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IN THE FTRST DISTRICT COIIRT OF APPEALSTATE OF FLORIDA
CasrNo. lD19-1780LowsR TmsuNaI- CesB No.: DOH 2019-0076
LOUIS DE,L FAVERO ORCHIDS, INC.
Appellant,
FLORIDA DEPARTMENT OF HEALTH ANdHART'S PLANT NURSERY, INC.,
Appellees
ANSWER BRIEF OF APPELLEEHART'S PLANT NURSERY, INC.
V
David C. AshburnFlorida Bar No. 708046
Lorence Jon BielbyFlorida Bar No. 393517
M. Hope KeatingFlorida Bar No. 981915
Greenberg Traurig, P.A.101 East College AvenueTallahassee, FL 32301Telephone: (850) [email protected]@[email protected] þr Appellee Hart's PlantNursery, Inc.
Filing # 94701542 E-Filed 08/23/2019 03:44:48 PM
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App
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .................'. lv
STATEMENT OF THE CASE AND FACTS...
SUMMARY OF ARGLMENT 10
ARGLIN4ENT ... 13
I. Del Favero Does Not Have Standing to Appeal the Final Order
Page
1
A. Standard of Review ........1 3
Del Favero's Reliance Upon Agrico is Misplaced......... .....13
Del Favero Did Not Intervene and Otherwise WasNot a Party to the Action Below t4
Del Favero is Not Adversely Affected by the Final Order
B
C
D
l3
15
il Ashbacker Radio Corp. v. F.C.C.,326U.5.327 (1945) Does NotApply to this Case Because Hart's' Application is Not MutuallyExclusive with that of Del Favero
A. Standard of Review
Del Favero's Reliance on Ashbqcker is Misplaced....
Mutual Exclusivity Does Not Exist Between the LicensureApplications of Haft's and Del Favero
20
.20
B
C
...21
ll
-i
ru. The Administrative Procedure Act Has Not Been Violated ....27
A. Standard of Review .27
B. The Department Was Not Required to Provide Del FaveroWith a Point of Entry.. ..........27
J\/. The Joint Settlement Agreement is Not Contrary to Public Policy...............30
A. Standard of Review 30
B. The Joint Settlement Agreement is in Conformance withPublic Policy
CONCLUSION ... 35
30
37
37
CERTIFICATE OF SERVICE
CERTIFICATE, OF COMPLIANCE
lll
TABLE OF AUTHORITIES
Cases
Abramson v. Fla. Psychological Ass'n,634 So. 2d 61,0 (Fla. 1994)......
Agrico Chem. Co. v. Dep't of Envtl. Regulation,406 So. 2d 478 (Fla.2d DCA 1981)
Am. Home Assurance Co. v, Plaza Materials Corp.,908 So. 2d360 (Fla. 2005).. . .....
Ameriloss Pub. Adjusting Corp. v. Lightbourn,
Page(s)
31,32,35
13,28
...1 8
46 So. 3d 107 (Fla. 3d DCA 2010)....
Ashbacker Radio Corp. v. F.C.C.,326 U.S. 327 (te{s)........ 20,2r,22,26
Bío-Medical Applications of Clearwater, Inc. v. Dep't of Health &Rehab. Servs.,370 So. 2d 19 (Fla. 2d DCA 1979) .. 21,22,23,24
Bio-Medical Applications of Ocala, Inc. v. Office of Cmty. Med.Facilities, Dup't of Health & Rehab. Servs.,374 So. 2d 88 (Fla. lst DCA 1979) 21,22,23, 24
CBS Outdoor, Inc. v. Fla. Dep't of Transp.,124 So. 3d 383 (Fla. lst DCA 2013). 20,2r,27
Cíty of Largo v. AHF-Bay Fund, LLC,215 So.3d 10 (Fla.2017) ... 30, 35
Cleveland Clinic Fla. Hosp. v. Agencyþr Health Care Admin.,679 So. 2d 1237 (Fla. 1st DCA 1996) 24,27
Cmty. Psychiatric Ctrs., Inc. v. Dep't of Health and Rehab. Servs.,
t4
47 4 So. 2d 870 (Fla. 1 st DCA 1985)
IV
.....24,27
Davís v. Hinson, 67 So. 3d 1107 (Fla. 1st DCA 2011)...... ......13
Envtl. Confederation of SW Fla., Inc. v. IMC Phosphates, Inc.,857 So. 2d207 (Fla. lst DCA 2003) l5
Fírst Hosp. Corp. of Fla. v. Dep't of Health and Rehab. Servs.,566 So. 2d917 (Fla.lst DCA 1990)
Fla. Dep't of Health v. Nature's Way lt{ursery of Míami, 1nc, Case No.IDIS-2929 (Fla. 1 st DCA dismissed Apr. 23 , 2019)
Gessav. Manor Care of Fla., Inc.,86 So. 3d 484 (Fla. 2011).........
Gulf Coast Home Health Servs. of Fla, Inc. v. Dep't of Health andRehab. Servs.,515 So.2d1009 (Fla. lstDCA 1987)
Health Quest Realty XII v. Dep't of Health and Rehab. Servs.,477 So.2d 576 (Fla. 1st DCA 1985) .
Interstate Fíre & Cas. Co. v. Abernathy,93 So. 3d352 (Fla. 1st DCA 2012) ..,
Kruer v. Bd. of Trs. of the Internal Improvement Tr. Fund,647 So.2dl29 (Fla. lstDCA 1994)
Legal Envtl. Assístance Found., Inc. v. Clark,668 So. 2d982 (Fla. 1996)
Louis Del Favero Orchíds, Inc. v. Fla. Dep't of Health,Case No. 18-2838RP (DOAH Arrg. 6,2018) (Final Order)..
Louís Del Favero Orchids, Inc. v. Fla. Dep't of Health,Case No. 1Dl9-2932 (Fla. l st DCA filed Aug . 13,2019) ....
Louis Del Favero Orchids, Inc. v. Fla. Dep't of Health,Case No. 2019-0098, DOAH Case No. 19-0107 (Fla. Dep't ofHealth Aug. 5,20t9) (Final Order)
Murcìano v. State,208 So. 3d 130 (Fla. 3d DCA 2016).....
24,27
6
.30
.27
22, 23,24, 26
31,35
33,35
13, 14
.19,29
...20
19,27,29
.........20
l{atelson v. Dep't of Ins.,454 So. 2d3l (Fla. lst DCA 1984)
Nature's Way Nursery of Miam| Inc. v. Fla. Dep't of Health,Case No. 18-0721 (DOAH June 15,2018) (Final Order)
Nature's Way Nursery of Miami, Inc. v. Fla. Dep't of Health,Case No. 18-0721 (DOAH June 15,2018) (Recommended Order)
Nature's Way Nursery of Miami, Inc. v. Fla. Dep't of Health,Case Nos. 17-5801R8 &. l8-0720RU (DOAH June 15, 2018)(Final Order)
O'Connell v. Fla. Dep't of Cmty. Affairs,874 So. 2d 673 (Fla. 4th DCA 2004)..
Pinnacle Three Corp. v. EVS Invs.,193 So. 3d973 (Fla. 3d DCA 2016)
Russell v. Shelby Mut. Ins. Co.,128 So. 2d 161(Fla. 3d DCA 1961)
Schriver v. Tucker,42 So. 2d 107 (Fla. 1 949)...........
