GREG MILLS, ET AL., Plaintiffs/Appellants, υ. ARIZONA BOARD OF TECHNICAL REGISTRATION, ET AL., Defendants/Appellees.
No. CV-21-0203-PR
SUPREME COURT OF THE STATE OF ARIZONA
Filed August 10, 2022
Appeal from the Superior Court in Maricopa County, The Honorable Joseph P. Mikitish, Judge, No. CV2019-013509. AFFIRMED IN PART; REVERSED IN PART; REMANDED. Memorandum Decision of the Court of Appeals, Division One, 1 CA-CV 20-0510, Filed August 12, 2021, REVERSED
COUNSEL:
Paul V. Avelar (argued), Institute for Justice, Tempe; Daniel Rankin, Institute for Justice, Arlington, VA, Attorneys for Greg Mills, et al.
John C. Gray (argued), Gregory Y. Harris, Lewis Roca Rothgerber Christie LLP, Phoenix, Attorneys for Arizona Board of Technical Registration, et al.
Brett W. Johnson, Tracy A. Olson, Ian R. Joyce, Snell & Wilmer LLP, Phoenix; Ronald M. Jacobs, Jay C. Johnson, Venable LLP, Washington, D.C., Attorneys for Amici Curiae National Council of Architectural Registration Boards, National Council of Examiners for Engineering and Surveying, and Council of Landscape Architectural Registration Boards
Timothy Sandefur, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for Amicus Curiae Goldwater Institute
Aditya Dynar, Pacific Legal Foundation, Arlington, VA, Attorneys for Amicus Curiae Pacific Legal Foundation
¶1 Greg Mills is an engineer who designs, analyzes, tests, and builds electronic circuits for consumer products through his consulting firm, Southwest Engineering Concepts, LLC (“SEC“). The Arizona Board of Technical Registration regulates several technical professions, including engineers. See
¶2 The issue here is whether the doctrines of exhaustion of administrative remedies, ripeness, and standing bar Mills’ suit filed in the superior court pursuant to the Uniform Declaratory Judgments Act (“UDJA“),
BACKGROUND
¶3 Mills worked as an engineer for manufacturing companies for decades before starting SEC and eventually coming to the Board‘s attention. In May 2019, the Board commenced an investigation after receiving a customer complaint about Mills’ fees and his non-registration status. Based on two Board-registered engineers’ opinions, it determined Mills and SEC had violated the law by engaging in “engineering practices” and by advertising their services as “engineers” without first registering with the Board. See
¶4 To resolve the complaint informally, a Board investigator sent Mills a proposed consent agreement and order in August asking him to agree he had violated the law. See
¶5 In October, Mills declined a Board invitation to meet and discuss the investigation. The Board met anyway and voted to offer Mills a second consent agreement and order identical to the first, except it doubled the fine to $6,000. As before, Mills refused to sign.
¶6 The legislature has delegated authority to the Board to conduct evidentiary hearings itself or through an administrative law judge and resolve complaints or charges within its jurisdiction. See
¶7 In December, Mills and SEC (collectively, “Mills“) filed this lawsuit in superior court against the Board, its members, and its executive director (collectively, the “Board“), seeking declaratory and injunctive relief. Mills alleges four causes of action:
- (1) Section 32-145, subsections (1) and (2), both facially and as applied here, violate the Arizona Constitution, article two, section six, by preventing him from speaking freely about his business as an engineer unless he registers as an engineer;
- (2) Section 32-101(B)(11), which defines the “engineering practice” subject to registration, is void for vagueness and violates the Arizona Constitution‘s due process and separation of powers provisions, see
Ariz. Const. art. 2, § 4 ;art. 3 ;art. 4, pt. 1, § 1 ; - (3) Sections 32-141(1) and 32-145(1), as applied here, violate the Arizona Constitution, article two, sections four and thirteen,
and article four, part two, section 19(13), by prohibiting unregistered engineering practices and therefore arbitrarily prohibiting Mills from earning a living; and - (4) Sections 12-910(E) (2018) and 32-106(A)(5), as applied here, usurp judicial powers by authorizing the Board to adjudicate facts in violation of the Arizona Constitution, article two, section four and articles three and six.
