Court Opinion

ID: 4377891
Source: CourtListenerOpinion
Date Created: 2019-03-18 07:05:48.040166+00
Date Added: 2024-06-11T14:49:31.948410
License: Public Domain

Order                                                                         Michigan Supreme Court
                                                                                    Lansing, Michigan

  March 15, 2019                                                                   Bridget M. McCormack,
                                                                                                 Chief Justice

  156270                                                                                David F. Viviano,
                                                                                        Chief Justice Pro Tem

                                                                                      Stephen J. Markman
                                                                                           Brian K. Zahra
  WILLIAM R. HENDERSON and All Others                                                Richard H. Bernstein
  Similarly Situated,                                                                Elizabeth T. Clement
                Plaintiffs-Appellants,                                               Megan K. Cavanagh,
                                                                                                      Justices

  v                                                        SC: 156270
                                                           COA: 332314
                                                           Ingham CC: 15-000645-AA
  CIVIL SERVICE COMMISSION and
  DEPARTMENT OF CORRECTIONS,
            Defendants-Appellees.

  _________________________________________/

         On January 23, 2019, the Court heard oral argument on the application for leave to
  appeal the August 15, 2017 judgment of the Court of Appeals. On order of the Court, the
  application is again considered, and it is DENIED, because we are not persuaded that the
  questions presented should be reviewed by this Court.

         MARKMAN, J. (concurring).

         I concur with this Court’s order denying leave to appeal. As Justice CAVANAGH
  observes in her concurring statement, although the predecessor Attorney General
  previously argued in this Court that the test set forth in Brandon Sch Dist v Mich Ed
  Special Servs Ass’n, 191 Mich. App. 257, 263 (1991) for determining whether an agency
  decision is “authorized by law” is inconsistent with the common understanding of Const
  1963, art 6, § 28, the present Attorney General, as is her prerogative, expressly
  abandoned that position at oral argument. 1 Furthermore, as Justice CAVANAGH also
  observes, a review for whether the decision is “arbitrary and capricious”-- which
  constitutes the fourth component of the Brandon test-- contemplates a “minimum level of
  review of the evidentiary record in order to ensure that there is some evidentiary support
  for [the] decision.” I write separately only to note that this Court by its order today does
  not decide that an “arbitrary and capricious” review does comport with the “authorized
  by law” standard, as the Court of Appeals held in Brandon.

  1
    Specifically, the Assistant Attorney General stated at oral argument in this regard that,
  in the Attorney General’s own supplemental briefing to this Court, “we took the position
  that it would not have been understood at the time [of the Constitution’s ratification in
  1963] to include whether the decision is arbitrary and capricious. I can represent to the
  Court at this time that we are no longer advancing that argument, it is not necessary to
  reach that issue in this case, [and] we are not asking the Court to reach that issue . . . .”
                                                                                           2

        For the following reasons, it is at least reasonably arguable that the “authorized by
law” standard does not include an “arbitrary and capricious” review. First, Black’s Law
Dictionary (5th ed) defines “authorize” as “[t]o empower; to give a right or authority to
act. . . . ‘Authorized’ is sometimes construed as equivalent to ‘permitted’ . . . .” From
this definition, “authorized by law” essentially means “empowered by law to act.”
Arguably, whether an agency is empowered by law to act is determined only by reference
to the presence or absence of a constitutional provision, statute, or regulatory enactment
sustaining the underlying authority of the agency action.

       Second, the term “authorized by law” appears in multiple (specifically, six) other
sections of our Constitution. And in those sections, “authorized by law” is used in a
manner consistent with the above understanding of that phrase, i.e., as meaning only
“empowered by law to act.” For instance, Const 1963, art 12, § 2 provides that petitions
to amend the Constitution “shall be filed with the person authorized by law to receive the
same at least 120 days before the election at which the proposed amendment is to be
voted upon.” (Emphasis added.) This provision sets forth a straightforward reference to
the person empowered by statute, the Secretary of State, to receive amendment petitions.
See MCL 168.471. See also Const 1963, art 2, § 9; Const 1963, art 9, § 31; Const 1963,
art 9, § 40; Const 1963, art 9, § 41; and Const 1963, art 9, § 42. There is no obvious
reason why “authorized by law” in Const 1963, art 6, § 28 should be understood in a
disparate manner from other constitutional provisions in which it appears to include
review of the evidentiary record.

       Third, concluding that the “authorized by law” standard permits courts to consider
the evidentiary record to assess agency findings of fact would seem to constitute a
somewhat unorthodox reading of Const 1963, art 6, § 28 as a whole. That provision
includes one, and only one, clause concerning court review of agency findings of fact:
“[I]n cases in which a hearing is required, whether the same are supported by competent,
material and substantial evidence on the whole record.” That is, Const 1963, art 6, § 28
explicitly includes a provision allowing review of the evidentiary record, and that
provision only pertains to “cases in which a hearing is required.” By negative
implication alone, that would arguably constitute the only circumstance in which review
of the evidentiary record is allowed.

