Boreta Enterprises, Inc. v. Department of Alcoholic Beverage Control

• Decision Date: 26 February 1970
• Docket Number: 22661,S.F. 22660
• Citation: 465 P.2d 1,2 Cal.3d 85,84 Cal.Rptr. 113
• Court: California Supreme Court
• Parties: , 465 P.2d 1 BORETA ENTERPRISES, INC., Plaintiff and Respondent, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Defendant and Appellant.

Page 113

84 Cal.Rptr. 113

2 Cal.3d 85, 465 P.2d 1

BORETA ENTERPRISES, INC., Plaintiff and Respondent, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Defendant and Appellant.

S.F. 22660, 22661.

Supreme Court of California In Bank.

Feb. 26, 1970.

Thomas C. Lynch, Atty. Gen., Charlton G. Holland and L. Stephen Porter, Deputy Attys. Gen., for defendant and appellant.

Melvin M. Belli, Paul J. Fitzpatrick, Robert L. Lieff and Belli, Ashe, Ellison, Choulos, Cone & Harper, San Francisco, for plaintiff and respondent.

SULLIVAN, Justice.

These two cases, considered together because of their common issues, present the question of whether the Department of Alcoholic Beverage Control (Department) has abused its discretion in revoking the on-sale, general bona fide eating place license of Boreta Enterprises, Inc. (licensee) doing business as the Off Broadway in San Francisco. In each of these actions the Department has appealed from a judgment of the San Francisco Superior Court ¹ granting a peremptory writ of mandate which set aside the decision of the Department, affirmed by the Alcoholic Beverage Control Appeals Board (Appeals Board), ordering the license revocation. We conclude that the decision of the Department was an abuse of its discretion and, accordingly, we affirm the judgment of the court below.

On June 1, 1965, the Department filed an amended accusation (No. 6279) against licensee in one count charging that licensee, at all times a holder of an on-sale general bona fide public eating place license, permitted nine specified acts to occur which were contrary to public welfare and morals. These acts were in substance as follows: that on four specified dates in April and May 1965, certain described female employees of licensee, 'in the course of their employment as waitresses and while in the actual proximity ² to patrons who were ordering their meals and alcoholic beverages from said employees did display and expose their breasts to patrons and persons assembled on the above-named bona fide eating place'; that licensee permitted photographs depicting the exposed breasts of a named woman employee to be taken and distributed to patrons of the establishment; and that a named employee, while seated at the bar in the presence of the president of licensee corporation, 'did expose her breasts to the public view of patrons seated in the bar and elsewhere' on the premises. ³

The acts set forth in the accusation were charged as providing grounds for suspension or revocation of licensee's license under article XX, section 22 of the California Constitution and section 24200, subdivision (a) of the Business and Professions Code. ⁴ Additional grounds for suspension or revocation were also charged to exist under Business and Professions Code section 24200, subdivision (b), in that the acts set forth in the accusation constituted a violation of Business and Professions Code section 25601 (keeping a disorderly house). ⁵ There had been no prior disciplinary action against the licensee.

On July 8, 1965, prior to the hearing on the accusation in No. 6279, the Department filed a second accusation (No. 6850) against licensee in one count charging that licensee permitted 10 additional specified acts to occur which were contrary to public welfare and morals. These acts were in substance as follows: that on three specified dates in May 1965 certain described female employees of licensee 'in the course of their employment as waitresses and while in the actual proximity ⁶ to patrons who were ordering their meals and alcoholic beverages from said employees, did display and expose their breasts to patrons and persons assembled' on the premises; and that licensee permitted photographs depicting the exposed breasts of a named female employee to be taken and distributed to patrons. ⁷

As in No. 6279, the acts set forth in the accusations were alleged to provide grounds for suspension or revocation of the license under article XX, section 22 of the California Constitution and section 24200, subdivision (a) of the Business and Professions Code. It was also charged that the acts set forth provided additional grounds for such suspension or revocation under section 24200, subdivision (b) in that they were a violation of section 25601. Prior to filing either accusation, the Department had issued a 'policy statement' condemning topless waitresses and warning against their use. The Department has never claimed that this was a duly issued regulation (see § 25750 and Gov. Code, §§ 11370--11445) and, indeed, neither accusation charged licensee with a violation of any departmental rule or regulation or mentioned the above policy statement in any way.

