Holiday Alaska, Inc. v. State, Division of Corporations, Business & Professional Licensing

280 P.3d 537, 2012 WL 2947637, 2012 Alas. LEXIS 100
CourtAlaska Supreme Court
DecidedJuly 20, 2012
DocketNo. S-14155
StatusPublished

This text of 280 P.3d 537 (Holiday Alaska, Inc. v. State, Division of Corporations, Business & Professional Licensing) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holiday Alaska, Inc. v. State, Division of Corporations, Business & Professional Licensing, 280 P.3d 537, 2012 WL 2947637, 2012 Alas. LEXIS 100 (Ala. 2012).

Opinions

OPINION

WINFREE, Justice.

I. INTRODUCTION

In Godfrey v. State of Alaska, Department of Community & Economic Development, we upheld a version of AS 43.70.075, Alaska's tobacco endorsement statute, against several due process challenges.1 While those challenges were pending the legislature amended the statute to address due process concerns.2 We now consider due process challenges to the amended statute, and affirm the superior court's conclusion that the amended statute provides due process.

II. FACTS AND PROCEEDINGS

Holiday Alaska, Inc. (Holiday) sells tobacco at over 25 stores in Alaska, and each store holds a tobaceo license endorsement from the State.3 The State sought to suspend five different Holiday stores' tobaceo license endorsements following five separate incidents of Holiday employees' illegal tobacco sales to [538]*538minors4 Each case resulted in conviction: One employee was found guilty by default judgment, three pled guilty, and one was found guilty at trial.

The State filed a notice of intent to suspend the five tobacco license endorsements based on the employee convictions, seeking to impose a $300 civil fine and a 20-day endorsement suspension against each store.5 Holiday requested a hearing before the Office of Administrative Hearings in each case. An Administrative Law Judge (ALJ) held two hearings. The ALJ first considered the allegations against Holiday resulting from four of the convictions and issued a consolidated decision; the ALJ later considered the allegations against Holiday resulting from one additional employee's conviction and issued a separate decision.

Throughout the proceedings Holiday asserted various constitutional challenges, which the ALJ denied because he could not "rule on a constitutional challenge that seeks to nullify the statute." However, the ALJ allowed Holiday to present evidence relevant to its constitutional challenges to construct a factual record for appeal.

Holiday also presented evidence about its zero-tolerance policies regarding underage tobacco sales, which included education programs for new employees and possible immediate termination of any employee caught in a government sting operation. Holiday presented little or no specific evidence on the factual cireumstances of each individual sale; in fact, Holiday contested liability in only two of the individual sales. In one instance, Holiday argued that the employee's plea bargain made in exchange for a dismissal of a more serious charge of selling aleohol to a minor in the same incident constituted clear and convincing evidence that no negligent sale occurred. In the other, Holiday argued that the default judgment resulting from the employee's failure to appear was clear and convincing evidence that no negligent sale occurred.

The ALJ concluded that Holiday did not overcome the statutory presumption of negligence established by the convictions,6 and therefore was liable for each violation and subject to penalty under AS 43.70.075(d). The ALJ considered Holiday's internal procedures as evidence justifying mitigation of the penalty, but did not find the policies rebutted liability entirely.7 The ALJ recommended imposing a $300 penalty and suspending the tobacco license endorsement for 13-20 days in each case, with reductions in three instances based on the mitigating evidence of internal policies.

The Commissioner adopted the ALJ's recommendations as the final agency decision, and Holiday appealed to the superior court. The superior court upheld the Commissioner's decision without modification, specifically rejecting Holiday's constitutional arguments.

Holiday appeals, presenting only one issue: whether AS 43.70.075, as amended, violates its due process rights.

III. STANDARD OF REVIEW

We review issues of statutory interpretation and questions concerning the constitutionality .of statutes de novo, and adopt the rule of law that is most persuasive in light of precedent, reason, and policy.8 We apply our independent judgment to deter[539]*539mine whether there was a violation of Holiday's right to due process.9

IV. DISCUSSION

A. Godfrey v. State

In Godfrey we considered several due process challenges to the former version of Alaska's tobacco endorsement statute.10 The statute permitted the licensee to dispute whether its employee was acting within the scope of employment and whether there was a conviction, but did not allow inquiry into the employee's underlying negligence.11 We explained that the statute:

strive[d] to enforce the state's strong interest in preventing all underage sales by holding licensees liable for any such sale, whether negligent or not. The clear text of subsection .075(d) unequivocally require[d] the department to suspend an endorsement based on proof of an employee's conviction under AS 11.76.100; it does not require proof of the employee's actual guilt [12]

Godfrey, the owner of a store licensed to sell tobaceo products, argued that the statutory scheme was facially unconstitutional because it denied him due process.13 We first considered Godfrey's argument that the statute did not provide him an opportunity to contest issues of "central importance" to the licensing decision, thereby denying him due process under Javed v. Department of Public Safety, Division of Motor Vehicles.14 We concluded that Javed was not analogous "in light of the inherent danger posed by commercial tobacco sales, the legislature's clear intent to regulate tobacco sales and to provide firm mechanisms for curtailing tobacco use by minors, and the entirely commercial nature of the licensee's interest." 15 We explained that the statute's underlying purpose was to protect minors by restricting their access to tobacco, not to punish negligent tobacco sales; the licensing action's "central element" was whether a minor purchased tobacco through Godfrey's tobacco license, not whether the employee was negligent.16 We also noted that relying on the fact of conviction as presumptive proof of sanctiona-ble conduct was rationally based and neither arbitrary nor capricious.17

We then determined Godfrey was not denied due process under the Mathews v. El-dridge test, noting the State's interest in protecting minors from tobacco and the low risk of erroneous deprivation outweighed Godfrey's economic interest in an unsuspend-ed tobaceo endorsement.18 We summarized our conclusions by noting that "when an industry engages in commercial activity that routinely exposes the public to significant harm, the legislature has a legitimate interest in holding the industry's licensed participants accountable for all conduct in exereis-ing the license, not just for the licensee's personal negligence or fault.19

B. The Amended Statutory Scheme

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Related

Mathews v. Eldridge
424 U.S. 319 (Supreme Court, 1976)
Thorne v. Department of Public Safety
774 P.2d 1326 (Alaska Supreme Court, 1989)
Stevens v. State, Alcoholic Beverage Control Board
257 P.3d 1154 (Alaska Supreme Court, 2011)
Copeland v. Ballard
210 P.3d 1197 (Alaska Supreme Court, 2009)

Cite This Page — Counsel Stack

Bluebook (online)
280 P.3d 537, 2012 WL 2947637, 2012 Alas. LEXIS 100, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holiday-alaska-inc-v-state-division-of-corporations-business-alaska-2012.