        Finally, although obviously not binding upon our interpretation of the
Constitution, federal courts have asserted that an “arbitrary and capricious” standard of
review and the “substantial evidence” test under the federal Administrative Procedure
Act, 5 USC 551 et seq., are similar, if not identical, in assessing agency findings of fact.
See, e.g., AllCare Home Health, Inc v Shalala, 278 F3d 1087, 1089 (CA 10, 2001) (“The
arbitrary and capricious standard of review has been equated to the substantial evidence
test.”). Thus, if this Court included an “arbitrary and capricious” review in the
“authorized by law” standard under Const 1963, art 6, § 28, it would conceivably lead to
a peculiar outcome-- to wit, the provision would explicitly provide for a “substantial
evidence” test in cases in which a hearing is required and it would implicitly provide for
                                                                                            3

the same examination of the record through an “arbitrary and capricious” review in cases
in which a hearing is not required. Can this be what was understood by the ratifiers of
our Constitution?

       CAVANAGH, J. (concurring).

       I concur in the denial of leave to appeal in this case, but write separately to clarify
the appropriate evidentiary review of agency decisions under the “authorized by law”
standard of Const 1963, art 6, § 28.

        Const 1963, art 6, § 28 provides for “direct review by the courts” of whether
agency final decisions, findings, rulings and orders are “authorized by law . . . .” I agree
with the Court of Appeals that, because no hearing was held in this case, the circuit
court’s review of the Civil Service Commission’s decision and findings should have been
limited to whether they were authorized by law and not extended to apply the broader
“competent, material and substantial evidence” test in § 28. As the Court of Appeals
properly held, and as both parties now agree on appeal, the proper test for determining
whether a final decision, finding, ruling, or order is authorized by law is the four-factor
test articulated in Brandon Sch Dist v Mich Ed Special Servs Ass’n, 191 Mich. App. 257,
263 (1991). 2 That test asks whether the final decision, finding, ruling or order is (1) “in
violation of a statute,” (2) “in excess of the statutory authority or jurisdiction of the
agency,” (3) “made upon unlawful procedures resulting in material prejudice,” or (4)
“arbitrary and capricious.” Id. A decision is arbitrary and capricious when it (1) “lacks
an adequate determining principle,” (2) reflects an absence of consideration of significant
principles or circumstances, or (3) is “freakish or whimsical.” Wescott v Civil Serv
Comm, 298 Mich. App. 158, 162 (2012).

       I disagree with the Court of Appeals that review of the evidentiary support for an
agency’s final decision, finding, ruling or order is not proper under “authorized by law”
review—and notwithstanding that statement, I believe that the Court of Appeals actually
conducted the appropriate review of the evidentiary record in this case. While the
“arbitrary and capricious” standard of review necessarily must be more deferential than
the “competent, material and substantial evidence” standard applicable to decisions
following hearings, the “arbitrary and capricious” standard must mean something in order
to effectuate the Constitution’s requirement of direct review. While the exact contours of
the boundary between “arbitrary and capricious” review and “competent, material and
substantial evidence” review have proven difficult to define, see 2 Hickman &

2
  While the Civil Service Commission originally argued to this Court that the Brandon
test exceeds the original intent of the constitutional text of Const 1963, art 6, § 28, it
affirmatively abandoned that position at oral argument.
                                                                                                               4

Pierce, Administrative Law Treatise (6th ed), § 10.4, p 1136, I am unaware of any
authority that draws those lines in a manner that prohibits any review of the evidentiary
record.

       In order to determine whether an agency’s final decision and findings were
arbitrary and capricious, the reviewing court must conduct a minimum level of review of
the evidentiary record in order to ensure that there is some evidentiary support for that
decision. For example, a reviewing court could not determine whether a decision has
been made upon unlawful procedures without reviewing what procedures had been used.
Likewise, a reviewing court could not determine whether a decision lacked an adequate
determining principle without reviewing the reasoning behind the decision. While a
reviewing court lacks authority to reweigh the evidence considered by an agency and
cannot second-guess an agency’s view of the facts or an agency’s application of the
correct legal standard to those facts, a reviewing court must review the evidentiary record
in order to determine there was not a complete lack of evidentiary support for an agency’s
decision and in order to ascertain the determining principle applied by the agency.

       The circuit court did not err in scope by reviewing the evidentiary record. It was
required to do so to determine whether the Civil Service Commission’s decision was
authorized by law. Rather, the circuit court erred in manner by failing to afford the Civil
Service Commission proper deference. Because I believe the errors identified by the
Court of Appeals discussed manner rather than scope, I concur in the Court’s decision to
deny leave to appeal.

       MCCORMACK, C.J., joins the statement of CAVANAGH, J.

       BERNSTEIN, J., would remand this case to the Court of Appeals to apply the
standard set forth in Brandon Sch Dist v Mich Educ Special Services Ass’n, 191 Mich
App 257 (1991).

                         I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
                   foregoing is a true and complete copy of the order entered at the direction of the Court.
                         March 15, 2019
       t0312
                                                                             Clerk