Wash. Ass'n for Substance Abuse & Violence Prevention, Nonprofit Corp. v. State

Decision Date31 May 2012
Docket NumberNo. 87188–4.,87188–4.
Citation174 Wash.2d 642,278 P.3d 632
PartiesWASHINGTON ASSOCIATION FOR SUBSTANCE ABUSE AND VIOLENCE PREVENTION, a Washington nonprofit corporation; David Grumbois, an individual, Appellants, and Gruss, Inc., a Washington corporation, Plaintiff, v. STATE of Washington, Respondent, and John McKay, Bruce Beckett, Costco Wholesale Corporation, The Yes On 1183 Coalition, Washington Restaurant Association, MacKay Restaurant Group, Northwest Grocery Association, Safeway, Inc., The Kroger Company, and Family Wineries of Washington, Respondents/Intervenors.
CourtWashington Supreme Court

OPINION TEXT STARTS HERE

Michael Craig Subit, Frank Freed Subit & Thomas LLP, Seattle, WA, for Appellants.

Mary Maureen Tennyson, Washington Atty. General, Bruce L. Turcott, Ofc. of The Atty. General, Peter B. Gonick, Washington Attorney General's Office, Olympia, WA, for Respondent.

Michael K. Vaska, Foster Pepper PLLC, David John Burman, Attorney at Law, Ulrike Buschbacher Connelly, Perkins Coie, Seattle, WA, Kathryn Carder Mccoy, Foster Pepper PLLC, Seattle, WA, for Respondents/Intervenors.

Dmitri L. Iglitzin, Schwerin Campbell Barnard Iglitzin & Lav, Seattle, WA, James Gerard McGuinness, McGuinness & Streepy Law Offices L.L.C., Federal Way, WA, amicus counsel for General Teamsters Union Local No. 174 and United Food and Commercial Workers Local Union No. 21.

Hugh Davidson Spitzer, P. Stephen Dijulio, Foster Pepper PLLC, Seattle, WA, amicus counsel for Local Government Officials.

GONZÁLEZ, J.

[174 Wash.2d 646]¶ 1 This court was asked to determine whether Initiative 1183 (I–1183) violates the single-subject and subject-in-title rules found in article II, section 19 of the Washington State Constitution. I–1183 removes the State from the business of distributing and selling spirits and wine, imposes sales-based fees on private liquor distributors and retailers, and provides a distribution of $10 million per year to local governments for the purpose of enhancing public safety programs. We hold that appellants have not overcome the presumption that the initiative is constitutional, and therefore we affirm summary judgment in favor of the State and intervenors.

I. Facts

¶ 2 I–1183 was approved by 59 percent of voters in the November 2011 general election. Wash. Sec'y of State, November 08, 2011 General Election Results, http:// vote. wa. gov/ results/ 20111108/ measures. html. The ballot title of I–1183 states:

Initiative Measure No. 1183 concerns liquor: beer, wine, and spirits (hard liquor).

This measure would close state liquor stores and sell their assets; license private parties to sell and distribute spirits; set license fees based on sales; regulate licensees; and change regulation of wine distribution.

Should this measure be enacted into law?

[ ] Yes

[ ] No

State of Washington Voters' Pamphlet, General Election 19 (Nov. 8, 2011).

¶ 3 The Twenty–First Amendment to the United States Constitution ended federal prohibition of the manufacture, sale, or transportation of intoxicating liquors, allowing each state to develop its own system for regulating the presence and use of alcohol within its boundaries. Washington adopted the Washington State Liquor Act (Liquor Act) to regulate intoxicating liquors. Laws of 1933, Ex.Sess., ch. 62; Title 66 RCW. The Liquor Act created the Washington State Liquor Control Board (LCB), RCW 66.08.012, and authorized it to administer the comprehensive control scheme developed in the act, RCW 66.08.020.

¶ 4 Beginning with the adoption of the Liquor Act, Washington has established distinct regulatory systems to control the distribution and sale of different types of liquor. Laws of 1933, Ex.Sess., ch. 62. The legislature enacted a “three-tier” system to govern the distribution and sale of beer and wine, which provided different regulations and licensing requirements for manufacturers, distributors, and retailers. Former RCW 66.28.280 (2009). The distributor tier was included to prevent manufacturers from exerting undue influence upon retailers and to provide an efficient means of tax collection. Three–Tier Sys. Review Task Force, Wash. State Liquor Control Bd., Beer and Wine Three–Tier System Review Task Force Report 11 (Nov. 2006), available at http:// www. leg. wa. gov/ Joint Committees/ SCBW/ Documents/ 6– 10– 2008_ LCB. pdf.

