13-002780F American Amateur Mixed Martial Arts, Inc., A/K/A United States Amateur Mixed Martial Arts, Inc. vs. Department Of Business And Professional Regulation, State Boxing Commission Status: Closed DOAH Final Order on Friday, December 20, 2013.

Summary: Evidence demonstrated that the agency was substantially justified in initiating administrative action. Attorney's fees and costs are denied.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMERICAN AMATEUR MIXED MARTIAL

ARTS, INC., a/k/a UNITED STATES

AMATEUR MIXED MARTIAL ARTS,

INC. ,

Petitioner ,

vs. Case No. 13 - 2780F

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION, STATE

BOXING COMMISSION ,

Resp ondent .

/

SUMMARY FINAL ORDER

By agreement of the parties this matter is being determined

as a summary proceeding pursuant to section 120.57(1)(h), Florida

Statutes.

APPEARANCES

For Petition er: Melissa Posey Furman, Esquire

Furman and Furman Attorneys, LLP

Post Office Box 610

Loxley, Alabama 36551 - 0610

For Respondent: Joseph M. Helton, Jr., Esquire

Dep artment of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Whether the Petitioner, American Amateur Mixed Martial Arts,

(AAMMA or Petitioner ) is entitled to an award of attorneyÓs fees

and costs pursuant to section 57.111, Florida Stat utes .

PRELIMINARY STATEMENT

On July 19, 2013, Petitioner, American Amateur Mixed Martial

Arts, filed a motion for attorneyÓs fees and costs under section

57.111, Florida Stat utes . 1 / Specifically, Petitioner reque sted an

award of attorneyÓs fees and costs as the prevailing party in the

underlying matter of DOAH Case No. 12 - 0142. Thereafter, both

par ties agreed that this matter should be decided upon the record

in the underlying proceeding, as well as the affidavits and

exhibits filed by AAM MA in support of its application for

attorneyÓs fees and costs herein. Further, the parties agreed

that this case should be decided without an evidentiary hearing

as a summary proceeding.

FINDING S OF FACT

1. AAMMA is a not - for - profit corporation, incorpo rated

under the laws of Florida. It has no full - time employees and

utilizes volunteers to conduct its business.

2 . Evidence in the record as to AAMMAÓs net worth

throughout its existence and at the time the case was initiated

by the Department of Busines s and P rofessional R egulation , S tate

B oxing C ommission (Department), demonstrated that AAMMA sustains

itself through personal do nations from members and fees from a

variety of registrations. Evidence further demonstrated that the

association was very smal l with few members and registrations .

In fact, AAMMA uses a home gym located on property owned by

founders and members Larry a nd Alice Downs to operate a mixed

martial arts/b oxing and training school . Mr. DownsÓ plumbing

business and the DownsÓ residence are also located on this

property. There was no eviden ce of the value of the home gym .

Additionally, there was no evidence that demonstrated that AAMMA

has any ownership interest in the home gym owned by the DownsÓ or

in any training equipment associate d with that gym . More

importantly, there was no substantially credible evidence that

demonstrated AAMMA was not a separate entity from any of the

DownsÓ interests or that any of the DownsÓ finances should be

included in the net worth of AAMMA.

3. On the other hand, t he testimony, while not specific,

was sufficient to infer that AAMMAÓs net worth is well below the

$2,000,000.00 threshold for a business to be considered a small

business for purposes of section 57.111, Florida Statutes .

Moreover, as indicated earlier, AAMMA has no full - time employees.

Based on these facts, AAMMA is a small business as defined under

section 57.111.

4. The underlying action in this case was initiated by the

Department when it filed an Amended Administrative Complaint

against AAMMA in DOAH Case No. 12 - 0142. 2 /

5. Additionally , after a lengthy mul ti - day hearing during

which both sides vigorously litigated their side of the case and

after both parties filed P roposed R ecommended O rders in the

matter, AAMMA was the prevailing party in DOAH Case No. 12 - 0142.

6 . In case 12 - 0142 , t he Amended Administra tive Comp laint

was based on evidence that was obtained through investigation by

the Department both before and after the filing of the

Administrative Complaints in the related DOAH Case No. 11 - 5102. 3 /

7 . The amended complaint in case 12 - 0142 alleged in Count I

that Respondent allowed minors under the age of 18 to engage in

mi xed martial arts ( MMA) matches on January 28, 2011;

February 26, 2011; May 6, 2011; July 16, 2011; and August 3,

2011, in violation of sections 548.006(4), and 548.071(1),

Florida Statutes , and Florida Administrative Code Rule 61K1 -

1.0031(1)(c), by failing to enforce the ISKA Overview as

RespondentÓs minimum health and safety standard s and engaging in

unprofessional conduct . The ISKA Overview contained age limits

for participants in amateu r MMA matches.

