NEW MIDWEST RENTALS, LLC, d/b/a DES MOINES VALERO #2043733 EASTON BLVD.DES MOINES, IOWA 50317 Plaintiff-Appellant,
IOWA DEPARTMENT OF COMMERCE, ALCOHOLIC BEVERAGES DIVISION, Defendant-Appellee.
from the Iowa District Court for Polk County, David N. May,
convenience store sought judicial review after the alcoholic
beverages division denied its request to renew its retail
L. Dorr of Wasker, Dorr, Wimmer & Marcouiller, P.C., West
Des Moines, for appellant.
J. Miller, Attorney General, and John R. Lundquist, Assistant
Attorney General, for appellee.
P.J., and Vaitheswaran and Potterfield, JJ.
Midwest Rentals, LLC, d/b/a Des Moines Valero #204 (Valero),
sought judicial review of the decision of the Iowa Department
of Commerce Alcoholic Beverages Division (the ABD), which
denied Valero's application to renew its retail beer
permit. After the district court affirmed the ABD's
action, Valero appeals, asserting (1) the district court
erred in concluding the language of Iowa Code section 123.45
(2013) is unambiguous; (2) the ABD's interpretation of
section 123.45 is irrational, illogical, and wholly
unjustifiable; and (3) the ABD's denial of Valero's
retail beer permit violates its equal protection and due
process rights under both the Federal and Iowa Constitutions.
While we agree the district court was wrong to declare the
language of section 123.45 unambiguous, we do not find the
ABD's interpretation of the statute irrational,
illogical, or wholly unjustifiable. We likewise find no
constitutional violation in the ABD's denial of
Valero's retail beer permit. The agency's decision is
Background Facts and Proceedings.
Forsythe wholly owns the company New Midwest Rentals, and in
2010 the company purchased five convenience stores, which,
after renovations were made, operate under the name Valero.
The Valero store at issue in this case is number 204, located
on Easton Boulevard in Des Moines. Store 204 was initially
issued a class "C" beer permit on November 11,
2011. On April 25, 2012, the ABD received a request for a
direct shipper wine license for a company called Continental
Vineyards, LLC, d/b/a Broken Earth Winery. Forsythe signed
the Broken Earth Winery application. When the ABD
cross-referenced Forsythe's name, they discovered he also
owned the Valero stores. Forsythe was informed by the ABD
that he may not hold both an ownership interest in a
California winery and a business holding an Iowa retail beer
permit. Broken Earth Winery subsequently withdrew its direct
that Forsythe was actively working towards divesting his
ownership interest of either the winery or the Valero stores,
the ABD renewed the beer permit for store 204 in 2012. In
October 2013, store 204 filed its second renewal application,
with Forsythe still listed as owner, and the ABD confirmed he
still retained an ownership interest in Broken Earth Winery.
The ABD subsequently denied the renewal application for store
204 because of Forsythe's ownership interest in the
Broken Earth Winery.
appealed the decision of the ABD staff, and this matter was
heard by an administrative law judge (ALJ) in a contested
case proceeding in February 2014. The ALJ concluded the
renewal permit was properly denied on the basis of Iowa Code
section 123.45, which the ALJ determined unambiguously stated
individuals engaged in the business of manufacturing
"alcoholic beverages, wine, or beer . . . shall not . .
. directly or indirectly be interested in the ownership,
conduct, or operation of the business of another licensee or
permittee authorized under this chapter to sell at retail,
nor hold a retail liquor control license or retail wine or
beer permit." See Iowa Code § 123.45.
appealed the ALJ's decision, which was upheld by the
ABD's administrator on October 3, 2014. The administrator
concluded, "[T]he legislature forbid a liquor, wine or
beer manufacturer or wholesaler from holding any retail
license or permit, regardless of what type of alcoholic
beverage the retailer sells." The administrator
acknowledged "the probability of the California winery
exerting an undue influence over the . . . Iowa retail beer
permit at issue is questionable, " but he noted
"the legislature intended, through clearly enacted
legislative language in Iowa Code [section] 123.45, to apply
to such circumstances." The administrator also rejected
Valero's claim that the ALJ should have used rules of
statutory construction when interpreting section 123.45
because such rules are only employed when a statute is
ambiguous, which the administrator determined section 123.45
sought judicial review of the administrator's decision
with the district court pursuant to Iowa Code section 17A.19.
After a hearing, the district court issued a decision on
March 12, 2015, concluding the language used by the
legislature in section 123.45 was ambiguous:
A reasonable person could interpret the meaning of this
statute to prohibit any alcoholic beverage
manufacturer to hold any type of alcoholic beverage
retail permit, as the ABD held. . . . [Or] a reasonable
person could also interpret the statute to only prohibit the
dual ownership among the same type of alcoholic beverages
(e.g. a wine manufacturer and wine retail permittee). At the
very least, a reasonable person could be uncertain as to the
meaning of the statute.
of the ambiguity in the statute, the 2015 judicial review
decision remanded the matter so the ABD could apply the
statutory rules of construction to determine which meaning
the legislature intended.
party appealed that decision, and the case proceeded back to
the ABD for the application of the rules of statutory
construction to section 123.45. On March 25, 2016, the ABD
administrator issued its decision on remand, finding
"[t]he legislature has directed the [ABD] to maintain
strict separation between the retail, wholesale, and
manufacturing of the industry through its enactment of Iowa
Code chapter 123. The [ABD] concludes a rational and logical
interpretation of Iowa Code [section] 123.45
(2015) prohibits [Valero] from holding Iowa
retail beer permits."
once again sought judicial review of the agency's
decision. In November 2016, a second district court judge
affirmed the ABD decision, concluded section 123.45 was in
fact unambiguous, and prohibited a wine manufacturer from
holding a retail beer permit. Valero appeals from the 2016
judicial review decision.
Scope and Standard of Review.
review of an agency's actions is governed by Iowa Code
chapter 17A. Neal v. Annette Holdings, Inc., 814
N.W.2d 512, 518 (Iowa 2012). The district court reviews the
agency's actions in an appellate capacity. JBS Swift
& Co. v. Hedberg, 873 N.W.2d 276, 279 (Iowa 2015).
"The district court may grant relief if the agency
action has prejudiced the substantial rights of the
petitioner, and the agency action meets one of the enumerated
criteria contained in section 17A.19(10)(a) through
(n)." Burton v. Hilltop Care Ctr., 813 N.W.2d
250, 256 (Iowa 2012) (citations omitted). We then apply the
same standards of section 17A.19(10) to determine whether we
reach the same result as the district court. Id. at
255-56. "If we ...