Court Opinion

ID: 9915114
Source: CourtListenerOpinion
Date Created: 2024-01-04 17:08:54.260208+00
Date Added: 2024-06-11T13:17:10.525131
License: Public Domain

No. 7                January 4, 2024                    85

         IN THE COURT OF APPEALS OF THE
                 STATE OF OREGON

                 Scott KASLINER,
                Petitioner-Respondent,
                           v.
                STATE OF OREGON,
 Department of Human Services, Child Welfare Services,
                Respondent-Appellant.
             Marion County Circuit Court
                20CV34607; A178904

  Sean E. Armstrong, Judge.
  Argued and submitted June 21, 2023.
   Inge D. Wells, Assistant Attorney General, argued
the cause for appellant. Also on the briefs were Ellen F.
Rosenblum, Attorney General, and Benjamin Gutman,
Solicitor General.
   George W. Kelly argued the cause and filed the brief for
respondent.
   Before Shorr, Presiding Judge, and Pagan, Judge, and
Kistler, Senior Judge.
  KISTLER, S. J.
  Affirmed.
86                          Kasliner v. Dept. of Human Services

          KISTLER, S. J.
         The Department of Human Services (DHS) investi-
gated a report that petitioner had sexually abused his step-
daughter L. Based on its investigation, DHS issued a final
order in other than a contested case determining that the
report was “founded.” On judicial review, the circuit court
found that DHS had conducted a biased investigation. The
court reasoned that, in conducting its investigation, DHS had
focused on evidence that supported a founded determination
without considering evidence of alternative explanations for
L’s report. The court entered a judgment remanding DHS’s
order and a supplemental judgment awarding petitioner
attorney fees. DHS appeals both judgments, which we affirm.
         When, as in this case, a person asks a circuit court
to review an order in other than a contested case, the par-
ties may submit evidence in the circuit court to supplement
the record created by the agency. Norden v. Water Resources
Dept., 329 Or 641, 649, 996 P2d 958 (2000) (interpreting
ORS 183.484). Moreover, ORS 183.484(6) “contemplates * * *
[that the circuit court will make] findings of fact based on
that record when it reverses the agency.” Id. We accordingly
summarize the facts developed before both DHS and the cir-
cuit court. We then describe the circuit court’s ruling. We
set out DHS’s arguments, discuss the deference we owe the
circuit court’s factual findings, and explain why we affirm
the circuit court’s judgments.
        Petitioner and wife were married in 2010. Wife
brought three children from two earlier relationships
into their family—two sons, R and J, and a daughter L.
Several years later, petitioner and wife had a third son K.
Throughout their marriage, wife has been the primary wage
earner in the family, holding executive positions in various
companies around the country. Petitioner, for his part, has
held part-time jobs, primarily tutoring students to improve
their scores on standardized tests. He and grandmother1
assumed primary responsibility for caring for the children
and maintaining the household.
    1
      Grandmother is the mother of wife’s second husband, which makes her J
and L’s paternal grandmother. Grandmother has lived with wife’s family since
wife and grandmother’s son divorced.
Cite as 330 Or App 85 (2024)                                                   87

        In 2018, when L was 15 years old, she told her boy-
friend and then her mother that petitioner had sexually
abused her several years earlier when the family lived in
Nevada and Virginia. According to L, the abuse started
when she was approximately six years old2 but ended before
the family moved to North Carolina and later Oregon.
After L reported that petitioner had abused her, her mother
immediately took her to the Washington County Sheriff’s
Office, where the officers questioned L about her allega-
tions. The officers notified DHS of the reported abuse, and
DHS assigned a Child Protective Services employee Ruiz to
investigate the report.
          Ruiz spoke briefly to L and referred her to CARES
Northwest for an evaluation. Ruiz also spoke with peti-
tioner, wife, and L’s brothers, J and K.3 Ruiz requested but
did not receive information from the other states where the
family previously had lived. Based on what Ruiz described
as L’s clear and detailed reports of abuse to the officers and
CARES, Ruiz concluded that L’s report was “founded”; that
is, Ruiz concluded that “there is reasonable cause to believe
the [reported] abuse occurred.” See OAR 413-015-1010(2)(a)
(defining “founded”); Querbach v. Dept. of Human Services,
369 Or 786, 799-800, 512 P3d 432 (2022) (interpreting the
phrase “reasonable cause” in DHS’s regulations).4 After two
levels of internal agency review, DHS issued a final order in
other than a contested case concluding that L’s report of abuse
was founded. In confirming Ruiz’s conclusion, each level of
internal agency review relied on the same factual basis that
Ruiz had—the consistency and specificity of L’s report.
       Before the circuit court, petitioner supplemented
the agency record by offering exculpatory evidence. For
example, an expert, who is a psychologist and certified
    2
      The record is not consistent regarding L’s age when petitioner’s alleged
abuse began. The dates range from four to six years of age.
    3
      Ruiz did not speak with R, who is several years older than L. When L
reported in 2018 that petitioner had abused her, R no longer lived with the family.
    4
      The Oregon Supreme Court has explained that “reasonable cause,” as
used in DHS’s regulations, means something less than probable cause, and it
suggested that the phrase means something more than “reasonable suspicion.”
Querbach, 369 Or at 799-800. The court did not have occasion to decide how much
greater certainty, if any, a “reasonable cause” standard requires than a “reason-
able suspicion” standard. See id.
88                             Kasliner v. Dept. of Human Services

