WILKE HOLZHEISER INC v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL (1965)

Plaintiff Wilke & Holzheiser, Inc. appeals from four separate judgments denying writs of mandate in actions brought under section 1094.5 of the Code of Civil Procedure.

In cach of the four actions, the administrative proceedings sought to be reviewed involved the sale of alcoholic beverages at prices below fair trade prices as filed and published pursuant to section 24755 of the Business and Professions Code, as it existed prior to September 1961. The first action involved a 15-day suspension of the licenses of plaintiff's Minna and Market Street stores; the second action, a 15-day suspension of both licenses; the third, as to the Market Street store, an overall 165-day suspension, and as to the Minna Street store, indefinite suspension to be terminated on transfer of license; the final action, a decision that the license for each store be revoked.

Plaintiff first contends that in each of the four actions subject of this appeal, the trial court ought to have set aside the decisions of the Department and the Appeals Board and directed the Department to conduct further administrative hearings for the purpose of receiving evidence that the alcoholic beverages mentioned in the various accusations against plaintiff were not sold in fair and open competition.

Plaintiff concedes that it was only in the administrative proceeding subject of the fourth action that it attempted to introduce evidence for the purpose of disproving fair and open competition. However, plaintiff asserts that the administrative proceedings subject of the first three actions were all held prior to the decision in DeMartini v. Department of Alcoholic Beverage Control (1963) 215 Cal.App.2d 787, 30 Cal.Rptr. 668, and that its failure to offer such evidence was therefore excusable. Plaintiff reasons that since it did offer such evidence in the administrative proceedings held subsequent to the DeMartini decision and since the earlier proceedings were based upon ‘identical’ circumstances, it should now be afforded an opportunity to defend each of the accusations against it by disproving fair and open competition. This argument is wholly without merit. The DeMartini decision did not change the law. Plaintiff was clearly entitled, during each of such proceedings, to offer such evidence, and the fact that it did not do so provides no basis for furnishing it an opportunity to do so now.

With regard to the proceedings subject of the fourth action, plaintiff complains of a number of adverse rulings which occurred at a hearing held on January 4, 1961. Plaintiff first contends that the hearing officer improperly quashed a subpoena duces tecum whereby plaintiff sought to compel Norbert Falvey, a district supervisor for the department, to produce the following documents: ‘Records of complaints received or made, accusations filed, investigations made, and other action taken, by the Department * * * pertaining to marketing practices of distiller's, distiller's agents, wholesalers, importers and rectifiers dealing in the brand[s] of alcoholic beverages hereinafter specified, or any or all of them, during the period from December 15, 1950 to date hereof, including but not limited to the following marketing practices: 4. Giving secret rebates. 2. Giving free goods. 3. Making payments to retailers for advertising display or distribution service. 4. Giving of illegal advertising novelties. 5. Inducing retailers to overload by giving deep discounts. ,6. Giving extra discounts in excess of those posted with the Department. 7. Limiting discounts to large volume purchases. 8. Encouraging retailers to unload or sell below alleged ‘fair trade’ prices by giving long advance notice of price changes. 9. Making discounts conditional on short time payment of accounts. 10. Encouraging and participating with retailers in price cutting. 11. Discriminating between retailers as to foregoing practices and other marketing practices. 12. Any other trade restraints or collusion or conspiracy with respect to marketing practices.'

The record discloses that the hearing officer quashed the subpoena in its entirety only with respect to those brands of alcoholic beverages referred to in Count I of the accusations. Since Count I of both accusations were subsequently dismissed, the correctness of this portion of the ruling is moot. With regard to those matters pertaining to the other counts of the accusations against plaintiff, the hearing officer granted the motion to quash only with respect to those investigations made by the Department which had not resulted in the taking of any official action. This ruling was proper, inasmuch as these matters were privileged. (Code Civ.Proc., § 1881, subd. 5; Chronicle Pub. Co. v. Superior Court (1960) 54 Cal.2d 548, 564–575, 7 Cal.Rptr. 109, 354 P.2d 637.)

Plaintiff also asserts that the hearing officer improperly refused to allow it to examine Mr. Falvey with regard to his knowledge that secret rebates had been afforded retailers of the alcoholic beverages mentioned in the accusations and that the effect of such rebates was to encourage unfair competition by retailers. The record reveals that the Department objected to this line of questioning on the ground that that portion of plaintiff's subpoena which sought evidence of such practices in connection with the brands specified in Count I had been quashed and plaintiff ought not to be allowed to obtain the same information through Falvey's testimony. The Department further asserted that hearsay testimony of such practices in connection with the other counts of the accusations ought not to be admitted because plaintiff had already obtained, by means of its subpoena, documents constituting the best evidence of any such practices. The hearing officer sustained the objection.

