Russell v. Bureau of Alcoholic Beverages and Lottery Operations

STATE OF MAINE DISTRICT COURT
KENNEBEC, SS. LOCATION: AUGUSTA
DOCKET NO. AUGDC-AP-2020-1

JONATHAN RUSSELL
and
PEPPERS GARDEN & GRILL,
Petitioners
DECISION AND ORDER
v.

BUREAU OF ALCOHOLIC
BEVERAGES AND LOTTERY
OPERATIONS
and
TOWN OF WINTHROP,
Respondents

Petitioners Jonathan Russell and Peppers Garden & Grill appeal, pursuant to M.R. Civ. P.

SOC, a decision of the Bureau of Alcoholic Beverages and Lottery Operations ("Bureau"). The

Bureau upheld the Town of Winthrop's ("Town") refusal to renew Peppers Garden & Grill's

liquor license because of Russell's "character."

Petitioners are represented by Attorney Brian D. Condon, Jr., the Bureau is represented

by Assistant Attorney General Michelle M. Robert, and the Town is represented by Attorney

Daniel J. Murphy. In accordance with M.R. Civ. P. 80C(f), the Bureau provided the Court with

the complete record of the proceedings under review. Because the Court has determined that this

matter can be decided on the briefs, and to avoid further delay, the Court has proceeded without

oral argument. See Lindemann v. Comm'n on Governmental Ethics & Election Practices, 2008

ME 187, ~ 26, 961 A.2d 538.
For the reasons stated below, the Court affirms the decision of the Bureau. Two motions

filed by Petitioners will be denied as moot.

BACKGROUND

Petitioner Jonathan Russell ("Petitioner") 1 has been the sole owner of Peppers Garden &

Grill, a restaurant in the Town of Winthrop, since May 15, 2007. The restaurant formerly held a

Class I on-premise liquor license. On June 28, October 17, and November 12, 2019, Petitioner

was arrested for operating under the influence of alcohol. He was also charged with violations of

the conditions of his release for the latter two incidents. On November 21 and December 10,

2019, Petitioner pleaded guilty to the charges and was sentenced to incarceration for 28 days,

which he had already served. On December 2 and December 16, 2019, the Town held hearings

on Petitioner's liquor license renewal application. The Town denied Petitioner's application on

December 20, 2019, because Petitioner's arrests had "led the Town Council to lose confidence in

[his] ability to fulfill the responsibilities associated with holding a liquor license."

Petitioner timely appealed to the Bureau, which appointed a hearing officer, see 28-A

M.R.S. § 83-B(2), who held a de novo hearing on January 17, 2020, and issued a decision on

March 12, 2020. The Bureau upheld the Town's decision, finding that three OUI arrests within

the span of six months, two of which were in violation of conditions cif release, were

"inconsistent with those character traits of honesty, trust, reliability, discipline, and respect for

the law and public safety necessary to be granted the privilege of selling alcohol." The Bureau

also found that Petitioner's admission at the hearing that he had been intoxicated at his restaurant

"demonstrate[d] a complete disregard of the level of responsibility required for the privilege to

1
Although the restaurant was technically the holder of the license and is a party to this appeal, the rest of this
decision will refer to Russell as the primary actor and Petitioner for the sake ofreadability.
sell alcohol, a regulated product, that among other things is prohibited from being served to

intoxicated persons or allowing such persons to remain on the licensed premises. " 2

Petitioner timely appealed the Bureau's decision to the Superior Court, which dismissed

the appeal for lack ofjurisdiction, and to the District Court. Petitioner did not initially seek a

stay of the Bureau's decision. Eventually, on June 23, 2020, he sought a stay from the Bureau,

which was denied. Petitioner then moved for a stay from this Court on July 1, and also moved

for an expedited hearing on that motion on September 25.

STANDARD OF REVIEW

Liquor license applications are first considered by the officers of the relevant

municipality. 28-A M.R.S. § 653(1). Their decision can be appealed to the Bureau. Id §

653(3). This appeal has been termed a de nova appeal-the Bureau is free to take additional

evidence, and it need not rely on the same grounds as the municipality did. See Ullis v.

