601 S.W.3d 111
Ark.2020Background
- Arkansas adopted Amendment 98, creating the Arkansas Medical Marijuana Commission (MMC) to adopt rules and license cultivation facilities; MMC rules are subject to the APA.
- Carpenter Farms, a putative 100% minority-owned applicant, submitted a cultivation-license application that ABC staff first verified; after four commissioners scored, ABC staffer Mary Robin Casteel later disqualified Carpenter Farms for an alleged ownership-structure discrepancy.
- Carpenter Farms alleges confidentiality was breached, that one commissioner then gave a low score to place it below the five-license cutoff, and that other applicants with similar defects were treated differently.
- Carpenter Farms sued DFA, ABC, and MMC seeking reinstatement, APA-based relief (including that MMC failed to adopt Attorney General model rules), and a declaratory judgment for equal-protection violations; the circuit court denied the State’s sovereign-immunity motion and the State appealed interlocutorily.
- The Supreme Court held: claims based on APA §212 (agency adjudication) and challenges to the Commission’s application of its rules (including reliance on MMC Rule 19 to create jurisdiction) are dismissed; but Carpenter Farms may proceed on (a) a §207 challenge to the validity of MMC rules to the extent MMC failed to adopt/model rules under §215 (an ultra vires claim), and (b) a declaratory-judgment equal-protection claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sovereign immunity / ultra vires exception | Carpenter Farms alleges MMC acted illegally/ultra vires (failed to adopt model rules and violated equal protection), so immunity does not bar suit | State argues sovereign immunity bars suit against the State | Ultra vires exception allows challenges to MMC’s failure to adopt AG model rules and constitutional claims; sovereign immunity bars claims that seek to control lawful State action except for those ultra vires claims |
| APA §212 — was there an adjudication subject to judicial review? | Carpenter Farms says disqualification is final agency action reviewable under §212 | State says no adjudication (no notice/hearing, no quasi-judicial process) so §212 review doesn't apply | Court rejects §212 jurisdiction: disqualification was administrative, not an adjudication; claims based on §212 dismissed (following Naturalis) |
| APA §207 — challenge to rule application vs rule validity | Carpenter Farms claims MMC misapplied its rules (failed to score) and also failed to adopt AG model rules under §215 | State contends §207 cannot be used to review case-specific application and challenges standing/exhaustion | Court bars §207 review of case-specific application (per Naturalis) but permits §207 challenge to rule validity based on MMC’s alleged failure to adopt or justify departing from AG model rules (an ultra vires APA §215 claim) |
| MMC Rule 19 and declaratory equal-protection claim | Carpenter Farms relies on MMC Rule 19 (appeal of denials to circuit court) and also seeks declaratory relief for equal-protection violations | State argues MMC cannot waive sovereign immunity by internal rule and Rule 19 cannot create jurisdiction | MMC Rule 19 cannot independently confer subject-matter jurisdiction; however, Carpenter Farms may proceed with a declaratory-judgment equal-protection claim under constitutional/declaratory-judgment statutes as an ultra vires/unconstitutional exception to sovereign immunity |
Key Cases Cited
- Arkansas Department of Finance and Administration v. Naturalis Health, LLC, 549 S.W.3d 901 (Ark. 2018) (§212 review requires an agency adjudication; MMC licensing decision there was not an adjudication)
- Board of Trustees of the University of Arkansas v. Andrews, 535 S.W.3d 616 (Ark. 2018) (Arkansas Constitution bars making the State a defendant; statutory waivers of immunity may be repugnant)
- Ark. Oil & Gas Comm'n v. Hurd, 564 S.W.3d 248 (Ark. 2018) (distinguishes agency adjudicative role; in adjudication appeals sovereign immunity does not bar review)
- Monsanto Co. v. Arkansas State Plant Board, 576 S.W.3d 8 (Ark. 2019) (confirms ultra vires/illegal-acts exception to sovereign immunity remains available)
- McGhee v. Arkansas State Board of Collection Agencies, 201 S.W.3d 375 (Ark. 2005) (standard of review on motion to dismiss; treat complaint allegations as true)
- Martin v. Haas, 556 S.W.3d 509 (Ark. 2018) (reiterates that illegal or ultra vires state acts may be enjoined)