Jacobs v. State Board of Optometry

81 Cal. App. 3d 1022, 147 Cal. Rptr. 225, 1978 Cal. App. LEXIS 1646

• Court: California Court of Appeal
• Decided: June 22, 1978
• Docket: Civ. 16201
• Status: Published

Opinions

Opinion

REGAN, J. —

Defendant, the State Board of Optometry, a state agency charged with licensing of optometrists (board) and real party in interest, California Vision Service, a nonprofit corporation formed pursuant to Corporations Code section 9201 for the purpose of providing group vision care (CVS), both appeal from a judgment granting a peremptory writ of mandate and declaratory relief.

The writ commands the board “to compel” CVS to strike from its criteria for membership in its panel of participating optometrists all restrictions on advertising of the type allowed under certain provisions of the Business and Professions Code. The portion of the judgment granting declaratory relief decrees that the board “has the duty to supervise” CVS to insure that it complies with Corporations Code section 9201.

On appeal, the position of CVS is (a) that plaintiff is barred from relief due to failure to exhaust his administrative remedies and lack of an actual controversy; (b) that the trial court erred in its statutory interpretation of Corporations Code section 9201,¹ subdivision (b); and (c) that the trial court exceeded its jurisdiction in compelling the board to exercise its discretion in a particular manner.

The position of the board on appeal is that the trial court erred in ordering it to compel CVS to strike its advertising criteria and to “supervise” CVS under Corporations Code section 9201, without providing some form of “specific guidance” from the court for the board to follow. In this connection, it is asserted by the board that the trial court erred in not making specific findings requested by the board and that this court should make such special findings on appeal.

Plaintiff is a licensed optometrist. CVS provides its services through contracts it negotiates with organizations such as labor unions, associations, fraternal groups and others.

About 85 to 95 percent of the group vision services provided by CVS to its beneficiaries is provided by the approximately 1,700 optometrists who are panel members of CVS. A nonpanel optometrist must bill the beneficiary who is then later reimbursed by CVS. CVS has specific criteria for panel membership. One of these is a prohibition against any advertising except as provided in the criteria. Paid “box ads” in telephone directories are prohibited. CVS beneficiaries, while not prevented from using nonpanel optometrists, are provided with a booklet containing only names of panel optometrists.

Plaintiff was and is ineligible for membership on the panel of CVS optometrists because he maintained a paid “box ad” in the telephone directory. Knowing he was ineligible, he had never applied for membership, although he desired to be a member. He had been informed by a representative of CVS that if he would take his ad out of the telephone book he would be eligible. Plaintiff testified he had lost business because of nonmembership in CVS.²

Prior to the filing of this action, a letter had been addressed to the board by counsel for an organization known as the Academy of California Optometrists (ACO) demanding the board require that CVS eliminate the “arbitrary criteria” it had imposed. The letter asserted the board should exercise its statutory duty under Corporations Code section 9201 to supervise CVS and to require CVS to permit participation in its program by all licensed California optometrists without regard to the arbitrary criteria. The board had taken no action in response to the letter and there are no regulations in effect supplementing Corporations Code section 9201. Neither ACO nor plaintiff has requested promulgation of any regulations. Plaintiff is a member and an officer of ACO, and the organization requested he file the instant action.

CVS contends the trial court ignored the fact that plaintiff failed to exhaust his administrative remedies and was therefore not entitled to either the writ of mandate or the deelaratoiy relief sought and obtained. CVS argues that as a prerequisite to this lawsuit it was necessary for plaintiff to have petitioned the board, pursuant to Government Code section 11426, to adopt regulations to supplement Corporations Code section 9201, and that the trial court erred in not finding, as requested, that there was no such petition. We reject this contention and argument.

