Opinion ID: 2051750
Heading Depth: 2
Heading Rank: 2

Heading: Whether a contested case hearing is required by the due process clause

Text: Petitioners argue that even if a contested case hearing is not required by the DCAPA, it is constitutionally compelled because they enjoy a property and liberty interest in their respective charters. If the School Reform Act provides for less procedural safeguards, they argue, it must be deemed unconstitutional. The Board responds that due process does not require a contested case hearing, and that the School Reform Act's provision for an informal hearing is constitutionally adequate. The due process clause provides that [n]o person shall be ... deprived of life, liberty, or property, without due process of law. U.S. CONST. amend. V. The procedural due process guarantee imposes procedural requirements on the government before it deprives individuals of protected interests. Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Although protected by the Constitution, such interests are not created by it. Board of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Instead, property and liberty interests are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state lawrules or understandings that secure certain benefits and that support claims of entitlement to those benefits. Id. at 577, 92 S.Ct. 2701. When protected interests are implicated, the Constitution requires notice and opportunity for hearing appropriate to the nature of the case. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985); Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971); Bell v. Burson, 402 U.S. 535, 542, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971). Thus, in order to determine whether a contested case hearing is constitutionally mandated before the government revokes a charter, we must conduct a two-part inquiry. Ingraham v. Wright, 430 U.S. 651, 672, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977); see also District of Columbia v. Jones, 442 A.2d 512, 516-17 (D.C.1982). First, we must decide whether the asserted individual interests are encompassed within the [Fifth Amendment's]... protection of `life, liberty, and property.' Id. Second, if protected interests are at issue, we must then determine what procedures are required to satisfy due process. Id.
World and Milburn contend that they enjoy property and liberty interests in their respective charters. At oral arguments, the Board conceded that the public charter schools have a property interest in their charters. In light of the Board's concession that the due process clause is implicated, we now turn to consider whether due process requires a contested case hearing.
In order to satisfy constitutional due process requirements, the hearing must take place at a meaningful time and in a meaningful manner. Goldberg v. Kelly, 397 U.S. 254, 267, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) (citations omitted). These requirements have been interpreted to mean that a hearing should take place prior to the deprivation of the protectable interest, [9] Fuentes, supra note 9, 407 U.S. at 82, 92 S.Ct. 1983, and that the right to appear and argue against the deprivation should be afforded. See id. at 81, 92 S.Ct. 1983 (when a person has an opportunity to speak up in his own defense, and when the State must listen to what he [or she] has to say, erroneous deprivations of liberty and property may be avoided); see also Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 16, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978) ([A] hearing in its very essence demands that he [or she] who is entitled to it shall have the right to support his [or her] allegations by argument however brief, and, if need be, by proof, however informal) (citations omitted). [10] The Supreme Court has stressed the flexibility of the procedural due process requirement. See Mathews, supra, 424 U.S. at 334, 96 S.Ct. 893 ([d]ue process, unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place, and circumstances, but rather it is flexible and calls for such procedural protections as the particular situation demands); see also Boddie, supra, 401 U.S. at 378, 91 S.Ct. 780 (The formality and procedural requisites for the hearing can vary, depending upon the importance of the interests involved and the nature of the subsequent proceedings). Thus, in its cases, the Supreme Court has avoided specifying precise requirements for satisfying due process since [t]he alternative methods of compliance are several... [and][t]he area of choice is wide. Bell, supra, 402 U.S. at 542-43, 91 S.Ct. 1586; see also Fuentes, supra note 9, 407 U.S. at 96-97, 92 S.Ct. 1983 (The nature and form of ... prior hearings ... are legitimately open to many potential variations and are a subject, at this point, for legislationnot adjudication). The hearing may be formal or informal, [11] Fuentes, supra note at 9, 407 U.S. at 90, 92 S.Ct. 1983, and the pretermination hearing need not be elaborate and, generally, something less than a full evidentiary hearing is sufficient prior to adverse administrative action. Cleveland Bd. of Educ., supra, 470 U.S. at 545, 105 S.Ct. 1487 (internal citations and quotations omitted). Moreover, the Court noted that the ordinary principle established in our decisions [is] that something less than an evidentiary hearing is sufficient prior to adverse administrative action. Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893. A determination as to whether a contested case hearing is constitutionally required before the school charters are revoked requires analysis of the governmental and private interests affected. See id. at 334, 96 S.Ct. 893. Determining what process is due in a particular situation involves balancing three factors, which reflect the competing interests at issue: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Id. at 335, 96 S.Ct. 893. It is the charter schools' burden to persuade us to depart from `the ordinary principle' established by [Supreme Court] decisions, that something less than a [trial-type] hearing is constitutionally required. Donnelly Assocs., supra, 520 A.2d at 279 (quoting Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893). Applying the Mathews balancing test, the charter schools argue that a trial-type contested case hearing is constitutionally mandated since the Board's procedures will not provide procedural safeguards required by the Fifth Amendment such as the right to call and cross-examine witnesses and a final written decision that includes findings of facts and conclusions of law. The charter schools argue that only a contested case hearing will adequately safeguard their private interests in retaining their charters, and the Board's procedures will result in a high risk of erroneous deprivation which is not offset by the government's interest in a less burdensome procedure. In opposition, the Board argues that petitioners' private interests are outweighed by the public interest in an educational system that meets the needs of our children and a government that is not burdened by a requirement that full-blown hearings be held in such situations. Furthermore, the Board insists that the risk of erroneous deprivation of the schools' charters is minimized by the statutorily provided procedures and the procedures devised by the Board to govern the informal hearing. In applying the Mathews balancing test, we conclude that due process does not require that the Board conduct a contested case hearing before deciding to revoke a public school charter.
In determining the nature of the loss, we must consider the importance of the private interest and the length or finality of the deprivation. Logan, supra note 9, 455 U.S. at 434, 102 S.Ct. 1148. The Supreme Court has recognized that government action can have a significant effect on a business, particularly as here when such action effectively puts the charter schools out of business by depriving them of their charters. See Old Dominion Dairy Prods. v. Secretary of Defense, 203 U.S.App. D.C. 371, 381, 631 F.2d 953, 963 (1980). The schools maintain that they have made a substantial investment of time and energy establishing their respective schools. In analyzing their private interests in retaining their charters, the schools also include the deprivation to the students and their parents, as well as to the staff and teachers who will be losing their livelihoods. The Board acknowledges that the charter schools have a significant private interest in retaining their charters.
The Mathews Court indicated that the relevant inquiry when considering the risk of erroneous deprivation should involve a determination as to the fairness and reliability of the existing pretermination procedures, and the probable value, if any, of additional procedural safeguards. Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893. Thus, the second Mathews factor demands that we consider the risk that petitioners' charters will be erroneously revoked as a consequence of the procedures provided by the statute and the Board, as well as the probable value of additional procedures that petitioners argue are constitutionally mandated. We conclude that the statutory procedures and those adopted by the Board for these charter revocation proceedings are sufficiently fair and reliable to pass constitutional muster under the Mathews balancing test. The School Reform Act provides charter schools facing a proposed revocation with several procedural protections, including written notice of the right to an informal hearing, and that such notice must also state the reasons for the proposed revocation. D.C.Code § 38-1802.13(c)(1). With respect to the request for a hearing, the Board shall provide reasonable notice of the date and time, as well as the procedures to be followed at the hearing. Id. at § 38-1802.13(c)(3)(A). If the Board decides to revoke the charter after the informal hearing, it must state in its decision the reasons for the revocation, and the school has the right to appeal the Board's decision to the Superior Court. Id. at § 38-1802.13(c)(4) and (6). In addition, the procedures established by