Dep't of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd.
| Decision Date | 17 August 2022 |
| Docket Number | C094984 |
| Citation | 82 Cal.App.5th 337,298 Cal.Rptr.3d 349 |
| Parties | DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent; Bogle Vineyards, Inc., Real Party in Interest. |
| Court | California Court of Appeals Court of Appeals |
Rob Bonta, Attorney General, Chris A. Knudsen, Assistant Attorney General, Andrea R. Austin, Kelcie M. Gosling and Lykisha D. Beasley, Deputy Attorneys General, for Petitioner.
No appearance for Respondent.
Alan Charles Dell'Ario, Napa; Hinman & Carmichael LLP, John A. Hinman, San Francisco, and Barbara L. Snider for Real Party in Interest.
The Department of Alcoholic Beverage Control (Department) suspended the license of real party in interest, Bogle Vineyards, Inc. (Bogle), for 10 days after finding that Bogle violated Business and Professions Code section 25502, subdivision (a)(2)1 by furnishing, giving, or lending a "thing of value"—a nonoperational pizza oven—to a Raley's grocery store as part of a promotional display. Bogle appealed the Department's decision to the Alcoholic Beverage Control Appeals Board (Board), and the Board reversed the suspension. The Department then petitioned this court for a writ of review, which we issued. We agree with the Board that the Department erred, and therefore reverse the Department's decision and affirm the Board's decision.
Bogle is a family-owned winery that has operated for approximately 40 years. It holds a type 2 winegrower's license and has no record of prior discipline.
On July 12, 2018, Agent B. Pender, as part of his enforcement assignment with the Department, entered a Raley's store (store #119) in South Lake Tahoe. During his visit, Pender and another agent observed a point of sale display for Bogle that prominently featured a Bogle-branded pizza oven. The display also had multiple layers of open and unopened cases of Bogle wine and a Bogle-branded pennant. Raley's received the display from its wine supplier, Young's Market (Young's). Young's, in turn, had received the display from Bogle, unsolicited, to put up in Raley's.
The pizza oven was part of a Bogle point-of-sale promotional campaign highlighting pizza month, in which a customer would receive $4 off a pizza with the purchase of a bottle of Bogle wine. For the promotional displays, Bogle purchased 250 Blackstone pizza ovens for a total of $81,734.02. Of those 250 units, Bogle allocated 50 large and 38 small ovens to be used in promotional displays in 88 Raley's stores in California, including Raley's store #119. An individual large oven, like the one at Raley's store #119, costs $280.32. Bogle provided a guidance packet on the promotion for its employees and wholesaler which stated in part that "[i]f buyers are still w[ ]ary, FYI the ovens ‘don't work’ without propane AND the regulators can be removed, if needed." It also showed how the pizza ovens were to be set up in the displays. Bogle paid for the pizza oven promotional campaign.
Young's sales representative, Lynne Marie Guerra Jackson, received the pizza oven and prepared the display for Raley's store #119. Jackson did not fully assemble the pizza oven for use in the display, as she did not attach the propane regulator parts included with the oven, and instead kept the parts. As a result, the oven was inoperative when placed in the display at Raley's store #119.
On July 20, 2018, Pender and the other agent returned to Raley's store #119 to discuss the Bogle display, but it had been removed. There was no written contract or agreement regarding the use or disposal of the pizza oven or its parts after the promotion ended. However, the store's management informed Pender that all point-of-sale displays are loans from the vendors, and that Young's had removed the display—including the pizza oven—after the display had been in the store for over a month. Beau Cornell, Bogle's merchandising manager for the promotion, also understood that it was Jackson's responsibility to take the display down when the promotion ended, but he did not know what ultimately became of the pizza oven components.
