Title: Marshall's Towing v. Department of State Police

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED:  July 21, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
MARSHALL'S TOWING
and MARSHALL JENNINGS,
Petitioners on Review,
v.
DEPARTMENT OF STATE POLICE,
Respondent on Review.
(DSP 3011, 3018, 3058; CA A122558; SC S51803)
En Banc
On review from the Court of Appeals.*
Argued and submitted June 21, 2005.
Charles F. Lee, of Lee & Kaser, P.C., Roseburg, argued the cause and filed the brief for petitioners on review.
Erin C. Lagesen, Assistant Attorney General, Salem, argued
the cause and filed the brief for respondent on review.  With her on the brief were Hardy Myers, Attorney General, and Mary H.
Williams, Solicitor General.
GILLETTE, J.
The decision of the Court of Appeals is reversed.  The order
of the Oregon Department of State Police is reversed.
*Judicial Review of order of Department of State Police, 194 Or App 726, 99 P3d 1237 (2004).
GILLETTE, J.
In this administrative law case, petitioners Marshall's
Towing and Marshall Jennings (1) seek review of a Court of
Appeals decision that affirmed without opinion a final order of
the Department of State Police (OSP).  That final order debarred
Marshall's Towing from participating for ten years in a pool of
tow truck operators who share in the towing business generated by
certain OSP activity.  Petitioners assert that the OSP final
order incorrectly construes and applies certain OSP
administrative rules and that, when those rules are correctly
construed and applied, Marshall's Towing has not violated any of
them.  For the reasons that follow, we agree with petitioners. 
We therefore reverse the contrary decision of the Court of
Appeals.
Petitioner Marshall Jennings operates petitioner
Marshall's Towing, a tow truck business.  Marshall's Towing has
locations in Roseburg, Sutherlin, and Winston, and it competes
with other tow truck companies in those areas.  A desirable part
of a tow truck company's business is "non-preference towing," a
process in which OSP calls a company from a rotating list of
towing companies to tow a vehicle when the vehicle's driver or
owner does not choose a particular company.  Removal generally
involves abandoned vehicles, vehicles involved in accidents, or
vehicles involved in crimes.
Marshall's Towing applied for and received appointments
for all three business locations to the non-preference rotation
tow list maintained by OSP.  The application forms, signed by
Marshall Jennings on behalf of Marshall's Towing, indicated that
each of the locations, including the Winston location, complied
with all applicable statutes and administrative rules.
Marshall's Towing leases space for the Winston location
from the owners of a gas station, Herrington Oil.  Marshall's
Towing used two service bays that are attached to the gas station
office.  Outside the building, a fenced-off area displayed a
"Marshall's Towing" sign and the towing company telephone number. 
Employees of Herrington Oil had access to the service bays.  At
one point, an employee of Herrington Oil also had a key to the
fenced area, and used the key on at least one occasion to admit a
police officer who wished to inspect a vehicle.
In May 2001, an OSP dispatcher contacted the Marshall's
Towing dispatcher to arrange for three tow trucks to "clear" a
three-vehicle accident that had occurred in the Winston tow zone. 
Marshall's Towing responded with two tow trucks registered in the
Winston zone, but it also brought in a third truck from Roseburg. 
There is a dispute in the record as to whether OSP authorized use
of the out-of-zone truck, but the evidence was such that a fact-finder could conclude (as the hearings officer in this case did)
that OSP had not authorized use of the Roseburg truck
specifically.
OSP initiated the present case by sending petitioners a
notice of intent to revoke Marshall's Towing's three letters of
appointment.  The notice alleged that petitioners were guilty of
11 different violations of the rules and statutes relating to the
towing business.  Marshall's Towing denied those allegations, and
the matter proceeded to a contested case hearing.  At the close
of the hearing, the hearings officer issued a proposed order that
found that OSP had established three of the allegations, but not
the remaining eight.  Specifically, the hearings officer found:
(1) that Marshall's Towing violated OAR 257-050-0140(20) (2)
because Marshall's Towing did not have exclusive control over the
storage area used at the Winston location; (2) that Marshall's
Towing violated OAR 257-050-0100(2) (3) by responding to an
accident with a tow truck that was not authorized to operate in
the zone in which the accident occurred; and (3) that Marshall's
Towing violated ORS 162.085 (4) by certifying on the
application for the Winston location that Marshall's Towing had
exclusive access to the premises.  Marshall's Towing filed
exceptions to the hearing officer's proposed order.  OSP rejected
the exceptions and adopted and incorporated the proposed order as
its final order.  By that final order, OSP revoked Marshall's
Towing's three letters of appointment for a period of ten years.
