IN COURT OF APPEALS
In the Matter of the
Class A License Application of North Metro Harness, Inc.
Filed March 28, 2006
Byron E. Starns, Timothy J. Keane, James A. Stein, Leonard, Street & Deinard, P.A., 150 South Fifth Street, Suite 2300, Minneapolis, MN 55402 (for relator Columbus Concerned Citizens, Inc.)
Mike Hatch, Attorney General, Darren DeJong, Assistant Attorney
General, Kenneth Raschke, Assistant Attorney General, 1800
John E. Drawz, Jay Quam, Mollie M. Smith, Fredrikson & Byron, P.A., 4000 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent North Metro Harness, Inc.)
Considered and decided by Wright, Presiding Judge; Willis, Judge; and Worke, Judge.
S Y L L A B U S
Without a statute or rule proscribing such action, a commission, in a quasi-judicial proceeding, has inherent authority to sua sponte move to reconsider a decision when the time for appeal has not expired.
O P I N I O N
Following respondent the Minnesota Racing Commission’s vote to deny respondent North Metro Harness, Inc.’s application for a Class A racetrack license, commissioners received new information outside of the record that settled concerns underlying the application denial. The commission sua sponte moved to reconsider its decision, and after reopening the record to receive new information, granted the application. On this appeal, relator Columbus Concerned Citizens, Inc. argues that the commission did not have authority or jurisdiction to sua sponte move to reconsider its decision, that the commission denied relator due process of law, and that the record lacks substantial evidence to support the commission’s decision to grant the application. While sua sponte moving to reconsider based on conversations outside of the record is generally not a preferred manner in which to request reconsideration, without a statute or rule proscribing such action, a commission, in a quasi-judicial proceeding, has inherent authority to sua sponte move to reconsider a decision when the time for appeal has not expired. Because the commission has inherent authority to reconsider its decision, because the commission did not violate relator’s right to due process of law, and because there is substantial evidence in the record to support approval of the license, we affirm.
On December 23, 2003, North
Metro Harness Inc. (North Metro) submitted an application for a Class A license
for the North Metro Harness Racetrack to the Minnesota Racing Commission
(commission). The application sought to
establish the facility in
On October 21, 2004, the commission voted five
to three to deny the application. On
November 15, 2004, the commission issued an order formally denying the
application. Concerns underlying the
denial were inadequate road access and transportation, inadequate horse stalls
and human accommodations, resident opposition, and the creation of competition adversely
Prior to the December 30 meeting, relator filed a complaint and petition for a writ of prohibition against the commission and the individual commissioners in district court. Relator sought a judgment declaring that the commission violated the Minnesota Open Meeting Law and the Minnesota Administrative Procedures Act by sua sponte deciding to reconsider the application. Additionally, relator sought a writ of prohibition against a rehearing without the commission first establishing a procedure for reconsideration. On December 29, 2004, despite concern about the one-sided communications commissioners engaged in outside of the record regarding new information that triggered the motion for reconsideration, the district court ruled that the commission had inherent authority to reconsider its decisions and denied the writ.
At the December 30, 2004 meeting, the
commission provided the reasons for reconsideration and discussed the new
information that was learned outside of the record after the October 21
vote. The meeting was open to the public
and all interested individuals were permitted to submit materials and to
address the commission. The commission
reopened the record and agreed to keep it open to receive additional
information until January 18, 2005. On
January 19, 2005, the commission conducted a regularly scheduled meeting with the
issue of reconsideration on the agenda.
The commission discussed four areas of concern: (1) housing and
stabling; (2) transportation; (3) competition; and (4) community opposition. The commission determined that a newly proposed
stabling plan was adequate. Further, new
information provided by the Metropolitan Council and
1. Did the commission lack authority and jurisdiction to reconsider its decision?
2. Did the commission violate relator’s right to due process of law?
3. Is there substantial evidence in the record to support the commission’s decision to grant North Metro’s license?
1. “There is a
presumption in favor of judicial review of agency decisions in the absence of
statutory language to the contrary.”
An appellate court may reverse or modify an administrative decision if substantial rights of the petitioners have been prejudiced by administrative findings, inferences, conclusions or decisions that are unsupported by substantial evidence in view of the entire record, or arbitrary and capricious, but the court must also recognize the ‘need for exercising judicial restraint and for restricting judicial functions to a narrow area of responsibility lest (the court) substitute its judgment for that of the agency.’ It must be guided in its review by the principle that the agency’s conclusions are not arbitrary and capricious so long as a ‘rational connection between the facts found and the choice made’ had been articulated.
