Attorney for Appellant Attorneys for Appellee
Rosemary Adams Huffman Eli Lilly and Company
Indianapolis, Indiana Daniel P. McInerny
George T. Patton, Jr.
Attorneys for Appellee
Indiana Department of Environmental Management
Attorney General of Indiana
David L. Steiner
Deputy Attorney General of Indiana Indianapolis, Indiana
Appeal from the Marion Superior Court, No. 49F12-0201-MI-63
The Honorable Michael D. Keele, Judge
On Petition To Transfer from the Indiana Court of Appeals, No. 49A02-0207-CV-564
June 30, 2004
The Indiana Office of Environmental Adjudication dismissed Rosemary Huffmans petition for administrative review
of a decision of the Indiana Department of Environmental Management renewing a pollution
permit for Eli Lilly and Company. We hold, as did the Court
of Appeals, that whether a person is entitled to seek administrative review depends
upon whether the person is aggrieved or adversely affected (as provided in statute)
by the administrative agencys decision and that the rules for determining whether the
person has standing to file a lawsuit do not apply. We also
conclude that a portion of the Office of Environmental Adjudications determination that Huffman
was not entitled to seek administrative review was not supported by substantial evidence.
Huffman challenged the permit on several grounds: (1) Lilly did not disclose its
planned facility expansion and so IDEM was not able to consider the increased
effluent that will result from this major expansion; (2) Lilly did not disclose
the scheduled Leary Ditch clean up for which the taxpayers were recently assessed;
(3) IDEM accepted new information and made a substantial number of permit revisions
after the close of public comment . . . depriving the public of
its right to review; and (4) IDEM failed to address health risks to
the residential use of contiguous property from toxicology research and other Lilly activities
involving discharge of water. (Appellants App. at 48.)
At a prehearing conference, Lilly claimed that Huffman lacked standing to petition for
administrative review. Chief Administrative Law Judge Wayne E. Penrod ordered Huffman to
provide evidence of her legal interest in the property. Huffman filed an
Amended Petition for Administrative Review that asserted her interest . . . is
as a member of the public and that her family has residential property,
in which she has had a legal interest for several years, contiguous to
the Lilly property. (
Id. at 41-42.) Lilly then filed a Motion
to Dismiss Huffmans Amended Petition for lack of standing. In Huffmans response
to that motion, she stated her legal interest more specifically the property
adjacent to Lillys Greenfield Laboratories is owned by GreenWoods LLC; Huffman is the
sole owner of a corporation named DOS, Inc., that owns one unit of
and is the managing member of GreenWoods LLC.
Judge Penrod granted Lillys motion. He reasoned that the judicial doctrine of
standing applies to administrative proceedings and compliments the statutory provision of aggrieved or
adversely affected, the ground relied upon by Huffman to seek administrative review.
He then found that Huffman had not demonstrated that she had standing to
contest the permit. The trial court affirmed Judge Penrods decision but the
Court of Appeals reversed, finding that there is not substantial evidence to support
the dismissal of her petition. Huffman v. IDEM, 788 N.E.2d 505, 506
(Ind. Ct. App. 2003). IDEM and Lilly sought transfer, which we granted.
804 N.E.2d 757 (Ind. 2003) (table). We now reverse the trial
Both the OEA and the trial court held that the judicial doctrine of
standing applies to administrative proceedings and found that Huffman had no standing.
The Court of Appeals, reasoning that the judicial doctrine of standing applies to
lawsuits filed in a trial court and not to administrative proceedings, looked to
the language of AOPA to determine who could seek administrative review. Huffman,
788 N.E.2d at 508. On petition to our Court, Lilly and IDEM
urge the construction put forth by the OEA and the trial court.
That is, they argue that a person must have the same standing to
invoke administrative review under AOPA as the person would need to file a
lawsuit in a trial court and that because in their view Huffman
would not have had such standing, she cannot seek administrative review. Huffman,
for her part, contends that she would have had standing to file a
lawsuit and so is entitled to administrative review.
