Red Sky, Inc. v. Pennsylvania State Police, Bureau of Liquor Control Enforcement

PELLEGRINI, Judge,

dissenting.

I respectfully dissent. I believe the majority opinion erred in holding that if a manufacturer packages beer containers together, in this case, 24 beer cans in a cardboard tray or box, then beer distributors are precluded from replacing damaged cans in a case with intact cans from other damaged cases to make a full case. The definition of “original container” as used in Section 441(a) of the Liquor Code1 means only that the beer must be in the same container that holds the liquid as sealed by the manufacturer but not in the same overall package. To adopt the majority’s view, if a manufacturer places a plastic ring around six kegs, the distributors would be precluded from selling those kegs other than as a six pack.

As summarized by the majority opinion, beer distributors Red Sky, Inc., titled as Payless For Beer & Pop Everyday, Jet Distributors, titled as Beer & Pop Warehouse, Beer & Pop Warehouse, Inc. and Q.F.A., Inc. (collectively, Licensees) were issued citations by the Pennsylvania State Police, Bureau of Liquor Control Enforcement (Bureau) for selling cases displayed as “mixed” brand cases at a reduced price after informing the customer that there were different brands of beer within the case. The administrative law judges ruled that Section 441(a) did not prohibit the sale of eases containing brands from more than one manufacturer. The decision interpreted Section 441(a) as protecting the integrity of the beverage itself and not as prohibiting Licensees from mixing cans or bottles in a case or package. On appeal, the Pennsylvania Liquor Control Board (LCB) reversed, holding that the sale of mixed brand cases violates Section 441(a) because “original containers”, as used in Section 441(a), means all types of objects used in distribution, including cases. The trial court reversed the LCB, finding “original containers” to mean only bottles, cans or like objects actually holding the liquid. The trial court held that the definition of “original containers” was set forth in the Liquor Code and that the definition must be used despite a contrary interpretation by the LCB.

The Bureau contends to this court that the construction given a statute by those charged with its administration is entitled to great weight and cannot be disregarded unless clearly erroneous. It argues that the proper interpretation of Section 441(a) is that mixed brand cases are not “original containers as prepared for the market”, as determined by the LCB and as upheld by the majority opinion. However, an interpretation by an agency is not entitled to deference, if, as here, the words of the statute are clear:

When the words of a statute are clear and free from all ambiguity, the letter of it is *148not to be disregarded under the pretext of pursuing its spirit.

Section 1921(b) of the Statutory Construction Act, 1 Pa.C.S. § 1921(b). Only when statutory language is not explicit must an administrative agency’s interpretation of the legislature’s intent be given deference. Section 1921(e)(8) of the Statutory Construction Act of 1972, 1 Pa.C.S. § 1921(c)(8); Tool Sales & Service Company, Inc. v. Commonwealth, 536 Pa. 10, 637 A.2d 607 (1993), cert. denied, Mistick & Sons v. Pennsylvania, — U.S. -, 115 S.Ct. 85, 130 L.Ed.2d 37 (1994); Roberts v. Pennsylvania Liquor Control Board, 146 Pa.Commonwealth Ct. 64, 68, 604 A.2d 1152, 1155 (1992). See also Pennsylvania Electric Company v. Pennsylvania Public Utility Commission, 166 Pa.Commonwealth Ct. 413, 648 A.2d 63 (1994).2

The issue before this court then is solely whether Section 441(a) restricts distributors from selling in only the cans and bottles as prepared and sealed by the manufacturer or in only the cases exactly as prepared by the manufacturer. If the statutory language is clear, then the court need not defer, but if the language is capable of more than one meaning, then the court must defer to the agency’s interpretation. The statute states that no distributors shall sell beer “except in the original containers as prepared for the market by the manufacturer at the place of manufacture”. Section 441(a) of the Liquor Code, 47 P.S. § 4-441 (a) (emphasis added). “Original container” is a defined term in the Liquor Code:

“Original container” shall mean all bottles, casks, kegs or other suitable containers that have been securely capped, sealed or corked by the manufacturer of malt or brewed beverages at the place of manufacture, with the name and address of the manufacturer of the malt or brewed beverages contained or to be contained therein permanently affixed to the bottled, cask, keg or other container, or in the case of a bottle or can, to the cap or cork used in sealing the same or to a label securely affixed to a bottle or can.