The Department filed an accusation alleging that Bogle, through its agents, did, directly or indirectly, furnish, give, or lend a thing of value, namely, a pizza oven, to an off-sale retail licensee (namely Raley's) in violation of section 25502, subdivision (a)(2). Following an administrative hearing, the administrative law judge (ALJ) issued a proposed decision, sustaining the accusation and recommending a 10-day suspension of Bogle's license. In doing so, the ALJ found that the oven was valued at $280.32, yet Bogle took no steps to render the ovens valueless prior to sending them to Young's, although it did provide a guidance packet instructing Young's that the ovens "don't work" without propane and that the regulator also may be removed "if needed." It further found that Jackson installed the pizza oven at Raley's store #119 without the propane tank regulator tubing, but did assemble the infrastructure, including the pizza stone. The ALJ noted that there were no consequences if Raley's decided to keep the display at the end of the promotional campaign. While it found Bogle did not intend to "gift" the ovens to retailers in exchange for prominent displays in their stores, it concluded that the "net result" was an unlawful furnishing in violation of the statute.
The ALJ further found that Thus, it found that Bogle furnished or gave a " ‘thing of value’ to an off-sale licensed premises in violation of Section 25502 [, subdivision] (a)(2)." The Department adopted the proposed decision.
Bogle appealed to the Board, arguing the Department erred when it found Bogle violated section 25502, subdivision (a)(2). The Board agreed, calling the Department's result "absurd." It concluded that the Department's decision that the pizza oven was a "thing of value" was inaccurate as a matter of law and was not supported by substantial evidence because there was no evidence presented that Raley's reassembled the pizza oven or removed the pizza stone for use. It therefore found the Department's result was based on speculation and conjecture and was not within the spirit or letter of the law. It accordingly reversed the Department's decision.
The Department petitioned this court for a writ of review, which we issued. ( § 23090.)
The Department argues it correctly found that the pizza oven was a " ‘thing of value’ " under section 25502, subdivision (a)(2), and contends the pizza oven had " ‘intrinsic value other than as advertising’ " per California Code of Regulations, title 4, section 106 (hereafter, Rule 106). It avers that the Board's interpretation of the statute would lead to absurd results, as it would permit a supplier to furnish any inoperative item, no matter how valuable, to a retailer without violating the statute.
Bogle counters that the inoperative pizza oven was a display, as permitted by Rule 106, and was not an impermissible "thing of value." It further contends that the Department's finding that the oven had value was pure speculation. We agree with Bogle that the Department erred when it found that an inoperative pizza oven, used solely for purposes of a temporary promotional display, was a "thing of value" under the statute.2
The California Constitution vests the Department with the authority to administer the Alcoholic Beverage Control Act. ( Cal. Const., art. XX, § 22 ; § 23000 et seq. ) However, any party aggrieved by a decision of the Department may file an appeal with the Board. ( Cal. Const., art. XX, § 22, par. 11; § 23081.) After the Board has issued a final order, the Department's decision is subject to judicial review in the Supreme Court or the Court of Appeal. ( §§ 23090, 23090.2.)
The scope of our review is narrow. ( Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (2002) 100 Cal.App.4th 1066, 1071, 123 Cal.Rptr.2d 278 ( Deleuze ).) We review the Department's decision to determine whether "the department has proceeded without, or in excess of, its jurisdiction," "the department has proceeded in the manner required by law," the decision "is supported by the findings," the findings "are supported by substantial evidence in the light of the whole record," or "there is relevant evidence, which, in the exercise of reasonable diligence, could not have been produced or which was improperly excluded at the hearing before the department." ( §§ 23084, 23090.2.)
In conducting our review, we must indulge all legitimate inferences in support of the Department's determination. ( Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (2004) 118 Cal.App.4th 1429, 1437, 13 Cal.Rptr.3d 826.) We may not "reweigh the evidence or exercise independent judgment to overturn the Department's factual findings to reach a contrary, although perhaps equally reasonable, result." ( Ibid . )3
The Department's interpretation of its own rules is entitled to deference and a reviewing court generally will not depart from that interpretation unless it is clearly erroneous or unauthorized. ( Physicians & Surgeons Laboratories, Inc. v. Department of Health Services (1992) 6 Cal.App.4th 968, 986-987, 8 Cal.Rptr.2d 565 ; Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (2017) 7 Cal.App.5th 628, 634, 213 Cal.Rptr.3d 130.) However, the...
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