Gregory A. Anderson, Petitioner-Appellant,
Wisconsin Department of Financial Institutions, Respondent-Respondent.
from an order of the circuit court for Manitowoc County No.
2017CV61: MARK ROHRER, Judge. Reversed and cause remanded
Neubauer, C.J., Gundrum and Hagedorn, JJ.
The constitution limits the power of the state to take
someone's property. At a minimum, constitutional due
process requires the state to provide notice and an
opportunity to be heard. This case concerns whether
sufficient notice was provided when the Wisconsin Department
of Financial Institutions (DFI) notified Gregory A. Anderson
that he was liable for more than three million dollars due to
his alleged involvement in unlawful securities transactions.
In its notice, DFI informed Anderson that he had thirty days
to "request a hearing" or its allegations would be
deemed proven and the threatened punishment would become
fixed. Anderson-on day number thirty-mailed a certified
letter requesting a hearing. DFI denied Anderson's
request for a hearing on the grounds that DFI needed to
receive the request by the thirtieth day. No grace,
The notice Anderson received tracks the language of Wis.Stat.
§ 551.604(2) (2017-18). However, this recently modified
statute (and hence, the notice) is less than clear on
precisely what Anderson was supposed to do by the thirtieth
day. While DFI offers a plausible reading in defense of its
position, we conclude that the notice Anderson received was
inadequate. If the state is going to take Anderson's
property, it must tell him with reasonable clarity what he
needs to do and by when. The notice failed in this basic task
and therefore violated Anderson's due process
protections. Accordingly, we reverse and remand.
On October 24, 2016, DFI issued a summary order alleging that
Anderson participated in the offer and sale of unregistered
securities and directing him to cease and desist from
engaging in unlawful activities of this kind. The order further
proposed the entry of a final order requiring Anderson to pay
restitution in excess of three million dollars and a civil
penalty of twenty-five thousand dollars.
Regarding what Anderson needed to do to challenge this and by
when, the order stated as follows:
Notice of Hearing Rights
(a.) PLEASE TAKE NOTICE that you have the right to request a
hearing. Every request for a hearing shall be in the form of
a petition filed with the Division, pursuant to Wis. Admin.
Code § DFI-Sec 8.01. A petition for a hearing to review
an order shall:
(1) Plainly admit or deny each specific allegation, finding
or conclusion in the order and incorporated papers. However,
if the petitioner lacks sufficient knowledge or information
to permit an admission or denial, the petition shall so
state, and that statement shall have the effect of a denial;
(2) State all affirmative defenses. Affirmative defenses not
raised in the request for hearing may be deemed waived.
(b.) PLEASE TAKE FURTHER NOTICE that, within 15 days after
receipt of a request in a record from you, the matter will be
scheduled for a hearing, pursuant to Wis. Stats. §§
551.604(2) and (3).
(c.) PLEASE TAKE FURTHER NOTICE that if you do not request a
hearing and none is ordered by the Administrator within 30
days after the date of service of this order, the findings of
fact, conclusions of law, and summary and proposed orders,
including the imposition of a civil penalty or requirement
for payment of restitution, disgorgement, interest, or the
costs of investigation sought in a statement in the order,
becomes final by operation of law, pursuant to Wis.Stat.
On the thirtieth day-November 23, 2016-Anderson requested a
hearing in a letter sent to DFI through certified mail, in
part apologizing "for the late reply on this
matter" and noting that he had been dealing with a major
family health issue. DFI received the request on November 28,
2016. Thereafter, DFI notified Anderson that his request was
denied as untimely because it was received after the
thirty-day period had expired. DFI then entered a final order
adopting the factual and legal allegations that were set
forth in the summary order, including the restitution and
civil penalty obligations. Anderson sought a rehearing, which
DFI denied. Anderson then sought judicial review, which the
circuit court denied. He now appeals.
On appeal from administrative review, we consider the
agency's decision, not that of the circuit court.
Zimbrick v. LIRC, 2000 WI.App. 106, ¶9, 235
Wis.2d 132, 613 N.W.2d 198');">613 N.W.2d 198. "Whether a notice is
sufficient to provide due process presents a question of law,
and our review is therefore de novo." Homeward Bound
Servs., Inc. v. OIC, 2006 WI.App. 208, ¶39, 296
Wis.2d 481, 724 N.W.2d 380.
Anderson asserts that his request for a hearing was timely.
But, he adds, even if it was not, DFI failed to provide him
with constitutionally adequate notice. DFI responds that
Anderson's request was untimely and that its notice
comported with due process because it informed Anderson what
he had to do to request a hearing and preserve his rights.
No one disputes that Anderson was sufficiently apprised of
the fact that he had until November 23, 2016, to request a
hearing. What is less clear from the language of
the notice is when a request for a hearing would be
considered effective. Anderson contends that, absent specific
instructions to the contrary, he complied by sending his
request via certified mail on the thirtieth day. DFI argues
that the notice clearly provided that a request would only
become effective when it was received by DFI. From the
perspective of a reasonable person in Anderson's
position, however, DFI's conclusion is far from obvious.
DFI's argument rests on a multiple-step analysis
involving the language of Wis.Stat. § 551.604(2) and
Wis. Admin. Code § DFI-Sec 8.01 (Sept.
2010), the two provisions cited in the notice.
These provisions read:
An order under sub. (1) is effective on the date of issuance.
Upon issuance of the order, the administrator shall promptly
serve each person subject to the order with a copy of the
order and a notice that the order has been entered. The order
must include a statement of any civil penalty, restitution,
disgorgement, interest, or costs of investigation the
administrator will seek, a statement of the reasons for the
order, and notice that, within 15 days after receipt of a
request in a record from the person, the matter will be
scheduled for a hearing. If a person subject to the order
does not request a hearing and none is ordered by the
administrator within 30 days after the date of service of the
order, the order, including the imposition of a civil penalty
or requirement for payment of restitution, disgorgement,
interest, or the costs of investigation sought in a statement
in the order, becomes final as to that person by operation of
law. If a hearing is requested or ordered, the
administrator, after notice of and opportunity for hearing to
each person subject to the order, may modify or vacate the
order or extend it until final determination.
551.604(2) (emphasis added).
Every request for a hearing shall be in the form of a
petition filed with the division. A petition for a
hearing to review an order shall:
(1) Plainly admit or deny each specific
allegation, finding or conclusion in the order and
incorporated papers. However, if the petitioner lacks
sufficient knowledge or information to permit an admission or
denial, the petition shall so state, and that statement shall
have the effect of a denial; and
(2)State all affirmative defenses.
Affirmative defenses not raised in the request for hearing