Sterling Drug, Inc. v. Wickham

Decision Date02 July 1980
Docket NumberNo. 79-237,79-237
Citation406 N.E.2d 1363,17 O.O.3d 10,63 Ohio St.2d 16
Parties, 17 O.O.3d 10 STERLING DRUG, INC., Appellee, v. WICKHAM, Exec. Dir., et al., Appellants.
CourtOhio Supreme Court

Syllabus by the Court

In a declaratory judgment action seeking to invalidate a rule adopted by the State Board of Pharmacy, pursuant to authority granted in R.C. 3719.44(A)(1) to amend the controlled substances schedules in R.C. 3719.41 by adding a previously unscheduled drug to Schedule II, upon the ground that it is unlawful for the reason the exercise of such amending authority is legislatively restricted to drugs possessing dependency criteria enumerated in R.C. 3719.44(D) and that pentazocine added by the rule to Schedule II does not possess such dependency criteria, the factual conclusions of the agency as to the existence of such jurisdictional facts must be presumed to have been made upon sufficient evidence, and the burden of proof is upon the one asserting the non-existence of such facts to prove such non-existence by a preponderance of substantial, reliable and probative evidence upon the whole of the record sufficient to overcome such presumption and to establish the facts as otherwise than determined by the board.

The State Board of Pharmacy (hereinafter appellant), acting pursuant to the authority granted in R.C. 3719.44 to amend the controlled substances schedules set forth in R.C. 3719.41 by rule adopted pursuant to R.C. Chapter 119, issued notice of proposed amendments including, inter alia, its intention to place pentazocine in Schedule II. On December 13, 1977, a public hearing was held pursuant to R.C. 119.03(C). Numerous witnesses appeared and documentary evidence was presented in support and in opposition of the proposed amendment, including scientific literature. Among the opponents to the proposed amendment was Sterling Drug, Inc., appellee herein, the sole manufacturer of pentazocine under the trade name "Talwin" which adduced testimony tending to show that the statutory criteria in R.C. 3719.44 for the placement of a substance in Schedule II did not exist. 1

Thereafter, the board by rule, Ohio Adm.Code 4729-11-02, amended Schedule II to include pentazocine. On March 16, 1978, the board filed the rule with the Secretary of State and other appropriate offices of the state. On March 17, 1978, and prior to the effective date of the rule, Sterling Drug filed a declaratory judgment complaint seeking a declaration that the rule was invalid and preliminary and permanent injunctive relief against enforcement of the rule. The stenographic record of hearing before the board was admitted by stipulation as evidence before the court. Additional evidence was also introduced by the parties.

The trial court held the rule invalid by reason of (1) the failure of the board to comply at the rule hearings with certain procedural requirements of R.C. 119.03(C) respecting cross-examination and argument and (2) the failure of the evidence to show that the drug had a high potential for abuse and that it may lead to severe physical or severe psychological dependence. A permanent injunction was issued against the board and its executive director from enforcement of Ohio Adm.Code 4729-11-02 as it applied to pentazocine.

Upon appeal, the Court of Appeals affirmed. Although the court concluded the trial court erred in invalidating the rule on procedural grounds, it further observed that the evidence placed before the board showed that pentazocine was "subject to potential abuse and, consequently, should be placed in some schedule or category," but concluded that pentazocine lacked the requisite high potential for abuse as well as severe physical or psychological dependence referred to in R.C. 3719.44(D).

This cause is now before this court upon a motion to certify the record.

Lane, Alton & Horst, Jack R. Alton, William M. Lane and David Wm. T. Carroll, Columbus, for appellee.

William J. Brown, Atty. Gen., and Richard J. Forman, Asst. Atty. Gen., for appellants.

STEPHENSON, Justice.

In Burger Brewing Co. v. Liquor Control Comm. (1973), 34 Ohio St.2d 93, 296 N.E.2d 261, this court held that preenforcement review of an agency rule under now repealed R.C. 119.11 was precluded, but that the validity of the rule could properly be adjudicated by a court, in the exercise of its sound discretion, under the Declaratory Judgment Act if a justiciable controversy existed between adverse parties and speedy relief was necessary to the preservation of rights which might otherwise be impaired or lost. 2

After remand to the appellate court in Burger, the declaratory judgment issued was subsequently reviewed by this court in Burger Brewing Co. v. Thomas (1975), 42 Ohio St.2d 377, 329 N.E.2d 693, and disposition made by the court solely upon a question of law, i. e., that the General Assembly had not delegated authority to promulgate the rule. Thus, the posture of each appeal as presented to this court was such that this court was not required to explicate whether the nature of the subject matter of such a declaratory judgment action, i. e., the validity of an agency rule or regulation, mandated procedural or adjudicatory limitations different from principles of law normally applicable to such proceedings.

