Appendix — Rancho La Costa, Inc. v. Alcoholic Beverage Control Appeals Board

IN THE

Supreme Court of the Unit

OCTOBER TERM, 1979

No. ¥9= 906

RANCHO LA COSTA, INC., dba LA COSTA

COUNTRY CLUB,

Petitioner,

v.

ALCOHOLIC BEVERAGE CONTROL APPEALS

BOARD and CALIFORNIA DEPARTMENT OF

ALCOHOLIC BEVERAGE CONTROL,

Respondents.

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI TO THE

CALIFORNIA ALCOHOLIC BEVERAGE CONTROL

APPEALS BOARD AND THE CALIFORNIA

DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

LEROY S. HULDEN

DONNELLEY & HULDEN

3366 Fifth Avenue

San Diego, California 92103

Telephone: (714) 299-8350

Attorneys for Petitioner

December 10, 1979

INTERIM PRINTING & MAILING COMPANY

1105 WesT MORENA BOULEVARD, SAN DIEGO, CALIFORNIA 92110 — 275-3050

EN ee

=e

TABLE OF CONTENTS

PAGE

APPENDIX A:

Notice of Hearing Denied

by the California Supreme

Court, dated September 12,

og, Peer eee cinco aevenes 1

APPENDIX B:

Notice of Denial of Petition

for Writ of Certiorari to

Review Order of Alcoholic

Beverage Control Appeals

Board Issued by the Fourth

Appellate District Court

of Appeal of the State of

California, dated August 17,

AUP a teseer eee ees Cee Memeewee es 2

APPENDIX C:

Decision by Alcoholic Beverage

Control Aprcals Board, filed

COLT 2Fy BPI ee cena -eeeneosees 3-33

APPENDIX D:

Certificate of Decision by

the State of California

Department of Alcoholic

Beverage Control, dated

ae ee re sco

@ ti

TABLE OF CONTENTS (Cont.d.)

PAGE

APPENDIX E:

Proposed Decision of Admin-

istrative Law Judge of

Department of Alcoholic

Beverage Control, dated

Re ATS ROU 666 ccd vee anas 35-39

APPENDIX F:

Constitutions and

WONT REOR 6k oso Ken ewes err ere Ts 40

U.S. Constitution

Fourteenth Amendment....... 40-41

Twenty-First Amendment......42

California Constitution..... 42

ASCLSCIS AA BOStiom 226.0200 42-44

California Statutes......-» - - 45-46

APPENDIX G:

FPOOCROLOE . cc cence Cvetene eee caer

he 626200. GEOUMGS.. 260s es ~-47

2. §266i. Pandering;

PPLE sok eh aweseecasess 47-48

3. §664. Attempts;

oS 48-49

4. §647. Disorderly con-

a (ievkee C068 © 8 6 ee - 49-50

5. H.D. Wallace & Assoc.,

Inc., v. Department of

Alcoholic Bev. Control,

271 Cal.App.2d 589

CAPews ¢. CEOs cokes (cee ek wae 50

Appendix A

CLERK'S OFFICE. SUPREME COURT

4250 STATE BUILDING

SAN FRANCISCO, CALIFORNIA 94102

te

=» £.°

"TJ

I have this day filed Order wt

In re: a (ty. No 22122

_Rancho La Costa, Inc.

vs.

__ABC Anneats Board

Respectfully,

G. E. BISHEL

Clerk

60378-077 2-79 <M OSP

COURT OF APPEAL: FOURTH CST,

2

2 Appendix B Je AUG 1 “% 78793 Appendix C 3

ROBER Chor e = [= l)

vm ou

Z pelea . a i oe

COURT OF APPEAL Darery CLERK

STATE OF CALIFORNIA 4 JUL 17 ig

FOURTH APPELLATE DISTRICT eee

MCOHOUIC REVERSE CONTROL

DIVISION ONE APPEALS PCA CU

RANCHO LA COSTA, INC.,

Petitioner, 4 Civil

No. 22122

BEFORE THE ALCOHOLIC BEVERAGE CONTROL

vs.

ALCOHOLIC BEVERAGE CONTROL

APPEALS BOARD,

APPEALS BOARD OF THE STATE OF CALIFORNIA

In the Matter AB-4622

Respondent. of the File 11363; Reg. 9242

Accusation ALJ: Marilyn Nelson

Against

SUPERIOR COURT NO. AB4622 Date and Place of

BY THE COURT:

The Petition for Writ of Certi-

orari to Review Order of Alcoholic

Beverage Control Appeals Board with

Request for Temporary Stay is denied.

Copies to:

Z

Aah rn

Presiding Justice

Donnelley & Holden-SD

Attorney General-SD

Attn.Ms.Elizabeth Riggs

Superior Court-SD

RANCHO LA COSTA,

INC., dba La Costa

Country Club

E/S El Camino

Real, 2.5 miles

south of Palomar

Airport Road

Carlsbad, CA 92008

On-sale general

license, three

duplicates and a

caterer's permit

Respondent

Under the alcoholic

beverage

control act.

ae a a ee ee

Rancho La Costa,

Hearing

April 5, 1979

314 West First St.

Room F

Los Angeles, CA

For Department:

Honorable George

Deukmejian,

Attorney General

Elizabeth Riggs

Deputy Attorney

General

For Applicant:

Leroy Hulden,

Attorney

Inc., doing busi-

4 Appendix

ness as La Costa Country Club, has

appealed a decision of the Department

of Alcoholic Beverage Control which

determined: respondent violated sec-

tions 266(i), 664 and 647(b) of the

California Penal Code; that grounds

exist for the suspension or revocation

of respondent's above-designated licenses

in that the commission of said offenses

on said premises created conditions con-

trary to public welfare and morals within

the meaning of Article XX, section 22, of

the California Constitution, and section

24200(a) of the Business and Professions

Code; that grounds do not exist for the

suspension or revocation of respondent's

above-designated licenses pursuant to

section 24200(b) of the Business and

Professions Code in that the aforemen-

tioned offenses do not come within the

meaning of said section. By way of

Appendix 5

penalty, the respondent's licenses were

suspended for a period of 30 days, with

25 days of said suspension stayed, for a

total suspension of 5 days.

