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  • WisBar News
    November 07, 2013

    Supreme Court Clarifies Standard in Reviewing Municipal Liquor License Decisions

    Nov. 7, 2013 – When a municipal body makes a decision about a liquor license that is up for judicial review, the circuit court may not review the decision independently, de novo, according to a unanimous decision of the Wisconsin Supreme Court.

    Instead, circuit courts must employ a certiorari standard of review, the court ruled in IC Willy’s LLC v. City of Wausau, 2013 WI 88 (Nov. 6, 2013), a loss for night club owners in Wausau who wanted the circuit court to make an independent decision on the case.

    Thomas and Suporn Nowell (the Nowells) own IC Willy’s nightclub in Wausau, and obtained a liquor license in October 2009. Within a month, however, police were receiving complaints about noise levels, nudity, and lewd behavior there.

    The city imposed a 15-day suspension of the Nowells’ liquor license after police observed a “Girls Gone Wild” event, which typically involves women “flashing” their breasts or performing other activities that may be construed as “adult entertainment.”

    Adult entertainment was not permitted at IC Willy’s, the city had warned. The night club was allowed to continue operations after serving its suspension. But in May 2010, the city notified the Nowells of its intention to discontinue the establishment’s liquor license.

    Wausau’s Public Health and Safety Committee conducted a hearing that lasted 14 hours. It found that Wausau police had received around a dozen complaints for loud music, issued three citations for disturbing the peace, IC Willy’s failed compliance checks involving minors, and did not take action to prevent nudity despite warnings.

    The Wausau City Council, based on the findings and recommendations of the committee, voted to discontinue the Nowells’ liquor license. The Nowells sought judicial review of the council’s decision in the Marathon County Circuit Court.

    The Nowells asserted that the circuit court should employ a de novo standard of review to decide the issue independently of any municipal decisions, findings, or recommendations. However, the circuit court disagreed with that argument.

    It determined that certiorari review was the proper standard of review. Under that standard, courts accord some deference to the municipality’s decision and determine, among other factors, whether it was “arbitrary, oppressive, or unreasonable.”

    Courts also determine whether a municipality is acting within its jurisdiction, acting a according to the law, and whether there is sufficient evidence to make the decision.

    After hearing extensive evidence on these points, the circuit court affirmed the city’s decision. An appeals court reversed, however, concluding that the circuit court employed the wrong standard of review: it should have reviewed the case de novo. 

    Certiorari Review is the Correct Standard 

    A unanimous Wisconsin Supreme Court reversed the appeals court. Judicial review of decisions under Wis. Stat. section 125.12(2)(d) require certiorari review, it ruled.

    Section 125.12(2)(d) determines the process for judicial review of municipal decisions relating to liquor licenses. It says “procedure on review shall be the same as in civil actions,” but the statute is silent on the standard of review that courts should use.

    “Although Wis. Stat. § 125.12(2)(d) dictates the procedure for judicial review, it is silent on which standard of review the circuit court is to employ,” wrote Justice Ann Walsh Bradley for the court. “[A]n examination of the procedures required by the statute likewise does not indicate whether a de novo or certiorari review was intended.”

    To resolve this issue, the court reviewed the statute in context with other statutes, the legislative history, prior case law, and considerations of policy. The court concluded that certiorari review is the proper standard in cases involving liquor license denials.

    “The court of appeals’ conclusion that the procedures for civil actions are incompatible with certiorari review was based on two cases that are not persuasive here,” Bradley wrote. “Here, the context of [the statute] suggests that certiorari review is appropriate.”

    The supreme court noted that municipalities have explicit authority to grant or deny liquor licenses, and permitting de novo review of those decisions “would, in essence, improperly transfer that legislative function from the municipality to the court.”

    The court also explained that ch. 125 was enacted in 1981 to reorganize existing statutes and make changes to “reflect current interpretations and practices.” Prior to 1981, judicial review of liquor license determinations applied a certiorari standard.

    “[T]he legislature’s statements … that the changes were meant to reflect current interpretations and practices evince an intent that certiorari review under Wis. Stat. § 125.12(d)(2) is the proper standard,” Justice Bradley wrote.

    Finally, the court pointed out that, as recently as last year, the Wisconsin Supreme Court applied a certiorari analysis in an alcohol license renewal case, and that standard recognizes a strong public policy in favor of local control on the sale of alcohol.

    “These policy considerations suggest that certiorari review is appropriate as it serves to keep alcohol licensing decisions within the control of the municipality by according deference to its decisions,” Justice Bradley explained for the court.

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