ABC, LLC v. State Ethics CommissionABC, LLC v. State Ethics Commission
Opinion
The defendant, the state ethics commission (commission), appeals
The record contains the following relevant facts and procedural history. On November 24, 1999, the plaintiffs, pursuant to
The parties stipulated to the following relevant facts for purposes of the declaratory ruling.
In September, 1994, Finley sought a legal opinion from Paul McCormick, an attorney, regarding the application of Public Acts 1994, No. 94-69 (P.A. 94-69), to the marketing of services by Crossroads Management Partners, another entity in which Finley had an interest, to the state treasurer’s office and its servicing of existing contracts. Public Act 94-69 had amended the statutory
Before engaging in any conduct in furtherance of its obligations under the agreement with IAI Ventures, Truro also obtained a legal opinion from Richard Kraut, an attorney and the former assistant director of enforce
In 1997, Finley, on behalf of Truro, inquired of the then state treasurer, Christopher Burnham, whether the treasurer’s office would be interested in investing in a venture capital fund. When Burnham indicated his interest in making such an investment, Finley informed him about IAI Ventures and arranged a meeting between Burnham and representatives of IAI Ventures, which Finley also attended. Finley did not engage in any sales conduct with respect to the IAI World Fluid and did not explain the investment or negotiate any terms of the state treasurer’s investment in the fund. Ultimately, the state treasurer entered into an agreement with IAI Ventures to invest in IAI World Fluid. On August 15, 1997, Truro filed with the state treasurer an unsolicited and voluntary disclosure of the type and amount of the fee that it would receive from IAI Ventures if the state invested in IAI World Fund.
The plaintiff St. James Associates, LLC (St. James), is a limited liability company formed under the laws of this state. Finley is St. James’ president and Droney is a partner in the company. On October 15, 1998, St. James entered into an agreement with Crescendo Ventures III, LLC, and Crescendo Venture Management, LLC (jointly, Crescendo), concerning the Crescendo III, LP Fund (Crescendo Fund). The terms of the agreement were virtually identical to the terms of the agreement between Truro and IAI Ventures.
On the basis of these facts, the commission issued a declaratory ruling that the conduct described in the petition constituted “lobbying” within the meaning of § 1-91 (k). It also concluded that, for the commission to impose a civil penalty “equal to the amount of compensation which the registrant was required to be paid”;
The plaintiffs appealed from the commission’s declaratory ruling to the trial court pursuant to § 4-183. In its decision, the trial court noted that, “[b]y agreement of the parties, the facts which formed the basis of the declaratory ruling were to be hypothetical and were not investigated or corroborated by the commission.” It also determined, as a preliminary matter, that the plaintiffs were aggrieved by the commission’s ruling. The court specifically noted that the commission had not contested that the plaintiffs had “a specific personal and legal interest that has been specially and injuriously affected by the decision of the commission.”
In a thoughtful and comprehensive analysis of the merits of the plaintiffs’ appeal, the trial court first found that the hypothetical conduct described in the plaintiffs’ petition did not constitute lobbying because it did not constitute “communicating directly . . . with any official or his staff in the . . . executive branch of government . . . for the purpose of influencing any . . . administrative action . . . .”
The court then turned to the commission’s responses to the six questions posed by the plaintiffs in their petition. See footnote 5 of this opinion. The court concluded that, contrary to the commission’s ruling,
The commission appealed from the trial court’s decision, claiming that the trial court improperly: (1) had failed to accord proper deference to the commission’s ruling or to consider all relevant evidence in the record before it; (2) had concluded that the described conduct did not constitute lobbying; (3) had concluded that the
As a threshold matter, we set forth the appropriate standard of review. “A determination regarding a trial court’s subject matter jurisdiction is a question of law. When . . . the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record.” (Internal quotation marks omitted.) Doe v. Roe,
The plaintiffs’ right to appeal from the commission’s declaratory ruling is created by § 4-183 (a), which provides in relevant part that “[a] person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision may appeal to the Superior Court as provided in this section. . . .” (Emphasis added.) “Accordingly, in order to have standing to bring an administrative appeal, a person or entity must be aggrieved. . . . Aggrievement is a question of fact for the trial court and the plaintiff has the burden of proving that fact. . . . Pleading and proof of facts that constitute aggrievement are essential prerequisites to the trial court’s subject matter jurisdiction over an administrative appeal. ... In the absence of aggrievement, an administrative appeal must be dismissed for lack of subject matter jurisdiction. . . .