specialist in evaluating sex offenders, testified. He noted
that a qualified polygrapher had administered a polygraph
examination to petitioner and had concluded that petitioner
truthfully denied sexually abusing L. The psychologist also
testified that, after administering a battery of psychologi-
cal and other examinations to petitioner, he concluded that
petitioner did not display a sexual interest in prepubescent
children, nor did he pose a risk of sexually abusing them.5
Additionally, both wife and grandmother testified that L
does not have a reputation for truthfulness.
         By and large, however, most of the evidence that
petitioner offered in circuit court was directed at deficien-
cies in DHS’s investigation. Petitioner introduced evidence
that he or wife had tried to tell Ruiz about alternative
explanations for L’s report of abuse. Ruiz, however, rebuffed
those efforts. Ruiz also actively discouraged wife from doing
anything other than affirming her daughter’s allegations
against petitioner. For example, wife testified that “[Ruiz]
told me that if I didn’t cooperate fully and support my daugh-
ter in all of her allegations that all of my children would be
removed from my home.” Wife testified that, beyond the nor-
mal fear of losing custody of all her children, their threat-
ened removal was particularly upsetting because her son J
is a special needs child who requires substantial assistance.
DHS did not call Ruiz to testify at the circuit court hearing;
as a result, wife’s testimony was unrebutted.
         Petitioner’s evidence also identified multiple issues
that he and wife had raised with Ruiz that, as his expert tes-
tified before the circuit court, raised “red flags” and called
for further investigation. For example, wife tried to tell Ruiz
that years earlier her oldest son R had admitted to sexually
abusing L at roughly the same time that L later reported
petitioner had been abusing her and that the types of sexual
abuse that R had admitted to wife paralleled the types of
abuse that L later attributed to petitioner. Wife also tried to
tell Ruiz that, when L had been in therapy in North Carolina
seeking to deal with R’s sexual abuse, L never mentioned to
    5
      The expert was careful to explain that his conclusion that petitioner did not
pose a risk of sexually abusing children did not necessarily mean that L’s report
was inaccurate.
Cite as 330 Or App 85 (2024)                              89

her psychiatrist or her therapist what she later reported to
the police in Oregon—that petitioner also had been abusing
her. Ruiz did not ask wife any questions about her son’s sex-
ual abuse of L, and when wife mentioned the son’s sexual
abuse to CARES, she “was told that that abuse was irrele-
vant to the case.”
         The record shows that CARES primarily and Ruiz
derivatively took the view that the oldest brother’s sexual
abuse was a closed chapter, that L had moved on, and that
she was capable of distinguishing between her brother’s
abuse and the abuse that she attributed to petitioner. Before
the circuit court, however, petitioner introduced expert
testimony that the similarity and timing of the brother’s
and petitioner’s reported abuse was more significant than
CARES apparently had appreciated. And Ruiz’s immediate
supervisor at DHS acknowledged that DHS’s records did not
show that either Ruiz or CARES had explored the similari-
ties between the oldest brother’s sexual abuse and the abuse
that L later attributed to petitioner.
         Wife testified that Ruiz also had rebuffed attempts
to tell her about two “major incidents” that occurred less
than a month before L reported that petitioner had abused
her. In one incident, a boy, who was almost 18, brought L
home from a movie. They parked outside L’s home so long
that his car battery died. Given the three-year difference in
L’s and the boy’s ages, petitioner and wife were concerned
about their behavior. Wife spoke with L, and petitioner spoke
with the boy. Petitioner asked the boy whether he thought
his behavior was appropriate, given the difference in his
and L’s ages. According to wife, L became “really upset” and
“really angry” at petitioner for interfering in her affairs.
         In the other incident, also less than a month before
L reported that petitioner had abused her, “another boy who
was actually [L’s] boyfriend at the time * * * climbed into
[L’s] bedroom window in the middle of the night.” When
petitioner and wife learned afterwards about the boy’s visit,
they spoke with him together. Wife testified that L “[a]gain
[was] very very upset that we would get involved in talking
to her boyfriend, that [L told them] we shouldn’t speak to
him, [and] that she could handle everything on her own.”
90                            Kasliner v. Dept. of Human Services

         When wife sought to raise those incidents with Ruiz
as a possible explanation for L’s report that petitioner had
abused her, Ruiz was “very clear that [wife’s] input wasn’t
what was important in the case.” Ruiz told wife that she
should “only support [her] daughter’s accusations” and that
she “should immediately * * * g[e]t a restraining order and
seek a divorce.”6 Consistently with that view, Ruiz’s report
does not mention either incident as a possible motive for L’s
report of abuse.
          Before the circuit court, petitioner introduced evi-
dence of other reasonable alternative explanations—such as
L’s substantial mental health issues, ranging from a bipolar
condition to what L reported to CARES as “crippling anx-
iety,” issues of control within the family, and petitioner’s
anger management issues—that could have led L to report
that petitioner had abused her. Ruiz was aware of L’s men-
tal health issues and petitioner’s anger management issues.
The record does not show, however, that Ruiz explored those
plausible explanations for L’s report. As Ruiz’s supervisor
acknowledged on cross-examination, DHS’s records did not
reveal whether Ruiz or CARES had sought to determine the
severity of L’s mental health problems or how her longstand-
ing mental health issues might have affected her perception.
          As noted, DHS did not call Ruiz to testify before the
circuit court. It did, however, call her immediate supervisor,
Bromley, and a central staff employee, Harper, to testify.
Bromley became Ruiz’s supervisor as Ruiz was concluding
her investigation of L’s report. Given the limited time that
he supervised Ruiz’s investigation, Bromley’s testimony was
essentially limited to repeating what Ruiz had documented
in L’s file. For example, Bromley was unaware of the two
major confrontations between L and petitioner that imme-
diately preceded L’s report of abuse, and he agreed on cross-
examination that Ruiz should have explored those and other

