The scope of deference to administrative agencies was recently treated by a divided panel of the Appellate Division, Third Department, whose decision in an Article 78 substantial evidence proceeding was reversed by a divided Court of Appeals in Matter of Haug v. State University of N.Y. at Potsdam, 149 A.D.3d 1200 (2017). The disturbing facts and the review standard make compelling reading—and not just for lawyers.
The Article 78 proceeding in Haug was initially considered in the Appellate Division as the result of the transfer to that court pursuant to CPLR 7804(g). That section provides for the court procedures in a special proceeding that follows an administrative hearing and determination. If the proceeding raises (as in Haug) a question of whether the determination of the agency is supported by substantial evidence, the case will be transferred by the Supreme Court to the Appellate Division for review—as if the lower court role had already been performed by the agency.
Petitioner in the proceeding was a freshman at the State University of New York at Potsdam who had a sexual encounter with another student in a dormitory room. The complainant reported to campus police shortly after the encounter that she had been sexually assaulted, although she declined to reveal the identity of the assailant or submit to a sexual assault examination. An anonymous tip subsequently indicated that the petitioner was the assailant, and the University charged petitioner with sexual misconduct, a violation of the Code of Student Rights, Responsibilities and Conduct. The University held a disciplinary hearing at which the complainant did not appear. Relying on hearsay and other evidence, the hearing board found the petitioner guilty of sexual misconduct and recommended a penalty of suspension for the remainder of the semester, an alcohol evaluation and treatment program and other terms. Petitioner appealed to the SUNY Appellate Board, which rejected petitioner’s appeal and increased the penalty to expulsion from the University.
The Third Department majority opinion found the determination unsupported by substantial evidence, stating that the complainant “had not declined to engage in sex and gave no ‘gesture saying that the [sexual encounter] wasn’t welcome.’” As the complainant had not appeared at the disciplinary hearing, testimony as to the surrounding facts were supplied by written notes prepared by the Director of Student Conduct, and the hearing testimony of a campus police officer. The majority held that “the only path to finding a lack of consent under these circumstances would be to make inferences that would not reasonably flow from the hearsay accounts of what the complainant said” which caused the court to conclude that “when the hearsay evidence is seriously controverted, common sense and elemental fairness suggest that it may not constitute the substantial evidence necessary to support the [challenged] determination.”
Justice Clark, joined by Justice Lynch, wrote a detailed and powerful dissenting opinion which noted that the substantial evidence test is a relatively low or “minimal” evidentiary standard, requiring even less proof than the preponderance of the evidence. To confirm the determination, all that is required is that “a given inference is reasonable and plausible, not necessarily the most probable.”
The dissent also pointed out two telling facts, that petitioner had sent a text message to the complainant after seeing a campus-wide alert as to an alleged rape, thus indicating that petitioner was concerned that he had been reported. The dissenters found petitioner’s testimony in this case supportive of the University’s determination, because it was “indicative of a consciousness of guilt.” Further, the dissenters noted that petitioner’s testimony could have been deemed unreliable, because he had repeatedly stated at the hearing that he had consumed a large amount of alcohol to the point that he was not “fully aware of the situation.” Finally, the dissent recognized that hearsay evidence is generally admissible in administrative hearings, and may form the basis of a determination provided that such hearsay evidence is sufficiently relative and probative or sufficiently reliable and not otherwise seriously controverted.
The Court of Appeals, in reversing, reiterated the dissent’s point that the substantial evidence standard is a “minimum standard,” that is less than the preponderance of the evidence. The Court of Appeals also notes that in many cases there is substantial evidence on both sides of an issue disputed before an administrative agency, and that in such cases the courts have “no power” under Article 78 review to substitute the court’s judgment for the judgment of the administrative agency. The University also was fully empowered to judge the credibility of the petitioner as a witness, and to reject his version of the events to the extent they conflicted with the evidence on which the finding against the petitioner was based.
The Court of Appeals held that the Appellate Division had “improperly engaged in a re-weighing of the evidence when it substituted its own factual findings for those of respondents.” Judge Fahey dissented from the majority opinion of the Court of Appeals, noting that he would have granted the petition for the reasons stated in the majority opinion of the Appellate Division.
Of note is the fact that the Student Code of Conduct in Haug apparently made clear that consent to sexual activity “cannot be inferred from silence and must flow ‘spoken words or behavior that indicates, without doubt to either party, a mutual agreement’ to proceed with sexual contact.” The Student Code of Conduct is an instance of rulemaking of very significant import—in effect defining the proof necessary for misconduct that may also be a serious crime.
The State Administrative Procedure Act broadly defines Executive Agency action in terms of rulemaking (meaning the promulgation of standards of general applicability that implement or apply laws) or adjudicatory (usually involving a hearing with a record and some formality that determines an individual’s rights or responsibilities under law or regulation). (See State Administrative Procedure Act §102 and Article 3.) In Haug, the rulemaking was not subject to challenge, and the adjudicatory conclusion based on the rule was subject to very limited review.
Arguably invalid rules usually are challenged in court by a declaratory judgment action under CPLR 3001. To the extent petitioner sought to raise in the Article 78 proceeding a due process issue regarding the manner in which sexual assault could be proved under the Code of Conduct, or based on his ability to directly confront complainant at the hearing, those issues were not preserved. Haug demonstrates the great importance of raising all significant issues in the administrative hearing as one would in a court of original instance.
Adjudicatory determinations are challenged in Article 78 proceedings, usually in the nature of the common law writ of certiorari. (See CPLR 7803). As Haug makes very clear, substantial evidence challenges are rarely successful, which is why experienced practitioners struggle mightily in Article 78 proceedings to categorize the dispute as involving error of law.
In Haug, the Appellate Division majority was concerned over the “significant impacts that the determination could have upon petitioner’s reputation as well as his educational and job prospects …,” and in that context, “many of the procedures employed by the Hearing Board [gave the court] pause.” However, as the Court of Appeals ultimately held, the impact of the determination was not a basis to depart from the longstanding rule of deference to an agency on Article 78 review. In such instances, due process does not require de novo review by the judicial branch.
This case demonstrates the sometimes enormous power of the Executive Branch of government, which can establish rules of great importance and then adjudicate life-changing matters for the regulated person. The number of entities exercising such executive power is vast, including, as in this case, University Hearing and Appellate Boards. Apart from the facts and result in Haug, perhaps the scope and power of such entities merit a general review in the public interest, as to any risks to due process that are inherent in such combined rulemaking and quasi-judicial administrative power centers.
Thomas F. Gleason is a member of Gleason, Dunn, Walsh & O’Shea in Albany and an adjunct professor at Albany Law School.