2022 Ohio 4281
Ohio Ct. App.2022Background
- Lake Front Medical LLC applied (Dec 2017) for an Ohio medical-marijuana processor provisional license, submitting five narrative plans (business, operations, quality assurance, security, financial).
- The Department of Commerce used three-person scoring teams and score sheets that separated mandatory (rule-based, bold/italic) criteria from additional non-mandatory “disputed” criteria; applicants needed minimum scores in each plan to qualify.
- Lake Front failed the security (5 then 6 of 20; minimum 12) and quality assurance (12 of 30; minimum 18) portions; 14 of 104 applicants met all minimums and received provisional licenses.
- Lake Front requested an administrative hearing; it presented a security expert (Dimoff); the Department presented scoring-team witnesses; the hearing officer found Lake Front failed to meet mandatory criteria and recommended denial.
- The Department adopted the recommendation; Lake Front appealed to common pleas (72 assignments), which affirmed; Lake Front appealed to the Eleventh District raising 11 assignments of error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agency had to accept Lake Front’s uncontroverted security expert under In re Williams | Williams requires adoption of uncontroverted expert opinion when it is the only evidence on the issue | Williams is inapplicable because the Department had competing evidence and no rule requires expert testimony here | Court: Williams inapplicable; competing evidence existed, so Department was not required to adopt Lake Front’s expert opinion |
| Legality of using non-mandatory (“disputed”) criteria to score and rank applicants | Department unlawfully used criteria not adopted as rules to score and competitively rank applicants | Disputed criteria were for competitive ranking and did not disqualify applicants who failed mandatory criteria | Court: Moot as to Lake Front because it failed to meet mandatory criteria; no relief warranted on disputed-criteria claims |
| Reliance on a rescinded rule for quality-assurance scoring | Department relied on a rescinded rule, requiring award of passing score | Department denies rescission affected Lake Front’s failure to meet mandatory criteria | Court: Moot because Lake Front did not meet mandatory quality-assurance criteria |
| Failure to list federal regulation (21 C.F.R. 117) in notice of laws/rules involved (R.C. 119.07) | Notice omitted 21 C.F.R. 117, depriving Lake Front of required statutory notice | Department says omission is immaterial to Lake Front’s failure on mandatory criteria | Court: Moot for Lake Front because it failed mandatory criteria; no reversible error shown |
| Use of non-department employees/contractors to score applications (Ohio Adm.Code 3796:3-1-03(A)) | Department violated rule by using outside scorers | Department contends scoring teams were authorized and properly trained | Court: Moot for Lake Front because it failed mandatory criteria; no relief granted |
| Due-process claim: unreasonable delay between application and final order | Aggregate delay violated Lake Front’s due process rights | Department scheduled hearings timely; delay explained by voluminous records and routine administrative processes; no prejudice shown | Court: No due-process violation — scheduling complied with statute and no prejudice/stigma shown |
| Due-process claim: hearing officer failed to provide a “de novo” hearing / showed bias | Hearing officer pre-decided matter and did not hold a new, impartial hearing | Hearing officer’s comments addressed Lake Front’s burden of proof; no statutory right to a “de novo” label; process satisfied R.C. 119.09 | Court: No error — Lake Front bore burden to prove it met mandatory criteria; no improper bias shown |
Key Cases Cited
- In re Williams, 60 Ohio St.3d 85 (1991) (agency cannot reject sole, uncontradicted expert evidence on an issue governed only by expert testimony)
- Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108 (1980) (common pleas court must review entire administrative record for substantial, reliable, probative evidence)
- Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619 (1993) (appellate review of administrative decisions is limited; trial court reviews evidence)
- State Med. Bd. of Ohio v. Murray, 66 Ohio St.3d 527 (1993) (Williams failed due to lack of evidence, not merely absence of board expert testimony)
- Fortner v. Thomas, 22 Ohio St.2d 13 (1970) (mootness doctrine: courts should avoid deciding abstract or academic questions)
- State ex rel. Dispatch Printing Co. v. Louden, 91 Ohio St.3d 61 (2001) (narrow exception for issues capable of repetition yet evading review)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (concern over administrative interpretive deference and separation-of-powers implications)
- Natl. Fedn. of Indep. Business v. Dep’t of Labor, OSHA, 142 S. Ct. 661 (2022) (discussion in concurrence emphasizing nondelegation and limits on agency power)