In re Excess Surplus Status of Blue Cross
& Blue Shield of Minn., 624 N.W.2d 264, 277 (
Relator first challenges the commission’s authority and jurisdiction
to sua sponte reconsider its decision. Whether an agency has jurisdiction over a matter is a
legal question and, therefore, a reviewing court need not defer to “agency
expertise.” Frost-Benco Elec. Ass’n v.
Relator first argues that the
commission lacked jurisdiction to reconsider its decision because the time for appeal had
expired. “[J]urisdiction end[s] once the
time to appeal from the order expire[s] without appeal having been taken.” Marzitelli
v. City of Little
Relator next argues that the
commission may not sua sponte request reconsideration. Relator contends that although Minn. Stat.
§ 14.64 (2004) allows an agency to reconsider its decisions, reconsideration
of a license denial is triggered only by a formal request. “If a request for reconsideration is made
within ten days after the decision and order of the agency, the 30-day period
provided in section 14.63 shall not begin to run until
service of the order finally disposing of the application for reconsideration.”
Relator also argues that the commission’s rules do not allow reconsideration. Relator contends that there is no legal
authority permitting the commission to reconsider its decisions because the
rules only permit reconsideration in disciplinary matters and in Class A
license revocations or suspensions.
Relator challenges the commission’s reliance on Robert’s Rules of Order
Finally, relator argues that caselaw
supporting the commission’s inherent authority to reconsider its decisions
predates the Minnesota Administrative Procedure Act (APA), and that, unlike the
Minnesota Racing Commission, other commissions have been granted express
statutory authority to sua sponte reconsider their decisions. Relator mistakenly relies on the APA because
the only time the
The Minnesota Supreme Court
recognized the inherent authority of an agency to reconsider its decisions in State ex. rel. Turnbladh v. Dist. Ct.,
259 Minn. 228, 107 N.W.2d 307 (1960). In
that case, the warden of the Minnesota state prison filed suit against the
commissioner of corrections after the two had discussed a matter of wrongdoing
on the part of the warden and agreed that the warden had exhibited poor
judgment; days later the warden was charged with misconduct. Turnbladh,
It is generally recognized that one of the powers proper to an efficient and just administration of the right to adjudicate is the power to reverse adjudications which appear to be erroneous . . . . This power lasts until jurisdiction is lost by appeal or certiorari or until a reasonable time has run, which would be at least coextensive with the time required by statute for review.
Anchor Cas. Co., 253
Barring statutory regulation, the power may be invoked by administrative agencies to serve the ends of essential justice and the policy of the law. But there must be reasonable diligence. The denial to such tribunals of the authority to correct error and injustice and to revise its judgments for good and sufficient cause would run counter to the public interest. The function cannot be denied except by legislative fiat; and there is none such here. The power of correction and revision, the better to serve the statutory policy, is of the very nature of such governmental agencies. It involves the exercise of a sound discretion, controlled by the statutory considerations and the dictates of justice; the action taken must rest on reasonable grounds and be in no sense arbitrary.
Here, the commission moved for reconsideration two days after it formally denied the application. The commission acted with diligence and retained jurisdiction. Because there is no statute barring the commission from reconsidering its decisions while it still has jurisdiction, the commission had inherent authority to reconsider its decision.
2. Relator agues that the commission violated
its right to due process when it provided no reasons for its decision to
reconsider and did so without providing notice.
The requirements of due process are measured according to the nature of
the government function involved and whether private interests are directly
affected. Barton Contracting Co., Inc. v. City of
Relator contends that its due-process rights were violated when reconsideration was not on the commission’s published agenda for the November 17 meeting. But there are approximately three pages of meeting minutes dedicated to discussions on reconsideration, including relator’s oral opposition. Relator was offered reasonable notice and the right to be heard, especially in light of the fact that the only action taken on November 17 was a motion to reconsider the denial at a future meeting.
Relator next argues that the commission’s admitted communications with North Metro after the October 21 vote denied relator due process of law. But the communications resulted in the commission reopening the entire record to receive additional information from any interested party; the communications did not result in an immediate reversal of the commission’s decision. Relator was given notice of the December 30, 2004 meeting, at which the commission welcomed testimony, comments, documents, evidence, and anything relevant to the decision to reconsider and the decision whether to grant the license. Relator’s attorney and many members of the community attended this meeting and were heard.