8 . T he evidence in the underlying case demonstrated that

AAMMA allowed athletes under the age of 18 years to participate

in MMA matches on the dates alleged in the A mended Administrative

Complaint . Clearly, such evidence constitutes a reas onable basis

in fact for which the Department may proceed with an

administrative action.

9 . The Department alleged in Count II of the Amended

Administrative Complaint that Respondent was aware of, and

allowed, amateur fighters to compete outside the appro priate

weight class on July 16, 2011, in violation of sections

548 .006(4) and 548.071(1 ) Florida Statutes , and Florida

Administrative Code Rule 61K1 - 1.0031(1)(c), by failing to enforce

the health and safety standards in RespondentÓs Rules and ISKA

Overview Guidelines, s pecifically regarding weight classes, as

well as, engaging in unprofessional or unethical conduct .

10 . Again, the evidence presented in DOAH Case No. 12 - 0142

showed that Robert Birge, a heavyweight, and Travis Grooms, a

super heavyweight, competed against each other at the July 16,

2011, event with a weight difference of 61 pounds. Again, there

was a reasonable basis in fact for the Department to proceed with

an administrative action.

1 1 . The Department alleged in Count III of the Amended

Administrativ e Complaint that Respondent misle d American Legion

Post #75 into signing a letter that incorrectly stated the

American Legion was the sole sponsor of RespondentÓs May 6, 2011,

amateur event, thereby violating section 548.071(4), by engaging

in unprofessional or unethical conduct.

1 2 . The DepartmentÓs evidence s howed that Alice Downs,

Larry Downs, Jr., and his secretary had access to AAMMAÓs

letterhead. While the evidence eventually showed that the event

held on May 6, 2011, was not sponsored by AAMMA or the American

Legion, the DepartmentÓs evidence clearly est ablished that the

letter to the Department attempting to exempt the May 6, 2011,

event from regulation was on AAMMAÓs letterhead. From these

facts, i t was reasonable for the Department to conclude that the

letter came from AAMMA at the time it in itiated t he underlying

action and was an attempt to mislead the American Legion into

signing the letter in order to gain an exemption under the

statutes for the May 6 event. Given these facts , ther e was a

reasonable basis for the Department to proceed with an

admi nistrative action .

1 3 . In conjunction with the factual basis of the underlying

administrative action, t he DepartmentÓs legal position in that

action was based on its authority to regulate amateur sanctioning

organizations and the rules the boxing commissi on had promulgated

under the authority granted to it in c hapter 54 8, Florida

Statutes. Ultimately, AAMMA prevailed because the rules of the

boxing commission were so vague that they could not be enforced

against AAMMA based on the law governing enforcemen t of such

rules. However, the Department, at the initiation of the

underlying proceeding and throughout this process, had reasonable

legal arguments which it posited to support its interpretation

that the ISKA Overview contained the health and safety stan dards

AAMMA was required to follow and that the Department was required

to enforce. The fact that the Department did not prevail in its

legal position does not support a finding that its position did

not have a reasonable legal basis. Given these facts, the

Department had a reasonable basis in law to proceed with an

administrative action against AAMMA.

1 4 . Finally, t he undersigned has reviewed the a ffidavit as

to AttorneyÓs Fees and Costs filed on September 23, 2013 , and the

corrections thereto , and find s the fees and costs contained

therein to be reasonable. However, since the Department was

substantially justified in initiating the underlying proceeding

in this action, Petitioner is not entitled to an award of

attorneyÓs fees or costs in this matter.

C ONCLUSIONS OF LAW

1 5 . The Division of Administrative Hearings has

jurisdiction over the subject matter of and the parties to this

proceeding. §§ 57.111(4), 120.569, and 120.57(1), Fla. Stat .

1 6 . Attorney's fees and costs have been sought by

Peti tioners in this matter pursuant to section 57.111, Florida

Statutes, the Equal Access to Justice Act.

1 7 . The legislative intent for enacting the Equal Access to

Justice Act is provided in s ub section 57.111(2) , Florida

Statutes, which state s the following :

(2) The Legislature finds that certain

persons may be deterred from seeking review

of, or defending against, unreasonable

governmental action because of the expense of

civil actions and administrative proceedings.

