Burger Brewing Co. v. Liquor Control Commission, Dept. of Liquor Control

• Decision Date: 09 May 1973
• Docket Number: No. 72-493,72-493
• Citation: Burger Brewing Co. v. Liquor Control Commission, Dept. of Liquor Control, 296 N.E.2d 261, 34 Ohio St.2d 93, 63 O.O.2d 149 (Ohio 1973)
• Parties: , 63 O.O.2d 149 The BURGER BREWING CO. et al., Appellants, v. LIQUOR CONTROL COMMISSION, DEPARTMENT OF LIQUOR CONTROL, et al., Appellees.
• Court: Ohio Supreme Court

Page 93

34 Ohio St.2d 93

296 N.E.2d 261, 63 O.O.2d 149

The BURGER BREWING CO. et al., Appellants, v. LIQUOR CONTROL COMMISSION, DEPARTMENT OF LIQUOR CONTROL, et al., Appellees.

No. 72-493.

Supreme Court of Ohio.

May 9, 1973.

Syllabus by the Court

1. An action for a declaratory judgment to determine the validity of an administrative agency regulation may be entertained by a court, in the exercise of its sound discretion, where the action is within the spirit of the Declaratory Judgment Act, a justiciable controversy exists between adverse parties, and speedy relief is necessary to the preservation of rights which may otherwise be impaired or lost. (Paragraph two of the syllabus in American Life & Accident Ins. Co. v. Jones, 152 Ohio St. 287, 89 N.E.2d 301, followed.)

2. Where the prerequisites for entertaining such an action are met, an action for a declaratory judgment upon the validity of an administrative agency regulation does not constitute a judicial review of quasi-legislative proceedings of such agency. (Fortner v. Thomas, 22 Ohio St.2d 13, 257 N.E.2d 371, distinguished.)

The Liquor Control Commission adopted Regulation LCc-1-73, effective in August 1970. The regulation was promulgated pursuant to the provisions of R.C. §§ 4301.03 and 4301.10. The regulation, in pertinent part, provides:

'Section 2. No manufacturer or wholesale distributor shall initiate specials or temporary price cuts and for the purpose of preventing specials or temporary price cuts the following restrictions shall be applied to all wholesale distributors and manufacturers located in Ohio or shipping beer into Ohio with the consent of the Department of Liquor Control.

'* * *

'Section 3. No manufacturer shall fix the price per case or draft package at which a wholesale distributor sells beer or malt beverages to retailers in Ohio. In order to prevent said practices the following restrictions shall be applied to all manufacturers and wholesale distributors located in Ohio or shipping into Ohio with the consent of the Department of Liquor Control.'

The plaintiffs in this case are nine breweries that hold permits issued by the commission to manufacture and distribute beer in the state. The defendants are the Liquor Control Commission, Department of Liquor Control, the chairman of the commission, and The Wholesale Beer Association of Ohio, Inc., an intervening defendant. The breweries, in attacking the validity of commission Regulation LCc-1-73, instituted three actions in the Court of Common Pleas. The first was an appeal under R.C. § 119.11; the second was an appeal under R.C. § 119.12; and the third was an action for a declaratory judgment and injunction. The cases were consolidated for trial. The Court of Common Pleas granted a declaratory judgment that certain paragraphs of Sections 2 and 3 of the regulation were unreasonable and unlawful, and issued an injunction to prohibit their enforcement. The court held that R.C. §§ 119.11 and 119.12 do not provide a remedy for plaintiffs. The intervening defendant filed an appeal in the Court of Appeals, and plaintiffs cross-appealed. There was no appeal from the judgment with regard to R.C. § 119.12.

The Court of Appeals, one judge dissenting, affirmed the judgment of the Court of Common Pleas with regard to R.C. § 119.11, but reversed the judgment granting a declaratory judgment and issuance of an injunction. It held that 'R.C. § 119.11 does not provide the remedy to the appellants * * * to obtain review of the adoption of Regulation 73 * * *,' and that 'The Common Pleas Court erred in its holding that plaintiffs could determine the validity of said regulation pursuant to R.C. § 2721.03.'

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Topper, Alloway, Goodman, DeLeone & Duffey, R. Brooke Alloway, John J. Duffey, James F. DeLeone, and Burneson, Krier, Clark & Asher and David L. Kessler, Columbus, for appellants.

William J. Brown, Atty. Gen., John A. Connor, II, Fontana, Ward, Kaps & Perry and Charles T. Kaps, Columbus, for appellees.

