Petition for Writ of Certiorari — Graff Trucking Co. v. Kelley

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obcieke

NO.

IN THE

Supreme Court, us. |

FILED

FES 19 1991

CLERK

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

GRAFF TRUCKING COMPANY, INC.,

Petitioner,

VS.

FRANK J. KELLEY, Attorney General

of the State of Michigan;

WILLIAM E. LONG, Chairperson of the Michigan

Public Service Commission;

STEVEN M. FETTER, Commissioner of the Michigan

Public Service Commission;

RONALD E. RUSSELL, Commissioner of the Michigan

Public Service Commission;

and Captain ANTHONY PHILIPPS, Commander of the

Motor Carrier Division of the Michigan State Police,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Robert E. McFarland

Counsel of Record

McFARLAND & NIEMER

29645 West Fourteen Mile Road

Suite 101

Farmington Hills, Michigan 48334

Attorneys for Petitioner

BECKER GALLAGHER LEGAL PUBLISHING, INC., CINCINNATI, OHIO (513) 621-2880

QUESTIONS PRESENTED FOR REVIEW

1. is the “bad faith” exception to the Younger doctrine

established, where a state has utilized a variety of procedural

tactics in both the state and federal courts, to prevent a ruling

on the const itutionality of a state statute under the U.S. Con-

stitution Commerce Clause and Supremacy Clause?

2. Is the “bad faith” exception to the Younger doctrine

established, when a state continues to enforce a state statute

against Petitioner and prosecute an action against Petitioner

before a state administrative agency, after a state court in a

criminal proceeding has found the state statute in question to

be unconstitutional, under the U.S. Constitution, and dis-

missed charges against Petitioner?

3. Is Younger abstention inappropriate, where no vital

state interest has been established or is involved?

PARTIES

PETITIONER

1) Graff Trucking Company, Inc.*

RESPONDENTS

1) Frank J. Kelley, Attorney General of the State of

Michigan

2) William E. Long, Chairperson of the Michigan Public

Service Commission

3) Steven M. Fetter, Commissioner of the Michigan Public

Service Commission

4) Ronald E. Russell, Commissioner of the Michigan Public

Service Commission

5) Captain Anthony Philipps, Commander of the Motor

Carrier Division of the Michigan State Police

* Graff Trucking Company, Inc., a Michigan corporation, has no parent

subsidiary corporations.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........... A

Eg ARES aa TT

ye gs VI

ee oy cA Vinh ede adndewaees 2

Eee 2

CONSTITUTIONAL PROVISIONS INVOLVED ...... 2

ose ei pg 6 ae yd o> a 4

ne 4

B. History of Proceedings and Basis for Federal

RE on SE 9

REASONS FOR GRANTING THE WRIT ............ 1]

1. Prevent the Use of the Younger Doctrine as a

Manipulative Device to Delay or Prevent the

Resolution of Federal Constitutional Claims In-

So ll

2. Younger Should not be Extended to Situations

like the Instant One, Where No Vital State In-

terest has been Established. ................... 20

es Sea la

APPENDIX

A. Decision of U.S. Court of Appeals for the Sixth

Circuit of August 31, 1990. .........0......... la

B. Decision of the U.S. District Court, Western

District of Michigan, Southern Division of

a 3a

Decision of the U.S. District Court, Western

District of Michigan, Southern Division of Oc-

tober 16, 1989, denying Motion for New Trial

(or Rehearing) ...... Pee ee OS eR ee ERIC

Decision of U.S. Court of Appeals for the Sixth

Circuit of November 6, 1990, denying Petition

RP irae te Nd ee ee ee

Decision of U.S. Court of Appeals for the Sixth

Circuit of November 8, 1990, vacating order

GE I: TI hi 555 Kx hss hace cccs

Decision of U.S. Court of Appeals for the Sixth

Circuit of November 19, 1990, ultimately deny-

ing Petition for Rehearing ....................

Bench Opinion of the 3-2 Michigan Judicial Dis-

trict Court in Centreville, Michigan of June 20,

1990 in People of the State of Michigan v. Graff

Trucking, Indiana Division ...................

Order of the 3-2 Michigan Judicial District

Court in Centreville, Michigan of June 27, 1990

in People of the State of Michigan v. Graff

Trucking, Indiana Division ...................

SRR Fa DS RE A Mere

Decision of the 34th Judicial District Court of

April 26, 1989 in People of the State of Michigan

v. CTX Division of Central Transport, Inc. ......

Decision of the 52-3 Judicial District Court of

May 15, 1990 in People of the State of Michigan

v. ABC Cartage Company... -. . 2. 6 cece cne.

Motion and Stipulation of Parties to Hold Mat-

ters in Abeyance in People of the State of Michi-

gan v. CTX Division of Central Transport, Inc.,

8 er eee

Page

. 28a

QO.

Decision of the Wayne County Circuit Court of

March 22, 1989 in Central Transport, Inc. and

its CTX Division v. State of Michigan and the

Michigan Public Service Commission .... 2... ..

Letter to The Honorable James B. Stone of April

18, 1989 in Central Traisport, inc. and its CTX

Division v. State of Michigan and the Michigan

Public Service Commission ..................

Excerpt from the Opinion and Order of the

Michigan Public Service Commission of January

9, 1990 In the Matter of the Application of Cen-

tral Transport, Inc., C-6714, Case No. 60... ...

Decision of the Macomb County Circuit Court

of January 19, 1990 in Universal Am-Can, Ltd.

¥. FOES: GE og So RC ee

Decision of the Macomb County Circuit Court

of March 7, 1990, denying Petition for Re-

hearing in Universal Am-Can, Ltd. v. Frank J.

PN: CR 2530 85s SON as ee ee

Page

. dla

. Ba

. 38a

. 40a

TABLE OF AUTHORITIES

CASES Page

Federal

Bibb v. Navajo Freight Lines, Inc.,

359 U.S. 520; 79 S.Ct. 962; 3 L.Ed.2d 1003 (1959) ... 23

Burford v. Sun Oil Co.,

319 U.S. 315; 63 S.Ct. 1098; 87 L.Ed.2d 1424

(1943), reh. den. 320 U.S. 214; 63 S.Ct. 1442; 87

PEC 2 cakes Us ons dae iS 0 kak SM KDERE ROR EK 6

Deakins v. Monaghan,

484 U.S. 193, 203; 108 S.Ct. 523; 98 L.Ed.2d 529

RGA a APRA Reis Oy rena hy UALR ae 16

Hicks v. Miranda,

422 U.S. 332; 97 S.Ct. 2281; 45 L.Ed.2d 223 (1975) .. 12

Huffman v. Pursue, Ltd.,

420 U.S. 592; 95 S.Ct. 1200; 43 L.Ed.2d 482 (1975) .11, 12

Kassel v. Consolidated Freightways Corp..,

450 U.S. 662; 101 S.Ct. 1309; 67 L.Ed.2d 580 (1981) . 23

Middlesex County Ethics Committee v. Garden State

Bar Association, 457 U.S. 423; 102 S.Ct. 2515; 73

A OP RUIIED 3 s sca eccesesneanseuansuacs 12

Moore v. Sims,

442 U.S. 415; 99 S.Ct. 2371; 60 L.Ed.2d 994 (1979) .11, 12

New Orleans Public Service, Inc. v. Council of New

Orleans, 491 U.S. 350, 109 S.Ct. 2506, 2512; 105

UM EU 4 ss so Nk we ee wea dk eee wane 16

Ohio Civil Rights Commission v. Dayton Christian

Schools, Inc., 477 U.S. 619; 106 S.Ct. 2718; 91

err reer es eer are 13

Railroad Commission of Texas v. Pullman Co.,

312 U.S. 496; 61 S.Ct. 643; 85 L.Ed. 971 (1941) ..... 6

Vil

Page

Raymond Motor Transportation, Inc. v. Rice,

434 U.S. 429; 98 S.Ct. 787; 54 L.Ed.2d 664 (1978) . 23

Southern Pacific Co. v. Arizona,

325 U.S. 761; 65 S.Ct. 1515; 89 L.Ed.2d 1915 (1945) . 23

Trainor v. Hernandez.

431 U.S. 434; 97 S.Ct. 1911, 52 L.Ed.2d 486 (1977) .. 11

Younger v. Harris,

401 U.S. 34; 91 S.Ct. 746; 27 L.Ed2d :

669 (1971) ...... 6, 9, 11, 12, 13, 14, 15, 16, 19, 20, 24, 25

United States v. Mutual Trucking Co.,

ee a | a eee re re 22

United States v. Silk (Harrison v. Greyvan Lines, Inc.),

331 U.S. 704; 64 S.Ct. 1463; 91 L.Ed. 1757 (1947) ... 22

Internal Revenue Service

Revenue Ruling 76-226 (1976) ....................... 22

National Labor Relations Board

Capital Parcel Delivery Co..

anes cae eaner naan 21

Container Transit, Inc.,

281 NLRB No. 141, 124 LRRM 1349 (1986) ......... 21

Don Bass Trucking, 275 NLRB 1175 (1985) ............ 21

Precision Bulk Transit Inc.,

279 NLRB No. 60, 122 LRRM 1098 (1985) .......... 21

Interstate Commerce Commission

Dixie Ohio Express Co. Common Carrier Application,

Se ee I so ees een et een ek Dean 22

Ex Parte No. MC-122 (Sub. No. 2), Lease of Equip-

ment and Drivers to Private Carriers, 132 MCC 756,

Se erect eae Cee ee ees 21, 22

Vill

Ex Parte No. MC-43, Lease and Interchange of Ve-

hicles by Motor Carriers, 522 MCC 675 (1951) ....... 22

State

Central Transport, Inc. and its CTX Division v. State

of Michigan and the Michigan Public Service Com-

mission, Wayne County Circuit Court No. 88-

816850-CZ (March 22, 1989) .............. 7-8, 14, 15, 17

People of the State of Michigan v. ABC Cartage Com-

pany, 52-3 Judicial District Court No. 89-002118

gg er reer rr a Pee

People of the State of Michigan v. CTX Division of

Central Transport, Inc., 34th Judicial District Court

No. C-88-0736—C-88-0762 (April 26, 1989) ......... 7, 14

People v. Graff Trucking, Indiana Division,

3-2 Judicial District Court No. 89-1137-1-ST....... 6,7, 16

People y, Universal Am-Can, Ltd., 52-3 Judicial Dis-

trict Court Nos. 90-003143-ST and 90-003144-ST .... 18

Shavers v. Attorney General,

402 Mich. 554, 588; 267 N.W.2d 72 (1978)... 22... ... 15

Universal Am-Can, Ltd. v. Frank J. Kelley, et al..,

Macomb County Circuit Court No. 89-3884-AW ..... 8

Michigan Public Service Commission

In the Matter of the Application of Central Transport,

Inc., File No. C-6714, Case No. 60 (January 9, 1990)... 8

In the Matter of the Complaint Against Graff Trucking

Company, Inc. Filed by the Michigan Public Service

Commission Staff, MPSC File No. T-1075 ........... 6

Page

STATUTES/ Regulations

Federal

Commerce Clause, U.S. Const., Art. I, Sec. 8, Cl.3..... 2

Supremacy Clause, U.S. Const., Art. VI, Cl. 2......... 2

fb ot | LAA rr rarer rere 2

er RE, ois ok sc chee evens an cake kn aeens 10

EE on 5 nae go kane eons ab ale act eaten wee 10

A Sr reer yes are wre ee 10

ME aoc vena. cas teen Sk ek ce exe 10

ne hr eget ana 21

MOOR 6M Seles. .......6.. sso 23

ee NE Bog <5 6 vx cane caiss ihe etWasnas eee 23

Gr Fs gn es ceo ceaesncecse canyons 10, 22

State

SG MEE, cs uw cee ences vawcessee teens 6

SR 2 er ek eee CEL cheat ees uanees on 6

eee reer rr ree ree ree ery ee 20)

he |” es a a ee ee

a ete ccs shale CRE aA Ree ae 16

I ont. as aly cole ck Vk RRR 15

SE Pane Costs kot wg rag aie ce a we oe 15

ES ie re re POR Nr rr 15

Michigan Public Service Commission

rg etry ne cere ce at te ok ra et ars 23

SRN NG ead yaad agen ekg eat Ma AN panty 23

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

NO.

GRAFF TRUCKING COMPANY, INC.,

Petitioner,

VS.

FRANK J. KELLEY, Attorney General

of the State of Michigan;

WILLIAM E. LONG, Chairperson of the Michigan

Public Service Commission;

STEVEN M. FETTER, Commissioner of the Michigan

Public Service Commission;

RONALD E. RUSSELL, Commissioner of the Michigan

Public Service Commission;

and Captain ANTHONY PHILIPPS, Commander of the

Motor Carrier Division of the Michigan State Police,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

To the Honorable Chief Justice and Associate Justices of the

Supreme Court of the United States:

The Petitioner Graff Trucking Company, Inc. respectfully

prays that a Writ of Certiorari issue to review the judgment

of the United States Court of Appeals for the Sixth Circuit.

