U.S. Oil, Inc. v. City of Fond Du Lac

• Decision Date: 22 November 1995
• Docket Number: No. 95-0213,95-0213
• Citation: 199 Wis.2d 333,544 N.W.2d 589
• Court: Wisconsin Court of Appeals
• Parties: U.S. OIL, INC., d/b/a Express Convenience Center, Enge's Beer & Liquor, EZ Mart, Farrell's Red Owl, Lauer's Food, Inc., Lauer's Food Mart, Inc., Ma & Pa's Grocery Express, Merwin Fuel Mart, QSO, Inc., Stop N Shop Food of Fond Du Lac, Inc., and Warra Enterprises, Inc., Plaintiffs-Respondents, v. CITY OF FOND DU LAC, Defendant-Appellant. . Oral Argument

Page 589

544 N.W.2d 589

199 Wis.2d 333

U.S. OIL, INC., d/b/a Express Convenience Center, Enge's Beer & Liquor, EZ Mart, Farrell's Red Owl, Lauer's Food Inc., Lauer's Food Mart, Inc., Ma & Pa's Grocery Express Merwin Fuel Mart, QSO, Inc., Stop N Shop Food of Fond Du Lac, Inc., and Warra Enterprises, Inc., Plaintiffs-Respondents, v. CITY OF FOND DU LAC, Defendant-Appellant.

No. 95-0213.

Court of Appeals of Wisconsin.

Oral Argument Nov. 22, 1995.

Opinion Released Jan. 10, 1996.

Opinion Filed Jan. 10, 1996.

On behalf of the defendant-appellant, there were briefs and oral argument by James A. Flader, Assistant City Attorney.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Thomas L. Shriner, Jr. and Michael B. Brennan of Foley & Lardner of Milwaukee. There was oral argument by Thomas L. Shriner, Jr.

On behalf of the City of Fond du Lac, there was a brief filed by Maria K. Myers and James M. Jorissen of Davis & Kuelthau, S.C. of Milwaukee. There was oral argument by James M. Jorissen.

On behalf of the League of Wisconsin Municipalities, there was a brief filed by Claire Silverman of Madison.

On behalf of Petroleum Marketers Association of Wisconsin and Wisconsin Association of Convenience Stores, the cause was submitted on the brief of Jon P. Axelrod and Stephen A. DiTullio of DeWitt Ross & Stevens S.C. of Madison. There was oral argument by Jon P. Axelrod.

Appeal from a judgment of the circuit court for Fond du Lac County: John W. Mickiewicz, Judge. Affirmed.

Before ANDERSON, P.J., and BROWN and SNYDER, JJ.

BROWN, Judge.

The City of Fond du Lac has enacted an ordinance aimed at curtailing the ability of area teenagers to get tobacco products. In particular, the ordinance bans self-service displays that enable consumers to access single packs of cigarettes without merchant assistance. This effectively means that all single packs of cigarettes must pass through the retailer's hands before the customer gets possession. We hold, however, as did the trial court, that this ordinance is invalid because the state preempted the field of tobacco distribution when it promulgated §§ 48.983, 134.66, and 139.43, STATS. We affirm.

In December 1993, the City adopted an ordinance designed to limit teenage tobacco use. It acted in response to a study conducted by Western Michigan University which revealed an alarming rate of tobacco use in the area schools. The study reported that these children primarily obtained the product by either shoplifting or direct purchases. The City also observed results from a study of an Illinois community which showed how tobacco use among minors could be effectively limited through a regulatory program targeted at tobacco retailers.

Accordingly, the City adopted a regulatory scheme patterned on this successful ordinance. Our analysis reveals that the City's ordinance has four other facets in addition to the ban on self-service displays. FOND DU LAC, WIS., ORDINANCES § 12.30(2)(d). First, it adopts the state restrictions regarding tobacco sales. Id. at § 12.30(1). Thus, the City acquired the authority to directly enforce the state's basic regulatory scheme which includes licensing provisions, prohibitions on sales to minors (under eighteen years of age) and rules regarding placement and operation of vending machines. See §§ 48.983, 134.65 and 134.66, STATS. Second, the City adopted a specific provision requiring tobacco sellers to request identification from persons who did not appear to be eighteen years old. See FOND DU LAC, WIS., ORDINANCES § 12.30(2)(a). Next, the City ordinance requires that all tobacco products be sold in their original packaging and include all health warnings. Id. at § 12.30(2)(b). Finally, the ordinance commits the City to making a minimum number of compliance inspections at area retailers. Id. at § 12.30(4).

In May 1994, U.S. Oil, Inc. filed an action seeking to have the ordinance declared void. The trial court issued an order to stay enforcement of the ordinance in June 1994 and scheduled oral arguments for the following October. There, U.S. Oil argued, in essence, that because the state legislature has enacted comprehensive regulations governing the sale and use of tobacco, the City had overstepped its police power when it enacted this ordinance. In response, the City challenged U.S. Oil's contention that the state statutes covering tobacco sales and usage were so comprehensive as to usurp local government's authority to act.

