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Overview:

The Alcoholic Beverage Control Appeals Board is an administrative body that reviews the decisions of the Department of Alcoholic Beverage Control, which licenses and regulates alcohol manufacturing, distribution and sales throughout the state. The department regulates bars, restaurants, and other establishments that manufacture, distribute, or sell alcoholic drinks, as well as the employees of those businesses. When a business violates one of the state regulations, the department may fine or penalize the business, including the suspension or removal of its license. The business may then appeal the decision of the department to the appeals board. Before a case reaches the board, an accused party can ask for a hearing in front of an administrative law judge. The board consists of three members, each from a different county, appointed by the governor and confirmed by the senate. The board is in the new Business, Consumer Services and Housing Agency by mid-2013.

 

more
History:

The Alcoholic Beverage Control Appeals Board was established by an amendment to the state Constitution in 1954.  The board is chartered under California’s constitution in Article XX, section 22 and Business and Professions Code Sections 23084 and 23085.In 1967, citing inexplicable delays in Superior Court reviews of board decisions, the state legislature adopted a speedier procedure. All appeals of the board were required to bypass the Superior Court and go directly to the Court of Appeals or the state Supreme Court. Although it was argued that this law unconstitutionally divested the Superior Courts of jurisdiction, the law was upheld.

In 1987, the Court of Appeal ruled that the appeals board had constitutional and statutory authority to review all decisions of the Department of Alcoholic Beverage Control and was not limited to review of “quasi-judicial” decisions following a formal hearing. The board has authority to review even purely administrative decisions issued by the department.

 

Administrative Law (by Wiley W. Manuel, Cal Law Trends and Developments) (pdf)

Court of Last Resort (by Ralph B. Saltsman with Stephen Warren Solomon and Stephen A. Jamieson, SSJ Law)

more
What it Does:

Businesses accused of a violation of California’s rules by Department of Alcoholic Beverage Control may file an appeal of the decision before the Alcoholic Beverage Control Appeals Board within 40 days of the department’s decision or within 10 days if the decision is to take effect immediately. The appeal allows the firm to plead its case before the panel and perhaps have the decision reversed. The panel, in its review of the department’s decisions, considers whether the department acted in a lawful manner, within the bounds of its jurisdiction, and whether the decision is supported by the evidence presented. The board only looks at evidence previously presented; no new evidence may be entered, although the board can decide that the department overlooked or improperly excluded evidence, and advise the department to take a second look.

Any decision of the appeals board may be appealed in a regular court of law, by either the defendant or the department, or by the board’s director.

The board can determine when the department has violated its own rules. For example, in sales-to-minors decoy cases, the appeals board has repeatedly reversed decisions by the department based upon violations of the department’s Rule 141. Rule 141 requires, among other things, that the decoy display the appearance which could generally be expected of a person under 20 years of age under the actual circumstances presented to the seller at the time of the alleged offense.

 

ABC Appeals Board (Official Board Homepage)

Decisions of the Board (Links to Case pdfs)

more
Where Does the Money Go:

The 2011-12 budget for the board of a little more than $1 million is devoted to personnel and operating costs. Just over 70%, $721,000, is used for payroll and benefits; while the remainder is spent on overhead, such as rent and equipment. The budget request represents a 6% increase over the previous year.

 

3-Year Budget (Governor’s Proposal for FY 2011-12) (pdf)

more
Controversies:

Political Patronage

The Alcoholic Beverage Control Appeals Board, like many political entities, is often used for political patronage, distributing the spoils to the victorious. While salaries on the board are low, just $25,500 per year, the titles are résumé-worthy, the positions require less than full time effort, and the public visibility low and generally without conflict. When used as patronage, the board serves as a temporary holding facility, until a better position becomes available.

The list of governors, who in the last year of a term, have used a seat on the board as a way of rewarding supporters is long. Eugene V. Lipp, appointed by Gov. Ronald Reagan, served from 1971 to 1978 before moving on to Washington D.C. with Reagan when he was elected to the presidency. Gov. Jerry Brown, who succeeded Reagan in 1975, selected Peter Finnegan for the board. He is expected to join Brown as he returns to Sacramento; although not on the appeals board. “On election night, I saw Jerry and he told me, ‘Call me,’” Finnegan said, according to an article in the Sacramento Bee. Gov. Pete Wilson brought longtime state senator Ed Davis, from Ventura County, back to the state capitol in 1993 after Davis retired from politics, by naming him to the appeals board.

