ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before the Administrative Law Court (ALC or Court) pursuant to S.C. Code Ann. §§ 61-2-20 and 61-2-260 (Supp. 2006). The South Carolina Department of Revenue (Department) seeks a forty-five (45) day suspension of Respondent’s beer and wine permit for its third violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006). A hearing was held before me on July 12, 2007, at the offices of the Administrative Law Court.
STIPULATIONS OF FACT
At the hearing into this matter and pursuant to ALC Rule 25(C), the parties entered the following written stipulations of fact into the Record:
1. Nic’s Pic Kwik is the holder of an off premises beer and wine permit issued by the Department for the location at 101 Tatum Ave. in McColl, South Carolina. Nic’s Pic Kwik has been licensed at this location since August 12, 1994. On November 30, 2006, Nic’s Pic Kwik held an off premises beer and wine permit, No. 32002737 PBG, at this location.
2. On November 30, 2006, at approximately 2:18 p.m., SLED agents, in conjunction with an 18 year old underage confidential informant (hereinafter “UCI”), conducted an inspection at the above location. The UCI was knowingly allowed to purchase a 24 ounce can of Bud Light beer from the store clerk, Charles W. Yarborough. Charles W. Yarborough was an agent and/or employee of Nic’s Pic Kwik on this date. Charles W. Yarborough did not request the UCI’s driver’s license or ask his age, and sold him the beer.
3. Charles W. Yarborough was charged with the transfer of beer to a person under the age of 21. Nic’s Pic Kwik was issued a regulatory violation for knowingly permitting a person under 21 to purchase beer on the licensed premises in violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006).
4. Nic’s Pic Kwik has had two prior alcohol violations within a three years period at this location. The prior violations were both for permitting the purchase of beer by a person under the age of 21 and were committed on April 23, 2004 and March 15, 2006. Nic’s Pic Kwik paid fines of $1,000 for each of the prior offenses.
5. Nic’s Pic Kwik admits that it committed a violation of Regulation 7-200.4 on November 30, 2006 in that its employee, Charles W. Yarborough did knowingly permit a person under the age of 21 to purchase beer on the licensed premises. Nic’s Pic Kwik further admits that this is the third offense within a three year period at this location.
6. The Department issued its Final Agency Determination on April 12, 2007.
7. Nic’s Pic Kwik appealed the agency’s Final Determination by timely filing a request for contested case hearing with the Administrative Law Court on May 14, 2007.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and taking into consideration the burden of persuasion and the credibility of the witnesses, I make the following findings of fact by a preponderance of evidence:
1. Notice of the time, date, place and subject matter of the hearing was given to the Petitioner and the Respondent.
2. Nic’s Pic Kwik operates eight stores in North Carolina and two stores in South Carolina. They have a strict policy against the sale of beer or wine to minors and all ten stores use the “We Card” program, approved by North Carolina law enforcement. The manager of each store receives training and materials and is then responsible for training that stores employees. During an employees first day on the job, they watch a 20 minutes video that gives different scenarios of an underage person trying to buy alcohol. The clerks are also informed of the consequences of selling alcohol to an underage person, which includes termination of employment.
Nic’s Pic Kwik utilizes many tools to deter the sale of alcohol to underage persons. A secret shopper visits each store once or twice per quarter. Each register has a “We Card” calendar displayed next to it which assists the cashier in determining whether the purchaser is of age. The cash register identifies when alcohol is being sold and requires that the cashier enter the age of the person purchasing the beer or wine. If the person is not 21, the cash register will show “No Sale.” However, there is an override feature which allows the cashier to override the need to enter the purchaser’s date of birth. To combat this, managers are asked to review the DVR security system, which monitors the cash registers, at least three times a week.
3. Charles Yarborough, the employee who sold the beer in this case, has been an employee of Nic’s for over 15 years. In fact, during his tenure with Nic’s, he served as a store manager until he began to experience health problems. As a store manager, he trained employees not to sell beer or wine to minors. Though he had not worked in over a year and a half, on the date of the sale, he nevertheless agreed to fill-in in for an employee who had called in sick. While working that day, Mr. Yarborough noticed that the clerk running the cash register was getting “backed up.” Mr. Yarborough then opened a register and asked the UCI to step forward. When the UCI approached the register, Mr. Yarborough simply asked, “you look old enough, are you” and when the UCI did not answer, he rung up the beer, hit override, and completed the sale without entering a date of birth or checking the UCI’s ID.
