The opinion
Filed 9/19/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
CALIFORNIA GROCERS ASSOCIATION, C070007
Petitioner, C070375
v.
DEPARTMENT OF ALCOHOLIC BEVERAGE
CONTROL et al.,
Respondents.
ORIGINAL PROCEEDINGS in mandate. Petitions granted and denied.
Pillsbury Winthrop Shaw Pittman, James M. Seff, Christopher R. Rodriguez and
Carrie L. Bonnington for Petitioner.
Kamala D. Harris, Attorney General, Alicia M. B. Fowler, Senior Assistant
Attorney General, Fiel D. Tingo, Supervising Deputy Attorney General and Michael D.
Gowe, Deputy Attorney General, for Respondents.
This case involves the meaning of section 23394.7 of the Business and Professions
Code, that regulates the sale of alcoholic beverages at any customer-operated checkout
1
stands.1 It provides: “No privileges under an off-sale license shall be exercised by the
licensee at any customer-operated checkout stand located on the licensee‟s physical
premises.” (§ 23394.7, as added by Stats. 2011, ch. 726, § 2.) The principal question
tendered is whether “customer-operated checkout stand” refers to the stand itself or to the
function performed at the stand, and, accordingly, whether the members of petitioner
California Grocers Association (Grocers) may sell alcoholic beverages at such a stand.
Grocers invokes our original jurisdiction in two writs of mandate to review the
validity of an advisory issued by the respondent Department of Alcoholic Beverage
Control (Department). (§ 23090.5.) The advisory interprets section 23394.7 as providing
that “no alcoholic beverages may be sold through any checkout stand that is enabled to
allow operation by the customer at the time the customer‟s check-out transaction
commences or at any point during the check-out process.”
The writ in case No. C070007 challenges the Department‟s compliance with the
Administrative Procedures Act (Gov. Code, §11340 et seq.; hereafter APA). The APA
sets forth procedures for the adoption of an administrative regulation and provides that a
failure to do so voids the agency action. (Gov. Code, § 11340.5 subd. (a).) A regulation
is inter alia a general rule that interprets the law enforced by the agency. (Gov. Code,
§ 11342.600; Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571
(Tidewater).) An interpretation is subject to the APA unless it is “essentially rote,
ministerial, or . . . repetitive of . . . the [law‟s] plain language.” (Morning Star Co. v.
State Bd. of Equalization (2006) 38 Cal.4th 324, 336-337 (Morning Star).) A rule that
violates the APA is void regardless that its interpretation is a correct reading of the law.
(Morning Star, supra, at pp. 336-337.)
1 A reference to a section is to the Business and Professions Code unless otherwise
specified or apparent from the context.
2
We shall conclude that the advisory is a regulation subject to the APA because it is
directed to the general class of retail off-sale liquor licensees that employ checkout stands
and because its interpretation of section 23394.7 is not “essentially rote, ministerial,
or . . . repetitive . . . .” (Morning Star, supra, 38 Cal.4th at p. 337.) This conclusion
requires that we void the advisory.
However, this does not end our inquiry. “[A]lthough the court must void an
interpretive regulation that does not comply with the APA procedures, it may resolve the
ambiguity that gave rise to the agency interpretation if it is not required to defer to the
agency construction.” (Capen v. Shewry (2007) 155 Cal.App.4th 378, 391.) As we
explain below, we need not defer to the Department‟s interpretation because the
interpretation of section 23394.7 is well within the court‟s competence.
The writ in case No. C070375 challenges the validity of the advisory as a violation
of section 23394.7. The advisory describes a “customer-operated checkout stand” as a
physical device that may be operated in whole or in part by a customer. It expresses the
interpretive view of the Department that section 23394.7 prohibits the sale of alcoholic
beverages at such a checkout stand even if the sale is approved by an employee of the
licensee in a face-to-face transaction.
Grocers argues that a checkout stand that is programmed to lock the stand‟s
mechanism when an alcoholic beverage is scanned, and that can be unlocked only by an
employee of the licensee after a face-to-face approval of the sale, complies with section
23394.7. Resolution of the claim turns on whether section 23394.7 refers to the checkout
stand itself or the function performed at the stand. We find the answer in the grammar of
the section.
Section 23394.7 prohibits the sale of alcoholic beverages “at any customer-
operated checkout stand . . . .” (Italics added.) The “at” refers to the checkout stand
itself, and “customer-operated” modifies the term “checkout stand.” The phrase
“customer-operated checkout stand” thus describes the kind of checkout stand “at” which
3
the sale of alcoholic beverages is prohibited. By contrast, section 23394.7 does not use
qualifying words that specify the function performed by the checkout stand, such as
“when” or “by whom” the checkout stand is operated or “unless” a lock-out system is
employed. Grocers argues that under section 23394.7 the exercise of privileges under an
off-sale license occurs only at the point of sale of the alcohol and that occurs only when
an employee authorizes the sale to proceed at a customer-operated checkout stand.
Accordingly, at the point of sale the stand is not functioning as a customer-operated
checkout stand. The argument is not responsive to the language of section 23394.7.2 It
makes no difference at what point the sale occurs in the checkout procedure since section
23394.7 bars any sale “at” a customer operated checkout stand. This view is amply
supported by the legislative history of the section, as we explain below.
