Baran v. Port of Beaumont Navigation District of Jefferson County

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 94-40610

WILLIAM J. BARAN, ET AL.,

Plaintiffs-Appellees,

v.

PORT OF BEAUMONT NAVIGATION DISTRICT

OF JEFFERSON COUNTY TEXAS, ET AL.,

Defendants-Appellants,

and

STATE OF TEXAS,

Intervenor-Defendant-Appellant.

Appeals from the United States District Court

for the Eastern District of Texas

(June 21, 1995)

Before VAN GRAAFEILAND,* JOLLY and WIENER, Circuit Judges.

WIENER, Circuit Judge:

Defendants-Appellants, the public Ports of Beaumont, Port

Arthur, and Orange ("Ports"), and Intervenor-Appellant the State of

Texas ("State"), (collectively "Appellants"), appeal a district

*

Circuit Judge of the 2nd Circuit Court of Appeals, sitting by

designation.

court order granting summary judgment in favor of Plaintiffs-

Appellees the Sabine Pilots Association ("Pilots"), declaring that

the second sentence of Article 8267(C)(5) of the Texas Revised

Civil Statutes violates the Due Process Clause.

The Pilots filed suit against the Ports in federal district

court, complaining that Art. 8267(C)(5) violates both the Due

Process and Equal Protection clauses of the United States

Constitution. The second sentence of that article, which is

contained in the statutory framework for authorizing and fixing

pilotage rates for the Sabine-Neches Waterway ("Waterway"),

essentially grants the Ports the power to veto the pilotage rates

for the Waterway as set by the Texas State Pilot Commission for the

Sabine Bar, Pass and Tributaries (the "Commission"). The Pilots

claim that this "veto provision" permits the Ports to veto the

pilotage rates at their own rate-approval proceedings after

opposing the proposed increases at the Commission hearings, thereby

denying the Pilots the right to a fair and impartial tribunal in

which to present their rate increase proposals. The Pilots also

insist that the authority of the Ports to veto any pilotage rate

increase effectively establishes a dual pilotage rate-making system

between the public and private ports in the Waterway, in violation

of the Equal Protection Clause. The private ports are not parties

to this appeal.

Concluding that the district court erred as a matter of law

in granting summary judgment in favor of the Pilots on the due

process issue, we reverse and vacate that summary judgment and

2

render summary judgment in favor of Appellants.

I

FACTS AND PROCEEDINGS

All ships entering and leaving Texas ports must hire pilots to

navigate the passages of the state's coastal waterways between

those ports and the Gulf of Mexico. Each waterway in Texas is

under the authority of its own pilot commission, which has

jurisdiction over all facets of pilotage on the waterway in

question, including the authority to set the fee schedule for

pilots that navigate the passages into the waterway for the ships

that enter and leave the waterway's ports. Any party interested in

changing the pilotage rates for a waterway (pilots, consignees,

owners, or ports) may submit a written application to the cognizant

commission requesting a change in the fee schedule. To approve any

rate changes, however, that commission must act in compliance with

the statutory procedures, which require notice and hearings on the

proposal, and must consider the effect of new rates on all

legitimately interested parties.1 Additionally, pursuant to

Article 8267(C)(5), "no increase of rates to either the public

ports . . . shall ever be set, established or granted unless the

[boards of the ports] so affected shall approve the same."2

1

See TEX. REV. CIV. STAT. art. 8267(C)(1),(2),(3),(4), and

(6)(a) (West 1994). The commission is directed to consider the

effect that its decision to grant, deny, or modify rates will have

on the ports and citizens living within the commission's

jurisdiction. TEX. REV. CIV. STAT. art. 8267(C)(6)(a) (West 1994).

2

TEX. REV. CIV. STAT. art. 8267(C)(5) (West 1994).

3

The Ports are navigation districts created pursuant to the

Texas constitution and acts of the state legislature. The Ports

operate in accordance with Chapters 60-62 of the Texas Water Code,

and are defined as "governmental agencies and bodies politic and

corporate with the powers of government and with the authority to

exercise the rights, privileges, and functions which are essential

to the accomplishment of those purposes."3 Generally, navigation

districts are given substantial powers over the improvement,

preservation, and conservation of inland and coastal waters and

other purposes incidental to the navigation of those waters.4

In September 1992, the Pilots filed an application requesting

a pilotage rate increase with the Commission. In accordance with

the prescribed procedures, the Commission held public hearings on

the Pilots' proposal. Representatives of the Ports attended the

Commission hearings as parties legitimately interested in - and

opposed to - the proposed rate increase. Only the Port of

Beaumont, however, presented testimony at the hearing; and although

that port's "evidence" was deemed to be time-barred by the

Commission, Beaumont's materials were included in the reports

submitted by the West Gulf Maritime Association, another group

opposing the increase. The data from the Port of Beaumont

supported the Ports' concern that the increased rates proposed

were too high and would adversely affect the Ports' competitive

positions.

