Dept. of Alcoholic Bev. Control v. Board

• Citation: 99 Cal.App.4th 880,121 Cal.Rptr.2d 729
• Decision Date: 26 June 2002
• Docket Number: No. E030224.,E030224.
• Court: California Court of Appeals
• Parties: DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent, Renee Vicary, Real Party in Interest.

121 Cal.Rptr.2d 729

99 Cal.App.4th 880

DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent Renee Vicary, Real Party in Interest.

No. E030224.

Court of Appeal, Fourth District, Division 2.

June 26, 2002.

Rehearing Denied July 18, 2002.

Review Denied October 23, 2002.

Bill Lockyer, Attorney General, Dennis W. Dawson, Supervising Deputy Attorney General, and Chris A. Knudsen, Deputy Attorney General, for Petitioner.

No appearance for Respondent.

Roger Jon Diamond, Santa Monica, for Real Party in Interest.

OPINION

HOLLENHORST, Acting P.J.

Real party in interest Renee Vicary (Vicary) is the proprietor of Angels Sports Bar, which offers topless entertainment. The bar is licensed to serve alcoholic beverages and accordingly is supervised by petitioner Department of Alcoholic Beverage Control (Department). During an investigation, Department investigators observed dancers employed by Vicary at the bar touching and fondling their bare breasts during dances. Other dancers were observed exposing one or more breasts while sitting or standing within six feet of patrons.

The Department thereafter filed an accusation alleging that Vicary's employees had seven times violated title 4, section 143.3, subdivision (1)(b) ("touching, caressing or fondling of the breast, buttocks, anus or genitals") of the California Code of Regulations,¹ and had once violated title 4, section 143.3, subdivision (2) of the California Code of Regulations, which prohibits the exposure of breast or buttock unless the dancer is on a raised stage at least six feet from patrons.

At the scheduled hearing, Vicary first raised a constitutional challenge to the power of the administrative law judge (ALJ), an employee of the Department, to hear the case. This challenge was rejected and the hearing proceeded. The ALJ sustained all counts of the accusation and a license suspension of 30 days was imposed. Vicary duly appealed. (Cal. Const., art. XX, § 22; Bus. & Prof.Code, § 23081.) The Alcoholic Beverage Control Appeals Board (Board) reversed the decision of the ALJ not on factual grounds, but on the basis that Rule 143.3 could not be constitutionally applied to the arguably "expressive" conduct of the dancers. The Department sought judicial review from this court. (Bus. & Prof.Code, § 23090.) We issued a writ of review, and now annul the decision of the Board.

DISCUSSION

A.

We first address the threshold issue of the ALJ's legal power and the propriety of his employment as a decision maker. Vicary argues that he was not selected in conformity with the Administrative Procedures Act specifically Government Code section 11502;² further, that because he was an employee of the Department, his implicit bias deprived her of due process. Neither contention has merit.

Section 11502, subdivision (a), provides that "[a]ll hearings of state agencies required to be conducted under this chapter shall be conducted by administrative law judges on the staff of the Office of Administrative Hearings." However, subdivision (a) of section 11501 qualifies this requirement by stating: "This chapter applies to any agency as determined by the statutes relating to that agency." (Italics added.) Here, the ALJ acted under the authority of Business and Professions Code section 24210, which provides in subdivision (a) that "[t]he department may delegate the power to hear and decide to an administrative law judge appointed by the director." As petitioner points out, this statute was amended in 1994 to delete the existing provision that matters be heard pursuant to the Administrative Procedures Act statutes, and instead to empower the director of the Department to appoint ALJ's. Furthermore, sections 11415.10 and 11415.20 clearly confirm that "[t]he governing procedure by which an agency conducts an adjudicative proceeding is determined by the statutes and regulations applicable to that proceeding," and that "[a] state statute ... applicable to a particular agency ... prevails over a conflicting or inconsistent provision of this chapter."³ These provisions make explicit the applicability of the rule that where two statutes consider the same subject matter the more specific prevails over the more general. (San Francisco Taxpayers Assn. v. Board of Supervisors (1992) 2 Cal.4th 571, 577, 7 Cal.Rptr.2d 245, 828 P.2d 147.)⁴

Vicary's assertion that Business and Professions Code section 24210 merely authorizes the director of the Department to select an ALJ from the staff of the Office of Administrative Hearings to hear a particular case is without merit. This was the procedure under the previous version of the statute, and its express references back to the Administrative Procedures Act. The new version must have been designed to accomplish some alteration in procedure; to construe substantial changes in language as effecting no change would be absurd. We think it obvious that the intended change was to permit the director to establish a staff of Department ALJ's.⁵ The new version provides that the Department may delegate its powers to an ALJ "appointed by the director," and in the context of state employment, "appointed" is frequently equivalent to "hired." (See § 18525.) We think it plain that the Department is authorized to hire and use its own ALJ's rather than to use those selected and employed by the Office of Administrative Hearings.

