BWK, Inc. v. Department of Administrative Services

218 P.3d 156, 231 Or. App. 214, 2009 Ore. App. LEXIS 1505
CourtCourt of Appeals of Oregon
DecidedSeptember 30, 2009
DocketAgency 0103; A131329
StatusPublished
Cited by2 cases

This text of 218 P.3d 156 (BWK, Inc. v. Department of Administrative Services) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BWK, Inc. v. Department of Administrative Services, 218 P.3d 156, 231 Or. App. 214, 2009 Ore. App. LEXIS 1505 (Or. Ct. App. 2009).

Opinion

*216 SERCOMBE, J.

Petitioner seeks review of a final order issued by the Department of Administrative Services (DAS) after a contested case proceeding determining that respondent Garten Services, Inc. (Garten) was a qualified rehabilitation facility (QRF) under the Products of Disabled Individuals Act (PDIA), ORS 279.835 to 279.855. 1 Petitioner contends that DAS had no authority to conduct a contested case hearing to determine Garten’s qualifications as a QRF and that its determinations were not supported by substantial evidence. After review of the agency’s relevant legal interpretations for legal error and factual findings for supportive substantial evidence, ORS 183.482(8)(a) and (c), we affirm.

We summarize the background facts, drawing primarily on the findings set out in the order under review. Petitioner is a private corporation in the business of providing mail presorting and other mail-related services to customers. The objective of presorting mail is to qualify for postage discounts by processing mail before it is delivered to the post office. Mail is sorted by zip code, and sometimes by the sequence of a delivery route, making the post office operations more efficient and allowing a postage discount.

Garten is a nonprofit corporation whose mission is “to support people with disabilities in their effort to contribute to the community through employment, career and retirement opportunities.” Garten provides mail presorting and other services to private and public customers. For some time, Garten has provided mail presorting services to state agencies and others as a QRF under the PDIA. As set forth below, that qualification requires public agencies to purchase products and services from a QRF, without procurement through the normal competitive selection process. ORS 279.850(1).

In 2001, petitioner filed an action in Marion County Circuit Court to challenge DAS’s renewal of its previous QRF contract with Garten for mail presorting services. During the pendency of that case, DAS informed Garten that, if it wished *217 to continue providing mail presorting services to the state, it should request a determination of QRF suitability from DAS. Garten made that request. On March 13, 2003, DAS issued a notice of proposed action to determine whether Garten was suitable as a QRF to provide mail and barcode presorting services. The notice was later amended and reissued. The amended notice of proposed action was directed

“TO: GARTEN SERVICES, INC., AND ALL OTHER PERSONS WHO MAY BE AGGRIEVED OR ADVERSELY AFFECTED BY THIS PROPOSED DETERMINATION.”

(Capitalization in original.) The notice set out proposed factual findings and legal conclusions supporting the agency’s proposed determination of Garten’s suitability as a QRF for mail sorting services. It advised recipients that “[y]ou are entitled to a contested case hearing as provided by the Administrative Procedures Act (ORS chapter 183.413 through 183.470)” and that, should a hearing not be requested, DAS “may issue a final order by default determining the rights of the affected parties.” In response to the initial notice, petitioner demanded a contested case hearing and also reserved “all claims including, but not limited to, unlawfulness and absence of statutory authority” for the proceeding. Garten did not request a contested case hearing.

In the Marion County action, DAS moved to dismiss petitioner’s earlier action challenging the contract renewal. The court entered an order of abatement on the record, pending the resolution of any contested case proceedings.

On August 21, 2003, petitioner filed a motion in the contested case proceeding to dismiss the amended notice for lack of statutory authority. The administrative law judge (ALJ) denied the motion, and the matter proceeded to a contested case hearing. The ALJ issued a proposed order that was modified and adopted by DAS. The agency’s final order concluded that Garten was suitable as a QRF for the provision of mail sorting services. Petitioner seeks judicial review of that final order.

On review, petitioner makes four assignments of error. Petitioner contends that DAS erred in (1) concluding *218 that it had legal authority to conduct a contested case hearing; (2) deciding that the mail and presorting services provided by Garten were “suitable” for procurement under the PDIA; (3) determining that DAS had performed its duty to set the prices for those services; and (4) finding that Garten employed disabled individuals for not less than 75 percent of the work hours of direct labor required for the provision of services, as required by ORS 279.835(5)(c). In response, DAS and Garten (collectively “respondents”) argue that DAS acted according to its statutory authority and that there is substantial evidence in the record to support the agency’s findings. We agree with respondents.

Petitioner’s first assignment of error raises an initial question that we determine before considering the substantive issues on review. Petitioner contends that DAS lacked authority to hold a contested case hearing in this matter. In the proceeding below and on review, petitioner has argued that DAS had no statute or rule allowing contested case proceedings for the determination of QRF suitability and that the contested case proceedings were unlawful because they were arbitrarily offered only to evade circuit court review of the contract extension. DAS responds that it is empowered under ORS 279.845(2) to determine QRF status and suitability and that ORS 183.310(2)(a)(D) authorized it to conduct a contested case hearing to make those determinations.

The Oregon Administrative Procedures Act (APA), ORS 183.310 to 183.750, defines a contested case by the potential consequences of an agency action or the manner by which that action is required to be taken. ORS 183.310(2)(a)(D) provides:

“ ‘Contested case’ means a proceeding before an agency:
“(D) Where the agency by rule or order provides for hearings substantially of the character required by ORS 183.415,183.417, 183.425,183.450,183.460 and 183.470.”

ORS 183.310(6)(a), in turn, defines “order” to mean

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Cite This Page — Counsel Stack

Bluebook (online)
218 P.3d 156, 231 Or. App. 214, 2009 Ore. App. LEXIS 1505, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bwk-inc-v-department-of-administrative-services-orctapp-2009.