Ark. Dep't of Fin. & Admin. v. Naturalis Health, LLC

Decision Date21 June 2018
Docket NumberNo. CV-18-356,CV-18-356
Citation549 S.W.3d 901
Parties ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION; Arkansas Alcoholic Beverage Control Division; and Arkansas Medical Marijuana Commission, Appellants v. NATURALIS HEALTH, LLC, Appellee Natural State Wellness Enterprises, LLC ; Delta Medical Cannabis Company, LLC; Bold Team, LLC; and Osage Creek Cultivation, LLC Appellants/Intervenors Arkansas Medicinal Source, LLC; Clear Creek Medical, Inc.; Natural State Agronomics, Inc.; River Valley Production, LLC, d/b/a River Valley Relief Cultivation; Acanza Health Group, LLC; Carpenter Farms Medical Group, LLC; Mildred Griggs and Delta Cannabinoid Corporation, Appellees/Intervenors
CourtArkansas Supreme Court

Leslie Rutledge, Att’y Gen., by: Lee P. Rudofsky, Solicitor Gen., Monty V. Baugh, Deputy Att’y Gen., and Jennifer L. Merritt, Sr. Ass’t Att’y Gen., for appellants/cross-appellees.

McDaniel, Richardson & Calhoun, PLLC, Little Rock, by: Scott M. Richardson, for appellant-intervenor/cross-appellee Natural State Wellness Enterprises, LLC.

Fuqua Campbell, P.A., by: Eric R. Gribble, Fayetteville, Phil Campbell, Annie Depper, and Haley Heath Burks, Little Rock, for appellant-intervenor/cross-appellee Delta Medical Cannabis Company, LLC.

Murphy, Thompson, Arnold, Skinner & Castleberry, by: Kenneth P. "Casey" Castleberry, El Dorado, for appellant-intervenor/cross-appellee Bold Team, LLC.

Hardin, Jesson & Terry, PLC, Fort Smith, by: Rex M. Terry ; and Everett Law Firm, Fayetteville, by: John C. Everett, for appellant-intervenor/cross-appellee Osage Creek Cultivation, LLC.

Bequette & Billingsley, P.A., by: Jay Bequette, Keith I. Billingsley, and W. Cody Kees, Little Rock, for appellee/cross-appellant Naturalis Health, LLC.

Dover Dixon Horne, PLLC, Little Rock, by: Randall L. Bynum and Roger "Todd" Wooten, for appellee-intervenor Acanza Health Group, LLC.

Hale & Young PLLC, by: Virgil W. Young, North Little Rock, and Paul A. Young ; and William L. Owen, P.A., by: William L. Owen, Little Rock; and Robert S. Tschiemer, Mayflower, for appellee-intervenor/cross-appellant Natural State Agronomics, Inc.

RHONDA K. WOOD, Associate Justice

Appellants, which include Arkansas Department of Finance and Administration (DFA), Arkansas Alcoholic Beverage Control Division (ABC), and Arkansas Medical Marijuana Commission (MMC),1 appeal the circuit court’s preliminary injunction and declaratory judgment. At issue is the MMC’s process that resulted in a decision awarding the top five scoring applicants, including Natural State Wellness Enterprises, Delta Medical Cannabis Company, Bold Team, LLC, and Osage Creek Cultivation, medical-marijuana-cultivation-facility licenses. Appellee2 Naturalis Health, LLC (Naturalis), is one of the applicants that did not receive a score sufficient to obtain one of the initial five licenses. We reverse and dismiss the appeal because the circuit court lacked subject-matter jurisdiction.

I. Factual and Procedural Background

In 2016, the people of Arkansas amended the Arkansas Constitution to legalize medical marijuana. Ark. Const. amend. 98. Amendment 98 created the MMC3 "to determine the qualifications for receiving a license to operate a dispensary or a license to operate a cultivation facility and the awarding of licenses." Id. § 19(a)(1). Pursuant to this authority, the MMC promulgated "Rules and Regulations Governing the Application For, Issuance, and Renewal of Licenses for Medical Marijuana Cultivation Facilities and Dispensaries in Arkansas" (MMC Rules).

