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Lighthouse Resources Inc. v. Inslee

United States District Court, W.D. Washington, Tacoma

April 1, 2019

LIGHTHOUSE RESOURCES INC., et al., Plaintiffs,
JAY INSLEE, et al., Defendants, and BNSF RAILWAY COMPANY Intervenor-Plaintiff, and WASHINGTON ENVIRONMENTAL COUNCIL, et al., Intervenor-Defendants.


          ROBERT J. BRYAN United States District Judge

         The Court requested that the parties be prepared to discuss, on March 26, 2019, Pullman abstention, pending state matters, and authority to grant Plaintiffs' prayers. Oral argument on those matters was heard on March 26, 2019.

         That argument, and the Court's research, led to the observations set out below. Counsel may wish to add to the briefing on these matters before the Court makes definitive rulings. While this is an unusual procedure, it appears to the Court that the parties differ widely in regard to the law to be applied at the upcoming trial, scheduled for 13 May 2019. It will be of benefit to all parties to resolve the issues presented here well in advance of the trial date.

         Current work on this case has centered on the Washington State Department of Ecology's §401 Water Quality Certification Denial. (Dkt. 1-*1). The Court is mindful that there are other permits and events at issue within the scope of the case, but will focus on the §401 denial here, as counsel has done.

         Preclusive Effect of Pollution Control Hearings Board Decision and Other Administrative Decisions

         Under the Full Faith and Credit Act, 28 U.S.C. § 1738, federal courts give “the same preclusive effect to a state-court judgment as another court of that state would give.” The federal common law rules of preclusion apply to “state administrative adjudications of legal as well as factual issues, even if unreviewed, so long as the state proceeding satisfies the requirements of fairness outlined in United States v. Utah Construction & Mining, 384 U.S. 394, 422 (1966).” Miller v. County of Santa Cruz, 39 F.3d 1030, 1032-1033 (9th Cir. 1994). The Utah Construction test requires: (1) that the administrative agency act in a judicial capacity, (2) that the agency resolve disputed issues of fact and law properly before it, and (3) that the parties have an adequate opportunity to litigate. Id., at 1033. Washington courts also recognize that decisions of administrative bodies may have preclusive effect. Reninger v. Dept. of Corrections, 134 Wash.2d 437, 449 (1998). The Washington test, like the Utah Construction test, considers whether the administrative body was acting within its jurisdiction when it made factual and legal determinations, it examines procedural differences between Washington courts and the administrative body, and adds policy considerations. Id.

         Here, the test under both Utah Construction and Washington law are met. First, the Pollution Control Hearings Board was acting in a judicial capacity when it made factual and legal decisions about the propriety of Bellon's decision to deny the § 401 permit. Second, the parties had an adequate opportunity to litigate, that is, the procedures available in the Pollution Control Hearings Board were adequate: notice was given, the parties had counsel, they had the opportunity to present evidence, they made argument, a written decision was given, they had the right to appeal the decision to the Washington State Superior Court, and did appeal the decision of the Pollution Control Hearings Board to the Cowlitz County, Washington Superior Court. The Plaintiffs argue that because here they assert federal Constitutional violations, there are policy reasons not to give the administrative decision preclusive effect. That assertion rings hollow, because in their appeal to the Cowlitz County Superior Court, two federal constitutional claims are raised pursuant to § 1983. Those claims appear to overlap with the federal Constitutional claims raised in this federal court.

         The decision of the Pollution Control Hearings Board to affirm Defendant Bellon's denial of the § 401 permit appears entitled to preclusive effect. Analysis of the same issue through the rules of collateral estoppel is also appropriate.

         “Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case.” Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000). Washington courts apply collateral estoppel to “(1) identical issues; (2) a final judgment on the merits; (3) the party against whom the plea is asserted must have been a party to or in privity with a party to the prior adjudication; and (4) application of the doctrine must not work an injustice on the party against whom the doctrine is to be applied.” Sprague v. Spokane Valley Fire Dep't, 189 Wn.2d 858, 899 (2018).

         The Pollution Control Hearings Board's decision to affirm Defendant Bellon's denial of the § 401 permit also appears entitled to preclusive effect under the doctrine of collateral estoppel. The issues are identical - the constitutional claims raised here involve the propriety of the grounds for Bellon's denial on the same issues the board was reviewing. The decision was a final judgment on the merits and Lighthouse and BNSF were parties or in privity with parties. Further, as to the fourth element, the “injustice element, ” it “is rooted in procedural unfairness. Washington courts look to whether the parties to the earlier proceeding received a full and fair hearing on the issue in question.” Schibel v. Eymann, 189 Wn.2d 93, 102 (2017). There is no showing that the proceeding before the board was anything but full and fair.

         An obvious issue raised by the preclusive effect of an administrative body's ruling is the finality of such a decision. Here, the Order on Motion for Summary Judgment of the State Pollution Control Hearings Board (Dkt. 130-6) is on appeal to the Superior Court of the State of Washington; a motion requesting that the State Court of Appeals take direct review is pending; the Washington State Supreme Court may also review the actions of the lower courts. A different result may occur at each level.

         The landscape of this federal case may substantially change if the federal court gives full faith and credit not only to the final ruling of the state courts, but to each administrative agency or inferior court's ruling as the state record stands at the time of any federal trial. The risk of injustice is high on these shifting sands. Nevertheless, the law seems clear - the federal court must give full faith and credit to the state rulings on both facts and law as they stand at the time of trial, or at the time other issues - such as motions for summary judgment - are presented to the federal court for decision.

         In this case, the Pollution Control Hearings Board Order on Summary Judgment appears entitled to full faith and credit and apparently removes a great deal from the federal court issues to be decided at trial - notably, that the Department of Ecology's denial of the §401 certificate was not arbitrary, capricious, or contrary to law, that it was proper to include SEPA considerations in the §401 denial, and to include the words “with prejudice” in the denial.

         A careful reading of every relevant state ruling is called for to determine admissibility of evidence ...

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