the Board for the conduct of the informal hearing provided for thirty minutes to present testimony, including an opening statement; the submission of testimony in written form; one hour of questions and answers; and written responses to the list of reasons forming the basis for the revocation decision. Petitioners were apprised of the Board's informal procedures in advance of the informal hearing. See Jones, supra, 442 A.2d at 522 (the notice requirement of procedural due process requires that petitioner should be informed prior to the hearing concerning the manner in which [it] would be conducted). Our review of the nature of the Board's inquiry during revocation proceedings also supports the conclusion that additional procedural safeguards are not constitutionally required. See Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893 (Central to the evaluation of any administrative process is the nature of the relevant inquiry). The Board's proposed revocation of the Milburn and World charters is based on the two schools' alleged violations of applicable laws and their charters by engaging in fiscal mismanagement and failing to comply with statutory obligations requiring the submission of data and documentation concerning various aspects of the charter schools' operations and programming. Thus, the informal hearing will be driven by an inquiry as to whether the charter schools complied with these obligations. Such a determination requires the Board to undertake a sharply focused and easily documented decision. See Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893. This is certainly not a situation in which a wide variety of information may be deemed relevant, or issues of witness credibility and veracity are critical to the decisionmaking process. See id. at 343-44, 96 S.Ct. 893. Rather, the inquiry is driven by whether or not the charter schools complied with statutory requirements, an inquiry which can, and indeed, must be answered primarily with documentary evidence. [12] Even if we allow, as the Mathews Court did, that credibility might be an issue in reports prepared by specialists, such exceptional circumstances should not drive our analysis since procedural due process rules are shaped by the risk of error inherent in the truthfinding process as applied to the generality of cases, not the rare exceptions. Id. at 344, 96 S.Ct. 893. Moreover, where the information required by the decisionmaker is amenable to effective written presentation, the value of an evidentiary hearing ... to an accurate presentation of those factors to the decisionmaker does not appear substantial. Id. at 345 n. 28, 96 S.Ct. 893. In addition, an explanation from the Board as to the information relied upon in making its decision and access to such information provides further procedural safeguards against erroneous deprivations. See id. at 345-46, 96 S.Ct. 893. As a consequence, public charter schools facing revocation proceedings will be in a position to provide the agency with additional evidence or arguments to refute the agency's determination and to `mold' their arguments to respond to the precise issues which the decisionmaker regards as crucial. See id. at 346, 96 S.Ct. 893. Here, the record reflects that Milburn received a copy of the monitoring report at the August 6, 2001 Board meeting, and that World received a copy of the draft report of the monitors' findings with respect to its school on July 2, 2001. The August 8, 2001 letter, which apprised the charter schools that revocation proceedings had been initiated, specifically referred to the respective reports as the basis for the proposed revocation decisions and listed the findings that the Board relied upon in reaching its decision. Thus, both schools were well informed as to the basis for the revocation decisions and were provided with an opportunity to address these specific findings through both oral and written testimony and written submissions during the informal hearing. Petitioners argue that the procedures provided by the School Reform Act and the Board are inadequate because they do not include the right to call witnesses and the right to cross-examination found in contested case proceedings. However, in determining whether the addition of a right to call and cross-examine witnesses could reduce the risk of an erroneous [Board] decision, we must examine the nature of the issues involved in a charter revocation. See Donnelly Assocs., supra, 520 A.2d at 283; see also Mathews, supra, 424 U.S. at 343, 96 S.Ct. 893 (Central to the evaluation of any administrative process is the nature of the relevant inquiry). Moreover, this court has recognized that the right to cross-examination in an administrative proceeding is among those rights considered less fundamental than other procedural rights and therefore that the decision whether to allow it should be left to the sound discretion of the officials authorized to issue regulations on the subject. Donnelly Assocs., supra, 520 A.2d at 285 (quoting Jones, supra, 442 A.2d at 523 internal quotations omitted). In arriving at