Burns v. Apsc ( 2021 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
ROBERT BURNS, Plaintiff/Appellant,
v.
ARIZONA PUBLIC SERVICE COMPANY, et al., Defendants/Appellees.
No. 1 CA-CV 19-0183
FILED 3-4-2021
Appeal from the Superior Court in Maricopa County
No. CV2017-001831
The Honorable Daniel J. Kiley, Judge
AFFIRMED
COUNSEL
Richards & Moskowitz PLC, Phoenix, AZ
By William A. Richards
Counsel for Plaintiff/Appellant
Jenner & Block LLP, Washington, DC
By Matthew E. Price
Osborn Maledon PA, Phoenix, AZ
By Mary R. O’Grady, Joseph N. Roth
Co-Counsel for Defendants/Appellees Arizona Public Service Company, Pinnacle
West Capital Corporation, and Donald Brandt
BURNS v. APSC, et al.
Opinion of the Court
Polsinelli PC, Phoenix, AZ
By Edward F. Novak, Jonathan G. Brinson
Counsel for Defendant/Appellee Arizona Corporation Commission
Broening Oberg Woods & Wilson PC, Phoenix, AZ
By Sarah L. Barnes
Counsel for Defendant/Appellee Commissioner Boyd W. Dunn
OPINION
Judge Kent E. Cattani delivered the opinion of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Jennifer B. Campbell joined.
C A T T A N I, Judge:
¶1 Arizona Corporation Commissioner Robert Burns challenges
the dismissal of his two amended complaints against Arizona Public
Service Company (“APS”), its parent company, Pinnacle West Capital
Corporation (“Pinnacle West”), and their president and board chairman
(collectively, the “APS Parties”), and against the Commission and other
Commission members (collectively, the “ACC Parties”). For reasons that
follow we affirm, holding that a member of the Corporation Commission
lacks authority to individually enforce an investigatory subpoena in a rate-
making case over the opposition of the majority of the Commission.
FACTS AND PROCEDURAL BACKGROUND
¶2 On August 25, 2016, Burns issued two subpoenas to the APS
Parties in a rate-making case pending before the Commission (the “Rate
Case”). The subpoenas sought information relating to whether the APS
Parties funneled donations through independent expenditure groups in
support of other Commission candidates in the 2014 election. Burns also
initiated a new Commission proceeding in February 2017 (the “Rule-
Making Case”), in which he issued the same subpoenas.
¶3 The APS Parties did not comply fully with the subpoenas in
either proceeding. In March 2017, Burns sued the APS Parties for
declaratory relief, asking the court to declare that he was authorized to
demand compliance with the subpoenas without the approval of other
Commission members. On March 30, 2017, the APS Parties moved to
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Opinion of the Court
dismiss on the basis that Burns had not exhausted his administrative
remedies in either the Rate Case or the Rule-Making Case. Over Burns’s
objection, the superior court stayed both proceedings to allow Burns to do
so.
¶4 Burns subsequently sought to call six witnesses in the Rate
Case, including APS and Pinnacle West’s president and board chairman.
The administrative law judge (“ALJ”) assigned to the case declined to call
the witnesses absent direction from the Commission. Burns sought
emergency relief from the ALJ and moved to disqualify two of his fellow
commissioners, contending they had benefited from “dark money” from
“APS and/or Pinnacle West.” The ALJ did not consider either motion.
Burns then sought to compel the APS Parties to comply with the subpoenas.
¶5 The Commission set a June 20, 2017, public meeting to
consider Burns’s motions. The other four commissioners voted to deny the
motions in an interlocutory order issued on June 27, 2017 over Burns’s
dissent. The other commissioners concluded that: (1) the information Burns
sought was not relevant to the Rate Case; (2) the subpoenas he issued were
overly broad, unduly burdensome, and not reasonably calculated to lead to
the discovery of admissible evidence; and (3) Burns’s requests for witness
interviews sought irrelevant information and were not reasonably
calculated to lead to the discovery of admissible evidence.
