Opinion
C.A. NO. 00A-09-015-NAB.
Submitted: January 9, 2001.
Decided: January 30, 2001.
Appeal of a Decision From the Commission on Adult Entertainment Establishments. Reversed and Remanded.
Thomas H. Ellis, Esquire, Deputy Attorney General, Wilmington, Delaware, for the State.
Stephen F. Dryden, Esquire, Robinson Grayson, Wilmington, Delaware, for the Commission.
ORDER
This opinion addresses the State's appeal of a final decision of the Commission on Adult Entertainment Establishments (Commission). In response to the State's Complaint seeking to revoke the business license of Bob's Discount Books, Inc./Live Peeps (Bob's), the Commission instead imposed a fine on Bob's for violation of one of the statutes regulating the operation of adult entertainment establishments. The State appealed the Commission's decision to this Court, arguing that the Commission has no authority to impose monetary fines. Having reviewed the parties' submissions, as well as the record below, the Court concludes that the Commission erred as a matter of law and that its decision must be reversed.
FACTS
The relevant facts of this case are undisputed. Bob's Discount Books is a business falling within the purview of the Commission on Adult Entertainment Establishments. In August 1999, the State filed a complaint with the Commission alleging that one of Bob's former employees had engaged in prostitution while on the premises and sought to have Bob's license revoked for a violation of 24 Del. C. § 1617(a). In December 1999, the State amended the pleading to include an allegation that Bob's had failed to report a change in the status of one of its employees, in violation of 24 Del. C. § 1622(a). The complaint alleged that although Bob's had informed the Commission that an employee named Mitchell Watson would not be working at Bob's until certain criminal charges against him were resolved, Mitchell continued to work at Bob's, albeit on an irregular basis.
In March 2000, the State dismissed the first count of the Complaint relating to the alleged prostitution. In June 2000, a hearing on the alleged reporting violation was conducted by the Commission. Bob's acknowledged the violation, and the Commission imposed a $1000 fine. After the fine was paid, the State filed a motion to vacate, arguing that the Commission's authority includes issuing, suspending or revoking licenses but does not include imposing monetary fines. The Commission denied the motion, and the State filed a timely appeal to this Court. Briefing is complete, and the issue is ripe for decision.
ISSUE
The issue before the Court is whether the Commission on Adult Entertainment Establishments, which is explicitly empowered to issue, suspend and revoke licenses, is implicitly authorized to impose monetary fines.
STANDARD OF REVIEW
The function of this Court on review of a decision of an administrative agency such as the Commission is to determine whether the tribunal's decision is supported by substantial evidence. Substantial evidence is such evidence as a reasonable mind might accept as adequate to support a conclusion. This Court does not weigh the evidence, determine questions of credibility or make factual findings. It merely determines if the evidence is adequate to support the Commission's factual findings. However, where, as here, the issue is one of statutory construction and the application of the law to undisputed facts, the Court's review is plenary.
General Motors v. Freeman, Del.Supr., 164 A.2d 686, 688 (1960).
Oceanport Ind. v. Wilmington Stevedores, Del.Supr., 636 A.2d 892, 899 (1994).
Johnson v. Chrysler Corp., Del.Supr., 213 A.2d 64, 66-67 (1965).
Title 29 Del. C. § 10142(d).
Public Water Supply Co. v. DiPasquale, Del.Supr., 735 A.2d 378, 381 (1999).
DISCUSSION
The Adult Entertainment Establishment Act. In 1977, the General Assembly enacted the Adult Entertainment Establishment Act in part to further the "compelling interest of the people of this State in being free of the crimes of obscenity, prostitution and its companion offenses." The Act creates the Commission on Adult Entertainment Establishments and defines the types of businesses which fall within its control. The Act also imposes stringent requirements for obtaining and maintaining a license for operating an adult entertainment establishment. Several of these statutes create requirements for reporting personnel to the Commission. The General Assembly enacted these provisions because "existing criminal penalties for the foregoing offenses [of obscenity, prostitution and related offenses] have been rendered ineffective [in part] by the active concealment of the identities of the individuals who create, control and promote such businesses. . . ." For this reason, the Act puts a high priority on accurate and timely reports regarding all individuals employed at adult entertainment establishments.Reporting violations pursuant to § 1622. In the case at bar, Bob's acknowledged a violation of the statute which mandates a prompt notification of any change in personnel. Title 24 Del. C. § 1622 provides as follows:
(a) An adult entertainment establishment shall notify the Commission in writing within 10 days of any change, containing the full name(s), including nicknames or aliases, residential address(es), place(s) of employment, including address(es) and phone number(s), Social Security number, date of birth, driver's license number and a photograph taken within 30 days of notification, of any change in the identity of the persons identified pursuant to § 1613(b) and (e) of this title.
(b) A violation of this section shall be punishable by a fine in the amount of $1,000.
The question before the Court is whether the Commission has the statutory authority to impose the $1000 fine set forth in subsection (b). While § 1622 clearly establishes a $1000 fine as a sanction for a reporting violation, the statute is silent as to which entity shall impose the fine. However, § 1622 must not be construed in isolation but must be read in pari materia with related statutes within the Act.
Watson v. Burgan, Del.Supr., 610 A.2d 1364, 1368 (1992); State Farm Mut. Auto. Ins. Co. v. Wagamon, Del.Supr., 541 A.2d 557, 560 (1988).
In the proceedings below, the State sought revocation of Bob's license for violation of § 1622(a), not payment of the fine. Such a revocation is clearly within the Commission's authority. The statute which creates the Commission states that "[t]he Commission shall issue, revoke and suspend licenses for operation of adult entertainment establishments." It is silent as to sanctions other than suspension or revocation of licenses. Title 24 Del. C. § 1617(a) mandates revocation certain specified acts, including a violation of § 1622:
Title 24 Del. C. § 1604(a).
