Beason v. North Carolina Department of the Secretary of State
Beason v. North Carolina Department of the Secretary of State
Opinion of the Court
Respondent the North Carolina Department of the Secretary of State appeals the trial court’s order reversing and setting aside the civil fine assessment imposed against petitioner Mark Beason. After careful review, we affirm the trial court’s order.
This case involves the lobbying efforts of petitioner to repeal or amend N.C. Gen. Stat. § 136-28.7 (2011), commonly known as the “Buy America” law, which prohibits the North Carolina Department of Transportation from purchasing or using foreign-made steel and iron in highway construction projects. Petitioner has been working as a lobbyist since 1999. His father, Donald Beason (“Don”), was also a registered lobbyist in North Carolina from 1993 to 2007. Between late 2006 and August 2007, petitioner worked with his father at Beason Government Affairs (BGA), a lobbying firm. Respondent and the North Carolina Ethics Commission are the administrative agencies statutorily charged with enforcing and administering Chapter 120C of the North Carolina General Statutes (the “lobbying laws”). N.C. Gen. Stat. § 120C-600 and § 120C-601 (2011).
In late 2006, Sigma, a New Jersey corporation that imports and sells foreign manufactured cast iron and steel products in the United States,
In February 2007, Sigma executed a contract with BGA. The contract stated that petitioner, Don, and Mr. Williams would lobby on behalf of Sigma and be paid- $95,000 plus expenses. Documents obtained by respondent during its investigation indicate that five companies engaged in importing and selling iron products — specifically, EEPC; Star Pipe Products (“Star”); General Foundries, Inc. (“GF”); Serampore Industries Products (Ltd.) Inc.; and Capitol Foundry of Virginia (“Capitol”) — agreed to reimburse Sigma for its contract with BGA. After executing the contract, both petitioner and Mr. Williams lobbied on behalf of Sigma to repeal the “Buy America” law. Petitioner, Don, and Mr. Williams all registered with respondent as lobbyists for Sigma.
In March 2007, in response to safety concerns of Indian iron products, Don attended a meeting in Washington, D.C. with Sigma representatives, EEPC, and various other representatives of companies involved with exporting Indian Steel. Petitioner and Mr. Williams were not aware of this meeting.
In October 2007, respondent initiated an investigation into Don and petitioner’s lobbying activities. On 31 March 2010, respondent issued a civil fine assessment against petitioner for three alleged violations of the lobbying laws. Specifically, respondent contended that petitioner violated section 200 by failing to register as a lobbyist for EEPC, section 402 by failing to file lobbyist reports as a lobbyist for EEPC, and section 200 by failing to disclose to designated individuals that he was a lobbyist for EEPC. In the fine, respondent noted that the fine was based on petitioner’s “ ‘coordinated efforts’ on behalf of the registered principal, Sigma, and EEPC” and his “acting in concert” with numerous individuals
On 29 March 2010, respondent also issued a civil fine assessment against Don, citing nine violations of the lobbying laws and related administrative rules. Don was ordered to pay a civil fine totaling $111,000.
On 15 April 2010, because they were both fined by respondent, petitioner and Don filed a joint petition for a contested case hearing with the Office of Administrative Hearings appealing their civil fine assessments. The matter came on for hearing on 30 August 2010, and Administrative Law Judge Fred G. Morrison, Jr. (“ALJ Morrison”) issued his Decision (“ALJ Decision”) on 22 November 2010. Relying on the definition of lobbying in N.C. Gen. Stat. § 120C-100(a)(9)
Petitioner filed a Petition for Judicial Review, including a North Carolina Constitutional Claim, in Wake County Superior Court on 8 March 2011. On 8 April 2011, respondent issued its Final Agency Decision, affirming in part and modifying in part the ALJ Decision. The Final Agency Decision adopted the conclusion, made by ALJ Morrison, that petitioner’s “activities” constituted lobbying. Moreover, respondent concluded that the “joint lobbying activities of Don Beason and Mark Beason” violated N.C. Gen. Stat. § 120C-200 and § 120C-402 (the same violations found by ALJ Morrison). Thus, the civil fine assessment against petitioner was affirmed.
