Mary M. Tennyson, Sr. Assistant Attorney General Legal Counsel to Washington State Liquor Control Board March 7, 2012

How to support Board as Legal Counsel? Implementation: What needs to be done? Advice: What does Board need? What level of involvement in agency planning Advice: oral, written, both? Reviewing agency work product (Q & A, etc) Contract drafting/review (Buyback agreement, CLS contract changes) How does I-1183 change Board’s authority? Defending legal challenges to the Initiative

Implementation Prioritizing requests, managing contacts Who has ability to request AAG advice, participation in meetings, etc. Board decision, or staff? Agency’s work, or Attorney’s? Public Forums (Contract Store Managers) Learning about aspects of the law, agency policies Coverage for legal work normally performed for other state agencies

Defending I-1183: First legal challenge filed December 6, 2011 King County Superior Court (Seattle) Plaintiffs are: Local 174 Teamsters (drivers for companies contracted to haul product to state stores) UFCW Local No. 21 (state employees in stores and distribution center) State and Governor named defendants No motion for TRO or Preliminary Injunction filed

Second legal challenge filed December 7, 2011 Cowlitz County Superior Court (Kelso, WA) Plaintiffs are: Washington Association for Substance Abuse and Violence Prevention, a nonprofit corporation David Grumbois (landlord of state store in Cowlitz County) Gruss, Inc. (corporation, owns two grocery stores in Kitsap County) Defendant: State of Washington

Relief Requested (Unions) King County complaint (Teamsters, et. al): 13 pages 80 paragraphs 3 causes of action I-1183 violates the “single subject” provision of article II, section 19 I-1183 violates the “subject-in-title” provision of article II, section 19 Injunction restraining further enforcement.

Relief Requested (WASAVP, et. al) Complaint is 14 pages 79 paragraphs One cause of action (consisting of 9 paragraphs and several subparagraphs) Asserts I-1183 violates single subject and subject-in-title provisions of article II, section 19.

Relief Requested is Identical Statement of relief requested, in both cases: Declaratory judgment that I-1183 violates Art. II §19 and is null and void, Injunction to prevent further enforcement of I-1183.

Ballot titles, RCW 29A Ballot Title for initiatives is prepared by the Attorney General. Statement of subject may be no more than 10 words Brief description may contain no more than 30 words Titles may be challenged in court Title for I-1183 was challenged by sponsors and opposition, including plaintiff WASAVP Superior Court made changes to ballot title Superior Court decision may not be appealed

Legal Basis of Both Challenges: Article II, Section 19 No bill shall embrace more than one subject, and that shall be expressed in the title. (Washington State Constitution, Article II, section 19) Plaintiffs in each case assert that I-1183 contains more than one subject and at least one of the multiple subjects are not expressed in the title.

Motions: Cowlitz County case With their complaint, Plaintiffs filed Motion for Preliminary Injunction, noted for hearing on December 16, 2011, 1 pm State’s response brief due Wed. Dec. 14, 10 am State filed Motion to Dismiss or Transfer the action (to King County, for consolidation with first case)

Motions, cont’d State also filed Motion to Shorten Time, and Motion to Continue hearing on Motion for Preliminary Injunction, so Motion to Dismiss could be heard first. Motion to Shorten Time granted on 12/13; hearing on Motion to Dismiss or Transfer set for 12/16, with Motion for P-I; state allowed until 3 pm on 12/15 to file its response brief. Judge denied Motion to Dismiss or Transfer on 12/16, but continued hearing of Motion for Preliminary Injunction to 12/21/11.

Motions, cont’d Motion to Intervene as defendants filed 12/19: Yes On 1183 Coalition; sponsors Bruce Beckett and John McKay; Costco; Safeway; Washington Restaurant Association; The Kroger Company; Family Wineries of Washington. Motion to Intervene granted 12/21/11. Motion for Preliminary Injunction argued on 12/21/11; Motion denied.