OPINIONS BELOW

The opinion of the Court of Appeals below (Appendix A,

infra, p. la) denying the appeal of Petitioner is unreported.

The opinion of the District Court below (Appendix B, infra,

p. 3a) dismissing Petitioner's action is unreported. The opin-

ion of the District Court below (Appendix C, infra, p. 9a) de-

nying Petitioner's request for rehearing is unreported. The

Court of Appeals below issued three subsequent orders, first

denying Petitioner’s request for rehearing (Appendix D, infra,

p. 12a), then vacating that order (Appendix E, infra, p. 13a),

and ultimately denying Petitioner's request for rehearing (Ap-

pendix F, infra, p. 14a), all of which are unreported.

JURISDICTION

The opinion of the Court of Appeals below (Appendix A,

infra, p. la) was filed on August 31, 1990. Rehearing was

sought and denied by ultimate order of the Court of Appeals

filed on November 19, 1990 (Appendix E, infra). The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL PROVISIONS INVOLVED

The federal constitutional provisions involved are two. The

first is the Commerce Clause, U.S. Const., Art. I, Sec. 8, Cl.

3, which states:

The Congress shall have power . . . To regulate Com-

merce with foreign Nations, and among the several

States, and with Indian Tribes.

The other constitutional provision involved is the Supremacy

Clause, U.S. Const., Art. VI, Cl. 2, which states:

This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all

Treaties made, or which shall be made, under the

Authority of the United States, shall be the supreme

Law of the Land; and the Judges in every State shall

be bound thereby; any Thing in the Constitution or

Laws of any State to the contrary notwithstanding.

STATEMENT OF THE CASE

A. Statement of the Facts

Petitioner Graff Trucking Company, Inc. (Graff) is a for-

hire motor carrier, based in Kalamazoo, Michigan. It

operates as a common and contract carrier, pursuant to

authority granted to it by the Interstate Commerce Commis-

sion in Docket No. MC-205269 to transport general com-

modities between all points in the contiguous 48 states. Nine-

ty percent of Graff's revenues are derived from operations in

interstate commerce. The remaining ten percent of Graff's

revenues are derived from operations in Michigan intrastate

commerce, pursuant to authority held by Graff from the

Michigan Public Service Commission (MPSC).

In order to conduct its trucking operation, Graff obtains a

portion of its power equipment from owner-operators. These

owner-operators lease the power unit, or tractor, to Graff for

use by Graff in pulling trailers owned by Graff or leased by it

from other sources. This equipment is then used to transport

freight for customers of Graff.

Graff maintains an unincorporated operating division,

known as the “Indiana” Division. Graff's Indiana Division is

based at White Pigeon, Michigan, in southern Michigan close

to the Indiana border.

Graff treats the owner-operators of its Indiana Division as

independent contractors. Graff has always treated those

owner-operators as independent contractors, in terms of its

dealings with those individuals. Those owner-operators con-

duct trucking operations chiefly in interstate commerce,

with, once again, about 90% of the drivers’ operations in-

volving interst..te commerce, as is the case of Graff's opera-

tions overall. The other 10% of the time, the drivers of the

Indiana Division conduct operations in Michigan intrastate

commerce. The Interstate Commerce Commission allows

motor carriers to treat their owner-operators as independent

contractors, and has allowed such treatment historically.

In 1986, Graff began receiving from Staff of the MPSC let-

ters informing Graff that its leases for motor carrier equip-

ment on file with the Michigan Public Service Commission

were in violation of a state statutory provision, MCL

479.10a(6), which provisien requires that drivers of leased

equipment, i.e., the owner-operators, be treated by the

motor carrier as employees. Commencing in the summer of

1988, Officer Rodney B. Krietemeyer of the Motor Carrier

Division of the Michigan State Police visited Graff's offices,

and directed Graff to bring its uperations into compliance

with MCL 479.10a(6). These visits began at the same time

that the MPSC published in its Bi-Weekly Information

Bulletin a notice of a moratorium on enforcement of MCL

479.10a(6), while a study of enforcement of that provision

was under review. The MPSC then notified carriers, through

another notice in its Information Bulletin, that enforcement

would commence on October 20, 1988, and there would be

no exemptions, based on the incidental nature of intrastate

operations conducted in relation to interstate operations. The

state police officer’s visits continued into the spring of 1989.

The officer continued to instruct Graff to bring its operations

into compliance, and threatened enforcement action.

On May 2, 1989, a complaint was filed by Graff in the U.S.

District Court for the Western District of Michigan, seeking a

judgment that the Michigan state statutory provision be

declared null and void, as violative of the Commerce Clause

and Supremacy Clause of the U.S. Constitution. On May 4,

1989, Officer Krietemeyer issued 14 misdemeanor citations

against Graff, alleging violations of the staté statutory provi-

sion requiring Graff to treat its drivers of leased equipment as

employees. On May 22, 1989, Staff of the Michigan Public

Service Commission filed a formal complaint with the MPSC

against Graff, seeking a cease and desist order against Graff,

monetary fines, and the revocation of Graff's intrastate

operating authority, as well as other relief, because of the

violations by Graff of MCL 479.10a(6). One of the admitted

purposes of the filing of the formal administrative proceeding

against Graff, according to Mr. Thomas Lonergan, the Direc-

tor of the Motor Carrier Regulation Division, was to avoid

federal court jurisdiction.

Respondents answered the federal court complaint, based

on the abstention doctrine as set forth in Younger v. Harris,

401 U.S. 37; 91 S.Ct. 746; 27 L.Ed.2d 669 (1971), as well as

other grounds!. The U.S. District Court dismissed the action

filed by Graff in federal court, based on Younger, supra, as

there were two pending state proceedings against Graff?.

While Graff was pursuing its appeal from the dismissal to

the U.S. Court of Appeals, Graff presented and argued a Mo-

tion to Dismiss the state criminal charges against it, in the 3-2

Michigan Judicial District Court in Centreville, Michigan. By

bench opinion issued on June 20, 1990, (see Appendix G, in-

fra, p. 15a), and order entered on June 27, 1990, (see Appen-

dix H, infra, p. 18a), the state district court dismissed the

criminal charges, finding that the Michigan statute was

repugnant to the Commerce Clause of the U.S. Constitution.

The state did not appeal that judgment to the state circuit

court, as the state had a right to do.

The MPSC continued to pursue enforcement against Graff

in its administrative proceeding before the MPSC. Hearings

in that cause were completed in April, 1990, the case was

briefed, and the matter is awaiting the issuance of a proposal

for decision by the Administrative Law Judge*. Respondents

1 Respondents also argued for dismissal based on such cases as Burford v.

Sun Oil Co., 319 U.S. 315; 63 S.Ct. 1098; 87 L.Ed.2d 1424 (1943), reh.

den. 320 U.S. 214; 63 S.Ct. 1442; 87 L.Ed.2d 1851, and Railroad Commis-

sion of Texas v. Pullman Co., 312 U.S. 496; 61 S.Ct. 643; 85 L.Ed.2d 971

(1941).

2 These two proceedings were the state criminal proceeding, People v.

Graff Trucking, Indiana Division, District Court No. 89-1137-1-ST (3-2

Judicial District), and the MPSC administrative proceeding In the Matter of

the Complaint Against Graff Trucking Company, Inc. Filed bu the

Michigan Public Service Commission Staff, MPSC File No. T-1075.

3 Under the Michigan Administrative Procedures Act, MCL 24.201. et

seq., the proposal for decision of a hearing officer can be appealed by any

aggrieved party to the Commissioners themselves, pursuant to MCL 24.281,

continue to enforce actively MCL 479.10a(6) against Graff,

as well as other carriers.

There has been a succession of attempts by carriers to ob-

tain rulings from the state courts that this provision is un-

constitutional since the beginning of 1988. (See Appendix I,

infra, p. 20a, which charts these cases). Respondents,

represented by the Attorney General, have succeeded in

avoiding a decision on the merits in any of these court

challenges, with the exception of state criminal proceedings.

However, in Graff as well as in the two other criminal pro-

ceedings, prosecutions have been dismissed without appeal by

the State of Michigan.

In People of the State ef Michigan v. CTX Division of Cen-

tral Transport, Inc., District Court No. C-88-0736—

C-88-0762, 34th Judicial District (April 26, 1989), (Appendix

J. infra, p. 23a), for example, all 25 citations pending against

the defendant carrier were dismissed, when the only matter

before the court was a motion by defendant raising the same

constitutional grounds which have been raised by Graff in

this proceeding. That dismissal was not appealed by the

State. In People of the State of Michigan v. ABC Cartage

Company, District Court No. 89-002118, 52-3 Judicial

District (May 15, 1990), (Appendix K, infra, p. 26a), an ac-

tion was dismissed against a carrier for violation of MCL

479.10a(6), on an independent ground — that the statute did

not require employment, in the manner interpreted by the

MPSC. That decision was not appealed by the State either.

Other civil actions brought by carriers in the state courts

however, have fallen to Respondents’ procedural attacks. For

example, the district court judge in the CTX proceeding,

- supra, first suggested that the defendant carrier file an action

in state circuit court seeking a declaratory judgment while the

criminal matters were held in abeyance. Defendant and the

prosecutor stipulated to this process, and the judge signed an

order to that effect (Appendix L, infra, p. 28a). An action

was then commenced in Wayne County Circuit Court, en-

titled Central Transport, Inc. and its CTX Division v. State

of Michigan and the Michigan Public Service Commission,

Wayne County Circuit Court No. 88-816850-CZ. By opinion

dated March 22, 1989 (See Appendix M, infra, p. 3la),

however, defendants’ Motion to Dismiss was granted, based

on the ground that the matter was already pending before a

court of competent jurisdiction. This was in spite of the order

of the district court judge and the stipulation of the pros-

ecutor which had approved the filing of such an action. It

was only after this circuit court opinion and a request by

Defendant that its Motion to Dismiss was ripe for decision

(see Appendix N, infra, p. 35a) that the state district court

dismissed the citations, without appeal by the State.

On September 22, 1989, still another action was com-

menced in the circuit court, in Universal Am-Can, Ltd. v.

Frank J. Kelley, et al., Macomb County Circuit Court No.

89-3884-AW, seeking a declaratory ruling that the statute in

question was unconstitutional. These same Respondents again

filed a motion to dismiss, arguing, among other grounds, that

plaintiff had failed to exhaust its administrative remedies,

despite already existing MPSC decisions that it did not have

the power to rule its own enabling statute unconstitutional, as

In the Matter of the Application of Central Transport, Inc.,

File No. C-6714, Case No. 60 (January 9, 1990) (see excerpt

at Appendix O, infra, p. 38a). The circuit court judge, on

January 19, 1990, dismissed the action in Universal, based on

its failure to exhaust its administrative remedies (see Appen-

dix P, infra, p. 40a). Universal’s motion for rehearing was

denied (see Appendix Q, infra, p. 43a), and that matter is

presently pending on appeal, before the Michigan Court of

Appeals*. The issue on appeal in that case involves the pro-

priety of dismissal of the action, on exhaustion grounds, and

not the merits of the constitutional challenge to MCL

479.10a(6).

4 That appeal has been docketed as Court of Appeals Docket No. 127145.

: 9

B. History of Proceedings and Basis for Federal Jurisdic-

tion

As this case involves the issue of whether Respondents’ ac-

tion in defeating federal court jurisdiction in this case comes

within the “bad faith” exception of Younger, various facts

concerning the prior proceeding have been set out in the

preceding discussion. A brief synopsis will be repeated here.

Graff filed its complaint with the U.S. District Court for

the Western District of Michigan on May 2, 1989, when no

state court proceedings were pending against it. Two days

later, criminal citations were issued against Graff in state

district court. Twenty days later, a formal complaint was

commenced against Graff by Staff of the MPSC, in File No.

T-1075. Respondents moved to dismiss the U.S. District

Court action, based on Younger and two pending state pro-

ceedings in both state district court and before the ad-

ministrative agency. The U.S. District Court granted the Mo-

tion to Dismiss on Younger grounds on August 18, 1989, and

denied Graff's Motion for Rehearing on October 16, 1989.

Graff appealed to the U.S. Court of Appeals for the Sixth Cir-

cuit.

The criminal charges against Graff were dismissed by the

state district court, by bench opinion rendered June 20, 1990

and order issued June 27, 1990. That decision was not ap-

pealed by the People.

On August 31, 1990, the panel of the Sixth Circuit issued its

decision affirming the U.S. District Court decision. Graff

filed a petition for rehearing. Respondents were directed by

the Court of Appeals to file a response. On November 6,

1990, the Court of Appeals issued an order denying the Peti-

tion for Rehearing. On November 8, 1990, the Court of Ap-

peals issued an order vacating the November 6, 1990 order,

indicating that it had been issued inadvertently. On

November 19, 1990 still another order was issued denying the

petition for rehearing. The administrative proceeding is still

" y pending at the MPSC.