We shall grant the writ in case No. C070007 because the advisory is more than a
simple paraphrase of section 23394.7. We shall deny the writ in case No. C070375
because we find that the advisory correctly interprets section 23394.7. A sale “at” a
“customer-operated checkout stand” unambiguously refers to a kiosk, a device that may
be physically operated in whole or part by a customer.
Procedure
Grocers filed two petitions for a writ of mandate3 and an allied complaint for
declaratory relief invoking our original jurisdiction under section 23090.5.4 (Schenley
2 Petitioner‟s motion in support of request for judicial notice filed in case Nos. C070007
and C070375 on June 5, 2012, are denied.
3 Code of Civil Procedure section 1085.
4 Section 23090.5 provides in relevant part: “No court . . . except the Supreme Court and
the courts of appeal . . . shall have jurisdiction to review . . . any order, rule, or decision
of the department . . . but a writ of mandate shall lie from the Supreme Court or the courts
of appeal in any proper case.”
4
Affiliated Brands Corp. v. Kirby (1971) 21 Cal.App.3d 177.) We shall consider only the
petitions for extraordinary relief.5
The writs seek different forms of relief. In case No. C070007 Grocers seeks the
invalidation of the advisory on the ground its adoption did not comply with the
procedural provisions of the APA. In case No. C070375 Grocers seeks the invalidation
of the advisory on the ground it is not authorized by section 23394.7.
In case No. C070007 Grocers filed a petition for writ of mandate and a request for
a stay of the advisory, together with supporting exhibits and a request for judicial notice
and supporting briefs. We issued a stay of the effect of the advisory, issued an order
granting an alternative writ, and granted the petitioner‟s request for judicial notice. The
Department filed a return to the writ, exhibits in support of respondent‟s return, a motion
in support of judicial notice, and supporting briefs. We granted the Department‟s motion
in support of judicial notice, with accompanying exhibits, consisting of the legislative
history of section 23394.7 and declarations, except for exhibit Nos. 4, 7, and 12 (a bill
analysis from Grocers; a letter analysis from the author of the legislation,
Assemblymember Fiona Ma, to the Department; and a committee staff memorandum to
Assemblymember Ma). Grocers filed opposing briefs. Department also submitted
exhibits in support of respondent‟s return to which Grocers filed objections to evidence
5 The Court of Appeal does not have original jurisdiction over a complaint for
declaratory relief. The court “ha[s] original jurisdiction [only] in habeas corpus
proceedings . . . [and] in proceedings for extraordinary relief in the nature of mandamus,
certiorari and prohibition.” (Cal. Const., art. VI, § 10.) Section 23090.5 specifies a “writ
of mandate” as the proper form of appellate review of an “order, rule, or decision” of the
Department. In section 23090.5 “the Legislature intended . . . to provide for judicial
review” of actions of the Department “when acting in its administrative rather than in its
limited judicial capacity.” (Samson Market Co. v. Kirby (1968) 261 Cal.App.2d 577,
581.)
5
regarding exhibit Nos. 14 through 16, consisting of the same exhibits denied admission
pursuant to respondent‟s motion in support of judicial notice.6
In case No. C070375 Grocers filed a second petition for writ of mandate and
complaint for declaratory relief, invoking our original jurisdiction, claiming that the
Department was continuing to enforce the advisory, a request for a stay, supporting
points and authorities, a request for judicial notice, and a motion to consolidate the case
with case No. C070007. We issued an alternative writ, granted the request for judicial
notice, issued a stay of the enforcement of the statute on February 21, 2012, and
consolidated the cases for all further appellate proceedings except for the retention of
their case numbers.
Legislative History of Section 23394.7
Prior to the enactment of section 23394.7 there was no express statutory
prohibition of the sale of alcoholic beverages at a customer-operated checkout stand. The
Alcoholic Beverage Control Act (§ 23000 et seq.) prohibited the sale of alcohol to
minors, and a violation subjected a licensee to the suspension or revocation of a license to
sell alcoholic beverages or punishment as a misdemeanor.
In 2011 section 23394.7 was added to the Business and Professions Code by
Assembly Bill No. 183 (2011-2012 Reg. Sess.). As introduced in the Assembly on
January 25, 2011, the bill provided in relevant part as follows:
“Sec. 2. Section 23394.7 is added to the Business and Professions
Code, to read:
“(a) No privileges under an off-sale license shall be exercised by the
licensee at any checkstand, where the customer is able to scan and purchase
alcoholic beverages using a point-of-sale system with limited or no
assistance from an employee of the licensee.
6 The objection is sustained and the motion granted.
6
“(b) For purposes of this section, „point-of-sale‟ system means any
computer or electronic system used by a retail establishment such as, but
not limited to, Universal Product Code scanners, price lookup codes, or an
electronic price lookup system as a means for determining the price of the
item being purchased by a consumer.”
The section was preceded by legislative findings, as follows:
“SECTION 1. The Legislature finds and declares that allowing
customers to purchase alcoholic beverages through self-service checkouts:
“(a) Facilitates the purchase of alcoholic beverages by minors.
“(b) Permits customers who are in an advanced state of intoxication
to purchase additional alcoholic beverages, in violation of state law.
