McGladrey & Pullen v. Bd. of Certified
| Citation | 615 S.E.2d 339 |
| Decision Date | 19 July 2005 |
| Docket Number | No. C0A04-911.,C0A04-911. |
| Court | United States State Supreme Court of North Carolina |
| Parties | McGLADREY & PULLEN, LLP, Petitioner, v. NORTH CAROLINA STATE BOARD OF CERTIFIED PUBLIC ACCOUNTANT EXAMINERS, Respondent. |
Parker Poe Adams & Bernstein, LLP, by William L. Rikard, Jr., R. Bruce Thompson, III, and Deborah L. Edney, Charlotte, for petitioner-appellant.
Allen and Pinnix, P.A., by Noel L. Allen and M. Jackson Nichols, Raleigh, for respondent-appellee.
McGladrey & Pullen, LLP ("petitioner") appeals from order adopting and affirming the declaratory ruling issued by The North Carolina State Board of Certified Public Accountant Examiners (the "Board"). We affirm.
Petitioner is a North Carolina limited liability partnership and licensed by the Board to practice in North Carolina as a certified public accounting ("CPA") firm. Petitioner specializes in providing audit and attest services for mid-sized businesses. Petitioner is affiliated with RSM McGladrey, Inc., a national consulting, wealth management, and corporate finance firm, through an "Alternative Business Structure."
RSM McGladrey, Inc. is a member of RSM International, Inc., a subsidiary of H & R Block. "RSM" is an acronym for Robson Rhodes, a United Kingdom firm, Salustro Reydel, a firm in France, and petitioner.
In Fall 2002, petitioner sought to change its name from "McGladrey & Pullen, LLP" to "RSM McGladrey & Pullen, LLP, Certified Public Accountants." Petitioner gave notice of intent to change its name to each jurisdiction in which it was registered.
On 1 October 2002, Robert N. Brooks, the Board's executive director, recommended petitioner's name change request be rejected on the grounds the initials "RSM" could deceive the public by conveying the impression that any firm using a name that begins with "RSM" is a lawful CPA firm.
On 11 March 2003, petitioner submitted its request to the full Board for a declaratory ruling. By letter dated 2 May 2003, the Board informed petitioner that the Board adopted the declaratory ruling on 28 April 2003 denying petitioner's request and ruling petitioner's proposed name change to "RSM McGladrey & Pullen, LLP, Certified Public Accountants" violated N.C. Admin. Code. Tit. 21, 8N.0307.
On 30 May 2003, petitioner filed a petition in the Wake County Superior Court for judicial review. The petition was heard on 26 February 2004 and on 18 March 2004, the trial court entered an order affirming the Board's declaratory ruling. Petitioner appeals.
Petitioner contends the trial court erred by: (1) violating petitioner's right to free speech and equal protection under the North Carolina and United States Constitutions; (2) affirming the declaratory ruling of the Board after it acted outside of its statutory authority and jurisdiction in violation of N.C. Gen.Stat. § 150B-51(b)(2); and (3) being arbitrary and capricious in affirming the Board's ruling.
Upon our "judicial review of an administrative agency's final decision, the substantive nature of each assignment of error dictates the standard of review." N.C. Dep't of Env't & Natural Res. v. Carroll, 358 N.C. 649, 658, 599 S.E.2d 888, 894 (2004) (citations omitted). N.C. Gen.Stat. § 150B-51(b) (2003) states:
in reviewing a final decision, the court may affirm the decision of the agency or remand the case to the agency or to the administrative law judge for further proceedings. It may also reverse or modify the agency's decision, or adopt the administrative law judge's decision if the substantial rights of the petitioners may have been prejudiced because the agency's findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional provisions;
(2) In excess of the statutory authority or jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or
(6) Arbitrary, capricious, or an abuse of discretion.
"This standard of review applies to judicial review of an agency's decision, whether at the superior or the appellate court level." Vanderburg v. N.C. Dep't of Revenue, ___ N.C.App. ___, ___, 608 S.E.2d 831, 839 (2005) (); see also Crist v. City of Jacksonville, 131 N.C.App. 404, 405, 507 S.E.2d 899, 900 (1998) (appellate court review) (citing Shoney's v. Bd. of Adjustment for City of Asheville, 119 N.C.App. 420, 421, 458 S.E.2d 510, 511 (1995)).