At the time this action arose, Government Code section 11426 provided, in pertinent part, that “any interested person may petition a state agency requesting the adoption or repeal of a regulation ... .”³ There is nothing mandatory about the statute. Neither is there any statute which requires the board to adopt formal regulations supplementing Corporations Code section 9201. The rule relative to exhaustion of administrative remedies as a prerequisite to a civil action at law is premised upon the existence of a specific administrative remedy provided by statute. (Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 292-293 [109 P.2d 942, 132 A.L.R. 715].) The mere possession by some official body, such as the board, of a “continuing supervisory or investigatory power” does not itself suffice to afford an administrative remedy. There must be “clearly defined machinery” for the submission, evaluation and resolution of complaints by aggrieved parties. (Rosenfield v. Malcolm (1967) 65 Cal.2d 559, 566 [55 Cal.Rptr. 505, 421 P.2d 697]; see also, Eye Dog Foundation v. State Board of Guide Dogs For the Blind (1967) 67 Cal.2d 536, 543 [63 Cal.Rptr. 21, 432 P.2d 717]; Alta-Dena Dairy v. City of San Diego (1969) 271 Cal.App.2d 66, 73 [76 Cal.Rptr. 510].)

Moreover, even were there an administrative remedy to exhaust, the exhaustion requirement is excused where its pursuit would be futile, idle or useless. Thus, where an agency has made it clear what its ruling would be, idle pursuit of administrative remedies is not required. (See Huntington Beach Police Officers’ Assn. v. City of Huntington Beach (1976) 58 Cal.App.3d 492, 499 [129 Cal.Rptr. 893].) The record here discloses a letter from ACO demanding administrative action, as we have indicated above. The board replied in a manner making it plain that no action would be taken as requested.

CVS also contends the trial court erred in failing to find plaintiff had not applied for membership in CVS and that such failure barred him from a writ of mandate. There is no legal requirement that plaintiff formally apply for membership in CVS. It is clear that he would not be accepted, since the evidence shows he was ineligible, had been so informed by a representative of CVS, and was aware of his ineligibility from his own knowledge of the rules of CVS as to advertising. His testimony also was definite that he would not give up his advertising to become a member of CVS. The law does not require the performance of a useless or idle act as a procedural condition to seeking its aid in redressing a grievance.-(Civ, Code, § 3532.)

In response to CVS’ argument that plaintiff did not have a beneficial interest or show a potential interference with his rights, so as to justify the writ procedure, we need only point out that the evidence shows that plaintiff was prevented from becoming a member of CVS because of its allegedly wrongful criteria as to advertising, and as a result of not being a member he lost some business. This is an assertion and showing of sufficient beneficial interest in the criteria of CVS and the actions of the board with respect theieto to serve as a foundation for use of the writ procedure, since membership in CVS could have a significant economic effect on plaintiffs’ professional career. (Cf. Pinsker v. Pacific Coast Soc. of Orthodontists (1969) 1 Cal.3d 160, 166 [81 Cal.Rptr. 623, 460 P.2d 495].)

CVS contends declaratory relief was also an improper procedural remedy. It asserts no actual controversy existed. We disagree. Plaintiff alleged in his complaint that a controversy existed, by asserting the board had the general duty to supervise CVS and specifically to compel it to admit plaintiff to membership, whereas the board had refused to supervise CVS and to compel it to admit plaintiff or change its criteria. The board answered this portion of the complaint, not by denial, but by alleging it “did not know” whether a “controversy” existed but admitted “at least a definite misunderstanding.” Moreover, throughout briefs and arguments at trial the board took the position that it had no specific mandatory duties under Corporations Code section 9201 once it had certified a corporation such as CVS. Among the trial court’s findings was one that an actual controversy existed between plaintiff and the board.

We conclude that plaintiff has shown he had a procedural right to the remedies of mandate and declaratory relief. It remains to be seen whether he had the substantive right to the relief given in the judgment.

The principal CVS contention is one which goes to the heart of the substantive issue of this case. It is the issue of the proper statutory construction of Corporations Code section 9201, and particularly the meaning of subdivision (b) thereof. It is provided in that subdivision that “Membership in the corporation [CVS] and an opportunity to render professional services upon a uniform basis are available to all licensed members of the particular profession.” The trial court ruled that this language means every licensed optometrist must be allowed membership in CVS and that any restrictions, criteria or other conditions to membership are invalid which prohibit advertising of the type done by plaintiff, otherwise “allowed” by law.⁴ CVS contends on appeal that the trial court erred in this interpretation of the statute. We agree with this contention.