Our court has recently had several opportunities to discuss what the OEA and lower courts here refer to as the judicial doctrine of standing. This doctrine dictates whether the complaining party [in a lawsuit] is the proper person to invoke the court's power. State ex rel. Cittadine v. Ind. Dept of Transp., 790 N.E.2d 978, 979 (Ind. 2003); see also City of Gary v. Smith & Wesson Corp., 801 N.E.2d 1222 (Ind. 2003); Embry v. O'Bannon, 798 N.E.2d 157 (Ind. 2003). However, whether Huffman is the proper person to file a lawsuit is not at issue in this case. Rather, the question is whether Huffman is the proper person to invoke the OEAs power of administrative review of IDEMs permit renewal decision. Subject to constitutional constraints, of which none are asserted here, the Legislature may dictate access to administrative review on terms the same as or more or less generous than access to file a lawsuit. We therefore find imposition of the judicial doctrine of standing inappropriate here because AOPA itself identifies who may pursue an administrative proceeding.
AOPA provides that to qualify for administrative review of an agency order, a
(1) States facts demonstrating that:
(A) the petitioner is a person to whom the order is specifically directed;
(B) the petitioner is aggrieved or adversely affected by the order; or
(C) the petitioner is entitled to review under any law.
Ind. Code § 4-21.5-3-7(a)(1) (1998). Huffman sought administrative review under the provision
for persons who are aggrieved or adversely affected by the order.
The statute does not define aggrieved or adversely affected, but those words have
a well-developed meaning. Blacks Law Dictionary 73, 1154 (8th ed. 2004), defines
aggrieved as having legal rights that are adversely affected, and aggrieved party as
a party whose personal, pecuniary, or property rights have been adversely affected by
another persons actions or by a courts decree or judgment. In another
context, we have defined aggrieved as:
[A] substantial grievance, a denial of some personal or property right or the
imposition upon a party of a burden or obligation. . . . The
appellant must have a legal interest which will be enlarged or diminished by
the result of the appeal.
McFarland v. Pierce, 151 Ind. 546, 547-48, 45 N.E.2d 706, 706-07 (1897) (construing
statute allowing appeal to the Indiana Supreme Court), quoted in Stout v. Mercer,
160 Ind. App. 454, 460, 312 N.E.2d 515, 518 (1974) (citations and quotations
omitted); accord Bagnall v. Town of Beverly Shores, 726 N.E.2d 782, 786 (Ind.
2000). Essentially, to be aggrieved or adversely affected, a person must have
suffered or be likely to suffer in the immediate future harm to a
legal interest, be it a pecuniary, property, or personal interest.
The view that the rules of standing to file a lawsuit apply to administrative proceedings originates from a case of this Court, Insurance Commissioners of Indiana v. Mutual Medical Insurance, Inc., 251 Ind. 296, 241 N.E.2d 56 (1968), See footnote upon which IDEM and Lilly rely. At the time, AOPAs predecessor statute, the Administrative Adjudication Act (AAA), was in effect, and allowed all interested persons or parties the ability to seek administrative review of agency action. Ind. Code § 4-22-1-4 (repealed effective July 1, 1987).
Mutual Medical, the Indiana State Podiatrists Association filed a complaint against Mutual
Medical Insurance Company with the Insurance Commissioner, alleging that some of Mutual Medicals
insurance policies illegally excluded certain services from compensation when those services were performed
by podiatrists. The Commissioner ruled for the Podiatrists Association but the trial
court reversed and the Podiatrists Association appealed. At the trial level and
on appeal, Mutual Medical argued that the Podiatrists Association did not have standing
to participate in the legal action because it had no justiciable interest in
the controversy. Mutual Medical, 251 Ind. at 299, 241 N.E.2d at 58.
This Court addressed two questions. First, whether an administrative agency could entertain
a hearing on a complaint brought by a complainant who has no justiciable
interest in the alleged unlawful action charged. Id. We answered that
question in the affirmative:
The Insurance Law and the Administrative Adjudication Act do not contemplate the proposition
that a complaint must be filed by a party with legal standing to
invoke the jurisdiction of the Insurance Commissioner to review the legality of insurance
policy provisions. The personal merit, standing or legal interests and motives of
a private complainant under these statutory provisions, are immaterial to the jurisdiction of
the Insurance Commissioner, if the practice complained of is one in which the
public generally has an interest.
