Malt Beverage Distributors Ass'n v. Pennsylvania Liquor Control Board ( 2015 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Malt Beverage Distributors :
Association, Gabler’s Beverage :
Distributor, Inc. and PKD, Inc., :
Petitioners :
: No. 1352 C.D. 2014
v. :
: Argued: June 15, 2015
Pennsylvania Liquor Control Board, :
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION BY
JUDGE McCULLOUGH FILED: July 31, 2015
Malt Beverage Distributors Association (MBDA), Gabler’s Beverage
Distributor, Inc. (Gabler’s), and PKD, Inc., (collectively, Petitioners) petition for
review of the July 17, 2014 order of the Pennsylvania Liquor Control Board (Board),
which approved Ohio Springs, Inc.’s t/a Sheetz (Applicant) application for
intermunicipal double transfer of Restaurant Liquor License No. R-19377 (License).
Facts/Procedural History
On July 30, 2012, Applicant filed a prior approval application for
intermunicipal double transfer1 of the License from Ruby Tuesday to Applicant’s
1
A “double transfer” is a term used by the Board to refer to a transfer in both ownership and
location.
restaurant located at 359 East King Street, Shippensburg, Pennsylvania under section
404 of the Liquor Code (Code).2 Applicant’s proposed licensed restaurant presently
includes: a 32’x18’ serving area that will accommodate 38 patrons; 2 serving areas,
80’x37’ and 10’x6’, with no seating for patrons; 2 kitchen areas measuring 30’x23’
and 58’x12’; a 9’x10’ office area; and 7 storage areas, ranging from 22’x38’ to 7’x7’.
(Board’s Findings of Fact Nos. 1, 3.)
At the same site, Sheetz, Inc., operates a convenience store and fuel
pumps. Both the restaurant and the convenience store/fuel station operate under the
trade name “Sheetz Convenience Store.” (Reproduced Record (R.R.) at 111a-12a.)
On July 17, 2012, the Borough of Shippensburg (Borough) adopted
Resolution No. 12-015, approving the proposed intermunicipal transfer of the License
into the Borough. The Board’s Bureau of Licensing informed Applicant that a
hearing would be held regarding the application on March 18-19, 2014. (Board’s
Findings of Fact Nos. 8-9.)
At the hearing,3 Timothy Lamark (Lamark), a Board licensing
supervisor, testified that the property at 359 East King Street has been subdivided into
two condominium units with two separate lease agreements. Lamark stated that there
is a four-foot opening in a wall that connects the proposed licensed restaurant to the
unlicensed convenience store but that the submitted site plan does not distinguish
2
Act of April 12, 1951, P.L. 90, as amended, 47 P.S. §4-404.
3
The Board granted standing as intervenors in the instant matter to MBDA, Gabler’s, and
PKD, Inc. The Board denied intervenor standing to Alvin Oberholtzer, Sharon Hershey, Lewis
Deardorff, Luke and Lois Martin, John Mummau, James Andrews, and Terry Helm. The Board
granted standing as protestants to Jaye Alleman and the Civic Club of Shippensburg. Standing has
not been challenged by any party on appeal to this Court.
2
them and refers to the entire premises as Sheetz Store #70.4 He testified that 359 East
King Street is the same address for both premises. (R.R. at 54a, 58a, 63a, 65a.)
Lamark further testified that liquid fuels are sold at the unlicensed
premises. Lamark stated that the distance between the restaurant and the fuel pumps
is 80 feet, which includes a speed bump, a tapered curb, a front concrete area, a patio
area, and a parking lot. Lamark stated that the restaurant has no outdoor serving area,
but there is an outdoor eating area that restaurant patrons may use. (R.R. at 54a, 60a-
61a, 64a, 67a.)
John Campbell (Campbell), the regional director of operations for
Sheetz, Inc., testified that there are two separate businesses at the 359 East King
Street location, a convenience store and a restaurant. Campbell stated that Applicant
operates the restaurant, and Sheetz, Inc., operates the convenience store and fuel
pumps. He said that Applicant does not own the property and that there are two
separate lease agreements; one for the location of the convenience store and one for
the location of the restaurant. Campbell stated that the restaurant would be separated
from the convenience store by an eight-foot-high wall with a four-foot-wide opening.
