LITIGATION BACKGROUNDER

Mississippi Mapping

Mississippi Regulatory Board Sues Tech Entrepreneurs to Prevent Competition

When a bank accepts a piece of property as collateral for a loan, underwriting principles require the bank to have a survey performed if the property is large and expensive. But for smaller, less expensive properties, conducting a survey is not required because it is not financially feasible.

Mississippi entrepreneurs Brent Melton and Scott Dow founded the innovative startup Vizaline, LLC, to provide banks—especially small community banks—with a cost effective way to assess these small property assets within their portfolios. In 2017, however, the Mississippi Board of Licensure for Professional Engineers and Surveyors sued the company, claiming it was practicing unlicensed surveying even though it was simply using public information to draw maps on a computer.

All new business ventures must overcome challenges. But Vizaline is facing the wrath of a powerful regulatory board made up of professional engineers and surveyors who want to protect themselves from competition and who want to drive Vizaline out of Mississippi and out of business. Vizaline uses new and innovative technologies that have nothing to with traditional land surveying through measurements in the field. Nevertheless, the self-serving Board is trying to use vague, broad statutes to define Vizaline’s business as “unlicensed surveying.”

The Board’s expansive regulatory theory would allow it to shut down Google Maps, Zillow and other map-based apps. This is akin to having buggy-whip manufacturers regulate the automobile industry. With help from the Institute for Justice, Brent, Scott and Vizaline are fighting back to protect their First Amendment right to generate and disseminate information to advise their clients. Simply put, it is not the government’s place to squelch this speech and entrepreneurial opportunity, yet that is exactly what is happening in this case.

Vizaline Provides an Innovative, Valuable Service to Customers

When banks take on a piece of property as collateral for a loan, underwriting principles require the bank to have a survey performed on large and expensive properties. But for smaller, less expensive properties, conducting a survey is not required or financially feasible. The more information banks have about their properties, the better. Less uncertainty means safer loans, safer banks and safer customers.

Brent wanted to offer the banks something much easier to comprehend than legal property descriptions. He wanted to help banks “see” the properties without having to commission pricey surveys.

As the information age brought new and powerful digital geospatial and visualization tools, Brent realized his idea had potential. After retiring, he decided to bring his idea to fruition. Through the Mississippi Enterprise for Technology, Brent pitched his concept to a group of technology entrepreneurs at the Stennis Space Center in Mississippi. There, he met his future business partner, Scott Dow.

Scott has a background in business, technology and entrepreneurship. He started his own computer networking company while still in college. He spent years managing IT networks for a variety of customers. And more than 20 years ago, he co-founded a company that conducts remote sensing—using helicopter-mounted cameras and lasers—to create 3D maps. Scott’s expertise in remote sensing and geospatial modeling led him to work on projects with electric utilities, the military and the Defense Advanced Research Projects Agency.

Vizaline brought its first product—“Viza-plat”—to market in April 2014, calling it a “New Way to Visualize Your Legal Descriptions.”

What Vizaline does is straightforward. It takes the publicly-available legal description of a bank’s property, plugs it into a computer program, generates a line drawing of the property description and overlays those drawings onto satellite photographs. Vizaline compiles the resulting images into an advisory report for the bank, flagging any apparent errors or discrepancies in the legal descriptions (such as when a described property has borders that do not connect). This provides the bank with the ability to easily visualize its property assets, as well as identify issues that should be corrected with a formal survey or with the help of attorneys.

Already, Vizaline is expanding. They employ six people in Mississippi and work with more than 30 banks in five states. Banks from another 20 states have expressed interest in their product. But the future of this Mississippi-founded and Mississippi-based tech startup is threatened by the Mississippi Board of Licensure for Professional Engineers and Surveyors, simply because the Board members would rather not deal with a little competition.

Mississippi Board of Licensure for Professional Engineers and Surveyors Sues to Shut Down—and Bankrupt—Vizaline and Brent.