Síerra Club, Inc. v. State of Fla.,Case No. lD08-4881 (Fla. lst DCA Sept. 9,2009)
S. Broward Hosp. Dist. v. Dep't of Health and Rehab. Servs.,3 85 So. 2d 1094 (Fla. 4th DCA 1980)
State v. Gtech Corp.,816 So. 2d 648 (Fla. lst DCA 2001) . . .
State v. Lockheed Martin Corp.,905 So. 2d 1017 (Fla. 1st DCA 2005)
Whíte v. Fla, Dep't of Envtl. Prot.,Case No. 1Dl8-3282 (Fla. lst DCA Jan. 14,2019)
Ybor III, Ltd. v. Fla. Housíng Fin. Corp.,843 So. 2d 344 (Fla. 2d DCA 2003)
7,8,33
""'7 ,8,9,33
30, 31,35
13, 16
3r,35
10
........1 5
..24,25,27
35
19,27
V1
Statutes
Ch.2014-157, Laws. of Fla.
Ch.2017-232, Laws of Fla..
$ 90.202(5), Fla. Stat.
$ 120.57, Fla. Stat. ....
$ 120.68, Fla. Stat.
$ 120.68(1), Fla. Stat.
$ 381 .986, Fla. Stat. ..
$ 381.986, Fla. Stat. (2014).....
$ 381.986(8)(a), Fla. Stat
$ 38 1.986(8)(a)2., FLa. Stat. ..
$ 381.986(8Xa)2.a., Fla. Stat.
$ 381.986.(8)(a)2.b., Fla. Stat.
$ 381.986(8Xa)3., Fla. Stat.....
$ 381.986(8)(a)4., Fla. Stat.
Other Authorities
Art. X, ç 29, Fla. Const......
Black's Law Dictionary (9th ed. 2009).....
Florida Deparlment of Health, Office of Medical Marijuana Use,Weekly Updates athttps ://knowthefactsmmj .coml 201 8 I 121 2l I 20 19-ommu-updates/ ..
Fla. S. Comm. on Approp., Senate Bill 8-A Staff Analysis(June 8, 201 9)..............
.........28
10
13
2
2
passtm
T3, T4
passím
passim
passim
passim
4, 10, 17,18, 19
4 17, 18,26
4, 10,20,27 ,29
4, 18,29
-laJJ
I
R. 28-106.205, Fla. Admin. Code......
vll
14
R. 64-4.002(5), Fla. Admin. Codè 1
R. 64-4.002(5)(a), Fla. Admin. Code. .........1
R. 64-4.002(5Xb), Fla. Admin. Code. 1
R. 648R17-3,Fla. Admin, Code
R. 648R17-3(1Xd), Fla. Admin. Code
R. 64ER17-7,FIa. Admin. Code .............5, 6
R. 648R17-7(l)(d), Fla. Admin. Code. 5
5
vlll
STATEMENT OF THE CASE AI{D FACTS
In 2014, the Florida Legislature passed the Compassionate Medical
Cannabis Act of 2014 which authorized the use of low-THC cannabis for certain
medical conditions. Ch. 2014-157, Laws. of Fla. As part of the acT, the
Department was required to license five dispensing organizalions to cultivate,
process and dispense low-THC cannabis in the five geographic regions of Florida.
g 381.986, Fla. Stat. (2014). In July 2015, Hart's timely filed an application for
licensure as a dispensing organizalion in the northeast geographic region. (R: 7).t
The application was made pursuant to former section 381.986, Florida Statutes
(2014). (R: 7). Hart's' application was received, reviewed, evaluated, and scored
by the Florida Department of Health ("Department").2 (R: 7).
1 Where a record has not been made, the allegations in an administrative petitionmay be taken as true for purposes of appellate review. See Ybor III, Ltd. v. Fla.Housing Fin. Corp., 843 So. 2d 344,345 (Fla. 2d DCA 2003).
2 The applications for dispensin g organizations were scored in accordance withRule 64-4.002(5) of the Florida Adrninistrative Code. The rule established a panelof three individuals to review and score the applications. R. 64-4.002(5)(a) and (b),Fla. Admin. Code. The rule required each reviewer to independently review eachapplication and score the application by completing a scorecard. Id. The reviewer'sscores were then combined to generate an aggregate score for each application andthe applicant with the "highest aggregate score" in each region was selected as theregion's dispensing organization. Id. The methodology for scoring the applicationsand generating an aggregate score was not described in the rule or the scorecard.
I
In November 2015, the Department issued a letter denying Hart's'
application for licensure as a dispensing organization stating that Haft's was not
the highest scored applicant in the region for which it applied. (R: 7)
Amendments to Section 381.986. Florida Statutes
ln 2016, Amendment 2 to the Florida Constitution was passed by ballot
initiative. Amendment 2 added section 29 to article X of the Florida Constitution
and authorized the medical use of marijuana for the treatment of debilitating
medical conditions. Art. X, $ 29, Fla. Const. In 2017, the Florida Legislature
passed implementing legislation that substantially amended section 381.986. Ch.
2017-232, Laws of Fla.
The 2017 amendments required the Department to license the existing
dispensing organizations as Medical Marijuana Treatment Centers ("MMTCs")
and established a process for licensing new MMTCs. 1d The relevant language is
as follows
(8) MEDICALCENTERS.-
MAzuJUANA TREATMENT
(a) The department shall license medical marijuanatreatment centers to ensure reasonable statewideaccessibility and availability as necessary for qualifiedpatients....*trt<
2. The deparlment shall license as medical marijuanatreatment centers 10 applicants that meet therequirements of this section,parameters.
2
under the followine
a As soon as practicable, but no later than August 1,2017,the deoaftment shall li se anv anolicant whoseapplication was reviewed. evaluated. and scored bv the
and whi edaorgani zation license bv the department under former s
381.986. Florida Statutes 2014'" which had one or moreadministrative or iudicial challenses pendins as ofJanuarv l^ 2017. or had a final rankins within one pointof the hishest final rankins n its resion under former s
Florida Statutes which meets therequirements of this section; and which providesdocumentation to the department that it has the existinginfrastructure and technical and technological ability tobegin cultivating marijuana within 30 days afterregistration as a medical marijuana treatment center.
b. As soon as practicable, the department shall license oneapplicant that is a recognized class member of Pígbrd v.
Glickman, 185 F.R.D. 82 (D.D.C . 1999), or In Re BlackFarmers Litig.,856 F. Supp. 2d I (D.D.C.2011). . . .
As soon as practicable, but no later than October 3,2017,the department shall license applicants that meet therequirements of this section in suff,rcient numbers toresult in 10 total licenses issued under this subparagraph,while accounting for the number of licenses issued undersub-subparagraphs a. and b.
$ 381.986(B)(a), Fla. Stat. (emphasis added).
Thus, pursuant to the 2017 amendments and as set forth in section
381.986(8)(a)2., an entity must receive a MMTC license if it: (1) previously
submitted an application as a dispensing organization that had been reviewed,
evaluated, and scored under former section 381.986; (2) had pending litigation as
of January I, 201'7 , or had a frnal ranking within one point of the highest final
c
J
ranking in its region; (3) meets the requirements of section 381.986; and (4)
provides documentation of the ability to cultivate marijuana within 30 days.