The underlying basis of Graff's federal court action is that a

provision in the Michigan Motor Carrier Act, MCL

479.10a(6) which requires trucking companies to treat their

owner-operators as employees, is unconstitutional under the

Commerce Clause and Supremacy Clause. Trucking com-

panies have traditionally regarded their owner-operators as

independent contractors. The Interstate Commerce Commis-

sion specifically authorizes the maintenance of owner-

operator status, and has done so historically. The ICC has

promulgated extensive rules at 49 C.F.R. 1057.11-12 govern-

ing the relation between owner-operators and motor carriers,

but nowhere requires an employee status. Graff's operations

are heavily centered in interstate commerce. To treat an

owner-operator as an employee involves substantially higher

labor costs. Graff must compete in interstate commerce with

carriers which do not have this same obligation. Graff main-

tains the Michigan statutory provision is an undue burden on

interstate commerce. Further, it conflicts with federal

regulatory treatrnent, which is supreme in all respects for car-

riers operating in interstate commerce, as Graff does.

The basis for federal jurisdiction in the court of the first in-

stance is 28 U.S.C. §§ 1331, 1343, 2201, and 2202, as the

matter involves a federal constitutional challenge to a state

statute.

REASONS FOR GRANTING THE WRIT

1. Prevent the Use of the Younger Doctrine as a

Manipulative Device to Delay or Prevent the Resolu-

tion of Federal Constitutional Claims Involving State

Statutes.

This case involves a critical question of federal-state rela-

tions, involving as it does the Younger abstention doctrine

and the bad faith exception thereto. This Court has never

decided whether Younger abstention is still appropriate,

where a state has prevented judicial determination of a

federal constitutional! issue in not only the federal courts, but

the state courts, through legal maneuvering. This Court has

also never decided whether Younger abstention is ap-

propriate, when a state criminal prosecution has been re-

solved in defendant’s favor, based on lack of constitutionality

of a state statute, but the state continues to enforce the stztute

against the party. These questions are worthy of decision by

this Court.

In Younger, of course, this Court, based on the notion of

“comity” and “our federalism,” declared that there would be

no federal court intervention with a pending state criminal

prosecution, absent a showing of “. . . bad faith, harassment,

or any other circumstance that would call for equitable

relief”. 401 U.S. at 34. The scope of the Younger abstention

doctrine was expanded beyond pending state criminal pros-

ecutions to civil enforcement proceedings in Huffman v. Pur-

sue, Ltd., 420 U.S. 592; 95 S.Ct. 1200; 43 L.Ed.2d 48°

(1975), where the application of a public nuisance statute to a

theater displaying pornographic films was involved>. It was

5 See, also, in this same regard, Trainor v. Hernandez, 431 U.S. 434: 97

S.Ct. 1911, 52 L.Ed.2d 486 (1977), involving a civil action by a state

department seeking the return of welfare payments alleged to have been ob-

tained fraudulently, and Moore v. Sims, 442 U.S. 415; 99 S.Ct. 2371; 60

L.Ed.2d 994 (1979), involving state child custody proceedings, in a case of

suspected abuse. This court noted in Trainor that the option had been

available to the state to prosecute the involved parties in criminal pro-

pointed out in Huffman that the proceeding was “. . . more

akin to a criminal prosecution than are most civil cases” Id. at

604.

In Hicks v. Miranda, 422 U.S. 332; 97 S.Ct. 2281; 45

L.Ed.2d 223 (1975), Younger was also applied in a broader

context, in that this Court held that the state proceedings did

not have to be pending, at the time that the federal case was

initiated. In the instant case involving Graff, of course, no

state court proceedings were pending at the time that Graff

filed its actions. Hicks, once again, involved obscenity

charges. This court declared at 422 U.S. 349 that:

. . . We now hold that where state criminal proceed-

ings are begun against the federal plaintiffs after the

federal complaint is filed but before any proceedings

of substance on the merits have taken place in the

federal court, the principles of Younger v. Harris

should apply in full force.

In the case at hand, there had been no proceedings of

substance prior to the institution of the state court criminal

proceeding, although some of the Respondents, at least had

been served with Graff's U.S. District Court complaint®.

Younger has been applied in still other contexts by this

Court. For example, in Middlesex County Ethics Committee

v. Garden State Bar Association, 457 U.S. 423; 102 S.Ct.

2515; 73 L.Ed.2d 116 (1982), Younger abstention was held

——appropriate, where a state bar disciplinary proceeding

ceedings, but the state elected to vindicate its important state policies

through the civil action. See 431 U.S. at 433. In Moore, this court empha-

sized that an action involving the removal of a child in child-abuse context

was Closely related to criminal statutes. See 442 U.S. at 423. Again, impor-

tant state interests were involved.

6 There were never actual hearings held on any of the issues involved in

this case by the U.S. District Court. The matter was decided entirely on the

written arguments of counsel.

judicial in nature and within the jurisdiction of the New

Jersey Supreme Court had been commenced prior to the in-

stitution of the federal court complaint. Further, in Ohio

Civil Rights Commission v. Dayton Christian Schools, Inc.,

477 U.S. 619; 106 S.Ct. 2718; 91 L.Ed.2d 512 (1986),

Younger was applied to a prior pending proceeding involving

a state administrative agency. The lewer court, relying upon

the two pending, but not prior, state court proceedings in the

case at hand, found Younger abstention to be appropriate and

dismissed Graff's claim without prejudice. In its Motion to

Dismiss, Respondents had argued that:

Plaintiff has state remedies which it may utilize and

this issue is the subject of currently pending state

district court and state administrative proceedings.

Respondents’ Memorandum of Law in Support of Motion to

Dismiss Complaint on Grounds of Abstention, p.12.

Respondents relied upon both the state district court criminal

proceeding and the administrative agency proceeding, as did

the U.S. District Court in its opinion. In Respondents’

Response to Graff's Motion for a New Trial in the U.S.

District Court, Respondents stated, at p.19, as follows:

Plaintiff argues (memo, p.13) that Defendants have

evidenced bad faith and seek to avoid a hearing on the

merits in this cause. In response, Defendants’ urges

(sic) that the state district court proceeding involving

the 14 citations issued to Plaintiff was adjourned until

December 1, 1989 pursuant to a request by Plaintiff.

Thus, it was not the state who seeks to avoid litigating

the merits of this case in the state district court pro-

ceedings. Rather, it is the Plaintiff who seeks to

maneuver this case from the traditional state forums

to the federal court.

Respondents further charged that:

. .. Plaintiff will in all likelihood be attempting to

persuade both the (state) district court judge, as well

as the MPSC that proceedings on the merits in those

state proceedings should await a final disposition of

this case by the federal court. It is thus the Plaintiff

who seeks to prolong and defer the litigation of these

cases on the merits in the two pending state pro-

ceedings. Id., at 20.

Petitioner had, in response to the initial Younger motion

argued that the “bad faith” exception to Younger applied,

and pointed out what had transpired already in People v.

CTX, supra and Central Transport, Inc., et al. v. State of

Michigan, et al., supra. Those matters were again presented

to the district court, in Graff's Motion for Rehearing and

Graff's Memorandum of Law in Support of Motion for New

Trial (or Rehearing), at p.14, where the following prediction

was made by Petitioner:

In the event, of course, that the provision is found un-

constitutional before a state district court, the people

will have the election of not appealing that decision

and trying their luck with another citation issued

before another district court, claiming all the while

that the adverse decision on constitutionality was an

aberration and without precedential value in any

other district. To allow Defendants to play this game

is not, Plaintiff submits, in the interest of justice or

fair play. These are extraordinary circumstances, also.

Yet, Graff's argument on bad faith was rejected by the trial

court in its initial opinion, and not addressed in its decision on

Graff's Motion for Rehearing.

When the arguments regarding the oppressive state tactics

concerning both the state and federal challenges to the

statutory provision in question were raised before the Court

of Appeals, on both brief and oral argument, the court noted

that it was “. . . limited to the record before us on appeal”.

(Appendix A, infra, p. 2a). Graff submits that the issue of

bad faith was properly before the U.S. District Court, as well

as the Court of Appeals, and, further, that the courts can

properly take notice of other court decisions and court

pleadings, which proceedings continue to support Graff's con-

tention that the State of Michigan has engaged in a legal war

of attrition, for purposes of preserving enforcement of this

statute as long as possible. This strategy of Respondents has

been singularly successful, as a review of the events reveals.

That strategy has been oppressive to Graff and has caused it

incredible expense.

Petitioner is aware of no situation in which Younger

abstention has been deemed appropriate, in a case such as

this, where the state has declined to appeal dismissals of state

criminal charges, based on federal constitutional challenges,

while continuing to enforce the same state law. The State

here has, further, utilized procedural arguments, such as ex-

haustion of aaministrative remedies, in Universai, supra, and

the existence of another prior and competent state forum, in

Central Transport, supra, to avoid decisions on the merits in

state declaratory judgment actions brought in state courts.

The state has an appeal by right to the circuit court, as does

any other party, from a district court decision, pursuant to

MCL 600.8342(1) and (3). Moreover, there is an appeal by

application from such a circuit court decision to the Michigan

Court of Appeals itself. Concerning the declaratory judgment

actions which the State was successful in having dismissed,

appeals from the circuit court decisions in those cases proceed

directly to the Michigan Court of Appeals, pursuant to MCL

600.308’. Here, after Respondents expressly directed the U.S.

District Court’s attention to the state criminal proceeding, as

7 The declaratory judgment device was attacked by Respondents, despite

the fact that the courts of Michigan have long favored its use to determine

questions such as constitutionality. See, in that regard Shavers v. Attorney

General, 402 Mich. 554, 588; 267 N.W.2d 72 (1978), wherein the court

stated that “the declaratory judgment rule was intended and has been

liberally construed to provide a broad, flexible remedy with a view to mak-

ing the courts more accessible to the people.”

= 16

an avenue which Graff had available in which to raise its

constitutional arguments, and the U.S. District Court ac-

cepted Respondents’ argument in that regard, dismissing on

Younger grounds, Graff's arguments were presented to the

state district court in the context of the criminal charges.

Graff prevailed. Yet, Respondents have continued to enforce

the statutory provision in question against Graff, as well as

other carriers, and continues to prosecute the state ad-

ministrative proceeding, requesting a variety of draconian

relief, even including the assessment of fines’. As Justice

Scalia, writing for the Court, recently pointed out in New

Orleans Public Service, Inc. v. Council of New Orleans, 491

U.S. 350, 109 S.Ct 2506, 2512; 105 L.Ed.2d 298 (1989),

Our cases have long supported the proposition that

federal courts lack the authority to abstain from the

exercise of jurisdiction that has been conferred.

It was pointed out there, once again, that abstention is “the

exception, not the rule”. Jd. at 2513. In its discussion, the

Court again noted that the obligation of the federal courts to

determine claims within their jurisdiction was “virtually

unflagging”, as had been stated in Deakins v. Monaghan, 484

U.S. 193, 203; 108 S.Ct. 523; 98 L.Ed.2d 529 (1988). The

bad faith language of Younger must be given meaning in

Graff's case, if the language of this Court in cases such as

New Orleans and Deakins concerning the federal courts’

obligation to rule on cases within their jurisdiction, is to have

meaning. In this case, Graff, before the U.S. District Court,

successfully predicted the course which Respondents would

take, if Graff prevailed in the state district court proceeding.

Graff said that such a state court ruling would mean nothing

to Respondents. It has meant nothing.

8 Fines could have been assessed in the criminal proceeding, but were

not, because of the state district court's disposition in People v. Graff, supra.

Criminal violations of the Michigan Act are punishable by fines not ex-

ceeding $500 or imprisonment for not more than 90 days, pursuant to MCL

479.16.

It is true that, at the time that Petitioner filed its federal

court action, it was aware of the continuing interests of State

Police Officer Krietemeyer in Graff's method of treatment of

owner-operators. Such interest had been expressed for several

months. However, for a part of the time that Graff was being

investigated, a moratorium by the MPSC was in effect. Also,

Graff was aware that the Central declaratory judgment ac-

tion, supra, was pending in Wayne County Circuit Court.

After that action was dismissed, based on Respondents’ mo-

tion, Graff concluded that it was necessary for it to file this

federal court complaint. However, it is absurd to suggest, as

Respondents have argued, that Graff should have known that

a formal complaint proceeding would be instituted against it

by the MPSC Staff. No formal complaint had ever been in-

stituted by Staff against a carrier for violations of MCL

479.10a(6). The state police, further, issue a multitude of

citations against motor carriers each and every year in

Michigan for various and sundry Motor Carrier Act offenses,

and only a small fraction of these ever result in formal com-

plaint proceedings being instituted against the carrier. Also of

note is the admission by Mr. Lonergan, Director of the MPSC

Motor Carrier Regulation Staff, in the MPSC proceeding in-

volving Graff, that one of Staff's motivations was to avoid a

federal court determination of Graff's Commerce Clause and

Supremacy Clause issues?.