The exclusion of hearsay testimony which would only have been cumulative of documentary evidence already subpoenaed by plaintiff constitutes a proper exercise of the hearing officer's discretion. In any event, such ruling obviously could not have resulted in prejudice to plaintiff.

Plaintiff next complains of the hearing officer's refusal to grant a continuance in order that plaintiff might obtain copies of press releases which had been issued by the Director of the Department in connection with disciplinary action taken against various licensees. We find no abuse of discretion in this refusal. Plaintiff's motion for a continuance was made one year after the accusations were filed and six months after the hearings had commenced. In addition, we consider it reasonable to assume that the information contained in such press releases would merely have been cumulative of the information which plaintiff had already obtained by its subpoena.

Plaintiff next asserts that the hearing officer erroneously excluded from evidence an article from a trade journal publication which contained excerpts from a speech given by the director of the Department in February 1960. Plaintiff asserts that during such speech, the director commented upon the fact that many licensees had sold below fair trade prices during the Christmas season and also expressed disapproval of the distributors' practice of giving deep discounts to retailers and thereby encouraging them to overstock and to sell at less than the fair trade price.

Hearsay evidence is admissible in an administrative hearing if it is relevant and if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs. (Gov.Code, § 11513, subd. (c); Mast v. State Board of Optometry (1956) 139 Cal.App.2d 78, 85, 293 P.2d 148.) We are satisfied that a speech containing vague references to unfair practices in connection with the sale of unspecified brands of alcoholic beverages was of questionable relevance and was clearly not the type of evidence upon which responsible persons are accustomed to rely in the conduct of serious affairs. Moreover, such evidence would at best have furnished slight corroboration for the documentary evidence already obtained through plaintiff's subpoena. Under such circumstances, the hearing officer's decision to exclude the evidence cannot be deemed an abuse of discretion.

Plaintiff next asserts that it ought to have been allowed to produce additional evidence of unfair competition which was brought to the court's attention by means of an affidavit filed in conjunction with plaintiff's motion for new trial. This argument is frivolous. The four actions subject of this appeal are all mandate proceedings brought pursuant to Code of Civil Procedure, section 1094.5. In actions of this nature, the plaintiff is not entitled to offer evidence which was not considered by the administrative agency. (Housman v. Board of Medical Examiners (1948) 84 Cal.App.2d 308, 313, 190 P.2d 653, 192 P.2d 45.)

Plaintiff next contends that enforcement of the fair trade contracts in issue violates the requirements of the Alcoholic Beverage Control Act because the alcoholic beverages subject of the various accusations against plaintiff were not in fair and open competition. This contention may be disposed of summarily for the reason that plaintiff has utterly failed to demonstrate a lack of fair and open competition with regard to any of the alcoholic beverages in question.

In the proceedings subject of the first three actions, the Department offered evidence that each of the brands of alcoholic beverages mentioned in the accusations were in fair and open competition. Plaintiff concedes that it offered no evidence in rebuttal.

In the proceedings subject of the fourth action, plaintiff did attempt to prove that the brands in question were not in fair and open competition. However, the Department offered evidence that such beverages were in fair and open competition and the hearing officer also took official notice of this fact. There is thus ample support for the Department's express findings that all of the alcoholic beverages in question were in fair and open competition.

Plaintiff next asserts that the evidence does not support the findings of proper publication of the retail prices of the alcoholic beverages because publication in a private trade journal is insufficient. We do not agree.

Plaintiff relies upon Government Code, section 6040, which provides that ‘[w]henever any official advertising, notice, resolution, order, or other matter of any nature whatsoever is required by law to be published in a newspaper, such publication shall be made only in a newspaper of general circulation.’ Government Code, section 6001, provides that ‘[a] newspaper devoted to the interests, or published for the entertainment or instruction of a particular class, profession, trade, calling, race, or denomination, or for any number thereof, when the avowed purpose is to entertain or instruct such classes, is not a newspaper of general circulation.’

We have no doubt that section 6040 is inapplicable in the instant case because the Alcoholic Beverage Control Act contains no requirement of publication in a newspaper of general circulation. At the time plaintiff committed the acts subject of the various accusations, section 24755 contained no requirement of publication (Stats.1953, ch. 152, p. 1001) and Rule 99, subdivision (d), required publication ‘in a trade journal or industry price book.’ (See Cal.Admin.Code, tit. 4, § 99 subd. (d), as it existed prior to 1961 repeal and repromulgation.)

Section 24755 was amended in 1961 so as to require that any person filing a minimum retail price schedule ‘shall cause such schedule to be published in a manner which will result in each retailer affected by such schedule being advised of the contents of such schedule prior to the effective date thereof.’ (Stats.1961, ch. 635, p. 1836.) Subdivision (k) of Rule 99, which was repromulgated in 1961, has continued to require publication in a trade journal of general circulation in the trading areas affected. (Cal.Admin.Code, tit. 4, § 99 subd. (k).)

