Dash, Inc. v. Alcoholic Beverage Control Appeals Bd., s. 80-5740

• Citation: 683 F.2d 1229
• Decision Date: 10 August 1982
• Docket Number: 80-5267 and 80-5268,Nos. 80-5740,s. 80-5740
• Parties: DASH, INC., dba The Arches, Plaintiff-Appellant, v. The ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice, Director of the Department of Alcoholic Beverage Control; The Department of Alcoholic Beverage Control, Defendants and Appellees. Elmer O. LOCKER, Jr., and Joyce M. Locker, Plaintiffs and Appellants, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice, Director of the Alcoholic Beverage Control; The Department of Alcoholic Beverage Control, Defendants and Appellees. Elmer O. LOCKER, Jr., and William Coleman, Plaintiffs and Appellants, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice, Director of the Alcoholic Beverage Control; The Department of Alcoholic Beverage Control, Defendants and Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1229

683 F.2d 1229

DASH, INC., dba The Arches, Plaintiff-Appellant, v. The ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice,

Director of the Department of Alcoholic Beverage

Control; The Department of Alcoholic

Beverage Control, Defendants

and Appellees.

Elmer O. LOCKER, Jr., and Joyce M. Locker, Plaintiffs and Appellants, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice,

Director of the Alcoholic Beverage Control; The

Department of Alcoholic Beverage

Control, Defendants and Appellees.

Elmer O. LOCKER, Jr., and William Coleman, Plaintiffs and Appellants, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD; Baxter Rice,

Director of the Alcoholic Beverage Control; The

Department of Alcoholic Beverage

Control, Defendants and Appellees.

Nos. 80-5740, 80-5267 and 80-5268.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 10, 1981.

Decided Aug. 10, 1982.

Ralph B. Saltsman, Stephen Warren Solomon, Inc., Marina del Rey, Cal., Joshua Kaplan, Kaplan & Novodor, Beverly Hills, Cal., for plaintiff-appellant.

Scott D. Rasmussen, Deputy Atty. Gen., Richard M. Radosh, Los Angeles, Cal., for defendants and appellees.

On Appeal from the United States District Court for the Central District of California.

Before BROWNING and ANDERSON, Circuit Judges, and BILBY, District Judge ^*.

J. BLAINE ANDERSON, Circuit Judge:

I. BACKGROUND

Dash, Inc., the Lockers, and Mr. Coleman ("Appellants") filed actions in federal district court under 42 U.S.C. § 1983 against the Department of Alcoholic Beverage Control ("Department"), its director, and the Alcoholic Beverage Control Appeals Board ("ABC Appeals Board"), requesting declaratory and injunctive relief prohibiting the Department from enforcing Department Rules 143.2 and 143.3 ¹ and the statutory enabling authority for those rules, Cal.Bus. & Prof.Code § 24200. ²

Appellants are owners of businesses considered by California state law to be restricted entry premises licensed to dispense alcoholic beverages by appellee Department. The establishments under appellants' control provided entertainment in the form of nude dancing by female entertainers. Because Department Rule No. 143.3 prohibits such nude entertainment, license revocation proceedings were initiated against appellants. Following hearings, the Department found that appellants had violated Rule 143.3 and ordered appellants' licenses revoked. Appellants appealed to the ABC Appeals Board which affirmed the Department. Petitions for writs of review filed with the courts of appeal and the California Supreme Court were summarily denied. Appellants then commenced the instant federal litigation.

Appellants do not seek to relitigate the substantive constitutionality of Rule 143.3; ³ they do contend that the current California procedure for revoking liquor licenses denies licensees the procedural due process guarantees of the Fourteenth Amendment. Appellants argue that the process provides no meaningful opportunity to present constitutional defenses to license revocations. Appellants also contend that California Constitution article 3, § 3.5 violates the Supremacy Clause; that Rule 143.3 is overbroad; that the Department abused its discretion in ordering the revocations; and that the ABC Appeals Board was not competent to review appellants' appeals. The district courts below denied declaratory and injunctive relief. We affirm.

II. DISCUSSION

A. Res Judicata

We first address appellees' argument, based upon the doctrine of res judicata, that the revocation orders followed by the appellate court summary denials of appellants' petitions for review preclude the instant action. The district court, in No. 80-5740, expressly rejected appellees' argument, ⁴ while the district court, in Nos. 80-5267 and 80-5268, denied relief on other grounds without reaching the res judicata issue. ⁵

