TWISM Enters. v. State Bd. of Registration for Prof'l Eng'rs & Surveyors
| Decision Date | 29 December 2022 |
| Docket Number | 2021-1440 |
| Parties | TWISM Enterprises, L.L.C., Appellant, v. State Board of Registration for Professional Engineers and Surveyors, Appellee. |
| Court | Ohio Supreme Court |
Submitted July 12, 2022
Appeal from the Court of Appeals for Hamilton County, Nos. C-200411 C-210125, 2021-Ohio-3665.
Pacific Legal Foundation, Oliver J. Dunford, and John F Kerkhoff; and Wood + Lamping, L.L.P., and Dale A. Stalf, for appellant.
Michael J. Hendershot, Chief Deputy Solicitor General, Samuel C. Peterson, Deputy Solicitor General, and Shelli R. Brock and Brian R. Honen, Assistant Attorneys General, for appellee.
Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General, and Mathura J. Sridharan, Deputy Solicitor General, in support of neither party for amicus curiae Attorney General Dave Yost.
James Bart Leonardi, L.L.C., and James Bart Leonardi; and Casey Norman, urging reversal for amicus curiae New Civil Liberties Alliance.
Jay R. Carson and Robert Alt, urging reversal for amicus curiae Buckeye Institute.
{¶ 1} This case involves a dispute about a statute that sets forth the requirements a firm must meet to provide engineering services in Ohio. Specifically, the firm must "designate one or more full-time partners, managers, members, officers, or directors" as in "responsible charge" of its engineering activities. R.C. 4733.16(D). The state agency in charge of administering the statute contends that to be a full-time manager, one must be an employee and cannot be an independent contractor. The court of appeals determined that it was required to defer to the agency's reasonable interpretation of an ambiguous statute and, on this basis, held that the statute precluded an independent contractor from fulfilling the role of full-time manager.
{¶ 2} To resolve the dispute, we must answer two questions. The predicate question is: What deference, if any, should a court give to an administrative agency's interpretation of a statute? Second, once we have sorted out the deference issue: What does the statute mean?
{¶ 3} We reaffirm today that it is the role of the judiciary, not administrative agencies, to make the ultimate determination about what the law means. Thus, the judicial branch is never required to defer to an agency's interpretation of the law. As we explain, an agency interpretation is simply one consideration a court may sometimes take into account in rendering the court's own independent judgment as to what the law is.
{¶ 4} Applying our independent judgment here, we find nothing in the statutory language to preclude an independent contractor from serving as a full-time manager of an engineering firm. We reverse the contrary judgment of the court of appeals.
{¶ 5} The Ohio Board of Registration for Professional Engineers and Surveyors ("the Board") oversees the engineering profession in Ohio. This case arises from the Board's denial to TWISM Enterprises, L.L.C., of a certificate of authorization to provide engineering services.
{¶ 6} Engineering firms that wish to do business in Ohio must receive authorization from the Board. R.C. 4733.16(B). The firm seeking authorization "shall designate one or more full-time partners, managers, members, officers, or directors as being responsible for and in responsible charge of the professional engineering or professional surveying activities and decisions." R.C. 4733.16(D). The person designated must be a state-registered engineer. Id. Once the statutory requirements are met, the Board has a mandatory duty to register the firm: the Board "shall issue a certificate of authorization to each firm, partnership, association, limited-liability company, or corporation that satisfies the requirements of this chapter." R.C. 4733.16(E).
{¶ 7} The Board has adopted an administrative rule that defines "responsible charge" as "being in control of, accountable for and in either direct or indirect supervision of the engineering and/or surveying activities of the business enterprise." Ohio Adm.Code 4733-39-02(A). The rule defines "full-time" as "working more than thirty hours per week or working substantially all the engineering or surveying hours for a firm, partnership, association, limited liability company or corporation that holds a certificate of authorization." Ohio Adm.Code 4733-39-02(B).