Boothbay Harbor, 459 A.2d 153, 157 (Me. 1983). However, the Bureau must uphold the

municipality's decision to deny an application unless "it finds by clear and convincing evidence

that the decision was without justifiable cause." 28-A M.R.S. § 653(3)(B). The Bureau's

decision may then be appealed to the District Court. Id. § 653(5); 3 75 M.R.S. §10051; M.R. Civ.

P. 80(C).

In reviewing final agency action, the Court "shall not substitute its judgment for that of

the agency on questions of fact." 5 M.R.S. § 11007(3). The Court's review of an action for

administrative appeal is "deferential and limited." Watts v. Bd. ofEnvtl. Prat., 2014 ME 91, ~ 5,

97 A.3d 115. The party attempting to vacate the agency's decision bears the burden of

persuasion. Town ofJay v. Androscoggin Energy, LLC, 2003 ME 64, ~ 10, 822 A.2d 1114. The

2
The hearing officer cited 28-A M.R.S. § 705(3-A) and 18-553 C.M.R. ch. 101, § 8, on this point.
Court may affirm the agency's decision or may "remand the case for further proceedings,

findings of fact or conclusions of law or direct the agency to hold such proceedings or take such

action as the court deems necessary." 5 M.R.S. § 11007(4)(A, B). The Court may reverse or

modify the decision if the agency's findings, inferences, conclusions or decisions violate

constitutional or statutory provisions; exceed the agency's statutory authority; arise from

unlawful procedure; are affected by bias or error of law; are unsupported by substantial evidence

on the whole record; or are arbitrary, capricious or characterized by an abuse of discretion. 5

M.R.S. § 11007(4)(C). "An abuse of discretion may be found where an appellant demonstrates

that the decision maker exceeded the bounds of the reasonable choices available to it,

considering the facts and circumstances of the particular case and the governing law." Sager v.

Town ofBowdoinham, 2004 ME 40, ~ 11, 845 A.2d 567.

STATUTORY PROVISIONS

To be granted a liquor license, an applicant must first meet the eligibility requirements

and not be subject to a disqualification. 28-A M.R.S. § 601. Section 653 then lists bases for the

municipal officers and the Bureau to deny an application:

2. Findings. In granting or denying an application, the municipal officers or the county
commissioners shall indicate the reasons for their decision and provide a copy to the
applicant. A license may be denied on one or more of the following grounds:
A. Conviction of the applicant of any Class A Class B or Class C crime;
B. Noncompliance of the licensed premises or its use with any local zoning ordinance or
other land use ordinance not directly related to liquor control;
C. Conditions of record such as waste disposal violations, health or safety violations or
repeated parking or traffic violations on or in the vicinity of the licensed premises and
caused by persons patronizing or employed by the licensed premises or other such
conditions caused by persons patronizing or employed by the licensed premises that
unreasonably disturb, interfere with or affect the ability of persons or businesses residing
or located in the vicinity of the licensed premises to use their property in a reasonable
manner;
D. Repeated incidents ofrecord of breaches of the peace, disorderly conduct, vandalism
or other violations of law on or in the vicinity of the licensed premises and caused by
persons patronizing or employed by the licensed premises;
D-1. Failure to obtain, or comply with the provisions of, a permit for music, dancing or
entertainment required by a municipality or, in the case of an unincorporated place, the
county commissioners;
E. A violation of any provision of this Title;
F. A determination by the municipal officers or county commissioners that the purpose of
the application is to circumvent the provisions of section 601 ; and
G. After September 1, 2010, server training, in a program certified by the bureau and
required by local ordinance, has not been completed by individuals who serve alcoholic
beverages.

Id. § 653(2).

Section 654 further provides:

1. Character; Location; Operation of Business. In issuing or renewing licenses, the
bureau, the municipal officers or the county commissioners, as the case may be, shall
give consideration to:
A. The character of any applicant;
B. The location of the place of business;
C. The manner in which the business has been operated; and
D. Whether the operation has endangered the safety of persons in or on areas surrounding
the place of business.

