Petition of VT Electric Power Producers, Inc.
Annotate this Case
Petition of Vermont Electric Power Producers, Inc. (95-441); 165 Vt 282; 683 A.2d 716
[Opinion Filed 12-Jul-1996]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
No. 95-441
Petition of Vermont Electric Supreme Court
Power Producers, Inc.
On Appeal from
Public Service Board
April Term, 1996
Richard H. Cowart, Chair
Michael Marks of Tarrant, Marks & Gillies, Montpelier, for appellant
Morris L. Silver and Mary C. Marzec, Law Clerk (On the Brief), Rutland
for appellee Central Vermont Public Service Corp.
David J. Mullett of Cheney, Brock, Saudek & Mullett, P.C., Montpelier,
for appellee Vermont Electric Power Producers, Inc.
Sheldon M. Katz, Special Counsel, Montpelier, for appellee Department
of Public Service
PRESENT: Gibson and Morse, JJ., and Meaker, Super. J., Norton,
Super. J., and Teachout, Super. J., Specially Assigned
GIBSON, J. Appellant Vermont Power Exchange, Inc. (VPX) appeals
orders of the Public Service Board (PSB) denying VPX's motion to dismiss a
petition brought by Vermont Electric Power Producers, Inc. (VEPPI) and
denying VPX's motion to disqualify VEPPI's attorney from further
proceedings in this matter. The VEPPI petition sought to revoke VPX's
designation as the state's purchasing agent for purposes of implementing
the federal Public Utility Regulatory Policy Act (PURPA), 16 U.S.C. §
824a-3, and 30 V.S.A. § 209. VPX argues that the PSB erred in: (1)
failing to conclude, as a matter of law, that VPX's designation as PURPA
purchasing agent is a public franchise that cannot be terminated except for
cause; (2) failing to hold an evidentiary hearing on VPX's franchise and
other claims; and (3) failing to disqualify VEPPI's attorney from continued
participation in these proceedings. We reverse the PSB order denying VPX's
motion to disqualify VEPPI's attorney; otherwise, we affirm.
Since 1984, VPX has served as the state's PURPA purchasing agent. In
prior decisions, we have reviewed the history and purpose of PURPA and "the
unique way in which Vermont has implemented PURPA." In re Vermont Power
Exch., 159 Vt. 168, 171-72, 617 A.2d 418, 419 (1992); see In re Department
of Pub. Serv., 161 Vt. 97, 102, 632 A.2d 1373, 1376 (1993); In re East
Georgia Cogeneration Ltd. Partnership, 158 Vt. 525, 528-29, 614 A.2d 799,
801-02 (1992); In re Department of Pub. Serv., 157 Vt. 120, 121-22, 126,
596 A.2d 1303, 1304-05, 1307 (1991); In re Vicon Recovery Sys., 153 Vt.
539, 543-44, 572 A.2d 1355, 1357-58 (1990). Rather than allowing
cogenerators and other small power producers to sell electric power
directly to utility companies, the PSB, pursuant to the authority granted
in 30 V.S.A. § 209(a)(8), promulgated PSB Rule 4.100, which authorized the
designation of a single purchasing agent to serve as an intermediary
between the power producers and the purchasing utilities.(FN1) See Public
Service Board, Rule 4.104(A); Department of Pub. Serv., 157 Vt. at 121,
126, 596 A.2d at 1304, 1307. VPX has been the only designated Rule 4.100
purchasing agent for the state since Vermont's PURPA compliance system
began. Vermont Power Exch., 159 Vt. at
172, 617 A.2d at 420.
Under the terms of the 1984 agreement between the PSB and VPX, VPX's
designation as PURPA purchasing agent could be "revoked by the Board at any
time without prior notice." In 1987, however, the PSB issued a new
designation order for VPX, which stated:
This designation shall remain in effect unless terminated (a) by the
Board for cause (in accordance with contested case procedures); (b) by
VPX on the ground that there is no reasonable prospect for it to obtain
a fair return on its investment or to recover its costs and meet its
obligations on an on-going basis; or (c) by the mutual agreement of
the Board and VPX.