{¶ 8} TWISM, a small start-up firm, applied to the Board for a certificate of authorization. TWISM's application designated James Cooper as its manager. Cooper attested that he is a full-time engineer "in responsible charge for and in charge of the professional engineering * * * activities and decisions of the firm." Cooper represented that he provides engineering services to TWISM on a per-project basis and that he provides all of TWISM's engineering services. TWISM's operating agreement lists Cooper as a "manager" "vested with the management" authority "to oversee the day to day operations of the engineering department." For tax purposes, the firm reports his income to the IRS as an independent contractor on a form 1099, rather than withholding and reporting his income as an employee under a W-2 tax form.
{¶ 9} The Board denied TWISM's application. As the basis for its denial, the Board said that TWISM had "failed to designate one or more full-time partners, managers, members, officers, or directors as being responsible for and in charge of professional engineering activities and decisions for the firm." In the Board's view, a manager had to be a "W-2" employee rather than a "form-1099" independent contractor.
{¶ 10} TWISM pursued its right to an administrative appeal, which it presented to a hearing officer appointed by the Board. The hearing officer recommended that the Board again deny TWISM's application, noting that the Board's "expertise in the area" requires "deference" to its "interpretation of the laws." The Board adopted the hearing officer's findings of fact and conclusions of law and accepted his recommendation to deny the application.
{¶ 11} The Board identified two problems with TWISM's application. First, it said that Cooper did not work "full time" for TWISM. It pointed to Ohio Adm.Code 4733-39-02(B)'s definition of "full-time," which requires more than 30 hours of work weekly or "working substantially all the engineering or surveying hours for" the firm. The Board, though, never explained why Cooper, who indisputably performed "all the engineering * * * hours" of TWISM, failed to meet this definition.
{¶ 12} Second, the Board found that TWISM did not satisfy the requirement that it have a full time "manager," because of Cooper's status as an independent contractor rather than a W-2 employee. The Board said that it was necessary that the holder of the certificate of authorization have control over the professional engineer's activity and "[t]hat control is ensured by an employer/employee relationship." Thus, the Board adopted a hardline rule that R.C. 4733.16(D) requires formal W-2 employment; a business may not designate an independent contractor as professional engineer.
{¶ 13} TWISM appealed the agency adjudication to the Hamilton County Court of Common Pleas. See R.C. 119.12(A)(1). In its arguments to the court, the Board asked for "due deference" to its "reasonable" interpretation that R.C. 4733.16(D) requires an employer-employee relationship between the business and the designated engineer. Adopting a magistrate's recommendation, the court reversed the Board's decision without affording any deference to the agency's interpretation of the statute. In doing so, the court concluded that the Board's determination that a manager "is required to be a full-time 'W-2' employee in order to satisfy the requirements of R.C. 4733.16(D)" is "not mandated by the plain text of the statute." The court also rejected the Board's conclusion that Cooper did not meet the full-time requirement. It explained that because Cooper performs "substantially all" of TWISM's engineering work, he satisfied the administrative code's definition of "full-time." The court thus ordered the Board to issue TWISM a certificate of authorization to perform engineering services.
{¶ 14} The Board appealed to the First District Court of Appeals. The court of appeals framed the question as "whether the statute and regulation permit an independent contractor to serve as a 'full-time manager' for the purposes of obtaining a [certificate of authorization]." 2021-Ohio-3665, ¶ 14. The Board asserted that the trial court should have inquired only into whether the Board's interpretation of the statute is reasonable. Id. at ¶ 15. As long as its interpretation is reasonable, maintained the Board, the trial court owes it deference. Id.
{¶ 15} The court of appeals declined to go so far. It held that a court must defer to an administrative interpretation only if the court first has found the statute to be ambiguous. Id. at ¶ 16, citing Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). It then defined "ambiguity" broadly, holding that "a statute is ambiguous when its language is subject to more than one reasonable interpretation." Id. at ¶ 18.
{¶ 16} Applying this definition, the court found R.C 4733.16(D) to be ambiguous. It reasoned that the statute "could" be read as requiring the manager to be "directly affiliated with the entity" or "could" be read as allowing the manager to be an independent contractor. Id. at ¶ 28. It thus concluded: ...
To continue reading
Request your trial