Kahn v. State Bd. of Auctioneer Examiners

• Decision Date: 03 October 2001
• Citation: 785 A.2d 512
• Parties: Azam KAHN, Petitioner, v. STATE BOARD OF AUCTIONEER EXAMINERS, Respondent, Abid M. Butt, Petitioner. v. State Board of Auctioneer Examiners, Respondent.
• Court: Pennsylvania Commonwealth Court

785 A.2d 512

Azam KAHN, Petitioner, v. STATE BOARD OF AUCTIONEER EXAMINERS, Respondent, Abid M. Butt, Petitioner. v. State Board of Auctioneer Examiners, Respondent.

Commonwealth Court of Pennsylvania.

Argued September 10, 2001.

Decided October 3, 2001.

Reargument Denied December 13, 2001.

Edgar R. Casper, Harrisburg, for petitioner.

Bernadette Paul, Harrisburg, for respondent.

Before McGINLEY, Judge, PELLEGRINI, Judge, and McCLOSKEY, Senior Judge. PELLEGRINI, Judge.

Before this Court are two consolidated appeals by Azam Kahn (Kahn) and Abid M. Butt (Butt), collectively, Auctioneers, from orders of the Commonwealth of Pennsylvania, State Board of Auctioneer Examiners (Board) imposing upon Kahn a $2,000 penalty and revoking Butt's auctioneer license for purported conduct each had engaged in other states in violation of Section 20(a)(11) of the Auctioneer and Auction Licensing Act (Act).¹

On July 16, 1999, Kahn and Butt were each issued and served with a Notice and Order to Show Cause by the Commonwealth of Pennsylvania, Bureau of Professional and Occupational Affairs (Bureau) in which it was alleged that both Pennsylvania-licensed auctioneers had violated Section 20(a)(11) of the Act because they had disciplinary action taken against their auctioneer licenses in other states. Kahn's notice stated that he violated the Act due to the following actions taken by Virginia and Maine:

• on January 12, 1999, the Virginia Auctioneer Board approved a Consent Order imposing a $1,000 administrative penalty against Kahn for making material misrepresentations in the course of performing auctioneer duties; and

• on December 8, 1997, the Maine Board of Licensing of Auctioneers through a Consent Agreement imposed a $250 penalty and warned Kahn for making misrepresentations in advertisements.

Kahn filed an answer denying the characterizations of the other state disciplinary actions, explaining that the $1,000 he paid to the Virginia Board was for reimbursement of administrative costs and not a penalty, and there was no finding that he had made any material misrepresentations. He also argued that the Maine Consent Agreement made no finding that he violated any rules or regulations of that state, but only provided that he "denies, does not admit, but does not contest allegations of Complaint No. 122."

In Butt's Notice, the Bureau alleged that he violated the Act due to the following actions taken by Virginia, Texas and Wisconsin:

• on January 22, 1992, the Virginia Auctioneer's Board adopted a Consent Order imposing a monetary penalty of $900 against Butt for misleading advertising and for violating requirements to properly execute auction contracts;

• on March 20, 1995, the Texas Commission of Licensing and Regulation, through a Final Order, ordered Butt to cease and desist committing violations involving improper advertising and imposed an administrative penalty of $750;

• on November 14, 1996, the Texas Commission of Licensing and Regulation, through a Final Order, imposed an administrative penalty of $500 against Butt for misleading advertising; and

• on April 26, 1999, the Wisconsin Auctioneer Board, through a Final Decision and Order, suspended Butt's certificate of registration for one year for unprofessional conduct when he failed to disclose on his application disciplinary actions that had been taken in the other two states.

In response, Butt filed an answer arguing that in regard to the Virginia disciplinary action, he had done nothing wrong and there was no finding of fault or admission of guilt. He also alleged that because these were minor violations, it was less expensive to pay a fine than to attend a hearing. As to the Texas disciplinary action, he alleged that the omission of his name in an advertisement was a minor oversight by the advertising agent, and at the auction he forgot to announce his license number or make other legally mandated disclosures. He stated that he paid a fine rather than contest the charges at a hearing. As to the second disciplinary action in Texas relative to misleading advertising, he stated that he simply failed to comply with a font requirement. Regarding the Wisconsin disciplinary action, he denied that he had made a material misstatement and alleged that his failure to disclose discipline by other states was a mistake made by a temporary employee who filled out his license application.