¶8 On the Board‘s motion, the superior court dismissed the complaint on two bases: (1) the court lacks subject matter jurisdiction because Mills failed to exhaust administrative remedies with the Board, see
¶9 We granted review of Mills’ petition because it presents an issue of statewide importance.
DISCUSSION
I. Standard of review
¶10 We review the grant of a motion to dismiss de novo. Shepherd v. Costco Wholesale Corp., 250 Ariz. 511, 513 ¶ 11 (2021). Likewise, we review issues of jurisdiction, ripeness, and standing de novo as issues of law. See Brush & Nib Studio, LC v. City of Phoenix, 247 Ariz. 269, 279 ¶ 34 (2019) (standing and ripeness); Medina v. Ariz. Dep‘t of Transp., 185 Ariz. 414, 417 (App. 1995) (jurisdiction).
II. Exhaustion of administrative remedies
A. General principles
¶11 A litigant must exhaust a statutorily prescribed administrative remedy before seeking judicial relief from actual or threatened injuries. See Moulton v. Napolitano, 205 Ariz. 506, 511 ¶ 9 (App. 2003). The purpose of the exhaustion doctrine is to afford an administrative agency the opportunity to “perform functions within its special competence - to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies.” Id. (quoting Medina, 185 Ariz. at 417). As a result, “[t]he doctrine promotes both judicial economy and administrative agency autonomy by preventing premature judicial intervention in inchoate administrative proceedings.” Id. (quoting Medina, 185 Ariz. at 417); see also Univar Corp. v. City of Phoenix, 122 Ariz. 220, 223 (1979) (stating the “doctrine is firmly entrenched in Arizona for such sound reasons as judicial economy and reliance on the expertise of the administrative body for initial adjudication” (internal citation omitted)).
¶12 A complainant‘s failure to exhaust administrative remedies does not deprive the superior court of subject matter jurisdiction. Moulton, 205 Ariz. at 511 ¶ 9 n.2; Medina, 185 Ariz. at 418. But when the doctrine is properly raised as an affirmative defense, the court will refuse to adjudicate the case for the complainant‘s failure to satisfy a procedural prerequisite. Medina, 185 Ariz. at 416, 418; cf. Taliaferro v. Taliaferro, 186 Ariz. 221, 223 (1996) (distinguishing between a court‘s authority to proceed and its subject matter jurisdiction).
B. Application here
¶13 The Board argues Mills must exhaust administrative remedies by awaiting the initiation and completion of formal proceedings that would result in either a favorable outcome for Mills or an appealable adverse decision. It asserts that if Mills is permitted to adjudicate his claims outside an appeal of the Board‘s final decision, it would render superfluous the statutes authorizing the court to review final agency decisions. See
¶15 Although Mills could raise his constitutional challenges in an appeal from the Board‘s final administrative decision, see id. at 513 ¶ 20;
¶16 If Mills could compel the Board to formally resolve whether he must register as an engineer, he could then raise his constitutional claims in an appeal of any adverse decision. Then, we might agree with the Board and the previous courts that Mills must exhaust those remedies before initiating this lawsuit. See Mills, 2021 WL 3557298, at *7 ¶ 30. The lack of an available administrative path for bringing Mills’ claims before the superior court, however, persuades us that the legislature did not intend an appeal of a final, adverse Board decision as the exclusive remedy available to Mills, as the Board suggests. If that were so, after asserting Mills’ statutory violations and assessing escalating fines in proposed consent agreements, the Board could delay initiating formal proceedings for years or never initiate proceedings that would culminate in an appealable decision, leaving Mills in legal limbo, unable to know with certainty whether he is lawfully required to register as an engineer under
¶17 Contrary to the statutes governing the Board, statutes governing other professional boards either require formal proceedings if informal efforts to resolve issues are unsuccessful or permit the professional to initiate such proceedings. See, e.g.,
