Malt Beverages Dist. v. Liquor Control Bd.

• Decision Date: 23 February 2009
• Docket Number: No. 517 C.D. 2008.,517 C.D. 2008.
• Citation: 965 A.2d 1254
• Parties: MALT BEVERAGES DISTRIBUTION ASSOCIATION and Tanczos Beverages, Inc., Petitioners v. PENNSYLVANIA LIQUOR CONTROL BOARD, Respondent.
• Court: Pennsylvania Commonwealth Court

965 A.2d 1254

MALT BEVERAGES DISTRIBUTION ASSOCIATION and Tanczos Beverages, Inc., Petitioners v. PENNSYLVANIA LIQUOR CONTROL BOARD, Respondent.

No. 517 C.D. 2008.

Commonwealth Court of Pennsylvania.

Argued December 10, 2008.

Decided February 23, 2009.

Robert B. Hoffman, Harrisburg, for petitioner.

Rodrigo J. Diaz, Executive Deputy Chief Counsel, Harrisburg, for respondent.

Robert J. O'Hara, III and Stanley Wolowski, Pittsburgh, for intervenor, Wegman's Food Markets, Inc.

BEFORE: LEADBETTER, President Judge, SMITH-RIBNER, Judge, PELLEGRINI, Judge, FRIEDMAN Judge,¹ COHN JUBELIRER, Judge, SIMPSON, Judge, and LEAVITT, Judge.

OPINION BY Judge SIMPSON.

In this appeal from an order of the Pennsylvania Liquor Control Board (PLCB), Malt Beverage Distributors Association (MBDA) and Tanczos Beverages, Inc. (Tanczos) ask whether the PLCB erred in granting Wegmans Food Markets, Inc.'s (Wegmans) application for a restaurant liquor license at its store in Bethlehem, Pennsylvania. Essentially, MBDA argues the real seller of beer here is Wegmans' supermarket, and the notion that Wegmans' Market Café restaurant is actually the seller is merely a legal fiction. Wegmans asserts the PLCB erred in granting MBDA and Tanczos standing to intervene in the proceedings. Upon review, we affirm.

I. Background

In February 2007, Wegmans filed an application for the inter-municipal transfer of Restaurant Liquor License No. R-18314 from Gerstenberg, Inc., 375 East Lawn Road, Upper Nazareth Township, Nazareth, Pennsylvania, to itself, for the premises located at 5000 Wegmans Drive, Hanover Township, Bethlehem, Pennsylvania. MBDA, Tanczos, and Jim-Bob, Inc., filed a joint motion to intervene in the licensure proceedings. Wegmans filed an answer, requesting the PLCB deny the motion to intervene.

The PLCB's Bureau of Licensing (Bureau) informed Wegmans it would conduct a hearing to take evidence regarding several objections by the Bureau, including:

1) The [PLCB] shall take evidence to determine if it should permit an interior connection to the unlicensed grocery store in accordance with Section 3.52(b) of the [PLCB's] Regulations.

2) The [PLCB] shall take evidence to determine whether it should permit [Wegmans] to operate another business on the licensed premises (the storage and preparation of food items for the unlicensed grocery store as well as grocery item sales), in accordance with Section 3.52(c) of the [PLCB's] Regulations.

3) The [PLCB] shall take evidence to determine if [Wegmans] will allow minors to frequent its licensed premises, in violation of Section 493(14) of the Liquor Code.[²]

* * * *

6) The [PLCB] shall take evidence and hear argument on the issue of whether the Commonwealth Court decision in Malt Beverage Distributors Association v. Pennsylvania Liquor Control Board, [918 A.2d 171 (Pa.Cmwlth.), appeal granted, 593 Pa. 413, 931 A.2d 626 (2007)], and/or Section 3.52-3.54 of its Regulations, precludes an interior connection between a supermarket and a restaurant, notwithstanding the lack of reference to such a limitation in the Regulation and its predecessors, Regulation 103 and Regulation [R-]37-27 and further notwithstanding the [PLCB's] historical policy of approving such connections when appropriate. [See] Freedman v. Pennsylvania Liquor Control Board, 20 Pa. D & C[.]2d 353 (CCP Montgomery 1954). [See also] Tacony Civic Association v. Pennsylvania Liquor Control Board, 668 A.2d 584 (Pa. Cmwlth.1995).

7) The [PLCB] shall take evidence and hear argument on the issue of whether the Commonwealth Court decision in Malt Beverage Distributors Association v. Pennsylvania Liquor Control Board, [918 A.2d 171 (Pa.Cmwlth.), appeal granted, 593 Pa. 413, 931 A.2d 626 (2007) ], and/or Section 3.52-3.54 of its Regulations, imposes a limitation on the size of the licensed business, notwithstanding the lack of reference to such a limitation in the Regulation and its predecessors, Regulation 103 and Regulation [R-]37-27 and further notwithstanding the [PLCB's] historical interpretation of the Regulations to allow an interior connection to other businesses such as department stores (Wanamaker's and Boscov's).

