Marovec v. PMX INDUSTRIES

693 N.W.2d 779, 2005 Iowa Sup. LEXIS 35, 2005 WL 627572

• Court: Supreme Court of Iowa
• Decided: March 18, 2005
• Docket: 03-1325
• Status: Published

Opinions

LAVORATO, Chief Justice.

The workers’ compensation commissioner dismissed the appeal of Brett Marovec, claimant, because he failed to file an appeal brief in his intra-agency appeal as required by the commissioner’s rules. He petitioned the district court for judicial review and that court affirmed. Marovec then appealed to this court, and we transferred the case to the court of appeals, which affirmed the district court’s decision. We granted Marovec’s application for further review. We conclude, as did the district court and the court of appeals, that the commissioner did not abuse her discretion in dismissing Marovec’s appeal. We therefore affirm the decision of the court of appeals and the judgment of the district court.

I. Background Facts and Proceedings.

On February 10, 1999, Marovec sustained an injury while working for PMX Industries. Later, he sought workers’ compensation benefits. On March 13, 2001, following a hearing, a deputy workers’ compensation commissioner determined in an arbitration decision that Maro-vec had failed to establish any permanent disability as a result of the February 10, 1999 injury. The deputy therefore did not award Marovec any permanent partial disability benefits. The deputy also rejected Marovec’s claim for healing period benefits, temporary total disability benefits, and reimbursement of medical expenses.

On March 29 Marovec filed with the Iowa Workers’ Compensation Commissioner notice of appeal and affidavit of ordering transcript. On April 5 Marovec filed notice of filing transcript.

On June 4 Iris J. Post, Iowa Workers’ Compensation Commissioner, filed an order to show cause why Marovec’s appeal should not be dismissed because he had failed to file a brief as required by Iowa Administrative Code rule 876 — 4.28 (2001). The brief should have been filed by May 18. Iowa Admin. Code r. 876 — 4.28(1). The commissioner stated that Marovec “shall have until twenty days from the filing of this order to file evidence, briefs, and exceptions on the issue to be decided as stated above.” (Emphasis added.) The show cause order stated the issue as follows: “Claimant, Brett Marovec, is ordered to show cause why his appeal should not be dismissed pursuant to rule 876 IAC 4.36 for failure to file a brief as required by rule 876 IAC 4.28.”

On June 13 Marovec filed his reply to the show cause order. In the reply, Maro-vec recited the dates of filings made and noted the show cause order. His sole response to the show cause order was this: “Claimant’s brief was not filed due to an oversight.” Marovec also stated the following: “The Order states that Claimant ‘shall have until twenty days from the filing of this order’ to file his brief. Claimant’s brief will be filed by the deadline set in the Order to Show Cause.” So, apparently, Marovec interpreted the show cause order as setting a new deadline for filing briefs on the substantive issues.

Marovec filed an appeal brief on June 21 on the substantive issues. The brief made no reference to the show cause order.

On June 27 the employer filed a motion for additional time to file a brief in response to Marovec’s appeal brief. On July 10 the employer filed its appeal brief, addressing the substantive issues. The employer’s appeal brief made no mention of the show cause order. Marovec filed a reply brief addressing only the substantive issues.

On July 31 the commissioner filed her ruling on the show cause order. She determined there was no reason to review the deputy’s decision sua sponte. Her ruling continued:

The show cause order filed June 4, 2001, ordered claimant to show cause why the appeal should not be dismissed for failure to file a brief as required by rule 876 IAC 4.28. Claimant filed a brief on the merits of the appeal arguing that the deputy’s arbitration decision be reversed and remanded. Claimant submitted no arguments nor brief why the appeal should not be dismissed for failure to file a timely brief. Claimant gave no cause or reason tvhy its appeal should not he dismissed. Defendants filed a brief on July 10, 2001, but the issue discussed in the brief was whether the deputy erred in making a determination of a disability award. Defendant, like claimant, gave no cause or reason why claimant’s appeal should not be dismissed.