Corporations Code section 9201 is a part of division 2, part 1, of the Corporations Code, relating to nonprofit corporations in general. Also contained in this part of the code is section 9402 which provides that nonprofit corporations may make provisions for the qualifications of members. We must apply certain rules of statutoiy construction, including the rule that all statutes must be read together and harmonized whenever possible to ascertain the legislative intent. (Bozung v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 274, fn. 7 [118 Cal.Rptr. 249, 529 P.2d 1017].) It is presumed that the Legislature did not intend to act inconsistently on the same subject. (See 45 Cal.Jur.2d, Statutes, § 99, p. 613. Moreover, a construction consistent with common sense and reasonableness is called for, and considerations of phraseology should be limited to the end that the purpose of the statute will not be sacrificed. (Estate of Todd (1941) 17 Cal.2d 270, 275 [109 P.2d 913]; Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640, 645 [335 P.2d 672].)

Under sound principles of statutory construction, it is a strained interpretation of section 9201, subdivision (b), and unreasonable to conclude, as did the trial court, that by enacting section 9201 the Legislature meant to abrogate the general statutory and common law principle that a nonprofit corporation or association can establish criteria for membership, so long as there is no violation of law in such criteria. It has been recently held by the Supreme Court that while a voluntaiy real estate association may not be forced to open its membership to all who apply, an unlawful restraint of trade could occur under the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.) by an exclusion where membership was an “economic necessity” of doing real estate business. (See Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 928 [130 Cal.Rptr. 1, 549 P.2d 833].) However, it was not shown in the instant case that plaintiff had experienced anything like the 75 percent denial of employment which occurred in the Marin case. Restraint of trade is not an issue in this case. The only law which plaintiff asserts (and the trial court agreed) is violated is Corporations Code section 9201, subdivision (b).

We conclude that section 9201 is a statute which regulates the manner in which membership criteria are applied, rather than one which defines the full range of criteria which may be adopted. Thus, the statute requires the criteria be administered in such a way that membership in the corporation and the opportunity to render professional services be available in an equal manner to all licensed members of the profession. The modifying phrase “uniform basis” clearly applies both to “membership” as well as “opportunity to render professional services.”

Were the trial court’s interpretation (that “uniform basis” only modifies “opportunity to render professional services”) allowed to stand, section 9201 corporations such as CVS would be crippled. Such corporations could not adopt criteria of membership other than to require a state license and could not provide for rules of professional quality or professional standards such as were recognized as generally lawful for nonprofit medical societies or associations by the Supreme Court in Pinsker v. Pacific Coast Society of Orthodontists (1974) 12 Cal.3d 541, 560 [116 Cal.Rptr. 245, 526 P.2d 253].)

In summary, it is our conclusion that when sections 9201, subdivision (b), and 9402 are read together, CVS may provide for admission and expulsion of members, as long as the criteria are uniformly applied to prospective members and membership is open to all licensed optometrists who must conform to certain requirements in exchange for the benefits of membership. CVS’ criteria are reasonably intended to maintain the professional standing of its members, prevent unfair competition, and prevent possibly misleading and unprofessional advertising. Compliance with the criteria is a reasonable exchange for the benefits of membership in CVS.

Having so concluded, we find the trial court erred in rendering judgment ordering a writ of mandate to issue commanding the board to compel CVS to strike its criteria for panel membership restricting advertising of the type not prohibited under Business and Professions Code sections 3104, 3129 and 3130. That portion of the judgment must be reversed.