In response to the Final Agency Decision, petitioner filed an Amended Petition for Judicial Review (“Amended Petition”), which also included a North Carolina Constitutional Claim, in Wake County Superior Court. In response to various discovery motions and respondent’s motion to dismiss petitioner’s constitutional claim in his Amended Petition, the trial court issued an order deferring ruling on the discovery motions, staying discovery, and staying petitioner’s constitutional claim. The trial court also dismissed petitioner’s 8 March 2011 Petition for Judicial Review
On 5 December 2011, petitioner’s Amended Petition came on for hearing. On 6 January 2012, Judge Ridgeway issued a Memorandum of Decision and Order (“order”), reversing and setting aside the civil fine assessment against petitioner. Specifics of the order will be discussed as they relate to respondent’s arguments on appeal. Respondent appealed the order on 3 February 2012. On 23 August 2012, petitioner filed a motion to dismiss the appeal.
Grounds for Appeal
As an initial'matter, we must determine whether respondent’s appeal is interlocutory. Petitioner claims that the appeal is interlocutory because the order did not resolve all of his claims for relief, specifically, his constitutional Corum claim.
“Generally, there is no right of immediate appeal from interlocutory orders and judgments.” Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). “An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.” Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381, rehearing denied, 232 N.C. 744, 59 S.E.2d 429 (1950). There is no evidence in the record that the trial court addressed petitioner’s Corum claim besides its order staying it. Since petitioner’s Corum claim is still pending, the trial court’s order did not fully dispose of petitioner’s case. Thus, we must conclude that petitioner’s appeal is interlocutory.
However, an interlocutory appeal is immediately appealable if it involves a substantial right. Sharpe v. Worland, 351 N.C. 159, 162, 522 S.E.2d 577, 579 (1999). To determine if an appeal involves a substantial right, “[essentially a two-part test has developed — the right itself must be substantial and the deprivation of that substantial right must potentially work injury... if not corrected before appeal from final judgment.” Goldston, 326 N.C. at 726, 392 S.E.2d at 736.
We conclude that since respondent is charged with investigating violations of and enforcing Articles 2,4, and 8 of the lobbying laws pursuant
Standard of Review
Pursuant to N.C. Gen. Stat. § 150B-51(b) (2009)
may affirm the decision of the agency or remand the case to the agency or to the administrative law judge for further proceedings. It may also reverse or modify the agency’s decision, or adopt the administrative law judge’s decision if the substantial rights of the petitioners may have been prejudiced because the agency’s findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional provisions;
(2) In excess of the statutory authority or jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or
(6) Arbitrary, capricious, or an abuse of discretion.
In reviewing afina! decision in a contested case in which an administrative law judge made a decision, in accordance with G.S. 150B-34(a), and the agency does not adopt the administrative law judge’s decision, the court shall review the official record, de novo, and shall make findings of fact and conclusions of law. In reviewing the case, the court shall not give deference to any prior decision made in the case and shall not be bound by the findings of fact or the conclusions of law contained in the agency’s final decision. The court shall determine whether the petitioner is entitled to the relief sought in the petition, based upon its review of the official record.
Our standard of review of a trial court’s order reviewing a final agency decision is well-established:
On appeal from a trial court’s review of a final agency decision, an appellate court’s task is to examine the trial court’s order for error of law by (1) determining whether the trial court exercised the appropriate scope of review and, if appropriate, (2) determining whether the court did so properly.
Bulloch v. N. C. Dep’t of Crime Control & Pub. Safety, _ N.C. App. _, _, 732 S.E.2d 373, 377, disc. review denied, _ N.C. _, 735 S.E.2d 178 (2012). “For errors alleged regarding violations of subsections 150B-51(b)(l) through (4), the appellate court engages in de novo review; for errors alleged regarding violations of subsections 150B-51(b)(5) or (6), the ‘whole record test’ is appropriate.” Id. Here, the trial court stated that it reviewed the matter de novo. Respondent does not allege that the trial court applied the wrong standard of review, only that it applied it incorrectly. Therefore, we must determine whether the trial court applied its de novo review properly.
Arguments
Respondent’s overarching argument is that the trial court erred in concluding that respondent lacked authority to interpret the lobbying laws and find violations of those laws through the common law doctrine of “acting in concert.” Specifically, respondent contends that its conclusion that petitioner was “lobbying” based on his “coordinated efforts”
There seems to be two basic issues that must be resolved with regard to respondent’s first argument. The first issue is whether respondent had the authority to interpret the lobbying laws. The second is whether respondent properly found that petitioner was a lobbyist for EEPC based on his “coordinated efforts” and “acting in concert” with others.
