Opinion ID: 1974418
Heading Depth: 1
Heading Rank: 6

Heading: the standard for judicial review

Text: The authority of a circuit court on judicial review of a final order under the APA is spelled out in SG § 10-215(g). The subsection provides: In a proceeding under this section, the court may: (1) remand the case for further proceedings; (2) affirm the decision of the agency; or (3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision of the agency: (i) is unconstitutional; (ii) exceeds the statutory authority or jurisdiction of the agency; (iii) results from an unlawful procedure; (iv) is affected by any other error of law; (v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or (vi) is arbitrary or capricious. See Maryland Rules, ch. 1100, subtitle B, Rules B1-B13, implementing SG § 10-215. We have reviewed a goodly number of our cases addressing the matter of judicial review. They range from the first one governed by the Administrative Procedure Act after its enactment in 1957, Bernstein v. Real Estate Comm, 221 Md. 221, 156 A.2d 657 (1959), appeal dismissed, 363 U.S. 419, 80 S.Ct. 1257, 4 L.Ed.2d 1515 (1960), to the most recent, Dashiell v. Department of Health, 327 Md. 130, 607 A.2d 1249 (1992). The opinions discuss the import of what is now § 10-215(g), explicate it and apply it. All of them sing the same tune; the melody of each is identical. Even though the lyrics may vary at times, their substance is always in harmony. See, in addition to Bernstein 221 Md. at 224-225 and 230, 156 A.2d 657 and Dashiell 327 Md. at 137-138, 607 A.2d 1249, State Board v. Ruth, 223 Md. 428, 436-437, 165 A.2d 145 (1960); Kaufman v. Taxicab Bureau, 236 Md. 476, 484, 204 A.2d 521 (1964), cert. denied, 382 U.S. 849, 86 S.Ct. 95, 15 L.Ed.2d 88 (1965); Nuger v. Insurance Comm'r, 238 Md. 55, 61, 207 A.2d 619 (1965); Melfa v. Commissioner, 240 Md. 744, 746, 215 A.2d 755; cert. denied, 384 U.S. 1001, 86 S.Ct. 1922, 16 L.Ed.2d 1014 (1966); Eger v. Stone, 253 Md. 533, 542, 253 A.2d 372 (1969); Grosman v. Real Estate Comm'n, 267 Md. 259, 268, 297 A.2d 257 (1972); Zeitschel v. Board of Education, 274 Md. 69, 79, 332 A.2d 906 (1975); Dep't of Nat. Res. v. Linchester, 274 Md. 211, 224-226, 334 A.2d 514 (1975); Bulluck v. Pelham Wood Apts., 283 Md. 505, 511-513, 390 A.2d 1119 (1978); Holy Cross Hosp. v. Health Services, 283 Md. 677, 683, 393 A.2d 181 (1978); Annapolis v. Annap. Waterfront Co., 284 Md. 383, 394-396, 396 A.2d 1080 (1979); Courtney v. Board of Trustees, 285 Md. 356, 361-363, 402 A.2d 885 (1979); Md. State Dep't of Personnel v. Sealing, 298 Md. 524, 535-536, 471 A.2d 693 (1984); United Steelworkers v. Beth. Steel, 298 Md. 665, 679, 472 A.2d 62 (1984); Balto. Lutheran High Sch. v. Emp. Sec. Adm., 302 Md. 649, 660-661, 490 A.2d 701 (1985); Board of Educ., Mont. Co. v. Paynter, 303 Md. 22, 35-36, 491 A.2d 1186 (1985); State Election Bd. v. Billhimer, 314 Md. 46, 58-59, 548 A.2d 819 (1988), cert. denied, 490 U.S. 1007, 109 S.Ct. 1644, 104 L.Ed.2d 159 (1989); Board of County Comm'rs v. Holbrook, 314 Md. 210, 218, 550 A.2d 664 (1988); Caucus v. Maryland Securities, 320 Md. 313, 323-324, 577 A.2d 783 (1990). There are a host of other of our cases cited in the above cases in support of the principles they expressed. No matter how the test for reviewing factual findings of administrative agencies is phrased, the reviewing court's appraisal or evaluation must be of the agency's fact-finding results and not an independent original estimate of or decision on the evidence. Hammond, C.J., speaking for a majority of the Court in Insurance Comm'n v. Nat'l Bureau, 248 Md. 292, 309, 236 A.2d 282 (1967). The Chief Judge recognized that [t]he required process is difficult to precisely articulate but it is plain that it requires restrained and disciplined judicial judgment so as not to interfere with the agency's factual conclusions under any of the tests, all of which are similar. There are differences but they are slight and under any of the standards the judicial review essentially should be limited to whether a reasoning mind reasonably could have reached the factual conclusion the agency reached. This need not and must not be either judicial fact-finding or a substitution of judicial judgment for agency judgment. Id. at 309-310, 236 A.2d 282. [T]he common denominator of the scope of judicial review with respect to all administrative agencies, we said in Balto. Lutheran High Sch., 302 Md. at 661, 490 A.2d 701, is [t]he substantiality of the evidence. That is to say, a reviewing court, be it a circuit court or an appellate court, shall apply the substantial evidence test to the final decisions of an administrative agency, but it must not itself make independent findings of fact or substitute its judgment for that of the agency. Id. at 662, 490 A.2d 701. Bulluck, 283 Md. 505, 390 A.2d 1119, (Eldridge, J.) drew upon our cases as well as Universal Camera Corp. v. National Labor Rel. Bd., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951) and Consolidated Edison Co. v. National Labor Rel. Bd., 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126 (1938) and referred to treatises and