Opinion ID: 1314432
Heading Depth: 2
Heading Rank: 1

Heading: Fasi's Appeal

Text: Review of a decision made by the circuit court upon its review of an agency's decision is a secondary appeal. Chock v. Bitterman, 5 Haw.App. 59, 63, 678 P.2d 576, 580, cert. denied, 67 Haw. 685, 744 P.2d 781 (1984). The standard of review is one in which this court must determine whether the [circuit] court was right or wrong in its decision, applying the standards set forth in HRS § 91-14(g) to the agency's decision. [This court's] review is further qualified by the principle that the [agency's] decision carries a presumption of validity and [a]ppellant has the heavy burden of making a convincing showing that the decision is invalid because it is unjust and unreasonable in its consequences. Id. 5 Haw.App. at 64, 678 P.2d at 580 (citations and footnote omitted); see also Dole Hawaii Division  Castle & Cooke, Inc. v. Ramil, 71 Haw. 419, 794 P.2d 1115 (1990). HRS § 91-14(g) provides: (g) Upon review of the record the court may affirm the decision of the agency or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are: (1) In violation of constitutional or statutory provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedure; or (4) Affected by other error of law; or (5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion. HRS § 91-14(g) (1985). Under HRS § 91-14(g), conclusions of law are reviewable under subsections (1), (2), and (4); questions regarding procedural defects under subsection (3); findings of fact under subsection (5); and an agency's exercise of its discretion under subsection (6). Outdoor Circle v. Harold K.L. Castle Trust Estate, 4 Haw.App. 633, 638-39, 675 P.2d 784, 789 (1983), cert. denied, 67 Haw. 1, 677 P.2d 965 (1984). Accordingly, a reviewing court will reverse an agency's finding of fact if it concludes that such agency finding is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record. HRS § 91-14(g)(5). On the other hand, the agency's conclusions of law are freely reviewable. Amfac, Inc. v. Waikiki Beachcomber Investment Co., 74 Haw. 85, ___, 839 P.2d 10, 28, recon. denied, 74 Haw. ___, 843 P.2d 144 (1992).
The principal issue in this case is whether Sussel was demoted or merely downwardly reallocated. All parties agree that if Sussel was demoted, such demotion was illegal because Sussel did not receive the requisite ten-day written notice setting forth the specific reasons for the demotion. Revised Rules of the Civil Service Commission (RR) Rule 1.1-D.10.2C. However, Fasi and the City [3] contend that Sussel was not demoted, and that his position as administrator of the OCDA was simply downwardly reallocated, that is, changed to a lower pay grade due to a change in the duties and responsibilities of the position. All parties agree that prior rulings of the federal courts on various issues in this case are binding on them under the doctrine of res judicata. However, the parties disagree as to exactly which rulings of the federal district court and the Ninth Circuit have preclusive effect in the present case. In the recent decision of Pele Defense Fund v. Paty, 73 Haw. 578, 837 P.2d 1247 (1992), cert. denied, ___ U.S. ___, 113 S.Ct. 1277, 122 L.Ed.2d 671 (1993), we reiterated the rules in this jurisdiction concerning the related doctrines of res judicata and collateral estoppel. After noting the basic tenet[] of res judicata  that `[t]he judgment of a court of competent jurisdiction is a bar to a new action in any court between the same parties or their privies concerning the same subject matter,' we stated that `[c]ollateral estoppel is an aspect of res judicata which precludes the relitigation of a fact or issue which was previously determined in a prior suit on a different claim between the same parties or their privies.' Id. 73 Haw. at 599-600, 837 P.2d at 1261 (quoting Morneau v. Stark Enters., Ltd., 56 Haw. 420, 422-23, 539 P.2d 472, 474-75 (1975)). We further noted that the doctrine of collateral estoppel was tempered only by the prerequisite that a [party] have a full and fair opportunity to litigate the relevant issues in the prior lawsuit. Id. In the instant case, the federal district court specifically found that Sussel was demoted. In his decision, Judge Ezra stated: The City contends that [Sussel] was not demoted. He was reclassified from Executive Assistant I to Administrative Assistant II, retaining the same salary level and remaining in the same department: OCDA. Therefore, it reasons, it was a downward reallocation, not a demotion. That being the case, under this reasoning, [Sussel] was entitled to no notice or hearing under the civil service rules. It is not disputed that [Sussel] was stripped of his duties and benefits as Administrator of OCDA and reclassified to a salary position which deleted some of the salary increases to which he would otherwise have been entitled. This was accomplished by red-circling his salary: i.e., leaving [Sussel] at a salary level higher than that usually accorded an Administrative Assistant II. [Sussell] lost his title, his authority and his office. On these undisputed facts, this court finds that [Sussel] was in fact demoted. (Emphasis added.) There is no denying that the federal district court is a court of competent jurisdiction, that the parties in the instant case are precisely the same as those who litigated the federal case, and that the issue of Sussel's demotion, upon