Most recently, in one of his last acts in office, Gov. Arnold Schwarzenegger appointed Michael A. Prosio, his legislative affairs secretary, to the board in January 2011.

 

Too Much Cooperation

In 2006, the state Supreme Court reversed decisions by the Department of Alcoholic Beverage Control in three cases which set a precedent for all agencies that employ internal legal teams. In all three cases, an administrative judge had dismissed the department's suspension of liquor licenses because of insufficient proof of violations. The department's in-house prosecutor then filed a routine report about the hearing with his boss, who rejected the judge's decision and reinstated the suspensions.

This decision was taken to the board of appeals, which rejected the department's move because communication between the prosecutor and his boss violated the California Administrative Procedure Act, which limits contact between internal agency prosecutors and superiors who make final decisions on cases.

The Court of Appeal and the Supreme Court agreed that prosecutors and superiors could communicate about cases, but must make those communications available to licensees and give them a chance to respond.

 

Good Fences Make Good Regulators (by Mike McKee, The Recorder)

 

Anti-Trust Ruling

While most of the appeals board’s work and decisions have little impact beyond the immediate concerns of the parties involved, one case has had wide ranging effects. In the 1978 case of Rice vs. Alcoholic Beverage Control Appeals Board, the Alcoholic  Beverage Control Department and the appeals board fought a court battle over whether the state had the right to restrict competition by establishing price controls on liquor, under California’s fair trade law.

In the landmark case, the California Supreme Court confirmed the appeals board’s decision against the Alcoholic Beverage Control Department, which had suspended the license of Rice, a small retailer, for violating state liquor laws. Rice had sold liquor to state undercover agents at below market prices. California’s fair trade laws required liquor dealers not to sell their wares below certain prices. The reasoning was that lower prices would encourage competition and therefore greater alcohol consumption, and higher prices fostered temperance in the public. Rice appealed the revocation of the license to the appeals board, and the board ruled in his favor, finding that the price guidelines were a violation of the 1890 federal Sherman Anti-Trust Act’s policy of unrestricted competition. The department went to court to have the appeals board’s ruling overturned and obtained a lower court ruling in its favor. But the California Supreme Court ruled in favor of the appeals board, and the state’s control over the pricing of alcohol was removed, and the fair trade laws were struck down as a violation of the anti-trust act.

more
Debate:

Underage Decoys

In 1994, the state Supreme Court, in a case involving the Alcoholic Beverage Control Appeals Board, ruled that the use of underage decoys to enforce laws against unlawful sales to minors was legal. The court said that the use of minor decoys was not entrapment and did not violate due process requirements. Since the Supreme Court ruling, more than 100 law enforcement agencies have used the decoy program. When used on a regular basis, the percentage of licensees selling to minors drops dramatically.

State regulations that took effect January 2, 1996, require that the decoy be less than 20 years of age and look it. The Department of Alcoholic Beverage Control issues liquor licenses, investigates violations and penalizes stores found guilty of selling to minors, but the actual operations are carried out by local police. Licensees caught in a sting often end up taking their case to the appeals board.

Although the Supreme Court has ruled it is not entrapment to use decoys, licensees (and lawyers who represent them) continue to make the case that decoy behavior goes beyond legal bounds. John Hinman, a San Francisco lawyer, argued that “police use old-appearing decoys. Decoys dress up in suits, wear make-up, take briefcases....It's pure entrapment." Although there are established guidelines for decoys, Hinman said, “anyone can make a mistake.”

Hinman said the decoy stings, in combination with the three-strike rule instituted in 1995 that automatically revokes a seller's license after a third violation in three years,  treats owners too harshly.  "Decoys are the most abused program in the state," he said. "They put people out of business on a regular basis. The program is a joke."