“(c) Allows for greater theft of alcoholic beverages, thereby
depriving the state of tax revenue.”
Assembly Bill No. 183 was amended in the Assembly on May 19, 2011, and in the
Senate on June 22, 2011, to read as it now appears in the Business and Professions Code:
“No privileges under an off-sale license shall be exercised by the
licensee at any customer-operated checkout stand located on the licensee‟s
physical premises.” (§ 22934.7.)
The amendments retained the same findings as contained in the bill as introduced.
The exhibits admitted as evidence set forth the bill analyses of the measure at each
stage of the measure‟s passage through the Legislature.
The bill analysis of Assembly Bill No. 183 provided to the Assembly Committee
on Governmental Organization at its hearing on April 13, 2011, sets forth a summary of
the measure, the existing law, and comments. The comments contain a statement by the
bill‟s author, in relevant part, as follows. “[T]his bill takes a precautionary step and
precludes the possibility of underage drinking abuses occurring due to the usage of a self-
service checkout kiosk, the passive supervision associated with these stations makes them
7
vulnerable to manipulation. By forcing alcohol purchases to be made through a face-to-
face transaction from beginning to end, the state of California can ensure that the
necessary age verification steps are being taken to keep alcohol out of the hands of
minors.” (Assem. Com. on Governmental Organization, Rep. on Assem. Bill No. 183
(2011-2012 Reg. Sess.) as introduced Jan. 25, 2011, p. 2, italics added.)
The identical author‟s comment was attached to the bill analyses provided to the
Assembly Committee on Appropriations on May 4 and May 11, 2011, the Assembly on
Third Reading, and the Senate Committee on Governmental Organization at its hearing
on June 14, 2011, that occurred after the Assembly‟s amendment set forth above was
adopted on May 19, 2011. The arguments in opposition to the measure at the latter
hearing by the Senate Committee on Governmental Organization, that followed the May
19, 2011, amendment, state, in relevant part: “Opponents disagree with the findings of
the measure and argue that self-service checkout stations have a lock-out or „freeze‟
mechanism to preclude any customer from purchasing alcoholic beverages without clerk
intervention to verify age (ID) and finalize the purchase. [¶] Opponents state that
„assisted checkout stations are overseen by clerks who must abide by California state law
governing the sale of alcoholic beverages. The clerks must either ask for identification
from individuals seeking to purchase alcoholic beverages or make a determination that
the customer is above the age of 21 and “override” the system by keying in their clerk or
other code in order to complete the transaction.‟ ” (Sen. Com. on Governmental
Organization, Rep. on Assem. Bill No. 183 (2011-2012 Reg. Sess.) as amended May 19,
2011, p. 3.) The opponents‟ arguments were rejected.
Finally, the bill analysis of the Senate amendments from the Office of Senate
Floor Analyses provided to the Senate states the purpose of the legislation. “Current law
requires retailers to conduct all sales of cigarettes, spray paints, and some over the
8
counter drugs through face to face transactions.[7] This bill will additionally require
customers to purchase alcoholic beverages at a check stand other than a self-service
kiosk. Retailers claim that self-service checkouts already contain a „lock-out‟ mechanism
which prohibits a customer from purchasing alcohol until a clerk intervenes and verifies
that the customer is over age 21 through the identification of the customer.” (Sen. Rules
Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 183 (2011-
2012 Reg. Sess.) as amended June 22, 2011, pp. 2-3, italics added.)
DISCUSSION
This case tenders two issues of interpretation arising from the two writs of
mandate. The first concerns whether the advisory‟s interpretation meets the test of a
regulation. The second concerns whether the advisory‟s interpretation of section 23394.7
is correct. We treat these matters separately.
A. The Administrative Procedures Act
In case No. C070007 Grocers argues that the advisory interpretation is a regulation
that is void for lack of compliance with the APA.
The APA requires that an agency comply with the notice and comment procedures
for formalizing a regulation and the failure to do so voids the regulation. (Gov. Code,
§ 11340.5, subd. (a); Tidewater, supra, 14 Cal.4th 557, 568 ff.) “A regulation subject to
the APA . . . has two principal identifying characteristics. [Citation.] First, the agency
must intend its rule to apply generally . . . . Second, the rule must „implement, interpret,
or make specific the law enforced by . . . [the agency] . . . .” (Tidewater, supra, 14
Cal.4th at p. 571.) The first is a test of the generality of the agency‟s promulgation; the
second is a test of the conformity of the interpretation with the statute interpreted.
7Section 22960 prohibits the sale of cigarette or tobacco produce “from a vending
machine . . . .”
9
As to the first test, a regulation subject to the APA has been construed to apply “to
all generally applicable administrative interpretations of a statute,” presumptively
including the advisory, whether or not the interpretation is in the form of a regulation and
whether or not it is a correct reading of the statute. (Morning Star, supra, 38 Cal.4th at p.
335; Capen v. Shewry (2007) 155 Cal.App.4th 378, 383 (Capen).)
