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Oregon Judicial Department Appellate Court Opinions

FILED: April 8, 2004 IN THE SUPREME COURT OF THE STATE OF OREGON DANIEL BOYD COLE, Respondent on Review, v. DRIVER AND MOTOR VEHICLE SERVICES BRANCH (DMV), Petitioner on Review. KAREN DINSMORE, Respondent on Review, v. DRIVER AND MOTOR VEHICLE SERVICES BRANCH (DMV), Petitioner on Review. (CC 9902-01073, DMV No. 81427; CA A108349, A109749; SC S48815, S49117) (Consolidated for Argument and Opinion) On review from the Court of Appeals.* Argued and submitted September 9, 2003. Christina M. Hutchins, Assistant Attorney General, Salem, argued the cause and filed the briefs for petitioner on review. With her on the briefs were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General. Wayne Mackeson, of Birmingham & Mackeson, L.L.P., Portland, argued the cause and filed the brief for respondent on review Cole. With him on the brief was Richard Lee Barton, of Barton & Associates, Portland. Robert J. McCrea, Eugene, argued the cause and filed the brief for respondent on review Dinsmore. Before Carson, Chief Justice, and Gillette, Durham, Riggs, De Muniz, and Balmer, Justices.** BALMER, J. In Cole, the decision of the Court of Appeals and the judgment of the circuit court are affirmed, and the case is remanded to DMV for further proceedings. In Dinsmore, the decision of the Court of Appeals is affirmed, the order of DMV is reversed, and the case is remanded to DMV. *Appeal from Multnomah County Circuit Court, Robert W. Redding, Judge. Cole v. DMV, 172 Or App 132, 17 P3d 573 (2001). Judicial review from the Oregon Department of Transportation, Dinsmore v. DMV, 175 Or App 509, 28 P3d 1268 (2001).

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** Kistler, J., did not participate in the consideration or decision of this case. BALMER, J.In these cases, which we consolidated for argument and decision, the Driver and Motor Vehicle Services Branch (DMV), seeks review of Court of Appeals decisions holding that hearsay evidence presented in two driver license suspension hearings did not constitute substantial evidence sufficient to support DMV's orders suspending the driver licenses. Cole v. DMV, 172 Or App 132, 17 P3d 573 (2001); Dinsmore v. DMV, 175 Or App 509, 28 P3d 1268 (2001). Substantial evidence supports a finding made in an administrative hearing when the record, viewed as a whole, permits a reasonable person to make that finding. ORS 183.482(8)(c). (1) The question before us on review is whether this court's decision in Reguero v. Teacher Standards and Practices, 312 Or 402, 822 P2d 1171 (1991), articulating the standards to be used to determine whether and when hearsay evidence may be substantial evidence under that statute, requires a different outcome in these cases. For the reasons that follow, we affirm the decision of the Court of Appeals in Cole and the judgment of the circuit court, although on different grounds than the Court of Appeals, and remand the case to DMV for further proceedings. In Dinsmore, we affirm the decision of the Court of Appeals, reverse the order of DMV, and remand the case to DMV. I. BACKGROUND As we will describe in greater detail, DMV suspended the driver licenses of Cole and Dinsmore after they had been arrested for separate traffic violations. They both requested hearings to contest those suspensions, and, at those hearings, DMV offered hearsay evidence in the form of police reports. The presiding hearing officers made findings in DMV's favor based on information contained in those reports, and, as a result, DMV ordered that Cole's and Dinsmore's licenses remain suspended. Before discussing the specific facts of the cases, it is useful first to review this court's decision in Reguero, because that case represents this court's most comprehensive discussion of the substantial evidence test in administrative proceedings and of the permissible use of hearsay evidence in those proceedings. Reguero was a teacher who had been fired by a school district and whose state teaching license had expired after his termination. 312 Or at 404. In a contested case hearing at which he sought to have his license reinstated, the Teacher Standards and Practices Commission (TSPC) introduced hearsay and multiple hearsay evidence (2) to support its allegations that Reguero had engaged in inappropriate sexual contact with two female students. Id. at 404-05. The hearsay evidence included statements that the two students had made; neither student testified at the hearing. Id. at 405. Reguero presented countervailing evidence, including teachers and school employees who refuted a number of the students' claims. Id. Following the hearing, TSPC denied Reguero's license application based on its findings that he had engaged in inappropriate sexual contact and therefore "lack[ed] good moral character to serve as [a] teacher." Id. at 408. On