Campbell acknowledged that the restaurant, the convenience store, and the fuel
pumps are all operating under the trade name “Sheetz Convenience Store.” (R.R. at
111a-12a, 124a.)
Campbell testified that the restaurant has its own entrance and a dining
area that seats 37 patrons. He said that Applicant is prepared to increase its staff and
have signs indicating the separate entities of the restaurant and the convenience store
so that merchandise will not be intermingled. Campbell noted that a steel fence and a
4
Under section 468(e) of the Code, “the board may not approve an interior connection that
is greater than ten feet wide between a licensed business and another business.” 47 P.S. §4-468(e).
3
sidewalk further separate the restaurant from the fuel pumps. Campbell stated that
customers will only be able to purchase fuel by credit and debit cards at the fuel
pumps; they will not be able to purchase fuel at the convenience store or at the
restaurant. (R.R. at 113a, 120a, 134a-35a, 140a.)
John Kuchar, Sheetz, Inc.’s real estate counsel, testified that the property
containing the restaurant and the convenience store has been separated into two
condominium units, with Unit 1 having an address of 354 East King Street and Unit 2
having an address of 359 East King Street. (R.R. at 190a.) The lease agreements
support the testimony that the restaurant has a 354 East King Street address and the
convenience store has a 359 East King Street address, (R.R. at 290a, 303a), but
Applicant’s transfer application lists only the 359 East King Street address. (R.R. at
1a.)
Stephen Gabler (Gabler), owner of Gabler’s, testified that his beverage
distributorship is approximately four and a half blocks from the Sheetz Convenience
Store. He stated that he is concerned that the sale of beer at a convenience store that
sells liquid fuels would provide an unfair advantage to Applicant. Gabler
acknowledged that he would not have a reason to object if Applicant was not selling
liquid fuels on the premises. (R.R. at 212a-13a.) Patrick Diehl, owner and president
of PKD, Inc., his beer distributorship, testified that PKD, Inc., is approximately four
blocks from the Sheetz Convenience Store. He stated that he objected to the License
transfer because Applicant will sell liquid fuels and alcohol on the same property.
(R.R. at 224a.)
Mark Tanczos (Tanczos), president of MBDA, testified that MBDA is a
trade association for Pennsylvania’s beer distributors, of which Gabler’s and PKD,
Inc., are members. Tanczos stated that MBDA is objecting to the License transfer
4
because Applicant will be selling liquid fuels and alcohol on the same property. He
said that a chain, such as Sheetz, is able to purchase mainstream beer at a reduced
price that is not available to distributors and taverns. (R.R. at 226a-27a, 234a.)
The hearing examiner issued a recommended opinion, concluding that
the application for License transfer should be denied because Applicant would be
selling liquid fuels and alcohol on the same property in violation of sections 404 and
468 of the Code. The hearing examiner stated that sections 404, 431, and 432 of the
Code contain identical provisions under which the Board must refuse any application
for a new license or the transfer of any license to a new location “where the sale of
liquid fuels or oil is conducted.” 47 P.S. §§4-404, 4-431(b), 4-432(d).
However, the hearing examiner determined that section 468 is
distinguishable from sections 404, 431, and 432, because it prohibits the transfer of a
liquor license to any “place” or “property” where liquid fuels and oil are sold. 47
P.S. §4-468(a)(3).
The hearing examiner concluded that the terms “place” and “property”
are more encompassing and cannot have the same meaning as the term “location.”
The hearing examiner distinguished this case from our decision in Water Street
Beverage, LTD v. Pennsylvania Liquor Control Board, 84 A.3d 786 (Pa. Cmwlth.),
appeal denied, 97 A.3d 746 (Pa. 2014), stating that this Court only considered the
facts of that case in interpreting the word “location” in section 432(d) of the Code.
The hearing examiner further found that there are no physical demarcations
separating the two condominium units, as both the convenience store and the
restaurant contain logos, trademark colors, and signage identifying the property as a
Sheetz operation.
The hearing examiner further opined:
5
Therefore it is submitted the “property” at issue is not
condominium unit 1, a separate interest in land containing
solely the proposed licensed premises which distinction the
Commonwealth Court rejected, but that “piece of land with
a building on it” consisting of 1.64 acres. Additionally the
“place” at issue is the “locality” clearly displaying to the
general public the “situation” of a standardized Sheetz food,
fuel and convenience store operation, of which hundreds
presently exist.
