Oral arguments over agency deference

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On December 1st, the Wisconsin Supreme Court heard oral arguments in TetraTech v. DOR, Appeal No. 2015AP2019, DWD v. LIRC (Beres), Appeal No. 2016AP1365, and Wisconsin Bell, Inc. v. LIRC, Appeal No. 2016AP355.

Here is a rundown of what happened.

Tetratech

For a description of the issues in this case, see TetraTech: Agency discretion and “process”.

The company began with agency deference, taking advantage of the Revenue Department’s concession that great weigh deference was no longer valid and that even due weight deference was not provided for under ch.227 except when the agency’s technical expertise was in play.

There was some general discussion of the facts in the case: which company did what task as part of the clean-up. TetraTech’s main point here was that in practical terms there was no real consumer good being sold, and so the sales tax in question lacked the basic requirement of a consumer good to be valid. Likewise, the cleanup of the polluted river silt did not lead to any new product that could be sold on a market of some kind.

The solicitor general disputed these points, claiming that the tax in question was valid because of: (1) the company’s role in processing the polluted silt or (2) its role as a consumer of the silt and water after cleaning by a sub-contractor.

The justices’ main concern was with how broadly the Revenue Department was interpreting the “processing” at issue in this case. Several justices indicated that the statutory term in this case — “processing” — was incredibly broad and could be applied to almost anything a company did. Accordingly, on several occasions they asked for guidance from counsel on how to narrow a reading of the term in some structured way. The Revenue Department advocated for a broad reading of “processing” based on the dictionary definition. TetraTech, on the other hand, sought to limit “processing” to a physical change in the raw materials rather than just the separation of materials into distinct parts or the enhancement of personal property in a way that creates commercial value.

In regards to agency deference, the Department of Revenue contended that agency deference only meant that a court could take account of the agency viewpoint and be persuaded by that viewpoint. In light of the amicus brief from the Wisconsin Utilities Association, the solicitor general indicated that courts could acknowledge the technical expertise of utilities when reviewing the rates set by those utilities.

Justice Gableman, however, apparently would go further in limiting court deference to state agencies. He asked specifically whether less deference was due to a state agency that was a party to the case than a neutral party that produces learned treatises (and most likely amicus briefs as well). This concern mirrored what Wisconsin Manufacturers & Commerce raised in its amicus brief in this case.

Beres

For the legislative history, see Beres/absenteeism at the Wisconsin Supreme Court, Part 1. For the facts and legal issues, see Beres: Agency discretion to undo a statutory scheme.

Counsel for the Department of Workforce Development began by proclaiming that great weight deference was invalid and even due weight deference was problematic. Prior to the current deference scheme, the solicitor general remarked, early court decisions had usually questioned and doubted the views of administrative agencies. In the current deference scheme, on the other hand, courts had ceded this caution and instead uncritically accepted the viewpoints of state agencies as valid simply because a state agency was behind that viewpoint. By failing to come up with its own interpretation and accepting the proffered rationale of an administrative agency, the Department explained, courts had improperly ceded their own authority and responsibility to determine for themselves what a law should mean.

NOTE: The solicitor general cited Boynton Cab v. Neubeck, 237 Wis. 249 (1941) as an example of the hard work of interpretation a court should always be doing. The problem with this claim is that the court in Boynton Cab relied heavily on and followed numerous reports and decisions of British and federal administrative agencies to determine what the term “misconduct” should mean for unemployment purposes.

As in TetraTech, the solicitor general would only concede that the limited deference due a state agency was the deference due a party for its persuasiveness (similar to the deference a higher court gives to a lower court that provides a persuasive analysis of an issue).

Furthermore, Borgnis was NOT on point, the Department responded when pushed, because the court review then was extremely limited to a jurisdictional question and did not inquire into whether an administrative agency had improperly usurped court authority.

As for the absenteeism provision itself, the Department argued that a plain reading of this statute allowed the employer to set its own misconduct disqualification, and the Commission’s arguments to the contrary were neither grammatically sound or in sync with the unemployment statute as a whole.

