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8 Selected Case Readings

CHAPTER OUTLINE

Introduction................................................................................................................................... 335

Notes.............................................................................................................................................. 481

Introduction The following cases have been properly labeled “benchmark” precedents in the world of

private security. Use them as reference points and as catalysts for further discussion.

The cases emphasize the legal nuances of private sector justice, and, even more compel-

lingly, they tell the story of privatization and its apparent invincibility. Since Burdeau

v. McDowell, the kingpin of private security cases, decided in 1921, the courts at both

the state and federal levels have consistently ruled on this well-settled area of law. While

activists on many fronts wish constitutional extension to private sector operations, the

reticence of jurists, even in the age of judicial activism, is quite remarkable. To be sure,

the courts have been dependable and even more predictable. That sort of uniformity is

rare and a reflection of how high the stakes are in the law of private security.

AETNA CASUALTY & SURETY COMPANY V. PENDLETON DETECTIVES OF MISSISSIPPI, INC. 182 F.3d 376 (5th Cir. 1999)

Before Garwood, Duhe, and Benavides, circuit judges.

Opinion:

John M. Duhe, Jr., circuit judge:

Aetna Casualty & Surety Company (“Aetna”) sued Pendleton Detectives of Mississippi, Inc.

(“Pendleton”) for recovery of the amount of claims it paid for losses to its insured, The Merchants

Company, Inc. (“Merchants”), resulting from Pendleton’s negligence or breach of contract. The jury

awarded Aetna $174,000 in damages. Subsequently, the district court granted Pendleton’s Motion

for Judgment as a Matter of Law and entered judgment for Pendleton. Aetna appeals arguing the

district court erred, because Aetna presented sufficient evidence to sustain the jury’s verdict.

We agree, and reverse the district court’s judgment and reinstate the jury’s verdict.

BACKGROUND

In August 1993, Pendleton contracted with Merchants to provide security for Merchants’

Jackson, Mississippi distribution warehouse facility. Merchants quickly determined that it was

unsatisfied with Pendleton’s service. Merchants complained that the gate was left open at times,

guards arrived at work intoxicated, made personal phone calls, and entertained members of the

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Private Security and the Law

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AETNA CASUALTY & SURETY COMPANY V. PENDLETON DETECTIVES OF MISSISSIPPI, INC.—CONT’D

opposite sex while on duty. In early 1995, Merchants determined through its inventories an

unusually high amount of loss from its warehouse. Merchants suspected nightshift employee

theft was responsible for the increased losses. Merchants fired its nightshift manager and

notified Pendleton, but the problem only grew worse. After Merchants notified Pendleton again

of the problem, it hired a private investigator posing as an employee to investigate the problem.

The private investigator concluded employee theft was responsible for the losses. Additionally,

several nightshift employees, while taking lie detector tests administered by a hired expert,

admitted stealing large amounts of food from the warehouse. After receiving Merchants’

complaints, Robert H. Pendleton, chairman of the board of Pendleton, sent Merchants a memo

acknowledging that the guards’ performance was below what was expected.

On January 31, 1996, Merchants submitted a claim of $430,266.68 for losses resulting

from theft at its Jackson, Mississippi warehouse. After settling the claim, Aetna sued to

recover the amount as Merchants’ legal subrogee and contractual assignee. Although the jury

awarded $174,000 in damages to Aetna, the district court granted Pendleton’s Motion for

Judgment as a Matter of Law and entered a judgment for Pendleton on May 8, 1998.

Merchants appeals.

DISCUSSION

We review the district court’s grant of a motion for judgment as a matter of law de novo,

applying the same standard it used. See Hill v. International Paper Co., 121 F.3d 168, 170 (5th

Cir. 1997). A court may grant a judgment as a matter of law if after a party has been fully heard

by the jury on an issue, “there is no legally sufficient evidentiary basis for a reasonable jury to

have found for that party with respect to that issue.” Fed. R. Civ. P. 50; Conkling v. Turner, 18

F.3d 1285, 1300 (5th Cir. 1994). A court should view the entire record in the light most favorable

to the nonmovant, drawing all factual inferences in favor of the nonmoving party, and “leaving

credibility determinations, the weighing of the evidence, and the drawing of legitimate

inferences from the facts to the jury.” Conkling, 18 F.3d at 1300 (citing Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)).

