January 2014 (Issue 1-2014)

Due Process Requires An Opportunity To Confront Adverse Evidence And Cross-examine Adverse Witnesses When Facts Are Contested.

Business Communications, Inc. (BCI) was awarded contracts to install cable in Arkansas School districts under the American Recovery and Reinvestment Act (ARRA).  Mueller, who worked for BCI on these projects, filed a complaint with the Department of Education (DOE) alleging that BCI had terminated his employment after he complained about not being paid ”Prevailing Wages” as required by the ARRA.

The DOE conducted a six-month investigation into his claims about not being paid prevailing wages on ARRA projects and determined that his complaint to the DOE was a contributing factor to his termination of employment.  The DOE investigatory report relied heavily on statements made by Mueller and other witnesses and often rested its conclusion on conflicting witness accounts and additionally found the testimony of Mueller’s supervisors regarding the reason he was fired to be unpersuasive and not credible.  The DOE investigation specifically found that the statement of Mueller’s supervisors that his attitude had changed after he was promoted to lead technician was unpersuasive and not credible.  Therefore, the DOE investigation concluded that an impermissible reprisal had occurred and that BCI had not established by clear and convincing evidence that Mueller would have been terminated regardless of his complaints about not being paid prevailing wages.  The DOE report recommended to the Secretary of Education (Secretary) that Mueller’s complaint be sustained.

The Secretary reviewed the report by the DOE and ordered that Mueller be reinstated with back pay.  BCI petitioned the 8th Circuit for review of the Secretary’s order arguing that it was deprived of its fifth amendment due process rights because it was never afforded a hearing either before or after the Secretary’s decision.  The procedure for review of the agency decision by statute provided that any person ”adversely affected or aggrieved” by an agency may obtain direct review of the order by appealing directly to the United States Court of Appeals for the circuit in which the reprisal is alleged to have occurred under the Administrative Procedure Act.  BCI appealed the Secretary’s order to the Eighth Circuit arguing that it was deprived of due process of law under the Fifth Amendment because it was forced to reinstate Mueller with back pay without the benefit of either a hearing before of after the Secretary’s decision.

The Eighth Circuit held that when important decisions turn on questions of fact and the process does not provide an opportunity to confront adverse evidence and cross-examine adverse witnesses there is a denial of due process.  This is particularly true when a decision depends on the credibility of individual witness testimony since cross-examination helps minimize the risk of an erroneous declaration.  At some point in the process there must be an opportunity to confront adverse evidence and cross-examine witnesses in order to satisfy the demands of due process.  Since the procedures did not provide the right to confront adverse evidence or cross-examine adverse witnesses either before or after the Secretary made the decision BCI was deprived of due process.  Business Communications, Inc. v.  U. S. Department of Education., (Eighth Circuit., 12–3081, 12/02/13)

State Renewable Energy Law Does Not Preempt Local Ordinances And Section 89.100 Applies Only To Appeals From The Board Of Adjustment.

The Board of Aldermen for Clarkson Valley, Missouri (City), denied the application of James and Francis Babb’s (Babb’s) for a special use permit (SUP) to install a solar energy system (system) at the Babb’s home.  The Babb’s along with Missouri Solar Energy Industries Association filed suit alleging that City’s solar energy ordinance was preempted by the state regulations on renewal energy.  The City contended that the ordinance was regulatory and not prohibitive.  The City also contended that the appeal of Babb from the decision by the City denying the SUP was not timely under Section 89.110 RSMo. because it was filed beyond the 30-day time limit for appeals under Section 89.110 from board of adjustment decisions.  The trial court ruled against the City and the City appealed to the Western District.

With respect to the alleged conflict with state law and preemption by the state the Western District held that the City ordinance did not conflict with state law because there was no express prohibition in the state law preempting local laws nor did any provision of the City code conflict with state law prohibiting what state law permitted or vice versa.  The City code merely supplemented the state regulations with respect to renewable energy.  In addition, the state regulations specifically require that a customer generator of renewable energy is required to meet all applicable safety, performance, connection, reliability standards in city codes.

With respect to a claim by the City that the appeal from the decision of the City was not timely the Western District held that the appeal was not subject to the 30-day time limit in section 89.110 RSMo. because it was not an appeal from a decision of the board of adjustment. Despite opinions to the contrary from other courts the opinion of the Western District is that 89.110 applies only to appeals from the board of adjustment. The appeal filed by Babb was pursuant to section 536.150 of the Administrative Procedures Act and therefore was timely.  Babb v. Missouri Public Service Commission, 2013 WL 617064 (W. D. 2013) (WD76384, 11/26/13)

Comment Howard: This case generated a lot of interest on the MMAA List Serve ranging from questions/comments as to whether or not it would have been more advantageous for the city to provide that the special use permit be handled by the board of adjustment instead of the board of aldermen.  Ted Elo chimed in noting that he prevailed at the circuit court level with respect to solar panel questions and that there are specific defenses available under Section 89.110 that are not available under Chapter 536.  Duke McDonald also added that under 536.150 the appeal would be de novo basically requiring you to start from scratch.

The other issue getting several comments was whether or not appeals from section 89.110 were limited to board of adjustment cases calling into question whether the Western District properly decided this case.  If you have a case like this I would direct you to the excellent comments made by Kevin O’Keefe and John Mulligan on these issues for your review (even though they had a different take).  I would urge caution in making the process too complicated, less we raise the ire of the legislature, since it seems this is just a code issue to get a permit for solar panels.  The issues raised by this case might be a good topic for the MMAA Summer program.

Kansas City Ordinance Limiting The Ability Of New Taxicab Providers To Enter Market Is Upheld

A permit is required for a taxicab to pick up passengers in Kansas City, Missouri.  In 2005, with 554 outstanding permits, the City enacted Section 76-73, which decreases the number of permits by attrition.  Existing permits may be renewed but additional permits are not issued until the number of permits drops below 500. (The number of permits has apparently dropped by seven to 547 between 2005 and the present.)  The ordinance also establishes a minimum permit requirement for new applicants, who must apply for a bundle of at least ten permits.

Gammachu Mixicha, Taddessee Erbetto, and Kansas City Taxi Cab Drivers Association, LLC (“Cab Drivers”) sued the city to overturn the ordinance.  The Cab Drivers argued that the provisions entirely exclude entrants from the taxicab market.  When the number of permits reaches 499, existing permit holders may apply for an additional permit but new applicants must wait until the number of permits reaches 490, because they must apply for ten permits at a time.  The Cab Drivers contend that this disparate treatment of new applicants versus existing firms is not rationally related to a legitimate government interest.  The City filed a motion for summary judgment, which was sustained and the Cab Drivers appealed to the 8th Circuit alleging a violation of their constitutional rights under the equal protection and due process clauses of the United States Constitution.

The City’s stated purpose for the ordinance was that there was insufficient demand for taxicabs, therefore it instituted a cap of 500 but allowed existing cab companies to have a significant advantage in securing permits when the numbers dropped below 500 thereby depriving others from entering into the market.  The district court’s decision identified other purposes such as creating incentives to invest in infrastructure that increases quality in the taxicab industry, and avoiding low-quality single cab companies that offer-limited services. While the court recognized that these provisions favored existing firms they are constitutionally permissible under the rationale basis test so long as they do not constitute invidious discrimination “wholly arbitrary.” Kansas City Taxicab Drivers Association, LLC v. City of Kansas City, Missouri, (8th Cir. No. 13 –1343, 12/19/13)

The Good, The Bad, The Ugly, And The Red Light Cameras 

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Status Update

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Kimble et al v. Jefferson City

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