The Commission’s oral argument started with the strange question from Justice Abrahamson about why the Commission could not get along with the Department and somehow resolve these disputes prior to court action. Given that the Commission has statutory responsibility to decide how unemployment law should be interpreted and that the Commissioners themselves are independent of the governor (they have set terms and can only be removed for cause), this question made no sense. If the Department has a valid and strongly held dispute with the Commission over a Commission decision, then the only way to get that dispute resolved is through litigation. In no way should the Commission ever be responsible for getting disputes with the Department resolved through some kind of backroom deal. Such action would call into question the very independence that is condicio sine qua non to the Commission.

To keep matters off kilter, Justice Gableman repeated his concern from TetraTech about a state agency being a party to a dispute and so possibly biased in some improper way whereas a neutral law firm could provide unbiased guidance regarding the legal questions at issue. The response from the Commission about the legislature designating that administrative agency as having shared authority with courts for reviewing administrative law decisions did not seem to convince the justice that his concern over alleged agency bias was statutorily suspect.

Justice Gableman also pushed the Commission to explain what was wrong with the kind of persuasive deference lower courts could have on appellate courts under de novo review. The Commission’s response: the Commission is statutorily charged with deciding the legal disputes that come its way and by far most of those decisions are never appealed to court. See, for instance, the Commission’s statistics page. To do otherwise would scuttle the precedent Commission decisions provide employees and employers.

For the Commission, the holding in Borgnis was directly on point and reflected the simply reasonable notion that a court defer to a state agency when offering up a reasonable interpretation of the law. Some justices seemed to accept this point, others in addition to Justice Gableman seemed to reject it, and some (notably Chief Justice Roggansack) seemed to be on the fence.

The justices also seemed split on the absenteeism provision and whether the more than two absences in 120 days provision in the first part was a floor that no employer could lower or a default for when the employer lacked its own absenteeism policy. The Commission posited that this provision was a floor, and so the employee in Beres was not disqualified because her absence was not her fault and only a single absence. If this provision was just an option for an employer, then an employer would be free to set its own disqualification standard no matter how severe to its employees.

Wisconsin Bell

For a summary of this case, see Making factual findings subject to never-ending review: Wisconsin Bell.

The focus on agency deference in the first two cases allowed the oral argument here to focus almost entirely on the substance of discrimination law. The ensuring discussion, however, was hardly about the intersection of discrimination and disability law. Rather, the questions and answers almost entirely concerned the factual record in this case. As one of the attorneys observed after oral argument was over, it seemed like a motion for summary judgment was being heard. At one point, Justice Abrahamson even asked rhetorically where the discussion of the inference method had gone.

So, the factual record was immediately in play in this matter. Justice Gableman and Chief Justice Roggansack wanted to know what evidence the employer had to support its claims that the employee’s disability was illegitimate and nothing more than the shirking of job duties. The employer’s theory of the case, however, did not turn on the court re-assessing the credibility of the evidence presented. As a result, Wisconsin Bell could not point to evidence in the record to counter the employee’s claims in large part because the employer had never presented such counter evidence at the administrative hearing. Indeed, Chief Justice Roggansack along with Justice Bradley challenged the employer about whether specific findings of fact in the record were clearly erroneous, and Wisconsin Bell had to admit that there WAS evidence in the record to support those findings.

NOTE: Only Justice Kelly seemed ready to agree that court review of the factual record was needed anew when reviewing the case. For him, a new look at the factual record could verify the employer’s concerns about the employee’s alleged shirking. Justice Gableman also seemed ready for some additional court review of the facts if a reason for such review was presented to him. At several points, he voiced concerns about the employee working disability law to his advantage. In other words, Justice Gableman thought it improper in some way for an employee to exercise his rights in an astute manner.

Rather, the conceit of the employer’s case turned on a change in discrimination law that would make the employer’s decisions unassailable unless there was a some kind of admission by it of an illicit intent. It did not seem that the justices were ready to adopt that legal position, however (it barely came up at all). Only Justice R. Bradley indicated that she was willing to alter the law in a substantial way when she cited a statutory exception to Wisconsin’s discrimination law — Wis. Stat. § 111.34(2)(a) — as allowing any employer to discharge its employees who fail to do their assigned job duties regardless of their disabilities. This provision, however, is simply an affirmative defense available to employers to allow them to discharge permanently disabled employees who can no longer perform necessary job duties — like firefighters having their employment terminated should they become blind — and has nothing to do with employees who have temporary disabilities or illnesses that occasionally limit how they perform their jobs. So, it is unclear how this provision could be transformed in the way J. Bradley indicated.

All the posts in this series