law journals in explaining the meaning of substantial evidence. The Court said: Substantial evidence as the test for reviewing factual findings of administrative agencies, has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.... The scope of review is limited `to whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.' Id. 283 Md. at 512, 390 A.2d 1119 (citations omitted). It pointed out: In applying the substantial evidence test, we have emphasized that a court should [not] substitute its judgment for the expertise of those persons who constitute the administrative agency from which the appeal is taken. Id. at 513, 390 A.2d 1119 (citations omitted) (emphasis in original). The Court explained, We must also review the agency's decision in the light most favorable to the agency, since `decisions of administrative agencies are prima facie correct,' ... and `carry with them the presumption of validity.' Id. (citations omitted). Furthermore, Judge Eldridge continued, not only is it the province of the agency to resolve conflicting evidence, but where inconsistent inferences from the same evidence can be drawn, it is for the agency to draw the inferences. Id. (citations omitted). [2] One of the main objectives of the Legislature in establishing the OAH was to provide an impartial hearing officer in contested cases. A hearing officer employed by and under the control of the agency where the contested case or other disputed action arises, often results in the appearance of an inherent unfairness or bias against the aggrieved. See the Final Report of the Governor's Task Force on Administrative Hearing Officers. (1988). It is apparent that the Legislature, in enacting the OAH statute did not depart from the principles which have been recognized in our opinions that govern judicial review of an agency's final decision. The OAH act on its face and the APA as amended to accommodate the provisions of the OAH act did not address the test for judicial review. The standard for judicial review remained the same as we had consistently declared it to be. The creation of an ALJ as a impartial hearing officer in administrative proceedings introduced another factor to be considered in our standard for judicial review. To determine what impact the findings of fact, conclusions and proposed order of an ALJ have on an agency's final order provoked us to look again to Universal Camera, 340 U.S. 474, 71 S.Ct. 456. The essential issue raised in Universal Camera was the effect of the Administrative Procedure Act and the ... Taft-Hartley Act ... on the duty of Courts of Appeals when called upon to review orders of the National Labor Relations Board. 340 U.S. at 476, 71 S.Ct. at 458. After carefully tracing the history of the reviewing power, id. at 477-486, 71 S.Ct. at 459-63, the Court held that the standard of proof specifically required of the Labor Board by the Taft-Hartley Act is the same as that to be exacted by courts reviewing every administrative action subject to the Administrative Procedure Act. Id. at 487, 71 S.Ct. at 463. Charles H. Koch, Jr. observed in his Administrative Law and Practice (1985), Vol. 1, § 6.73 at 520 (hereinafter Koch), that Universal Camera outlined the significance of the presiding officer's findings for the agency and ultimately for the court. Our Administrative Procedure Act parallels the federal Administrative Procedure Act sufficiently so that the guidelines of Universal Camera relate to proceedings under our Act. The meat of Universal Camera on the standard of judicial review is contained in Part III of the opinion. The basic concept of the test firmly established by our opinions is left intact. Universal Camera is not contrarient to our test but explicates it. First we note that Universal Camera made perfectly clear that the responsibility for the final decision placed on the agency is wholly inconsistent with the notion that the [agency] has power to reverse an examiner's findings only when they are `clearly erroneous.' 340 U.S. at 492, 71 S.Ct. at 467. This assertion was confirmed in Federal Commun. Com'n v. Allentown Broad. Corp., 349 U.S. 358, 364, 75 S.Ct. 855, 859, 99 L.Ed. 1147 (1955). Given that there is no error of law within the contemplation of § 10-215(g)(3)(i)(ii)(iii) and (iv), the test firmly established by our opinions follows the dictate of § 10-215(g)(3)(v), that the decision of the agency shall be reversed or modified if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision of the agency is unsupported by competent, material, and substantial evidence in light of the entire record as submitted.... Ordinarily, if the decision is so unsupported, it may also be arbitrary and capricious under § 10-215(g)(3)(vi). See Dashiell, 327 Md. at 137-138, 607 A.2d 1249. Universal Camera fleshed out what constitutes the entire record. The Supreme Court observed: Surely an examiner's report is as much a part of the record as the complaint or the testimony. Id. 340 U.S. at 493, 71 S.Ct. at 467. The determination of the substantiality of the record includes the examiner's report. Id. But, the Court cautioned: We do not require that the examiner's findings be given more weight than in reason and in the light of judicial experience they deserve. 