PROCEDURAL CONSIDERATIONS IN ADMINISTRATIVE HEARINGS

1. PROCEDURAL CONSIDERATIONS IN ADMINISTRATIVE HEARINGS John A. Young Hazelwood & Weber LLC 200 N. Third Street St. Charles, MO 63301 636-947-4700 www.hazelwoodweber.com

2. Administrative Authority • “When the legislative body of the city chooses… to delegate to itself the discretionary power to enforce its regulation[s],… it acts administratively in acting on applications…” State ex rel. Steak n’ Shake, Inc. v. City of Richmond Heights, 560 S.W.2d 373, 376 (Mo. App. 1977). • Administrative Authority: • An ordinance may not give an administrative body unbridled discretion – there must be a definite standard or rule for guidance. • A governmental body may not delegate their legislative discretion. • The standards must be specific enough so that an administrative body cannot arbitrarily grant permission to one person while denying it to another similarly situated.

3. Missouri Administrative Procedures Act (MAPA) • The MAPA applies not only to State created agencies, but also to local governmental agencies because local agencies are created “by law,” meaning “by constitutional provisions, statute, municipal charter provision or ordinance.” Young v. City of St. Charles, 977 S.W.2d 503, 504 (Mo. banc 1998).

4. Contested Case A proceeding before an agency in which legal rights, duties or privileges of specific parties are required by law to be determined after hearing. Contested Case

5. Contested Case • Contested cases provide the parties with an opportunity for a formal hearing with the presentation of evidence, including sworn testimony of witnesses and cross-examination of witnesses, and require written findings of fact and conclusions of law. • The key to the classification of a case as contested or non-contested is the requirement of a hearing. • The question is not whether a hearing was actually conducted, but whether one was required by law. • Statute, Ordinance or Constitution. • E.g. Implication of procedural due process rights.

6. Contested CaseHearing • The term “hearing,” as used in the MAPA means a proceeding at which a “measure of procedural formality” is followed. • Notice of the issues • Oral evidence taken upon oath or affirmation and the cross-examination of witnesses • Making of a record -Adherence to evidentiary rules -Written decisions including findings of fact and conclusions of law.

7. Presentation of Evidence • Judicial review is limited to determining whether the decision is supported by competent and substantial evidence upon the whole record, whether it was arbitrary and capricious or unreasonable, and whether the administrative agency abused its discretion. • The findings and decisions are to be based on evidence presented at the hearing. Steak n’ Shake, Inc., 560 S.W.2d at 378. • Records and documents that “are to be considered in the case shall be offered in evidence so as to become a part of the record….” § 536.070(5), RSMo. • “Any evidence received without objections which has probative value shall be considered by the agency along with the other evidence in the case.” § 536.070(8), RSMo.

8. Presentation of Evidence • Hearsay evidence admitted without objection may be utilized as substantial and competent evidence to support the finding of an agency. The Housing Authority of the City of St. Charles v. Board of Adjustment of the City of St. Charles, 941 S.W.2d 725, (Mo. App. E.D. 1997). • Agency records may be admitted by reference. § 536.070(5), RSMo. • A board may utilize its personal observations in reaching the decision provided the facts which are known by the Board and upon which it bases its decision are disclosed on the record. State ex rel. C.C.G. Management Corp., v. City of Overland, 624 S.W.2d 50, 55 (Mo. App. E.D. 1981)

9. Findings of Fact andConclusions of Law • Findings of Fact and Conclusions of Law • The decision, order and findings of fact and conclusions of law shall in every case be included in the record for judicial review. • This requirement cannot be waived. • Without findings of fact and conclusions of law, the court has no basis for reviewing the agency’s decision on the record. • Must reveal the basis of the decision of the administrative agency.

10. Contested CaseBias • “The procedural due process requirement of fair trials by fair tribunals applies to an administrative agency acting in an adjudicative capacity.” State ex rel. AG Processing, Inc. v. Thompson, 100 S.W.3d 915, 919 (Mo. App. W.D. 2003). • “Officials occupying quasi-judicial positions are held to the same high standard as apply to judicial officers in that they must be free of any interest in the matter to be considered by them.” Id. at 919-20. • “A presumption exists that administrative decision-makers act honestly and impartially, and a party challenging the partiality of the decision-maker has the burden to overcome that presumption.” Id.