With regard to the first issue, whether respondent had the authority to interpret the lobbying laws, we conclude that the trial court properly found that respondent did not have such authority. “[T]he responsibility for determining the limits of statutory grants of authority to an administrative agency is a judicial function for the courts to perform.” McDonald v. N. C. Dep’t of Corr., _ N.C. App. _, _, 724 S.E.2d 138, 140, disc. review denied, _ N.C. _, 731 S.E.2d 146 (2012). “An administrative agency is a creature of the statute creating it and has only those powers expressly granted to it or those powers included by necessary implication from the legislature grant of authority.” Boston v. N.C. Private Protective Servs. Bd., 96 N.C. App. 204, 207, 385 S.E.2d 148, 150-51 (1989).
In concluding that respondent lacked the authority to interpret the lobbying laws, the trial court looked to N.C. Gen. Stat. § 120C-101(a) (2011), the statute setting out the rule-making responsibilities of the Ethics Commission and respondent. Respondent was required to adopt any rules, orders, and forms necessary to administer the provisions of Articles 2, 4, and 8 of the lobbying laws. Id. However, the Ethics Commission was responsible for adopting rules necessary to interpret all provisions of the lobbying laws and for adopting rules necessary to administer Articles 1, 3, 5, 6, and 7 of the lobbying laws. Id. (emphasis added). Based on this statute, the trial court concluded that: (1) the legislature delegated the authority to interpret the lobbying laws to the Ethics Commission; (2) any interpretation of the lobbying laws by respondent was “not entitled to traditional deference by the [c]ourt”; and (3) any interpretation by respondent that would expand the plain meaning of the lobbying laws or define terms would be beyond its statutory authority.
While respondent, in administering Articles 2, 4, and 8 of the lobbying laws, would have the implied power to determine whether certain actions constituted violations of those laws, the power to interpret the lobbying laws has been expressly granted to the Ethics Commission pursuant to N.C. Gen. Stat. § 120C-101(a). “In performing its function, the power of an agency to interpret a statute that it administers is limited
Moreover, we note that “[a]lthough the interpretation of a statute by an agency created to administer that statute is traditionally accorded some deference by appellate courts,” Charlotte-Mecklenburg Hosp. Auth., 201 N.C. App. at 73, 685 S.E.2d at 565, respondent had no authority to interpret the statutes it was charged with administering. Thus, we also affirm the trial court’s conclusion that the interpretation of the lobbying laws by respondent was “not entitled traditional deference.”
Next, we must determine whether respondent was authorized to find violations of the lobbying laws based on the common law doctrine of “acting in concert.” In reviewing the lobbying laws, the trial court strictly construed them, concluding that they are penalty statutes. Statutes imposing penalties are to be strictly construed. State v. Holmes, 149 N.C. App. 572, 576, 562 S.E.2d 26, 30 (2002). “Statutes imposing penalties are similarly strictly construed in favor of the one against whom the penalty is imposed and are never to be extended by construction.” Winston-Salem Joint Venture v. City of Winston-Salem, 54 N.C. App. 202, 205, 282 S.E.2d 509, 511 (1981). Respondent contends that the trial court erred in strictly construing the lobbying laws because, as a whole, they should not be considered penalty statutes, only the statutes in Article 6 entitled “Violations and Enforcement.” However, the statutes in Articles other than Article 6 provide the basis for a penalty. Moreover, the statutes in Articles 2, 4, and 8 of the lobbying laws are specifically incoiporated in N.C. Gen. Stat. § 120C-602(b), the statute authorizing respondent to “levy civil fines” for violations of statutes in those Articles. While the statutes in sections 200 and 400 are not per se penalty statutes, they allow the imposition of a fine or penalty under Article 6 of the lobbying laws. See id. Therefore, they constitute penalty statutes and must be strictly construed and in favor of petitioner. See generally Winston-Salem Joint Venture, 54 N.C. App. at 206, 282 S.E.2d at 511.
a. Influencing or attempting to influence legislative or executive action, or both, through direct communication or activities with a designated individual or that designated individual’s immediate family.
b. Developing goodwill through communications or activities, including the building of relationships, with a designated individual or that designated individual’s immediate family with the intention of influencing current or future legislative or executive action, or both.