340 U.S. at 496, 71 S.Ct. at 469. The Court made clear that the `substantial evidence' standard is not modified in any way when the [agency] and its examiner disagree. Id. The Court explained: We intend only to recognize that evidence supporting a conclusion may be less substantial when an impartial, experienced examiner who has observed the witnesses and lived with the case has drawn conclusions different from the [agency's] than when he has reached the same conclusion. The findings of the examiner are to be considered along with the consistency and inherent probability of testimony. Id. The Court emphasized: The significance of his report, of course, depends largely on the importance of credibility in the particular case. To give it this significance does not seem to us materially more difficult than to heed the other factors which in sum determine whether evidence is substantial. Id. at 496-497, 71 S.Ct. at 469. On the matter of assessing the credibility of the witnesses the Court indicated that the agency should give appropriate deference to the opportunity of the examiner to observe the demeanor of the witnesses. All aspects of the witnesses demeanor  including the expression of his countenance, how he sits or stands, whether he is inordinately nervous, his coloration during critical examination, the modulation or pace of his speech and other non-verbal communication  may convince the observing [hearing officer] that the witness is testifying truthfully or falsely. Penasquitos Village, Inc. v. N.L.R.B., 565 F.2d 1074, 1078-1079 (9th Cir.1977). Nothing in the statutes, Universal Camera pointed out, suggests that the [agency] should not be influenced by the examiner's opportunity to observe the witnesses he hears and sees and the [agency] does not. 340 U.S. at 495, 71 S.Ct. at 468. Nothing suggests, the Court continued, that reviewing courts should not give to the examiner's report such probative force as it intrinsically commands. Id. The [agency's] findings are entitled to respect.... Id. at 490, 71 S.Ct. at 466. [B]ut they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the [agency's] decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both. Id. In other words, the decision of the agency must be vacated when the standard appears to have been misapprehended or grossly misapplied. Id. at 491, 71 S.Ct. at 466. Koch stated on the question of credibility: The presiding officer's findings as to credibility have almost conclusive force and the importance of credibility evidence to the final decision will affect the weight given the presiding officer's findings. Koch, § 6.73 at 522 (footnote omitted). He quoted General Dynamics v. OSHRC, 599 F.2d 453, 463 (1st Cir.1979) for the general principle regarding the administrative review body's authority over credibility findings of the hearing officer: the credibility findings of the person who sees and hears the witnesses  be he ALJ, juror or judge  is entitled to considerable deference. While the degree of deference due the ALJ's final decision is related to the importance of credibility in a particular case, the ALJ's decision to give or deny credit to a particular witness' testimony should not be reversed absent an adequate explanation of the grounds for the reviewing body's source of disagreement with the ALJ. Koch, § 6.73 at 522 (footnote omitted). In sum, Koch concluded, the review authority has the power to reject credibility assessments only if it gives strong reasons for doing so. Id. (footnote omitted). We have surveyed a fair sampling of cases in other jurisdictions which address the matter of judicial review of the final decision of an administrative agency. See Appendix hereto. They all look to Universal Camera and are in line with our test as explicated by that opinion. The cases recognize that [w]hile the standard set forth in Universal Camera is imprecise, `it provides as much clarity as the area affords.' N.L.R.B. v. Interboro Contractors, Inc., 388 F.2d 495, 499 (2d Cir.1967), quoting Bon-R Reproductions, Inc. v. NLRB, 309 F.2d 898 (2d Cir.1962). Universal Camera itself recognized that a precise standard for review cannot be imprisoned within any form of words.... 340 U.S. at 489, 71 S.Ct. at 465. It noted, There are no talismanic words that can avoid the process of judgment. The difficulty is that we cannot escape, in relation to this problem, the use of undefined defining terms. Id. But, the Court observed, a standard leaving an unavoidable margin for individual judgment does not leave the judicial judgment at large even though the phrasing of the standard does not wholly fence it in. Id. Kenneth Culp Davis, in his Administrative Law Treatise (1980), Vol. 3, § 17.16 at 330, observed that the principles of Universal Camera are reasonably clear, but a good many problems arise in applying them.... He selected a number of cases applying the principles to show that each of the cases referred to was unique; seldom can two or more problems about application of the principles be put together. Id.