Whether an agency decision is classified as quasijudicial or quasilegislative affects both court jurisdiction and the level of judicial deference the decision is given, but determining whether a hearing is one or the other is not always so clear.

by David Schultz

Quasijudicial and quasilegislative hearings are distinct and important legal concepts in Minnesota administrative law. Categorization of a hearing -- such as for zoning, conditional use permits, public school expulsion, or other agency decisions -- as either the former or the latter, comes with legal significance affecting court jurisdiction, rights to appeal, and the level of judicial scrutiny and deference awarded to that decision. Yet determining whether a hearing is quasijudicial or quasilegislative is not always so clear, setting up traps for unsuspecting attorneys.

Administrative Law 101

The idea that judicial and legislative matters are distinct is a staple of administrative law. In the classic Bi-Metallic Investment Company v. State Board of Equalization of Colorado,1 the board was adopting an assessment policy for all property to be taxed at 40 percent. The issue was whether individuals have a constitutional right to be heard in this situation; Justice Holmes said no. He distinguished general policies, where all parties are treated alike, from decisions that single out property owners for particular treatment. In the latter case, there is a right to be heard, while in the former, the general remedy the public has against legislative policies they do not like is to resort to elections and the political process.

Kenneth Culp Davis similarly distinguishes adjudicative from legislative facts, arguing that the former are facts which are specific to an individual while the latter are facts on matters of public policy which are weighed and balanced.2 Adjudicative facts, for Davis, "answer the questions of who did what, when, how, why, with what motive or intent."3 Adjudicative facts are the kind of facts that go to a jury, whereas legislative facts are not immediate to specific parties but are more general facts that help clarify matters of policy.

Davis' point is that appeals on legislative matters should be treated differently from judicial and administrative matters. Matters involving individual adjudicative facts are the kind that ought not to be determined or ascertained unless the party in question is given an opportunity to be heard or to have the matter reviewed by an appropriate court on appeal. On the other hand, legislative facts or policy issues generally are matters for the political process to decide. When judicial review does occur, courts should grant broad deference to decisions reached by legislative bodies because they, and not the courts, are generally entrusted to make policy.

This distinction between matters that implicate general policy and those that are specific to individuals is at the root of Minnesota's distinction between quasijudicial and quasilegislative hearings. This distinction between adjudicative and legislative facts is also critical to distinguishing contrasting ways the Minnesota courts view different types of agency decisions.

Pre-1996 Law

Prior to 1996, what constituted a quasijudicial hearing was not clear. For example, in Arvig Telephone Company v. Northwestern Bell Telephone Company4 the Minnesota Supreme Court noted that state law distinguished administrative agencies acting in their legislative versus judicial capacities:

In delineating the scope of our review of administrative agency decisions, we have in the past drawn a distinction between legislative and quasi-judicial agency functions. Agency determinations which are legislative in character receive an extremely limited review on appeal, while quasi-judicial actions are somewhat more closely scrutinized.5

In In re Haymes,6 the Court indicated that judicial review was constitutionally mandated for administrative agencies exercising quasijudicial powers. The Court based this argument on the separation of powers provision of the Minnesota Constitution, Article III, section 1, contending that significant deference should be granted to agencies acting in their executive or legislative capacity, but that similar deference was not necessarily required when an agency was acting in its judicial capacity.

However, despite articulating a clear doctrine of deference depending on what function the agency was performing, the Court failed to clarify exactly what quasijudicial meant and how the Court distinguished it from executive and legislative actions.

Clarifying the Distinction

Attempts to clarify the distinction between quasijudicial and quasilegislative hearings began in 1996 with Meath v. Harmful Substance Compensation Board.7 Here, the Legislature had created the Harmful Substance Compensation Board (Board) to take testimony and make recommendations regarding compensation for individuals who had been exposed to anhydrous ammonia. By law, complainants were barred from filing in court while the issue was before the Board, but were free to go to court afterward if they rejected the offer. Individuals accepting an award were precluded from bringing a civil action in court for the same injury or damage. Meath was denied compensation by the Board and then appealed the denial of compensation to the Minnesota Court of Appeals. The Court of Appeals affirmed the decision. Meath then appealed to the Minnesota Supreme Court, which reversed.

