Virginia Dep't of Health v. Kepa, Inc.Virginia Dep't of Health v. Kepa, Inc.
In this appeal, we consider whether the Court of Appeals erred in construing the
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
A. Background
Kepa, Inc. has owned and operated She-Sha Café and Hookah Lounge (“She-Sha“) in Blacksburg since 2003. She-Sha sells tobacco and tobaсco products to its customers. Customers may purchase tobacco to smoke on-site through “hookahs,” which are available for rent at the café, or to smoke off-site.1 It also sells food for on-site consumption in the same area where tobacco is smoked.
She-Sha is licensed as a “Food Establishment,” specifically a “Full Service Restaurant,” by the Virginia Department of Health (“Department“). It is also licensed as an “Other Tobacсo Product Retailer” by the Virginia Department of Taxation. On its business license application to the Town of Blacksburg, She-Sha lists the nature of its business as “Restaurant and Retail Tobacco Store.”
On January 22, 2010, the Montgomery County Health Department received a complaint indicating that She-Sha was allowing customers to smoke in its restaurant in violation of the Virginia Indoor Clean Air Act,
B. Relevant Statutory Provisions and Material Proceedings Below
At issue in this appeal is the proper interpretation of two statutory provisions from VICAA that appear to conflict when applied to She-Sha. First,
Nothing in this chapter shall be construed to:
- Permit smoking where it is otherwise prohibited or restricted by other applicable provisions of law; or
- Regulate smoking in retail tobacco stores, tobacco warehouses, or tobacco manufacturing facilities.
Next,
A. Effective December 1, 2009, smoking shall be prohibited and no person shall smoke in any restaurant in the Commonwealth or in any restroom within such restaurant, except that smoking may be permitted in:
. . . .
3. Any restaurants located on the premises of any manufacturer of tobacco products;
. . . .
5. Any portion of a restaurant that is constructed in such a manner that the area where smoking may be permitted is (i) structurally separated from the portion of the restaurant in which smoking is prohibited and to which ingress and egress is through a door and (ii) separately vented to prevent the recirculation of air from such area to the area of the restaurant where smoking is prohibited.
It is also relevant to note that, for the purposes of VICAA, a “Rеstaurant” is “any place where food is prepared for service to the public on or off the premises, or any
She-Sha requested an informal hearing to contest the charges. On July 8, 2010, the Department upheld the violations, stating that She-Sha was “properly labeled as a restaurant” and that none of the exceptions in VICAA applied to the establishment.
After the informal hearing, Shе-Sha requested a formal hearing pursuant to the Virginia Administrative Process Act,
In his findings of fact and conclusions of law, the hearing officer noted that the Department‘s officiаl interpretation of
She-Sha appealed the Department‘s decision to the Circuit Court of Montgomery County. After considering the record compiled during the administrative proceedings and the oral arguments of both parties, the circuit court ruled that VICAA did not provide an exemption for She-Sha‘s establishment. Thus, the circuit court found that the Department did not make an error of law when it interpreted VICAA to regulate hookah bars that serve food in areas where smoking occurs.
Next, She-Sha pursued its case to the Court of Appeals. A three-judge panel affirmed the circuit court by a 2-1 vote in a published opinion. Kepa, Inc. v. Virginia Dept. of Health, 61 Va. App. 696, 740 S.E.2d 26 (2013) (Kepa I). The majority found that to adopt She-Sha‘s reading of
The majority began with the premise that, “[a]s a restaurant, She-Sha must comply with the restaurant smoking ban, unless it falls within one of the six expressly stated exemptions.” Id. at 704, 740 S.E.2d at 30. It then turned to the exemptions listed under
Then, She-Sha petitioned the full Court of Appeals for a rehearing en banc. In a 6-3 decision, the Court of Appeals overruled the panel, holding that She-Sha, as a restaurant, was exempt from VICAA because it is also a retail tobacco store. Kepa, Inc. v. Virginia Dept. of Health, 62 Va. App. 614, 617, 751 S.E.2d 671, 672 (2013) (Kepa II).
Again, the majority found that Code §§ 15.2-2821 and -2825 were “inconsistent or ambiguous when read together” and sought to harmonize the provisions. Id. at 623, 751 S.E.2d at 675. This time, the majority declined to infer that the General Assembly signaled its intent to regulate restaurants located on the premises of a retail tobacco store by not providing a specific exemption under
The majority further concluded that
The dissent argued that the interpretation adopted by the majority “ascribes a broad meaning to the term ‘retail tоbacco store’ that is not contextually supported.” Id. at 627, 751 S.E.2d at 677 (Chafin, J., dissenting). As a result, the dissent contended, the majority opinion elevated
The Department‘s appeal to this Court followed.
II. DISCUSSION
A. Standard of Review
“[W]e give deference to the decisions of administrative agencies when those decisions ‘fall within an area of the agency‘s specialized competence.‘” Virginia Marine Res. Comm‘n v. Chincoteague Inn, 287 Va. 371, 380, 757 S.E.2d 1, 5 (2014) (quoting Virginia Dep‘t of Health v. NRV Real Estate, LLC, 278 Va. 181, 185, 677 S.E.2d 276, 278 (2009)). “‘However, when an issue involves a pure question of statutory interpretation, that issue does not invoke the agency‘s specialized competence but is a question of law to be decided by the courts.‘” Id. (quoting Alliance to Save the Mattaponi v. Commonwealth Dep‘t оf Envtl. Quality, 270 Va. 423, 442, 621 S.E.2d 78, 88 (2005)). This appeal presents a pure question of statutory construction which we review de novo. Id.
