Department Of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Board

145 P.3d 462 (2006)

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Nature of the Case

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Facts

Three consolidated cases are on appeal. P has exclusive licensing authority over entities that sell alcoholic beverages. To determine if there has been a violation of a license D has an evidentiary hearing where D's prosecutor makes D's case to an administrative law judge (ALJ), and a second level of decisionmaking in which D's director or a delegee decides whether to adopt the ALJ's proposed decision. After the trial, the ALJ makes factual findings, prepares a proposed decision, and submits it to D. D then makes its decision. P filed accusations against three Ds. In each case, the ALJ considered the evidence and issued a proposed decision dismissing the accusations, which was then referred to D for final action. Before P rendered its decision, the prosecutor prepared a report of the hearing, a form document, and apparently sent it to P's chief counsel, but not to any Ds. The reports prepared by the prosecutor are not part of the records for any of the actions. In each case, the prosecutor summarized the issues and the evidence presented at the hearing and recommended, with supporting reasons, a particular disposition of the case. P rejected the ALJ's proposed decision to dismiss the accusation and substituted its own decision, suspending the licenses of Ds. D appealed to the Alcoholic Beverage Control Appeals Board (Board). Ds claimed that P had violated their due process rights because the decision-maker, P's chief counsel, was the prosecutor's supervisor and a biased advocate rather than a neutral decision-maker. Ds each filed a motion to augment the record, seeking all documents available to the chief counsel at the time P rendered its decision. P claimed the documents sought were protected by the attorney-client privilege and work product doctrine and, in any event, the Board lacked authority to augment the record. The Board granted Ds' motion. P refused. The Board reversed P's decisions. It held that Ds were deprived of the right to a fair trial by a fair tribunal. It found that the ex parte communication between P's decision maker or decision maker's adviser (D's chief counsel) and a party (D's prosecutor) were prohibited under the APA, and P had violated the APA by failing to make the report part of the administrative record, notify the parties of its inclusion, and allow Ds an opportunity to respond. The Court of Appeal affirmed. It held that P violated Ds' due process rights. P appealed.