 

Minor Decoy Program (Official ABC website)

Shoulder Tap Program (Official ABC website)

more
Former Directors:

Ed Davis 

Easily the most colorful of the former members of the appeals board was Ed Davis, best remembered as chief of the Los Angeles Police Department (LAPD) from 1969 to 1978, a particularly turbulent era.  The LAPD under his rule pursued and arrested the Manson “family” for the Tate/La Bianca murders in 1969, and engaged in live televised shootouts with the radical Symbionese Liberation Army.  Davis was also credited with several innovations in police work, such as the creation of SWAT teams. Chief Davis was a tough-talking no-nonsense cop, known for his colorful language and blunt approach. Critics called him “Crazy Ed,” and admirers “Hang ’em high Ed.” He earned the titles with proposals such as the one he made concerning airline hijackers: “I recommend we have a portable gallows, and after we have the death penalty back in, we conduct a rapid trial for a hijacker out there and hang him with due process out there at the airport.” At the time of his appointment in 1993 by Governor. Pete Wilson, Davis had retired from an active political life, during which he ran and lost races for governor and the U.S. Senate, and served in the state senate for a number of years.

 

Ed Davis Bio (Wikipedia)

more
Leave a comment
Founded: 1954
Annual Budget: $1.03 million (Proposed FY 2012-2013)
Employees: 8
Alcoholic Beverage Control Appeals Board
Armendariz, Fred
Chairman

Fred Armendariz graduated from Mater Dei High School in 1979 and holds a Bachelor of Arts degree in political science from the University of Southern California. In 1989, he founded Advanced Business Management, an Irvine-based office equipment distributor that specialized in high-speed laser and digital imaging machines. In 1998, Armendariz founded Digikon USA, a nationwide sales and marketing group that assists the auto, financial and law enforcement industries with the disposal of returned, seized and repossessed assets. After George W. Bush was elected, Small Business Adinistration administrator Hector Barreto chose Armendariz to be an associate deputy administrator of the Small Business Administration, in charge of the Office of Government Contracting and Business Development. Armendariz resigned in the fall of 2003 and went into the used luxury car business. In 2005 he was appointed to the appeals board by Gov. Arnold Schwarzenegger.

Armendariz is also on the boards of the Orange County Lincoln Club, for which he was chairman of the Hispanic-Outreach Program and the Business Credit Advisory Council. He contributed $2,000 to the 2004 Bush-Cheney campaign, $1,500 to Republican Assemblyman Nathan Fletcher’s campaign in 2010, and $199 to Republican Diane Harkley’s Assembly campaign.

He and his wife, Amy, have three children.

 

Board Members (Official appeals board site)

more
Bookmark and Share
Overview:

The Alcoholic Beverage Control Appeals Board is an administrative body that reviews the decisions of the Department of Alcoholic Beverage Control, which licenses and regulates alcohol manufacturing, distribution and sales throughout the state. The department regulates bars, restaurants, and other establishments that manufacture, distribute, or sell alcoholic drinks, as well as the employees of those businesses. When a business violates one of the state regulations, the department may fine or penalize the business, including the suspension or removal of its license. The business may then appeal the decision of the department to the appeals board. Before a case reaches the board, an accused party can ask for a hearing in front of an administrative law judge. The board consists of three members, each from a different county, appointed by the governor and confirmed by the senate. The board is in the new Business, Consumer Services and Housing Agency by mid-2013.

 

more
History:

The Alcoholic Beverage Control Appeals Board was established by an amendment to the state Constitution in 1954.  The board is chartered under California’s constitution in Article XX, section 22 and Business and Professions Code Sections 23084 and 23085.In 1967, citing inexplicable delays in Superior Court reviews of board decisions, the state legislature adopted a speedier procedure. All appeals of the board were required to bypass the Superior Court and go directly to the Court of Appeals or the state Supreme Court. Although it was argued that this law unconstitutionally divested the Superior Courts of jurisdiction, the law was upheld.

In 1987, the Court of Appeal ruled that the appeals board had constitutional and statutory authority to review all decisions of the Department of Alcoholic Beverage Control and was not limited to review of “quasi-judicial” decisions following a formal hearing. The board has authority to review even purely administrative decisions issued by the department.

 

Administrative Law (by Wiley W. Manuel, Cal Law Trends and Developments) (pdf)

Court of Last Resort (by Ralph B. Saltsman with Stephen Warren Solomon and Stephen A. Jamieson, SSJ Law)

more
What it Does:

Businesses accused of a violation of California’s rules by Department of Alcoholic Beverage Control may file an appeal of the decision before the Alcoholic Beverage Control Appeals Board within 40 days of the department’s decision or within 10 days if the decision is to take effect immediately. The appeal allows the firm to plead its case before the panel and perhaps have the decision reversed. The panel, in its review of the department’s decisions, considers whether the department acted in a lawful manner, within the bounds of its jurisdiction, and whether the decision is supported by the evidence presented. The board only looks at evidence previously presented; no new evidence may be entered, although the board can decide that the department overlooked or improperly excluded evidence, and advise the department to take a second look.