Petitioners sought judicial review of the OSP final
order in the Court of Appeals, which affirmed the order without
opinion.  Marshall's Towing v. Department of State Police, 194 Or
App 726, 99 P3d 1237 (2004).  We allowed petitioners' petition
for review. (5)
Because the Court of Appeals did not issue an opinion,
we are uncertain as to that court's rationale for affirming OSP's
final order.  The parties treat the case as presenting a conflict
between the approaches to agency rule-making found in two
decisions of this court, Megdal v. Board of Dental Examiners, 288
Or 293, 605 P2d 273 (1980), and Don't Waste Oregon Com. v. Energy
Facility Siting, 320 Or 132, 881 P2d 119 (1994).  Even if such a
conflict exists -- an issue that we do not decide -- we believe
that this case can (and should) be resolved along conventional
lines:  Could OSP find that Marshall's Towing's various
activities violate applicable rules and statutes as OSP had
alleged?  We proceed to that inquiry.
We begin with a summary of the law relating to non-preference towing, which we believe provides useful context for
the discussion that follows. (6)
"Non-preference" towing refers to situations in which
police call a tow truck to tow a vehicle, but the driver or other
person in charge of the vehicle does not or cannot specify the
towing company that he or she would prefer to use.  The
legislature has delegated to OSP, and, more specifically, to the
Superintendent of State Police, the power to adopt rules
governing non-preference towing.  ORS 181.440 provides:
"The Superintendent of State Police may make rules
governing the eligibility of towing businesses to be
placed and remain on any list of such businesses used
by the Department of State Police when it requests
towing services on behalf of any person."
Pursuant to that authorization, the Superintendent has
adopted OAR chapter 257, division 50.  OAR 257-050-0040.  Under
those rules, OSP has created a "non-preference list," which the
rules define as 
"[t]he list of authorized tow operators maintained at
the Oregon State Police headquarters that is used to
dispatch the tow operators on an equitable basis when
no choice or preference to a towing company is stated
by the vehicle owner, operator, or other person
responsible for the vehicle."
OAR 257-050-0050(13).
To be placed on the non-preference list, a tow operator
must apply for a letter of appointment (sometimes called in the
rules a "certificate" of appointment) using an application form
provided by OSP.  OAR 257-050-0060; 257-050-0070.  A tow operator
may obtain a letter of appointment for a particular place of
business only if "[t]he applicant has an established place of
business at the address shown."  OAR 257-050-0070(1). 
Additionally, a tow operator that maintains multiple places of
business must obtain a separate letter of appointment for each
place of business.  OAR 257.050-0100(6).  Moreover, "[a] letter
of appointment will be valid only in the zone or zones assigned
by the station commander."  OAR 257-050-0100(2).
A towing business seeking to receive or renew a letter
of appointment for a particular place of business must
demonstrate that the place of business, the business records, and
the tow vehicles operating from that place of business meet the
standards outlined in the administrative rules.  OAR 257-050-0090.  Specifically,
"[w]ithin 30 days of the receipt of a request for an
application for a letter of appointment, the Patrol
Services Division [of OSP] shall send an application
packet to include a current copy of these OAR's, and
all forms related to self certification, inspection and
certification of equipment and other related
information required by these OAR's.  The applicant
shall self certify under penalty of suspension and/or
revocation from the non-preference tow rotation that
they (their towing business, vehicles and operators)
meet the minimum requirements as required by these
OAR's."
Id.
Under the rules, a participating tow truck operator
must conduct the self-certification/inspection of the business,
associated trucks, and employees at least yearly.  OAR 257-050-0090(1).  A place of business cannot receive a letter of
appointment unless it has at least one tow truck.  OAR 257-050-0100(9).  Additionally, a place of business operating under a
letter of appointment must notify OSP whenever it acquires or
loses a tow truck.  OAR 257-050-0090(6) and (7).  A place of
business also must notify OSP if one of its tow trucks is not
working.  OAR 257-050-0090(2) and (3).