The department's decision further

provides, where pertinent:

"FINDINGS OF FACT:

"COUNT I

"1. It is true that on

July 25, 1977, respondent, by

its agent and catering manager,

Frank Rayo, did suffer and per-

mit the said premises to be

used as a place wherein Frank

Rayo did solicit and attempt

to solicit confidential infor-

mant "Rhonda" to engage in an

act of prostitution,

"2. It is true that on

July 25, 1977, respondent, by

it agent and catering manager,

Frank Rayo, did suffer and per-

mit the said premises to be

used as a place wherein Frank

Rayo did attempt to procure con-

fidential informant "Rhonda" to

engage in an act of prostitution.

"SPECIAL FINDINGS:

"1. Respondent corporation

is doing business as La Costa Country

6 Appendix

Club. Said country club is a large,

complete resort which had approxi-

mately 950 employees in July, 1977.

"2s Respondent has, on

an ongoing basis, taken affirma-

tive steps to attempt to control

prostitution on its premises,

as follows:

"a. Employment of

security personnel.

"b. Cooperation

with and maintaining a

working relationship with

the Carlsbad Police Depart-

ment.

"c. Adopting un-

written rules forbidding

employees to solicit or

Otherwise be involved in

prostitution.

"d. Communicating

such rules to its depart-

ment heads, including

Frank Rayo.

"3. Frank Rayo was termi-

nated by respondent upon management

being informed of his said miscon-

duct.

"4. The actions of Frank

Rayo in relation to said misconduct

were performed in a surreptitious

manner."

Appendix

Appellants appeal upon all grounds

available under Business and Professions

Code section 23084.

Rhonda Lilien, working as a paid,

civilian under-cover operative for the

Sheriff's Department (R.T. 13-14), testi-

fied for the Department of Alcoholic

Beverage Control. When working as a

masseuse for the subject licensee (R.T.

24), she had conversations with one Terri

Bishop, prior to July 25, 1977, with

regard to being a prostitute at the La

Costa resort (R.T. 35); on July 25, 1977,

Mr. Rayo was called on the telephone by

the bartender at their request, while Ms.

Bishop was with the witness in the cock-

tail lounge of the licensee (R.T. 6);

later, in the booth at the licensed pre-

mises, Rayo, Bishop and she discussed

"working customers", which she understood

to mean prostitution (R.T. 8); when she

8 Appendix

said she was interested in working with

them, he suggested it would be better if

they left the cocktail lounge and go to

his office for privacy (R.T. 8); they

left the cocktail lounge, walked around

the building "a bit", and went upstairs

to Rayo's catering office which was

Opened by him with a key (R.T. 9-10); Mr.

Rayo indicated that, since his customers

were wealthy, some might want a couple of

hours of sexual intercourse and others

would desire an all-night affair (R.T.

11-12); he said that it would cost them

approximately $50.00 for a single sexual

act and $100 for one night (R.T. 12); he

stated that the customers would be

Staying at the La Costa Country Club and

at the Spa (R.T. 12); that he usually

did not derive a profit, but that some-

times customers would tip him $10 or $20,

and that the witness was to be available

Appendix 9

to him for free sexual acts (R.T. 12, 37);

he stated that the business was sporadic,

but that sometimes she could make $500

on a weekend (R.T. 13); during these

conversations, she had a small electro-

nic recorder in her purse; she had

received it from Sheriff's Deputy Randy

Anderson, with whom she was working

(R.T. 14-15).

Randall A. Anderson, a sergeant

with the San Diego Sheriff's Department,

testified for the Department of Alcoholic

Beverage Control. On July 25, 1977, he

gave Lilien a small transmitter to

trasmit her conversations to his nearby

vehicle, so he could listen to and

record the conversations (R.T. 65, 68);

on July 25, 1977, he was able to over-

hear Lilien's and Bishop's voices, and,

although rot able to identify it as

Rayo's voice, he also heard a male

10 Appendix

voice (R.T. 69); he heard the male intro-

duce himself as Frank, tell Lilien he

had been working with Bish ©: a pro-

stitution operation for some time, and

he would like to see Lilien involved

in the operation after he screened her;

also, that most of the customers were

guests of the appellant; he overheard the

male state that normally the fees charged

by most prostitutes were $50.00 for a

Single act of sexual intercourse and

$100.00 for all night (R.T. 70-72).

Shortly thereafter, he arrested Bishop

and Rayo in the catering office, while

Lilien was present (R.T. 72); he gave

Rayo the Miranda warning; after waiving

his right to remain silent, Rayo told

him he had been involved with Bishop

and other prostitutes since February of

the previous year and that his customers

were wealthy guests at appellant's re-

Appendix 11

sort (R.T. 73-74); that it was more or

less expected of him to provide prosti-

tutes for the guests (R.T. 74); and, for

his services, he was entitled to occa-

sional free sexual intercourse (R.T. 75).

The witness made marks on a layout of the

subject resort (Department's Exhibit 1),

indicating where Lilien entered the bar

and where he was parked during the sub-

ject conversation; the witness identi-

fied a diagram representing the interior

of the La Costa Bar, although not to

scale (R.E. 92-93; Department's Exhibit

2). In a three and one-half year period,

Deputy Anderson made three other prosti-

tution arrests in the cocktail lounge of

the subject resort (R.T. 75-76).

