California Grocers Ass'n v. Department of Alcoholic Beverage Control
162 Cal. Rptr. 3d 396
Cal. Ct. App.2013Background
- In 2011 the Legislature added Bus. & Prof. Code § 23394.7: “No privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.”
- The Department of Alcoholic Beverage Control issued an advisory interpreting the statute to bar any sale of alcohol through a checkout stand that is enabled for customer operation at any point in the checkout process, even if an employee ultimately approves the sale.
- California Grocers Association (Grocers) challenged the advisory in two writs: (1) the advisory is a regulation adopted without APA notice-and-comment (C070007); (2) the advisory misinterprets § 23394.7 and thus is invalid (C070375).
- The trial court stayed enforcement; the Court of Appeal consolidated the writs for review under its original mandamus jurisdiction over Department rules (§ 23090.5).
- The court held the advisory is an interpretive regulation subject to the APA (and therefore void for lack of notice/comment) but separately concluded the Department’s substantive interpretation of § 23394.7—reading “customer-operated checkout stand” to describe the device itself (e.g., a kiosk operable by customers)—is correct and binding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the advisory is a regulation subject to the APA | Advisory is interpretive guidance, not a generally applicable regulation | Advisory establishes general rule and implements statute; so it is a regulation | Advisory is a regulation subject to the APA (invalid for lack of notice/comment) |
| Whether the APA exception for the sole "legally tenable" interpretation applies | The advisory is the only tenable reading, so APA procedures not required | Advisory is not the only tenable reading; ambiguity exists | Exception does not apply; advisory must have complied with APA |
| Meaning of “customer-operated checkout stand” in § 23394.7 | Grocers: statute bans sales only when the sale occurs while the stand is customer-operated; an employee lockout that requires face-to-face approval complies | Dept: statute forbids sales at any checkout stand that is designated/designed to be customer-operated, regardless of employee intervention | Court: phrase modifies the stand (device) not a momentary function; bans sales at kiosks/kinds of stands operable by customers even if employee ultimately approves |
| Remedy / next steps | Grocers: advisory void and should not be enforced; allow retailer lockout systems | Dept: advisory should be upheld as correct interpretation | Court: advisory void for APA noncompliance, but court adopts the Department’s interpretation of § 23394.7; lift stay and remand costs each party bears |
Key Cases Cited
- Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (discusses tests for whether an agency interpretation is a regulation subject to APA)
- Morning Star Co. v. State Bd. of Equalization, 38 Cal.4th 324 (defines the "only legally tenable" exception to APA rulemaking and when interpretive rules are void)
- Capen v. Shewry, 155 Cal.App.4th 378 (explains when courts may resolve statutory ambiguity after voiding an interpretive regulation)
- Yamaha Corp. of America v. State Bd. of Equalization, 19 Cal.4th 1 (discusses comparative interpretive advantage of agencies vs. courts)