Hi-Starr, Inc. v. Washington State Liquor Control Bd.

• Decision Date: 24 July 1986
• Docket Number: INC,HI-STAR,No. 52181-6,52181-6
• Citation: 722 P.2d 808,106 Wn.2d 455
• Court: Washington Supreme Court
• Parties: , d/b/a The Park Bench Restaurant, Respondent, v. WASHINGTON STATE LIQUOR CONTROL BOARD, Appellant.

Page 455

106 Wn.2d 455

722 P.2d 808

HI-STARR, INC., d/b/a The Park Bench Restaurant, Respondent, v. WASHINGTON STATE LIQUOR CONTROL BOARD, Appellant.

No. 52181-6.

Supreme Court of Washington En Banc.

July 24, 1986.

Kenneth Eikenberry, Atty. Gen., John Hennen, Asst. Atty. Gen., Olympia, for appellant.

Diamond & Sylvester, John Petrie, Seattle, for respondent.

Robert Seeber, Atty. at Law, Olympia, on behalf of Restaurant Ass'n, amicus curiae for appellant.

CALLOW, Justice.

The Washington State Liquor Control Board (Board) appeals the trial court's judgment reinstating the Class H liquor license of Hi-Starr, Inc., d/b/a Park Bench Restaurant. We reverse the trial court and affirm the revocation of Hi-Starr's Class H liquor license.

The Board held a hearing to review Hi-Starr's eligibility to retain its Class H liquor license. The Administrative Law Judge revoked Hi-Starr's Class H liquor license ruling that Hi-Starr had failed to demonstrate that the Park Bench Restaurant was being operated in conformance with the standards set forth in WAC 314-16-190(4). Further, it was shown that for two consecutive semi-annual reports the restaurant did not maintain daily average gross food sales in amounts of 40 percent or more of its combined food and liquor sales in violation of WAC 314-16-190(5). The evidence was that Hi-Starr also failed to establish any unusual, extenuating or mitigating circumstances warranting an extension of its Class H liquor license pursuant to WAC 314-16-190(7).

The trial court reversed the revocation of the Class H liquor license holding: (a) the Board exceeded its authority in adopting WAC 314-16-190(4) and (5) because the adoption of these rules amounted to the improper assumption of legislative functions by the administrative body; (b) the legislative delegation of power to the Board to further define "restaurant" for the purposes of RCW 66.24.410(2) was unconstitutional; (c) the 40 percent requirement of WAC 314-16-190(4) and (5) is arbitrary and capricious; and (d) WAC 314-16-190(7) pertaining to unusual, extenuating and mitigating circumstances is void for vagueness.

The pertinent WAC 314-16-190 sections are as follows:

WAC 314-16-190 CLASS H RESTAURANT--QUALIFICATIONS. (1) All restaurant applicants for a Class H license, in addition to furnishing all requested material and information relating to the premises applied for and their personal qualifications, shall establish to the satisfaction of the board that the premises will commence as, and continue to operate as, a bona fide restaurant as required by RCW 66.24.400 and 66.24.410(2).

* * *

(4) To demonstrate to the satisfaction of the board that a Class H restaurant as defined in RCW 66.24.410(2) is maintained in a substantial manner as a place for preparing, cooking and serving of complete meals, a Class H restaurant shall maintain daily average gross food sales of one hundred dollars or more, and such food sales shall amount to forty percent or more of the restaurant's total food-liquor sales.

(5) Each Class H restaurant licensee shall submit semi-annual reports on forms provided by the board, showing its gross food and liquor sales. If for two successive semi-annual reports, a Class H restaurant's daily average gross food sales are less than one hundred dollars, or its food sales are less than forty percent of its total food-liquor sales, such restaurant shall be ineligible to retain its Class H license.

* * *

(7) In the event a Class H restaurant licensee shall fail to comply with any of the foregoing requirements, and such licensee has been notified that they will not be eligible to retain its Class H license, such licensee may petition the board setting forth unusual, extenuating and mitigating circumstances for the failure to comply and the board may consider such reasons and may grant an extension of the Class H license under such terms and conditions as the board determines are in the best interest of the public.

The issues are:

I. Did the Board exceed its authority in adopting WAC 314-16-190(4) and (5) and is the delegation of this authority to the Board unconstitutional?

II. Is the 40 percent requirement of WAC 314-16-190(4) and (5) arbitrary and capricious?

III. Is WAC 314-16-190(7) void for vagueness?

I THE DELEGATION OF AUTHORITY IS CONSTITUTIONAL

Legislative functions cannot be delegated to an administrative body but the Legislature may delegate administrative power. Keeting v. PUD 1, 49 Wash.2d 761, 767, 306 P.2d 762 (1957); see also 1 C. Koch, Administrative Law & Practice § 1.22 (1985); R. Pierce, Jr., S. Shapiro & P. Verkuil, Administrative Law & Process § 3.4.5 (1985); B. Schwartz, Administrative Law § 2.12 (2d ed. 1984). Regarding the standards required for a proper delegation of administrative power Barry & Barry, Inc. v. Department of Motor Vehicles, 81 Wash.2d 155, 159, 500 P.2d 540 (1972), appeal dismissed, 410 U.S. 977, 93 S.Ct. 1503, 36 L.Ed.2d 173 (1973), states:

[T]he delegation of legislative power is justified and constitutional, and the requirements of the standards doctrine are satisfied, when it can be shown (1) that the legislature has provided standards or guidelines which define in general terms what is to be done and the instrumentality or administrative body which is to accomplish it; and (2) that procedural safeguards exist to control arbitrary administrative action and any administrative abuse of discretionary power.