The district court based its ruling on Merchants’ failure to introduce conclusive evidence

that the thefts occurred while Pendleton guards were on duty. Although Pendleton’s security

expert, Robert Vause, testified that it was more likely than not that the theft occurred because of

Pendleton’s substandard service, the district court disregarded his testimony because his belief

was based on the lax security environment created by Pendleton employees at Merchants’

warehouse.

Merchants contends that it presented sufficient evidence to support the jury’s verdict, while

Pendleton asserts that Merchants did not prove its employees proximately caused Merchants’

losses. Specifically, Pendleton argues Merchants failed to present direct evidence that

Pendleton guards were on duty when the thefts occurred. While admitting that its security

services were substandard, Pendleton contends that Merchants’ restrictions on its security

service caused the losses rather than Pendleton’s substandard services.

To prove negligence, “a plaintiff must prove by a preponderance of the evidence each

element of negligence: duty, breach of duty, proximate causation, and injury.” Lovett v.

Bradford, 676 So. 2d 893, 896 (Miss. 1996). Circumstantial evidence is sufficient to prove

proximate cause under Mississippi law. See K-Mart, Corp. v. Hardy, 735 So. 2d 975, 1999 Miss.

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AETNA CASUALTY & SURETY COMPANY V. PENDLETON DETECTIVES OF MISSISSIPPI, INC.—CONT’D

LEXIS 102, 1999 WL 145306, at *5 (Miss. 1999). “Negligence may be established by

circumstantial evidence in the absence of testimony by eyewitnesses provided the

circumstances are such as to take the case out of the realm of conjecture and place it within the

field of legitimate inference.” Id. (quoting Downs v. Choo, 656 So. 2d 84, 90 (Miss. 1995)); see

Davis v. Flippen, 260 So. 2d 847, 848 (Miss. 1972). (“when the case turns on circumstantial

evidence it should rarely be taken from the jury.”)

Merchants presented the following evidence of Pendleton’s negligent security practices:

(1) guards slept on the job; (2) guards watched T.V. on the job; (3) guards drank on the job;

(4) guards entertained guests of the opposite sex on the job; (5) guards left the gate to the

warehouse open;(6) Pendleton’s admission of failing to perform sufficient background checks

on its guards; (7) the private investigator’s conclusion that nightshift employees were

responsible for the losses; (8) several of Merchants’ nightshift employees’ confessions to

stealing large amounts of food;(9) Pendleton’s contractual obligation to provide security from

4 P.M. to 8 A.M. and 24 hours a day on weekends; (10) Merchants’ repeated reports of

suspected employee theft to Pendleton; (11) the report of a person wearing a Pendleton

baseball cap selling Merchants’ products from the trunk of his car; and (12) Merchants’

security expert’s testimony that it was more probable than not that Pendleton’s lax security

practices caused the losses. Merchants argues the above evidence is sufficient to support

the jury’s verdict.

Pendleton argues that Merchants’ restrictions on its security service caused the losses, and

that, because of the limited nature of the security service Merchants requested, the loss

would have occurred even had Pendleton performed its duties perfectly. Pendleton contends

the following restrictions placed upon its service by Merchants prevented it from deterring the

losses: (1) Pendleton was not allowed to go inside Merchants’ warehouse; (2) Pendleton was not

allowed to inspect the inside of trucks or employee vehicles leaving the facility; (3) Pendleton

did not provide 24 hour a day protection 7 days a week; and (4) the Pendleton security officer’s

view of the employee parking lot was obstructed for a short period of time every hour while he

conducted rounds of the premises.