The MMC reviewed and ranked the applications4 for cultivation-facility licenses pursuant to the criteria for merit selection contained in the MMC Rules. In February 2018, the MMC named the top five applicants to whom it would award licenses after each applicant paid a $100,000 licensing fee and posted a $500,000 performance bond.5 Naturalis ranked thirty-eighth out of eighty-two applicants.

On March 13, 2018, Naturalis filed a "Verified Complaint to Appeal Agency Decision, for Temporary Restraining Order, Preliminary and Permanent Injunction and Declaratory Judgment" in the circuit court against DFA, ABC, and the MMC. On March 14, 2018, the circuit court entered a temporary restraining order. On March 16, 2018, the circuit court conducted an evidentiary hearing on the preliminary injunction. On March 21, 2018, the circuit court entered an order granting the preliminary injunction and a declaratory judgment. Naturalis had asserted that the MMC carried out the application process in a flawed, biased, and arbitrary and capricious manner, and that the commissioners failed to uniformly apply their rules when scoring the applications. The circuit court went further and concluded that the MMC’s licensing process and decisions violated Amendment 98 to the Arkansas Constitution, were ultra vires , violated due process of law, resulted from improper procedure, and were arbitrary and capricious. It also declared the MMC’s licensing decisions null and void, and it enjoined the MMC from issuing the cultivation-facility licenses.

After the circuit court entered its order, successful and unsuccessful applicants filed motions to intervene,6 each seeking an opportunity to be heard in the matter.7 On April 2, 2018, the circuit court entered a "Nunc Pro Tunc Order," again granting the preliminary injunction and declaratory judgment. The circuit court granted the motions to intervene. On April 11, 2018, the circuit court entered a "Memorandum Omnibus Order" denying the appellants/intervenors' motion to vacate the preliminary injunction on grounds of "law of the case." The court stated that because it had already made its decision, it was prohibited from reconsidering it and the parties were bound by it. Appellants appealed.

II. Analysis
A. Finality

We must first determine whether there is an appealable, final order. See Henson v. Cradduck , 2017 Ark. 317, 530 S.W.3d 847. The circuit court’s April 11, 2018 memorandum order stated that because it had remanded to the agency, "it is not a final appealable order." First, it is for this court to make that determination, and second, the circuit court is wrong. In some instances, a remand to an agency would preclude us from hearing the appeal for lack of a final order. See Floyd v. Ark. State Bd. of Pharm. , 248 Ark. 459, 451 S.W.2d 874 (1970). An order to remand is not final and appealable if it directs the agency to complete a step which is a predicate to the circuit court reaching its ultimate decision. When this occurs, the circuit court’s order contemplates the agency completing the task and the case returning to it for a final decision. See, e.g. , Floyd , 248 Ark. 459, 451 S.W.2d 874 (dismissing appeal because the circuit court’s order remanded to the Board to correct its order); Ark. Ins. Dep't v. Henley , 2016 Ark. App. 60, 481 S.W.3d 467 (dismissing appeal because the circuit court remanded for further proceedings); Ark. Dep't of Human Servs. v. J.N. , 96 Ark. App 319, 241 S.W.3d 293 (2006) (circuit court remanding for an in-person hearing to be scheduled at DHS’s earliest possible convenience); Hargrett v. Dir., Emp't Sec. Dep't , 44 Ark. App. 111, 866 S.W.2d 432 (1993) (per curiam) (dismissing appeal because the circuit court remanded for the Agency to "issue a determination"); Baldor Elec. Co. v. Jones , 29 Ark. App. 80, 777 S.W.2d 586 (1989) (denying rehearing, 29 Ark. App. 80, 777 S.W.2d 586 (1989) ) (dismissing appeal because the circuit court remanded for the taking of additional evidence).

Here, the circuit court’s order is final. It nullified the MMC’s decision and remanded to restart the selection process. The circuit court had ruled on the merits. Therefore, we find that the order is a final disposition of the case for purposes of an appeal.