review, this court analyzed the record to determine whether evidence sufficient to satisfy the substantiality requirement of ORS 183.482(8)(c) supported TSPC's findings. Id. at 417-18. The court noted that, under the Oregon Administrative Procedures Act (APA), ORS 183.310 to 183.550, "[h]earsay evidence is as admissible under ORS 183.450(1) as any other evidence as long as it meets the statutory test of reliability." (3) Id. at 417 (footnote omitted). The court explained that ORS 183.482(8)(c) does not provide "for weighing some classes of evidence in the record more heavily as classes than other classes of evidence in the record * * * as a matter of law." Id. (emphasis in original). The court adopted the reasoning of the Court of Appeals that the legislature had not intended for hearsay evidence that was reliable enough to be admissible under ORS 183.450(1) to be "categorically incapable of being substantial enough to permit a reasonable person to find in accordance with it under ORS 183.482(8)(c)." Id. (emphasis in original; internal citation omitted). Thus, the court rejected the "residuum rule" (4) and affirmed the Court of Appeals' holding that "hearsay evidence alone, even if inadmissible in a civil or criminal trial, is not incapable of being 'substantial evidence' under ORS 183.482(8)(c)." Id. The court noted that, rather than engaging in "any categorical method of determining substantiality," the court must make a case-specific inquiry to determine "whether the finding of substantiality is reasonable in the light of countervailing as well as supporting evidence." Id. at 417-18. The court stated that "variable circumstances may be considered" when assessing whether proffered hearsay evidence constitutes substantial evidence in a given case and then provided a nonexclusive list of factors:

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"[1] [T]he alternative to relying on the hearsay evidence; [2] the importance of the facts sought to be proved by the hearsay statements to the outcome of the proceeding and considerations of economy; [3] the state of the supporting or opposing evidence, if any; [4] the degree of lack of efficacy of crossexamination with respect to the particular hearsay statements; and [5] the consequences of the decision either way." Id. at 418. The court also noted that "[a]n underlying concern must always be fundamental fairness." Id. n 23. Notwithstanding its earlier conclusion that hearsay could constitute substantial evidence under ORS 183.482(8)(c), the court went on in Reguero to find that TSPC's findings were not supported by substantial evidence and, thus, its conclusions of law based on those findings were impermissible. Id. at 422. The court emphasized that the agency's findings were based entirely on hearsay and that no reason had been given as to why TSPC had not called the alleged victims as witnesses, despite their being available. Id. at 419. The court noted that the witnesses that did testify on behalf of TSPC had been permitted to express their opinions regarding the alleged victims' credibility "based on * * * hearsay [and] multiple hearsay." Id. Moreover, the court stated that, "[w]hen unsworn hearsay constitutes the major (in this case, the entire) support for the administrative decision, the importance of providing [the petitioner] with the opportunity to test on cross-examination each of the available declarants' perception, memory, narration, and veracity is undeniable." Id. at 421 (emphasis in original). Thus, although hearsay evidence may constitute substantial evidence, nothing in Reguero compels the conclusion that the hearsay evidence in a particular case will satisfy that standard. See also Younger v. City of Portland, 305 Or 346, 358, 752 P2d 262 (1988) (noting that, under LUBA provisions analogous to APA, whether particular decision is supported by substantial evidence depends upon evaluation of unique evidence in each case). II. FACTS With that background in mind, we now return to the facts in the cases before us, which we take from the record and the Court of Appeals opinion in each case. We begin with Cole. In 1998, Gresham Police Sergeant Gurkman stopped Cole's car. According to a written report that Gurkman prepared, Gurkman had observed Cole commit a number of traffic infractions, including crossing the center line of the road numerous times, exceeding the speed limit by 20 miles per hour, and making an unsignaled lane change. Gurkman stopped him, and, shortly thereafter, Gresham Police Officer Nguyen arrived at the scene. Gurkman told Nguyen that he suspected that Cole had been driving under the influence of intoxicants (DUII), and Nguyen requested that Cole perform several field sobriety tests. After Cole performed the tests, Nguyen concluded that he had probable cause to arrest Cole for DUII. (5) Thereafter, Cole submitted to a chemical breath test, which registered his blood