William Jefferson & Co., Inc. v. Board of Assessment and Appeal

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WILLIAM JEFFERSON & CO., INC., 

Plaintiff-Appellant, No. 11-55223

v. D.C. No.

BOARD OF ASSESSMENT AND APPEALS  8:09-cv-00849-

NO. 3 FOR ORANGE COUNTY and DOC-RNB

STATE OF CALIFORNIA, OPINION

Defendants-Appellees.



Appeal from the United States District Court

for the Central District of California

David O. Carter, District Judge, Presiding

Argued and Submitted

June 8, 2012—Pasadena, California

Filed August 29, 2012

Before: Betty B. Fletcher and Kim McLane Wardlaw,

Circuit Judges, and John A. Mendez, District Judge.*

Opinion by Judge B. Fletcher

*The Honorable John A. Mendez, District Judge for the U.S. District

Court for the Eastern District of California, sitting by designation.

10193

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10195

COUNSEL

William A. Kent, Esq. (argued), Irvine, California, for

plaintiff-appellant William Jefferson & Co., Inc.

William L. Haluck (argued) and Ashley N. Coleman, Koeller,

Nebeker, Carlson & Haluck, LLP, Irvine, California, for

defendant-appellee Assessment Appeals Board for Orange

County.

10196 JEFFERSON & CO. v. BOARD OF ASSESSMENT

OPINION

B. FLETCHER, Circuit Judge:

William Jefferson & Co., Inc. (“William Jefferson”) lost a

state administrative appeal in which William Jefferson chal-

lenged the Orange County Tax Assessor’s (“Assessor”) valua-

tion of a parcel of real property. William Jefferson then filed

suit in federal district court, alleging that its procedural due

process rights were violated in the course of the administra-

tive appeal hearing. We affirm the district court’s conclusion

that the state administrative appeal did not deny William Jef-

ferson procedural due process. In a separate memorandum

disposition filed concurrently with this opinion, we affirm the

lower court’s grant of the agency’s motion for a protective

order and its denial of class certification.

I

William Jefferson owns a parcel of real property located in

Orange County, California. William Jefferson disputed the

Assessor’s valuation of that property and assessment of state

property taxes. William Jefferson appealed the Assessor’s

determination to the Assessment Appeals Board for Orange

County (“Board”). The Board denied, on statute of limitations

grounds, William Jefferson’s administrative appeal. The mer-

its of the Board’s decision are not relevant here.

The Assessor was represented at the administrative hearing

by James C. Harmon. Paula Whaley advised the Board. Both

Harmon and Whaley are attorneys who work for the County

Counsel for Orange County, the county’s public law office.

William Jefferson alleges that because the Board was advised

by one member of the Orange County Counsel’s office, and

the Assessor was represented by another member of that

office, the hearing did not comply with the requirements of

due process. The Orange County Counsel’s “dual representa-

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10197

tion” of the Board and the Assessor is expressly authorized by

California Government Code § 31000.7.

William Jefferson filed suit in federal district court arguing

that the hearing procedures employed by the Board violated

William Jefferson’s procedural due process rights under the

Fourteenth Amendment and seeking relief under 42 U.S.C.

§ 1983. At a brief bench trial, Whaley, Harmon, and the clerk

for the Board testified regarding the procedures that the

Orange County Counsel’s office employed to avoid improper

exchange of information between attorneys who represent the

Board and those who represent the Assessor. Harmon and

Whaley also testified about their conduct with respect to the

William Jefferson case in particular.

The district court issued twenty-three findings of fact. The

district court found that Whaley was a member of the County

Counsel’s “advisory” section, while Harmon was a member

of the “litigation” section. In the William Jefferson case,

Whaley’s duties included reviewing the parties’ briefs to the

Board, attending the hearing, observing the Board’s delibera-

tions, advising the Board on the applicable law, and preparing

the written findings of fact memorializing the Board’s deci-

sion. The district court found that Whaley “did not have, and

did not seek to exercise, any discretionary authority in draft-

ing the findings of fact.”

The district court found that “[t]he County Counsel’s office

takes diligent measures to separate the members of its advi-

sory section from the members of its litigation section.” These

include maintaining a separate “doored-off” work space for

members of the advisory section and a locked file cabinet for

all documents relating to advising the Board. Both Whaley

and Harmon had received training on the County Counsel’s

procedures for maintaining an “ethical wall” between the

advisory and litigation sections. The district court found that

due to the County Counsel’s procedures and Whaley’s own

“diligence in observing the office’s ethical rules, [she] had no

10198 JEFFERSON & CO. v. BOARD OF ASSESSMENT

formal or informal contact with Mr. Harmon during the pen-

dency of the [William Jefferson] appeal.”

