Northwestern Title Loans, LLC v. Division of Finance & Corporate Securities

42 P.3d 313, 180 Or. App. 1, 2002 Ore. App. LEXIS 407

• Court: Court of Appeals of Oregon
• Decided: March 13, 2002
• Docket: A113713
• Status: Published

Opinions

DEITS, C. J.

Pursuant to ORS 183.400(1),¹ Northwestern Title Loans has petitioned for judicial review of a rule promulgated by the Division of Finance and Corporate Securities of the Department of Consumer and Business Services (DCBS) limiting petitioner’s ability to make and roll over short-term loans. See OAR 441-730-0270. In conjunction with its petition, petitioner has moved to stay enforcement of the challenged rule. The primary question presented here is whether this court has the authority to stay enforcement of an administrative rule pending judicial review of the rule under ORS 183.400(1). We hold that the court does have such authority. However, we also conclude that petitioner has not demonstrated that the court should stay the challenged rule pending judicial review, and, therefore, we deny the motion to stay.

We begin with the text and context of ORS 183.400(1). See PGE v. Bureau of Labor and Industries, 317 Or 606, 610-11, 859 P2d 1143 (1993). In relevant part, ORS 183.400(1) provides: “The validity of any rule may be determined upon a petition by any person to the Court of Appeals in the manner provided for review of orders in contested cases.” Arguably, the text of ORS 183.400(1) could be read as authority for the issuance of a stay by this court. As noted, the statute provides that this court shall determine the validity of any rule “in the manner provided for review of orders in contested cases.” ORS 183.482 is one of the statutes that addresses the manner in which this court reviews orders in contested cases. That statute contains a stay provision, ORS 183.482(3).² Consequently, it could be said that ORS 183.400(1) incorporates the stay provisions for review of orders in contested cases into judicial review of rules.

We are not convinced, however, from the text of ORS 183.400(1) that the legislature intended to incorporate the stay provisions. As the concurrence points out, a number of the provisions relating to judicial review of contested cases simply do not make sense in the context of judicial review of a rule. 180 Or App at 18-19 (Brewer, J., concurring). Consequently, the statutory text does not provide a clear answer to the question of whether this court has the authority to issue a stay in a rule review proceeding.

Petitioner, in fact, does not contend that the text of ORS 183.400 authorizes this court to stay enforcement of an administrative rule that is the subject of a petition for judicial review under that statute. It is petitioner’s position that this court has the inherent powers of a court of equity, including the inherent power to grant injunctive relief, and that this court may invoke that power to stay enforcement of an administrative rule pending direct judicial review under ORS 183.400(1). We agree that we have the inherent powers of a court of equity and that those powers include the authority to grant provisional, including injunctive, relief. Blair v. Blair, 199 Or 273, 287, 247 P2d 883, 260 P2d 960 (1953) (“[T]he granting of appellate jurisdiction necessarily vests in this court the power to stay * * * an order [transferring custody] pending an appeal, and that such power is of the incidental nature required to make the granted jurisdiction effective.”); Helms Groover & Dubber Co. v. Copenhagen, 93 Or 410, 416, 177 P 935 (1919) (as a general rule, both a circuit court and an appellate court have inherent power to grant a stay of proceedings pending an appeal even when there is no statute entitling a party to a stay); Livesley v. Krebs Hop Company, 57 Or 352, 356-57, 97 P 718, 107 P 460, 112 P 1 (1910) (concluding that court has incidental power to issue restraining order); Armatta v. Kitzhaber, 149 Or App 498, 501, 943 P2d 634 (1997) (the Court of Appeals has inherent authority to stay an injunction that bars the state from enforcing a provision of a ballot measure enacted by the voters).³

Respondent appears to agree that, generally, this court has inherent authority, but it argues that a court’s inherent power to grant provisional relief is subject to limitation by the legislature and that, here, the legislature has enacted a statutory scheme showing a deliberate choice not to give this court authority to grant a stay in a rule review proceeding. In Blair, the Supreme Court explained:

“It is the general rule that either the lower or appellate court, according to the circumstances, has inherent power to grant a stay of proceedings pending an appeal even where there is no statute entitling a party to such stay. Where the right to a stay is entirely regulated by statute, or where the statute prescribes the conditions upon which it may be obtained or allowed, the courts cannot grant a stay of proceedings in a case which is not within the statute, or in the absence of compliance with the prescribed conditions[.]” 199 Or at 284 (emphasis added; citations omitted).

