Reece v. Alcoholic Bev. etc. Appeals Bd.

• Decision Date: 07 December 1976
• Citation: 134 Cal.Rptr. 698,64 Cal.App.3d 675
• Court: California Court of Appeals Court of Appeals
• Parties: George P. REECE, Acting Director of the Department of Alcoholic Beverage Control of the State of California, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD of the State of California, Respondent; Virginia SCHEFFEL, Real Party in Interest. Civ. 15931.

Page 698

134 Cal.Rptr. 698

64 Cal.App.3d 675

George P. REECE, Acting Director of the Department of Alcoholic Beverage Control of the State of California, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD of the State of California, Respondent;

Virginia SCHEFFEL, Real Party in Interest.

Civ. 15931.

Court of Appeal, Third District, California.

Dec. 7, 1976.

Rehearing Denied Jan. 3, 1977.

Hearing Denied Feb. 3, 1977.

Evelle J. Younger, Atty. Gen., by William J. Power Deputy Atty. Gen., Sacramento, for petitioner.

Floyd R. Mitzner, Alcoholic Beverage Control Appeals Bd., Sacramento, for respondent.

Patricia K. Norris, Stockton, for real party in interest.

PARAS, Associate Justice.

This is an original petition for a writ of review filed under Business and Professions Code sections 23090 and 23090.5. The Acting Director of the Department of Alcoholic Beverage Control (hereinafter 'ABC') seeks reversal of a decision of the ABC Appeals Board which held a departmental rule (Tit. 4, § 58, Cal.Administrative Code), unconstitutional under California and United States equal protection standards. The rule in question states that the spouse of a person who is disqualified under section 62 ¹ from holding a liquor license is similarly so disqualified.

Virginia Scheffel is the wife of Arch Scheffel, a 21-year veteran of, and active as the Commander of the Detective Division in the San Joaquin County Sheriff's Department. In November 1974, she leased a grocery store and cafe in a rural area of San Joaquin County. The lessors had operated a similar business on the premises for many years prior to leasing it to Virginia, and had been holders of an off-sale beer and wine license. Virginia submitted an application for such a license to the ABC, accompanied by a written and signed post-nuptial agreement stating that the business was entirely her separate property over which Arch would have no management or control. The application was denied on the ground of Arch's employment. She nevertheless began to operate the business, but estimated at the hearing that her inability to sell wine and beer had cut the gross sales by 50 percent or more.

The hearing examiner's proposed opinion upheld the denial, finding sections 58 and 62 not in conflict with the equal protection and due process clauses of the Fourteenth Amendment to the United States Constitution and the due process clause of article I, section 13 of the California Constitution.

The Appeals Board took the position that the 'strict scrutiny standard of review' was applicable 'because section 58 limits the fundamental right of one class of persons to pursue a lawful occupation,' citing Sail'er Inn, Inc. v. Kirby (1971) 5 Cal.3d 1, 95 Cal.Rptr. 329, 485 P.2d 529. It then stated, 'We do not consider the department as having established a compelling interest for the application of section 58 as to the factual situation before us; i.e., where an otherwise qualified spouse holds the proposed premises as her separate property, and the applicant's spouse, who is disqualified from holding a license by virtue of section 62, will not be employed by nor assist the applicant in the operation of the proposed premises.' The Board further noted in its opinion that the applicant confirmed at oral argument that her husband 'will not be employed at nor assist (her) in operating the proposed premises.'

We reverse the Board's decision because the strict scrutiny test does not apply, and because the rational relationship test is satisfied by sections 58 and 62.

I

The equal protection standards under the Fourteenth Amendment to the United States Constitution and article I, section 7 of the California Constitution are substantially the same. (Sail'er Inn, Inc. v. Kirby,supra, 5 Cal.3d at p. 15, fn. 13, 95 Cal.Rptr. 329, 485 P.2d 529.) California follows the two-level test employed by the United States Supreme Court in reviewing legislative classifications under the equal protection clause. As stated in Westbrook v. Mihaly (1970) 2 Cal.3d 765, 784--785, 87 Cal.Rptr. 839, 852--853, 471 P.2d 487, 500--501: 'In the area of economic regulation, the high court has exercised restraint, investing legislation with a presumption of constitutionality and requiring merely that distinctions drawn by a challenged statute bear some rational relationship to a conceivable legitimate state purpose. (Citations.) ( ) On the other hand, in cases involving 'suspect classifications' or touching on 'fundamental interests,' (fn. omitted), the court has adopted an attitude of active and critical analysis, subjecting the classification to strict scrutiny. (Citations.) Under the strict standard applied in such cases, the state bears the burden of establishing not only that it has a Compelling interest which justifies the law but that the distinctions drawn by the law are Necessary to further its purpose.' (Emphasis in original.)

