SC Administrative Law Court Decisions

STATEMENT OF THE CASE

The above-captioned case comes before this Court pursuant to S.C. Code Ann. § 61-2-260 (Supp. 2006), S.C. Code Ann. § 1-23-600(B) (Supp. 2006), and S.C. Code Ann. §§ 1-23-310 to -400 (2005 & Supp. 2006) for a contested case hearing. In this matter, Petitioner South Carolina Department of Revenue contends that Respondent Meeting Street Express, Inc., d/b/a Raceway Express has committed a violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006) by knowingly allowing an underage individual to purchase beer from its convenience store located at 2475 Charlotte Highway in Lancaster, South Carolina. For this alleged third violation in as many years, the Department seeks to suspend Raceway’s off-premises beer and wine permit for this location for a period of forty-five (45) days. In response, Raceway concedes that the violation occurred, but contends that the proposed penalty for the violation is excessive in light of its efforts to prevent such sales.

After timely notice to the parties, a hearing of this matter was held on December 13, 2007, at the South Carolina Administrative Law Court (ALC or Court) in Columbia, South Carolina. Based upon the testimony and exhibits presented at the hearing, I find that the appropriate penalty for Raceway’s violation is a fourteen-day suspension of its off-premises beer and wine permit.

STIPULATIONS OF FACT

Pursuant to ALC Rule 25(C) and Rule 43(k), SCRCP, the parties submitted Stipulations of Fact to the Court at the hearing of this matter. Specifically, the parties stipulated to the following:

1. Raceway is the holder of an off-premises beer and wine permit issued by the Department for the location at 2475 Charlotte Highway in Lancaster, South Carolina. Raceway was licensed under permit number 32008706-PBG on June 10, 1994.

2. On Tuesday, July 3, 2007, at approximately 11:30 a.m., South Carolina Law Enforcement Division (SLED) Agent James P. Jackson, in conjunction with a seventeen-year-old underage confidential informant (UCI), conducted an underage investigation at the above location.

3. During this investigation, the UCI was knowingly allowed to purchase a 24 ounce can of Bud Light beer from the clerk, Amanda Hinson. Amanda Hinson was an agent and/or employee of Raceway on this date. Amanda Hinson did request the UCI’s driver’s license, but still sold him the beer.

4. Amanda Hinson was charged with the sale of beer to a person under the age of twenty-one. Raceway was issued a regulatory citation under 23 S.C. Code Ann. Regulation 7-200.4 for knowingly permitting a person under the age of twenty-one to purchase beer on the permitted premises.

5. Raceway has had two prior alcohol violations within a three year period at this location. Both violations were for permitting the purchase of beer by a person under the age of twenty-one and were committed on December 3, 2004 and April 11, 2006, respectively. Raceway paid a $500 fine for each of the prior two offenses.

6. Raceway admits that on July 3, 2007, it committed a violation of Regulation 7-200.4, in that its employee, Amanda Hinson, did knowingly permit a person under the age of twenty-one to purchase beer on the permitted premises. Raceway further admits this is the third offense within a three-year period at this location of Regulation 7-200.4, “knowingly permitting the purchase of beer by a person under the age of twenty-one.”

7. The Department issued its Final Department Determination in this matter on September 26, 2007, in compliance with the Revenue Procedures Act, S.C. Code Ann. §§ 12-60-10 to -3390 (2000 & Supp. 2006), and the Administrative Procedures Act, S.C. Code Ann. §§ 1-23-310 to -400 (2005 & Supp. 2006).

8. Raceway timely appealed the Final Department Determination pursuant to the

Revenue Procedures Act by filing a Request for a Contested Case Hearing with the Administrative Law Court on October 16, 2007.

9. Further, the parties agree to enter the following Petitioner’s Exhibits into evidence without objection:

1. Department Determination dated September 26, 2007;

2. SLED Violation Report issued to Raceway on July 3, 2007;

3. Copy of the criminal citation issued to the clerk, Amanda Hinson;

4. Department’s records of prior violations;

5. Copy of UCI’s State issued driver’s license;

6. Copy of the UCI’s Buy Statement;

7. Copy of the picture of the UCI taken on July 3, 2007; and,

8. Copy of the SLED AEU Seizure Report No. 17817-A.

10. Further, at the hearing, the parties agreed on the record on the record in open court to enter the following Respondent’s Exhibits into evidence without objection:

1. Mandy Hinson sale of Controlled Substances penalties signed form;

2. Raceway Memo to Cashiers to Check IDs;

3. Raceway Reminder Sign “CHECK ID’S DO NOT SELL BEER WINE OR

CIGARETTES TO UNDER AGE INDIVIDUALS”; and,

4. TIPS Training Certification Cards for all five cashiers employed

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the evidence:

1. Raceway convenience store is located at 2475 Charlotte Highway in Lancaster, South Carolina. Dale Elliott testified as the general manager of Raceway. His wife, Jody C. Elliott, owns the stock of this family owned and operated business that has been in operation for thirteen years. Raceway has seven employees, four at this location, in addition to the store manager. Raceway’s policy is to abide by all State laws regarding the sale of alcohol to minors. In order to ensure compliance, a new employee undergoes three days of training upon initial hire, which is conducted by current employees. The store averages $500 in beer sales per day, and Mr. Elliott has frequently seen customers irate about having to produce IDs. This situation of checking IDs and not selling to underage individuals is not uncommon and arises at least once during that three-day training. Therefore, all cashiers receive on-the-job training to ask for IDs before selling alcohol. Further, on a regular basis, the store manager discusses the alcohol laws with the new employee to ensure that the new employee is aware of the age requirements for the purchase of alcohol and is abiding by those requirements when conducting a sale of alcohol to an individual.

2. Raceway has a computerized cash register system that requires an employee to enter the date of birth of a purchaser who is buying alcohol or tobacco to complete the sale. This system does not, however, require that an employee enter the purchaser’s actual birth date, as shown on the purchaser’s driver’s license or other valid form of identification. Further, this system does not detect if the license is authentic and unaltered. Previously, the system could be manually overridden without entering an age. However, since this third violation, the override feature was removed so that the cashier must enter a valid date of birth before making the sale. Nonetheless, the cashier may enter any date of birth over the legal age, which does not necessarily have to be the same as the date on the ID.

3. Raceway presented further evidence of the measures it has put in place since this third violation. Raceway is in the process of installing a new video system within the next month that will show the register’s date-of-birth display for alcohol and other age restricted sales. The new system will allow the store management to pull up all beer sales for a given day for review or spot checks to ensure the cashier is using the system correctly to prevent underage sales. Mr. Elliott intends to review the video daily or every few days on a regular basis.

4. Ms. Hinson, who was the employee directly responsible for the current violation, was hired on February 19, 2007, and quit two days after the violation, after being fined and corrected by Mr. Elliott concerning the violation. In making the sale, she checked the UCI’s driver’s license, but apparently misapprehended the date. Both of the clerks who sold to underage persons for the two prior violations similarly quit a few days after the violations occurred, after being fined and corrected by Mr. Elliott.

5. As further evidence of its efforts to prevent underage sales, Raceway has “We ID” cards posted around the register area. Raceway has a reminder sign which alerts cashiers to “Check ID’s” in large capital letters posted. See Resp. Ex. 3. From December 21, 2007, forward, the language of that sign will also be included with cashier’s paychecks on a monthly basis. In addition, Mr. Elliott intends to give verbal reminders to cashiers when he is regularly in the store.

6. All of the current cashiers have been sent to TIPS (Training for Intervention ProcedureS) training on November 21, 2007, after this third violation. The two store managers are scheduled to go to the next available session, which is in January 2008. Raceway stipulated as a condition of its permit that it will have all new hires TIPS trained within a reasonable time following their hire; that reasonable time will usually be the first training available.

7. Raceway plans to implement a written test developed by Mr. Harrison for its cashiers on a monthly basis to ensure they understand store policy, proper ID, and penalties for violations. Raceway also plans to implement a Secret Shopper program, but has experienced difficulty finding secret shoppers unknown to the cashiers in a small town. Raceway also plans to implement an incentive program for its cashiers, who will receive a cash bonus quarterly for each period in which no underage sales are made.

8. The measures Raceway has taken since this third violation comply with the Department’s published recommended mitigation measures. See S.C. Rev. Proc. 03-3 at 2-3 (2003) & 04-4 at 2-3 (2004).

CONCLUSIONS OF LAW

Based upon the foregoing Stipulated Facts and Findings of Fact, I conclude the following as a matter of law:

1. The Department is charged with the responsibility of administering and enforcing the laws and regulations governing alcoholic beverages, including beer and wine. S.C. Code Ann. § 61-2-20 (Supp. 2006).

2. Regulation 7-200.4 prohibits holders of beer and wine permits from selling beer or wine to persons under twenty-one years of age. The regulation provides that:

To permit or knowingly allow a person under twenty-one year [sic] of age to purchase or possess or consume alcoholic liquors, beer or wine in or on a licensed place of business which holds a license or permit issued by the Department is prohibited and constitutes a violation against the license or permit. Such violation shall be sufficient cause to suspend or revoke the license or permit by the Department.

23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006). Raceway concedes and stipulates that it committed a violation of Regulation 7-200.4 as alleged by the Department.

