The state Supreme Court has struck down a common method that cities and counties use to select temporary administrative hearing officers for land use controversies and other issues. The court ruled that San Bernardino County's unilateral appointment and payment of an attorney as a temporary hearing officer created the possibility of a conflict of interest for the attorney. The court accepted the argument from a massage clinic owner that the attorney might provide the county a favorable decision in hopes of being rewarded with additional work as a hearing officer.
The California State Association of Counties, 110 California cities and the California School Boards Association filed amicus briefs for San Bernardino County. They argued that a more formal process for selecting hearing officers would be expensive and cumbersome. But the court said, essentially, "tough."
"[S]peculation about the possible outcome of hypothetical cases cannot justify tolerating a practice that we have considered and found to create a constitutionally unacceptable risk of bias," Justice Kathryn Werdegar wrote for the court.
Five other justices joined Werdegar's opinion. Justice Janice Rogers Brown filed a concurring and dissenting opinion in which she agreed with the ruling on the San Bernardino County case but said the court should not dismantle a selection process used by many local governments.
The case at hand involved a massage clinic in San Bernardino County operated under a county license by Theodore Haas. When a deputy sheriff reported that a massage clinic employee exposed her breasts and propositioned him, the county revoked Haas's license. He requested a hearing, which the county granted.
The county counsel's office selected local attorney Abby Hyman to hear the matter. Haas's attorney, Roger Jon Diamond, objected prior to the hearing and again during the hearing. Diamond argued that Hyman had an interest in ruling for the county so she would be hired again. The case was like one in which a prosecutor files cases before a judge of the prosecutor's choice, Diamond contended. He offered to pay for a judge if the county were to contract with the state Office of Administrative Hearings, but the county declined.
Hyman refused to recuse herself and conducted a hearing. About seven weeks later, she issued a written decision recommending revocation of Haas's license. During a hearing at which Diamond again complained of the hearing officer selection process, the Board of Supervisors accepted Hyman's recommendation and pulled the license.
Haas filed a lawsuit. San Bernardino County Superior Court Judge J. Michael Gunn accepted Haas's argument and ordered the Board of Supervisors to set aside its decision. The county appealed, but the Fourth District Court of Appeal ruled the county had violated Haas's due process rights and upheld Gunn's decision. The county appealed again, but the state high court backed the lower courts, although for slightly different reasons.
The state Supreme Court focused on the monetary interest the hearing officer had in ruling for the county. While judges challenged for other reasons have been presumed impartial, courts have provided no exception for judges with a "direct, personal, substantial pecuniary interest," the court held.
"The question presented," Werdegar wrote, "is whether a temporary administrative hearing officer has a pecuniary interest requiring disqualification when the government unilaterally selects and pays the officer on an ad hoc basis and the officer's income from future adjudicative work depends entirely on the government's goodwill. We conclude the answer is yes."
"[C]ourts have consistently recognized that a judge has a disqualifying financial interest when plaintiffs and prosecutors are free to choose their judge and the judge's income from judging depends on the number of cases handled. No persuasive reason exists to treat administrative hearing officers differently."
The county presented a variety of arguments: Hyman's financial interest was too slight to require disqualification. The court should require a showing of actual bias. The hearing officer only makes a recommendation that the Board of Supervisors automatically reviews. The benefits of a different system do not outweigh the costs.
The court rejected all of the county's arguments. The Government Code offers two methods the county could follow, the court ruled. The county could establish the "office of county hearing officer," or the county could contract with the state Office of Administrative Hearings for services of an administrative law judge.
"To satisfy due process, all a county need do is exercise whatever authority the statute confers in a manner that does not create the risk that hearing officers will be rewarded with future remunerative employment for decisions favorable to the county," Werdegar wrote.
Haas v. County of San Bernardino, No. S076868, 02 C.D.O.S. 3888, 2002 DJDAR 4893. Filed May 6, 2002.
For Haas: Roger Jon Diamond, (310) 399-3259.
For the county: Alan Marks, county counsel, (909) 387-5459.