The federal courts have traditionally adhered to res judicata principles. Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Furthermore, this court has applied the doctrine to bar claims brought in federal district court under 42 U.S.C. § 1983 alleging constitutional violations related to liquor license revocation proceedings where such claims were rejected by the Department. Francisco Enterprises, Inc. v. Kirby, 482 F.2d 481, cert. denied, 415 U.S. 916, 94 S.Ct. 1413, 39 L.Ed.2d 471 (1974) (9th Cir. 1973). ⁶ Res judicata principles do not apply, however, "when the party against whom the earlier decision is asserted did not have a 'full and fair opportunity' to litigate the claim or issue." Kremer v. Chemical Const. Corp., --- U.S. ----, 102 S.Ct. 1883, 1897, 72 L.Ed.2d 262 (1982); Allen v. McCurry, 449 U.S. at 95, 101 S.Ct. at 415. Appellants here argue that they were denied a full and fair opportunity to present constitutional defenses during their state revocation proceedings. Thus, for our purposes here, the res judicata analysis merges with our analysis of appellants' procedural due process claims. Since we find, reaching the merits, that the California liquor license revocation procedures, as evidenced by the records in these cases, sufficiently provided appellants with the minimum guarantees of due process required under the Fourteenth Amendment, we need not reach appellees' res judicata arguments as to the procedural due process issue. ⁷

B. Due Process

Procedural due process imposes constraints on governmental decisions which deprive individuals of liberty or property interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment. Mathews v. Eldridge, 424 U.S. 319, 332, 96 S.Ct. 893, 901, 47 L.Ed.2d 18 (1976). Under California law, a liquor license issued pursuant to the Alcoholic Beverage Control Act is a valuable property right. Etchart v. Pyles, 106 Cal.App.2d 549, 235 P.2d 427, 429 (1951). Thus, some form of hearing is required before liquor licensees may be deprived of their property interest in a liquor license. However, due process is flexible and "calls for such procedural protections as the particular situation demands," Mathews, 424 U.S. at 334, 96 S.Ct. at 902; United States v. One 1971 BMW 4-Door Sedan, 652 F.2d 817 (9th Cir. 1981); and "no single model of procedural fairness, let alone a particular form of procedure, is dictated by the Due Process Clause." Kremer, 102 S.Ct. at 1898.

Under California law, Department licensees accused of violating statutes or regulations are afforded hearings under the California Administrative Procedures Act (APA). Cal. Gov't Code § 11500 et seq. ⁸ Licensees may appeal Department determinations to the ABC Appeals Board. Cal.Bus. & Prof.Code §§ 23081-23087. Further review is available by petitions for writs of review to the appropriate California court of appeal and the California Supreme Court. Cal.Bus. & Prof.Code § 23090.

At issue here is the impact upon the above procedural process of the 1967 amendment to the Bus. & Prof.Code embodied in section 23090.5, ⁹ restricting review of Department determinations to petitions for writ of review with the California appellate courts, together with the 1978 amendment to article III, § 3.5 of the California Constitution ¹⁰ which prohibits administrative bodies from declaring statutes unconstitutional or refusing enforcement of statutes on the basis of claims that such statutes are unconstitutional. Appellants contend that these two enactments, working in combination, deny licensees due process of law by forcing licensees to submit to revocations by an administrative body which may not act on constitutional defenses, while review of such decisions is limited to a discretionary petition for writ of review before the appellate courts. We disagree.

Appellants' arguments exaggerate the impact of the two sections. Article 3, § 3.5 merely "places restraints on administrative agencies relative to their refusal to enforce statutes on constitutional grounds; it does not affect their enforcement of their own rules or their competence to examine evidence before them in light of constitutional standards." Capitol Industries-EMI v. Bennett, --- F.2d ----, at n.28, Nos. 80-4113 and 80-4114, slip op. at 843, n.28 (9th Cir., February 16, 1982) (amended July 22, 1982, slip op. at 3306), cert. denied, --- U.S. ----, 102 S.Ct. 1438, 71 L.Ed.2d 655 (1982) (quoting Goldin v. Public Utilities Commission, 23 Cal.3d 638, 688, 153 Cal.Rptr. 802, n.18, 592 P.2d 289, 309 n.18 (1979)). Moreover, section 3.5 does not affect the powers of the California courts to consider constitutional claims. Id. slip op. at 843, n.27, at ----, n.27.

Despite the 1967 amendment to Cal.Bus. & Prof.Code § 23090.5, the appellate courts retain jurisdiction to determine whether the Department "has proceeded without or in excess of its jurisdiction," or "has proceeded in the manner required by law." Bus. & Prof.Code §§ 23090.2(a) and (b). ¹¹ As mentioned, section 3.5 also has not affected these powers. In addition, the appellate courts, by virtue of their inherent powers to declare statutes unconstitutional, Marbury v. Madison, 5 U.S. 137, 2 L.Ed. 60 (1803); Byers v. Board of Supervisors, 262 Cal.App.2d 148, 157-58, 68 Cal.Rptr. 549 (1968), may do so based upon arguments raised in petitions for writs of review of a Department determination. Those courts may therefore reach constitutional issues raised by petitions seeking review of Department determinations.

During their administrative hearings, appellants were given the opportunity to present evidence relevant to all defenses raised, including their constitutional defenses. ¹² The ABC Appeals Board disposed of all of Dash's constitutional arguments and all but one of Lockers'. ¹³

On petition for writ of review, appellants raised the constitutional contention raised here and below that the revocation procedures denied them procedural due process protection. ¹⁴ Contrary to appellants' contentions, petitions for writ of review of an administrative determination constitute...