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Malt Beverages Distributors Association v. Pennsylvania Liquor Control Board

June 15, 2009

MALT BEVERAGES DISTRIBUTORS ASSOCIATION
v.
PENNSYLVANIA LIQUOR CONTROL BOARD, OHIO SPRINGS, INC., INTERVENOR
APPEAL OF: PENNSYLVANIA LIQUOR CONTROL BOARD
MALT BEVERAGES DISTRIBUTORS ASSOCIATION
v.
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

OPINION

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 ...


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