3. The Department has jurisdiction to revoke or suspend permits authorizing the sale of beer and wine. S.C. Code Ann. § 61-4-590 (Supp. 2006). Pursuant to such authority, the Department may suspend or revoke a beer and wine permit if the permittee has knowingly sold beer or wine to a person under twenty-one years of age. S.C. Code Ann. § 61-4-580(1) (Supp. 2006); 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006); see also S.C. Code Ann. § 61-4-270 (Supp. 2006) (authorizing the Department to “revoke the permit of a person failing to comply with any requirements” in Chapter 4 of Title 61). Further, the Department may exercise this authority to suspend or revoke a permit for a first violation of the prohibition against selling beer and wine to minors. See S.C. Code Ann. §§ 61-4-270, 61-4-580, 61-4-590; 23 S.C. Code Ann. Regs. 7-200.4. The Department is also authorized to impose a monetary penalty upon a permittee for selling beer and wine to minors. S.C. Code Ann. § 61-4-250 (Supp. 2006). For retail beer and wine permittees, this monetary penalty must be no less than $25 and no greater than $1,000. Id.

4. S.C. Revenue Procedure 04-4 (2004) sets forth the Department’s penalty guidelines for violations of the alcoholic beverage control laws. For retail beer and wine permits, Revenue Procedure 04-4 provides for a five hundred dollar ($500) fine for the first violation by a permittee, a one thousand dollar ($1000) fine for the second violation, a 45-day suspension of the permit for the third violation, and revocation of the permit for the fourth violation. However, this document does not set binding norms for the Department, but rather only provides guidance to the Department in assessing penalties for violations of the alcoholic beverage control laws. See Revenue Procedure 04-4, at ¶ 4 (“These are guidelines only and this advisory opinion does not establish a binding norm.”). As such, Revenue Procedure 04-4 is not law and thus is not binding upon this Court. Cf. Home Health Serv., Inc. v. S.C. Tax Comm’n, 312 S.C. 324, 328, 440 S.E.2d 375, 378 (1994) (holding that “whether a particular agency proceeding announces a rule or a general policy statement depends upon whether the agency action establishes a binding norm”) (citing Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369 (11th Cir. 1983)).

5. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S.C. Cable Television Ass’n v. S. Bell Tel. & Tel. Co., 308 S.C. 216, 222, 417 S.E.2d 586, 589 (1992); see also Doe v. Doe, 324 S.C. 492, 502, 478 S.E.2d 854, 859 (Ct. App. 1996) (holding that a trial judge, when acting as finder of fact, “has the authority to determine the weight and credibility of the evidence before him”). Furthermore, a trial judge who observes a witness is in the best position to judge the witness’s demeanor and veracity and to evaluate the credibility of his testimony. See, e.g., Woodall v. Woodall, 322 S.C. 7, 10, 471 S.E.2d 154, 157 (1996); Wallace v. Milliken & Co., 300 S.C. 553, 556, 389 S.E.2d 448, 450 (Ct. App. 1990).

6. The facts in this case warrant a lesser penalty than that sought to be imposed by the Department. It is a generally recognized principle of administrative law that the fact finder has the authority to determine an appropriate administrative penalty, within the statutory limits established by the legislature, after the parties have had an opportunity for a hearing on the issues. See, e.g., Walker v. S.C. Alcoholic Beverage Control Comm’n, 305 S.C. 209, 407 S.E.2d 633 (1991). Further, in assessing a penalty, the finder of fact “should give effect to the major purpose of a civil penalty–deterrence.” Midlands Utility, Inc. v. S.C. Dep’t of Health & Envtl. Control, 313 S.C. 210, 212, 437 S.E.2d 120, 121 (Ct. App. 1993).

7. A fourteen-day suspension is adequate to deter Respondent from further violations and thus serve as an appropriate penalty for Respondent’s violation.

8. Respondent should be reminded that the purpose of the statutory prohibition against selling alcohol to underage individuals is to protect the underage individuals and the public at large from the possible adverse consequences of such sales. The sale of alcohol to an underage individual is a serious offense and cannot be taken lightly. Further, it should be noted that a permit to sell beer and wine is neither a contract nor a property right. Rather, it is merely a permit to do what otherwise would be unlawful to do, and to be enjoyed only so long as the restrictions and conditions governing its continuance are complied with. Feldman v. S.C. Tax Comm’n, 203 S.C. 49, 26 S.E.2d 22 (1943). Accordingly, beyond satisfying the penalty imposed in this matter, Respondent is advised to make every effort to prevent such sales in the future, as the failure to do so may subject it to more severe penalties in the event of a future violation.

ORDER

Based upon the Stipulated Facts, Findings of Fact, and Conclusions of Law stated above,

IT IS HEREBY ORDERED that, for Respondent’s third violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006) within three years, the Department shall SUSPEND Respondent’s off-premises beer and wine permit for its Raceway store at 2475 Charlotte Highway in Lancaster, South Carolina for fourteen (14) days.

AND IT IS SO ORDERED.

_____________________________

JOHN D. GEATHERS

Administrative Law Judge

1205 Pendleton Street, Suite 224

Columbia, South Carolina 29201-3731

January 10, 2008

Columbia, South Carolina