Deputy Anderson was called by res-

pondents to testify as an adverse wit-

ness. The tape recording he made of the

subject conversation was from a receiver

12 Appendix

in his police vehicle; since the tape

recorder was lying on top of the dash of

the vehicle, it picked up outside inter-

ference, along with other problems; he

estimated approximately 25 percent of

the conversation was audible on the

tape (R.T. 128).

The department subsequent!y called

Deputy Anderson as a rebuttal witness.

He visited the La Costa clubhouse six

times, in an official capacity, over a

period of three and one-half years

(R.T. 262); to the best of his knowledge,

he was not known as a police officer by

anyone at said resort (R.T. 263). He

was told by Rayo that he had been working

with various prostitutes at the resort

for approximately two years (R.T. 271-

277); that the facts of prostitution took

place in the guest rooms of the resort

(R.T. 278); that Rayo generally would

Appendix 13

call Teri Bishop, or one of the other

prostitutes, and inform them someone

would be calling to arrange a meeting,

which was generally on the resort pre-

mises (R.T. 278-279); that Rayo contacted

one customer who arranged for a prosti-

tute to have sex with 26 individuals for

$500.00 (R.T. 278). The witness testified

his report did not state specifically

that Rayo introduced the customers to

Bishop or that most of the acts took

place at the LaCosta resort (R.T. 290-

291).

Leslie L. Case, the San Diego

District Administrator for the Depart-

ment of Alcoholic Beverage Control,

testified for the department. It was

stipulated that a part of his duties in-

cludes keeping official files regarding

alcoholic beverage licenses in San Diego

County, including the respondent's (R.T.

14 Appendix

96); respondent holds a bona fide master

license and three duplicate licenses

(R.T. 97); Department's Exhibit 1, in his

files, was received from the respondent;

each building outlined in red is a por-

tion of the licensed premises (R.T. 98);

he identified five documents, pertaining

to the licensed premises, which were re-

ceived into evidence (Department's

Exhibite 1, 2, 3, 4 and 5).

The respordent introduced a declara-

tion of Robin Kuest, presently living

in New Mexico, as hearsay evidence,

which stated, inter alia: Rayo was

catering manager at the licensee's re-

sort and had no control or authority

with respect to the operation of the

cocktail lounge, bar or liquor facili-

ties; Kuest had instructed Rayo that

prostitution would not be condoned and

would result in the immediate dismissal

Appendix 15

of any employee involved; and, that at

that time there wre over 600 employees

employed at the resort (Respondent's

Exhibit B).

Doris M. Hogue, the directoress of

the women's spa at La Costa Resort, tes-

tified for the respondent. Male custo-

mers are massaged by males (R.T. 134);

Rhonda Lilien worked as a part-time

technician and masseuse in the women's

section (T.R. 135-136). The respondent

introduced hiring forms regarding Lilien

(Repondent's Exhibit C).

Robert S. Mott, General Manager of

La Costa and Spa since March of 1968,

testified for the respondent. Previous

to his present position, he was employed

at La Costa as Assistant to the general

manager (R.T. 140). The respondent

introduced a diagram depicting the La

Costa Hotel and Spa (R.T. 140, Respon-

16 Appendix

dent's Exhibit D). The witness described

the various grounds and buildings reflec-

ted there (R.T. 141-145); in July of 1977,

they employed approximately 950 persons

(R.T. 163). There are 28 basic depart-

ments within the resort management, as

well as departments within these depart-

ments; they have 37 department heads

(R.T. 146); the catering manager heads a

department which has 28 persons on the

staff (R.T. 185); he is responsible for

food functions in the conference center

facility; this includes the set-up,

decorations, and ensuring that the

party goes well (R.T. 146); the catering

manager also handles arrangements for

the wine to be served (R.T. 184), com-

plaints about service and arranges for

live entertainment (R.T. 186); he has

the right to hire and fire within his

department, which includes busboys and

Appendix 17

waitresses but not cocktail waitresses

(R.T. 149). The director of sales

handles room bookings and prepares the

resume’ for the function, which would

then be submitted to the catering mana-

ger (R.T. 147); the catering manager

would not have the authority to book the

rooms, determine prices for meals or

arrange for additional services, without

higher authorization (R.T. 148); if al-

coholic beverages are to be served, he

contacts the beverage manager who

arranges for bartenders and cocktail

waitresses (R.T. 148). Rayo was

discharged because of his activity;

employees have been instructed that they

would be immediately terminated and their

case turned over to the local authorities,

if involved in prostitution (R.T. 153);

they have their own security force and

have always cooperated with the Carlsbad

18 Appendix

Police Department to eliminate prostitu-

tion in their cocktail lounge, which in-

cluded giving the undercover detectives

hotel keys to that they could appear to

be guests (R.T. 150-163).

Roy J. Kundtz, Chief of Police for

the City of Carlsbad, for four years,

testified for the respondent. Rancho La

Costa is within the City of Carlsbad and

subject to his police department's judis-

diction (R.T. 189); he was ecavetnced with

Robin Kuest when he was general manager

of the subject hotel and spa (R.T. 189);

he had several conversations with Kuest

regarding prostitution at Rancho La Costa

(R.T. 189); in 1974, he told Kuest he

had heard rumors concerning prostitution

at La Costa; Kuest informed him he did

not know of any but, if there was, I

would come out and do something about it;

that he would cooperate (R.T. 190-191).

Appendix 19

At that time, they occasionally placed

detectives in the cocktail lounge (R.T.