It did not take long for the Board to take notice of Vizaline. In a May 2015 meeting, the Board called on Vizaline to revise its website and make clear that Vizaline’s work product is not intended to be used as a survey. Vizaline immediately complied with the Board’s demand.

The Board, however, still wasn’t happy that, in its view, Vizaline was encroaching on their cartel. But the Board doesn’t have the legal authority to stop a business simply because it might present fair market competition for board members, so it chose to adopt an interpretation of Mississippi’s surveyor licensing laws that is so broad, it would cover anyone who uses data to superimpose points and lines on satellite images. Google Maps, Uber, Zillow or anyone who describes the Earth in any way would be in violation. Although Vizaline has never once conducted a single survey, in February 2016 the Board elected to sue Vizaline and Brent for engaging in the “unlicensed practice of surveying.”

The Board’s lawsuit seeks to permanently stop Vizaline from operating in Mississippi and “immediately disgorge themselves” of all fees and compensation earned in the state. That is, the government wants to force Vizaline and Brent to repay its customers every dollar it has ever earned in Mississippi, even though Vizaline’s customers have never complained about Vizaline, continue to be satisfied, and want to employ Vizaline’s services in the future.

The Board’s lawsuit against Vizaline, if successful, would not only force the tech startup out of the state, it could bankrupt the company.

The First Amendment Protects Vizaline’s Speech                 

The lawsuit that the Board filed against Vizaline and Brent is a violation of the First Amendment. That is why Brent, Scott and Vizaline have teamed up with the Institute for Justice to defend their free speech rights and to stop the Board’s self-serving and anticompetitive actions.

A series of U.S. Supreme Court cases decided in just the past decade make clear that Vizaline’s “activity” is pure speech protected by the First Amendment. First, the Court has made clear that the First Amendment applies where “conduct triggering coverage” of a regulation “consists of communicating a message”—such as providing expert advice. Second, the Court has made clear that “the creation and dissemination of information are speech within the meaning of the First Amendment” and that the First Amendment is “implicated when information [a speaker] possesses is subjected to restraints on the way in which the information might be used or disseminated.” And third and most recently in the case of NIFLA v. Becerra, which was decided in June 2018, the Surpeme Court rejected restrictions on “professional speech”—speech made as part of an occupation—which some had treated as a separate category of speech subject to lesser constitutional scrutiny.

To be clear, Vizaline does not conduct surveys—it does not establish property boundaries or place survey markers (the absolute reference points used to mark boundaries or triangulate locations in surveying). Vizaline’s reports do not purport to be authoritative—they don’t get turned into legal descriptions of property and put into recorded deeds or easements.

All Vizaline does is use existing public information, legal descriptions of property, to generate new information—a user-friendly visual representation of that information. They communicate this information to their bank clients to advise their bank clients about their property portfolios. This is speech, fully protected by the First Amendment. As the U.S. Supreme Court concluded in its NIFLA opinion from June 2018, that the Board calls this the “practice” of an “occupation” does not change the First Amendment’s protection of Vizaline’s speech.

Regulatory Boards Stretch Occupational Licensing Laws to Shut Down Their Competitors

The Board’s lawsuit is yet another example of occupational licensing run amok in America. In the 1950s, merely 1 in 20 American workers needed the government’s permission to do their jobs. Today, that number is 1 in 4. The move to reform occupational licensing and reduce these government-imposed restrictions is a bipartisan issue. The administrations of both President Obama and President Trump have called for occupational licensing laws to be curtailed.

The same legislation that creates a license also frequently creates a licensing board to administer that license. Often, the law requires that boards be composed almost entirely of occupational practitioners, as is the case with the Mississippi Board of Licensure for Professional Engineers and Surveyors. The result is that licensing boards are frequently run by people with a vested interest in the occupation. This is often called “regulatory capture”—where the practitioners of a field overtake the regulation of the field and, because they wield often-unchecked power, they administer that power in such a way that protects existing service providers from competition. A common tactic is to broaden the definition or scope of practice of a licensed occupation, a practice IJ has termed “license creep.” Licensing legislation ordinarily describes the activities that define the practice of the occupation. Through license creep, boards expand these definitions to often encompass occupations that operate well outside of the actions that typically define a field. In this case, Vizaline does not conduct surveys, it does not establish property boundaries or place survey markers—all traditional practices of surveying—yet through the Board’s licensing creep, the Board now seeks to expand the definition of surveying to include Vizaline’s work as the practice of surveying.

