Consumers Lobby Against Monopolies v. Public Utilities Commission

NEWMAN, J.,

Concurring and Dissenting. I concur with parts I, II and V of the majority opinion. I dissent *918 from parts III and IV because I believe that the commission’s jurisdiction to award attorney fees extends beyond “quasi-judicial reparation actions.” I am not persuaded that attorney-fee awards are inappropriate in rate-making cases.

Interestingly, since 1947 when our Legislature first prescribed overall procedures for adopting and amending regulations, “every regulation ... which... [establishes or fixes rates” has been exempted from the California Administrative Procedure Act. (See Gov. Code, §§ 11380, subd. (a) (1) and 11421, subd. (a).)

The Federal Administrative Procedure Act, too, segregates rate-making from other rulemaking. Generally, the type of rate-prescribing rules that are at issue here is by law required to be made on the record after opportunity for agency hearing; and 5 United States Code section 553 (c), which governs most federal rulemaking, provides that in those on-the-record cases “sections 556 and 557 of this title apply instead of this subsection.” Those two sections (556 and 557) mostly govern formal adjudication, and only in section 556(d) and section 557(b) is there any kind of special adjustment for rate-making and other on-the-record rulemaking.

What explains that deferential approach to rate-making that both the California Legislature and the Congress have articulated? I think it is demonstrable that legislators have been influenced less by the famous dictum in Prentis v. Atlantic Coast Line (1908) 211 U.S. 210 , 226 [ 53 L.Ed. 150 , 158-159, 29 S.Ct. 67 ] (“establishment of a rate is the making of a rule for the future, and therefore is an act legislative not judicial”) 1 than by the holdings of Morgan v. United States (1936) 298 U.S. 468 [ 80 L.Ed. 1288 , 56 S.Ct. 906 ] and (1938) 304 U.S. 1 [ 82 L.Ed. 1129 , 58 S.Ct. 773 ]. In the first of those two Morgan cases Hughes, C.J. (at p. 480 [ 80 L.Ed. at p. 1295 ]) stated; “A [rate-making] proceeding of this sort requiring the taking and weighing of evidence, determinations of fact based upon the consideration of the evidence, and the making of an order supported by such findings, has a quality resembling that of a judicial proceeding. Hence it is frequently described as a proceeding of a quasi-judicial character.” In the second *919 ( 304 U.S. at p. 18 [82 L.Ed. at pp. 1132-1133]), he referred to rate-making as a “contest with the Government in a quasi-judicial proceeding aimed at the control of their [the Kansas City Stock Yards marketing agencies’] activities....” Further (pp. 19-20 [ 82 L.Ed. at p. 1133 ]), “Congress, in requiring a ‘full hearing’ had regard to judicial standards,—not in any technical sense but with respect to those fundamental requirements of fairness which are of the essence of due process in a proceeding of a judicial nature.... [¶] The answer that the proceeding ... was not of an adversary character, as it was not upon complaint but was initiated as a general inquiry, is futile. It has regard to the mere form of the proceeding and ignores realities. In all substantial respects, the Government... was prosecuting the proceeding against the owners of the market agencies. The proceeding had all the essential elements of contested litigation, with the Government and its counsel on the one side and the appellants and their counsel on the other. It is idle to say that this was not a proceeding in reality against the appellants when the very existence of their agencies was put in jeopardy. Upon the rates for their services the owners depended for their livelihood, and the proceeding attacked them at a vital spot.” (All italics added.)

What is the relevance here of those Morgan case excerpts? I think they explain why, concerning the award of attorney fees, on-the-record rate-making is comparable to “quasi-judicial reparation.”

The majority stress that there may be “a number of interveners” and that there may not be “a clear-cut victory for any party.” Those problems also arise, of course, in many adjudications. (Cf. 2 Davis, Administrative Law Treatise (2d ed. 1979) § 7.2 (“Rules and Rulemaking Distinguished from Orders and Adjudication”) and § 10.5 (“Classification as Adjudication or Rulemaking Is Not the Key to Proper Procedure”).)

What line would I draw? We cannot anticipate all future questions. We could, though, identify the differences between rate-making proceedings that are on the record and those that are not. The observations of Chief Justice Hughes in the Morgan cases are a good start because they acknowledge that the role of lawyers in on-the-record rate-making is parallel to the role of lawyers in adjudication.

I think the search is for “trial-type proceedings,” as to which Professor Kenneth Davis has given us remarkably perceptive guides. (See his *920 Administrative Law Treatise (2d ed. 1979) vol. 2, ch. 12 (“Requirement of Opportunity for Trial-Type Hearing”).) In trial-type proceedings, attorney fees are appropriate because there the attorneys do perform the kind of adversary tasks that prominently have characterized the lawyer’s function.

Bird, C. J., and Tobriner, J., concurred.

Petitioners’ application in No. 23868 for a rehearing was denied January 3, 1980. Bird, C. J., and Tobriner, J., were of the opinion that the application should be granted.

Prentis is cited in Southern Pacific Co. v. Railroad Com. (1924) 194 Cal. 734, 738 [ 231 P.2d 28 ], which the majority opinion here quotes {ante, p. 909). Nothing held in that case is inconsistent with my view here, I believe. Some dicta in Wood v. Public Utilities Commission (1971) 4 Cal.3d 288, 292-293 [ 93 Cal.Rptr. 455 , 481 P.2d 823 ], also quoted {id.), do appear inconsistent.