PIONEER LIQUOR MART, INC. vs. ALCOHOLIC BEVERAGES CONTROL COMMISSION (and two companion cases [Note 1]).

CUTTER, J. Pioneer Liquor Mart, Inc. (Pioneer) operates a licensed retail liquor package goods store in Mattapan. It was charged by the commission with violation of G. L. c. 138, Section 25C (see St. 1952, c. 385, and c. 567, Section 1 [Note 2]), in

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selling an alcoholic beverage [Note 3] at a price less than the minimum consumer resale price therefor. Upon an order to show cause why Pioneer's license should not be suspended or revoked, a hearing was held before the commission on April 30, 1963.

On August 1, 1963, the commission by letter notified Pioneer of its findings (see fn. 3) and that its license would be suspended for six days. On August 29, 1963, Pioneer filed in the Superior Court a petition under G. L. c. 30A, Section 14, for review of the board's decision. The following facts, alleged in the petition, were stipulated: Distillers Products Sales Corporation (Distillers), the filer of the schedules for minimum consumer resale prices including the price for the alcoholic beverage allegedly improperly sold, [Note 4] notwithstanding that it was fully authorized under its wholesaler's license to do so, did not have in Massachusetts (as of the time of the hearing and during 1963) either

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any warehouse or any inventory of alcoholic beverages. Distillers made no sales in Massachusetts.

It appears that the commission did not hold a public hearing preceded by any notice prior to its purported approval of the minimum consumer resale prices for March and April, 1963. On February 7, 1963, the commission adopted two votes, (1) to approve certain price schedules for the months of March and April as not being excessive, inadequate, or unfairly discriminatory, and (2) that the foregoing vote and regulation be declared an "emergency" regulation so that it would "become effective without conformance with the notice and public hearing requirements of" G. L. c. 30A, "there being insufficient time in this instance for the [c]ommission to comply and it being contrary to the public interest to allow the months of March and April to pass without the establishment of legal and proper [m]inimum [c]onsumer [r]esale [p]rices as authorized by" Section 25C. [Note 5] On February 14, 1963, the Governor and Council "voted to approve the [s]chedule of [m]inimum [c]onsumer [r]esale [p]rice[s]" which had been submitted to them by the commission on February 7, 1963. On February 25, 1963, the commission wrote to the filers of price schedules advising them of the commission's action "(1) in the absence of any information to the effect that the . . . prices are . . . `excessive, inadequate, or unfairly discriminatory' . . . [see Section 25C (d)] and (2) upon your continuing assurance that this is the fact."

By motion to dismiss and requests for rulings filed with the commission, Pioneer attempted in connection with the hearing on the alleged violation to raise two principal issues: (1) whether the regulation as it applied to the particular branded beverage was invalid because the minimum price schedule was filed by Distillers, which was not a "wholesaler

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selling such brand," under c. 138, Section 25C (c) (2), see fn. 2; and (2) whether the whole March-April price schedule was valid at all, in view of its approval by the commission, purporting to act under the "emergency" provisions of G. L. c. 30A, Section 2 (3) or Section 3 (3), [Note 6] without prior notice and public hearing. The commission denied the motion to dismiss and the requests for rulings. A judge of the Superior Court ruled that no constitutional provisions were violated, that the commission did not commit error of law, that its procedures were not unlawful, and that its decision was not "unsupported by substantial evidence." By final decree, the commission's decision was affirmed. Pioneer appealed.

1. The price schedule for the particular branded beverage was filed by a person (see Kneeland Liquor, Inc. v. Alcoholic Beverages Control Commn. 345 Mass. 228, 232) who could properly make such a filing under G. L. c. 138, Section 25C (c), see fn. 2. The stipulations established that Distillers did not come within either clause (1) or clause (2) of par. (c). Distillers, however, was within clause (3) permitting a filing by "any wholesaler, with the approval of the commission, in the event that the owner of such brand does not file." The owner of the brand did not file. The commission's acceptance of the filing made by Distillers, a

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licensed wholesaler, and the commission's subsequent approval of the filed price constituted sufficient "approval of the commission" in respect of the filing itself.