the decision to revoke a charter within five years after it was conferred, the Board must find that the charter school has [c]ommitted a violation of applicable law or a material violation of the conditions, terms, standards, or procedures set forth in the charter, including violations relating to the education of children with disabilities; or that the school (1) [ha]s engaged in a pattern of nonadherence to generally accepted accounting principles; (2)[h]as engaged in a pattern of fiscal mismanagement; or (3)[i]s no longer economically viable. D.C.Code § 38-1802.13(a) and (b). It appears to us that the Board's inquiry during revocation proceedings as indicated by the statutory guidelines will ordinarily involve issues of fact which will not be elucidated by calling witnesses and conducting cross-examination because witness reliability is rarely at issue during this type of proceeding. See Donnelly Assocs., supra, 520 A.2d at 283. Rather, the overwhelming majority of factual issues will ordinarily be addressed by consulting the documentation that the charter schools are statutorily required to provide, as well as the oral and written testimony and written responses that are provided for in the Board's procedures, not by testing truth-telling desire and capacity. Id. Of course, when the Board alleges that the charter schools have failed to provide required documentation or that the documentation was inadequate, the charter schools will have an opportunity to show that adequate documentation was in fact provided. The decision as to whether to finally revoke a school's charter within the first five years will be driven by the failure or diligence of the charter school to document or effectuate its compliance with the School Reform Act and its charter, and we fail to see, at this point, what the right to cross-examination and other requested procedures would significantly add to the quality of decisionmaking. For example, the Board's conclusion that Milburn had engaged in fiscal mismanagement was based on a finding by the monitors that the charter school consistently failed to provide financial audits on a timely basis. Fiscal mismanagement was also found to be reflected in the chronic lack of basic school supplies and unaddressed maintenance problems at the school. In the event the Milburn representatives take issue with the accuracy of the monitoring report's findings as to what was or was not submitted to the Board, what school materials were available to students, or the conditions at the school facility, the charter school will have an opportunity to address their position in both oral and written testimony, during a question and answer period with the Board, and in written responses to the specific violations. Thus, cross-examination is unlikely to add to the opportunities already provided to the charter schools to ensure that they are given a meaningful opportunity to present their case. See Mathews, supra, 424 U.S. at 349, 96 S.Ct. 893. The schools also argue that they should have the right to call individual members of the monitoring teams and the Board members as witnesses regarding the grounds for the revocation. We find such an approach perplexing. A more suitable means of refuting the various purported errors made by the monitors and ultimately relied upon by the Board would be to furnish the Board with documentation indicating that the schools had in fact complied with their statutory duty to furnish financial and other data. In addition, the charter schools take issue with the Board procedure allowing them only thirty minutes to present oral testimony. [13] However, we do not see why that time allotment is so unreasonable so as to preclude our deference to the Board's decision as to which procedures are appropriate. See Mathews, supra, 424 U.S. at 349, 96 S.Ct. 893 (In assessing what process is due in this case, substantial weight must be given to the good-faith judgments of the individuals charged by Congress with the administration of [the agency] that the procedures they have provided assure fair consideration). In addition to the thirty minutes to provide oral testimony, petitioners have other means to press their arguments. The Board's procedures also provide for written testimony, a one hour question and answer period, and written responses to the violations forming the basis for the revocation. [14] Moreover, pursuant to statute, the charter schools have the right to judicial review of any revocation decision by an appropriate court of the District of Columbia. D.C.Code § 38-1802.13(c)(6). In sum, in considering the second Mathews factor, we conclude that petitioners have not shown that there will be sufficient probable value to petitioners of additional or substitute procedural safeguards in reducing the risk of erroneous deprivation of their private interests in the charters. Given the nature of the Board's revocation proceedings, driven as they are by documentary evidence, and the procedures established by the School Reform Act and the Board, the risk of erroneous deprivation is minimalized.