The district court found that Whaley had never represented

the Assessor and that Harmon played no direct or indirect role

in Whaley’s professional reviews or advancement in the

County Counsel’s office. Whaley and Harmon had mutual

professional respect for each other but “rarely” interacted and

there was no evidence of any shared loyalty that would have

influenced Whaley’s advice to the Board in the William Jef-

ferson case. The district court concluded that “[t]here is sim-

ply no evidence that [Harmon] was ever in a position to

influence Ms. Whaley’s advice, if any, to the Board.”

The district court also issued ten conclusions of law. The

district court found that § 31000.7 expressly permits one

member of the County Counsel’s office to advise the Board

in a hearing in which another member represents the Asses-

sor. The district court concluded that this provision was not

unconstitutional on its face because the dual representation it

permits does not necessarily “call[ ] into question the

decision-maker’s impartiality.” The district court also con-

cluded that the statute did not violate due process as applied

in William Jefferson’s case, because there was no evidence

that Whaley’s advice to the Board was improperly influenced

by her professional respect for Harmon. The district court

added that even if Whaley had been so influenced, the Board,

not Whaley, was the decision-maker in William Jefferson’s

case and there was no evidence that it was biased.

The district court entered judgment against William Jeffer-

son and William Jefferson timely appealed. We have jurisdic-

tion pursuant to 28 U.S.C. § 1291.

II

William Jefferson does not challenge the district court’s

findings of fact. We review de novo the district court’s legal

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10199

conclusion that the Board’s hearing procedures did not violate

William Jefferson’s procedural due process rights. See Singh

v. Holder, 638 F.3d 1264, 1269 (9th Cir. 2011). William Jef-

ferson makes both a facial and an as-applied challenge to Cal-

ifornia Government Code § 31000.7, the state provision

authorizing the county counsel’s office to represent both the

Board and the Assessor. If William Jefferson’s as-applied

challenge fails, then William Jefferson’s facial challenge nec-

essarily fails as well because there is at least one set of cir-

cumstances where application of § 31000.7 does not violate a

taxpayer’s procedural due process rights. See United States v.

Inzunza, 638 F.3d 1006, 1019 (9th Cir. 2011) (a facial chal-

lenge to a statute necessarily fails if an as-applied challenge

has failed because the plaintiff must “ ‘establish that no set of

circumstances exists under which the [statute] would be

valid.’ ” (quoting United States v. Salerno, 481 U.S. 739, 745

(1987))).

III

William Jefferson asserts that the dual representation

scheme authorized by § 31000.7 denies taxpayers an unbiased

adjudicator and undermines the appearance of fairness in the

Board’s proceedings. William Jefferson also argues that Wha-

ley’s interactions with the Board were impermissible ex parte

contacts with a decision maker. Finally, William Jefferson

suggests that the Orange County Counsel’s office has a finan-

cial stake in the outcome of taxpayer appeals that could influ-

ence the advice its attorneys give to the Board. We consider

each of these arguments in turn.

[1] We begin our constitutional analysis with the state stat-

utory provision at issue. Section 31000.7 provides in full:

The same law firm shall not be employed to advise

or represent both the assessor and the county board

of equalization1 on any matters relating to hearings

1

The Orange County Board of Supervisors appoints members of the

Board to serve “as the local board of equalization.”

10200 JEFFERSON & CO. v. BOARD OF ASSESSMENT

before the county board of equalization. This prohi-

bition shall not apply to the county counsel’s office.

Individual representatives of that office may repre-

sent the assessor and the county board of equaliza-

tion, as long as the same individual does not

represent both parties.

Although there is no federal authority directly on point, the

California Court of Appeal has held that § 31000.7 does not

violate procedural due process, so long as the attorney advis-

ing the county board is “screened from any inappropriate con-

tact with the advocate [for the assessor].” Howitt v. Superior

Court, 5 Cal. Rptr. 2d 196, 203 (Cal. Ct. App. 1992). The Cal-

ifornia court’s resolution of a federal constitutional question

is persuasive but is not binding on us. See Davis v. Metro

Prods., Inc., 885 F.2d 515, 519 (9th Cir. 1989).

We turn first to William Jefferson’s argument that having

Whaley advise the Board in the same proceeding where Har-

mon represented the Assessor undermined the impartiality of

the Board, or the appearance thereof. “It is axiomatic that ‘[a]

fair trial in a fair tribunal is a basic requirement of due pro-

cess.’ ” Caperton v. A.T. Massey Coal Co., 556 U.S. 868, 876

(2009) (alteration in original) (quoting In re Murchison, 349

U.S. 133, 136 (1955)). “This applies to administrative agen-

cies which adjudicate as well as to courts.” Withrow v. Larkin,

421 U.S. 35, 46 (1975). Moreover, “justice must satisfy the

appearance of justice.” Marshall v. Jerrico, Inc., 446 U.S.

