DLH, Inc. v. NEBRASKA LIQUOR CONTROL COM'N, No. S-02-033.

CourtSupreme Court of Nebraska
Writing for the CourtMcCORMACK, J.
Citation266 Neb. 361,665 N.W.2d 629
Decision Date18 July 2003
Docket NumberNo. S-02-033.
PartiesDLH, INC., doing business as Coaches Sports Bar & Grill, Appellant, v. NEBRASKA LIQUOR CONTROL COMMISSION et al, Appellees.

665 N.W.2d 629
266 Neb. 361

DLH, INC., doing business as Coaches Sports Bar & Grill, Appellant,
v.
NEBRASKA LIQUOR CONTROL COMMISSION et al, Appellees

No. S-02-033.

Supreme Court of Nebraska.

July 18, 2003.


665 N.W.2d 631
K.C. Engdahl, of Raynor, Rensch & Pfeiffer, Omaha, for appellant

Don Stenberg, Attorney General, and Hobert B. Rupe for appellees.

HENDRY, C.J., and WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

McCORMACK, J.

NATURE OF CASE

The Nebraska Liquor Control Commission (Commission) suspended the liquor license of DLH, Inc., after an administrative hearing. The Commission found that DLH allowed a "disturbance" in or about the licensed premises in violation of 237 Neb. Admin. Code, ch. 6, § 019.01F1 (1994). The district court affirmed the Commission's order, and DLH appealed. We removed the case to this court's docket

665 N.W.2d 632
on our own motion pursuant to our statutory authority to regulate the caseloads of the appellate courts of this state. See Neb.Rev.Stat. § 24-1106(3) (Reissue 1995)

BACKGROUND

DLH is a Nebraska corporation doing business as Coaches Sports Bar & Grill. In June 2000, DLH; Duane Hartman Investments, Inc.; and DTR, Inc., doing business as Cheetah's, (Cheetah's) entered into a contract whereby Cheetah's would provide "adult entertainment performers" to its portion of the premises. Cheetah's is a leased property separate but adjacent to Coaches Sports Bar & Grill and is within the licensed premises to be covered by DLH's liquor license.

On three separate occasions, August 10, 16, and 19, 2000, an undercover Lancaster County sheriff's deputy visited Cheetah's. Thereafter, according to DLH, the Commission sent three notices to DLH, one for each occasion, alleging that DLH did allow or permit a "disturbance" in or about the licensed premises in violation of a Commission regulation, § 019.01F1. An administrative hearing was scheduled for October 19, 2000.

At the hearing, the State offered the testimonies and investigation reports of the three undercover officers who had visited Cheetah's. The testimonies were consistent. Each officer testified that he observed female dancers dressed in bikini tops and bottoms, which generally covered their genital areas, buttocks, and breasts, engaging in physical contact with patrons. Contact involved the dancers' touching the patrons, among whom were the officers, with their hands and breasts, including rubbing their breasts on patrons' faces. No attempts by employees or owners to stop or prevent the contact were witnessed by the officers. The officers also testified that the patrons often tipped the dancers with dollar bills after such contact. At no time did the officers observe topless dancing or physical contact initiated by the patrons toward the dancers. Nor did the officers observe activity which they believed to endanger the patrons, but if they had, they testified that they would have acted. The officers also testified that they did not inform the owners or management of their surveillance, nor did they inquire whether the dancers were agents or employees of DLH. After the officers testified, the State rested.

Hartman was the only witness called to testify on DLH's behalf. Hartman confirmed that Cheetah's is within the licensed premises of DLH and that a contract existed between DLH and Cheetah's whereby Cheetah's would provide adult entertainment to its portion of the premises. Hartman also testified that after receiving notice of the Commission's allegations in the mail, he notified his attorney to make demand on Cheetah's to comply with Nebraska law. To the best of Hartman's knowledge, Cheetah's complied with the terms made in the demand. In support of Hartman's testimony, DLH offered exhibit 9, an acknowledgement signed by the owner of Cheetah's, agreeing to abide by the laws of Nebraska. Hartman further testified that in July 2000, he applied to the Commission to delicense the space occupied by Cheetah's. Hartman wanted to avoid any question concerning the compliance or noncompliance with liquor laws on Cheetah's portion of the premises. The application was unanimously denied by the Commission. At the conclusion of the hearing, the Commission found DLH to be in violation of its regulation, § 019.01F1. The Commission suspended DLH's liquor license for 30 days, 10 days for each offense.

