Cocina Superior, LLC v. Jefferson County Dept. of Revenue
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Cocina Superior, LLC owned a restaurant in Birmingham that sold alcoholic beverages to the public. Cocina appealed two final assessments of the Jefferson County Department of Revenue. The assessments reflected that, for the years 2008-2010, Cocina owed money pursuant to the "Alabama Liquor Tax." The parties filed cross-motions for a summary judgment at the circuit court, agreeing that there were no disputed issues of fact and that the issue to be resolved was a question of law. Cocina argued that the applicable legislation called for the imposition of a tax on the gross receipts derived from the sale of "alcoholic beverages," but, it said, the Department's assessments were erroneously based upon the taxpayer's gross sales of mixed drinks that were composed of both alcoholic beverages and nonalcoholic mixing agents such as colas, sodas, and juices. Cocina asserted that its internal policy and procedure dictated that each mixed drink contain 1.25 ounces of alcohol, and, it maintained, the taxes were due only on the alcohol portion of the mixed drinks, exclusive of any nonalcoholic mixing agent. Cocina also argued that the Department's assessments denied it due process and equal protection of the law because its restaurant was a more upscale establishment with higher overhead expenses than many other facilities that sell alcoholic beverages and was therefore required to charge higher prices and, consequently, pay more taxes for the mixed drinks it sold. Upon review, the Supreme Court concluded that the circuit court correctly held that the plain meaning of "alcoholic beverage" was a beverage containing alcohol, and that the Department's assessments did not violate the restaurant's right to due process or equal protection of the law.
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REL: 03/15/2013 Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . ALABAMA COURT OF CIVIL APPEALS OCTOBER TERM, 2012-2013 2110807 Cocina S u p e r i o r , LLC v. J e f f e r s o n County Department o f Revenue Appeal from J e f f e r s o n C i r c u i t (CV-11-01372) Court PITTMAN, J u d g e . Cocina Superior, LLC ("the t a x p a y e r " ) , which owns a r e s t a u r a n t i n Birmingham t h a t s e l l s a l c o h o l i c beverages t o the p u b l i c , a p p e a l e d t o t h e J e f f e r s o n C i r c u i t C o u r t f r o m two assessments of the Jefferson County Department final o f Revenue 2110807 ("the D e p a r t m e n t " ) , p u r s u a n t t o § 4 0 - 2 A - 7 ( b ) ( 5 ) b . 2 . ( i i i ) A l a . Code 1975, a p a r t o f t h e A l a b a m a T a x p a y e r s ' B i l l o f R i g h t s and U n i f o r m Revenue P r o c e d u r e s A c t , § 40-2A-1 e t s e q . , A l a . Code 1975. The 2010, assessments 747, A c t No. No. 388, A l a . Acts "Alabama A d d i t i o n a l Act f o r the and years rum, vodka, ( e f f e c t i v e May 18, March resolution 1986, the cocktails, Jefferson that states, to the Beverages," amended § 3 o f and l e v i e d a t a x on " [ w ] h i s k e y , and or taken out o f s t o r a g e w i t h i n 25, Act 2001). a l l other beverages except malt beverages, s o l d , d i s t r i b u t e d , stored, "Alabama pursuant 747, A l a . A c t s 1979, 388, A l a . A c t s 1965, brandy, $33,910.07 2008¬ as amended by S a l e s Tax [ o f 3 % ] on A l c o h o l i c 545, A l a . A c t s 2001 No. gin, A l a . A c t s 1965, 1979, S e c t i o n 2 o f A c t No. Act that, t h e t a x p a y e r owed $ 7 2 , 9 1 1 . 