¶6 Burns then sought leave to amend his superior court
complaint to add the Commission and his fellow commissioners as
defendants and to challenge the June 27, 2017 order. The superior court
granted leave to amend, and Burns filed his first amended complaint on
August 4, 2017. On August 20, 2017, Burns filed a special action in the
Arizona Supreme Court challenging the denial of his motion to suspend the
Rate Case to investigate potential grounds to disqualify other
commissioners. The Arizona Supreme Court declined jurisdiction, and
shortly thereafter, the ALJ approved a final settlement in the Rate Case,
which the Commission voted to confirm, with Burns casting a dissenting
vote.
¶7 The APS Parties and the ACC Parties then moved to dismiss
Burns’s first amended complaint on numerous grounds, including: the
Commission’s final Rate Case order rendered it moot; Burns lacked
authority to enforce the subpoenas over the Commission’s vote not to do
so; Burns could not sue the other commissioners; the subpoenas intruded
on the Legislature’s authority to establish the scope of mandatory
disclosures in rate-making matters and the Commission’s authority to
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establish reporting requirements for regulated entities; and the
Commission’s rulings were correct. The superior court ruled in Burns’s
favor on four issues, concluding: (1) the case was not moot; (2) a request for
declaratory relief was an appropriate vehicle to consider disputes over the
Commission’s investigatory powers; (3) the subpoenas did not encroach on
the Legislature’s or the Commission’s powers; and (4) Burns had the
authority to issue the subpoenas.
¶8 The court ruled against Burns, however, on the issue of
whether he could unilaterally enforce the subpoenas, finding that such
authority rested solely with the Commission. The court reasoned that it
“could not overrule the decision of a majority of the Commission about the
proper scope of an ACC investigation without running afoul of the
‘separation of powers’ principles that are at the heart of our system of
government.” On that basis, the court dismissed the first amended
complaint.
¶9 Burns sought leave to amend his complaint to request specific
declaratory relief on the four rulings in his favor. He also contended he had
a due process right to investigate and present facts relevant to the APS
Parties’ financial support. of the campaigns of the Defendant
Commissioners, or against the campaigns of any of their election
opponents. The court granted leave to amend in part but denied Burns’s
requests for declaratory relief as to its prior four rulings.
¶10 After Burns filed a second amended complaint, the APS
Parties and the ACC Parties moved to dismiss, contending (1) Burns had no
constitutional authority to pursue an investigation over a vote of the
Commission or to seek to disqualify other commissioners from ruling in the
Rate Case; (2) Burns lacked standing to assert any due process claims
stemming from the Rate Case; and (3) the resolution of the Rate Case and
the “rule of necessity” rendered his contentions moot. The court granted
the motions, concluding that Burns “lack[ed] standing to assert the due
process rights of litigants to an unbiased adjudicative process” and “no
other constitutional or statutory authority entitle[d] him to initiate and
maintain an investigation into potential grounds for disqualification of his
fellow Commission members.” The court did not reach the APS Parties’
and ACC Parties’ other arguments.
¶11 Burns timely appealed, and we have jurisdiction under A.R.S.
§§ 12-1837 and -2101(A)(1).
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DISCUSSION
I. Mootness.
¶12 The APS Parties and the ACC Parties urge this court to
dismiss the appeal as moot. We decline to do so.
¶13 Courts generally will not hear declaratory judgment cases
that raise only moot questions. Thomas v. City of Phoenix, 171 Ariz. 69, 74
(App. 1991). A case becomes moot when an event occurs that causes “the
outcome of the appeal to have no practical effect on the parties.” Sedona
Priv. Prop. Owners Ass’n v. City of Sedona, 192 Ariz. 126, 127, ¶ 5 (App. 1998).
