Mcmanus Enters., Inc. v. Neb. Liquor Control Comm'n

303 Neb. 56

926 N.W.2d 660

MCMANUS ENTERPRISES, INC., doing business as Heidelberg’s, appellant,

v.NEBRASKA LIQUOR CONTROL COMMISSION, appellee.

No. S-18-699.

Supreme Court of Nebraska.

Filed May 3, 2019.

Charles D. Humble, of Erickson & Sederstrom, P.C., Lincoln, for appellant.

Douglas J. Peterson, Attorney General, and Milissa Johnson-Wiles, Lincoln, for appellee.

Heavican, C.J., Miller -Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Cassel, J.

INTRODUCTION

This appeal turns on the correct interpretation of the Nebraska Liquor Control Commission’s "disturbance rule."¹ The rule’s plain language applies only where a licensee "allow[s] any unreasonable disturbance; as such term is defined [in the rule], to continue without taking the steps , as set forth [in the rule]."² The commission and the district court on review³ disregarded that plain language: ignoring the words "to continue." Although we must reverse this license cancellation, we emphasize that our decision does not preclude the commission from adopting a rule that would impose upon licensees a duty to take reasonable steps to prevent disturbances from occurring in the first instance. But its existing rule does not do so, and we are required to apply the rule as written.

BACKGROUND

DISTURBANCE RULE

Because our decision turns upon the plain language of the disturbance rule, we recite it in full:

019.01F Disturbance: No licensee or partner, principal, agent or employee of any licensee shall allow any unreasonable disturbance; as such term is defined hereunder, to continue without taking the steps, as set forth hereunder, within a licensed premise or in adjacent related outdoor areas.

019.01F1 A "Disturbance" as used in this section shall mean any brawl, fight, or other activity which may endanger the patrons, employees, law enforcement officers, or members of the general public within licensed premises or adjacent related outdoor area. Such term shall include incidents involving, but not necessarily limited to: drug dealing; intoxicated individuals; soliciting of prostitution; or any physical contact between the licensee’s agents or employees and its customers, involving any kissing, or any touching of the breast, buttock or genital areas. Any brawl fight or other activity which results in serious injury to any patro[n], employee or members of the general public shall be reported to law enforcement. Serious injury means any gunshot wou[n]d, knife or other stab wound or any other injury requiring medical treatment onsite or transportation to a medical facility for treatment. Licensees and their employees shall not prohibit or interfere in any way with a patro[n] who chooses to contact law enforcement in the event they are assaulted on the premises.

019.01F2 Unless there is reason to believe that a licensee or partner, principal, agent or employee of any licensee would endanger himself/herself or others, such person shall take such action as is reasonably necessary to terminate the disturbance. Physical force should be exercised only in extreme circumstances and should be limited to the force reasonably required to terminate the disturbance and remove the individual from the licensed premise, without endangering any patron or other person.

019.01F3 In the event efforts taken in accordance with the preceding subparagraph are not successful or if there is reason to believe that the licensee, partner, principal, agent or employee of any licensee may create a danger to himself/herself or others, th[e]n in such event, such person shall immediately contact law enforcement personnel to assist in properly handling the disturbance. In the event law enforcement and/or medical personnel are summoned, the directions and/or orders given by such law enforcement or medical personnel shall be followed.

019.01F4 A licensee who has conformed with the procedure as set forth in this section shall be deemed to have not permitted a disturbance to occur and continue. Licensees who wish to document their compliance with this rule may maintain a log in which they document disturbances or other unusual occurrences.⁴

EVENTS

John McManus is the owner of McManus Enterprises, Inc. (collectively McManus), which operates Heidelberg’s bar in Lincoln, Nebraska. In August 2017, a professional boxing match was held at an arena in Lincoln. The day before the match, an event promoter approached McManus, asking to host an event at Heidelberg’s after the match. McManus agreed. The promoter hired and paid a company to provide security for the event.