    6
      To the extent that Ruiz believed that wife needed to immediately divorce
petitioner to protect L or the other children living at home, the record does not
disclose the basis for that belief. After L first reported the abuse, petitioner
moved out of the house and had no contact with L. L began college when she was
16 years old and had moved out of the family home (and Oregon) before petitioner
returned home. Neither of the other two children living at home, J and K, claimed
that petitioner had sexually abused them.
Cite as 330 Or App 85 (2024)                                                  91

reasonable explanations for L’s report that petitioner and
wife had raised with Ruiz.
        Harper is a DHS central staff supervisor, who con-
ducted the final internal agency review of Ruiz’s founded
determination. She testified that, in concluding that L’s
report was founded, she considered both the record devel-
oped by DHS’s investigation and the documentary evidence
that petitioner submitted to DHS as part of its internal
review process.7 The circuit court, however, expressly found
that Harper was not credible when she testified that she
had considered petitioner’s documentary evidence. The
court stated that it based its credibility finding on Harper’s
tone, demeanor, and body language.
         After considering that record, the circuit court
issued a six-page letter opinion detailing the problems with
DHS’s investigation. The letter opinion stated that the
court “finds that DHS conducted an incompetent and biased
investigation that was designed solely to obtain enough evi-
dence to support its ‘founded’ determination while failing
to obtain or consider evidence that might have supported
a different conclusion.” The letter opinion summarized the
factual basis for that finding:
    “DHS failed to obtain collateral source information offered
    by petitioner, failed to document its ‘diligent’ efforts to
    obtain that information, relied upon the conclusory state-
    ment that it could not obtain that information, refused to
    consider some information that petitioner offered to pro-
    vide, failed to establish that the interviews that formed the
    basis for its ‘founded’ determination were not conducted in
    accord with any accepted protocol, and then made its deter-
    mination of ‘founded’ based only upon the evidence it did
    gather—[L’s] statements—evidence that only supported
    the conclusion it was predisposed to reach.”

    7
      Harper clarified on cross-examination that DHS rules constrained her
ability to assess the significance of some of the documentary evidence that peti-
tioner had submitted as part of DHS’s internal review process. She explained
that, if petitioner’s submissions contained evidence that she lacked the expertise
to assess, which she testified they did, she could not consult other sources to
determine the significance of petitioner’s evidence. Only Ruiz could have done
that. And, if Ruiz had not taken that step or had not documented doing so, then
Harper was unable to determine the weight to be given the exculpatory evidence
that she lacked the expertise to assess.
92                             Kasliner v. Dept. of Human Services

         The circuit court concluded that, in failing to con-
sider those alternative explanations, DHS had not followed
its own rules and, in so doing, abused its discretion. Moreover,
the court found that DHS’s bias undermined the reliability
of its founded determination. Specifically, the court con-
cluded that DHS’s founded determination was not supported
by substantial evidence, and it remanded DHS’s order with
instructions to enter an order that the agency was unable to
determine whether the report was founded.8 After the court
issued that ruling, it awarded petitioner attorney fees.
         On appeal, DHS assigns error to three of the circuit
court’s rulings. It contends that the circuit court erred in:
(1) ruling that DHS’s order was not supported by substantial
evidence; (2) concluding that DHS abused its discretion in
investigating L’s reported abuse; and (3) awarding petitioner
any attorney fees. We consider those issues in that order.
         For the most part, case law establishes the principles
that guide substantial evidence review of orders in other than
a contested case. See Cervantes v. Dept. of Human Services,
295 Or App 691, 695, 435 P3d 831 (2019). As noted, the par-
ties may supplement the record created before the agency
by introducing evidence in circuit court. Norden, 329 Or at
649. In reviewing an order in other than a contest case for
substantial evidence, a court assumes that the agency would
have reached the same determination if it had heard the evi-
dence introduced both before the agency and in the circuit
court. See id. (explaining that, in reviewing for substantial
evidence, the circuit “court’s evaluation of the record [created
before the agency and the court] is limited to whether the evi-
dence would permit a reasonable person to make the [same]
determination that the agency made in a particular case”).
That is, the court asks whether the record developed before
both the agency and the circuit court, viewed as a whole, pro-
vides substantial evidence to support the decision that the
agency made. See id. at 647-48. In undertaking that inquiry,

     8
       Although the court styled its ruling as a remand under ORS 183.484(5)(b)(A),
we conclude that the court effectively “reversed” or “set aside” DHS’s order
for lack of substantial evidence under ORS 183.484(5)(c). The court cited both
grounds in its letter opinion and judgment, and the latter ground appears to be
the dispositive one. Otherwise, the court could not have directed DHS to enter a
specific disposition on remand.
Cite as 330 Or App 85 (2024)                               93

neither we nor the circuit court may focus only on the evi-
dence that favors DHS’s determination in deciding whether
its determination is supported by substantial evidence. See
Younger v. City of Portland, 305 Or 346, 354, 752 P2d 262
(1988) (interpreting the same phrase in a related statute).
Rather, we must consider evidence that detracts from as well
as evidence that supports the agency’s determination. See id.
         In this case, DHS argues that L’s statements pro-
vide substantial evidence to support its founded determina-
tion. It also contends, contrary to the circuit court’s find-
ings, that it complied with its own rules in investigating
L’s report. Finally, it relies on Querbach for the proposition
that petitioner could have remedied any deficiency in its
investigation by submitting any evidence in circuit court
that Ruiz had overlooked. It follows under Querbach, DHS
argues, that the only issue on substantial evidence review
is whether, considering all the evidence developed before
DHS and the circuit court, substantial evidence supported
its founded determination.
         In relying on Querbach, DHS does not address, in
any detail, an issue that Querbach reserved and that, as we
explain below, potentially makes a difference in this case—
namely, what deference, if any, is owed the circuit court’s
subsidiary factual findings in reviewing DHS’s order for
substantial evidence. The Oregon Supreme Court expressly
noted that question in Querbach but did not decide it. 369 Or
at 801 (explaining that “[t]he present case does not require a
definitive answer” to that question). Instead, the court ques-
tioned whether the findings on which the petitioner relied
in Querbach were factual findings that the circuit court had
made. Id. at 801-02. For example, the Supreme Court noted
that the petitioner in Querbach inferred from some of the
circuit court’s findings that DHS had been biased against
him; however, the Supreme Court was careful to point out
that the “trial court made no finding that DHS was ‘biased’
against [the] petitioner.” Id. at 802.
         Moreover, the Supreme Court reasoned that any
defects in the investigation in Querbach did not affect the
petitioner’s ability to submit the evidence in circuit court
that, in his view, DHS should have gathered. Id. It followed,
94                              Kasliner v. Dept. of Human Services