4. The Department offered the testimony of two “expert witnesses” to show that a greater sanction should be imposed in cases involving the sale of beer or wine to minors.[2] Terecia Wilson, the Director of Safety for the South Carolina Department of Transportation testified concerning the data reflecting young drivers in alcohol related crashes and the economic cost of young drivers in alcohol related crashes. Steven Burrett testified that on average teenagers drink more in one sitting than adults and teenagers obtain 15-30% of their alcohol from retail stores. He also testified that he believes compliance checks are the most important tool to deter the sale of alcohol to underage persons. He believes there are seven steps stores can take to curb the sale of alcohol to minors; implement a quality training program, require employees to sign statements saying that they understand the law, keep loitering down, use secret shopper programs, use age verification equipment, keep a calculator or calendar at the cash register and have a an ID guide showing an illustration of each state’s drivers license by the cash register.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude the following as a matter of law:
1. S.C. Code Ann. § 1-23-600 (Supp. 2006) grants jurisdiction to the Court to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2006) grants the ALC the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.
2. Permits and licenses issued by this state for the sale of liquor, beer and wine are privileges to be used and enjoyed only so long as the holder complies with the restrictions and conditions governing them. See Feldman v. S.C. Tax Comm’n, 203 S.C. 49, 26 S.E.2d 22 (1943).
3. Permitting or knowingly allowing a person under the age of twenty-one (21) to purchase or possess beer upon the licensed premises is a violation against a license or a permit. Such a violation constitutes sufficient grounds for either suspension or revocation of the beer and wine permit. 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2006). Furthermore, the permittee is responsible for all acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. Following that principle, the South Carolina Supreme Court upheld a civil forfeiture of a corporation’s boat based upon an employee’s transporting drugs even though the corporation claimed the use of the boat to transport drugs was without its knowledge. S.C. Law Enforcement Div. v. The "Michael and Lance,” 281 S.C. 339, 315 S.E. 2d 171 (Ct. App. 1984). The Court held that “[a] principal is affected with constructive knowledge of all material facts of which its agent receives notice while acting within the scope of his authority.” Id. at 173, citing Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E. 2d 496 (1979). Likewise, the license holder is responsible for the actions and conduct of employees utilizing the permit upon the permitted premises. 48 C.J.S. Intoxicating Liquors § 259 (1981).
Expert Testimony
The Department offered the testimony of two “expert witnesses” to show that a greater sanction should be imposed in cases involving the sale of beer or wine to minors. The effort of the Department’s counsel and the witnesses in seeking to protect our underage citizens is laudable. Nevertheless, the admissibility of evidence and the ultimate weight given to that evidence is not tested by the sincerity of the motives but by the laws of evidence.
Examination of this issue must start with a determination of relevancy. “There are two components to relative evidence: materiality and probative value.” C.J.S. Relevance § 185 at 729 (2004). To be probative as to the proper sanction to impose, the evidence must have a tendency to prove that a greater or lesser sanction should be imposed in this case. Here, the evidence offered reflected that the sale of beer, wine or alcohol to minors can result in grave societal and economic costs to the State of South Carolina, and it is thus very important to properly regulate the sale of those substances. Though the data and evidence presented was not one of common knowledge, the underlying premise (the importance of restricting the sale of beer, wine or alcohol to minors) is a concept of which all Administrative Law Judges are aware. Therefore, the initial probative value of the Department’s expert testimony was certainly dubious.
That probative value was lessened even more by the nature of the testimony. Neither of the Department’s witnesses’ testimony was based upon direct observations or first hand knowledge but rather was based upon evidence they obtained from other sources to reach their conclusions. “An expert witness may state an opinion based on facts not within his firsthand knowledge.” Hundley ex rel. Hundley v. Rite Aid of S.C., Inc., 339 S.C. 285, 529 S.E.2d 45 (Ct. App. 2000). Though that evidence is admissible, the inadmissible facts or data is admitted not as substantive evidence but solely to show the basis of an expert’s opinion. C.J.S. Evidence § 593 (2004). Furthermore, to be used to support the expert’s opinion, the information must be of the type reasonably relied upon in the expert’s field to make opinions. Hundley, 529 S.E.2d 45; S.C. R. Evid. 703. Thus, while antidotal reports can provide some information, “they are more useful as a stimulus for further inquiry than as a basis for establishing association or causation.” McCormick on Evidence, § 209 (6th ed. 2006).
Here, no evidence was presented that the hearsay data/facts relied upon by the expert witnesses are commonly relied upon by experts in their respective fields in reaching an opinion. C.J.S. Evidence § 605 (2004). Additionally, though a qualified expert witness may testify to the probability of an occurrence, the inference will be rejected “where the [factfinder] is equally competent with the witness to draw the required inference and where the fact is one intimately connected in the particular case with their function.” C.J.S. Evidence § 593 at 426 (2004). As noted above, the ALC is equally competent to evaluate the significance of the sale of alcohol to a minor in determining the appropriate sanction and, in fact, that determination is intimately connected with the Courts discretionary function in this case.
