[Cite as Wymsylo v. Bartec, Inc., 132 Ohio St.3d 167, 2012-Ohio-2187.]




    WYMSYLO, DIR., APPELLEE, v. BARTEC, INC., D.B.A. ZENO’S VICTORIAN
        VILLAGE, ET AL., APPELLANTS; DEWINE, ATTY. GEN., APPELLEE.
    [Cite as Wymsylo v. Bartec, Inc., 132 Ohio St.3d 167, 2012-Ohio-2187.]
R.C. Chapter 3734—Smoke Free Workplace Act—Legislation requiring
        proprietors of public places of employment to prevent smoking on
        premises is valid exercise of state’s police power—State’s enforcement of
        legislation against property owners does not constitute regulatory taking
        without just compensation.
    (No. 2011-0019—Submitted October 19, 2011—Decided May 23, 2012.)
               APPEAL from the Court of Appeals for Franklin County,
                           No. 10AP-173, 2010-Ohio-5558.
                                 __________________
                               SYLLABUS OF THE COURT
R.C. Chapter 3794, the Smoke Free Workplace Act, is a valid exercise of the
        state’s police power by Ohio voters and does not amount to a regulatory
        taking.
                                 __________________
        LANZINGER, J.
        {¶ 1} In this case, we are asked to address several constitutional
challenges to the Smoke Free Workplace Act, R.C. Chapter 3794.
                                 I. Factual Background
        {¶ 2} On November 7, 2006, Ohio voters passed a ballot initiative to
enact the Smoke Free Workplace Act (“the Smoke Free Act”). Codified in R.C.
Chapter 3794, the act became effective on December 7, 2006.                      The Ohio
Department of Health (“ODH”) and its designees are charged with the
enforcement of the Smoke Free Act.                R.C. 3794.07.          Subject to certain
                                  SUPREME COURT OF OHIO




exemptions, proprietors of public places of employment are not to permit smoking
in their establishments. R.C. 3794.02(A). Zeno’s Victorian Village is a privately
owned bar in Columbus that has been cited for violations of the act on multiple
occasions.
         {¶ 3} ODH’s director filed a complaint seeking preliminary and
permanent injunctive relief ordering Bartec, Inc., d.b.a. Zeno’s Victorian Village,
and Richard Allen, the CEO and sole shareholder of Bartec, Inc. (collectively,
“appellants”) to comply with the Smoke Free Act and to pay all outstanding fines.
Appellants answered the complaint and admitted receiving nine notices of
violations after investigations had been completed and that a tenth investigation
was pending. They raised the affirmative defenses that R.C. Chapter 3794 is
unconstitutional both on its face and as applied to them and that R.C. Chapter
3794 has been enforced in an unconstitutional manner and in a manner that is
inconsistent with its plain language. Appellants also filed a counterclaim for
declaratory and injunctive relief against ODH and a cross-claim against the Ohio
Attorney General, alleging that the Smoke Free Act operates in violation of
appellants’ constitutional rights under the Ohio Constitution, Article I, Sections 1,
16, 19, and 20, that the act is invalid as applied to them, and that ODH engaged in
rulemaking that exceeds its authority.1


1. The actual relief sought by appellants with respect to their declaratory judgment is somewhat
unclear because the answer/counterclaim/cross-claim filed in the record is missing two pages. The
only part of the request for relief that appears in full is a request for a preliminary and permanent
injunction prohibiting

                  1. Any further unconstitutional or otherwise unlawful enforcement of
         R.C. 3794 and OAC 3701.
                  2. Any further Ohio Attorney General collection efforts against Zeno’s
         and similarly situated proprietors that have been, are, and continue to be issued
         under an unconstitutional and unlawful framework.
                  3. Current Ohio Attorney General collection efforts which, if
         successful, will effectuate the permanent cessation of Zeno’s as a going business
         concern.




                                                 2
                                     January Term, 2012




         {¶ 4} The trial court consolidated the parties’ requests for preliminary
injunction with the trial on the merits. At trial, evidence was presented that
appellants had been cited ten times for violating the Smoke Free Act between July
2007 and September 2009. Eight of the ten violations were not appealed. The
two violations that were appealed were upheld by the Franklin County Court of
Common Pleas. The trial court, however, found that ODH has implemented a
policy of strict liability for violations of the Smoke Free Act by issuing fines
regardless of whether the appellants were actually “permitting” smoking to occur
at Zeno’s. The court observed, “Property owners, however, have no control over
whether someone rips out a cigarette and lights up. Again, the Department of
Health’s interpretation of the Smoke Free Act makes property owners liable for
the actions of third parties upon which the property owner has little to no control.”
The trial court held that this ODH policy of imposing liability without fault was
stricter than R.C. 3794.02 allowed and that ODH had exceeded its authority in
implementing it. The trial court denied ODH’s request for a permanent injunction
and vacated the ten citations.
         {¶ 5} ODH appealed to the Tenth District Court of Appeals, raising three
assignments of error. The first alleged that the trial court failed to apply the plain
language of the Smoke Free Act. The second alleged that the trial court erred


But a fragment of another request for what appears to be declaratory relief reads as follows:

                   3. Relevant policies of the Ohio Department of Health constitute
         unlawful agency policymaking.
                   4. The Ohio Department of Health’s interpretations and applications of
         relevant provisions of R.C. [Chapter] 3794 and OAC [Chapter] 3701 are in
         contravention of the language of the statute drafted and handed down by Ohio’s
         legislative branch of government.
                   5. Ohio Attorney General’s Office collection efforts effectuate a taking
         of property without just compensation.

From appellants’ trial brief, it appears that they were requesting that R.C. Chapter 3794 be
declared unconstitutional as applied to them, that the citations already issued be invalidated, and
that future enforcement against them be enjoined.




