IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT
June 15, 2009
MALT BEVERAGES DISTRIBUTORS ASSOCIATION
PENNSYLVANIA LIQUOR CONTROL BOARD, OHIO SPRINGS, INC., INTERVENOR
APPEAL OF: PENNSYLVANIA LIQUOR CONTROL BOARD
MALT BEVERAGES DISTRIBUTORS ASSOCIATION
PENNSYLVANIA LIQUOR CONTROL BOARD, OHIO SPRINGS, INC., INTERVENOR
APPEAL OF: OHIO SPRINGS, INC., INTERVENOR
Appeal from the Order of the Commonwealth Court dated February 23, 2007, at 896 CD 2006, reversing the Order of the Pennsylvania Liquor Control Board dated May 3, 2006, at 04-9056 918 A.2d. 171 (Pa. Cmwlth. 2007)
The opinion of the court was delivered by: Mr. Justice Baer
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, JJ.
ARGUED: May 14, 2008
This appeal presents the issue of whether an establishment that sells malt or brewed beverages ("beer")*fn1 solely for takeout and prohibits consumption of beer on its premises qualifies as a "retail dispenser," as defined by Section 102 of the Liquor Code ("Code"), 47 P.S. § 1-102.*fn2 We hold that such an establishment does not qualify as a retail dispenser and, accordingly, affirm the order of the Commonwealth Court.
In January of 2004, Ohio Springs, Inc., (Ohio Springs), filed an application with the Pennsylvania Liquor Control Board (PLCB) for the transfer of both the ownership and location of an "eating place malt beverage license" from a bar and grill located in Altoona, Blair County, to a different locale in Altoona, where Ohio Springs operated a Sheetz gas station/convenience store/fast food restaurant (for convenience, the fast-food portion of the Sheetz facility will be referred to as "restaurant").*fn3 Ohio Springs proposed to sell beer from coolers placed in the restaurant area of the facility, and planned to prohibit consumption of the beer on the premises. The Malt Beverages Distributors Association of Pennsylvania (MBDA), a trade association for Pennsylvania beer distributors, filed a petition to intervene, in which it objected to the license transfer on the ground that Ohio Springs failed to satisfy the definition of retail dispenser under Section 102 of the Code because it intended to limit its beer sales to carry-out purchases with no on-premises consumption. The PLCB denied MBDA's petition to intervene and, thus, did not address its objection to the transfer application.
Following a hearing on June 30, 2004, the PLCB approved Ohio Springs' application to transfer the license, subject to conditions requiring it to separate the convenience store from the restaurant by a permanent partition, and separate the gas pump area from the restaurant.*fn4 MBDA filed a petition for review of the PLCB's decision in the Commonwealth Court, in which it challenged the denial of intervenor status and the approval of the license transfer. MBDA also requested that the Commonwealth Court remand the matter to the PLCB for it to consider, for the first time, MBDA's objection to the transfer application on the ground that Ohio Springs failed to qualify as a retail dispenser.
On August 18, 2005, the Commonwealth Court granted MBDA's requested relief. Malt Beverages Distributors Ass'n. v. Pennsylvania Liquor Control Bd., 881 A.2d 37 (Pa. Cmwlth. 2005). The court ruled that MBDA had standing to intervene and remanded the matter to the PLCB to determine whether Ohio Springs satisfied the statutory definition of retail dispenser. Ohio Springs subsequently filed a petition for allowance of appeal with our Court, challenging the Commonwealth Court's ruling on MBDA's intervenor status.
Ultimately, we denied allocatur on this issue. Malt Beverages Distributors Ass'n. v. Pennsylvania Liquor Control Bd., 895 A.2d 1264 (Pa. 2006). Thus, the matter then returned to the PLCB for a hearing on the merits of MBDA's challenge to the license transfer.
Upon remand, on May 3, 2006, the PLCB ruled that Ohio Springs fell within the statutory definition of retail dispenser.*fn5 It held that while Section 102 permits a retail dispenser to sell beer for on-site consumption, it contains no express language requiring it do so. The PLCB found that imposing such an obligation would require a licensee to avail himself of all privileges granted by a particular license. It reasoned that such construction would lead to the absurd result of citing a licensee for not offering alcohol to be ingested at the site, when the express purpose of the regulatory scheme is to restrict the sale of alcohol. See Application of El Rancho Grande Inc., 437 A.2d 1150, 1155 (Pa. 1981) (providing that the purpose of legislation regulating the sale of alcohol has always been to restrain the sale, not promote it). Finally, the PLCB noted that there was no impediment to the approval of Ohio Springs' application because, in various "court filings,"*fn6 it indicated that it would sell beer for on-premises consumption if it was required to do so to obtain the license.*fn7 Accordingly, the PLCB reaffirmed its order approving Ohio Springs' license transfer application.
