In re McCulloch

980 N.W.2d 599

In the MATTER OF the Administrative Penalty Order and License Suspension Issued to Kevin MCCULLOCH and Mission Tavern, Inc., d/b/a Mission Tavern (A22-0148),

In the Matter of the Administrative Penalty Order and License Suspension Issued to Norman Sugden (A22-0273).

A22-0148, A22-0273

Court of Appeals of Minnesota.

Filed September 19, 2022

Richard Dahl, Dahl Law Firm PA, Brainerd, Minnesota (for relators Kevin McCulloch, Mission Tavern, Inc., and Norman Sugden)

Keith Ellison, Attorney General, Megan J. McKenzie, Lindsay K. Strauss, Assistant Attorneys General, St. Paul, Minnesota (for respondent Minnesota Department of Health)

Considered and decided by Smith, Tracy M., Presiding Judge; Segal, Chief Judge; and Smith, John, Judge.^*

SEGAL, Chief Judge

Relators in these consolidated appeals challenge enforcement actions brought by respondent Minnesota Department of Health (MDH) for violating provisions of the governor's COVID-19-related emergency executive orders. Relators argue that MDH lacked statutory authority to enforce the governor's emergency executive orders; to utilize the contested case process provided in the Minnesota Administrative Procedure Act (MAPA), Minn. Stat. §§ 14.001 -.69 (2020 & Supp. 2021); or to impose, after the orders were rescinded, license consequences and administrative penalties for violations that occurred while the orders were in effect. Relators also argue that MDH lacked authority for the enforcement actions because the emergency executive orders were not supported by a rational basis and were thus unconstitutional. Because we conclude that MDH acted within its statutory authority and that the emergency executive orders were supported by a rational basis, we affirm.

FACTS

Relators Kevin McCulloch and Mission Tavern, Inc. operate Mission Tavern in the town of Merrifield, and relator Norman Sugden operates Norm's Wayside in Buffalo. Both establishments have food and beverage licenses issued by MDH. During the COVID-19 pandemic, MDH received a number of complaints about the establishments and their lack of compliance with various COVID-19 emergency executive orders issued by the governor.¹ Those executive orders prohibited restaurants and bars from serving food and beverages for on-premises consumption between mid-March 2020 and early June 2020. EEOs 20-04, 20-74. After a spike in COVID-19 case levels in the fall of 2021, on-premises consumption of food and beverages was also prohibited between mid-November 2021 and early January 2022. EEOs 20-99, 21-01. When allowed to reopen for on-premises consumption of food and drinks, restaurants and bars were required to restrict indoor occupancy and to implement a COVID-19-preparedness plan. EEOs 20-74, 21-01. Another order issued by the governor in July 2020 required face coverings to be worn indoors at restaurants and bars, with an exception allowing customers to remove them while eating and drinking. EEO 20-81. The face-coverings requirement remained in place until early summer 2021. (The applicable emergency executive orders are collectively referred to hereafter as "the executive orders.").

In response to complaints received from the public, MDH staff inspected both establishments a number of times and found repeated violations of the executive orders, including instances of the establishments remaining open and serving customers indoors during the months when on-premises consumption was prohibited. MDH provided notice of the violations and issued cease-and-desist orders. Because the establishments continued to operate in violation of the executive orders, MDH suspended Mission Tavern's license, suspended and then revoked the license for Norm's Wayside, and assessed an administrative penalty in the amount of $10,000 against both establishments.

Relators contested MDH's enforcement actions. Separate contested case proceedings were held before an administrative-law judge (ALJ). Relators did not dispute the facts underlying the violations. Instead, they challenged the authority of MDH to enforce the executive orders and argued that the orders were unconstitutional because they lacked a rational basis.

MDH moved for summary disposition, and the ALJ recommended that MDH's motions be granted in both cases. In the Mission Tavern case, MDH's designated agency decision-maker determined that the ALJ's recommendation would "constitute the final agency decision," and returned the matter to the ALJ "for consideration of disciplinary action," including determination of the length of Mission Tavern's license suspension. In the final order, the ALJ found that Mission Tavern violated EEO 20-99; imposed a 40-day suspension of Mission Tavern's food and beverage license, with 20 days conditionally stayed for one year; and an administrative penalty of $7,500, with $2,500 conditionally stayed for one year.