The Supreme Court held that the Board decision was not a quasijudicial act and therefore the court had no jurisdiction to hear the case. The Court argued that the Legislature set up the Board as an alternative procedure to resolve complaints and that a Board "decision" was really a recommendation or offer to the claimant. Thus, a denial of compensation was not a judicial decision and the claimant could have rejected the offer and gone to court, but could not appeal it. The Court's effort to distinguish quasijudicial from quasilegislative hearings and to clarify both terms was critical to the reasoning behind this holding.

In summary, quasi-judicial conduct is marked by an investigation into a disputed claim and a decision binding on the parties. Even though the phrase "quasi-judicial act" has sometimes been so broadly defined that it can be said to include almost any administrative decision based on evidentiary facts, it seems to us that we would be well-advised today to apply the term only to those administrative decisions which are based on evidentiary facts and which resolve disputed claims of rights.8

Paralleling both Kenneth Culp Davis and Justice Holmes, the Supreme Court indicated that quasijudicial hearings have two characteristics. First they involve the gathering of evidentiary (adjudicative) facts and, second, they resolve a disputed claim. In short, quasijudicial hearings do not address policy questions and they do not involve the weighing of competing interests, as would be the case with quasilegislative hearings.

More important in Meath was Justice Anderson's concurrence. While agreeing with much of the majority holding, he also stipulated that past case law in Minnesota indicated that for a decision to be considered quasijudicial it had to have a sense of finality.9 The lack of finality and the voluntary nature of the Board's procedures rendered it not a quasijudicial body. Moreover, Justice Anderson averred that the majority in this case and the Court in In re Haymes had overstated the reason why judicial review was mandated for agency decisions that were quasijudicial. In Justice Anderson's view, instead of being mandated by the state constitution for all agency quasijudicial proceedings, "judicial review must exist if an administrative agency's quasi-judicial decision would be a Ôjudicial' decision absent the existence of judicial review." 10

Justice Anderson's concurrence, especially his insistence on finality, became critical to subsequent Court efforts to distinguish quasijudicial from quasilegislative activity. In Minnesota Center for Environmental Advocacy v. Metropolitan Council,11 the Minnesota Center for Environmental Advocacy (Center) challenged a decision by the Met Council to include a recommendation to replace the Stillwater Bridge in the Council's 1998-2000 Transportation Improvement Program (tip). The Center contended that this recommendation was inconsistent with the Metropolitan Development Guide and therefore violated the Federal Intermodal Surface Transportation Efficiency Act of 1991 (istea). The Center sought judicial review of the Council's decision. The Court of Appeals denied jurisdiction, claiming that the decision was not quasijudicial but quasilegislative. The Center appealed to the Supreme Court, which affirmed the Court of Appeals.

Drawing upon Meath, including Anderson's concurrence, the Court clarified a three-part test for whether a decision is quasijudicial:

Adopting the additional standard proposed by the concurrence in Meath, the three indicia of quasi-judicial actions can be summarized as follows: (1) investigation into a disputed claim and weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim.12

In this case, there was an investigation by a political body and its research, public debate, and comments were more legislative than judicial in character. Second, no prescribed standard existed, and third, the decision was not binding on the parties but could be modified at will.

In Handicraft Block Limited Partnership v. City of Minneapolis,13 the Court again applied the new three-prong standard. Here, the petitioner (Handicraft Block Limited Partnership) challenged the designation of the exterior of their building for "heritage preservation" by the Minneapolis Heritage Preservation Commission (hpc). Hpc, the city planning commission, and eventually the entire City Council all voted to grant the designation. Petitioner sought certiorari review by the Court of Appeals. The court indicated that it had jurisdiction only if the designation occurred in a quasijudicial and not a quasilegislative proceeding. Both parties had initially stipulated that the hearing was quasijudicial. But in light of Minnesota Supreme Court decisions distinguishing quasijudicial and quasilegislative hearings, the Court of Appeals again asked for clarification from the parties and the city reversed itself, stating that the decision was quasilegislative. The Court of Appeals then held that the proceeding was quasilegislative and denied petitioner's writ. Handicraft appealed to the Supreme Court, which reversed, holding that a heritage preservation decision is quasijudicial and therefore reviewable by the Court of Appeals on petition for certiorari. According to the Supreme Court:

The three indicia of quasi-judicial actions can be summarized as follows: (1) investigation into a disputed claim and a weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim. Here, petitioner attended several hearings on the designation and thus these were adversarial hearings on a disputed claim that weighed facts. Second, the criteria of historic preservation constituted a standard. Third, the city reached a binding decision on the issue.14