It is submitted that section 468(a)(3)’s specific reference to
“place” and “property” is not synonymous repetition of the
identical “location” restrictions contained within sections
404, 431 and 432 regarding particular classes of licenses, in
that such characterization would lead to the conclusion that
this provision is mere surplusage to be disregarded rather
than accorded distinct, independent and comprehensive
application to all license transfers. This interpretation of
mere duplication would in turn lead to an unreasonable and
absurd result which under the Statutory Construction Act
the General Assembly clearly did not intend. 1 Pa.C.S.
§1922(i).
(R.R. at 580a-81a.) The hearing examiner concluded that this interpretation is
consistent with the purpose of the Code to “prohibit . . . transactions in liquor, alcohol
and malt or brewed beverages . . . .” (R.R. at 582a) (citing section 104(c) of the
Code, 47 P.S. §1-104(c)). Accordingly, the hearing examiner recommended that the
Board deny Applicant’s application for License transfer.5
On July 17, 2014, the Board issued an order granting the application for
transfer of the License. In its opinion, the Board noted that, although the term
“location” is found in sections 404, 431(b), and 432(d) of the Code, section 468(a)(3)
5
Further, the hearing examiner recommended denial of the application for License transfer
because the proposed licensed restaurant would be within 300 feet of a charitable institution, in
violation of section 404 of the Code. The hearing examiner also took evidence regarding issues of
standing and violations of the Code and the Board’s regulations. However, none of these issues are
raised on appeal.
6
of the Code uses the terms “place” and “property.” The Board reasoned that this
Court, in Water Street Beverage, in upholding the Board’s initial determination,
interpreted the term “location” in section 432(d) to allow “an applicant applying for
an eating place malt beverage license to have gasoline pumps located off its proposed
licensed premises.” (Board’s op. at 113.) Reading section 468(a)(3) in pari materia
with sections 404, 431(b), and 432(d), the Board determined that the terms “place”
and “property” should be interpreted similarly with the term “location.”
The Board explained as follows:
The record shows the gasoline pumps will be located
approximately eighty (80) feet from Applicant’s proposed
licensed premises, and between the proposed licensed
premises and the gas pumps, there will be a sidewalk,
ballards, parking stalls, macadam drive area, and a speed
bump.
The record provides that Sheetz, Inc. will have an employee
located inside the unlicensed convenience store who will be
responsible for the proposed gas pumps. Also, the record
provides that gasoline may only be purchased at the gas
pumps and the employees who are working at Applicant’s
proposed licensed premises will not have any involvement
with the gas pumps.
Therefore, the Board finds that liquid fuels will not be sold
at the same location as the proposed licensed premises, and
as such, there is no violation of sections 404 and 468 of the
[Code].
(Board’s op. at 113-14.)6
6
The Board also addressed the same issues concerning standing and violations of the Code
and the Board’s regulations discussed in the hearing examiner’s recommended opinion.
7
Discussion
On appeal to this Court,7 Petitioners argue that the Board erred in its
interpretation of the terms “place,” “property,” and “location” in sections 404 and
468(a)(3) of the Code when it granted Applicant’s application for License transfer.
We note that “an administrative agency’s interpretation of a statute is
given controlling weight unless it is clearly erroneous.” Pennsylvania Liquor Control
Board v. Richard E. Craft American Legion Home Corporation, 718 A.2d 276, 278
(Pa. 1998).
Section 404 of the Code (pertaining to the issuance, transfer, or
extension of hotel, restaurant, and club liquor licenses) provides that: “The board
shall refuse any application for a new license, the transfer of any license to a new
location or the extension of any license to cover an additional area where the sale of
liquid fuels or oil is conducted.” 47 P.S. §4-404.8 Section 431(b) of the Code
7
“An appellate court’s standard of review over an appeal from an agency requires it to
affirm the administrative adjudication unless it finds that an error of law was committed, that
constitutional rights were violated, that a practice or procedure of a Commonwealth agency was not
followed, or that any necessary finding of fact is not supported by substantial evidence.” Malt
Beverages Distributors Association v. Pennsylvania Liquor Control Board, 8 A.3d 885, 892 (Pa.