3

TEX. WATER CODE ANN. § 62.102 (West 1988).

4

TEXAS WATER CODE ANN. § 62.101 (West 1988).

4

Despite strong opposition to the proposed rate increases, the

Commission approved the new rates, which went into effect at all

private ports on the Waterway in November 1992. The rate increases

did not go into effect at the Ports, however, as Art. 8267(C)(5)

establishes that no rate increase affecting public ports can ever

be set, established, or granted unless approved by the ports

affected. In an effort to obtain such approval, the Pilots

presented their proposal to the Ports, which thereafter denied the

rate increases in their own proceedings.

After bringing suit against the Ports in federal court, the

Pilots filed a motion for a summary judgment declaring that the

veto permitted by Art. 8267(C)(5) violated the Due Process and

Equal Protection clauses. Important to this appeal is the Pilots'

claim that the second sentence of Art. 8276(C)(5) permits an

"interested party" to adjudicate and veto pilotage rate

applications, thereby denying the Pilots' their right to a fair

hearing before an impartial tribunal.

The district court granted the Pilots' motion for summary

judgment, declaring that the veto sentence does violate the Due

Process Clause. In reaching this holding, the court determined

that the Ports have a pecuniary interest in the flow of vessels

through their ports that is affected by the pilot rates. As such,

the court determined that the Ports' interest, when combined with

the their veto power, denies the Pilots their right to a fair and

impartial tribunal. The court then proceeded to "sever" the second

sentence from Art. 8267(C)(5), declaring that the balance of the

5

statute remained operable. Nevertheless, the court declined to

enforce the Commission-approved rate increase at the Ports, leaving

the "individual ports with the state court recourse provided by

section 62.078 of the Texas Water Code." The court also declined

to address the Pilots' equal protection claim. The Ports timely

filed this appeal.

II

DISCUSSION

A. STANDARD OF REVIEW

We review a grant of summary judgment using the same standards

that guide the district court.5 Summary judgment is appropriate

when no issue of material fact exists and the movant is entitled to

judgment as a matter of law.6 Questions of law are reviewed de

novo.7

B. THRESHOLD ISSUE: ABSTENTION

Appellants argue on appeal that the district court erred in

not abstaining from exercising its jurisdiction in what Appellants

describe as an "on-going" state law dispute. If we were to

determine that abstention is appropriate in this instance, we would

not need to review the merits of the district court's grant of

summary judgment. Thus we first focus our attention on abstention.

The Ports raised abstention as an affirmative defense in a

5

Walker v. Sears, Roebuck & Co., 853 F.2d 355, 358 (5th Cir.

1988).

6

Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986).

7

Walker, 853 F.2d at 358.

6

somewhat cursory manner in their answer to the Pilots' complaint.

In that answer the Ports asserted that abstention was appropriate

because the dispute against them was not a constitutional dispute,

arguing instead that the dispute was a local rate-making dispute

over pilotage fees. The Ports also argued that, as the statute was

fairly susceptible of an interpretation that would avoid the

constitutional challenge, the district court should abstain from

reaching the constitutional question until the Texas state courts

had had an opportunity to render a definitive interpretation of the

veto provision. The Ports' final argument in favor of abstention

by the district court was that the case presents complex and

significant issues of local policy that have been committed to the

State legislative and executive branches.

The State too urged the district court to abstain from

exercising its jurisdiction in this case. In its response to the

Pilots' motion for summary judgment the State observed that "when

the validity of a state statute or regulatory action is challenged

in federal court by plaintiffs who have not first asserted their

complaints in state court, the federal court should abstain from

deciding the constitutionality of the statute pending review by a

state tribunal." Even though the issue of abstention was raised

once more in Appellants' post-hearing brief,8 we note that the

Ports did not reassert their abstention defense in responding to

the Pilots' motion for summary judgment; neither did Appellants

8

There the Appellants merely observed that notions of

federalism require the confinement of federal court intervention in

state judicial processes.

7

argue the issue of abstention at the summary judgment hearing.