The trial court agreed with U.S. Oil and in January 1995 entered a judgment declaring the ordinance void as preempted by state law. The City appealed. We are thus faced with an issue of statutory interpretation: does the state legislation preempt the City's tobacco ordinance. This is a question of law that we review de novo. See DeRosso Landfill Co. v. City of Oak Creek, 191 Wis.2d 46, 49-50, 528 N.W.2d 468, 469 (Ct.App.), petition for review granted, 534 N.W.2d 85 (1995). ¹

Wisconsin municipalities have both constitutional, WIS. CONST. ART. XI, § 3, and statutory home rule power. See § 62.11(5), STATS. The City, however, argues only that its statutorily derived powers support its ordinance. ²

When addressing whether home rule power exists under § 62.11(5), STATS., the court must first ascertain whether the legislature has declared a subject area to be of "statewide concern." If it is, then the court must determine if the legislature, even though it has declared a statewide interest, has nonetheless permitted local authorities to act, and to what extent they may act. The rationale supporting this analytic procedure was explained in State ex rel. Michalek v. LeGrand, 77 Wis.2d 520, 253 N.W.2d 505 (1977), where the court wrote:

In an area solely or paramountly of statewide concern, the legislature may either delegate to local units of government a limited authority or responsibility to further proper public interests, or may preempt the field by expressly banning local legislative action as to such matter of statewide concern.

Id. at 529, 253 N.W.2d at 508 (quoted source omitted). We will thus begin by determining whether the legislature has manifested the level of interest in tobacco distribution identified in Michalek.

Before the trial court, and here on appeal, U.S. Oil primarily bases its argument regarding the question of statewide concern on §§ 48.983, 134.66 and 139.43, STATS. The relevant portions of these statutes are reproduced at the margin. ³ The touchstone language within the many sections of these statutes includes a requirement that localities may only adopt tobacco-related ordinances which "strictly conform" to state law. See §§ 48.983(5) and 134.66(5). Moreover, § 139.43 expressly states that "providing a uniform regulation of the sale of cigarettes" is of "statewide concern."

Pointing to the cited statutes, especially the terms "strictly conforms" and "statewide concern," U.S. Oil argues that the state legislature has "expressly declared this comprehensive system of laws to preempt supplemental local regulation."

As outlined above, we must first decide whether the legislature has expressed a "statewide concern" in the sale of tobacco products to minors as that term is defined in Michalek. At U.S. Oil's prompting, our focus initially turns to the language "statewide concern" found in the tax laws, § 139.43, STATS., and how it affects the state's restrictions on tobacco distribution.

The City argues that because the "statewide concern" language deals only with the taxation of cigarettes, and that indeed the whole of ch. 139, STATS., only concerns the taxation of beverages, controlled substances and cigarettes, U.S. Oil may not successfully argue that this statutory language was also meant to encompass the sale of tobacco to minors.

The legislative history of these laws reveals that the state's interest in regulating tobacco distribution came twenty years after its decision to tax tobacco products. Compare 1987 Wis.Act. 336, §§ 1 and 2 (creating §§ 48.983(5) and 134.66(5), STATS.) with Laws of 1965, ch. 67, § 4 (creating § 139.43, STATS.). We nonetheless determine that the terms manifesting the "statewide concern" in the "uniform regulation of the sale of cigarettes" also apply to all aspects of tobacco distribution.

Our conclusion is based on three observations. First, the state rules regarding tobacco distribution make many references to the legislation governing the taxation of these products. See, e.g., § 48.983(1)(a), STATS. (incorporating definition of "cigarette" set out in ch. 139, STATS.). More significantly, the penalty scheme laid out in the tobacco distribution regulations requires the sentencing court to not only suspend the retailer's taxation permit, see § 134.66(4)(a)3, STATS., but to also inform the department of revenue of this suspension. See § 134.66(4)(a) 4. Thus, when the legislature approached the task of designing laws to limit minors' access to tobacco, it relied upon the legislative conclusions concerning tobacco taxation that had been set out twenty years earlier. It made an active choice that its distribution regulations would be most effective if they incorporated existing law.

Finally, even if we did not face the "statewide concern" language within § 139.43, STATS., we recognize that the legislature's decision to enact distribution regulations, and to graft onto these laws the "strictly conforms" requirement, must be given independent weight in our analysis. The legislature could have, hypothetically, enacted a law enabling localities to pass their own minimum tobacco age. Such a statute would reveal to us some legislative interest in having a minimum age, but the functions of such a law would suggest that the state did not consider a specific minimum age requirement to be of statewide concern.

But we do not face this hypothetical. In fact, the legislature set out eighteen years of age as a bright-line standard, see § 48.983(2), STATS....