“The test for determining aggrievement is a two part inquiry: [F]irst, the party claiming aggrievement must successfully demonstrate a specific personal and legal interest in the subject matter of the decision, as distinguished from a general interest, such as is the concern of all members of the community as a whole. Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the decision.” (Citations omitted; internal quotation marks omitted.) Water Pollution Control Authority v. Keeney,
Although the legal concepts of standing, mootness and aggrievement are not identical, they are “founded on the same policy interests . . . namely, to assure the vigorous presentation of arguments concerning the matter at issue.
The plaintiffs claim that the facts relied on by the commission were not hypothetical and that they were aggrieved by the commission’s declaratory ruling. In support of this claim, they point to the commission’s statement that the ruling was “predicated solely upon the facts set forth in the Request for the Declaratory Ruling, the exhibits introduced and the testimony provided. It is the intention of the parties that these facts and information are submitted for the sole purpose of obtaining a Declaratory Ruling, and the resultant Ruling should not be construed as addressing the specific conduct of the Respondents in [the pending investigations against them]. Said conduct will be judged in subsequent hearings on the merits conducted pursuant to [General Statutes] § 1-93.” The plaintiffs argue that this language shows that “[t]he facts as set forth in the request, and as found by the trial court, are real; they were just not subject to preclusive effect” in the enforcement actions. The plaintiffs also claim, however, that “[t]he [commission’s] interpretation of the Code of Ethics would no doubt have served to influence the decision in those pending charges.” Finally, the plaintiffs argue that they had “a specific personal and legal interest in the subject matter of the decision . . . [which] has been specially and injuriously affected by the decision”; (internal quotation marks omitted) Water Pollution Control Authority v. Keeney, supra,
Thus, the plaintiffs simultaneously claim that the facts relied on by the commission in reaching its declaratory ruling represented a “real” account of the plaintiffs’ actual past conduct, that the ruling did not have preclusive effect in the ongoing enforcement actions, and that the ruling necessarily would influence the out
Indeed, counsel for the commission stated repeatedly at oral argument before the trial court on the merits of the administrative appeal that the declaratory ruling had been based on hypothetical facts and that “the real-world facts that are discovered, that are fleshed out in the probable cause investigation of the commission, may be different than these hypothetical facts. These [facts] are not the real world. This may not be what happened. There may be additional facts that are relevant.” Counsel for the plaintiffs did not dispute this characterization of the record before the commission, but, in support of his request to introduce additional evidence favoring the plaintiffs that was not contained in that record, argued that the facts underlying the ruling “cannot be separated from the real-world facts because, as the commission has conceded, if this conduct as described is not lobbying, then no penalty may be assessed.” The parties had stipulated, however, that the ruling would have no preclusive effect in the
If the facts presented to the commission were not “real” for the purposes of the enforcement proceedings, then they were not “real” for the purposes of the declaratory ruling. The law, as a general rule, does not countenance parallel realities. This principle underlies both the aggrievement requirement for the existence of an actual controversy and the doctrines of collateral estoppel and res judicata. Under those doctrines, “when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.” (Internal quotation marks omitted.) Cumberland Farms, Inc. v. Groton,
The plaintiffs argue, however, that the commission “should not be permitted to subvert the legislatively created process for seeking declaratory rulings by consolidating a request with another matter and then asserting the facts contained in the request to be hypothetical.” It was not the consolidation of the petition for a declaratory ruling with the enforcement actions— to the limited extent that that appears to have occurred—however, that rendered the facts of this case hypothetical. To the contrary, the facts were rendered hypothetical by the plaintiffs’ choice not to litigate the nature and legality of their conduct within the context of the enforcement proceedings, but, instead, to seek a declaratory ruling in a separate proceeding, based on a limited record that was not the result of a truth seeking, adversarial, fact-finding process.
We emphasize that we do not decide in this case whether a person may be aggrieved by an agency’s declaratory ruling on the applicability of a statute to purely hypothetical, but actually intended, future conduct, when the ruling was requested for the purpose of providing guidance to the person requesting the ruling.
The purpose of the aggrievement requirement is to ensure that “courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy . . . .” (Internal quotation marks omitted.) Wallingford v. Dept. of Public Health, supra,
The judgment is reversed and the case is remanded with direction to dismiss the plaintiffs’ appeal.
