In re Rusty Nail Acquisition, Inc.

• Citation: 980 A.2d 758,2009 VT 68
• Decision Date: 26 June 2009
• Docket Number: No. 08-338.,08-338.
• Parties: In re RUSTY NAIL ACQUISITION, INC.
• Court: United States State Supreme Court of Vermont

980 A.2d 758

2009 VT 68

In re RUSTY NAIL ACQUISITION, INC.

No. 08-338.

Supreme Court of Vermont.

June 26, 2009.

Russell D. Barr and Daniel A. Seff of Barr & Associates, P.C., Stowe, for Appellant.

William H. Sorrell, Attorney General, and Jacob A. Humbert, Assistant Attorney General, Montpelier, for Appellee.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

BURGESS, J.

¶ 1. The Rusty Nail, a licensed bar in Stowe, appeals the Liquor Control Board's conclusion that the bar violated a Board regulation by allowing two intoxicated patrons to loiter on the premises. We affirm.

¶ 2. In February 2008, a team of liquor control investigators carried out an inspection of all licensees on the Stowe Mountain Road, including the Rusty Nail. After observing licensee's dance floor from an upstairs balcony for approximately ten minutes, the team determined that one male patron appeared intoxicated. They based this determination on his aggressive dancing, difficulty standing up, and general unruly behavior.

¶ 3. After watching him for several minutes, members of the team escorted the man from the dance floor and brought him to the attention of the bar's manager. During this interaction, the man's friend approached, and the team observed signs of intoxication from both patrons. The manager indicated that he did not dispute that the two men were intoxicated. The team instructed the manager to see that the two men got a ride home and then left, having concluded their inspection.

¶ 4. The team reported a violation of General Regulation 17 (GR17),¹ which states:

No alcoholic beverages shall be sold or furnished to a person displaying signs of intoxication from alcoholic beverages or other drugs/substances. No alcoholic beverages may be consumed on the licensed premises by any person displaying such signs of intoxication. No person displaying such signs of intoxication shall be allowed to loiter on the licensed premises.

Department of Liquor Control General Regulation 17, 4 Code of Vermont Rules 26 020 016-1 (2005). The matter was referred to the state Liquor Control Board, which administers alcohol service licenses in the state and adjudicates alleged violations of the General Regulations. Licensee was cited for violating the last sentence of GR17, which prohibited allowing intoxicated persons to loiter on the premises, and a contested hearing was held. Licensee disputed the violation on two grounds, contending that the patrons were not intoxicated—or at least not intoxicated enough for licensee's management to have noticed them—and also positing that the GR17 loitering prohibition was void for vagueness. The Board concluded that the meaning of "loiter" in the context of GR17 was clear and unambiguous, thus validating the constitutionality of the regulation, and ruled that it was or should have been apparent that the patrons were intoxicated in violation of the ban on intoxicated loitering in GR17. Licensee appealed.

¶ 5. Licensee makes three arguments on appeal. It asserts, first, that the regulation exceeds the Board's enabling legislation. Second, it contends that GR17 is void for vagueness, both on its face and as applied. Third, it argues that the Board committed reversible error by deciding that the events in question violated the rule's prohibition on drunken loitering. We address each in turn.

I. Whether the Regulation Exceeds the Board's Enabling Statute

¶ 6. By statute, the Board has the authority to promulgate and enforce regulations relating to the "`furnishing, purchasing, selling, . . . delivering and possessing of alcohol.'" In re Club 107, 152 Vt. 320, 323, 566 A.2d 966, 967 (1989) (quoting 7 V.S.A. § 104(8)); see also 7 V.S.A. § 104(5) (giving the Board authority to make regulations necessary for the execution of its powers and duties). For a regulation to be a permissible exercise of this statutory authority, there must be a "nexus between the regulation . . . and the consequences of excessive use of alcohol." In re Con-Elec Corp., 168 Vt. 576, 576, 716 A.2d 822, 823 (1998) (mem.) (quotation omitted). Thus, the issue here is whether GR17 is connected to, and is therefore a proper exercise of the Board's authority for, regulating the overuse of alcoholic beverages, or if it impermissibly regulates an unrelated activity—namely, mere loitering—that is beyond the Board's authority.

