use APA 706(2)(e)’s “arbitrary & capricious” standard if they determine the proceeding does not require formal procedures. • But courts often apply 706(2)(e) here as if it is essentially the same as the “substantial evidence” standard.