Because of the greater resources of th e

state, the standard for an award of

attorney's fees and costs against the state

should be different from the standard for an

award against a private litigant. The

purpose of this section is to diminish the

deterrent effect of seeking review of, or

defen ding against, governmental action by

providing in certain situations an award of

attorney's fees and costs against the state.

1 8 . In pertinent part, s ub section 57.111(4)(a), Florida

Statutes, provides the following:

(4)(a) Unless otherwise provided by law, an

award of attorney's fees and costs shall be

made to a prevailing small business party in

any adjudicatory proceeding or administrative

proceeding pursuant to chapter 120 initiated

by a state agency, unless the actions of the

agency were substan tially justified or

special circumstances exist, which would make

the award unjust . (emphasis add ed) .

1 9 . In proceedings to establish entitlement to an award of

attorney's fees and costs pursuant to section 57.111, the initial

burden of proof is on the party requesting the award to establish

by a preponderance of the evidence that it prevailed in the

underlying action and that it was a small business party at the

time the action was initiated. Once the party requesting the

award has met this burden, th e burden shifts to the agency to

establish that its actions in instituting the proceeding were

substantially justified or that special circumstances exist that

would make an award of attorney's fees and costs to Petitioner

unjust. Helmy v. Dep Ó t of Bus . & Prof Ó l Reg . , 707 So. 2d 366,

368 (Fla. 1st DCA 1998) .

20. Section 57.111(3)(d)1.b., defines Ðsmall business

partyÑ as follows:

(d) The term Ðsmall business partyÑ means:

b. A partnership or corporation, including a

professional practice, which has its

principal office in this state and has at the

time the action is initiated by a state

agency not more than 25 full - time employees

or a net worth of not more than $2 million;

(emphasis supplied)

2 1 . In Fields v. United States , 29 Fed. Cl. 376, 383 (Fed.

Cl. 1993) , affÓd , U.S. App. LEXIS (Fed. Cir. 1995) , the court

denied an award of attorneyÓs fees under the federal analog to

section 57.111 where evidence concerning plaintiffÓs net worth

was incomplete and lacked specificity. Similarly , in Scherr

Constr. Co. v. United States , 26 Cl. Ct. 248, 250 - 51 (Fed. Cl.

1992) , the court denied an award of attorneyÓs fees where the

record evidence did Ðnot enable the court to ascertain

plaintiffÓs net worth, which plaintiff must establish as a

predicate for an awardÑ); See also Monzon v. DepÓt of Bus. and

ProfÓl Reg. Case No 11 - 6007F, 2012 Fla. Div. Adm in . Hear ings

LEXIS 654, *1 0 - 11 (Fla. DOAH Mar. 30, 2012) and Slavin v. DepÓt

of Heath, Bd. of Medicine , Case No. 13 - 2097F (Fla. DOAH (Aug. 14,

2013) ) (Bauer , ALJ).

2 2 . In this case, there is sufficient evidence

demonstrating that the net worth of AAMMA at the time the case

was ini tiated by the Department was well under the $2,000,000.00

threshold to qualify as a small business party under section

57 .111 . The evidence demonstrated that AAMMA is a very small

not - for - profit business whose operations are financed through

p ersonal donations from members and fees from registrations.

There was no substantive evidence that sufficiently supported a

conclus ion that the personal or business finances of any members

should be included in AAMMASÓs net worth. Additionally , the

evidence was clear that AAMMA has le ss than 25 full - time

employees. In fact, it has no full - time employees. As such,

AAMMA qualifies as a small business party under section 57.111 .

2 3 . Further , section 57.111 requires that the small

business party prevail in the underlying action in order to be

awarded attorneyÓs fees and costs. Sub section 57.111(3)(c)

defines a "prevailing small business party" as follows:

(c) A small business party is a "prevailing

small business party" when:

1. A final judgment or order has been

entered in favor of the small business party

and such judgment or order has not been

reversed on appeal or the time for seeking

judicial review of the judgment or order has

expired;

2. A settlement has been obtained by the

small business party which is favorable to

the small business party on the majority of

issues which such party raised during the

course of the proceeding; or

3. The state agency has sought a voluntary

dismissal of its complaint.

2 4 . In this case, t here is no dispute that AAMMA prevailed

in the underlying proceeding for purposes of s ub section

57.111(3) , Florida Statutes.