As to the second test, an agency interpretation of a statute is not subject to the
APA if it is “the only legally tenable interpretation” of the statute. (Gov. Code,
§ 11340.9, subd. (f).) That phrase has been construed to apply only if the interpretation
is “patently compelled by . . . the statute‟s plain language.” (Morning Star, supra, at
p. 337.) An interpretation is “patently compelled” when it “ „can reasonably be read only
one way‟ [citation] such that the agency‟s actions or decisions in applying the law are
essentially rote, ministerial, or . . . repetitive of . . . the statute‟s plain language.” (Id. at
pp. 336-337.) By contrast, “interpretations that arise in the course of case-specific
adjudication are not regulations . . . .” (Tidewater, supra, 14 Cal.4th at p. 571.)
The advisory is palpably a regulation. It meets the two criteria that define a
regulation. It is a generally-applied policy of the agency. It is an interpretation of section
23394.7 that is not “rote, ministerial, or . . . repetitive of . . . the [law‟s] plain language”
because it describes a circumstance to which the statute applies. For this reason the
adoption of the advisory without the notice and opportunity to comment required by the
APA is invalid.
B. Section 23394.7
As noted, section 23394.7 provides: “No privileges under an off-sale license shall
be exercised by the licensee at any customer-operated checkout stand located on the
licensee‟s physical premises.” The question is whether “customer-operated checkout
stand” refers to the stand itself or to the function performed at the stand, and, accordingly,
whether the members of petitioner Grocers may sell alcoholic beverages at such a stand.
10
The writ in case No. C070375 challenges the validity of the advisory issued by the
Department as in violation of section 23394.7. The section provides that “[n]o privileges
under an off-sale license shall be exercised by the licensee at any customer-operated
checkout stand located on the licensee‟s physical premises.” (§ 23394.7.) The advisory
interprets section 23394.7 as providing that “no alcoholic beverages may be sold through
any checkout stand that is enabled to allow operation by the customer at the time the
customer‟s check-out transaction commences or at any point during the check-out
process.” The advisory thus describes a “customer-operated checkout stand” as a
physical device that may be operated in whole or in part by a customer. It expresses the
interpretive view of the Department that section 23394.7 prohibits the sale of alcoholic
beverages at such a checkout stand even if the sale must be approved by an employee of
the licensee in a face-to-face transaction.
Grocers argues that a checkout stand that is programmed to lock the stand‟s
mechanism when an alcoholic beverage is scanned, and that can be unlocked only by an
employee of the licensee after a face-to-face approval of the sale, complies with section
23394.7. The Department replies: “Under the Legislature‟s approach, sellers must
directly monitor both the handling and purchase of alcoholic beverages as the product
proceeds through checkout. Because direct human monitoring is involved at every stage
of the sales transaction – avoiding the serious risk of customers evading so-called
automated „failsafe‟ devices and the mechanical failure of those devices – minors and
intoxicated persons are prevented from obtaining alcoholic beverages.” Resolution of the
claims turns on whether section 23394.7 refers to the stand itself or the function
performed at the stand. We find the answer in the grammar of the section.
Section 23394.7 prohibits the sale of alcoholic beverages “at any customer-
operated checkout stand . . . .” (Italics added.) The “at” refers to the checkout stand
itself, and “customer-operated” modifies the term “checkout stand.” The phrase
“customer-operated checkout stand” thus describes the kind of checkout stand “at” which
11
the sale of alcoholic beverages is prohibited. By contrast, section 23394.7 does not use
qualifying words that specify the function performed at the checkout stand, such as
“when” it is being operated by a customer or “unless” a lock-out system is employed.
This reading is supported by legislative findings that justified both the amended
and unamended forms of section 23394.7.8 The findings say that the purpose of the
legislation is to preclude theft and that a customer-operated checkout stand “[a]llows for
greater theft of alcoholic beverages.” This is a circumstance that could occur only if an
alcoholic beverage container is concealed and not scanned by the purchaser.9 However, a
lock-out system works only when an alcoholic beverage container is scanned at the
checkout stand. If the beverage is concealed it perforce is not scanned.
This reading is also supported by the legislative history of the measure. The
Legislature was informed at each stage of its passage, both before and after the
amendments in the Assembly and the Senate that produced the current language, in
relevant part as follows: “[T]his bill takes a precautionary step and precludes the
possibility of underage drinking abuses occurring due to the usage of a self-service
checkout kiosk . . . . By forcing alcohol purchases to be made through a face-to-face
transaction from beginning to end, the state of California can ensure that the necessary
age verification steps are being taken to keep alcohol out of the hands of minors.”
(Assem. Com. on Governmental Organization, Rep. on Assem. Bill No. 183 (2011-2012
8 “The Legislature finds and declares that allowing customers to purchase alcoholic
beverages through self-service checkouts: [¶] (a) Facilitates the purchase of alcoholic
beverages by minors. [¶] (b) Permits customers who are in an advanced state of
intoxication to purchase additional alcoholic beverages, in violation of state law. [¶] (c)
Allows for greater theft of alcoholic beverages, thereby depriving the state of tax
revenues.” (Assem. Bill No. 183 (2011-2012 Reg. Sess.) §1, as introduced Jan. 25, 2011;
id. as amended May 19, 2011, § 1; id. as amended June 22, 2011, § 1.)
9 Although this could be said of all checkout stands, the purpose set forth in the finding
is nonetheless consistent only with customer-operated checkout stands.