¶ 7. We have stated that Board regulations exceed the Board's Title 7 authority when the regulations force the Board to define and regulate matters over which it has no expertise or authority. In Club 107, this Court invalidated a Board regulation that prohibited certain activities it labeled as "obscene, lewd, or indecent entertainment" at licensed establishments because the Board had no expertise or authority to regulate obscenity. 152 Vt. at 323-25, 566 A.2d at 967-69. We struck down the obscenity regulation because we concluded that the Board should not be in the position of defining obscenity in order to enforce its alcohol regulations. Club 107 emphasized that there must be a nexus between the exercise of the Board's authority and either the consequences of excessive alcohol use, or a specifically granted power of the Board, in order for the exercise of the Board's authority to be valid. Id. at 324, 566 A.2d at 968. "[T]he mere coincidence of the sale of liquor and some other activity is not—by itself—sufficient to allow the Board to regulate the other activity." Id. Although the Legislature directed that Title 7 "`is for the protection of the public welfare, good order, health, peace, safety and morals of the people of the state, and all of its provisions shall be liberally construed for the accomplishment of the purposes set forth herein,'" we are mindful that "the Board's authority is not unrestrained." Id. (quoting 7 V.S.A. § 1).

¶ 8. General Regulation 17, however, is quite different from the obscenity regulation at issue in Club 107. Its purpose is not to regulate or prevent loitering per se, but to prevent intoxicated persons from loitering in a licensed establishment. Therefore, the Board need not exceed its expertise or authority to enforce the regulation. Instead, the inspectors need only to observe patrons for signs of intoxication, a matter which is clearly within the Board's expertise. When individuals in a licensed establishment exhibit commonly recognized signs of intoxication, and the licensee takes no action to remove them, the licensee is in violation of GR17. Enforcing the regulation, therefore, depends solely upon observing demonstrably intoxicated patrons remaining inside licensed establishments. Because the Board and its inspectors are well-qualified to judge the signs that indicate intoxication, the Board is not required to define anything beyond its area of expertise in order to enforce the regulation.

¶ 9. Furthermore, GR17 does not, as licensee argues, attempt to regulate loitering generally in contravention of the Board's statutory authority to regulate only intoxicating liquors. In SBC Enterprises, Inc. v. City of South Burlington Liquor Control Commission, 166 Vt. 79, 84, 689 A.2d 427, 430 (1996), we overturned a decision by a city's liquor control commission² to revoke a club's liquor license, which was conditioned on the club's compliance with all city ordinances, because the commission was not authorized to use its powers to enforce municipal public indecency regulations beyond the immediate realm of controlling alcoholic beverage sales and consumption. Licensee argues that GR17 similarly forces licensed establishments to prevent loitering, which the Legislature has neither prohibited directly nor authorized the Board to prohibit. But this case is distinguishable from SBC Enterprises because it does not concern the licensee's failure to enforce collateral ordinances or regulations issued by another governmental entity. The Board cited licensee for violating a Board regulation. Further, under GR17, the Board does not place conditions on licensees forcing them to prohibit loitering generally at their establishments. Instead, the regulation forbids licensees from allowing patrons to loiter when they appear intoxicated, which is well within the power delegated to the Board.

¶ 10. Unlike both Club 107 and SBC Enterprises, where liquor control authorities attempted to regulate matters wholly unconnected to alcohol consumption and beyond the scope of the Board's enabling legislation, the regulation at issue here specifically ties together loitering with the state of intoxication, bringing it squarely within the Board's purview. There is the necessary nexus between the regulation and the consequences of excessive use of alcohol because the regulation prevents licensees from allowing only intoxicated people to idle at their establishments, which are places where intoxicated people may pose a threat to themselves and to public safety. See In re DLC Corp., 167 Vt. 544, 548, 712 A.2d 389, 392 (1998) (pointing out that the State may "permit the manufacture and sale of intoxicating liquor under such conditions as will limit to the utmost its evils" (quotation omitted)). Although GR17 uses the word "loiter," which has a definition and connotation unrelated to the consumption of alcohol, the regulation prohibits the licensee from tolerating only intoxicated loitering and so directly relates to the Board's enabling legislation.

¶ 11. We also accept the Board's conclusion that removing intoxicated patrons from a licensed establishment furthers the Board's mandate to facilitate sales of alcoholic beverage in such a manner as to "discourage intoxication and encourage temperance." In re Club 107, 152 Vt. at 324, 566 A.2d at 968 (quotation omitted). Removing intoxicated individuals encourages patrons to consume moderately to avoid being ejected, and reduces the likelihood of further consumption by those who appear already intoxicated. It also promotes the general welfare by removing...