The Legislature went on to state that for "up to two" of the licenses issued
under section 331.986(8)(a)2. the Depaftment shall give preference to applicants
that demonstrate specific involvement in the citrus industry. $ 381.986(8)(a)3.,
Fla. Stat. The Staff Analysis of Senate Bill 8-4, the legislation creating section
381.986(8)(a), clarifies that the citrus provision relates to "up to two of the
remaining licenses" following the awards to applicants qualifying under section
381.986(8)(a)2.a. and b. (Fla. S. Comm. on Approp., SB8-A Staff Analysis at20
(June 8,2017) fcontained in App.to Initial Br. at 5a]) (emphasis added)
The Legislature also enacted a provision whereby more MMTC licenses
would become available in the future. Section 381 .986(8Xa)a. provides that
Within 6 months after the registration of 100,000 activequalified patients in the medical marijuana use registry,the department shall license four additional medicalmarijuana treatment centers that meet the requirements ofthis section. Thereafter, the department shall license fourrnedical marijuana treatment centers within 6 monthsafter the registration of each additional 100,000 activequalified patients in the medical marijuana use registrythat meet the requirements of this section.
g 331.986(8Xa)4., Fla. Stat. Therefore, for every 100,000 qualified patients in the
Deparlment's patient registry, four new MMTC licenses shall issue
4
Department Rulemakine and Challenses to the Rules
In response to litigation alleging the failure to adopt rules in calculating the
aggregate scores during the dispensing orgarizaÍion selection process and in
determining what constitutes "within one point" under section 381.986(8)(a)2.a.,
the Department adopted emergency rule 64ER17-3. The rule attempted to define
"within one point" of the highest final ranking.3 Following a challenge to the rule,
the Department adopted another emergency rule that superseded 64ERl7 -3. R.
648R17-7,FIa. Admin. Code.a The validity of Rule 64ER17-7 was challenged on
3 Rule 64ER17-3 provided the following definition:
Within One Point - one integer (i.e., whole, non-roundednumber) carried out to four decimal points (i.e. 1.0000)by subtracting an applicant's final ranking from thehighest final ranking in the region for which the applicantapplied.
Rule 64ERl7-3(l)(d), Fla. Admin. Code
a Rule 648R17-7 incorporated by reference the 2015 aggregated score card andprovided an expanded interpretation of "within one point:"
For the aggregale score under column "Final Rank" oneinteger (i.e., whole, nonrounded number) carried out tofour decimal points (i.e., 1.000) or for the regional rankunder column "Regional Rank" one whole numberdifference, by subtracting an applicant's final rankingfrom the highest final ranking in the region for which theapplicant applied.
5
R. 648R17-7(l)(d), Fla. Adrnin. Code
the grounds that it was vague, arbitrary and capricious, exceeded the Department's
grant of rulemaking authority, and contravened the law implemented. (R: 13). On
June 15, 2018, Administrative Law Judge John Van Laningham issued a final
order holding that rule 64ERIJ-7 constituted an invalid exercise of delegated
legislative authority. See Nature's Way Nursery of Miamí, Inc. v. Fla. Dep't of
Health, Case Nos. 17-5801R8 &. 18-0720RU (DOAH June 15, 2018) (Final
Order). The Department appealed to this Court, but the appeal was voluntarily
dismissed on April 23, 2019. Fla. Dep't of Health v. Nature's LVay Nursery of
Miqmi, Inc, Case No. lD 1 8-2929 (Fla. 1 st DCA dismissed Apr. 23 , 2019)
Challenee to the Validitv of the 2015 S Methodolosv
On October 19, 2017, Nature's 'Way Nursery of Miami, Inc. ("Nature's
Way") requested that it be registered as a MMTC pursuant to the "within one
point" qualification. (R: 11). Nature's Way was a prior dispensing organization
applicant in the southeast region and the difference between its aggregate score and
that of the regional awardee was 1.5167. (App.to Initial Br. at 40). Nature's Way
had the fourth highest score/rank in that region. Id. The Department denied
Nature's Way's request noting that Nature's Way was not within one point of the
highest final ranking in its region. (R' 11). Nature's Way challenged the
Depaftment's denial on the grounds that the Depaftment's calculation was
6
unreasonable, arbitrary, capricious, erroneous, and based on an unadopted rule
(R: 12)
At the hearing, Administrative Law Judge John Van Laningham ("ALJ")
concluded that the Department's use of rankings instead of quantitative scores for
the applicants was defective, invalid, and lacked "actual measurements." lVature's
Way ltlursery of Miami, Inc. v. Fla. Dep't of Health, Case No. l8-0721 (DOAH
June 1 5,2018) (Recommended Order). The ALJ stated that the Legislature's goal
of "within one point" could not be effectuated unless the quality of applicants "is
expressed in interval data, using numbers that hold quantitative content ." Id. at 53.
Based upon testimony provided by an expert in mathematics and statistics at the
hearing, the ALJ utilized a formula that created a range of possible scores for each
applicant. Id. aL 63-66. The ALJ adopted the expert's method to calculate the
possible score range for Nature's 'Way, and found that Nature's Way was "within
one point" of the regional awardee's ranking. Id. at 66-69. Therefore, the ALJ
recommended that Nature's Way be granted a license. Id. at 105.
Following the ALJ's recommended order, the Depaftment issued a final
order rejecting the ALJ's recommended order in its entirety. Nature's Woy
It/ursery of Míamí, Inc. v. Fla. Dep't of Health,DOAH Case No. 18-0721 (Dep't of
Health July 13,2018) (Final Order). However, the frnal order incorporated by
7
reference a settlement agreement pursuant to which Nature's \May was granted a
MMTC license. 1d.5
Hart's' Request for Reeistration as a MMTC and Subsequent Challenge
On March 18, 2019, Hart's filed with the Department a request for
registration and notified the Department that it meets all statutory criteria of
subsection 381.986(8)(a)2.a. to be registered as a MMTC because it had a final
ranking within one point of the highest final ranking in its region under former
section 381.986.6 @: 1a). On March 28,2019 the Department issued a denial of
Hart's' request for registration, and Haft's filed a Petition for Formal
Administrative Hearing on the basis that it is entitled to a MMTC license under the
"within one point" qualification. (R: 14, 6-19).
Hart's' Petition challenged the Department's erroneous calculation of
Hart's' score. The Petition discussed the l{ature's LVay case in which - in light of
the fundamental errors associated with the 2015 scoring methodology - the ALJ
issued a recommended order finding that the applicant was entitled to a license
5 Prior to the settlement with Nature's Wuy, the Department also entered into a
settlement with Keith St. Germain Nursery Farms ("KSG"). KSG had requested tobe registered as a MMTC pursuant to the "within one point" qualification ofsection 381.986(8)(")2. but had been denied. KSG brought an administrativechallenge based on the validity of the 2015 scoring. The Depaftment entered a finalorder adopting a settlement awarding KSG a MMTC license. (R: 10).
o Harl's request for registration was based on its application filed in July 2015 thalhad been reviewed, evaluated, and scored by the Departrnent pursuant to formersection 382.986.
B
under the "within one point" qualifrcation, despite having a final ranking of over
1.5 points less than the highest final ranking in the region and having a regional
rank of 3 less than the highest fînal ranking. (R: 13). The Petition also pointed out
that the 2015 scoring methodology had been held to be defective and invalid. (R:
13-r4).
