Mike's Smoke, Cigar & Gifts v. St. George CityMike's Smoke, Cigar & Gifts v. St. George City
Case Information
*1
T HE U TAH C OURT OF A PPEALS
M IKE ’ S S MOKE , C IGAR & G IFTS , Petitioner and Appellee, v.
S T . G EORGE C ITY , Respondent and Appellant. Memorandum Decision No. 20140521-CA Filed June 18, 2015 Fifth District Court, St. George Department The Honorable Jeffrey C. Wilcox No. 130500429 Bryan J. Pattison, Thomas J. Burns, Shawn M. Guzman, and Paula J. Houston, Attorneys for Appellant
Ryan L. Holdaway and Diane Pitcher, Attorneys for Appellee
J UDGE K ATE A. T OOMEY authored this Memorandum Decision, in which J UDGES S TEPHEN L. R OTH and J OHN A. P EARCE concurred.
TOOMEY, Judge: St. George City appeals from a district court order
reversing the City’s revocation of the business license of Mike’s Smoke, Cigar & Gifts (MSCG). The City argues the district court employed the incorrect standard in reviewing the City’s revocation decision. We agree and therefore vacate the order and remand for further proceedings. MSCG is a store licensed by the City to sell cigarettes and
other tobacco-related products. Between March 2012 and January 2013, the Washington County Drug Task Force investigated MSCG for the suspected distribution of a controlled substance. Investigators purchased a product called ‚Reborn‛ at MSCG; they later seized MSCG’s inventory of Reborn. A forensic scientist at the Utah Bureau of Forensic Sciences (the State Crime Lab) tested samples of Reborn, and determined that it contained a substance known as XLR11, a structural analog of another substance called AM-694. Because AM-694 is classified as a controlled substance under Utah law and MSCG sold a structural analog of it, the City revoked MSCG’s business license. MSCG appealed to the City Council. During a hearing before the City Council, attorneys for
the City and MSCG argued their respective positions and proffered evidence. The City presented the State Crime Lab’s reports in which the forensic scientist attested that the samples of Reborn contained XLR11, which has a substantially similar chemical structure to the controlled substance AM-694. Taking the opposite view, MSCG presented the City Council with two opinion letters. In the first letter, a chemist opined that XLR11 is ‚substantially structurally different‛ from AM-694 and therefore is not ‚a structural analog of AM-694.‛ In the second letter, a chemistry consultant opined that XLR11 and AM-694 are structurally dissimilar and have different pharmacological effects. Based on the evidence before it, the City Council
determined that the product sold by MSCG contained XLR11. It then relied on the State Crime Lab’s reports to conclude that XLR11 is an analog of AM-694 and concluded that MSCG sold and possessed the product with intent to distribute it in violation of the Utah Controlled Substances Act. As a result, the City Council upheld the City’s business-license-revocation decision. MSCG petitioned the district court for judicial review of the City’s decision. In its petition, MSCG claimed, first, that the City’s revocation decision was not supported by substantial 1. Pursuant to a stipulation, the City stayed the revocation of MSCG’s business license while the matter is pending. evidence and, second, that the definition of a controlled substance analog under the Utah Controlled Substances Analog Statute (the Analog Statute) was unconstitutionally vague. See Utah Code Ann. § 58-37-2(g) (LexisNexis 2012). In contrast, the City contended the City Council correctly interpreted the Analog Statute and MSCG’s constitutional challenge lacked merit. Further, the City asserted that substantial evidence in the administrative record supported the City Council’s revocation decision. After reading the briefing and listening to oral argument
on the matter, the district court issued its Final Order on Petition
for Judicial Review. In the order, the court acknowledged that its
task was ‚to determine whether the City Council’s decision is
supported by substantial evidence in the record.‛ (Citing
14th St.
Gym, Inc. v. Salt Lake City Corp
.,
[M]y thinking is I need to reverse and remand sometimes as appellate courts do. I want to reverse and remand and tell you to have an evidentiary hearing where the experts are put under oath, they’re subject to examination and cross- examination, and then the city council can make a determination based on an evidentiary hearing.
City [Council] holds an evidentiary hearing as set forth . . . above.‛ The City appeals.