On February 23, 2007, in a majority opinion authored by the Honorable Robert Simpson, a divided en banc Commonwealth Court reversed, holding that the PLCB erred in granting the application because Ohio Springs failed to satisfy the statutory definition of retail dispenser. Malt Beverages Distributors Ass'n. v. Pennsylvania Liquor Control Bd., 918 A.2d 171 (Pa. Cmwlth. 2007). The court held that the PLCB's interpretation of Section 102 was inconsistent with the plain language of the statute, which provided that the primary purpose of a retail dispenser is to engage in the sale of beer for on-premises consumption, and that providing beer for takeout sales was only secondary. It concluded that, by allowing a retail dispenser to sell either for on-site consumption or takeout, the PLCB erroneously inserted "either/or" language into the statute when none existed. Further, the court found that the PLCB's interpretation lacked common sense and queried why the PLCB would license an entity "to engage in the retail sale of malt or brewed beverages for consumption on the premises" when that entity expressly prohibited the sale of beverages for that purpose.*fn8
The Commonwealth Court viewed the PLCB's interpretation of Section 102 as significantly transforming the character of outlets for retail beer sales by essentially permitting beer sales in grocery stores, convenience stores, and other commercial establishments, so long as such facilities had a small area for dining and thereby satisfied the statutory definition of "eating place." The court concluded that if such transformation of the character of retail sales was warranted, it should be initiated by the legislature. Finally, the Commonwealth Court rejected the PLCB's finding that enumerated "court filings" could be utilized to establish that Ohio Springs would be amenable to selling beer on the premises if required to do so to obtain the license. The court held that there were no "filings" or any other documentation in the record before the PLCB indicating that Ohio Springs would permit on-premises consumption of beer.
Judge Cohn Jubelirer, joined by Judges Leadbetter and Leavtt, dissented. The dissent mirrored the position taken by the PLCB -- that Section 102 merely permits the sale of beer for on-site consumption, but does not require it. It interpreted Section 102 as providing that one who has permission to sell beer for on-site consumption (by license) may (by privilege) sell beer in limited quantities to persons for off-site consumption. The dissent further opined that the majority erred by reading the definition in Section 102 in isolation, without examining it in context with other provisions of the Code, including Section 442(a), which addresses the means by which retail dispensers can receive and dispense beer, and states that retail dispensers may "break the bulk upon the licensed premises and sell or dispense the same for consumption on or off the premises so licensed." 47 P.S. § 4-442(a)(1).*fn9 As a final point, the dissent reiterated the view that the majority's reading of Section 102 mandated a licensee to use its license to the fullest extent, a proposition never adopted by any court or statute.
This Court granted the petitions for allowance of appeal filed by the PLCB and Ohio Springs to determine whether the Commonwealth Court erred in holding that Ohio Springs failed to satisfy the statutory definition of retail dispenser.*fn10
In resolving this issue, we are guided by the settled principles set forth in the Statutory Construction Act, including the primary maxim that the object of statutory construction is to ascertain and effectuate legislative intent. 1 Pa.C.S. § 1921(a). In pursuing that end, we are mindful that "when the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." 1 Pa.C.S. § 1921(b). As a general rule, the best indication of legislative intent is the plain language of a statute. Shiffler, 879 A.2d at 189 (citations omitted). In reading the plain language, "words and phrases shall be construed according to rules of grammar and according to their common and approved usage," while any words or phrases that have acquired a "peculiar and appropriate meaning" must be construed according to that meaning. 1 Pa.C.S. § 1903(a). It is only when "the words of the statute are not explicit" on the point at issue that resort to statutory construction is appropriate. 1 Pa.C.S. § 1921(c); Street Road Bar & Grille, Inc., v. Pennsylvania Liquor Control Board, 876 A.2d 346, 352 (Pa. 2005). Finally, in ascertaining legislative intent, the Statutory Construction Act "requires a presumption that the General Assembly did not intend a result that is absurd or unreasonable." 1 Pa.C.S. § 1922(1); Street Road Bar & Grille, Inc., 876 A.2d at 353.
As noted, the relevant statutory provision at issue, Section 102, defines "retail dispenser" as follows:
"Retail dispenser" shall mean any person licensed to engage in the retail sale of malt or brewed beverages for consumption on the premises of such licensee, with the privilege of selling malt or brewed beverages in quantities not in excess of one hundred ninety-two fluid ounces in a single sale to one person, to be carried from the premises by the purchaser thereof.