B. The Parties’ Arguments
On appeal, the parties presented the same arguments that they advanced at each stage below. The parties do not dispute that, by definition, She-Sha operates a restaurant and a retail tobacco store on its premises. The only dispute between the parties is how to read and apply Code §§ 15.2-2821 and -2825 given She-Sha‘s dual businеss identities.
The Department argues that She-Sha is not exclusively a retail tobacco store, so
She-Sha argues that the plain language of
C. Whether Code § 15.2-2821 Exempts She-Sha from Regulation Under Code § 15.2-2825
“The primary objective in statutory construction is to determine and give effect to the intent of the legislature as expressed in the language of the statute.” Appalachian Power Co. v. State Corp. Comm‘n, 284 Va. 695, 706, 733 S.E.2d 250, 256 (2012) (citing Halifax Corp. v. First Union Nat‘l Bank, 262 Va. 91, 99-100, 546 S.E.2d 696, 702 (2001)). “If a statute is subject to more than one interpretation, we must apply the interpretation that will carry out the legislative intent behind the statute.” Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007) (collecting cases). Moreover, “wherе, as here, a regulatory statute is designed to promote the public welfare and the scope of the coverage intended is drawn in doubt by a regulated [business] claiming exemption, courts must determine what was intended.” Virginia Electric & Power Co. v. Board of Cnty. Supervisors, 226 Va. 382, 387-88, 309 S.E.2d 308, 311 (1983).
With these principles in mind, and for the four reasons stated below, we agree with the Department that
1. Code § 15.2-2821 Recognizes a Three-Tier Industry and Code § 15.2-2825 Exempts Only One Tier from Regulation
She-Sha, and the Court of Appeals in Kepa II, appears to begin with the premise that
Rather, we begin by noting that
Nothing in this chapter shall be construed to:
- Permit smoking where it is otherwise prohibited or restricted by other applicable provisions of law; or
- Regulate smoking in retail tobacco stores, tobacco warehouses, or tobacco manufacturing facilities.
Thus, the General Assembly clearly recognized three tiers within the tobacco industry: manufacturing, shipрing and storage, and retail, and it exempted such businesses from regulation under VICAA. Yet, the General Assembly only addressed manufacturers in
[S]moking shall be prohibited and no person shall smoke in any restaurant in the Commonwealth or in any restroom within such restaurant, except that smoking mаy be permitted in:
. . . .
3. Any restaurants located on the premises of any manufacturer of tobacco products .
. . .
Section 15.2-2825(A) specifically prohibits smoking in “any restaurant,” which in turn is “any place where food is sеrved,” regardless of its location or the nature of business it is combined with. See
2. Code § 15.2-2825(A)(5) Reflects a Balanced Approach to Regulating Smoking in Restaurants
Next, we note that
Any portion of a restaurant that is constructed in such a manner thаt the area . . . is (i) structurally separated from the portion of the restaurant in which smoking is prohibited and to which ingress and egress is through a door and (ii) separately vented to prevent the recirculation of air from such area to the area of the restaurant where smoking is prohibited.
This provision balances VICAA‘s public health initiatives with the interests of businesses that cater to the smoking public. Subsection (A)(5) allows She-Sha to accommodate its patrоns who wish to smoke and eat at the same time, as long as it provides a separate nonsmoking area. Thus, the General Assembly created viable options for businesses that sell both tobacco and food for on-site consumption.
The Court of Appeals in Kepa II never considered subsection (A)(5), and thus, failed to construe the statute as a whole. See City of Lynchburg v. English Constr. Co., 277 Va. 574, 584, 675 S.E.2d 197, 202 (2009). Indeed, the majority in Kepa II stated that “[t]he only
3. VICAA Does Not Contain a Primary Business Purpose Test and Courts May Not Graft Such a Test onto the Act
As we have already noted, She-Sha‘s restaurant and She-Sha‘s retail store are one and the same. Yet, She-Sha and the Court of Appeals would fashion an exemption for restaurants in retail tobacco stores, or more accurately, an exemption for combination restaurant/retail tobacco stores, provided that the “primary business is the retail sale of tobacco.” Kepa II, 62 Va. App. at 621 n.8, 751 S.E.2d at 674 n.8.
The term “retail tobacco store” is not defined anywhere in VICAA. Moreover, construing “retail tobacco store” broadly would invite any restaurant to avoid VICAA by selling tobacco at retail or re-branding itself as a retail tobacco store that happens to prepare and sell food. She-Sha protests that courts could look through a business’ self-representation to ensure thаt the “core business model is based upon its sale of tobacco to the consuming public.”
4. The Purpose of VICAA is to Promote Public Health
“The purpose for which a statute is enacted is of primary imрortance in its interpretation or construction.” Virginia Electric & Power Co., 226 Va. at 388, 309 S.E.2d at 311 (internal quotation marks and citation omitted). As the dissent below recognized, VICAA “is undoubtedly a public health initiative.” Kepa II, 62 Va. App. at 630, 751 S.E.2d at 678 (Chafin, J., dissenting). The plain language of VICAA clearly shows that the General Assembly intended VICAA to promote the health of the Commonwealth by reducing exposure to second hand smoke in public places. The enforcement framework buttresses that conclusion.6
VICAA promotes clean indoor air in public places, and it promotes clean indoor air for the customers and employees of such places. Not all employees have the luxury of working in their preferred work environment, yet they must work, and the General Assembly has determined that they should be able to work in an environment that limits their exposure to second hand smoke if that concerns them. Construing
III. CONCLUSION
For the reasons stated, we hold that
Reversed and final judgment.
JUSTICE McCLANAHAN, dissenting.
I dissent for the reasons stated by the Court of Appeals’ majority in the decision below, Kepa, Inc. v. Virginia Dep‘t of Health, 62 Va. App. 614, 751 S.E.2d 671 (2013)(en banc).