Log Cabin Prop., LP v. Pa. Liquor Control Bd.

• Decision Date: 27 May 2022
• Docket Number: 292 M.D. 2020
• Parties: LOG CABIN PROPERTY, LP, individually and on behalf of all those similarly situated, Petitioner v. PENNSYLVANIA LIQUOR CONTROL BOARD, Respondent
• Court: Pennsylvania Commonwealth Court

276 A.3d 862

LOG CABIN PROPERTY, LP, individually and on behalf of all those similarly situated, Petitioner

v.PENNSYLVANIA LIQUOR CONTROL BOARD, Respondent

No. 292 M.D. 2020

Commonwealth Court of Pennsylvania.

Argued November 17, 2021

Decided May 27, 2022

John G. Papianou and Joseph E. Samuel, Jr., Philadelphia, for Petitioners.

Brian J. Slipakoff, Philadelphia, for Respondent.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge¹ , HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION BY JUDGE COVEY

Before this Court is the Pennsylvania Liquor Control Board's (PLCB)² Preliminary Objection to the petition for review in the nature of a class action complaint (Complaint) Log Cabin Property, LP filed, individually and on behalf of all those similarly situated (Log Cabin) against the PLCB, in connection with this Court's May 1, 2020 Order in MFW Wine Co., LLC v. Pennsylvania Liquor Control Board , 231 A.3d 50 (Pa. Cmwlth. 2020) ( MFW I ) (Brobson, J., single judge op.), aff'd per curiam , ––– Pa. ––––, 247 A.3d 1008 (2021). In MFW I , this Court granted peremptory judgment in mandamus and summary declaratory relief in favor of MFW Wine Co., LLC (MFW), A6 Wine Company (A6), and GECC2 LLC d/b/a Bloomsday Café (Bloomsday Café) (collectively, MFW I Petitioners), related to the PLCB's failure to carry out the General Assembly's directive to permit properly licensed companies to sell and deliver special orders (SOs) directly to their customers without added handling fees.³

Background

Before June 8, 2016, SO customers, like Bloomsday Café, that wished to purchase a class, variety, or brand of liquor or alcohol not then available from a PLCB Fine Wine and Good Spirits store (PLCB Store) could place SOs for the items with licensed importers or vendors, like MFW or A6. However, the licensed importers or vendors were required to deliver the SOs to PLCB Stores, where the customers had to pick them up. The PLCB charged the customers a handling fee for each bottle purchased in this process.

On June 8, 2016, by enacting Section 3 of Act 39,⁴ the General Assembly amended Section 305(a) of the Liquor Code⁵ to provide that SOs may be delivered from a licensed importer or vendor directly to a customer. Section 3 of Act 39 also states that the PLCB may not assess a handling fee on [SOs], and that "[t]he [PLCB] shall , by January 1, 2017, implement a procedure for processing [SOs] ...." (Emphasis added.) Further, on July 13, 2016, the General Assembly passed an omnibus amendment to implement the Commonwealth's 2016-2017 budget (Section 20 of Act 85 of 2016⁶ ), which added Section 1799.2-E to The Fiscal Code,⁷ and therein provided that "the [PLCB] may implement a procedure for processing [SOs] ... by June 1, 2017." (Emphasis added.) The PLCB took the position that implementing an SO processing procedure was discretionary, and the June 1, 2017 date was merely advisory. As a result, to date, the PLCB has not implemented an SO processing procedure, thereby preventing licensed importers and vendors from directly shipping SOs to their customers, and the PLCB continues to assess handling fees on all SOs.

On March 6, 2020, Pennsylvania Governor Tom Wolf (Governor Wolf) issued a Proclamation of Disaster Emergency (Proclamation) in response to the COVID-19 pandemic. See Wolf v. Scarnati , ––– Pa. ––––, 233 A.3d 679 (2020) ; see also "Process to Reopen Pennsylvania."⁸ On March 16, 2020, the PLCB announced the indefinite closure of the PLCB Stores and licensee service centers effective March 17, 2020, to reduce the spread of COVID-19.⁹ On March 18, 2020, the PLCB, with Governor Wolf's authorization, mandated that all retail licensees, clubs, permittees, and producers cease sales of food and alcohol until further notice.¹⁰

On April 15, 2020, in MFW I , MFW and A6 filed a petition for review in this Court's original jurisdiction seeking to enforce their statutory right to direct ship SOs from licensed importers and/or vendors to customers.¹¹ On April 16, 2020, in MFW I , MFW filed an emergency motion for peremptory judgment in mandamus, and special injunctive and declaratory relief ( MFW I Motion), and requested an expedited hearing.¹²

On April 22, 2020, the PLCB re-opened its SO program to allow retail licensees with wine expanded permits (i.e., those permitted to sell wine to-go) to pick up SOs from designated PLCB Stores beginning April 24, 2020.¹³ Also on April 22, 2020, MFW and A6 filed an amended petition for review in MFW I , adding Bloomsday Café as a petitioner. On April 28, 2020, this Court conducted a hearing on the MFW I Motion.

