Stroh v. Midway Restaurant Systems, Inc.

• Decision Date: 13 May 1986
• Citation: 180 Cal.App.3d 1040,226 Cal.Rptr. 153
• Court: California Court of Appeals Court of Appeals
• Parties: Jay R. STROH, as Director, etc., Plaintiff and Respondent, v. MIDWAY RESTAURANT SYSTEMS, INC., etc., Defendant and Appellant. D002491.

Page 153

226 Cal.Rptr. 153

180 Cal.App.3d 1040

Jay R. STROH, as Director, etc., Plaintiff and Respondent, v. MIDWAY RESTAURANT SYSTEMS, INC., etc., Defendant and Appellant.

D002491.

Court of Appeal, Fourth District, Division 1, California.

May 13, 1986.

As Modified May 29, 1986.

Review Denied Aug. 13, 1986.

Joshua Kaplan, Los Angeles, for defendant and appellant.

John K. Van de Kamp, Atty. Gen., N. Eugene Hill, Asst. Atty. Gen., Beth Lori Faber, Deputy Atty. Gen., for plaintiff and respondent.

BUTLER, Associate Justice.

We validate a new statute empowering the superior court to enjoin violations of rules of the Department of Alcoholic Beverage Control (Department) occurring after revocation of a liquor license and pending an administrative appeal to the Board.

Midway Restaurant Systems, Inc. dba A.J.'s Lounge (Midway) appeals a preliminary injunction imposed upon Midway pursuant to BUSINESS AND PROFESSIONS CODE § 23053.1¹ at the request of the Department of Alcoholic Beverage Control (Department).

In October of 1983 the Director of the Department filed an accusation against Midway alleging ten separate violations of Title 4, California Administrative Code section 143.3(1)(c) (rule 143.3) ² which prohibits certain activities such as nude dancing in conjunction with the sale of alcoholic beverages. (Cal. Const., art. XX, § 22; Bus. & Prof. Code, §§ 24200, subds. (a) and (b), 25750.) The accusation was amended with additional occurrences in November of 1983.

After a hearing in January of 1984, the Department issued a decision May 10, 1984, revoking Midway's license to serve alcoholic beverages. The violation as found by the Department consisted of 14 counts of 10 different dancers variously displaying either her pubic hair or her vulva. Pursuant to section 23081, Midway appealed the decision to the Board which also resulted in an automatic stay of the revocation ( § 23082). However, invoking a newly-enacted statute, section 23053.1, ³ the Department on August 20, 1984, filed a complaint in superior court against Midway for a preliminary and permanent injunction as well as an order to show cause for a temporary restraining order alleging similar and continuous violations of Midway's license May 15 and June 1. The complaint lists seven occurrences where six different dancers displayed pubic hair while performing on stage and one dancer displayed breasts and buttocks while not on stage and within six feet of the nearest patron in violation of rule 143.3(1)(c), (2).

After various preliminary proceedings, the superior court granted preliminary injunction enjoining any violations of rule 143.3. Subsequently, Midway also filed with this court a petition for writ of prohibition and for a writ of supersedeas as to the injunction. Both were denied December 12, 1984. Midway also brought the requests to the California Supreme Court but failed again to get relief on December 28, 1984 (D002509, D002511).

We now round out the picture of the various actions taken in opposition to and in attempted delay of the license revocation. After the Board upheld on April 29, 1985, the Department's decision to revoke Midway's license, Midway filed with this court a petition for writ of review and request for a stay which was denied on May 22, 1985. Then Midway filed a petition for review with the California Supreme Court ( § 23090; D003156) which the court denied July 11, 1985. ⁴

Midway now appeals the injunction which prohibited continued violations of rule 143.3 during the pendency of Midway's appeal to the Board, and advances these contentions:

(1) The superior court both constitutionally and statutorily is without jurisdiction to entertain the action.

(2) Section 23053.1 is unconstitutional under the due process clauses of the United States and California Constitutions since it conflicts with sections 23080-23089.

(3) The application of section 23053.1 to Midway is unconstitutional under the United States and California Constitutions which prohibit ex post facto laws.

(4) It is a violation of Midway's constitutional right of free expression to apply section 23053.1 in this context and injunctive enforcement constitutes a prior restraint on such free expression.

(5) Finally Midway contends enforcement of rule 143.3 in this case is unconstitutional because only dancing or conduct which is "grossly sexual" can be prohibited under the First Amendment of the United States Constitution.

We reject all of Midway's contentions and find section 23053.1 constitutional on its face as well as in its application to Midway in this circumstance.