Case Schedule (Cowlitz County) Motions for Summary Judgment filed by 1/20/12 Response Briefs due 2/10/12 Reply Briefs due 2/17/12 Oral Argument set for 3/5/12 (moved to 3/2/12) Contingent trial dates: April 16-19, 2012

King County case (filed 12/6/11) Motion to Intervene filed 12/16/11, granted without opposition, 12/28/11 State filed Motion to Stay Proceedings, 1/4/12 Motion granted, over Plaintiffs opposition, 1/13/12 Plaintiffs filed Emergency Motion for Discretionary Review to Court of Appeals, 1/30/12 Court of Appeals ordered state to respond by 2/6/12; petitioners reply due 2/10/12 Court of Appeals denied discretionary review 2/13/12.

Applicable legal principles Washington’s Constitution allows direct legislation, in the form of Initiatives Initiatives, once adopted, are statutes with same standing as laws adopted by legislature Initiatives are laws presumed to be constitutional Initiatives subject to same rules as laws adopted by legislature Burden of Proof: Party challenging statute on constitutional grounds must prove beyond a reasonable doubt that it is unconstitutional

Constitutional provision (article II, section 19) must be liberally construed in favor of finding statute constitutional.

What is the “subject” of I-1183? Plaintiffs (Cowlitz) claim it is “privatization of liquor sales” Intervenors describe subject as “liquor” Other options: “reform of the liquor laws”; “changing the regulation of liquor sales”

Multiple subjects alleged to be included in I King County Plaintiffs Privatization of sale and distribution of hard liquor by closing state stores and licensing private parties to sell and distribute liquor 17% “tax” on gross revenues from spirits sales Imposes taxes on sale of spirits by distributors (allegedly 15% and 10%) Allows retail licensees to act as distributors, selling to on-premises licensees Doubles fines for sales of spirits to minors

King County case “subjects” Grants franchise protections to distributors Allows non-uniform pricing of wine by distributors and allows central warehousing Prohibits WSLCB from regulating price advertising of spirits, wine, and beer Allocates $10 million to local governments to enhance public safety programs

“Subjects” found by Cowlitz County Plaintiffs (based on complaint and pleadings, to date) Privatization of sale and distribution of “hard liquor” (spirits) by closing state stores and selling assets, and allowing private entities to distribute hard liquor Creates franchise protection for spirits distributors (not briefed) Deregulates marketplace and licensees by repealing or amending uniform pricing Changes limited hours and locations for sale of spirits (presumably because of elimination of state stores) Imposes 27% tax on hard liquor sales

Cowlitz County “subjects” cont’d Changes 3-tier system for wine distribution Uniform pricing requirement eliminated Allows retailers to centrally warehouse wine Creates fourth tier of distribution by allowing off- premises retailers to act as distributors for on-premise retailers Uses new tax revenues to fund local public safety programs Permits advertisement of spirits but prohibits WSCLB from restricting advertising of lawful prices of liquor

Cowlitz County “subjects” cont’d Does not change separate licenses being issued for beer, wine, and spirits sales In Motion for Preliminary Injunction, added allegation that removal of words in a policy statement changes the state policy of encouraging moderation in the consumption of alcohol In Motion for Summary Judgment, allege that removal of words in the same policy statement changes policy of an orderly market.

What can the court consider? Cases say: the ballot title, as published; text of the initiative Parties often seek to introduce “legislative history” in the form of statements for and against (in the Voter’s Pamphlet) and advertisements, pro and con. Cases where the meaning of an initiative is concerned have considered materials beyond text of the statute.

YES on 1183 increases selection and lowers wine prices 1183 opens up a competitive market for wineries that will ultimately lead to better selection and more competitive prices on wine for Washington consumers. Join The YES on Coalition A YES vote on is supported by a broad and growing coalition of wineries, restaurants, grocers, and other businesses across the state along with consumers, taxpayer advocates and public safety officials. Please join us in voting YES on YES 0n I 1183 is Good for Wineries & Good for Consumers Read the facts for yourself – YES on 1183.com Paid for by The YES on 1183 Coalition, 300 Queen Anne Ave N, 380, Seattle WA

What result? Hearing held on March 2 Details will be provided on March 7 Regardless of result, likely expedited appeal directly to Washington Supreme Court King County case may, or may not, be allowed to proceed

Questions?