Due South v. Dept. of Alcohol. Bev. Control

• Decision Date: 10 October 2008
• Docket Number: No. 20060971.,20060971.
• Citation: 197 P.3d 82,2008 UT 71
• Parties: DUE SOUTH, INC. dba Southern X-posure, Petitioner, Appellant, and Cross-Appellee, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Respondent, Appellee, and Cross-Appellant.
• Court: Utah Supreme Court

197 P.3d 82

2008 UT 71

DUE SOUTH, INC. dba Southern X-posure, Petitioner, Appellant, and Cross-Appellee, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL, Respondent, Appellee, and Cross-Appellant.

No. 20060971.

Supreme Court of Utah.

October 10, 2008.

M. David Eckersley, Michael N. Zundel, Glenn R. Bronson, Salt Lake City, for appellant.

Mark L. Shurtleff, Att'y Gen., Thom D. Roberts, Asst. Att'y Gen., Salt Lake City, for appellee.

PARRISH, Justice:

INTRODUCTION

¶ 1 Following two incidents in 2002, the Department of Alcoholic Beverage Control (the "DABC") found Due South, Inc. ("Due South") liable for three statutory violations of the Alcoholic Beverage Control Act. Due South appeals. Challenging, among other issues, the definition of "intoxication" as applied to Utah Code section 32A-12-216 (2001) by the DABC Commission (the "Commission") and later by the district court in a trial de novo. The DABC cross-appeals, arguing that the district court wrongly conducted a trial de novo rather than reviewing the record created by the Commission and giving deference to the Commission's conclusion. We hold that the district court correctly conducted a trial de novo. However, the district court and the DABC misinterpreted Utah Code section 32A-12-216.

BACKGROUND

¶ 2 In August 2002, the DABC initiated an informal administrative disciplinary proceeding against Due South, a private club liquor licensee doing business in Murray, Utah. The complaint was based on two incidents, which took place a few weeks apart. The first incident began at Due South's private club, Southern X-posure (the "Club"), and ended in a fatal drunk driving accident. The second incident was an undercover Serving Intoxicated Persons ("SIP") operation conducted by the State Bureau of Investigation. We recite the facts of the two incidents according to the district court's findings of fact.¹

I. THE KORTH AND HARRIS INCIDENT

¶ 3 The first incident occurred on April 25, 2002. Brian Korth and his friend, Johnny Harris, went to the Club around six in the evening. They stayed for about three and a half hours, playing pool, drinking beer, and consuming shots of liquor. During this time, Korth became intoxicated to the point that he was having trouble talking and forming sentences, as well as standing and walking. Korth and Harris left the bar in Korth's car and were subsequently involved in a one-car rollover accident in which Harris died. The Utah Highway Patrol ("UHP") responded to the accident and arrested Korth for driving while intoxicated. Korth's blood alcohol level was .22 at 11:20 p.m., approximately one hour after the accident, which meant that he likely consumed between eleven and fifteen drinks that evening.

II. THE SIP INVESTIGATION

¶ 4 The second incident occurred a few weeks later when the State Bureau of Investigation conducted a SIP operation at the Club. At the conclusion of the SIP operation, the agents reported that they had observed five patrons who were allowed to become intoxicated or who were served alcohol while intoxicated. The agents' notes included specific observations regarding the physical signs of intoxication apparent in each of the patrons, such as unsteadiness or a flushed face. They also included conclusory observations regarding the likelihood that the patron would endanger himself or others through a "lack of judgment" or a possibility of stumbling and falling or bumping into another patron, as well as the likelihood of the patron endangering others if he were to drive.

III. PROCEDURAL HISTORY

¶ 5 An informal administrative disciplinary proceeding was commenced in August 2002 before the Commission. It was conducted by a hearing officer appointed by the Commission. The hearing officer listened to the evidence and wrote a detailed sixty-six-page memorandum containing his findings of fact and conclusions of law. The Commission adopted these findings in whole in its final order.

¶ 6 As to the Korth and Harris incident, the final order concluded that Due South violated the over-serving statutes, Utah Code sections 32A-5-107(24)(h)(ii) and 32A-10-206(4)(b)(iii), by serving Korth and Harris when they were "apparently or obviously intoxicated" and section 32A-12-216 by permitting Korth and Harris to become intoxicated on the premises of the Club. As to the SIP incident, the Commission concluded that Due South violated section 32A-12-216 by allowing or permitting five patrons to become intoxicated. But the Commission found insufficient evidence that Due South served the patrons after they were intoxicated. Thus, the Commission did not find a violation of sections 32A-5-107(24)(h)(ii) and 32A-10-206(4)(b)(iii) the over-serving statutes, in connection with the SIP operation.