At trial, Pendleton theorized that Merchant’s former night shipping manager was involved in

a large-scale scheme to steal food by colluding with truck drivers to falsify shipping documents

and send sealed trucks full of food to nonexistent locations. Pendleton contended that because

its guards lacked the authority to search sealed trucks as they left the gates of Merchants’

facility, it was unable to prevent the losses Merchants suffered. However, Pendleton did not

offer evidence that Merchants accused its truck drivers of stealing or that it ever suspected or

investigated any occurrences of falsified shipping documents. Moreover, Merchants’ evidence

established that the substantial losses from theft continued long after Merchants fired the night

shipping manager.

Merchants’ evidence at trial sufficiently supports the jury’s inference of causation between

Pendleton’s lax security practices and the losses Merchants suffered. The Security Instructions

developed by Pendleton exclusively for Merchants expressly stated that the mission of

Pendleton’s post was “to maintain security of the property and prevent fires, theft, etc. during

all hours.” The Security Instructions required that Merchants’ employees enter the facility only

(Continued)

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AETNA CASUALTY & SURETY COMPANY V. PENDLETON DETECTIVES OF MISSISSIPPI, INC.—CONT’D

through a gate located next to the guard house and that Pendleton guards be stationed at the

guard house during their entire shift except during the brief period of their rounds. These

instructions also authorized Pendleton’s guards to stop Merchants’ employees and inspect any

packages or bundles they were carrying, and mandated that Pendleton guards keep a “close

check on the employee parking area to deter outsiders, or other employees, from tampering

with or damaging employee vehicles.” (emphasis added). Additionally, while the guards’ view of

the employee parking lot was obstructed for a short period of time every hour during the

rounds of the premises, the guards were to perform these rounds randomly rather than at a set

time of day and were supposed to lock the gate while away, requiring employees to wait until

the guard’s return to exit the facility, thereby reducing the likelihood of employee theft during

this brief absence.

The period of loss claimed by Merchants extended from October 1994 to December 1995.

During this period Merchants employed up to 90 nightshift employees, and Pendleton was

required to conduct nearly 1,000 shifts of security services. The jury’s award of $174,000 to

Aetna, an amount substantially smaller than the $430,266.68 Aetna demanded, evidences the

jury’s implicit conclusion that Pendleton caused at least some of Merchants’ losses. The jury

obviously concluded that while the night shipping manager Merchants fired in July 1995 caused

some of the losses, Pendleton’s substandard security practices also caused $174,000 of the

losses Merchants suffered.

Based on the above evidence, a reasonable juror could not only have concluded that

Pendleton’s poor security practices allowed Merchants’ nightshift employees to steal with

impunity, but that in fact Pendleton’s security officers were also involved in the theft from

Merchants themselves. For the above reasons, we reverse the district court’s decision and

reinstate the jury’s verdict.

REVERSED AND JURY VERDICT REINSTATED

ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.

212 Ill. App. 3d 717; 571 N.E.2d 783 (1991)

Justice White delivered the opinion of the court. Cerda, P. J., and Rizzi, J., concur.

Defendants appeal from a judgment entered by the circuit court of Cook County that

reversed the revocation of plaintiffs’ licenses to practice. We affirm the judgment of the

circuit court.

Defendants are the Department of Registration and Education (the Department), now

known as the Department of Professional Regulation; Gary L. Clayton (the Director), who was

Director of Registration and Education at the pertinent times; the Illinois Private Detective,

Private Alarm, and Private Security Board (the Board); and the Board’s chairman, and five other

members.

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

One plaintiff is Arthur Letourneau, to whom the record sometimes refers as Arthur

LeTourneau. The other plaintiffs are the detective division, the security division, and the

alarm division of Investigations International (the company). Of the four licenses and

certificates revoked, two licenses (as a private detective and a private security contractor) were

issued in Letourneau’s name, and two certificates (as a private detective agency and as a private

security contractor agency) were issued to Letourneauin the names of the company’s detective

division and security division, respectively. For convenience when referring collectively in this

opinion to plaintiffs’ licenses and certificates, the general term “licenses” is used.

A certificate as a private alarm contractor agency, issued in the name of the company’s alarm

division, and a license as a private alarm contractor, issued in Letourneau’s name, were neither

revoked nor involved in the disciplinary proceedings, but as licensees the holders thereof have

joined as plaintiffs.