238, 243 (1980) (quoting Offutt v. United States, 348 U.S. 11,

14 (1954)). Accordingly, due process requires that “a judge

must recuse himself when he has a ‘direct, personal, substan-

tial, pecuniary interest’ in a case.” Caperton, 556 U.S. at 876

(quoting Tumey v. Ohio, 273 U.S. 510, 523 (1927)); see also

Stivers v. Pierce, 71 F.3d 732, 741 (9th Cir. 1995) (“[T]he

adjudicator’s pecuniary or personal interest in the outcome of

the proceedings may create an appearance of partiality that

violates due process, even without any showing of actual

bias.”).

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10201

William Jefferson relies heavily on the Supreme Court’s

recent decision in Caperton, which held that due process calls

for an objective inquiry into “whether the average judge in

[the adjudicator’s] position is ‘likely’ to be neutral, or whether

there is an unconstitutional ‘potential for bias.’ ” 556 U.S. at

881. The Court concluded that a state supreme court justice

was required to recuse himself from hearing a case where the

president of the defendant corporation had contributed three

million dollars to the justice’s election campaign. Id. at

884-85. Because William Jefferson does not allege that the

Board members had a direct personal or pecuniary interest in

the outcome of its appeal, the Court’s Caperton analysis is of

limited use here.

Withrow v. Larkin is the Supreme Court authority most rel-

evant to resolving William Jefferson’s due process challenge.

Larkin was a doctor licensed by the Wisconsin Examining

Board. Withrow, 421 U.S. at 38. The Examining Board sent

Larkin a hearing notice and informed him that on the basis of

the evidence presented at the hearing, it would determine

whether he had violated state licensing statutes, whether he

should be warned or reprimanded, and whether to institute an

action to revoke his license or a criminal action against him.

Id. at 39. Larkin filed suit in federal district court, asserting

that this combination of investigative and adjudicative func-

tions within the Examining Board denied him procedural due

process. Id. at 41-42. The three-judge district court agreed

with Larkin that permitting the Examining Board to suspend

his license “at its own contested hearing on charges evolving

from its own investigation would constitute a denial to

[Larkin] of his rights to procedural due process” and enjoined

the Examining Board from proceeding against Larkin. Id. at

42. The district court found that the state statute authorizing

this regulatory scheme was unconstitutional. Id.

[2] The Supreme Court reversed. First, the Court explained

that Larkin had to “overcome a presumption of honesty and

integrity in those serving as adjudicators” and show that “con-

10202 JEFFERSON & CO. v. BOARD OF ASSESSMENT

ferring investigative and adjudicative powers on the same

individuals poses such a risk of actual bias or prejudgment”

that due process forbids the practice. Id. at 47. The Court held

that the mere fact that investigative and adjudicative powers

are combined in a state administrative agency, without more,

did not violate due process. Id. at 48-52. The Court cautioned,

however, that federal courts must “be alert to the possibilities

of bias that may lurk in the way particular procedures actually

work in practice.” Id. at 54; see also id. at 58.

William Jefferson argues that the Board’s procedures cre-

ated the appearance of unfairness. In Withrow, the Court held

that the same members of the state’s Examining Board could

investigate Larkin and adjudicate claims arising from that

investigation without running afoul of due process. Id. at 58.

The Withrow facts are not directly analogous to the facts

before us because the asserted impermissible overlap there

was between investigative and adjudicative functions. Here

the asserted overlap is between prosecutorial and adjudicative

functions, which potentially raises a greater concern about

bias. The problem for William Jefferson is that here the Board

acted only as an adjudicator. William Jefferson makes no alle-

gation that the Board itself was involved in valuing or defend-

ing the Assessor’s valuation of the property. It is true that

Harmon, the prosecutor, worked in the same public law office

as Whaley, the Board’s advisor, but they performed different

functions and were carefully screened from each other. The

prosecutorial and adjudicative functions in William Jeffer-

son’s assessment appeal were kept much further apart than the

investigative and adjudicative functions in Withrow, where

the same individuals performed both roles.

We rejected an argument similar to William Jefferson’s in

United States v. Oregon, 44 F.3d 758 (9th Cir. 1994). There,

the Klamath Tribe argued that the State of Oregon’s adminis-

trative proceedings for determining water rights denied the

Tribe an adjudication by a fair tribunal. Id. at 771. The Ore-

gon Department of Justice, which provided legal advice to the

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10203

administrative adjudicator, had previously argued against the

existence of treaty rights that were the basis for the Tribe’s

claim to water rights. Id. at 771-72. We concluded that the

Tribe failed to show how the Oregon Department of Justice’s

“prior hostility to certain Treaty rights” could affect the agen-

cy’s subsequent determination of water rights or the review-

ing state court’s decision whether to enforce that

determination. Id. at 772. Our precedent therefore suggests

that even if there were some evidence that Whaley was biased

in favor of the Assessor, which there is not, that evidence

might not be sufficient to conclude that the adjudicating body

—the Board itself—was biased.