Although the notion of abstention was presented to the

district court,9 it did not address the issue in its opinion. As

the decision whether to abstain is generally one involving some

exercise of discretion by the district court, our first inclination

would be to remand to the district court for it to resolve the

abstention question before proceeding with the merits.10

In American Bank and Trust Company of Opelousas v. Dent,11 we

reviewed a district court order granting the defendant-appellee's

motion to dismiss based on the Eleventh Amendment. In his motion

to dismiss, the defendant urged the court in the alternative to

dismiss the case against him under any one of three abstention

doctrines: Younger, Burford, or Pullman. As the court granted the

motion to dismiss based on the Eleventh Amendment, it did not

address the abstention issue. On appeal the defendant-appellee

asked us to consider alternatively the abstention doctrines and to

affirm the dismissal on that basis. After concluding that the

district court erred in dismissing the case, we turned to the

alternative abstention arguments. We observed that the decision to

9

See, e.g., Portis v. First Nat'l Bank of New Albany, Miss.,

34 F.3d 325 (5th Cir. 1994) (noting that issue is presented to

trial court when party has raised it in pleadings or pretrial

order or if issue has been tried by consent of parties).

10

See, e.g., American Bank and Trust Co. of Opelousas v. Dent,

982 F.2d 917, 922 (5th Cir. 1993) (concluding that even if all

preconditions for abstention are present in case, decision to

abstain generally involves some exercise of discretion by district

court).

11

982 F.2d 917 (5th Cir. 1993).

8

abstain is generally one involving some discretion of the district

court, and concluded that, as the propriety of abstention under

Burford or Pullman was not absolutely clear on the record, it was

advisable to remand the issue to the district court.12

But our review of abstention in the instant context convinces

us that it would be inappropriate for the district court to abstain

from exercising its jurisdiction in this case. Moreover,

Appellants' own cursory treatment of abstention persuades us to

forego remand of this meritless issue to the district court if for

no other reason than that resolving the abstention issue is

generally within the discretion of that court. In National

Association of Government Employees v. City Public Service Board of

San Antonio, Tex.,13 we reiterated that, as a "trial court will not

rule on claims - buried in pleadings - that go unpressed before the

court," appellants' failure to urge their claims before the court

may be construed as an intent to abandon those claims.14 Although

this maxim pertains to a determination whether a judgment is final

for the purposes of appeal, we are satisfied that it supports our

conclusion that we need not remand a meritless issue to the

district court, particularly when the party urging that issue on

appeal failed to develop and argue it fully in that court.

We discuss briefly the three abstention doctrines here

12

Id. at 921-22.

13

40 F.3d 698 (5th Cir. 1994).

14

Id. at 705 (quoting Vaughn v. Mobil Oil Exploration and

Producing Southeast, Inc., 891 F.2d 1195, 1198 (5th Cir. 1990)).

9

implicated by the Appellants in their pleadings, illustrating why

abstention - which is generally the exception, not the rule - is

not appropriate in this dispute.15

1. Younger Abstention

Abstention under Younger v. Harris16 is appropriate when

federal court jurisdiction would interfere with pending criminal,

civil, or administrative state proceedings.17 For Younger

abstention to apply, the pending state proceedings must be ongoing

and judicial in nature.18 When no state proceedings are pending,

a federal action does not interfere with state processes, and the

policies on which the Younger abstention doctrine is premised are

unavailing.19

Clearly when, as here, no state judicial proceedings are

pending, abstention under Younger is unavailable. Appellants'

attempt to classify this dispute as a local rate-making controversy

does not satisfy the standard for Younger abstention. Even though

the rate-making dispute could possibly be classified as ongoing, it

is not judicial in nature. In fact, the only state proceedings

that could trigger abstention under Younger would be an action

15

Louisiana Debating and Literary Ass'n v. City of New Orleans,

42 F.3d 1483, 1491 (5th Cir. 1995).

16

401 U.S. 37 (1971).

17

Louisiana Debating and Literary Ass'n, 42 F.3d at 1489; Word

of Faith World Outreach Center Church, Inc. v. Morales, 986 F.2d

962, 966 (5th Cir. 1993), cert. denied, 114 S.Ct. 82 (1993).

18

Louisiana Debating and Literary Ass'n, 42 F.3d at 1490.

19

Id.

10

brought in state court by the Ports, challenging the Commission's

approval of the pilotage rates, or some state court action brought

by the Pilots challenging the Ports' rejection of the Commission-

approved rate increase. As neither party has initiated any such

state court action, there are pending no ongoing state judicial

proceedings to suggest that the district court should have

abstained from exercising its jurisdiction in this case.