A consolidated hearing was held before the Board. Neither Kahn nor Butt appeared to testify, but their attorney argued that it would be unfair or an abuse of the Board's discretion to take actions against them based upon the mere fact that disciplinary action had been taken against them in other states. After arguments, the Board found that it had a legitimate interest in regulating the practice of auctioneering in order to safeguard the public, and both Kahn and Butt had been disciplined by other states for incidents of misconduct that were serious enough to establish a pattern, thereby warranting the penalty imposed against Kahn and the revocation of Butt's auctioneer license. This consolidated appeal by Kahn and Butt followed.²

I.

Auctioneers contend that they were denied procedural due process because there was a commingling of prosecutorial and administrative functions between the Prosecution Division and the Board. More specifically, they contend that the Prosecution Division offered them the opportunity to enter into Consent Agreements which Auctioneers agreed to sign, but the Board refused to approve the signed Agreements and scheduled a hearing, thereby taking over the prosecutorial function. As a general rule, where a tribunal supervises an investigation and is also responsible for adjudicating the matter after a formal adversarial hearing, the tribunal's decision is not, per se, biased, provided there is an adequate separation between the prosecutorial and adjudicatory functions. Makris v. Bureau of Professional and Occupational Affairs, 143 Pa.Cmwlth. 456, 599 A.2d 279, 284 (1991). The test to determine if there has been an improper commingling is whether the functions performed are adequately separated so there is no actual prejudice. Id. at 284-285. However, an administrative tribunal must be unbiased, and must avoid even the appearance of bias to ensure that constitutional rights are adequately protected. Id. Commingling or bias is not established because the agency or one of its members performs more than one role in the process. Id.

In this case, the Prosecution Division attempted to settle the matter with Auctioneers by having them sign consent agreements. That function is distinctly different from the Board's decision to hold a hearing and determine whether discipline was warranted. Because there is no other evidence that the functions of the two were not adequately separated, there was no commingling and, consequently, no deprivation of due process.³

II.

Auctioneers next contend that Section 20(a)(11) of the Act violates due process because they have a constitutionally protected right to pursue a livelihood, and Section 20(a)(11) authorizes the Board to impose sanctions on licensees without affording them due process protections of their property interests.⁴ They further argue that there is a substantive due process violation because "in the absence of any reference to the `underlying facts' there is no rational nexus between the fact of disciplinary action of a Pennsylvania licensee by the licensing authority of another state and the imposition of any sanction by the Board which deprives, or adversely affects, the Pennsylvania licensee's constitutionally protected property right to pursue a livelihood as an auctioneer."⁵

In Johnston v. Commonwealth of Pennsylvania, State Board of Medical Education and Licensure, 49 Pa.Cmwlth. 9, 410 A.2d 103 (1980), this Court addressed the constitutionality of the state to regulate licensing as it related to physicians. In Johnston, a Pennsylvania-licensed physician had his license to practice medicine revoked in the State of Washington. The Pennsylvania State Board of Medical Education and Licensure then revoked his Pennsylvania license based on the now repealed Section 15 of the Medical Practice Act of 1974, Act of December 20, 1974, P.L. 551, formerly 63 P.S. § 421.15(a)(4),⁶repealed by the Act of December 20, 1985, P.L. 457, 63 P.S. § 422.41(4), which allowed the Board to impose disciplinary measures based on a physician having his license revoked or suspended or having other disciplinary action taken by the licensing authority in another state. Acknowledging that individuals had the right to follow the profession of their choice, we also acknowledged the public's right to be protected, holding the following:

[T]he Legislature's authorization of suspension or revocation following disciplinary action taken by another state against a holder of a Pennsylvania license found in Section 15(a)(4) is neither unreasonable nor arbitrary and constitutes a valid exercise of the state's police power. Because the Pennsylvania Board has no real independent ability to monitor the performance of Pennsylvania-licensed physicians who conduct their practices out-of-state, we view the authority of the Pennsylvania board to act swiftly upon official verification of disciplinary action in another state as most salutary.

Id. at 105. We further noted that because the Pennsylvania Board was acting on the fact of disciplinary action in another state rather than on the underlying events leading to that action, the substance of the charges and the procedure...