Dep't of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd.

240 Cal. Rptr. 3d 195, 29 Cal. App. 5th 410
CourtCalifornia Court of Appeal, 5th District
DecidedNovember 26, 2018
DocketC085199
StatusPublished
Cited by6 cases

This text of 240 Cal. Rptr. 3d 195 (Dep't of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd.) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dep't of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd., 240 Cal. Rptr. 3d 195, 29 Cal. App. 5th 410 (Cal. Ct. App. 2018).

Opinion

Duarte, J.

*413The Department of Alcoholic Beverage Control (the Department) petitioned for a writ of review to annul the decision of the Alcoholic Beverage Control Appeals Board (the Appeals Board) and reinstate the Department's decision sustaining four accusations against licensee Kajla Petroleum, Inc. and suspending Kajla's license to sell alcoholic beverages. The Department asserts that Kajla violated two conditions of its license relating to prohibitions on the *197sale of single beer or malt beverages and exterior advertising of alcoholic beverages. The Department contends the Appeals Board improperly substituted its own interpretation of one of the conditions (condition three, the single beverage condition) and relied on decisions of the Appeals Board that were not precedential and that misinterpreted that condition. It further contends the other condition at issue here (condition two, the advertising ban) *414was reasonable and argues that a disciplinary hearing is not the proper venue for challenging the reasonableness of a license condition in any event.

We agree with the Department only as to the impropriety of the reasonableness challenge. We annul the decision of the Appeals Board and reinstate the decision of the Department as to the violation of the license condition pertaining to the advertising ban.

FACTUAL AND PROCEDURAL BACKGROUND

In 2010 Kajla applied for an alcoholic beverage license, a person to person transfer from the previous owner of a gas station and food mart at 9701 Jackson Road in Sacramento. The Department granted a conditional license.

Of the 15 conditions on the license, two are issue here. Condition two (the advertising ban) provides: "There shall be no exterior advertising of any kind or type, including advertising directed at the exterior from within, promoting or indicating the availability of alcoholic beverages." Condition three (the single beverage condition) states: "Beer and/or malt beverages shall be sold in original factory packages of a six-pack or greater, except malt based coolers. At no time, shall a single unit be sold individually, or in conjunction with another brand/size container of beer and/or malt beverage to constitute a six-pack or larger quantity."

On three separate days in February 2015, an Alcoholic Beverage Control (ABC) agent purchased a single beer or malt beverage from Kajla's store: a 24-ounce can of beer, a 40-ounce bottle of malt beverage, and a 25-ounce can of beer. On the day of the third purchase, the agent observed on the window to the right of the front door a sign advertising 18-pack cans or bottles of Budweiser, Coors Light, and Tecate beer for $13.99 plus tax and CRV.

In April 2015 the Department filed an accusation against Kajla. The first three counts were for violating the single beverage condition. The fourth count was for violating the advertising ban.

A hearing was held before an administrative law judge (ALJ). At the hearing, Kajla first noted an Appeals Board decision, Chevron Stations v. Department of Alcoholic Beverage Control (July 31, 2013) No. AB-9326, in which the Appeals Board held a condition identical to the single beverage condition did not apply to large beers and malt beverages such as those sold *415here.1 Another decision, certified by the Department, adopted the reasoning of Chevron Stations. The Department argued the language of the condition was clear and easy to understand; the *198Appeals Board "got it wrong" in those cases. Kajla stipulated to the truth of the factual allegations in the accusation, the sales of single beverages and the sign. The ABC agent testified the three beverages he purchased are generally sold as individual units or three-packs for the 24-ounce containers. As relevant here, they were not originally sold in six-packs or greater.

In addition to arguing about the proper interpretation of the single beverage condition, Kajla also argued that both conditions at issue were unreasonable, relying on the Appeals Board decision Dirty Bird Lounge v. Department of Alcoholic Beverage Control (Aug. 1, 2014) No. AB-9401 (Dirty Bird Lounge ). The ALJ questioned whether Kajla's position was that the conditions were unreasonable because they were too vague to be understood, as in Dirty Bird Lounge , or whether they were unreasonable and never should have been imposed in the first place. The ALJ found the argument that the conditions were unreasonable and thus originally imposed in error was beyond the scope of the hearing. When it became clear that Kajla was arguing the conditions were too unreasonable to have been properly imposed and offered a retired assistant director of the Department to establish their unreasonableness, the ALJ sustained the Department's objections to questions designed to elicit information purporting to show the unreasonableness of the conditions.

The ALJ issued a proposed decision, finding cause did not exist for suspension or revocation of the Kajla's license under counts one, two, or three (the counts based on the single beverage condition), but cause did exist for count four (the count based on the advertising ban). The ALJ relied on the Appeals Board's decision Chevron Stations, in which the Appeals Board determined the single beverage condition did not affect the sale of individual containers of beer or malt beverages that were originally sold (by the factory) as individual containers. Rather, that condition only restricted the resale of beverages originating in six-packs. The ALJ dismissed counts one through three and sustained count four. Punishment was a 10-day suspension, with execution of five days stayed for one year provided there was no cause for discipline during that year.

*416The Department did not adopt the ALJ's proposed decision and issued its own decision. The Department found cause for suspension or revocation of the license under all four counts of the accusation. It explained that its interpretation of the statutes and regulations it enforced was entitled to deference and the same principle applied to a condition unless it was clearly erroneous. In Chevron Stations , the Appeals Board found two plausible interpretations of the single beverage condition and merely decided its interpretation was better. Thus the Department posited that its interpretation--that the single beverage condition applied to Kajla's sales of single beverages--was not clearly erroneous and under that interpretation Kajla had violated the condition. The Department imposed a 15-day suspension for counts one through three, with execution of five days stayed for one year. It imposed a concurrent 10-day suspension for count four, again with five days stayed for one year.

Kajla appealed to the Appeals Board.

The Appeals Board reversed all four counts. It analogized a liquor license to a contract and noted that in contract law, an ambiguity in a form contract was construed against the drafter.

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Cite This Page — Counsel Stack

Bluebook (online)
240 Cal. Rptr. 3d 195, 29 Cal. App. 5th 410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dept-of-alcoholic-beverage-control-v-alcoholic-beverage-control-appeals-calctapp5d-2018.