2. Burford Abstention

We have previously described abstention under Burford v. Sun

Oil Co.,20 as follows:

"[w]here timely and adequate state-court review is

available, a federal court sitting in equity must decline

to interfere with the proceedings or orders of state

administrative agencies: (1) when there are 'difficult

questions of state law bearing on policy problems of

substantial public import whose importance transcends the

result in the case then at bar'; or (2) where the

'exercise of federal review of the question in a case and

in similar cases would be disruptive of state efforts to

establish a coherent policy with respect to a matter of

substantial public concern.'" 21

The underlying lawsuit in Burford challenged a highly technical and

complicated regulatory scheme that affected the state's entire oil

and gas conservation system. In an effort to address this complex

scheme, the state had created a comprehensive centralized system

for judicial review of orders affecting the scheme. In light of

these circumstances, the Court in Burford determined that federal

court abstention was proper to protect the state's administrative

20

319 U.S. 315 (1943).

21

St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 588 (5th Cir. 1994)

(quoting New Orleans Public Serv., Inc. v. Council of City of New

Orleans, 491 U.S. 350, 361 (1989)).

11

process from undue federal influence.22 Although Burford abstention

is concerned with protecting complex state administrative processes

from undue federal interference, abstention is not mandated merely

because an administrative process exists, or even "in all cases

where there is a 'potential for conflict.'"23

In challenging Art. 8267(C)(5), the Pilots attack the very

fact that the Ports have the power to veto pilotage rate increases,

arguing that any veto power vested in the Ports is

unconstitutional. The Pilots do not claim that the Ports

misapplied their lawful authority or that they failed to consider

or balance properly the relevant factors in vetoing the pilotage

rates. Neither do the Pilots contend that the individuals who

comprise the Ports had any disqualifying personal interest that

would give rise to conflicts of interest in establishing the

pilotage rates for the Ports. Rather, the Pilots argue that, as

the Ports are inherently biased, the provision in Art. 8276(c)(5)

that grants the Ports a veto over the pilotage rates for the

individual ports violates due process. As the Pilots present a

facial challenge to the statute - disputing the constitutionality

of the Ports' authority to act at all - reaching the merits of this

challenge will not intrude into any particular state administrative

process or administrative order. Thus, the policy concerns of

Burford are not implicated and abstention under that doctrine would

22

Burford, 319 U.S. at 332.

23

St. Paul Ins. Co., 39 F.3d at 589.

12

be inappropriate.24

3. Pullman Abstention

Appellants suggest that a third basis for abstention is found

in Railroad Commission of Texas v. Pullman Company.25 Under this

abstention doctrine a federal court should abstain from exercising

its jurisdiction when difficult and unsettled questions of state

law must be resolved before a substantial federal question can be

decided.26 Generally, Pullman abstention is appropriate only when

there is an issue of uncertain state law that is "'fairly subject

to an interpretation [by a state court] which will render

unnecessary or substantially modify the federal constitutional

question.'"27

For a federal court adjudication to be stayed under Pullman,

more than an ambiguity in state law and a likelihood of avoiding a

constitutional ruling is required. Rather, the district court must

assess the totality of the circumstances presented by a particular

case, considering the rights at stake and the costs of delay

24

See New Orleans Pub. Serv., Inc. v. Council of City of New

Orleans, 491 U.S. 350, 363 (1989) (observing that federal court's

inquiry into administrative agency's rate-making authority was

limited to four corners of order denying rate increase and did not

unduly intrude into processes or policy of state government).

25

312 U.S. 496 (1941).

26

Louisiana Debating and Literary Ass'n, 42 F.3d at 1491

(citing Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 236 (1984)).

27

Id. at 1492 (quoting Harman v. Forssenius, 380 U.S. 528, 534-

35 (1965)).

13

pending state court adjudication.28 Even though a district court

must assess the totality of circumstances before deciding whether

to abstain, the decision to abstain under Pullman turns on the

existence of an ambiguous state law. In situations such as the one

we consider today, in which there is no question of ambiguous state

law - the interpretation of which will substantially modify or

eliminate the constitutional question - for a federal court to

abstain from exercising jurisdiction over the case would clearly be

inappropriate.29

Appellants suggest that Article 8267(C)(5) is fairly

susceptible of a reading that would avoid the constitutional issue,

yet they offer no credible argument or interpretation of that

statute to support their abstention argument. We read the plain

language of Article 8267(C)(5) to mean unambiguously that there can

be no increase of pilotage rates at the Ports unless the Ports

approve the increased rates. Even though it might be less than

pellucid whether the statute intended to grant the Ports the power

to veto the rates set by the Commission, or to permit a system of

dual pilotage rates as between the public and private ports to

28

Duncan v. Poythress, 657 F.2d 691, 697 (5th Cir. 1981), cert.

dismissed, 459 U.S. 1012 (1982).

29

See, e.g., Louisiana Debating and Literary Ass'n, 42 F.3d at

1491 and n.10 (affirming district court's decision declining to

abstain, noting that one of the bases on which court declined

abstention was fact that neither party had demonstrated that

chapter of city code was ambiguous); Word of Faith World Outreach

Center, 986 F.2d at 967 (observing that Pullman abstention is not

proper unless state law in issue is fairly susceptible of an

interpretation that might avoid or modify the federal

constitutional question).

