Mills v. Ariz. Bd. of Technical Registration
| Decision Date | 10 August 2022 |
| Docket Number | CV-21-0203-PR |
| Citation | 76 Arizona Cases Digest 17,514 P.3d 915 |
| Parties | Greg MILLS, et al., Plaintiffs/Appellants, v. ARIZONA BOARD OF TECHNICAL REGISTRATION, et al., Defendants/Appellees. |
| Court | Arizona Supreme Court |
Paul V. Avelar (argued), Institute for Justice, Tempe; Daniel Rankin, Institute for Justice, Arlington, VA, Attorneys for Greg Mills, et al.
John C. Gray (argued), Gregory Y. Harris, Lewis Roca Rothgerber Christie LLP, Phoenix, Attorneys for Arizona Board of Technical Registration, et al.
Brett W. Johnson, Tracy A. Olson, Ian R. Joyce, Snell & Wilmer LLP, Phoenix; Ronald M. Jacobs, Jay C. Johnson, Venable LLP, Washington, D.C., Attorneys for Amici Curiae National Council of Architectural Registration Boards, National Council of Examiners for Engineering and Surveying, and Council of Landscape Architectural Registration Boards
Timothy Sandefur, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for Amicus Curiae Goldwater Institute
Aditya Dynar, Pacific Legal Foundation, Arlington, VA, Attorneys for Amicus Curiae Pacific Legal Foundation
¶ 1 Greg Mills is an engineer who designs, analyzes, tests, and builds electronic circuits for consumer products through his consulting firm, Southwest Engineering Concepts, LLC ("SEC"). The Arizona Board of Technical Registration regulates several technical professions, including engineers. See A.R.S. §§ 32-101 to -113. Persons engaging in an "engineering practice" must comply with the Board's qualifications and standards, including registration. See A.R.S. §§ 32-101(B)(11), 32-121. Mills and the Board dispute whether his work requires registration with the Board, but the Board has not initiated formal proceedings to resolve the matter.
¶ 2 The issue here is whether the doctrines of exhaustion of administrative remedies, ripeness, and standing bar Mills’ suit filed in the superior court pursuant to the Uniform Declaratory Judgments Act ("UDJA"), A.R.S. §§ 12-1831 to -1846, to challenge the constitutionality of statutes prohibiting persons and firms from engaging in "engineering practices" unless registered with the Board. We hold that, for the most part, these doctrines do not prohibit Mills from proceeding with his lawsuit.
¶ 3 Mills worked as an engineer for manufacturing companies for decades before starting SEC and eventually coming to the Board's attention. In May 2019, the Board commenced an investigation after receiving a customer complaint about Mills’ fees and his non-registration status. Based on two Board-registered engineers’ opinions, it determined Mills and SEC had violated the law by engaging in "engineering practices" and by advertising their services as "engineers" without first registering with the Board. See A.R.S. §§ 32-141 (firm), 32-145 (individual). A violation of either statute is a class two misdemeanor that subjects the offender to fines and incarceration. A.R.S. §§ 32-145(6), 13-707(A)(2), 13-802(B).
¶ 4 To resolve the complaint informally, a Board investigator sent Mills a proposed consent agreement and order in August asking him to agree he had violated the law. See Ariz. Admin. Code R4-30-120(G). If signed, the consent agreement would have imposed a $3,000 fine, assessed investigation costs, and required Mills to stop working until he and SEC properly registered with the Board. Mills disputed that either he or SEC was required to register with the Board and therefore refused to sign the consent agreement.
¶ 5 In October, Mills declined a Board invitation to meet and discuss the investigation. The Board met anyway and voted to offer Mills a second consent agreement and order identical to the first, except it doubled the fine to $6,000. As before, Mills refused to sign.
¶ 6 The legislature has delegated authority to the Board to conduct evidentiary hearings itself or through an administrative law judge and resolve complaints or charges within its jurisdiction. See A.R.S. § 32-106(A)(5)–(6) ; see also § 32-106.02(A) (). An aggrieved party may appeal an adverse Board decision to the superior court after exhausting all administrative remedies. See A.R.S. §§ 32-128(J), 41-1092.08(H). The scope of that review is governed by A.R.S. § 12-910, which the legislature amended last year to require de novo review of final decisions by agencies regulating professions if demanded. See § 12-910(D) ; see also 2021 Ariz. Legis. Serv. Ch. 281 (S.B. 1063). The Board has not initiated formal proceedings against Mills for the alleged statutory violations, and nothing authorizes Mills to affirmatively seek a determination from the Board that no violations have occurred. Consequently, whether Mills is required to register with the Board and has broken the law remains unresolved.