Any decision of the appeals board may be appealed in a regular court of law, by either the defendant or the department, or by the board’s director.

The board can determine when the department has violated its own rules. For example, in sales-to-minors decoy cases, the appeals board has repeatedly reversed decisions by the department based upon violations of the department’s Rule 141. Rule 141 requires, among other things, that the decoy display the appearance which could generally be expected of a person under 20 years of age under the actual circumstances presented to the seller at the time of the alleged offense.

 

ABC Appeals Board (Official Board Homepage)

Decisions of the Board (Links to Case pdfs)

more
Where Does the Money Go:

The 2011-12 budget for the board of a little more than $1 million is devoted to personnel and operating costs. Just over 70%, $721,000, is used for payroll and benefits; while the remainder is spent on overhead, such as rent and equipment. The budget request represents a 6% increase over the previous year.

 

3-Year Budget (Governor’s Proposal for FY 2011-12) (pdf)

more
Controversies:

Political Patronage

The Alcoholic Beverage Control Appeals Board, like many political entities, is often used for political patronage, distributing the spoils to the victorious. While salaries on the board are low, just $25,500 per year, the titles are résumé-worthy, the positions require less than full time effort, and the public visibility low and generally without conflict. When used as patronage, the board serves as a temporary holding facility, until a better position becomes available.

The list of governors, who in the last year of a term, have used a seat on the board as a way of rewarding supporters is long. Eugene V. Lipp, appointed by Gov. Ronald Reagan, served from 1971 to 1978 before moving on to Washington D.C. with Reagan when he was elected to the presidency. Gov. Jerry Brown, who succeeded Reagan in 1975, selected Peter Finnegan for the board. He is expected to join Brown as he returns to Sacramento; although not on the appeals board. “On election night, I saw Jerry and he told me, ‘Call me,’” Finnegan said, according to an article in the Sacramento Bee. Gov. Pete Wilson brought longtime state senator Ed Davis, from Ventura County, back to the state capitol in 1993 after Davis retired from politics, by naming him to the appeals board.

Most recently, in one of his last acts in office, Gov. Arnold Schwarzenegger appointed Michael A. Prosio, his legislative affairs secretary, to the board in January 2011.

 

Too Much Cooperation

In 2006, the state Supreme Court reversed decisions by the Department of Alcoholic Beverage Control in three cases which set a precedent for all agencies that employ internal legal teams. In all three cases, an administrative judge had dismissed the department's suspension of liquor licenses because of insufficient proof of violations. The department's in-house prosecutor then filed a routine report about the hearing with his boss, who rejected the judge's decision and reinstated the suspensions.

This decision was taken to the board of appeals, which rejected the department's move because communication between the prosecutor and his boss violated the California Administrative Procedure Act, which limits contact between internal agency prosecutors and superiors who make final decisions on cases.

The Court of Appeal and the Supreme Court agreed that prosecutors and superiors could communicate about cases, but must make those communications available to licensees and give them a chance to respond.

 

Good Fences Make Good Regulators (by Mike McKee, The Recorder)

 

Anti-Trust Ruling

While most of the appeals board’s work and decisions have little impact beyond the immediate concerns of the parties involved, one case has had wide ranging effects. In the 1978 case of Rice vs. Alcoholic Beverage Control Appeals Board, the Alcoholic  Beverage Control Department and the appeals board fought a court battle over whether the state had the right to restrict competition by establishing price controls on liquor, under California’s fair trade law.

