P. v. Cole 11/26/03 CA4/1

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: D040475

Case Date: 11/26/2003

Preview:Filed 11/26/03

CERTIFIED FOR PUBLICATION COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

THE PEOPLE, Plaintiff and Appellant, v. JEFFREY A. COLE et al., Defendants and Respondents; PEARLE VISION, INC., et al., Defendants and Appellants.

D040475

(Super. Ct. No. GIC783135)

APPEALS from orders of the Superior Court of San Diego County, J. Richard Haden, Judge. Affirmed in part and reversed in part.

Bill Lockyer, Attorney General, Andrea Lynn Hoch, Chief Assistant Attorney General, Albert Norman Shelden, Robert M. Foster, Susan A. Ruff, Antoinette Cincotta, Jennifer Weck and Diane de Kervor, Deputy Attorneys General, for Plaintiff and Appellant.

Jones, Day, Reavis & Pogue, Jones Day, Thomas R. Malcolm, Richard J. Grabowski, Daniel H. Bromberg, Amar D. Sarwal and Dominick V. Freda for Defendants and Appellants Pearle Vision, Inc., et al., and Defendants and Respondents Jeffrey A. Cole et al.

This action was brought by The People of the State of California against Pearle Vision, Inc. (Pearle), Pearle VisionCare, Inc. (Pearle VisionCare), alleged officers and directors Jeffrey A. Cole, Peggy J. Deal, Joseph Gaglioti, Stephen L. Holden, Dennis C. Osgood, Larry Pollack, David J. Sherriff, and David Stefko (collectively, Management), as well as various related entities and officers and directors.1 The People's complaint charged Pearle, an optician and retailer of eyeglasses; Pearle VisionCare, a provider of optometry services; and Management with violating California law governing the practice of optometry that prohibits opticians and eyeglass retailers from advertising optometric services, forbids opticians and eyeglass retailers from having financial connections with optometrists, and prohibits optometrists from charging a fee for "dispensing" therapeutic drugs. The People filed a motion for preliminary injunction, seeking to enjoin Pearle from advertising eye exams and to enjoin Pearle VisionCare from charging a fee for dilating patients' eyes with eye drops. Management brought a motion to quash service of

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These other entities, officers and directors are not parties to these appeals.

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summons, arguing that they were residents of Ohio who had insufficient contacts with California to support personal jurisdiction over them.2 The court granted Management's motion to quash. The court found that Management lacked minimum contacts with California sufficient for the exercise of jurisdiction over those individuals. The court further found that the alleged violations of California law were the acts of the corporate entities, not Management in their individual capacities. The court made its order without prejudice to the People conducting further discovery to establish facts supporting personal jurisdiction over Management. The court granted the People's request for a preliminary injunction, prohibiting Pearle from disseminating advertising in California that would mislead consumers into believing that it employed optometrists. The order further provided that Pearle could still mention eye examinations, doctors and optometrists in its advertisements as long as they contained a disclaimer that Pearle did not employ optometrists or provide eye exams in California. The court also enjoined Pearle VisionCare from charging a fee for dilating patients' eyes with eye drops. Pearle and Pearle VisionCare appealed from the order granting the preliminary injunction, asserting that (1) the People had not shown a reasonable probability of success on the merits of their claim attacking Pearle's advertising; and (2) they also did not show

2 Other defendants, including Dr. Stanley Pearle and various parent companies of Pearle and Pearle VisionCare, also brought motions to quash. Their motions were denied, and they have not challenged that decision in this appeal. Therefore, we do not address those motions in this decision.

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a reasonable probability of success on their claim again Pearle VisionCare for charging for dilation of patients' eyes. The People also appealed from the court's order granting preliminary injunction, contending that the court (1) failed to rule upon the People's contention that Pearle's advertising was illegal; (2) improperly allowed Pearle to continue to advertise eye exams as long as they provided a disclaimer; (3) issued an order that was ambiguous because it did not specify how it affected Pearle VisionCare's advertisements or whether Pearle VisionCare could charge fees for eye drops if they disguised such fees under another name; and (4) issued an order that did not apply to any successors-in-interest or related parties of Pearle and Pearle VisionCare. The People have also appealed from the order granting Management's motion to quash, asserting that (1) the court improperly considered the merits of their action against Management in granting the motion; (2) the People demonstrated a violation of California law by Management; (3) the People established sufficient minimum contacts to establish personal jurisdiction over Management; and (4) Management waived the right to challenge jurisdiction because they attacked the merits of the People's case. We conclude that the court properly enjoined Pearle's advertising, as it was both illegal and misleading. However, the court erred in allowing Pearle to continue advertising optometric services if it also provided a disclaimer that Pearle VisionCare provided those services. We also conclude that the court erred in enjoining Pearle VisionCare from charging a fee for dilating patients' eyes with eye drops. The People's other objections to the terms of the injunction are unpersuasive. We conclude last that 4

the court did not err in granting Management's motion to quash. Accordingly, the court's order is affirmed in part and reversed in part and the court is ordered to enter a new order consistent with this opinion. FACTUAL AND PROCEDURAL BACKGROUND A. California's Optometry Laws The practice of optometry is highly regulated in California. (California Assn. of Dispensing Opticians v. Pearle Vision Center, Inc. (1983) 143 Cal.App.3d 419, 424 (CADO).) "Optometrists in California are licensed and regulated by the Board [of Optometry]. Optometry is regarded as a learned profession. To become licensed as an optometrist an individual must have at least three years of undergraduate education in a scientific field and four years of optometry school culminating in a doctor of optometry degree. Upon admission to practice optometrists are allowed to correct refractive errors and to detect eye disease. Most optometrists also dispense ophthalmic products consisting of eye glasses and contact lenses." (Ibid.) "In contrast, a registered dispensing optician is licensed by the Division of Allied Health Professions of the Board of Medical Quality Assurance. Dispensing opticians fill prescriptions for glasses or contact lenses from optometrists and ophthalmologists (physicians and surgeons who specialize in eye care and treatment). Dispensing opticians do not examine eyes and dispense ophthalmic goods only on prescription." (CADO, supra, 143 Cal.App.3d at p. 424.) Thus, while an optometrist "may engage in retail sales of eyeglasses and contact lenses, the reverse is not equally true: the eye wear retailer is not allowed to engage in the practice of optometry." (Id. at p. 426.) 5

In this regard, Business and Professions Code section 6553 prevents financial affiliations of any kind between optometrists and opticians or optical retailers: "(a) No person licensed under Chapter 7 (commencing with Section 3000) of this division may have any membership, proprietary interest, coownership, landlord-tenant relationship, or any profitsharing arrangement in any form, directly or indirectly, with any person licensed under Chapter 5.5 (commencing with Section 2550) of this division. [

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