OFFICES AND OFFICERS ‑- STATE ‑- LIQUOR CONTROL BOARD ‑- LICENSES

OFFICES AND OFFICERS ‑- STATE ‑- LIQUOR CONTROL BOARD ‑- LICENSES

(1) The Washington state liquor control board probably does not possess the requisite authority, under existing statutes, to adopt and enforce a regulation disqualifying from class H licensure those private clubs which are governed by a written constitution, bylaw or house rule excluding persons from membership or use of the club's facilities because of race, creed, color or national origin. 

(2) The legislature may constitutionally grant to the liquor control board the requisite statutory authority to adopt such a regulation.

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                                                                 August 22, 1972

Honorable Daniel J. Evans
Governor, State of Washington
Legislative Building
Olympia, Washington 98504

                                                                                                                 Cite as:  AGO 1972 No. 18

Dear Sir:

            This is written in response to your request for an opinion of this office regarding the ability of the state liquor control board to withhold class H liquor licenses from certain exclusionary private clubs.  We paraphrase your questions as follows:

            (1) Under its existing statutory authority, may the liquor control board adopt and enforce a regulation disqualifying from class H licensure those private clubs which are governed by a written constitution, bylaw or house rule excluding persons from membership or use of the club's facilities because of race, creed, color or national origin when those qualifications are not relevant to the general purpose of the club?

            (2) If question (1)is answered in the negative, may the legislature constitutionally grant to the liquor control board the requisite statutory authority to adopt such a regulation?

             [[Orig. Op. Page 2]]

            For the reasons set forth in our analysis we must express substantial doubt as to the board's authority under existing statutes to adopt and enforce a regulation such as you have described.  However, we believe that the legislature may constitutionally grant the board the requisite authority to adopt such a regulation.

                                                                     ANALYSIS

            We are concerned in this opinion with only one of the several categories of licenses which the state liquor control board is authorized to issue in connection with the distribution and sale of intoxicating liquor in this state.  RCW 66.24.400, codifying the provisions of § 1, chapter 5, Laws of 1949,1/ as amended by § 1, chapter 208, Laws of 1971, 1st Ex. Sess., provides for this license as follows:

            "There shall be a retailer's license, to be known and designated as class H license, to sell beer, wine and spirituous liquor by the individual glass, and beer and wine by the opened bottle, at retail, for consumption on the premises, including mixed drinks and cocktails compounded or mixed on the premises only.  Such class H license may be issued only to bona fide restaurants, hotels and clubs, and to dining, club and buffet cars on passenger trains, and to dining places on passenger boats and airplanes, and to dining places at publicly owned civic centers with facilities for sports, entertainment, and conventions, and to such other establishments operated and maintained primarily for the benefit of tourists, vacationers and travelers as the board shall determine are qualified to have, and in the discretion of the board should have, a class H license under the provisions and limitations of this title."  (Emphasis supplied.)

            Related to this provision is RCW 66.24.410 (3), which states  [[Orig. Op. Page 3]] that:

            "(3) 'Hotel,' 'clubs,' 'wine' and 'beer' are used in RCW 66.24.400 to 66.24.470, inclusive, with the meaning given in chapter 66.04."  (Emphasis supplied.)

            RCW 66.04.010 (5), in turn, defines the term "club" as meaning:

            ". . . an organization of persons, incorporated or unincorporated, operated solely for fraternal, benevolent, educational, athletic or social purposes, and not for pecuniary gain."

            At the present time we understand the policy of the liquor control board to be one of basic neutrality with respect to such clubs as you have described; i.e., a club now applying to the board either for a new class H license or for renewal of one previously granted will not be denied such a license solely because it is (in the words of your first question)

            ". . . governed by a written constitution, bylaw or house rule excluding persons from membership or use of the club's facilities because of race, creed, color or national origin when those qualifications are not relevant to the general purpose of the club."