OAR 257-050-0140 establishes standards governing the
operation of places of business and maintenance of business
records.  As relevant to this judicial review proceeding, OAR
257-050-0140(20) provides that "[a]ll storage areas shall be
under the operator's exclusive control and cannot be shared with
other tow companies."  Finally, OAR 257-050-0050(24) defines
"vehicle storage area" as:
"[T]he approved yard or enclosed building where stored
vehicles are kept.  The storage area and fencing will
comply with requirements as established by this rule
and all local zoning rules and regulations.  This
storage area will be under the exclusive access and
control of the individual towing service and be
separate for each place of business."
We turn from the foregoing general description of the
statutory and administrative rule framework regulating the non-preference towing business to the specifics of Marshall's
Towing's alleged violations of that regime.  Two of the three
alleged violations involve the same issue:  namely, whether
Marshall's Towing maintained "exclusive" control over the Winston
facility, as petitioners had asserted in the application.  One of
the allegations was that Marshall's Towing did not, in fact, have
such exclusive control.  The second was that Marshall's Towing
falsely asserted in the application for approval of the Winston
location that Marshall's Towing had such control over the Winston
premises.  Obviously, the correctness of the latter allegation
depends on the correctness of the former:  If Marshall's Towing
was in exclusive control of the Winston premises, then it cannot
have been guilty of falsely asserting that such was the
case. (7)
As noted, the requirement of exclusive control of
business premises is found in OAR 257-050-0140(20), which
provides:
"All storage areas [of a tow truck operator
approved to participate in non-preference towing] shall
be under the operator's exclusive control and cannot be
shared with other tow companies."
Petitioners assert, in essence, that a reasonable person reading
the foregoing rule would not understand that the rule prohibited
the conduct, which now serves as the factual basis for the
agency's finding of a violation. (8)  OSP responds that (1) the
agency reads the "exclusive control" requirement rule to forbid
allowing someone other than an operator's employee to have a key
to a storage area, (2) such a reading is "plausible," and
(3) because such a reading is plausible, our inquiry should be at
an end.  In so arguing, OSP relies on this court's rationale in
Don't Waste Oregon.
This court's task in interpreting an administrative
rule is to "'ascertain the intent of the body that promulgated
[the rule].'"  SAIF v. Kurcin, 334 Or 399, 406, 50 P3d 1167
(2002) (citing Osborn v. PSRB, 325 Or 135, 145, 934 P2d 391
(1997)).  To carry out that task, we begin by examining the text
and context of the rule in question.  Id.  
The first thing that becomes clear from reading the
text of the rule is that its exclusivity provision applies only
to "storage areas."  The rules contain no separate definition of
"storage area."  Contextually, however, it is clear that the
reference in fact is more specifically to vehicle storage areas. 
OAR 257-050-0050(24) provides that a "vehicle storage area" is
"the approved yard or enclosed building where stored vehicles are
kept."  No other rule uses the term "storage area" in a contrary
sense.  Thus, the scope of the rule that Marshall's Towing
allegedly violated does not extend to offices or other parts of
business premises not used for storing vehicles. (9)
Beyond that, however, the intended function of the rule
is something of a mystery.  As noted, the full text of the rule
states that "[a]ll storage areas shall be under the operator's
exclusive control and cannot be shared with other tow companies." 
(Emphasis added.)  Reading the words of the rule in pari materia,
the scope of the rule appears to be limited to the concern
identified by the emphasized part of the rule, i.e., a concern
that towing companies not share a common vehicle storage area. 
That would be the most natural and ordinary reading of this
specific rule, and would wholly eliminate the rationale offered
by OSP -- viz., that Herrington Oil personnel had a key to the
vehicle storage area at one time -- for finding that Marshall's
Towing violated it.
The foregoing discussion demonstrates the difficulty in
reading the rule as broadly as OSP reads it.  Moreover, OSP's
version of the meaning of the exclusivity requirement is
inherently illogical.  It is a verity, for example, that some
vehicle storage areas will be rented, not owned.  Yet, according
to OSP, an operator must be able to state categorically that no
one -- even including representatives of the landlord -- will,
under any circumstances, be allowed into the vehicle storage
area.  Just how a lessee legally could assure such a degree of
exclusivity escapes us, especially given the usual relationship
between landlord and tenant, and OSP offers no insight into the
problem.  Other plausible contingencies -- for example,
entrusting a key to a representative of the landlord, in case a
tow truck operator arrives at a storage area and cannot find his
key, or cases like the one described in this proceeding, in which
a representative of the landlord was in possession of a key and
was able to use it to assist a police investigation -- come to
mind, but cannot be accommodated by the OSP construction of the
rule.