The governmental interest includes the administrative burden and other societal costs that would be associated with requiring, as a matter of constitutional right, an evidentiary hearing upon demand in all cases prior to the termination of a protected interest. Mathews, supra, 424 U.S. at 347, 96 S.Ct. 893. The most obvious burden in the context of the charter revocation proceedings from additional procedural safeguards would be the delay involved by more elaborate proceedings, as well as the cost of continuing to provide public funding to charter schools that have flouted their statutory obligations while the revocation decision is pending. See id. Although the record before us does not provide any indication of what the additional costs of a contested case hearing would be, the Supreme Court has indicated that their experience with the constitutionalizing of government procedures suggests that the ultimate additional costs in terms of money and administrative burden would not be insubstantial. Id. Moreover, additional procedural safeguards are unjustified if they are not accompanied by a reduction in erroneous deprivations: the Government's interest, and hence that of the public, in conserving scarce fiscal and administrative resources is a factor that must be weighed. At some point the benefit of an additional safeguard to the individual affected by the administrative action and to society in terms of increased assurance that the action is just, may be outweighed by the cost. Id. at 348, 96 S.Ct. 893; see also Sterling v. District of Columbia Dep't of Employment Servs., 513 A.2d 253, 255 (D.C.1986) (holding that consistent with due process, telephone hearings may be conducted to resolve interstate unemployment compensation claims because abolition of such hearings would not materially reduce the risk of erroneous deprivations and such hearings are a reasonable means of conserving fiscal and administrative resources). [15] In weighing the third Mathews factor, our inquiry is not limited to the costs and burdens of requiring a trial-type contested case hearing, but also extends to considering the function involved. See Cloutterbuck v. Cloutterbuck, 556 A.2d 1082, 1086 (D.C.1989). In considering the pre-revocation proceedings, we may look to the statute for the government interest in conducting an informal hearing. Id. The government function at issue here is the Board's duty to ensure that charter school students receive the type of educational opportunities and other services they deserve by overseeing the operations of public charter schools and revoking the charters of those schools that do not operate within the law. By requiring an informal hearing, we may infer that Congress determined that ... [the government] interest is best served by such a hearing. See id. Clearly, the purpose of requiring the less elaborate informal hearing as opposed to a formal evidentiary hearing is to provide the Board with an expeditious means to close down public charter schools that fail to meet statutory requirements and the terms and conditions of their individual charters while paying due regard to the public charter school's private interest in the charter. Moreover, pursuant to statute, the charter schools have the right to judicial review of any revocation decision by an appropriate court of the District of Columbia. D.C.Code § 38-1802.13(c)(6). The cases relied upon by Milburn and World to support their argument in favor of a contested case hearing are distinguishable. Both Woods v. District of Columbia Nurses' Examining Bd., 436 A.2d 369 (D.C.1981) and District of Columbia v. Douglass, 452 A.2d 329 (D.C.1982), were cases in which the relevant statutes made no allowance for any type of hearing before the deprivation of the protected interests, a nursing license and a license to practice naturopathic medicine, respectively. Treating as the two available alternatives in those cases no hearing or a contested case hearing pursuant to the DCAPA, this court concluded that due process required a contested case hearing where the right of an individual to practice his or her livelihood was at stake. Woods, supra, 436 A.2d at 373; Douglass, supra, 452 A.2d at 332. We consider by contrast, a statutory scheme which provides for an informal but meaningful hearing before a school's charter can be revoked. Given that we face a different procedural posture than did the Douglass and Woods courts, we are not constrained to follow their result. [16] In sum, after balancing the private and governmental interests and the effect that the right to cross-examine witnesses and the other requested procedures would contribute to reducing erroneous deprivations, we conclude that, given the decision to be made and the capacities and circumstances of those who are to be heard, the charter schools have not met their burden of establishing that a contested case hearing is constitutionally required. See Mathews, supra, 424 U.S. at 349, 96 S.Ct. 893. Given the constitutionally adequate procedures provided by statute and by the Board, there is no reason for an additional judicially-imposed procedure which does not enhance in any significant way the protection of a charter school's private interest in its charter. See Brown, supra, 682 A.2d at 1140. The constitution in itself does not require a contested case hearing that might compromise the Board's significant interest in administering the District of Columbia's public charter schools within the guidelines established by Congress under the School Reform Act. We wish to emphasize that we deal here only with absolute constitutional minimums, carrying out our judicial duty as mandated by the Supreme Court, with deference both to the expressed judgment of the legislature and to the agency with its special knowledge of its mission. Certainly views as to the appropriate procedures in any given circumstance can reasonably differ and there is nothing whatever to prevent an expansion of protections by the Board beyond constitutional requirements. Furthermore, we have come to our present judgment in a somewhat abstract context, relying upon our understanding of the issues that are actually at stake and the procedures proposed to be followed by the agency in the ultimate revocation hearings. [17]