the court reasoned, that it need not decide whether any
deference was due the circuit court’s findings. Id. at 801-
02. That is, the circuit court and the appellate courts in
Querbach could fairly review the hybrid record created
before the agency and the circuit court for substantial evi-
dence, despite the defects in DHS’s investigation that the
petitioner had identified.9 Id.
          In this case, the circuit court expressly found that
DHS had conducted a biased investigation, a finding that the
circuit court in Querbach did not make. And, if DHS’s investi-
gation was biased, then its founded determination, which was
based on that investigation, cannot provide a reliable start-
ing point for a substantial evidence inquiry. Put differently, if
we defer to the circuit court’s factual findings, then petition-
er’s ability to supplement the record in circuit court cannot
remedy a biased decision reached by the agency. It follows, we
think, that this case requires us to decide the question that
the court left unanswered in Querbach: What role, if any, do a
circuit court’s subsidiary factual findings play in substantial
evidence review of an order in other than a contested case?
         On that issue, DHS asserts that “[t]he [circuit]
court’s role is not to act as a factfinder itself.” DHS, how-
ever, never identifies the basis for that assertion, nor does it
explain how it reconciles its position with ORS 183.484(6),
which requires a circuit court to make “special findings of
fact” when it reverses an agency’s order in other than a con-
tested case. The role that the circuit court’s subsidiary find-
ings of fact play in substantial evidence review of an order
in other than a contested case presents a question of stat-
utory interpretation, which we resolve by considering the
text, context, and legislative history of ORS 183.484.10

     9
        A review of the briefs filed in the Supreme Court in Querbach reveals, as
the court observed, that the investigative defects that the petitioner identified in
that case were relatively minor. See Querbach, 369 Or at 803-04. As a result, the
court had no occasion to decide whether more significant defects in DHS’s inves-
tigation would call into question the assumption on which Norden based substan-
tial evidence review—that the agency would have reached the same conclusion if
it had been aware not only of the evidence introduced before the agency but also
of the significant contrary evidence that was later introduced in circuit court.
     10
        As noted above, the degree of deference that we owe the circuit court’s sub-
sidiary factual findings is critical to DHS’s ability, as the appellant, to show that
the circuit court erred in reversing DHS’s founded determination. DHS does not
Cite as 330 Or App 85 (2024)                                                  95

         We begin with the text of ORS 183.484. ORS 183.484
contains two subsections that, at first blush, do not appear
to fit neatly together. On the one hand, ORS 183.484(5)(c)
provides that a circuit court “shall set aside or remand the
[agency’s] order if it finds that the order is not supported
by substantial evidence.” On the other, ORS 183.484(6) pro-
vides that, “[i]n the case of reversal the [circuit] court shall
make special findings of fact based upon the evidence in the
record and conclusions of law indicating clearly all aspects
in which the agency’s order is erroneous.”
         Ordinarily, substantial evidence review does not
entail a reviewing court’s making its own factual findings.
See ORS 183.482(7) (explaining that on review of an order in
a contested case, a “court shall not substitute its judgment
for that of the agency as to any issue of fact”). Moreover,
ORS 183.484(5)(c) and ORS 183.484(6) do not explicitly
address the role, if any, that the special findings of fact that
ORS 183.484(6) requires should play in substantial evidence
review of an order in other than a contested case.
         The court’s reasoning in Norden, however, provides
some insight into the relationship between those two sub-
sections. As Norden makes clear, review of an order in other
than a contested case differs from the procedures that apply
in reviewing orders in contested cases. On review of orders
in other than contested cases, the parties may supplement
the agency record in circuit court with evidence that the
agency never considered. Norden, 329 Or at 648. As the
court observed in Norden, on review of an order in other
than a contested case, “there may be no [agency] record to
review or only so much record as supports the agency’s order,
until a record is made before the circuit court.” Id. The court
accordingly concluded that:
    “the reference in ORS 183.484 to the ‘record’ is to the record
    made before the circuit court and * * * the reference to ‘find-
    ings of fact’ in ORS 183.484([6]) is to the findings of fact
    that the circuit court makes based on the evidence in that
    record when it reverses the agency.”
Id. at 647.

offer an extended analysis of that statutory issue; however, we conclude that that
issue, which it identified in its opening brief, is appropriately before us.
96                     Kasliner v. Dept. of Human Services