In the light of the foregoing, there can be no dispute that publication in a newspaper of general circulation is not now, and has not been at any time relevant to the instant proceedings, a requirement imposed either by statute or by rule of the Department.

Plaintiff also complains of the fact that in certain instances publication was shown to have been made by a person other than the party filing the minimum retail price schedule. This argument is meritless since section 24755, if assumed to be applicable in its post-1961 form, requires only that the person filing such schedule ‘shall cause’ such schedule to be published.

Plaintiff also suggests that the Department ought to have offered a later edition of the ‘Beverage Industry News' in proving publication of the minimum retail price established for one of the brands of alcoholic beverages in question. However, section 24755 only requires publication of the filed prices prior to their effective date and does not require continual publication thereafter.

Plaintiff's contention that the fixing of prices by brand owners is an unconstitutional delegation of legislative power was rejected in Allied Properties v. Dept. of Alcoholic Beverage Control (1959) 53 Cal.2d 141, 149–152, 346 P.2d 737.)

Plaintiff's final contention is that departmental re-examination of all of the various proceedings against plaintiff has become necessary as the result of the recent enactment of section 24755.1, Business and Professions Code (Stats.1965, ch. 742, § 1). Section 24755.1, which became effective September 17, 1965, provides: ‘No criminal penalties shall be imposed on any licensee for a violation of the provisions of Section 24755 nor shall the license of a licensee be suspended or revoked for a violation of such section.

‘The penalties imposed by the department for violations of such section shall be confined solely to monetary penalties for each violation committed during 36 consecutive months and shall be in the following amounts:

‘For the first violation, two hundred fifty dollars ($250); for the second and subsequent violations, one thousand dollars ($1,000). The penalties herein provided shall be due and payable by the licensee to the General Fund not later than 30 days from the date the department rendered its decision imposing the penalty. Should the licensee appeal the decision of the department, he shall either pay the amount of the penalty under protest or execute a surety bond in the amount of the penalty. The surety bond shall be executed by the licensee as principal and a corporation such as is mentioned in Section 1056 of the Code of Civil Procedure in this state as surety, payable to the General Fund at such time as the final decision is rendered affirming the department's decision. If the final decision should reverse the decision of the department, the penalty paid by the licensee under protest shall be returned to him with interest at the rate of 6 percent per annum or the surety bond executed by the licensee terminated. The license of a licensee against whom the department has imposed the monetary penalty and who has refused to pay the penalty for each violation under protest or execute a surety bond as herein provided shall be automatically suspended and shall remain suspended until such time as the licensee either pays the penalty under protest or executes the surety bond as herein provided.

‘Each sale in violation of Section 24755 shall constitute a separate violation.’

Plaintiff, in support of its contention that the new statute must be deemed ‘retroactive as applied to pending cases,’ relies upon Hamm v. City of Rock Hill (1964), 379 U.S. 306, 85 S.Ct. 384, 13 L.Ed.2d 300, and Blow v. North Carolina (1965), 379 U.S. 684, 85 S.Ct. 635, 13 L.Ed.2d 603. In those cases, the Supreme Court held that state criminal trespass actions based upon peaceful attempts to obtain civil rights should abate when, prior to the finalization of such criminal actions, the Civil Rights Act of 1964 had become effective and had made the defendants' prior unlawful actions lawful and in no way punishable by either federal or state action.

The facts of the instant case clearly do not present any question as to the effect of newly enacted section 24755.1 upon any pending criminal proceedings based upon a violation of section 24755. Plaintiff is seeking only to take advantage of that language of section 24755.1 which substitutes monetary penalties in place of suspension or revocation of a license. Under such circumstances, the Hamm and Blow cases are not controlling and section 24755.1 is subject to ordinary rules of statutory construction.

