NO. 92-610 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

VESTER A. WILSON, 11, 

and SUE E. WILSON, 

Plaintiffs and Respondents, 

-v - 

DEPARTMENT OF PUBLIC SERVICE 

REGULATION: and PUBLIC SERVICE 

COMMISSION OF THE STATE OF MONTANA, 

Defendants and Appellants. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Thomas C. Honzel, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Timothy N. Sweeney, Montana Public Service 

Commission, Helena, Montana 

For Respondent: 

Neil E. Ugrin, Gary M. Zadick, Ugrin, Alexander, 

Zadick & Slovak, Great Falls, Montana 

Filed: 

Submitted on Briefs: April 30, 1993 

Decided: nugust 26, 1993 
Justice James C. Nelson delivered the Opinion of the Court. 

This is an appeal from a Memorandum and Order of the First 

Judicial District granting, inter alia, Vester A. Wilson, I1 and 

Sue Wilson (Wilsons) immediate judicial review of action taken 

against them in a matter presently pending before the Public 

Service Commission (PSC). We affirm. 

We restate the issue on appeal as whether, under Section 2-4- 

701, MCA, the District Court properly granted immediate review of 

the agency's action in this case. 

The following facts are taken from the District Court's 

Memorandum and Order dated October 20, 1992, and, for purposes of 

this opinion, will be deemed controlling. 

The Wilsons, d/b/a Bitter Root Disposal hold a Class D Motor 

Carrier Certificate of Public Convenience and Necessity issued by 

the PSC (the certificate). Under the certificate, Wilsons are 

authorized to transport garbage and other materials defined in 5 

69-12-301(5), MCA, in the area of Hamilton, Montana. 

On April 17, 1992, the PSC issued a notice of complaint and 

order to show cause (the notice) to the Wilsons pursuant to 5 69- 

12-327, MCA, on the basis of three complaints of alleged 

intimidation and harassment of customers and competitors by the 

Wilsons in the operation of their business. The notice stated: 

A certificate of authority is granted by order of 

the Commission and is contingent upon carrier fitness to 

provide for hire motor carrier service to the public. 

"Carrier fitness" refers to a carrier's character, 

financial strength, and equipment base. Conduct of the 

type described in the complaints is inconsistent with a 

finding of carrier fitness and therefore in violation of 
the order granting the certificate of authority. 

On April 29, 1992, the Wilsons filed their answer to the 

notice and requested a hearing with full opportunity for discovery 

and contested case procedures. In their answer, the Wilsons 

asserted that the notice was beyond the scope of the PSC's 

authority and that the complaints did not relate to service or 

fitness under the provisions of Title 69. 

The PSC, by subsequent notice, scheduled the matter for public 

hearing in July 1992 and provided dates certain in June for 

requesting and responding to discovery. Wilsons moved to dismiss, 

timely requested discovery from the PSC and also moved for the 

appointment of an independent hearing examiner. 

Prior to the date set for responding to discovery, a staff 

attorney for the PSC advised the Wilsons by letter that, at a work 

session, the PSC denied their motion to dismiss, denied their 

request for an independent hearing examiner and denied their 

request for discovery, and, further, advised that the actions of 

the PSC would not become final until it issued an order or notice 

of Commission action. 

Shortly thereafter, Wilsons filed with the District Court 

their application for alternate writs including a writ of review of 

the PSC's jurisdiction in the case, a writ of mandamus to appoint 

an independent hearing examiner and a writ to compel discovery by 

the PSC. That same day the District Court issued an order staying 

the proceedings pending a hearing on the application. Subsequently, 

the Wilsons moved to amend their application to include a request 
for immediate review under 9 2-4-701, MCA. 

Later in June, at a hearing before the District Court to 

determine whether the court's order staying the proceedings should 

remain in effect, Wilsons and their counsel first learned from the 

PSC attorney that the proposed PSC witness list had been expanded 

by approximately 200 people who had been invited to offer testimony 

and to present evidence at the PSC hearing. 

After a hearing in August 1992, the District Court issued its 

Memorandum and Order granting the Wilsons' motion to amend their 

application to request immediate judicial review, denying their 

application for the appointment of an independent hearing examiner 

and remanding the matter to the PSC with directions that the agency 

either dismiss the proceeding or give the Wilsons notice of the 

alleged bases for revocation under § 69-12-327, MCA, of their 

certificate, that the PSC follow procedures which insure that the 

Wilsons receive due process and that the PSC respond to the 

discovery requests served by the Wilsons. This appeal followed. 

Section 2-4-701, MCA, provides: 

Immediate review of agency action. A preliminary, 

procedural, or intermediate agency action or ruling is 

immediately reviewable if review of the final agency 

decision would not provide an adequate remedy. 