Claimant has failed to show cause why his appeal should not be dismissed. Claimant has failed to file a brief within the time required by rule 876 IAC 4.28. Claimant has failed to comply with rule 876 IAC 4.28. Claimant’s notice of appeal should be dismissed.

(Emphasis added.)

On August 6 Marovec filed a petition for judicial review, claiming, among other things, that the show cause ruling was unreasonable, arbitrary, capricious, and characterized by an abuse of discretion. PMX Industries filed an answer denying the allegation.

On August 4, 2003, nearly two years after the petition for judicial review was filed, the district court ruled. The court noted that the file did not reach it until shortly before this date and that it ruled as soon as possible after receiving the file.

The district court denied the petition, ruling that the commissioner had acted reasonably in dismissing Marovec’s appeal for failing to file a timely brief. Contrary to Marovec’s interpretation, the district court interpreted the show cause order as providing Marovec an opportunity to show why he did not file a timely brief. And because, as the show cause ruling indicated, Marovec did not provide an adequate reason for his failure to file a timely brief, the court ruled the commissioner was well within her discretion to dismiss the appeal.

Marovec appealed, and we transferred the ease to the court of appeals. The court of appeals affirmed, stating:

The commissioner gave claimant an opportunity to respond to the order to show cause, including filing evidence, briefs, and exceptions to the order. Claimant’s only response [for his] failure to timely file a brief was [that his failure was due to] “an oversight.” The commissioner found this response inadequate and imposed sanctions. The district court correctly evaluated the commissioner’s exercise of discretion and affirmed. We cannot say the commissioner’s decision meets the definition of “unreasonable, arbitrary, capricious, or an abuse of discretion.” Iowa Code § 17A.19(10)(w).

We granted Marovec’s application for further review.

II. Issue.

The sole issue is whether the commissioner abused her discretion when she dismissed Marovec’s intra-agency appeal because he did not file an appeal brief by the deadline imposed by Iowa Administrative Code rule 876 — 4.28.

III. Scope of Review.

Iowa Code chapter 17A governs judicial review of a decision or order of the workers’ compensation commissioner. Iowa Code § 86.26 (2001). When the district court exercises its judicial review power, it acts in an appellate capacity. Mycogen Seeds v. Sands, 686 N.W.2d 457, 463 (Iowa 2004). In reviewing the district court’s decision, we apply chapter 17A standards to determine whether the conclusions we reach are the same as those of the district court. Id. at 464. “If they are the same, we affirm; otherwise we reverse.” Id.

In this case, the issue involves whether the commissioner abused her discretion. Abuse of discretion is encompassed in one of the grounds chapter 17A recognizes as a basis for reversing agency action:

10. The court may affirm the agency action or remand to the agency for further proceedings. The court shall reverse, modify, or grant other appropriate relief from agency action ... if it determines that substantial rights of the person seeking judicial relief have been prejudiced because the agency action is any of the following:

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n. Otherwise unreasonable, arbitrary, capricious, or an abuse of discretion.

Iowa Code § 17A.19(10)(»). “ ‘Discretion is abused when it is exercised on grounds clearly untenable or to an extent clearly unreasonable.’ ” Martin Marietta Materials, Inc. v. Dallas County, 675 N.W.2d 544, 553 (Iowa 2004) (citation omitted). An abuse of discretion also means the decision lacked rationality and was made clearly against reason and evidence. Dico, Inc. v. Iowa Employment Appeal Bd., 576 N.W.2d 352, 355 (Iowa 1998).

