Club 107, In re

• Decision Date: 11 August 1989
• Docket Number: No. 85-526,85-526
• Citation: 566 A.2d 966,152 Vt. 320
• Parties: In re CLUB 107.
• Court: Vermont Supreme Court

Page 966

566 A.2d 966

152 Vt. 320

In re CLUB 107.

No. 85-526.

Supreme Court of Vermont.

Aug. 11, 1989.

Frank F. Berk and Linda Sable, Law Student (On the Brief) of Mayer & Berk, South Royalton, for plaintiff-appellant.

Jeffrey L. Amestoy, Atty. Gen., and Robert W. Gagnon, Sr. Asst. Atty. Gen., Montpelier, for defendant-appellee.

Before ALLEN, C.J., and PECK, GIBSON, DOOLEY and MAHADY, JJ.

DOOLEY, Justice.

Appellant, Club 107, is the holder of first and third class licenses to sell alcoholic beverages for consumption on its premises. On November 1, 1985, the Liquor Control Board (Board) determined that appellant had, on August 28, 1985, violated the Board's General Regulation 9(a) which prohibits "[o]bscene, lewd, or indecent entertainment." As a result of this violation, the Board suspended appellant's licenses for a period of fifteen days. This appeal ensued, and the Board issued an order staying the suspension during the pendency of the action before this Court. We hold that in promulgating General Regulation 9(a) the Board exceeded its legislative grant of authority and that the regulation is, therefore, invalid. For this reason, we reverse and vacate the Board's order.

On August 28, 1985 appellant held a "ladies night," so called, which included male dancers as the featured entertainment. In attendance at this event were approximately 170 women and two investigators from the Department of Liquor Control. During the course of the evening, the investigators observed that one of the dancers had exhibited pubic hair during his performance and that the buttocks of the same dancer and a subsequent dancer were partially exposed as they danced. Appellant was cited for violating the regulation, and a hearing was held before the Board on October 18, 1985. On November 1 the Board issued its findings of fact, conclusions of law, and ruling.

Appellant challenges the constitutionality of General Regulation 9(a) on the grounds that it violates the free speech provision embodied in Chapter I, Article 13 of the Vermont Constitution, which states:

That the people have a right to freedom of speech, and of writing and publishing their sentiments, concerning the transactions of government, and therefore the freedom of the press ought not to be restrained.

Specifically, appellant argues that the semi-clothed dancing of the male performers was speech-related conduct which is improperly infringed upon by the regulation.

We need only address the constitutional issue if we find that this regulation was promulgated pursuant to authority either expressly or impliedly granted to the Board by the Legislature. See, e.g., 4245 Corp. v. Division of Beverage, 371 So.2d 1032, 1033 (Fla.Dist.Ct.App.1978). This is because without a legislative grant of authority enabling the Board to establish and enforce such a prohibition, the regulation is void. See In re Agency of Administration, 141 Vt. 68, 75, 444 A.2d 1349, 1352 (1982). As this Court has previously observed, "[a]n agency must operate for the purposes and within the bounds authorized by its enabling legislation, or this Court will intervene." Id. If the regulation is void as exceeding the Board's enabling legislation, it cannot stand--regardless of whether its enforcement violates the constitutional protections afforded to free speech under either the Vermont or United States Constitutions. Thus, we must first put aside the question whether the semi-nude performances of male dancers in a night club is constitutionally protected speech-related conduct, and the question of whether the state--in the exercise of its police powers--may regulate such activities. Rather, the focus of our initial concern is whether the Legislature has authorized the Liquor Control Board to promulgate such regulations.

The challenged regulation states, in relevant part:

9. (a). Obscene, lewd, or indecedent entertainment. The Liquor Control Board shall consider the following conduct upon any licensed premises to constitute obscene, lewd or indecent entertainment:

(1) The real or simulated showing of the human male or female genitals, pubic hair or buttocks, or the showing of the female breast below the top of the areola by any employee, entertainer or by any other person.

In order to determine whether the promulgation of Regulation 9(a) was a valid exercise of the Board's authority, we begin our analysis by noting that the Board, as an administrative body, "has only such powers as are expressly conferred upon it by the Legislature, together with such incidental powers expressly granted or necessarily implied as are necessary to the full exercise of those granted...." Trybulski v. Bellows Falls Hydro-Electric Corp., 112 Vt. 1, 7, 20 A.2d 117, 120 (1941). And while there is a presumption of validity afforded the actions taken by administrative agencies, see In re Handy, 144 Vt. 610, 612, 481 A.2d 1051, 1052 (1984), an agency's regulations must be reasonably related to its enabling legislation in order to withstand judicial scrutiny. See In re Baptist Fellowship of Randolph, Inc., 144 Vt. 636, 638, 481 A.2d 1274, 1275 (1984); see also In re Vermont Gas Systems, Inc., 150 Vt. 34, 39, 549 A.2d 627, 630 (1988) (agency's rulemaking authority cannot support an expansive interpretation of its own powers); Agency of Administration, 141 Vt. at 75, 444 A.2d at 1352 (administrative agency may not use its rulemaking power to exceed its legislative grant of authority); State v. Auclair, 110 Vt. 147, 163, 4 A.2d 107, 114 (1939) (even when afforded broad discretion, an administrative agency may not act in an "unrestrained" or "arbitrary" manner).

The Liquor Control Board has been given broad authority to "[m]ake rules and regulations concerning, and issue permits under such terms and conditions as it may impose for the furnishing, purchasing, selling, ... delivering and possessing of alcohol...." 7 V.S.A. § 104(8). And it may "[m]ake and promulgate regulations necessary for the execution of its powers and duties...." 7 V.S.A. § 104(5). Moreover, the Legislature has provided that:

[Title 7] is based on the taxing power and the police power of the state, and is for the protection of the public welfare, good order, health, peace, safety and morals of the people of the state, and all its provisions shall be liberally construed for the accomplishment of the purposes set forth herein.

7 V.S.A. § 1; see also Ackerman v. Kogut, 117 Vt. 40, 47, 84 A.2d 131, 136 (1951) (interpreting the predecessor statute to 7 V.S.A. § 1).

Even given the sweeping language of § 1, the Board's authority is not unrestrained. See Auclair, 110 Vt. at 163, 4 A.2d at 114. In Ackerman, 117 Vt. at 47, 84 A.2d at 136, this Court discussed the meaning of the language in the predecessor statute to 7 V.S.A. § 1. There, the Court determined that "the spirit and purpose of the law is that traffic in intoxicating liquor shall be so conducted as to discourage intoxication and encourage temperance." The implication of our discussion in Ackerman for the purposes of the present case is that the mere coincidence of the sale of liquor and some other activity is not--by itself--sufficient to allow the Board to regulate the other activity for the protection of the public welfare, good order, health, peace, safety and morals of the people of...