Hart's' Petition was not forwarded by the Department to the Division of
Administrative Hearings. On April 16,2019, Hart's - along with other entities that
had brought "one point" administrative challenges following the denial of MMTC
registration pursuant to the 2017 amendments - entered into a Joint Settlement
Agreement by which Hart's, and the others, dismissed their petitions in return for
receiving a MMTC license. (R: 25-61). The Joint Settlement Agreement included
specific restrictions on each MMTC license not required of prior MMTC licensees
such as the implementation of hiring and security protocols beyond what is
required in the statute, and the requirement of locating a percentage of medical
marijuana dispensaries in impoverished communities and rural areas. (R: 30,3l)
The Joint Settlement Agreement was adopted by the Deparlment as a Final Order
on April 19,2019 ("Final Order"). (R: 22-24). The Joint Settlement Agreement
provides that the Department agrees that Hart's had a colorable claim that it
qualifies for a MMTC license under section 3 81 .986(8)(a). (R: 29)
9
Del Favero was not a named party to Hart's' administrative proceeding at
the Department, nor did it intervene or seek to intervene. Del Favero never applied
for a license under former section 381.986 and has never been reviewed, evaluated,
and scored. In fact, Del Favero did not submit an application for a MMTC license
until October 2018. (Initial Br. at 8 n.4). Additionally, Del Favero is not a
recognized member of a designated class as set forth in section 381.986(8)(a)2.b
At the time of the Final Order, there were 207,869 active qualified patients
on the Department's patient registry.7 Therefore, pursuant to section
381.986(8)(a)4., at the time of the Final Order, the Department was authorizedto
ISSUE eight licenses in addition to the ten licenses mandated by section
381.986(8)(u)2.r As of the most recent count, there were 255,256 qualified
patients. See note 7
SUMMARY OF ARGUMBNT
Under the plain language of section 120.68(l), standing to appeal is limited
to "parties" who have been "adversely affected" by the fìnal agency action at issue.
7 The Department's Office of Medical Marijuana Use issues weekly updates of thenumber of active qualified patients. Such weekly updates are on file with theDepartment of Health and may be viewed at:https://knowthefactsrnmj.com/about/weekly-updates/. The Court is requested totake judicial notice of the documents pursuant to section 90.202(5), FloridaStatutes. See Schriver v. Tucker, 42 So.2d 707 ,709 (Fla. 1949).
' The licenses authorized by section 381.986(B)(a) are in addition to the sevenlicenses issued pursuant to former section 381.986. (App. to Initial Br. at 40).
10
Having never perfected party status below, Del Favero cannot establish standing to
appeal under section 120.68(1). Also, Del Favero has no legitimate basis to argue
that it is adversely affected by the Department's Final Order. Hart's was
considered for a license because it was an applicant for a dispensing organization
for its geographic region during the 2015 application process as required by section
381.9S6(8)(a)2.a., and claimed entitlement to a license under the "within one
point" provision of that statute. Del Favero did not participate in the 2015
application process and, therefore, can claim no such entitlement. Furthermore,
Del Favero remains eligible for a MMTC license pursuant to whatever benefit the
citrus "preference" may provide. As a result, Del Favero has not been adversely
affected by the Final Order issuing a license to Hart's
Contrary to its assertions, Del Favero is not entitled to a comparative review
of its application with that of Hart's because the two applications are not mutually
exclusive. For mutual exclusivity to exist, two applications must have competed
for the same pool of licenses for which both are eligible. Here, Haft's was
considered for a license because it was a prior applicant under former section
381.986, had been reviewed, evaluated, and scored, and claimed qualif,rcation for
licensure under the "within one point" provision of section 381.986(8)(a)2.a. Del
Favero did not timely file an application under the prior statutory scheme in Hart's'
11
geographic region or otherwise. Pursuant to Florida law, mutual exclusivity does
not exist.
The Department was not required to provide Del Favero with a point of
entry pursuant to the Administrative Procedures Act where Del Favero has not
demonstrated the requisite substantial interest. Del Favero cannot show an injury
in fact because of the issuance of a license to Hart's where Del Favero was not
eligible under the same statutory criteria, and where the citrus preference for a
license remains available. Also, Del Favero's alleged injury is not the type that
Hart's' proceeding - brought pursuant to section 381.986(8)(a)2.- was designed to
protect. The plain language of section 381.986(8)(a)2. makes clear that it is
intended to protect the rights of prior applicants, such as Hatl's, who participated
in the 2015 review process.
Finally, the Joint Settlement Agreement adopted by the Final Order does not
violate public policy as Del Favero asserts. In Florida, pre-trial settlement
agreements entered into by state agencies should be upheld where, as here, they
were entered into in good faith, without collusion, will not jeopardize the health or
welfare of the citizens of Florida, and are in the best interest of the people. The
Joint Settlement Agreement meets all of these requirements.
t2
ARGUMENT
I. Del Favero Does Not Have Standing to Appeal the Final Order
A. Standard of Review
This Court reviews the question of standing de novo. 8.g., Davis v. Hinson,
67 So. 3d II07,1110 (Fla. 1st DCA 20II). Standing to appeal an administrative
order is governed by section 120.68(1), Florida Statutes, that requires the appellant
be "adversely affected by the final agency action." $ 120.68(1), Fla. Stat.
is Mis
In support of its standing argument to bring this appeal, Del Favero cites to
Agrico Chemical Co. v. Department of Environmental Regulation, 406 So.2d 478
(Fla. 2d DCA 1981). Del Favero's reliance on Agrico is misplaced. Agrico
pertains to standing to bring an administrative proceeding. However, "fs]tanding
on appeal requires more than standing at the administrative level." O'Connell v
Fla. Dep't of Cmty. Affairs,874 So. 2d 673,675 (Fla.4th DCA 2004). The
"APA's definition of party recognizes the need for a much broader zone of party
representation at the administrative level than the appellate level." Legal Envtl
Assistance Found., Inc. v. Clark,668 So. 2d982,986 (Fla. 1996) (quoting Daniels
v. Fla. Parole & Probation Comm'n, 401 So. 2d 1351,1354 (Fla. 1st DCA 1981))
Section 120.68, Florida Statutes, sets forlh the standard for appellate revlew
of administrative actions. Section 120.68(1) provides that "[a] party who is
B
l3
adversely affected by final agency action is entitled to judicial revlew
$ 120.68(1), Fla. Stat. This provision has been interpreted to mean that there are
four requirements for standing to seek such review: (1) the action is final; (2) the
agency is subject to provisions of the act; (3) the person seeking review was a party
to the action; and (4) the party was adversely affected by the final agency action
Legal Envtl., 668 So. 2d at 986. In the case aI bar, the third and fourth
requirements are not met by Del Favero
C Del Favero Did Not Intervene and C)therwise Was Not a
to the Action Bel
An intervenor is generally considered a party to the action for purposes of
appealing a final order. Ameríloss Pub. Adjusting Corp. v. Lightbourn, 46 So. 3d
107, 110 (Fla. 3d DCA 2010). A person who did not participate as a party - as an
intervenor or otherwise - does not have standing to appeal a potentially adverse
administrative ruling. Id.; Legal EnvtL,668 So. 2d at986-87; see also Fla. Admin.
Code R. 28-106.205.e
Here, Del Favero was not a named pafty to Hatl's' administrative
proceeding and was not an intervenor in the proceeding. Therefore, pursuant to
Florida law, Del Favero has no standing to invoke this Court's jurisdiction to
e Rule 28-106.205 provides that "Persons other than the original parties to a
pending proceeding whose substantial interest will be affected by the proceedingand who desire to become parlies may move the presiding officer for leave toìntervene."
T4
review the Final Order in this matter. See Sierra Club, Inc. v. State of Fla., Case
No. 1D08-4881 (Fla. lst DCA Sept. 9,2009) (granting motion to dismiss appeal
for lack of standing where appellant failed to achieve party status in the
administrative action below); White v. Fla. Dep't of Envtl. Prot., Case No. lDl8-
3282 (Fla. lst DCA Jan. 14,2019) (same). Del Favero states in its brief that it did
not move to intervene because it did not have notice. Yet, Del Favero cites to no
legal authority to support an exemption from well-established standing principles
based on lack of notice.