(Emphasis added.)
Simultaneously with the issuance of the 1987 designation order, the
PSB and VPX executed a "Contract for Personal Services" (Contract), under
which VPX agreed to perform certain services in addition to those specified
for the purchasing agent in Rule 4.100. The Contract provided that,
"[u]nless the designation of [VPX] as purchasing agent is sooner
terminated, this agreement shall have a term of five years and, unless
either party gives 180 days' written notice of its intention not to renew,
shall be renewed for a term of five years on each anniversary hereof."
In a letter sent the same day by VPX to PSB's general counsel, VPX
expressed its "understanding of various matters regarding the designation
of Vermont Power Exchange, Inc. as the Rule 4.100 purchasing agent, and the
contract between the Public Service Board and the Exchange." According to
VPX:
The designation permits the Board to terminate the Exchange's status
as the Purchasing Agent for cause, in accordance with contested case
procedures, as described in the Board's Rules of Civil Procedure.
Cause, as used in the designation, shall be deemed to include only
negligence, neglect of material obligations, fraud, or the inability of the
Exchange to perform its material obligations as Purchasing Agent.
(Emphasis added.) The letter was signed by VPX President Lawrence Copp and
countersigned by Thomas Wies, General Counsel to the PSB.
On December 31, 1990, the PSB notified VPX of its intention not to
renew the Contract,
effective June 30, 1995. VPX did not contest the termination of its
Contract with the PSB, nor did the parties attempt to negotiate a new
personal services contract.
In April 1994, VEPPI, a nonprofit corporation controlled by power
producers and purchasing utilities, petitioned the PSB to revoke VPX's
designation as the Rule 4.100 purchasing agent, and to designate VEPPI as
purchasing agent, effective July 1, 1995. VPX moved to dismiss the VEPPI
petition on two grounds: first, that the PSB's 1987 designation order
created a "franchise" as a matter of law, and that such a franchise could
be revoked only for "cause"; and second, that designation of VEPPI as
purchasing agent would violate the Rule 4.100 requirement of an independent
purchasing agent.(FN2) VPX also moved to disqualify VEPPI's attorney from
further representation of VEPPI in this matter, on the ground that the
attorney (who also represents VEPPI in the instant appeal) had served as
associate general counsel to the PSB at relevant times and in such role had
reviewed VPX's contract and designation order and recommended renegotiation
of the PSB's relationship with VPX.
In January 1995, the PSB hearing officer, relying on the parties'
written submissions and oral argument, but without taking evidence, denied
VPX's motion to dismiss. The hearing officer agreed with VPX that the 1987
designation order and the Contract, although executed simultaneously,
served different purposes and had different durations. The termination of
the Contract therefore did not affect the operation of the designation
order. With respect to the designation order, the hearing officer
concluded that "[t]he 1987 Board intended that VPX could remain the state's
purchasing agent, even without a contract, so long as VPX did not provide
cause for termination." The hearing officer further found that "VEPPI has
not made any allegations that amount to `cause,' as VPX would have that
term understood here." Nevertheless, the hearing officer held that the 1987
PSB did not have the authority to vest VPX with "a durable form of agency,"
but rather could act only in a way that did not "restric[t] the
1995 Board from transferring existing power contracts to a different
agent." The hearing officer therefore rejected VPX's claim of a franchise
terminable only for cause, and held instead that, "[s]ince the Board's
Designation Order was based upon a broadly delegated legislative power, the
Board can . . . terminate VPX, even without a showing of dereliction or
neglect." (Emphasis added.)
VPX sought and obtained interlocutory review by the PSB. In an order
filed June 30, 1995, the PSB affirmed the hearing officer's denial of VPX's
motion to dismiss. The PSB held that the 1990 Amendment to Rule 4.100 gave
the PSB the authority to alter or revoke the 1987 designation order without
a showing of "cause." The PSB, however, went on:
[I]f "cause" is required to revoke VPX's designation, that term must
be broadly defined. The term is not limited merely to negligence or
fraud. Subject to limitations of explicit contract, the purchasing agent
can be replaced if another candidate should appear who can fulfill the
function at less cost or with greater effectiveness.