In response to the Department's accusations, licensee filed notices of defense pursuant to Government Code section 11506 and requested that it be granted hearings. Licensee filed identical briefs in which it: denied that the licensed premises constituted a 'disorderly house' within the meaning of the provisions of section 25601; asserted that the conduct charged in the accusations was a protected form of expression under the First Amendment to the United States Constitution; claimed that the exact conduct involved in the accusations had been held not to be obscene in a prior criminal proceeding against the licensee and other defendants; contended that the Department was 'an unappropriate tribunal for the adjudication of constitutional facts, (and) the mere assertion of jurisdiction * * * in and of itself, constitutes an unconstitutional prior restraint of expression,' and prayed that the accusations be dismissed.

Hearings were held in each action before different hearing officers of the Office of Administrative Procedure. At the hearing on No. 6279, the parties stipulated that the facts alleged in the accusations were true. ⁸ In addition, certain photographs were introduced into evidence depicting topless girls on the licensed premises in order to show the type of costume worn by the waitresses and the nature of the photographs distributed to the patrons. The hearing officer found, pursuant to the stipulation, that the factual allegations of the accusation were true and that they provided grounds for the suspension or revocation of the license pursuant to article XX, section 22 of the Constitution and section 24200, subdivisions (a) and (b), of the Business and Professions Code. He recommended that the licensee's license be revoked but that the revocation be stayed upon the condition that no cause for disciplinary action against licensee occur within one year. The Department adopted the hearing officer's proposed decision and ordered the penalty there recommended. Licensee appealed to the Alcoholic Beverage Control Appeals Board which, after a hearing, affirmed the Department's decision in its entirety. A petition for writ of mandate was then filed in the trial court by the licensee and an alternative writ thereafter issued. ⁹

After the hearing in No. 6279 and before issuance of the hearing officer's proposed decision therein, a separate hearing was held in No. 6850 before a different hearing officer. The parties again stipulated that the facts as alleged were true (see fn. 8, Supra) and also introduced certain photographs of topless girls into evidence. The hearing officer's proposed decision found as a fact that the allegations of the accusation which had been stipulated to were true, and that, as a result, grounds for suspension or revocation of the license existed under article XX, section 22 of the Constitution and section 24200, subdivisions (a) and (b) of the Business and Professions Code. The hearing officer recommended that the license be revoked but that the revocation be stayed upon the condition that it be suspended for 30 days and that no cause for disciplinary action against licensee occur within one year of the effective date of that decision. ¹⁰ The Department adopted the proposed decision and ordered that revocation be stayed upon the conditions recommended by the hearing officer. After the Appeals Board had affirmed the Department's decision, licensee filed a separate petition for writ of mandate in the trial court and that court issued an alternative writ. ¹¹

The trial court found that there was no substantial evidence showing 'that the presence of topless waitresses encourages the consumption of liquor' or 'intemperance or immorality,' or showing 'that the presence of topless waitresses is contrary to public health and welfare.' The court concluded that the Department had failed to demonstrate grounds for suspension or revocation of licensee's license under section 24200; that the order of revocation of the license was 'unjust, arbitrary and capricious,' and that no regulations or statutes prohibited licensee's conduct. The court thereupon granted judgment for licensee and ordered the issuance of a peremptory writ of mandate commanding the Department to set aside its decision. This appeal by the Department followed.

The Department contends that it was the duty of the trial court merely to determine whether the findings of the Department were supported by substantial evidence and that the court erred in deciding that they were not. The Department's position is that it did not abuse its discretion in determining that the employment of topless waitresses to solicit orders for and to serve alcoholic beverages was conduct which is contrary to public welfare or morals.

We commence our consideration of this issue with some observations concerning the nature and scope of judicial review appropriate when a decision of the Department of Alcoholic Beverage Control is challenged. The rules we set forth here as governing our function on review are equally applicable to the proper conduct of the trial court in its review of the decision of the Appeals Board. (De Martini v. Department of Alcoholic Beverage Control (1963) 215 Cal.App.2d 787, 798, 30 Cal.Rptr. 668.)

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