This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
In the Matter of the Grocery and Tobacco
Dealer License Held by
Uncle Bill’s Market, Inc., d/b/a Uncle Bill’s Market
Filed December 11, 2007
Minneapolis City Council
OAH Docket No. 7-6010-17292-3
Leon A. Trawick, Trawick & Smith, P.A., 331 Second Avenue South, Suite 515, Minneapolis, MN 55401 (for relator Uncle Bill’s Market)
Jay M. Heffern, Minneapolis City Attorney, Joel M. Fussy, Assistant City Attorney, 333 South Seventh Street, Suite 300, Minneapolis, MN 55402 (for respondent City of Minneapolis)
Considered and decided by Randall, Presiding Judge; Peterson, Judge; and Hudson, Judge.
On May 19, 2006, respondent City of Minneapolis initiated adverse license proceedings against the grocery and tobacco licenses of relator Uncle Bill’s Market, a convenience store owned by Alioe Meshjell. The city claimed that relator’s licenses should be revoked for allegedly allowing the sale of illegal narcotics on the premises, possessing drug paraphernalia behind the sales counter, permitting lurking and loitering around the business, failing to remove litter and debris near the premises, failing to maintain a refuse enclosure, and violation of fire department orders.
A hearing was held before an administrative law judge (ALJ), and after consideration of the evidence presented, the ALJ found that the city had satisfied its burden of proof on several license violations. Specifically, the ALJ found that relator had violated city ordinances that required the store to (1) prevent loitering on the premises, (2) provide adequate security to prevent criminal activity, (3) take appropriate action to prevent the store from being used to maintain a public nuisance, (4) remove litter and debris, and (5) pay fire alarm penalties. Additionally, the ALJ found relator vicariously liable for a single sale of crack cocaine on the premises.
However, the ALJ also ruled that the city failed to prove that relator had intentionally maintained a nuisance or had neglected to take appropriate action to prevent the sale or possession of controlled substances on the premises. The ALJ explained that although police officers testified “to witnessing hand-to-hand transactions ‘consistent with narcotics activity’ between the loiterers outside the store, there is no evidence that Mr. Meshjell was aware of any further drug activity occurring on the premises.” Based on the license violations that werefound, and due to certain mitigating factors such as the remedial action taken by relator, the ALJ recommended that the city institute a penalty short of revocation that would include a fine and “appropriate conditions” on relator’s licenses. Neither party filed written exceptions to the ALJ’s report.
Shortly thereafter, the city council’s public safety and regulatory services committee (the committee) reviewed the ALJ’s findings and conclusions and considered whether adverse action was necessary at a public hearing. At that time, the city division of licensing submitted a report and a recommendation for adverse action to the committee. The report proposed that the committee (a) adopt the ALJ’s findings of fact and recommended conclusions of law and (b) penalize relator by implementing a stayed revocation of the grocery and tobacco licenses with conditions that the store licenses be suspended for 15 days, and payment of a fine of $5,000, and conduct its business operations in strict adherence to several enumerated conditions. After consideration of the record and the arguments of counsel, the committee adopted the ALJ’s findings of fact and conclusions of law, but declined to accept the sanctions recommended by the ALJ and the licensing division. Instead, the committee recommended that the city council revoke the licenses. By subsequent vote of the entire city council, the committee recommendation was adopted, and relator’s licenses were revoked without a stay pending appeal. This court reversed the denial of a stay and remanded for further findings. On remand, the city council granted the stay pending appeal. This certiorari appeal followed.
Relator’s brief alludes to several issues on appeal, but the crux of the arguments is that the city acted arbitrarily and capriciously by revoking the store’s tobacco and grocery licenses. A reviewing court may reverse an agency’s decision if it is arbitrary or capricious. Minn. Stat. § 14.69(f) (2004). “An agency decision is arbitrary and capricious if it is an exercise of the agency’s will, rather than its judgment, or if the decision is based on whim or is devoid of articulated reasons.” CUP Foods, Inc., v. City of Minneapolis, 633 N.W.2d 557, 565 (Minn. App. 2001), review denied (Minn. Nov. 13, 2001). Where there is room for two opinions on a matter, the decision to accept one over another is not arbitrary and capricious. Id. The burden is on the appealing party to demonstrate the arbitrariness of the council’s action. Country Liquors, Inc., v. City Council, 264 N.W.2d 821, 824 (Minn. 1978).
Relator argues that the city acted arbitrarily and capriciously because the penalty imposed was a substantial deviation from the recommendations of the ALJ and the department of licensing. “A city council may affirm, reject, or modify an ALJ’s findings or conclusions.” CUP Foods, 633 N.W.2d at 565. When an agency significantly deviates from a reviewing authority’s conclusions, it must explain the deviation. Beaty v. Minn. Bd. of Teaching, 354 N.W.2d 466, 472 (Minn. App. 1984). Failure to do so is evidence that the city desired to exercise its will and not its judgment. Id.; see also Burnett v. Stearns County Welfare Bd., 370 N.W.2d 452, 455 (Minn. App. 1985) (ruling that a county welfare board acted arbitrarily and capriciously by rejecting, without comment, a merit system council recommendation to grant a relator a merit increase). But see In re Friedenson, 574 N.W.2d 463, 467-68 (Minn. App. 1998) (holding that revocation of relator’s medical license was not arbitrary and capricious, even though board failed to explain its reasons for deviating from an ALJ’s findings of fact and conclusions of law because the reviewing court was satisfied the penalty was the product of “careful and prudent judgment”), review denied (Minn. Apr. 30, 1998).
