New Palm Gardens, Inc. v. Alcoholic Beverages Control Commission

• Decision Date: 08 May 1981
• Parties: NEW PALM GARDENS, INC. v. ALCOHOLIC BEVERAGES CONTROL COMMISSION.
• Court: Appeals Court of Massachusetts

Page 8

420 N.E.2d 8

11 Mass.App.Ct. 785

NEW PALM GARDENS, INC. v. ALCOHOLIC BEVERAGES CONTROL COMMISSION.

Appeals Court of Massachusetts, Suffolk.

Argued Jan. 12, 1981.

Decided May 8, 1981.

Kenneth H. Tatarian, Boston, for plaintiff.

Maureen L. Fox, Asst. Atty. Gen., for defendant.

Before GRANT, CUTTER and DREBEN, JJ.

DREBEN, Justice.

After the Alcoholic Beverages Control Commission (commission) suspended for eight days the plaintiff's license to sell alcoholic beverages, the plaintiff sought judicial review of the commission's decision under G.L. c. 30A, § 14. Both parties moved for judgment on the pleadings ¹ and the commission's motion was allowed. Judgment was entered in the Superior Court dismissing the complaint. A stay of the suspension was granted by a single justice of this court.

The suspension of the plaintiff's license was based on a determination by the commission that the plaintiff had violated a regulation of the commission by permitting obscene dancing on the premises in violation of G.L. c. 272, § 29. ² The regulation, 204 Code Mass. Regs. § 2.05(2) (1978), ³ also referred to by the parties as Regulation 21, prohibits a licensee from permitting any "illegality of any kind to take place" on the licensed premises.

The plaintiff challenges the decision of the commission on numerous grounds, including that: 1) the decision was made upon unlawful procedure (G.L. c. 30A, 14(7)(d )) because the notice of hearing and the decision itself cited the wrong statute; 2) in the absence of a criminal conviction, the commission does not have the authority to determine whether a licensee has violated a criminal statute and, in any event, such a determination must be made upon a standard of proof beyond a reasonable doubt; 3) the proper standards in determining obscenity were not applied by the commission; 4) actual knowledge of the obscenity by the licensee was not shown; and 5) the commission failed to state its reasons as required by G.L. c. 30A, § 11(8). We reject all of the plaintiff's claims and affirm the judgment as modified by this opinion.

1. References to the wrong statute by the commission. Both in its original notice of hearing dated July 24, 1979, and in its decision dated September 26, 1979, the commission referred to a violation of G.L. c. 272, § 32, ⁴ instead of to a violation of G.L. c. 272, § 29. We think the errors insignificant.

The licensee was well aware of the charges made against it and concedes in its brief that it availed itself of the opportunity to review the commission's file prior to the hearing. Moreover, as found by the commission in its statement of reasons, when offered a continuance, the licensee chose to go forward. Reversal of agency action is only appropriate under G.L. c. 30A, § 14(7)(d ), where "the substantial rights of any party may have been prejudiced." Aristocratic Restaurant of Massachusetts, Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. 547, 551, 374 N.E.2d 1181, appeal dismissed, 439 U.S. 803, 99 S.Ct. 58, 58 L.Ed.2d 96 (1978). No such showing of prejudice, let alone substantial prejudice, has been made here by reason of the incorrect statutory citation in the notice of hearing.

Similarly, the reference to G.L. c. 272, § 32, in the commission's decision, where the commission in its statement of reasons had correctly referred to G.L. c. 272, § 29 was clearly inadvertent and nonprejudicial. A corrected notice of decision was properly issued prior to the hearing in the Superior Court.

2. Determination by the commission of an "illegality" in the absence of a criminal conviction. The licensee claims that whether a criminal statute has been violated can only be determined by the judiciary. This argument misconceives the purpose of G.L. c. 138. That statutory scheme which gives the commission the authority to grant, revoke and suspend licenses was "enacted ... to serve the public need and ... to protect the common good." G.L. c. 138, § 23, as amended through St. 1977, c. 929, § 7. "(T)he purpose of discipline is not retribution but the protection of the public." Arthurs v. Board of Registration in Medicine, --- Mass. ---, --- ^a, 418 N.E.2d 1226 (1981). The commission is given "comprehensive powers of supervision over licensees," Connolly v. Alcoholic Beverages Control Commn., 334 Mass. 613, 617, 138 N.E.2d 131 (1956), as well as broad authority to issue regulations. It could rationally conclude that a violation of G.L. c. 272, § 29, is an "illegality" which relates to the "proper and orderly conduct of the licensed business" (G.L. c. 138, § 24) requiring suspension. See. G.L. c. 138, §§ 23, fifth paragraph, and 64. ⁵ See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., --- Mass. ---, --- ^b, 407 N.E.2d 311 (1980); Olitsky v. O'Malley, 597 F.2d 295, 302 (1st Cir. 1979); cf. Aristocratic Restaurant of Massachusetts, Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. at 554, 374 Mass. 1181; California v. LaRue, 409 U.S. 109, 115-116, 93 S.Ct. 390, 395-396, 34 L.Ed.2d 342 (1972); Paris Adult Theatre I v. Slaton, 413 U.S. 49, 58 n.8, 93 S.Ct. 2628, 2635 n.8, 37 L.Ed.2d 446 (1973). Thus the commission can properly determine whether a licensee has violated G.L. c. 272, § 29, for purposes of license suspension under G.L. c. 138, regardless of the existence or outcome of any criminal proceedings. See Arthurs v. Board of Registration in Medicine, --- Mass. at --- ^c, 418 N.E.2d 1226. We see no such usurpation of the judicial function as is urged by the licensee.