47 P.S. § 1-102.
Ohio Springs argues that the Commonwealth Court erroneously held that Section 102 requires a retail dispenser to sell beer for on-site consumption, and thereby converted the privilege of selling beer in such manner into a duty. It asserts that the clear implication of the decision is that a liquor licensee must now fully exercise all privileges granted by a liquor license or risk citation for failing to do so. To illustrate its point, Ohio Springs maintains that, under the Commonwealth Court's holding, licensees who are permitted to sell several types of alcohol during enumerated times would be obligated to do so and would be prohibited from operating less hours or selling a limited type of alcohol. It maintains that this notion is clearly antithetical to the core principles of the Liquor Code, which are to restrain the sale of alcohol, see Application of El Rancho Grande Inc., 437 A.2d at 1155 (providing that the purpose of legislation regulating the sale of alcohol has always been to restrain the sale, not promote it), and protect the public welfare, health, peace, and morals of our citizens. See 47 P.S. § 1-104(a) (providing that Liquor Code must be construed liberally for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon.).
Ohio Springs further contends that the Commonwealth Court's interpretation overlooks the purpose of Section 102, which is to designate the type of alcohol that a retail dispenser may sell, i.e., "malt or brewed beverages [beer]." Like the dissenting opinion below, it submits that the Commonwealth Court failed to read this definitional section in para materia with Section 442(a)(1) of the Code, which provides restrictions on a retail dispenser's purchase and sale of beer and states that "[t]he retail dispenser may . . . sell or dispense [beer] for consumption on or off the premises so licensed. . . ." 42 Pa.C.S. § 4-442(a)(1) (emphasis added).*fn11
The PLCB, also an appellant herein, reiterates the arguments made by Ohio Springs and presents additional contentions. It asserts that the Commonwealth Court erred by failing to defer to the PLCB's interpretation because it was not clearly erroneous, as evidenced by the strong dissent below. The PLCB also argues that the Commonwealth Court's holding was implicitly rejected by our Court in Pittaulis Liquor License Case, 282 A.2d 388 (Pa. 1971), where our Court held that an application to transfer a restaurant liquor license cannot be refused by the PLCB on grounds not embraced in the Code; the particular ground in Pittaulis being that the proposed premises was subject to a lease restriction that prohibited the sale of alcohol. Further, essentially acknowledging that the precise issue presented herein is one of first impression for this Court, the PLCB contends that appellate court decisions involving retail dispenser liquor licenses have never required the sale of beer for on-site consumption. See Myers v. Pennsylvania Liquor Control Board, 451 A.2d 1000 (Pa. 1982); Pennsylvania Liquor Control Board v. Court House Motor Inn, Inc., 318 A.2d 383 (Pa. Cmwlth. 1974); Application of Dorothy R. Hohl, 342 A.2d 493 (Pa. Cmwlth. 1975).
MBDA responds that the Commonwealth Court properly construed the plain language of Section 102 to mean that a retail dispenser's sale of beer for takeout is a "privilege" that arises from the exercise of the right to sell beer to be consumed on the premises of the facility. It relies on the unique language employed in Section 102, defining retail dispenser as any person "licensed" to engage in the retail sale of beer for consumption on the premises, with the "privilege" of selling a limited amount of beer for takeout. MBDA argues that this language is strikingly different from "either/or" language and establishes that "consumption on the premises" is the principal manner of beer sales for such licensees. As such, it maintains that the sale of beer for consumption on the premises serves as a prerequisite to selling beer for takeout purposes.*fn12 Because the record here demonstrates that Ohio Springs prohibits patrons from drinking beer at the Sheetz facility, MBDA concludes that Ohio Springs is ineligible for a retail dispenser license.
MBDA explains that, contrary to its opponents' assertions, the Commonwealth Court's construction of Section 102 in no way obligates a retail dispenser, or any other licensee, to exercise its license to the fullest extent. It maintains that the Commonwealth Court's holding merely recognizes that a retail dispenser's privilege to sell beer for takeout is contingent on its sale of beer for on-site consumption. According to MBDA, this plain language of Section 102 tracks the structure of the Code-established beer distribution system and embraces the statutory limitation on which entities can sell beer. It argues that granting the license transfer application would effectively convert the Sheetz facility into a beer distributor, without requiring it to sell the beer by the case.*fn13 Echoing the Commonwealth Court's concerns, MBDA submits that such holding would significantly transform the character of beer sale outlets to include grocery stores, convenience stores, and other commercial establishments with small areas for dining, that would qualify as eating places under the Code. It maintains that a policy decision in this regard can only be accomplished through legislative mandate, and not by administrative or judicial decision.