Pursuant to Neb.Rev.Stat. §§ 84-917 to 84-919 (Reissue 1999) of the Administrative

665 N.W.2d 633
Procedure Act (APA), DLH appealed the Commission's decision to the district court. The district court, in affirming the Commission's order, found that (1) the type of business that occurs in Cheetah's does fall under the Commission's authority to regulate dancing where alcohol is sold; (2) DLH did allow a disturbance in violation of the regulation on three separate occasions; and (3) it was DLH's responsibility, as a liquor license holder, to ensure that the dancers were not violating any of the Commission's regulations

ASSIGNMENTS OF ERROR

DLH assigns, rephrased, that the district court erred in (1) finding that the Commission did not exceed its statutory authority in promulgating rules and regulations

§§ 019.01F and 019.01F1; (2) affirming suspension of DLH's liquor license for violation of a regulation which is not prohibitory but merely definitional; (3) affirming suspension of DLH's liquor license for violation of a regulation, § 019.01F, which was never alleged to be violated in the Commission's complaint or order; (4) relying upon Major Liquors, Inc. v. City of Omaha, 188 Neb. 628, 198 N.W.2d 483 (1972), in affirming the order of the Commission; (5) concluding that the Commission has authority to regulate "dancing" where alcohol is sold; and (6) determining that DLH is responsible for "dancers" at the licensed premises notwithstanding the absence of evidence adduced at the time of trial by the Commission to establish either employment or agency of the individuals by DLH.

STANDARD OF REVIEW

Appeals from orders or decisions of the Commission are taken in accordance with the APA. Neb.Rev.Stat. § 53-1,116 (Cum.Supp.2002); City of Omaha v. Kum & Go, 263 Neb. 724, 642 N.W.2d 154 (2002). Proceedings for review of a final decision of an administrative agency shall be to the district court, which shall conduct the review without a jury de novo on the record of the agency. City of Omaha v. Kum & Go, supra. A judgment or final order rendered by a district court in a judicial review pursuant to the APA may be reversed, vacated, or modified by an appellate court for errors appearing on the record. Id. When reviewing an order of a district court under the APA for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Id.

To the extent that the meaning and interpretation of statutes and regulations are involved, questions of law are presented, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below. Id.

ANALYSIS

The Commission's "disturbance" regulation at issue in this case provides:

019.01F Disturbance: No licensee or partner, principal, agent or employee of any licensee shall allow any unreasonable disturbance, as such term is defined hereunder, to continue without taking the steps, as set forth hereunder, within a licensed premise or in adjacent related outdoor areas.

019.01F1 A "disturbance" as used in this section shall mean any brawl, fight, or other activity which may endanger the patrons, employees, law enforcement officers, or members of the general public within licensed premises or adjacent related outdoor area. Such term shall include incidents involving, but not necessarily limited to: drug dealing; intoxicated individuals; soliciting of prostitution;

665 N.W.2d 634
or any physical contact between the licensee's agents or employees and its customers, involving any kissing, or any touching of the breast, buttock, or genital areas.

....

019.01F4 A licensee who has conformed with the procedure as set forth in this section shall be deemed to have not permitted a disturbance to occur and continue.

(Emphasis supplied.) The unreasonable disturbance specifically complained of in this case, which we limit our analysis to, is any physical contact between the licensee's agents or employees and its customers, involving any kissing, or any touching of the breast, buttock, or genital areas. See § 019.01F1.

In this appeal, DLH argues that the Commission, an administrative agency, exceeded its statutory authority in promulgating its disturbance regulation. Our review is guided by the following principles of law: The Legislature may delegate to an administrative agency the power to make rules and regulations to implement the policy of a statute. Governor's Policy Research Office v. KN Energy, 264 Neb. 924, 652 N.W.2d 865 (2002). However, an administrative agency is limited in its rulemaking authority to powers granted to the agency by the statutes which they are to administer, and it may not employ its rulemaking power to modify, alter, or enlarge portions of its enabling statute. County Cork v. Nebraska Liquor Control Comm., 250 Neb. 456, 550 N.W.2d 913 (1996).