¶18 We are further persuaded that the exhaustion doctrine does not preclude Mills’ lawsuit because the court, not the Board, possesses authority to grant Mills the remedies he seeks: a declaration that the statutes at issue are unconstitutional either facially or as applied and an injunction against their enforcement. See Ariz. Indep. Redistricting Comm‘n v. Brewer, 229 Ariz. 347, 355 ¶ 34 (2012) (“[W]hen one with standing challenges a duly enacted law on constitutional grounds, the judiciary is the department to resolve the issue . . . .“); Moulton, 205 Ariz. at 513 ¶ 20 (“We commit to administrative agencies the power to determine constitutional applicability, but we do not commit to administrative agencies the power to determine constitutionality of legislation.” (quoting Est. of Bohn v. Waddell, 174 Ariz. 239, 249 (App. 1992))); see also Manning v. Reilly, 2 Ariz. App. 310, 312 (1965) (“Legal or constitutional questions concerning the validity of a zoning ordinance require judicial determination and are beyond the scope of an administrative body‘s powers and authority.“). Requiring Mills to await a (possible) final Board decision before raising his constitutional challenges on appeal would be pointless because the Board is powerless to resolve those challenges. See Moulton, 205 Ariz. at 513 ¶ 18 (“[A] litigant should not be required to exhaust administrative remedies when such an effort would be futile.“); see also S. Pac. Co. v. Cochise County, 92 Ariz. 395, 399–400 (1963) (finding a taxpayer had no obligation to use a prescribed administrative remedy that could not correct the systemic undervaluation practices complained about); McCluskey v. Sparks, 80 Ariz. 15, 19 (1955) (concluding the superior court erred by dismissing a suit challenging constitutionally discriminatory valuation of real property for taxing purposes because a tax protest before the county board of equalization and subsequent appeal would not encompass this issue, making the administrative remedy “no remedy at all“).
¶19 To clarify, the fact that the superior court has original jurisdiction to adjudicate constitutional challenges to statutes does not necessarily relieve litigants of their obligation to exhaust administrative remedies when administrative issues also raise constitutional concerns. See
¶20 But the legislature has not conditioned the superior court‘s authority to adjudicate constitutional challenges to the statutes here on a complainant‘s exhaustion of administrative remedies. See Est. of Bohn, 174 Ariz. at 245-46. As previously described, a complainant like Mills has no statutorily prescribed administrative remedy to pursue. Also, by adopting the UDJA, the legislature empowered the courts to “declare rights, status, and other legal relations,”
¶21 This Court‘s opinion in State Board of Technical Registration v. McDaniel, 84 Ariz. 223 (1958), supports our conclusion that appeal of a Board‘s final decision is not an exclusive remedy. There, the Board initiated disciplinary proceedings against McDaniel, a registered structural engineer, for three charged statutory violations. Id. at 226. The week before a scheduled hearing, McDaniel obtained an extraordinary writ of prohibition (what we today call “special action relief,” see
¶22 In sum, because Mills does not have a prescribed administrative remedy to pursue by which to raise his constitutional claims, his lawsuit is not precluded by the exhaustion of remedies doctrine, and the superior court erred by dismissing his complaint on this basis.
III. Standing and ripeness
A. General principles
¶23 Unlike the federal constitution, “the Arizona Constitution does not have a case or controversy requirement.” See Brush & Nib, 247 Ariz. at 279 ¶ 35. Nevertheless, we apply the doctrines of standing and ripeness as a matter of judicial restraint to ensure courts “refrain from issuing advisory opinions, that cases be ripe for decision and not moot, and that issues be fully developed between true adversaries.” City of Surprise v. Ariz. Corp. Comm‘n, 246 Ariz. 206, 209 ¶ 8 (2019) (quoting Bennett v. Brownlow, 211 Ariz. 193, 196 ¶ 16 (2005)).