Moreover, àfly right Del Favero might have had to participate as an
intervenor was lost altogether when the parties decided to settle and entered into
the Joint Settlement Agreement. See Envtl. Confederation of SW Fla., Inc. v. IMC
Phosphates, Lnc.,857 So. 2d207,211 (Fla. lst DCA 2003) (this Court holding that
rights of an intervenor are conditional in that they exist only so long as the
litigation continues between the parties and stating, "Any right fthe appellants]
have to participate as intervenors would be lost altogether if the parlies decide to
settle the case or voluntarily dismiss it."). Del Favero has no basis whatsoever to
bring this appeal.
D. Del Favero is Not Adversely Affected bv the Final Order
Because Del Favero was not a party below it has no standing to now appeal.
Furthermore, Del Favero also fails to meet the standing test because it is not
15
adversely affected by the Final Order. See O'Connell, 874 So. 2d at 675 ("In order
to have standing on appeal under section 120.68(1) . . . Appellants must be not
only affected, but adversely affected by the final agency action.").
Del Favero asserts that it has a "substantial interest" in this matter because
Del Favero and Hart's sought one of a statutorily limited number of MMTC
licenses. However, Del Favero's argument ignores the requirements of the statute.
The Department issued a MMTC license to Hart's after Hart's claimed entitlement
pursuant to section 381.986(8)(a)2.a. under the "within one point" qualification.
Significantly, Hart's was a participant in the 2015 application process and was a
prior "applicant whose application was reviewed, evaluated, and scored by the
department and which was denied a dispensing organization license by the
department under s.381.986, Florida Statutes 2014" as required to receive a
license under the statute. The statute mandates that applicants meeting the statute's
criteria receive a license. Hart's made a colorable claim that it met such criteria
and the Department agreed.
On the other hand, Del Favero did not parlicipate in the 2015 application
process pursuant to former section 381.986. Del Favero did not file an application
for a dispensing organization license in Hart's' geographic region or any other
region. Rather, Del Favero filed an application for a MMTC license in October
t6
2018. (Initial Br. at 8 n.4). Therefore, unlike Hart's, Del Favero had no basis to
claim an entitlement to a license under section 381.986(8)(a)2.a.
Notably, Del Favero has stated that it seeks a "citrus preference" for a
MMTC license pursuant to section 381.986(8Xa)3., Florida Statutes. (See App. to
Initial Br. at 3,4,6,9). That provision states:
For up to two of the licenses issued under subparagraph2, fhe department shall give preference to applicants thatdemonstrate in their applications that they own one ormore facilities That are, or were, used for the canning,concentrating, or otherwise processing of citrus fruit orcitrus molasses and will use or convert the facility orfacilities for the processing of marijuana.
$ 381.986(8)(a)3., Fla. Stat. Del Favero asserts that section 381.986(8)(a),
subparagraph 3, makes a "promise" that citrus processors are entitled to licenses
(App. to Initial Br. at 4). However, contrary to Del Favero's assertion, by its plain
language subparagraph 3 makes no such promise. And also contrary to Del
Favero's argument in its brief,, it is Del Favero - not Hart's - that has added words
to the statute that do not exist.
Section 381.986(8Xa)3. requires that the Deparlment give preference to
citrus applicants "[{lo. up to two of the licenses issued under subparagraph 2."
However, a plain reading of the statute shows that such preference can only be
given to an applicant after the mandates of subparagraphs 2.a. and 2.b. have been
complied with. The language of subparagraph 2.a. states very clearly that the
17
Department "shall license any applicant" that fits the previous applicant criteria.
$ 381.986(8)(a)2.a., Fla. Stat. Likewise, the language of subparagraph 2.b. makes
very clear that the Department "shall license one appli eant" that meets the class
action criteria. $ 381.986(8)(a)2.b., Fla. Stat.
Thus, the Department must first account for the number of licenses provided
through those subparagraphs before issuing additional licenses. As a result, the
Department must act on prior applicants such as Hart's - whose application was
reviewed, evaluated, and scored pursuant to former section 381.986 by, the
Department - before it can consider a non-prior applicant such as Del Favero under
the citrus "preference" or for any other reason. Del Favero's argument that the
phrase "while accounting for the number of licenses issued under sub-paragraphs
a. and b." in section 381.986(8)(a)2.c. requires a different result is irreconcilable
with the clear mandates in subparagraphs 2.a. and 2.b. In fact, to read the statute as
suggested by Del Favero would render subparagraphs 2.a. and 2.b. meaningless.
See, e.g., Am. Home Assurance Co. v. Plaza Materíals Corp.,908 So. 2d 360' 367-
68 (Fla. 2005) ("As a fundamental rule of statutory construction, courts should
avoid readings that would render part of a statute meaningless.").
Tellingly, the Senate Staff Analysis of the legislation creating section
381.986(8)(a) states that section 381.986(8)(a)3. - the citrus provision - relates to
"up to two of the rernaining licenses" following the awards to applicants qualifying
IB
under section 381.986(8)(a)2.a. and b. (App.to Initial Br. at 54) (emphasis added).
See State v. Lockheed Martin Corp.,905 So. 2d 1017,1020 (Fla. 1st DCA 2005)
("legislative intent is the polestar that guides a court's statutory construction
analysis").
Also, when the Department attempted to promulgate rules that would spell
out how and to whom a citrus preference would be given, Del Favero challenged
those proposed rules and they were struck down. See Louis Del Favero Orchids,
Inc. v. Fla. Dep't of Health, Case No. 18-2838RP (DOAH Aug. 6,2018) (Final
Order). In the final order, Administrative Law Judge Bruce McKibben found that:
"The plain language in fthe citrus provision] allows for a preference of 'up to two'
applicants. There is, therefore, no mandate that any applicants must receive the
preferenc e." Id. at 14 (emphasis in original).
At bottom, the Department was not allowed under section 381.986(8)(a) to
consider or compare the eligibility of prior applicants such as Hart's with any
potential eligibility of Del Favero under the citrus preference
Moreover, the Department recently confirrned in the final order dismissing
Del Favero's collateral administrative petition challenging the Joint Settlement
Agreement that the citrus preference - for which Del Favero assefis qualification -"refilains available" for licenses. Lottís Del Favero Orchids, Inc. v. Fla. Dep't of
Health, Case No. 2019-0098, DOAH Case No. 19-0107, at 4 n.l (Fla. Dep't of
l9
Health Aug. 5, 2019) (Final Order).r0 Also, additional licenses have become
available under section 381.986(8)(a)4. with the registration of over 200,000 more
qualifîed medical marijuana patients. ,See note 7. Thus, Del Favero can still obtain
a license under section 381.986(8)(a). Of course, whether or not it ultimately will
establish entitlement to a license is entirely speculative. Regardless, Del Favero
indisputably has not been adversely affected by the Final Order issuing a license to
prior applicant Hart's.
II. Ashbercker Radio Corn. v. F.C.C., 326 IJ.S. 327 1194$ Does NotAnnlv to this Case Because Hart's' Annlication is Not MutuallvExclusive with that of Del Favero
A. Standard of Review
Del Favero's argument that section 381.986(8)(a) requires a "comparative
review" of its application with that of Hart's' is a question of law subject to de
novo revlew see Murciano v. state,208 so. 3d 130, 134 (Fla. 3d DCA 2016).
