Day v. Elections Div. of the Sec'y of State

246 Or.App. 140

265 P.3d 16

Ross DAY and David Hunnicutt, Petitioners,

v.ELECTIONS DIVISION OF the SECRETARY OF STATE, Respondent.

2005520; A141017.

Court of Appeals of Oregon.

Argued and Submitted Feb. 4, 2011.Decided Oct. 19, 2011.

Ross Day, Portland, argued the cause for petitioners. With him on the briefs was Common Sense for Oregon, Inc.

Jamie K. Contreras, Assistant Attorney General, argued the cause for respondent. With her on the brief were John R. Kroger, Attorney General, and Jerome Lidz, Solicitor General.

Before ORTEGA, Presiding Judge, and SERCOMBE, Judge, and ROSENBLUM, Senior Judge.

SERCOMBE, J.

Petitioners Day and Hunnicutt were the chief petitioners responsible for the circulation and submission of Initiative Petition 57 (2006). They seek review of a final order of the Secretary of State assessing a civil penalty of $250 against each of them for violating OAR 165–014–0260(5) (Oct 15, 2003),¹ which requires the chief petitioners of an initiative to insure that the persons to whom they delegate the task of obtaining signatures on the petition do not violate Article IV, section 1b, of the Oregon Constitution. That constitutional provision makes it “unlawful to pay or receive money or other thing of value based on the number of signatures obtained on an initiative or 0 referendum petition.” On review, petitioners contend, among other things, that the secretary's order was not supported by substantial evidence in the record. Specifically, petitioners contend that there is insufficient evidence that (1) signature gatherers for Initiative Petition 57 were paid by the signature rather than by the hour and (2) petitioners failed to insure that their agents complied with Article IV, section 1b. We conclude that the order was supported by substantial evidence and affirm.²

The following facts are undisputed. Petitioners contracted with Democracy Direct Inc. (DDI) to gather signatures for Initiative Petition 57. That contract prohibited DDI from paying petition circulators on a per-signature basis. In addition, prior to entering into the contract with DDI, petitioners had a conversation with Trickey, the president of DDI, concerning the practices and procedures to be followed in gathering signatures. DDI then contracted with B & P Campaign Management, Inc. (B & P) to gather signatures for several initiatives, including Initiative Petition 57. B & P employed, among other people, Otti and Jurow to circulate petitions for that initiative.

After petition circulation commenced, petitioners periodically received status updates from Trickey on the progress of signature gathering for Initiative Petition 57. During those discussions, Trickey provided oral assurances that DDI and B & P were complying with Article IV, section 1b. Petitioners relied on those assurances; they made no request for documents, had no direct interaction with B & P, and did not review any payroll records.

The Elections Division of the Secretary of State received a formal complaint alleging that petitioners had violated the pay-per-signature ban in OAR 165–014–0260 and Article IV, section 1b. After an investigation, the Elections Division issued a notice of a proposed civil penalty, and a contested case hearing was held. A hearings officer ultimately issued a proposed order concluding that petitioners had violated the pay-per-signature ban. Specifically, the hearings officer found that two of B & P's employees—Otti and Jurow—were paid by the signature while circulating petitions for Initiative Petition 57 and that petitioners had failed to “insure that [B & P] complied with Article IV, section 1b of the Oregon Constitution,” as required by OAR 165–014–0260. Consequently, the hearings officer imposed a civil penalty of $250 against each of petitioners. The Secretary of State adopted the hearings officer's findings and conclusions in its final order.

Petitioners now seek judicial review of that order. Before we address petitioners' arguments, a review of the legal context of the dispute is helpful. Article IV, section 1b, provides:

“It shall be unlawful to pay or receive money or other thing of value based on the number of signatures obtained on an initiative or referendum petition. Nothing herein prohibits payment for signature gathering which is 0 not based, either directly or indirectly, on the number of signatures obtained.”

The Elections Division of the Secretary of State promulgated a rule to effectuate that constitutional provision. OAR 165–014–0260 provides, in part:

“(1) The purpose of this rule is to interpret Article IV, section 1b of the Oregon Constitution * * *.