191); in approximately 1975, he was en-

couraged by Kuest to come out and ensure

there was no prostitution activity; at

that time, he had not heard rumors of

prostitution at La Costa (R.T. 192);

later, he had another conversation with

Kuest; the relationship was such that

any time their detectives wanted to pose

as hotel guests, arrangements were made

for them to do so (r.T. 193); there have

been no arrests for prostitution by his

department at Rancho La Costa within two

years; there was never a lack of coopera-

tion by the management thereof (R.T. 193);

in his opinion, the officials at La

Costa have continually made a good effort

to control prostitution (R.T. 193). To

his recollection, the La Costa management

has never called his department to request

20 Appendix

the arrest of a prostitute at their bar

(R.T. 204); he has heard rumors of pro-

stitution in the subject bar (R.T. 201);

in the last four years, female and male

undercover officers have worked in the

bar without informing the management, yet

they made no arrests (R.T. 209).

William S. Huntington, a police

detective with the City of Carlsbad,

testified for the respondent. At times,

he has been assigned to work on prostitu-

tion cases at Rancho La Costa (R.T. 214);

occasionally, they went out there on their

own initiative while at other times they

were called there by the management of

La Costa, if they thought prostitutes

were working on their premises (R.T. 214);

he has received hotel keys from the

management, so as to allow him to appear

as a guest (R.T. 215); he encountered a

known prostitute therein only on one

Appendix 21

occasion, approximately three years pre-

viously, during the Tournament of Chani-

pions (R.T. 215); in his opinion, the

licensee has made a good effort to elimi-

nate prostitution (R.T. 217); he was

known by some of the employees at the

bar, so he never worked completely

undercover therein (R.T. 218).

The respondent introduced the

written material available to the guests

in their rooms (Respondent's Exhibit E);

and, the classified ad section of the San

Diego Union of August 3, 1978, with

regard to massage advertisements (Res-

pondent's Exhibit F).

Allard Roen, a major stockholder,

chief operating officer, and Chairman of

the Board of respondent corporation, tes-

tified therefor. He did not deny they

had an employee utilizing call girls,

however, as soon as he knew of it, the

22 Appendix

employee was terminated (R.T. 240-241,

248). They did not want prostitutes at

their bar; it is not the image they

desire (R.T. 241); they completely

cooperated with the authorities in that

regard (R.T. 242); however, it is a

difficult problem as one cannot accuse

someone of being a prostitute unless

absolutely certain (R.T. 242). In his

opinion, encouraging prostitution would

be detrimental to their business because,

while it might satisfy a few guests, it

alienated many more if they observed the

solicitations (R.T. 247); the gross in-

come of the resort is in excess of 20

million dollars; if prostitution were

allowed on the premises, he felt it would

be detrimental to this income (R.T. 248-

249). He concluded that Rayo had done

it because he wanted to be a big shot

(R.T. 248); the catering manager is a

Appendix 23

liaison between management and the indi-

viduals having a conference (R.T. 253);

as such, Rayo was in a position to re-

ceive requests for prostitutes; however,

in the resort business there are probably

a number of employees who have been

requested to provide such services (R.T.

255-257).

Upon appeal appellant contends: the

decision of the department is not

supported by the findings, as determined

by the administrative law judge, as there

was no culpable conduct by the licensee,

profit derived, ongoing misconduct in

the licensed premises, control given to

the subject employee, nor was the employee

on duty or on the licensed premises; the

department abused its discretion by

holding that a license is strictly liable

for an employee's isolated act of surrep-

titious, unpreventable criminal misconduct,

24 Appendix

in view of the stringent measures taken

to control prostitution; section 25601 of

the Business and Professions Code has been

unconstitutionally applied to appellant;

the imposition of strict liability for a

criminal offense in this case is not

reasonably related to regulation of the

alcoholic beverage industry; and, the

department has improperly interpreted and

applied Business and Professions Code

section 25601, has created an irrebutable

presumption that a licensee is guilty of

violating snckion 960k. and that the

continuance of its license is contrary

to public welfare and morals if an

employee commits an act prohibited by

Business and Professions Code section

25601.

Appellant's contentions the decision

of the department is not support by the

findings and constitutes an abuse of

—

Appendix 25

discretion, for the reasons stated above,

is devoid of merit. A licensee can be

held liable for a single, isolated cri-

minal act of an employee under Business

and Professions Code section 24200(a),

even though the employee is not in con-

trol of the licensed premiss. Under the

facts, a corporate director and officer,

Mr. Roen, admitted: "Nobody's denying"

the employee "was using call-girl prosti-

tution" (R.T. 240-241, 248; see Evidence

Code sections 1221 and 1222). However,

the testimony of witness Lilien indicated

the initial solicitation discussion

occurred in the cocktail lounge and that

the balance of the solicitation occurred

in the catering manager's office on the

licensee's property. Also, Deputy

Sheriff Anderson testified that Rayo,

the catering manager, admitted he had

been providing prostitutes for guests

26 Appendix

of the licensee for approximately two

years. This evidence, although hearsay,

supplements other testimony and explains

the reason for the solicitaion of prosti-

tution by the licensee's manager (Govern-

ment Code Section 11513(c)). The officers

of the licensee admitted that Rayo was in

charge of serving wine and arranging for

the handling of conference functions,

including the hiring and firing of

waiters and waitresses who served the

wine; that Rayo had 28 persons in his

department. A corporation, which is a

person by legal fiction, cannot function

on its own; it must function through its

managerial personnel. Hence, it was

proper for the department to suspend

this license upon the evidentiary

showing of solicitation for continuing

acts of prostitution with guests of th

licensee, by the licensee's catering

Appendix 27

manager (Harris v. Department of

Alcoholic Beverage Control and the

Alcoholic Beverage Control Appeals

Board, 197 Cal.App. 2d 172 [17 Cal.

Rptr. 315]). In Mantzoros v. State

Board of Equalization, 87 Cal.App. 2d

140 [196 P.2d 657], the court stated:

"The licensee, if he elects

to operate his business through

employees, must be responsible

to the licensing authority for

their conduct in the exercise

of his license, else we would

have the absurd result that

liquor could be sold by employees

at forbidden hours at licensed

premises and the licensees would

be immune to disciplinary action

by the board. Such a result

cannot have been contemplated

by the Legislature ...."