9 The following exchange occurred between Mr. Lonergan and Peti-

tioner’s counsel, during Mr. Lonergan’s cross-examination in the ad-

ministrative proceeding:

Q: Would I be correct that if I were to ask you questions about

your personal knowledge with regard to the factual matters

underlying the complaint, that you have not —

A: Very little.

Was part of your reasons for filing the formal complaint

against Graff to have available this Commission as a forum to

present the factual issues as opposed to a federal court?

A: Yes, I would say it was desired, ves.

When the Court of Appeals below directed Respondents to

file a response to Graff's Petition for Rehearing, Respondents,

apparently out of a feeling of concern that their tactics might

have caught up to them, represented to the Court of Appeals

at Note 10, p. 5 of their response that: \

It should also be noted, however, that although the

Defendants-Appellees do not recognize either of the

three district court decisions as foreclosing or pre-

cluding any enforcement of MCL 479.10a(6), Defen-

dants-Appellees have ceased any enforcement activity

against any existing operations not in compliance with

MCL 479.10a(6) during the pendency of the MPSC

proceeding involving Graff and will continue to do so,

at least until the Commission’s order therein, and

perhaps during any pending Court of Appeals review

thereof.

A similar representation was made to the administrative law

judge before the MPSC in a pleading filed with that agency.

The purpose of the representation made by Respondents was

to demonstrate to the Court of Appeals that they were not

acting in “bad faith”. Graff subsequently pointed out to the

administrative law judge before the agency that Respondents

continued to enforce the statute in question’®. In response to

Graff's charge that enforcement continued, Respondents

replied as follows in the administrative proceeding:

Clearly, Graff has not carefully read the statement

contained in footnote 7 (footnote 8 of Respondents’

pleading before the Court of Appeals) because that

footnote expressly states that Staff has ceased enforce-

10 Citations were issued, for example, on October 16 and October 17,

1990 for related offenses in People v. Universal Am-Can, Ltd., District

Court Nos. 90-003143-ST and 90-003144-ST (52-3 Judicial District) which

matters are presently pending before the district court on Motions to

Dismiss, because of constitutionality grounds. Other enforcement actions

continue to take place against existing carriers by Respondents.

ment activity against any ‘existing’ operations not in

compliance with MCL 479.10a(6). Thus, the only en-

forcement activity that Staff is therefore taking would

be in instances where a carrier seeks to augment or

add to its illegal operations. In other words, if a car-

rier currently has 25 leases on file with the MPSC for

vehicles it leases from owner-operators, the carrier is

still able to renew and obtain decals for those vehicles

on an annual basis, even if those leases do not comply

with MCL 479.10a(6). However, if a carrier wishes to

add more vehicles to its existing fleet, then the Staff

has refused to issue decals if the leases that the carrier

attempts to file are not in compliance with the

Michigan Motor Carrier Act and rules.

This is but another example of Respondents’ perfidy. A state

which is engaged in this kind of behavior is not entitled to the

respect for state functions declared in Younger. Involved in

this case is the bad faith necessary to justify federal interven-

tion. Involved is the harassment necesssary. Litigants should

not be deprived of a federal court forum in which to hear

their federal constitutional claims in cases such as this.

Younger elaborates on an important and vital theme in this

nation’s federal and political system. Younger is not an ex-

cuse, however, for manipulation by a state of both state and

federal judicial proceedings to delay a decision on the merits

of an important federal constitutional claim. Some three

years after legal proceedings first ensued with regard to this

issue, no state or federal trial court has had the issues

presented to it on the merits. The only actual trial pro-

ceedings, thanks to Respondents’ strategy, have been before a

state administrative agency which has declared itself in-

competent to render a ruling on this very same constitutional

issue. Abstention is not appropriate in this instance, and this

court should take this opportunity, Graff submits, to inform

the states that Younger is not to be utilized in this fashion.

2. Younger Should not be Extended to Situations like the

Instant One, Where No Vital State Interest has been

Established.

Younger and its progeny have all examined whether a vital

state interest was involved, on behalf of the State. The U.S.

District Court, in this proceeding, determined that a vital

state interest was involved, which was:

The protection of its citizens’ general health, welfare,

and safety by forcing trucking companies, through

state statute to be financially accountable for ac-

cidents . . . (Appendix B, infra, at p. 7a).

No evidence was submitted by Respondents to support this

proposition. This finding was based on assertions by

Respondents, in their pleadings, signed by Respondents’

counsel. Those assertions of Respondents were controverted

by Graff. No evidentiary hearings or oral arguments were

had before the U.S. District Court. The conclusion of the

U.S. District Court that a vital state interest was involved was

erroneous.

The statutory provision in question, MCL 479.10a(6), is a

small part of the Michigan Motor Carrier Act of 1933, MCL

475.1 et seq., which governs the affairs of Michigan motor

carriers. That provision simply states, in reievant part, at

MCL 479.10a(6), that:

The lease, contract, or arrangement shall provide that

the vehicle, at all times, while being operated under

the lease, contract, or arrangement, shall be operated

only by persons who are employees of the holder who

stand in relation to the holder as employee to

employer.

That section and requirement was not added to the Michigan

Motor Carrier Act until the latter half of the 1950's. It was

part and parcel of a labor-backed initiative to assist unions in

organizing trucking companies!''. The “employee” require-

ment for owner-operators in Michigan has nothing what-

soever to do with the right of a state to control entry or rates

in intrastate transportation, however. Graff possesses in-

trastate authority as required by the Michigan Public Service

Commission and has for decades. Graff's formation in 1921

even predates the present Michigan regulatory scheme.

What the state statutory provision does, however, is require

a motor carrier to conorm all of its operations, including its

interstate operations, to an intrastate method of operations

which has as its purpose the protection of a labor union. That

is not, in Graff's view, a vital state function. The Interstate

Commerce Commission has, for years, allowed motor carriers

to treat their owner-operators as independent contractors. As

was stated by the ICC in Ex Parte No. MC-122 (Sub. No. 2),

Lease of Equipment and Drivers to Private Carriers, 132

MCC 756, 787 (1952),

For general legal purposes, we held long ago that a

regulated carrier can carry on its service with equip-

ment leased from owner-operators as independent

contractors, and it is our understanding that owner-

operators are not typically treated as employees for tax

purposes when they lease to regulated carriers.

11 The bill adding this language was even known as the “Wendell”

amendment, after the late Otto Wendell, former govermental Affairs Direc-

tor for the Teamsters’ Union in Michigan. The bill has a union purpose, as

bona fide independent contractors are not covered by the provisions of the

National Labor Relations Act. See 29 U.S.C. § 152(3). In the case of truck-

ing operations, the National Labor Relations Board, in determining

whether or not individuals were truly independent contractors, has focused

on the “right to control” test, with particular emphasis on the assumption of

entrepreneurial risk by the owner-operator. See, in this regard, such cases as

Capital Parcel Delivery Co., 269 NLRB 52 (1984); Don Bass Trucking, 275

NLRB 1175 (1985); Precision Bulk Transit, Inc., 279 NLRB No. 60, 122

LRRM 1098 (1986), and Container Transit, Inc., 281 NLRB No. 141, 124

LRRM 1349 (1986).

In that same decision, the ICC noted that it had rejected a re-

quirement that owner-operators be employees, as early as its

decision in Dixie Ohio Express Co. Common Carrier Applica-

tion, 17 MCC 735 (1939). Lease of Equipment, supra, at

780!?. In addition to specifically holding that motor carriers

can treat their owner-operators as independent contractors,

the ICC has also promulgated an extensive set of rules, at 49

C.F.R. § 1057.11-12, which establishes in detail the contrac-

tual relationship which must exist between a motor carrier

and its owner-operators. The employee relationship is not a

part of that. Thus, the Michigan statutory requirement is

totally contrary to the scheme crafted at the federal level'*. It

imposes substantial additional operational costs on carriers,.

also.

The fact of the matter is that motor carriers must maintain

insurance for their operations and be responsible to the public

for those operations, whether or not the motor carriers treat

their drivers as independent contractors or employees, pur-

12 See also Ex Parte No. MC-43, Lease and Interchange of Vehicles by

Motor Carriers, 522 MCC 675 (1951), again supporting the ability of in-

terstate motor carriers to treat their owner-operators as independent con-

tractors. In terms of tax treatment of the owner-operators, see, also, United

States v. Silk (Harrison v. Greyvan Lines, Inc., 331 U.S. 704; 64 S.Ct. 1463;

G91 L.Ed. 1757 (1947), and United States v. Mutual Trucking Co., 141 F.2d

655 (6th Cir., 1944), as well as Revenue Ruling 76-226 (1976), which pro-

vide guidance as to the parameters under which it is permissible, under the

Federal Tax Laws, for motor carriers to treat their owner-operators as in-

dependent contractors.

'3 Graff initially posited in these various proceedings that there was no

other state which had a requirement similar to Michigan's, based on

testimony from its Chairman of the Board concerning Graff's experience as

a motor carrier operator over a wide portion of the United States.

Respondents have since pointed out that there are two other states,

Washington and Rhode Island, which have in effect requirements such as

Michigan’s, for their intrastate transportation. Clearly, then, the impostion

of such a requirement has not been found necessary by the vast majority of

states or the federal government, in order to regulate economically in-

trastate or interstate motor transportation.

suant to federal regulations at 49 C.F.R. § 1043.1. Similarly,

the MPSC has promulgated rules setting forth specific re-

quirements for carriers to maintain public liability and prop-

erty damage insurance for the protection of the public, at

R 460.19101. These ruies apply to regulated carriers

operating in intrastate commerce in Michigan. Graff is one of

those carriers. Accordingly, the insurance requirements of

this state are already in force as to Graff, separate and apart

from any requirement as to the status of the drivers. Further,

the safety rules of the United States Department of Transpor-

tation, 49 C.F.R. § 390.1 et seq., apply to all commercial

motor vehicles, whether or not operated for-hire. Similarly,

the rules of the Motor Carrier Division of the Michigan State

Police, governing motor carrier safety, R 470.16101, apply to

carriers whether or not those carriers are “for-hire”. The con-

clusion of the U.S. District Court, then, was simply wrong. It

relied on the incantation of a purpose by the State, for which

there is no evidentiary support.

This court has, in the past, recognized the pitfalls in relying

upon mere assertions of safety purposes for state requirements

which interfere with interstate commerce, by a state, in cases

such as Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520; 79

S.Ct. 962; 3 L.Ed.2d 1003 (1959), and Raymond Motor

Transportation, Inc. v. Rice, 434 U.S. 429; 98 S.Ct. 787; 54

L.Ed.2d 664 (1978)!*. That is why it is necessary for a court

to determine whether there is actual evidence which supports

a state’s contention. No such evidence was presented in this

case. The assertion by Respondents’ counsel has no basis in

law or in fact.

Neither does the interest of a state in maintaining a

criminal prosecution have any further relevance, in this par-

ticular situation, where the criminal action has been resolved

14 See also, along these same lines, Southern Pacific Co. v. Arizona, 325

U.S. 761; 65 S.Ct. 1515; 89 L.Ed.2d 1915 (1945) and Kassel v. Con-

solidated Freightways Corp., 450 U.S. 662; 101 S.Ct. 1309; 67 L.Ed.2d 580

(1981).

in Graff's favor, because of the unconstitutionality of the state

statute. There is no vital state interest worthy of protection in

the instant case.

What the Michigan statute does, however, is not only assist

labor unions, with regard to their organizing efforts of

Michigan carriers operating in intrastate commerce, but, fur-

ther, requires those carriers to either maintain two separate

operations, using trucks in interstate commerce for one opera-

tion and intrastate commerce for another, or conform all of

the carrier's operations to the Michigan dictated method —

treating owner-operators as employees. This protects

Michigan-based union carriers from competition from other

carriers who eléct not to operate in intrastate commerce, in

that state, because of this requirement. Also, it increases the

costs of operations and makes operations inefficient, for car-

riers operating in both interstate and intrastate commerce, by

requiring those carriers to either treat their owner-operators

as employees, or, in the alternative, to have two parallel

operations, with inefficient equipment usage and worsened

service commensurately. That is why this law is defective

from both a Commerce Clause and Supremacy Clause stand-

point. Yet, no federal court, or state court for that matter,

has ruled on the legitimacy of the Michigan statutory provi-

sion, in light of the federal constitutional dictates, because of

Respondents’ legal chicanery. The asserted state interest here

is not significant enough to invoke Younger abstention, under

this court’s past precedent. The decision should fall on this

ground also.