In determining whether the Commission exceeded its statutory authority, we must interpret its enabling legislation. To the extent that the meaning and interpretation of statutes and regulations are involved, questions of law are presented, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below. American Legion v. Nebraska Liquor Control Comm., 265 Neb. 112, 655 N.W.2d 38 (2003); Kosmicki v. State, 264 Neb. 887, 652 N.W.2d 883 (2002); City of Omaha v. Kum & Go, 263 Neb. 724, 642 N.W.2d 154 (2002).

The Commission is empowered to adopt...

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10 practice notes
  • City of Neb. v. C.A. Howell, Inc., No. A–11–1116.
    • United States
    • Court of Appeals of Nebraska
    • 23 Abril 2013
    ...court, which shall conduct the review without a jury de novo on the record of the agency. DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003). Under the APA, an appellate court may reverse, vacate, or modify a district court's judgment or final order for errors a......
  • Brunk v. NEBRASKA STATE RACING COM'N, No. S-03-698
    • United States
    • Supreme Court of Nebraska
    • 22 Julio 2005
    ...the district court's findings. Nebraska Liq. Distrib. v. Nebraska Liq. Cont. Comm., supra; DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003). When reviewing a question of law, an appellate court reaches a conclusion independent of the district court's ruling. Z......
  • Scofield v. State, Dnr, No. S-07-511.
    • United States
    • Nebraska Supreme Court
    • 25 Julio 2008
    ...L.B. 826, Committee on Natural Resources, 98th Leg., 2d Sess. 11348-49 (Mar. 11, 2004). 23. DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 24. Id. 25. See Jacobson v. Solid Waste Agency of Northwest Neb., 264 Neb. 961, 653 N.W.2d 482 (2002). 26. See Schumacher v. J......
  • Mahnke v. State, Dept. of Health, No. S-06-918.
    • United States
    • Supreme Court of Nebraska
    • 11 Julio 2008
    ...2-3 (Feb. 23, 1981). 17. Schumacher v. Johanns, 272 Neb. 346, 722 N.W.2d 37 (2006). 18. See, DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003); County Cork v. Nebraska Liquor Control Comm., 250 Neb. 456, 550 N.W.2d 913...
  • Request a trial to view additional results
10 cases
  • City of Neb. v. C.A. Howell, Inc., No. A–11–1116.
    • United States
    • Court of Appeals of Nebraska
    • 23 Abril 2013
    ...court, which shall conduct the review without a jury de novo on the record of the agency. DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003). Under the APA, an appellate court may reverse, vacate, or modify a district court's judgment or final order for errors a......
  • Brunk v. NEBRASKA STATE RACING COM'N, No. S-03-698
    • United States
    • Supreme Court of Nebraska
    • 22 Julio 2005
    ...the district court's findings. Nebraska Liq. Distrib. v. Nebraska Liq. Cont. Comm., supra; DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003). When reviewing a question of law, an appellate court reaches a conclusion independent of the district court's ruling. Z......
  • Scofield v. State, Dnr, No. S-07-511.
    • United States
    • Nebraska Supreme Court
    • 25 Julio 2008
    ...L.B. 826, Committee on Natural Resources, 98th Leg., 2d Sess. 11348-49 (Mar. 11, 2004). 23. DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 24. Id. 25. See Jacobson v. Solid Waste Agency of Northwest Neb., 264 Neb. 961, 653 N.W.2d 482 (2002). 26. See Schumacher v. J......
  • Mahnke v. State, Dept. of Health, No. S-06-918.
    • United States
    • Supreme Court of Nebraska
    • 11 Julio 2008
    ...2-3 (Feb. 23, 1981). 17. Schumacher v. Johanns, 272 Neb. 346, 722 N.W.2d 37 (2006). 18. See, DLH, Inc. v. Nebraska Liquor Control Comm., 266 Neb. 361, 665 N.W.2d 629 (2003); County Cork v. Nebraska Liquor Control Comm., 250 Neb. 456, 550 N.W.2d 913...
  • Request a trial to view additional results

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