The central issue is whether revocation of plaintiffs’ licenses was contrary to the manifest

weight of the evidence, unsupported by substantial evidence, or arbitrary and unreasonable.

I. STATUTORY BACKGROUND AND PROCEDURAL HISTORY

Under the Private Detective, Private Alarm, and Private Security Act of 1983 (Ill. Rev. Stat. 1985,

ch. 111, par. 2651 et seq.) (the Act or the present Act), a licensee is subject to disciplinary

sanctions for enumerated violations. (Ill. Rev. Stat. 1985, ch. 111, par. 2672(a).) A range of

sanctions, including license revocation, is provided. Ill. Rev. Stat. 1985, ch. 111, par. 2675. In this

cause, the department filed formal charges seeking disciplinary action against Letourneau and

the company as respondents. The charges named Letourneau and the company’s detective and

security divisions as holders of the licenses in question. The charges alleged three substantive

acts or omissions, said to constitute violations of the Act or of its precursor statute (the 1933

Act) (Ill. Rev. Stat. 1983, ch. 111, par. 2601 et seq.) (repealed eff. Jan. 5, 1984)1 and therefore to

constitute grounds for license revocation or suspension under section 22 of the Act (Ill. Rev.

Stat. 1985, ch. 111, par. 2672). The alleged violations were:

(a) Failure by the company since 1979 to register its employees with the department, in

violation of section 10b(4) of the 1933 Act and section 15(c) of the present Act (Ill. Rev. Stat.

1983, ch. 111, par. 2622(4);Ill. Rev. Stat. 1985, ch. 111, par. 2665(c)).

(b) Practice by the company as “a detective” while its “license” was nonrenewed from 1977 to

October 1983, said to be in violation of section 3 of the 1933 Act (Ill. Rev. Stat. 1983, ch. 111,

par. 2603).2

(c) Practice by Ernest Rizzo since 1979 as a detective for the company despite a 1978

revocation of his detective license, in violation of sections 16(b) and (f) of the 1933 Act and

sections 22(a)(3), (a)(14), (a)(15), and (a)(19) of the present Act (Ill. Rev. Stat. 1983, ch. 111,

pars. 2628(b), (f); Ill. Rev. Stat. 1985, ch. 111, pars. 2672(a)(3), (a)(14), (a)(15), (a)(19)).

Under the version of the Act applicable to this cause, it was a continuing requirement for

agency certification such as here that the agencies each have a full-time Illinois-licensed

private detective or private security contractor in charge and that each such person reside in

Illinois. (Ill. Rev. Stat. 1985, ch. 111, pars. 2664(d), (f).) “Residency” meant having established an

(Continued)

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

actual domicile in Illinois for at least one year. (Ill. Rev. Stat. 1985, ch. 111, par. 2652(m).) The

1933 Act contained similar requirements for detective agencies. (Ill. Rev. Stat. 1983, ch. 111,

pars. 2601, 2621.) The present Act has now been amended to repeal the requirement that a

licensee in charge reside in Illinois. See Pub. Act 85—981, art. III, } 5, eff. Jan. 1, 1988 (amending Ill. Rev. Stat. 1985, ch. 111, pars. 2664(d) through (f)).

During several sessions between January and July 1986, a hearing officer received testimony

from 11 witnesses and admitted 75 exhibits into evidence. Attending from time to time and

sometimes participating in the proceedings were several members of the board. On January 22,

1987, the board made and submitted its written findings of fact, conclusions of law, and

recommendation that the licenses at issue be revoked. See Ill. Rev. Stat. 1985, ch. 111, par. 2674(d).

The board’s factual findings were that:

Letourneau had been a Florida resident since at least 1980 and, while holding the licenses at

issue, had falsely reported to the Department since 1980 that he was an Illinois resident.

Letourneau and the company had practiced as a detective and detective agency from

October 1977 to October 13, 1983, and from January 4, 1984, to January 7, 1985, without a

license and without registering employees.