Appellees also argue that our review is limited to the injunctive relief and that we cannot consider the merits because this is an interlocutory appeal under Arkansas Rule of Appellate ProcedureCivil 2(a)(6). Again, we disagree. "For an order to be final and appealable, it must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject matter in controversy." Robinson v. Villines , 2012 Ark. 211, at 2–3, 2012 WL 1739140. In contrast, an order that contemplates further action by a party or the court is not a final, appealable order. Id. at 3. Here, the circuit court’s order is final, and therefore appealable, because it vacated the selection of licensees and enjoined the MMC from issuing the cultivation licenses to applicants it had chosen. The circuit court considered it sufficiently final that it erroneously applied the "law of the case doctrine."8 The court’s decision concluded the lawsuit’s controversy, and the appellants appealed from a final, appealable order.9

B. Subject-Matter Jurisdiction

Next, we must address subject-matter jurisdiction. Subject-matter jurisdiction is a court’s authority to hear a particular type of case. Fatpipe, Inc. v. State , 2012 Ark. 248, 410 S.W.3d 574. It cannot be waived, can be questioned for the first time on appeal, and can be raised by this court sua sponte. Terry v. Lock , 343 Ark. 452, 37 S.W.3d 202 (2001). Subject-matter jurisdiction is determined from the pleadings and not proof. Id. Where the issue of subject-matter jurisdiction requires interpretation of a statute or constitutional provision, our review is de novo. Tripcony v. Ark. Sch. for the Deaf , 2012 Ark. 188, 403 S.W.3d 559.

Our constitution divides our state government into three branches and states that no branch "shall exercise any power belonging to either of the others." Ark. Const. art. 4, § 2. This is foundational to our government. The judicial branch must not abdicate this by reviewing the day-to-day actions of the executive branch. See Ark. Livestock & Poultry Comm'n v. House , 276 Ark. 326, 634 S.W.2d 388 (1982). The Administrative Procedure Act (APA) subjects limited agency decisions to circuit court review. See Tripcony...

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  • Haverstick v. Haverstick (In re Haverstick)
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    • December 16, 2021
    ...When the issue of jurisdiction requires statutory interpretation, our review is de novo. Ark. Dep't of Fin. & Admin. v. Naturalis Health, LLC , 2018 Ark. 224, at 7, 549 S.W.3d 901, 906.As noted, a hearing is required only if someone opposes a petition for probate or for appointment of an ex......
  • Ark. Dep't of Educ. v. McCoy
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    ...Subject-matter jurisdiction is a court's authority to hear and decide a particular type of case. Ark. Dep't of Fin. & Admin. v. Naturalis Health, LLC , 2018 Ark. 224, at 6, 549 S.W.3d 901, 906. Whether a circuit court has subject-matter jurisdiction rests on the pleadings, not the proof. Id......
  • Ark. Dep't of Fin. & Admin. v. Carpenter Farms Med. Grp., LLC
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    ...Publ'g Co. , 264 Ark. 1, 7, 568 S.W.2d 33, 36 (1978).We addressed a similar challenge to the Commission's licensing decision in Arkansas Department of Finance and Administration v. Naturalis Health, LLC , 2018 Ark. 224, 549 S.W.3d 901. There, a failed cultivation-facility applicant sued to ......
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    ...operations and administrative decisions of state agencies in the medical marijuana licensing and regulatory process; (2) under Arkansas Department of Finance and Administration v. Naturalis Health, LLC , 2018 Ark. 224, 549 S.W.3d 901, the decisions at issue are not subject to judicial revie......
  • Request a trial to view additional results
2 books & journal articles
  • Chapter 15 Special Kinds of Appeals
    • United States
    • Handling Appeals in Arkansas
    • Invalid date
    ...inappropriate or irrelevant to the person or situation." See Ark. Dep't of Fin. & Admin. v. Naturalis Health, LLC, 2018 Ark. 224 at 9-10, 549 S.W.3d 901, 907. That is different than challenging an agency's "application" of a rule, which the APA does not allow unless the proceedings qualify ......
  • Chapter 15 Special Kinds of Appeals
    • United States
    • Handling Appeals in Arkansas
    • Invalid date
    ...inappropriate or irrelevant to the person or situation." See Ark. Dep't of Fin. & Admin. v. Naturalis Health, LLC, 2018 Ark. 224 at 9-10, 549 S.W.3d 901, 907. That is different than challenging an agency's "application" of a rule, which the APA does not allow unless the proceedings qualify ......

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