14

exist, resolving these ambiguities does not modify or eliminate the

constitutional questions presented: Whether the veto violates due

process, or the dual rate system violates equal protection, or

both. We conclude, therefore, that, as the state statute under

review is not fairly subject to an interpretation that will render

unnecessary or substantially modify the federal constitutional

questions raised by the Pilots, abstention under Pullman is not

appropriate.

It follows, then, that as abstention under any of the above

doctrines would not be appropriate in this dispute, the district

court did not err in exercising its properly invoked jurisdiction.

Thus, in the interest of judicial economy, and in an effort to move

this litigation forward expeditiously, we proceed to consider the

merits of this dispute.30

C. SUMMARY JUDGMENT BASED ON DUE PROCESS

Appellants challenge the district court's grant of summary

judgment in favor of the Pilots. Specifically, Appellants contend

that the court erred in concluding that the Ports have such a

pecuniary interest in the flow of vessels to and from their ports

that giving the Ports a final "veto" over the pilotage rates

30

See, e.g., Burns v. Watler, 931 F.2d 140, 147 (1st Cir. 1991)

(observing that, despite cases in which appellate court recognized

that district court was better positioned to perform abstention

analysis, simplicity of factual situation before appellate court

and potential prejudice to parties for further delay advised court

to perform evaluation itself). Cf. Snap-On Tools Corp. v. Mason, 18

F.3d 1261, 1267 n.7 (5th Cir. 1994) (reviewing district court's

dismissal of case on abstention grounds; noting that when

abstention is clearly unwarranted, rather than remand case back to

district court to consider substantive merits, appellate court

should consider merits of case and move litigation along).

15

deprives the Pilots of their due process right to a hearing before

a fair and impartial tribunal.

At the outset we note that the Pilots state repeatedly that

they are not challenging the quality or quantity of the Ports'

procedure for approving pilotage rate increases. We note further

that despite the fact that the Pilots' due process claim rests only

on the Ports' status as "interested parties," the Pilots do not

define "interest" with any particularity. Rather, they allege

simply and conclusionally that because the Ports are legitimately

interested parties which opposed the proposal for a pilotage rate

increase at the Commission hearing, the Ports cannot constitute a

fair and impartial tribunal before which the Pilots must present

the same proposal at the subsequent port proceedings.31 Implicit

in this argument is the contention that the Ports are biased by

virtue of their having prejudged the facts of the rate-making issue

prior to adjudicating that same issue at their own proceedings.

The Ports do not dispute that (1) they have an interest in the

economic viability of their respective ports, or (2) their

representatives attended the Commission hearings and opposed the

proposed rate increases.32 These undisputed facts relating to the

31

See TEX. REV. CIV. STAT. art. 8267(c)(4) (West 1994) (mandating

that all parties that have demonstrated a legitimate interest in

rate application shall have right to speak, present evidence, and

cross examine (to extent possible) at Commission hearings).

32

The Ports do argue, however, that as they were denied the

opportunity to present evidence at the Commission hearing, they

were not actually an interested party in the hearings. Arguably,

according to Pilots' definition of "interested party," only the

Port of Beaumont could qualify as an interested party, as it was

the only Port that testified at the Commission hearing.

16

Ports' "interest" apparently persuaded the district court to grant

summary judgment in favor of the Pilots. But, the district court

went beyond that simple conclusion, labeling the Ports' interest as

"pecuniary," and observing that the Ports' had a "pecuniary

interest in the flow of vessels through their ports which is

affected by the rates for pilot fees." In light of this perception

the district court concluded that, by granting the Ports a final

veto over the applications requesting an increase in pilotage

rates, the subject sentence of the statute deprived the Pilots of

their right to a fair and impartial tribunal. As we are satisfied

that the district court erred as a matter of law in reaching this

conclusion, we analyze the Ports' "interest" in light of the

relevant due process caselaw and distinguish it from the only two

categories of bias under which the Pilots' due process claim and

the district court's ruling could fall: (1) Actual bias or

probability of actual bias stemming from a pecuniary interest; or

(2) irrevocably closed minds as the result of prejudging the issue.

1. Actual Bias

A fair trial before a fair and impartial tribunal, whether a

court or administrative agency, is a basic requirement of due

process.33 "Not only is a biased decisionmaker constitutionally

unacceptable, but 'our system of law has always endeavored to

33

Withrow v. Larkin, 421 U.S. 35, 46-47 (1975) (citing In re

Murchison, 349 U.S. 133, 136 (1955)); Gibson v. Berryhill, 411 U.S.

