This opinion will be unpublished and
                           may not be cited except as provided by
                           Minn. Stat. § 480A.08, subd. 3 (2014).

                                STATE OF MINNESOTA
                                IN COURT OF APPEALS
                                      A15-0288

                             Thai Ginger Restaurant, Inc., et al.,
                                         Relators,

                                              vs.

                              City of Saint Paul, City Council,
                                        Respondent.

                                 Filed December 21, 2015
                                        Affirmed
                                      Harten, Judge

                                    St. Paul City Council
                                  File No. RES PH 14-349

Shuly Her, Der Yang, Village Lawyer, LLC, St. Paul, Minnesota (for relators)

Samuel J. Clark, St. Paul City Attorney, Virginia D. Palmer, Assistant City Attorney, St.
Paul, Minnesota (for respondent)

         Considered and decided by Johnson, Presiding Judge; Larkin, Judge; and Harten,

Judge.

                          UNPUBLISHED OPINION

HARTEN, Judge

         Relators, a restaurant and its owner, argue that respondent city acted on unlawful

procedure when it revoked relators’ liquor license and that the revocation was not based on



 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
substantial evidence and was unreasonable, arbitrary, and capricious.           Because we

conclude that the city did not exceed its authority or act on unlawful procedure and that the

revocation was a reasonable exercise of the city’s discretion, we affirm.

                                          FACTS

       In April 2014, relators Thai Ginger Restaurant, Inc. and its president, Kyrina

Sengmavong, purchased liquor at retail while on the no-sale list, a violation of state law

that resulted in a $1,500 fine, which they paid.

       In October 2014, the license inspector for the Department of Safety and Inspections

(DIS) notified relators that their insurer had reported cancellation of their liquor liability

insurance since December 2013 and ordered them to stop serving liquor until they

submitted a certificate showing no lapse in coverage. The certificate relators submitted

showed coverage only after 31 October 2014, indicating a ten-month gap in coverage

during which relators served liquor.

       The city’s legislative code includes a matrix of penalties for various violations. The

penalty for a second appearance on a failure to comply with statutory requirements for

liability insurance is revocation. St. Paul Legislative Code, § 409.26(b). On a first

appearance, a licensee may elect to pay the recommended fine rather than appear, and that

payment “shall be considered an ‘appearance’ for the purpose of determining presumptive

penalties for subsequent violations.” Id. Relators paid the recommended fine for their first

violation; thus, this was their second appearance.

       On 14 November 2014, relators received a notice of their violation. It recommended

that their license be revoked based on “the egregiousness of [their] conduct, and the public


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safety risk it posed” and gave them the option of contesting the recommendation at a

hearing. After relators requested a hearing, a notice of the hearing date, 17 December 2014,

was mailed to them.

       On that date, city council members and relator’s husband, David Souvanphong,

appeared. Souvanphong explained that relator Sengmavong was in the hospital following

a C-section, that she handled the restaurant finances, that he was not familiar with the

restaurant’s paperwork, that neither he nor Sengmavong knew the insurance had lapsed,

and that he did not know if Sengmavong had seen the cancellation notice sent out by the

insurer.

       A council member then said to Souvanphong, “[Y]ou’re trying to answer questions

for things that . . . you typically aren’t responsible for, so . . . it might make sense to do [a]

layover [of the hearing] . . . .” The council president then said, “Does that work for

every[one] . . . [a] motion to lay the matter over until January 7th?” The clerk then read

out the names of the council members present and said, “Six in favor. None opposed. The

resolution is laid over to January 7th.” Souvanphong was present throughout these

proceedings.

       On 7 January, the hearing reconvened. Neither Sengmavong nor Souvanphong was

present. The city council voted to revoke relators’ liquor license.