11. Contested CaseBias • “[A]ny administrative decision[-]maker who has made an unalterable pre-judgment of operative adjudicative facts is considered biased.” Fitzgerald v. City of Maryland Heights, 796 S.W.2d 52, 59 (Mo. App. E.D. 1990). • The MAPA states that “reasonable opportunity shall be given for the preparation and presentation of evidence bearing on any issue raised.” This includes the issue of bias amongst the decision-makers.

12. Contested CaseBias • Administrative decision makers are expected to have preconceived notions concerning policy issues within the scope of their agency’s expertise. • Familiarity with the adjudicative facts of a particular case, even to the point of having reached a tentative conclusion prior of the hearing, does not necessarily disqualify an administrative decisionmaker, in the absence of a showing that the decisionmaker is not capable of judging a particular controversy fairly on the basis of its own circumstances.

13. Contested CaseBias • Financial Solutions and Assoc. v. Carnahan, 316 S.W.3d 518 (Mo. App. 2010). • Securities Division of the Office of the Secretary of State filed a petition for an Order of Cease and Desist with the Missouri Commissioner of Securities against company Under the Missouri Securities Act of 2003. • Hearing held before the Commissioner. • Biased alleged because Assistant Commissioner who worked under the supervision of the Commissioner investigated the matter and filed the petition. • Specifically, Appellants contended that the Commissioner’s Cease and Desist Order, which found the Appellants guilty of various violations of the Missouri Securities Act, and a press release issued by the Secretary of State describing the findings of the Cease and Desist Order, constituted evidence of bias and prejudgment.

14. Contested CaseBias • Financial Solutions and Assoc. v. Carnahan, 316 S.W.3d 518 (Mo. App. 2010) Cont’d: • Commissioner’s Bias: • “[T]he commissioner was performing the duties prescribed by Missouri statute by entering a Cease and Desist Order… and the fact that the Commissioner issued a Cease and Desist Order that was unfavorable to the Appellants does not show bias. ‘The mere fact that rulings are made against a party does not show bias or prejudice on the part of the judge.’” • “”[A]ny alleged bias or prejudice on the part of the judge, to be disqualifying, must stem from an extrajudicial source.”

15. Contested CaseBias • Financial Solutions and Assoc. v. Carnahan, 316 S.W.3d 518 (Mo. App. 2010) Cont’d: • Improper commingling of adjudicative and prosecutorial functions: • Assistant Commissioner prosecuted while the Commissioner adjudicated. • No allegation that Commissioner acted in dual roles. Appellants contest having an administrative body that contains investigatory departments as well as adjudicative departments. • It is a difficult burden to contend that “the combination of investigative and adjudicative functions necessarily creates an unconstitutional risk of bias in administrative adjudications.” Withrow v. Larkin, 421 U.S. 35, 46-47 (1975). • The “fact that the Commission had entertained such views as the result of its prior ex parte investigations did not necessarily mean the minds of its members were irrevocably closed on the subject.” Id. at 48. • “Bias and prejudice must flow from an extra-judicial source to be disqualifying.”

16. Contested CaseBias • Davenport Pastures, LP v. Morris County Board of County Commissioners, 238 P.3d 731 (Kan. 2010). • Evidentiary damages hearing on County Commission’s decision to vacate two roads. • County Counselor acted as the board’s legal adviser and advocate during and after the damages hearing process. • Role as Boards legal advisor: drafted letters on behalf of the board; advised the board on how to schedule and conduct the hearing; recommended the appraiser that the board hired as its sole expert witness; advised board how to proceed after damages hearing; arguably drafted the Board’s written decision. • Role as Board’s advocate: represented board at all court proceedings, asserted attorney-client privilege, commented upon and argued against evidence presented at the hearing; cross-examined witnesses; and called witnesses to testify and directly examined them.

17. Contested CaseBias • Davenport Pastures, LP v. Morris County Board of County Commissioners, 238 P.3d 731 (Kan. 2010), Cont’d: • “In short, the Board requested [the County Counselor] to advocate/investigate on the amount of damages (if any), to advise on legal procedures; and arguably to also help adjudicate, particularly with the drafting of the order. In our view the [County Counselor] was improperly asked to be, if not “A Man for All Seasons,” then a man for too many seasons.”

18. Contested CaseBias • State ex rel. Praxair, Inc. v. Missouri Public Service Commission, 2010 WL 3218887 (Mo. App. W.D. 2010). • Merger of public utility companies before the PSC for approval. • Office of Public Counsel alleged bias of members of the PSC because members of the PSC met with utility executives before the planned merger was publicly announced and before a petition for the merger was submitted. • On four or five occasions, two company executives met privately with members of the PSC to discuss the proposed merger. No commitments were made by the PSC. • The commission is specifically authorized to function in a quasi-legislative as well as a quasi-judicial capacity. § 386.210.1, RSMo. • “The statutory scheme permits communications between commissioners and members of the public, regarding industry matters that are not the subject of a pending proceeding.” § 386.210.2, RSMo.