While that provision is not included in the Model 

Administrative Procedures Act, the Compiler's Comments indicate 

that this section was reinserted into the Montana Administrative 

Procedures Act in 1971. 

The PSC argues that the District Court improperly granted 

immediate review in this case because the Wilsons failed to show 
that review of the final agency decision would not provide an 

adequate remedy. We disagree. 

The PSC's April 17, 1992 notice was issued pursuant to 5 69- 

12-327, MCA, which provides, in pertinent part: 

Revocation of certificate -- right of review. (1) If 

it appears that a certificate holder is violating or 

refusing to observe any of the commission's orders or 

rules or anv provision of Title 69. as amended, the 

commission may issue an order to the certificate holder 

to show cause why the certificate should not be 

revoked. ... (Emphasis added). 

While it is clear that the PSC has the authority to revoke a 

certificate of public convenience and necessity, it is equally 

clear that the revocation must be based upon the certificate 

holder's violation of or refusal to observe any of the 

"commission's orders or rules or any provision of Title 69, as 

amendedtt. 

Whether some order, rule or provision of Title 69 includes the 

concept of "carrier fitness," as argued by the FSC, and whether 

violation of that concept constitutes a "viola[tion] of or 

refus [all to observe . . .any provision of Title 69, as amended, tt was 

not finally decided by the District Court and is not the issue on 

this appeal. 

It is a well established principle of administrative law that 

before a reviewing court considers the question of an agency's 

jurisdiction, that sound judicial policy dictates that there be an 

exhaustion of administrative remedies, part and parcel of which 

requires that the agency be accorded an opportunity to determine 

initially whether it has jurisdiction. Marshall v. Burlington 
Northern, Inc. (9th Cir. 1979), 595 F.2d 511, 513; Marshall v. Able 

Contractors, Inc. (9th Cir. 1978), 573 F.2d 1055, 1057. 

The District Court followed that rule when it observed that 

there was a question of jurisdiction that would ultimately have to 

be decided by the court and that the Wilsons had challenged the 

authority of the PSC to proceed on the basis of the cited statute. 

The District Court's primary concern went to the failure of the PSC 

to articulate to the Wilsons exactly how their alleged misconduct 

related to the statutory basis for revocation. As the District 

Court stated in its Memorandum and Order, "[blecause the Commission 

has failed to point to any alleged violation of a statute or a 

Commission order or rule, the Court concludes that the notice fails 

to comply with the requirements of Section 69-12-327, MCA." 

Additionally, the District Court was concerned that the 

Wilsons requested in discovery and in various hearings that the PSC 

specify the Commission's orders or rules or provisions of Title 69 

which were alleged to have been violated, that the PSC had failed 

to respond to the Wilson's discovery requests, and that the agency 

had greatly expanded the service list well beyond that contained in 

the original notice to include an additional 200 people who were 

invited to testify. The latter was accomplished without notice to 

the Wilsons, who, a week before the scheduled hearing, did not know 

the witnesses against them or what such witnesses might say. 

In Billings Assoc. Plumbing, Etc. v. State Bd. (1979), 184 

Mont. 249, 253, 602 P.2d 597, 600, we stated that, "[tlhe right to 

carry on a lawful business is a property right; due process 
requires that it not be unreasonably or unnecessarily restricted," 

citing the U.S. Constitution, Amendment XIV, Section 1 and the 1972 

constitution of Montana, Article 11, Section 17. 

Inasmuch as the Wilsons may not carry on their business except 

under the authority of a certificate of public convenience and 

necessity issued by the PSC, it follows that if that agency intends 

to take action which might result in the Wilsons' loss of their 

certificate, and hence their right to do business, fundamental 

fairness and due process require that they at a minimum be given 

notice of the alleged bases for the possible revocation. Under the 

governing statute, notice by the PSC necessarily requires 

specification of the "commission's orders or rules or . . . 

provision[s] of Title 69, as amended . . .," that they are alleged 

to have violated or that they are alleged to have refused to 

observe. 

Furthermore, the Wilsons are entitled to procedural due 

process which includes, among otherthings, the abilityto discover 

information relevant to the case against them along with the 

identity of the witnesses who are expected to testify and the 

substance of the expected testimony. 

We hold that, under the facts and circumstances of this case, 

judicial review of the final agency decision is not an "adequate 

remedy" where the record on which the final decision is to be based 

contains no specification of the orders, rules or statutes which 

the Wilsons are alleged to have violated; where the Wilsons have 

been denied discovery; where the Wilsons, who are in jeopardy of 
losing a valuable property right, have not been afforded adequate, 

timely notice of the persons who will testify and of the nature of 

the evidence that will be presented in support of the possible 

agency action; and where, cumulatively, it appears that the agency 

has failed to afford the Wilsons fundamental fairness and due 

process. 

