Project Extra Mile v. Nebraska Liquor Control Comm'n

• Decision Date: 02 March 2012
• Docket Number: No. S–11–157.,S–11–157.
• Citation: 283 Neb. 379,810 N.W.2d 149
• Parties: PROJECT EXTRA MILE et al., appellees, v. NEBRASKA LIQUOR CONTROL COMMISSION and Hobert Rupe, its executive director, appellants.
• Court: Nebraska Supreme Court

283 Neb. 379

810 N.W.2d 149

PROJECT EXTRA MILE et al., appellees,

v.NEBRASKA LIQUOR CONTROL COMMISSION and Hobert Rupe, its executive director, appellants.

No. S–11–157.

Supreme Court of Nebraska.

March 2, 2012.

Syllabus by the Court

1. Administrative Law: Judgments: Appeal and Error. In an appeal under the Administrative Procedure Act, an appellate court may reverse, vacate, or modify the judgment of the district court for errors appearing on the record.

2. Appeal and Error. An appellate court independently reviews a lower court's rulings on questions of law.

3. Statutes. Statutory interpretation presents a question of law.

4. Standing: Jurisdiction: Parties. A party's standing to commence an action presents a jurisdictional issue.

5. Jurisdiction: Appeal and Error. An appellate court determines jurisdictional questions that do not involve a factual dispute as a matter of law.

6. Administrative Law: Standing. Generally, Neb.Rev.Stat. § 84–911 (Reissue 2008) requires a plaintiff to have common-law standing to challenge an agency's regulation or its threatened application.

7. Actions: Taxation: Injunction. A resident taxpayer, without showing any interest or injury peculiar to itself, may bring an action to enjoin the illegal expenditure of public funds raised for governmental purposes.

8. Declaratory Judgments. Neb.Rev.Stat. § 84–911 (Reissue 2008) does not limit a plaintiff to seeking only declaratory relief.

9. Declaratory Judgments: Pleadings. When a plaintiff's pleadings in a declaratory judgment action put the defendant on notice of the remedy sought, a court may order relief that is clearly within the scope of its declaratory judgment.

10. Immunity: Declaratory Judgments. The only limitations placed on the relief that a plaintiff can obtain in a declaratory judgment action authorized under Neb.Rev.Stat. § 84–911 (Reissue 2008) are the limitations imposed by sovereign immunity principles.

11. Immunity: Public Officers and Employees. State sovereign immunity does not bar actions to restrain state officials or to compel them to perform an act they are legally required to do unless the prospective relief would require them to expend public funds.

12. Immunity: Public Officers and Employees: Declaratory Judgments: Injunction. Neither Neb.Rev.Stat. § 84–911 (Reissue 2008) nor sovereign immunity bars injunctive relief in a declaratory judgment action authorized by § 84–911 when such relief would not require state officials to expend public funds.

13. Actions: Taxation. A taxpayer's interest in challenging an unlawful state action must exceed the common interest of all taxpayers in securing obedience to the law.

14. Taxation: Equity. Taxpayers have an equitable interest in public funds, including state public funds.

15. Actions: Taxation: Standing: Proof: Public Officers and Employees. A taxpayer has standing to challenge a state official's failure to comply with a clear statutory duty to assess or collect taxes—as distinguished from legitimate discretion to decide whether to tax. But the taxpayer must show that the official's unlawful failure to comply with a duty to tax would otherwise go unchallenged because no other potential party is better suited to bring the action.

16. Administrative Law: Taxation: Standing. In an action brought under Neb.Rev.Stat. § 84–911 (Reissue 2008), a taxpayer has standing to challenge an agency's unlawful regulation that negates the agency's statutory duty to assess taxes.

17. Administrative Law: Taxation: Standing. No other potential parties are better suited than a taxpayer to claim that a state agency or official has violated a statutory duty to assess taxes when the persons or entities directly and immediately affected by the alleged violation are beneficially, instead of adversely, affected.

18. Administrative Law: Statutes. A rule of deferring to agency interpretations does not apply when the agency's regulation contravenes the plain language of its governing statutes.

19. Administrative Law: Courts: Statutes: Appeal and Error. In determining whether an agency's governing statute is ambiguous, an appellate court is guided by its own principles of statutory construction.

20. Statutes. A statute is ambiguous when the language used cannot be adequately understood from the plain meaning of the statute or when considered in pari materia with any related statutes.

21. Statutes: Appeal and Error. Absent a statutory indication to the contrary, an appellate court gives words in a statute their ordinary meaning.

22. Statutes: Legislature: Intent: Appeal and Error. In construing a statute, an appellate court determines and gives effect to the legislative intent behind the enactment.

