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When the California Department of Alcoholic Beverage Control temporarily suspended the liquor licenses of three Southern California businesses in 2002, the owners quickly cried foul over how the decisions were reached. They were incensed that the department’s chief counsel had ignored an administrative law judge’s recommendation against suspension and instead imposed penalties after relying on a report by the losing staff attorney who prosecuted the cases. Since then-Chief Counsel Matthew Botting was the staff attorney’s direct supervisor, the businesses’ lawyers argued he was a biased advocate, not a neutral decision maker. The suspensions, they said, should be overturned. On Wednesday, the dispute reaches the California Supreme Court, where oral arguments will help determine whether the Department of Alcoholic Beverage Control � and by extension any other state administrative agency � must separate its prosecutorial and adjudicatory functions. The court’s ruling should resolve whether written or verbal discussions between administrative prosecutors and adjudicators constitute improper ex parte communications. Although the department argues that the current system is essential, both the Alcoholic Beverage Control Appeals Board � which reviews department decisions � and Los Angeles’ Second District Court of Appeal said those functions should be separate. Having the prosecutor and the adjudicator on the same internal legal team, they ruled, isn’t proper. “The manner in which the department conducts its administrative proceedings,” the Second District ruled last year, “violates an accused’s due process rights by creating an unacceptable risk of bias and unfairness.” In an amicus curiae brief, though, the California attorney general’s office contends that the Second District’s ruling � along with similar opinions in the past few years � could have costly and disruptive effects. “These recent decisions,” Oakland-based Deputy AG Joseph Barbieri wrote, “may expose agencies to more claims of bias; force restructuring in the way that agencies divide work among their professional staff; or compel them to hire private counsel.” Indeed, he said, the rulings very well could affect the attorney general’s office itself. The AG, Barbieri wrote, “serves its client state agencies in dual capacities, acting both as their advocate in litigation and providing them advice informally and at their public hearings.” The underlying conflict erupted in late 2001 and early 2002 when the Department of Alcoholic Beverage Control went after two businesses � one store owned by Richard Kim and another operated by KV Mart � for allegedly selling alcoholic beverages to minors. Also, a bartender employed by Daniel Quintanar was accused of selling booze to an overly drunken customer. An administrative law judge recommended that all three cases be dismissed, however, because of insufficient proof. Afterward, the prosecuting staff attorney, who wasn’t named in court papers, filed a routine report with Botting outlining what happened in the administrative hearings. Botting, who is no longer chief counsel, then rejected the judge’s proposal and ordered suspensions ranging from 15 to 25 days. In Supreme Court documents, Kerry Winters, staff counsel for the Department of Alcoholic Beverage Control, argued that the appeal board and the Second District were wrong. Before a department decision can be overturned, she wrote, there must be a showing of actual bias, which didn’t exist in the cases at hand. Moreover, Winters added, the state constitution recognizes the Department of Alcoholic Beverage Control as a “unitary agency” in which prosecutorial and adjudicatory functions are allowed to coexist. “By giving one agency the exclusive power to license the manufacture and sale of alcoholic beverages,” Winters wrote, “the Constitution ‘necessarily’ invests the agency’s decision maker with the roles of determining when there is a violation and taking action to correct the violation, i.e., the functions of accuser and adjudicator.” Playa Del Rey attorneys Ralph Saltsman and Stephen Solomon, who represent the three suspended businesses, say the AG’s office misunderstands their position. The Solomon, Saltsman & Jamieson partners concede in court papers that the Department of Alcoholic Beverage Control has the authority to prosecute and adjudicate cases. But, they argue, it’s improper for one person within that agency to prosecute cases, then advise the ultimate adjudicator about a possible ruling. “Certainly,” Saltsman and Solomon wrote, “the prosecutor invaded the expected neutrality which should have defined the role of decision maker.” In a telephone interview, Saltsman said a ruling in his clients’ favor would have “an impact across the board in administrative proceedings” by guaranteeing that agency prosecutors don’t engage in ex parte communications with the same agency’s adjudicators. “If you look at the direction the courts have been taking over the last 30 years,” he said, “you will see that [they] are taking those steps necessary to ensure that administrative proceedings are fairly conducted.” John Peirce, current chief counsel of the Department of Alcoholic Beverage Control, said it’s important “as a matter of principle” for the court to clarify whether the agency’s internal operations are appropriate. He wouldn’t speculate on what would happen if the court rules against the department. The case is Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Board (Quintanar), S133331.

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