In this opinion the other justices concurred.
Notes
The commission appealed from the judgment of the trial court to the Appellate Court, and we granted the commission’s motion to transfer the appeal to this court pursuant to
The plaintiffs are Truro Associates, LLC, St. James Associates, LLC, George Finley, John F. Droney and Peter Kelly. At the time that this action was initiated, the trial court, McWeeny, J., granted the plaintiffs’ ex parte motion to proceed under fictitious names, namely, ABC, LLC, DEF, LLC, John Doe 1, John Doe 2 and John Doe 3. By order dated October 11, 2000, the trial court, Satter, J., vacated that order. The fictitious names, however, have remained as part of the official case caption.
Specifically, the plaintiffs requested a ruling on the following issues: “(1) Does
“(2) Does
“(3) Does
“(4) Does Conn. Gen Stat.
“(5) Does
“(6) Does
The facts stipulated to by the parties were those set forth in the plaintiffs’ petition and the exhibits attached thereto and contained in an affidavit submitted on behalf of the plaintiffs by former Chief Justice John Speziale and in testimony at the hearing on the petition by the plaintiffs’ expert witness on ethics, Ralph Elliot.
McCormick wrote that “[ijncluded in the category of exempt activities [under §§ l-92-42a through l-92-42c of the Regulations of Connecticut State Agencies] are: the preparation of submissions required by, or filed pursuant to, statute, regulation, or agency rule (e.g., the preparation of a rate increase submission, permit application or response to a request for contract proposals or otherwise requested by the agency); ordinary and customary communications made to the agency, or related entity, incident to the performance of a contract, implementation of a permit, etc.; communications by a manufacturer’s representative or other sales agent if that person is acting solely as a salesperson and does not otherwise engage in lobbying regarding any administrative action.”
Accordingly, the commission answered the plaintiffs’ questions one, two, three, five and six; see footnote 5 of this opinion; as follows:
“1. Yes.
“2. Yes, if the agreement in fact violates § 1-97 (b).
“3. Yes, if the agreement in fact violates § 1-97 (b).
“5. No. The § 1-99 (a) civil penalty is not limited to two thousand dollars if the agreement, in fact, violates § 1-97 (b).
“6. No. The only ‘knowingly’ requirement for imposition of the § 1-99 (a) penalty is that the person ‘knowingly enters into a contingent fee agreement.’ ”
The following exchange took place at the hearing on the administrative appeal:
“[Counsel for the plaintiffs]: At the outset, Your Honor, as I understand it from a prior discussion I had with [counsel for the commission], the commission has stipulated or will stipulate to the facts necessary to establish aggrievement for the purposes of an administrative appeal.
“[Counsel for the commission]: That’s not precisely what I said, but I’m not—I’m not disputing aggrievement. I’m not stipulating as to any facts, I’m just not contesting aggrievement.”
See also Gladysz v. Planning & Zoning Commission,
We note that the trial court, Hon. Robert Satter, judge trial referee, In its ruling on the plaintiffs’ motion for a stay of the commission’s ruling pending resolution of the administrative appeal, held that “as long as facts found in the probable cause investigation by the commission are substantially the same as the hypothetical facts presented for the declaratory ruling, the commission is stayed from using its declaratory ruling as the basis for a finding of probable cause.” Thus, the trial court properly recognized that, to the extent that the facts relied on by the commission in reaching its ruling were “real,” the decision on the appeal necessarily would have precedential value in the enforcement actions. The court also noted, however, that “[t]he investigation may reveal facts that differ from the hypothetical facts on the basis of which the declaratory ruling was made. Thus, the plaintiffs have failed to establish the requisite likelihood they will prevail [in the enforcement actions].” Accordingly, the court denied the request for a stay of the enforcement actions pending resolution of the administrative appeal.
This is not to suggest that parties cannot stipulate to the facts. It is to suggest, however, that they cannot stipulate to the facts for a limited purpose. If the facts underlying a declaratory ruling are not agreed to be the “real” facts for all relevant legal purposes, then they are hypothetical.
In the present case, for example, if the plaintiffs had sought a declaratory ruling before engaging in the conduct that was the subject of the enforcement actions, it is entirely possible that they would have been aggrieved by the injunctive effect of an adverse ruling. For reasons that do not appear in the record, however, the plaintiffs chose not to request such a ruling but, instead, relied on the advice provided by Finley’s counsel in a different, but related, matter.