CONCLUSION

Younger abstention is the exception, not the rule. If citizens

are not to be deprived of the protection of the United States

Constitution, then, it is necessary for the courts to give

Younger’s “bad faith” exception meaning, by refusing to

allow states to employ abstention as a manipulative device to

delay or prevent altogether a ruling on the merits on the ques-

tion of the propriety of a state statute under the U.S. Con-

stitution. Michigan's actions, as outlined here, reflect a con-

tempt for the judicial process. It should not be countenanced

by this court. This is an important question of federal law,

which, in Petitioner's view, has not yet been settled. A state

should not be allowed to avoid federal court jurisdiction in

ruling on a claim such as is involved here, when the siate

courts have already ruled, in a criminal proceeding, that the

statute in question is unconstitutional. Neither shouid states

be allowed to recite a purpose, such as safety, for which there

is no evidence of record, in support of a Younger abstention

claim. Younger should not be allowed to become a shield

against legitimate judicial inquiry as to the constitutionality

of a state statute under the U.S. Constitution. Younger has

never been held to mean that. It should not be held to mean

that now.

For the reasons expressed, it is respectfully prayed that a

Writ of Certiorari issue to review the decision of the United

States Court of Appeals for the Sixth Circuit.

Respectfully submitted,

By: /s/ Robert E. McFarland

Counsel of Record

McFARLAND & NIEMER

29645 W. Fourteen Mile Road

Suite 101

Farmington Hills, MI 48334

(313) 851-7500

Attorneys for Petitioner

Graff Trucking Company, Inc.

Date: February 18, 1991

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 89-2320

NOT RECOMMENDED FOR PUBLICATION

GRAFF TRUCKING COMPANY, INC.,

Plaintiff-Appellant,

FRANK J. KELLEY; et al.,

Defendants-Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE WESTERN DISTRICT OF MICHIGAN

(Decided and Filed August 31, 1990)

Before: JONES and NORRIS, Circuit Judges; TODD,

District Judge. *

PER CURIAM. Plaintiff, Graff Trucking Company, Inc.,

appeals from the judgment of the district court dismissing,

upon grounds of abstention, plaintiff's action for injunctive

and declaratory relief, and the court's order denying its mo-

tion for a new trial.

Having had the benefit of oral argument and _ having

* The Honorable James D. Todd, United States District Judge for the

Western District of Tennessee, sitting by designation.

carefully considered the record on appeal and the briefs of the

parties, we are unable to say that the district court erred in

dismissing the action without prejudice and in denying the

motion for a new trial.

Although there was considerable discussion during oral

argument concerning changes in circumstances that may have

occurred since this cause was appealed, we are, of course,

limited to the record before us on appeal. We note that the

action was dismissed without prejudice, and that the district

court would be in the position to entertain another filing by

plaintiff should defendants engage in conduct which denies

plaintiff rights guaranteed it under the United States Con-

stitution. We have every confidence that the defendants will

see their duty in that regard, and will not subject plaintiff to

unwarranted litigation and expense.

As the reasons why judgment should be entered for defen-

dants have been articulated by the district court, the issuance

of a written opinion by this court would be duplicative and

serve no useful purpose. Accordingly, the judgment of the

district court dismissing the action without prejudice and the

order denying the motion for new trial, are affirmed upon the

reasoning set out by the district court in its opinion of August

18, 1989.

APPENDIX B

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

File No. L89-30043-CA

Hon. Benjamin F. Gibson

GRAFF TRUCKING COMPANY, INC.,

Plaintiff,

Vv.

FRANK J. KELLEY, WILLIAM E. LONG,

STEVEN M. FETTER, RONALD E. RUSSELL, and

CAPTAIN ANTHONY PHILLIPS,

Defendants.

JUDGMENT

(Filed August 18, 1989.)

At a session of the Court held in and for said District

and Division, in the City of Grand Rapids, Michigan,

this 18th day of August, 1989.

PRESENT: HON. BENJAMIN F. GIBSON, DISTRICT

JUDGE

In accordance with the Opinion dated August 18, 1989,

this Court abstains from deciding the merits of this case, and

IT IS HEREBY ORDERED that plaintiff's complaint is

DISMISSED without prejudice to plaintiff's right to return to

this Court if it is not afforded a fair and prompt hearing from

the state proceedings.

IT IS SO ORDERED.

/s)/ BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

DATED: August 18, 1989.

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

File No. L89-30043-CA

Hon. Benjamin F. Gibson

GRAFF TRUCKING COMPANY, INC.,

Plaintiff,

Vv.

FRANK J. KELLEY, WILLIAM E. LONG,

STEVEN M. FETTER, RONALD E. RUSSELL, and

CAPTAIN ANTHONY PHILLIPS,

Defendants.

OPINION

sempre (Filed August 18, 1989.)

INTRODUCTION

Plaintiff Graff Trucking Company, Inc. filed this action

seeking both a preliminary injunction and declaratory relief

against defendants Frank J. Kelley, Attorney General of

Michigan, William E. Long, Chairperson of the Michigan

Public Service Commission (“MPSC”), Steven M. Fetter and

Ronald E. Russell, Commissioners of the MPSC, and Captain

Anthony Phillips, Commander of the Motor Carrier Division

of the Michigan State Police. Plaintiff claims that Michigan

Compiled Laws Annotated Section 479.10a(6) (“Section

479.10a(6)”) violates its fourteenth amendment rights and is a

violation of the Commerce Clause, article I, section 8, of the

United States Constitution. Presently pending before the

Court is defendants’ motion to dismiss the complaint on the

grounds of abstention.

ANALYSIS

In Younger v. Harris, 401 U.S. 37 (1971), plaintiff brought

a civil rights action under Title 28 United States Code Section

1983 in federal district court to enjoin a criminal proceeding

pending against him. The Supreme Court held that an ongo-

ing state criminal proceeding may not ordinarily be enjoined

by a federal court. Id. at 49. Younger and its progeny

“espouse a strong federal policy against federa! court interfer-

ence with pending state judicial proceedings absent extraor-

dinary circumstances.” Middlesex County Ethics Committee

v. Garden State Bar Association, 457 U.S. 423, 431 (1982).

Underlying Younger are the principles of federalism and

“comity,” that is, a proper respect for state functions,

a recognition of the fact that the entire country is

made up of a Union of separate state governments,

and. . . the belief that the National Government will

fare best if the States and their institutions are left free

to perform their separate functions in their separate

ways . . . What the concept does represent is a system

in which there is sensitivity to legitimate interests of

both State and National Governments, and in which

the National Government, anxious though it may be

to vindicate and protect federal rights and federal in-

terests, always endeavors to do so in ways that will not

unduly interfere with the legitimate activities of the

States.

Younger, 401 U.S. at 44.

In Parker v. Commonwealth of Kentucky, Board of Den-

tistry, 818 F.2d 504 (6th Cir. 1987), the Sixth Circuit set forth

a three-prong test for determining whether Younger absten-

tion should apply in particular case. “First, the court must

determine whether state proceedings, including ad-

ministrative proceedings, are pending. Second, the state pro-

ceedings must involve an important state interest. Third, the

court must determine whether the state proceedings will af-

ford the plaintiff an adequate opportunity to raise his con-

stitutional claims.” Jd. at 508 (citations omitted).

A. PENDING STATE PROCEEDINGS

The Court is aware of two pending state proceedings, thus

the first prong of the Parker test is satisfied. Two days after

plaintiff filed this action in federal court, the Motor Carrier

Division of the Michigan State Police served the plaintiff with

fourteen citations for the violation of Section 479.10a(6)

which are now pending in the District Court for the Third

Judicial District, Centerville, Michigan. In addition, on May

22, 1989, plaintiff was served with a formal complaint now

pending before the MPSC.

Although the factual situations of Younger and the case at

hand are distinguishable, these distinctions do not affect the

applicability of Younger. The fact that the state proceedings

were commenced subsequent to the filing of this action does

not automatically preclude Younger doctrine abstention. See

Hicks v. Miranda, 422 U.S. 332, 349 (1975). In fact, the

Supreme Court in Hicks held that if the state court pro-

ceeding was commenced “after the federal complaint is filed

but before any proceedings of substance on the merits have

taken place in federal court the principles of Younger v. Har-

ris should apply in full force.” Id. Hicks decreased the impor-

tance of the race to the courthouse results which previously

were dispositive; to do otherwise would “trivialize the prin-

ciples of Younger v. Harris.” Id. at 350.

B. IMPORTANT STATE INTEREST

The legislature in enacting Section 479. 10a(6) was attempt-

ing to impose liability on parties more likely to be economi-

cally capable of covering damages resulting from accidents in-

volving a motor carrier. Section 479.10a(6) provides in perti-

nent part that where a motor carrier attempts to complement

his existing equipment through the leasing of a vehicle, “the

lease, contract, or arrangement shall provide that the vehicle,

at all times, while being operated under the lease, contract,

or arrangement, shall be operated only by persons who are

employees of the holder who stand in a relation to the holder

as employee to employer. M.C.L.A. § 479.10a(6). The pro-

tection of its citizens’ general health, welfare and safety by

forcing trucking companies, through state statute, to be

financially accountable for accidents is an important state

function. Thus, the second prong requiring that the state pro-

ceedings involve an important state interest also is satisfied.

C. ADEQUACY OF STATE PROCEEDINGS

The final prong of the Parker test requires the federal court

to determine whether the state proceedings will afford the

plaintiff an adequate opportunity to raise his constitutional

claims. In this case, the Court finds that plaintiff will be able

to raise his constitutional claims in the state proceedings and

may appeal any MPSC order to the state court of appeals pur-

suant to Michigan Compiled Laws Annotated Sections

479.20, 462.26. ‘

Having found all three Parker prongs satisfied, the Court is

compelled to refrain from interfering with the pending state

proceedings under the notions of comity and federalism ab-

sent proof of extraordinary circumstances which would bring

one of the Younger exceptions into play. A federal court may

intervene where it otherwise would abstain if the state pro-

ceeding is motivated by a desire to harass, if the state pro-

ceeding is conducted in bad faith, or where the state statute is

“flagrantly and patently violative of express constitutional

prohibitions in every clause, sentence and paragraph, and in

whatever manner and against whomever an effort might be

made to apply it.” Younger, 401 U.S. 53-54.

Plaintiff alleges that there has been a showing of bad faith

in this case since this is the first time a formal complaint pro-

ceeding has been brought for a violation Section 479. 10a(6).

However, the Court does not believe that the first prosecution

under a statute is sufficient evidence that the action was

brought in bad faith. In--ead, the Court finds that the state is

simply trying to enforce the law to protect its citizens from

what it sees as a potential liability loophole.

CONCLUSION

For the reasons stated above, the Court abstains from hear-

ing the plaintiff's claim and permits the state court to address

the constitutional challenges against Section 479.10a(6). Ac-

cordingly, defendants’ motion for abstention is granted and

plaintiffs complaint is dismissed without prejudice to plain-

tiffs right to return to this Court if it is not afforded a fair

and prompt hearing.

/s/ BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

APPENDIX C

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

File No. L89-30043-CA

Hon. Benjamin F. Gibson

GRAFF TRUCKING COMPANY, INC.,

Plaintiff,

FRANK J. KELLEY, WILLIAM E. LONG,

STEVEN M. FETTER, RONALD E. RUSSELL, and

CAPTAIN ANTHONY PHILLIPS,

Defendants.

OPINION

(Filed October 16, 1989)

Plaintiff Graff Trucking Company, Inc. (“Graff”) filed its

Motion for a New Trial (or Rehearing) of this Court’s Opin-

ion and Judgment dated August 18, 1989, pursuant to Rule 59

of the Federal Rules of Civil Procedure. This opinion dis-

missed plaintiff's complaint on the grounds that the Younger

abstention doctrine was applicable. See Trainor v. Her-

nandez, 431 U.S. 434 (1977); Younger v. Harris, 401 U.S. 37

(1971). Plaintiff Graff argues that the Supreme Court's recent

decision in New Orleans Pub. Serv., Inc. v. New Orleans, 109

S. Ct. 2506 (1989) (“NOPSI”’) renders the Younger doctrine

inapplicable to this case.

This Court has reviewed the parties’ memorandums re-

garding this motion and the NOPS] opinion. This Court is of

the opinion that the NOPS/ decision does not affect the result

10a

reached by this Court in its August 18, 1989, Opinion and

Judgment. Therefore, the plaintiff's motion is denied.

/s)/ BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

DATED: October 12, 1989

lla

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

File No. L89-30043-CA

Hon. Benjamin F. Gibson

GRAFF TRUCKING COMPANY, INC.,

Plaintiff,

FRANK J. KELLEY, WILLIAM E. LONG,

STEVEN M. FETTER, RONALD E. RUSSELL, and

CAPTAIN ANTHONY PHILLIPS,

Defendants.

ORDER

(Filed October 16, 1989)

At a session of the Court held in and for said District

and Division, in the City of Grand Rapids, Michigan,

this 12th day of October, 1989.

PRESENT: HON. BENJAMIN F. GIBSON, U.S. DIS-

TRICT JUDGE

In accordance with the Opinion dated October 12, 1989,

IT IS HEREBY ORDERED that plaintiff Graff Trucking

Company, Inc.’s motion for a new trial (or rehearing) is

DENIED.

IT IS SO ORDERED.

/s/ BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

12a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 89-2320

GRAFF TRUCKING COMPANY, INC.,

Plaintiff-Appellant,

FRANK J. KELLEY, ATTORNEY GENERAL OF THE

STATE OF MICHIGAN, ET AL.,

Defendants-Appellees.

