Opinion ID: 709238
Heading Depth: 3
Heading Rank: 1

Heading: Pierce's Pecuniary Interest

Text: 32 Stivers has introduced evidence showing that Pierce had a pecuniary interest in ensuring that Stivers' license applications were denied. A short time before the licensing proceedings began, Stivers had entered into direct competition with Dick Pierce and Associates. Stivers asserts that Pierce's pecuniary interest in stifling competition rendered his participation in the licensing proceedings constitutionally objectionable. 33 Among the cases in which the appearance of bias is too high to be constitutionally tolerable are those in which the adjudicator has a direct and substantial pecuniary interest in the outcome of the case before him. Withrow, 421 U.S. at 47, 95 S.Ct. at 1464. In such cases, the adjudicator's participation constitutes a per se violation of due process--the appearance of partiality in itself renders the proceedings objectionable, without any showing that the adjudicator was actually biased. Aetna Life, 475 U.S. at 825, 106 S.Ct. at 1587; Utica Packing Co. v. Block, 781 F.2d 71, 77-78 (6th Cir.1986). 34 The Supreme Court has held that a state licensing tribunal violates due process when its members have a direct and substantial competitive interest in the outcome of the proceedings before them. Gibson, 411 U.S. at 578-79, 93 S.Ct. at 1697-98. In Gibson, the Court considered the disciplinary proceedings of an optometry licensing board. The plaintiffs subject to license revocation proceedings were optometrists employed by an optometry company. All the members of the licensing board, however, were self-employed optometrists. 411 U.S. at 571, 93 S.Ct. at 1694. The district court found that, if the optometry company were forced to shut down, the individual members of the Board, along with other private practitioners of optometry, would fall heir to this business. Id. Without requiring any showing that the board's decision was actually influenced by impermissible bias, the Court upheld the district court's conclusion that the board members' substantial pecuniary interest in denying licenses to competitors constituted a per se violation of the plaintiffs' right to due process. Id. at 579, 93 S.Ct. at 1698. 35 The Court's decision in Gibson did not invalidate all licensing boards that include industry representatives. After Gibson, the Court upheld a state statute requiring that a majority of optometry board members be drawn from an organization of professional optometrists. Friedman v. Rogers, 440 U.S. 1, 18, 99 S.Ct. 887, 898, 59 L.Ed.2d 100 (1979). More recently, the Court has made clear that due process is not violated by the participation of adjudicators who might conceivably have had a slight pecuniary interest in the outcome of the case before them. Aetna Life, 475 U.S. at 825, 106 S.Ct. at 1587 (1986). An adjudicator is, however, precluded from participating in decisions in which he has a direct, personal, substantial, pecuniary interest. 475 U.S. at 822, 106 S.Ct. at 1585. 36 The fact that Pierce and Stivers have in the past competed for a few specific contracts is not in itself sufficient to meet this standard. While under Stivers' management, Great Western outbid Pierce's company for the convention business at Bally's and other business totalling $55,000, the contracts constituted a relatively small portion of Dick Pierce and Associates' $5 million annual receipts. Nevertheless, there may be a genuine issue as to whether Pierce had a sufficient interest in the denial of Stivers' application to necessitate his recusal. Unlike most other license applicants before the Board, who sought to do business in the more populous Southern Nevada region, Stivers intended to enter into business in the Reno area, where he would operate in direct competition with Pierce. See Wilkerson v. Johnson, 699 F.2d 325, 328 (6th Cir.1983) (licensing board member's interest in preventing barber shop from opening next door to his own created unconstitutional risk of bias). There are other pertinent facts that do not appear in the record as developed thus far. We do not know, for example, how many similar businesses are currently licensed in the Reno area, what effect one more business is likely to have, or even much about the nature of the market or the particular qualifications or attributes that Stivers and Pierce may possess. Such facts may be critical in determining whether Pierce had a direct and substantial pecuniary interest that would constitute a per se due process violation. 37 There are undoubtedly cases in which the appearance of partiality arising from competitive interests is sufficiently strong to warrant recusal. See Gibson, 411 U.S. at 578-79, 93 S.Ct. at 1697-98. A lawyer in a one-lawyer town, for example, would probably have a direct and substantial pecuniary interest in the licensing of a competitor planning to hang a shingle across the street. On the other hand, it is unlikely that any attorney practicing in a city like Los Angeles would have a competitive interest sufficiently strong to require that he be disqualified from considering the licensing of an additional lawyer. 38 We note that any per se rule governing the appearance of partiality must take into account the fact that the system of industry representation on governing or licensing bodies is an accepted practice throughout the nation. As the Supreme Court has pointed out, the Due Process Clause imposes only broad limits ... on the exercise by the State of its authority to regulate its economic life, and particularly the conduct of its professions. Friedman, 440 U.S. at 18 n. 19, 99 S.Ct. at 898 n. 19. If members of a licensing board were disqualified whenever they have some competitive interest in the outcome of proceedings before them, practitioners in the field would as a practical matter be excluded from becoming members of such boards. 39 There are, of course, advantages to the involvement of industry representatives in licensing decisions. Private investigators, for example, can bring a particular practical understanding and perspective to the proceedings. It is presumably for this reason that the Board, by statute, must include a private investigator, a private patrolman, and a polygraphic examiner. See Nev.Rev.Statute Sec. 648.020(1). Were we to hold Pierce's participation impermissible, based solely on the fact that there may on occasion be some competition for clients, we would call into question the composition not only of the Board involved in the case before us but many other boards throughout the circuit that include industry representatives among their membership. That we do not wish to do. 40 Without more facts, it does not appear that Pierce's economic interest is such as to warrant a per se disqualification. Upon remand, however, Stivers is free to introduce evidence tending to show that Pierce's pecuniary interest is in fact sufficient to warrant application of the per se rule. On this appeal, we consider the evidence concerning Pierce's competitive interest for a different purpose. We consider it in connection with Stivers' claim that Pierce was actually biased against him. It is that claim which we now examine.