2010). “The ‘error of law’ component of the applicable standard of review may include an issue of
statutory construction, over which our review is plenary.” Id.8
Section 404 of the Code states in pertinent part as follows:
Upon receipt of the application and the proper fees, and upon being
satisfied . . . that the premises applied for meet all the requirements of
this act and the regulations of the board, that the applicant seeks a
license for a hotel, restaurant or club, as defined in this act, and that
the issuance of such license is not prohibited by any of the provisions
of this act, the board shall, in the case of a hotel or restaurant, grant
and issue to the applicant a liquor license, and in the case of a club
may, in its discretion, issue or refuse a license: Provided, however,
That in the case of any new license or the transfer of any license to a
(Footnote continued on next page…)
8
(pertaining to malt and brewed beverages manufacturers’, distributors’, and importing
distributors’ licenses) states that: “The board shall refuse any application for a new
license or the transfer of any license to a location where the sale of liquid fuels or oil
is conducted.” 47 P.S. §4-431(b).9 Section 432(d) of the Code states that: “The
(continued…)
new location or the extension of an existing license to cover an
additional area the board may, in its discretion, grant or refuse such
new license, transfer or extension if such place proposed to be
licensed is within three hundred feet of any church, hospital,
charitable institution, school, or public playground, or if such new
license, transfer or extension is applied for a place which is within
two hundred feet of any other premises which is licensed by the
board: And provided further, That the board's authority to refuse to
grant a license because of its proximity to a church, hospital,
charitable institution, public playground or other licensed premises
shall not be applicable to license applications submitted for public
venues or performing arts facilities: And provided further, That the
board shall refuse any application for a new license, the transfer of
any license to a new location or the extension of an existing license to
cover an additional area if, in the board's opinion, such new license,
transfer or extension would be detrimental to the welfare, health,
peace and morals of the inhabitants of the neighborhood within a
radius of five hundred feet of the place proposed to be licensed: And
provided further, That the board shall have the discretion to refuse a
license to any person or to any corporation, partnership or association
if such person, or any officer or director of such corporation, or any
member or partner of such partnership or association shall have been
convicted or found guilty of a felony within a period of five years
immediately preceding the date of application for the said license.
The board shall refuse any application for a new license, the transfer
of any license to a new location or the extension of any license to
cover an additional area where the sale of liquid fuels or oil is
conducted.
47 P.S. §4-404 (emphasis added).
9
Section 431(b) provides in relevant part as follows:
(Footnote continued on next page…)
9
board shall refuse any application for a new license, the transfer of any license to a
location where the sale of liquid fuels or oil is conducted or the extension of an
existing license to cover additional area[.]” 47 P.S. §4-432(d).10 Section 468(a)(3) of
(continued…)
The board shall issue to any reputable person who applies therefor,
and pays the license fee hereinafter prescribed, a distributor's or
importing distributor's license for the place which such person desires
to maintain for the sale of malt or brewed beverages, not for
consumption on the premises where sold, and in quantities of not less
than a case or original containers containing one hundred twenty-
eight ounces or more which may be sold separately as prepared for
the market by the manufacturer at the place of manufacture. The
board shall have the discretion to refuse a license to any person or to
any corporation, partnership or association if such person, or any
officer or director of such corporation, or any member or partner of
such partnership or association shall have been convicted or found
guilty of a felony within a period of five years immediately preceding
the date of application for the said license: And provided further,
That, in the case of any new license or the transfer of any license to a
new location, the board may, in its discretion, grant or refuse such
new license or transfer if such place proposed to be licensed is within
three hundred feet of any church, hospital, charitable institution,
school or public playground, or if such new license or transfer is
applied for a place which is within two hundred feet of any other
premises which is licensed by the board: And provided further, That
the board shall refuse any application for a new license or the transfer
of any license to a new location if, in the board's opinion, such new
license or transfer would be detrimental to the welfare, health, peace
and morals of the inhabitants of the neighborhood within a radius of
five hundred feet of the place proposed to be licensed. The board
shall refuse any application for a new license or the transfer of any
license to a location where the sale of liquid fuels or oil is conducted.