alcohol level as 0.12 percent. DMV notified Cole that it intended to suspend his driving privileges. A second notice of Cole's rights and procedures in a DMV implied consent hearing also informed Cole that he could request DMV to subpoena witnesses on his behalf to appear at the hearing. (6) Cole requested a hearing to contest the suspension and, in preparation for the hearing, sought discovery of "photocopies of all documents that [were] public records relating to [his] hearing in the possession of [DMV]" and "copies of any and all police reports in the possession of the arresting officer and agency in this case." DMV responded by providing Cole with a report prepared by Nguyen and a separate page on which appeared the following statement: "Under difficulty presenting documents, see Sergeant German's [sic] report." DMV did not provide Cole with any report prepared by Gurkman. At Cole's hearing, Nguyen testified, but Gurkman did not appear. Cole had not requested DMV to subpoena any witnesses; however, DMV had issued its own subpoena for Nguyen. DMV sought to introduce a report prepared by Gurkman to prove that Gurkman had stopped Cole lawfully. (7) Cole objected to the admission of the Gurkman report, arguing that he had not received a copy of the report and did not know that Nguyen was not the stopping officer until the hearing. Cole further alleged that, had he known Gurkman's identity, he would have subpoenaed him to appear at the hearing. Cole contended that the "heart of [his] defense" was the validity of the stop and, therefore, it was essential that he have "adequate opportunity to confront, cross-examine, and test" that validity.
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The hearing officer overruled Cole's objection to the admission of the Gurkman report and denied his request for a continuance. (8) Cole cross-examined Nguyen but presented no contrary evidence, stating, "We'll produce no evidence, in light of the absence of Sergeant Gurkman." At the conclusion of the hearing, the hearing officer upheld the lawfulness of the stop solely on the basis of Gurkman's report, finding that "Gurkman's report provides a sufficient basis for the traffic stop * * *. No evidence contradicted the information contained in Gurkman's report." After concluding that Nguyen had had probable cause to arrest Cole, the hearing officer affirmed the suspension of Cole's driver license. Cole sought judicial review pursuant to ORS 813.410 and ORS 813.450. (9) He argued that the hearing officer's finding that he had been stopped lawfully was not supported by substantial evidence in the record. In addition, Cole contended that, because he had not known Gurkman's identity before the hearing, he had not had a meaningful opportunity to secure Gurkman's attendance by subpoena and, therefore, reliance on Gurkman's report offended due process. The circuit court agreed with Cole's due process argument and set aside DMV's suspension order, concluding that Cole had had "no means available to determine the identity of the stopping officer or to obtain a copy of his police report" before his hearing. Consequently, the court held that the administrative hearing did not comport with due process: "While the law does allow the state to prove essential elements of its case by hearsay, due process requires that the defendant, at the least, have an opportunity to subpoena critical witnesses to subject their hearsay assertions to cross-examination. To have any type of hearing, a defendant has to at least have the right to subpoena witnesses whose out of court, unsworn, written statements are used against him. To rule otherwise means that the administrative hearing is no hearing at all, but is simply an administrative review of the facial sufficiency of the state's assertions with no meaningful opportunity to challenge the truthfulness or accuracy of those assertions." DMV appealed, and the Court of Appeals affirmed. 172 Or App at 141. That court examined the hearsay evidence that DMV had offered in light of each of the Reguero factors and held that, "Gurkman's report did not, by itself, constitute substantial evidence of the validity of the stop." Id. The court concluded that the consequences of DMV's decision to suspend Cole's license were "significant," but not "devastating," and that the alternative to relying on the hearsay evidence "militates against reliance on Gurkman's report" because DMV knew of Gurkman's identity, could have compelled his attendance through subpoena, and failed to explain why he did not testify. Id. at 139, 141. In addition, the court concluded that Gurkman's report had been determinative to the outcome of Cole's suspension hearing because it was "the only evidence in the record from which the hearing officer could assess the lawfulness of Gurkman's initial stop of [Cole]." Id. at 140 (emphasis in original). The court emphasized that it considered