564, 579 (1973).

17

prevent even the probability of unfairness.'"34 In an effort to

prevent "even the probability of unfairness," courts have

identified situations in which the probability of actual bias on

the part of the judge or decisionmaker is too high to be

constitutionally tolerable. Such situations include circumstances

in which the adjudicator has a direct, personal, substantial, and

pecuniary interest in the outcome of the case or in which the

adjudicator has been the target of personal abuse or criticism from

the party before him,35 or "situation[s] . . . which would offer

a possible temptation to the average . . . judge to . . . lead him

not to hold the balance nice, clear and true."36 These identified

situations, as applied to due process claims, represent the

standard for reviewing allegations of bias against judicial and

quasi-judicial decision-makers.37

34

Withrow, 421 U.S. at 47.

35

Aetna Life Ins. Co., 475 U.S. at 825-26; Withrow, 421 U.S.

at 47; Tumey, 273 U.S. at 523; United States v. Couch, 896 F.2d 78,

81 (5th Cir. 1990).

36

Couch, 896 F.2d at 81 (quoting Aetna Life Ins. Co., 475 U.S.

at 822); Brown v. Vance, 637 F.2d 272, 278 (5th Cir. 1981) (citing

Tumey v. State of Ohio, 273 U.S. 510, 532 (1927)).

37

See Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 826 (1986)

(holding that state supreme court justice's failure to recuse

himself from case in which he had direct stake in outcome of case

violated due process; holding that, while remaining justices may

have had slight pecuniary interest in case, interest could not be

classified as direct, personal, substantial, and pecuniary, thus

participation of remaining justices did not violate due process);

Gibson v. Berryhill, 411 U.S. 564, 578-79 (1973) (affirming

district court's holding that substantial pecuniary interest of

administrative adjudicators was sufficient to disqualify them from

adjudicating state law complaints against competitors); Ward v.

Village of Monroeville, Ohio, 409 U.S. 57, 59-61 (1972) (holding

that mayor's dual responsibilities for village finances - derived

18

The Supreme Court has determined, however, that the strict

requirements of neutrality imposed on these types of decision-

makers are not applicable to situations involving nonjudicial

decision-makers.38 In Marshall v. Jerrico, Inc.,39 the Supreme Court

determined that a federal administrator, who, despite the

enforcement aspects of his position, performed no judicial or

quasi-judicial function, heard no witnesses, and ruled on no

disputed factual or legal questions in carrying out his enforcement

tasks. The Court concluded that the administrator functioned in a

capacity more akin to that of a prosecutor or civil plaintiff than

a judge.40 In light of the noted distinctions between the

administrator's functions and those of a judge, the Court held that

the rigid due process requirements imposed on individuals

in part from fines levied by mayor's court - and presiding over

mayor's court violated due process rights of defendants appearing

before mayor's court); In re Murchison, 349 U.S. 133, 139 (1955)

(holding that judge who functioned as grand jury and judge for same

defendants violated due process by virtue of fact that judge was

not wholly disinterested in conviction or acquittal of accused);

Tumey v. State of Ohio, 273 U.S. 510, 523 (1927) (observing that it

violates due process to subject defendant to judgment of court in

which judge has direct, personal, substantial, and pecuniary

interest in reaching a conclusion against defendant).

38

See, e.g., Concrete Pipe and Products of Cal., Inc. v.

Construction Laborers Pension Trust for S. Cal., 113 S.Ct. 2264,

2277 (1993) (observing that rigid requirements for officials

performing judicial or quasi-judicial functions are not applicable

to those acting in prosecutorial or enforcement-like capacity);

Marshall v. Jerrico, Inc., 446 U.S. 238, 243 (1980) (concluding

that strict requirements of neutrality under Tumey and Ward are not

applicable to administrative determinations made by government

administrator, whose functions resemble those of prosecutor more

closely than those of judge).

39

446 U.S. 238 (1980).

40

Id. at 247.

19

performing judicial or quasi-judicial functions are not applicable

to individuals acting in a prosecutorial or plaintiff-like

capacity.41 Thus, according to the Supreme Court, an administrator

who functions in a prosecutorial or plaintiff-like capacity is not

held to the strict requirements of impartiality imposed on those

whose functions are essentially judicial in nature. This is not to

say that there are no due process limits on those who perform

prosecutorial or plaintiff-like functions: As public officials,

these individuals still must "serve the public interest" and not be

"motivated by improper factors" or otherwise act "contrary to

law."42

Clearly the Ports are more akin to administrative prosecutors

than to those who perform judicial or quasi-judicial functions.

