Diageo-Guinness Usa, Inc. v. Board of Equalization

Plaintiffs Diageo-Guinness USA, Inc. (Diageo-Guinness), and the Flavored Malt Beverage Coalition (Coalition) appeal from a judgment entered in favor of defendant Board of Equalization (Board) on plaintiffs’ complaint for declaratory relief. Plaintiffs had sought a declaration that regulations adopted by the Board, which redefined “distilled spirits” to include flavored malt beverages (FMB’s) for purposes of excise taxation are void. Plaintiffs contend the classification of alcoholic beverages is within the exclusive jurisdiction of the Department of Alcoholic Beverage Control (Department), and the Department has consistently classified FMB’s as beer, which is subject to a much lower tax rate. We agree the Board exceeded its statutory powers and reverse.

Facts and Proceedings

Prior to 1955, the manufacture, distribution and sale of alcoholic beverages was regulated by the Board. In November 1954, article XX, section 22, of the state Constitution was amended, transferring such regulatory power to the Department. As later amended, it reads in relevant part:

To implement the foregoing, the Legislature enacted the Alcoholic Beverage Control Act (the ABC Act) (Bus. & Prof.…