2. In Kneeland Liquor, Inc. v. Alcoholic Beverages Control Commn. 345 Mass. 228, among other things this court (1) held (p. 233) that the commission's approval of minimum price schedules under Section 25C constitutes a "regulation" under G. L. c. 30A, Section 1 (5); and (2) rejected (p. 234) the commission's contention that package store dealers, when charged with a violation of an "approved" minimum price schedule, are "estopped from raising the issue of the denial of hearing" on the schedule by "not insisting upon the right to be heard." Without deciding whether commission action to avoid a hearing could have been taken under either c. 30A, Section 2 (3) or Section 3 (3), see fn. 6, the Kneeland case (p. 235) determined that, since there had been neither a hearing nor "emergency" action under Section 2 (3) or Section 3 (3), "the regulations [of which a violation was there alleged] were invalidly enacted and there was no legally established minimum sale price."

Although "emergency" action to avoid a hearing was attempted by the commission in the present cases, we still need not deal with the question left undecided in the Kneeland case, viz. whether the approved schedule now before us was a regulation of the type described in Section 2 or one within the ambit of Section 3. The commission took emergency action which, if it was valid, would be adequate whether the price schedule was a regulation of the type described in Section 2, or one of the type described in Section 3. We thus need not determine (1) whether this is the type of regulation a violation of which may be punished under G. L. c. 138, Section 62 (as amended through St. 1935, c. 440, Section 39) by a fine or imprisonment (see c. 30A, Section 2), or (2) whether the schedule was a regulation as to which a hearing was "required by any law," or by constitutional requirement for a hearing. See discussion in Michigan v. Board of Registration in Pharmacy, 348 Mass. 491, 495-499, and Davis, Administrative Law Treatise, Sections 7.01, 7.06, 7.07 (and 1965 pocket parts).

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The question whether, under c. 30A, Section 2 (3), a hearing can be avoided by the commission or whether, under c. 30A, Section 3 (3), an opportunity to present views may be avoided must be considered in the light of c. 138, Section 25C (d), making it necessary for the commission to determine that the prices approved by it are "not . . . excessive, inadequate, or unfairly discriminatory." This provision is a statutory standard similar to standards which are applicable to the administrative filing of rates for various services affected with a public interest; e.g. motor vehicle liability insurance, Massachusetts Bonding & Ins. Co. v. Commissioner of Ins. 329 Mass. 265, 270 ("adequate, just, reasonable and non-discriminatory . . . charges," G. L. c. 175, Section 113B, as amended); medical insurance, Massachusetts Medical Serv. v. Commissioner of Ins. 344 Mass. 335, 338-340 (rates may not be "excessive, inadequate or unfairly discriminatory," G. L. c. 176B, Section 4, as amended); S. C. 346 Mass. 346. See also, as to certain public utility rates and practices; G. L. c. 164, Sections 93, 94; Boston Consol. Gas Co. v. Department of Pub. Util. 321 Mass. 259, 267-268; [Note 7] Boston Real Estate Bd. v. Department of Pub. Util. 334 Mass. 477, 495 (implicit standard of "public interest"). Even apart from c. 30A, the standard of approval prescribed by Section 25C (d) seems to presuppose the existence of substantial evidence [Note 8] upon the

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basis of which approval may be justified. Such evidence would be obtained most readily by the commission through a hearing at which the evidence may be placed in the record, if, indeed, such a hearing is not essential. See American Employers' Ins. Co. v. Commissioner of Ins. 298 Mass. 161, 166-170 (which, however, may rest, in part at least, upon the specific statutory procedural provisions there considered). The commission, of course, is not intended by Section 25C (d) blindly to endorse any schedule of prices submitted to it. On the contrary, the commission must decide upon some form of substantial information or evidence whether such prices comply with the statutory standard. See Bond Liquor Store, Inc. v. Alcoholic Beverages Control Commn. 336 Mass. 70, 73.