Id. at 300, 241 N.E.2d at 59 (citations omitted) (emphasis added).
The Court then addressed a second question: May a complainant, who has no
legal standing to sue, become a party to the administrative proceeding with legal
standing on appellate review. Id. at 299, 241 N.E.2d at 58.
We answered in the negative, because of two barriers. First, the AAA
had a provision limiting judicial review of any order or determination made by
any such agency to [a]ny party or person aggrieved. Ind. Code §
4-22-1-14 (repealed effective July 1, 1987). Second, the judicial doctrine of standing
required that in order to invoke a courts jurisdiction, a plaintiff must demonstrate
a personal stake in the outcome of the lawsuit and must show that
he or she has sustained or was in immediate danger of sustaining, some
direct injury as a result of the conduct at issue. Higgins v.
Hale, 476 N.E.2d 95, 101 (Ind. 1985).
But this situation created a problem. If a person was entitled to an administrative hearing but not judicial review, it was possible that not all sides would be represented on review and that review would then be ineffective and incomplete. Mutual Medical, 251 Ind. at 301, 241 N.E.2d at 59-60. The Court tried to remedy this problem by holding that Indianas rules of standing are applicable to administrative proceedings; if a person did not have standing, the person could not become a party to the administrative hearing. Id. Under the Courts answer to the first question, however, those without standing could still get a hearing if the practice complained of was one in which the public generally had an interest. Subsequent Court of Appeals cases have glossed over this nuance and have read Mutual Medical for the proposition that the doctrine of standing applies to administrative proceedings under the AAA. City of Hammond v. Red Top Trucking Co., 409 N.E.2d 655, 657 (Ind. Ct. App. 1980); Dept of Fin. Insts. v. Wayne Bank & Trust Co., 178 Ind. App. 265, 269-72, 381 N.E.2d 1100, 1103-05 (1978); Ind. Alcoholic Beverage Commn v. McShane, 170 Ind. App. 586, 596, 354 N.E.2d 259, 266 (1976); Bowen v. Metro. Bd. of Zoning Appeals, 161 Ind. App. 522, 527, 317 N.E.2d 193, 197 (1974). See footnote
Mutual Medical was decided under the AAA, not AOPA. Unlike its predecessor, the AAA, which allowed all interested persons or parties the ability to seek administrative review, AOPA reserves administrative review for a more narrow class. See footnote As a consequence, under AOPA, we do not believe a situation will arise in which a party to administrative review would not have standing to seek judicial review in court. Said differently, the reach of the judicial standing doctrine certainly includes persons aggrieved or adversely affected by administrative agency action given that the definition of aggrieved or adversely affected requires harm to a pecuniary, property, or personal interest. IDEM and Lilly warn that if the definition of aggrieved or adversely affected means something different than the recognized standing requirement . . . . [this] could open administrative tribunals to persons who have no real, personal stake in the outcome of a case, but merely believe themselves to be aggrieved. (Pet. to Transfer at 8.) This argument ignores the fact that the concept of aggrieved is more than a feeling of concern or disagreement with a policy; rather, it is a personalized harm.
In any event, AOPA defines who can get administrative review. When a
statute is clear, we do not impose other constructions upon it.
Bell Tel. Co. v. Ind. Util. Regulatory Commn, 715 N.E.2d 351, 354 (Ind.
1999) (citing Ind. Dept of State Revenue v. Horizon Bancorp, 644 N.E.2d 870,
872 (Ind. 1994)). IDEM and Lilly assert that the legislative intent of
the statute was to bring it into alignment with controlling Indiana case law
on standing. (Pet. to Transfer at 7.) While the change in
the language from all interested persons or parties to aggrieved or adversely affected
suggests an intention to narrow the class of persons who can seek administrative
review, there is no clear evidence of a legislative intent to make that
class and the class of persons who have standing one in the same.
If that were so, one would think the Legislature would have used
phrases like personal stake or direct injury that were prevalent at the time
in the case law of standing. It did not.
Huffman takes the position that the common law doctrine of public standing would
provide her standing to invoke judicial review in a trial court. Public
standing allows persons with no personal stake in a matter to bring suit
when certain public rights are at issue.