Mootness is not a constitutional concern under Arizona law but rather “a
matter of prudential or judicial restraint subject to the exercise of our
discretion.” Cardoso v. Soldo, 230 Ariz. 614, 617, ¶ 5 (App. 2012). And we
may consider an otherwise moot appeal if it presents an issue of significant
public importance or is likely to recur. Big D Constr. Corp. v. Ct. of Appeals,
163 Ariz. 560, 563 (1990).
¶14 The APS Parties and the ACC Parties contend that Burns’s
appeal is moot because the Rate Case has concluded and the two
commissioners elected in 2014 are no longer on the Commission.
Additionally, in August 2019, the Commission adopted a revised Code of
Ethics that imposes new reporting requirements for commissioners relating
to campaign contributions. See Code of Ethics, Decision No. 77345, Docket
No. AU-00000E-17=0079, at 7 (Aug. 7, 2019),
https://docket.images.azcc.gov/0000199337.pdf?i=1609444846123.
Nevertheless, the issues Burns raises are of significant public importance
involving the rights and powers of commissioners to investigate matters
relevant to rate-making proceedings and to enforce compliance with those
investigations. Moreover, although the Rate Case has been resolved,
similar issues could arise in future rate cases. Accordingly, we exercise our
discretion to consider the merits of the appeal. See Arpaio v. Maricopa Cnty.
Bd. of Supervisors, 225 Ariz. 358, 362, ¶ 14 (App. 2010) (exercising discretion
to hear an otherwise moot appeal because “a decision on the substantive
issues could affect similar future legislative acts”).
II. Motion to Dismiss.
¶15 We review de novo the dismissal under Arizona Rule of Civil
Procedure 12(b)(6) of Burns’s amended and second amended complaint.
See Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). We accept all well-
pleaded facts as true and will affirm only if Burns would not have been
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entitled to relief under any facts susceptible of proof. See Zubia v. Shapiro,
243 Ariz. 412, 414, ¶ 13 (2018).
¶16 Burns argues that the superior court erred by concluding that
it could not review Commission orders declining to enforce a single
commissioner’s investigatory subpoena. He argues that, because rate-
making matters are quasi-judicial, the superior court has the authority to
decide whether the Commission’s investigatory actions during a rate-
making proceeding exceeded its plenary constitutional authority or were
arbitrary and capricious.
¶17 “The framers established the Commission as a separate,
popularly-elected branch of state government.” Ariz. Corp. Comm’n v.
Woods, 171 Ariz. 286, 290 (1992), abrogated by Johnson Utilities, L.L.C. v. Ariz.
Corp. Comm’n, 249 Ariz. 215 (2020). The Commission is “a constitutional
body which owes its existence to provisions in the organic law of this state.”
Miller v. Ariz. Corp. Comm’n, 227 Ariz. 21, 24, ¶ 12 (App. 2011). It has broad
constitutional and statutory powers to regulate public service corporations.
Campbell v. Mountain States Tel. & Tel. Co., 120 Ariz. 426, 431 (App. 1978).
Generally speaking, “in areas in which the . . . Commission is given
exclusive power, it is supreme subject to judicial review.” Stop Exploiting
Taxpayers v. Jones, 211 Ariz. 576, 581, ¶ 20 (App. 2005). Here, the superior
court recognized its authority to consider whether the Arizona Constitution
afforded Burns the right to enforce his subpoenas unilaterally in a rate-
making case, see Polaris Int’l Metals Corp. v. Ariz. Corp. Comm’n, 133 Ariz.
500, 506 (1982), but concluded that Burns was not entitled to the declaratory
relief he requested.
¶18 Burns argues that, by affirming the Commission’s decision
not to enforce his subpoenas, the superior court improperly granted the
Commission an implied power to “nullify[] their fellow commissioners’
investigatory subpoenas or requests to call and question witnesses in a rate
case.” See City of Surprise v. Ariz. Corp. Comm’n, 246 Ariz. 206, 212, ¶ 20
(2019) (noting that Commission “has no implied powers and its powers do
not exceed those to be derived from a strict construction of the Constitution
and implementing statutes”). The superior court’s ruling created no such
power.