Id. § 654(1).
DISCUSSION

Petitioner's QUI convictions were all Class D crimes and therefore were not a basis for

denial under section 653(2)(A). Petitioner argues that the Bureau instead relied entirely on

section 654. For the purposes of this discussion, the Court will assume that this was the case. 3

See Palian v. HHS, 2020 ME 131, ,r,r 41-43, _A.3d_ (summarizing rule that courts must

rely on the grounds clearly stated by an agency).

Petitioner contends that the separation of sections 653 and 654 means they serve different

functions. By this interpretation, section 653 enumerates the sole grounds on which a license can

be denied. Section 654 then lays out "plus factors" for the Bureau to consider. The Bureau must

3
The hearing officer's introduction to his legal analysis rested entirely on the "character" prong of section 654.
However, he also discussed potential violations of law, supra note 2, which could bear on sections 654(1 )(C),
654(l)(D), 653(2)(D), or 653(2)(E).
therefore apply a two-part test: to deny a license, it must first find that at least one item from

section 653 applies, and then it must consider the items in section 654 to decide whether, in its

discretion, it should nevertheless grant the license.

The Bureau argues that the sections both offer criteria for the Bureau to apply to ensure it

is not making arbitrary decisions-it may deny a license if an applicant meets any of the criteria

in section 653 or if the factors in section 654 weigh against approval.

The Court finds that the statute is ambiguous, because "it is reasonably susceptible of

multiple interpretations." Competitive Energy Servs. v. PUC, 2003 ME 12, ~ 15, 818 A.2d 1039

(quoting Guilford Transp. Indus. v. PUC, 2000 ME 31, Pl 1, 746 A.2d 910, 914) . The Court

must defer to the agency's interpretation of an ambiguous statute it is charged with administering

if the interpretation is reasonable. See Allied Res., Inc. v. Dep 't ofPub. Safety, 2010 ME 64, ~~

21-22, 999 A.2d 940. Because the ultimate goal of statutory interpretation is to determine the

intent of the Legislature, in considering the reasonableness of the Bureau's interpretation, the

Court will examine the highlights of what is a rather extensive history of the liquor licensing law.

See id.

Decades ago, liquor licenses were subject to the "approval" of municipal officers. R.S .

ch. 57, §§ 22, 28, 40 (1944). The statute did not specify what standards the municipal officers

should use. See Ullis, 459 A.2d at 158. Even when the municipal officers refused to approve the

application, the State Liquor Commission4 could nevertheless issue a license "if it finds the

refusal arbitrary or without justifiable cause." R.S. ch. 57, §§ 28, 40 (1944). The statute laid out

several mandatory grounds for non-issuance, at least for malt liquor licenses: age, lack of

4
The Commission is equivalent, for these purposes, to the Bureau. See L.D. 1572 (118th Legis. 1997) (updating
code to reflect transfer of licensing responsibilities to the Bureau).
violative of Petitioner's due process or equal protection rights, especially given that the hearing

officer specifically enumerated the character traits he was relying upon and detailed the elements

of Petitioner's behavior that distinguished his case from that of someone arrested for OUI on a

single occasion.

Petitioner now objects to the hearing officer's use of police reports concerning his arrests.

Although Petitioner objected to the testimony of the Town's police chief on hearsay grounds, at

the end of the hearing, the hearing officer left the record open to allow the Town to submit the

reports. Petitioner's counsel was expressly asked by the Bureau's counsel whether he objected,

and he repeatedly indicated that he did not and stated: "I know what they say." Counsel also

filed no objections after the hearing officer provided notice that the reports had been received.

The reports were, in any event, admissible as "the kind of evidence upon which reasonable

persons are accustomed to rely in the conduct of serious affairs." 18 M.R.S. § 9057.

Petitioner also makes much of the fact that the Town based its decision on his arrests,

while the Bureau also considered his convictions. This was no error, because the Bureau was not

required to base its decision on the same grounds as the Town. See Ullis, 459 A.2d at 157. What

matters is that the fact of Petitioner's convictions existed at the time of the Town's decision. See

Oronoka, 532 A.2d at 1045.