7 4 p u r s u a n t t o t h e L i q u o r Tax," No. reflected County i n pertinent the county Commission alcoholic delivered, " adopted part: "There i s h e r e b y l e v i e d , f i x e d , and o r d a i n e d a l i c e n s e t a x on e a c h p e r s o n s e l l i n g , d i s t r i b u t i n g , d e l i v e r i n g , s t o r i n g or withdrawing from storage f o r r e t a i l w i t h i n t h e C o u n t y o f 6% o f t h e g r o s s r e c e i p t s r e a l i z e d by s u c h p e r s o n f r o m t h e d i s t r i b u t i o n , d e l i v e r y , s a l e , storage or w i t h d r a w a l from storage i n t h e C o u n t y o f w h i s k e y , g i n , b r a n d y , rum, v o d k a , c o c k t a i l s , and a l l o t h e r a l c o h o l i c b e v e r a g e s and drinks containing alcohol except malt beverages, wine, and other fermented beverages, sold or 2 On a 2110807 distributed, county." stored (Emphasis added.) provides, or taken out o f storage i n the S e c t i o n 3 o f A c t No. 545, A l a . A c t s i n pertinent 2001, part: "Notwithstanding any p r o v i s i o n o f l a w a n d p u r s u a n t t o S e c t i o n 104 o f t h e C o n s t i t u t i o n o f A l a b a m a o f 1901, t h e r e i s imposed, i n a d d i t i o n t o a l l other taxes, i n c l u d i n g , but not l i m i t e d t o , municipal gross r e c e i p t s l i c e n s e taxes, a three percent sales t a x on a l c o h o l i c b e v e r a g e s s o l d f r o m restaurants t h a t a r e l i c e n s e d by t h e A l c o h o l i c Beverage C o n t r o l Board." (Emphasis added.) In t h e c i r c u i t c o u r t , the p a r t i e s f i l e d c r o s s - m o t i o n s f o r a summary issues of question judgment, agreeing that fact issue and that the o f law f o r the c i r c u i t tax on the "alcoholic gross beverages," a s s e s s m e n t s were e r r o n e o u s l y sales of mixed d r i n k s that no disputed resolved The t a x p a y e r was a argued c a l l e d f o r the i m p o s i t i o n of receipts but, were t o be court. that the a p p l i c a b l e l e g i s l a t i o n a there derived i t said, from the the sale Department's b a s e d upon t h e t a x p a y e r ' s were of gross composed o f b o t h a l c o h o l i c b e v e r a g e s a n d n o n a l c o h o l i c m i x i n g a g e n t s s u c h as c o l a s , s o d a s , and juices. and procedure The t a x p a y e r a s s e r t e d dictated that each 3 that i t s i n t e r n a l p o l i c y mixed drink contain 1.25 2110807 o u n c e s o f a l c o h o l , a n d , i t m a i n t a i n e d , t h e t a x e s were due o n l y on t h e a l c o h o l p o r t i o n o f t h e m i x e d d r i n k s , e x c l u s i v e o f a n y nonalcoholic The m i x i n g agent. taxpayer also argued that the Department's a s s e s s m e n t s d e n i e d i t due p r o c e s s a n d e q u a l p r o t e c t i o n o f t h e law because, i t said, establishment with facilities i t s restaurant higher is a overhead expenses more upscale t h a n many o t h e r t h a t s e l l a l c o h o l i c beverages and i t i s , t h e r e f o r e , r e q u i r e d t o c h a r g e h i g h e r p r i c e s a n d , c o n s e q u e n t l y , p a y more taxes f o r the mixed d r i n k s i t s e l l s . The Department "alcoholic beverage" irrespective nonalcoholic Department argued of is whether mixing agents. that a the beverage the plain meaning containing beverage also of alcohol, contains I n s u p p o r t o f t h a t argument, t h e c i t e d t h e i n c l u s i o n o f t h e p h r a s e " c o c k t a i l s , and a l l o t h e r a l c o h o l i c b e v e r a g e s and d r i n k s c o n t a i n i n g a l c o h o l , " in t h e J e f f e r s o n County Commission's r e s o l u t i o n promulgated p u r s u a n t t o A c t No. 747, w h i c h i n c l u s i o n , t h e D e p a r t m e n t i n d i c a t e s an i n t e n t t o c o n s i d e r "alcoholic beverages." The said, c o c k t a i l s a n d m i x e d d r i n k s as Department also cited the d e f i n i t i o n o f " a l c o h o l i c b e v e r a g e s " i n T i t l e 28, C h a p t e r 3 o f 4 2110807 t h e A l a b a m a Code 1975, which control beverages of counties alcoholic in permitted. which Section the relates sale 28-3-1, in of Ala. to the wet "regulation counties," i . e . , alcoholic Code and 1975, beverages provides, is in pertinent part: "The f o l l o w i n g words o r p h r a s e s , w h e n e v e r t h e y a p p e a r i n t h i s c h a p t e r , and i n A l c o h o l i c B e v e r a g e L i c e n s i n g Code, b e i n g A c t No. 80-529, A c t s of A l a b a m a , 1980, as amended, a p p e a r i n g as C h a p t e r 3A, T i t l e 28, as amended, and t h e A l a b a m a T a b l e Wine A c t , b e i n g A c t 80-382, A c t s o f A l a b a