The Omaha Police Department informed the Lincoln Police Department (LPD) that an event following the last boxing match in Omaha, Nebraska, resulted in an "all call" disturbance. "All call" means a radio call directing all available officers to respond. LPD became concerned that "there could be a gang following and some violent problems." An LPD officer testified that on the evening of the match, LPD approached John McManus, the owner, about its concerns and informed him of the incident following the last boxing match in Omaha. The owner testified that he was unaware of problems following the last boxing match in Omaha and that LPD never informed him about such issues.

After the match, LPD had 10 to 15 officers in the parking lot of Heidelberg’s. About 1:55 a.m., a small group of people clustered around the front door started a fight that rippled through the crowd. LPD entered the bar and began to break up the fights. One officer requested an all-available-unit call. A few of the security company’s guards aided LPD in breaking up the fights. Approximately 15 to 20 minutes later, all patrons were out of the bar.

LICENSE PROCEEDING

The commission charged McManus with "allow[ing] or permit[ting] a disturbance," in violation of § 019.01F. Although the commission charged McManus with a second violation, it dismissed that charge at the close of the hearing.

After the hearing, the commission found that McManus violated the disturbance rule when it (1) "allow[ed] or permit[ted] a disturbance in or about the licensed premises," (2) "ignore[d] security concerns that were expressed to it by law enforcement and proceeded with the event despite the warning," and (3) "willingly turn[ed] over a portion of [its] licensed business to the care and control of an unregulated third party and its security force," and that (4) such willful actions "created an unreasonable threat to the health, safety and welfare of its patrons and first responders." The commission canceled McManus’ liquor license.

DISTRICT COURT

After McManus sought judicial review of the commission’s order, the district court concentrated its analysis on the "other activity which may endanger" language in the definition of "disturbance" in § 019.01F1. It reasoned that because McManus was aware of the Omaha "all call" and admitted to similar problems with previous events, it was aware of the potential danger. It reasoned that the actions of the security company and LPD could not be attributed to McManus, because McManus had no control over them. The court concluded that the record supported the commission’s findings that McManus violated the disturbance rule when it was aware of the danger and failed to take reasonable steps to terminate the disturbance. It affirmed the commission’s order.

McManus filed a timely appeal, which we moved to our docket.⁵

ASSIGNMENTS OF ERROR

McManus assigns, restated, that the district court erred in (1) failing to apply the plain meaning of the disturbance rule and thereby finding that McManus allowed a disturbance and (2) canceling McManus’ liquor license "on the basis that [McManus] failed to take actions required in the ... disturbance rule to prevent the disturbance from continuing when the required actions already had been taken by third parties to prevent the disturbance from continuing."

STANDARD OF REVIEW

A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative Procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record.⁶ When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.⁷ An appellate court, in reviewing a district court’s judgment for errors appearing on the record, will not substitute its factual findings for those of the district court where competent evidence supports those findings.⁸

Whether an agency decision conforms to the law is by definition a question of law.⁹ To the extent that the meaning and interpretation of statutes and regulations are involved, questions of law are presented which an appellate court decides independently of the decision made by the court below.¹⁰

ANALYSIS

The commission is empowered to adopt and promulgate rules and regulations to carry out the Nebraska Liquor Control Act,¹¹ including provisions covering any and all details which are necessary or convenient to the enforcement of the intent, purpose, and requirements of the act.¹² McManus does not dispute that as a licensee, it is subject to the rules and regulations of the act, including the disturbance rule.

McManus instead contends that the district court erred when it agreed with the commission that the disturbance occurred when McManus hosted the event. It argues this is contrary to the plain reading of the regulation, because the regulation is designed to terminate disturbances that are occurring from continuing. It argues that nothing in the regulation places a duty on a licensee to take action against something that might or could happen. We agree.

For purposes of construction, a rule or regulation of an administrative agency is generally treated like a statute.¹³ Indeed, we have often said that properly adopted and filed regulations have the effect of statutory law.¹⁴

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