Licensee can be barred from contesting issues litigated earlier

The state’s plumbing board could prevent a licensee from re-litigating factual issues already determined by a different state agency in a different administrative action, the Court of Appeals of Maryland ruled April 26 (Garrity v. Maryland State Board of Plumbing).

In 2012, Maryland’s Consumer Protection Division charged licensed plumber and plumbing company owner Wayne Garrity with unfair and deceptive trade practices, including the use of unlicensed plumbers in more than 6,000 cases.

After a hearing, the Division found that Garrity had committed more than 7,000 total violations of the state’s Consumer Protection Act. The division imposed a fine of approximately $700,000 in restitution, fees, and costs.

Following that decision, the Maryland Board of Plumbing opened its own case against Garrity, primarily relying on the factual record contained in the Consumer Protection Division’s final order.

Based on the legal doctrine of offensive non-mutual collateral estoppel—which prevents a defendant from re-litigating matters decided in another case in which they were also a defendant, but with a different plaintiff—the board adopted the earlier decision’s findings of fact, determined that Garrity had violated the state’s Plumbing Act, revoked his license, and imposed $75,000 in penalties. Garrity appealed, and the case eventually made its way to the Court of Appeals of Maryland.

Garrity’s appeal challenged the use of the collateral estoppel doctrine to prevent him from contesting the earlier factual record. But the court, in an opinion by Judge Mary Barbera, rejected this challenge and upheld the board’s decision.

The use of offensive non-mutual collateral estoppel in this case, Judge Barbera wrote, “comports with principles of judicial economy and fairness.” The board was unable to join in the earlier prosecution of Garrity, she noted. In addition, Garrity had sufficient incentive to defend himself against the charges in the earlier action, the procedures before the two prosecuting agencies were very similar, and the board’s decision to seek revocation of his license was a foreseeable consequence if Garrity failed in his defense in the earlier case.

Garrity also argued that, by charging him for the same conduct for which he was already punished by the Consumer Protection Division, the board violated his right to be free from double jeopardy. This argument did not get far. Judge Barbera noted that the double jeopardy doctrine only protects defendants from criminal charges, and neither case involved criminal prosecution

Although Garrity had argued that the Consumer Protection Division’s penalties were so large and severe that they constituted a criminal penalty, the court dismissed this argument as well. Because penalties associated with licensing statutes are directed towards protecting the public, those penalties are remedial rather than punitive in nature, and are thus civil penalties.

As to the actual size of the penalty, Judge Barbera noted that Garrity committed over 7,000 violations of the Consumer Protection Act, each of which was subject to at least a $1,000 fine. Although the overall sanction was large, the per-violation sanction was not.