On May 1, 2020, relative to the MFW I Motion, the Court granted summary relief in the MFW I Petitioners’ favor with respect to amended petition Count III (Declaratory Judgment), and declared that Section 305(a) of the Liquor Code, as amended , (1) prohibits the PLCB from charging a handling fee on SOs delivered directly to customers, and (2) requires the PLCB to implement a procedure to process SO direct shipments. See MFW I . With respect to amended petition Count I (Mandamus), the Court granted summary relief in the MFW I Petitioners’ favor and issued a writ of mandamus: (1) directing the PLCB to allow licensed vendors and licensed importers to ship SOs directly to customers, and (2) directing the PLCB to implement a procedure for processing SO direct shipments. The Court denied the MFW I Motion in all other respects (Count II (Injunctive Relief)). See MFW I .

Specifically relative to the MFW I Mandamus, this Court ruled:

[A]ll of the elements for issuance of a writ of mandamus are present. Mandamus is appropriate where, as is the case here, an agency is operating under a "mistaken view of the law that it has discretion to act when it actually does not." Weaver v. Pa. Bd. of Prob. [& ] Parole , 688 A.2d 766, 776 (Pa. Cmwlth. 1997) (en banc ) (citing C [n ]ty. of Allegheny v. [Commonwealth ], 507 Pa. 360, 490 A.2d 402 (1985) ); see also A.S. v. Pa. State Police , 636 Pa. 403, 143 A.3d 896 (2016) (affirming award of mandamus based on judicial construction of ambiguous statute). Section 305(a) of the Liquor Code, properly construed, imposes a mandatory duty on [the] PLCB to accept and process [SOs] for direct shipment to customers. It further imposes a mandatory duty on [the] PLCB to implement a procedure for doing so. [The] PLCB has yet to comply with these mandatory duties, depriving licensed vendors, licensed importers, and customers of their statutory right to direct shipment of [SOs] permitted under Section 305(a) of the Liquor Code.

MFW I , 231 A.3d at 57.

This Court added:

[T]he Court recognizes that the time established by the General Assembly for [the] PLCB to implement a direct shipment [SO] process has long passed. Nonetheless, based on the credible evidence adduced during the hearing, the Court is satisfied that implementing a new process for the direct shipment of [SOs] authorized by Act 39 is neither as simple as [ MFW I ] Petitioners suggest nor as complicated (or expensive) as [the] PLCB would have the Court believe. [The] PLCB must be afforded a reasonable amount of time to implement thoughtfully a process, perhaps even an interim one as Petitioners’ counsel suggested during the hearing, to provide licensed vendors, licensed importers, and customers a[n] [SO] direct shipment alternative. The Court is confident that [the] PLCB has the resources and ingenuity to do so without unreasonable delay.

In not setting a deadline for [the] PLCB to act, the Court's restraint is also based in part on [the] PLCB's recent decision to re-open [SO] pick[-]up at designated PLCB facilities, which [the] PLCB suspended when it closed all PLCB [S]tores in response to the COVID-19 pandemic and executive action by [Governor Wolf]. The absence of a direct shipment option for [SOs], coupled with the closure of all PLCB [S]tores, had an obvious impact on Petitioners - who, through their unrebutted testimony at the hearing, established that their businesses rely on the sale, purchase, and delivery of [SO] wines in Pennsylvania. The fact that Petitioners now have some way of selling, ordering, processing, and fulfilling [SOs] through [the] PLCB, though not all of what Act 39 promised, is an improvement over the recent circumstances that prompted them to initiate this lawsuit.

For these reasons, the Court will not, at this time , endeavor to set a date by which time [the] PLCB must comply with this Court's Order.^[14]

MFW I , 231 A.3d at 57-58 (footnote omitted).

On May 6, 2020, Log Cabin filed the Complaint in the instant action, therein alleging that it and those similarly situated have been unlawfully compelled to pick up and pay a handling fee to the PLCB on every bottle of SO liquor or wine it purchased since June 1, 2017 (allowing the PLCB to collect millions of dollars in handling fees) and, pursuant to Section 8303 of the Judicial Code, 42 Pa.C.S. § 8303, and MFW I , they are entitled to recover damages in the form of all handling fees paid and pick-up expenses incurred due to the PLCB's inaction since June 1, 2017, plus costs, prejudgment interest, and attorneys’ fees.

On May 27, 2020,¹⁵ in MFW I , the PLCB appealed to the Pennsylvania Supreme Court (30 MAP 2020). On June 5, 2020, the PLCB filed an Application to Stay Log Cabin's Complaint in the instant action pending the Supreme Court's decision relative to MFW I . Log Cabin opposed the Application for Stay. However, on June 30, 2020, the parties filed a Joint Application to Stay, which this Court granted the same day.

On March 25, 2021, the Pennsylvania Supreme Court issued a Per Curiam Order (without an opinion) affirming this Court's May 1, 2020 Order in MFW I . On April 15, 2021, the parties in this case filed a joint stipulation to lift the stay. On April 28, 2021, this Court lifted the stay and issued a scheduling order.

On May 25, 2021, the MFW I Petitioners filed an ...