The dominion of the Board is broad and extensive. Quan v. State Liquor Control Bd., 69 Wash.2d 373, 379, 418 P.2d 424 (1966). The broad powers of the Board are, in part, enumerated under RCW 66.08.050. The Board has the authority to make necessary and advisable regulations consistent with the spirit of RCW 66. RCW 66.08.030(1); see State ex rel. Thornbury v. Gregory, 191 Wash. 70, 78, 70 P.2d 788 (1937). However, the broad and extensive powers given the Board are not all inclusive. Numerous statutory guidelines have been provided which broadly define the authority and duty of the Board and which insure procedural safeguards against arbitrary administrative action and abuse of discretionary power. See in particular RCW 66.08.010; . 030; .050; . 150; RCW 66.24.010; . 400-.450; RCW 66.98.070; see also RCW 34.04. RCW 66.08.010 states:

This entire title shall be deemed an exercise of the police power of the state, for the protection of the welfare, health, peace, morals, and safety of the people of the state, and all its provisions shall be liberally construed for the accomplishment of that purpose.

The Legislature has provided the Board with standards or guidelines and has established required procedural safeguards to protect against improper administrative action. See Barry, 81 Wash.2d at 159, 500 P.2d 540. The delegation of administrative power to the Board is justified and constitutional.

THE BOARD ACTED WITHIN ITS AUTHORITY.

An agency's rules must be encompassed within its statutory framework. Anderson, Leech & Morse, Inc. v. State Liquor Control Bd., 89 Wash.2d 688, 694, 575 P.2d 221 (1978). Rules and regulations enacted by an agency are presumed valid and will be upheld if reasonably consistent with the statutes they implement. Brannan v. Department of Labor & Indus., 104 Wash.2d 55, 60, 700 P.2d 1139 (1985). "[R]egulation[s] will not be struck down unless 'compelling reasons are presented sufficient to show the scheme is in conflict with the intent and purpose of the legislation.' " Anderson, 89 Wash.2d at 695, 575 P.2d 221 (quoting Weyerhaeuser Co. v. Department of Ecology, 86 Wash.2d 310, 317, 545 P.2d 5 (1976)).

After the repeal of prohibition by the Twenty-first Amendment the original authority for the selling of alcohol in the state of Washington came from the Steele Act passed in the 1933 Extraordinary Session. The Steele Act created the Liquor Control Board. See RCW 66.08.

The Steele Act granted the Board the power necessary to maintain strict monopoly control over the sale of alcoholic beverages. In the interest of public health, safety and morals, the Board "possesse[s] the constitutional and statutory power to control and regulate the dispensation of alcoholic beverages." Quan, 69 Wash.2d at 379, 418 P.2d 424. State ex rel. Shannon v. Sponburgh, 66 Wash.2d 135, 401 P.2d 635 (1965); "U" Dist. Bldg. Corp. v. O'Connell, 63 Wash.2d 756, 388 P.2d 922 (1964); Derby Club, Inc. v. Becket, 41 Wash.2d 869, 252 P.2d 259 (1953); Ajax v. Gregory, 177 Wash. 465, 32 P.2d 560 (1934). The Steele Act did not allow restaurants to serve liquor by the drink. Laws of 1933, 1st Ex.Sess., ch. 62.

Washington State voters passed Initiative 171 on November 2, 1948 creating the Class H "liquor by the drink" license. Randles v. State Liquor Control Bd., 33 Wash.2d 688, 206 P.2d 1209, 9 A.L.R.2d 531 (1949) upheld the constitutionality of Initiative 171 stating at 694, 206 P.2d 1209:

There is no natural or constitutional right to sell or engage in the business of selling or dispensing intoxicating liquor. The state, under its police power, may prohibit entirely the carrying on of such business and may regulate it in such a manner as may be deemed advisable. The times when, the places where, and the persons to whom it may be sold, may be determined by the state. The privilege of dispensing intoxicating liquor may be given to some and denied to others.

The rules of statutory construction apply to initiatives as well as to legislative enactments. Department of Rev. v. Hoppe, 82 Wash.2d 549, 552, 512 P.2d 1094 (1973). The collective intent of the people is to be ascertained when construing a law adopted by the vote of the people. Hoppe, at 552, 512 P.2d 1094; E. Crawford, The Construction of Statutes § 365 (1940 ed.) at 745. To ascertain the collective purpose and intent of the people, material in the official voters' pamphlet may be considered. Hoppe at 552, 512 P.2d 1094; Bayha v. PUD 1, 2 Wash.2d 85, 98, 97 P.2d 614 (1939) ("arguments made in pamphlets for and...