12
Reg. Sess.) as introduced Jan. 25, 2011, p. 2; Sen. Rules Com., Off. of Sen. Floor
Analyses, 3d reading analysis of Assem. Bill No. 183 (2011-2012 Reg. Sess.) as amended
June 22, 2011, p. 2, italics added.) This history is contrary to a functional test.
Grocers argues that the amendment to section 23394.7, that removed language
applying the section to a “point-of-sale” system, had the result of exempting such a
system from its prohibitions. We disagree. The argument is not supported by the
grammar of the section nor by the legislative findings and explanation given the
Legislature during the section‟s passage, which remained unchanged.
Thus, notwithstanding that we void the advisory for violation of the APA, we
determine that it correctly interprets section 23394.7. Although the advisory is void, our
construction of the section is binding on the Department. (Tidewater, supra, 14 Cal.4th at
pp. 577-579; Capen, supra, 155 Cal.App.4th at pp. 390-393.)
DISPOSITION
We grant the writ in case No. C070007 voiding the advisory because the
interpretation is more than a simple paraphrase of section 23394.7. We deny the writ in
case No. C070375 because the advisory is a correct interpretation of section 23394.7.
The stay of enforcement of section 23394.7, issued on February 21, 2012, having served
its purpose, is lifted. The parties shall bear their own costs. (Cal. Rules of Court,
rule 8.493(a)(1)(B).)
BLEASE , Acting P. J.
13
Concurring Opinion of Duarte, J.
I concur in the majority opinion, but write separately to explain my analysis.
I
The First Writ
The first writ petition before us (3 Civ. No. C070007) raises the question of
whether the Advisory was subject to the APA. A regulation subject to the APA has two
principal identifying characteristics. “First, the agency must intend its rule to apply
generally, rather than in a specific case. The rule need not, however, apply universally; a
rule applies generally so long as it declares how a certain class of cases will be decided.
[Citation.] Second, the rule must „implement, interpret, or make specific the law
enforced or administered by [the agency], or . . . govern [the agency‟s] procedure.‟”
(Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571.)
An exception to the second identifying characteristic exists where the agency
interprets a law in such a manner that the agency‟s interpretation constitutes “the only
legally tenable interpretation of a provision of law.” (Gov. Code, § 11340.9, subd. (f).)
“[T]he exception for the lone „legally tenable‟ reading of the law applies only in
situations where the law “can reasonably be read only one way” [citation], such that the
agency‟s actions or decisions in applying the law are essentially rote, ministerial, or
otherwise patently compelled by, or repetitive of, the statute‟s plain language.” (Morning
Star Co. v. State Bd. of Equalization (2006) 38 Cal.4th 324, 336-337 (Morning Star).)
Here, the Advisory is a regulation subject to the APA because it has both required
characteristics and the exception to the second is not present. The Advisory is a
generally-applied policy of the agency which constitutes an interpretation of section
23394.5 that is not the lone legally tenable reading, that is, it is not “rote, ministerial, . . .
patently compelled by, or repetitive of, the statute‟s plain language.” (Morning Star,
supra, 38 Cal.4th at pp. 336-337.)
1
II
The Second Writ
The second writ petition before us (3 Civ. No. C070375) raises the question of
whether the Advisory correctly interprets section 23394.7. This court has explained
when it is appropriate to remand an interpretive question so that an agency can apply its
expertise, and when it is appropriate to resolve the interpretive question ourselves:
“[A]lthough the court must void an interpretive regulation that does not
comply with the APA procedures, it may resolve the ambiguity that gave rise to
the agency interpretation if it is not required to defer to the agency construction.
[Citations.] In this regard the courts generally distinguish between quasi-
legislative rules, which involve the exercise of a delegated lawmaking power and
come with a strong presumption of regularity, and an agency‟s interpretation of a
statute, which is due a lesser degree of judicial deference. [Citations.]
“ „Unlike quasi-legislative rules, an agency‟s interpretation does not
implicate the exercise of a delegated lawmaking power; instead it represents the
agency‟s view of the statute‟s legal meaning and effect, questions lying within the
constitutional domain of the courts. But because the agency will often be
interpreting a statute within its administrative jurisdiction, it may possess special
familiarity with satellite legal and regulatory issues. It is this “expertise,”
expressed as an interpretation . . . that is the source of the presumptive value of the
agency‟s views. An important corollary of agency interpretations, however, is
their diminished power to bind. Because an interpretation is an agency‟s legal
opinion, however “expert,” rather than the exercise of a delegated legislative
power to make law, it commands a commensurably lesser degree of judicial
deference.‟” (Capen v. Shewry (2007) 155 Cal.App.4th 378, 391-392.)
In this case, the Advisory‟s interpretation of section 23394.7 does not require the
application of administrative expertise. The dispositive words that modify “customer
operated checkout stand” are ordinary words: “at” and “any.” Any ambiguity in the term
“customer operated checkout stand” arises from whether the language refers to the stand
itself or the function performed at the stand. In this area of interpretation, there is no
reason to believe the Department has “„a comparative interpretive advantage over the
2
courts.‟” (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1,
12.)
