Arizona court rejects bar owner’s challenge to liquor-license suspension

Tuesday, April 27, 1999

The Arizona state liquor board may suspend the liquor license of the owner of a topless bar because of her association with a convicted felon, a state appeals court recently ruled.

The liquor board suspended Elizabeth Brazee's license because the board determined that the manager of her topless bar, Dennis Mondavano, had not revealed his two felony convictions to the board. He was convicted of possession of narcotics in 1987 and of conspiracy to defraud the Internal Revenue Service in 1988.

The board initially granted a license to Brazee — then in her mid-70s — in 1994. The board suspended the license after learning that Mondavano had not revealed his convictions.

Arizona law provides that a liquor license can be revoked or suspended if the licensee “knowingly associates” with someone who has engaged in racketeering or been convicted of a felony and if the association creates a “reasonable risk” the licensee will fail to conform to the law.

The board asserted that the untruthful testimony and past convictions provided ample reason to suspend Brazee's license until she terminated business association with Mondavano. However, Brazee contended that the law was unconstitutionally vague and restricted her First Amendment free-association rights.

She and her business, 3613 Limited, filed a lawsuit in state court, challenging the administrative agency's decision to suspend her license. The trial court judge affirmed the agency's decision to suspend the license and ruled the law constitutional.

On appeal, the Arizona Court of Appeals agreed with the lower court in 3613 Limited v. Department of Liquor Licenses and Control, rejecting Brazee's arguments that the law was unconstitutional. Brazee argued that the law should be overturned because:

  • It did not sufficiently define the key term “reasonable risk.”
  • It created an administrative system of prior restraint by inhibiting association before any violation could ever occur.
  • It infringed on Brazee's First Amendment free-association rights.

The appeals court first responded to the vagueness argument, writing: “In the context of the statute, the term ["reasonable risk"] clearly means that it would be sensible, logical, or rational to believe that the licensee may fail to conform to licensing requirements due to the particular association.”

The court next addressed the prior restraint claim. Brazee argued that the law was unconstitutional because it created an “administrative scheme of prior restraint.” She claimed the law promoted a prior restraint on speech because it inhibited her association with Mondavano before any law could be broken.

The appeals court said that the doctrine of prior restraint did not apply “in situations other than those in which [F]irst [A]mendment expressions are involved.” According to the court, “neither the maintenance of a liquor license nor the employment of a convicted felon to manage a licensed liquor establishment is a mode of protected expression.”

Finally, the court also dismissed Brazee's contention that the statute prohibited her free-association rights.

The appeals court wrote: “A person's right of association may be curtailed if necessary to further a significant governmental interest like eliminating the public evils of crime, corruption, and racketeering.”

The court also noted that the ruling does not prevent Brazee from “continuing a personal relationship with Mondavano as long as he does not use that relationship to significantly influence or control the licensed business.”

State Assistant Attorney General Daniel R. Christl said the court's decision “provided good law to protect the liquor industry in the state of Arizona.” He said: “The state has a substantial governmental interest in keeping organized crime and convicted felons out of the regulated liquor industry.”

Christl agreed with the court's dismissal of the constitutional challenges, including the vagueness argument. “The department's position, which the court of appeals upheld, was that the terms of this statute had a common and ordinary meaning so that a reasonable person could understand them,” he said. “Thus, the law was not unconstitutionally vague and provided sufficient direction to the liquor licensee.”

A call placed to Brazee's attorney was not returned.