. . . .
We hold that, notwithstanding the limiting language contained
in the Designation Document, the Public Service Board, upon
determining that the public interest would thereby be served, today has
authority to appoint an entity other than VPX as purchasing agent.
(Emphasis added.) The present appeal followed.
In reviewing a PSB order, we employ "a strong presumption that orders
issued by the Public Service Board are valid," East Georgia Cogeneration
Ltd. Partnership, 158 Vt. at 531, 614 A.2d at 803, and "we give great
weight to the Board's interpretations of its own regulations." Id. We
also accord "great deference to the particular expertise and informed
judgment of the Board." Vermont Power Exch., 159 Vt. at 179, 617 A.2d at
424. Where the PSB's findings fairly and reasonably support its
conclusions of law, we will uphold the PSB's decision. In re New England
Tel. & Tel. Co., 159 Vt. 459, 461-62, 621 A.2d 232, 235 (1993).
I.
VPX first argues that its 1987 designation as the state's Rule 4.100
purchasing agent created a common-law "franchise," terminable only for
cause.
The PSB is a body of special and statutory powers, as to which nothing
is presumed in favor of its jurisdiction. Vermont Power Exch., 159 Vt. at
176, 617 A.2d at 422. Consequently, the PSB's powers include only those
expressly granted by the Legislature and such incidental powers as are
necessarily implied to carry out its express grant. Id. Nevertheless, we
have also recognized that:
[u]nder Vermont's implementation of PURPA, the Legislature's grant
of power to the PSB is very broad. It grants jurisdiction in all matters
respecting the sale of electricity to utilities under PURPA. . . .
. . . [T]he Legislature's authorizations are broad, leaving the
PSB to determine the detailed regulation necessary.
Id. (internal quotation marks omitted); accord Department of Pub. Serv.,
161 Vt. at 102, 632 A.2d at 1376; see also 30 V.S.A. § 209 (general scope
of PSB jurisdiction).
In the instant matter, VPX acknowledges that the PSB did not issue the
1987 designation order under the authority of 30 V.S.A. § 231, which
establishes the requirements for issuance and revocation of a certificate
of public good to operate a business over which the PSB has jurisdiction;
and that the PSB did not issue the 1987 designation order following public
notice and public hearings conducted to determine whether designation of a
PURPA purchasing agent would promote the general good of the state. See 30
V.S.A. § 231(a).(FN3) Rather, VPX argues that, under the broad legislative
grant of 30 V.S.A. § 209(a)(8), the PSB's 1987 designation order, together
with the accompanying VPX letter countersigned by PSB's general counsel,
vested VPX with a common-law "franchise" as a matter of law. We disagree.
A franchise is a right or privilege conferred by the state to a
grantee for the provision of some public purpose. Delmarva Power & Light
Co. v. City of Seaford, 575 A.2d 1089, 1092 (Del. 1990). A grant of
franchise conveys a property interest that is subject to due process
protections. City of Los Angeles v. Los Angeles Gas & Elec. Corp., 251 U.S. 32, 39 (1919).
Because of its public purpose, any ambiguity regarding the nature of the
grant must be construed strictly against the grantee. Delmarva Power &
Light Co., 575 A.2d at 1092.
The Vermont Legislature has given the PSB statutory authority to grant
a franchise, in the form of a "certificate of public good," but only after
a period of public notice and an opportunity for a public hearing to
determine whether the award of such a franchise promotes the good of the
state. See, e.g., 30 V.S.A. §§ 102 (establishment of public service
corporation), 231(a) (operation of public utility), 248 (new gas and
electric utilities), 502-504 (cable television systems); see also In re
Telesystems, Corp., 143 Vt. 504, 506-07, 469 A.2d 1169, 1170-71 (1983)
(setting forth proper procedure to consider application "for a permanent
certificate of public good"); In re Hathorn's Transp. Co., 121 Vt. 349,
353, 158 A.2d 464, 467 (1960) ("It is well settled that a certificate of
[public good] is a franchise, and is a property right."). But cf. Delmarva
Power & Light Co., 575 A.2d at 1096 ("[A] certificate of convenience and
necessity . . . in and of itself does not confer or represent an exclusive
property right.").