As the majority opinion points out, the word “at” refers to the checkout stand
itself. So does the word “any.” Generally, “any” means all or every. “From the earliest
days of statehood the courts have interpreted „any‟ to be broad, general, and all
embracing.” (Burnsed v. State Bd. of Control (1987) 189 Cal.App.3d 213, 217; see
Emmolo v. Southern Pacific Co. (1949) 91 Cal.App.2d 87, 91-92 [“the use of the word
„any‟ in the statute negatives the contention that the statute is restricted”].) The
designation “at any” signals that, rather than referring to a specific use or function at a
specific point in time or under a certain set of conditions, the term “customer-operated”
is intended to describe the stand‟s generally designated use or function--its kind, type,
design, or general nature.
When the plain language of the statute itself is considered together with the
legislative findings and history, any ambiguity resolves in favor of the Department‟s
interpretation of the statute.
DUARTE, J.
3
HULL, J., Concurring and Dissenting
I concur in the court‟s holding that the Industry Advisory issued by the
Department of Alcoholic Beverage Control (the Department) on December 23, 2011, in
anticipation of the January 1, 2012 effective date of the 2011 amendment to Business and
Professions Code section 23394.7 (hereafter the Advisory), is subject to the rulemaking
provisions of the Administrative Procedure Act (the APA) (Gov. Code, § 11340 et seq.)
and that we must declare the Advisory invalid due to the failure of the Department to
comply with the provisions of that act. (Unspecified section references that follow are to
the Business and Professions Code.)
As to that portion of the majority opinion that finds that this court nonetheless may
uphold the Advisory because we need not defer to the Department‟s interpretation of the
statute and because “the interpretation of section 23394.7 is well within the court‟s
competence,” I dissent.
In 2011, the Legislature enacted section 23394.7 which provides: “No privileges
under an off-sale license shall be exercised by the licensee at any customer-operated
checkout stand located on the licensee‟s physical premises.” (Stats. 2011, ch. 726, § 2.)
Section 23394.7 is intended to (1) avoid facilitation of the purchase of alcoholic
beverages to minors, (2) prevent customers who are intoxicated from purchasing more
alcohol, and (3) prevent the theft of alcoholic beverages. (Stats. 2011, ch. 726, § 1.)
On December 23, 2011, the Department issued the Advisory relating to section
23394.7 “Self-Service Checkouts.”
The Advisory read in relevant part:
“The purposes behind this law include preventing minors from purchasing
alcoholic beverages, denying obviously-intoxicated patrons from buying alcoholic
beverages, and preventing theft of alcoholic beverages, by ensuring that alcoholic
beverages are sold only in circumstances in which substantial interaction between the
purchaser and the sales clerk occurs.
1
“It is clear that a „customer-operated checkout stand‟ means a checkout stand or
station that is designated for operation by the customer. Such checkout stands are
commonly referred to as „self serve‟ or „self service‟ checkout stands. While retailers do
monitor these customer-operated checkout stands and provide assistance to the customer
as necessary to conclude any given transaction, including the purchase of alcoholic
beverages, such monitoring or oversight does not satisfy the language and intent of the
statute. Accordingly, no alcoholic beverages may be sold through any checkout stand
that is enabled to allow operation by the customer at the time the customer‟s check-out
transaction commences or at any point during the check-out process.”
Petitioner brings these petitions challenging that interpretation of the statute.
We must first decide whether the Advisory is a regulation subject to the
requirements of the APA. The majority concludes that it is and I agree.
A “regulation” within the meaning of the APA is a “rule, regulation, order, or
standard of general application . . . adopted by any state agency to implement, interpret,
or make specific the law enforced or administered by it, or to govern its procedure.”
(Gov. Code, § 11342.600.)
“ „A regulation subject to the APA . . . has two principal identifying
characteristics. [Citation.] First, the agency must intend its rule to apply generally, rather
than in a specific case. The rule need not, however, apply universally; a rule applies
generally so long as it declares how a certain class of cases will be decided. [Citation.]
Second, the rule must “implement, interpret, or make specific the law enforced or
administered by [the agency], or . . . govern [the agency‟s] procedure.” [Citation.]‟ ‟‟
(Morning Star Co. v. State Bd. of Equalization (2006) 38 Cal.4th 324, 333-334 (Morning
Star), quoting Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571
(Tidewater).)
It is apparent the Advisory establishes a rule the Department intends to apply
generally, declaring, as it does, that the rule applies to all “off-sale licensed premises.”
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It is equally clear that the Advisory establishes a rule that implements and
interprets section 23394.7 in that the statute does not define a “customer-operated
checkout stand,” but the Advisory does. The Advisory declares the statute must be
interpreted and implemented to refer to any checkout stand “that is enabled to allow
operation by the customer at the time the customer‟s check-out transaction commences or
at any point during the check-out process.” The Advisory also declares that,
notwithstanding the statutorily undefined term “customer-operated checkout stand,” those
checkout stands operated by retailers who monitor and provide assistance to the customer
as necessary to conclude any given transaction, including the purchase of alcoholic
beverages, do not “satisfy the language and intent of the statute.” A clearer example of
an agency‟s interpretation of the Legislative intent behind a statute and an agency‟s
determination of the manner in which that intent can be implemented is difficult to
imagine. Thus, the Department was required to comply with the provisions of the APA
and, having failed to do so, we must declare the Advisory invalid.