However, agencies are afforded wide discretion in the interpretation of a statute
that it administers. 8.g., id.; Ì,{atelsonv. Dep't of lns.,454 So. 2d31,32 (Fla. lst
DCA 1984). This Court's review standard "over an agency's interpretation of law
is that of clearly erroneous, meaning the interpretation will be upheld if the
agency's construction falls within the perrnissible range of interpretations." CBS
r0 Del Favero has appealed the final order to this Courl. Louís Del FaveroOrchids, Inc. v. Fla. Dep't of Health, Case No. 1Dl9-2932 (Fla. 1st DCA filed4rg. 13,2019).
20
Outdoor, Inc. v. Fla. Dep't of Transp., 124 So.3d 383,385 (Fla. lstDCA 2013)
(citing Colbert v. Dep't of Health,890 So. 2d 1165, 1166 (Fla. lst DCA 2004))
B. Del Favero's Reliance on Ashbacker is Misplaced
Del Favero relies upon Ashbøcker Radío Corporation v. Federal
Communícations Corporation, 326IJ.5. 327 (1945), Bio-Medical Applications of
Clearwater, Inc. v. Department of Health & Rehabilítative Services, 370 So. 2d 19
(Fla. 2d DCA 1979), and Bio-Medical Applications of Ocala, Inc. v. Office of
Community Medical Facilities, Department of Health & Rehabilítative Services,
374 So. 2d 88 (Fla. 1st DCA 1979) to argue that its application should be
comparatively reviewed with that of Hart's'. Such reliance is misplaced.
In Ashbacker, the U.S. Supreme Courl held that where two bona fide
applications for administrative approval are "mutually exclusive," the grant of one
without a hearing to both deprives the loser of the hearing to which he or she is
entitled. Ashbacker, 326 U.S. al 333. Following the Ashbacker opinion, the
concept of "mutually exclusive applications" began to evolve in the determination
of whether competing applicants were entitled to comparative review. Such
comparative review principles were delineated in cases such as Bio-Medical
Applications of Clearwater and Bio-Medical Applications of Ocala
In Bio-Medical Applications of Clearwater, the coutt defined the Ashbacker
doctrine as "an administrative agency is not to grant one application for a license
21
without some appropriate consideration of another bona fide and timely filed
application to render the same service Biomedical Applications of),
Clearwater,3T0 So. 2d at 23. The court held that "Ashbacker should apply
whenever an applicant is able to show that the granting of authority to some other
applicant will substantially prejudice his application." Id. In such case, fairness
requires that the agency conduct a comparative hearing at which the competing
applications are considered simultaneously. Id. Likewise, in Bio-Medical
Applications of Ocala, this Court found that simultaneous certificate of need
applications for a renal dialysis facility were mutually exclusive where each
competitor was one "whose substantial interests will be affected by the proposed
agency action" on the other's application. Bio-Medical Applications of Ocala,374
So. 2d at 89.
Thus, central to the notion of "mutual exclusivity" is a demonstration of
how an applicant is aggrieved, or substantially prejudiced, by the issuance of a
license to another applicant. For such aggrievement to occur, Florida law dictates
that two applications must have competed for the same pool of licenses for which
both are eligible.
For example, in Health Quest Realty XII v. Department of Health and
Rehabítitative Services, 477 So.2d 576 (Fla. lst DCA 1985), this Court reviewed a
matter involving Health Care and Retirernent Corporation of America ("HCRC")
22
and Health Quest, two nursing home certificate of need applicants. Pursuant to the
rule establishing bed need methodology, only 101 additional nursing home beds
were needed in Broward County. Health Quest, 477 So. 2d at 577. HCRC's
application was received and processed during the batching cycle preceding Health
Quest's batching cycle. Id. Prior to Health Quest's hearing on its denied
application, the administrative hearing on HCRC's application had already been
completed, and an order recommending that HCRC be granted a certificate of need
for the needed beds in Broward had been entered. Id. After the granting of the
certificate of need, there was no unprovided for bedneed. Id.
On appeal, Health Quest cited to Bio-Medícal Applications of Ocala and
Bio-Medical Applications of Clearwater To argue that that the applications were
mutually exclusive and required a comparative hearing at which the competing
applications be considered simultaneously. This Court stated that "[w]e fail to see
the connection between the holdings in those cases and this case." Id. at 578. The
Court noted that Health Quest was not a simultaneous or near simultaneous
applicant to HCRC, since HCRC had applied in the earlier batching cycle. Id.
"Accordingly, fthe agency] followed its long-standing policy and the statutorily
rnandated 'batching cycles' process, and awarded the beds to the applicant in the
prior batching cycle." Id. The Courl found that Health Quest had rnade no
showing that its application and the application of HCRC were mutually exclusive
23
Id, See also Cleveland Clinic Fla. Hosp. v. Agency for Health Care Admín., 679
So. 2d 123'7,1o4f $b. 1st DCA 1996) (Bio-Medícal was "clearly distinguishable"
where it involved two applications competing for the same fixed need pool, and the
application at issue did not); First Hosp. Corp. of Fla. v. Dep't of Health and
Rehab. Servs.,566 So. 2d 917,918 (Fla. 1st DCA 1990) ("Appellant has not
shown that it is competing . . . for the same fixed pool of need and thus has not
met its burden with regard to the necessary criteria for entitlement to
comparative review"); Cmty. Psychiatric Ctrs., Inc. v. Dep't of Health and Rehab.
Servs., 474 So. 2d 870, 872 (Fla. lst DCA 1985) (Bío-Medical Applícations of
Ocala and Bio-Medical Applícations of Clearwater were inapplicable in case
where applications were filed four batching cycles apaft).
In rendering its opinion in Health Quest, this Court cited to Judge
Glickstein's dissenting opinion in South Broward Hospital Distríct v. Department
of Health and Rehabilitative Servíces,385 So. 2d 1094, 1095 (Fla. 4th DCA 1980),
which thoroughly discussed the circumstances under which mutual exclusivity
exrsts. In South Broward, a hospital applied for a cerlificate of need for a
computerized tomographic (CT) whole-body scanner, and the application was
granted. S. Broward, 385 So. 2d at 1096. Another hospital also applied for a
certificate of need for a CT scanner in the same health services area and the
application was denied. Id. at 1095-96. The unsuccessful hospital petitioned for an
24
administrative proceeding. Id. at 1096-97. The successful hospital filed a petition
for a writ of prohibition to determine whether the unsuccessful hospital had
standing to contest the certificate. Id. at 1095. The majority opinion stated that
questions of fact as to whether the two applications fell into the mutually exclusive
category precluded the granting of a writ of prohibition. Id. In his dissenting
opinion, Judge Glickstein pointed out that the petitioner in the case was issued a
certificate of need on the basis of extenuating circumstances, one of the ten criteria
for approval of a scanner. Id. at 1100. The judge then pointed out that no such
extenuating circumstances were found on a review of the other application. Id.
"Thus a prima facie case of mutual exclusivity has not been shown and a
comparative hearing should not be heId." Id.
C. Mutual Exclusivitv Does Not Exist Between the LicensureAoolications of Hart's and l)el Favero
Here, pursuant to the Florida law set forth above, mutual exclusivity does
not exist. Haft's filed an application for a dispensing organizalion license in the
northeast geographic region of Florida and was "reviewed, evaluated, and scored
by the department and which was denied a dispensing organization license by the
deparlment under former section 381.986, Florida Statutes 2014."
g 381.986(8)(a)2., Fla. Stat. The language of subparagraph2.a. plainly states that
the Deparlment "shall license any applicant" that fits the criteria of that
subparagraph
25
On the other hand, Del Favero's application was not reviewed in 2015
pursuantto former section 381.986. Unlike Hart's, Del Favero did nottimely file
an application under the prior statutory scheme. Del Favero did not compete with
Hart's for a license in 2015 in the northeast geographic region, nor did it compete
with applicants for a dispensin g organization license in any other region. Del
Favero never filed a licensure application for a dispensing organization that was
comparatively reviewed with Hart's or any other applicant. In fact, Del Favero did
not even applv for a license until October 2018 when it filed an application for a
MMTC license seeking a citrus "preference" under section 381.986(8Xu)3.