The requirement that a franchise be awarded pursuant to public notice
and public hearing ensures that the property right thus created serves the
public good. VPX's view -- that a public-service franchise can arise
without such procedural safeguards, and that the PSB cannot then curtail
the franchise without providing procedural safeguards -- contravenes the
very purpose that public franchises are intended to serve. Absent the
statutory requisites for the creation of a public franchise, the PSB was
without authority to grant a franchise to VPX by means of the 1987
designation order.
VPX contends, however, that, by countersigning the June 30, 1987
letter from VPX President Lawrence Copp, PSB General Counsel Thomas Wies
created "a binding commitment made on behalf of the Public Service Board
itself." We disagree. The powers of the PSB general counsel are expressly
defined by statute, 30 V.S.A. § 20, and do not include the power to create
public franchises on behalf of the PSB. Actions taken by an employee of a
public agency that are beyond the power and authority of that employee will
not bind the agency. See
In re McDonald's Corp., 146 Vt. 380, 385, 505 A.2d 1202, 1205 (1985)
(regional engineer of environmental conservation agency acted beyond his
power and authority in rendering opinion concerning possible Act 250
jurisdiction); see also Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380,
384 (1947) ("[A]nyone entering into an arrangement with the Government
takes the risk of having accurately ascertained that he who purports to act
for the Government stays within the bounds of his authority. . . . And
this is so even though, as here, the agent himself may have been unaware of
the limitations upon his authority."). We see no error in the PSB's denial
of VPX's motion to dismiss.
II.
VPX also argues that the PSB should not have terminated the proceeding
without first allowing VPX an opportunity to present further legal and
factual arguments to support its franchise claim and its claims to
enforceable contract and equitable rights.
With respect to the franchise claim, a review of the record indicates
that all parties, including VPX, treated VPX's claim as a question of law.
VPX presented extensive legal argument in support of its claim before both
the hearing officer and the PSB. At no time did VPX request an evidentiary
hearing or otherwise indicate that further factual development was
necessary to a final disposition of its legal claim.(FN4) We therefore
decline to address VPX's claim of error with respect to the franchise
issue. See White Current Corp. v. Vermont Elec. Coop., 158 Vt. 216, 222,
609 A.2d 222, 225 (1992) (court will not entertain issue not raised in
proceedings below or in order appealed from).
VPX contends, however, that, even if it has no protectible franchise
interest, it
nonetheless has enforceable contract and equitable claims that the PSB
cannot adjudicate, either because exclusive jurisdiction over such claims
rests with the superior court under 4 V.S.A. § 113, or because due process
considerations bar the PSB from adjudicating its own liability.
Because we find nothing in the record to suggest that VPX raised a
contract or equitable claim before the PSB, we will not reach the issue.(FN5)
Although "[i]t is axiomatic that lack of subject matter jurisdiction of the
trial court may be raised for the first time on appeal to this Court," Town
of Charlotte v. Richmond, 158 Vt. 354, 358, 609 A.2d 638, 640 (1992), there
is no indication that the PSB exercised, or had the opportunity to
exercise, subject-matter jurisdiction over VPX's contract or equitable
claims.(FN6) Consequently, VPX's claim of lack of subject-matter
jurisdiction is not ripe for review. See In re Hill, 149 Vt. 86, 87-88,
539 A.2d 992, 994 (1987) (claim concerning adequacy of testimony sought at
hearing that has not yet been convened is not ripe).
III.
Finally, VPX argues that the PSB erred in denying its motion to
disqualify VEPPI's attorney, David Mullett, who had previously served as
associate general counsel to the PSB from September 1988 to September 1989.
