Court Opinion

ID: 9533275
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:30:05.21361+00
Date Added: 2024-06-11T13:28:59.403497
License: Public Domain

PETERS, J.
I dissent.
The majority in construing the statutes before us are telling us what the Legislature should have done rather than what it did, and are thus violating the cardinal principle that our job begins and ends with determining the legislative intent. The meaning of the statutes when placed side by side is clear, and since they are closely related both as to subject matter and *413numerical placement, they must be interpreted together. When interpreted together it is clear that a retailer may acquire a beer and wine wholesaler’s license, although the wholesaler would not be permitted to acquire a retailer’s license. As we shall see, there is a substantial justification for the distinction made by the Legislature. The Alcoholic Beverage Control Appeals Board recognized that its function was to determine what the Legislature had done and did not consider whether the statutes should or should not be extended beyond their apparent meaning. We should affirm the order of the board.
The majority seek to avoid the clear meaning of the statutes by a resort to the history of legislative opposition to vertical integration or tied-house relationships in the alcoholic beverage industry and by a claim that it would be paradoxical to accept the clear meaning of the statutes. However, although there is a history of opposition to vertical integration, the Legislature has made exceptions to its opposition, and there is no reason not to give effect to the exception involved here as well as the other exceptions.
The statutory pattern shows careful consideration of the various evils and benefits of vertical integration, and contrary to the majority’s view, the carefully drawn legislative scheme should not be invalidated by condemning all vertical integration. When the problems involved in vertical integration are scrutinized it is apparent that there is a sound policy reason for prohibiting a wholesaler from having a chance of becoming a retailer which does not exist in the instant case where a retailer seeks to enter the wholesale business. Thus, there is no paradox in adopting, as the Legislature did, different rules for the two situations.
Secondly, the majority in relying on their claimed paradox fail to mention the greater paradox which continues to exist even in the light of then-construction of the statutes. As the appeals board points out, no statute prohibits a beer and wine wholesaler from acquiring a beer and wine off-sale retailer’s license or a beer and wine off-sale retailer from acquiring a beer and wine wholesaler’s license. The Attorney General concedes that persons may own off-sale beer and wine licenses and wholesale beer and wine licenses at the same time. In other words, tied houses and vertical integration are permitted in beer and wines. (The sections basically involved here relate to off-sale general licenses.)
Thirdly, if the issue of paradox is relevant, the ultimate paradox is the immediate and direct practical effect of the majority opinion and its reasoning. In the name of opposition to vertical integration, the majority prohibit Thriftimart, Inc., which does not intend to integrate a retail and wholesale business, from obtaining a wholesale license which Thriftimart *414wants so that it can compete against a grocery cooperative, which is vertically integrated.
Section 25502 of the Business and Professions Code provides; “No . . . wholesaler . . . shall, except as authorized by this division: (a) Hold the ownership, directly or indirectly, of any interest in an off-sale general license. . . .” Section 25506 of that code provides: “Except as authorized by this division, no off-sale general licensee . . . shall hold any ownership or interest, directly or indirectly, in the business, property, or license of any distilled spirits wholesaler, . . .” (Italics added.) The only reasonable interpretation of the sections when they are analyzed together is that section 25506 is a limitation on the business in which an off-sale general licensee (retailer) may engage in and section 25502 is a limitation on the business a wholesaler may engage in. It follows that although any wholesaler is prohibited from acquiring any interest in a retailer, a retailer is prohibited only from acquiring an interest in a “distilled spirits wholesaler,” and there is no prohibition against a retailer acquiring an interest in a beer and wine wholesaler.
If there were any doubt as to this construction of the code sections, it is dispelled by the parallel .provisions of sections 25500 and 25505 of the Business and Professions Code dealing with the relationship insofar as relevant here between wholesalers and on-sale licensees. Section 25500 like section 25502 must be read as a restriction on wholesalers, and section 25505 like section 25506 must be read as a restriction on retailers. Any other construction would render section 25505 meaningless. Section 25500 provides: “No . . . wholesaler . . . shall: (a) Hold the ownership, directly or indirectly, of any interest in any on-sale license. ...(c) Own any interest, directly or indirectly, in the business, furniture, fixtures . . . lease ... or ... in realty acquired after June 13, 1935, upon which on-sale premises are maintained. . . .” Section 25505 provides: “No on-sale licensee . . . shall hold any ownership or interest, directly or indirectly, in any . . . wholesaler’s license, the business conducted under such license, or the property used in the business. . . .”
The majority urge that section 25502 means not only that a wholesaler may not acquire a retail license but also that a retailer may not acquire a wholesale license. Such a construction renders section 25506 meaningless in violation of the familiar rule of statutory construction. The majority attempt to ¿void the violation by urging that its construction, if applied to the sections prior to the 1969 amendment to section 25502, would give some meaning to section 25506. First, the meaning is a very limited one and leaves the provisions of section 25506 largely duplicative of those in *415section 25502. Second, the argument fails because it means that the Legislature in 1969 did not realize that it was then rendering section 25506 meaningless, contrary to the rule of statutory construction. Third, the argument will not work as to the parallel provisions of sections 25500 and 25505 quoted above because those provisions were not changed as to relevant matters in 1969.
