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

This case involves the construction of Business and Professions Code sections 25500, subdivision (a)(2) and 25503, subdivision (h), and California Code of Regulations, title 4, section 106, subdivision (i)(2). The Department of Alcoholic Beverage Control (Department) suspended the license of real party in interest, Schieffelin and Somerset Company (Schieffelin), an alcoholic beverage supplier, for violating these statutes by paying an event promoter for cosponsorship of a race sponsored by Chevys Restaurants, an alcoholic beverage retailer, and for the placement of advertising for Schieffelin’s product on Chevys’ premises. The Department also concluded that the administrative rule, which permits alcoholic beverage suppliers to sponsor contests, races, tournaments, and similar activities held by “bona fide amateur or professional organizations established for the encouragement and promotion of the activities involved” (Cal. Code Regs., tit. 4, § 106, subd. (i)(2); hereafter Rule 106(i)(2)), did not exempt Schieffelin from the coverage of the statutes, commonly known as the tied-house restrictions, as explained in part II.

Schieffelin appealed to the Alcoholic Beverage…