Finally, relator argues that the commission violated its due-process rights when it proceeded with its regularly scheduled meeting on January 19, 2005. Relator claims that the commission did not provide notice that reconsideration would be considered prior to this meeting. But at the December 30 meeting, attended by relator’s counsel, a commissioner stated that the public record was open through January 18 and anticipated that reconsideration would be on the January 19 meeting agenda. Relator received reasonable notice that the commission was going to address reconsideration at the next regularly scheduled meeting. Further, the record was open from December 30, 2004, until January 18, 2005, providing relator with a reasonable opportunity to be heard. The commission did not violate relator’s right to due process of law.
3. Relator next challenges the commission’s
decision to grant the license application.
An agency acts in a quasi-judicial manner “when the commission hears the
view of opposing sides presented in the form of written and oral testimony,
examines the record and makes findings of fact.” Appeal of Signal Delivery Serv., Inc., 288 N.W.2d 707, 710 (
The substantial evidence test requires a reviewing court to evaluate the evidence relied upon by the agency in view of the entire record as submitted. If an administrative agency engages in reasoned decisionmaking, the court will affirm, even though it may have reached a different conclusion had it been the factfinder. The court will intervene, however, where there is a ‘combination of danger signals which suggest the agency has not taken a “hard look” at the salient problems’ and the decision lacks ‘articulated standards and reflective findings.’
Bd. v. Nor-West Cable Commc’ns P’ship, 356 N.W.2d
658, 668-69 (
There were four issues that caused
the commission to initially deny North Metro’s application: (1) housing and
stabling; (2) transportation; (3) competition; and (4) local opposition. The February 16, 2005 order granting the
license application addressed the new information the commission received while
the record was reopened. First, North
Metro presented a new stabling plan adequate to conduct harness racing. Specifically, North Metro increased the
number of stables and accommodations for track employees—the original plan
proposed 75 stalls and the new plan included 256 stalls plus off-track
stabling. Second, the transportation and
highway system was initially believed to be inadequate. The Metropolitan Council provided new
statistical and study information showing that the current infrastructure is
Relator contends that a significant change of ownership occurred with respect to North Metro’s parent company, Southwest Casino and Hotel Corp. (Southwest).
If a change in the officers, directors, shareholders, or other persons with a present or future direct or indirect financial or management interest in the licensee, or a change of ownership of more than five percent of the licensee’s shares is made after the application is filed or the license issued, the applicant or licensee must notify the commission of the changes within five days of their occurrence and provide the affidavit required by subdivision 1, clause (d).
Minn. Stat. § 240.06, subd. 6 (2004). Relator argues that despite this disclosure the commission declined to investigate this change.
Relator’s attorney submitted a letter
to the commission stating that “the Securities and Exchange Commission reported
a private placement of [Southwest] corporate stock in the amount of up to
$50,000,000 with . . . The Graves Group.”
At the February 16, 2005 meeting, the commission questioned Gordon
Graves regarding his association with Southwest and his decision to make an
investment in North Metro.
In the event this court does not reverse the commission’s decision, relator moves this court to remand the matter to the commission or to the district court to determine alleged procedural irregularities. Relator contends that the commission granted North Metro’s license application based on unlawful procedure because it relied on “ex parte” communications in requesting reconsideration. Although this court is not at ease with the commissioners’ decisions to engage in one-sided, outside-of-the-record conversations, the commission did not grant North Metro’s license based on these communications. While new information from these communications influenced some commissioners to request reconsideration, the commission voted to grant the application only after reopening the record and receiving additional information that supplemented the record. Furthermore, although it would have been better for the commissioners to have refrained from engaging in off-the-record communications, relator fails to provide any authority that the commissioners may not rely on these communications in moving for reconsideration.
Relator suggests that Hard Times Café, Inc. v. City of Minneapolis,
625 N.W.2d 165 (Minn. App. 2001), supports its argument that this matter should
be remanded. But Hard Times Café, Inc. involved adverse action against an existing
license and a contested-case hearing before an administrative-law judge. Hard
Times Café, Inc., 625 N.W.2d at 169.
The license-issuance process for a Class A license is not a contested
case and, therefore, relator’s reliance on Hard
Times Café, Inc. is misplaced.
Further, in Hard Times Café, Inc.,
the city council was to make its decision in accordance with its manual, which
prohibited ex parte contacts.
D E C I S I O N
Relator has not met its burden of proving that the commission exceeded its statutory authority or jurisdiction in exercising its inherent authority to sua sponte move to reconsider a decision in a quasi-judicial proceeding when the time for appeal had not expired and no statute or rule proscribed such action. The commission did not violate relator’s right to due process of law because relator was afforded reasonable notice and a reasonable opportunity to be heard. Finally, the commission’s decision is supported by substantial evidence.
Affirmed; motion denied.