ORDER

(Filed November 6, 1990)

BEFORE: JONES and NORRIS, Circuit Judges; and

TODD", United States District Judge.

The court having received a petition for rehearing en banc,

and the petition having been circulated not only to the

original panel members but also to all other active judges of

this court, and no judge of this court having requested a vote

on the suggestion for rehearing en banc, the petition for

rehearing has been referred to the original hearing panel.

The panel has further reviewed the petition for rehearing

and concludes that the issues raised in the petition were fully

considered upon the original submission and decision of the

case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

is) LEONARD GREEN

Clerk

* Hon. James D. Todd sitting by designation from the Western District of

Tennessee.

13a

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Case No. 89-2320

GRAFF TRUCKING COMPANY, INC.,

Plaintiff-Appellant,

FRANK J. KELLEY, Attorney General of the State of

Michigan; WILLIAM E. LONG, Chairperson of the

Michigan Public Service Commission; STEVEN M.

FETTER, Commissioner of the Michigan Public Service

Commission; RONALD E. RUSSELL, Commissioner of the

Michigan Public Service Commission; ANTHONY

PHILLIPS, Captain, Commander of the Motor Carrier Divi-

sion of the Michigan State Police,

Defendants-Appellees.

ORDER

(Filed November 8, 1990)

The order filed on November 6, 1990 denying the petition

for rehearing and rehearing en banc having been issued in-

advertently,

It is ORDERED vacated. The petition for rehearing en

banc, response and reply remain pending before the court.

ENTERED PURSUANT TO RULE 8

(b) RULES OF THE SIXTH CIRCUIT

Leonard Green, Clerk

/s) LEONARD GREEN

l4a_

APPENDIX F

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Case No. 89-2320

GRAFF TRUCKING COMPANY, INC.,

Plaintiff-Appellant,

FRANK J. KELLEY, ATTORNEY GENERAL OF THE

STATE OF MICHIGAN, ET AL.,

Defendants-Appellees.

—_——

ORDER

(Filed November 19, 1990)

BEFORE: JONES and NORRIS, Circuit Judges; and

TODD", United States District Judge.

The court having received a petition for rehearing en banc,

and the petition having been circulated not only to the

original panel members but also to all other active judges of

this court, and no judge of this court having requested a vote

on the suggestion for rehearing en banc, the petition for

rehearing has been referred to the original hearing panel.

The panel has further reviewed the petition for rehearing

and concludes that the issues raised in the petition were fully

considered upon the original submission and decision of the

case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s) LEONARD GREEN

Clerk

* Hon. James D. Todd sitting by designation from the Western District of

Tennessee.

l5a

APPENDIX G

IN THE DISTRICT COURT OF THE

STATE OF MICHIGAN

IN AND FOR ST. JOSEPH COUNTY

File No. 89-1137

THE PEOPLE OF THE STATE OF MICHIGAN

Vv.

GRAFF TRUCKING, INDIANA DIVISION,

Defendant.

COMMERCIAL VEHICLE, CONDUCTING

INTRASTATE FREIGHT MOVES UNDER

IMPROPER LEASE

MOTION TO DISMISS

BEFORE THE HONORABLE WILLIAM L. McMANUS

Centreville, Michigan

Wednesday, June 20, 1990 — at about 11:07 a.m.

APPEARANCES:

MR. LEE F. FISHER

Assistant Prosecuting Attorney

Appeared on behalf of the People;

MR. ROBERT E. McFARLAND

Attorney at Law

Appeared on behalf of the Defendant.

Kenneth R. Nelson (CSR-0508)

Official Court Reporter

* * *

l6a

TABLE OF CONTENTS

WITNESSES

None

EXHIBITS

None

Centreville, Michigan

June 20, 1990 — at about 11:07 a.m.

(Court and counsel present)

THE COURT: People against Graff Trucking. This is

File 89-1137.

It involves a number of citations written to Graff Trucking

Company charging violations of Act 254 of the Public Acts of

1933, Michigan Compiled Laws 479.10a, commercial vehicle,

conducting intrastate freight moves under improper lease.

The matter this morning is on a motion by the defense to

dismiss.

You're Robert McFarland?

MR. McFARLAND: Yes.

THE COURT: You may proceed.

MR. McFARLAND: Your Honor, the subject matter, as

the Court has indicated, has to do with an alleged violation

by Graff Trucking, an Indiana Division.

One provision of the Motor Carrier Act is a provision which

requires trucking companies to use in its leased equipment in-

dividuals who stand in relationship to the carrier as employee

to employer.

This act is a part of Act 254 of 1933 as amended.

However, this provision was added in 1959, twenty-six

years after the Act was initially passed and

* * *

THE COURT: Im inclined to think, considering the

Constitution of the United States and of Michigan and the

relationship of Graff Trucking to the drivers, that the opinion

of Judge Nelson seems to me to make some sense, and the

l7a

argument that this is a burden upon interstate commerce im-

posed by the State of Michigan and by no one else makes some

sense. 7

Based upon those findings, Ill dismiss these citations based

upon merely the fact that Graff Trucking Company doesn’t

withhold income taxes or FICA from their compensation paid

to the drivers.

That does not necessarily mean that they're not employees

for all other purposes, and that to require Graff to act or any

trucking company to act differently in Michigan and, there-

fore, impose restraints upon their business in other states in

interstate commerce acts to create undue burden in violation

of the U.S. Constitution. I won’t touch upon the Michigan

Constitutional provision regarding object of the original

statute and whether or not this economic impact violates that

provision.

The matters will be shown as dismissed.

Counsel may prepare an order accordingly, if you wish,

and present it to the prosecution for their approval, and I'll

sign it.

I'll also return these extra copies. Maybe you can use them

for someone else.

MR. FISHER: Thank you, your Honor.

MR. McFARLAND: Thank you, your Honor.

18a

APPENDIX H

STATE OF MICHIGAN

IN THE 3RD DISTRICT COURT, DIVISION TWO

Case No. 89-1137-1-ST

PEOPLE OF THE STATE OF MICHIGAN,

Plaintiff,

Vv.

GRAFF TRUCKING, INDIANA DIVISION,

Defendant.

ORDER

At a session of said Court, held in the District Court,

City of Centreville, County of St. Joseph, Michigan on

June 27, 1990.

PRESENT: HON. William L. McManus

District Court Judge

This matter having come on to be heard on Defendant's

Motion to Dismiss, and the Court having reviewed the

pleadings and arguments of the parties and being fully ap-

prised of the same.

IT IS HEREBY ORDERED AND ADJUDGED that Cita-

tion Nos. T-321161—T-32174 charging Defendant with viola-

tions of MCL 479.10a are dismissed, for the reasons expressed

by the Court in its bench opinion of June 20, 1990, including

the grounds that:

1. Anemployer-employee relationship may be main-

tained, for purposes of this statute, without the

need for the employer to withhold federal and

state taxes, etc. (See People of the State of

19a

Michigan v. ABC Cartage Co., Case No.

89-002118, Opinion of May 15, 1990): and

2. This statute constitutes an undue burden on inter-

state commerce in violation of the Commerce

Clause of the United States Constitution, U.S.

Const., Art. I, Section 8.

/s) WILLIAM L. McMANUS

The Honorable William L. McManus

District Court Judge

APPROVED AS TO FORM:

/s/ LEE F. FISHER

(P-42384)

Assisiant Prosecuting Attorney

St. Joseph County

New Courts Building

P.O. Box 250

Centreville, MI 49032-0250

(616) 467-6361

/s) ROBERT E. McFARLAND

(P17394)

Attorney for Defendant

Graff Trucking, Indiana Div.

2100 North Woodward Avenue

Suite 130

Bloomfield Hills, Michigan 48013

(313) 258-4880

20a

APPENDIX I

CHART OF CASES

Al. People of the State of Michigan v. CTX Division of Cen-

tral Transport, Inc., District Court No. C-88-0736—

C-88-0762, 34th Judicial District.

Twenty-five misdemeanor citations issued in January, 1988.

Defendant filed a Motion to Dismiss, based on the unconstitu-

tionality of MCL 479.10a(6). The Court issued an order

holding the case in abeyance, while Defendant filed state

court action for a declaratory judgment in circuit court (A2).

When A2 was dismissed, the district court dismissed the

twenty-five charges on April 26, 1989. Dismissal was not ap-

pealed by State.

A2. Central Transport, Inc. and tts CTX Division v. State of

Michigan and the Michigan Public Service Commission,

Circuit Court No. 88-816850-CZ, Wayne County Cir-

cuit Court.

Based on stay order and stipulation in Al, this action for a

declaratory judgment, declaring MCL 479.10a(6) unconstitu-

tional was filed in July, 1988. State moved to dismiss, claiming

it was already before a court of competent jurisdiction (Al).

State’s motion granted, on March 26, 1989.

A3. Central Transport, Inc., File No. C-6714, Case No. 60.

Michigan Public Service Commission Staff intervened in

Michigan Public Service Commission application filed in

December, 1988, claiming applicant unfit for violations of

MCL 479.10a(6). Applicant claimed the statute unconstitu-

tional. The Commission ruled it did not possess power to

declare its own statute unconstitutional on January 9, 1990.

Bl. Graff Trucking Company, Inc. v. Frank J. Kelley, At-

torney General of the State of Michigan, William E.

Long, Chairperson of the Michigan Public Service Com-

mission; Steven M. Fetter, Commissioner of the Michi-

2la

gan Public Service Commission; Ronald E. Russell,

Commissioner of the Michigan Public Service Commis-

sion; and Captain Anthony Philipps, Commander of the

Motor Carrier Division of the Michigan State Police,

U.S. District Court File No. L89-30043-CA, filed May

2, 1989.

This matter is the subject of this appeal.

B2. People of the State of Michigan v. Graff Trucking, In-

diana Division, District Court No. 89-1137 (3-2 Judicial

District).

Fourteen misdemeanor citations were issued against Graff

on May 4, 1989, for violation of MCL 479. 10a(6). Graff filed a

Motion to Dimiss, claiming the statute unconstitutional. On

June 20, 1990, the court, in a bench cpinion followed by an

order on June 27, 1990, dismissed the case, ruling that the

statute violated the U.S. Constitution. Dismissal not appealed

by the State.

B3. In the Matter of the Complaint Against Graff Trucking

Company, Inc., Filed by the Michigan Public Service

Commission Staff, File No. T-1075.

A formal complaint was filed against Graff on May 22,

1989, claiming violations of MCL 479.10a(6), and requesting

various relief, including assessment of fines and revocation of

Graff's intrastate operating authority. This matter is presently

pending before the administrative law judge.

Cl. People of the State of Michigan v. ABC Cartage Com-

pany, District Court No. 89-002118 (52-3 Judicial

District).

Misdemeanor citations issued against ABC claiming viola-

tion of MCL 479.10a(6). ABC claimed the MPSC interpreta-

tion went beyond statutory requirements. District court

agreed and dismissed on May 15, 1990. Dismissal not appealed

by the State.

D1. Universal Am-Can, Ltd. v. Frank J. Kelley, Attorney

22a

General of the State of Michigan, William E. Long,

Chairperson of the Michigan Public Service Commis-

sion; Steven M. Fetter, Commissioner of the Michigan

Public Service Commission; Ronald E. Russell, Com-

missioner of the Michigan Public Service Commission;

and Captain Anthony Philipps, Commander of the

Motor Carrier Division of the Michigan State Police,

Circuit Court No. 89-3884-AW, (Macomb County Cir-

cuit Court).

On September 22, 1989, Universal filed a complaint seeking

a declaratory ruling that MCL 479.10a(6) was unconstitu-

tional. The State moved to dismiss, claiming Universal should

file a petition for declaratory ruling with Michigan Public Ser-

vice Commission. Motion for dismissal granted on January 19,

~ 1990 (see however, A3). The matter is presently pending

before Michigan Court of Appeals. Issue is propriety of

dismissal on exhaustion grounds.

D2. People of the State of Michigan v. Universal Am-Can,

Ltd., District Court Nos. 90-003143-4-ST (52-3 Judicial

District).

Two misdemeanor citations issued against Universal for vio-

lations of Michigan Motor Carrier Act on October 16, 1990,

with issue of the same statutory provision involved. Motion to

Dismiss filed by Universal, based on the unconstitutionality of

the statute. Motion pending.

23a

APPENDIX J

STATE OF MICHIGAN

IN THE 34TH DISTRICT COURT COUNTY OF WAYNE

District Court No. C88-0736, C-88-0737, C88-0738,

C88-0739, C88-0742, C88-0743, C88-0744, C88-0745,

C88-0746, C88-0747, C88-0748, C88-0749, C88-0750,

C88-0751, C88-0752, C88-0753, C88-0754, C88-0755,

C88-0756, C88-0757, C88-0758, C88-0759, C88-0760,

C88-0761, C88-0762

PEOPLE OF THE STATE OF MICHIGAN

Vv.