Finally, in Interstate Power Company v. Nobles County Board of Commissioners,15 Interstate Power Company (Interstate) appealed a decision by a county board to deny a conditional use permit (cup) to upgrade transmission power lines. The denial was brought on petition for certiorari to the Court of Appeals which remanded back to the county with directions to make specific findings for the denial. While the matter was on remand, the county board also held a hearing on a zoning amendment regarding setback requirements that would have an impact on Interstate's cup request. The amendment passed and the cup was again denied. Interstate sought certiorari from the Court of Appeals granting review of both the amendment and the denial of the cup. The court denied review of the amendment and affirmed the denial of the cup, stating the cup hearings were quasijudicial. The Supreme Court reversed and remanded, stating that: "[l]egislative acts are not reviewable by certiorari in the court of appeals, but by a direct action in district court. In contrast, where, as here, a quasi-judicial zoning decision is made by a county board, it is reviewable by writ of certiorari."16 In general, the Court stated that zoning amendments could not be reviewed by certiorari, but in this case the zoning amendment was related to the cup request and therefore reviewable by certiorari.

The Quasijudicial Test

The Meath, Minnesota Center, Handicraft Block, and Interstate Power decisions established a three-prong test to clarify whether a hearing is quasijudicial, as opposed to quasilegislative.

First, there must be an investigation into a disputed claim and a weighing of evidentiary facts. This means that there must be a use of or appeal to adjudicative facts specific to the complainant. These might be unique factors about specific property, behavior, or other characteristics unique to that individual that set him or her apart from others. In short, the complainant must not be a member of a larger class of parties such as taxpayers who are all affected equally by a decision. Moreover, a quasijudicial hearing is not a public policy debate about the general merits of historic preservation, whether a city should allow for commercial uses in certain parts of the city, whether to build a bridge, or how to route traffic.

Second, there must be an application of those facts to a prescribed standard. Standards may include zoning, housing, or building codes, for example. A quasilegislative decision, which is policy based, does not have a prescribed standard. Issues such as where to build a bridge or how competing land uses should be resolved are normative or evaluative in character rather than being necessarily based upon more objective standards. They are thus matters of policy. Other characteristics of a quasilegislative decision include the balancing of cost and noncost factors,17 rate-making to protect the public interest,18 or discretionary balancing of "competing concerns and choosing among public policy alternatives."19

Third, there must be a decision regarding the disputed claim that binds the parties. Here, there must be antagonistic parties with conflicting interests who seek resolution of their dispute. They cannot opt out or disregard the agency's decision. Finality is also achieved when the decision is subject to appeal to city council, for example.

Given the Court's recent statements, when is a hearing quasijudicial? First, the Minnesota Administrative Procedure Act classifies some decisions -- such as contested cases -- as quasijudicial and some decisions -- such as the adoption of state agency rules -- as quasilegislative. Second, some pre-1996 decisions that remain good law define specific hearings as quasijudicial or quasilegislative. For example, agencies are acting in their quasilegislative capacity when they are engaged in rate-making to protect the public interest.20 Third, the Meath, Minnesota Center, Handicraft Block, and Interstate Power test has been used extensively since 1996 to categorize a large number of hearings as quasijudicial. The sidebar on page 16 of this article lists a variety of examples of quasijudicial and quasilegislative matters.

Why the Classification Matters

Does it matter whether a hearing is classified as quasijudicial or quasilegislative? The answer is "yes," since it affects both court jurisdiction and the level of judicial deference given to the agency decision.

In general, quasijudicial decisions are reviewable through certiorari by the Court of Appeals and not in district court.21 Conversely, the Court of Appeals lacks jurisdiction to review a quasilegislative decision unless the case was first heard at the district court level. Attorneys seeking initial review of quasilegislative decisions at the Court of Appeals will find their cases dismissed for lack of jurisdiction. The proper forum to challenge quasilegislative decisions is in district court in a declaratory-judgment proceeding.22

Quasijudicial decisions are given great deference. If the decision is quasijudicial, the Court of Appeals will defer to the agency's determination of facts but not law. These kinds of agency decisions are upheld unless not supported by substantial evidence, based on erroneous interpretation of the law, outside agency jurisdiction, procedurally defective, or arbitrary and capricious.23 In reviewing quasijudicial administrative decisions not subject to the state Administrative Procedures Act, a reviewing court is not bound by the agency's determination of the legal issues but it must defer to its fact-finding process.24 Moreover, in quasijudicial hearings, the quality of evidence and testimony does not have to meet full judicial standards.25

Agency decisions that are more legislative in nature are given even greater deference than those which are quasijudicial. In Arvig Telephone Company v. Northwestern Bell Telephone Company26 the Court noted that "[a]gency determinations which are legislative in character receive an extremely limited review on appeal, while quasi-judicial actions are somewhat more closely scrutinized."27 The Court then clarified that twin standard of review in the context of decisions made by the Public Service Commission.