The Department attempts to save the rule by invoking that portion of the law that
allows a proposed rule to stand even after a violation of the APA if the rule can be said to
be the only “legally tenable” reading of the statute. (Gov. Code, §11340.9, subd. (f).)
Government Code section 11340.9, subdivision (f) of the APA provides that the
provisions of the APA do not apply if a regulation embodies “the only legally tenable
interpretation of a provision of law.”
“To evaluate this argument, we consider, as with conventional statutory
interpretation, the language and the purpose of the relevant statutes in order to discern the
Legislature‟s intent. [Citation.] That said, whether the [agency] has adopted the sole
„legally tenable‟ reading of the statute[] represents a different question than whether its
interpretation is ultimately correct. As the APA establishes the „interpretations‟ typically
constitute regulations, it cannot be the case that any construction, if ultimately deemed
meritorious after a close and searching review of the applicable statutes, falls within the
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exception provided for the sole „legally tenable‟ understanding of the law. Were this the
case, the exception would swallow the rule. Rather the exception for the lone „legally
tenable‟ reading of the law applies only in situations where the law „can reasonably be
read only one way‟ [citation], such that the agency‟s actions or decisions in applying the
law are essentially rote, ministerial, or otherwise patently compelled by, or repetitive of,
the statute‟s plain language. [Citation.]” (Morning Star, supra, 38 Cal.4th at pp. 336-
337.)
The question is not whether the Department has adopted an interpretation of the
statute that is consistent with the law, but whether that interpretation is the only “legally
tenable” one, that is, whether its interpretation “follows directly and inescapably from the
pertinent provisions of law.” (Morning Star, supra 38 Cal.4th at p. 340.)
The Department, through its advisory, has concluded that prohibiting a sale of
alcohol at a “customer-operated checkout stand” as that phrase is used in the statute,
means that alcohol may not be sold at a checkout stand “that is enabled to allow operation
by the customer at the time the customer‟s check-out transaction commences or at any
point in the check-out process.” The Department has concluded that monitoring and
oversight of the sale of alcohol at such sites does not satisfy the intent of the statute. But,
in my view, that interpretation of the law does not follow “directly and inescapably” from
the language of the statute. (Morning Star, supra, 38 Cal.4th at p. 340.)
The parties have contrary views regarding the proper interpretation of the statutory
language and, ultimately, the Legislative intent underlying its provisions. Both the
petitioner and the Department rely on the legislative history of section 23394.7 to argue
that its interpretation of the statute is the correct one. On the one hand, the Department
argues, for example, that the legislative history proves without question that its
interpretation of the statute is the correct one relying in part on language in the third
reading in the Assembly of Assembly Bill No. 183 which said the bill represented a
“precautionary step and precludes the possibility of underage drinking abuses occurring
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due to the use of a self-service checkout kiosk, the passive supervision associated with
these stations makes them vulnerable to manipulation [sic].” (Assem. Bill No. 183, 3d
reading May 19, 2011 (2011-1012 Reg. Sess.) p. 3 (hereafter Assembly Bill 183).) That
same report went on to say that the Legislature intended to force alcohol purchases to be
conducted through a “face-to face transaction from beginning to end.” (Ibid.)
Petitioner, on the other hand, argues that amendments to the bill show that the
Legislature did not intend to preclude the sale of alcohol occurring at a kiosk monitored
and controlled by a store employee. They point out that the bill as originally drafted
provided that:
“SEC 2. Section 23394.7 is added to the Business and Professions Code, to read:
“(a) No privileges under an off-sale license shall be exercised by the licensee at
any checkstand, where the customer is able to scan and purchase alcoholic beverages
using a point-of-sale system with limited or no assistance from an employee of the
licensee.”
“(b) For purposes of this section, „point-of-sale‟ system means any computer or
electronic system used by a retail establishment such as, but not limited to, Universal
Product Code scanners, price lookup codes, or an electronic price lookup system as a
means for determining the price of the item being purchased by the customer.” (Assem.
Bill 183, as introduced Jan. 25, 2011.)
The bill was thereafter amended to read simply: “No privileges under an off-sale
license shall be exercised by the licensee at any customer operated checkout stand.”
(Assem. Amend to Assem. Bill 183, May 19, 2011.)
Petitioner argues that this amendment demonstrates “the original version of the
legislation contained language that more specifically defined the sales practices to be
prohibited. For example, the law would have clearly prohibited retailers from selling
alcohol at checkout stands where customers themselves scanned products for checkout
„with limited or no assistance‟ from a store employee. . . . By replacing the language
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with the general phrase „customer-operated checkout stand‟ the Legislature made the
prohibition less stringent, so that retailers can comply with the law by selling alcohol
through employee-assisted face-to-face transactions, even at checkout stands with the
self-scan technology.”
Petitioner also points out that the Legislature specifically did not define what it
meant by a sale of alcohol at a “customer-operated checkout stand” when “[i]f the
Legislature truly intended [section 23394.7] to mean what [the Department] now
interpret[s] it to mean, it easily could have included in the statute, for example, the
language contained in [the Advisory].” It did not, of course, arguably leaving to the
Department the determination of the regulations that would be necessary to satisfy the
goals of the statute.