Plaintiff has also cited to us many authorities from other jurisdictions, together with some from California, which it contends supports its position that this cause should be remanded. We have considered them all and are convinced that we need not go outside our own state for authority to determine the problem presented to us. We find that the courts of this state have left unsettled the question of whether a change in the applicable law which occurs during the pendency of an appeal is controlling of the appellate disposition of the cause. In Tulare Irr. Dist. v. Lindsay-Strathmore Irr. Dist. (1935) 3 Cal.2d 489, 45 P.2d 972, plaintiffs sought to quiet their title to certain surface and underground waters and to enjoin defendant from diverting such waters. Plaintiffs prevailed in the trail court, which properly applied the riparian doctrine then in effect, but said doctrine was substantially modified by a constitutional amendment pending appeal. The appellate court held that the amendment was controlling of the parties' rights because the action involved an injunctive decree which operated in the future. However, the court commented upon the general state of the law as follows: ‘Aside from questions presented when rights are vested in reliance on the lower court's decision, and aside from questions presented where the new statute expressly states whether it is or is not to apply retrospectively, questions which are not here presented, on the main question as to whethed the cause should be disposed of according to the law in effect at the time judgment was rendered, or to the law in effect at the time the cause is disposed of on appeal, there is a sharp diversion of authority. [Citations.] California, apparently, has cases both ways. * * * Whether these cases are in conflict or can be reconciled, and what the better rule may be in cases of appeals generally, need not now be decided. * * * The present action involves an appeal from an injunction decree, which, by its very nature, acts on the rights of these parties in the future. * * * For this reason, whatever may be the law applicable to appeals generally, the rule is well settled that on appeals involving injunction decrees, the law in effect when the appellate court renders its opinion must be applied.’ (Pp. 527–528, 45 P.2d p. 987.)

In the later case of Complete Service Bureau v. San Diego County Med. Soc. (1954) 43 Cal.2d 201, 207, 272 P.2d 497, which was also an injunctive proceeding, the court applied the rule of the Tulare case but again left unanswered the question of whether a change in the law pending appeal was to be deemed controlling in actions which were not injunctive in nature.

The most recent case dealing with the question is Manquero v. Turlock etc. School Dist. (1964) 227 Cal.App.2d 131, 38 Cal.Rptr. 470. In that case, the trial court found that plaintiff's petition to present a personal injury claim against defendant school district was barred by former section 716 of the Government Code, since she had not filed such claim within the 100-day period therein provided for and had not been physically or mentally incapacitated during all of such time. The judgment was reversed on appeal on the ground that plaintiff's rights ought to have been determined under section 912 of the Government Code, a reenactment of section 716 which became effective while the case was pending before the lower court and which authorized the filing of a claim after the expiration of the 100-day period if the failure to file such claim was due to mistake, inadvertence, surprise or excusable neglect. The court commented upon the decisions in Tulare Irr. Dist. v. Lindsay-Strathmore Irr. Dist., supra, and Complete Service Bureau v. San Diego County Med. Soc., supra, and stated, ‘It appears that rather than attempt a comprehensive rule governing consideration of changes in applicable law during pendency of an appeal, the Supreme Court has left the question to be determined by inclusion and exclusion according to the circumstances in particular cases.’ (227 Cal.App.2d p. 136, 38 Cal.Rptr. p. 473.) In reaching its decision to apply newly enacted section 912, the court stressed the facts that the statute had become effective prior to judgment in the trial court and that it preserved rather than defeated the plaintiff's remedy. The court also found a manifestation of legislative intent to protect persons having claims against a governmental agency which arose prior to the enactment of section 912 but which were not tolled by a statute of limitations.

The four actions subject of the instant appeal were not injunctive in nature nor intended to operate as an adjudication of the parties' future rights. Plaintiff merely sought and obtained a review of certain administrative proceedings before the Department and the Appeals Board. Section 24755.1 did not become effective prior to the rendition of the judgments appealed from and contains no language indicative of a legislative intent that it be applied retrospectively. The statute is totally dissimilar from the one held applicable in the Manquero case and obviously does not relate to the preservation of a plaintiff's civil remedies. To the contrary, a careful reading of section 24755.1 discloses that it is designed to put into effect a more practical method of penalizing licensees who violate section 24755. The new section thus substitutes monetary fines in place of either criminal penalties or the suspension or revocation of licenses and also requires that the licensee pay such penalties within 30 days of the Department's decision unless, in the event of an appeal, he should elect to execute a surety bond in lieu thereof. It is apparent that the portions of the statute which authorize the Department to impose a monetary fine and which require the execution of a bond pending appeal are, in their very nature, prospective in operation. It is an established canon of interpretation that statutes are not to be given a retrospective operation unless it is clearly made to appear that such was the legislative intent. (DiGenova v. State Board of Education (1962) 57 Cal.2d 167, 172–173, 18 Cal.Rptr. 369, 367 P.2d 865; State of California v. Ind. Acc. Com. (1957) 48 Cal.2d 355, 361, 362, 310 P.2d 1; Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 393, 182 P.2d 159.) Since section 24755.1 contains no language indicating that any of its other provisions are to be given retrospective effect, it would appear that the entire statute ought to be held prospective only in operation. To hold otherwise would, in the present proceeding, result in the remand of charges which have been pending against plaintiff for as long as 11 years but as to which it has thus far avoided the imposition of any penalty. The Legislature obviously could not have intended any such application of a statute designed to provide a more efficient method of enforcing section 24755.

The judgments and each of them are affirmed.

SHOEMAKER, Presiding Justice.

AGEE and TAYLOR, JJ., concur.