(Emphasis added). Respondent only contended that petitioner engaged in “lobbying” as defined in subparagraph (a). The definition of lobbying at issue here specifically states that lobbying only includes direct communication or activities. Therefore, indirect communications, such as those that could be based on “acting in concert” or imputed liability, would not constitute lobbying. Here, the language and intent of the legislature is unambiguous, and respondent did not have room to construe the statute and find violations of the lobbying laws based on imputed liability. Thus, by doing so, respondent impermissibly expanded the definition of lobbying. We note that, as the trial court concluded, had the General Assembly wanted to include “indirect communication” in its definition of lobbying, it could have drafted the statute similar to Minnesota’s statute, defining a lobbyist as an individual “engaged for pay or other consideration ... for the purpose of attempting to influence legislative or administrative action, or the official action of a metropolitan governmental unit, by communicating or urging others to communicate with public or local officials.” Minn. Stat. § 10A.01, subd. 21 (2005) (emphasis added). Similarly, Mississippi defines “lobbying” as “(i) [i]nfluencing or attempting to influence legislative or executive action through oral or written communication; or (ii) [sjolicitation of others to influence legislative or executive action.” Miss. Code Ann. § 5-8-3 (2002) (emphasis added). However, here, our General Assembly did not include such language in the definition of “lobbying.” Therefore, the trial court did not err in concluding that respondent exceeded its statutory authority by extending the definition of lobbying.
In its order, the trial court concluded that “EEPC was not a lobbying principal of [p]etitioner” because:
• There is no evidence that [petitioner was aware of the existence, the identity, or the purpose of EEPC;
• There is no evidence of communications between [p]etitioner and EEPC;
• There is no evidence of [p] etitioner’s awareness of any communications, negotiations or discussions between Donald Beason and others regarding EEPC;
• There is no evidence of any compensation paid to [p]etitioner by EEPC;
• There is no evidence of direction or instructions from EEPC to [petitioner;
• The [p] etitioner’s evidence is largely corroborated by the sworn testimony of a third party, T. Jerry Williams, who has been exonerated by the [Respondent of any wrongdoing with respect to these matters; and
• The absence of any contradictory evidence offered by the [Respondent to refute these findings[.]
In other words, the trial court concluded that EEPC was not a lobbyist principal for two primary reasons: (1) petitioner had no knowledge of EEPC, and (2) petitioner was not paid by EEPC.
The evidence relied upon by the trial court supported its conclusion that EEPC was not a lobbyist principal of petitioner. Pursuant to N.C. Gen. Stat. § 120C-100(a)(ll), a lobbyist principal is defined as “[t]he person or governmental unit on whose behalf the lobbyist lobbies and who makes payment for the lobbying.” Without knowledge of EEPC, petitioner could not have been lobbying on behalf of EEPC, an unknown entity. The findings of fact, which respondent did not challenge, overwhelmingly support this conclusion. Specifically, the trial court found that petitioner had no knowledge that EEPC existed or that Don had discussed a potential client relationship with it. In addition, with regard to the unexecuted contract between BGA and EEPC, the trial court noted that petitioner never saw the proposed contract nor was he aware of
In a separate, yet related, argument, respondent seems to argue that EEPC was a lobbyist principal of petitioner’s because petitioner received payment for his lobbying services, contrary to the trial court’s order concluding otherwise. Respondent contends that N.C. Gen. Stat. § 120C-100(a)(ll) does not require that payment be made directly to the lobbyist from the lobbyist principal. Accordingly, “[p]ayment to the source of [p]etitioner’s clients constituted payment to him.” However, the trial court specifically concluded that “[tjhere [was] no evidence of any compensation paid to [petitioner by EEPC[,]” and respondent fails to point to any evidence in the record on appeal that EEPC made any payment to petitioner or BGA. Therefore, by not providing any contradictory evidence, respondent has not established grounds to support its contention that the trial court’s conclusion was erroneous. Thus, we affirm the trial court’s conclusion that EEPC was not a lobbyist principal of petitioner’s because petitioner received no compensation from EEPC.
Conclusion
Based on the foregoing reasons, we affirm the trial court’s order.
Affirmed.
. We note that ALJ Morrison cites to N.C. Gen. Stat. § 120C-100(a)(10) when quoting the definition of “lobbying.” However, the definition of “lobbying” is found in section 100(a)(9).
. In Corum v. Univ. of N.C., 330 N.C. 761, 785-86, 413 S.E.2d 276, 291-92, rehearing denied, 331 N.C. 558, 418 S.E.2d 664 (1992), our Supreme Court concluded that, under specific circumstances, a plaintiff may bring a direct claim under our state constitution in the absence of an adequate state remedy and that sovereign immunity does not bar these claims.
. We note that N.C. Gen. Stat. § 150B-51 was modified by Session law in 2011. See 2011 N.C. Sess. Laws ch. 398, sec. 27 (2011). However, the modifications were not effective until 1 January 2012 and only apply to contested cases commenced on or after that date. Since the Final Agency Decision was issued 8 April 2011 and petitioner’s Amended Petition was filed 2 May 2011, the trial court’s review is governed by the version of N.C. Gen. Stat. § 150B-51 in effect prior to 1 January 2012.
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