Source: http://abc.ca.gov/trade/Court122702.htm
Timestamp: 2019-04-20 12:17:13+00:00

Document:
APPEAL from a judgment of the Superior Court of Sacramento County, Charles C. Kobayashi, J. Affirmed.
Bill Lockyer, Attorney General, Jacob Appelsmith, Lead Supervising Deputy Attorney General, Stacy Boulware Eurie, Deputy Attorney General, for Plaintiff and Appellant.
Farella Braun & Martel and Richard Van Duzer for Defendant and Respondent.
The Department of Alcoholic Beverage Control (the Department) appeals from the superior court’s order denying the Department’s request for a preliminary injunction to enjoin Miller Brewing Company (Miller) from giving consumers cash rebates on the purchase of beer when the consumers buy certain nonalcoholic products.
According to the Department, Miller’s promotional campaign, which the Department refers to as a “contingent rebate” scheme, violates Business and Professions Code section 25600 (hereafter section 25600) and California Code of Regulations, title 4, section 106 (hereafter rule 106). We disagree.
As we will explain, almost 20 years ago, section 25600 was construed by this court to allow cash rebates on the purchase of alcoholic beverages. Since then, the Legislature has amended section 25600 without altering that construction of the statute, thus acquiescing in the court’s interpretation of legislative intent. Nothing in the language of section 25600 supports the Department’s position that the Legislature’s intent to allow direct cash rebates on the purchase of alcoholic beverages does not extend to cash rebates contingent upon the purchase of nonalcoholic products. And, because the provisions of rule 106 cannot exceed the scope of its enabling statute, section 25600, the Department cannot rely on rule 106 to prohibit so-called “contingent rebate” promotional campaigns.
Accordingly, we shall affirm the judgment, denying the request for a preliminary injunction to stop Miller’s rebate campaign.
Miller’s rebate promotion gives coupons to consumers for $1 or $2 off of the purchase of one of Miller’s beer products if the consumers purchase specified nonalcoholic products, such as ground beef, pickles, soda, or buns. For example, one promotion offers $2 off the purchase of Foster’s beer, which is distributed by Miller, when the consumer purchases a pound or more of shrimp. Some of the coupons may be redeemed instantly at the time of purchase, while others must be mailed in to obtain the rebate. The Department refers to the promotion as a “contingent rebate” program because the rebate on the purchase of beer is contingent upon the consumer’s purchase of a nonalcoholic item.
In the Department’s view, the contingent rebates are premiums within the meaning of section 25600, subdivision (a), and thus are prohibited because they exceed the $0.25 limit imposed by subdivision (b) of section 25600. The Department also argues that rule 106 prohibits Miller’s cross-merchandising promotion.
Relying on this court’s decision in Gonzales & Co. v. Department of Alcoholic Bev. Control (1984) 151 Cal.App.3d 172 (hereafter Gonzales), the superior court ruled that the cash rebates offered by Miller are not premiums, and therefore are not prohibited by section 25600. The court also held the rebates are not barred by the Department’s interpretation of rule 106 because the Department does not have the authority to issue a regulation exceeding the scope of the enabling statute.
The Department does not assert that the contingent rebate coupons are gifts or free goods within the meaning of section 25600. Rather, it contends the superior court erred in relying on Gonzales, supra, 151 Cal.App.3d 172, for the proposition that, as a matter of law, the contingent rebates offered by Miller are not premiums within the meaning of section 25600.
The statutory changes pointed out by the Department are noteworthy, however, in that they demonstrate the Legislature has amended section 25600 several times following the Gonzales decision, yet the Legislature has not altered the statute to provide that rebates on the purchase of alcohol are intended to fall within the prohibition against the giving of premiums in connection with the sale or distribution of alcohol. (See Stats. 1985, ch. 803, § 1, p. 2586; Stats. 1988, ch. 1080, § 1, pp. 3493-3494; Stats. 1994, ch. 392 (Assem. Bill No. 3329), § 1, pp. 2245-2246; Stats. 1995, ch. 91 (Sen. Bill No. 975), § 15.) Section 25600 still forbids the direct or indirect giving of “any premium, gift, or free goods” in connection with the sale or distribution of alcohol, which are the same items that former section 25600 prohibited licensees from giving in connection with the sale of alcohol at the time Gonzales was decided.
When a statute has been construed judicially and the Legislature thereafter amends that very portion of the statute using substantially similar language and without changing the interpretation put on that statute by the courts, the Legislature is presumed to have been aware of, and acquiesced in, the court’s construction of the statute unless a contrary intent appears. (Estate of Griswold (2001) 25 Cal.4th 904, 915-916; Townzen v. County of El Dorado (1998) 64 Cal.App.4th 1350, 1357-1358.) No such contrary intent appears in the present case.
The Department contends that Gonzales does not govern in this case because Gonzales held only that direct rebates are not premiums and did not address indirect rebates, which the Department maintains must be treated differently. It points out the decision in Gonzales noted that giving “something extra” for the purchase of a product could be construed as a premium. (Gonzales, supra, 151 Cal.App.3d at p. 179.) According to the Department, Miller’s rebates on the purchase of alcohol are premiums because they are “something extra” given for the purchase of a nonalcoholic product. We disagree.