CTX, DIVISION OF CENTRAL TRANSPORT, INC.,

Defendant.

HEARING

BEFORE THE HONORABLE KALEM GARIAN,

DISTRICT JUDGE

Romulus, Michigan — Wednesday, April 26, 1989

APPEARANCES:

For The People: MS. DENISE D. GREEN P35194

3000 Henry Ruff Road

Westland, Michigan 48185

(313) 278-8310

RECORDED BY: Susanne L. Hughes, CER 3415

Certified Electronic Recorder

(313) 941-4462

24a

TABLE OF CONTENTS

WITNESSES: PEOPLE

None.

EXHIBITS:

None.

[3] Romulus, Michigan

Wednesday, April 26, 1989 — at 11:38 a.m.

THE COURT: What are you going to do with those 25

cases?

MS. GREEN: What 25 cases?

THE COURT: The ones that were handed to you.

MS. GREEN: Oh, I haven't even looked at them yet,

your Honor.

THE COURT: All right. Well, you don’t have to. They

should be dismissed. There’s a Circuit Court Order ruling

that those — it’s illegal for the — to have charged — what

was it, the driver or something on that one? They found out

that some Circuit Judge has already made a ruling on it.

That’s why they just brought it back here.

MS. GREEN: [ll look —

THE COURT: You can look at it.

(At 11:38 a.m., court recessed)

(at 11:42 a.m., court reconvened)

THE COURT: This was a case of 25 cases against CTX,

Division of Central Transportation, Incorporated. Let the

record reflect this case is now brought — brought back before

this Court after the Circuit Court had made a ruling in which

would be binding on this Court, and that is that there can be

a leasing agreement without the employer-employee relation-

ship.

MS. GREEN: Um hum (affirmative response).

[4] THE COURT: This required a leasing arrangement

only between employer-employee in the Circuit Court ruling.

This Court’s going to dismiss all 25 cases.

25a

MS. GREEN: Thank you, your Honor.

(At 11:46 a.m. proceedings concluded)

CERTIFICATE

STATE OF MICHIGAN )

)

COUNTY OF WAYNE)

I certify that this transcript, consisting of 5 pages, is a com-

plete, true, and correct transcript, to the best of my ability, of

the proceedings and testimony taken in this case on April 26,

1989.

April 16, 1990 /s) SUSANNE L. HUGHES CER 3415

11131 S. Wayne Road

Romulus, Michigan 48174

26a

APPENDIX K

STATE OF MICHIGAN

IN THE 52-3 JUDICIAL DISTRICT

Case No. 89-002118

PEOPLE OF THE STATE OF MICHIGAN,

Plaintiff,

ABC CARTAGE COMPANY,

Defendant.

OPINION

The Defendant was charged with improper leasing under

Act 254. This case came to trial on March 7, 1990. Stipulated

facts were placed on the record and both parties given thirty

days to present briefs.

The issue is whether drivers who don’t have their state and

federal taxes withheld from their wages by the Defendant are

employees or contractors? The Court finds that is not suffi-

cient to prove guilt beyond a reasonable doubt. Therefore,

the Defendant is found not guilty.

In this case the Defendant hired several persons who super-

vised the delivery of the Defendant’s merchandise out of the

Defendant’s warehouse. The prosecutor relies on an opinion

of the Public Service Commission, which requires not only

the control over these people that an employer usually exer-

cises but that the state and federal taxes be withheld from

these drivers or they are not employees.

The Court concedes to the prosecutor that an employer is

required to withhold certain state and federal taxes from

employees. The failure to do so would be some proof that

they are not considered employees by the employer or driver.

27a

However, it is just as easy and even easier for the taxing agen-

cies to find that, if the requisite control that denotes an

employer agreed to by the parties in their stipulations were

present, they would find the Defendant was liable for

withholding. Therefore, the Court finds that the Commission

opinion is not binding.

Further, the Court concludes that the failure to withhold

state and federal taxes is of less value than the exclusive con-

trol of the drivers. Since the intent of the legislation is to

regulate the activity, the actual control of the driver's activity

is of utmost importance, not the failure to comply with tax

laws; which have no bearing on the driver’s activities.

Dated: May 15, 1990

/s) RALPH H. NELSON

District Judge

28a

APPENDIX L

STATE OF MICHIGAN

IN THE DISTRICT COURT FOR THE

34th JUDICIAL DISTRICT

Case Nos. T-220501—T-220525

PEOPLE OF THE STATE OF MICHIGAN

Vv.

CTX. DIVISION OF CENTRAL TRANSPORT, INC.,

Defendant.

Andrew S. Telek (P-21320)

Assistant Wayne County Prosecutor

Attorney for the People

3000 Henry Ruff Road

Westland, Michigan 48185

Robert E. McFarland (P-17394)

McFarland & Bullard

Attorney for Defendant

CTX Division of Central Transport, Inc.

2100 North Woodward Avenue

Suite 130

Bloomfield Hills, Michigan 48013

29a

MOTION AND STIPULATION OF PARTIES

TO HOLD MATTERS IN ABEYANCE

NOW COME People of the State of Michigan, by Andrew

S. Telek, Assistant Wayne County Prosecutor, and CTX Divi-

sion of Central Transport, Inc., by its attorney Robert E.

McFarland, and hereby move and stipulate as follows:

1. On or about January 21, 1988, 25 citations were issued

against Defendant in the above-referenced proceedings, alleg-

ing improper leasing agreements, lacking an employee-

employer relationship existing between Defendant and cer-

tain of its drivers, in violation of MCLA 479.10(a)(6) of the

Michigan Motor Carrier Act, Public Act 254 of 1933, as

amended.

2. Defendant entered its plea of not guilty to the charges

and, on or about March 31, 1988, filed with the court a Mo-

tion to Dismiss, Affidavit in Support Thereof, and Brief in

Support of Motion to Dismiss.

3. In open court on April 27, 1988, a discussion ensued

between the parties, at which time it was agreed that Defen-

dant would, in the interest of judicial economy, and in order

to expedite these proceedings, file a Complaint for

Declaratory Judgment with the Circuit Court for the County

of Wayne, in order to obtain a decision on the merits of the

matters raised in its Motion to Dismiss, which is grounded in

both federal and state constitutional claims. It was noted by

Defendant's counsel that the issues involved herein are of

statewide significance and importance to the regulated motor

carrier industry in Michigan generally. It was agreed by the

parties, with the concurrence of the court, that the 25 cita-

tions would be held in abeyance, while the Petition for

Declaratory Judgment is pending.

WHEREFORE, the parties stipulate and move that these

25 citations be held in abeyance by the District Court for the

34th Judicial District, while the Complaint for Declaratory

Judgment is pending and that Defendant CTX Division of

Central Transport, Inc. will file by July 10, 1988, a Com-

plaint for Declaratory Judgment with the Circuit Court for

30a

the County of Wayne, concerning the federal and state con-

stitutional issues which underlie its Motion to Dismiss.

/s)/ ANDREW S. TELEK

Andrew S. Telek Robert E. McFarland

Assistant Wayne County McFarland & Bullard

Prosecutor Attorney for Defendant

Attorney for the People of CTX Division of Central

the State of Michigan Transport, Inc.

3000 Henry Ruff Road 2100 North Woodward

Westland, MI 48185 Suite 130

Bloomfield Hills, MI 48013

Dated: June 23, 1988

ORDER

At a session of said court held in Romulus, Michigan

on the 29th day of June, 1988

PRESENT: JAMES B. STONE

The Honorable James B. Stone

District Court Judge

This court having read the attached Stipulation and Motion

of the parties, and being fully apprised of the issues herein;

and it appearing that it would further the interest of justice

and judicial economy for Defendant CTX Division of Central

Transport, Inc., to seek a resolution of the constitutional

issues involved in these proceedings by filing a Complaint for

Declaratory Judgment with the Circuit Court for the County

of Wayne, in order to obtain the most expeditious resolution

of the issues involved,

IT IS HEREBY ORDERED AND ADJUDGED that Case

Nos. T-220501—T-220525 be held in abeyance while Defen-

dant CTX Division of Central Transport, Inc. pursues its

Complaint for Declaratory Judgment.

/s) JAMES B. STONE

The Honorable James B. Stone

Dated: June 23, 1988 District Court Judge

3la

APPENDIX M

STATE OF MICHIGAN

IN THE CIRCUIT COURT

FOR THE COUNTY OF WAYNE

Hon. Wm. Leo Cahalan (P11509)

Case No. 88-816850-CZ

CENTRAL TRANSPORT, INC., and its CTX DIVISION,

Plaintiffs,

Vv.

STATE OF MICHIGAN and the MICHIGAN

PUBLIC SERVICE COMMISSION,

Defendants.

OPINION AND ORDER GRANTING DEFENDANTS’

MOTION FOR SUMMARY DISPOSITION.

OPINION

This case arises from a cause pending in the Thirty-Fourth

(34th) District Court. Central Transport, Inc. was therein

charged with some twenty-five citations for violations of

Michigan Public Service Commission rules attending the

operation of a trucking company. Plaintiff has filed the in-

stant action to secure a judgment under MCR 2.605(A)

declaring that MCLA 479a6 (forming the basis for the cita-

tions below) is unconstitutional. The State of Michigan and

the Michigan Public Service Commission have filed this mo-

tion for summary disposition.

The identical issues before this Court now are pending in

the Thirty-Fourth (34th) Judicial District. That Court is fully

competent to adjudicate.the questions. For this Court to ar-

32a

rogate that function to itself would constitute an abuse of

discretion.

While plaintiff raises 14 questions in his petition,

they relate to matters that may be presented in the

criminal case that is pending. We condemn the prac-

tice of a person who, after being charged with

violating the law, then asks for a declaratory judg-

ment in an independent cause, with the result that

two cases involving the same subject matter are pend-

ing at the same time. If such a practice were per-

mitted, it would cast an unnecessary burden on the

courts and the law enforcement authorities. The

general rule is set forth in Woolard v. Schaffer Stores

Co., 272 NY 304, 311 (5 NE[2d] 829, 109 ALR 1262);

273 NY 527 (7 NE[2d] 676, 109 ALR 1267), where

Justice O’Brien said:

“When, however, another action between the

same parties, in which all issues could be deter-

mined, is actually pending at the time of the com-

mencement of an action for a declaratory judg-

ment, the court abuses its discretion when it enter-

tains jurisdiction. Colson v. Pelgram, 259 NY 370

(182 NE 19).”

A declaratory judgment is not a substitute for

regular actions. Washington-Detroit Theatre Co. v.

Moore, 249 Mich 673 (68 ALR 105); Village of Grosse

Pointe Shores v. Ayres, 254 Mich 58; Miller v. Siden,

259 Mich 19. One test of the right to institute pro-

ceedings for declaratory judgment is the necessity of

present adjudication as a guide for plaintiff's future

conduct in order to preserve his legal rights. City of

Flint v. Consumers Power Co., 290 Mich 305. Plain-

tiff is first charged with violating the law; then he

asked for a declaratory judgment in an independent

proceeding while the criminal suit was still pending.

Borchard in his work on Declaratory Judgments,

p 179, states as follows:

33a

“Yet where a suit or proceeding is already pending

involving the same issues, it is manifestly unwise

and unnecessary to permit a new petition for a

declaration to be initiated by the defendant or the

plaintiff in that suit. * * * The first court seized of

the issues involved, if identical, whether by action

for declaratory or other judgment, must be per-

mitted to retain jurisdiction of the case.”

Updegraff v. Attorney General, 298 Mich 48, 51,

52 (1941); see also Com’r of Revenue v. GTWR

Co., 326 Mich 371 (1949);

Consistent with the preceding, defendants’ motion for sum-

mary disposition shall be GRANTED.

/s) WILLIAM LEO CAHALAN

Judge, Third Judicial Circuit

March 22, 1989

34a

STATE OF MICHIGAN

IN THE CIRCUIT COURT FOR THE

COUNTY OF WAYNE

Hon. William Leo Cahalan (P11509)

Case No. 88-816850-CZ

CENTRAL TRANSPORT, INC., and its CTX DIVISION,

Plaintiffs,

STATE OF MICHIGAN and the MICHIGAN

PUBLIC SERVICE COMMISSION,

Defendants.

ORDER

At a session of said Court held in the City-County

Building, Detroit, Michigan on March 22, 1989

PRESENT: HON. WILLIAM LEO CAHALAN

Circuit Judge

Being fully avised in the premises, after plenary review and

consistent with the tenor of the foregoing Opinion,

IT IS HEREBY ORDERED AND ADJUDGED that defen-

dants’ motion for summary disposition is GRANTED.

This Court retains no further jurisdiction.

/s) WILLIAM LEO CAHALAN

Circuit Judge

35a

APPENDIX N

[LETTERHEAD OF McFARLAND & BULLARD]

April 18, 1989

The Honorable James B. Stone

District Court Judge

34th Judicial District

11131 South Wayne Road

Romulus, Michigan 48174

Re: Central Transport, Inc., and its CTX Di-

vision v. State of Michigan and the

Michigan Public Service Commission,

Case No. 88-816850-CZ:; People of the

State of Michigan v. CTX Division of

Central Transport, Inc., Case Nos.