47 P.S. §4-431(b) (emphasis added).
10
Section 432(d) states in pertinent part:
(Footnote continued on next page…)
10
(continued…)
The board shall, in its discretion, grant or refuse any new license, the
transfer of any license to a new location or the extension of an
existing license to cover an additional area if such place proposed to
be licensed is within three hundred feet of any church, hospital,
charitable institution, school, or public playground, or if such new
license, transfer or extension is applied for a place which is within
two hundred feet of any other premises which is licensed by the
board. The board shall refuse any application for a new license, the
transfer of any license to a new location or the extension of an
existing license to cover an additional area if, in the board's opinion,
such new license, transfer or extension would be detrimental to the
welfare, health, peace and morals of the inhabitants of the
neighborhood within a radius of five hundred feet of the place to be
licensed. . . . The board shall refuse any application for a new license,
the transfer of any license to a location where the sale of liquid fuels
or oil is conducted or the extension of an existing license to cover an
additional area: And provided further, That the board shall have the
discretion to refuse a license to any person or to any corporation,
partnership or association if such person, or any officer or director of
such corporation, or any member or partner of such partnership or
association shall have been convicted or found guilty of a felony
within a period of five years immediately preceding the date of
application for the said license. The board may, in its discretion,
refuse an application for an economic development license under
section 461(b.1) or an application for an intermunicipal transfer or a
license if the board receives a protest from the governing body of the
receiving municipality. The receiving municipality of an
intermunicipal transfer or an economic development license under
section 461(b.1) may file a protest against the approval for issuance
of a license for economic development or an intermunicipal transfer
of a license into its municipality, and such municipality shall have
standing in a hearing to present testimony in support of or against the
issuance or transfer of a license. Upon any opening in any quota, an
application for a new license shall only be filed with the board for a
period of six months following said opening.
47 P.S. §4-432(d) (emphasis added).
11
the Code provides that: “No license shall be transferred to any place or property upon
which is located as a business the sale of liquid fuels and oil.” 47 P.S. §4-468(a)(3).11
Specifically, Petitioners contend that the terms “place” and “property”
found in section 468(a)(3) are clear and unambiguous and are not synonymous with
this Court’s interpretation of “location” in Water Street Beverage, and, as undefined
terms in the Code, “place” and “property” should be interpreted according to their
“common and approved usage.”12 Section 1903(a) of the Statutory Construction Act
11
Section 468(a)(3) provides:
No license shall be transferred to any place or property upon which is
located as a business the sale of liquid fuels and oil. Except in cases
of emergency such as death, serious illness, or circumstances beyond
the control of the licensee, as the board may determine such
circumstances to justify its action, transfers of licenses may be made
only at times fixed by the board. In the case of the death of a
licensee, the board may transfer the license to the surviving spouse or
personal representative or to a person designated by him. From any
refusal to grant a transfer or upon the grant of any transfer, the party
aggrieved shall have the right of appeal to the proper court in the
manner hereinbefore provided.
47 P.S. §4-468(a)(3) (emphasis added).
12
Petitioners present the following Black’s Law Dictionary definitions of “place” and
“property,” as cited by the hearing examiner in his recommended opinion. The definition presented
for “place” is as follows:
This word is a very indefinite term. It is applied to any locality,
limited by boundaries, however large or however small. It may be
used to designate a country, state, county, town, or a very small
portion of a town. The extent of the locality designated by it must
generally be determined by the connection in which it is used. In its
primary and most general sense [it] means locality, situations, or
size[.]
(R.R. at 575a) (emphasis added). The hearing examiner and Petitioners have defined “property” as:
(Footnote continued on next page…)
12
of 1972, 1 Pa.C.S. §1903(a) (“[W]ords and phrases shall be construed according to
rules of grammar and according to their common and approved usage; but technical
words and phrases and such others as have acquired a peculiar and appropriate
meaning or are defined in this part, shall be construed according to such peculiar and
appropriate meaning or definition.”).
In the alternative, Petitioners assert that, if the terms “place” and
“property” are ambiguous, the Code must be interpreted to restrain the sale of alcohol
and that the Board’s interpretation failed to do so. 47 P.S. §1-104(c) (“Except as
otherwise expressly provided, the purpose of this act is to prohibit the manufacture of
and transactions in liquor, alcohol and malt or brewed beverages which take place in
this Commonwealth . . . .”).
Here, we are bound by our Supreme Court’s decision in Malt Beverages
Distributors Association v. Pennsylvania Liquor Control Board, 8 A.3d 885 (Pa.