In making the determination whether the agency’s action is unreasonable, arbitrary, capricious, or an abuse of discretion, the court “[sjhall give appropriate deference to the view of the agency with respect to particular matters that have been vested by a provision of law in the discretion of the agency.” Iowa Code § 17A.19(ll)(c). In this instance, we think we must give appropriate deference to the commissioner’s decision because by law the commissioner is required to adopt and enforce rules and procedures necessary to implement Iowa Code chapter 86. See id. § 86.8; see also id. § 17A.3(1)(6) (“[E]ach agency shall ... [ajdopt rules of practice setting forth the nature and requirements of all formal and informal procedures available to the public, including a description of all forms and instructions that are to be used by the public in dealing with the agency.”). In reaching its decision, the commissioner relied on several of those rules, which we will mention shortly. More specifically, with respect to intra-agency appeals, Iowa Code section 86.24 provides that “[a]ny party aggrieved by a decision, order, ruling, finding or other act of a deputy commissioner in a contested case proceeding arising under [chapter 86] or chapter 85 or 85A may appeal to the workers’ compensation commissioner in the time and manner provided by rule.” Id. § 86.24(1) (emphasis added).

Finally, in our review, we must keep two principles in mind. First, subject to certain exceptions not relevant here, the party challenging the agency action has the burden of proving the illegality of the agency action and the prejudice required. Id. § 17A.19(8)(a). Second, the standards specified in chapter 17A are to be applied to the challenged agency action as of the time the action was taken. Id. § 17A.19(8)(5).

IV. Analysis.

An appeal of a contested workers’ compensation case must be commenced within twenty days of the decision, order, or ruling by filing a notice of appeal. Iowa Admin. Code r. 876 — 4.27 para. 1. Maro-vec’s proceeding before the workers’ compensation commissioner is a contested workers’ compensation case. See Iowa Code § 86.14. As mentioned, by statute, the commissioner’s rules govern the time and manner of Marovec’s intra-agency appeal. See id. § 86.24(1). The statute also requires an appealing party to provide a transcript of a contested case proceeding at the party’s cost and requires the appealing party or the party’s attorney to file an affidavit with the commissioner within ten days after the appeal is filed stating that the transcript has been ordered. Id. § 86.24(4).

There are several administrative rules governing the time and manner of the appeal. One rule requires the appeal to be commenced within twenty days of the filing of the decision, order, or ruling by filing a notice of appeal with the commissioner. Iowa Admin. Code r. 876- — 4.27 para. 1. Another requires the appealing party to serve its brief within fifty days after the date on which notice of appeal was filed, or within twenty days after the transcript is filed, whichever date is later. Id. r. 876 — 4.28(1). The appellee must serve its brief within twenty days after service of appellant’s brief. Id. The appellant must serve its reply brief, if any, within ten days after service of appellee’s brief. Id. The same rule requires that any briefs required or allowed by the rule shall be filed promptly following service. Id. r. 876 — 4.28 para. 1. Briefs shall include a statement of issues. Id. r. 876— 4.28(4)(6). The appeal must be decided on the issues presented by the appellant and appellee except as provided in rule 876— 4.29. Id. r. 876 — 4.28(4)(d).

Besides this method of appeal, the commissioner on its own motion may review a deputy’s decision. Id. r. 876 — 4.29; see also Aluminum'Co. of Am. v. Musal, 622 N.W.2d 476, 478 (Iowa 2001). The commissioner must file such motion within twenty days of the deputy’s decision. Id. In a notice mailed (1) to the parties by certified mail, return receipt requested and (2) on the date the motion is filed, the commissioner must specify the issues to be reviewed and the additional evidence, if any, to be obtained by the parties. Iowa Admin. Code r. 876 — 4.29; see also Iowa Code § 17A.15(3) (“On appeal from or review of the proposed decision, the agency has all the power which it would have in initially making the final decision except as it may limit the issues on notice to the parties or by rule.”).

The rules further provide what may happen if the parties do not conform to these rules:

If any party to a contested case or an attorney representing such party shall_ fail to comply with these rules or any order of a deputy commissioner or the workers’ compensation commissioner, the deputy commissioner or workers’ compensation commissioner may dismiss the action.

Iowa Admin. Code r. 876 — 4.36.

