Washington's Temple of Justice, where argument was heard Thursday.
OLYMPIA, May 18.—Even as the state of Washington prepares to close down its 78-year-old liquor-store chain at the end of the month, opponents Thursday mounted what can only be seen as a last-ditch effort in the state Supreme Court to overturn the initiative that made it possible.
Déjà vu reigned during the hour-long oral argument as the Washington Coalition Against Substance Abuse and Violence raised an objection that was considered and rejected in court more than a year ago, and which voters heard time and again last fall during the campaign for Initiative 1183. Merchants will pay hefty license fees to the state when they take over the business June 1. Opponents say that money is a tax, and they insist the 10-word ballot title should have used that deadly term. They also maintain that the initiative violates the state constitution’s “single subject rule,” because it earmarks some of the proceeds for public-safety purposes at the same time that it shutters the state liquor stores.
The argument hinges in part on the idea that voters somehow must have missed the TV ads that aired during the best-publicized ballot-measure campaign in state history, when Costco Wholesale, labor unions and national alcoholic-beverage distributors spent a record $35 million to buy up every available moment of airtime. Voters just didn’t understand what they were doing, argued attorney Michael Subit, who represented the opposition coalition. Proponents “are claiming that this is a comprehensive initiative that was a broad reform, and that is not what voters understood,” he said. “They understood that this was getting the state out of the hard-liquor business, and that is what this initiative did.”
Justices seemed more than a little skeptical of that argument.
Should they agree with either line of reasoning, however, it could be fatal to the most important change in liquor sales in this state since 1934, and to a measure that could have implications for the liquor business nationwide. One unanswered question is how soon the court will rule: There isn’t much time left.
The hearing came at the 11th hour, after the state has already auctioned off its 167 state-owned liquor stores and shopkeepers statewide are preparing to stock their shelves with hard liquor for the first time since Dec. 31, 1915. Washington adopted its own Prohibition law by initiative before alcohol sales were banned nationwide in 1920. When repeal came, Washington was among the “control” states that restricted hard-liquor sales to state-run stores and to contract stores overseen by the state. Last year, Costco Wholesale, the Issaquah-based big-box chain, led a coalition of retailers and restaurateurs in their successful bid to overturn the state’s liquor-sales restrictions. Costco spent an unprecedented $22 million to promote the measure, virtually the entire budget of the yes campaign, and voters agreed, 59-41.
Now arguments that didn’t click with the electorate are being renewed in court. The challenge has been working its way to the Supreme level since the beginning of the year. A trial court in Cowlitz County rejected the lawsuit in March.
A Central Irony
The key point is that I-1183 didn’t just close down the liquor stores. It also created an entirely new arrangement for the sale of hard liquor in the state of Washington, including license fees for retailers and permission for retailers and distributors to buy directly from distillers. The latter feature, from a business standpoint, is a remarkable change that brought distributors nationally into the fight. Since the repeal of Prohibition every state of the union has required that all forms of alcoholic beverages be sold through distributors, ensuring they have a cut of the business. Costco mounted a years-long legal battle to overturn the “three-tier system” in Washington state, but gave up on the courts after an adverse ruling in federal appeals court. It turned to the voters and was the leading player in the coalition that pushed an earlier measure, I-1100, in 2010. That one missed the mark just barely, 53-47 – after opponents hammered away at the fact that the state would lose hundreds of millions of dollars in revenues from the state’s hefty liquor markups. Other campaign arguments centered on public-safety impacts.
That provides the central irony of the latest challenge. Because I-1183 attempted to address the arguments opponents raised against the 2010 ballot measure, opponents say the 2011 ballot measure ought to be thrown out.
The argument is preposterous, said Mary Tennyson of the state attorney general’s office, which defended the initiative. There is a rational unity to the measure: If you end the old system, you ought to be able to set up a new one in its place. Public safety is a legitimate concern, and providing money for the purpose isn’t out of line.
“The challenged provisions of Initiative 1183 have a relation to liquor, which is expressed in the ballot title,” she said. “The title gave sufficient notice of the government charges that would be imposed on businesses who obtained licenses to sell spirits and how those fees would be calculated. The court looks to the common meaning of the words in a title and the body of the law, which in this case are consistent.”
Renews Campaign Argument
The argument over whether the license fees really should have been called a tax was argued and re-argued ad nauseum last year. It came up the first time in June 2011, when the ballot title was litigated in Thurston County Superior Court. The Washington Coalition Against Substance Abuse and Violence was among the parties that sued to force state elections officials to include the word “tax” in the ballot title – a term sure to be a turn-off to Washington voters. Superior Court Judge Christine Pomeroy rejected that argument: “It’s not a tax, it’s a fee,” she said. “I’ve been here long enough to know that tax and fee are two different things… I don’t like the word tax, because it is not a tax, people don’t like the word tax, and it is a fee. It’s a fee, a licensing fee, so I am going to tell you that.”
But her decision didn’t settle the issue. Opponents continued to use the term throughout their campaign advertising and in their statement in the voters’ pamphlet.
At Thursday’s hearing, David Burman, representing the coalition that promoted the initiative, said voters got a rather full briefing on the issue last year. “They spent millions of dollars arguing that it is taxes,” he said. “We spent millions of dollars saying this is fees.”
Yet Subit said the argument deserves a full reboot. What happened last year in Thurston County court should have no effect on the Supreme Court – the adequacy of the ballot title is something the Supreme Court has the right to judge after the fact. Subit also pointed out, correctly, that the single subject question was not raised in the Thurston County hearing. Washington courts don’t hear constitutional challenges to initiatives until after they pass, and the single-subject rule has been the downfall of many a successful initiative.
The single-subject provision of the constitution is an important protection that prevents decisionmakers from being forced to say yes to something they don’t like in order to get something they do, Subit argued. What makes the allocation for local-government public safety programs a different subject is the fact nothing in the initiative says the money has to be spent for purposes related to the sale of alcohol. “We don’t know that a single dollar of that $10 million will be spent on alcohol,” he said.
Justices Appear Skeptical
At one point during the oral arguments, Justice James Johnson observed that it is hard to imagine voters these days wouldn’t understand an initiative. In the old days, he said, “the ballot title was all they saw, going into the voting booth, so the argument was that you could confuse them with a ballot title. However, today, every voter votes at home. Every voter gets a voters’ pamphlet that requires a statement of the initiative, arguments for and against, and the whole initiative is actually presented. It is pretty hard, in that context, for me to see how voters are being confused.”
And Justice Deborah Stephens appeared particularly skeptical of the single-subject argument. “I suppose one person’s logrolling is another person’s hedge against the risk,” she said. “The record shows here that there was a concern that the means by which alcohol can be sold would increase public safety risks, and then there is a response that addresses money for public safety. Why doesn’t that history of the debate on this particular initiative create some rational unity?”
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