[3] In our case, the district court found that the Orange

County Counsel’s office meticulously followed screening pro-

cedures to prevent any improper exchange of information

between attorneys advising the Board and attorneys represent-

ing the Assessor. This finding is unchallenged. In addition,

the Board members are presumed to discharge their adjudica-

tive responsibilities with honesty and integrity. See Withrow,

421 U.S. at 47. Under Withrow, the dual representation sys-

tem authorized by § 31000.7, on its own, is not sufficient to

overcome that presumption. We conclude that the Orange

County Counsel’s office screening procedures were sufficient

to ensure that William Jefferson’s case was heard by an

impartial adjudicator.

[4] William Jefferson also argues that Whaley’s discus-

sions with the Board were impermissible ex parte contacts. In

the absence of a compelling justification, “ex parte communi-

cation will not be tolerated.” Guenther v. CIR, 889 F.2d 882,

884 (9th Cir. 1989). Ex parte contacts, however, are contacts

between the adjudicator and an interested party, of which the

other party is unaware. See Black’s Law Dictionary 657 (9th

ed. 2009); Camero v. United States, 375 F.2d 777, 781 (Ct.

Cl. 1967) (“It is difficult to imagine a more serious incursion

on fairness than to permit the representative of one of the par-

ties to privately communicate his recommendation to the deci-

10204 JEFFERSON & CO. v. BOARD OF ASSESSMENT

sion makers.”) (emphasis added). Whaley did not represent

any party to William Jefferson’s appeal, she was the Board’s

legal advisor. As a result, her communications with the Board

were not ex parte. The cases William Jefferson cites for the

proposition that ex parte communications may violate proce-

dural due process are therefore inapposite.2

Finally, William Jefferson argues that the Orange County

Counsel’s office has a financial incentive to advise the Board

to rule against taxpayers because a portion of the fees that the

Board collects for written findings of fact are paid to the

County Counsel’s office. The district court did not make any

findings of fact on this issue but Whaley and the Board’s

clerk testified that the Orange County Counsel’s office

receives approximately two-thirds of the fees collected by the

Board when a taxpayer requests written findings of fact. This

fact does little to help William Jefferson’s case. The Board

prepares written findings of fact only when a taxpayer

requests them and pays the required fee, which the party does

prior to commencement of the hearing. William Jefferson has

not shown that there is anything that Whaley, or any other

member of the County Counsel’s office, can do to encourage

this request. In addition, the fees are collected and distributed

to the County Counsel’s office for the attorney-advisor’s

work, regardless of which party prevails before the Board.

2

Many of the cases that William Jefferson relies on analyze statutory,

rather than constitutional, standards for determining whether particular ex

parte contacts with administrators were impermissible. See, e.g., Gonzales

v. United States, 348 U.S. 407, 411-12 (1955) (evaluating under the Uni-

versal Military Training and Service Act a conscientious objector’s chal-

lenge to procedures employed by the Department of Justice Appeal

Board); Portland Audubon Soc. v. Endangered Species Comm., 984 F.2d

1534, 1539 (9th Cir. 1993) (analyzing whether ex parte contacts between

White House staffers and a federal agency violated the Administrative

Procedure Act); Grolier Inc. v. FTC, 615 F.2d 1215, 1217 (9th Cir. 1980)

(analyzing whether an ALJ was disqualified from a particular case under

the Administrative Procedure Act and declining to reach a due process

challenge).

JEFFERSON & CO. v. BOARD OF ASSESSMENT 10205

Whaley testified that her salary is in no way tied to the sub-

stance of her advice to the Board and her testimony was not

rebutted. William Jefferson does not explain how the fact that

the Orange County Counsel’s office is paid for the time its

employees spend preparing written findings of fact for the

Board has any influence on the attorney advising the Board or

on the Board itself.

[5] We hold that § 31000.7, which permitted Whaley to

advise the Board in the same proceeding where her colleague

—also from the Orange County Counsel’s office—

represented the Assessor, does not violate due process as

applied in this case. As long as the county counsel’s office

maintains an ethical wall that prevents attorneys representing

the Assessor from supervising attorneys who advise the Board

or sharing case information with them, the county counsel’s

dual representation does not undermine the Board’s impartial-

ity.

AFFIRMED.