The Ports function as policymakers who are authorized by state law

to establish the rates for pilotage into and out of the individual

ports. In establishing the pilotage rates, the Ports hear no

witnesses (in a judicial sense) and issue no findings or rulings on

factual or legal questions. Thus, under Marshall, to avoid

judicial scrutiny of their individual port hearings, the Ports need

only act according to their public interests, within the confines

of the law and untainted by any substantial personal interest.

The burden of establishing a disqualifying interest on the

part of the Ports is on the Pilots.43 In this instance, a "port"

41

Id. at 248.

42

Id. at 249.

43

Schweiker v. McClure, 456 U.S. 188, 196 (1982).

20

is a navigational district, an entity whose identity is inseparable

from the individuals who comprise the district. Thus, in

challenging the Ports' role as "adjudicator" over pilotage rates,

the Pilots of necessity challenge those individuals who are the

Ports. It is therefore the "interest" of those individuals that

determines the "interest" of the Ports. And, unless those natural

persons have a disqualifying interest, there is no disqualifying

interest on the part of the artificial or juridical person they

comprise, i.e., the Ports.

As noted above, the Pilots challenge the Ports' status as

"interested parties" but do not allege with particularity any

"disqualifying interest." The Pilots offer no evidence that the

Ports were not acting according to their public interest in vetoing

the pilotage rate proposal. And our de novo review of the record

reveals nothing to suggest that the Ports qua Ports cannot hold the

balance between the role of a decisionmaker on behalf of the public

and the ports on the one hand and the Pilots' request for rate

increases on the other.44 We assume, in such balancing, that the

Ports, through their individual members, recognize that shipping is

the lifeblood of the ports; that the Pilots are indispensable to

ship traffic; and that the pilotage rates are of vital importance

to the Pilots. Likewise, we assume that the Ports are aware that

pilotage rates that are too low will result in a dearth of pilots,

whereas rates that are too high will make the Ports noncompetitive.

44

See Couch, 896 F.2d 78, 81 (5th Cir. 1990) (citing Aetna Life

Ins. Co., 475 U.S. at 822)).

21

We surmise that in an effort to reconcile these two extremes, the

Ports do in fact hold the balance on behalf of the public, seeking

a happy medium in which both the ports and the Pilots can co-exist

and function.

We observe that the Pilots do not contend on appeal that the

Ports violated Texas law or that the Ports' decision to veto the

rate increase was motivated by any substantial personal interest.

And, as we noted above, our de novo review of the record reveals

nothing to suggest that there would have been any support for such

allegations had they been presented. We conclude, therefore, that

the Pilots have failed to state any constitutional due process

violation based on a "disqualifying interest" of the Ports.

Accordingly, we hold that the district court erred as a matter of

law in granting summary judgment in favor of the Pilots on the

basis of the Ports' interest.45

2. Irrevocably Closed Minds

45

As we conclude that the Pilots' failed to allege a

constitutional violation based on a disqualifying interest, we need

not discuss the district court's specific conclusion that the

pecuniary interest of the Ports in the flow of vessels through

their ports rendered unconstitutional the Ports' power to veto the

pilotage rates. We do note, however, that, despite the fact that a

financial or personal interest could in some circumstances render

an administrator's authority unconstitutional, the Ports' economic

interest in their respective ports is too remote to violate the

constraints applicable to the financial or personal interests of

officials charged with prosecutorial or plaintiff-like functions.

See, e.g., Marshall v. Jerrico, Inc., 446 U.S. 238, 250-51 (1980)

(declining to define with precision what limits there may be on a

financial or personal interest of one who performs prosecutorial

function, concluding that disqualifying interest alleged was too

remote to impose bias); Hortonville Joint Sch. Dist. No. 1 v.

Hortonville Educ. Ass'n, 426 U.S. 482, 491-92 (1976) (concluding

that board members did not have kind of personal or financial stake

in challenged decision that might create a conflict).

22

We also conclude that the Pilots' implicit allegation that the

Ports' "minds" were irrevocably closed to the proposed pilotage

rates by having prejudged the facts of the rate-making "dispute"

prior to adjudicating that same "dispute" at their own proceedings

is without merit. The contention that a tribunal is

unconstitutionally biased because it has prejudged the facts of a

particular dispute carries a more difficult burden of persuasion

than a claim based on actual bias.46 Allegations of bias based on

the prejudgment of the facts or outcome of a dispute generally stem

from the fact that an administrative body or hearing officer has

dual roles of investigating and adjudicating disputes and

complaints. In situations in which this type of bias is raised,

the honesty and integrity of those serving as adjudicators is

presumed.47 In addition, "there is a presumption that those making

decisions affecting the public are doing so in the public

interest."48 Thus, a party challenging this presumption of honesty

must convince the court that "under a realistic appraisal of

psychological tendencies and human weakness, conferring

investigative and adjudicative powers on the same individuals poses

such a risk of actual bias or prejudgment that the practice must be

forbidden if the guarantee of due process is to be adequately

46

Withrow, 421 U.S. at 47.