         Norden recognized that it is the parties’ ability to
create a record in circuit court that the agency never con-
sidered that gives rise to the circuit court’s authority and
sometimes obligation to make findings of fact “based on the
evidence in that record.” Id. To be sure, the court explained
in Norden that the circuit court may not substitute its deter-
mination for the one that the agency made—in this case,
DHS’s determination that L’s report was founded. Id. at
649. But the fact that a circuit court may not substitute
its determination for the agency’s ultimate determination
does not mean that the subsidiary findings of fact that ORS
183.484(6) directs the court to make have nothing to do
with the circuit court’s (or our) evaluation of the record in
conducting a substantial evidence review. See id. Indeed, it
would make little sense to overlook the circuit court’s find-
ing in this case—that DHS’s supervisor’s testimony was not
credible—in assessing the weight her testimony should be
given in a substantial evidence review of DHS’s order.
         Although we think that the reasoning in Norden
provides guidance in answering the statutory interpretation
question this case presents, Norden does not provide a defin-
itive answer to that question, as the court implicitly recog-
nized in Querbach. See Querbach, 369 Or at 801. Accordingly,
we also consider the context and history of ORS 183.484;
that is, we trace the changes in judicial review of orders in
other than contested cases from the enactment of the 1971
Oregon Administrative Procedures Act (the “Oregon APA”)
to the 1979 amendments to that statute, which resulted in
what is now substantially the current text of ORS 183.484.
See Stephens v. Czerniak, 336 Or 392, 401, 84 P3d 140 (2004)
(explaining that context includes the statutory framework
within which a statute was enacted).
        In 1971, the legislature undertook a comprehensive
revision of the statutes governing administrative law. See
Younger, 305 Or at 352. Among other things, the legislature
enacted ORS 183.480 (1971), which set out, in a single stat-
utory section, the standards for judicial review of orders in
both contested and other than contested cases. See Or Laws
1971, ch 734, § 18. The legislature allocated review of the
former orders to the Court of Appeals and the latter to the
Cite as 330 Or App 85 (2024)                                                     97

circuit court, as the current statutes do. Id. § 18(2). It also
established an open-ended procedure for reviewing orders
in other than contested cases. Id. §18(6). Specifically, it pro-
vided that “[r]eview of orders other than a contested case
shall be conducted by the [circuit] court without a jury as
a suit in equity.” Id. That is, it provided for de novo review
of those orders, with only one condition.11 The 1971 act pro-
vided that, “[i]n the case of reversal the court shall make
special findings of fact and conclusions of law indicating
clearly all respects in which the agency’s order is errone-
ous.”12 Id. § 18(8).
         The legislative history of the 1971 act devoted lit-
tle attention to judicial review of orders in other than con-
tested cases. The issue did not prompt discussion, and the
relevant wording remained largely unchanged as the bill
went through the legislature. The history that does exist
is consistent with the textual reference to reviewing those
orders as a court would in a suit at equity. It states that
“the Circuit Court is specifically empowered to make its
independent judgment of fact” in reviewing orders in other
than contested cases. Exhibit, Summary Statement of the
Committee on Administrative Law of the Oregon State Bar,
House Judiciary Committee, HB 1213, Apr 23, 1971, 4.13
        In 1975, the legislature placed the procedures for
reviewing orders in contested cases and orders in other than
contested cases into two separate statutory sections. See Or
Laws 1975, ch 759, §§ 14-16 (creating ORS 183.482 (1975) and

    11
       No appellate decision addressed the procedures for review of orders in
other than contested cases between 1971 and 1979, when ORS 183.484 assumed
essentially its present form. We note, however, that the general rule in 1971 was
that, in a suit in equity, a court would review the lower tribunal’s ruling de novo;
that is, it was free to assess the facts anew. See Moore v. Brown, 19 Or App 199,
205, 527 P2d 132 (1974).
    12
       In contrast, the 1971 legislature specified with far greater precision the
procedures for reviewing orders in contested cases. See Or Laws 1971, ch 734,
§ 18(6). The legislature confined our review to the record created before the
agency and prohibited us from substituting our “judgment as to any issue of
fact” found by the agency. Id. The 1971 legislature also specified the grounds for
reversing or modifying orders in contested cases and thus limited a reviewing
court’s ability to depart from the agency’s ultimate determination. See id. § (7)(d).
    13
       The quoted exhibit is attached to the House Judiciary Committee minutes
immediately after the April 23, 1971, committee hearing. It is unclear, however,
from the legislative history when the committee received that exhibit.
98                          Kasliner v. Dept. of Human Services

ORS 183.484 (1975)). Aside from that organizational change,
the 1975 legislature left the provisions for judicial review of
orders in other than contested cases largely unchanged. See
id.; Minutes, House Judiciary Committee, HB 2068, Jan 29,
1975, 3 (statement of Al Laue) (explaining that the proce-
dures for reviewing those two types of orders were moved
into separate sections primarily for clarification).
         Regarding review of orders in other than contested
cases, the 1975 act provided, in part:
         “(3) * * * The review shall proceed and be conducted by
     the [circuit] court without a jury as a suit in equity, and the
     court shall have such powers as are conferred upon a court
     of equitable jurisdiction.
        “(4) In the case of reversal the court shall make special
     findings of fact based upon the evidence in the record and
     conclusions of law indicating clearly all aspects in which
     the agency’s order is erroneous.”
Or Laws 1975, ch 759, § 16(3), (4).
         In 1979, the legislature substantially revised the
Oregon APA. See Exhibit A, House Judiciary Subcommittee,
HB 2497, Apr 5, 1979 (1977 Letter from the Speaker of the
House and the President of the Senate asking Legislative
Counsel to undertake a “thorough review” of the Oregon
APA). As a small part of that larger revision, the legisla-
ture amended the two statutory sections governing judi-
cial review of orders in contested and other than contested
cases. See Or Laws 1979, ch 593, §§ 24, 25, 25(a) (amend-
ing ORS 183.482 and 183.484). A representative from
the Legislative Counsel’s office explained that the House
Judiciary Subcommittee had “decided to try to incorporate
the judicial review provisions of the Florida Administrative
Procedures Act into the Oregon’s Administrative Procedures
Act.” Tape Recording, House Committee on Judiciary, HB
2497, May 7, 1979, Tape 60, Side 2 (statement of Elizabeth
Stockdale). The Florida provisions that the Oregon legisla-
ture incorporated identify the grounds on which a review-
ing court can set aside, modify, or remand an agency order.
Id. Legislative counsel observed that, although the judicial
review provisions that Oregon borrowed from Florida use
different wording, they are “not really different in substance
Cite as 330 Or App 85 (2024)                                               99