In addition to the above portion of the judgment, the trial court ordered and decreed the board had the duty to supervise CVS under Corporations Code section 9201 “which includes the duty to insure that [CVS] complies with the provisions of section 9201 of the Corporations Code.” Although couched in declaratory terms, this portion of the judgment read in context, is a mandate. It is true that Corporations Code section 9201 specifically provides that a nonprofit corporation such as CVS, licensed by the board, “shall be subject to supervision by the [board].” CVS contends this language does not impose any mandatory duty of law enforcement on the board, so that the trial court erred when it concluded the code section made supervision (in the enforcement sense) a ministerial act which could be declared and mandated. (Cf. People v. Brophy (1942) 49 Cal.App.2d 15, 27-28 [120 P.2d 946], holding “supervision” of district attorneys by the Attorney General did not mean “control.”) Even if the board could be said to have “control” or enforcement duties in the sense of somehow “insuring compliance” as the trial court determined, such control or supervisory power could only manifest itself by the exercise of discretion. The statute says “subject to supervision.” We deem it most significant that the Legislature did not choose to say the board “shall supervise.” (Cf. Knoff v. City etc. of San Francisco (1969) 1 Cal.App.3d 184, 196, fn. 10 [81 Cal.Rptr. 683].) Since an exercise of discretion on the part of the board as to whether, when and how to exercise its general power of supervision is involved, that portion of the judgment which purports to order the board “to supervise” CVS to “insure” its compliance with section 9201, must also be reversed. Exercise of discretion may be ordered or mandated, but exercise in a particular manner may not. (See 5 Witkin, Cal. Procedure (2d ed. 1971), Extraordinary Writs, § 75, p. 3851.)

The board contends the trial court erred in neglecting or refusing to make the special findings requested by it to fix precisely its responsibilities and the “parameters of its authority over a corporation organized under Corporations Code section 9201.” Since we have decided the judgment must be reversed, any action we would take on the board’s contention cannot have a practical legal effect upon the disposition of this case, and the contention has accordingly been rendered moot, by definition. (See Black’s Law Dict. (4th ed. 1968), p. 1159; 27A Words and Phrases, pp. 155-158.) Moreover, as we have pointed out above, the most a trial court could properly do, would be to order general exercise of discretion, not specific acts in a particular manner. Hence any “guidelines” as requested by the board, or directives by the trial court as to the boundaries, limits or “parameters” of its authority under section 9201 would be neither proper nor within the judicially cognizable issues of this lawsuit.

What we have said disposes also of the board’s second contention on appeal, which is that this appellate court should now make “special findings” of the type requested by the board in the trial court. Rule 23 of the California Rules of Court is not a vehicle for such purpose. It provides for the taking of evidence and the making of factual findings. We are being asked, in part, to make conclusions of law. Moreover, we can conceive of no useful or pertinent additional evidence to be presented. Even purely factfinding under rule 23 is an extraordinary procedure to be used sparingly and only in a case clearly calling for it, which this case clearly does not. (See Tyrone v. Kelley (1973) 9 Cal.3d 1, 13 [106 Cal.Rptr. 761, 507 P.2d 65].)

The judgment is reversed.⁵

Puglia, P. J., concurred.

1 Corporations Code section 9201 reads as follows:

“A nonprofit corporation may be formed under this part for the purposes of defraying or assuming the cost of professional services of licentiates under any chapter of Division 2 (commencing with Section 500) of the Business and Professions Code or of rendering any such services, but it may not engage directly or indirectly in the performance of the corporate purposes or objects unless all of the following requirements are met:

“(a) At least one-fourth of all licentiates of the particular profession residing in California become members.

“(b) Membership in the corporation and an opportunity to render professional services upon a uniform basis are available to all licensed members of the particular profession.

“(c) Voting by proxy and cumulative voting are prohibited.

“(d) A certificate is issued to the corporation by the particular professional board whose licentiates have become members, finding compliance with the requirements of subdivisions (a), (b), and (c).

“Any such nonprofit corporation shall be subject to supervision by the particular professional board under which its members are licensed and shall also be subject to Section 9505.”

2 CVS covers between 900,000 and 1 million people as beneficiaries.

3 In 1977 the Legislature added the word “amendment” following “adoption” in the quoted language. (Stats. 1977, ch. 538, § 1.)

4 Business and Professions Code sections 3104, 3129, 3130, expressly prohibit certain types of advertising by optometrists but do not prohibit the type done by plaintiff.

5 The motion of CVS filed March 21, 1977, to take judicial notice of the “Notice of Intended Decision” of Judge Schreck in Sacramento Superior Court case No. 211535 has been under submission. It is hereby granted, and this court has in fact taken judicial notice of the superior court document in question pursuant to Evidence Code section 452.