Vicary's second argument raises the issue of due process, which of course includes the right to an impartial decision maker. (Hall v. Harker (1999) 69 Cal. App.4th 836, 841, 82 Cal.Rptr.2d 44.) Due process applies to administrative proceedings as well as to judicial proceedings. (Burrell v. City of Los Angeles (1989) 209 Cal.App.3d 568, 582, 257 Cal.Rptr. 427.) However, at least in the administrative context, all that is required is that the hearing officer or other decision maker be a "`reasonably impartial, noninvolved reviewer.'" (Linney v. Turpen (1996) 42 Cal.App.4th 763, 771, 49 Cal.Rptr.2d 813 (Linney), italics added.)

Vicary's position is that because the ALJ was employed by the Department, he necessarily had a bias in favor of the Department which would be prompted by a perceived need to please the Department in order to keep his job. We recognize that no showing of actual bias is necessary if the challenged adjudicator has a strong, direct financial interest in the outcome. (Haas v. County of San Bernardino (2002) 27 Cal.4th 1017, 1032-1034, 119 Cal.Rptr.2d 341, 354, 45 P.3d 280, 292 (Haas).) However, it has been consistently recognized that the fact that the agency or entity holding the hearing also pays the adjudicator does not automatically require disqualification (see McIntyre v. Santa Barbara County Employees' Retirement System (2001) 91 Cal.App.4th 730, 735, 110 Cal.Rptr.2d 565; Linney, supra, 42 Cal.App.4th at pp. 770-771, 49 Cal. Rptr.2d 813), and Haas confirms this. (Haas, supra, 27 Cal.4th at p. 1031, 119 Cal.Rptr.2d 341, 354, 45 P.3d 280, 292.) As the Supreme Court also noted in Haas, such a rule would make it difficult or impossible for the government to provide hearings which it is constitutionally required to hold.

Haas involved a county that had no regular "hearing officer," but simply hired attorneys to serve on an ad hoc basis. The vice of the system was that an attorney who desired future appointments had a financial stake in pleasing the county, and that the county had almost unrestricted choice for future appointments. In this case, ALJ's are protected by civil service laws against arbitrary or retaliatory dismissal. (See § 18500 et seq.) Thus, there is no basis upon which to conclude that the ALJ was influenced to rule in favor of the Department by a desire for continued employment.

As the court noted in Linney, current law also authorizes disqualification if the circumstances would lead a reasonable person to suspect bias. (Code Civ. Proc., § 170.1, subd. (a)(6); Linney, supra, 42 Cal.App.4th at p. 776, 49 Cal.Rptr.2d 813.) Given that the ALJ's financial interest in the result is too attenuated to require disqualification without a showing of actual bias, we find Vicary's other speculative and factually bare concerns about the ALJ's presumed "coziness" with the Department insufficient to raise a suspicion of bias.⁶ The record contains no information on the manner in which an ALJ is selected by the Department for any given hearing which would suggest any possibility of bias. Finally, although Vicary insists that the Department should employ ALJ's provided by the Office of Administrative Hearings— that is, by the state—it is speculative to state that such ALJ's would be "more impartial" than those employed directly by a particular agency. We will not presume that state-employed professional ALJ's cannot, will not, or do not bring a constitutional level of impartiality to the cases they hear, even if one side is the agency that directly employs them. The procedure here was constitutionally permissible.

B.

We turn now to the substance of the case and the continuing viability of Rule 143.3. In our view, the Board erred in underestimating the state's power to impose regulations directed at the undesirable "secondary effects" of certain types of entertainment and the establishments offering them. Furthermore, the Board failed to give adequate consideration to the rule that reasonable restrictions on the "time, place, and manner" of expression may be constitutionally valid. Finally, we reject any reliance by the Board on an alleged de minimis theory.⁷

It has long been recognized that "there is no inherent right to sell intoxicating liquors, that the liquor business is fraught with danger to the community, and [that it] may therefore be either entirely prohibited, or permitted under such conditions as are prescribed by the regulatory agency." (Yu v. Alcoholic Bev. etc. Appeals Bd. (1992) 3 Cal.App.4th 286, 296, 4 Cal.Rptr.2d 280.) Once granted, a...