m a 1980, as amended, a p p e a r i n g as C h a p t e r 7, T i t l e 28, as amended, unless the context clearly indicates o t h e r w i s e , s h a l l have t h e m e a n i n g a s c r i b e d t o them in this section: "(1) Alcoholic beverages. Any a l c o h o l i c , s p i r i t u o u s , v i n o u s , fermented, or o t h e r a l c o h o l i c beverage, or combination o f l i q u o r s and m i x e d l i q u o r , a p a r t o f which i s s p i r i t u o u s , v i n o u s , fermented, or otherwise a l c o h o l i c , and a l l d r i n k s o r d r i n k a b l e l i q u i d s , p r e p a r a t i o n s or m i x t u r e s intended f o r beverage purposes, which c o n t a i n o n e - h a l f o f one p e r c e n t o r more o f alcohol by volume, and shall include l i q u o r , b e e r , and w i n e . " (Emphasis On added.) May 6, 2012, the circuit summary j u d g m e n t i n f a v o r o f t h e court entered D e p a r t m e n t on t h e t a x p a y e r ' s l i a b i l i t y t o pay t h e a s s e s s m e n t s . court s t a t e d : 5 a the The partial i s s u e of circuit 2110807 "[The t a x p a y e r ] a r g u e s t h a t t h e C o u n t y has no r i g h t t o i m p o s e t h e t a x on t h e n o n - a l c o h o l i c 'mixing a g e n t s ' which are mixed w i t h the a l c o h o l to c r e a t e c o c k t a i l s and o t h e r m i x e d d r i n k s . I t s a y s t h a t t h e t a x e s s h o u l d be on o n l y t h e 1.25 o u n c e s o f a l c o h o l contained i n s a i d drinks. "The C o u r t d i s a g r e e s . Words u s e d i n a s t a t u t e must be g i v e n t h e i r n a t u r a l , p l a i n , o r d i n a r y and commonly understood meaning, and where plain language i s used, a c o u r t i s bound t o i n t e r p r e t t h a t l a n g u a g e t o mean e x a c t l y what i t s a y s . IMED C o r p . v. S y s t e m s Eng'g A s s o c s . C o r p . , 602 So. 2d 344, 346 (Ala. 1992). "The C o u r t must presume t h a t t h e l e g i s l a t u r e knew t h e e x a c t m e a n i n g o f t h e words i t u s e d i n t h e s t a t u t e . Our representatives c e r t a i n l y knew the meaning of ' c o c k t a i l s , and a l l other a l c o h o l i c b e v e r a g e s and d r i n k s c o n t a i n i n g a l c o h o l . ' T h a t i s what t h e y t a x e d , and n o t j u s t t h e a l c o h o l contained w i t h i n such d r i n k s . While the language i n the s e c o n d s t a t u t e i s n o t as s p e c i f i c , i t c l e a r l y i s b a s e d upon t h e f i r s t s t a t u t e and t h e same r u l i n g must a p p l y t o b o t h . "The t a x p a y e r ' s n e x t argument i s t h a t the a s s e s s m e n t s v i o l a t e i t s c o n s t i t u t i o n a l r i g h t s t o due p r o c e s s and e q u a l p r o t e c t i o n . I t s a y s t h a t o t h e r r e s t a u r a n t s and b a r s can s e l l d r i n k s f o r l e s s and t h a t i t w o u l d be u n f a i r t o t a x [ t h e t a x p a y e r ] on t h e h i g h e r p r i c e d d r i n k . Under the r e l e v a n t statute, [ t h e t a x p a y e r ] i s t r e a t e d t h e same as o t h e r s e l l e r s o f a l c o h o l i c d r i n k s . They a r e a l l c h a r g e d s a l e s t a x on t h e b a s i s o f g r o s s r e c e i p t s f r o m t h e r e t a i l s a l e of a l c o h o l i c beverages. T h i s i s not u n f a i r and c e r t a i n l y does n o t v i o l a t e [ t h e t a x p a y e r ' s ] r i g h t s t o due p r o c e s s o r e q u a l p r o t e c t i o n , u n d e r e i t h e r t h e C o n s t i t u t i o n of the S t a t e of Alabama or of the United States." 6 2110807 Following the Department's r e c a l c u l a t i o n of past-due taxes, p e n a l t i e s , and i n t e r e s t owed by t h e t a x p a y e r f o r a t i m e w i t h i n the a p p l i c a b l e s t a t u t o r y l i m i t a t i o n s p e r i o d , the c i r c u i t c o u r t e n t e r e d a f i n a l j u d g m e n t on May 8, 2012, d e t e r m i n i n g t h a t the taxpayer taxpayer timely We owed $ 9 9 , 8 7 6 . 0 1 . review standard of The appealed. a summary j u d g m e n t de n o v o , a p p l y i n g t h e review as the trial Westhampton C o u r t , L.L.C., 903 So. court 2d 82, applied. 