Our decision today, however, addresses only VPX's claim
to a public franchise arising from the 1987 designation order, which was
issued before Mr. Mullett joined the PSB. We preface our discussion,
therefore, by noting that, although we agree that the PSB erred in refusing
to disqualify Mr. Mullett from representing VEPPI in this matter, we find
that the error has not tainted the proceedings to date and does not affect
the outcome of the instant appeal.
Nevertheless, the PSB's order, which we today affirm in relevant part,
leaves open the ultimate disposition of the purchasing-agent designation.
The certainty of subsequent proceedings necessitates a final resolution of
the propriety of Mr. Mullett's continued participation in those
proceedings. Accordingly, we must reach the merits of VPX's claim of error
in the PSB's denial of its disqualification motion.
We begin by noting that the PSB has all the powers of a trial court in
the determination and adjudication of matters over which it has
jurisdiction. 30 V.S.A. § 9. A motion to disqualify counsel is a matter
that rests within the sound discretion of the trial court, and its ruling
will not be disturbed absent a showing of an abuse of discretion.
Derrickson v. Derrickson, 541 A.2d 149, 152 (D.C. 1988); see In re Judy
Ann's Inc., 143 Vt. 228, 233-34, 464 A.2d 752, 755 (1983) (applying
abuse-of-discretion standard to review of liquor control commission's
ruling on disqualification motion).
When the propriety of an attorney-client relationship involving a
lawyer previously employed by a governmental agency is raised in the course
of litigation, the standard of conduct set forth in DR 9-101(B) of the
Vermont Code of Professional Responsibility is a primary source for
resolution of the issue. See Cleary v. District Court, 704 P.2d 866, 869
(Colo. 1985) (en banc) (DR 9-101(B) recognizes that government attorneys
acquire special responsibilities with regard to information and authority
entrusted to them). According to DR 9-101(B), "[a] lawyer shall not accept
private employment in a matter in which the lawyer had substantial
responsibility while he or she was a public employee." (Emphasis added.)
In this case, the unchallenged evidentiary record indicates that Mr.
Mullett, while serving
as the PSB's associate general counsel in 1988, was involved in PSB efforts
to renegotiate or otherwise redefine VPX's role as PURPA purchasing agent.
Specifically, Mr. Mullett reviewed, commented upon, and revised (FN7) a draft
designation order that would have superseded the 1987 designation order at
issue here; the 1988 designation order was never issued, however. In
addition, on April 28, 1989, Mr. Mullett sent a "Confidential Memorandum"
to PSB Chairman Richard Cowart and to PSB members Suzanne Rude (FN8) and
Rosalyn Hunneman concerning a proposed "VPX Certificate of Public Good."
In that memorandum, Mr. Mullett urged the PSB not to issue a certificate of
public good to VPX. According to Mr. Mullett:
The issuance of another piece of paper . . . will exacerbate the
perception that our relationship with VPX is inconsistent with the
Board's responsibilities as a regulatory agency charged with hearing and
deciding contested matters. It is also more likely than not that VPX
itself will use this as another tool to beat the Board over the head with.
. . . I think we need to recognize that . . . there is at least a fair
likelihood that all of this will end in unpleasant litigation. In view of
that, we need to simply stop making more pieces of paper upon which
VPX can claim reliance, and hold fast to the view that our future course
will be determined through duly noticed rulemaking proceedings.
(Emphasis added.) In the same memorandum, Mr. Mullett also observed that
he "was involved in the early drafting of a potential VPX certificate," and
that, between his work as general counsel to the Public Service Department
and as assistant general counsel to the PSB, he "personally ha[d] spen[t]
over 2000 hours on matters directly related to VPX and the small power
program."
The PSB concluded, based on its review of the foregoing documents and
on Mr. Mullett's representations at oral argument, that the VEPPI petition
to revoke the 1987 designation order is not the same "matter," for DR
9-101(B) purposes, as the PSB's 1988-89
effort to redefine VPX's role under that designation order, and that Mr.
