¶ 1 Appellants challenge a Scottsdale ordinance regulating erotic entertainment at establishments serving liquor. We must determine if state alcohol law has preempted local regulation in this area.
Facts and Procedural History
¶ 2 Stephanie's Babes, Inc., d.b.a. Babe's Cabaret, and Wisnowski, Inc., d.b.a. Diamond Girls (the appellants), are establishments licensed by the State Department of Liquor Licenses and Control (the department) to sell intoxicating liquor. They also feature erotic entertainment. In 1993, Scottsdale adopted Ordinance No. 2521, regulating sexually oriented businesses. In 1994, both Scottsdale and the Arizona Licensed Beverage Association asked the legislature to clarify whether local control of erotic entertainment was preempted by statewide law. For its part the city sought explicit legislation to authorize municipalities to regulate local erotic entertainment at licensed premises. After the legislature rejected a bill that would have explicitly preempted local control, it adopted this measure:
Arizona Revised Statutes Annotated ("A.R.S.") § 4-112(H), as enacted by Laws 1994, Ch. 373, § 2. At the same time, the legislature added the following section:
A.R.S. § 4-224, as enacted by Laws 1994, Ch. 373, § 7.
¶ 3 In 1995, in response to this legislation, Scottsdale added to its City Code ("S.C.C.") regulations addressing "sexually oriented businesses" in provisions we refer to here generally as "the Ordinance."
¶ 4 After adoption of the Ordinance, the appellants challenged it as conflicting with the statutes adopted by the Arizona Legislature regarding liquor licensees. The superior court granted summary judgment for the city. The appellants appealed. We have jurisdiction under A.R.S. section 12-2101(B).
¶ 5 The appellants first argue that under Title 4, the legislature has preempted local control over erotic subject matter. They argue
¶ 6 The facts are not in dispute and the issues are matters of statutory construction that we review without deference to the trial court's decision. See City of Tucson v. Rineer, 193 Ariz. 160, 162, 971 P.2d 207, 209, (App.1998); see Chaparral Dev. v. RMED Int'l, Inc., 170 Ariz. 309, 311, 823 P.2d 1317, 1319 (App.1991).
¶ 7 Arizona cities and towns are state created municipal corporations having "no greater powers than those delegated to them by the constitution and the general laws of the state." City of Scottsdale v. Superior Court, 103 Ariz. 204, 205, 439 P.2d 290, 291 (1968). A city may "exercise all powers granted by its charter, provided that the exercise is not inconsistent with either the constitution or general laws of the state." Rineer, 193 Ariz. at 161-62, 971 P.2d at 208-9; see Jett v. City of Tucson, 180 Ariz. 115, 118, 882 P.2d 426, 429 (1994).
¶ 8 The appellants contend that all local control is preempted because the state has co-opted the regulation of intoxicating liquors. See Mayor & Common Council v. Randall, 67 Ariz. 369, 372-75, 196 P.2d 477, 479-81 (1948). For its part the city relies on the specific permission the legislature granted to municipalities to legislate in this area under A.R.S. section 4-112(H), quoted above. Anticipating this defense, the appellants respond that section 4-112(H) is invalid because the state's regulation of liquor is so comprehensive that no local control is possible.
¶ 9 The appellants rely on Randall in which the superior court struck down an ordinance limiting the number of liquor licenses that could be issued within the City of Prescott. On appeal, the supreme court held that the licensing and regulation of the liquor trade fell exclusively under Chapter 72 of the Arizona Code Annotated (1939), which created the Department of Liquor Licenses and Control. The court rejected an argument by the Prescott mayor and common council that the legislature had specifically authorized local authority in the very same chapter. The supreme court instead held that local control was preempted:
Id. at 374-75, 377, 378, 196 P.2d at 481, 482, 483. See also Keller v. State, 46 Ariz. 106, 47 P.2d 442 (1935) (state highway code occupied the field, preempting Phoenix's reckless driving ordinance).
¶ 10 From Randall, appellants conclude that because of the comprehensive nature of statewide regulation of the liquor trade, the Ordinance is invalid as exceeding the authority granted in A.R.S. section 4-112(H).
¶ 11 When an issue raises both local and statewide concern, both the city and the state may enact relevant laws. However,
City of Prescott v. Town of Chino Valley, 163 Ariz. 608, 616, 790 P.2d 263, 271 (App.1989), vacated in part on other grounds, 166 Ariz. 480, 803 P.2d 891 (1990) (citations omitted). Absent a clear manifestation of legislative intent to preclude local control, there is no preemption. See Jett, 180 Ariz. at 121, 882 P.2d at 432.