This is the background against which we must determine whether the commission, under c. 30A, Section 2 (3) or Section 3 (3), has properly given "emergency" approval of price schedules for March and April, 1963, without notice and hearing or opportunity to present views. The commission's vote of February 7, 1963 (see fn. 5, and related text), does not describe the "emergency" in detail, other than to say (a) that there was not time to comply with the notice and public hearing requirements of c. 30A, and (b) that it was contrary to the public interest to have no minimum prices in effect in March and April, 1963.

The vote strongly suggests that the occasion for the exercise of the "emergency" provision of Section 2 (3) or Section 3 (3) was that the commission encountered difficulties in arranging to comply with Section 25C as interpreted in the Kneeland case, 345 Mass. 228, decided December 12, 1962. This was about thirty days prior to the last day (January 10, 1963) for price filings for March and April, 1963. The record does not disclose what these difficulties were, but it is probable that the commission's prior practices had to be materially changed in the light of the Kneeland decision.

These "emergency" provisions, see fn. 6, permit deviation from the prescribed procedures where speed in the adoption or amendment of regulations is essential. The

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statutory finding that the action is necessary and a statement of the reasons for such action must be included in the regulation. The provision is somewhat more explicit than the comparable provision of Section 4 (a) of the Federal Administrative Procedure Act, 5 U. S. C. Section 1003 (a) (1964). See Curran and Sacks, op. cit. (see fn. 7), pp. 81-82; Davis, Administrative Law Treatise, Sections 6.04, 6.05. [Note 9]

Massachusetts case authority is inconclusive as to the extent of an agency's powers to declare an "emergency" regulation. In Dacey v. Milk Control Commn. 340 Mass. 681, 684-685, we upheld an "emergency" order or regulation under Section 2 (3) requiring milk dealers to produce, on an industry-wide basis, information needed for further regulatory activity. This order, however, was more limited in substantive effect than the order now before us. In other instances, as in the Kneeland case ( 345 Mass. 228, 235), the agency did not purport to act under emergency provisions. See Massachusetts Gen. Hosp. v. Commissioner of Pub. Welfare, 346 Mass. 739, 740, fn. 2. See also Commissioner of Labor & Indus. v. Boston Housing Authy. 345 Mass. 406, 415, fn. 10. We recognize that "emergency" findings under c. 30A must be carefully scrutinized because, if unwarrantably made, they may lead to improper denial of public hearings or comment on regulations, to evasion of the salutary purposes of c. 30A and possibly to other serious abuse. See Heady, Administrative Procedure Legislation in the States, 40-49.

Despite the meager character of the commission's statement of the "emergency" in respect of its approval of the price schedules, we cannot say that it was insufficient. The commission's statement must be viewed in the light of the commission's apparent difficulty in adjusting itself to compliance with Section 25C as interpreted in the Kneeland decision. The record does not justify us in concluding that the commission

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had no substantial basis for the finding that the public interest required promulgation of some price schedule for March and April, 1963. [Note 10]

3. We have dealt with these cases upon the assumption that St. 1963, c. 258, amending c. 138, Section 25C (d), has no application. See fn. 2, sentence following point [A]. The commission's decision approving the March-April, 1963, price schedules took place on February 7, 1963. The schedule took effect on March 1, 1963. Pioneer's alleged violation took place on March 23, 1963, although the alleged violations in the Gandolfo and the Orlandella cases (see fn. 1), took place on April 20, 1963. Chapter 258 did not become effective until April 11, 1963. We see no basis for supposing that c. 258 was intended to have retroactive effect with respect to earlier commission determinations and to regulations then already in effect. See Building Inspector of Acton v. Board of Appeals of Acton, 348 Mass. 453, 456-457, and cases cited.

4. It is not necessary to recite in detail the facts in the companion cases (see fn. 1). We have reviewed them. The same principles of law are applicable as in the Pioneer case. We see no special circumstances of either companion case which would lead to any different result. In each of these three cases, the final decree is affirmed.

So ordered.