Here, the formal recommendation of revocation by the committee, which was later approved by the entire city council, articulates a thorough, legitimate explanation for rejecting the ALJ’s and city licensing division’s recommendation of a penalty less than revocation:
The severity, scope and nature of the established license violations are indicative of a poorly-managed licensed business which has had a deleterious impact upon its community while consuming a disproportionate and unreasonable amount of City enforcement and regulatory resources. This Committee finds that this established and lengthy negative impact upon the community and upon City resources, which continued for a period of multiple months, outweighs any mitigating factors related to more recent decreases in police calls to and nuisance activity at the licensed business. The multiple business license management violations which occurred while the premises were under the operation, control and ultimate responsibility of [relator] were pervasive and severe such that revocation of the referenced business licenses is an appropriate sanction.
This finding has support in the record. The ALJ found that from June 1, 2004, to February 22, 2006, there were 141 calls for police service, 21 police reports filed, and five arrests made at the store. There were also numerous hand-to-hand transactions consistent with narcotics activity and several shootings and assaults while the store was under the ownership of Meshjell. The penalty imposed by the city was not capricious.
Relator also argues that remarks by council members at the committee hearing demonstrate that the decision to revoke the licenses was an exercise of will over judgment. Relator focuses its argument on specific comments made by council members regarding the sale and possession of controlled substances on the premises. During the hearing, council member Paul Ostrow seemed confused about whether the ALJ found a pattern of such activity and expressed frustration with the lack of clarity in the findings on this issue:
[T]he ALJ frankly was unhelpful in finding a fact whether or not there were narcotics. To say that there was activity consistent with narcotics—to say that there was behavior or transactions consistent with narcotics activity is not a finding that’s helpful. As far as a sanction to this particular licensee, it seems like this panel either has to find that there was a pattern of narcotics activity or not. We don’t care about, technically, about transactions consistent with narcotics activity. We care about narcotics activity, and so do we need to amend the Findings of the ALJ if we conclude that, in fact, there was additional narcotics activity, or if we adopt all these findings, are we adopting a finding that says there was really just one drug transaction?
Council member Don Samuels also asked for clarification of the findings pertaining to illegal drug activity, and commented several times that, based on his understanding of the ALJ’s report, relator “was able to convince the ALJ that whether [the controlled substances transactions] occurred outside of the store or inside of the store . . . [Meshjell] took action whenever he found out about it . . . .”
In response to these questions, the city attorney and counsel for relator explained the ALJ’s finding that, although there was evidence of controlled substance transactions on the premises, relator was either unaware of this activity or took remedial action after being apprised of the problem. The city attorney also informed the committee that it had the authority to amend the findings if it did not agree with them, and explained that the potential penalty to be imposed was a “policy decision [that] needs to be borne by th[e] Committee.” Relator’s argument that the decision to revoke was improperly based on the city’s will is not apparent from the record. The committee was merely performing its duties by reviewing the record of the administrative hearing and the ALJ’s report, and asking clarifying questions about the earlier proceedings to determine whether to affirm, reject, or modify the ALJ’s findings and conclusion. The council members’ comments evince some criticism of the ALJ’s findings, but do not demonstrate an exercise of will over judgment.
Finally, relator argues that the revocation of its license was arbitrary and capricious because it received a more severe penalty than the Minneapolis convenience store in CUP Foods. Like relator, the convenience store in CUP Foods experienced problems with loitering and drug activity. 633 N.W.2d at 560. Due to concerns about crime on the premises, the city placed conditions on the store’s license that were aimed at curtailing illegal activity. Id. at 561. After about a year of full compliance with the licensing conditions, the reported crime at the store appeared to decrease, but after the store discontinued some of its crime prevention efforts, the loitering and drug activity returned. Id. The city eventually initiated adverse license proceedings and revoked the store’s license for permitting loitering and drug activity. Id. at 561-62. Revocation was stayed on the condition that the store close for six months and take additional crime-prevention measures upon reopening. Id. at 562.
Here, relator claims that its license violations were less egregious than the store in CUP Foods and that it made more substantial efforts to correct the violations and deter illegal activities. Based on this comparison, relator believes the record supports a sanction short of revocation. We agree that this issue is close. The violations in CUP Foods are at least comparable to those involved here. But under the arbitrary and capricious standard, appellate review does not mete out mathematically equal sanctions to different entities for similar violations of municipal ordinances. As long as there is a rational connection between the facts found and the decision made, the city’s determination can be upheld. See Bloomquist v. Comm’r of Natural Res., 704 N.W.2d 184, 190 (Minn. App. 2005). The findings acknowledge that relator made improvements to the store and that the amount of illegal activity and police calls had decreased. But as a policy matter, the city decided that these mitigating factors were outweighed by “the lengthy negative impact” the activity around the store had on the community. The city council’s decision was within its discretion and we cannot conclude that it was arbitrary and capricious.