As noted above, the critical question presented here is whether the authority of this court to stay enforcement of an administrative rule in the course of a direct rule review proceeding under ORS 183.400(1) is entirely regulated by statute. If not, the court may act pursuant to its inherent authority and determine whether the issuance of a stay is appropriate in this case. For the reasons we will discuss, we conclude that this matter is not entirely regulated by statute; indeed, it may not be regulated by statute at all. Consequently, it is within the court’s inherent authority to issue a stay in a rule review case.

In the first level of analysis of a statute under PGE, we consider previous versions of a statute. See Owens v. Maass, 323 Or 430, 435, 918 P2d 808 (1996) (related statutory provisions, applicable case law interpreting those other provisions, and prior legislative changes constitute context). ORS 183.400(1) is a part of the Administrative Procedures Act (APA). The APA was first enacted in 1957. Or Laws 1957, ch 717. As initially enacted, the APA divided agency actions into two groups: rulemaking and adjudication of contested cases. Or Laws 1957, ch 717, §§ 3, 8. The APA authorized review of “final decision[s] in * * * contested case[s]”in circuit court. Or Laws 1957, ch 717, § 12(1). It also specifically authorized either the agency or the circuit court to issue a stay pending review of a final decision in a contested case, and it set out the terms on which a stay could be granted. Or Laws 1957, ch 717, § 12(3).⁴ Regarding rules, the act provided that the “validity of any rule may be determined upon a petition for a declaratory judgment thereon filed as provided by ORS chapter 28 for declaratory judgment in actions at law or suits in equity.” Or Laws 1957, ch 717, § 6(1). The 1957 APA did not specifically authorize either the agency or the reviewing court to stay the effect of a rule pending review, as it did with respect to final decisions in contested cases.

Since 1957, the legislature has amended the APA numerous times. It has expanded judicial review to include orders in other than contested cases. See Or Laws 1971, ch 734, § 18. It also has transferred jurisdiction to hear a rule challenge under ORS 183.400 from the circuit courts to the Court of Appeals. Or Laws 1975, ch 759, § 9. However, the initial distinction that it made in 1957 has remained. The present version of the APA continues to authorize an agency to stay an order in a contested case, establishes the terms on which an order may be stayed, and provides for review in the Court of Appeals of an agency’s denial of a motion for stay. ORS 183.482(3)(a) to (d). In contrast, ORS 183.400(1) does not explicitly provide a procedure by which either the agency or a court may stay the agency’s rule unless, as discussed above, it can be said that ORS 183.400(1) incorporates the stay provisions for review of contested cases.

Respondent argues that the evolution of the APA generally, and ORS 183.400 in particular, especially the legislature’s failure to grant explicit authority to this court to issue stays, while at the same time explicitly giving the court the authority to stay enforcement of orders in contested cases, indicates a legislative intent that this court should not have such authority in rule review cases. We do not agree.

As noted above, when the APA was originally enacted in 1957, ORS 183.400 provided, in part, that the validity of any rule could be determined by a petition for declaratory relief filed in the circuit court:

“The validity of any rule may be determined upon a petition for a declaratory judgment thereon filed as provided by ORS chapter 28 for declaratory judgment in actions at law or suits in equity. The agency shall be made a party to the proceeding. The declaratory judgment may be rendered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question. However, this section shall not apply in any case where the petitioner is not bound by law to any course of conduct until after hearing required by law by the agency concerned. In such a case, the court may determine the validity of the rule, as provided in subsection (2) of this section, upon review of the order issued on such hearing, as provided by law or in ORS 183.310 to 183.510.” ORS 183.400(1) (1957).

In 1971, the legislature amended ORS 183.400 by breaking subsection (1) into two subsections and by deleting words from and adding words to both subsections. As relevant here, the legislature added to ORS 183.400(1) the words italicized:

“The validity of any rule may be determined upon a petition for a declaratory judgment thereon filed as provided by ORS chapter 28 if the rule, or its threatened application, interferes with or impairs, or threatens to interfere with or impair, the rights, privileges or substantial interests of the petitioner. The agency shall be made a party to the proceeding. The declaratory judgment may be rendered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question, but not when the petitioner is a party to an order or a contested case in which the validity of the rule may be determined by a court.” ORS 183.400(1) (1971); Or Laws 1971, ch 734, § 9.