Therefore, Del Favero never filed a timely application as required by the
Ashbacker doctrine, and it was not filed simultaneous or near simultaneous to
Hart's' application for Hart's' geographic region or otherwise so as to be
considered a potential competitor. See Health Quest, 477 So.2d at 578.
As discussed above, the Department must act on prior applicants such as
Haft's who have made a claim that they qualifl' for a license in their individual
regions under section 3 81 .986(8)(a)2.a. before it can consider a non-prior applicant
such as Del Favero. Thus, Hart's and Del Favero cannot compete for the same
license where Del Favero was never eligible for a license in Hafi's' region and is
otherwise not eligible for a license under section 381.986(8)(a)2.a. Pursuant to the
authority cited above, where one applicant is eligible for a particular license, but
26
the other applicant is not, the applicants are not mutually exclusive and a
comparative hearing should not be held. See Health Quest, 477 So. 2d aI 578;
Cleveland Clinic, 679 So. 2d at I24l; First Hosp. Corp., 566 So. 2d at 918; Cmty
Psychiatric Ctrs., 474 So. 2d at 872; S. Broward Hosp., 385 So. 2d at 1100
(Glickstein, J., dissenting). Furthermore, other licenses remain avarlable under the
citrus preference for which Del Favero may be eligible. See Del Favero, DOAH
Case No. 1 9-0107 , Final Order at 4 n.l; $ 381.986(8Xa)4., Fla. Stat.
Iil. The Administrative Procedu Act Has Not Been Violated
A. Standard of Review
The issue of statutory construction is subject to de novo review. Lockheed
Martin Corp.,905 So. 2d at 1020. This Court's review standard "over an agency's
interpretation of law is that of clearly effoneous, meaning the interpretation will be
upheld if the agency's construction falls within the permissible range of
interpretations." CBS Outdoor, 124 So. 3d at384
B. The Department Was Not Required to Provide Del Favero Witha Point of Entrv
Pursuant to the Administrative Procedure Act, a person whose "substantial
interest" will be affected by a proposed agency action must be provided with a
"clear point of entry" to formal or informal adrninistrative proceedings under
section 120.57. Gulf Coast Home Health Sews. of Fla, Inc. v. Dep't of Health and
Rehab. Servs.,515 So. 2d 1009, 1011 (Fla. lst DCA 1987). To demonstrate a
27
substantial interest in the outcome of a proceeding, a person must show that (1) he
or she will suffer an injury in fact that is of sufficient immediacy to entitle him or
hertoasection 120.57 hearing, and(2)thesubstantialinjuryisof atypeornature
that the proceeding is designed to protect. Agríco, 406 So. 2d at 482. Del Favero
cannot meet this test
First, Del Favero cannot show an injury in fact. Del Favero seeks a license
under the citrus "preference" provision. But as discussed above, any preferences
to be issued under that statutory subsection are only relevant if any licenses remain
to be issued after the Department complies with the requirements of subparagraph
2. The licenses in question are expressly available first to applicants whose
applications were reviewed, evaluated, scored, and denied a dispensing
organization license under former section 381.986, and who had (u) an
administrative or judicial challenge pending as of January l,2017, or (b) a fìnal
ranking within one point of the highest final ranking in their region. Del Favero
does not qualify under these criteria and, therefore, cannot establish - because of
an issuance of a license to Hart's under that criteria - that it will suffer an injury in
fact of sufficient immediacy to entitle it to participate in Haft's' proceeding
Furtherrnore, the citrus "preference" - for which Del Favero may qualify - remains
available, and ûìore MMTC licenses are available and continue to become
28
available by virtue of section 381.986(8)(a)4. See Del Favero, DOAH Case No.
19-0107, Final Order at 4 n.1; $ 381 .986(8)(a)4., Fla. Stat.
Next, Del Favero cannot meet the second prong of the test because the
statute at issue - section 3S1.986(8)(a)2.- pursuant to which Hart's filed its
Petition is not designed to protect against Del Favero's alleged injury. The statute
makes clear that it is intended to protect the rights of applicants, such as Hatl's
"whose application was reviewed, evaluated, and scored by the department and
which was denied a dispensing organization license under former s. 381.986,
Florida Statutes 2074." lJnlike Hart's, Del Favero did not file a timely application
under the former statutory scheme and, therefore, is not entitled to any protections
afforded under section 3 8 I .986(8)(")2
Moreover, unlike subparagraph 2.a. that provides that the Department "shall
license" eligible applicants, the citrus "preference" provision in subparagraph 3,
upon which Del Favero relies, does not "promise" any licenses for citrus applicants
as alleged. There is "no mandate that any applicants must receive the preference."
Del Favero, f)O,\H Case No. 18-2838RP, Final Order at 14. Rather, as discussed
above, subparagraph 3 merely affords the Department discretion to give preference
to "up to two of the remaining licenses" following awards to applicants qualifying
under subparagraphs2.a. and2.b. (See App. to Initial Br. at 54) (ernphasis added)
Subparagraph 3 sirnply does not give future citrus applicants any rights to licenses
29
issued to applicants who satisfu the requirements of subparagraph 2.a. Therefore,
Del Favero's alleged injury is not the type that Hart's' proceeding was designed to
protect. As a result, Del Favero has not demonstrated a substantial interest so as to
be afforded a clear point of entry into Hart's' proceeding.
IV. The Joint Settlement Agreement is Not Contrary to Public Policy
A. Standard of Review
Whether an agreement violates public policy is a question of law and the
review is de novo. Gessa v. Manor Care of Fla., Inc., 86 So. 3d 484, 489 (Fla.
2011).
B The Joint Settlement Asreement is in Conformance with PublicPolicy
Because a settlement agreement is contractual in nature, it is interpreted and
governed by contract law. Pinnacle Three Corp. v. EVS Invs., 193 So. 3d973,976
(Fla.3d DCA 2016). A court should not strike down a contract,or a portion of a
contract, on the basis of public policy grounds except in "extreme circumstances."
Cíty of Largo v. AHF-Bay Fund, LLC,2l5 So. 3d 10, 15 (Fla. 2017). As the
Florida Supreme Courl stated in City of Largo in the context of a public contract:
Courts should be guided by the rule of extremecaution when called upon to declare transactions void as
contrary to public policy and should refuse to strike downcontracts involving private relationships on this ground,unless it be made clearly to appear that there has beensorre great prejudice to the dominant public interest . . . .
30
Id. (internal citations omitted). This Court has further pointed out that:
\Mhen determining whether a contract violates publicpolicy, it is necessary to carefully balance the publicinterest with the right to freely contract when a
contract is not prohibited under a constitutional orstatutory provision, or prior judicial decision, it shouldnot be struck down on the ground that it is contrary topublic policy, except it be clearly injurious to the publicgood or contravene some established interest of society.
Interstate Fíre & Cas. Co. v. Abernathy, 93 So. 3d 352,358 n.9 (Fla. lst DCA
2012) (internal citations omitted).