See footnote Huffman reasons that if public
standing is allowed at the trial court level, then it is allowed at
the administrative proceeding level, where the purpose is to develop public policy where
public rights are at interest. (Br. in Resp. to Pet. to Transfer
Just as the judicial doctrine of standing does not apply to administrative proceedings,
its public standing component is also inapplicable. The language of AOPA does
not allow for administrative review based on a generalized concern as a member
of the public. The statute says aggrieved or adversely affected and this
contemplates some sort of personalized harm. To repeat, this is a different
standard than that under the previous AAA statute that allowed all interested persons
or parties the ability to seek administrative review and arguably allowed for some
type of public standing. Moreover, in many instances, the public is allowed
time to comment on administrative agency action before it occurs or becomes final.
Indeed, Huffman stated that she actively expressed her concerns during the public
comment phase of IDEMs decision-making. (Appellants App. at 33.) We therefore
decline to find such an exception in AOPA.
We hold that the statute, and only the statute, defines the class of
persons who can seek administrative review of agency action.
On appeal, the court noted that although Lilly filed its motion under 12(B)(1),
lack of subject matter jurisdiction, motions to dismiss for lack of standing are
properly brought under 12(B)(6), for failure to state a claim. Huffman, 788
N.E.2d at 509-10. The court proceeded to evaluate Lillys motion as a
12(B)(6) motion and found that there was not substantial evidence supporting the OEAs
decision to dismiss Huffmans petition for review. Id. at 510-11.
If the administrative law judge intended to apply Indianas trial rules, as Lilly
requested by invoking Trial Rule 12(B)(1), the motion should have been treated as
a 12(B)(6) motion. The question here is whether Huffman is a proper
person to challenge Lillys permit and not whether IDEM has subject-matter jurisdiction over
challenges to the permits it issues. IDEM always has jurisdiction over such
challenges, and that does not change depending upon the petitioner. The standard
for a 12(B)(6) motion is that articulated by the Court of Appeals:
In reviewing a Rule 12(B)(6) motion, a court is required to take as true all allegations upon the face of the complaint and may only dismiss if the plaintiff would not be entitled to recover under any set of facts admissible under the allegations of the complaint. This Court views the pleadings in a light most favorable to the nonmoving party, and we draw every reasonable inference in favor of that party.
Huffman, 788 N.E.2d at 510 (citations omitted); see also State Civil Rights Commn v. County Line Park, Inc., 738 N.E.2d 1044, 1049 (Ind. 2000); Lawson v. First Union Mortgage Co., 786 N.E.2d 279, 281 (Ind. Ct. App. 2003). Trial Rule 12(B) also states that if, on a 12(B)(6) motion, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56. In such case, all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56. The standard of Trial Rule 56 is that [t]he judgment sought shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C).
The administrative law judge considered the additional information provided in the motion papers,
but never gave the parties an opportunity to provide additional evidence or to
develop the arguments more fully, such as through a hearing. The consequence
is that some of the findings are not supported by substantial evidence.
The OEAs finding on this first issue is supported by substantial evidence.
A general rule of corporate law is that shareholders cannot bring actions in
their own name to redress an injury to the corporation.
Glass, GMBh v. Stein, 622 N.E.2d 163, 165 (Ind. 1993); Speedway Realty Co.
v. Grasshoff Realty Corp., 248 Ind. 6, 9 (Ind. 1966) (It is fundamental
that every action must be prosecuted in the name of the real party
in interest. (quotation and citation omitted)). The rationale for this rule is
twofold. First, if a shareholder sues for money damages for injury to
the corporation, there is a concern that the corporation itself could still sue
and inflict double punishment on the defendant. Meanwhile, the shareholder has received
money that is really owed to the corporation. Second, there is a
concern that the real partys interests will not be taken into account if
that party is not represented in the action. The shareholder and the
corporation may have different interests and goals in litigation, and the shareholder could
act in ways that harm the corporation, even if unintentionally.
