����Ӱ��AV

In a brief order, the justices agreed to hear arguments by EFG America LLC of Mesa that claims of securities fraud against the company by the Arizona Corporation Commission cannot be decided by the commission itself. The company is entitled to have its case decided by jurors, contends attorney Aditya Dynar of Pacific Legal Foundations, which is representing the company.

The company lost the first round in its quest at the Court of Appeals.

Appellate judges acknowledged there is a right to trial by jury in the Arizona Constitution. But they concluded that was overridden by another section which grants specific authority to handle such cases to the commission.

In deciding to hear the case, the Supreme Court rebuffed the Corporation Commission’s attorney, Elizabeth Schmitt, who said there no reason for them to get involved. She said the legal dispute “applies to only a single category of matters before a single agency and does not have the immense impact claimed by petitioners.’’

But Dynar told Capitol Media Services that what the high court decides ultimately could set new precedents involving the rights of anyone who has a dispute with a state agency, such as individuals whose right to practice is governed by a regulatory board, and businesses that find themselves in a dispute over whether they are complying with rules and regulations.

All that goes to the system used not only by the Corporation Commission but most state agencies that review claims of violations or laws or regulations.

These are generally referred to a hearing officer — called an “administrative law judge’’ — who takes evidence and decides if the rules have been violated. But in all cases, that becomes little more than a recommendation, with the agency itself having the final say.

Dynar said that’s not due process.

But Douglas Clark, the Corporation Commission’s executive director, said his agency has “followed its constitutional and legislatively granted authority to regulate securities.’’

He said while jury trials have not been provided in the past, “the commission will follow whatever the courts and the Legislature ask it to do when it comes to enforcement actions.’’

The commission’s allegations against company

The case involves EFG, which recycles rubber.

Pacific Legal, which is defending the company for free, says EFG developed what it believed to be a proprietary chemical process to do the job more efficiently than competitors. It says founder Douglas Fimrite, needing capital for the new business, sold securities to investors.

But the commission, in its complaint, says EFG made material misrepresentations and omissions to investors in connection with the sale of more than $26 million in unregistered securities. The allegations include that the company provided investors with baseless financial projections and failed to disclose prior lawsuits, judgments and bankruptcies.

Following normal procedures, the commission referred the case to its own in-house administrative law judge. That person rejected the company’s request to instead transfer the case to a court where there could be a jury trial.

That sent EFG to the Court of Appeals.

There, appellate Judge James Morse Jr. acknowledged there is a provision in the Arizona Constitution that says “the right of trial by jury shall remain inviolate.’’

But Morse, writing for the unanimous three-judge panel, also pointed out that the commission itself was constitutionally created and has “the power and authority to enforce its rules, regulations, and orders by the imposition of such fines as it may deem just.’’ He said the only constitutional limit is that any fines can be no more than $5,000 for each violation.

“If our constitutional framers had intended to confer a jury-trial right for commission enforcement actions, they would have done so,’’ Morse wrote. “Given the framers’ omission of such a right, and the absence of a statutory grant, we conclude that Arizona law does not grant a jury-trial right for commission enforcement actions.’’

The argument for a right to jury trial

Dynar, however, is telling the Supreme Court it’s not that simple. He contends the state constitutional right to a trial by jury is supreme and pretty much absolute, and cannot be overridden by other provisions.

It comes down to how he interprets the Arizona Constitution.

He said that after the constitution says the right to a jury trial “shall remain inviolate,’’ it then spells out things like the requirement for a 12-person jury in serious criminal cases and that the verdict must be unanimous.

“It then states in no uncertain words: ‘In all other cases, the number of jurors, not less than six, and the number required to render a verdict, shall be specified by law,’’ Dynar told the justices.

“That last sentence means the legislature can set the number of jurors and decide whether jury unanimity is necessary ‘in all other cases,’ ‘’ he said. “But neither the legislature nor the commission has the power to declare the right to jury trial is unavailable in some categories of civil cases.’’

Dynar said even if the justices say the state constitutional provisions don’t apply, there’s also relevant language in the Seventh Amendment of the U.S. Constitution.

It guarantees a right to a jury trial in any suit “at common law’’ where the value exceeds $20. What’s at issue here comes down to a claim of fraud, which fits that “common law’’ description, Dynar said.

All those arguments ultimately come down to claims by Pacific Legal that the process at issue is legally wrong.

“This unjust system puts defendants at the mercy of the very agency seeking to punish them by acting as a prosecutor, judge, and punisher rolled into one court-like apparatus within the agency’s own walls and without a jury trial,’’ the organization said in a news release.

“I think it definitely could set a precedent for future cases,’’ Dynar said of the case.

He pointed out the similar procedures now used by other state agencies, where they can level fines against those they determine have run afoul of rules and regulations, without a jury trial. Dynar said that includes the multiple boards that license professionals.

There are a lot of them, ranging from medical and nursing practice to accountants, barbers, contractors and those who operate funeral homes.

The high court has not set a date to hear arguments.