Although Gonzales involved a direct rebate, its holding that rebates on the purchase of alcohol are not prohibited premiums was not premised on this fact. Rather, it was based on the legislative history of the Act, which demonstrated the Legislature perceived a difference between a rebate and a premium, and did not intend to include rebates in the statutory prohibition against the giving of premiums in connection with the sale of alcohol. While the mechanism for obtaining a rebate may be different under Miller’s promotional program than the promotion in Gonzales--the consumer must first purchase a nonalcoholic product to obtain a rebate on the purchase of Miller beer--this distinction is not meaningful. The end result is the same, a reduction in the purchase price of the alcoholic beverage.
The Department proffers no cogent reason why a rebate on the purchase of alcohol that is contingent on the purchase of a nonalcoholic product should be treated differently than a direct rebate. And nothing in the language of section 25600 makes such a distinction. Furthermore, the Department has failed to show that interpreting the term “premium” not to include the type of indirect rebates offered by Miller is more likely to contravene the purpose of the Act, of which section 25600 is a part, than the exclusion of direct rebates from the statute’s prohibition.
The purpose of the Act is to promote temperance in the use and consumption of alcoholic beverages (§ 23001), a purpose that is accomplished, in part, by the limitations set forth in section 25600. The typical scenario prohibited by section 25600 is one where an enticement, such as a gift, free goods, or “something extra,” is given in exchange for the purchase of alcohol because this either (1) encourages a person who does not ordinarily imbibe to purchase and drink alcohol in order to obtain the “enticement,” or (2) encourages a person who already drinks alcohol to purchase and imbibe more than usual to obtain more free goods or gifts.
Despite its concern with promoting temperance, the Legislature has not prohibited cash rebates on the purchase of alcohol, even though such rebates might be viewed as promoting and encouraging increased purchases of alcohol by giving the consumer a price discount. Given that the Legislature has allowed direct rebates, it makes no sense to interpret 25600 as prohibiting the “contingent” rebates offered by Miller. Miller’s rebates--which include the added requirement of purchasing a nonalcoholic product in order to obtain a rebate on the purchase of beer--are no more likely, and may even be less likely, to encourage intemperance than direct rebates on the purchase of beer. Rather than simply having to purchase beer to receive a rebate, consumers also must expend an additional amount of money on a food item to achieve the same benefit provided by a direct rebate.
Thus, the primary difference between the so-called “contingent rebate” in this case and the so-called “direct rebate” in Gonzales is that Miller’s contingent rebate program encourages consumers to purchase the specified nonalcoholic food items in order to obtain a rebate on their purchase of beer. But encouraging the purchase of shrimp, ground beef, or soda does not contravene the public policy underlying section 25600.
As explained in Gonzales, the Legislature did not intend to prohibit cash rebates on the purchase price of alcoholic beverages. Because there is no sound reason for distinguishing between direct rebates and the kind of contingent rebates offered by Miller, we conclude that Miller’s contingent rebates are not prohibited premiums within the meaning of section 25600.
The Department also contends that Miller’s contingent rebate program is prohibited by rule 106. According to the Department, rule 106 governs the present case because (1) it was promulgated after Gonzales, and (2) rule 106 was held to be valid in Coors Brewing Co. v. Stroh (2001) 86 Cal.App.4th 768 (hereafter Coors).
Before addressing the Department’s claim that rule 106 prohibits the contingent rebate program, it is necessary to clear up the Department’s confusion regarding its rule-making authority and the holding in Coors.
As discussed previously, Gonzales construed the term “premium” in section 25600 not to include rebates on purchases of alcoholic beverages. Thereafter, the Legislature did not amend section 25600 to clarify that, contrary to the holding in Gonzales, it intended to prohibit such rebates. Thus, as used in section 25600, the term “premium” does not encompass rebates on the purchase of alcohol.
Here, the statute provides that premiums are invalid except to the extent permitted by the Department’s rules, and that with respect to beer, the value of a premium may not exceed $0.25. (§ 25600, subds. (a), (b).) In other words, pursuant to section 25600, the Department is authorized to make rules permitting inconsequential premiums. But nothing in the statute gives the Department the authority to expand the definition of the term “premium” beyond that intended by the Legislature. To the extent the Department construes rule 106 to provide a more expansive definition of the term, its construction is invalid.
The Department also views Coors, supra, 86 Cal.App.4th 768, as holding that rule 106 is valid in its entirety for all purposes. Apparently, the Department believes this means it may enforce its interpretation of the rule. This is incorrect.
In any event, the Department’s reliance on rule 106 is misplaced. Subdivision (j) of rule 106 simply provides that Miller may not circumvent the prohibition against giving any premium worth more than $0.25 by way of cross-merchandising promotions with a nonalcoholic beverage product. If the contingent rebates Miller offers through its cross-merchandising promotion are not premiums, they are not within the prohibition of rule 106. As we explained previously, the contingent rebates are not premiums. Therefore, rule 106 has no application.
For the reasons stated above, the superior court correctly refused to issue the requested preliminary injunction.

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