This Court has held that fact-intensive issues
"`such as sufficiency of the evidence to support [an agency's] decision are reviewed under the whole-record test.'" This standard of review requires the reviewing court to analyze all the evidence provided in the record "to determine whether there is substantial evidence to justify the agency's decision." Substantial evidence is "relevant evidence a reasonable mind might accept as adequate to support a conclusion." A reviewing court "may not substitute its judgment for the agency's," even if a different conclusion may result under a whole record review.
Vanderburg, ___ N.C.App. at ___, 608 S.E.2d at 839 (internal quotations and citations omitted).
In In re Appeal of the Maharishi Spiritual Ctr. of Am., our Supreme Court revered the Court of Appeals for reasons stated in the dissenting opinion and explained the Court's proper role under the whole record test when reviewing an administrative agency's ruling or judgment.
The whole record test is not "a tool of judicial intrusion." This test does not allow a reviewing court to substitute its own judgment in place of the Commission's judgment even when there are two reasonably conflicting views. The whole record test merely allows a reviewing court to determine whether the decision of the Commission is supported by substantial evidence.
"`Substantial evidence is such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.'" "The credibility of the witnesses and resolution of conflicting testimony is a matter for the administrative agency to determine." This Court cannot overturn the Commission's decision if supported by substantial evidence.
152 N.C.App. 269, 284, 569 S.E.2d 3, 12 (2002) (J. Tyson dissenting) (internal quotations and citations omitted), per curiam rev'd, 357 N.C. 152, 579 S.E.2d 249 (2003).
Petitioner argues the trial court erred in affirming the Board's declaratory ruling because it violated petitioner's constitutional freedom of speech.
"`Untruthful speech, commercial or otherwise, has never been protected for its own sake.'" Friedman v. Rogers, 440 U.S. 1, 9, 99 S.Ct. 887, 59 L.Ed.2d 100, 110 (1979) (quoting Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974); Konigsberg v. State Bar, 366 U.S. 36, 49, 81 S.Ct. 997, 6 L.Ed.2d 105 (1961)). In Central Hudson Gas v. Public Service Comm'n, the United States Supreme Court defined commercial speech as an "expression related solely to the economic interests of the speaker and its audience." 447 U.S. 557, 563-64, 100 S.Ct. 2343, 65 L.Ed.2d 341, 348 (1980) (citing Virginia Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748, 762, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976); Bates v. State Bar of Arizona, 433 U.S. 350, 363-64, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Friedman v. Rogers, 440 U.S. 1, 11, 99 S.Ct. 887, 59 L.Ed.2d 100 (1979)).
The United States Supreme Court also held "the First Amendment, as applied to the States through the Fourteenth Amendment, protects commercial speech from unwarranted governmental regulation." Central Hudson Gas, 447 U.S. at 561, 100 S.Ct. at 2349, 65 L.Ed.2d at 348 (citing Virginia Pharmacy Bd., 425 U.S. at 761-63, 96 S.Ct. at 1825-26, 48 L.Ed.2d at 346). The Supreme Court explained:
The First Amendment's concern for commercial speech is based on the informational function of advertising. Consequently, there can be no constitutional objection to the suppression of commercial messages that do not accurately inform the public about lawful activity. The government may ban forms of communication more likely to deceive the public than to inform it, or commercial speech related to illegal activity. If the communication is neither misleading nor related to unlawful activity, the government's power is more circumscribed. The State must assert a substantial interest to be achieved by restrictions on commercial speech.
Id. at 564, 100 S.Ct. at 2350, 65 L.Ed.2d at 348-49 (internal citations omitted) (emphasis supplied).
The respondent Board is a State agency created by N.C. Gen.Stat. § 93-12 to regulate CPA firms. One of the Board's duties is to regulate the manner in which CPA firms hold themselves out to the public. N.C. Admin. Code tit. 21, 8N.0307(a) (2004) entitled, "Deceptive Names Prohibited," allows the Board to prohibit a CPA firm from using any name that would have "the capacity or tendency to deceive."
The parties agree the regulation at issue restricts petitioner's commercial speech. The parties disagree on whether adding "RSM" and "Certified Public Accountants" to petitioner's trade name is misleading, tends to be deceptive, and whether the regulation as applied, violates petitioner's First Amendment rights.
Evidence before the Board included: (1) a U.S. federal claims court case wherein a managing director of RSM McGladrey, Inc. testified and was referred to as an expert in auditing; and (2) several filings with the Securities and Exchange Commission showing the public misperception and referring to "RSM McGladrey" as a public accounting firm and confusing ownership and...
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