¶ 7 In December, Mills and SEC (collectively, "Mills") filed this lawsuit in superior court against the Board, its members, and its executive director (collectively, the "Board"), seeking declaratory and injunctive relief. Mills alleges four causes of action:
(1) Section 32-145, subsections (1) and (2), both facially and as applied here, violate the Arizona Constitution, article two, section six, by preventing him from speaking freely about his business as an engineer unless he registers as an engineer;
(2) Section 32-101(B)(11), which defines the "engineering practice" subject to registration, is void for vagueness and violates the Arizona Constitution's due process and separation of powers provisions, see Ariz. Const. art. 2, § 4 ; art. 3 ; art. 4, pt. 1, § 1;
(3) Sections 32-141(1) and 32-145(1), as applied here, violate the Arizona Constitution, article two, sections four and thirteen, and article four, part two, section 19(13), by prohibiting unregistered engineering practices and therefore arbitrarily prohibiting Mills from earning a living; and
(4) Sections 12-910(E) (2018) and 32-106(A)(5), as applied here, usurp judicial powers by authorizing the Board to adjudicate facts in violation of the Arizona Constitution, article two, section four and articles three and six.
¶ 8 On the Board's motion, the superior court dismissed the complaint on two bases: (1) the court lacks subject matter jurisdiction because Mills failed to exhaust administrative remedies with the Board, see Ariz. R. Civ. P. 12(b)(1) ; and (2) the complaint fails to state a claim upon which relief can be granted because the claims are unripe and Mills lacks standing to bring them, see Ariz. R. Civ. P. 12(b)(6). The court of appeals affirmed. Mills v. Ariz. Bd. of Tech. Registration , No. 1 CA-CV 20-0510, 2021 WL 3557298, at *1 (Ariz. App. Aug. 12, 2021) (mem. decision).
¶ 9 We granted review of Mills’ petition because it presents an issue of statewide importance.
¶ 10 We review the grant of a motion to dismiss de novo. Shepherd v. Costco Wholesale Corp. , 250 Ariz. 511, 513 ¶ 11, 482 P.3d 390 (2021). Likewise, we review issues of jurisdiction, ripeness, and standing de novo as issues of law. See Brush & Nib Studio, LC v. City of Phoenix, 247 Ariz. 269, 279 ¶ 34, 448 P.3d 890 (2019) (standing and ripeness); Medina v. Ariz. Dep't of Transp. , 185 Ariz. 414, 417, 916 P.2d 1130 (App. 1995) (jurisdiction).
A. General principles
¶ 11 A litigant must exhaust a statutorily prescribed administrative remedy before seeking judicial relief from actual or threatened injuries. See Moulton v. Napolitano , 205 Ariz. 506, 511 ¶ 9, 73 P.3d 637 (App. 2003). The purpose of the exhaustion doctrine is to afford an administrative agency the opportunity to "perform functions within its special competence—to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies." Id . (quoting Medina , 185 Ariz. at 417, 916 P.2d 1130 ). As a result, "[t]he doctrine promotes both judicial economy and administrative agency autonomy by preventing premature judicial intervention in inchoate administrative proceedings." Id . (quoting Medina , 185 Ariz. at 417, 916 P.2d 1130 ); see also Univar Corp. v. City of Phoenix , 122 Ariz. 220, 223, 594 P.2d 86 (1979) ().
¶ 12 A complainant's failure to exhaust administrative remedies does not deprive the superior court of subject matter jurisdiction. Moulton , 205 Ariz. at 511 ¶ 9 n.2, 73 P.3d 637 ; Medina , 185 Ariz. at 418, 916 P.2d 1130. But when the doctrine is properly raised as an affirmative defense, the court will refuse to adjudicate the case for the complainant's failure to satisfy a procedural prerequisite. Medina , 185 Ariz. at 416, 418, 916 P.2d 1130 ; cf. Taliaferro v. Taliaferro , 186 Ariz. 221, 223, 921 P.2d 21 (1996) ().
B. Application here
¶ 13 The Board argues Mills must exhaust administrative remedies by awaiting the initiation and completion of formal proceedings that would result in either a favorable outcome for Mills or an appealable adverse decision. It asserts that if Mills is permitted to adjudicate his claims outside an appeal of the Board's final decision, it would render superfluous the statutes authorizing the court to review final agency decisions. See §§ 12-905(A), 32-106.02(D), 41-1092(6). Relatedly, the Board asserts that permitting Mills to maintain his lawsuit would violate the...
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Gilmore v. Gallego
... ... in taxable costs. See Ariz. Rev. Stat. (A.R.S.) ... §§ 12-341, -341.01 ... Hull , 192 Ariz. 65, 69 ¶ 16 (1998)); ... accord Mills v. Ariz. Bd. of Tech. Regis. , 514 P.3d ... 915, 923 ¶ 24 (2022) ... ...