from the [existing] Oregon law” governing review of orders
in contested cases. Id.
         Legislative counsel added, without further expla-
nation, that “[t]he same amendments have been made for
circuit court review of an order that is the result of other
than a contested case.”14 Id. Incorporating those amend-
ments into ORS 183.484 worked a larger change in the pro-
cedures for reviewing orders in other than contested cases.
Specifically, it entailed removing all references to reviewing
orders in other than a contested case as a court would in
a suit at equity, and it added the standards now found in
ORS 183.484(5), which identify when a court can set aside,
modify, or remand an order in other than a contested case.
See Or Laws 1979, ch 593, § 25a. In making those changes,
however, the legislature left in place what is now codified as
ORS 183.484(6). That subsection provides, as it has since
1971, that, when a circuit court reverses an order in other
than a contested case, it shall make special findings of fact
and conclusions of law indicating clearly all aspects in which
the agency’s order is erroneous.
         The legislative history of the 1979 amendments does
not specifically address the legislature’s intent in amend-
ing ORS 183.484. It does, however, provide some guidance.
Specifically, in moving from the open-ended review of orders
in other than contested cases set out in the 1975 amend-
ments to the more constrained review set out in the 1979
amendments, the legislature retained and reaffirmed the
circuit court’s obligation to make “special findings of fact”
when it reverses an order in other than a contested case. See
ORS 183.484(6).
         In interpreting the relationship between what is
now codified as ORS 183.484(5) and ORS 183.484(6), our goal
is to give effect, if possible, to the terms of both subsections.
    14
       Legislative Counsel submitted a report to the House Judiciary
Subcommittee on the recommended changes to the Oregon APA. See Exhibit A,
House Judiciary Subcommittee, HB 2497, Apr 5, 1979. That report largely par-
allels the explanation that Stockdale later provided to the House Judiciary
Committee on May 7, 1979. See id. Although the report generated questions from
the subcommittee on other proposed changes to the Oregon APA, no question
touched on the procedures for judicial review of agency orders in contested and
other than contested cases. See Tape Recording, House Judiciary Subcommittee,
HB 2497, Apr 5, 1979, Tape 38, Side 2.
100                            Kasliner v. Dept. of Human Services

See PGE v. Bureau of Labor and Industries, 317 Or 606, 611,
859 P2d 1143 (1993) (stating that rule of construction). In
doing so, we note that the requirement in ORS 183.484(6)
that a circuit court make special findings of fact applies,
as a matter of text, when the court “reverses”—i.e., sets
aside—an agency’s order in other than a contested because
“the order is not supported by substantial evidence,” ORS
183.484(5)(c).15 Indeed, setting aside an agency’s order for
lack of substantial evidence is the primary, if not the only,
instance identified in ORS 183.484(5) in which the findings
of fact required by ORS 183.484(6) would matter.
         Holding, as DHS urges, that a circuit court’s sub-
sidiary findings of fact are irrelevant in substantial evi-
dence review of an order in other than a contested case
would reduce ORS 183.484(6) to a virtual nullity, which
PGE directs us to avoid doing. Considering the text, context,
and history of ORS 183.484, we conclude that courts should
defer to a circuit court’s subsidiary findings of fact that are
supported by the record in reviewing an order in other than
a contested case for substantial evidence.
         With that statutory directive in mind, we turn
to the question whether the court erred in setting aside
DHS’s order for lack of substantial evidence. As noted, the
circuit court found that DHS’s investigation, which led to
its founded determination, was “biased.”16 Although DHS’s
procedures for internal agency review permitted petitioner
to submit documentary evidence for the agency’s consider-
ation, the circuit court expressly found that DHS’s witnesses
were not credible when they testified that they considered

     15
        What is now codified as ORS 183.484(5) begins by providing that a “court
may affirm, reverse or remand [an agency’s] order.” That subsection then specifies
when a court may “set aside,” “modify,” or “remand” the agency’s order and identi-
fies grounds for doing so. See ORS 183.484(5)(a) - (c). Although subsection (5) uses
two related but slightly different sets of terms, we conclude that “revers[ing]” an
agency’s order includes “set[ting] aside” that order.
     16
        DHS does not argue that that finding is not supported by the record, nor
does it argue that the circuit court’s finding of bias is not a subsidiary factual
finding. It argues only that the circuit court’s subsidiary factual findings are not
relevant in reviewing for substantial evidence. See Querbach, 369 Or at 801-02
(leaving open the question whether, if the circuit court had made a finding of bias,
any deference would be owed that subsidiary factual finding).
Cite as 330 Or App 85 (2024)                                                 101

petitioner’s evidence before issuing DHS’s final order.17 Two
propositions follow from those findings. First, DHS’s biased
investigation fatally infected its determination that L’s
report was founded. Second, a founded determination that
is the product of bias does not provide a reliable benchmark
against which either we or the circuit court can measure the
substantiality of the evidence in the hybrid record.18
         Having made those factual findings, the circuit court
reasonably concluded that it could not say that DHS’s biased
determination was supported by the record. Attempting to
determine whether a biased decision is supported by sub-
stantial evidence is the antithesis of the fair procedures
that ORS 183.484 was intended to provide. Conversely, the
court could not say that L’s report was unfounded. See OAR
413-015-1010(2)(b) (defining a report as “unfounded” when
“there is no evidence the [reported] abuse occurred”; empha-
sis added). Rather, the circuit court remanded DHS’s order
with instructions to enter an order that DHS was “unable
to determine” whether the reported abuse occurred. See
OAR 413-015-1010(2)(c) (defining that option). Perhaps DHS
could have raised other challenges to the circuit court’s dis-
position. However, given the issues that DHS has raised on
appeal, we cannot say that the circuit court erred in reach-
ing that conclusion.
         DHS assigns error to a second ruling. It argues that
the circuit court erred in remanding DHS’s order for abusing its
discretion in investigating L’s report. See ORS 183.484(5)(b)(A)
(authorizing a remand for an abuse of discretion). DHS
notes that, as a statutory matter, it could reach only one of
three conclusions: L’s report was unfounded; DHS could not
determine whether L’s report was founded; or L’s report was