In so holding, we do not in any way diminish the statutory 

mandate of g 2-4-702, MCA, which requires exhaustion of 

administrative remedies and states the rule that judicial review 

will generally only be available to a person aggrieved by a final 

agency decision. Persons seeking immediate review of interlocutory 

administrative agency action or rulings under 3 2-4-701, MCA, 

continue to bear a heavy burden to demonstrate that judicial review 

of the final agency decision would not provide an adequate remedy. 

In this case, the District Court did not rule on the ultimate 

jurisdictional issue or on the merits of the PSC's notice to the 

Wilsons. Instead, the District Court remanded to the PSC under a 

narrowly drafted order requiring simply that in further proceedings 

on this matter before the PSC the Wilsons be afforded notice of the 

alleged bases for revocation of their certificate under the statute 

authorizing such revocation; that they have the opportunity for 

adequate discovery; and that the agency follow procedures that will 

insure due process. 

While not involving review of an interlocutory agency 

decision, in Smail v. Al's Sales, Inc. (1990), 245 Mont. 18, 21, 

797 P.2d 235, 237, we, nevertheless, required the District Court to 
remand the case to the agency for further proceedings rather than 

permitting the Court to exercise judicial review on the basis of an 

inadequate record and, thereby, substitute its judgment for that of 

the agency in violation of g 2-4-704, MCA. 

In the instant case, by remanding and requiring that the final 

agency decision be based upon an underlying proceeding grounded in 

due process, the District Court simply insured, to the extent 

possible, that any ultimate judicial review of the final agency 

decision will, in fact, be an "adequate remedy" instead of the 

meaningless exercise of reviewing an inadequate record formulated 

on the basis of unfair procedures. 

We affirm. 

We Concur: rcJustices 
Justice Karla M. Gray, dissenting. 

I respectfully dissent. My objection is a procedural, rather 

than a substantive, one. It relates, however, to the critical 

importance of maintaining our system of administrative law and the 

manner in which that system interrelates with the judicial system. 

My concern with the Court's decision here is that 5 2-4-701, 

MCA, permits immediate judicial review of an interlocutory agency 

action or ruling only under the specified condition that review of 

the final agency decision would not provide an adequate remedy. 

The importance of this statute in our system of administrative law 

cannot be overstated; thus, in my view, district courts must 

address applications for immediate judicial review with 

extraordinary care. To me, this means that the district courts 

must perform a particularized analysis of a party's entitlement to 

immediate judicial review under the facts of the case before it. 

In turn, such an analysis would provide this Court with a 

sufficient basis to review whether the district court's action in 

granting immediate judicial review pursuant to 5 2-4-701, MCA, was 

appropriate in a given case. 

The District Court's bare conclusion here that "[ilt is 

appropriate" to review the agency's action is insufficient. It 

provides the appealing party with nothing to argue from and, at the 

same time, provides this Court with an inadequate means of review. 

In affirming the District Court without requiring an analysis 

on this critical question, this Court undertakes to provide the 

initial analysis of whether immediate judicial review was 

available. Thus, we not only gut any requirement that the party 
seeking immediate review affirmatively establish entitlement to 

such review under 2-4-701, MCA, we also permit the district 

courts to take entirely too cavalier an approach to this important 

issue. 

I do not suggest that the District Court here did not have in 

mind the basis for its conclusion that immediate judicial review 

was appropriate; I suggest only that it is not possible either to 

know what that basis is or to properly perform this Court's review 

function. I would require in this important area, as we require in 

almost every conceivable situation, that the district courts both 

perform and provide an analysis in support of the conclusion that 

immediate judicial review is appropriate. I would remand this case 

to the District Court and direct it to do so. 

*. - \ + '---i c--_-J , 

..~, )" --.-/ 

Justice John Conway Harrison joins in the foregoing dissent of 

Justice Karla M. Gray. 
August 26, 1993 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the following 

named: 

TIMOTHY N. SWEENEY 

Montana Public Service Commission 

1701 Prospect Ave. 

Helena, MT 59620-2601 

Neil E. Ugrin 

Gary M. Zadick 

UGRIN, ALEXANDER, ZADICK & SLOVAK 

P.O. Box 1746 

Great Falls, MT 59403 

Charles H. Recht 

RECHT & RECHT 

P.O. Box 149 

Hamilton, MT 59840 

ED SMITH 

CLERK OF THE SUPREME COURT