In Walsh v. Schneider National Carriers, a deputy commissioner dismissed a claimant’s contested case without prejudice because of her failure to comply with numerous discovery orders. 497 N.W.2d 895, 896 (Iowa 1993). The commissioner affirmed the deputy’s decision. Id. The claimant petitioned for judicial review, contending that the commissioner had no authority to impose sanctions and dismiss her contested case. Id. at 896-97. The district court affirmed, and the claimant appealed. Id.

Relying on Iowa Code sections 86.8(1) and 17A.3(1)(&) and administrative code rules 4.34 (providing that any case on file in excess of two years may be subject to dismissal) and 4.36, we concluded that the commissioner indeed had the authority to dismiss a contested case proceeding when the claimant fails to comply with an agency order or fails to prosecute the case. Id. at 897. Because the claimant missed nearly every deadline the agency had set for over two years and because she was given two warnings before the dismissal, we held the commissioner was well within its discretion in ordering dismissal of the claimant’s contested case. Id.

In Aluminum, Co. of America v. Musal, the claimant failed to file a brief in support of his appeal, and the employer failed to file a brief in support of its cross-appeal. 622 N.W.2d at 477. After the case sat idle for more than a year, the commissioner filed an appeal decision increasing the claimant’s disability rating. Id. The employer petitioned for judicial review, claiming the commissioner had no power to review the deputy’s decision because the claimant had failed to file a brief identifying the issues to be decided on appeal. Id. The district court reversed, vacated the commissioner’s decision, and reinstated the deputy’s decision. Id. The claimant appealed, contending that because the procedural rules governing appeals to the commissioner do not require, but only permit, briefs to be filed, the notice of appeal authorizes the commissioner to generally review a deputy’s decision if briefs are not filed. Id. at 478. The employer contended that both the Iowa administrative rules and due process require the issues in an appeal to be identified before the commissioner is authorized to enter a decision. Id.

Viewing the methods by which an appeal can be considered by the commissioner, we concluded that whether the parties filed an appeal or the commissioner considered the case on its own motion, “the rules clearly contemplate that the issue or issues for review will be identified.” Id. We also recognized the commissioner’s authority to impose sanctions, including dismissal, for failure to comply with the rules. Id.

Relying on Iowa Code section 17A.15(3), we reasoned:

Once a case comes before the commissioner by notice of appeal or sua sponte review, the commissioner is empowered to make the final decision. Thus, we conclude the commissioner was authorized in this case to enter a decision even though the parties did not file briefs or identify issues for review.

Id. at 478-79 (citation omitted).

However, because this was a review by the commissioner on its own motion, we held — consistent with due process and statutory procedures — that the same rules which apply to cases coming before the commissioner by notice of appeal apply to the commissioner’s sua sponte review. Id. at 479. Consequently, the commissioner had to give notice of the issues it would consider and allow the parties to file briefs. Id. at 480. We concluded that the district court should have remanded the case to the commissioner, and given the commissioner the option of imposing sanctions or notifying the parties of the review to be taken. Id. Of course, one of the sanctions the commissioner could impose on remand was dismissal of the appeal for failure to file a brief. Id. at 478; see Iowa Admin. Code r. 876 — 4.36.

Here, the commissioner ordered Marovec to show good cause why his appeal should not be dismissed for failing to file a brief as required by the rules. Ma-rovec’s only response was that his failure to file a brief was “due to an oversight.”

We have defined “good cause” in the context of setting aside a default judgment:

A “good cause” ... is a sound, effective and truthful reason. “It is something more than an excuse, a plea, apology, extenuation, or some justification, for the resulting effect.” It is then clear that the facts of each case govern the determination of whether the trial court’s action was proper.

Handy v. Handy, 250 Iowa 879, 883, 96 N.W.2d 922, 925 (1959) (citation omitted).