¶19 The Arizona Constitution grants “[t]he corporation
commission, and the several members thereof,” authority to “inspect and
investigate the property, books, papers, business, methods, and affairs of
. . . any public service corporation doing business within the state, and for
the purpose of the commission, and of the several members thereof, shall
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have the power of a court of general jurisdiction to enforce the attendance
of witnesses and the production of evidence by subpoena, attachment, and
punishment, which said power shall extend throughout the state.” Ariz.
Const. art. 15, § 4.
¶20 The Constitution also provides, however, that “the
commission may make rules and regulations to govern [proceedings
instituted by and before it].” Ariz. Const. art. 15, § 6; see also A.R.S. § 40-
202(A) (“The commission may supervise and regulate every public service
corporation in the state and do all things, whether specifically designated
in this title or in addition thereto, necessary and convenient in the exercise
of that power and jurisdiction.”) (emphasis added).
¶21 And one such rule that the Commission has prescribed is that
the Commission as a whole resolves objections to subpoenas. Ariz. Admin.
Code R14-3-109(O). Thus, although individual commissioners have the
power to issue subpoenas, that power is not without limits when exercised
as part of commission proceedings and is instead subject to review and
oversight by the Commission as a whole.
¶22 Burns argues that R14-3-109(O) is a rule applicable only to
contested cases, and “[i]nvestigatory subpoenas can be issued by
commissioners in their individual capacity for purposes in addition to or
outside of uses in contested cases.” But the subpoenas in question here
were in fact issued during the course of a contested rate-making
proceeding. Accordingly, R14-3-109(O) applies to the subpoenas, and
whether it would apply if Burns had issued the subpoenas in a different
context is not before us.1
¶23 Our review of a Commission determination not to enforce a
subpoena is deferential. We typically afford the Commission “wide berth”
in reviewing the validity of its investigations, Carrington v. Ariz. Corp.
Comm’n, 199 Ariz. 303, 305, ¶ 8 (App. 2000), and we afford the Commission
the same latitude when it votes not to pursue an investigation started by
one of its elected members. If we were to grant relief in this case, we would
essentially be overturning the Commission’s vote and directly interfering
1 As noted above, Burns initially pursued subpoenas in the Rule-
Making Case, but the court stayed those proceedings to allow Burns to
exhaust administrative remedies. The record does not reflect any further
action in the Rule-Making Case, and the motions to dismiss that Burns
appeals from here addressed only the two subpoenas issued in the Rate
Case.
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in Commission operations. See A.R.S. § 40-102(C) (“The act of a majority of
the commissioners when in session as a board shall be the act of the
commission.”); A.R.S. § 40-254(E); see Forty-Seventh Legislature v. Napolitano,
213 Ariz. 482, 485–86, ¶ 11 (2006) (“Limiting the actions of each branch of
government to those conferred upon it by the constitution is essential to
maintaining the proper separation of powers.”).
¶24 Burns argues in the alternative that the Commission’s
decision not to enforce his subpoenas was arbitrary and capricious. But this
argument specifically challenges the June 27, 2017 order, and under A.R.S.
§ 40-254(A), only parties in interest or the attorney general may bring such
a challenge:
Except as provided in § 40-254.01, any party in interest, or the
attorney general on behalf of the state, being dissatisfied with
an order or decision of the commission, may within thirty
days after a rehearing is denied or granted, and not
afterwards, commence an action in the superior court in the
county in which the commission has its office, against the
commission as defendant, to vacate, set aside, affirm in part,
reverse in part or remand with instructions to the commission
such order or decision on the ground that the valuation, rate,
joint rate, toll, fare, charge or finding, rule, classification or
schedule, practice, demand, requirement, act or service
provided in the order or decision is unlawful, or that any rule,
practice, act or service provided in the order is unreasonable.