The Commission shall refuse to issue a license to any applicant, and shall revoke any license for the operation of an adult entertainment establishment other than a massage establishment, for any of the following reasons: . . .
(2) A transfer of a license in violation of § 1608(a) or 1610(a) of this title; or the failure to comply with § 1622 or 1623 of this title. (Emphasis added.)
Thus, it is clear that the Commission had explicit authority to revoke Bob's license because of the failure to comply with the terms of § 1622(a). The Commission is not explicitly empowered to levy fines, and the Court finds no support for Bob's contention that such authority is implicitly granted.
However, § 1618(c) gives the Commission discretion to establish its own regulations for imposing sanctions, including fines:
Notwithstanding anything in § 1617 of this title to the contrary, the Commission may adopt regulations imposing sanctions for violations of any provision of this chapter. Such sanctions may include fines or suspension of license to operate an adult entertainment establishment. The sanctions so adopted may be imposed in lieu of or in addition to license revocation.
The Commission has elected not to participate in this appeal, and the record in its current form does not suggest that the Commission has adopted any regulations pursuant to § 1618(c). Bob's seems to argue that such regulations are unnecessary because the Act implicitly authorizes the Commission to impose fines. However, administrative bodies such as the Commission derive their powers and authority solely from the enabling statutes which create them and define their responsibilities. Other than the potential for imposing fines contained in § 1618(c), there is nothing in Chapter 16 that empowers the Commission to levy fines.
Wilmington Vitamin Cosmetic Corp. v. Tigue, Del.Super., 183 A.2d 731, 739 (1962). See also Kreshtool v. Delmarva Power and Light Co., Del.Supr., 310 A.2d 649, 654 (1973) (noting that the powers of an administrative agency must be exercised in accordance with the statute conferring power upon it).
The District Court in Mitchell v. Commission on Adult Entertainment Establishments, reached the same conclusion. The Court invalidated a $10,000 fine for Mitchell's violation of § 1617(5) after one of his "independent contractors" pled guilty to a charge of conspiracy to commit prostitution. The court found that, in the absence of the implementing regulations authorized by § 1618(c), the Commission had no authority to set and impose the fine. One distinction between that case and the case at b?r is that there is no statutory fine for a violation of § 1617(a)(5), whereas § 1622 creates its own fine. Nevertheless, the determinative factor is that, without the § 1618(c) implementing provisions, the Commission has no authority to impose fines. "The powers of administrative agencies . . . must affirmatively appear from the enactment under which they claim to act. . . . Any reasonable doubt as to the existence of any particular power should be resolved against it."
D.Del., C.A. No. 85-735, Schwartz, J. (Jan. 3, 1991) (Mem. Op.).
73 C.S.J. Public Administrative Bodies Procedure § 49 at 371.
Furthermore, § 1626 of the Act states that, "[u]nless otherwise provided, all violations of this chapter are misdemeanors," and § 1627 bestows exclusive jurisdiction over criminal violations of the Act on the Superior Court. Because these statutes and § 1622 are laws pari materia, they must be construed together, along with the enabling statute. Such a reading unambiguously shows that a violation of § 1622 can result in either license revocation (a civil proceeding conducted by the Commission pursuant to § 1617(a)) or a $1000 fine (a criminal proceeding in Superior Court pursuant to § 1626 and § 1627), or both.
Title 24 Del. C. § 1626.
Title 24 Del. C. § 1627.
Watson v. Burger, 610 A.2d at 1368.
In the case at bar, the State sought to have Bob's license revoked. The Commission chose instead to impose a fine. If it had adopted implementing regulations pursuant to § 1618(c), the course of action would be appropriate. Without them, the Commission acted outside of its authority.
Additional arguments. Bob's argues that the enabling statute that creates the Commission implicitly empowers the Commission to impose and collect monetary fines. This argument, which is at odds with both § 1618 and § 1626, has no merit. Bob's also asserts that Chapter 16 does not support a license revocation for a first-time violation of § 1622, but the Court finds no distinction in the statutory language between a first-time violation and a repetitive violation. In fact, § 1617 affirmatively provides for either denial or revocation of the license for any violation of several statutes, including § 1622. Bob's also argues that the State consented to the imposition of the fine. However, the Commission's statutory powers cannot be enlarged by the parties' consent, particularly when doing so would conflict with the expressed intention of the General Assembly.
Wilmington Vitamin Cosmetic Corp. v. Tigue, Del.Super., 183 A.2d 731 (1962).
Finally, Bob's argues that the position urged by the State would trample on its First Amendment rights to free speech. The Court finds that the State's position accurately reflects the intent of the General Assembly in enacting the Act, which has been deemed to be constitutional. Bob's constitutional argument has no merit.
Mitchell v. Commission on Adult Entertainment Establishments, D.Del., 764 F. Supp. 928 (1991); the Court notes that this is a different opinion than the one cited previously, supra, n. 12. State v. Huddleston, Del.Super., 412 A.2d 1148 (1980).
Having reviewed the statutes at issue in context of the entire Act, the Court concludes that the General Assembly has given the Commission authority to adopt regulations for imposing sanctions such as monetary fines, but that, because the Commission has not done so, it has no power to levy fines. The Commission's statutory responsibilities include issuing, suspending and revoking licenses for the operation of adult entertainment establishments. The Commission erred as a matter of law when it ruled that it is empowered to impose monetary fines.
CONCLUSION
For all these reasons, the decision of the Commission imposing a $1000 fine on Bob's must be and hereby is Reversed and the cause is Remanded to the Commission for further proceedings consistent with this Opinion.
It Is So ORDERED .