Letourneau and the company had since at least 1980 allowed Ernest Rizzo to practice as a

detective without a license or supervision.

Letourneau and the company had practiced as a security contractor and security contractor

agency from January 4, 1984, to January 7, 1985, without registering employees.

The board’s legal conclusion was that Letourneau had violated the sections of the present

Act and of the 1933 Act that he and the company were charged with violating.

Letourneau filed a motion for rehearing, but the director denied it. Adopting the board’s

findings of fact, conclusions of law, and recommendation, he then ordered that licenses at

issue be revoked.

On April 28, 1987, Letourneau filed his complaint for administrative review in the circuit

court of Cook County, seeking to have the director’s revocation orders vacated. After briefing

and argument, the court entered an order on August 10, 1988, reversing the department’s

revocation decision.

The trial judge stated that he was reversing the revocation orders because the findings

of fact were without substantial foundation in the evidence. Specifically, the judge found that

there was no evidence to support the director’s finding that Letourneau had been a Florida

resident since 1980 and that there was evidence that Letourneau had been an Illinois resident

at the times in question. The judge also found that there was no evidence to support the

director’s finding that Letourneau had allowed Rizzo to practice as an unlicensed private

detective and that the department’s evidence in general was not strong enough to support the

result of revocation. At a hearing on defendants’ motion for reconsideration, the judge

again stated that there was insufficient evidence to support the director’s findings of fact

and conclusions of law. Accordingly, he denied the motion for reconsideration, and this

appeal followed. This opinion will refer to matters of evidence as required for discussion of

the issues.

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

II. ANALYSIS

A. Standard for Reviewing Findings of Fact

In reviewing the factual determinations made by the director, this court is limited to

ascertaining whether his decision accorded with the manifest weight of the evidence and was

supported by substantial evidence. Massa v. Department of Registration & Education (1987), 116

Ill. 2d 376, 385, 507 N.E.2d 814, 818; Bruce v. Department of Registration & Education (1963), 26

Ill. 2d 612, 622, 187 N.E.2d 711, 717; Irving’s Pharmacy v. Department of Registration &

Education (1979), 75 Ill. App. 3d 652, 658, 394 N.E.2d 627, 632.

The findings and conclusions of an administrative agency regarding questions of fact are to

be considered prima facie true and correct. (Ill. Rev. Stat. 1989, ch. 110, par. 3-110; Murdy v.

Edgar (1984), 103 Ill. 2d 384, 391, 469 N.E.2d 1085, 1088.) However, this does not mean that a

court should automatically approve an agency decision merely because the agency heard

witnesses and made findings. Viera v. Illinois Racing Board (1978), 65 Ill. App. 3d 94, 99, 382

N.E.2d 462, 466.

B. Letourneau’s Residency

Defendants appear to regard Letourneau’s residency as being relevant for two reasons, either of

which might support disciplinary action.

First, as the sole individual to whom the company’s agency licenses were issued, Letourneau

(or some person employed by him) was required to be in charge of agency operations as a full-

time, individually licensed Illinois resident, and failure to comply would violate the law. (See Ill.

Rev. Stat. 1985, ch. 111, pars. 2664(d), (f); Ill. Rev. Stat. 1983, ch. 111, par. 2621.) Letourneau

employed no such person; the question is whether Letourneau himself met the requirement.

Second, Letourneau was required to avoid fraud or material deception in connection with

licensure and to report his correct address and practice location to the department (Ill. Rev.

Stat. 1985, ch. 111, pars. 2671(a), 2672(a)(1); Ill. Rev. Stat. 1983, ch. 111, pars. 2616, 2628(a));

according to defendants, failure to report a Florida residence would violate the law. However,

though the department’s briefs discuss such residency questions at length, its formal charges

never clearly specified violation of either of these residency-related requirements. The only

formal charge that even arguably might be read as pertaining to one or both of them was the

charge that Rizzo had unlawfully practiced as a detective for the company.