See also A.R.S. § 40-254.01(A) (a party in interest may appeal Commission
orders “involving public service corporations and relating to rate making
or rate design” to the court of appeals). Other than by a writ of mandamus
from the Arizona Supreme Court, this procedure to challenge commission
orders is exclusive. A.R.S. § 40-254(E). Accordingly, only a “party in
interest” or the Arizona Attorney General can challenge a decision by the
Commission. Here, the Attorney General has not sought to intervene, and
Burns can challenge the decision only if he is a “party in interest” under §
40-254(A).
¶25 Burns recognizes that he “is not a party,” but “instead is a
regulator.” Nevertheless, he asserts that courts have permitted the type of
arguments he raises. But the cases on which Burns relies were brought by
interested parties to the proceeding, not by a member of the Commission.
See State ex rel. Corbin v. Ariz. Corp. Comm’n, 143 Ariz. 219, 233 (App. 1984);
Polaris, 133 Ariz. at 503 (noting that the Commission “entered a cease and
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desist order” and “issued several subpoenas duces tecum to gather
information from Polaris and its bank”) (emphasis added); Western Gillette,
Inc. v. Ariz. Corp. Comm’n, 121 Ariz. 541, 542 (App. 1979).
¶26 Burns also asserts that under Carrington, a court “can measure
whether an investigatory subpoena is properly authorized or not.” But as
with the other cited cases, Carrington involved a party’s challenge to an
action of the Commission, not a challenge by a commissioner who cast a
dissenting vote. 199 Ariz. at 304, ¶¶ 2–3. And as noted above, we grant the
Commission “wide berth” in determining the scope of its investigations. Id.
at 305, ¶ 8. Accordingly, the authority on which Burns relies establishes
only that an interested party or the Arizona Attorney General is entitled to
challenge the Commission’s determination not to enforce a subpoena in a
rate case. Because Burns is neither, he was not entitled to bring such a
challenge.
III. Standing to Disqualify Other Commissioners.
¶27 Burns also challenges the superior court’s determination that
he lacked standing to seek disqualification of other commissioners, arguing
that due process “require[s] a fair tribunal made up of commissioners
whose impartiality cannot reasonably be questioned.” Burns cites Horne v.
Polk for the proposition that “[a] quasi-judicial proceeding ‘must be
attended, not only with every element of fairness but with the very
appearance of complete fairness.’” 242 Ariz. 226, 234, ¶ 28 (2017) (quoting
Amos Treat & Co. v. Sec. & Exch. Comm’n, 306 F.2d 260, 266–67 (D.C. Cir.
1962)). In Horne, however, it was a party to an administrative hearing—not
an adjudicator—who complained that a county attorney appointed to
investigate alleged campaign finance violations was biased based on her
role in prosecuting the matter before she was subsequently appointed as an
adjudicator. Id. at 228, ¶¶ 2–5.
¶28 The Horne court held that an appearance of potential bias
arose because the regulatory agency adjudication process “involve[d] the
same official as both an advocate and the ultimate administrative
decisionmaker.” Id. at 231, ¶ 16. Here, Burns does not contend that any
other commissioner advocated for the APS Parties in the Rate Case. Citing
Caperton v. A.T. Massey Coal Co., 556 U.S. 868, 886 (2009), Burns instead
contends that due process “may sometimes bar trial by judges who have no
actual bias and who would do their very best to weigh the scales of justice
equally between contending parties.” But Caperton, like Horne, involved a
bias challenge raised by a party to litigation. 556 U.S. at 874–75.
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¶29 Burns also cites State v. Woods, 237 Ariz. 214, 221, ¶ 27 (App.
2015), in which we recognized that “courts commonly require trial judges
to poll jurors when [the jurors’] impartiality is called into question.” But
Burns was not a judge polling the actual decision-makers in a rate case; he
was a co-equal decision-maker with those he alleges were biased.