            In view of the recent decision of the United States Supreme Court in the case ofMoose Lodge No. 107 v. Irvis, et al.,     U.S.   , 32 L.Ed.2d 627, 92 S.Ct.     (June 12, 1972), there appears to be no constitutional obstacle to a continuation by the board of this existing policy.  In that case the Court by a 6-3 majority held that it is not a violation of the equal protection clause to Amendment 14 of the United States Constitution for a state to license the sale of liquor by an otherwise qualified private club which excludes persons from membership or the use of its facilities by reason of their race, creed, color or national origin ‑ so long, at least, as the state's policy does not affirmatively condone or support the club's exclusionary practices.2/

             [[Orig. Op. Page 4]]   Your questions, however, relate to the converse of this point; you ask whether the Washington state liquor control board may, either on the basis of its existing statutory authority or pursuant to a specific amendatory grant of power, change its present policy by adopting a new regulation designed to disqualify such exclusionary clubs from class H licensure.

            Question (1):

            We shall consider first the scope of the liquor control board'sexisting statutory authority.  RCW 66.08.030, codifying § 79, chapter 62, Laws of 1933, Ex. Sess., as last amended by § 1, chapter 62, Laws of 1971, provides (in material part) as follows:

            "(1) For the purpose of carrying into effect the provisions of this title according to their true intent or of supplying any deficiency therein, the board may make such regulations not inconsistent with the spirit of this title . . .

            "(2) Without thereby limiting the generality of the provisions contained in subsection (1), it is declared that the power of the board to make regulations in the manner set out in that subsection shall extend to

            ". . .

            "(q) prescribing the conditions and qualifications requisite for the obtaining of club licenses and the books and records to be kept and the returns to be made by clubs, prescribing the manner of licensing clubs in any municipality or other locality, and providing for the inspection of clubs;

            ". . ."

             [[Orig. Op. Page 5]]

            By virtue of this enactment, it is quite clear that the liquor control board currently has the express statutory authority to set qualifications for club licensure ‑ an authority which has, from time to time, been exercised in the past through the promulgation of rules detailing the procedures to be followed in qualifying for a club license.  See, WAC 314-40-010, et seq.  Moreover, under the provisions of RCW 66.24.450 (codifying § 6 of the 1948 initiative,supra) it is expressly stated that:

            "No club shall be entitled to a class H license:

            ". . .

            "(2) Unless the club premises be constructed and equipped, conducted, managed, and operated to the satisfaction of the board and in accordance with this titleand the regulations made thereunder;

            ". . ."  (Emphasis supplied.)

            The question to be here resolved thus must be refined a bit, in terms of thekinds of qualifications which may be established by the board as conditions precedent to licensure.  In other words, to what factors may the board properly look in determining the conditions which are to be met by private clubs applying for class H liquor licenses?

            In considering this question we note, first, the detailed analysis of the liquor control board's rule‑making authority which appears in an earlier opinion of this office, AGO 65-66 No. 103 [[to Roy Olsen, State Representative on August 18, 1966]](copy enclosed).  In this opinion we laid down the following set of guidelines to be applied in determining the validity of any particular liquor board regulation:

            "But within the framework of its legislatively-granted authority, it seems clear that the board may adopt rules and regulations which adhere to certain general guidelines which we derive from the principles recognized in the authorities cited and discussed above.  Thus, the questions to be asked in regard to any proposed regulation of the liquor board are whether the regulation,

            "(1) is 'necessary or advisable' to carry  [[Orig. Op. Page 6]] into effect any of the provisions of the liquor act 'according to their true intent,' and is consistent with the spirit of the act‑-see, RCW 66.08.030; and

            "(2) has a 'proximate connection' with some provision of the liquor act‑-see,State v. Miles, supra; and

            "(3) relates to the regulation and control of the liquor traffic in this state or the administration and enforcement of the liquor act‑-see, RCW 66.08.050 (9),supra; and

            "(4) is reasonable in scope and effect in the light of all circumstances (which include the particular factual problem giving rise to its adoption) and does not represent an arbitrary or capricious exercise of the board's powers."