The ultimate issue is what the Legislature meant by the phrase “self-controlled
checkout stand.”
Petitioner argues, in part, that “until the customer pays for and receives the
alcoholic beverage, the retailer has not exercised any relevant privilege” of conducting an
off-sale transaction under its license. This, petitioner argues, along with a retailer‟s
measures to insure that an employee is present to monitor or oversee the actual sale of an
alcoholic beverage, halting the transaction when the item scanned at the checkout stand is
alcohol and not allowing the transaction to proceed until the purchaser‟s age, state of
sobriety, and intention to pay for the alcohol is determined by a store clerk, satisfies the
goals of the statute. At oral argument, petitioner noted that a self-controlled checkout
stand which is self-controlled by the customer when the customer is buying, for instance,
bread or butter or beans is no longer a “self-controlled” checkout stand when a checkout
stand automatically stops a transaction that cannot continue absent a store employee‟s
electronic permission to do so. The place of purchase and the transaction has, at that
point, become store controlled for purposes of the sale of alcohol.
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Put slightly differently, petitioner argues that the only transaction, for our purposes
here, whereby retailers exercise the “privileges under an off-sale license” within the
meaning of section 23394.7 and over which the Department has any authority, is the
privilege of selling alcohol and that, if the sale of alcohol is under the supervision and
control of a store employee at the time of the purchase of the alcohol, just as it would be
if the customer had used a traditional, nonautomated checkout lane operated by a store
clerk, this privilege is not being exercised at a “self-controlled” checkout stand within the
meaning of the statute.
We are not here required to determine whether petitioner‟s reading of the statute is
the correct one. It may or it may not be. But the question at this juncture is whether the
petitioner‟s reading of the statute is “palpably unreasonable.” (Morning Star, supra, 38
Cal.4th at 338.) I think that it is not.
If called upon to do so, a court will eventually decide which party‟s view of the
Legislative intent behind the statute is the correct one, but, again, that is not the question
before us now. The question is whether the Department‟s interpretation of the statute is
the only “legally tenable” reading of the statute. While the petitioner‟s arguments may
ultimately prove to be wrong, their interpretation of the statute is not “palpably
unreasonable.”
I part company with the lead opinion when it concludes that the court “need not
defer to the Department‟s interpretation because the interpretation of section 23394.7 is
well within the court‟s competence.” (Lead opn., ante, at p. 3.) Under some
circumstances, a court may interpret and apply statutory language in the first instance
without deferring to an agency‟s interpretation. (See Tidewater, supra, 14 Cal.4th 557;
Capen v. Shewry (2007) 155 Cal.App.4th 378.) But, as explained in Morning Star, that is
the appropriate course only where an invalid regulation promulgated by an agency is a
“simple interpretive policy” and where the court is in “as good a position as [the agency],
or almost so, to interpret the underlying [rule].” (Morning Star, supra, 38 Cal.4th at pp.
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340-341.) But where the statutory scheme calls for the application of administrative
expertise, the matter should be returned to the agency for its interpretation of the statute
in the first instance. (Id. at p. 341.)
In my view, the latter course is the proper course under the circumstances
presently before us. It should be left to the Department, in proceedings that conform to
the requirements of the Administrative Procedure Act, initially to determine the proper
regulations necessary to carry forward the intent of the Legislature when it enacted
section 23394.7. Whether, for instance, as petitioner suggests, the intent of the statute
can be satisfied with a procedure whereby the retailer, when an otherwise self-controlled
checkout stand halts the “self-controlled” aspect of the process and gives full control of
the purchase of alcohol only to the retailer by checking a buyer‟s identification and
entering age information into the system before the transaction is allowed to go forward,
or whether, as the Department suggested at oral argument, such a system could be
manipulated in a way that would frustrate the intent of the statute, is one example of a
matter best left initially to agency expertise with full input from those persons whom the
regulations will affect. This court is not in as good a position, or almost so, to make
those determinations. “To transfer to the courts what are properly agency responsibilities
as to these and similar matters would frustrate the intent of the Legislature in enacting the
APA.” (Morning Star, supra, 38 Cal.4th at p. 341.)
“One purpose of the APA is to ensure that those persons or entities whom a
regulation will affect have a voice in its creation (Armistead v. State Personnel Board
(1978) 22 Cal.3d 198, 204-205), as well as notice of the law‟s requirements so that they
can conform their conduct accordingly (Ligon v. State Personnel Bd. (1981) 123
Cal.App.3d 583, 588). The Legislature wisely perceived that the party subject to
regulation is often in the best position, and has the greatest incentive, to inform the
agency about possible unintended consequences of a proposed regulation. Moreover,
public participation in the regulatory process directs the attention of agency policymakers
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to the public they serve, thus providing some security against bureaucratic tyranny. (See
San Diego Nursery Co. v. Agricultural Labor Relations Bd. (1979) 100 Cal.App.3d 128,
142-143.)” (Tidewater, supra, 14 Cal.4th at pp. 568-569.)
I would declare the Advisory invalid, order that our stay order remain in effect
pending action by the Department consistent with the APA and return the matter to the
Department for its further consideration under the provisions of the APA.
HULL , J.
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