2 5 . Thus, the remaining issue is whether the Department was

substantially justified in bringing the underlying action against

AAMMA. As indicated, the Department bears the burden of

establishing that its actions in initiating this proceeding were

substantially justified.

2 6 . The term "substantially justified" is defined in

s ub section 57.111(3)(e) , as follows:

(e) A proceeding is "substantially

justified" if it had a reasonable basis . . .

in la w and fact at the time it was initiated

by a state agency.

2 7 . To be substantial ly justified, the government agency

must have a solid , though not necessarily correct , basis in fact

and law for its actions in initiating the underlying case. In

Department of Health & Rehabilitative Services v. S.G. , 613 So.

2d 1380 (Fla. 1st DCA 1993 ) , the court stated:

In Gentele v. Department of Professional

Regulation, Board of Optometry , 513 So. 2d

672 (Fla. 1st DCA 1987), this court

addressed the issue of whether fees were

properly awarded pursuant to section 57.111 ,

and concluded that it must follow persuasive

federal authority in defining the scope of

the statutory definition of "substantially

justified." In tha t respect, McDonald v.

Schweiker , 726 F. 2d 311, 316 (7th Cir.

1983), proposed that "non - frivolous" (as

that term is utilized in federal rule 11)

may n ot be equated with "substantial

justification" for purposes of awarding fees

under the Federal Equal Acce ss to Justice

Act. Rather, the phrase "substantially

justified" was defined in McDonald as

meaning that "the government must have a

solid though not necessarily correct basis

in fact and law for the position that it

took" in the action. Id. at 316 . Thus, the

clear implication is that while governmental

action may not be so unfounded as to be

frivolous, it may nonetheless be based on

such an unsteady foundation factually and

legally as not to be substantially

justified. 613 So. 2d at 1386 .

Importantly, Ð[t] he Act is designed to discourage unreasonable

governmental action, not to paralyze agencies doing the necessary

and beneficial work of government .Ñ Rudloe v. Dep Ó t of Envtl .

Reg . , 33 Fla. Supp. 2d 203 (DOAH 1987). Consequently, such

evidence at the initiation of the proceeding Ðneed not be as

compelling as that which must be presented at the formal hearing

on the charges to support a finding of guilt and the imposition

of sanctions .Ñ Fish v. D ep Ó t of Health, Bd . of Dentistry , 825

So. 2d 421, 423 (Fla. 4th DCA 2002). Further, i n order to be

substantially justified, "an agency must, at the very least, have

a working knowledge of the applicable statutes under which it is

proceeding ." Helmy v. De pÓt of Bus. & ProfÓl Reg. , 707 So. 2d

366, 370 (Fla. 1st DCA 1998).

28 . In determining whether there was substantial

justification or a reasonable basis in law and fact, the

undersigned need only examine the information before the

Department when it dete rmined probable cause and filed the

underlying administrative complaint. Dep Ó t of Health, Bd . of

Physical Therapy Practice v. Cralle , 852 So. 2d 930, 932 (Fla.

1st DCA 2003).

29 . In this case, i t was clear that the material facts of

the underlying case contained in Count s I and II of the

DepartmentÓs Amended A dmi nistrative Complaint were not disputed.

M inors under the age of 18 participated in matches sponsored by

AAMMA . Additionally, there was a match in which participants of

different weight classes competed against each other in a mix ed

martial arts contest . Further, the commission had a rule which

arguably prohibited such matches. Given these facts, the

Department had a reasonable basis in fact to proceed with an

administrative action .

3 0 . Ult imately, t he issue with respect to Counts I and II

was not whether the material facts alleged as violations

occurred, but rather , whether under r ule 61K1 - 1.0031 , there were

identifiable heal th and safety standards as indicated in the rule

authority contain ed in section 548.003(2)(k), Florida Stat utes .

Under normal circumstances, the issue of whether a rule properly

implements its authorizing statute is an issue to be determined

in a rule challenge proceeding under section 120.54 . However, in

the underlying case, the determination that the rules at issue

were not health and safety standards became an issue of proof in

a disciplinary proceeding in which the rule was n ot challenged as

an invalid exercise of delegated legislative authority.

33 . The Department legitimately relied on the law that d uly

promulgated rules under the authority of law, have the effect of

law; and are presumed valid until invalidated in a rule c hallenge

proceeding . See State v. Jenkins , 469 So. 2d 733, 734 (Fla.