¶24 Standing and ripeness are both prudential doctrines. See Brush & Nib, 247 Ariz. at 280 ¶ 36; Bennett v. Napolitano, 206 Ariz. 520, 524 ¶ 16, 527 ¶ 31 (2003). A plaintiff has standing to bring an action if it alleges a “distinct and palpable injury“; a generalized harm shared by all or by a large class of people is generally insufficient. Sears v. Hull, 192 Ariz. 65, 69 ¶ 16 (1998). Ripeness reflects the judiciary‘s reluctance to adjudicate hypothetical or abstract questions. Ariz. Downs v. Turf Paradise, Inc., 140 Ariz. 438, 444 (App. 1984). As a general matter, a case is ripe if the plaintiff has incurred an injury or there is an actual controversy between the parties. Brush & Nib, 247 Ariz. at 280 ¶ 36.
¶25 Although the UDJA is remedial and therefore liberally construed, the standing and ripeness doctrines apply to complaints initiated under the act. See id. at 279–81 ¶¶ 33–41; Citizens’ Comm. for Recall of Jack Williams v. Marston, 109 Ariz. 188, 192 (1973); see also Bd. of Supervisors of Maricopa Cnty. v. Woodall, 120 Ariz. 379, 380 (1978) (stating that a declaratory judgment action must involve a “justiciable controversy,” which arises when there is “an actual controversy ripe for adjudication” and
B. Application
¶26 The Board argues Mills lacks standing to bring this lawsuit and his claims are unripe because a factual dispute exists whether Mills is required to register as an engineer and unless and until the Board formally resolves that dispute, any injury to Mills is speculative and thus nonjusticiable under the UDJA. See Brush & Nib, 247 Ariz. at 280 ¶ 39 (rejecting wedding invitation designers’ challenge to constitutionality of city ordinance precluding discrimination on the basis of sexual orientation as applied to some of plaintiffs’ products as that challenge “implicate[d] a multitude of possible factual scenarios too ‘imaginary’ or ‘speculative’ to be ripe” (quoting Thomas v. Anchorage Equal Rts. Comm‘n, 220 F.3d 1134, 1139 (9th Cir. 2000))). With one exception described later, we disagree.
¶27 First, factfinding by the Board is not required for the court to resolve Mills’ claims. Contrary to the court of appeals’ assertion, see Mills, 2021 WL 3557298, at *4 ¶ 18, *6 ¶ 28, Mills challenges the facial constitutionality of
¶28 Resolution of Mills’ remaining as-applied and void for vagueness challenges depends in part on whether he engages in an “engineering practice” under
¶29 Second, Mills is not required to suffer an actual injury before his claims become justiciable. The key inquiry in the absence of actual injury is whether an actual controversy exists between the parties. See id. at 280 ¶ 36-39 (concluding that wedding invitation designers’ claims were ripe regarding custom invitations as designers faced a real threat of prosecution for refusing to create such invitations for a same-sex wedding); Planned Parenthood Comm. of Phx., Inc. v. Maricopa County, 92 Ariz. 231, 233 n.1 (1962) (stating an “actual controversy” existed that justified a non-profit clinic‘s declaratory judgment action challenging a penal statute prohibiting publication of birth control methods because “the threat of prosecution by governmental officials ha[d] curtailed” the clinic‘s activities). We conclude that an actual controversy exists regarding Mills’ first through third causes of action, but not for the fourth cause of action.
¶30 The initial three causes of action relate to an existing threat to Mills’ right to speak freely about his business, his right to be clearly advised about what type of engineer must be registered, and his right to earn a living. The Board has investigated and determined that Mills is violating
¶31 We reach a contrary decision concerning the fourth cause of action. There, Mills seeks a declaration that, as applied to the determination and adjudication of private rights,
¶32 In sum, causes of action one through three in Mills’ complaint are justiciable, and the superior court erred by dismissing them as nonjusticiable. The fourth cause of action is unripe, and the court therefore correctly dismissed it.
IV. Issues not before us
¶33 The Board alternatively argues we should affirm the superior court‘s dismissal of the complaint on two independent bases. First, it asserts Mills is precluded from maintaining his lawsuit because he failed to lodge a notice of claim, as required by
CONCLUSION
¶34 For the foregoing reasons, we reverse the court of appeals’ memorandum decision. We affirm the superior court‘s judgment in part, reverse in part, and remand for further proceedings.
VICE CHIEF JUSTICE TIMMER