Planet Earth Entertainment, Inc. v. Ohio Liquor Control Comm., 97APE06-744

• Decision Date: 05 February 1998
• Docket Number: No. 97APE06-744,97APE06-744
• Citation: 709 N.E.2d 220,125 Ohio App.3d 619
• Parties: PLANET EARTH ENTERTAINMENT, INC., d.b.a. Diamonds, Appellee, v. OHIO LIQUOR CONTROL COMMISSION, Appellant. *
• Court: Ohio Court of Appeals

Page 619

125 Ohio App.3d 619

709 N.E.2d 220

PLANET EARTH ENTERTAINMENT, INC., d.b.a. Diamonds, Appellee, v. OHIO LIQUOR CONTROL COMMISSION, Appellant. ^*

No. 97APE06-744.

Court of Appeals of Ohio,

Tenth District, Franklin County.

Decided Feb. 5, 1998.

Carlile, Patchen & Murphy and Laurence E. Sturtz, Columbus; Sirkin, Pinales, Mezibov & Schwartz, H. Louis Sirkin, Cincinnati, and Anita P. Berding; Chris O. Paparodis, Hilliard, for appellee Planet Earth Entertainment, Inc. Betty D. Montgomery, Attorney General, and David A. Raber, Assistant Attorney General, for appellant Ohio Liquor Control Commission.

DESHLER, Judge.

Appellant Ohio Liquor Control Commission ("commission") appeals from a decision of the Franklin County Court of Common Pleas in favor of appellee Planet Earth Entertainment, Inc., d.b.a. Diamonds ("Planet"), reversing three permit revocation orders issued by the commission.

Appellee Planet operates a night club known as Diamonds, which features female dancers. Planet is licensed by the commission to sell alcoholic beverages on the Diamonds premises.

Underlying this appeal are three commission orders, each revoking Planet's liquor permit. In case No. 142-96, Planet was charged with violating Ohio Adm.Code 4301:1-1-52 ("Regulation 52"), by allowing a female dancer to perform with completely bare breasts. The incident was alleged to have occurred on October 14, 1995. In case No. 785-96, occurring on December 21, 1995, Planet was charged with allowing two female dancers to remove their halter tops and expose their breasts, which were covered only with transparent latex "pasties" on the nipple area. In case No. 1116-95, Planet was charged with hindering and/or obstructing the inspection of the premises on March 30, 1996, in violation of R.C. 4301.66. Pursuant to a hearing held on April 24, 1996, the commission issued three separate orders addressing the above three violations, each order revoking Planet's liquor permit.

Planet appealed the commission's orders to the Franklin County Court of Common Pleas, which reversed. The court of common pleas found that "the proceedings held [before the commission] were a deck stacked against [Planet]," and that "the tenor of the hearing was blatantly unfair * * *." The court of common pleas accordingly found that the commission's decision was not supported by reliable, probative, and substantial evidence, or in accordance with law. The court of common pleas therefore entered judgment on May 12, 1997, reversing the decision of the commission and ordering the charges against Planet dismissed.

The commission has timely appealed and brings the following three assignments of error:

"1. The common pleas court abused its discretion when the court substituted its judgment for that of the agency.

"2. The common pleas court abused its discretion when it determined that there was not reliable, probative, and substantial evidence to support the Liquor Control Commission's finding that Planet Earth Entertainment, Inc. violated Regulation 4301:1-1-52, Ohio Admin. Code.

"3. The common pleas court abused its discretion when it determined that there was not reliable, probative, and substantial evidence to support the Liquor Control Commission's finding that Planet Earth Entertainment, Inc. violated R.C. 4301.66."

The present appeal has been filed pursuant to R.C. 119.12, under which the court of common pleas is required to review the administrative agency's order to determine whether it is supported by reliable, probative, and substantial evidence and is in accordance with law. Upon appeal from the court of common pleas, this court's review is more limited; we are required to determine, with respect to most issues, whether the court of common pleas abused its discretion in deciding whether the order of the commission was supported by reliable, probative, and substantial evidence. Leo G. Keffalas, Inc. v. Ohio Liquor Control Comm. (1991), 74 Ohio App.3d 650, 652, 600 N.E.2d 275, 276-277.

The present appeal, however, raises two distinct types of issues which necessitate different standards of review: (1) whether there was sufficient reliable, probative, and substantial evidence before the commission to establish a violation of regulations governing liquor permit holders, and (2) whether the nature of the proceeding before the Liquor Control Commission afforded Planet a fair hearing in compliance with due process rights guaranteed by the Ohio and United States Constitutions.