Moreover, a licensee can even be

held responsible for isolated acts by

insignificant employees, as in Reimel v.

Alcoholic Beverage Control Appeals Board,

252 Cal.App. 2d 520 [60 Cal.Rptr. 641],

where the court held the licensee could

28 Appendix

be disciplined even though it was an

isolated incident of which neither the

general manager nor any other responsible

officer of the licensee had actual know-

ledge. The court pointed out that the

licensee could draw no protection from

the fact that he had taken reasonable pre-

cautions to prevent such violations. In

Copeland v. Department of Alcoholic

Beverage Control, 241 Cal.App.2d 186

[50 Cal.Rptr. 542], the court pointed out

that the disciplining of licensees is for

the protection of the public and not for

the punishment of the licensee. The dis-

cipline herein was reasonably related

to regulation of the alcoholic beverage

industry. Mew: Mr. Rayo had the mana-

gerial authority to exercise the

licensee's privilege with regard to

serving wine for guests of the licensee.

As the person in charge of wine service

Appendix 29

at convention functions, he was neces-

sarily in charge of enforcing the alco-

holic beverage laws thereat. The combi-

nation of Rayo's convention catering

manager's position, the liquor license

and the prostitution services conple-

mented each other in chis illegal acti-

vity. Moreover, the likelihood of such

activity at conventions would seem not

to be unusual. If handled surrepti-

tiously, prostitution might book conven-

tion bookings.

Appellant's citation of Business

and Professions Code section 25601 and

disorderly premises cases thereunder are

inapposite because section 25601 requires

proof of several incidents before a

licensed premises can be classified as

a disorderly premises. Appellant's con-

tention that Business and Professions

Code section 25601 was unconstitutionally

30 Appendix

applied to the appellant also in in-

apposite, since a violation of section

25601 is not involved in the department's

decision.

Appellant's citation of H.D. Wallace

and Associates v. Department of Alcoholic

Beverage Control, 271 Cal.App. 2d 580

[76 Cal.Rptr. 749], is not in point since

Wallace was involved in acts that had no

relation to his licensed premises; whereas,

in instant case the solicitation of prosti-

tution occurred in the manager's office

and the cocktail lounge of the premises,

and the prostitution was intended for the

licensee's patrons and guests, as dis-

cussed supra.

It has been stated that the provi-

sions of Article XX, section 22 (with

reference also being made to Business

and Professions Code section 24200(a) )

are made self-executing and revocation

Appendix 31

of the license may be based upon that

ground alone (Vallerga v. Department of

Alcoholic Beverage Control, 53 Cal.2d

313 [1 Cal.Rptr. 494]; also see Mack v.

Department of Alcoholic Beverage Control,

178 Cal.App.2d 149 178 [273 P.2d 372]).

However, we need not rule on whether the

conduct in question constituted a viola-

tion thereof per se, since the licensee's

employee violated Penal Code sections

266(1i), 664 and 647(b). Hence, sanctions

could be imposed under the constitutional

provision and Business and Professions

Code section 24200(a) (Maloney v. Depart-

ment of Alcoholic Beverage Control, 172

Cal. App.2d 104 [342 P.2d 520]; Reimel v.

Alcoholic Beverage Control Appeals Board,

252 Cal.App. 2d 520 [60 Cal.Rptr. 641]).

The department's findings that Rayo's

superiors did not know of these circum-

stances, that affirmative steps had been

32 Appendix

taken to control prostitution on the

premises, and that Rayo was terminated

by the appellant, are not in conflict

with the determination of appellant's

liability for its employee's acts under

the cases cited, supra. It would appear,

however, that such findings were taken

into consideration as mitigation evidence

in fixing the penalty.

For it's manager's crimes, the

department suspended appellant's license

30 days, with an actual suspension of 5

days and the remainder stayed. We con-

clude this did not constitute an abuse

of its discretion as to the penalty as a

matter of law (Lake v. Civil Service

Commissicn, 47 Cal.App. 3d 224). The

fact that reasonable minds may differ

as to the propriety of the penalty

imposed only serves to fortify the con-

clusion that the department acted within

Appendix 33

the broad area of discretion conferred

upon it (Martin v. Alcoholic Beverage

Control Appeals Board and Haley, 52 Cal.

2d 287 [341 P.2d 296]).:

For the foregoing reasons, the

department's decision is affirmed.

PETER M. FINNEGAN, CHAIRMAN

ALCOHOLIC BEVERAGE CONTROL

APPEALS BOARD

Members concurring:

Jacob F. West

James S. Lee

Appendix D 33

34 Appendix D

STATE OF CALIFORNIA

STATE OF CALIFORNIA DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

DEPARTMENT OF ALCOHOLIC IN THE MATTER OF THE )File 11363

BEVERAGE CONTROL Accusation Against: ‘ate ini sg

RANCHO LA COSTA, INC. )

CERTIFICATE OF DECISION La Costa Country Club ) Time of

E/S El Camino Real, ) Hearing: 8/2/78

File 11363 2.5 Miles South of ’ 11:00 a.m.

Palomar Airport Road 8/3,4/78 9:00 a.m.