19. Contested CaseBias • State ex rel. Praxair, Inc. v. Missouri Public Service Commission, 2010 WL 3218887 (Mo. App. W.D. 2010), Cont’d: • Commission found that Public Counsel “offer[ed] no legitimate factual basis from evidence in the record to support a conclusion of actual bias or prejudgment on the part of the Commissioners…. no reasonable person with total knowledge of the content of these conversations, the context surrounding the legislatively sanctioned conversations, and the timing of the conversations could conclude that the Commissioners were biased or that there was even a remote appearance of impropriety.” • “The Commission’s factual findings are presumptively correct and if substantial evidence supports either of two conflicting factual conclusions, this court ordinarily is bound by the Commission’s findings. Assessment of witness credibility is for the Commission…”

20. Contested CaseBias • State ex rel. Praxair, Inc. v. Missouri Public Service Commission, 2010 WL 3218887 (Mo. App. W.D. 2010), Cont’d: • “The proceeding was conducted in accordance with statue and regulation, and, thus, is presumed to have been appropriately and lawfully conducted until the contrary has been demonstrated. ‘[A] party challenging the [impartiality] of the decision-maker has the burden to overcome that presumption.’ We would be very reluctant, in the absence of the violation of a specific statute or rule, to set aside an administrative determination allowing a merger where the is no clear evidence that the ex parte communications actually influenced the result of the proceedings.”

21. Contested CaseBias • Continental Property Group, Inc. v. City of Minneapolis, 2011 WL 1642510 (Minn. App. 2011) • Property Owner requested conditional use permit (CUP) and variances to construct a 21 story multiple family complex where 2 ½ stories is permitted height. • Property Owner asserted bias and violation of procedural due process in proceedings before City Council.

22. Contested CaseBias • City Councilwoman and member of Planning and Zoning Committee. • Email communications to Zoning and Planning Committee and constituents voicing opposition. • Telephone Call to Property Owner advising that she intends to turn down the project.

23. Contested CaseBias • Emails to constituents:

24. Contested CaseBias • Emails to constituents: • “I am not supportive of a high-rise…”

25. Contested CaseBias • Emails to constituents: • “I am not supportive of a high-rise…” • “I have already come out against the height of the project…”

26. Contested CaseBias • Emails to constituents: • “I am not supportive of a high-rise…” • “I have already come out against the height of the project…” • “I will advocate vociferously against the appeal…”

27. Contested CaseBias • Emails to constituents: • “I am not supportive of a high-rise…” • “I have already come out against the height of the project…” • “I will advocate vociferously against the appeal…” • “I assure you I will do my best to advocate against the appeal in committee…”

28. Contested CaseBias • Emails cont’d: • “I serve on the Zoning and Planning Committee which is a quasi-judicial process. If I got involved prior to the public hearing I could face giving up my right to vote on the issue as the information I would receive would be outside the public hearing process.”

29. Contested CaseBias • Emails cont’d: • “…please do not be spreading the word that I have made up my mind and am working to oppose the variance on this project. If the developer hears this they will rightfully question that they didn’t get a fair hearing with me and that I made up my mind prior to the public hearing.”

30. Contested CaseBias • Court found: • City Council’s decision to deny the CUP’s and variances had some basis in the record. • Decision was nonetheless arbitrary and capricious because Councilmember Goodwin took a position in opposition and exhibited a closed mind with regard to [the] proposed project prior to hearing [the] appeal; adopted an advocacy role in opposition to the proposed project well before she discharged her quasi-judicial duties; and was clearly involved in an effort not only to assist to organize and mobilize neighborhood opposition to the project, but also to sway the opinions of her fellow council members. • In light of the foregoing, the court found that the city council improperly relied on factors it was not intended or permitted to consider in denying the applications. • Decision would not necessarily have been arbitrary and capricious had the council followed the correct standards and procedures in considering the application “namely, had it not allowed a biased councilmember to participate in the decision.”

31. ?QUESTIONS? John A. Young Hazelwood & Weber LLC 200 N. Third Street St. Charles, MO 63301 636-947-4700 www.hazelwoodweber.com