In sum, we hold that OAR 257-050-0140(2) cannot be read
in the way that OSP reads it.  Even if we do not read the
exclusivity requirement in the most natural way, i.e., as a
requirement concerned only with sharing premises with other tow
truck operations, the words of the rule cannot sustain the
extensive scope that OSP claims for it.  It follows that
Marshall's Towing cannot have violated the rule, as we read it,
and that OSP's contrary finding cannot stand.  It further follows
that OSP's finding that Marshall's Towing violated the related
criminal statute also cannot stand.
This brings us to Marshall's Towing's alleged violation
of OAR 257-050-0100(2).  As noted, that rule provides:
"A letter of appointment will be valid only in the
zone or zones assigned by the station commander. 
Applications for additional letters of appointment in
other zones must be based on a complete and separate
business location capable of independent operation
within the additional zone."
As explained elsewhere, Marshall's Towing's alleged violation of
this rule arose out of its choice to send a tow truck ordinarily
assigned to or located at its place of business in another zone
to tow one of three vehicles disabled in the Winston operating
zone.
There is an obvious difficulty with OSP's application of
OAR 257-050-0100(2) to the conduct here:  The rule nowhere
purports to confine trucks (as opposed to operators) to a
particular zone.  Neither OAR 257-050-0100(2) nor, so far as our
review of sub-chapter 050 of OAR chapter 257 discloses, any other
rule denies an operator who is authorized to operate in several
zones the right to shift trucks from one zone to another.  As OAR
257-050-0100(10) makes clear, "The letter of appointment shall
state the zone [that] the businesses are authorized to operate
in."  (Emphasis added.)  However, there is no similar provision
indicating that the letter of appointment (or any other document)
shall state (and thereby legally limit) the zone in which tow
trucks belonging to the operator shall be permitted to
operate. (10)
Read interstitially, the OSP order (and some of the
testimony at the hearing) appears to assume that the non-preference regime includes a limit on the ability of an operator
to shift trucks from one operating zone to another, either as a
simple administrative choice or in response to a request for
towing services.  Moreover, OSP doubtless is correct that, in
some circumstances, the use of an out-of-zone truck might result
in an avoidable delay in reaching a vehicle that needs towing. 
However, the practice of limiting a truck to operating only in
the zone to which that truck is assigned, if such a practice
exists, never has found its way into the rules and, because it
has not, failure to abide by such a practice cannot serve as a
basis for suspending or revoking a letter of appointment.  OSP's
finding that Marshall's Towing was guilty of violating OAR 257-050-0100(2) thus cannot stand.
Under the foregoing analysis, OSP has failed to justify
legally any of the findings of violation at issue.  It follows
that the final order of OSP is contrary to law, and must be set
aside. ORS 183.482(8)(a)(A).
The decision of the Court of Appeals is reversed.  The
order of the Oregon Department of State Police is reversed.
1. The record and the parties often refer to Marshall
Jennings and Marshall's Towing as if those were different names
for a single entity.  Testimony, however, indicates that Marshall
Jennings is only part owner of Marshall's Towing.  Throughout the
opinion, we distinguish the two insofar as the ambiguous record
permits.
2. OAR 257-050-0140(20) provides: 
"All storage areas [of a tow truck operator
approved to participate in non-preference towing] shall
be under the operator's exclusive control and cannot be
shared with other tow companies."
3. OAR 257-050-0100(2) provides:
"A letter of appointment will be valid only in the
zone or zones assigned by the station commander. 
Applications for additional letters of appointment in
other zones must be based on a complete and separate
business location capable of independent operation
within the additional zone."
4. ORS 162.085(1) provides:
"A person commits the crime of unsworn
falsification if the person knowingly makes any false
written statement to a public servant in connection
with an application for any benefit."
Violation of ORS 162.085(1) is a Class B misdemeanor.  ORS
162.085(2).
5. We offer the following observations to assist (and
encourage) OSP in observing its own rules:
(1)  The "final order" of OSP is signed by an OSP lieutenant
who is described in the order as being the "Interim Director" of
OSP's Patrol Services Division.  We note in passing that we have
been unable to find any statutory authority for anyone except the
Superintendent to issue final orders of the Department of State
Police.  (In fact, there is no specific statutory authority even
for the Superintendent to issue such orders, but we think that it
necessarily must be implied.)
