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Commonwealth Court Defers to PLCB

February 25, 2009


By order issued February 23, 2009, Pennsylvania Commonwealth Court upheld the PLCB's decision to grant retail liquor licenses to 6 Wegmans Supermarkets located in Wilkes-Barre, Williamsport, Scranton, Easton, Bethlehem and State College. The following will explain the basis for the court's decision, as well as address what can and will be done next.

The 31 page opinion addressed two issues, namely: whether MBDA had "standing" to object to the license transfers; and the merits of the objections raised by MBDA.

"Standing" is a requirement that a party such as MBDA prove to the court's satisfaction that it and its members either have been or will be harmed by the threatened action, in this case issuing to supermarkets licenses to sell beer, as well as that it is the right party to participate in the litigation so as to protect those threatened interests. As a result of the Commonwealth Court's ruling in the Sheetz case that MBDA did have standing, the PLCB eventually dropped its objections to MBDA's participation in the Wegmans cases. Wegmans vigorously continued its argument that MBDA lacked standing, hiring experts at substantial cost to prove that D Distributors would not be harmed by Wegmans' sale of beer. Commonwealth Court found in favor of MBDA as to standing, agreeing that it has a right to participate in the Wegmans cases. Approximately 22 of the 31 pages of the opinion were devoted to standing.

The merits of MBDA's numerous objections to the transfers were covered in the remaining 9 pages. The court fairly summarized MBDA's argument when writing, "MBDA argues that the PLCB's decision, licensing space that is fundamentally an integral part of a supermarket to sell beer primarily for take-out consumption, turns these principles [restraining, not promoting, the sale of alcohol] on their head. It asserts Wegmans clearly stated its goal in seeking licensure; it wanted to "make the experience of shopping at Wegmans even better, and certainly more convenient, by selling beer in our Market Cafe restaurant." MBDA contends buying beer "at" the Market Cafe is "shopping at Wegmans", part and parcel of Wegmans' "economy of scope" marketing strategy. MBDA asserts it is the sale of beer by and at a supermarket. MBDA maintains it is only by turning a blind eye to reality that the PLCB can view this as a typical restaurant license."

Nevertheless, rather than examining these and other objections raised by MBDA in order to decide if the PLCB's actions actually made sense as part of the overall regulatory scheme embodied by Pennsylvania's Liquor Code laws, the court felt bound to defer to the discretionary decision by the PLCB to issue the licenses, limiting its review only to the questiion of whether or not the PLCB had abused its discretion in approving interconnections between a licensed and unlicensed premises. Proof of abuse of discretion is shown by an agency's "bad faith, fraud, capricious action or abuse of power", none of which the court found present in the PLCB's decision.

Because we believe and have argued that it is beyond the scope of the PLCB's authority to issue supermarkets licenses to sell beer, such action being such a fundamental change in how beer is sold in Pennsylvania that it should be addressed by the legislature and not an administrative agency, MBDA will file with the Pennsylvania Supreme Court a Petition for Allowance of appeal of the Commonwealth Court's decision. There is no automatic right of appeal. Instead ,the Supreme Court chooses cases it believes raise important public policy issues and/or that were wrongly decided. There is no guarantee that the Supreme Court will choose our case, but we think there is a good chance that it will do so. The Supreme Court has previously shown its interest in these "where and how beer is sold" questions when it chose to hear the Sheetz case. That case was argued last May and we expect a decision any time in the next three months.

 

 
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