Mullett did not have "substantial responsibility" in either matter while he
was a public employee. We disagree with both conclusions.
A.
With respect to the word "matter," the American Bar Association, which
drafted the Model Code upon which the Vermont Code is based, has observed:
Although a precise definition of "matter" as used in the Disciplinary
Rule is difficult to formulate, the term seems to contemplate a discrete
and isolatable transaction or set of transactions between identifiable
parties. Perhaps the scope of the term "matter" may be indicated by
examples. The same lawsuit or litigation is the same matter. The
same issue of fact involving the same parties and the same situation or
conduct is the same matter. By contrast, working as a government
employee in drafting, enforcing or interpreting government or agency
procedures, regulations, or laws, or in briefing abstract principles of
law, does not disqualify the lawyer under DR 9-101(B) from
subsequent private employment involving the same regulations,
procedures, or points of law; the same "matter" is not involved
because there is lacking the discrete, identifiable transactions or
conduct involving a particular situation and specific parties.
ABA Comm. on Ethics and Professional Responsibility, Formal Op. 342 (1975),
in Formal and Informal Ethics Opinions 110, 115-16 (1985) (footnotes
omitted) (emphasis added). Thus, while the word "matter" may refer to the
same litigation, disqualification may also be proper where separate actions
arise from the same situation and there is substantial overlap of factual
issues. See General Motors Corp. v. City of New York, 501 F.2d 639, 650 (2d
Cir. 1974) (attorney was involved in same "matter" under DR 9-101(B), where
attorney, while employed in Justice Department, prosecuted antitrust action
against defendant, then later accepted employment as plaintiff's lawyer in
private antitrust action against same defendant for substantially same
conduct); cf. Olivier v. Town of Cumberland, 540 A.2d 23, 25 (R.I. 1988).
The unchallenged record indicates that Mr. Mullett, as associate
general counsel to the PSB in 1988-89, participated in a PSB effort to
limit VPX's powers as PURPA purchasing agent and to reestablish PSB
authority over the purchasing agent program. In the present matter, Mr.
Mullett, as attorney for VEPPI, argues that the PSB has inherent authority
to curtail VPX as PURPA purchasing agent and to appoint VEPPI in VPX's
place. Both circumstances require the PSB to define the scope of VPX's
rights under the 1987 designation order and the scope of the PSB's
statutory authority to narrow those rights. The overlap in legal and
factual issues between the two efforts is apparent from Mr. Mullett's own
words in his 1989 "Confidential Memorandum" to the PSB. In urging the PSB
to refrain from issuing a certificate of public good to VPX, Mr. Mullett
asserted the likelihood that "VPX itself will use this as another tool to
beat the Board over the head with." The phrase "another tool" is a clear
reference to the existing documents that established the PSB's relationship
with VPX and that are all at issue in the instant appeal. Mr. Mullett
further acknowledged that "there is at least a fair likelihood that all of
this will end in unpleasant litigation." Again, the phrase "all of this"
refers to the entirety of the PSB's relationship with VPX, each component
of which is in dispute in the instant appeal.
We conclude that the PSB's 1988-89 renegotiation involved the same
"matter" at issue in this case. The PSB, however, looked to the fact that
the PSB in 1988-89 did not contemplate the "involuntary revocation" remedy
that was employed in this case, and concluded from the difference in legal
strategies that the two efforts were not the same "matter." We do not
believe DR 9-101(B) requires such a narrow conception of "matter." As one
commentator has noted, "[a] matter that a lawyer is working on is the
general collection of facts, issues, blind alleys, options exercised and
options that might be considered later, and arguments that are made and
those that are held in reserve." C.W. Wolfram, Modern Legal Ethics § 8.10,
at 471 (1986).
The PSB also concluded, for policy reasons, that a broad definition of
"matter" for DR 9-101(B) purposes would have a chilling effect on the
recruitment of agency lawyers. We acknowledge the validity of such
concerns generally, see, e.g., Reardon v. Marlayne, Inc., 416 A.2d 852,
861-62 (N.J. 1980) (raising concern that "a broad approach to
disqualification of former government attorneys would adversely affect the
ability of government to recruit young professionals"), but we believe such
concerns are unwarranted here. Our conclusion that Mr.