       Relators challenge the revocation, arguing that the revocation was made upon

unlawful procedure and was an upward deviation unsupported by substantial evidence.1



1
  Relators argued in their brief that the city also exceeded its authority by revoking the
license, but conceded at oral argument that the city did have authority for the revocation.
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                                     DECISION

Standard of Review

       “On appeal from a municipality’s revocation of a liquor license, review is limited

to determining whether the city council exercised reasonable discretion, or whether it acted

capriciously, arbitrarily, or oppressively.” Bourbon Bar & Cafe Corp. v. City of St. Paul,

 (Minn. App. 1991).

1.     Was the procedure unlawful?

       Relators argue that, because Sengmavong was unable to testify at the 17 December

hearing and was not notified of the 7 January hearing, the procedure was unlawful. But

her husband, Souvanphong, was present and testified at the 17 December hearing; he also

heard the resolution to continue the hearing until 7 January when Sengmavong would be

able to be present. When neither Sengmavong nor Souvanphong appeared on 7 January or

notified the council that they would be absent, the matter proceeded in their absence. But

Sengmavong was not deprived of the essentials of due process, i.e., adequate notice and a

meaningful opportunity to be heard. See Staeheli v. City of St. Paul, 

(Minn. App. 2007). Souvanphong and other witnesses testified on Sengmavong’s behalf

at the 17 December hearing, and Sengmavong could have testified herself if she had

appeared on 7 January. The city’s procedure was not unlawful.

2.     Was the revocation supported by substantial evidence and not unreasonable,
       arbitrary, or capricious?

       “Municipal authorities have broad discretion to determine the manner in which

liquor licenses are issued, regulated, and revoked.” Bourbon Bar & Cafe, 

. A liquor license applicant must demonstrate proof of financial responsibility, which

                                             4
includes “a certificate that there is in effect for the license period an insurance policy . . . .”

Minn. Stat. § 340A.409, subd. 1(1) (2014). The municipal authority, “[o]n a finding that

the license . . . holder ha[d] . . . failed to comply with an applicable statute . . . relating to

. . . the operation of the licensed establishment . . . may [1] revoke the license . . . .” Minn.

Stat. § 340A.415 (2014).

       The city has adopted a matrix of “[p]resumptive penalties for violations” of 12

regulations, including “(12) Failure to comply with statutory . . . requirements for liability

insurance.” St. Paul Legislative Code, § 409.26(b) (2014). The penalties increase in

severity if the licensee has one or more prior “appearances” for previous violations. Id.

The penalty for “(12) Failure to comply with statutory . . . requirements for liability

insurance” is a ten-day suspension on the licensee’s first appearance and revocation on the

licensee’s second appearance. Id. Having found that (1) relators had failed to comply with

the statute requiring an insurance policy to be maintained and (2) this was relators’ second

appearance, the city revoked relators’ license.

       Relators argue that “there was no evidence . . . to substantiate a deviation from the

[c]ity’s own matrix of ten days’ suspension for a first time violation,” implying that this

was their first appearance because they paid a fine rather than appearing for their first

violation. But the code explicitly rejects this argument: “A licensee who would be making

a first appearance . . . may elect to pay the fine . . . without an appearance . . . . Payment of

the recommended fine . . . shall be considered an ‘appearance’ for the purpose of

determining presumptive penalties for subsequent violations.” Id.




                                                5
       Relators also argue that, because their previous appearance was not for failure to

maintain liability insurance but for a different violation, this was their first appearance in

regard to that offense. Again, the code rejects this argument.

              (d)     Subsequent appearances. Upon a second, third, or
              fourth appearance . . . by a particular licensee, the council shall
              impose the presumptive penalty for the violation or violations
              giving rise to the subsequent appearance without regard to the
              particular violation or violations that were the subject of the
              first or prior appearance.
              (e)     Computation of time.
                      (1)     Second appearance. A second violation within
              twelve (12) months shall be treated as a second appearance for
              the purpose of determining the presumptive penalty.

Id. This was relators’ second appearance; the presumptive penalty for their offense was

revocation.

       The city exercised reasonable discretion and did not act capriciously, arbitrarily, or

oppressively when it imposed the presumptive penalty and revoked relators’ license. See

Bourbon Bar & Cafe, 

.

       Affirmed.




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