2010) (Wegmans). The Supreme Court in Wegmans affirmed our orders that affirmed
the Board’s grant of Wegmans Food Markets, Inc.’s (Wegmans) applications for
transfer of five liquor licenses to its pre-existing market cafés within five separate
(continued…)
Land, and generally whatever is erected or growing upon or affixed to
land. Also rights issuing out of, annexed to, and exercisable within or
about land. A general term for lands, tenements, and hereditaments,
property which, on the death of the owner intestate, passes to his
heirs.
Real or immovable property consists of: Land; that which is affixed
to land; that which is incidental or appurtenant to land; that which is
immovable by law[.]
(R.R. at 576a.)
13
grocery stores because of clearly defined parameters between the unlicensed grocery
stores and the proposed licensed cafés.
In Water Street Beverage, this Court applied the reasoning of the
Supreme Court in Wegmans. Weis Markets, Inc., (Weis) filed an application with the
Board for the double transfer of a liquor license. Weis planned to sell malt beverages
in the café at its grocery store. Weis also planned to install gas pumps approximately
340 feet from the grocery store and café that would be separated by parking spaces,
trees, and islands of shrubbery. Water Street Beverage, LTD., t/a Keller’s Beer
(Water Street) filed a petition for intervention, objecting to Weis’ application.
After a hearing, the hearing examiner recommended that the Board grant
Weis’ application. The Board granted the application, concluding that Weis would
not be selling liquid fuels at the same location as the licensed premises in accordance
with section 432(d) of the Code. The Board noted that the Code does not define the
term “location” and considered the “common and approved usage” pursuant to
section 1903 of the Statutory Construction Act. The Board found that Weis would
sell liquid fuels at a location approximately 378 feet from the proposed licensed
premises, have numerous barriers in between, have an employee solely for the sale of
liquid fuels that has no responsibilities on the proposed licensed premises, and that
the liquid fuels would be purchased at the gas kiosk or the gas pumps. Accordingly,
the Board found that, “under a reasonable and practical interpretation of the term
‘location,’ the record indicates that Weis has taken appropriate measures to show that
its liquid fuels would be sold at a different location from the proposed licensed
premises.” Water Street Beverage, 84 A.3d at 791.
On further appeal to this Court, Water Street argued that the Board erred
in approving Weis’ application because the sale of liquid fuels and alcohol would
14
occur at the same location in violation of sections 432(d) and 468(a)(3) of the Code.
We first determined that Water Street waived any argument pertaining to section
468(a)(3), because no objection regarding that section had been made in the
proceedings below. We stated that the Board properly resorted to the rules of
statutory construction in interpreting “location,” because “location” was an undefined
term in the Code. This Court rejected Water Street’s interpretation of the term
“location” to mean a “single tract of land.” We stated that such an interpretation
would lead to absurd results, because “an applicant could operate a licensed premises
only steps away from the gas pumps so long as the pumps and licensed premises are
on separate deeds.” Water Street Beverage, 84 A.3d at 794.
We noted that, pursuant to Richard E. Craft, the Board’s interpretation
of the Code and its regulations should be afforded deference unless it is clearly
erroneous. We concluded that the Board’s interpretation of the term “location” was
consistent with the Code and its regulations. Relying on the Supreme Court’s
decision in Wegmans, we held that, after reviewing the Code and the Board’s
regulations, “a license is granted to a specific ‘location,’ i.e., premises, with clearly
defined parameters, especially, as in this case, when a licensed premises is interiorly
connected to an unlicensed premises/business.” Water Street Beverage, 84 A.3d at
796. Specifically, we stated:
Here, the Board has interpreted, and our Court affirms that
the term “location” is defined in relation to the particular
area of a licensed premises. Sections 432 and 436 of the
Code, as well as sections 3.22, 3.53-3.56, 7.8-7.9, and 7.21
of the Board’s regulations, consistently refer to the specific
“premises,” “place,” or “portion” to be licensed. Although
section 432(d) of the Code does not define “location,” the
Board’s interpretation of this term is reasonable and
supported by the aforementioned sections of the Code and
existing regulations, as well as established case law. Based
15
on all of the above, and in light of the deference to be
afforded to the Board’s interpretation of the Code and its
regulations, the Board did not err in approving Weis’
transfer application.
