Wyoming State Bd. of Examiners of Optometry v. Pearle Vision Center, Inc.
Citation | 82 A.L.R.4th 781,767 P.2d 969 |
Decision Date | 04 January 1989 |
Docket Number | No. 86-323,86-323 |
Parties | WYOMING STATE BOARD OF EXAMINERS OF OPTOMETRY, Appellant (Plaintiff), v. PEARLE VISION CENTER, INC., a corporation, and Robert L. Holly, O.D., an individual, Appellees (Defendants). |
Court | United States State Supreme Court of Wyoming |
Steven F. Freudenthal, Freudenthal, Salzburg, Bonds & Rideout, P.C., Cheyenne, for appellant (plaintiff).
Brent R. Kunz, Hathaway, Speight, Kunz, Trautwein & Barrett, Cheyenne, for appellee (defendants), Pearle Vision Center, Inc.
Dennis M. Grant, Grant & Osborn, Cheyenne, for appellee (defendant), Robert L. Holly, O.D.
Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and BROWN, J., Retired.
At issue in this case is whether a franchise agreement for the marketing of optical products and services, entered into between a certificated optometrist and a corporation, results in fee splitting or the employment of a "steerer," both in violation of § 33-23-110(b)(i), W.S.1977. Additional questions are raised as to whether the franchiser was engaged in the practice of optometry without a valid certificate of registration in violation of § 33-23-103, W.S.1977, or, as a general business corporation, was engaged indirectly in the practice of optometry in violation of § 33-23-111(b)(iv), W.S.1977. Section 33-23-110(b)(i), W.S.1977, provides:
Section 33-23-103, W.S.1977, provides:
"(a) It is unlawful for any person in the state of Wyoming to practice or attempt to practice optometry or to advertise, or hold himself out as qualified to fit or adjust any lenses or lens in any manner or form as an aid to human eyesight, without first obtaining a certificate to practice optometry."
Section 33-23-111(b), W.S.1977, provides:
The district court denied the injunctive relief sought by the Wyoming State Board of Examiners of Optometry (Board), holding that the arrangement between Pearle Vision Center, Inc. (Pearle), as the franchiser, and Robert L. Holly (Holly), a Board certificated optometrist as franchisee, did not transgress any of these statutory provisions. We are in accord with the judgment of the district court, and we affirm that judgment.
As appellant, the Board states the following issues in urging a reversal of the district court:
Pearle, as appellee, restates the issues on appeal in this way:
Holly also defends the decision of the district court in his favor, and his statement of the issues is:
On September 16, 1985, the Board brought an action seeking injunctive relief and monetary damages against Holly and Pearle. This action followed the formal opinion of the Wyoming attorney general issued on August 20, 1985 which, in pertinent part, said:
The Board alleged in its complaint that Holly and Pearle were engaged in fee splitting in violation of § 33-23-110(b)(i), W.S.1977; Holly was employing Pearle as a "steerer" to obtain business in violation of § 33-23-110(b)(i), W.S.1977; Pearle and/or Holly were engaged in "canvassing" in violation of § 33-23-111(b)(i), W.S.1977; Pearle was engaged in the practice of optometry without a valid certificate of registration in violation of § 33-23-103, W.S.1977; and Pearle, a general business corporation, was engaged indirectly in the practice of optometry in violation of § 33-23-111(b)(iv), W.S.1977.
Holly and Pearle filed separate answers to the Board's complaint. In each answer, the respective defendant alleged that the relationship between Holly and Pearle was not prohibited by statute or, to the extent it might be prohibited by statute, the prohibition is unconstitutional. Discovery was pursued, and the several parties then moved for summary judgment on all issues. A hearing was set on the motions for summary judgment and, prior to that hearing, the Board withdrew its claim for monetary damages and dropped its allegations that Pearle and/or Holly were engaged in canvassing. The district court received briefs and heard oral argument and then granted summary judgment to Pearle and Holly on all remaining issues and denied the summary judgment sought by the Board.
Pearle is a Texas corporation, and it owns and operates retail optical stores in several states. Holly was licensed as an optometrist in Wyoming in 1983. Early in 1985, Holly wrote to Pearle and suggested that he would be interested in acquiring a Pearle franchise. Several letters from Pearle to Holly explaining various arrangements by which Holly could acquire a Pearle franchise are included in the record. Ultimately, Holly and Pearle agreed to an arrangement that required Holly to enter into a sublease of office space and a separate franchise agreement with Pearle. The action filed by the Board challenged the relationship between Pearle and Holly pursuant to the franchise agreement. The complaint did not allege that the agreement is a sham, or that the true relationship between Pearle and Holly was anything other than what was set forth in the agreement.
The sublease was for office space at the Frontier Mall in Cheyenne, Wyoming. Pursuant to the sublease, Holly agreed to pay Pearle a base rate and, in addition, a percentage of his total sales in excess of an established amount each month. Approximately two-thirds of the subleased office space was used for dispensing optical goods, and the remaining space was used by Holly to treat patients and perform optometric services. Pictures of the office demonstrate that a wall divided the two areas, separate entrances were available for each area in the office, and a common doorway provided internal access between the two offices.
The franchise agreement provided for the purchase by Holly of a Pearle franchise. The total consideration was $155,000, and $15,000 was paid in cash with the remaining $140,000 financed by a ten-year loan from Pearle with an interest rate of three percent over the current prime rate. The purchase agreement for the franchise is a carefully drawn and detailed document. It sets forth the duties of the franchiser and the franchisee, and delineates the manner in which the franchisee is expected to operate the franchise. In forty-five pages, the agreement sets forth eighteen separate provisions with several subsections in each provision. The specific terms of both the sublease and the franchise purchase agreement will be discussed in connection with the disposition of the several issues.
Essentially, the Board's two issues are treated together in a series of arguments. The first argument of the Board is that the trial court erred because it did not find that Holly and Pearle violated the provision of § 33-23-110(b)(i), W.S.1977, which prohibits " 'splitting' or dividing a fee." The Board supports its claim that Holly was "splitting" or dividing fees with Pearle by reference to a required royalty which the franchise agreement provided in favor of Pearle. In pertinent part, the franchise agreement provides:
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