¶ 5 The three-tier system also allowed the State to control the price at which manufacturers and distributors sold beer and wine. Manufacturers were prohibited from “discriminat[ing] in price in selling to any purchaser for resale,” former RCW 66.28.170 (2004), and distributors were similarly required to maintain a wholesale price list for beer and wine, from which they were not allowed to deviate, former RCW 66.28.180(1) (2009). Distributors were also prohibited from offering quantity discounts or selling below acquisition cost. Former RCW 66.28.180(1)(d) (2009).1

¶ 6 Unlike the three-tier system that applied to beer and wine, prior to I–1183 the State had a monopoly over the distribution and sale of spirits. See former RCW 66.16.010 (2005); Wash. State Liquor Control Bd., FY 2010 Annual Report 9–10, available at http:// liq. wa. gov/ publications/ 2010– annual– reportfinal– web. pdf. State liquor stores and closely regulated contract liquor stores were the sole purveyors of spirits for consumers and businesses that sold spirits by the glass. Id. at 10.

¶ 7 The Liquor Act also created the Liquor Revolving Fund, which consists “of all license fees, permit fees, penalties, forfeitures, and all other moneys, income, or revenue received by the board.” RCW 66.08.170. Since its adoption in 1933, the Liquor Act has provided that money in excess of the statutory minimum remaining in the Liquor Revolving Fund would be disbursed for a number of purposes unrelated to alcohol. See Laws of 1933, Ex.Sess., ch. 62, §§ 77, 78; RCW 66.08.190. Under the Liquor Act as it was originally approved, 30 percent of excess money in the Liquor Revolving Fund was to be distributed to the general fund of the State; 20 percent to the counties, to be placed in the old age pension fund; and the remaining 50 percent to the incorporated cities and towns of the state. Laws of 1933, Ex.Sess., ch. 62, § 78. Any city or town in which the sale of liquor was forbidden was not entitled to any share of the distributions; and if any unincorporated area of a county voted not to allow the sale of liquor, the population in that area would not be included in the computation of the population for distribution purposes. Id.§ 78(2).

¶ 8 The Liquor Act currently provides funding for alcohol-related purposes, including the treatment of alcoholism, juvenile alcoholand drug abuse prevention programs, and wine and grape research at Washington State University. RCW 66.08.180. The legislature has continued, however, to provide general funding for state and local governments. The current version of RCW 66.08.190, which was not amended or repealed by I–1183, provides for distributions from the Liquor Revolving Fund to counties, cities, towns, border areas, and the State's general fund. Cities and unincorporated areas in which the sale of liquor is forbidden as the result of an election are not entitled to any share in such distributions from the Liquor Revolving Fund. RCW 66.08.200 (unincorporated areas), .210 (cities).

¶ 9 Prior to the effort to pass I–1183, liquor reform promoters, including intervenor Costco Wholesale Corporation, supported attempts to modify the State's liquor regulation system through legislation and initiatives to the people. I–1183 was designed to address the primary concerns that its supporters felt had impeded prior attempts to reform Washington's liquor laws, such as maintaining tax levels and revenue streams; “ensuring adequate funding (and penalties) for licensing and enforcement missions of the Liquor Control Board and, in their discretion, for related public health and safety efforts provided by local governments”; and limiting the number and type of retail outlets that would sell spirits for off-premises consumption. Clerk's Papers (CP) at 711–12 (Decl. of John Sullivan, Associate General Counsel at Costco Wholesale Corp.).

¶ 10 I–1183 dramatically changed the State's approach to regulating the distribution and sale of liquor in Washington. The initiative proposed to [g]et the state government out of the commercial business of distributing, selling, and promoting the sale of liquor, allowing the State to focus on the more appropriate government role of enforcing liquor laws and protecting the public health and safety concerning all alcoholic beverages.” Laws of 2012, ch. 2, § 101(2)(b). To that end, I–1183 authorizes the State to auction off state liquor distribution and liquor store facilities and equipment. Id.§ 102. The initiative allows private distributors to become licensed to distribute spirits, id.§ 105, and allows a limited number of retail stores to sell spirits, id.§ 103.

¶ 11 I–1183 imposes license fees on spirits retailers and distributors. Private retailers are required to pay a license issuance fee of 17 percent of their spirits revenue. Id.§ 103(4). Retailers must also pay a flat license renewal fee of $166 per year. Id.§ 103(5). Private distributors are required to pay a license issuance fee of 10 percent of revenue from sales of spirits made during the first two years and 5 percent of spirits revenue during subsequent years. Id.§ 105(3)(a). Additionally, private distributors must pay an annual license renewal fee of $1,320 for each licensed location. Id.§ 105(4). I–1183 provides that it “does not increase any tax, create any new tax, or eliminate any tax.” Id.§ 301.

¶ 12 I–1183 modifies the wine distribution system by allowing wine distributors and wineries to give discounts based upon competitive conditions, id.§ 119, and allowing retailers and restaurants to distribute wine to their stores from a central warehouse, id.§ 123. Wine retailers may also...

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