Marovec’s response appears truthful, but it is not anything more than an excuse. We have held that oversight is insufficient cause for failing to follow court rules. See Peoples Natural Gas Co. v. City of Hartley, 497 N.W.2d 874, 875-76 (Iowa 1993) (district court did not abuse its discretion denying party’s motion for jury trial when party’s failure to file timely jury demand was due to inadvertence and oversight); Schloemer v. Uhlenhopp, 237 Iowa 279, 284-85, 21 N.W.2d 457, 459 (1946) (“It appears affirmatively that appellant’s attorney was familiar with the Rule [concerning jury demands]. Appellant must be held responsible for his attorney’s knowledge of the Rule and for the inadvertence that resulted in failure to observe it. We cannot say there was an abuse of discretion in denying his motion for jury trial. To hold otherwise would be a virtual annulment of the Rule.”).

According to statute, administrative rules, and case law, the commissioner certainly had discretion to dismiss the appeal. Imposing a sanction permitted by agency rule is not clearly irrational or unreasonable when, as here, the reason for the sanction is obvious: Marovec — without good cause — failed to file an appeal brief in a timely manner. Moreover, we must keep in mind that we are required to give deference to the commissioner’s decision to dismiss the appeal. Iowa Code § 17A.19(ll)(c); see also Cowitz v. Alaska Workers’ Comp. Bd., 721 P.2d 635, 637-38 (Alaska 1986) (affirmed court’s order dismissing an administrative appeal for lack of diligent prosecution; appellant had responsibility to file brief and had no valid reason for not doing so; court rule allowed dismissal on its own motion even when notice of default had not been given); Kuvaja v. Bethel Sav. Bank, 495 A.2d 804, 806-07 (Me.1985) (claimant filed motion to dismiss employer’s appeal for want of prosecution based on rule allowing dismissal for want of prosecution; applying a fundamental fairness analysis, court concluded agency acted within its discretion in dismissing employer’s appeal when employer had “abundant” time to prepare brief, had actual notice of briefs due date, and did not file a brief until it was made aware of its default by the claimant’s motion to dismiss); McElreath v. Wyoming, 901 P.2d 1103, 1104, 1106 (Wyo.1995) (district court’s dismissal of appeal for filing a notice of appeal rather than a petition for review was a harsh but permissible sanction, given that another rule provided for dismissal for the failure to comply with appellate rules).

At first blush, the decision to dismiss the appeal may seem harsh in light of the circumstances: dismissal was not required by agency rules, and the commissioner had received briefs from both parties on the substantive issues by the time she ruled on the order to show cause. However, several factors mitigate any such apparent harshness.

First, the commissioner gave Marovec the opportunity to provide a good reason for his failure to file a brief. We must assume that had he done so, the commissioner would not have dismissed the appeal. But as mentioned, the only reason Marovec could provide was his counsel’s inadvertence, which was not good enough.

Second, we must keep in mind that we are dealing with an agency and not the district court. The difference becomes apparent when one contrasts, for example, the district court’s authority to dismiss an action for failure to comply with a discovery order with the commissioner’s authority to dismiss an appeal for failure to comply with the commissioner’s rules. Administrative rule 876 — 4.35 recognizes this difference. It states that our rules of civil procedure which apply to the district court do not apply to contested cases before the commissioner when such rules are “in conflict with [the commissioner’s] rules” or “obviously inapplicable to the ... commissioner.” Iowa Admin. Code r. 876' — 4.35. In such instances, the commissioner’s “rules or the appropriate Iowa Code section shall govern.” Id. As mentioned, a special statute expressly allows the commissioner to adopt and enforce rules to implement Iowa Code chapter 86. See Iowa Code § 86.8(1). Another statute states that any aggrieved party “may appeal to the workers’ compensation commissioner in the time and manner provided by rule.” Id. § 86.24(1) (emphasis added). Pursuant to these statutes, an administrative rule allows the commissioner to dismiss an appeal for failure to comply with the commissioner’s rules. See Iowa Admin. Code r. 876' — 4.36 Obviously, because of these statutes and administrative rules, Iowa’s civil procedure rules dealing with sanctions for failure to comply with discovery orders, for example, simply do not apply to the commissioner’s authority to dismiss an appeal for failure to comply with the commissioner’s rules. Compare Iowa R. Civ. P. 1.517(2) (listing a number of sanctions the district court may impose, including dismissal, in discovery matters for failure to comply with court order), with Iowa Code §§ 86.8(1), 86.24(1), and Iowa Admin. Code r. 876— 4.36; see also Iowa Admin. Code r. 876— 4.35.