Alcoholism's status as a disease does not make it inappropriate for the Bureau to rely on

Petitioner's alcohol-related behavior as evidence of character, particularly given that Petitioner

did not establish that he had been diagnosed with an alcohol use disorder, let alone that such a

disorder compelled his behavior. The Bureau found that at the time of the hearing Petitioner had

not engaged in alcohol-abuse counseling. 7 To the extent that Petitioner has now engaged in

7
A point not argued by Petitioner is that the Bureau likely erred in considering Petitioner's failure to obtain
treatment at the time of the January hearing, rather than only considering the facts as they existed when the Town
treatment, that would be relevant evidence of character for a future license application. See 28-A

M.R.S. § 2(G) (permitting reapplications six months after denial by Bureau).

Finally, the Court regrets that it was unable to address Petitioner's motions as speedily as

it would have under ordinary conditions. See State of Maine Judicial Branch COVID-19 Phased

Management Plan (last amended November 3, 2020). Nevertheless, the Court would have

denied the motions. It is unclear whether there was any remaining action from the Bureau that

the Court could have stayed, because Petitioner's temporary license, active during the pendency

of his appeal to the Bureau, see 5 M.R. S. § 10002, had already expired months earlier; the Court

would effectively have had to order the Bureau to grant Petitioner a new temporary license.

In any event, the Court would not have granted a stay, because even if it had found "a

strong likelihood of success on the merits," under the circumstances of the case, it could not have

found "no substantial harm to adverse parties or the general public" and "a showing of

irreparable injury" to Petitioner. See 5 M.R.S. § 4; see also Carriage House ofLivermore v.

Bureau ofAlcohol and Lottery Operations, No. CV-15-179 (Me. Dist. Ct., Lewiston, Jul. 30,

2015) (denying stay even when motion had been filed before temporary license expired).

CONCLUSION

For these reasons, the decision of the Bureau is affirmed. Petitioners' motions for a stay

and for an expedited hearing on that motion are denied as moot.

DATED: December JI., 2020.

Brent Davis
Judge, Maine District Court

held its hearing. See Oronoka, 532 A.2d at 1045. This error is oflittle significance in the overall context of the
decision, however, and was ultimately invited by Petitioner's counsel when he asked Petitioner at the hearing to
confinn that he was seeking treatment.
Date Filed:4/21/20 AUGDC Docket No.AP-20-01 tzA1lP l io
Action: Appeal

Jonathan Russell & Peppers
Garden and Grill vs Town of Winthrop and
State of Maine

Plaintiff's Attorney Defendant's Attorney

Brian Condon, Esq. Daniel Murphy, Esq.
PO Box 169 Bernstein Shur
Winthrop, Maine 04364 100 Middle Street, PO Box 9729
Portland, ME 04104-5029
Date of Entry

4/21/20 Petition for Review of Final Agency Action, filed. s/Condon, Esq.

4/24/20 Letter and Entry of Appearance filed by Daniel Murphy, Esq. for Defendant

4/27/20 Letter filed by defendant noted dismissal of appeal through superior court

5/26/20 Certified Administrative Record of Defendant filed by Lawrence Sanborn, Division
Manager, liquor Licensing & Enforcement

6/3/20 Notice and Briefing Schedule issued and mailed to parties

7/1/20 Motion for a Stay of the Final Agency Action

7/10/20 Defendant Bureau of Alcoholic Beverages and Lottery Operations' Response to the
petitioner's Motion for Stay filed 7/10/20.

8/13/20 Petitioner's Brief, filed. s/Condon, Esq.

9/3/20 The Bureau's Response to Petitioner's Rule BOC Brief, filed. s/Robert, AAG.

9/10/20 Response of the Town of Winthrop to Petitioner's Brief, filed. s/Murphy, Esq.

9/25/20 Motion for Expedited Hearing on Petitioner's Application for a Stay of Final
Agency Action , filed . s/Condon, Esq.
Affidavit in Support of, filed. s/Russell.

10/15/20 Bureau's Response to Motion for Expedited Hearing on its Motion for Stay, filed.
s/Robert, AAG. (attached exhibits)

10/22/20 Response of the Town of Winthrop to Petitioner's Motion for Expedited Hearing on it's
Motion for Stay

10/28/20 File Location - given to Law Clerk by Judge Davis

Page 1 AP-20-01