(2)  The foregoing concern notwithstanding, there is a
provision in OAR 257-050-0110(1) directing (and, by inference,
authorizing) the Patrol Services Division to suspend or revoke a
letter of appointment in certain specified circumstances.  The
question whether the Superintendent lawfully may delegate such
authority has not been raised by any party, but the lack of
statutory authority to that effect is a concern.  The concern is
made more palpable by the existence elsewhere (in ORS 183.325) of
specific statutory authority for persons such as the
Superintendent to delegate rule-making authority.
(3)  According to OSP's own rules, the decision of the
hearings officer is final.  No further review, either by the
Superintendent or by the person in charge of the Patrol Services
Division, is contemplated by the rules themselves.  OAR 257-050-0130 provides:
"The person aggrieved by the decision of the
Hearings Program officer denying, suspending, or
revoking a letter of appointment must make any further
appeal of such decision to the Oregon Court of
Appeals."
That is, the rules themselves appear to deny persons such as
petitioners any possibility of seeking a further administrative
remedy before invoking the jurisdiction of the Court of Appeals.
We offer the foregoing observations as a general admonition
(applicable to all administrative agencies, not just OSP) that
administrative rules, once made, must be followed, in order for
the public to have a reliable road map as to the actions that its
government claims to be entitled to take.
6. The following description of the legal context for
regulation of the non-preference towing business is derived in
the main from the able summary presented in the brief of OSP.
7. Indeed, this "doubling up" of violations, based on a
single fact, presents its own analytical difficulties:  Does the
fact that Marshall's Towing, at some time after receiving the
letter of appointment for the Winston location, allowed a
Herrington employee to have a key to the Winston premises
establish that any such person had such a key at the time that
petitioners made the application?  And, even if such a fact may
be inferred, may Marshall's Towing be punished both for that
circumstance and the fact that it was misstated?  In the hearings
officer's order, a similar "doubling up" of violations with
respect to other administrative rules was rejected as being
impermissible, but the hearings officer did not note the same
problem here.  We are not called upon in this case to resolve the
problem, both because petitioners did not raise it either before
OSP or the Court of Appeals, and also because we decide the case
on other grounds favorable to petitioners.
8. We say "in essence" because petitioners' argument is,
more generally, that a reasonable person in petitioners' position
would not have understood the rule as OSP now interprets it,
without some further and authoritative explication by the agency
of that interpretation.  We think, however, that the more
fundamental proposition -- that the rule cannot be read as the
agency reads it at all -- necessarily is subsumed in the argument
that petitioners present.
9. Such a reading is consistent with the wording of OAR
257-050-0040(16) and OAR 257-050-0070(2).  OAR 257-050-0040(16)
provides:
"'Place of Business' -- Means a building which the
registered tow truck operator occupies either
continuously or at regular times, where tow business
books and records are kept and tow business is
transacted in each assigned tow zone.  Businesses
operating on the same business lot shall maintain
individual and separate records, storage facilities,
and letters of appointment for operating authority."
(Emphasis added.)  OAR 257-050-0070(2) provides that the
application form for a letter of appointment to the non-preference towing list shall establish that the applicant's
"[p]lace of business has an office area that is accessible to the
public without entering the storage area."  (Emphasis added.)
10. There are, to be sure, several provisions relating to
the inspection of individual tow trucks, some of which provisions
also make reference to the non-preference tow list.  Thus, OAR
257-050-0090(2)(b) speaks of "remov[ing]" a tow truck that is
defective in some non-safety-related way "from the Oregon State
Police non-preference list."  Similarly, OAR 257-050-0090(3)(a)
directs that any tow truck that has safety-related defects "shall
be suspended from the use [sic] of the Department non-preference
list."  Related subsection (3)(b) permits a tow company to
"voluntarily remove the involved vehicle from the Oregon State
Police non-preference list."  Vehicles removed from the list may
be "reinstate[d]."  OAR 257-050-0090(4).  Operators are required
to notify OSP if a tow truck is sold, "so that the truck may be
dropped from the non-preference list."  OAR 257-050-0090(6). 
However, none of those sections (or any other that we have found
in division 050 of OAR chapter 257) confines trucks, as such, to
any particular zone.