¶ 12 However, statewide control over intoxicating liquors does not mean that municipalities are forbidden to enact any law having a collateral effect on businesses licensed by the Department. Holding otherwise would exempt licensees from a broad variety of local laws, including zoning, health and building codes. Randall certainly does not support such a notion. As we noted in City of Prescott v. Town of Chino Valley, preemption cannot be predicated on "the mere commonality of subject matter."
¶ 13 No indications exist that the legislature intended to preempt local regulation of erotic entertainment at licensed liquor establishments. Only one pertinent statute exists in the liquor title:
(Emphasis added.) A.R.S. § 4-112(G)(6). One statute that allows—but does not require—the director to regulate on a subject falls far short of occupying the field. Furthermore, no state agency exists for regulating erotic entertainment, as there is for liquor.
¶ 14 Besides the lack of comprehensive legislation on erotic entertainment, the legislature has expressly provided in A.R.S. section 4-112(H) that municipalities may legislate in this area. We find no intent, express or implied, to preempt local control; the contrary seems to be the case.
¶ 15 Here, the language of A.R.S. section 4-112(H) allows the city, in regulating erotic displays, to be more restrictive than the state but not to be less restrictive. The court has recognized that meaning twice in another context. In State v. Christi, 149 Ariz. 323, 324, 718 P.2d 487, 488 (App.1986), dealing with a state statute allowing cities to regulate prostitution in a manner "at least as" stringent as the state, this court emphasized that that statute allows cities to "impose restrictions upon prostitution greater than those otherwise applicable under Arizona law." (Emphasis added.) In State v. Crisp, 175 Ariz. 281, 855 P.2d 795 (App.1993), this Court again recognized that the plain meaning of "at least as stringent" permits cities to punish prostitution more severely than does the state.
¶ 16 Our conclusion that there is no state preemption of local regulation over erotic entertainment at licensed liquor establishments answers most of the appellants' other arguments. It negates the contention that portions of the Ordinance exceed the limited scope of the authority that section 4-112(H) cedes to municipalities. Because the legislature did not intend to preempt local control, no specific statutory authorization was necessary.
¶ 17 This conclusion in the preceding paragraph also answers the appellants' argument that the statutory authorization to enact local ordinances "at least as restrictive as rules adopted by the director" does not allow localities to pass and enforce ordinances that are more restrictive. Again, because there was no preemption to begin with, municipal corporations did not need section 4-112(H) to enter this arena but could regulate such behavior without legislative authority.
¶ 18 Finally, the appellants contend that two provisions of the Ordinance conflict with a specific statute on premise alterations and are therefore invalid. The appellants attack sections 16-247(d) and (g). The former requires that adult services occur on a stage elevated at least eighteen inches above the floor, separated from patrons by three feet with a barrier at least three feet high. The latter prohibits adult services in any location not in the direct line of sight of a manager's station, which itself must be in an area accessible to patrons. Appellants read these two subsections as requiring them to make significant alterations to the physical layout of their premises, leading them to argue that these sections conflict with the following statute:
A.R.S. § 4-207.01(B). They argue that the director might disapprove any plans they submit to alter their premises to conform to the Ordinance. This dilemma, they argue,
¶ 19 In order to be preempted, the local ordinance must be truly inconsistent with the state statute; if the two are capable of "peaceful coexistence," no preemption exists. See City of Prescott v. Town of Chino Valley, 163 Ariz. at 616, 790 P.2d at 271. "Mere commonality of some aspect of subject matter is insufficient. . . ." Id. Sections 16-247(d) and (g) of the Ordinance can peacefully coexist with A.R.S. section 4-207.01(B). The statute does not bar licensees from altering the physical layout of their premises; it simply requires them to obtain the director's approval before undertaking alteration. The appellants have not demonstrated that they cannot comply with both the Ordinance's requirements for a separate stage and line-of-sight manager's stations. They argue instead that it is possible the director might disapprove of proposed changes, a purely speculative prospect that does not render the Ordinance inconsistent with the statute.
¶ 20 The comprehensive statewide scheme for control of intoxicating liquors does not reveal any preemptive legislative intent to regulate erotic entertainment, statewide, at establishments licensed to serve liquor. Cities are free to enact their own ordinances on the subject. The judgment is accordingly affirmed.
CONCURRING: NOEL FIDEL, Judge, and SARAH D. GRANT, Judge.