I. The District Court’s Order Is a Final Appealable Order. ¶7 As an initial matter, MSCG contends that we lack jurisdiction, arguing the district court’s order is not a final appealable order. In particular, MSCG asserts that because the district court did not rule on the merits of its constitutional argument by addressing the meaning and interpretation of the Analog Statute, the issue remained before the court for its adjudication. MSCG further argues that the language of the order stating that it ‚is the final Order of the Court until after the City *Council+ holds an evidentiary hearing‛ indicates that the district court was not treating the order as final. ‚*W+hether an order is final and appealable . . . is a
question of law.‛
Miller v. USAA Cas. Ins. Co
.,
not final, MSCG cites
Loffredo v. Holt
,
order remanding the matter to the City Council for further proceedings ‚ends the controversy between the parties,‛ the controversy ended with respect to what the district court could do. Under Zions ’s logic, although the controversy still exists between the parties in the administrative forum, the order is final because nothing is left pending before the district court. Here, unlike Loffredo , the court disposed of all of the parties’ claims, albeit erroneously, when it ‚reverse*d+ and remand*ed+ the matter back to the City Council to hold an evidentiary hearing‛ and then dismissed MSCG’s constitutional issues based on that ruling. The court’s order did not rule on the merits of MSCG’s constitutional argument, but the order did dispose of the case so far as the court was concerned and effectively ‚end*ed+ the controversy between the parties‛ before the district court. See Bradbury , 2000 UT 50, ¶ 9 (citation and internal quotation marks omitted). MSCG further asserts that the order is not final based on
its own language. Indeed, the last sentence of the order describes the order as a final order ‚until after the City *Council+ holds an evidentiary hearing.‛ Nevertheless, at the hearing the district court reversed and remanded the issues to the City Council, dismissed MSCG’s constitutional issues, and then instructed the parties that they would have thirty days to appeal from it. This language, however, is surplusage in the face of other indications that the court intended the order as a final judgment. For these reasons, we conclude the order is a final appealable judgment that is properly before us. Accordingly, we turn to the merits of the City’s appeal.
II. The District Court Employed the Incorrect Standard in Reviewing the City Council’s Revocation Decision. The City argues on appeal that the district court used the
incorrect standard in reviewing the City Council’s business-
license-revocation decision. In particular, it contends the court
erroneously applied a summary judgment framework to reverse
the City Council’s decision on the basis that a disputed issue of
fact precluded the City Council from making a finding that
Reborn is a structural analog of a controlled substance. MSCG
agrees. ‚Whether the trial court employed the proper standards
presents a legal question which is reviewed for correctness.‛
See
Chandler v. Blue Cross Blue Shield of Utah
,
limited to a determination whether the municipality acted
within its lawful authority and in a manner that is not arbitrary
or capricious.‛
Dairy Prod. Servs., Inc. v. City of Wellsville
, 2000 UT
81, ¶ 42, 13 P.3d 581 (citation and internal quotation marks
omitted). This court has indicated that a ‚municipality’s license
revocation decision is deemed arbitrary or capricious if it is not
supported by substantial evidence in the record.‛
14th St. Gym,
Inc. v. Salt Lake City Corp.
,
standard for reviewing the City Council’s decision, it did not analyze whether the City Council’s decision was supported by substantial evidence. Instead, the district court found that ‚there is a disputed issue of fact as to whether the substance ‘Reborn’ has a substantially similar chemical structure to a controlled substance analog.‛ Because of this ‚disputed issue of fact,‛ the district court then reversed the City Council’s revocation decision for further fact finding. Instead of looking at all the evidence, both favorable and contrary, to determine if a reasonable mind could reach the City Council’s decision, the court seems to have reviewed the decision within the summary judgment framework. See Utah R. Civ. P. 56(c) (indicating that summary judgment is appropriate if based on the evidence ‚there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law‛). Whether there is a dispute in material facts is not relevant to the district court’s review of a municipality’s business-license- revocation decision. As a consequence, the district court erred by viewing this case through the prism of the summary judgment standard.
III. Conclusion The district court’s order was final because it disposed of
all of the parties’ claims. But the court erred when it failed to determine whether the City Council’s business-license- revocation decision was supported by substantial evidence. Accordingly, we vacate the order and remand for the district court to analyze the parties’ claims under the correct legal standards.
3. The City asks us to independently review the administrative record and to resolve these issues, but we decline to do so without the benefit of the district court’s analysis.