Wa Restaurant Assoc, V Wa State Liquor Control Bd
48807-8
Wash. Ct. App.Aug 8, 2017Background
- Voters passed Initiative 1183 (codified in Title 66 RCW) privatizing spirits distribution and creating new private licenses and fee schemes.
- The Liquor and Cannabis Board (Board) adopted rules implementing Title 66, including: (1) "10% license fee" rules taxing distillers' spirits revenue; (2) "sell-and-deliver" rules requiring distributors to sell/deliver from licensed premises; and (3) former "24-liter" rules imposing a one-sale-per-day limit to on-premises retailers.
- Washington Restaurant Association, Northwest Grocery Association, and Costco (the Association) sought judicial review, challenging the three rule sets as exceeding statutory authority and/or arbitrary and capricious.
- The Association of Washington Spirits and Wine Distributors intervened to defend the rules. The superior court upheld the 10% fee and sell-and-deliver rules but invalidated the 24-liter rules.
- The Association appealed as to the 10% fee and sell-and-deliver rules; Distributors cross-appealed the invalidation of the 24-liter rules. The Court of Appeals affirmed in part and reversed in part.
Issues
| Issue | Plaintiff's Argument (Association) | Defendant's Argument (Board/Distributors) | Held |
|---|---|---|---|
| Validity of 10% license fee rules | Board exceeded statutory authority by imposing a revenue-based fee on distillers not authorized by Title 66 | RCW 66.08.030(4) gives Board authority to prescribe fees where Title 66 is silent | Invalid — Board exceeded statutory authority; distillers are subject only to the $2,000 distiller license fee in RCW 66.24.140 |
| Validity of sell-and-deliver rules | Rules are arbitrary and capricious; Board provided no adequate justification | Board acted within broad regulatory authority and provided a CES explaining tax-collection and tracking rationales | Valid — Association failed to show rules were arbitrary and capricious; record contains rational basis tied to statutory goals |
| Validity of 24-liter rules (one sale per day) | Superior court held Board exceeded authority by adding a daily limit beyond statute | Board/Distributors argued rules reasonably implement statutory limits on retail-to-retail sales | Invalid — statutes limit only a single sale to 24 liters; adding a daily limit exceeds rule-making authority |
| Standing of intervening Distributors to cross-appeal | Association argued intervenor not an "aggrieved party" when agency declines defense | Distributors asserted intervenor status and statutory/pecuniary interest entitle appeal | Distributors are aggrieved parties and may appeal; court reached merits |
Key Cases Cited
- Ass’n of Wash. Spirits & Wine Distribs. v. Wash. State Liquor Control Bd., 182 Wn.2d 342 (2015) (limits on Board authority to impose fees on distillers)
- Wash. State Hosp. Ass’n v. Dep’t of Health, 183 Wn.2d 590 (2015) (agency rules inconsistent with statute are invalid)
- Lenander v. Dep’t of Ret. Sys., 186 Wn.2d 393 (2016) (agencies possess only statutorily granted powers)
- Puget Sound Harvesters Ass’n v. Dep’t of Fish & Wildlife, 157 Wn. App. 935 (2010) (rule arbitrary and capricious where agency disregarded facts relevant to its goals)
- W. Telepage, Inc. v. City of Tacoma Dep’t of Fin., 140 Wn.2d 599 (2000) (plain statutory language controls when unambiguous)