which Judge Ezra ruled, is precisely the same issue which confronted the special master, the Commission, and the circuit court in the present case. Therefore, under the doctrine of collateral estoppel set forth in Pele, we are required to give preclusive effect to Judge Ezra's finding that Sussel was demoted rather than downwardly reallocated. The Commission's decision, which violated both § 91-14(g)(4) and (5), was affected by an error of law when it failed to give preclusive effect to Judge Ezra's finding, and as a result, it then made the clearly erroneous finding that Sussel was not demoted. We therefore conclude that the circuit court was correct in reversing the Commission's decision and in reinstating Sussel. However, Fasi contends that the issue of Sussel's demotion was not decided by the Ninth Circuit. On December 6, 1990, by memorandum disposition, the Ninth Circuit ruled on the appeal of Judge Ezra's entire decision in Sussel's federal lawsuit. The Ninth Circuit first affirmed Judge Ezra's finding that Sussel was in a civil service position. The court then considered the central issue of whether Sussel had alleged sufficient facts to support a claim for violation of due process. The Ninth Circuit court noted that the relevant due process analysis required it to first determine whether Sussel had a property interest in his job. The court concluded that Sussel had a property interest, but that a procedural due process analysis would be triggered only if Sussel had been terminated or demoted. After noting that Sussel had not been terminated, the court stated that [t]he dispute is not whether demotion is an interest protected by the due process clause but whether Sussel was demoted or merely downwardly reallocated. The latter process is not protected by due process. Fasi contends that the aforementioned language demonstrates that the Ninth Circuit did not decide whether Sussel was in fact demoted. However, we note that immediately after stating that a downward reallocation would not trigger a due process analysis, the Ninth Circuit proceeded to perform just such an analysis to determine whether Sussel had carried his burden of establishing a genuine issue of material fact on the due process issue. The court pointed out that due process requires notice and an opportunity for a hearing before the deprivation of a property interest. The court then held that because Sussel had met with Fasi prior to the change in his position, he had received notice and an opportunity for hearing before any change in pay occurred. The court therefore ruled that Sussel had been afforded due process. Clearly, if the Ninth Circuit had decided that Judge Ezra was wrong and that Sussel had not been demoted, there would have been no reason to perform a due process analysis; Sussel would not have fulfilled the threshold requirement of demonstrating a property interest implicating due process concerns. Moreover, it is undisputed that the Ninth Circuit did not vacate or reverse Judge Ezra's unequivocal finding that Sussel was demoted. Additionally, when ruling later in its decision that Sussel had failed to establish a genuine issue of material fact on a first amendment claim, the Ninth Circuit clearly stated that Sussel has failed to present sufficient probative evidence that he was demoted solely on the basis of his political affiliation (emphasis added). In short, contrary to Fasi's contention, the state circuit court was clearly right in stating that Judge Ezra's finding that Sussel was demoted was essentially affirmed by the Ninth Circuit[.] Consequently, the Commission was required to give preclusive effect to Judge Ezra's finding on the demotion issue, and this court is likewise required to affirm the ruling of the circuit court that the Commission erroneously failed to do so. Because the parties do not dispute that if Sussel was demoted, such demotion was illegal, the preclusive effect of Judge Ezra's finding is dispositive of the instant case.
Besides noting the preclusive effect of Judge Ezra's finding on the demotion issue, the circuit court ruled that, based on the whole record in the case, the Commission had clearly erred in finding that Sussel was not demoted. The court found, as had Judge Ezra earlier, that Sussel had lost his title, his authority, his office, and his opportunity for certain salary increases. The court held that these undisputed facts inescapably led to the conclusion that Sussel was demoted. Sussel was, in fact, stripped of all his duties, responsibilities, and authority as administrator, and left with essentially nothing to do. He was dropped nine pay grades as a result, and denied any of the pay raises which would have been due him under his former pay grade. [4] To hold that Sussel was not demoted simply because his position was downgraded while he himself was not actually moved to another position would be to elevate form over substance. From any reasonable perspective, Sussel was in fact demoted. We find it no accident that three separate factfinders who evaluated all the available evidence in this case  the special master, Judge Ezra, and the circuit court judge  all came to the same conclusion on this issue. Thus, even without the preclusive effect of Judge Ezra's ruling, we hold that, based on the record, the circuit court correctly found the Commission's finding that Sussel was not demoted to be clearly erroneous.