WILLIAM B. BROWN, Justice.

This case presents two threshold questions: (1) Whether an appeal can be taken from a regulation of an administrative agency to the Court of Common Pleas pursuant to R.C. § 119.11, and (2) whether the Court of Common Pleas can make an original determination of the validity of an administrative agency regulation pursuant to R.C. § 2721.03.

R.C. § 119.11 provides, in part:

'Any person adversely affected by an order of an agency in adopting, amending, or rescinding a rule or in adopting, readopting, or continuing a rule, amendment, or rescission previously adopted as an emergency rule as provided in Section 119.03 of the Revised Code, may appeal to the court of common pleas of Franklin County on the ground that said agency failed to comply with the law in adopting, amending, rescinding, publishing or distributing said rule, or that the rule as adopted or amended by the agency is unreasonable or unlawful or that the rescission of the rule was unreasonable or unlawful. * * *'

The regulation (rule) that plaintiffs seek to bring before the court is one that is presently effective; they seek 'judicial scrutiny' of the regulation, not a determination of its application in an administrative adjudication. In Fortner v. Thomas (1970), 22 Ohio St.2d 13, 257 N.E.2d 371, this court had before it a Liquor Control Commission regulation. It held that such a regulation could not be reviewed under R.C. § 119.11. Thus, Fortner is dispositive of the appeal in this case under R.C. § 119.11, and the judgment of the Court of Appeals upon that issue is affirmed.

A judicial determination is also sought under R.C. § 2721.03, the declaratory judgment statute, which provides that:

'Any person interested under a deed, will, written contract, or other writing constituting a contract, or whose rights, status, or other legal relations are affected by a constitutional provision, statute, rule as defeined in Section 119.01 of the Revised Code, municipal ordinance, contract, or franchise, may have determined any question of contruction or validity arising under such instrument, constitutional provision, statute, rule, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder.'

This court has previously upheld the right to declaratory relief pertaining to the construction and validity of statutes and ordinances. This court construed a statute in American Life & Accident Ins. Co. v. Jones (1949), 152 Ohio St. 287, 89 N.E.2d 301, and determined the validity of a statute in Canton v. Imperial Bowling Lanes (1968), 16 Ohio St.2d 47, 242 N.E.2d 566. The validity of a city ordinance was determined in Wilson v. Cincinnati (1960), 171 Ohio St. 104, 168 N.E.2d 147, and in Peltz v. South Euclid (1967), 11 Ohio St.2d 128, 228 N.E.2d 320. See, also, Burt Realty Corp. v. Columbus (1970), 21 Ohio St.2d 265, 257 N.E.2d 355. As Professor Davis stated in his Administrative Law Text (1959 Ed.), 383, Section 21.06: 'From the standpoint of timing a challenge, regulations are hardly distinguishable from statutes.' So the court's declarative decisions involving the construction and validity of statutes and ordinances provide us with guidelines for the determination of the validity of regulations.

In American Life & Accident Ins. Co. v. Jones, the court held that a declaratory judgment action could be entertained under G.C. 1345-1, to determine whether the insurance company should contribute to the state unemployment compensation fund for its agents. There, at page 296, 89 N.E.2d 301, Judge Stewart listed the three elements prerequisite for the declaration: (1) A real controversy between the parties; (2) which is justiciable in character; and (3) speedy relief is necessary to preserve the rights of the parties.

For a real controversy to exist it is not necessary that the plaintiffs violate the regulation, as long as there is a controversy "between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." (Emphasis added.) Peltz v. South Euclid, supra, 11 Ohio St.2d at page 131, 228 N.E.2d at page 323. In the present case, there is no doubt that there are adverse legal interests. On one side of the controversy are the manufacturers, seeking a judgment declaring the regulation void in order to avoid its economic constraints; on the opposite side are the wholesalers, invoking the regulation to set a ratio of the price charged them and the retailers.

To aid in the determination whether a controversy 'is justiciable in character' or there is the 'ripeness' necessary for review, United States Supreme Court Justice Harlan, in Toilet Goods Ass'n v. Gardner (1967), 387 U.S. 158, 162, 87 S.Ct. 1520, 1523, 18 L.Ed.2d 697, developed a two-fold test:

'* * * first to determine whether the issues tendered are appropriate for judicial resolution, and second to assess the hardship to the parties if judicial relief is denied at that stage.' See also Justice Frankfurter's...