Just last year, the State of Mississippi enacted significant reforms in the Occupational Board Compliance Act to put a stop to license creep. Under this Act, a special commission has to review occupational regulations proposed by licensing boards to ensure they “increase economic opportunities…by promoting competition,” and use “the least restrictive regulations necessary to protect consumers,” in accordance with new state policy.

This reform was prompted by a 2015 U.S. Supreme Court decision. In North Carolina State Board of Dental Examiners v. FTC, the Supreme Court recognized that state boards composed of market participants—such as Mississippi’s Board of Licensure for Professional Engineers and Surveyors—can be sued for federal antitrust violations since they can use the power of government regulations to engage in anti-competitive activities.

Mississippi’s reform was meant to put a stop to boards behaving badly. But unfortunately, the Act did not affect enforcement actions. Boards are still free to engage in license creep through enforcement actions, even if they cannot make new regulations to do the same thing. That is why the Institute for Justice’s defense of Vizaline is so important; it seeks to block this power grab by Mississippi’s Board of Licensure for Professional Engineers and Surveyors.

The Mississippi Supreme Court Recognizes the Threat from Unchecked Regulatory Boards

The problem of license creep is exacerbated when judges—rather than interpret statutes for themselves—defer to those boards’ expanded definitions. In the federal courts, this is called “Chevron deference”—from the U.S. Supreme Court case Chevron v. Natural Resources Defense Council. Over the years, most state courts adopted similar deference doctrines. That tide, however, has now begun to reverse as courts recognize the doctrine undermines the separation of powers which is critical to protecting individual liberty.

In 2016, then-judge, now-U.S. Supreme Court Justice Neil Gorsuch wrote an influential decision about Chevron deference, calling it “a problem for the people whose liberties may now be impaired not by an independent decisionmaker seeking to declare the law’s meaning as fairly as possible—the decisionmaker promised to them by law—but by an avowedly politicized administrative agent seeking to pursue whatever policy whim may rule the day." Since that decision, a growing chorus of judges and courts have echoed these sentiments.

In June of 2018, the Mississippi Supreme Court joined the chorus. In a landmark ruling—King v. Mississippi Military Department—the Court abolished judicial deference to administrative agencies’ interpretations of law. This means that Mississippians can now count on the courts to “fulfill their duty to exercise their independent judgment about what the law is” as a check on overreaching administrative agencies.

The Claims

Vizaline and Brent’s counterclaim raises a single claim under the First Amendment, seeking to vindicate the right to use, create and disseminate information as part of their business providing advice to banks about their property portfolios.

Vizaline and Brent are defending themselves from the Board’s lawsuit by arguing that Vizaline is not “surveying” as defined by Mississippi’s surveyor licensing laws and that Vizaline’s business is protected by the First Amendment in any event.

The Litigation Team

The litigation team consists of Paul Avelar, Managing Attorney of the Institute for Justice Arizona Office and Johanna Talcott, Attorney in the Institute for Justice’s Florida Office.

Adam Stone and Jackie Bost II of the Jackson, Mississippi, office of Jones Walker, have teamed up with IJ to serve as local counsel.

About the Institute for Justice

The Institute for Justice is the national law firm for liberty and the nation’s leading advocate for First Amendment rights and economic liberty. IJ has challenged efforts to use occupational-licensing laws to silence speech by tour guides, veterinarians, diet coaches and makeup artists.

For more information about this case, please contact IJ Reporting and Communications Associate Matt Powers at mpowers@ij.org or (703) 682-9320 ext. 254.