Despite any deficiencies in the formal charges, one of the director’s findings of fact was that

Letourneau had been a Florida resident who falsely reported Illinois residency—thereby

presumably violating the requirements that he report his correct address and avoid fraud or

material deception (see Ill. Rev. Stat. 1985, ch. 111, pars. 2671(a), 2672(a)(1)). And one of the

director’s conclusions of law was that Letourneau had permitted his license to be used by an

unlicensed person in order to operate without Letourneau’s supervision or control (see Ill. Rev.

Stat. 1985, ch. 111, par. 2672(a)(15))—which comes close to saying that Letourneau violated the

requirement that he keep a full-time, Illinois-licensed individual who resides in Illinois in

charge of his agencies (see Ill. Rev. Stat. 1985, ch. 111, pars. 2664(d), (f)).

The implication of defendants’ treatment of the residency question is that Letourneau’s

nonresidency, failure to report a correct address, failure to keep a full-time licensed resident

in charge, and facilitation of Rizzo’s unlicensed practice are actually all of a piece in common

(Continued)

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

sense, and all unlawful under one statutory section or another. For the additional reason that

plaintiffs make no issue of any incongruity in formal charges, findings of fact, and conclusions

of law, Letourneau’s alleged nonresidency is treated in this opinion as if it had been duly framed

as a violation from the outset.

Defendants point to testimony by Letourneau’s business partner and two alleged former

employees (who testified under grants of immunity) that they never saw Letourneau in

Illinois during the period in question. Defendants also point to evidence that departmental

investigators were never able to find Letourneau at his Illinois addresses, that the company

maintained a Florida office, and that Florida had issued detective licenses to an Arthur

Letourneau. From this, defendants argue that they were entitled to use their expertise regarding

normal conduct of a licensee in order to infer that Letourneau was not an Illinois resident.

Though Ernest Rizzo (whom, according to the formal charges, Letourneau had helped to

engage in unlicensed practice) testified that he had known Letourneau for 20 years and that

Letourneau was an Illinois resident, defendants argue that they were entitled to judge Rizzo’s

credibility adversely because of his failure to explain adequately a number of past actions and

statements suggestive of unlicensed practice. In addition, defendants point to the testimony

of one witness, a longtime Letourneau acquaintance, that he had dined with Letourneau in

Florida in 1983 and that Letourneau, in the witness’ words, had then “indicated” that he

was a Florida resident.

Documentary evidence in the form of mail and utility bills shows Illinois addresses for

Letourneau, but defendants argue that the addresses were actually Rizzo’s. As a fact from

which an adverse inference can be drawn, defendants point to Letourneau’s refusal to answer

questions at the administrative hearing on grounds of potential self-incrimination after the

Department’s counsel had referred to the possibility of criminal charges. Accordingly,

defendants contend that the finding of Letourneau’s nonresidency in Illinois was not against

the manifest weight of the evidence.

In reply, besides referring to evidence already noted, plaintiffs point to other evidence that

Letourneau was an Illinois resident. The department’s investigator testified that he saw a

license on the wall at an address previously stated by Letourneau to be his own. The

department’s investigators testified that mailboxes bearing Letourneau’s name and containing

mail addressed to him existed at addresses given by Letourneau. Responses in Letourneau’s

name were received by the department, after it had sent mail to Letourneau at his Illinois

address, though defendants contend that the responses either did not bear Letourneau’s

personal signature at all or bore discrepant personal signatures. Letourneau also appeared

before Illinois notaries public. In the circuit court, the trial judge referred to the need for “facts

established by evidence,. . .evidence that is understood in law as being evidence.”

He continued:

This is not a case which turns on the weight of the evidence or the credibility of the

witnesses, quite frankly.

This is a case which must be reversed I believe because the findings are without substantial

foundation in the evidence. A case by the state cannot be made from inferences, from

presumptions, or from suspicions, or from indirect evidence. They have to be made by

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

evidence that’s credible, and sufficiently strong to warrant the result that is reached. There is no

strong evidence here to support the result of revocation of Letourneau’s license.