Moreover, we note that both the Supreme Judicial Court and this court have upheld suspensions or revocations of licenses on findings by licensing authorities of violations of criminal statutes. Olde Towne Liquor Store, Inc. v. Alcoholic Beverages Control Commn., 372 Mass. 152, 153, 360 N.E.2d 1057 (1977). Aristocratic Restaurant of Massachusetts, Inc. v. Alcoholic Beverages Control Commn. (No. 2), 374 Mass. 564, 565, 374 N.E.2d 1192, appeal dismissed, 439 U.S. 803, 99 S.Ct. 58, 58 L.Ed.2d 96 (1978). United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. 238, 240, 376 N.E.2d 833 (1978). Boylston-Washington, Inc. v. Alcoholic Beverages Control Commn., --- Mass.App. --- ^d, 394 N.E.2d 996 (1979). See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., --- Mass. at --- ^e, 407 N.E.2d 311.

We reject, for similar reasons, the licensee's claim that the commission's determination must be upon a standard of proof beyond a reasonable doubt in these civil proceedings. General Laws, c. 138, § 64, see note 5, supra, specifically authorizes suspension upon "satisfactory proof" of a violation. The statutory standard of review of agency action is whether the agency action is supported by "substantial evidence," G.L. c. 30A, § 14(7)(e), as defined in § 1(6), ⁶ and that standard has been consistently applied in cases where revocation or suspension of a license has been grounded on the violation of a statute or regulation. Olde Towne Liquor Store, Inc. v. Alcoholic Beverages Control Commn., 372 Mass. at 153, 360 N.E.2d 1057. Aristocratic Restaurant of Massachusetts, Inc. v. Alcoholic Beverages Control Commn. (No. 1), 374 Mass. at 552, 374 N.E.2d 1181. United Food Corp. v. Alcoholic Beverages Control Commn., 375 Mass. at 244, 376 N.E.2d 833. Boylston-Washington, Inc. v. Alcoholic Beverages Control Commn., --- Mass.App. at --- ^f, 394 N.E.2d 996. See Saxon Coffee Shop, Inc. v. Boston Licensing Bd., --- Mass. at --- ^g, 407 N.E.2d 311.

The licensee also contends that because free expression interests under the First Amendment to the Federal Constitution or under art. 16 of the Massachusetts Declaration of Rights may be implicated, see McKinney v. Alabama, 424 U.S. 669, 683-684, 96 S.Ct. 1189, 1197-1198, 47 L.Ed.2d 387 (1976) (Brennan, J., concurring), a finding of obscenity should be made by the commission only on proof beyond a reasonable doubt. No other authority has been cited to us for this proposition, and we are not persuaded that deviation from the statutory standard is mandated by art. 16. ⁷

We note, moreover, that the decision of the trier of fact, the commission, is by no means "unreviewable," Commonwealth v. Plank, --- Mass. ---, --- ^h, 392 N.E.2d 841 (1979), and that, in the area of obscenity, reviewing courts ensure "the necessary sensitivity to freedom of expression," Freedman v. Maryland, 380 U.S. 51, 58, 85 S.Ct. 734, 739, 13 L.Ed.2d 649 (1965), by conducting their own independent review where necessary to protect constitutional rights. Commonwealth v. Plank, --- Mass. at --- ⁱ, 392 N.E.2d 841. Jenkins v. Georgia, 418 U.S. 153, 160-161, 94 S.Ct. 2750, 2754-2755, 41 L.Ed.2d 642 (1974). Smith v. United States, 431 U.S. 291, 305-306, 97 S.Ct. 1756, 1766, 59 L.Ed.2d 324 (1977). See Miller v. California, 413 U.S. 15, 25, 93 S.Ct. 2607, 2615, 37 L.Ed.2d 419 (1973).

3. Licensee's challenges to the finding of obscenity. The commission, after a hearing at which three witnesses testified (Inspector Fox of the commission, Loris D'Amato, the manager of the licensee, and the manager's husband, Vincent D'Amato), found the licensee guilty of "violation of ABCC Regulation 21 to wit Chapter 272, § 29." Its subsidiary findings are contained in its "Statement of Reasons" which, except for two short introductory paragraphs, is set forth in full in the margin. ⁸

3(a). The licensee first argues that since the inspector did not see the entire performance of either of the two dancers, but only a portion of each, the commission could not and did not consider the words "taken as a whole" as required by statute ⁹ and case law, e. g., Roth v. United States, 354 U.S. 476, 489, 77 S.Ct. 1304, 1311, 1 L.Ed.2d 1498 (1957). The uncontroverted evidence before the commission indicates that the inspector watched the first dancer for a half an hour, that he saw the second performer engage in a series of acts of sexual conduct before leaving, that at that time a record had ended and a second record,...