the ability to cross-examine Gurkman "essential." (10) Id. at 141. Dinsmore also had her license suspended following a DMV hearing in which the hearing officer admitted hearsay evidence in the form of police reports and based her necessary findings of fact on that evidence. In 1999, Dinsmore's truck collided with two other vehicles that were stopped in her lane of travel on Highway 20. The collision killed one person and seriously injured another. State Trooper Johnson, who arrived at the scene after the accident, interviewed two witnesses -- drivers of two cars that had been traveling in the opposite direction from Dinsmore when the collision occurred -- and included their comments in his report. According to the report, those witnesses told Johnson that the vehicles that Dinsmore had struck with her truck had had their turn signals on at the time of impact and appeared to be waiting to turn left. Johnson noted that one of the witnesses described Dinsmore's vehicle as traveling "really fast" when it ran into the two stopped vehicles; the other witness opined that Dinsmore's vehicle "was going too fast." Johnson also interviewed Dinsmore and recorded in his report that she had told him that she had drunk one beer, was taking medications for high blood pressure and allergies, had slept only a few hours the night before, and had not seen the two vehicles in front of her. As a result of his on-site investigation, Johnson cited Dinsmore for DUII and reckless driving. State Trooper Skinner, an accident reconstructionist for the Oregon State Police, prepared a collision reconstruction report based on Johnson's report, forensic tests performed on the victims' vehicles, and Skinner's own investigation of the accident scene. Skinner made findings regarding the conditions and grade of the road, and whether the victims' cars

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had functioning brake lights and operating turn signals when Dinsmore's truck collided with them. Based on those findings and the speed that Dinsmore had told Johnson that she had been traveling at the time of the accident, Skinner estimated that Dinsmore would have had more than 1,000 feet in which to see and react to the cars stopped in front of her. Skinner also concluded in his report that Dinsmore had been using her cell phone when she collided with the other vehicles. In addition, Skinner's report contained an estimate that Dinsmore's blood alcohol level at the time of the crash had been between 0.10 percent and 0.14 percent. He arrived at that estimate by calculating backwards from a breath test that Dinsmore had taken four hours after the accident and that registered her blood alcohol level as 0.06 percent. (11) On the basis of Skinner's and Johnson's reports, DMV notified Dinsmore that it was suspending her driving privileges on the grounds that she had caused or contributed to an accident resulting in the death of another due to recklessness or criminal negligence and that she posed a potential danger to persons or property. Dinsmore requested and was granted a hearing, which was held in January 2000. Although entitled to do so under ORS 183.400, Dinsmore had not requested DMV to subpoena either Johnson or Skinner on her behalf. DMV had issued subpoenas for the officers on its own motion, but neither appeared at the hearing. In their absence, DMV offered into evidence the reports that the officers had prepared. Dinsmore objected on the grounds that the reports constituted hearsay and double hearsay, and that due process required that she have the opportunity to cross-examine the officers regarding their investigation and the "underpinnings," accuracy, and sufficiency of the information contained in the reports. The hearing officer received the reports as evidence over Dinsmore's objection, reasoning in the final order that "hearsay is admissible in an administrative hearing. * * * The fact that the reports are hearsay goes to their weight and not their admissibility." At the hearing, Dinsmore presented witnesses and offered evidence that contradicted several of the assertions that Skinner had made in his report. (12) Dinsmore offered her cell phone records to show that she had not been on the phone at the time of the collision and a letter by a doctor stating his opinion that it would be very difficult to calculate accurately Dinsmore's blood alcohol level at the time of the accident. In addition, a witness testified to having seen Dinsmore maneuver her car out of a cramped parking space without any difficulty just before the collision. Following the hearing, DMV issued its final order upholding Dinsmore's license suspension on the ground that, at the time of the accident, petitioner was "operating her vehicle either recklessly or with criminal negligence." Former ORS 809.410(15), repealed by Or Laws 2003, ch 402,

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