Appellant's first assignment of error challenges the court of common pleas' finding that the hearing before the commission was conducted in such a manner as to violate Planet's right to due process in the proceeding culminating in revocation of its liquor permit.

The issue of the constitutionality and procedural due process relating to the hearing is a question of law and thus falls under a less deferential standard of review than the abuse of discretion standard set forth above as applicable to issues of evidentiary sufficiency. On questions of law, the court of appeals' review is plenary. WFO DBA Bristols v. Ohio Liquor Control Comm. (Oct. 31, 1996), Franklin App. No. 96APE05-558, unreported, 1996 WL 631206, jurisdictional motion overruled (1997), 78 Ohio St.3d 1425, 676 N.E.2d 531, citing Univ. Hosp., Univ. of Cincinnati College of Medicine v. State Emp. Relations Bd. (1992), 63 Ohio St.3d 339, 587 N.E.2d 835, paragraph one of the syllabus.

We note that, although appellee presents some argument with respect to the constitutionality of Regulation 52 itself, it is well settled in this appellate district that Regulation 52 can be reasonably interpreted to prohibit the type of nude or semi-nude dancing that constituted two of the three violations in the present case. WFO, supra. Although authority to the contrary has recently issued from the Eighth Appellate District, see Cleveland's PM on the Boardwalk, Ltd. v. Ohio Liquor Control Comm. (Jan. 23, 1997), Cuyahoga App. No. 69779, unreported, 1997 WL 25522, we remain both persuaded and bound by our prior holding on this issue pending a resolution of the conflict upon certification to the Ohio Supreme Court.

The sole due process issue before us, then, is that raised in appellant's first assignment of error: whether the court of common pleas correctly found that the proceedings at the hearing before the commission that resulted in revocation of Planet's license constituted a violation of Planet's due process right to a fair hearing.

Appellant argues that the hearing strictly complied with applicable regulations governing procedures at hearings before the commission. Ohio Adm.Code 4301:1-1-65 ("Regulation 65") sets forth the procedures governing all hearings before the commission. It states in part:

"(C) In all hearings before the commission, the procedure shall be as follows:

"(1) The director of the department, first, must produce his evidence and the permit holder or appellant, as the case may be, must then produce his evidence.

"(2) The director may offer evidence in rebuttal.

"(3) The commission may, in its discretion, hear arguments.

"(D) In all hearings before the commission, and the determination thereon, the production of evidence shall be governed in general by the rules of evidence and burden of proof required by Ohio courts in civil cases. The director, the appellant or the permit holder may be represented by counsel at such hearing and such hearing shall be conducted with respect to the administration of oaths, the taking of depositions, issuing subpoenas, and the compulsory attendance of witnesses and the production of books, accounts, papers, records, documents and testimony all in accordance with section 4301.04 of the Revised Code.

" * * *

"(E) In all hearings before the commission, the burden of proof in all cases shall rest upon the director of the department."

It appears that the conduct of the hearing before the commission did, in fact, conform to the mandates of Regulation 65 with respect to the presentation of the principal evidence, that is, the stipulated reports of the commission's investigators and the rebuttal evidence presented by the manager of the night club. The Ohio Supreme Court, however, has clearly stated that the right to due process in an administrative proceeding is not limited to a simple right to have the hearing conform with the letter of applicable procedural regulations:

"Regulatory commissions have been invested with broad powers within the sphere of duty assigned to them by law. Even in quasi-judicial proceedings their informed and expert judgment exacts and receives a proper deference from courts when it has been reached with due submission to constitutional restraints. * * * Indeed, much that they do within the realm of administrative discretion is exempt from supervision if those restraints have been obeyed. All the more insistent is the need, when power has been bestowed so freely, that the inexorable safeguard * * * of a fair and open hearing be maintained in its integrity. * * * The right to such a hearing is one * * * assured to every litigant by the Fourteenth Amendment as a minimal requirement." State ex rel. Ormet Corp. v. Indus. Comm. (1990), 54 Ohio St.3d 102, 103, 561 N.E.2d 920, 922, quoting Ohio Bell Tel. Co. v. Pub. Util. Comm. of Ohio (1937), 301 U.S. 292, 304-305, 57 S.Ct. 724, 730-731, 81 L.Ed. 1093, 1101-1102.

The thrust of such a right to due process in an administrative proceeding is that "statutory procedural provisions aside, a requirement to conduct a 'hearing' implies a 'fair hearing.' " Id., 54 Ohio St.3d at 104, 561 N.E.2d at 922.

The principal violation of due process, as argued by appellee and as perceived by the court of common pleas, was the testimony at the hearing of State Representative Robert Corbin, a representative from the district in which Diamonds nightclub is located. The record does not indicate that Representative Corbin had any personal...