¶30 In sum, Burns has not established that anyone other than a
party to a proceeding before the Commission has standing to raise a due
process challenge to a ruling by the Commission. See also State v. Ellison,
213 Ariz. 116, 128, ¶ 37 (2006) (“[T]he party moving for change of judge must
prove a judge’s bias or prejudice by a preponderance of the evidence.”)
(emphasis added and citation omitted); Simon v. Maricopa Med. Ctr., 225
Ariz. 55, 63, ¶ 29 (App. 2010) (“A party challenging a trial judge’s
impartiality must overcome the presumption that trial judges are ‘free of
bias and prejudice . . . .’”) (emphasis added and citation omitted).
Accordingly, the superior court did not err by concluding that Burns lacked
standing to seek to disqualify other commissioners from participating in the
Rate Case.
IV. Specific Requests for Declaratory Relief.
¶31 Burns also contends the superior court erred by declining to
issue a declaratory judgment on “multiple conclusions that resolved
contested issues about [his] rights in his favor.” We disagree.
¶32 Under the Declaratory Judgments Act, “[a]ny person . . .
whose rights, status or other legal relations are affected by a statute . . . may
have determined any question of construction or validity arising under the
. . . statute . . . and obtain a declaration of rights, status or other legal
relations thereunder.” A.R.S. § 12-1832.
¶33 Burns argues that this provision “provides a right to relief on
any sub-set of disputed rights whose resolution will help the parties define
their ongoing interactions.” But that right is not absolute; a court may
decline to enter a declaratory judgment if it “would not terminate the
uncertainty or controversy giving rise to the proceeding.” A.R.S. § 12-1836.
¶34 Here, Burns sought a declaratory judgment to give effect to
the superior court’s rulings in his favor on the motion to dismiss his first
amended complaint. Burns sought in particular a ruling:
a. That the powers Commissioner Burns has as a
Commissioner to inspect records, books, papers, business,
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methods and affairs of corporations under A.R.S. § 40-241(A)
apply to [Pinnacle West] as well as to APS . . .;
b. That Commissioner Burns’ investigatory subpoenas did not
encroach on powers that are constitutionally entrusted to
other branches of government . . .;
c. That the Court was unable to decide the Defendants’ First
Amendment defenses to Commissioner Burns’ investigatory
subpoenas without further responsive Pleadings and factual
development in the proceedings . . .; and
d. That it is “plain that the provisions of Ariz. Const., Art. XV,
§ 4 and A.R.S. § 40-241(A) each authorize Commissioner
Burns to seek information from [APS and Pinnacle West] by
subpoena on his own authority and without prior approval of
the Commission as a whole” . . . .
But none of these rulings, if issued in a judgment, would have terminated
the controversy because the primary issue was not whether Burns could
issue discovery requests, but rather whether he could unilaterally enforce
compliance with those requests in a rate case. Accordingly, the court did
not err by declining to grant specific declaratory relief on these issues. See
Moore v. Bolin, 70 Ariz. 354, 357 (1950) (“[C]onstitutional questions will not
be determined abstractly or in a hypothetical case, or anticipated in advance
of the necessity for determination thereof . . . .”) (quoting 16 C.J.S.
Constitutional Law § 94, p. 211); see also Polaris, 133 Ariz. at 505 (court lacks
authority to enter a declaratory judgment on a “mere difference of opinion”
on a constitutional question); Citizens’ Comm. for Recall of Jack Williams v.
Marston, 109 Ariz. 188, 192–93 (1973) (“[T]he declaratory judgment act was
not intended to constitute a fountain of legal advice . . . .”).
V. Attorney’s Fees.
¶35 Burns requests attorney’s fees on appeal under A.R.S. §§
12-348.01 and -1840. Because Burns is not the prevailing party, he is not
entitled to fees under § 12-348.01, and in the exercise of our discretion, we
decline to award fees under § 12-1840.
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CONCLUSION
¶36 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
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