There is no question that, at the time of that amendment, the circuit court in the exercise of its declaratory relief jurisdiction could have enjoined or stayed enforcement of an ordinance or statute.⁵ See Alum. Utensil Co. et al v. North Bend et al, 210 Or 412, 419-23, 311 P2d 464 (1957), and the cases collected therein dating back to 1905 (if the threatened enforcement of an allegedly invalid ordinance or statute may harm the property rights of a party, the court has authority to issue an injunction to prevent the threatened harm from occurring).

Although neither Alum. Utensil Co. nor any of the cases it cites concerned a state administrative rule, there is no reason to believe that a state administrative rule would have been treated differently from a state statute or a municipal ordinance. Indeed, the reference in ORS 183.400(1) (1971) to the threatened application of a rule or the threatened interference with or impairment of any right or substantial interest of the petitioner suggests that the legislature contemplated that a party whose rights or interests were threatened by a state administrative rule could seek provisional relief to prevent the anticipated or prospective harm from occurring during the pendency of the declaratory relief action.

As noted above, in 1975, when the legislature transferred jurisdiction for direct judicial review of the validity of administrative rules from the circuit court to the Court of Appeals, the Court of Appeals, like the circuit court, had the inherent authority to grant provisional relief. There is no indication in the text of ORS 183.400, when it was amended to transfer jurisdiction for direct judicial review of administrative rules from the circuit court to the Court of Appeals, that the legislature intended to limit the inherent authority of the Court of Appeals to grant provisional relief in the form of a stay of enforcement of the subject of the proceeding.⁶ We believe it is unlikely that the 1975 Legislative Assembly, which was aware of the authority of the circuit court to grant provisional relief in a declaratory judgment action for review of an administrative rule and the inherent authority of the Court of Appeals to grant provisional relief, intended, by its silence, to deprive the Court of Appeals of the authority to grant provisional relief in such cases.

We also do not believe that it is significant that the legislature chose to enact a provision specifically authorizing the court to grant stays in its review of contested cases but did not include specific language authorizing the court to issue stays in rule review cases. As explained above, a circuit court’s inherent authority to issue stays in declaratory judgment type proceedings was firmly established, so there would have been no need for the legislature to reiterate that authority in a statute. Likewise, when the legislature transferred jurisdiction for direct judicial review of rules to the Court of Appeals, this court’s inherent authority to grant provisional relief was well established. Therefore there would have been no need to reiterate that authority in ORS 183.400(1). In contrast, in 1975, this court’s authority to review contested cases was a new and different type of proceeding, and it is not surprising that the legislature was more explicit in defining the court’s authority, including enacting specific provisions for granting stays. Our review of the pertinent statutes and their history indicates that this court’s authority to issue stays in these circumstances has not been entirely regulated by statute and, accordingly, that the issuance of a stay in a rule review proceeding is within the court’s inherent authority.

Our holding in this case is not inconsistent with pertinent case law. In Hay v. Dept. of Transportation, 301 Or 129, 137-38, 719 P2d 860 (1986), for example, the court noted that a direct rule review proceeding under ORS 183.400(1) is not the exclusive means for challenging the validity of a rule, because such a proceeding might not afford a party all of the relief to which the party was entitled. In making that point, the court relied on a quotation from a law review article that stated that the circuit court was the only forum available to grant injunctive relief in a rule review proceeding. The court did not, however, expressly adopt that view. The court in Hay held only that, when a party places a rule’s validity at issue in a civil action, the jurisdiction of the Court of Appeals is not exclusive and the circuit court may consider challenges tó the rule’s validity. 301 Or at 138. That the circuit court has authority to grant provisional relief from an administrative rule in a civil action filed in the circuit court is a very different issue and is in no way inconsistent with the Court of Appeals having the same authority to grant provisional relief in the course of a direct rule review proceeding under ORS 183.400(1).

Nor is our conclusion in this case inconsistent with the Supreme Court’s decision in Alto v. State Fire Marshal, 319 Or 382, 876 P2d 774 (1994). In that case, the plaintiffs sought declaratory and injunctive relief in circuit court concerning rules adopted by the State Fire Marshal that interpreted the phrase “at retail” in relation to self-service gasoline pumping facilities. The fire marshal argued that the circuit court lacked jurisdiction, because the plaintiffs primarily sought a determination of the validity of an administrative rule and the injunctive relief sought would merely flow from that determination. The Supreme Court noted that a challenge to the validity of a rule could be brought in circuit court in an action that involved enforcement of a rule, as provided in ORS 183.400(2). Alto, 319 Or at 392. However, fatally to the plaintiffs’ cause in that case, the plaintiffs had conceded in circuit court that the subject matter of the case was “what does ‘at retail’ mean” and “ftjhe subject isn’t even enforcement.” Id. at 393 (emphasis in original). The Supreme Court said that it was apparent from the circuit court’s findings of fact and conclusions of law that the essence of the plaintiffs’ inquiry was the fire marshal’s interpretation of a statutory term in the promulgation of the challenged rule. Id. at 393. As it turned out in that case, although the challenged rules had been adopted by the agency, the rules had not yet gone into effect. Because the challenged rules were not yet in effect, the only relief the circuit court could have granted was an injunction against the rules going into effect. With respect to that issue, the court held: “Injunctive relief was not necessary under these circumstances because we assume that the defendant state agency will, in the absence of an injunction, follow the law as a court decides it on review of the validity of a rule under ORS 183.400.” Alto, 319 Or at 395. Because all that remained of the plaintiffs’ case was the challenge to the validity of the rules, the court held that the Court of Appeals had exclusive jurisdiction to consider that challenge under ORS 183.400(1).

Again, this case presents very different circumstances. The rule being challenged here already has gone into effect, and petitioner contends that its compliance with the rule will cause it irreparable harm. Moreover, like Hay, Alto concerned the authority of the circuit court to entertain a declaratory relief action challenging the validity of a rule. The outcome of that question has no bearing whatsoever on the question of the authority of the Court of Appeals to stay enforcement of an administrative rule pending direct judicial review of the rule under ORS 183.400(1). For the reasons discussed above, we conclude that this court’s authority to issue a stay in a rule review proceeding brought under ORS 183.400(1) has not been entirely regulated by statute and, consequently, the court may issue a stay in this type of proceeding pursuant to its inherent authority.

Finally, the concurrence states that it is incongruous that this court could consider, for the purpose of deciding whether to stay enforcement of a rule, application of the challenged rule to the challenger’s particular circumstances, whereas the rule challenge itself is limited to a facial challenge. There is no incongruity, however, because the purposes of the two kinds of relief are different. The purpose of a rule challenge under ORS 183.400 is to determine whether the rule violates constitutional provisions, exceeds the statutory authority of the agency, or was adopted without compliance with rulemaking procedures. The purpose of a stay is to prevent harm to the party challenging the rule during the period of time that the court is considering the challenge. It is no surprise, then, that a court considering a stay would consider facts peculiar to the challenger that would have no bearing on the challenge to the validity of the rule itself. The same is true in other cases in which a party seeks a stay as relief ancillary to the primary relief sought. Indeed, in a motion for stay of an agency order in a contested case under ORS 183.482(3), the petitioner is required to state facts showing how the agency’s order will irreparably injure the petitioner, facts that may not be in the agency record at all. Thus, the fact that a motion for a stay pending judicial review may require reference to facts not involved in the rule challenge itself does not suggest that the legislature intended that a person seeking to invalidate an agency rule must seek a remedy in some other forum if the only other relief the person seeks is temporary relief from the rule pending the challenge.

Turning to the merits of this request for a stay pending review of the challenged rules, we conclude that petitioner has not demonstrated that it is entitled to a stay in this case. Petitioner is required to show, at the least, that the failure to grant a stay will result in irreparable harm to its rights.⁷ See Alum. Utensil Co., 210 Or at 421-23. As the plaintiff argued in Alum. Utensil Co. with respect to the municipal ordinance being challenged in that case, petitioner here argues that enforcement of the challenged administrative rules will put it out of business altogether. Petitioner argues that, if it goes out of business and ceases to exist, this judicial review proceeding will become moot. Respondent points out, however, that petitioner is a Georgia corporation and, although its business operations in Oregon may become unprofitable, petitioner will not cease to exist and petitioner will be able to continue business as this rule review proceeding progresses. Moreover, respondent has appended to its response to petitioner’s motion a document entitled “Best Practices for the Payday Advance Industry,” describing practices that are similar to the challenged administrative rules. According to respondent’s program manager, the majority of lenders like petitioner subscribe to those practices and remain in business.