47

Id. ; United States v. Batson, 782 F.2d 1307, 1313 (5th Cir.

1986), cert. denied, 477 U.S. 906 (1986).

48

Bakalis v. Golembeski, 35 F.3d 318, 326 (7th Cir. 1994)

(emphasis added).

23

implemented."49

Although courts have observed that an administrative body that

has prejudged the facts or the outcome of a dispute cannot render

a decision that comports with due process,50 we have held that we

will not infer bias when no evidence is presented to indicate that

a hearing officer's mind was irrevocably closed.51 Here, we are

satisfied that, even in light of the fact that the Ports attended

the Commission hearing, presumably in firm opposition to the

pilotage rate increase, there still is nothing in the summary

judgment record of this case to suggest that, at the subsequent

port proceedings, the Ports' minds were irrevocably closed

regarding the rate increase.

Indeed, the record supports just the opposite determination,

that the Ports' minds were not irrevocably closed. The summary

judgment evidence reflects that the Ports permitted the Pilots to

present testimony and evidence in support of their proposal,

including an opportunity for questions and answers. In addition,

rather than veto the rate increase "on the spot" - as one might

49

Withrow, 421 U.S. at 47.

50

See Bakalis, 35 F.3d at 326; Patrick v. Miller, 953 F.2d

1240, 1245 (10th Cir. 1992).

51

See, e.g., DCP Farms v. Yeutter, 957 F.2d 1183, 1188 (5th

Cir. 1992) (noting that even though appearance of bias was present,

standards governing administrative proceedings are more relaxed

than those controlling judicial proceedings: "[a]n administrative

decision will be overturned only when the hearing officers' mind is

irrevocably closed or there was actual bias"), cert. denied, 113

S.Ct. 406 (1992); Batson, 782 F.2d at 1315 (concluding that

appellant presented no evidence indicating that hearing officer's

mind was irrevocably closed or from which to infer bias).

24

expect from those whose minds are irrevocably closed - the Ports

assigned to board members or members of the ports' staffs the task

of studying the proposed rate increase, and instructed these

individuals and committees to address the issues relating to the

increase and to report back at the next meeting. On at least one

occasion a representative of the Pilots met separately with a

representative of the Ports to discuss the Pilots' proposal.

Clearly, this evidence supports our determination that there is no

credible suggestion that the Ports had irreversibly prejudged the

facts to the extent that their minds were permanently closed to the

issue of the rate increase or that the Ports' administrative

procedures posed an unacceptable risk of bias.52

III

CONCLUSION

Appellants assert on appeal that the district court erred in

failing to abstain from exercising its jurisdiction in this

dispute. As we determine that abstention is not appropriate in

this case, we do not remand this issue to the district court to

consider abstention, but instead hold that the district court did

52

See, e.g., Dell v. Board of Educ., TP High School Dist. 113,

32 F.3d 1053, 1067 (7th Cir. 1994) (relying on Roland, infra;

concluding that plaintiff-appellant failed to rebut presumption

that administrative decisionmaker had acted in a fair and impartial

manner by failing to allege a factual basis revealing bias or

prejudice); Roland M. v. Concord School Comm., 910 F.2d 983, 997-98

(1st Cir. 1990) (concluding that record was barren of any credible

suggestion that hearing officer had prejudged facts when party

raising claim of bias was permitted to present evidence, examine

witnesses, argue, and object, where objections were considered

fully and when rejected were explained), cert. denied, 499 U.S. 912

(1991).

25

not err in exercising its properly invoked jurisdiction.

We hold further that the Pilots have failed to allege a due

process violation to support their challenge to Art. 8267(c)(5).

We are satisfied that there is no disqualifying interest affecting

the judgment of the Ports regarding the pilotage rates. We are

equally satisfied that there is nothing to suggest that the Ports

had so prejudged the pilotage rate issue to the extent that they

were impermissibly biased. We hold, therefore, that the district

court erred as matter of law in concluding that the Ports'

"interest," in combination with the statutory veto permitted by

Article 8267(C)(5), violates due process, and therefore erred in

striking the "veto" provision in that statute as unconstitutional.

Accordingly, we reverse and vacate the district court's order

granting summary judgment in favor of the Pilots, and render

summary judgment in favor of Appellants, dismissing the Pilots'

action in this case.

REVERSED, VACATED, and RENDERED.

26