In the landmark case, the California Supreme Court confirmed the appeals board’s decision against the Alcoholic Beverage Control Department, which had suspended the license of Rice, a small retailer, for violating state liquor laws. Rice had sold liquor to state undercover agents at below market prices. California’s fair trade laws required liquor dealers not to sell their wares below certain prices. The reasoning was that lower prices would encourage competition and therefore greater alcohol consumption, and higher prices fostered temperance in the public. Rice appealed the revocation of the license to the appeals board, and the board ruled in his favor, finding that the price guidelines were a violation of the 1890 federal Sherman Anti-Trust Act’s policy of unrestricted competition. The department went to court to have the appeals board’s ruling overturned and obtained a lower court ruling in its favor. But the California Supreme Court ruled in favor of the appeals board, and the state’s control over the pricing of alcohol was removed, and the fair trade laws were struck down as a violation of the anti-trust act.

more
Debate:

Underage Decoys

In 1994, the state Supreme Court, in a case involving the Alcoholic Beverage Control Appeals Board, ruled that the use of underage decoys to enforce laws against unlawful sales to minors was legal. The court said that the use of minor decoys was not entrapment and did not violate due process requirements. Since the Supreme Court ruling, more than 100 law enforcement agencies have used the decoy program. When used on a regular basis, the percentage of licensees selling to minors drops dramatically.

State regulations that took effect January 2, 1996, require that the decoy be less than 20 years of age and look it. The Department of Alcoholic Beverage Control issues liquor licenses, investigates violations and penalizes stores found guilty of selling to minors, but the actual operations are carried out by local police. Licensees caught in a sting often end up taking their case to the appeals board.

Although the Supreme Court has ruled it is not entrapment to use decoys, licensees (and lawyers who represent them) continue to make the case that decoy behavior goes beyond legal bounds. John Hinman, a San Francisco lawyer, argued that “police use old-appearing decoys. Decoys dress up in suits, wear make-up, take briefcases....It's pure entrapment." Although there are established guidelines for decoys, Hinman said, “anyone can make a mistake.”

Hinman said the decoy stings, in combination with the three-strike rule instituted in 1995 that automatically revokes a seller's license after a third violation in three years,  treats owners too harshly.  "Decoys are the most abused program in the state," he said. "They put people out of business on a regular basis. The program is a joke."

 

Minor Decoy Program (Official ABC website)

Shoulder Tap Program (Official ABC website)

more
Former Directors:

Ed Davis 

Easily the most colorful of the former members of the appeals board was Ed Davis, best remembered as chief of the Los Angeles Police Department (LAPD) from 1969 to 1978, a particularly turbulent era.  The LAPD under his rule pursued and arrested the Manson “family” for the Tate/La Bianca murders in 1969, and engaged in live televised shootouts with the radical Symbionese Liberation Army.  Davis was also credited with several innovations in police work, such as the creation of SWAT teams. Chief Davis was a tough-talking no-nonsense cop, known for his colorful language and blunt approach. Critics called him “Crazy Ed,” and admirers “Hang ’em high Ed.” He earned the titles with proposals such as the one he made concerning airline hijackers: “I recommend we have a portable gallows, and after we have the death penalty back in, we conduct a rapid trial for a hijacker out there and hang him with due process out there at the airport.” At the time of his appointment in 1993 by Governor. Pete Wilson, Davis had retired from an active political life, during which he ran and lost races for governor and the U.S. Senate, and served in the state senate for a number of years.

 

Ed Davis Bio (Wikipedia)

more
Leave a comment
Founded: 1954
Annual Budget: $1.03 million (Proposed FY 2012-2013)
Employees: 8
Alcoholic Beverage Control Appeals Board
Armendariz, Fred
Chairman

Fred Armendariz graduated from Mater Dei High School in 1979 and holds a Bachelor of Arts degree in political science from the University of Southern California. In 1989, he founded Advanced Business Management, an Irvine-based office equipment distributor that specialized in high-speed laser and digital imaging machines. In 1998, Armendariz founded Digikon USA, a nationwide sales and marketing group that assists the auto, financial and law enforcement industries with the disposal of returned, seized and repossessed assets. After George W. Bush was elected, Small Business Adinistration administrator Hector Barreto chose Armendariz to be an associate deputy administrator of the Small Business Administration, in charge of the Office of Government Contracting and Business Development. Armendariz resigned in the fall of 2003 and went into the used luxury car business. In 2005 he was appointed to the appeals board by Gov. Arnold Schwarzenegger.

Armendariz is also on the boards of the Orange County Lincoln Club, for which he was chairman of the Hispanic-Outreach Program and the Business Credit Advisory Council. He contributed $2,000 to the 2004 Bush-Cheney campaign, $1,500 to Republican Assemblyman Nathan Fletcher’s campaign in 2010, and $199 to Republican Diane Harkley’s Assembly campaign.

He and his wife, Amy, have three children.

 

Board Members (Official appeals board site)

more