MBDA further disputes the additional contentions raised by the PLCB. It argues that the PLCB's interpretation of the Code is only entitled to deference when the statute is ambiguous and when the agency construction has arisen in the ordinary course, rather than having made its first appearance in litigation. It submits that neither condition applies here as the language of Section 102 is clear and the PLCB never identified any decision or internal memorandum reflecting that it had considered and decided the question at issue prior to this litigation. It further argues that the PLCB's reliance on the Commonwealth Court's decision in Pittaulis is misplaced because it is undisputed that the basis for denial of Ohio Springs' application is expressly included in the Code at Section 102. Emphasizing the PLCB's concession that there is no appellate decision that expressly addresses the issue at hand, see PLCB Brief at 21, MBDA contends the remaining cases upon which the PLCB relies are inapplicable here.*fn14
Initially, we agree with MBDA that this case presents an issue of first impression and that none of the cases relied upon by the PLCB are controlling. In determining whether Ohio Springs is entitled to an eating place malt beverage license when it prohibits on-site consumption of beer, we examine the relevant language of the Code. As noted, under Section 432(a) of the Code, the PLCB is authorized to issue a retail dispenser's license to, inter alia, an eating place that "meet[s] all the requirements of [the Code] and the regulations of the [PLCB]." 47 P.S. § 4-432(a). The disputed requirement at issue provides that retail dispenser means one "licensed to engage in the retail sale of [beer] for consumption on the premises of such licensee, with the privilege of selling [beer in limited quantities] . . . to be carried from the premises . . ." 47 P.S. § 1-102.
The crux of the dispute focuses on whether the two types of beer sales contemplated in Section 102-- the sale of beer for on-site consumption and the sale of beer for carry-out purchases -- are independent alternatives or whether the sale of beer for takeout is contingent upon the sale of beer for consumption on the premises of the facility. Initially, we recognize that there is no mandatory language in Section 102, expressly requiring the sale of beer for on-site consumption as a prerequisite to the sale of beer for takeout. Thus, as advocated by Ohio Springs and the PLCB, the language could be construed as holding that one who is "licensed" to sell beer for on-site consumption, but does not exercise such right, retains the "privilege" of selling beer solely for carry-out purposes.
Nevertheless, there is force to the Commonwealth Court's holding that it defies common sense to license an entity to sell beer for consumption on the premises when that entity expressly prohibits the sale of beer for that purpose. As advocated by MBDA, the Legislature did not employ "either/or" language indicating that the two types of beer sales were equal alternatives. Further, the sentence structure of Section 102 supports the view that the Legislature intended to make the sale of beer for takeout contingent upon the licensee engaging in the sale of beer for on-site consumption. Specifically, the placement of the phrase "with the privilege [of selling beer for carry-out]" after the Legislature defines a retail dispenser as "any person licensed to engage in the retail sale of [beer] for consumption on the premises," tends to indicate that the primary purpose of a retail dispenser is to sell beer to be ingested at the facility, with the privilege of selling beer for takeout being secondary to such purpose.
Faced with this predicament, we find that each party's interpretation of the statutory language is plausible and, therefore, the statute is ambiguous. As in all cases where a latent ambiguity in the statute exists, we resort to the canons of statutory construction to discover the Legislature's intent.*fn15 In determining legislative intent, we must read all sections of a statute "together and in conjunction with each other," construing them "with reference to the entire statute." Housing Auth. of the County of Chester v. Pa. State Civil Serv. Comm., 730 A,2d 935, 945 (Pa. 1999). Further, we keep in mind that the purpose of the Code is to restrain the sale of alcohol and to protect the public welfare, health, peace, and morals of the citizens of Pennsylvania. See Application of El Rancho Grande Inc., supra, and 47 P.S. § 1-104(a).
When viewed in this context, the statutory interpretation of retail dispenser offered by MBDA, which construes a retail dispenser's sale of beer for takeout as a prerequisite to the sale of beer for on-premises consumption, prevails. The Code, when examined as a whole, reveals a legislative scheme whereby the privileges of retail dispensers are "dovetailed" with those of distributors, thereby allowing each type of licensee to occupy its own "niche" in the beer market.*fn16 Construing the definition of retail dispenser so as to permit the sale of beer solely for takeout purposes disrupts this statutory beer distribution scheme.
To elucidate, the parties agree that there is a three-tiered beer distribution system encompassing: (1) manufacturers; (2) distributors/importing distributors; and (3) retail dispenser licenses.*fn17 Unlike retail dispensers, distributors are prohibited from selling beer for consumption on the premises, id. at § 4-441 (b), and can only sell beer by the case or keg. Id. Interpreting Section 102 as permitting retail dispensers to sell beer solely for takeout, without such purchases being incident to the general sale of beer for consumption on the premises, affords the retail dispenser the benefits of a distributor license, without imposing the accompanying restrictions, i.e., it can act as a distributor by solely offering beer for carry-out purchase, yet not be burdened with the restriction of selling beer only by the case. Such interpretation infringes upon the market niche legislatively carved for the distributor, albeit to the extent that each individual takeout beer transaction conducted by a retail dispenser is limited to the equivalent of two six-packs. As recognized by the Commonwealth Court, such holding would expand the character of retail dispenser beer sale outlets to encompass commercial entities, unlike hotels, restaurants, clubs, and eating places, which do not currently engage in the sale of alcohol.*fn18 While a policy determination in this regard may well be accomplished by our legislature, it is not our role to sanction such a momentous transformation. See Uniontown Newspapers, Inc. v. Roberts, 839 A.2d 185, 194 (Pa. 2003) (providing that policy considerations do not lie with the courts, but are reserved for the legislative body to resolve).
The PLCB's attempt to depart from the statutory framework by issuing a license to a facility that has no intention of using the license in the manner for which it was intended cannot be countenanced and, in fact, demonstrates to us the strained view of the relevant legislation taken by the PLCB. We are confident that if the Legislature had intended to permit retail dispensers, who do not serve alcohol at their facilities, to sell six-packs to the general public, it surely would have utilized clear language authorizing such sales in a distinct provision of the Code. To the contrary, as noted supra, the language and sentence structure employed in Section 102's definition of retail dispenser leads one to conclude that the principal definition of a retail dispenser is an entity licensed to serve beer on the premises, with the secondary permissible function being the sale of a limited quantity of beer for takeout. While the General Assembly could have more carefully drafted the statutory provision at issue in order to close the current loophole utilized by the PLCB to justify the issuance of a license to Ohio Springs, we refuse to adopt the PLCB's hyper-technical interpretation given the wide-ranging ramifications of doing so. As noted earlier, under such an interpretation, far more commercial facilities, which were never clearly contemplated by the Legislature to sell beer through any provision of the Code, could be licensed to sell six-packs. Again, such a sea change in the sale of alcoholic beverages in this Commonwealth must be sanctioned by the Legislature.
We also decline to afford administrative deference to the PLCB's interpretation of the Code for two reasons. First, as pronounced herein, the PLCB's construction of "retail dispenser" is contrary to the clear legislative scheme regarding beer distribution. See Seeton v. Pennsylvania Game Commission, 937 A.2d 1028, 1037 (Pa. 2007) (recognizing that while courts traditionally accord the interpretation of the agency charged with administration of the act some deference, the meaning of a statute is essentially a question of law for the court). Secondly, as MBDA cogently notes, there is nothing in the record indicating that the PLCB had considered and decided this issue at a point prior to the instant litigation. See id., (cautioning against the dangers of deferring to an agency's interpretation when such position was developed in anticipation of litigation); see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) (providing that "[d]eference to what appears to be nothing more than an agency's convenient litigation position would be entirely inappropriate.").
Contrary to the arguments of Ohio Springs and the PLCB, our holding in no way requires licensees across the Commonwealth to avail themselves of all privileges granted by their particular liquor license or risk citation for failing to do so. This case does not involve an attempt by the PLCB to sanction a retail dispenser licensee for failing to sell beer for on-site consumption; but rather involves a determination of whether Ohio Springs is entitled to an eating place malt beverage retail dispenser license based upon the proposed use of their facility. Under the circumstances presented, we find that it is not.
In summary, we hold that an establishment that sells beer solely for takeout and prohibits consumption of beer on the premises of the facility does not qualify as a "retail dispenser," as defined by Section 102 of the Code.
Applying our holding to the instant case, we conclude that Ohio Springs' policy decision to function solely as a takeout provider of beer renders it ineligible for a retail dispenser license under Section 102. Thus, the order of the Commonwealth Court is affirmed.*fn19
Mr. Chief Justice Castille and Messrs. Justice Saylor and McCaffery join the opinion. Madame Justice Todd files a concurring opinion.
Mr. Justice Eakin files a dissenting opinion.