1985), City of Palm Bay v. DepÓt of Transp. , 588 So. 2d 624, 628

(Fla. 1st DCA 1991), Graham v. Swift , 480 So. 2d 124, 125 (Fla.

3d D CA 1985). At the time the underlying action was init iated by

the Department the ISKA O verview had been promulgated under the

rule making provision of c hapter 120, Florida Statutes , as a rule

of the boxing commission. Mo re importantly, the Department had a

reasonable interpretation of its rule , albeit one th at was not

communicated sufficiently, and did not make clear the otherwise

vague rule. Given its legal position , the Department had a

substantial basis in law to enforce its valid, existing rules

based on its interpretation of those rules and was substant ially

justified in bringing the charges in Counts I and II of the

administrative complaint in the underlying action . Consequently,

Petitioner is not entitled to an award of attorneyÓs fees and

costs under section 57.111, Florida Statutes .

34 . In regard to Count III, t he facts before the Department

arguably indicated that AAM MA misled American Legion Post #75

into signing a letter that incorrectly stated the American Legion

was the sole sponsor of RespondentÓs May 6, 2011, amateur event .

Such an action c ould constitute unethic al or unprofessional

conduct which is prohibited c onduct under section 548.071(4),

Florida Statutes . C learly , the Departme nt had a reasonable basis

in fact and law to proceed with an administrative action. As

such, the Department was substantially justified in proceeding

with Count III and Petitioner is not entitled to an award of

attorneyÓs fees and co sts under section 57.111, Florida Statutes .

ORDER

Based on the forego ing Findings of Fact and Conclusions of

Law, the Petitioner is not entitled to an award of attorneyÓs

fees and costs under section 57.111, Florida Statutes , and the

request for such attorneyÓs fees and costs is denied.

DONE AND ORDERED this 20th day of December , 2013 , in

Tallahassee, Leon County, Florida.

S

DIANE CLEAVINGER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk o f the

Division of Administrative Hearings

this 20 th day of December , 2013 .

ENDNOTES

1 / The initial motion also asked for attorneyÓs fees and costs

under section 57.105, Florida Statutes , based on the same facts

and arguments. Notably, the same findings and conclusio ns would

apply under that section with the same result.

2 / For purposes of section 57.011 , this case was arguably

ini tiated by the Department when it filed the Administrative

Complaint against AAMMA in DOAH Case No. 11 - 5102. In addition to

some similar allegations to the Amended Administrative Complaint

in DOAH Case No. 12 - 0142, the complaint in DOAH Case No. 11 - 5102

in volved several allegations which were not brought forward into

DOAH Case No. 12 - 0142, the underlying action in this matter.

Moreover, the complaint in case 11 - 5102 had some serious

evidentiary problems that came to light during the course of the

litigatio n. The Department appropriately asked that jurisdiction

be relinquished in case 11 - 5102. The DepartmentÓs request was

granted, jurisdiction relinquished and DOAHÓs file closed.

Later, the Department filed an Amended Administrative Complaint

to initiate case 12 - 0142 that involved some of the same facts as

case 11 - 5102. Notably, the DepartmentÓs file number DBPR Case

No. 2011 - 040852 was the same for both cases. More importantly,

the same conclusions would result irrespective of whether case

11 - 5102 is seen as the initiating event under section 57.111,

Fl orid a Stat utes .

3 / The Department investigated this case pursuant to its

authority under section 455.225, Florida Statutes . Additionally,

the Department found probable cause to proceed with this action

pursuant to the authority granted it by the boxing commission in

Fl or id a Admin istrative Code Rule 61K - 1.070 and section

455.225(4), Florida Statutes .

COPIES FURNISHED:

Melissa Posey Furman, Esquire

Furman and Furman Attorneys, LLP

Post Office Box 610

Loxley, Alabama 36551 - 0610

James Michael Sawyer, Esquire

Law Office of DeCarlis and Sawyer

Sui te C

5000 Northwest 27th Court

Gainesville, Florida 32606

Pam Bondi, Attorney General

Department of Legal Affairs

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Jeff Atwater, Chief Financial Officer

Departm ent of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Joseph M. Helton, Jr., Esquire

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399

Thomas Molloy, Executive Director

Florida State Boxing Commission

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

J. Layne Smith, General Counsel

Department of Business

and Professio nal Regulation

1940 North Monroe Street

Tallahassee, Florida 32399

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statutes.

Rev proceedings are governed by the Florida Rules of Appellate

Procedure. Suc h proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

of the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as otherwise provided by law.