Section 102 of the Liquor Code, 47 P.S. § 1-102.

“Original container”, as defined in Section 102, is the can or bottle that actually holds the liquid and is sealed or corked by the manufacturer at the place of manufacture. The phrase “as prepared for the market by the manufacturer at the place of manufacture” describes the subject “original container”; because original container is defined as a can, bottle or keg, the phrase emphasizes the statutory requirement that the distributors may sell only in the can, bottle or keg as it was securely capped or sealed by the manufacturer at its place of manufacture. The phrase can not be interpreted independently of its subject to support the argument that “as prepared by the manufacturer” includes not only the bottle or can, but also the case used by the manufacturer. Because original container is clearly defined to mean the cans, bottles or kegs actually holding the beer, it is clear the General Assembly did not prohibit distributors from mixing brands from partially damaged cases to sell a whole case. This court need not defer to the agency’s interpretation, regardless of the asserted confusion created in taxation, pricing and marketing.

The Bureau also argues that Section 441(a) must be construed with Section 442(a) of the *149Liquor Code, citing Pennsylvania State Police, Bureau of Liquor Control Enforcement v. Beer & Pop Warehouse, Inc., 145 Pa.Commonwealth Ct. 355, 360, 603 A.2d 284, 287 (1992) (sections of a statute must be construed in reference to the entire statute). Section 442(a) of the Liquor Code, 47 P.S. § 4-442(a) provides, in relevant part:

No retail dispenser shall purchase or receive any malt or brewed beverages except in original containers as prepared for the market by the manufacturer at the place of manufacture. The retail dispenser may thereafter break the bulk upon the licensed premises and sell or dispense the same for consumption on or off the premises so licensed ... (emphasis added).

The Bureau argues that Section 442(a) of the Liquor Code establishes that retailers and distributors must both purchase beer in “original containers as prepared for the market by the manufacturer at the place of manufacture” but only retailers then may “break the bulk”, that is, it argues, open cases of beer. However, breaking the bulk may refer not to opening cases or packages but opening cans, bottles, and most appropriately, casks or kegs. Having determined that “original containers” explicitly means only sealed bottles, cans, casks or kegs that actually hold the liquid, the statutes read together mean that distributors must purchase and sell beer in the sealed bottles, cans, casks or kegs, but retailers may sell and serve beer in glasses after opening the sealed original containers. Even reading Section 442(a) with Section 441(a), allowing distributors to sell beer only in original containers does not prohibit them from mixing brands from partially damaged cases in order to sell a whole case because they are only required to sell bottles or cans in lots of 12, 24 or more, depending on the size of the bottles or cans.

Because the language of the Section 441(a) is clear that distributors are only prohibited from selling beer not in the cans, bottles or kegs as sealed by the manufacturer at the place of manufacture, the trial court did not err in refusing to rely on the Bureau’s contrary interpretation of the statute. If, as warned by the Bureau, injurious consequences of a decision allowing the distributors to mix brands from damaged cases by mixing brands from undamaged cases resulted, the General Assembly is certainly capable of substituting the word “case” for the defined term “original container” in the statute. Consequently, I would affirm the orders of the Court of Common Pleas of Allegheny County and dismiss the citations against the Licensees.

. Act of April 12, 1951, P.L. 90, as reenacted, 47 P.S. § 4 — 441(a). Section 441(a) provides:

No distributor or importing distributor shall purchase, receive or resell any malt or brewed beverages except in the original containers as prepared for the market by the manufacturer at the place of manufacture.

. Citing Pennsylvania Human Relations Commission v. Uniontown Area School District, 455 Pa. 52, 313 A.2d 156 (1973) and Chevron v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In Chevron, the United States Supreme Court explained the analysis to be used to determine whether to give deference to an agency's interpretation as follows:

When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

Chevron, 467 U.S. at 842, 104 S.Ct. at 2781.