In summary, we hold that this court has authority to stay enforcement of administrative rules in an ORS 183.400(1) rule review proceeding but, under the circumstances of this case, petitioner has not demonstrated that it is entitled to a stay of enforcement of the rules pending judicial review.

Motion for stay denied.

1 In relevant part, ORS 183.400 provides:

“(1) The validity of any rule may be determined upon a petition by any person to the Court of Appeals in the manner provided for review of orders in contested cases. The court shall have jurisdiction to review the validity of the rule whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question, but not when the petitioner is a party to an order or a contested case in which the validity of the rule may be determined by a court.

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“(3) Judicial review of a rule shall be limited to an examination of:

“(a) The rule under review;

“(b) The statutory provisions authorizing the rule; and

“(c) Copies of all documents necessary to demonstrate compliance with applicable rulemaking procedures.

“(4) The court shall declare the rule invalid only if it finds that the rule: “(a) Violates constitutional provisions;

“(b) Exceeds the statutory authority of the agency; or

“(c) Was adopted without compliance with applicable rulemaking procedures.”

2 ORS 183.482 provides, in part:

“(3)(a) The filing of the petition shall not stay enforcement of the agency order, but the agency may do so upon a showing of:

“(A) Irreparable injury to the petitioner; and

“(B) A colorable claim of error in the order.

“(b) When a petitioner makes the showing required by paragraph (a) of this subsection, the agency shall grant the stay unless the agency determines that substantial public harm will result if the order is stayed. If the agency denies the stay, the denial shall be in writing and shall specifically state the substantial public harm that would result from the granting of the stay.

“(c) When the agency grants a stay it may impose such reasonable conditions as the giving of a bond, irrevocable letter of credit or other undertaking and that the petitioner file all documents necessary to bring the matter to issue before the Court of Appeals within specified reasonable periods of time.

“(d) Agency denial of a motion for stay is subject to review by the Court of Appeals under such rules as the court may establish.”

3 Some of the cited cases suggest that an appellate court’s power to grant an injunction is limited to those circumstances in which the status quo must be maintained in order to preserve the subject matter jurisdiction of the court. However, those were not the circumstances in Livesley and, at least by the time that Blair was decided, the power to issue an injunction extended to those situations where, without regard to a loss of subject matter jurisdiction, an appellate court could grant a stay or injunctive relief to prevent irreparable harm to the appellant or petitioner.

4 The 1957 APA provided: “The filing of the petition shall not stay enforcement of the agency decision, but the agency may do so, or the reviewing court may order a stay upon the giving of a bond or other undertaking or upon such other terms as it deems proper.” Or Laws 1957, ch 717, § 12(3).

5 A request to stay enforcement of an administrative rule is essentially the functional equivalent of a request to enjoin enforcement of an administrative rule. When such a request is made before judicial review of an administrative rule is conducted, a motion to stay enforcement of the rule is a form of provisional relief. See generally ORCP 83 (regarding provisional relief that a circuit court may grant).

6 Although we need not resort to legislative history to resolve the issue presented, the legislative history is not inconsistent with our conclusion. Chapter 759 of Oregon Laws 1975 contains enrolled House Bill 2068. We have reviewed the minutes of committee hearings on that bill, written testimony and exhibits submitted at those hearings, and the various iterations of the bill as it made its way from initial introduction to eventual passage. Section 9 of that bill, amending ORS 183.400, does not appear to have been controversial. Apart from the sponsor of the bill briefly explaining the purpose of section 9 (to move jurisdiction for judicial review from the circuit court to the Court of Appeals) and a brief explanation of the policy reasons for that change (administrative agency cases generally are less expensive to litigate in the Court of Appeals and that forum has the advantage of resulting in a published decision that may be used for future similar cases), neither the witnesses testifying regarding the bill nor any legislators voting on the bill commented on section 9.

7 Arguably, we could apply a standard analogous to that used in reviewing requests for stays under ORS 183.482 in order to determine if a stay is appropriate in ORS 183.400 rule review proceedings. See Evans v. OSP, 87 Or App 514, 524, 743 P2d 168 (1987) (adopting ORS 183.482 criteria for stays, with certain modifications, in proceeding in which the APA did not directly apply). Under such a standard, in addition to demonstrating irreparable harm, a petitioner would have to establish a colorable claim of error. It is not necessary in this case to decide whether a petitioner should have to establish a colorable claim of error in these circumstances because, in any event, petitioner here has not established irreparable harm.