“ * * * * *

“(3) Section 1b bans the practice of paying circulators or others involved in an initiative or referendum effort if the basis for payment is the number of signatures obtained. This means that payment cannot be made on a per signature basis. * * *

“ * * * * *

“(5) The phrase ‘directly or indirectly’ in Section 1b means that the chief petitioners who are responsible for the circulation and submission of the initiative or referendum petition cannot directly pay for signature gathering based on the number of signatures obtained, and cannot contract or delegate to another person or entity to obtain signatures and allow the third party to pay circulators on the basis of the number of signatures obtained. However, chief petitioners may contract with a person or entity to manage the signature gathering, and pay the person or entity for services, including the service of qualifying the petition for the ballot, so long as the individuals who actually circulate the petition are not paid based on the number of signatures obtained. The chief petitioners are responsible for insuring that agents of the chief petitioner (anyone who is delegated the task of obtaining signatures on the initiative or referendum petition) do not violate Section 1b.

“(6) Violations of Section 1b will be processed under ORS 260.995 as civil penalties. Penalties may be assessed against chief petitioners or any other persons who either directly or indirectly pay circulators based on the number of signatures obtained. Liability may be imposed on chief petitioners as provided in ORS 260.561.”

(Emphases added.)

On review, petitioners contend that the secretary's order was not supported by substantial evidence. Petitioners challenge the secretary's findings that (1) two petition circulators employed by B & P were paid by the signature and (2) petitioners failed to ensure that petition circulators were not paid by the signature, as required by OAR 165–014–0260. As to the first finding, petitioners argue that the only evidence that Otti and Jurow were paid by the signature is hearsay evidence, which we should disregard in light of the “overwhelming countervailing evidence” that they were paid by the hour. As to the second finding, petitioners argue that they satisfied the requirements of OAR 165–014–0260 by contractually prohibiting DDI from violating Article IV, section 1b, and by obtaining oral assurances from Trickey that subcontractors were complying with the constitutional mandate.

Under ORS 183.482(8)(c), we are required to set aside an agency order in a contested case if we determine “that the order is not supported by substantial evidence in the record. Substantial evidence exists to support a finding of fact when the record, viewed as a whole, would permit a reasonable person to make that finding.” In making that assessment, we do “not substitute [our] judgment for that of the agency as to any issue of fact or agency discretion.” ORS 183.482(7).

Here, the secretary's finding that circulators of Initiative Petition 57 were paid by the signature was based primarily on hearsay and multiple hearsay evidence. That hearsay evidence consisted of statements made by Otti and Jurow to a Department of Justice (DOJ) investigator and to the Bureau of Labor and Industries (BOLI) for the purpose of pursuing wage and hour complaints against B & P. Some of the statements were written by Otti and Jurow and some were contained in reports written by investigators. In substance, the statements asserted that Otti and Jurow had been promised an hourly wage of $14 or $15 per hour, but that their actual pay had been retroactively reduced based on the number of signatures obtained on each petition. According to Otti and Jurow, they had not been asked to document their hours and were paid in cash. Neither individual testified at the hearing.

In general, hearsay evidence may be admitted and considered in an administrative proceeding, ORS 183.450(1), and may by itself amount to substantial evidence. Reguero v. Teacher Standards and Practices, 312 Or. 402, 417, 822 P.2d 1171 (1991) (“[H]earsay evidence alone, even if inadmissible in a civil or criminal trial, is not incapable of being ‘substantial evidence’ under ORS 183.482(8)(c).”). To determine whether hearsay evidence is sufficiently reliable to constitute substantial evidence, we follow the case-specific inquiry announced in Reguero:

“[I]n assessing the substantiality of the evidence or lack of it, variable circumstances may be considered, such as: the alternative to relying on the hearsay evidence; the importance of the facts sought to be proved by the hearsay statements to the outcome of the proceeding and considerations of economy; the state of the supporting or opposing evidence, if any; the degree of lack of efficacy of cross-examination with respect to the particular hearsay statements; and the consequences of the decision either way.”

Reguero, 312 Or. at 418, 822 P.2d 1171. Cases applying Reguero

“demonstrate the principle that the reliability of particular evidence must depend upon the quantity and quality of supporting and opposing evidence and on the whole circumstantial setting * * *. Accordingly, although we examine all of the Reguero factors, we give particular weight to the third—the state of supporting and opposing evidence.”

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