Reg. 9242 . Carlsbad 92008 ae ,

) Licenses: 47-

It is hereby certified that the Depart- on-sale general license} roe iar &

ment of Alcoholic Beverage Control, have- 3 duplicates anda P

ing reviewed the findings of fact, deter- caterer's permit

mination of issues and recommendation in ) Place of

; “is : Respondent. )Hearing: 1350

the attached proposed decision submitted ) Front St.,Rm.B-

by a Hearing Officer of the Office of under the Alcoholic ) 107,San pie i

Administrative Procedure, adopted said Beverage Control Act. _ : g

proposed decision as its decision in the Reporter:

case therein described on August 24, Cert. L-16188

1978. 5

Appearances:

A representative of the Department will For Dept: Frank Britt,Counsel

call on you on or after October 12, 1978 For Resp: Leroy S. Hulden, Atty.

to pick up the license certificate. 3366 Fifth Avenue

San Diego, 92103

Rec.d Aug.17,1978

Sacramento, California . hereby certify that the following

Dated: August 24, 1978 constitutes my proposed decision in the

above-entitled matter as a result of the

hearing held before me at the above

time and place, after due notice there-

of having been given according to law,

Beatrice Smalley and I hereby recommend its adoption as

Hearing and Legal Unit the decision of the Department of

Alcoholic Beverage Control

ABC-132 (8-71)

36 Appendix

PROPOSED DECISION

FINDINGS OF FACT:

COUNT I

1. It is true that on July 25, 1977,

respondent, by its agent and catering

manager, Frank Rayo, did suffer and permit

the said premises to be used as a place

wherein Frank Rayo did solicit and attempt

to solicit confidential informant "Rhonda"

to engage in an act of prostitution.

2. It is true that on July 25, 1977,

respondent, by its agent and catering

manager, Frank Rayo, did suffer and permit

the said premises to be used as a place

wherein Frank Rayo did attempt to procure

confidential informant "Rhonda" to engage

in an act of prostitution.

SPECIAL FINDINGS:

1. Respondent corporation is doing

business as La Costa Country Club. Said

country club is a large, complete resort

which had approximately 950 employees in

July, 1977.

2. Respondent has, on an angoing

basis, taken affirmative steps to attempt

to control prostitytion on its premises,

as follows:

a. Employment of security

personnel.

b. Cooperation with and main-

taining a working relationship with the

Carlsbad Police Department.

Appendix 37

c. Adopting unwritten rules for-

bidding employees to solicit or otherwise

be involved in prostitution.

d. Communicating such rules to

its department heads, including Frank Rayo.

3. Frank Rayo was terminated by re-

spondent upon management being informed of

his said misconduct.

4. The actions of Frank Rayo in re-

lation to said misconduct were performed

in a surreptitious manner.

SPECIAL RULING:

Respondent cited Coleman v. Alcoholic

Beverage Control Appeals Board, 71 C.A.

3d 336, an opinion which was not published

in the official reports pursuant to the

order of the Supreme Court of the State of

California dated August 19, 1977. Rule

977 of the California Rules of Court pro-

hibits the citation of non-published opin-

ions by a court or by a party in any other

action, with certain exceptions. Inas-

much as it has been held that a non-pub-

lished decision is not available as pre-

cedent, the citation of said Coleman

case is not determinative of the issues

herein. See People v. Gomez, 26 C.A.3d

928 (103 Cal. Rptr. 453); People v.

North Beach Bonding Co., 36 C.A. 3d 663

(123 Cal. Beper. 757).

DETERMINATION OF ISSUES PRESENTED:

1. Respondent violated Sections

266i, 664, and 647 (b) of the California

Penal Code. Grounds exist for the sus-

38 | Appendix

pensation or revocation of respondent's

above-designated licenses in that the com-

mission of said offenses on said premises

created conditions contrary to public wel-

fare and morals within the meaning of

Article XX, Section 22, of the California

Constitution, and Section 24200(a) of the

Business and Professions Code.

2. Grounds do not exist for the sus-

pension or revocation of respondent's

above-designated licenses pursuant to

Section 24200(b) of the Business and Pro-

fessions Code in that the aforementioned

offenses do not come within the meaning

of said section.

PENALTY OR RECOMMENDATION:

Respondent's above-designated li-

censes are suspended for a period of

thirty days, with twenty-five days of said

suspension stayed, upon the condition that

no subsequent final determination be made

upon hearing or upon stipulation, that

cause for disciplinary action occurred

within one year from the effective date

of this decision; that should such deter-

mination be made, the Director of the

Department of Alcoholic Beverage Control

may, in his discretion and without further

hearing, vacate this stay order and re-

impose the stayed portion of the penalty;

Appendix 39

and that should no such determination be

made, the stay shall become permanent.

Dated at Los Angeles, California;

August 15, 1978 °

.

a

m rs 3 (OA ge \. { ;

ar RA ¢ 1, ie a Bs A tne

ic a

Vee

MARILYN L. NELSON,

Administrative Law Judge

Office of Administrative

Hearings

MLN: nsa

40 Appendix F

UNITED STATES CONSTITUTION

AMENDMENT XIV--CITIZENSHIP; PRIVILEGES

AND IMMUNITIES; DUE PROCESS; EQUAL

PROTECTION; APPROTIONMENT OF REPRE-

SENTATION; DISQUALIFICATION OF OFFICERS;

PUBLIC DEBT; ENFORCEMENT

Section 1. All persons born or naturalized

in the United States, and subject to the

jurisdiction thereof, are citizens of the

United States and of the State wherein they

reside. No State shall make or enforce any

law which shall abridge the privileges or

immunities of citizens of the United

States; nor shall any State deprive any

person of life, liberty, or property, with-

out due process of law; nor deny to any

person within its jurisdiction the equal

protection of the laws.

Section 2. Representatives shall be ap-

portioned among the several States accord-

ing to their respective numbers, count-

ing the whole number of persons in each

State, excluding Indians not taxed. But

when the right to vote at any election

for the choice of electors for President

and Vice President of the United States,

Representatives in Congress, the Execu-

tive and Judicial officers of a State, or

the members of the Legislature thereof,

is denied to any of the male inhabitants

of such State, being twenty-one years of

age, and citizens of the United States,

or in any way abridged, except for parti-

cipation in rebellion, or other crime,

the basis of representation therein shall

be reduced in the proportion which the

number of such male citizens shall bear

Appendix 41

to the whole number of male citizens

twenty-one years of age in such State.