23. Statutes: Legislature: Intent. Components of a series or collection of statutes pertaining to a certain subject matter are in pari materia and should be conjunctively considered and construed to determine the intent of the Legislature, so that different provisions are consistent, harmonious, and sensible.

24. Administrative Law: Liquor Licenses: Statutes: Legislature: Intent. Under the Nebraska Liquor Control Act, the Legislature did not intend for a beer product to include beverages containing distilled alcohol in an amount constituting up to 49 percent of the total alcohol content.

25. Administrative Law. An administrative agency is limited in its rulemaking authority to powers granted to the agency by the statutes which it is to administer. It may not employ its rulemaking power to modify, alter, or enlarge portions of its enabling statute.

26. Administrative Law. An administrative agency has no power or authority other than that specifically conferred by statute or by construction necessary to accomplish the plain purpose of the act.

27. Administrative Law. An administrative agency cannot employ its rulemaking authority to adopt regulations contrary to the statutes that it is empowered to enforce.

Jon Bruning, Attorney General, and Milissa Johnson–Wiles, Lincoln, for appellants.

Vincent M. Powers, Lincoln, and Amanda M. Lightner, Senior Certified Law Student, of Vincent M. Powers & Associates, for appellees.

Marc E. Sorini and Jeffrey W. Mikoni, of McDermott, Will & Emery, L.L.P., and James P. Fitzgerald, of McGrath, North, Mullin & Kratz, P.C., L.L.O., Omaha, for amicus curiae Flavored Malt Beverages Coalition.

HEAVICAN, C.J., CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER–LERMAN, JJ.

CONNOLLY, J.

I. SUMMARY

We are asked to decide whether a flavored malt beverage is a beer or spirit under the Nebraska Liquor Control Act.¹ It makes a difference. Beer is taxed at 31 cents per gallon; spirits are taxed at $3.75 per gallon. The question presented is not whether the Legislature could classify and tax beverages containing distilled alcohol as beer. It could. The question is whether the Nebraska Liquor Control Commission and its executive director (collectively the Commission) exceeded its statutory authority in classifying and taxing these beverages as beer despite legislative inaction.

The Commission argues two issues: First, it contends that the district court erred in concluding that the appellees had standing to challenge its regulation. Second, it contends that the court erred in ruling that flavored malt beverages are spirits under the Nebraska Liquor Control Act.

We conclude that appellee Mary Doghman had taxpayer standing. The court correctly determined that the Commission exceeded its statutory authority by classifying and taxing flavored malt beverages as beer. The Nebraska Liquor Control Act plainly defines spirits as beverages that contain alcohol obtained by distillation. Up to 49 percent of the alcohol in flavored malt beverages is distilled alcohol. Therefore, a flavored malt beverage is a spirit. We affirm.

II. BACKGROUND

1. Procedural History

Of the four appellees in this case, three are Nebraska non-profit organizations: Project Extra Mile, the Public Health Association of Nebraska, and Pride–Omaha, Inc. (collectively the nonprofits). The other appellee, Doghman, is a resident taxpayer.

The appellees alleged that Doghman had taxpayer standing because the Commission had spent public funds and would spend public time and money to implement and enforce an unlawful classification. They also alleged that the classification would result in reduced tax revenues for the State; thus, it would increase the tax burden for Doghman and other taxpayers.

The appellees further alleged that the nonprofits had standing because of their status as Nebraska nonprofit corporations. The appellees' only factual allegations of injury from the regulation referred to Project Extra Mile's organizational purpose. They alleged that Project Extra Mile's primary mission and purpose was to address the issue of underage drinking. And they alleged that the Commission's actions would harm Project Extra Mile's mission.

The appellees sought a declaration that the Commission's regulations were illegal and void because the Commission had exceeded its authority under the Nebraska Liquor Control Act by classifying flavored malt beverages as beer. The appellees also sought a writ of mandamus compelling the Commission to classify and tax flavored malt beverages as spirits instead of beer.

The Commission moved to dismiss the action. It argued that (1) the appellees lacked standing, (2) sovereign immunity barred their action, and (3) a writ of mandamus was not an appropriate remedy.

The court ruled that Doghman had standing as a resident taxpayer to challenge the classification because she had alleged an illegal expenditure of public funds. It also ruled that she did not have to make a demand on the Commission before bringing her action because the demand would be useless.

In ruling that the nonprofits had representative standing, the court relied on the U.S. Supreme Court's decision in Hunt v. Washington Apple Advertising Comm'n.² The court reasoned that the nonprofits' members would have standing as...