T-220501—T-220525

Dear Judge Stone:

As you will recall, the Motor Carrier Division of the

Michigan State Police issued 25 citations against the CTX

division of Central Transport, Inc. in January of 1988, alleg-

ing improper leasing agreements, lacking an employer-

employee relationship between Defendant and certain of its

drivers in violation of MCL 479.10(a)(6) of the Michigan

Motor Carrier Act, 1933 P.A. 254, as amended. On March

31, 1988, Defendant filed with the Court a Motion to

Dismiss, Affidavit in Support Thereof and Brief in Support of

Motion to Dismiss. On April 27, 1988, after a discussion be-

tween your Honor, Assistant Wayne County Prosecutor An-

drew S. Telek, and me, it was agreed that Defendant would,

in the interest of judicial economy, and in order to expedite

the proceedings, file a Complaint for Declaratory Judgment

with the Wayne County Circuit Court, raising the federal

and state constitutional grounds which Defendant had earlier

relied upon in its Motion to Dismiss before this Court. On

36a

June 29, 1988, an order was entered, holding the citations in

abeyance while Defendant CTX division of Central

Transport, Inc. pursued its Complaint for Declaratory Judg-

ment in the Wayne County Circuit Court.

In response to the complaint, the Attorney General filed a

Motion for Summary Disposition or in the Alternative Motion

for Change of Venue, to which Central Transport responded.

The parties appeared in Wayne County Circuit Court on

September 30, 1988 to argue the motion, at which time no

oral arguments were heard, as Judge William Leo Cahalan

indicated to the parties that he wished to adjourn the matter

to further study the legal positions of the parties. He also

allowed the parties to submit any additional authority to

which they wished to address his attention.

Thereafter on March 22, 1989, Judge Cahalan granted

Defendants’ Motion for Summary Disposition. Attached is a

copy of the Opinion and Order. Judge Cahalan noted as

follows at p. 2 of his Opinion:

The identical issues before this court now are pending

in the Thirty-fourth (34th) Judicial District. That

court is fully competent to adjudicate the questions.

For this court to arrogate that function to itself would

constitute an abuse of discretion.

It had been the position of my client that the cases relied

upon in support of Judge Cahalan’s decision were distinct on

their facts and distinguishable, and that in those cases, the

parties had not agreed to hold a district court matter in

abeyance and the district court had not stayed its pro-

ceedings, in the interest of judicial economy, as is the situa-

tion here. However, again with a view to obtaining the

quickest possible resolution of this matter we have not ap-

pealed Judge Cahalan’s decision, as it turns on only a narrow

legal point, not related to the merits of the constitutional

claims raised by my client, and an appeal to the Court of Ap-

peals would necessarily involve further delay, with only the

possibility of a remand to the Wayne County Circuit Court

held out.

sat ntti atin lie ti aaceaaal pas al

37a

Accordingly, we would respectfully request that our Mo-

tion to Dismiss be considered as soon as possible, in accor-

dance with the decision of Judge Cahalan. Thank you for

your consideration in this matter.

Very truly yours,

/s)/ ROBERT E. McFARLAND

REM/mam

Enclosure

ce: Mr. Andrew S. Telek

Mr. James D. Payne

38a

APPENDIX O

STATE OF MICHIGAN

BEFORE THE MICHIGAN PUBLIC

SERVICE COMMISSION

File No. C-6714

Case No. 60

In the matter of the application of CENTRAL TRANSPORT,

INC. for an extension of operations as a common carrier of

property, intrastate.

At a session of the Michigan Public Service Commission

held at its offices in the city of Lansing, Michigan, on the 9th

day of January, 1990.

PRESENT: Hon. William E. Long, Chairperson

Hon. Steven M. Fetter, Commissioner

Hon. Ronald E. Russell, Commissioner

OPINION AND ORDER

Ill.

DISCUSSION

Finally, Central excepts to the ALJ's conclusion that Cen-

tral’s constitutional challenge to MCL 479.10a(6) is an issue

for the courts to resolve and, therefore, should not be ad-

dressed in this case. However, consistent with our January 3,

1979 order in File No. L-11332, the Commission does not

have the power, under the Constitution, to rule a statute un-

constitutional. Only the courts have the power to find

(or cella

39a

legislative action unconstitutional. Therefore, the Commis-

sion declines to address Central’s constitutional challenges

* * *

MICHIGAN PUBLIC SERVICE

COMMISSION

/s/ William E. Long

Chairperson

/s/ Steven M. Fetter

Commissioner

/s/ Ronald E. Russell

Commissioner

(SEAL)

By the Commission and pursuant to

its action of January 9, 1990.

/s/ Dorothy Wideman

Its Executive Secretary

40a

APPENDIX P

STATE OF MICHIGAN

IN THE CIRCUIT COURT FOR THE

COUNTY OF MACOMB

File No. 89-3884-AW

UNIVERSAL AM-CAN, LTD.,

Plaintiff,

VS.

FRANK J. KELLEY, Attorney General of the State of

Michigan, WILLIAM E. LONG, Chairperson of The

Michigan Public Service Commission, STEVEN M.

FETTER, Commissioner of the Michigan Public Service

Commission, RONALD E. RUSSELL, Commissioner of the

Michigan Public Service Commission, THOMAS R.

LONERGRAN, Director of Motor Carrier Regulation of the

Michigan Public Service Commission, and CAPT.

ANTHONY PHILIPPS, Commander of the Motor Carrier

Division of the Michigan State Police,

Defendants.

OPINION AND ORDER

This matter is before the Court on plaintiff's motion for a

writ of mandamus and/or preliminary injunction as well as

defendants’ motion for summary disposition, or in the alter-

native, for change of venue.

Plaintiff filed this action, on September 22, 1989 via a com-

plaint for preliminary and permanent injunction, mandamus,

and declaratory judgment alleging the defendants had not en-

forced MCL 497.10(a)(6) which provides that only employees

can operate vehicles, not independent contractors for many

4la

years. Plaintiff alleges it attempted to add equipment to its

fleet on September 8, 1989, tendered the fees but was in-

formed it could no longer add equipment for use in Michigan

intrastate commerce for the reason that plaintiffs drivers

were not employees but independent contractors. Plaintiff

argues the statute does not require drivers of carrier-owned

equipment to be employees of the carrier, that Michigan

Public Service Commission had announced it would interpret

the statutory provision to allow independent contractors, that

the procedure followed by defendants is unlawful end that

the enabling legislation is unconstitutional.

In their motion for summary disposition, defendants argue

this Court has no subject matter jurisdiction over matters

which should be properly brought before the Michigan Public

Service Commission and the Court of Appeals, that plaintiff

failed to exhaust available administrative remedies and that

this Court is constitutionally prohibited from issuing injunc-

tive relief. Defendants also assert, in the alternative, that

mandamus and injunctive relief is inappropriate.

Plaintiff argues this Court has subject matter jurisdiction

under the constitution and statutes of Michigan and that con-

stitutional questions can only be brought in court and not

before the administrative agency.

The Court is satisfied summary disposition is appropriate

not only because this Court lacks jurisdiction over an action

challenging the validity of Michigan Public Service Commis-

sion action but also because plaintiff has failed to exhaust

reasonable and available administrative remedies.

The Court is satisfied the Michigan Public Service Commis-

sion is vested with exclusive original jurisdiction to regulate

motor carrier operations in intrastate commerce. MCL

460.6(1). Under MCL 462.26(1), any common carrier or

other party in interest, being dissatisfied with any order of the

Commission fixing any rate or rates, fares, charges, classifica-

tions, joint rate or rates, or any order fixing any regulations,

practices, or services, may within thirty days from the is-

suance and notice of that order file an appeal as of right in

the Court of Appeals. Under MCL 462.26(4) no injunction

42a

shall issue except upon application to the Court of Appeals

following notice to the Commission and a hearing. It is ob-

vious from plaintiff's pleadings and brief that plaintiff seeks

to challenge an action of the Michigan Public Service Com-

mission, that is, the change in procedure to deny issuance of

decals to operate motor vehicles in intrastate commerce until

the carrier complies with the statutory requirement that

drivers be employees of the carrier. A well established and ex-

clusive administrative remedy was available to plaintiff but

was not pursued. Instead plaintiff has filed this collateral at-

tack in circuit court. Plaintiff seeks to bolster its position by

arguing the underlying legislation relating to employees is un-

constitutional. The Court is satisfied the mere assertion of a

constitutional argument is insufficient to divest the Michigan

Public Service Commission from jurisdiction. As is ably

pointed out by defendants in their briefs, a constitutional

challenge may be brought before the administrative agency

and be preserved for adjudication in a court of law on appeal

to the Michigan Court of Appeals.

Since the Court finds it has no subject matter jurisdiction

over plaintiff's challenge to actions of the Michigan Public

Service Commission and plaintiff has failed to exhaust its ad-

ministrative remedies, summary disposition should be and the

same hereby is GRANTED defendant pursuant to MCR

2.116(C)(4) and (7). As a result, the request for a preliminary

injunction and/or a writ of mandamus need not be addressed.

Plaintiff's complaint should be and the same hereby is DIS-

MISSED with prejudice.

IT IS SO ORDERED.

/s) FREDERICK D. BALKWILL

Circuit Court Judge

DATED: January 19, 1990.

ce:

Robert E. McFarland

Don L. Keskey/Richard M. Karoub

43a

APPENDIX Q

STATE OF MICHIGAN

IN THE CIRCUIT COURT FOR THE

COUNTY OF MACOMB

File No. 89-3884-AW

UNIVERSAL AM-CAN, LTD.,

Plaintiff,

Vs.

FRANK J. KELLEY, Attorney General of the State of

Michigan, WILLIAM E. LONG, Chairperson of The

Michigan Public Service Commission, STEVEN M.

FETTER, «.ommissioner of the Michigan Public Service

Commission, RONALD E. RUSSELL, Commissioner of the

Michigan Public Service Commission, THOMAS R.

LONERGRAN, Director of Motor Carrier Regulation of the

Michigan Public Service Commission, and CAPT.

ANTHONY PHILIPPS, Commander of the Motor Carrier

Division of the Michigan State Police,

Defendants.

OPINION AND ORDER

This matter is before the Court on plaintiff's motion for

rehearing pursuant to MCR 2.119(F).

Plaintiff seeks rehearing of the Court’s Opinion and Order

dated January 19, 1990 in which the Court held it has no sub-

ject matter jurisdiction over plaintiff's challenge to actions of

the Michigan Public Service Commission. The Court found

plaintiff had failed to exhaust i‘s administrative remedies

since it had not pursued remedies before the Michigan Public

Service Commission to conclusion. The Court did not find the

44a

assertion of a constitutional challenge to the underlying

legislation persuasive because it appeared to the Court a con-

stitutional challenge may be brought Uefore the ad-

ministrative agency and preserved for adjudication in a court

of law on appeal to the Michigan Court of Appeals.

Plaintiff seeks rehearing on the ground the Michigan Public

Service Commission has ruled definitively as recently as

January 9, 1990 that it is without jurisdiction to consider the

constitutionality of its own enabling legislation.

In order to obtain rehearing pursuant to MCR 2.119(F) the

moving party must demonstrate a palpable error by which

the Court and the parties have been misled and show that a

different disposition of the motion must result from correction

of the error. A motion which merely presents the same issues

ruled upon by the Court will not be granted.

Plaintiff merely presents the same issues already ruled upon

by the Court. The recent decision by the Michigan Public Ser-

vice Commission in which it states it does not have the power

to rule a statute unconstitutional is cumulative to authority

previous cited by plaintiff. As with many questions of law,

there is room for a difference of opinion as to whether the

Michigan Public Service Commission is the appropriate venue

to initiate constitutional claims relating to motor carrier en-

forcement or whether collateral attacks raising constitutional!

claims are appropriate in the various circuit courts. Plaintiff

has not convinced the Court it has committed palpable error

by determining the claim must first be preserved before the

Michigan Public Service Commission and then be resolved by

a Court of competent jurisdiction on appea! to the Michigan

Court of Appeals. If the Michigan Public Service Commission

takes enforcement action following the administrative pro-

ceeding its action is appealable to the Michigan Court of Ap-

peals and plaintiff may adjudicate the question cf whether

the Michigan Public Service Commission is attempting to en-

force an unconstitutional statute at that level. Independent

collateral attacks upon Michigan Public Service Commission

actions in the various circuit courts leads to a plethora of

45a

litigation divorced from the administrative proceedings with

which they are more properly associated.

For the reasons set forth above, plaintiff's motion for

rehearing should be and the same hereby is DENIED.

IT IS SO ORDERED.

/s); FREDERICK D. BALKWILL

Circuit Court Judge

DATED: March 7, 1990.

ce:

Robert E. McFarland

Don L. Keskey

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.