This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
A licensed liquor establishment, operating under the name Food Basket No. 11, was accused of selling alcohol to minors during two separate sting operations conducted by the New Mexico Department of Public Safety. In one instance, a clerk sold alcohol to a minor after checking her identification, which lacked a required legend indicating she was under 21. In the second instance, another clerk sold alcohol to a minor without requesting identification (paras 3-5).
Procedural History
- Hearing Officer Decision: Found that the licensee violated the Liquor Control Act by selling alcohol to minors on two occasions and rejected the licensee's defenses, including good faith and entrapment (paras 6, 10).
- District Court Decision: Affirmed the hearing officer's decision (para 10).
Parties' Submissions
- Appellant (ERICA, Inc.): Argued that the hearing officer misapplied the law by narrowly interpreting the good faith defense under Section 60-7B-6 and excluding evidence relevant to entrapment. Additionally, it claimed procedural and substantive due process violations, including bias, insufficient notice, and improper sting operations (paras 2, 10, 26, 44).
- Respondents (New Mexico Regulation and Licensing Department and Alcohol and Gaming Division): Contended that the hearing officer correctly applied the law, that the sting operations were conducted fairly, and that entrapment is not a valid defense in administrative proceedings (paras 47-48).
Legal Issues
- Was the good faith defense under Section 60-7B-6 improperly limited to cases involving fraudulent identification?
- Did the hearing officer's exclusion of evidence and procedural rulings violate the licensee's due process rights?
- Was the licensee entitled to assert an entrapment defense in an administrative proceeding?
- Did substantial evidence support the hearing officer's findings?
Disposition
- The Court of Appeals reversed and remanded the case for reconsideration of the good faith defense and the entrapment claims, with instructions to develop a full record on these issues (paras 57-58).
- The Court denied the appellant's request for attorney fees (para 53).
Reasons
Per Sutin CJ. (Kennedy and Vigil JJ. concurring):
Good Faith Defense:
The hearing officer erred in narrowly interpreting Section 60-7B-6 to apply only when fraudulent identification is presented. The statute's plain language allows a broader good faith defense, including reliance on identification that lacks a required legend indicating minority status. The hearing officer must reconsider this defense and evaluate the evidence under the correct legal standard (paras 16-24).
Procedural Due Process:
The hearing officer's refusal to admit evidence related to a 1994 memorandum and Section 66-5-47(A)(2) was improper. While the memorandum was irrelevant to the clerk's good faith, it was relevant to the entrapment claim. The hearing officer also erred in striking the memorandum from the record, which hindered appellate review. However, the denial of pre-hearing interviews and the minimum statutory notice did not violate due process (paras 30-41).
Entrapment and Substantive Due Process:
The Court declined to apply the precedent in Kearns v. Aragon barring entrapment defenses in administrative proceedings, noting developments in entrapment law since that decision. The hearing officer must develop a full record on both subjective and objective entrapment claims, including whether the sting operations violated substantive due process (paras 50-52).
Bias Allegations:
The Court found no evidence of bias by the hearing officer. Proximity to Division employees and pre-hearing rulings based on legal conclusions did not demonstrate prejudice or predisposition (paras 42-43).
Substantial Evidence:
The Court declined to rule on whether substantial evidence supported the hearing officer's findings, as the good faith defense and entrapment issues require reconsideration on remand (paras 55-56).
Attorney Fees:
The Court denied the appellant's request for attorney fees, finding no evidence of bad faith or frivolous litigation by the Division (para 54).