¶ 7 Due South sought de novo judicial review in the district court, questioning the legal standard applied by the Commission and the sufficiency of the evidence presented. The DABC did not appeal any part of the Commission's order. Following a bench trial, the district court adopted the proposed findings of fact and conclusions of law submitted by the DABC and affirmed the Commission's findings and conclusions. Additionally, the district court held Due South liable for violating the over-serving statutes during the SIP operation by serving alcohol to five club members after they were intoxicated. This additional holding directly contradicted the Commission's conclusion that the DABC had not met its burden of proof for showing a violation of the over-serving statutes — a conclusion that the DABC had not appealed.

¶ 8 Due South appeals the district court's decision, presenting us with seven issues. Four of the issues require us to interpret Utah Code section 32A-12-216 to determine the following issues: (1) whether the prosecution may satisfy the "may endanger" element of the public intoxication statute by demonstrating a speculative possibility of harm or whether the prosecution must demonstrate a reasonable likelihood of harm, (2) whether Due South qualified as a "private place" within the meaning of the public intoxication statute, (3) whether section 32A-12-216 is unconstitutionally vague, and (4) whether the district court erred in concluding that Due South's patrons were intoxicated. The remaining three issues Due South presents on appeal are these: (1) whether the district court improperly allowed the DABC to present evidence that Due South violated sections 32A-5-107(24)(h)(ii) and 32A-10-206(4)(b)(iii) during the SIP operation after the Commission expressly exonerated Due South of these violations and the DABC did not appeal that ruling, (2) whether the district court erred in holding that Due South's conduct constituted a "grave" violation of Utah's over-serving laws, and (3) whether Due South was denied due process when the DABC failed to identify by name some of the patrons whom Due South allegedly over-served.

¶ 9 The DABC cross-appeals two issues regarding the standard of review applied by the district court: (1) whether the district court applied the wrong standard of review by conducting a trial de novo rather than deferring to the Commission, and (2) whether the district court applied the wrong method of review by conducting a trial de novo rather than reviewing the record created during the proceedings before the Commission.

¶ 10 We have jurisdiction over this appeal pursuant to Utah Code section 78A-3-102(3)(j) (Supp.2008).

ANALYSIS

¶ 11 Our review of this case is limited to an examination of the district court's legal conclusions, which we review for correctness.² Because the standard of review shapes the rest of the discussion, we begin with the issues raised by the DABC's cross-appeal regarding the appropriate standard and method of review to be applied by a district court when reviewing a decision of the Commission. We then articulate the statutory violations that are properly before us on review and address the interpretation of Utah Code section 32A-12-216 (2001). Finally, we resolve the remaining two issues raised by Due South.

I. THE DISTRICT COURT APPLIED THE PROPER STANDARD AND METHOD OF REVIEW

¶ 12 The DABC challenges both the standard of review and the method of review applied by the district court. Regarding the standard of review, the DABC argues that the district court should not have conducted a de novo review in accordance with the Utah Administrative Procedures Act (UAPA),³ but should have used the more deferential standard of review articulated in section 32A-1-120 of the Alcoholic Beverage Control Act.⁴ Regarding the method of review, the DABC argues that the district court should have reviewed the record that was created during the Commission's informal adjudication. We disagree and hold that the district court applied both the proper standard and method of review to the Commission's decision.

¶ 13 Although both parties present persuasive arguments about which standard of review to apply when two applicable statutes conflict, we are ultimately convinced by a recent legislative amendment to Utah Code section 32A-1-120. The amendment clarifies that judicial review of disciplinary proceedings by the Commission shall occur "pursuant to the judicial review provisions of [UAPA] Sections 63-46b-14 through 63-46b-18."⁵

¶ 14 "The standard of review is a matter of procedural, rather than substantive, law."⁶ "`[P]rocedural statutes enacted subsequent to the initiation of a suit which do not enlarge, eliminate, or destroy vested or contractual rights apply not only to future actions, but also to accrued and pending actions as well.'"⁷ Moreover, "when the purpose of an amendment is to clarify the meaning of an earlier [statute], the amendment may be applied retroactively in pending actions."⁸

¶ 15 In Kilpatrick v. Wiley, the parties disagreed with the trial court's interpretation of the comparative fault statute and the jury instructions given explaining the statute.⁹ On appeal, we declined to reach the issue of...