It appears from the briefs that both parties would apparently agree that the ultimate test as to the validity of an agency rule is whether it is unreasonable or unlawful. In light of incorporation of that standard in syllabus language in both Zangerle v. Evatt (1942), 139 Ohio St. 563, 41 N.E.2d 369, and Fortner v. Thomas (1970), 22 Ohio St.2d 13, 257 N.E.2d 371, and the adoption of that standard by the General Assembly in R.C. 119.03(C) to be applied by an agency in resolving challenges in a hearing respecting adoption, amendment or recision of agency rules, the application of that standard in a declaratory judgment proceeding is both logical and proper.

A rule adopted by an administrative agency may be invalid by being unreasonable or unlawful for various reasons. See enumeration and discussion in 2 Cooper, State Administrative Law, 781, Chapter XX. Ohio courts have, inter alia, invalidated agency rules for the reason that the rule promulgated exceeded the rule making authority delegated by the General Assembly (Burger Brewing Co. v. Thomas, supra (42 Ohio St.2d 377, 329 N.E.2d 693)), that the agency failed to comply with the procedural requirements set forth in R.C. Chapter 119 respecting adoption of rules (Hansen v. State Personnel Bd. of Review (1977), 51 Ohio App.2d 7, 364 N.E.2d 1386), or that the rule is otherwise unreasonable (Stouffer Corp. v. Bd. of Liquor Control (1956), 165 Ohio St. 96, 133 N.E.2d 325).

The rule here considered was invalidated by the courts below for the reasons, inter alia, (1) that the authority of the board to enact a rule placing a substance in the Schedule II classification in R.C. 3719.41 was conditional, (2) that it could only be exercised if the legislative conditions in R.C. 3719.44(D) existed, i. e., as to the substance proposed to be scheduled that it appear that there is a high potential for abuse and that its abuse may lead to severe physical or severe psychological dependence, and (3) that since the evidence did not establish the existence of the legislative conditions, the board was without authority to adopt the rule. 3

The correctness of the conclusion below that, under the evidence, pentazocine does not possess the qualities necessary to meet legislative prerequisites for placement in Schedule II brings into focus a narrow but pivotal issue for resolution in this appeal. Succinctly stated, we perceive that question to be that where the General Assembly has limited the rule making authority of an agency, unless certain facts exist and the evidence in the declaratory judgment action as to the existence of such facts is conflicting, what evidentiary standard should be applied by the trial court to determine whether such jurisdictional facts exist. In resolution of this question we need not, and do not, address what rule should be applied in declaratory judgment actions involving, directly or indirectly, questions of fact when the validity of the rule is challenged upon other grounds.

An action for a declaratory judgment pursuant to R.C. Chapter 2721 is a civil action and has been held by this court to be sui generis and is neither strictly one in equity nor law, but is an action to which legal or equitable principles of law are applicable dependent upon the issues. Sessions v. Skelton (1955), 163 Ohio St. 409, 127 N.E.2d 378. Pursuant to R.C. 2721.10 issues of fact are required to be tried and determined in the same manner as issues of fact are tried and determined in other civil actions in that court. The Civil Rules are applicable by virtue of Civ.R. 57.

Since we view the issue of whether the board was authorized to adopt the controverted rule as a question of law, absent a contrary ruling by this court, the ordinary preponderance of evidence rule would be applicable. Although the record is silent upon the question, conceivably this standard was the standard applied by the courts below. Appellant urges the proper standard to be applied is that set forth in its proposition of law which reads as follows:

"The standard of review in a declaratory judgment action challenging a proposed rule promulgated pursuant to Section 119.03 is whether the rule as adopted is unreasonable or unlawful. The function of the Court of Common Pleas is to determine if there is a reasonable and lawful basis for the agency's action. If there is any evidence supporting the agency's action, said action is reasonable."

Appellant argues in support of that standard by analogizing the declaratory judgment action, of the nature here considered, to the previous existing R.C. 119.11 review. We find the analogy of functional equivalency less than compelling in view of the distinctions drawn in Burger, supra (34...

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