Mullett's public and private work involves the same "matter" rests on the
identity of factual and legal issues presented by the two representations.
As such, our construction of the word "matter" does not broaden the sweep
of the disciplinary rule.(FN9)
B.
The PSB also concluded that Mr. Mullett did not have "substantial
responsibility" in this matter while serving at the Department and the PSB.
We disagree. According to the ABA:
As used in DR 9-101(B), "substantial responsibility" envisages a
much closer and more direct relationship than that of a mere
perfunctory approval or disapproval of the matter in question. It
contemplates a responsibility requiring the official to become
personally involved to an important, material degree, in the
investigative or deliberative processes regarding the transactions or
facts in question. . . . With a responsibility so strong and compelling
that he probably became involved in the investigative or decisional
processes, a lawyer upon leaving the government service should not
represent another in regard to that matter.
Formal Opinion 342, supra, at 118 (footnotes omitted) (emphasis added).
Courts interpreting the term in light of Formal Opinion 342 have held that
"the prohibition against subsequent employment of a former government
official mandated by this disciplinary rule requires some degree of
personal involvement in a prior related matter." Cleary, 704 P.2d at 870
(emphasis added).
The record demonstrates that Mr. Mullett had substantial
responsibility in the VPX matter during his tenure with the PSB. The 1988
draft designation order, which was never issued but which purported to
establish guidelines for VPX's operation as purchasing agent under the 1987
designation order, bears Mr. Mullett's initials and handwritten revisions.
His 1989 "Confidential Memo" acknowledges that he "was involved in the
early drafting of a potential VPX certificate" and that he devoted over two
thousand hours to "matters directly related to VPX and the small
power program." Finally, in the same memorandum, Mr. Mullett expressly
contemplates future litigation of the issues involved in the PSB-VPX
relationship, and provides strategic advice to the PSB on how to avoid or
manage such litigation.
The PSB concluded, however, that the record was at best ambiguous on
the question of Mr. Mullett's role in this matter while at the PSB.
According to the PSB, Mr. Mullett's estimate of hours devoted to VPX and
PURPA includes his earlier service as general counsel to the Public Service
Department, as well as his later service at the PSB, and there is no
evidence that his service at the Department involved issues related to the
instant litigation. The short answer is that, whatever the ratio of
Department hours to PSB hours involved in Mr. Mullett's time estimate, the
record demonstrates that he had substantial responsibility in this matter
while at the PSB.
The PSB further concluded that the "Confidential Memorandum," which
provides the strongest indication of Mr. Mullett's work on this matter, was
an unsolicited statement representing Mr. Mullett's personal opinion, and
that there is no indication the document had any influence on the PSB's
final decision with respect to VPX. As one court has observed, however,
"the rule requires substantial responsibility `in' some matter, rather than
substantial responsibility `for' some matter." Cleary, 704 P.2d at 870.
Accordingly, the proper inquiry is whether Mr. Mullett engaged in "actual,
rather than theoretical, conduct," Olivier, 540 A.2d at 26, and not whether
his conduct had actual, rather than theoretical, influence on the outcome.
C.
Because we find that Mr. Mullett, while serving as associate general
counsel to the PSB, had substantial responsibility in the same matter as is
involved in the instant appeal, we conclude that the PSB abused its
discretion in failing to grant VPX's disqualification motion. Our
disposition of VPX's other claims on appeal, however, demonstrates that Mr.
Mullett's representation of VEPPI has not prejudiced VPX's rights up to
this time. Nevertheless, the potential for prejudice resulting from Mr.
Mullett's prior involvement at the PSB leads us to
conclude that Mr. Mullett's further participation in this matter is
inappropriate. See In re County of Bergen, 633 A.2d 1017, 1021 (N.J.