87 Turner v. ( A l a . 2004) . In a d d i t i o n , t h e i s s u e s r a i s e d by t h e t a x p a y e r p r e s e n t o f l a w f o r w h i c h o u r r e v i e w i s de novo. 46 So. 3d 403, 412 E s p i n o z a v. ( A l a . 2010). "'In determining the meaning of a statute, [trial and appellate courts] l o o k [ ] t o t h e p l a i n m e a n i n g o f t h e words as w r i t t e n by t h e l e g i s l a t u r e . As [our supreme c o u r t has] s a i d : II I II 'Words u s e d i n a s t a t u t e must be g i v e n t h e i r n a t u r a l , plain, o r d i n a r y , and commonly u n d e r s t o o d m e a n i n g , and where p l a i n l a n g u a g e is used a c o u r t i s bound to i n t e r p r e t t h a t l a n g u a g e t o mean e x a c t l y what i t s a y s . I f the language of the statute is unambiguous, then t h e r e i s no room f o r j u d i c i a l c o n s t r u c t i o n and t h e c l e a r l y e x p r e s s e d i n t e n t o f t h e l e g i s l a t u r e must be g i v e n effect.'" 7 same questions Rudolph, 2110807 " ' B l u e C r o s s & B l u e S h i e l d v. N i e l s e n , 714 So. 2d 293, 296 ( A l a . 1998) ( q u o t i n g IMED C o r p . v. Systems Eng'g A s s o c s . C o r p . , 602 So. 2d 344, 346 ( A l a . 1992)) . ... [ O ] n l y i f t h e r e i s no r a t i o n a l way t o i n t e r p r e t t h e words as s t a t e d w i l l we l o o k b e y o n d those words to determine legislative i n t e n t . To a p p l y a d i f f e r e n t p o l i c y w o u l d t u r n t h i s C o u r t i n t o a l e g i s l a t i v e body, and d o i n g t h a t , o f c o u r s e , w o u l d be u t t e r l y inconsistent with the doctrine of s e p a r a t i o n o f p o w e r s . See Ex p a r t e T.B., 698 So. 2d 127, 130 ( A l a . 1 9 9 7 ) . " ' II I I " D e K a l b C o u n t y LP Gas Co. v. S u b u r b a n Gas, I n c . , 729 So. 2d 270, 275-77 ( A l a . 1 9 9 8 ) . 2 " As e x p l a i n e d i n D e K a l b C o u n t y LP Gas, s u p r a , t h i s Court's a p p l i c a t i o n of the plain-meaning r u l e is g u i d e d by A r t . I I I , § 42, o f t h e A l a b a m a Constitution of 1901, which p r o v i d e s f o r the s e p a r a t i o n of powers between t h r e e departments of s t a t e g o v e r n m e n t . See g e n e r a l l y M a r c James A y e r s , Unpacking Alabama's P l a i n - M e a n i n g R u l e of S t a t u t o r y I n t e r p r e t a t i o n , 67 A l a . Law. 31, 32 ( J a n . 2 0 0 6 ) . " 2 Munnerlyn v. A l a b a m a Dep't o f C o r r . , (Ala. 2006). meaning of 946 So. 2d 436, 438-39 The c i r c u i t c o u r t c o r r e c t l y h e l d t h a t t h e p l a i n "alcoholic beverage" is a beverage containing alcohol. The circuit Department's court also correctly held that the assessments d i d not v i o l a t e the taxpayer's r i g h t 8 2110807 to due process or equal protection of the law. Every establishment that s e l l s a drink containing alcohol i s treated the same: percent each of pays i t s sales a gross-receipts of such tax drinks. amounting The fact to s i x that one p u r v e y o r c h a r g e s more f o r i t s m i x e d d r i n k s -- and t h e r e b y p a y s more t a x i n an a b s o l u t e sense -- is a consequence of that p u r v e y o r ' s p r i c i n g p o l i c y (a m a t t e r s o l e l y w i t h i n t h e c o n t r o l o f t h e p u r v e y o r ) and n o t an u n f a i r a t t r i b u t e o f t h e s y s t e m of t a x a t i o n , w h i c h t a x e s a l l p u r v e y o r s a t t h e same t a x r a t e . See C i t y o f B i r m i n g h a m v. S t a c y W i l l i a m s 611 (Ala. 1978) ("[T]he class Co., composed 356 So. 2d 608, of wholesale tobacco merchants i s not d e n i e d e q u a l p r o t e c t i o n of laws because the class as a w h o l e i s treated c l a s s i s a l l o w e d t o deduct its gross r e c e i p t s The fairly alike; no member o f t h e s a l e s t a x on t o b a c c o ... the from "). judgment o f the J e f f e r s o n C i r c u i t C o u r t i s a f f i r m e d . AFFIRMED. Thompson, P . J . , and Thomas, M o o r e , and concur. 9 Donaldson, J J . ,
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