Furthermore, it is well-established that the public policy of the state of
Florida is to encourage pre-trial settlement. 8.g., Russell v. Shelby Mut. Ins. Co.,
128 So. 2d 161, 164 (Fla. 3d DCA 1961). As such, public policy highly favors
settlement agreements among parties and will seek to enforce them whenever
possible. 8.g., Pínnacle, 193 So. 3d al 976. Specifically, the Florida Supreme
Court has held Íhal a settlement agreement between a state agency and state
licensees should be upheld if the public interest is not jeopardized. Abramson v
Fla. Psychological Ass'n,634 So. 2d 610 (Fla. 1994).
In Abramson, two practicing psychologists, following a change in state law,
no longer met the statutory requirements for Florida licensure. They filed a federal
lawsuit against the Florida Depafirnent of Business and Professional Regulation
claiming that the statute was unconstitutional. Id. at6lI. The department entered
into a settlement with thern, pursuant to which, the two psychologists were allowed
31
to continue to maintain licensure under certain conditions. Id. The trial court
enjoined the licensure as being violative of the statute. Id. at 61I-12. The decision
was affirmed on appeal. Id. On review, the Florida Supreme Court pointed out that
administrative agencies have the power to settle litigation. Id. at 612. The Court
also pointed out that a ruling adverse to the psychologists could make it extremely
difficult for agencies to accomplish settlements that are clearly in the best interest
of the people of the state. Id. The Court also found that the settlement had been
entered into in good faith and there was no suggestion of any collusion. Id.
Additionally, the settlement did not jeopardize the health or welfare of the citizens
of Florida. 1d The Courl stated:
To refuse to uphold the settlement under thesecircumstances would have the effect of discouragingthird parties from ever trying to settle their controversieswith the governmental agencies of Florida. We cannotsee how the public interest was jeopardized by thissettlement, and under principles of fundamental fairness,we believe that it should be upheld.
Id. The court quashed the decision below and remanded with directions that the
settlement be honored. Id.
Subsequently, this Court extracted from the Abramson decision the
following factors to be considered by the judiciary in determining whether
settlement agreements entered into by agencies should be upheld: (1) whether the
agency acted in good faith; (2) whether there is any evidence of collusion; (3)
32
whether it appears that the settlement will jeopardize the health or welfare of the
citizens of Florida; and (4) whether under the circumstances the settlement is in the
best interest of the people of the state. Kruer v. Bd. of Trs. of the Internal
Improvement Tr. Fund, 647 So.2d 129,133 (Fla. 1st DCA 1994).
Here, Hart's filed the Petition below requesting formal administrative
proceedings on the basis that it is entitled to a MMTC license under the "within
one point" qualification of section 381.986(8)(a). (R, 6-19). The Petition
challenged the Department's original scoring based on the l{ature's Way cases. As
it did in Nature's Way, the Department ultimately settled the matter in exchange
for Hart's' agreement to dismiss its Petition and other promises. By means of a
Joint Settlement Agreement, Hart's and other similarly situated applicants received
licenses, just as Nature's Way did in the prior case. (R: 22-61). There is
absolutely nothing about this agreement to suggest collusion, or that the
Department did not act in good faith. Although Del Favero argues that the
Deparlment "all but adrnits that Hart's does not qualiflu" for a MMTC license
because the Joint Settlernent Agreement states that Hart's has a 'colorable claim"'
to such license (Initial Br. at 38), Del Favero evidently misinterprets the meaning
of "colorable." A "colorable" claim is one that appears to be "true, valid or right."
Colorable. Black's Law Dictionary (9th ed. 2009). The use of the word
"colorable" in the Joint Settlement Agreement in no way indicates that the
îîJJ
settlement was not made by the Department in good faith. To the contrary, it
shows that the Department had reason to settle and thereby avoid the risks and
uncertainties of litigation.
Moreover, the Joint Settlement Agreement is not injurious to the public
good, nor does it jeopardizethe health or welfare of the citizens of Florida so as to
necessitate being declared void under Florida law. In fact, the Joint Settlement
Agreement furthers the public good and declared interest of the state. Section
381.986(8)(a) clarifies that it is designed to "ensure reasonable statewide
accessibility and availability as necessary for qualified patients registered in the
medical marijuana use registry and who are issued a physician certification under
this section." $ 381.986(8)(a), Fla. Stat. The issuance of a MMTC license
pursuant to the Joint Settlement Agreement promotes the accomplishment of this
stated intent and purpose. Furthermore, the Department obtained several
concessions in the settlement in the best interest of the state. The Joint Settlement
Agreement requires Haft's and the other licensees to locate a percentage of
medical marijuana dispensaries in impoverished courmunities and rural areas. (R
31). It also requires increased security protocols. (R: 30,31). As such, the pre-
trial settlement of the Deparlment and Haft's is in fuftherance of the public's
interest and is completely in accord with the public policy of the state of Florida
See Abranlson,634 So. 2d at 612; Kruer, 647 So. 2d at 133; Russell, 128 So. 2d at
34
163; Pinnacle Three Corp., 193 So. 3d at 976; Cíty of Largo,215 So. 3d at 15;
Interstate Fire,93 So. 3d at 358 n.9.
Del Favero's reliance upon State v. Gtech Corp.,816 So. 2d 648 (Fla. lst
DCA 2001) in support of its public policy argument is misplaced. The situation at
issue in Gtech in which two bidders were competing for the same contract cannot
be compared to the matter here. As fully discussed above, Hart's applied for a
regional dispensing organization license under former section 381.986 and later
sought a license under section 381.986(8)(a) as an applicant whose application had
been reviewed, evaluated, scored, and denied by the Deparlment under former
section 381.986. To the contrary, Del Favero never applied under former section
381.986, never competed against Hart's or any other former applicant for a
dispensin g organization license and, as a result, did not qualify for one of the
mandatory licenses provided for in section 381.986(8)(u)2. The fundamental
fairness issues atplay in Gtech simply do not exist here.
In summary, the Joint Settlement Agreement is in alignment with the public
policy of Florida. In accordance with Florida law as set forth above, the Joint
Settlernent should be enforced.
CONCLUSION
For the foregoing reasons, Hart's respectfully requests that the Court affirm
the Final Order rendered by the Department.
35
I
Re spectfully submitted,
/s/M. Hope KeatingDavid C. Ashburn 708046
Florida Bar No.Lorence Jon Bielby
Florida Bar No. 393517M. Hope Keating
Florida Bar No. 98191 5
Greenberg Traurig, P.A.101 East College AvenueTallahassee, FL 32301Telephone: (850) [email protected]@[email protected]
Counselþr Hart's Plant Nursery, Inc
36
CERTIFI OF SERVICE
I hereby cerliflz that on August 23,2019, I electronically filed and emailed
the foregoing document through the Florida Court eFiling Porlal which will serve
the following:
Seann M. FrazierMarc ItoKristen Bond215 South Monroe Street, Suite 750Tallahassee Florida [email protected]@[email protected]þr Appellant Louis Del Favero Orchids, Inc
Eduardo S. LombardAngela D. MilesRadey Law Firm301 S. Bronough Street, Suite 200Tallahassee, Florid a 3230 IEl ombard @r adeylaw. comCounselfor Co-Appellee Florida Department of Health
/s/NIM. Hope Keating
CBRTIFICATE OF COMPLIANCB
I hereby cerlify that this brief was prepared in Times New Roman, 14-point
font, in cornpliance with Rule 9.210(a)(2) of the Florida Rules of Appellate
/s/M. Hope KeatingM. Hope Keating
Procedure.
37