Huffman is seeking to have the permit invalidated and is not seeking damages, so the first concern is not present. But the second concern is. Huffman stated in her response to the motion to dismiss that she owns a corporation that owns one unit of and is the managing member of the corporation that owns the property. Huffman argues that [a] property right is not a requirement. (Br. in Resp. to Pet. to Transfer at 12.) While that is true, it ignores instances where someone else has a property right that is affected. In those situations, the holder of the property right is the person who should bring claims based on harm to the property. GreenWoods LLC, as the property owner and real party in interest, is therefore the proper party to seek administrative review for harm to the property. This issue is sufficiently clear from the information provided by the parties that it needs no further development.
The OEAs determinations on the second and third issues, however, are not supported
by substantial evidence. The OEA found that Huffman stated no facts demonstrating
how she was aggrieved or adversely affected by Lillys permit. However, one
of the bases for Huffmans challenge to Lillys permits was that IDEM failed
to address health risks to the residential use of contiguous property from toxicology
research and other Lilly activities involving discharge of water. (Appellants App. at
48.) In Huffmans response to the motion to dismiss, she stated that
she is extremely concerned by the permit because she has in fact managed
this property since 1987 and that responsibility requires that she and her agents
be on the property with frequency. (Id. at 33.) Under the
12(B)(6) standard, a motion to dismiss is inappropriate if a party could recover
under any set of facts admissible under the allegations of the complaint.
Particularly because the OEA never gave Huffman an opportunity to provide additional evidence
or to develop the argument more fully, it was impossible for the OEA
to tell what Huffmans personal health claim was and whether it had any
merit. Dismissing this claim was therefore premature.
The OEA also seemed to have based its decision in part on a statement in Lillys motion to dismiss, which it quoted in its order:
Based upon calculations performed by Lilly, the Lilly discharge point in Leary Ditch
is approximately 2800 feet west and downstream from the nearest point on the
Adams Property, and from the discharge point Leary Ditch continues to flow downstream
away from the Adams Property. The plain fact is that Lillys permitted
discharge to Leary Ditch has no impact, adverse or otherwise, upon the Petitioner
or the Adams Property.
(Appellants App. at 27.) IDEM and Lilly try to bolster this position
by pointing out that Huffman did not dispute [that] the discharge did not
even touch the property in which she owns one unit of stock.
(Pet. to Transfer at 9.) Huffman responds that she was not required
to refute such an unsworn allegation. (Br. in Resp. to Pet. to
Transfer at 11.)
Motions brought under Trial Rule 12(B)(6) and Trial Rule 56 do not need
to be sworn or verified. Trial Rule 11 requires that an attorney
or unrepresented party sign every pleading or motion, thereby certifying that he has
read the pleadings; that to the best of his knowledge, information, and belief,
there is good ground to support it; and that it is not interposed
for delay. Ind. Trial Rule 11(A). Lillys attorney signed the Motion
to Dismiss. A party may make a summary judgment motion with or
without supporting affidavits, T.R. 56(A), and affidavits are defined as voluntary declaration[s] of
facts written down and sworn to by the declarant before an officer authorized
to administer oaths. Blacks Law Dictionary 62 (8th ed. 2004). Lilly,
however, submitted no affidavits with its Motion to Dismiss. Therefore, the fact
that the allegation regarding the discharge point is unsworn is not a valid
excuse for failing to respond to it. Nevertheless, that one statement from
Lilly is an insufficient basis on which to dismiss Huffmans petition. Even
if what Lilly and IDEM said was true about the position of the
discharge point, that alone does not prove that there is no harm to
the property or to Huffman from the discharge. This is precisely the
type of fact that needs further development before it can be resolved.
We conclude for these reasons that the OEAs dismissal of Huffmans Petition for
Administrative Review was not supported by substantial evidence.
Shepard, C.J., and Boehm and Rucker, JJ., concur. Dickson, J., concurs in
result without opinion.
Our Supreme Court held that the Podiatrists Association did not have legal standing
and therefore could not be a party either to the administrative proceedings or
to the judicial review of those proceedings. However, the court went on
to state that the standing of the Podiatrists Association was not required to
put the issue of the policy provision before the Commissioner.
400 N.E.2d 1134, 1136 (Ind. Ct. App. 1980).