These differences become important because we have insisted that before the district court may dismiss an action for failure to comply with a discovery order there must be a finding that the failure to comply was a result of willfulness, fault, or bad faith. Kendall/Hunt Publ’g Co. v. Rowe, 424 N.W.2d 235, 240 (Iowa 1988). We see nothing in the statutes or administrative rules which we have cited that impose a similar requirement when the commissioner dismisses an appeal for failure to comply with the commissioner’s rules.

Third, Marovec had his day in court and what he lost was his right to have the commissioner consider his appeal. In contrast, plaintiffs in the district court lose their day in court if dismissal is the sanction. Clearly, the loss in the latter case is more extreme, and for that reason extra precaution, as mandated by Kendall/Hunt, is essential.

Fourth, we are duty bound by statute to give deference to the commissioner’s decision in these matters. See Iowa Code § 17A.19(ll)(c). Deference means to yield judgment. Webster’s Third New International Dictionary 591 (2002). In short, whether or not to impose the sanction of dismissal is a judgment call on the commissioner’s part. It is of no concern to a court reviewing an administrative sanction whether a different sanction would be more appropriate or whether a less extensive sanction would have sufficed; such matters are the province of the agency. 2 Am.Jur.2d Administrative Law § 453, at 388 (2004); cf. Cal. Real Estate Loans, Inc. v. Wallace, 18 Cal.App.4th 1575, 23 Cal.Rptr.2d 462, 465 (1993) (“Neither a trial court nor an appellate court is free to substitute its discretion for that of an administrative agency concerning the degree of punishment imposed.”); Yeksigian v. City of Chicago, 231 Ill.App.3d 307, 172 Ill.Dec. 731, 596 N.E.2d 10, 14 (1992) (“The mere fact a reviewing court considers a different sanction more appropriate does not render a decision arbitrary”).

Last, we must also keep in mind the purpose behind the workers’ compensation act:

“The fundamental reason for the enactment of [the workers’ compensation act] is to avoid litigation, lessen the expense incident thereto, minimize appeals, and afford an efficient and speedy tribunal to determine and award compensation under the terms of this act.

‘It was the purpose of the legislature to create a tribunal to do rough justice — • speedy, summary, informal, untechnical. With this scheme of the legislature we must not interfere; for, if we trench in the slightest degree upon the prerogatives of the commission, one encroachment will breed another, until finally simplicity will give way to complexity, and informality to technicality.’ ”

Zomer v. West River Farms, Inc., 666 N.W.2d 130, 133 (Iowa 2003) (emphasis added) (quoting Flint v. City of Eldon, 191 Iowa 845, 847, 183 N.W. 344, 345 (1921) (citation omitted)). Those words are as true today as they were eighty-four years ago.

Because the commissioner has the responsibility for deciding cases in an expeditious and timely manner, we must not “trench in the slightest degree upon the prerogatives of the [commissioner]” in this area. Id. On this record, we cannot say that Marovec has established that the commissioner abused her discretion in dismissing his appeal.

V. Disposition.

Finding no abuse of discretion regarding the commissioner’s decision to dismiss Ma-rovec’s appeal, we affirm the decision of the court of appeals and the judgment of the district court.

DECISION OF COURT OF APPEALS AND JUDGMENT OF DISTRICT COURT AFFIRMED.

All justices concur except CARTER, J„ who takes no part, CADY, J., who dissents and WIGGINS, J„ who dissents.