8) The [PLCB] shall take evidence to determine if [MBDA], [Tanczos] and Jim Bob, Inc., would be directly aggrieved by the granting of this application, which would qualify them as intervenors in this matter. See In re Application of Family Style Restaurant, Inc., 503 Pa. 109, 468 A.2d 1088 (1983); Malt Beverages Distribs. Ass'n v. Pa. Liquor Control Bd., 881 A.2d 37 (Pa.Cmwlth.2005).

9) The [PLCB] shall take evidence to determine that the approval of this application will not adversely affect the health, welfare, peace and morals of the neighborhood within a radius of 500 feet of the proposed licensed premises. ...

PLCB Op., Finding of Fact (F.F.) No. 2. A hearing ensued before a PLCB hearing examiner.

After hearing,³ the PLCB hearing examiner issued a recommended opinion in which he opined the PLCB should approve Wegmans' license transfer application. In addition, the hearing examiner opined MBDA and Tanczos would not be directly aggrieved if Wegmans obtained the requested license and, therefore, they should not be granted intervenor status.

The PLCB subsequently issued an order approving Wegmans' license application. The order indicated if an appeal was filed the PLCB would issue an opinion in support of its order. Wegmans filed three motions asking the PLCB to clarify and/or reconsider its order. Each motion focused on the standing of MBDA, Tanczos and Jim-Bob, Inc. to intervene in the proceedings. Ultimately, the PLCB clarified its prior order, holding MBDA and Tanczos had standing and expressly granting them intervenor status.⁴ MBDA and Tanczos filed a petition for review to this Court, and the PLCB issued an opinion in support of its order.⁵

II. PLCB's Opinion

A. PLCB's Findings

The PLCB's opinion in support of its order approving Wegmans' license application contained 458 findings, which are summarized below.

In December 2006, the Hanover Township Board of Supervisors adopted an ordinance approving the transfer of Restaurant Liquor License R-18314 into the Township.

Gregory Banzhoff, a PLCB licensing analyst who investigated Wegmans' inter-municipal license transfer application, testified concerning his investigation of the application and the proposed interior connections. Banzhoff explained the 900 square-foot licensed area would have seating and service accommodations for over 30 patrons at one time. He noted the Wegmans Market Café has numerous specialty food shops on premises, but customers would also be permitted to consume food purchased off the licensed premises. He explained Wegmans would install a four-foot high divider wall separating the licensed restaurant area from the unlicensed grocery store areas. Banzhoff further testified there would be four cash registers used for the purchase of both alcoholic and non-alcoholic beverages in the licensed area, and all beer sales would have to proceed through these registers. He testified the area around the registers currently contains non-alcoholic beverages, but would include coolers for beer if a license is obtained. Banzhoff further testified Wegmans would sell malt or brewed beverages for on and/or off premises consumption.

Banzhoff's investigation also revealed the proposed licensed premises is not located within 200 feet of any other licensed establishment or within 300 feet of any restrictive institutions. He explained the area within a 500-foot radius of the proposed licensed area is approximately 75-percent commercial and 25-percent residential. Banzhoff explained this particular location has a large parking lot which makes up a great deal of the 500-foot radius.

The Bureau also presented evidence that the PLCB previously issued licenses to Boscov's, John Wanamaker's and Wawa, Inc., all of which had restaurants with interior connections to retail stores.

MBDA presented the testimony of Mary Lou Hogan, MBDA's chief counsel and executive secretary. Hogan explained that MBDA is a trade association for malt beverage distributors in Pennsylvania, which is comprised of 430 members. Hogan testified that MBDA's basic concern with regard to Wegmans' application is the economic impact on distributors if a supermarket the size of Wegmans is permitted to sell beer. She testified MBDA believes the difference between Wegmans and a typical restaurant licensee is that customers who patronize Wegmans are there to buy grocery items, which beer distributors cannot sell. She further explained that Wegmans' customers would be able to purchase beer in direct competition with distributors. Hogan testified MBDA is concerned that, because Wegmans sells a multitude of grocery items, the sale of beer at Wegmans could attract customers who might not otherwise be contemplating a beer purchase. Hogan further testified Wegmans would attract customers for take-out beer sales and distributors could not compete with that because distributors are required to sell beer by the case, while restaurants can sell beer in six-packs. Hogan further testified that if Wegmans obtained a restaurant liquor license many of its sales could come at the expense of distributors and, as a result, a number of area distributors would go out of business. Hogan explained the sale of beer by Wegmans would have a direct and indirect negative impact on all distributors in the state. Specifically, she explained, the direct impact would be for distributors in the immediate area of Wegmans, while the indirect impact would be as a result of other supermarkets across the state obtaining licenses to sell beer.

In addition to Hogan's testimony, Mark Tanczos, a member and area director of MBDA, and president of Tanczos, which holds an importing distributorship license, testified his distributorship is about one mile from Wegmans' Bethlehem location. Tanczos testified that more than 80 percent of the...