Id. at 796-97.
In Wegmans, Wegmans filed transfer applications for five restaurant
liquor licenses to its Market Cafés in five separate grocery store locations. MBDA
and some of its members intervened in the licensure proceedings, arguing that the
interconnections between the proposed licensed premises and the attached grocery
stores would violate the Board’s regulations at 40 Pa. Code §§3.52–3.54,13 and, thus,
effectively allow supermarkets to sell beer. As a result of the objections, the Board
13
Section 3.52 provides:
(a) A licensee may not permit other persons to operate another
business on the licensed premises.
* * *
(b) Licensed premises may not have an inside passage or
communication to or with any business conducted by the licensee or
other persons except as approved by the Board.
(c) A licensee may not conduct another business on the licensed
premises without Board approval.
40 Pa. Code §3.52.
Section 3.53 states that “[w]here the Board approved the operation of another business
which has an inside passage or communication to or with the licensed premises, storage and sales of
liquor and malt or brewed beverages shall be confined strictly to the premises covered by the
license.” 40 Pa. Code §3.53. Section 3.54 provides that “[w]here the Board has approved the
operation of another business which has an inside passage or communication to or with the licensed
premises, the extent of the licensed area shall be clearly indicated by a permanent partition at least 4
feet in height.” 40 Pa. Code §3.54.
16
held five separate hearings regarding each liquor license transfer, but viewed all of
the evidence presented as constituting one record applicable to each license
application. The hearing examiner recommended that the Board approve each liquor
license transfer.
Subsequently, the Board approved Wegmans’ restaurant liquor license
transfer applications. The Board stated that its approval of interior connections
between restaurants and unlicensed premises is entirely discretionary and that it
historically permitted such interior connections. The Board found that the
requirements of the Board’s regulations at 40 Pa. Code §§3.53–3.54 had been met
because the perimeter of the proposed licensed premises was clearly marked with
four-foot walls and the beer storage and sales were confined to the cafés. The Board
concluded that Wegmans also met the requirements of the Board’s regulation at 40
Pa. Code §3.52(c), because, in exercising its discretion, the Board found that the
public welfare, health, peace, and morals would not be compromised by the
preparation and storage of food items on the licensed premises that would be sold in
the grocery store. The Board specifically found that Wegmans built its cafés in order
to provide its customers with easy access to food options and not as a “veiled attempt
to have the opportunity to sell takeout beer.” Wegmans, 8 A.3d at 891 (citation and
quotations omitted). MBDA appealed to this Court.
We first noted that neither party disputed whether Wegmans met the
definition of a “restaurant” under section 102 of the Code, 47 P.S. §1-102.14 We
14
Section 102 provides as follows:
“Restaurant” shall mean a reputable place operated by responsible
persons of good reputation and habitually and principally used for the
purpose of providing food for the public, the place to have an area
within a building of not less than four hundred square feet, equipped
(Footnote continued on next page…)
17
concluded that merely because Wegmans’ cafés resided within the grocery stores did
not disqualify them from receiving a restaurant liquor license. This Court further
concluded that the requirements of the Board’s regulations at 40 Pa. Code §§3.52–
3.54 had been met by Wegmans “demarcating the proposed restaurant by four-foot
walls and restricting beer storage and sales exclusively to that area.” Wegmans, 8
A.3d at 891. Accordingly, we affirmed the approval of Wegmans’ applications.
On further appeal, our Supreme Court also concluded that the Board did
not abuse its discretion in approving the interior connections between the proposed
licensed premises and the grocery stores under the Board’s regulation at 40 Pa. Code
§3.52, because “the [cafés] predate the applications for liquor license, are vastly
larger and more sophisticated than the minimum statutory requirements for
restaurants, and easily satisfy every other applicable statutory and regulatory
criterion[.]” Id. at 894. The court further determined that the Board’s regulations at
40 Pa. Code §§3.53–3.54 were satisfied, because the record supports the Board’s
findings that Wegmans “has made a physical distinction between the proposed
licensed area and the rest of the store by way of a four-foot dividing wall with interior
and exterior passageways,” and “beer is being stored and sold exclusively on the
licensed premises.” Wegmans, 8 A.3d at 894.