Section 3. No person shall be a Senator

or Representative in Congress, or elector

of President and Vice President, or hold

any office, civil or military, under the

United States, or under any State, who

having previously taken an oath, as a

member of Congress, or as an officer of

the United States, or as a member of any

State legislature, or as an executive or

judicial officer of any State, to support

~the Constitution of the United States,

shall have engaged in insurrection or

rebellion against the same, or given aid

or comfort to the enemies thereof. But

Congress may by a vote of two-thirds of

each House, remove such disability.

Section 4. The validity of the public

debt of the United States, authorized by

law, including debts incurred for payment

of pensions and bounties for services in

suppressing insurrection or rebellion,

shall not be questioned. But neither

the United States nor any State shall

assume or pay any debt or obligation in-

curred in aid of insurrection or rebellion

against the United States, or any claim

for the loss or emancipation of any slave;

but all such debts, obligations and claims

shall be held illegal and void.

Section 5. The Congress shall have power

to enforce, by appropriate legislation,

the provisions of this article.

42 Appendix

AMENDMENT XXI--REPEAL OF PROHIBITION

AMENDMENT

Section 1. The eighteenth article of

amendment to the Constitution of the United

States is hereby repealed.

Section 2. The transportation or impor-

tation into any State, Territory, or pos-

session of the United States for delivery

or use therein of intoxicating liquors, in

violation of the laws thereof, is hereby

prohibited.

Section 3. This article shall be inop-

erative unless it shall have been ratified

as an amendment to the Constitution by

conventions in the several States, as pro-

vided in the Constitution, within seven

years from the date of the submission

hereof to the States by the Congress.

CALIFORNIA CONSTITUTION

§22. Intoxicating liquors

Sec.22. The State of California, sub-

ject to the Internal Revenue Laws of the

United States, shall have the exclusive

right and power to license and regulate

the manufacture, sale, purchase, pos-

session and transportation of intoxicat-

ing liquor within the State, and subject

to the laws of the United States regula-

ting commerce between foreign nations

and among the states shall have the ex-

clusive right and power to regulate the

imposition into and exportation.from the

State, of intoxicating liquor. Intoxi-

cating liquors, other than beers, shall

Appendix 43

shall not be consumed, bought, sold, or

otherwise disposed of for consumption on

the premises, in any public saloon, pub-

lic bar or public barroom within the State;

provided, however, that subject to the

aforesaid restriction, all intoxicating

liquors may be kept and may be bought,sold,

served, consumed, and otherwise disposed

of in any bona fide hotel, restaurant, cafe,

cafeteria, railroad dining or club car,

passenger ship, or other public eating

place, or in any bona fide club after such

club has been lawfully operated for not

less than one year. The State Board of

Equalization shall have the exclusive

power to license the manufacture, impor-

tation and sale of intoxicating liquors

in this State, and to collect license fees

Or occupation taxes on account thereof and

Shall have the power, in its discretion,

to deny or revoke any specific liquor li-

cense if it shall determine for good cause

that the granting or continuance of such

license would be contrary to public wel-

fare or morals. It shall be unlawful for

any person other than a licensee of said

board to manufacture, import or sell in-

toxicating liquors in this State. Until

the Legislature shall otherwise provide,

the privilege of keeping, buying, selling,

serving, and otherwise disposing of in-

toxicating liquors in bona fide hotels,

restaurants, cafes, cafeterias, railroad

dining or club cars, passenger ships, and

other public eating places, and in bona

fide clubs after such clubs have been

lawfully operated for not less than one

year, and the privilege of keeping,

44 Appendix

buying, selling, serving, and otherwise

disposing of beers on any premises open to

the general public shall be licensed and

regulated under the applicable provisions

of the so-called State Liquor Control Act,

California Statutes 1933, Chapter 658, in-

sofar as the same are not inconsistent

with the provisions hereof, and excepting

that the license fee to be charged bona

fide hotels, restaurants, cafes, cafe-

terias, railroad dining or club cars, pas-

senger ships, and other public eating

places, and any bona fide clubs after such

clubs have been lawfully operated for not

less than one year, for the privilege of

keeping, buying, selling, or otherwise

disposing of intoxicating liquors other

than beers and wines, shall be $250.00

per year, or $62.50 per quarter-annum for

seasonal business, subject to the power

of the State Board of Equalization to

change such fees.

The Legislature may authorize, sub-

ject to reasonable restrictions, the sale

in retail stores of liquor contained in

the original packages, where such liquor

is not to be consumed on the premises

where sold.

The Legislature shall provide for

apportioning the amounts collected for

license fees or occupation taxes under

the provisions hereof between the State

and the cities, counties and cities and

counties of the State, in such manner as

the Legislature may deem proper.

All constitutional provisions and

laws inconsistent with the provisions

hereof are hereby repealed. (Added Nov.8,

1932; amended Nov.6,1934.)

Appendix 45

CALIFORNIA STATUTES

CHAPTER 7. SUSPENSION AND REVOCATION

OF LICENSES

§24200. Grounds

The following are the grounds which

constitute a basis for the suspension or

***revocation of licenses:

(a) When the continuance of a license

would be contrary to public welfare or

morals; but proceedings under this section

upon this ground are not a limitation upon

the department's authority to proceed under

Article XX, Section 22, of the California

Constitution.