The California Supreme Court in Sail'er Inn, Inc. v. Kirby, supra, 5 Cal.3d at p. 17, 95 Cal.Rptr. at p. 339, 485 P.2d at p. 539, held that the strict scrutiny standard applied to a statute prohibiting the employment of female bartenders, 'first, because the statute limits the fundamental right of one class of persons to pursue a lawful profession, and, second, because classifications based upon sex should be treated as suspect.'

Although the Board in its decision relied upon only the first of the Sail'er Inn rationales, i.e., the fundamental right to pursue a lawful profession, it argues in this court that another reason for applying the strict scrutiny standard is that sections 58 and 62 In fact discriminate on the basis of sex. It asserts that: '(w)hile section 58 prohibits the 'spouse' of a person who is not qualified to hold an alcoholic beverage license (because he is a law enforcement officer) from also holding an alcoholic bevarage license, we need not blind ourselves to the fact that most spouses of law enforcement officers are females.'

In making this assertion, the Board overlooks the fact that rule 62 is not limited to law enforcement officers but applies explicitly to All employees (including clerks, secretaries, department heads, etc.) of the California Department of Justice, local district attorneys' offices, police and sheriffs' offices, and the ABC. No statistics have been furnished to us as to the proportions of male and female employees in all these agencies, but we cannot blind ourselves to the fact that many, if not most, are female. Axiomatically therefore, many if not most of the spouses falling under the disability of section 58 are Male.

In evaluating an equal protection attack against a regulatory statute or regulation, it is improper to isolate its effect upon a specific segment of the affected class, and to sustain it if found deficient as to that segment alone. The overall effect upon the entire class must be viewed. The Board here considered the effect of sections 58 and 62 upon spouses of law enforcement officers only, ignoring the multitude of spouses of so many other employees of sheriff, police, district attorney and ABC offices.

When these too are considered, it is evident that sections 58 and 62 do not discriminate on the basis of sex.

II

The Board concentrates most of its attention on the first rationale of Sail'er Inn, that there is a fundamental right to pursue a lawful profession. But we note that the applicant here is not seeking to engage in 'one of the common occupations of the community;' rather she is applying for a license to deal in alcoholic beverages. The Supreme Court in D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18, 112 Cal.Rptr. 786, 798, 520 P.2d 10, 22, significantly circumscribed the broad language of Sail'er Inn, stating: 'Plaintiffs rely heavily on the decision of this court in Sail'er Inn, Inc. v. Kirby, supra, 5 Cal.3d 1, 95 Cal.Rptr. 329, 485 P.2d 529. It is true that in that case we employed rather broad language in describing why the 'strict scrutiny' standard was applicable--including language which might be fairly read to indicate that the statute in question touched upon a 'fundamental interest' within the meaning of the above-discussed cases insofar as it limited the right of a class of persons to pursue a lawful profession. We do not believe, however, that that language compels the application of the more stingent (sic) standard of review to this case. Three independent reasons support our belief. First, the fundamental thrust of Sail'er Inn is against discrimination on the basis of sex, a classification which is clearly 'suspect' and therefore subject on that basis to review under the 'strict scrutiny' test. Second, to the extent that Sail'er Inn may be interpreted to find a cognizable 'fundamental interest' in the right to pursue employment, It is clearly limited in scope to 'the common occupations of the community' and should not be applied to professions whose technical complexity and intimate relationship to the public interest and welfare counsel greater deference to the legislative judgment. Third, and perhaps most significant from the point of view of legal precedent, Sail'er Inn was decided prior to the case of San Antonio School District v. Rodriguez, supra, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16; the latter case, as we have indicated above, establishes that 'fundamental interests' for the purpose of equal protection review are limited to rights which are 'explicitly or implicitly guaranteed by the constitution.' (411 U.S. at pp. 33--34, 93 S.Ct. at p. 1297, (36 L.Ed.2d at pp. 43--44).) No such interest or right is involved in the instant case.' (Emphasis added.)

The liquor industry is one whose regulation has long been recognized as intimately related to the public interest, counseling deference to legislative judgment. And there is undeniably no right, either...