(continued…)
with tables and chairs, including bar seats, accommodating at least
thirty persons at one time. The board shall, by regulation, set forth
what constitutes tables and chairs sufficient to accommodate thirty
persons at one time.
Id.
18
The court concluded that “[r]efusing to acknowledge the validity of
these restaurants would violate, rather than vindicate, legislative intent. The
legislature has stated clearly that restaurants are entitled to obtain liquor licenses if
they satisfy criteria, and those criteria are met here.” Id. at 896. Accordingly, the
Supreme Court affirmed this Court’s orders affirming the Board’s approvals of
Wegmans’ applications for transfer of the restaurant liquor licenses.
The Supreme Court in Wegmans clearly set the standard that, as long as
the requirements set forth in the Code and the Board’s regulations for plainly defined
parameters between a licensed and an unlicensed premises are satisfied, the Board
does not abuse its discretion in granting a liquor license to a proposed licensed
premises that has clear physical demarcations from the interconnected unlicensed
premises.
In this case, Applicant has met the requirements to have physical
demarcations between the convenience store/fuel station and the proposed licensed
restaurant. There are eighty feet in between the proposed licensed restaurant and the
liquid fuel pumps, which are separated by a speed bump, a tapered curb, a sidewalk, a
front concrete area, a patio area, a steel fence, and a parking lot. The proposed
licensed restaurant and the unlicensed convenience store are separated by an eight-
foot-high wall with only a four-foot-wide pass-through connecting the two entities.
Further, all liquid fuel sales occur on the unlicensed premises. Applicant is also
prepared to increase staff and have signs indicating the separate entities of the
restaurant and the convenience store so that merchandise will not be intermingled.
Accordingly, Applicant has met the standard announced by the Supreme Court in
Wegmans to have clearly defined parameters in between the proposed licensed and
19
unlicensed premises, and, thus, the Board did not err or abuse its discretion in
granting Applicant’s application for License transfer.
Petitioners attempt to parse the Code’s language in an effort to
differentiate between our interpretation of the term “location” in section 432(d) of the
Code in Water Street Beverage, based on our Supreme Court’s opinion in Wegmans,
and the terms “place” and “property” in section 468 of the Code. However,
Petitioners concede that this Court’s interpretation of “location” in Water Street
Beverage is binding on this case. Giving deference to the Board, Richard E. Craft,
the Board’s interpretation of “place” and “property” is consistent with the Code and
the Board’s regulations. As we stated in Water Street Beverage, the Code and the
Board’s regulations “consistently refer to the specific ‘premises,’ ‘place,’ or ‘portion’
to be licensed.” 84 A.3d at 797. The terms “location,” “place,” and “premises” are
also used interchangeably in sections 404, 431(b), 432(d), and 468(a)(1)–(3) of the
Code. Such use reflects the Legislature’s intent that the terms “location,” “place,”
“premises,” and “property” should be similarly construed.
The Legislature’s use of each of these words in the noted sections
reflects an overall intent to control the “licensed premises.” As the Board correctly
asserts, absurd results would follow if “place,” “property,” and “location” are
interpreted differently. Notably, a new liquor license could be granted under section
432 but may not be transferred under section 468(a)(3) if a stricter analysis is applied
when dealing with a “place” or “property” where liquid fuels and alcohol are sold.
Conclusion
As it must under Wegmans, Applicant has constructed clearly defined
parameters in between the proposed licensed premises and the unlicensed premises.
20
The Board concluded that the prohibitions in the Liquor Code against licensing
locations, places, or properties that sell liquid fuels apply to the actual licensed
premises. We discern no error or abuse of discretion in the Board’s interpretation of
the terms “place” and “property” in section 468 of the Code to have the same
meaning as the term “location” in section 404 of the Code.
Accordingly, we affirm.
________________________________
PATRICIA A. McCULLOUGH, Judge
Judge Brobson did not participate in this decision.
21
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Malt Beverage Distributors :
Association, Gabler’s Beverage :
Distributor, Inc. and PKD, Inc., :
Petitioners :
: No. 1352 C.D. 2014
v. :
:
Pennsylvania Liquor Control Board, :
Respondent :
ORDER
AND NOW, this 31st day of July, 2015, the July 17, 2014 order of the
Pennsylvania Liquor Control Board is affirmed.
________________________________
PATRICIA A. McCULLOUGH, Judge