(b) Except as limited by***Chapter

11 (commencing with Section 24850) and

Chapter 12 (commencing with Section 25000)

of this division, the violation or the

causing or the permitting of a violation

by a licensee of this division, any rules

of the board adopted pursuant to Part 14

(commencing with Section 32001)of Division

2 of the Revenue and Taxation Code or any

rules of the department adopted pursuant

to the provisions of this division, or any

other penal provisions of law of this state

prohibiting or regulating the sale, ex-

posing for sale, use, possession, giving

away, adulteration, dilution, misbrand-

ing, or mislabeling of alcoholic beverages

or intoxicating liquors.

(c) The misrepresentation of a

material fact by *** an applicant in ob-

taining *** a license.

(d) The plea, verdict, or judgment

of guilty, or the plea of nolo contendere

46 Appendix

to any public offense involving moral

turpitude or under any federal law pro-

hibiting or regulating the sale, expos-

ing for sale, use, possession, or giving

away of alcoholic beverages or intoxi-

cating liquors or prohibiting the refil-

ling or rewse of distilled spirits con-

tainers charged against the licensee.

(e) Failure to correct objectionable

conditions constituting a nuisance with-

in a reasonable time after receipt of

notice to make such corrections from a

district attorney under Section 373a of

the Penal Code.

(Amended by Stats.1977,c.238,p.--§1.)

Appendix G 47

FOOTNOTES

he

§24200. Grounds. The following are

the grounds which constitute a basis for

the suspension or the revocation of li-

censes:

-.--(b) Except as limited by Chapters

11 and 12 of this division, the violation

or the causing or the permitting of a

violation by a licensee of this division,

any rules of the board adopted pursuant

to Part 14 of Division 2 of the Revenue

and Taxation Code of any rules of the

department adopted pursuant to the pro-

visions of this division, or any other

penal provisions of law of this State

prohibiting or regulating the sale,

exposing for sale, use, possession,

giving away, adulteration, dilution,

misbranding, or misgiving away, adul-

teration, dilution, misbranding, or

mislabelling of alcoholic beverages or

intoxicating liquors. ....

§266i. Pandering; punishment.

Any person who: (a) procures another

person for the purpose of prostitution;

or (b) by promises, threats, violence,

or by any device or scheme, causes,

induces, persuades or encourages ano-

ther person to become a prostitute; or

(c) procures for another person a

place as inmate in a house of prosti-

tution or as an inmate of any place in

which prostitution is encouraged or

allowed within this state; or (d) by

promises, threats, violence or by any

device or scheme, causes, induces,

persuades, or encourages an inmate of

48 Appendix

a house of prostitution, or any other place

in which prostitution is encouraged or

allowed, to remain therein as an inmate; or

(e) by fraud or artifice, or by duress of

person or goods, or by abuse of any posi-

tion of confidence or authority, procures

another person forthe purpose of prosti-

tution, or to enter any place in which

prostitution is encouraged or allowed with-

in this state, or to come into this state

or leave this state for the purpose of

prostitution; or (f) received or gives, or

agrees to receive or give, any money or

thing of value for procuring, or attempt-

ing to procure another person for the pur-

pose of prostitution, or to come into this

state or leave this state for the purpose

of prostitution, is guilty of pandering,

a felony, and is punishable by imprison-

ment in the state prison for not less

than one year nor more than 10 years.

Se §664. Attempts; punishment.

Every person who attempts to commit any

crime, but fails, or is prevented or in-

tercepted in the perpetration thereof, is

punishable, where no provision is made

by law for the punishment of such attempts

as follows:

1. Offense punishable by five

years or more. If the offense so attempt-

ed is punishable by imprisonment in the

state prison for five years, or more, or

by imprisonment in a county jail, the

person quilty of such attempt is punish-

able by imprisonment in the state prison,

or in a county jail, as the case may be,

for a term not exceeding one-half the

Appendix 49

longest term of imprisonment prescribed upon

a conviction of the offense so attempted;

provided however, that if the crime at-

tempted is one in,which there is no maximum

sentence set by law or in which the maxi-

mum sentence is life imprisonment or death,

the person guilty of such attempt shall be

punishable by imprisonment in the state

prison for a term of not more than 20

years.

2. Offense punishable by less than five

years. If the offense so attempted is

punishable by imprisonment in the state

prison for less than five years, the per-

son guilty of such attempt is punishable

by imprisonment in the county jail for not

more than one year.

3. Offense punishable by fine. If the

offense so attempted is punishable by fine,

the offender conficted of such attempt is

punishable by a fine not exceeding one-

half the largest fine which may be imposed

upon a conviction of the offense so attemp-

ted.

4. Offense punishable by imprisonment

and fine. If the offense so attempted

1s punishable by imprisonment and by a fine,

the offender convicted of such attempt may

be punished by both imprisonment and fine,

not exceeding one-half the longest term of

imprisonment and one-half the largest fine

which may be imposed upon a conviction of

the offense so attempted.

4. §647. Disorderly conduct.

Every person who commits any of the

50 Appendix

following acts shall be guilty of disor-

derly conduct, a misdemeanor:

--.-.(b) who solicits or who engaged in any

act of prostitution. As used in this sub-

division, "prostitution" includes any lewd

act between persons for money or other con-

Sideration. ....

5. "That a person seeking or holding a li-

cense has violated any law prohibiting con-

duct involving moral turpitude" has been

interpreted in California and in other

states to apply only to the individual li-

quor licensee and that such acts against

moral turpitude committed by an employee

cannot be imputed to the licensee unless

it has knowledge of or acquiesces in the

immoral act. H.D. Wallace & Associates,

Inc. v. Department of Alcoholic Beverage

Control, 271 Cal.App.2d 589: (1969),

Monsour v. North Carolina State Board of

Alcoholic Control, 5 N.C. App. 482, 168

S.E. 2d 490 (1969); Freud v. Davis, 64

N.J. Supra. 242, 165 A.2d 850 (1960).