    17
       Moreover, as noted above, Harper testified that DHS’s rules prevented her
from looking to other sources to consider the value of the exculpatory evidence
petitioner submitted when she lacked the expertise to assess the significance of
that evidence.
    18
       The proposition that an agency determination is the product of bias is sepa-
rate from the proposition that the contrary evidence introduced in circuit court is
significant enough that the assumption that underlies Norden—that the agency
would have reached the same conclusion if it had heard all the evidence—loses its
validity. See Querbach, 369 Or at 803 (noting that proposition). Our holding turns
on the first proposition. We express no opinion on how the second proposition
applies in this case.
102                            Kasliner v. Dept. of Human Services

founded. Because it had no discretion to do anything else,
DHS argues that the question whether it abused its discre-
tion in investigating L’s report is either inapposite or not an
independent basis for a remand.
         We do not reach the merits of that issue because DHS
did not preserve it. See State v. Wyatt, 331 Or 335, 345-47, 15
P3d 22 (2000) (explaining that an appellate court can con-
sider whether an appellant preserved an issue even though
the respondent does not contest preservation). On appeal,
DHS does not contend that it raised and thus preserved the
issue that underlies its second assignment of error—that
any abuse of discretion in investigating L’s report is either
inapposite or not an independent basis for a remand under
ORS 183.484(5)(b)(A). Rather, DHS argues that “the [circuit]
court’s reliance on that statute [ORS 183.484(5)(b)(A)] as a
basis for remand was unanticipated, and thus, preservation
principles do not apply.”
         We read the record differently. The circuit court
issued two letter opinions on the merits. In its first letter
opinion, the court reasoned that DHS’s order should be
reversed for lack of substantial evidence and asked petition-
er’s counsel to prepare a form of order. After receiving that
request, petitioner’s counsel submitted a memorandum to
the court. In that memorandum, petitioner’s counsel recited
that he had circulated a proposed form of order to DHS’s
counsel, who objected to reversing DHS’s order because the
court’s first letter opinion rested on DHS’s abuse of its dis-
cretion in investigating L’s report. Given that objection, peti-
tioner’s counsel suggested to the court that the more appro-
priate disposition was a remand to the agency under ORS
183.484(5)(b)(A).
        The court agreed and withdrew its first letter
opinion. More than a month after petitioner’s counsel filed
the memorandum, the court issued a second, revised let-
ter opinion remanding DHS’s order to the agency under
ORS 183.484(5)(b)(A).19 Between the time that petitioner’s

    19
       As noted above, we view the circuit court’s second letter opinion as effec-
tively reversing the circuit court’s order for lack of substantial evidence. DHS’s
second assignment of error, however, takes a more formal view of the court’s
ruling.
Cite as 330 Or App 85 (2024)                                            103

counsel filed the memorandum and the time that the cir-
cuit court issued its second, revised letter opinion, DHS’s
counsel did not object to remanding DHS’s order under ORS
183.484(5)(b)(A). Indeed, it appears from petitioner’s memo-
randum that DHS’s counsel was the person who suggested
a remand under ORS 183.484(5)(b) rather than a reversal.
At a minimum, the court’s reliance on ORS 183.484(5)(b)(A)
in its second letter opinion was not “unanticipated,” and
DHS had ample time to object to petitioner’s suggestion that
the court remand DHS’s order under ORS 183.484(5)(b)(A).
Because DHS did not do so, it failed to preserve the issue
that underlies its second assignment of error.20
         In its third assignment of error, DHS argues that
the circuit court erred in awarding petitioner approximately
$19,000 in attorney fees. DHS does not challenge the amount
of the fees that the court awarded. Rather, it argues the
court abused its discretion in awarding any fees under ORS
183.497(1)(a) and alternatively under ORS 183.497(1)(b).
Because we uphold the court’s fee award under ORS
183.497(1)(a), we need not decide whether ORS 183.497(1)(b)
provided an alternative basis for awarding fees.
          ORS 183.497(1)(a) provides that, in a judicial review
proceeding under ORS 183.484, a court “[m]ay, in its discre-
tion, allow the petitioner reasonable attorney fees” if it finds
in the petitioner’s favor. ORS 20.075(1) identifies a nonexclu-
sive list of factors that guide a court’s exercise of discretion
in deciding whether to award fees. See Necanicum Investment
Co. v. Employment Dept., 345 Or 518, 522-23, 200 P3d 129
(2003) (ORS 20.075 applies to a court’s exercise of discretion
under ORS 183.497(1)(a)). On appeal, DHS argues that the
circuit court erred in considering two factors listed in ORS
20.075(1).
         We review the circuit court’s decision to award attor-
ney fees under ORS 183.497(1)(a) for an abuse of discretion;
however, that discretionary decision “can involve predicate
factual and legal determinations.” Ellison v. Dept. of Rev.,
362 Or 148, 159, 404 P3d 933 (2017). We review predicate
legal determinations for errors of law and predicate factual
    20
       Given our resolution of DHS’s second assignment of error, we express no
opinion on the merits of the issue that assignment of error presents.
104                     Kasliner v. Dept. of Human Services