            In the past the board has placed considerable reliance upon this analysis in declining to change its existing policy with respect to the licensing of exclusionary private clubs in the absence of specific enabling legislation.  See, e.g., the following letters written by board members over the past several years:  Letter by former board chairman Robert L. Hagist, dated December 6, 1966, addressed to Mr. Seymour H. Kaplan, Regional Director, Pacific Northwest Regional Office, Antidefamation League; letter by former board chairman Albert C. Thompson, Jr., dated July 10, 1967, to Mr. Fred Rowlands, President, Local No. 1488, American Federation of State, County and Municipal Employees; letter by current board member Leroy M. Hittle, dated April 3, 1968, addressed to Mr. Carl Maxey, Attorney at Law; and finally, letter by current board chairman Jack C. Hood, dated January 19, 1970, to Mr. Gerald H. Rene, copies of which are enclosed ‑ all of which are representative of the position that since there is no present legislative policy declaration against racial or ethnic discrimination contained within the state liquor code itself, a regulation such as you have posited would not be within the scope of the board's existing statutory authority.

            In addition, the board in certain of these communications has pointed to repeated unsuccessful efforts in recent sessions of the state legislature to enact statutes designed to disqualify exclusionary clubs from class H licensure in this state.   [[Orig. Op. Page 7]] See, e.g., Senate Bill 461 and House Bill 749 of the 42nd (1971) session, as well as House Bills 284 and 290 and Senate Bill 138 of the 1972 extraordinary session.  Essentially, the board has taken the position that if the legislature had intended to empower the board to deny class H licensure to exclusionary clubs, it would have passed one of these bills ‑ and therefore, the problem is one to be solved by the legislature and not by the board through any exercise of its existing rule‑making authority.

            It is possible, on the basis of a few cases from other jurisdictions, to frame an argument in opposition to this view.  Based upon the proposition that this statedoes have a present statutory declaration of policy against racial and ethnic discrimination ‑ albeit, not within the liquor code itself3/ - it can be theorized that even without specific enabling legislation the liquor board could, presently, look to this extrinsic expression of public policy and give effect to it by a regulation denying class H licensure to exclusionary clubs such as are described in your request.  See,Williams v. Washington Metropolitan Area Transit Com'n., 415 F.2d 922 (D.C. Cir., 1968); Interstate Commerce Comm. v. Railway Labor Executives Assoc., 315 U.S. 373, 86 L.Ed. 904, 62 S.Ct. 717 (1942); City of Pittsburg v. Federal Power Comm., 237 F.2d 741 (D.C. Cir., 1956);National Broadcasting Co. v. United States, 319 U.S. 190, 87 L.Ed. 1344, 63 S.Ct. 997 (1942); and Southern Steamship Co. v. National Labor Relations Board, 316 U.S. 31, 86 L.Ed. 1246, 62 S.Ct. 886 (1941).  In each of these cases the regulatory agency involved was held able, and in some cases required, to give consideration to objectives expressed in statutes other than the one administered by it when the other statutes bear on a matter before the agency in the course of administering its own statutes.

            However, in the face of the Washington liquor control board's long-standing administrative construction of the extent of its own powers,4/ together with the reasoning of AGO 65-66 No. 103,  [[Orig. Op. Page 8]] supra, and the above related legislative history of attempts to cover this matter by express legislation within the confines of the liquor code itself, we are rather doubtful as to the persuasive force of these decisions should they be cited to our own supreme court in an attempt to sustain a regulation by the liquor control board such as you have in mind.  At least, we would for these reasons hesitate to predict that this line of cases would be sufficient to persuade a majority of the members of our Washington supreme court at the present time that the Washington state liquor control board has the power, under its existing statutes, to adopt and enforce such a regulation.

            Question (2):

            On the other hand, we feel relatively safe in advising that if our legislature were to enact a specific grant of authority with regard to this matter, such legislation would be constitutionally sustainable.  Most certainly, nothing contained in the supreme court's decision in Moose Lodge No. 107 v. Irvis, et al., would invalidate such legislation ‑ for (contrary to some reports by the press) the court didnot there hold that private clubs which are governed by exclusionary rules must nevertheless be regarded as having some form of constitutional right be granted a license notwithstanding those rules.  Instead, it merely held that it is not unconstitutional for a state liquor board to grant a license to such clubs if, in the exercise of duly granted authority, it chooses to do so.