Super. Ct. App. Div. 1993) (prospective disqualification of counsel ordered
where record does not disclose any past violations of rights of respective
parties). Accordingly, Mr. Mullett is disqualified from representing VEPPI
in this or in any matter or proceeding in which VPX has an adversary
position with VEPPI.
The order denying appellant's motion to disqualify appellee VEPPI's
attorney is reversed, and Mr. Mullett is disqualified from further
representing VEPPI in any matter in which VPX has an adversary position
with VEPPI; otherwise, affirmed.
FOR THE COURT:
_____________________________________________
Associate Justice
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Footnotes
FN1. In late 1989, the PSB amended Rule 4.100 to provide new rules
for, among other things, the designation of the PURPA purchasing agent.
Under the new rules,
The Board may by order designate one or more Purchasing Agents. Such
an order may define appropriate terms and conditions, including the rights,
authority, duties and obligations of the Purchasing Agent, and the
authority of the Board to regulate and supervise the Purchasing Agent. In
such an Order, the Board may incorporate provisions that reflect its
consideration of such factors as:
. . .
- the general good of the State. If the Purchasing Agent accepts such
a designation, the Purchasing Agent, and all parties which transact
business with the Purchasing Agent, shall, in the conduct of their business
under this Rule, be subject to the terms and conditions of the designation
order. Any previous designation shall remain in full force and effect
unless and until specifically modified by the Board on a prospective basis.
Rule 4.102(C) (effective Jan. 8, 1990) (hereinafter, 1990 Amendment).
FN2. The Board ultimately ruled unfavorably to VPX's position on this
second issue, and VPX has not pursued its claim on appeal.
FN3. We have previously held that "VPX is not a utility." In re
Department of Pub. Serv., 157 Vt. 120, 126, 596 A.2d 1303, 1307 (1991). We
pass no judgment on whether § 231 proceedings are required for the
designation of a PURPA purchasing agent.
FN4. VPX's argument for dismissal was that "VEPPI's petition fails as
a matter of law." In a supplemental memorandum in support of its motion to
dismiss, VPX stated: "VPX will produce testimony to contradict some of
VEPPI's more egregious factual misstatements if this case is not dismissed
on the pleadings. Evidence, however, is unnecessary. The Board must grant
the motion to dismiss because, as a matter of law, it cannot grant the
relief requested by VEPPI's petition." (Emphasis added.)
FN5. The only suggestion that VPX had additional legal rights came
from James Volz, representing the Public Service Department. In oral
argument before the PSB, Attorney Volz stated: "It is not appropriate to
dismiss this case at this time. I think there needs to be a hearing, and I
think the decision about what VPX's rights are needs to be decided. I
don't agree with Mr. Marks that VPX has a franchise. I think most of his
argument hangs on that assertion. And I think VPX probably does have some
rights and those rights need to be addressed and they are entitled to due
process and they may be entitled to some compensation or remedy. That
needs to be determined." At no time, however, did VPX express agreement
with Mr. Volz's analysis, request a hearing to resolve its rights, or
specify the rights that might be addressed in such a hearing.
FN6. The PSB order expressly reserved resolution of VPX's potential
legal claims. According to the order, "it may be necessary to determine
whether VPX is entitled to compensation for any or all of its assets. The
Hearing Officer will hear and resolve any such questions, should they
arise." (Emphasis added.)
FN7. In oral argument before the hearing officer, Mr. Mullett stated
that he could not "recall if it was an extensive revision or a small
revision; but I urge you to draw any inferences in the manner that is more
protective of any public interest."
FN8. Mr. Cowart and Ms. Rude are two of the three PSB members who
issued the June 30, 1995 order on appeal here.
FN9. Our construction of the word "interest" for purposes of V.R.C.P.
24 intervention, to which the PSB looked for guidance, is inapposite to our
decision today. Cf. Re Chittenden Recycling Servs., 162 Vt. 84, 88-89, 643 A.2d 1204, 1207 (1994); Helm v. Helm, 139 Vt. 225, 226-27, 424 A.2d 1081,
1082 (1981).
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