HIGHLIGHTS:

  • The Illinois Appellate Court has curbed the state liquor code allowing unlimited inspections of liquor retailers.
  • The court ruled that the authorization to enter a licensed premises "at any time" violates Fourth Amendment protection against unreasonable searches and seizures.

The Illinois Appellate Court has found unconstitutional a provision of the Illinois Liquor Control Act (Liquor Act) that authorizes unlimited inspection of liquor retailers' premises by local officials. The court ruled that the authorization to enter a licensed premises "at any time" violates Fourth Amendment protection against unreasonable searches and seizures. However, the court nevertheless ruled that, based on the facts of the case, the evidence found during the warrantless search was properly allowed in the liquor license revocation process.59th & State Street Corp. v. Emanuel, 2016 IL App (1st) 153098.

In January 2011, a City of Chicago task force of seven police officers, a fire inspector, two health inspectors, a building inspector and business affairs official entered Mr. Jack's Food and Liquor store. The team inspected not only the first-floor space in which the store was operated but also the second floor of the building, on which there was an office related to the store and several bedrooms. In the upper rooms and later in a first-floor office, the task force found numerous guns. The storekeeper did not have a Firearm Owner Identification card, and the guns were not registered with the City. The storekeeper was arrested and charged criminally.

The City commenced proceedings against the store's liquor license on the basis of 12 firearms-related violations of the City Code and Liquor Act. The store argued that the City could not use the evidence obtained during an illegal warrantless search. The hearing officer disagreed, finding that Section 4-4(2) of the Liquor Act and a parallel provision of the City Code allowed entry by City officials "at any time" to determine whether there were any violations of the Liquor Act or local liquor laws. The hearing officer concluded that the search was legal, the evidence obtained could be used in the hearing and the violations were proved. The City then revoked the liquor license and fined the store $17,000.

The store appealed to the City's License Appeal Commission, which upheld the revocation and fine. The store then sued the City in the Circuit Court of Cook County. That court ruled Section 4-4(2) of the Liquor Act unconstitutional, but upheld the use of the evidence obtained in the search in the revocation proceeding. The court thus upheld the license revocation and the $17,000 fine.

Appellate Court Decision

On review, the Illinois Appellate Court affirmed the Circuit Court's decision. Regarding the search, the Appellate Court ruled that the unlimited inspection authority set forth in Section 4-4(2) of the Liquor Act violates the Fourth Amendment. Relying on U.S. Supreme Court precedent, the Appellate Court noted the Fourth Amendment applies to business premises and, therefore, businesses have a protected expectation of privacy. The Appellate Court explained that when a business is "closely regulated," as liquor stores are, warrantless searches are permitted if 1) there is "a substantial governmental interest underlying the regulatory scheme pursuant to which the inspection is made," 2) the search is "necessary to further that regulatory scheme," and 3) the owner of the premises must be on notice "that its property will be subject to periodic inspections undertaken for specific purposes...[limited] in time, place and scope."

Applying that test to the case, the Appellate Court found that the search of the liquor store satisfied the first two criteria, but Section 4-4(2) failed the third criterion because there is no limit in the law on the timing of a search. The Appellate Court thus held that the search of the liquor store was not reasonable under the Fourth Amendment.

Nevertheless, the Appellate Court upheld the license revocation and fines. The Appellate Court held it was not necessary to exclude the use of the evidence from the search in the underlying administrative hearing. Although the U.S. Supreme Court has prohibited the use of illegally obtained evidence in certain criminal proceedings (known as the "exclusionary rule"), the Supreme Court had expressly refused to extend that prohibition to non-criminal cases. The Appellate Court concluded the exclusionary rule was not applicable to the warrantless search of Mr. Jack's Food and Liquor.

Considerations for Illinois Municipalities

As of this writing, it is not known whether either Mr. Jack's or the City has filed a Petition for Leave to Appeal to the Illinois Supreme Court. Unless an appeal is taken, Illinois municipalities should review their local liquor regulations concerning inspections or searches of liquor licensed premises. Local provisions that parallel the Liquor Act – allowing searches "at any time" – should be amended to reflect reasonable conditions. For example, a local ordinance could allow searches during business hours only, with appropriate specifications regarding the areas that may be searched and the purposes of searches. Alternatively, municipalities always can seek a judicial search warrant that authorizes a search that is broader in scope based on a finding of probable cause that a regulatory violation or worse has occurred.