After referring to the department’s grant of immunity to its witnesses, the trial judge

remarked:

The only basis for the conclusion that Mr. Letourneau resides in Florida is that one witness

had dinner with Mr. Letourneau once in Florida in 1983 I believe, and yet the charge is

that he lived there since 1980. That same witness said I hadn’t seen him around, and I had

dinner with him in ‘83. The fact that that witness had not seen Letourneau in Illinois does

not mean that Letourneau resided in Florida during all of that hiatus.

The trial judge acknowledged the evidence of Florida detective licenses in the name of an

Arthur Letourneau but stated:

I am not sure that this Mr. Letourneau is the only Arthur Leto[ur]neau in the USA, and

there was no attempt to demonstrate the Arthur Letourneau in Florida is the Arthur

Letourneau that we are talking about here in Illinois.

So there clearly is no evidence to support the finding. . .that Letourneau has lived in Florida

since 1980.

The judge then referred to evidence that Letourneau had received mail in his Illinois

mailbox, was paying utility bills in Illinois, had registered his automobile in Illinois, and had

responded to department notices mailed to Illinois. The judge also cited Rizzo’s testimony that

Letourneau lived in Illinois:

Clearly the department is free to ignore Mr. Rizzo’s testimony, but I find it incredible that

they would ignore that testimony and accept testimony from someone who said he had

dinner with Mr. Letourneau in Florida and give greater weight to the latter while giving

no weight to the former.

Defendants were entitled to draw reasonable inferences from the evidence. (Raymond

Concrete Pile Co. v. Industrial Comm’n (1967), 37 Ill. 2d 512, 517, 229 N.E.2d 673, 676.) In an

administrative proceeding, defendants could also, in conjunction with other evidence, draw an

inference adverse to Letourneau from his refusal to testify on grounds of potential self-

incrimination. (Giampa v. Illinois Civil Service Comm’n (1980), 89 Ill. App. 3d 606, 613-14,

411 N.E.2d 1110, 1116.) If the issue is merely one of conflicting testimony and a witness’

credibility, the administrative agency’s determination should be sustained. (Keen v. Police Board

(1979), 73 Ill. App. 3d 65, 70-71, 391 N.E.2d 190, 195.) An administrative agency may properly

base its decision on circumstantial evidence. Ritenour v. Police Board (1977), 53 Ill. App. 3d 877,

882-83, 369 N.E.2d 135, 139.

In finding “no” evidence of Letourneau’s nonresidency, the trial judge overlooked testimony

that, in what may have been admissions against interest (see Cox v. Daley (1981), 93 Ill. App. 3d

593, 596-97, 417 N.E.2d 745, 748), Letourneau had said in about 1979 that he planned to move

to Florida and had “indicated” in 1983 that he was now a Florida resident. In any event, the

department presented what it contends was circumstantial evidence of Letourneau’s Florida

(Continued)

Chapter 8 • Selected Case Readings 343

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

residency: the Florida licenses, inability to find him in Illinois, accumulation of several weeks’

worth of mail in a mailbox, identity between Letourneau’s claimed Illinois addresses and

Rizzo’s addresses, irregularities in Letourneau’s purported signature on answers to mail sent to

him at Illinois addresses, and the adverse inference from Letourneau’s refusal to testify on the

question of his residency.

Although the trial judge erred in concluding that there was no evidence that Letourneau

had lived in Florida since 1980, the question remains whether the evidence offered by the

department sufficiently supported the director’s decision so that the decision can be said not to

have been against the manifest weight of the evidence.

Defendants have not cited and we have not found any requirement that one must be a

Florida resident in order to be licensed as a detective in that state, so the mere fact of Florida

licensure would carry relatively little weight even if plaintiff were shown to have been the

Florida licensee.

The Act did not expressly require the person in charge of a private detective agency always to

remain within Illinois; all it required was that the person in charge be a resident of this State

and be a “full-time Illinois licensed private detective.” (See Ill. Rev. Stat. 1985, ch. 111, par. 2664

(d).) Assuming that Letourneau did spend some time in Florida, such a fact is not substantial

evidence that he thereby gave up Illinois residency, that while he was in Florida his Illinois

agency operations actively continued without him, or that he was thereby prevented from

being as much a “full-time Illinois licensed” individual as any other licensee who took

vacations or went on trips out of state. The fact that departmental investigators failed to find

Letourneau but found his mail in the mailbox is evidence that he was absent; it falls short of

being substantial evidence that he was nonresident.