In the Norm's Wayside case, MDH's designated agency decision-maker issued the final order. In that order, the agency decision-maker found that Sugden committed "knowing, intentional, serious, and repeated" violations of EEOs 20-74, 20-81, 20-99, and 21-01; revoked Sugden's food and beverage license but conditionally stayed the revocation; and affirmed a 60-day suspension of Sugden's food and beverage license, with 30 days conditionally stayed. The agency decision-maker also affirmed the $10,000 administrative penalty.

ISSUES

I. Does MDH have statutory authority to enforce the provisions of emergency executive orders?

II. Are the contested case provisions of MAPA applicable to MDH actions to enforce provisions of emergency executive orders?

III. Is MDH's authority to impose administrative penalties and license suspensions and revocations against licensees for violations of emergency executive orders extinguished by the rescission of those orders?

IV. Did the executive orders lack a rational basis?

ANALYSIS

Relators challenge the final orders in these consolidated appeals, arguing under various theories that MDH acted outside its authority and that the executive orders lacked a rational basis and were thus unconstitutional.² In our analysis, we first set out the statutory framework and standards of review and then address relators’ arguments.

Chapter 157 of the Minnesota Statutes requires food and beverage service establishments, like Mission Tavern and Norm's Wayside, to be licensed. Minn. Stat. § 157.16, subd. 1 (2020). The Minnesota Health Enforcement Consolidation Act of 1993 (HECA), Minn. Stat. §§ 144.989 -.993, gives MDH its enforcement authority, including the authority to enforce the provisions of chapter 157. Minn. Stat. § 144.99, subd. 1.

HECA also authorizes MDH to enforce "all rules, orders, stipulation agreements, settlements, compliance agreements, licenses, registrations, certificates, and permits adopted or issued by the department or under any other law now in force or later enacted for the preservation of public health." Id. HECA provides MDH with several different enforcement mechanisms, including authority to issue correction, cease-and-desist, and administrative-penalty orders. Id. , subds. 3, 4, 6. And, in the case of "serious or repeated violations," the commissioner of health may also "suspend, place conditions on, or revoke a ... license." Id . , subd. 9.

The enforcement actions taken by MDH here were premised on relators’ violations of provisions in the executive orders promulgated under the authority of the Minnesota Emergency Management Act of 1996 (MEMA), Minn. Stat. §§ 12.01 -.61. MEMA grants the governor the authority to declare a peacetime emergency, Minn. Stat. § 12.31, subd. 2(a), and to "make, amend, and rescind the necessary orders and rules to carry out the provisions" of MEMA, Minn. Stat. § 12.21, subd. 3(1). When the governor promulgates an order under Minn. Stat. § 12.21, subd. 3(1), and that order is "approved by the Executive Council and filed in the Office of the Secretary of State," the order has "the full force and effect of law." Minn. Stat. § 12.32. Relators do not dispute that the executive orders here were so approved and filed.

When MDH acts to suspend or revoke a license, or to impose an administrative penalty, HECA provides that a licensee has a right to request a contested case hearing. Minn. Stat. §§ 144.99, subd. 10, .991, subd. 5. Relators requested hearings here, and both cases were referred to an ALJ. As noted above, however, both cases were resolved on motions for summary disposition prior to a contested case hearing.

"Summary disposition is the administrative equivalent of summary judgment." Pietsch v. Minn. Bd. of Chiropractic Exam'rs , 683 N.W.2d 303, 306 (Minn. 2004). Appellate courts review a grant of summary disposition de novo to determine "whether there are any genuine issues of material fact and whether there was an error in applying the law to the facts." Id.

To the extent that relators’ arguments require statutory interpretation, we first examine the statutory language to see if the statute is ambiguous or if only one reasonable interpretation exists. Am. Fam. Ins. Grp. v. Schroedl , 616 N.W.2d 273, 277 (Minn. 2000). "Where the legislature's intent is clearly discernable from plain and unambiguous language, ... courts apply the statute's plain meaning." Am. Tower, L.P. v. City of Grant , 636 N.W.2d 309, 312 (Minn. 2001). "The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature." Minn. Stat. § 645.16 (2020).

I. MDH's authority under HECA to enforce orders extends to duly promulgated emergency executive orders.

Relators’ first challenge is to MDH's authority to enforce the executive orders. They argue that MDH's authority over its licensees does not extend to executive orders. HECA provides that the commissioner of health has the authority to enforce "all rules, orders, stipulation agreements, settlements, compliance agreements, licenses, registrations, certificates, and permits adopted or issued by the department or under any...