## Facts

- The Department of Alcoholic Beverage Control (Department) prosecuted multiple liquor licensees in administrative disciplinary actions.
- Each matter used a two-stage process: (1) an evidentiary hearing before an administrative law judge (ALJ), followed by (2) a final decision by the Department’s director or a delegatee on whether to adopt the ALJ’s proposed decision.
- After the ALJ hearing, the same Department prosecutor who tried the case prepared a written “report of hearing” summarizing the evidence and recommending an outcome.
- The prosecutor transmitted the report ex parte to the director or the director’s advisor, without notice to or participation by the licensee.
- In at least one matter, the director rejected an ALJ decision favorable to the licensee and imposed discipline.
- The Alcoholic Beverage Control Appeals Board reversed the Department’s decisions, concluding the ex parte practice violated the Administrative Procedure Act (APA).
- The Court of Appeal affirmed, and the Department sought review.

## Issues

1. Whether the APA bars a Department trial prosecutor from sending an ex parte post-hearing “report of hearing” (including a merits recommendation) to the agency’s final decisionmaker or the decisionmaker’s advisor.
2. Whether that practice violates the APA’s separation-of-functions requirements by allowing an advocate in the proceeding to assume a private advisory role in the decisional stage.
3. Whether such APA violations may be excused as harmless error, or instead require reversal.

## Decision

- The California Supreme Court affirmed the Court of Appeal and left in place the Appeals Board’s reversal of the Department’s disciplinary orders.
- The Court held the prosecutor’s ex parte “report of hearing” to the director or advisor violated the APA’s ex parte-communication restrictions.
- The Court also held the practice violated the APA’s separation-of-functions provisions because the prosecutor acted as an advocate at hearing and then privately advised the decisionmaker on the merits in the same case.
- The Court rejected harmless-error review and required reversal because the violations compromised the fairness guarantees built into the APA’s adjudicative structure.

## Legal Principles

- In an APA-governed adjudicative proceeding, a party (including an agency’s own prosecutor) may not communicate ex parte with the final decisionmaker or the decisionmaker’s advisors about issues in the proceeding.
- The APA requires meaningful separation between prosecutorial/advocacy functions and adjudicative decisional functions; an advocate may not privately provide merits recommendations to the decisionmaker in the same matter.
- When an agency’s decisional process includes prohibited ex parte merits communications from its prosecutorial arm, reversal is required; post hoc claims of no effect do not cure the defect.

## Conclusion

The court held that the Department’s practice of having its trial prosecutor submit an ex parte post-hearing merits report to the agency’s final decisionmaker (or advisor) violated the APA’s ex parte and separation-of-functions rules, and that the resulting decisions had to be reversed without a harmless-error inquiry.


Dep’t of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd., 40 Cal. 4th 1, 145 P.3d 462 (Cal. 2006)