The Substantial Evidence Standard of Reviewing Administrative Fact-Findings Is Unconstitutional
Federal court appellate rules (and most state appellate and high courts) require party briefs to include a “standard of review” section (Federal Rule of Appellate Procedure 28(a)(8)(B)). Lawyers tend to pay little, if any, attention to this section. Usually, a single sentence from some random case can be copy-pasted into the brief, saying: questions of law are reviewed de novo, and the trial court’s findings of fact and credibility assessments need to be supported by substantial evidence.
In seeking judicial review of administrative decisions, the standards of proof and review, which are thought to be well-established and beyond reproach, create some special problems. There are frustratingly few cases that have attempted to take a closer look at how the lax (or, sometimes, nonexistent) standards of proof, evidence, and procedure in administrative adjudications, coupled with the substantial-evidence standard of appellate review applied by courts reviewing administrative fact-finding, deprive non-governmental litigants of their civil liberties.
Evan D. Bernick and John Gibbons have presented persuasive arguments in their respective law review articles as to why judicial deference to administrative fact-finding is unconstitutional. Bernick argues that such fact deference violates both Article III and the Fifth Amendment’s Due Process Clause. Gibbons argues that jury-less administrative fact-finding fails the Seventh Amendment. Bernick proposes an alternative: de novo determination of questions of fact in Article III courts. Gibbons’ proposed alternative mirrors Bernick’s: fact-finding should occur in federal courts in the first instance.
NCLA’s original litigation, Phillip B. v. Faust, brings to light this unconstitutional coupling of administrative fact-finding with the deferential substantial evidence standard of judicial review. Mr. B., whose name is protected in compliance with court rules, underwent an administrative hearing in front of an Administrative Law Judge (ALJ) of the Arizona Office of Administrative Hearings (OAH). OAH is an Arizona state agency comprised of a pool of ALJs who preside over administrative adjudications arising out of almost all Arizona state agencies.
The ALJ conducted a two-day trial where eyewitnesses presented sworn and fully cross-examined testimony. The ALJ adhered to rules of evidence and rules of procedure—rules that are designed to protect the due process rights of all litigants. At the conclusion of that bench trial, the ALJ found facts and assessed credibility of witnesses, all of which went in Mr. B.’s favor. Based on those facts, the ALJ entered conclusions of law that gave Mr. B. a resounding victory over DCS’s false accusations of child abuse leveled against him.
Dissatisfied with the ALJ’s decision, DCS appealed the decision to DCS’s Director. The DCS Director can statutorily reject or modify the ALJ’s credibility assessments and findings of fact without ever observing live witness testimony. And that’s what the Director did. He was never in the ALJ’s courtroom, yet he deleted key ALJ findings of fact and credibility assessments and inserted his own alternative set of facts—which were unsworn, never proved at trial, and subject to neither confrontation nor cross-examination. Based on the alternative facts, he concluded that Mr. B. was guilty.
On appeal to the state trial court, the court deferred under the substantial evidence standard to the DCS Director’s findings of fact and credibility assessments—not to the ALJ’s. To be sure, fact-finding deference itself is unconstitutional for the reasons Bernick and Gibbons state. Such deference assuredly deprives non-governmental litigants like Mr. B. of due process because it enables courts to gloss over and whitewash much mischief that occurs during agency adjudications. By empowering an administrative agency to act as the judge and jury in cases where the same agency performs investigatory, accusatory, prosecutorial, and enforcement functions, fact-finding deference also disregards the separation of powers doctrine.
If a court were reluctant to reject the substantial-evidence standard under the due-process, separation-of-powers, or Seventh-Amendment arguments, however, at least it should think carefully as to whether fact-finding deference is due an agency adjudicator who takes sworn, cross-examined witness testimony in the adjudicator’s presence and finds facts on that basis (like the ALJ in Mr. B.’s case)—or whether fact-finding deference given to an agency adjudicator who flouts all rules of evidence, procedure, and proof (like the DCS Director in Mr. B.’s case) is constitutionally permissible. Short of revisiting the constitutionality of the substantial-evidence standard, the court could lessen if not eliminate the risk of erroneously depriving litigants like Mr. B. of their civil liberties if it concludes that substantial evidence applies only as a standard to review the facts found by an agency adjudicator who follows court-style rules of proof, evidence, and procedure.
For Mr. B., answering the fact-finding deference question is imperative because it leads to one of two possibilities—a full exoneration, or a lifelong label attached to his name: child abuser. It would be grave folly for the court to not check the fact-checkers when so much is at stake.
The fact-finding deference question is front and center in Mr. B.’s opening brief in the Arizona Court of Appeals. That case deals with Arizona administrative law. Eventually, a federal court should take a hard look at substantial evidence as a standard of reviewing federal administrative fact-finding. Until then, Mr. B.’s case, along with the Bernick and Gibbons articles, lays the necessary groundwork for such a federal challenge.
January 28, 2021