            There are, we understand, two different lines of argument which are generally propounded by exclusionary clubs in asserting the invalidity of legislation designed to disqualify them from licensure because of their membership and/or guest policies.  First, they contend that such legislation would deny equal protection of the laws to those exclusionary clubs to which it would apply; and secondly, they suggest that it would impair the freedom of their members to associate in  [[Orig. Op. Page 9]] private only with others of their particular choosing.  Our prognosis, however, is that our court would reject both of these arguments for the following reasons:

            (1)Equal Protection of the Laws

            This argument, of course, is the converse of that which was asserted by the plaintiff minority race representatives in Moose Lodge No. 107 v. Irvis, et al., supra.  They argued unsuccessfully that for the state to grant a liquor license to an exclusionary club is so to involve the state in the business of the club as to cause the club's discriminatory policies to be those of the state itself ‑ in violation of the 14th Amendment's equal protection clause.  The clubs, on the other hand, argued that for the state to deny them licensure because of their membership policies would be to unconstitutionally discriminate against them under this same provision.

            A moment's reflection will reveal the basic defect of this latter argument.  The 14th Amendment was adopted after the Civil War to secure to Black people and those of all other races equality of treatment by the states; i.e., the equal protection of state law.  To say that the effect of this amendment is to prevent states from treating those who discriminate because of race differently from those who do not would be to give the amendment a meaning opposite from its intended purpose.  If that is what the 14th Amendment means, then in the famous case of Shelley v. Kraemer, 334 U.S. 1, 92 L.Ed. 1161, 68 S.Ct. 836 (1947), the supreme court should have held that the amendment requires state courts to enforce racially restrictive convenants on real property equally with all other covenants.  Instead, however, it held that a state court violates the 14th Amendment by enforcing these kinds of covenants.

            (2)Freedom of Association

            The argument here is that the members of an exclusionary club have a constitutional right under the First Amendment to the United States Constitution to associate privately only with such persons as they choose to ‑ and that the denial of a class H liquor license to their club would impair this right.  See, e.g., NAACP v. Alabama, 357 U.S. 449, 2 L.Ed.2d 1488, 78 S.Ct. 1163 (1958); andUnited Mine Workers v. Illinois Bar Asso., 389 U.S. 217, 19 L.Ed.2d 426, 88 S.Ct. 353 (1967), for a general discussion and application of this concept of constitutional law.

             [[Orig. Op. Page 10]]

            However, in considering these and similar cases it is important to note and emphasize the obvious point that the mere denial of a liquor license to a club does not, in and of itself, deny the right of its members to associate together.  They are as free, legally, to associate together as they ever were ‑ irrespective of any financial consequences of nonlicensure.5/   This factor readily distinguishes the instant situation from the usual pattern of the freedom of association cases which have involved unsuccessful attempts to stamp out an organization in its entirety (see, NAACP v. Alabama, supra) or to deny employment because of an individual's membership in a particular political organization (as in United States v. Robel, 389 U.S. 258, 19 L.Ed.2d 508, 88 S.Ct. 419 (1967)).

            We would contrast these cases with two recent federal district court cases which appear to be closely in point with respect to the constitutionality of a mere denial of licensure to an exclusionary club:  Sigma Chi Fraternity v. Regents of University of Colorado, 258 F. Supp. 515 (D.C. Colo. 1966), andGreen v. Connally, 330 F. Supp. 1150 (D.C. Cir. 1971).

            In the first of these cases, the court upheld a state university's regulation denying accreditation or sanction to any fraternity or other student social organization ". . . compelled by its constitution, rituals or government to deny membership to any person because of his race, color or religion," against an assertion that the regulation unconstitutionally restricted "freedom of association" of the members of the local (Beta Mu) chapter of Sigma Chi Fraternity.  And in the second case,Green v. Connally, a three‑judge district court panel upheld a refusal by the Internal Revenue Service to grant tax exempt status to certain private schools in Mississippi which excluded Black students on the  [[Orig. Op. Page 11]] basis of race or color.  Because of this discriminatory policy, the court held that the schools did not constitute charitable organizations under §§ 170 and 501 of the Internal Revenue Code,6/ thus sustaining the authoritative basis for the Service's action.7/ Beyond this, the court further held, in response to arguments made by the schools that a denial of tax exempt status because of these racial policies would violate their right to "freedom of association," that: