Background - Thormac, LLC (McCormack’s Whisky Grill & Smokehouse) sold food and mixed beverages; for the license year Mar. 1, 2014–Feb. 28, 2015 food/nonalcoholic beverage sales = $159,651 (39.42%) and mixed beverage + food sales = $245,306 (60.58% mixed beverages), so it failed the statutory 45% food-beverage ratio. - ABC charged Thormac under Va. Code §§ 4.1-210, 4.1-114, and 4.1-225; an administrative hearing officer found a violation and recommended a 30-day suspension (reducible under Guidelines to 15 days plus $1,000). - On appeal to the ABC Board, the Board issued a 2–1 decision modifying the penalty to a seven-day suspension or a $500 fine, acknowledging Thormac sold substantial food but still violated the statutory ratio. - Thormac appealed to the Richmond Circuit Court, which affirmed the ABC Board; Thormac appealed to the Court of Appeals of Virginia. - The Court of Appeals reviewed de novo legal issues and for substantial evidence the agency’s factual findings; because the ABC Board has broad delegated discretion, penalty decisions are given special weight and overturned only if arbitrary or capricious. ### Issues | Issue | Plaintiff's Argument | Defendant's Argument | Held | |---|---:|---|---| | Did the circuit court impermissibly "rubber-stamp" the ABC Board by issuing a boilerplate order? | Circuit court failed to analyze contested legal issues and substantial compliance doctrine; thus improper affirmance. | Court acted as an appellate tribunal, reviewed record and law, and its order identified its conclusion; no statutory requirement for detailed reasoning. | Affirmed — no requirement for more detailed opinion; court properly applied review standards. | | Did the ABC Board mistakenly believe it lacked discretion to waive penalty entirely? | Dissent shows Board could have waived penalty; majority acted as if some penalty was mandatory. | Majority recognized broad discretion and simply chose to impose a reduced penalty consistent with statutory scheme. | Affirmed — Board has wide discretion; majority did not rely on a mistaken belief of lack of authority. | | Should the substantial compliance doctrine excuse Thormac’s violation? | Thormac substantially complied with the statute’s purpose (sells substantial food; high-priced spirits explain ratio); Board abused discretion by not applying doctrine. | Board has statutory authority and wide discretion to impose penalties despite substantial food sales; it considered facts and law and reasonably declined to apply doctrine. | Affirmed — penalty decision is within Board's specialized competence and not arbitrary or capricious. | | Does applying the statute to Thormac yield an absurd or irrational result inconsistent with legislative purpose? | Penalizing a restaurant that sells significant food (and deters excess drinking via expensive spirits) is absurd and undermines statute’s purpose; Congress should exempt such establishments. | Statute’s plain text requires 45% food receipts; Board’s reduced penalty reflects reasoned application; courts must not rewrite statute. | Affirmed — interpretation is consistent with plain statutory language; result not patently absurd. | ### Key Cases Cited Avante at Lynchburg, Inc. v. Teefey, 28 Va. App. 156, 502 S.E.2d 708 (1998) (agency factual findings upheld if supported by substantial evidence) Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 369 S.E.2d 1 (1988) (agency interpretations within specialized competence entitled to special weight) Va. Alcoholic Bev. Control Comm’n v. York Street Inn, Inc., 220 Va. 310, 257 S.E.2d 851 (1979) (courts should not substitute their judgment for agency discretion; reversal only for arbitrary or capricious action) School Bd. v. Wescott, 254 Va. 218, 492 S.E.2d 146 (1997) (defines arbitrary and capricious standard) Mozley v. Prestwould Bd. of Dirs., 264 Va. 549, 570 S.E.2d 817 (2002) (statutory construction and avoiding absurd results) Cook v. Commonwealth, 268 Va. 111, 597 S.E.2d 84 (2004) (clarifies meaning of absurd-result doctrine) Barr v. Town & Country Props., Inc., 240 Va. 292, 396 S.E.2d 672 (1990) (courts may not rewrite statutes) Herrel v. Commonwealth, 28 Va. App. 579, 507 S.E.2d 633 (1998) (respect for unambiguous legislative language) * Giannoukos v. Va. Bd. of Med. & Dep’t of Health Professions, 44 Va. App. 694, 607 S.E.2d 136 (2005) (circuit court acting as appellate tribunal in agency-review matters)