I

Preliminarily we note Midway's license has been revoked and the circumstances which underlie this appeal no longer exist. Ordinarily this would render the appeal moot. However, the issue inevitably will recur, is one of first impression and great public interest and we consider it appropriate to entertain the appeal. (Ballard v. Anderson (1971) 4 Cal.3d 873, 876-877, 95 Cal.Rptr. 1, 484 P.2d 1345; In re William M. (1970) 3 Cal.3d 16, 23, 89 Cal.Rptr. 33, 473 P.2d 737.)

II

The Business and Professions Code lays out a comprehensive framework of powers and duties of the Department of Alcohol Beverage Control, the Alcoholic Beverage Control Appeals Board, and the role of the courts in matters concerning the manufacture and sale of alcoholic beverages. The Department has the power to issue and revoke licenses according to the specifications set out in the statutes (Cal. Const., art. XX, § 22; Bus. & Prof. Code, §§ 23052, 23053.5, 23950 et seq., § 24200 et seq., see also Gov.Code, § 11500 et seq.) and pursuant to section 25750 the Department can make reasonable rules and regulations to carry out the purposes and intent of the constitutional mandate. Rule 143.3 is such a rule. Decisions of the Department can be appealed to the Board ( § 23081) and if such an appeal is taken there is an automatic stay of the effect of the decision ( § 23082). Further, judicial review of decisions is provided exclusively in either the court of appeal or the California Supreme Court ( § 23090); jurisdiction for either injunction or mandamus is provided in the same courts in the proper case ( § 23090.5). (See Top Hat Liquors v. Department of Alcoholic Beverage Control (1974) 13 Cal.3d 107, 118 Cal.Rptr. 10, 529 P.2d 42; Schenley Affiliated Brands Corp. v. Kirby (1971) 21 Cal.App.3d 177, 195-196, 98 Cal.Rptr. 609.)

Section 23053.1 was enacted as an urgency measure, to be effective immediately March 28, 1984. Previously the Department had little if any power to prevent license violations during the automatic stay after the Department decision and the final Board review. The statute authorizes the application by the Department for and the issuance of an injunction against continued violations but only after the Department has adopted a decision following the requisite administrative hearing.

III

First, Midway contends the superior court is without jurisdiction to issue an injunction pursuant to section 23053.1 since previously enacted statutes provide the Supreme Court and the court of appeal exclusive jurisdiction to review or otherwise determine the propriety of departmental activities ( §§ 23090, 23090.5). ⁵

According to Midway these statutes necessarily preclude the operation of section 23053.1 with its jurisdiction in superior court to enjoin the proscribed activities. Parenthetically, we note, superior courts before 1967 had jurisdiction to review Department activities. When the statutory scheme was changed in 1967 ( §§ 23090, 23090.5), various arguments were advanced and rejected the statutes improperly deprived the parties (licensees) of jurisdiction in superior court in actions relating to quasi-judicial and administrative activities of the Department. (Top Hat Liquors v. Department of Alcohol Beverage Control, supra, 13 Cal.3d 107 at pp. 111-112, 118 Cal.Rptr. 10, 529 P.2d 42; Dept. of Alcoholic Bev. Control v. Superior Court (1968) 268 Cal.App.2d 67, 73 Cal.Rptr. 780; Samson Market Co. v. Kirby (1968) 261 Cal.App.2d 577, 68 Cal.Rptr. 130.)

Legislative enactment in 1967 of revisions in the role of the courts in matters concerning alcoholic beverages did not exhaust the broad powers given the Legislature by section 22 of article XX of the California Constitution to enact laws concerning that subject. (Kirby v. Alcoholic Bev., etc. Appeals Bd. (1969) 71 Cal.2d 1200, 1204-1206, 81 Cal.Rptr. 241, 459 P.2d 657.) Section 22 of article XX as originally enacted and as now amended does not include provisions for judicial review of Department or Board rules. Such review has been authorized by legislative enactments. (Covert v. State Board of Equalization (1940) 29 Cal.2d 125, 132, 173 P.2d 545.) The Legislature has authorized the grant of injunctions to enjoin sales of alcoholic beverages to habitual or common drunkards or an intoxicated person ( § 25602.2). While section 23053.1 is a discordant note in the symmetrical scheme of judicial review set out in sections 23080-23090, we conclude the Legislature may add to the remedies available to the Department in the exercise of its alcoholic beverage control activities.

We thus read section 23053.1 narrowly and hold section 23053.1 may be invoked only in a circumstance where a licensee continues to violate the same rules after the license has been revoked by the Department after an administrative hearing concerning violation of such rules.

So construed, section 23053.1 injunctive relief is confined to activities occurring in conjunction with the sale of alcoholic beverages and thus does not run afoul of the First Amendment prohibition on prior restraints discussed in parts VII and VIII.

IV

Midway next contends since only the Department has access to superior court under section 23053.1, Midway has been denied equal protection under both the United States and California Constitutions (U.S. Const., 14th Amend.; Cal. Const., art. I, § 7). We disagree.

Equal...