determinations for lack of supporting evidence. Id. With that
preface, we turn to the two factors that DHS challenges.
         ORS 20.075(1)(a) provides that, in deciding whether
to exercise its discretion to award fees, a court shall consider
“[t]he conduct of the parties in the transactions or occur-
rences that gave rise to the litigation, including any conduct
of a party that was reckless, malicious, in bad faith or ille-
gal.” Applying that factor, the circuit court found that “DHS
acted in bad faith in purporting to conduct an ‘investiga-
tion’ that the evidence showed did not meet its minimum
standards.”
         DHS argues that the circuit court misinterpreted
the term “bad faith” in ORS 20.075(1)(a). Specifically, DHS
notes that, under Mattiza v. Foster, 311 Or 1, 8, 803 P2d 723
(1990), “meritlessness is a necessary precursor to a finding
of bad faith” and that a meritless position is one “that is
devoid of factual or legal support.” DHS argues that, because
its founded determination was not devoid of factual support,
it did not act in bad faith, as Mattiza defined that term.
         DHS’s argument assumes that the court’s decision
in Mattiza applies to ORS 20.075(1)(a). Mattiza, however,
was interpreting the phrase “bad faith, wantonly, or solely
for oppressive purposes” in ORS 20.105(1)—a statute that
specifies when a claim or defense will be so lacking in sub-
stance that a court may award fees on that basis alone. See
Mattiza, 311 Or at 8 (explaining that it was interpreting
the phrase “bad faith” “for the purposes of ORS 20.105(1)”).
In that context, the court concluded that, at a minimum,
the claim or defense must be meritless; it must be “entirely
devoid of legal or factual support at the time it was made.”
Id. The federal and state cases on which Mattiza relied in
announcing that standard reasoned that, if the standard
were less stringent, it “could discourage all but the most
airtight cases.” Christianberg Garment Co. v. EEOC, 434
US 412, 422, 98 S Ct 694, 54 L Ed 2d 648 (1978); see also
Browning Debenture Holders’ Committee v. DASA Corp., 560
F2d 1078, 1088 (2d Cir 1977) (reasoning that, if a less strin-
gent standard applied, “those with colorable, albeit novel,
Cite as 330 Or App 85 (2024)                                                105

legal claims would be deterred from testing those claims in
* * * court”) (superseded on other grounds).21
         The concerns that animated Mattiza’s interpreta-
tion of the phrase “bad faith, wantonly or solely for oppres-
sive purposes” in ORS 20.105(1) do not apply to the use of
the phrase “bad faith” in ORS 20.075(1)(a). ORS 20.075(1)(a)
focuses on whether the conduct that gave rise to the litiga-
tion was blameworthy. It does not focus on the merits of a
party’s claims or defenses, as the statute at issue in Mattiza
does. Moreover, when ORS 20.075(1) addresses the merits
of a party’s claims or defenses, it asks whether those claims
or defenses were “objectively reasonable,” not whether they
were “meritless.” See ORS 20.075(1)(b).
         In our view, DHS errs in using the court’s interpre-
tation of the phrase bad faith in ORS 20.105(1) to determine
the meaning of that phrase in ORS 20.075(1)(a). Mattiza
aside, we cannot say that the trial court erred in concluding
that DHS acted in bad faith when its investigator conducted
the investigation of L’s report in violation of the agency’s
rules and did so, as the circuit court found, because of bias—
namely, the investigator was “predisposed” to reach one con-
clusion. That is, given the circuit court’s factual findings, we
cannot say that the court erred in applying ORS 20.075(1)(a).
         DHS challenges a second factor that the circuit
court considered. It argues that the court erred in finding
that DHS’s defense of its founded determination was not
“objectively reasonable.” See ORS 20.075(1)(b) (identifying
“[t]he objective reasonableness of the claims and defenses
asserted by the parties” as a factor to be considered in exer-
cising discretion). DHS reasons that, even if it were wrong
in concluding that L’s report was founded, its reliance on
L’s statements to reach that conclusion demonstrate that its
defense of its order was “objectively reasonable.”
        If DHS had conducted a reasonable, unbiased
investigation, we would have little reason to question that
    21
       The court explained in Mattiza that, in enacting ORS 20.105(1), the Oregon
legislature borrowed the phrase “bad faith, wantonly or solely for oppressive pur-
poses” from a United States Supreme Court case that had identified that basis for
awarding fees but had not defined it. Mattiza, 311 Or at 6. The court accordingly
looked to state and federal cases interpreting that standard in determining when
ORS 20.105(1) will authorize a fee award. Id. at 7-8.
106                            Kasliner v. Dept. of Human Services

argument. The circuit court found, however, that DHS’s
investigator had not pursued reasonable alternative expla-
nations for L’s report, that she had failed to follow the agency
rules that govern the investigation of reported abuse, and
that she had conducted a biased investigation. Given those
factual findings, the circuit court reasonably concluded
DHS’s defense of its order was not objectively reasonable.
Cf. Ellison, 362 Or at 169-70 (looking to the trial court’s fac-
tual findings in concluding that the agency’s position was
not objectively reasonable).22
        Having upheld the two factors that DHS challenges,
we conclude that the circuit court did not abuse its discretion
in awarding petitioner attorney fees under ORS 183.497(1)(a).
We accordingly affirm the circuit court’s supplemental judg-
ment and its judgment on the merits.
           Affirmed.

     22
        Relying on Preble v. Dept. of Rev., 331 Or 599, 604-05, 19 P3d 335 (2001),
DHS argues generally that it reasonably based its founded determination on L’s
statements; for that reason, it contends that no fees are warranted under ORS
183.497(1)(a) even if its determination was erroneous. This is not a case, how-
ever, like Preble where the sole question was whether the agency reasonably had
interpreted a statute but, as it later turned out, had done so erroneously. This
is a case in which the circuit court found that the biased and inaccurate way in
which DHS conducted its investigation undermined the reliability of its founded
determination.