(a) When the Public Service Commission acts in a judicial capacity as a factfinder, receives evidence in order to make factual conclusions, and weighs that evidence as would a judge in a court trial, it will be held on review to the substantial-evidence standard.

(b) When the Public Service Commission acts in a legislative capacity as in rate increase allocations, balancing both cost and noncost factors and making choices among public policy alternatives, its decisions will be upheld unless shown to be in excess of statutory authority or resulting in unjust, unreasonable, or discriminatory rates by clear and convincing evidence.28

As the Court stated in Handicraft Block Limited Partnership v. City of Minneapolis, quasijudicial decisions are examined on certiorari to determine whether the agency had substantial evidence for its decision,29 whereas agencies acting in their legislative capacity will have their decisions upheld unless "the action is shown by clear and convincing evidence to exceed the agency's statutory authority or unless the result is shown by clear and convincing evidence to be unjust, unreasonable, or discriminatory."30

Perhaps one great example of how classification of a decision as quasijudicial or quasilegislative matters is important can be found in the recent University of Minnesota v. Woolley.31 Here an individual had been dismissed from the University of Minnesota. According to University procedures, there was a three-step process to follow before one could be terminated. At the end of that third step there was also a Phase IV whereby the dismissed employee could agree to submit the case to binding arbitration if he or she waived the right to appeal.

Here, Woolley had submitted to arbitration and the arbitrator upheld the Phase III dismissal. Woolley brought the case on petition for certiorari to the Court of Appeals. The court held that the binding arbitration decision was not quasijudicial, but found that termination of employment at the end of the Phase III hearing would have been quasijudicial and therefore reviewable by the Court of Appeals. The court determined that the Phase IV binding arbitration was not part of the internal grievance or disciplinary process of the University. By submitting the case to Phase IV arbitration, Woolley had waived further rights to court action; therefore, the arbitration was not a quasijudicial process that could be reviewed on certiorari by the Minnesota Court of Appeals. Granted, Woolley had waived his rights, but the decision to classify Phase IV as outside the quasijudicial proceedings of the University's internal grievance process was decisive in the court's ruling that it did not have jurisdiction to hear the case.

Conclusion

The difference between a quasijudicial and quasilegislative hearing is often difficult to ascertain. Understanding the difference is critical for lawyers because it may have tremendous bearing on whether and how a court will review the decision. The recent line of Minnesota Supreme Court cases beginning with Meath have sought to bring some important clarity to when and under what circumstances the courts will review different types of agency decisions. M

Notes
1 239 U.S. 441 (1915).

2 Kenneth Culp Davis, Administrative Law Treatise, 412-415 (San Diego, CA: K.C. Davis Publishing Company, 1979).

3 Id. at 413.

4 270 N.W. 2d 111 (Minn. 1978)

5 Id. at 6.

6 444 N.W.2d 257 (Minn. 1989).

7 550 N.W.2d 275 (Minn. 1996).

8 Id. at 279.

9 Id. at 281-2.

10 Id. at 283.

11 587 N.W.2d 838 (Minn. 1999).

12 Id. at 842.

13 611 N.W.2d 16 (Minn. 2000).

14 Id. at 20.

15 617 N.W. 2d 566 (Minn. 2000).

16 Id. at 574.

17 Arvig Telephone Company v. Northwestern Bell Telephone Company, 270 N.W. 2d 111, 116 (Minn. 1978).

18 In the Matter of the Excess Surplus of Blue Cross and Blue Shield of Minnesota, 606 N.W. 2d 697, 707 (Minn. App. 2000).

19 550 N.W. 2d, 275 at 280 (J. Anderson concurrence).

20 St. Paul Companies v. Hatch, 449 N.W.2d 130, 136-37 (Minn. 1989); In the Matter of the Excess Surplus of Blue Cross and Blue Shield of Minnesota, 606 N.W. 2d 697, 707 (Minn. App. 2000).