The majority also state that the exemptions for cooperatives and for small counties would be unnecessary if the same party could hold both a beer and wine wholesaler’s license and an off-sale retail license. But this is erroneous because the exemptions would still be necessary if the cooperative or the person in the small county held a distilled spirits wholesaler’s license. Moreover, the cooperative exemption in section 25508 by its own terms can have no application to the situation before us. The section applies only to cooperatives which have “a distilled spirits wholesaler’s license.” The section has no application to beer and wine wholesale licenses, the matter before us.
I do not find it unreasonable for the Legislature to apply different rules when a beer and wine wholesaler is seeking a retailer’s license than when a retailer is seeking to obtain a beer and wine wholesaler’s license. In Harris v. Alcoholic Bev. etc. Appeals Bd., 61 Cal.2d 305, 309 [38 Cal.Rptr. 409, 392 P.2d 1], we mentioned two purposes for the prohibitions of tied-house agreements, identifying one as the prevention of “imposition of quotas on retailers.” It seems clear to me that if wholesalers are in a position to obtain a retail license they may, by threatening to open a nearby competing retail establishment, compel a retailer to meet a quota. But permitting a retailer to obtain a wholesale license does not involve any such danger.
Vertical integration may, of course, involve other evils than the one discussed in the preceding paragraph. On the other hand, vertical integration may in some situations involve benefits to the consumer. It is for the Legislature to weigh the benefits and detriments in each situation and determine whether vertical integration should be prohibited. The fact that the Legislature has seen fit to prohibit vertical integration in a large number of situations in the alcoholic beverage industry based on its assessment of the relative benefits and evils does not warrant a conclusion that it intended to prohibit such integration in all situations.
Similarly, once we recognize that there are different evils involved in permitting a retailer to become a wholesaler than in permitting a wholesaler to become a retailer, we cannot say that it is anomalous or paradoxi*416cal for the Legislature to have adopted different rules for the different situations. We should give effect to the legislative intent as manifested by the statutory provisions; it is not for us to attempt to reweigh the benefits and evils and substitute our judgment for that of the Legislature. Nor should we assume in the light of the detailed statutory pattern that" the Legislature was not aware of the meaning of its statutes. And we should not attempt to extend them beyond their provisions on the basis of a general opposition to vertical integration in the alcoholic beverage industry when it is apparent that the Legislature has made a number of exceptions to its opposition.
The majority also rely upon Borun Bros. v. Department Alcoholic Beverage Control, 215 Cal.App.2d 503 [30 Cal.Rptr. 175]. The case, however, never considered or mentioned the provisions of section 25506, and thus should not be considered substantial authority for determining the construction of the statutes before us.
Since the majority have placed so much emphasis on the claimed paradox, I would be remiss if I did not call attention to the paradox shown by the practical effect of the majority ruling to the party before it. As the majority recognize, Thriftimart operates both 77 retail grocery store outlets and a wholesale division which serves institutional buyers and independent retail grocers. The majority also point out that the hearing officer concluded that Thriftimart did not intend to purchase beer and wine from its wholesale division for resale by its own retail division, but the majority fail to point out the effect of this finding. The evidence is that Thriftimart wants the wholesale license to sell to its institutional buyers and independent grocers so it can compete with its chief competitor in the wholesale business, Certified Grocers, a cooperative wholesale grocery company which has a wholesale beer and wine license and sells to its retail grocery members, most of whom have off-sale general licenses. Or, in other words, the evidence clearly shows that Thriftimart wants to give the independent retailers who purchase from its wholesale division the same competitive advantage they would have if they purchased from Certified Grocers. The evidence shows that the small retail grocers will be denied substantial savings if they are unable to purchase beer from their wholesale grocery outlets. The evidence also shows that Thriftimart’s retail stores, which apparently are large outlets, are already obtaining these savings by purchasing from other wholesalers and that beer makes up 4 percent of the wholesale grocery business, obviously a significant part.1
*417In sum, Thriftimart does not seek any vertical integration. Its chief competitor is vertically integrated. It seems paradoxical to me to deny Thriftimart a wholesale license in the name of opposition to vertical integration when its chief competitor in the field is permitted to carry on a vertically integrated business.
I would interpret the statutes together, would not extend them beyond their plain meaning, and would affirm the order of the Alcoholic Beverage Control Appeals Board.
The petition of the real party in interest for a rehearing was denied September 8, 1971. Burke, J., did not participate therein. Peters, J., was of the opinion that the petition should be granted.

 The gist of this evidence is that the small retail grocery store cannot obtain from beer wholesalers not in the grocery business private label beer at the savings that large *417retailers receive. But the small retailers could obtain those savings if they could purchase from their wholesale grocer.