                                                 3
                             SUPREME COURT OF OHIO




when it held that ODH had engaged in unlawful rulemaking. The third asserted
that the trial court abused its discretion in denying ODH’s complaint for
injunction. Appellants filed a cross-appeal, arguing that they were entitled to
declaratory and injunctive relief to prohibit further unconstitutional or otherwise
unlawful enforcement of R.C. Chapter 3794 and to prohibit the Ohio Attorney
General from attempting to collect the outstanding fines.
       {¶ 6} The Tenth District reversed the trial court’s judgment. Jackson v.
Bartec, Inc., 10th Dist. No. 10AP-173, 2010-Ohio-5558. The court of appeals
examined R.C. 3794.02 and determined that the plain language of the statute and
related Administrative Code sections required proprietors covered by the Smoke
Free Act to assume some level of responsibility for conduct occurring on their
premises. Id. at ¶ 19. The court of appeals determined that appellants were
challenging ODH’s method of enforcement as applied and that appellants were
therefore required to develop a factual record so that their challenge could be fully
considered on appeal. By not pursuing an administrative hearing and failing to
develop the necessary record, appellants had waived any error.          Id. at ¶ 24.
Because the ten orders finding violations of the Smoke Free Act had become final
orders, the court of appeals held that the trial court should not have heard
appellants’ collateral attack on the enforcement issue and thus erred as a matter of
law in vacating the violations. Id. at ¶ 25. With respect to appellants’ argument
that the Smoke Free Act is unconstitutional on its face, the appellate court relied
on its previous decision in Deer Park Inn v. Ohio Dept. of Health, 185 Ohio
App.3d 524, 2009-Ohio-6836, 924 N.E.2d 898, to hold that the act is
constitutional.
       {¶ 7} After resolving the constitutional issues, the Tenth District
addressed whether ODH was entitled to a permanent injunction. The court stated,




                                         4
                                 January Term, 2012




                On this record, the evidence is overwhelming that Bartec
        repeatedly and intentionally violated the Smoke Free Act, failed to
        comply with its provisions as R.C. 3794.09(D) requires, and in so
        doing exposed patrons and employees to the very harm the statute
        is designed to prevent. Due to the hearing the court conducted and
        the evidence adduced as a result of the hearing, the trial court
        could reach no other conclusion than that ODH is entitled to the
        statutory injunction it requested.


Id. at ¶ 33.
        {¶ 8} Based on its resolutions of ODH’s assignments of error, the Tenth
District overruled appellants’ cross-assignments of error as an impermissible
collateral attack on the final orders of violation.
        {¶ 9} We accepted appellants’ appeal to this court on the following three
propositions of law:
        {¶ 10} 1. “The Health Department’s method of enforcing the smoking
ban violates separation of powers, and must be discontinued.”
        {¶ 11} 2. “Inclusion of bars as proprietors subject to R.C. [Chapter] 3794
exceeds the outer limits of the state police power, and unreasonably extinguishes
property rights.”
        {¶ 12} 3. “Ohio’s declaratory judgment statute enables previously-cited
Ohioans to challenge the constitutionality of a statute or rule.”
        {¶ 13} Because appellants failed to exhaust their administrative remedies
and cannot use declaratory judgment to vacate final orders, we affirm the
judgment of the court of appeals with respect to the ten earlier violations. We
also hold that the Smoke Free Act is a valid exercise of the state’s police power
and does not constitute a taking.




                                             5
                                  SUPREME COURT OF OHIO




                                      II. Legal Analysis
        {¶ 14} R.C. 3794.04 expresses the purpose of the Smoke Free Act passed
by Ohio voters.


                 Because medical studies have conclusively shown that
        exposure to secondhand smoke from tobacco causes illness and
        disease, including lung cancer, heart disease, and respiratory
        illness, smoking in the workplace is a statewide concern and,
        therefore, it is in the best interests of public health that smoking of
        tobacco products be prohibited in public places and places of
        employment and that there be a uniform statewide minimum
        standard to protect workers and the public from the health hazards
        associated with exposure to secondhand smoke from tobacco.
                 The provisions of this chapter shall be liberally construed
         so as to further its purposes of protecting public health and the
         health of employees and shall prevail over any less restrictive state
         or local laws or regulations. Nothing in this chapter shall be
         construed to permit smoking where it is otherwise restricted by
         other laws or regulations.


         {¶ 15} The act also provides that “[n]o proprietor2 of a public place3 or
place of employment4 * * * shall permit smoking in the public place or place of
employment * * *.” (Footnotes added.) R.C. 3794.02(A). Another section states,



2. “ ‘Proprietor’ means an employer, owner, manager, operator, liquor permit holder, or person in
charge or control of a public place or place of employment.” R.C. 3794.01(G).

3. “ ‘Public place’ means an enclosed area to which the public is invited or in which the public is
permitted and that is not a private residence.” R.C. 3794.01(B).




                                                6
                                   January Term, 2012




                 No person shall refuse to immediately discontinue smoking
        in a public place, place of employment, or establishment, facility
        or outdoor area declared nonsmoking [under this chapter] when
        requested to do so by the proprietor or any employee of an
        employer of the public place, place of employment or
        establishment, facility or outdoor area.