21 Carlson v. Chermak, 639 N.W. 2d 886, 889 (Minn. App. 2002).

22 Id. at 889.

23 Alich v. Dakota County Community Development Authority, 2003 wl 230726 (unpublished).

24 In the matter of the Revocation of the Family Child Care License of Glewwe, 2002 wl 1275771 (Minn. App 2002) (unpublished); Rodne v. Commissioner of Human Services, 547 N.W.2d 440 (Minn. App. 1996).

25 Schwardt v. County of Watonwan, 656 N.W.2d 383 (Minn.. 2003).

26 270 N.W. 2d 111 (Minn. 1978)

27 Id. at 116.

28 Id., quoting St. Paul Area Chamber of Commerce v. Minnesota Public Service Commission, 251 N.W.2d 350, 358 (Minn.1977).

29 611 N.W.2d 16 at 23.

30 Meath v. Harmful Substances Control Board, 550 N.W. 2d, 275, 280 (J. Anderson concurrence).

31 C6-02-153 (Minn. App. 04/22/03).

Quasijudicial and Quasilegislative Hearings -- Examples

Quasijudicial
Conditional use permit. Interstate Power Company v. Nobles County Board of Commissioners, 617 N.W. 2d 566 (Minn. 2000).
Historical or heritage preservation. Handicraft Block Limited Partnership v. City of Minneapolis, 611 N.W.2d 16 (Minn. 2000); Billy Graham Evangelistic Association v. Minneapolis, 653 N.W.2d 638 (Minn. App. 2002); Soo Line v. Minneapolis, 625 N.W.2d 834 (Minn. App. 2001).
Variance. Carlson v. Chermak, 639 N.W. 2d 886 (Minn. App. 2002).
Denial of variance. Hibbing v. Baratto, 620 N.W.2d 58 (Minn. App. 2000); Friends of Chester Park v. Duluth, 2001 WL 290419 (Minn. App. 2002) (unpublished) (decisions of zoning board of appeals are quasijudicial and are reviewable in district court under Minn. Stat. §462.361).
Special use permit. Carlson v. Chermak, 639 N.W. 2d 886 (Minn. App. 2002).
County Board directive not to record developer's plat. West Circle Properties LLC v. Hall, 634 N.W.2d 238 (Minn. App. 2001).
Eminent domain decisions; determinations buildings are "structurally substandard." Walser Auto Sales v. City of Richfield, 635 N.W.2d 391 (Minn. App. 2001).
Decision to declare building a nuisance and demolish it. City of Minneapolis v. Meldahl, 607 N.W.2d 168 (Minn. App. 2000).
Agency determination regarding eligibility for Section 8 housing. Alich v. Dakota County Community Development Authority, 2003 WL 230726 (unpublished).
Denial of relocation benefits under Minnesota Uniform Relocation Act. In re Application for Relocation Benefits of James Brothers Furniture, Inc. , 642 N.W.2d 91 (Minn. App. 2002).
Public sector employment decisions. Shaw v. Board of Regents, 594 N.W.2d 187 (Minn. App. 1999); Michurski v. Minneapolis, 2002 WL 1791983 (Minn. App. 2002) (unpublished) (district court did not err in dismissing the case for lack of jurisdiction).
Revocation of child care license. In the matter of the Revocation of the Family Child Care License of Glewwe, 2002 WL 1275771 (Minn. App. 2002) (unpublished).
Commissioner's decision not to indemnify state troopers from civil lawsuit. State v. Tokheim, 611 N.W.2d 375 (Minn. App. 2000).
University of Minnesota expulsion hearing. Gebremeskel v. University of Minnesota, 2002 WL 1611336 (Minn.App. 2002).

Quasilegislative
Zoning amendments. Interstate Power Company v. Nobles County Board of Commissioners, 617 N.W. 2d 566 (Minn. 2000).
Petitions for cartways. Horton v. Town of Helen, 624 N.W. 2d 591 (Minn. App. 2001).
Ratemaking. St. Paul Companies v. Hatch, 449 N.W.2d 130, 136-37 (Minn. 1989); In the Matter of the Excess Surplus of Blue Cross and Blue Shield of Minnesota, 606 N.W. 2d 697, 707 (Minn. App. 2000).

DAVID SCHULTZ is an attorney and Hamline University professor in the Graduate School of Public Administration and Management. He also holds appointments in three area law schools.