E&J LOUNGE OPERATING COMPANY, INC. v. LIQUOR COMMISSION OF THE CITY AND COUNTY OF HONOLULU

December 24, 2007 (No. 27940)

Opinion [pdf]

OPINION OF THE COURT BY WATANABE, J.

This secondary appeal by Appellant-Appellee/Corss-Appellee E & J Lounge Operating Company, Inc. (E&J) from the denial of a liquor dispenser general license (liquor license) raises two issues: (1) whether Appellee-Appellant/Cross-Appellee Liquor Commission of the City and County of Honolulu (the Commission) was required to hold a "contested case' hearing in accordance with Hawaii Revised Statutes (HRS) § chapter 91 before deciding whether to approve or deny E&J's application for a liquor license, and (2) whether the Circuit Court of the First Circuit (the circuit court) had jurisdiction to review the Commission's denial of E&J's application for a liquor license.

The circuit court concluded that it had jurisdiction over E&J's appeal pursant to HRS § 91-14 (1993 & Supp. 2006) because "[t]he public hearings held before the Commission prior to issuance of a Liquor License are adjudicatory in nature and are therefore contested cases" subject to the procedural requirements for contested cases set forth in HRS chapter 91.  The circuit court also held that the Commission violated HRS § 91-11 (1993) in denying E&J's application because although one of the Commissioners who participated in the final decision was not present for the first day of public hearings on the application, the Commission rendered a final decision without first issuing a proposed decision and providing an opportunity for E&J to file exceptions and present arguments on the proposed decision, one of the procedural requirements for a contested cases under HRS chapter 91.  Additionally, the circuit court concluded that the Commission violated HRS § 281-59(b) (Supp. 2006) by failing to "make a ruling on corrections, additions, or subtraction of the persons required to be notified of the public hearing[.]"  The circuit court thereupon vacated the Commission's decision and remanded the case to the Commission with instructions for further proceedings on remand.

In light of Singleton v. Liquor Comm'n, 111 Hawai'i 234, 140 P.3d 1014 (2006), we agree that the circuit court had jurisdiction pursuant to HRS § 91-14 to review the denial of E&J's liquor-license application.  However, we conclude that the Commission was required to comply with the more specific "public hearing" procedures set forth in HRS chapter 281, rather than the "contested case" procedures delineated in HRS chapter 91, in deciding whether to grant or deny E&J's liquor-license application.  Accordingly, we vacate the circuit court's judgment and remand for further proceedings consistent with this opinion. [footnotes omitted]

Dissenting opinion by Nakamura, J. [pdf]