R.C. 3794.02(D). Proprietors of public places and places of employment are
required to remove all ashtrays and receptacles used for disposing of smoking
materials and to post at every entrance “no smoking” signs, which shall be
“clearly legible to a person of normal vision throughout the areas they are
intended to mark.” R.C. 3794.06. Only private residences and certain family-
owned and -operated places of employment, retail tobacco shops, outdoor patios,
private clubs, and designated smoking rooms in hotels and nursing homes are
exempt from the reach of the act. R.C. 3794.03.
        {¶ 16} According to the rules promulgated by ODH pursuant to R.C.
3794.04, once a report of violation is received, ODH has two alternatives. It may
dismiss the report if, after construing the allegations as true, it determines that the
report is frivolous, was not made in good faith, or is too old to be reasonably
investigated. Ohio Adm.Code 3701-52-08(C). If it concludes that the report may
have merit, ODH must issue to a proprietor a written notice and copy of the report
of violation and allow for written statements or evidence to contest the report.
Ohio Adm.Code 3701-52-08(D). After the written notice is issued, ODH must


4. “ ‘Place of employment’ means an enclosed area under the direct or indirect control of an
employer that the employer's employees use for work or any other purpose, including but not
limited to, offices, meeting rooms, sales, production and storage areas, restrooms, stairways,
hallways, warehouses, garages, and vehicles. An enclosed area as described herein is a place of
employment without regard to the time of day or the presence of employees.” R.C. 3794.01(C).




                                              7
                            SUPREME COURT OF OHIO




investigate. Ohio Adm.Code 3701-52-08(D)(2). Upon finding a violation, ODH
must provide a proprietor with either a letter of warning if there has been no
finding of violation within the previous two years, or a written proposed finding
of violation and a proposed civil fine. Ohio Adm.Code 3701-52-08(F). The fine
per day for a violation of R.C. 3794.02(A) shall be not less than $100 and not
more than $2,500. R.C. 3794.07(B). The fine shall be doubled for intentional
violations. Id.
       {¶ 17} A proprietor who receives a proposed finding of violation and
proposed civil fine may request an administrative review to present its case and to
confront and cross-examine adverse witnesses.         Ohio Adm.Code 3701-52-
08(F)(2).   The hearing officer must prepare a report and recommendation,
including findings of fact and conclusions of law, to which objections may be
filed. ODH is required to approve, modify, or disapprove the report. Id. An
affected proprietor may appeal a final ODH decision to the Franklin County
Common Pleas Court pursuant to R.C. 119.12. R.C. 3794.09(C).
A. Scope of Appeal
       {¶ 18} Before addressing the merits of appellants’ appeal, we must
determine which issues are properly before this court. The first two propositions
of law assert that ODH’s method of enforcing the Smoke Free Act violates the
separation-of-powers doctrine, exceeds the state’s police power, and constitutes a
taking of property.    The third proposition of law addresses the denial of
appellants’ request for declaratory judgment.
       {¶ 19} With regard to the first two propositions, the Tenth District Court
of Appeals concluded that these arguments were as-applied constitutional
challenges that should have been raised at the administrative level. 2010-Ohio-
5558, ¶ 22-25. Because the court of appeals determined that appellants never
argued an as-applied challenge during the administrative process, it held that the
issues had been waived, and the trial court erred in vacating the violations.




                                        8
                                January Term, 2012




Appellants counter that the issues were properly raised as facial challenges and
that they did not need to exhaust administrative remedies.
       1. The As-Applied v. Facial Constitutional Challenge
       {¶ 20} Like statutes and ordinances, administrative rules may be
constitutionally challenged on their face or as applied. Jones v. Chagrin Falls, 77
Ohio St.3d 456, 674 N.E.2d 1388 (1997). The distinction between the two types
of constitutional challenges is important. For example, the standard of proof
depends upon which type of challenge is being made. See State ex rel. Ohio
Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio St.3d 568, 2006-
Ohio-5512, 857 N.E.2d 1148, ¶ 21 (a facial constitutional challenge requires
proof beyond a reasonable doubt, whereas an as-applied challenge requires clear
and convincing evidence). More relevant to this case, however, is that parties
advancing an as-applied challenge must raise that challenge at the first available
opportunity, and failure to do so results in waiver. They need not do so if arguing
a facial challenge. South-Western City Schools Bd. of Edn. v. Kinney, 24 Ohio
St.3d 184, 494 N.E.2d 1109 (1986), syllabus; Reading v. Pub. Util. Comm., 109
Ohio St.3d 193, 2006-Ohio-2181, 846 N.E.2d 840, ¶ 16 (facial constitutional
challenge may be raised for the first time in appeal from administrative agency,
but as-applied constitutional challenge must be raised first in the agency to allow
the parties to develop an evidentiary record).
       {¶ 21} A facial challenge alleges that a statute, ordinance, or
administrative rule, on its face and under all circumstances, has no rational
relationship to a legitimate governmental purpose.           Jaylin Invests., Inc. v.
Moreland Hills, 107 Ohio St.3d 339, 2006-Ohio-4, 839 N.E.2d 903, ¶ 11. Facial
challenges to the constitutionality of a statute are the most difficult to mount
successfully, since the challenger must establish that no set of circumstances
exists under which the act would be valid. United States v. Salerno, 481 U.S.
739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987). If a statute is unconstitutional



                                         9
                              SUPREME COURT OF OHIO




on its face, the statute may not be enforced under any circumstances. When
determining whether a law is facially invalid, a court must be careful not to
exceed the statute’s actual language and speculate about hypothetical or
imaginary cases.    Washington State Grange v. Washington State Republican
Party, 552 U.S. 442, 450, 128 S.Ct. 1184, 170 L.Ed.2d 151 (2008). Reference to
extrinsic facts is not required to resolve a facial challenge. Reading at ¶ 15.
       {¶ 22} A party raising an as-applied constitutional challenge, on the other
hand, alleges that “the ‘application of the statute in the particular context in which
he has acted, or in which he proposes to act, would be unconstitutional. The
practical effect of holding a statute unconstitutional “as applied” is to prevent its
future application in a similar context, but not to render it utterly inoperative.’ ”
Yajnik v. Akron Dept. of Health, Hous. Div., 101 Ohio St.3d 106, 2004-Ohio-357,
802 N.E.2d 632, ¶ 14, quoting Ada v. Guam Soc. of Obstetricians &
Gynecologists, 506 U.S. 1011, 113 S.Ct. 633, 121 L.Ed.2d 564 (1992) (Scalia, J.,
dissenting). Because an as-applied challenge depends upon a particular set of
facts, this type of constitutional challenge to a rule must be raised before the
administrative agency to develop the necessary factual record. Reading at ¶ 13.
       2. Appellants’ Separation-of-Powers Proposition—An As-Applied
       Constitutional Challenge
       {¶ 23} In their first proposition of law, appellants allege that ODH’s
method of enforcing the smoking ban violates the separation of powers and is
therefore unconstitutional.    They argue that this is a facial challenge.        We
disagree.
       {¶ 24} R.C. 3794.02(A) provides that no proprietor shall permit smoking
in a public place or place of employment. In accordance with that statutory
provision, ODH adopted Ohio Adm.Code 3701-52-02(B), requiring a proprietor
to take “reasonable steps including, but not limited to, requesting individuals to
cease smoking, to ensure that tobacco smoke, in an area directly or indirectly




                                         10
                                 January Term, 2012




under the control of the proprietor, does not enter any area in which smoking is
prohibited.”     Appellants contend that ODH, in its efforts to enforce this
regulation, has adopted an unwritten policy of strict liability. In other words, if an
investigator sees smoking in a public place or place of employment covered by
the Smoke Free Act, the proprietor is automatically charged with violating R.C.
3794.02 regardless of the steps the proprietor has taken to comply with the act.
Appellants contend that the adoption of a policy of strict liability exceeds the
statutory authority granted to ODH, thereby usurping the legislative function and
violating the separation of powers.
         {¶ 25} The resolution of this proposition, however, depends upon the
particular set of facts and circumstances surrounding each of the ten separate
violations.    Due to the unwritten nature of the alleged strict-liability policy,
extrinsic evidence is required to prove that the policy existed and that ODH
investigators implemented it when conducting their investigations into the ten
complaints. Thus, appellants are raising an as-applied challenge on separation-of-
powers grounds.
         {¶ 26} Nevertheless, we agree with the court of appeals that the trial court
should not have entertained this as-applied challenge to the ten past violations.
Appellants had the opportunity to request an administrative hearing in which they
could have developed a record to show that ODH’s investigators used a strict-
liability approach. See Ohio Adm.Code 3701-52-08(F) and (G); R.C. 3794.09.
Because appellants failed to request an administrative hearing for eight of their
violations and because they failed to prosecute the two administrative appeals
they did request, appellants did not raise any constitutional challenge regarding
any of its ten violations.        Therefore, appellants failed to exhaust their
administrative remedies, and this constitutional issue is not properly before the
court.




                                          11
                                 SUPREME COURT OF OHIO




          3.      Appellants’ Police-Power and Takings Proposition—An As-
          Applied Constitutional Challenge
          {¶ 27} In their second proposition of law, appellants assert that their
inclusion as proprietors subject to the Smoke Free Act exceeds the outer limits of
the state’s police power and unreasonably extinguishes property rights.
Additionally, they argue that prohibiting smoking in an adults-only liquor-
licensed establishment, such as Zeno’s, is unduly oppressive and amounts to a
taking.        It is clear that this is an as-applied challenge.   Appellants are not
contending that there is no set of circumstances under which the Smoke Free Act
would be valid.         Again, appellants are contending that, as applied to their
particular circumstances, R.C. 3794.02 is unfair and unconstitutional.
          {¶ 28} Appellants acknowledge that this second proposition of law raises
an as-applied challenge but nonetheless urge this court to adopt their arguments
and invalidate the ten violations.          However, as discussed above, because
appellants did not raise this as-applied constitutional challenge in an
administrative review, they failed to exhaust their administrative remedies, and
this challenge is not properly before the court.
B. Declaratory Judgment—Collateral Attack or Alternate Remedy
          {¶ 29} In response to ODH’s complaint, appellants filed a counterclaim
and cross-claim requesting declaratory judgment. The Tenth District held that the
declaratory judgment was an as-applied challenge to the Smoke Free Act and was
an improper means to collaterally attack the ten final orders finding violations.
2010-Ohio-5558, ¶ 36. Appellants argue that the appellate court interpreted their
request for relief as addressing only the past ten violations. Appellants contend
that this characterization ignored the prospective aspect of their request for
declaratory relief, i.e., their request to prevent ODH from continuing to apply its
unwritten policy of strict liability.




                                            12
                                January Term, 2012




       {¶ 30} Declaratory judgment is available to challenge the constitutionality
of an administrative rule or policy. Karches v. Cincinnati, 38 Ohio St.3d 12, 526
N.E.2d 1350 (1988).        But it may not be used to review administrative
proceedings. Driscoll v. Austintown Assoc., 42 Ohio St.2d 263, 271, 328 N.E.2d
395 (1975) (“the declaratory judgment action is independent from the
administrative proceedings; it is not a review of the final administrative order”).
       {¶ 31} The three essential elements for declaratory relief are that (1) a real
controversy exists between the parties, (2) the controversy is justiciable in
character, and (3) speedy relief is necessary to preserve the rights of the parties.
Burger Brewing Co. v. Liquor Control Comm., 34 Ohio St.2d 93, 97, 296 N.E.2d
261 (1973), citing Am. Life & Acc. Ins. Co. v. Jones, 152 Ohio St. 287, 296, 89
N.E.2d 301 (1949).
       {¶ 32} Although the existence of another adequate remedy does not
preclude an action for declaratory judgment, Civ.R. 57, we have also indicated
that a party must exhaust an available administrative remedy before instituting a
declaratory judgment action challenging the constitutionality of an administrative
regulation as applied. Driscoll at 273-274. We further stated,


                 This court has recognized at least two situations in which
       exhaustion of administrative remedies is not required prior to filing
       a declaratory judgment action challenging the constitutionality of
       zoning.     One, of course, is the situation in which there is no
       administrative remedy available which could provide the relief
       sought. Kaufman v. Newburgh Heights, [26 Ohio St.2d 217, 271
       N.E.2d 280 (1971)].       The other is the situation in which the
       administrative remedy is unnecessarily onerous. Burt Realty Corp.
       v. Columbus, [21 Ohio St.2d 265, 257 N.E.2d 355 (1970)].




                                         13
                             SUPREME COURT OF OHIO




Driscoll at 275.
       1. The Ten Orders Finding Violations Are Final
       {¶ 33} Appellants argue that an administrative appeal would have been
futile and costly, and therefore they were not required to exhaust their
administrative remedies before seeking a declaratory judgment on the
constitutionality of the Smoke Free Act. But nothing in the record suggests that
the administrative process under the Smoke Free Act is unduly burdensome or
costly. The act provides proprietors, like appellants, several opportunities to
contest a reported violation. A proprietor may submit a written statement or
evidence after receiving a written notice of an alleged violation. Ohio Adm.Code
3701-52-08(F).     During an on-site visit by an investigator, a proprietor may
demonstrate compliance with the act. A sanitary and program administrator for
ODH testified that if no violations are observed during the investigation, the
complaint against the proprietor would be dismissed. If the investigation results
in proposed findings of violation and a civil fine, a proprietor will be afforded the
opportunity to submit additional evidence. Ohio Adm.Code 3701-52-08(F)(1).
Certain repeat violators will be afforded the opportunity to request administrative
review of the proposed findings, during which they may present evidence and
cross-examine witnesses. Ohio Adm.Code 3701-52-08(F)(2) and (F)(2)(a)(iv). If
the hearing report goes against the proprietor, the proprietor may object to ODH.
Ohio Adm.Code 3701-52-08(F)(2)(a)(vi). At any of these stages, given a proper
challenge to the method of enforcing R.C. 3794.02, ODH could have found that
there was insufficient evidence of a violation and dismissed the complaints
against appellants. Therefore, an administrative remedy was available.
       {¶ 34} Appellants also argue that pursuant to Johnson’s Island, Inc. v.
Danbury Twp. Bd. of Trustees, 69 Ohio St.2d 241, 431 N.E.2d 672 (1982),
exhaustion of administrative remedies is not required when the constitutionality of
a statute is raised as a defense in a proceeding brought to enforce the statute.




                                         14
                                  January Term, 2012




However, the original enforcement of the Smoke Free Act against appellants
occurred when the Columbus City Health Department, ODH’s designee, issued
the ten proposed findings of violation and civil fine. These orders became final
when they were not challenged on appeal, and the time for appeal has passed.
Collateral attacks of final judgments are disfavored and succeed only in limited
situations—fraud or lack of jurisdiction.            Ohio Pyro, Inc. v. Ohio Dept. of
Commerce, 115 Ohio St.3d 375, 2007-Ohio-5024, 875 N.E.2d 550, ¶ 22-23.
Because appellants do not argue either fraud or lack of jurisdiction, their attempt
to invalidate the ten violations through a declaratory judgment action is an
improper collateral attack.
          2. Future Application of Smoke Free Act to Zeno’s
          {¶ 35} Although appellants are foreclosed from challenging the violations
already      issued,   we     agree    with        appellants   that   their   declaratory
judgment/injunction action also sought to prevent future enforcement of the
Smoke Free Act. Appellants raised an as-applied challenge and, therefore, must
prove by clear and convincing evidence that future enforcement of the act would
violate their constitutional rights.
          {¶ 36} As an initial matter, we note that the Smoke Free Act was passed
as a ballot initiative by Ohio voters. The Ohio Constitution, Article II, Section 1,
provides,


                 The legislative power of the state shall be vested in a
          general assembly consisting of a senate and house of
          representatives but the people reserve to themselves the power to
          propose to the general assembly laws and amendments to the
          constitution, and to adopt or reject the same at the polls on a
          referendum vote as hereinafter provided. * * * The limitations
          expressed in the constitution, on the power of the general assembly



                                              15
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        to enact laws, shall be deemed limitations on the power of the
        people to enact laws.


        {¶ 37} Therefore, the same constitutional challenges that would invalidate
legislation enacted by the General Assembly would also invalidate laws passed by
ballot initiative.
                 a. Unlawful Enforcement of the Smoke Free Act
        {¶ 38} In their counterclaim, appellants requested that ODH be enjoined
from unlawful enforcement of R.C. Chapter 3794. Specifically, they contended
that ODH’s policy of strict liability—where there’s smoke, there’s a violation—
exceeds the authority R.C. Chapter 3794 grants to ODH.
        {¶ 39} A rule adopted by an administrative agency is “valid and
enforceable unless unreasonable or in conflict with the statutory enactment
covering the same subject matter.” Amoco Oil Co. v. Petroleum Underground
Storage Tank Release Comp. Bd., 89 Ohio St.3d 477, 484, 733 N.E.2d 592
(2000). In this respect, “an administrative rule cannot add [to] or subtract from
the legislative enactment.” Id.
        {¶ 40} In ruling in favor of appellants, the trial court found that the
following facts had been brought forward at trial:


        (1) The Department of Health has in the past implemented a policy
        of strict liability for violations of the SmokeFree Act in regards to
        property owners such as [appellants]; (2) In the case of
        [appellants,] the Department of Health implemented this policy
        and cited [appellants] for violations of the SmokeFree Act without
        regard to whether [appellants] were actually permitting smoking to
        occur on the premises of Zeno’s; (3) If a complaint was filed and
        the Department of Health found someone smoking at Zeno’s,




                                         16
                               January Term, 2012




       [appellants] were fined; (4) The Department of Health has never
       once fined an individual for smoking in a public place; and (5)
       [appellants] posted “no smoking” signs in Zeno’s, removed all
       ashtrays from Zeno’s, and would regularly ask patrons who were
       smoking on the premises to put out their cigarette or take it
       outside.


       {¶ 41} The trial court’s first finding may have been based in part on the
Tenth District’s decision in Pour House, Inc. v. Ohio Dept. of Health, 185 Ohio
App.3d 680, 2009-Ohio-5475, 925 N.E.2d 621 (10th Dist.). In that case, a bar in
Toledo had been cited by the Toledo-Lucas County Health Department for
violating the Smoke Free Act.       The hearing examiner concluded that the
proprietor’s evidence of good-faith efforts to comply with the act, though
credible, was unavailing, because R.C. 3794.02 imposes strict liability. The court
of appeals in Pour House stated,


       The question before us is the meaning of the phrase “permit
       smoking” [in R.C. 3794.02(A)]. Does this phrase mean that the
       statute is violated if smoking occurs in a prohibited place,
       regardless of the measures taken by the proprietor to prevent it?
       Or does this phrase mean that the statute is violated only if the
       proprietor affirmatively allows smoking in a prohibited place, or
       implicitly allows smoking by failing to take reasonable measures
       to prevent it?


Id. at ¶ 15. The appellate court determined that a violation of R.C. 3794.02(A)
occurs only when the proprietor permits smoking. “A proprietor permits smoking
when the proprietor affirmatively allows smoking or implicitly allows smoking by



                                       17
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failing to take reasonable measures to prevent patrons from smoking * * *.” Id. at
¶ 18.
        {¶ 42} In Pour House, ODH had argued that once it proved that smoking
had occurred, the burden shifted to the proprietor to prove that it had not
permitted smoking.        The Tenth District rejected that argument, stating,
“Permitting smoking is an element of the smoking violation; the opposite is not an
affirmative defense.” Id. at ¶ 20. The appellate court remanded the case to the
Franklin County Court of Common Pleas with instructions to remand to the
hearing examiner to determine whether the bar had violated the Smoke Free Act.
Id. at ¶ 22.
        {¶ 43} The Tenth District’s decision in Pour House, however, does not
establish that ODH has engaged in a widespread policy of strict liability in
investigating and citing proprietors for violations of the Smoke Free Act. Nor
does the evidence in this case, contrary to the trial court’s finding.
        {¶ 44} A sanitary and program administrator for ODH testified that the
determination of whether a proprietor is permitting smoking is conducted on a
case-by-case basis.     Appellants’ main contention is that investigators never
inquired of appellants’ employees whether they had taken steps to prevent
smoking in prohibited areas. The smoking enforcement coordinator for the city of
Columbus, however, testified that when he observed a patron smoking at Zeno’s,
he would on occasion speak with the employees and that none had told him that
they had asked the patron to stop smoking.
        {¶ 45} Substantial evidence exists that appellants at least implicitly
permitted smoking. For instance, on August 6, 2007, a Columbus City Health
Department investigator witnessed two people smoking at Zeno’s and observed
cigarette butts in plastic cups filled halfway with water. On November 29, 2007,
another investigator found multiple Zeno’s patrons who were smoking and who
were using partially filled plastic cups as ashtrays. Although appellant Richard




                                          18
                                 January Term, 2012




Allen was present at the time, the investigator did not witness him addressing any
of the smoking patrons. On November 6, 2008, a third investigator witnessed at
least eight patrons smoking and using small plastic cups as ashtrays.
        {¶ 46} The trial court also ignored the fact that appellants were cited nine
times for allowing ashtrays to be present. Although the “ashtrays” used were
plastic cups filled with water, R.C. 3794.06(B) requires proprietors to remove all
ashtrays and “other receptacles used for disposing of smoking materials” from
any area where smoking is prohibited.
        {¶ 47} Finally, in eight of the violations, the investigator determined that
the violation was intentional and doubled the fine. The court of appeals agreed:


                On this record, the evidence is overwhelming that Bartec
        repeatedly and intentionally violated the Smoke Free Act, failed to
        comply with its provisions as R.C. 3794.09(D) requires, and in so
        doing exposed patrons and employees to the very harm the statute
        is designed to prevent. Due to the hearing the court conducted and
        the evidence adduced as a result of the hearing, the trial court
        could reach no other conclusion.


Jackson, 2010-Ohio-5558, at ¶ 33.
        {¶ 48} We therefore conclude that appellants have failed to establish that
appellants will be subject to an unlawful policy of strict liability.
                b. The Smoke Free Act Does Not Unreasonably
                Interfere with Property Rights or Amount to a Taking
        {¶ 49} The Ohio Constitution, Article I, Section 19, provides, “Private
property shall ever be held inviolate, but subservient to the public welfare.”
Appellants present a two-fold argument that the inclusion of Zeno’s within the
Smoke Free Act is unconstitutional. First, they contend that the act exceeds the



                                           19
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limits of the state’s police powers. Second, appellants argue that the act amounts
to a taking without compensation. We disagree with both arguments.
                1. Valid Exercise of Police Power
         {¶ 50} The fundamental nature of property rights in Ohio was recently
reaffirmed.    Norwood v. Horney, 110 Ohio St.3d 353, 2006-Ohio-3799, 853
N.E.2d 1115, ¶ 38. But it has also long been established that the guarantees of the
Ohio Constitution are subject to a reasonable, nonarbitrary exercise of the police
power of the state or municipality, when exercised in the interest of public health,
safety, morals, or welfare. Yajnik, 101 Ohio St.3d 106, 2004-Ohio-357, 802
N.E.2d 632, ¶ 16. In Olds v. Klotz, 131 Ohio St. 447, 3 N.E.2d 371 (1936), we
noted,


         The exercise of the police power is inherent in government and
         essential to its existence and inevitably comes into conflict with the
         constitutional guaranties of the right of property and liberty of
         contract. In each case presented the court must draw the line of
         demarcation. Courts do not attempt to define police power with
         exactness, and inevitably the individual case must stand upon its
         own footing.


Id. at 451. Whether a statute is “truly in the public welfare within the meaning of
Section 19, and thus superior to private property rights, [the] legislation must be
reasonable, not arbitrary, and must confer upon the public a benefit commensurate
with its burdens upon private property.” Direct Plumbing Supply Co. v. Dayton,
138 Ohio St. 540, 546, 38 N.E.2d 70 (1941). A court will not invalidate the
judgment of the General Assembly as to whether an exercise of the police power
bears a real and substantial relation to the public health, safety, morals, or general
welfare of the public unless that judgment appears to be clearly erroneous.




                                          20
                                January Term, 2012




Benjamin v. Columbus, 167 Ohio St. 103, 146 N.E.2d 854 (1957), paragraph six
of the syllabus. We believe that the same holds true for legislation passed by
Ohio voters pursuant to a ballot initiative.
       {¶ 51} We have previously stated that the General Assembly has the
authority to enact a public-smoking ban. D.A.B.E., Inc. v. Toledo-Lucas Cty. Bd.
of Health, 96 Ohio St.3d 250, 2002-Ohio-4172, 773 N.E.2d 536, ¶ 54 (“Within its
constitutional grant of powers, the General Assembly possesses both the authority
to enact smoking legislation such as the regulation at issue and the prerogative to
delegate that authority to local boards of health”). Although the Smoke Free Act
was ultimately passed pursuant to a ballot initiative, the voters of Ohio also have a
legitimate purpose in protecting the general welfare and health of Ohio citizens
and the workforce from the dangers of secondhand smoke in enclosed public
places. By requiring that proprietors of public places and places of employment
take reasonable steps to prevent smoking on their premises by posting “no
smoking” signs, removing ashtrays, and requesting patrons to stop smoking, the
act is rationally related to its stated objective. Although appellants complain that
the Smoke Free Act is not being enforced against actual smokers themselves, the
evidence establishes that ODH has not received a complaint against an individual
smoker. The trial court may have also questioned how much a property owner
can do, but the evidence also establishes that during their on-site visits, the
investigators did not witness appellants or their employees asking patrons to stop
smoking or removing the makeshift ashtrays being used. It is not unreasonable or
arbitrary to hold responsible the proprietors of public places and places of
employment for their failure to comply with the Smoke Free Act.
       {¶ 52} Appellants would have us limit the police power to simply abating
public nuisances. Although the “state may use its police power to enjoin a
property owner from activities akin to public nuisances without offending either
the Due Process or Takings Clause,” State ex rel. Pizza v. Rezcallah, 84 Ohio



                                          21
                                 SUPREME COURT OF OHIO




St.3d 116, 125, 702 N.E.2d 81 (1998), we have not expressly limited the police
power to nuisance and decline to do so.


                 “The police power is inherent in sovereignty; and its
        exercise is justified by the necessity of the occasion. Its foundation
        is the right and duty of the government to provide for the common
        welfare of the governed. It is tersely expressed in the maxim,
        ‘salus populi suprema lex.’5 While, therefore, a broad discretion is
        given to the Legislature to provide for the general welfare, it
        necessarily is not an arbitrary or unlimited discretion * * *.”


(Footnote added.) State v. Martin, 168 Ohio St. 37, 40, 151 N.E.2d 7 (1958),
quoting State v. Boone, 84 Ohio St. 346, 351, 95 N.E. 924 (1911). In R.C.
3794.04, the state declared the necessity for regulating smoking in public places
and places of employment. Our review of the act leads us to conclude that it is
neither unduly oppressive nor arbitrary in its restrictions.                 Appellants’ own
witness testified that most patrons who are asked to stop smoking readily do so.
        {¶ 53} We therefore hold that the Smoke Free Act is a valid exercise of
the state’s police power by Ohio’s voters.
                 2. The Smoke Free Act Does Not Amount to a Taking
        {¶ 54} Appellants contend that the Smoke Free Act is unconstitutional
because it effects a regulatory taking without just compensation. Specifically,
appellants argue that R.C. Chapter 3794 confiscates a proprietor’s control over its
indoor air. But the standard to be used depends on the type of regulatory taking
involved:



5. This phrase has been translated as “[t]he safety of the people is the supreme law.” Black’s Law
Dictionary 1870 (9th Ed.2009).




                                               22
                               January Term, 2012




               Two types of regulatory actions will be deemed to be per se
       takings for Fifth Amendment purposes: first, those government
       actions that cause an owner to suffer a permanent physical invasion
       of property, see Loretto v. Teleprompter Manhattan CATV Corp.
       (1982), 458 U.S. 419, 435-440, 102 S.Ct. 3164, 73 L.Ed.2d 868
       (state law requiring landlords to permit cable companies to install
       cable facilities in apartment buildings effected a taking); and
       second, government regulations that completely deprive an owner
       of “all economically beneficial uses” of the property. (Emphasis
       sic.) Lucas v. South Carolina Coastal Council (1992), 505 U.S.
       1003, 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798. A Lucas taking is
       also known as a categorical, or total, taking, and in such a case, the
       government must pay just compensation for the total property
       taken except to the extent that “background principles of nuisance
       and property law” independently restrict the owner's intended use
       of the property.    Id. at 1030. “ ‘Outside these two relatively
       narrow categories (and the special context of land-use exactions
       * * *), regulatory takings challenges are governed by the standards
       set forth in Penn Cent. Transp. Co. v. New York City, 438 U.S.
       104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).’ ” Lingle v. Chevron
       U.S.A., Inc. (2005), 544 U.S. 528, 538, 125 S.Ct. 2074, 161
       L.Ed.2d 876.