Assuming that any connection between Rizzo and Letourneau was lawful, a coincidence

between Letourneau’s Illinois addresses and Rizzo’s is of little probative value. Any

relationship between Letourneau and Rizzo in the nature of business association,

friendship, or employment (unless of a type prohibited by the Act) is substantial

evidence neither of Letourneau’s nonresidency nor of his facilitation of unlicensed

practice by Rizzo.

Letourneau would ordinarily have had a right to appoint someone his agent for signing

documents; thus, purported irregularities in his signature are not substantial evidence of

nonresidency. Because Letourneau’s refusal to testify can lead to an adverse inference only in

conjunction with other evidence (Giampa, 89 Ill. App. 3d 606, 411 N.E.2d 1110), the lack of

other substantial evidence impairs the probative value of his refusal. And, given the other

evidentiary shortcomings, a naked assertion of departmental expertise in judging licensees’

conduct amounts to ipse dixit.

If the department had produced substantial evidence on the residency issue and it were

simply a matter of weighing that evidence against Letourneau’s or of judging the credibility

of witnesses, the presumption of correctness in the director’s findings would prevail over mere

disagreements by plaintiffs or even by this court. However, as did the circuit court, we believe

that no substantial evidence supported the director’s finding of Letourneau’s Florida residency

and false statements of Illinois residency.

344 PRIVATE SECURITY AND THE LAW

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ARTHUR LETOURNEAU ET AL. V. THE DEPARTMENT OF REGISTRATION AND EDUCATION ET AL.—CONT’D

Still, the matter does not end here. The parties agree that the most serious charge against

Letourneau was that he permitted the use of his agency certificates by Rizzo in order for

Rizzo to engage in unlicensed practice. Thus, we must address the sufficiency of the director’s

findings on that issue.

C. Rizzo’s Activities

Defendants point to considerable evidence as proving that Letourneau permitted Rizzo to

use Letourneau’s licenses and thus to operate without being licensed himself.

Repeated coincidences were demonstrated between Rizzo’s address and those of Letourneau

and the company. Letourneau, accompanied by Rizzo, had once attempted to obtain an

agency certificate in the name of Ernest D. Rizzo, Ltd. In addition, Rizzo had contacted the

department in behalf of Letourneau to discuss an agency name change and what kind of work

Rizzo (whose license had been revoked) could now permissibly do for the company. Insurance

procured by Letourneau was carried in Rizzo’s name until corrected after departmental

rejection. Checks payable to Rizzo had been deposited to the company’s account. Rizzo signed

purchase papers as owner of cars purchased by the company.

Raymond Rocke, testifying under a grant of immunity, said he had performed security work

for the company under Rizzo as “boss.” Though Rizzo testified that the witness was working

without authority and was discharged by Letourneau, the testimony was impeached by

Letourneau’s certification to the department that the witness had been an employee after the

“discharge.” Rizzo also attempted to explain such matters as his deposition testimony that he

was employed by the company, a magazine account of investigations he supposedly was

conducting as a company subcontractor without being licensed, and a telephone directory

advertisement for the company that carried Rizzo’s name. Defendants argue that the credibility

of Rizzo’s explanations was simply judged adversely.

In addition, Letourneau refused to answer questions about Ed Rossi, whom he had listed as

an employee and whose name the department contended was an alias for Rizzo. Rizzo matched

the age and physical description of Rossi, and his social security number was a slightly

transposed version of Rossi’s. Rizzo acknowledged having used the name Ed Ross.

But plaintiffs respond that no witness, not even Rocke, testified to personal knowledge that

since 1980 Rizzo had actually engaged in activities legally constituting practice as a private

detective. One witness testified to Rizzo’s having told him that Rizzo planned to be an employee