(Footnote omitted.) State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of
Commrs., 115 Ohio St.3d 337, 2007-Ohio-5022, 875 N.E.2d 59, ¶ 18. Because
there is no physical invasion of appellants’ property and there is no claim that the
Smoke Free Act deprives appellants of all economically beneficial uses of their




                                        23
                              SUPREME COURT OF OHIO




property, the only possible taking involved is a partial regulatory taking under
Penn Cent.
       {¶ 55} With a Penn Cent. regulatory taking, a court engages in a factual
inquiry of the following three factors: “(1) the economic impact of the regulation
on the claimant, (2) the extent to which the regulation has interfered with distinct
investment-backed expectations, and (3) the character of the governmental
action.” Shelly Materials at ¶ 19, citing Penn Cent., 438 U.S. at 124, 98 S.Ct.
2646, 57 L.Ed.2d 631.
       {¶ 56} Appellants submitted evidence that their gross sales declined in
2009, but the Smoke Free Act became effective in December 2006, and in 2007
and 2008, appellants’ gross sales actually increased. Furthermore, Columbus’s
smoking ban, found at Columbus Code of Ordinances Chapter 715, is very similar
to R.C. Chapter 3794 and went into effect in January 2005. Still, appellants’
gross sales increased in 2005 and 2006.         Thus, appellants have failed to
demonstrate that the Smoke Free Act has had a significant economic impact on
their business.
       {¶ 57} The second and third factors also do not support finding a taking in
this case. As the United States Supreme Court noted in Penn Cent.:


                  “Government hardly could go on if to some extent values
       incident to property could not be diminished without paying for
       every such change in the general law,” Pennsylvania Coal Co. v.
       Mahon, 260 U.S. 393, 413 [43 S.Ct. 158, 67 L.Ed. 322] (1922),
       and this Court has accordingly recognized, in a wide variety of
       contexts, that government may execute laws or programs that
       adversely affect recognized economic values. Exercises of the
       taxing power are one obvious example. A second are the decisions
       in which this Court has dismissed “taking” challenges on the




                                         24
                                 January Term, 2012




          ground that, while the challenged government action caused
          economic harm, it did not interfere with interests that were
          sufficiently bound up with the reasonable expectations of the
          claimant to constitute “property” for Fifth Amendment purposes.


Penn Cent. at 124-125. The “taking” of appellants’ indoor air space is not the
type of taking contemplated by either the Fifth Amendment to the United States
Constitution or the Ohio Constitution, Article I, Section 19. Appellants have also
failed to demonstrate that the Smoke Free Act interfered with a distinct
investment-backed expectation. The goal of this legislation is to protect the
health of the workers and other citizens of Ohio. R.C. 3794.04. It does so by
regulating proprietors of public places and places of employment in a minimally
invasive way. We therefore hold that the Smoke Free Act does not constitute a
taking.
                                   III. Conclusion
          {¶ 58} Because appellants failed to exhaust their administrative remedies
and may not use declaratory judgment as a collateral attack on a final judgment,
the ten previous violations of the Smoke Free Act are res judicata. We also hold
that the Smoke Free Act is a valid exercise of the state’s police power by Ohio
voters and does not amount to a regulatory taking. The judgment of the court of
appeals is affirmed.
                                                               Judgment affirmed.
          O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, CUPP, and MCGEE
BROWN, JJ., concur.
          O’DONNELL, J., concurs in judgment only.
                               __________________
          Michael DeWine, Attorney General, Alexandra T. Schimmer, Solicitor
General, Elisabeth A. Long, Deputy Solicitor, and Stacy Hannan, Robert



                                         25
                           SUPREME COURT OF OHIO




Moormann, and Angela M. Sullivan, Assistant Attorneys General, for appellees
Theodore E. Wymsylo and Michael DeWine.
       Maurice A. Thompson, for appellants.
       Law Office of Joseph C. Lucas, L.L.C., and Tyler W. Kahler, urging
reversal for amici curiae Ohio Licensed Beverage Association, Buckeye Liquor
Permit Holders Association, and Dr. Michael L. Marlow.
       Finney, Stagnaro, Saba & Patterson Co., L.P.A., and Christopher P.
Finney; and Law Firm of Curt C. Hartman and Curt C. Hartman, urging reversal
for amici curiae Ohio Liberty Council, Ohio Freedom Alliance, and Coalition
Opposed to Additional Spending & Taxes.
       Ron O’Brien, Franklin County Prosecuting Attorney, and Tracie M. Boyd,
Assistant Prosecuting Attorney, urging affirmance for amicus curiae Franklin
County District Board of Health.
       McTigue & McGinnis, L.L.C., Donald J. McTigue, Mark A. McGinnis,
and J. Corey Colombo, urging affirmance for amici curiae American Cancer
Society, East Central Division; American Cancer Society Cancer Action Network;
Academy of Medicine of Cleveland & Northern Ohio; American Heart
Association, Great Rivers Affiliate; American Lung Association of the Midland
States; American Medical Association; Americans for Nonsmokers’ Rights;
Association of Ohio Health Commissioners, Inc.; Campaign for Tobacco-Free
Kids; Cleveland Clinic; Ohio Asthma Coalition; Ohio Chapter of the American
College of Cardiology; Ohio Osteopathic Association; Ohio State Medical
Association; and Tobacco Control Legal Consortium.
                          ______________________




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