Addressing the testimony individually, the Department offered the testimony of Terecia Wilson, the Director of Safety for the South Carolina Department of Transportation (DOT), as an expert witness concerning the data reflecting young drivers in alcohol related crashes and the economic cost of young drivers in alcohol related crashes. Terecia Wilson testified about data gathered from the records of the DOT. However, her testimony failed to reflect expertise in extrapolating the meaning of that data. “[T]raditionally the subject of the inference must be so distinctively related to a science, profession, business, or occupation as to be beyond the ken of lay persons.” McCormick on Evidence, § 13 (6th ed. 2006). The rules of evidence also allow the admission of the opinion if the opinion will refine the trier of fact’s understanding of the issue. Id. Here, though Ms. Wilson testified to data that has been compiled by the Department of Transportation, no evidence established her ability, or any other known scientific or technical means, to apply that data to the determination of what is the appropriate sanction for a third offense sale of beer or wine to a minor.
Furthermore, even if the data could be applied to the issue of what is the appropriate sanction, the witnesses failed to establish why such data is probative concerning the proper sanction in this case. In fact, the closest her testimony came to relating to this case was that one person was killed, in an underage alcohol related accident, within a ten mile radius of Petitioner’s business. However, that death was in no way related to Petitioner’s business. Moreover, her testimony revealed that most all South Carolina counties could attribute a greater number of traffic deaths to alcohol consumption by minors. Therefore, even if this evidence is construed as relevant, the fact that only one death occurred within a ten mile radius of this particular location, compared with a greater number of deaths in numerous other locations, would lead to the logical conclusion that this location should receive a lesser penalty because of the fewer deaths related to alcohol consumption by minors within its proximity. The absurdity of that conclusion demonstrates the fallacy of this evidence. Simply put, this testimony is not a proper subject for an expert inference.
The Department also offered Steven Burrett as an expert witness in the following four categories:
· the effect of drinking on young people in the state;
· societal pressures on young people;
· young persons’ access to alcohol; and
· the societal costs of alcohol on young persons.
Mr. Burrett testified that on average, teenagers drink more in one sitting than adults. Teenagers obtain 15-30% of their alcohol from retail stores. An Oregon study, the only one thus far conducted on this subject, found that the rate of underage drinking directly correlates with the ability to buy alcohol illegally. However, the above statistics and study are not sufficiently probative as to the appropriate sanction in this case to warrant consideration. Moreover, “if the expert is making an inferential claim, a foundation simply showing the expert’s experience in inadequate.” McCormick on Evidence, § 13. The proponent must establish that the technique relied upon by the expert to reach their opinion “works.” Id. at 79-80. Here, the information relied upon by Mr. Burrett did not establish a correlation between increasing sanctions and the reduction of sales to minors. Id. Therefore, since his experiences (or the experiences of others in his field) are not sufficient to draw a qualified inference, the evidence has little probative value.
Mr. Burrett nevertheless did offer some probative evidence. He testified that he believes compliance checks are the most important tool to deter the sale of alcohol to underage persons. He also stated that there are seven steps stores can take to curb the sale of alcohol to minors; implement a quality training program, require employees to sign statements saying that they understand the law, keep loitering down, use secret shopper programs, use age verification equipment, keep a calculator or calendar at the cash register and have an ID guide showing each state’s drivers license by the cash register.
Sanction
5. The Department seeks a forty-five (45) day suspension of the Respondent’s beer and wine permit for a third violation of Regulation 7-200.4 within the past three (3) years. See Revenue Procedure 04-4. Where the General Assembly authorizes a range of alternatives for an administratively imposed penalty, the administrative fact-finder may set the amount of the penalty after a hearing on the dispute. Walker v. S.C. ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). To that end, an Administrative Law Judge must consider relevant evidence presented in mitigation. Mitigation is defined as a lessening to any extent, great or small. It may be anything between the limits of complete remission on one hand and a denial of any relief on the other. In a legal sense, it necessarily implies the exercise of the judgment of the court as to what is proper under the facts of the particular case. 58 C.J.S. Mitigation p. 834, 835 (1948). Furthermore, the agency is responsible for assessing penalties within its discretion. “The exercise of the discretion must be an impartial one, taking into account all the relevant facts, together with legal principles essential to an informed and just decision.” 73 C.J.S. Public Administrative Law and Procedure § 137 at 370 (2004).
Here, the Department, and therefore the ALC, has jurisdiction to “revoke or suspend permits authorizing the sale of beer or wine.” S.C. Code Ann. § 61-4-590 (Supp. 2006). Furthermore, in lieu of suspension or revocation, a beer and wine permittee may be fined not less than twenty-five dollars nor more than one thousand dollars for an infraction against Title 61, Chapter 4 or “for a violation of any regulation pertaining to beer or wine and wine.” S.C. Code Ann § 61-4-250 (Supp. 2006). See also, S.C. Code Regs. 7-702.1. The fine may range from twenty-five dollars to one thousand dollars for retail beer and wine licensees. Id.
In the present case, the Respondent violated the provisions of Regulation 7-200.4 by permitting the purchase of beer by an individual under the age of twenty-one (21). As the Department seeks to establish, I recognize that the sale of beer or wine to a minor is a serious offense. Furthermore, the enforcement of these regulatory laws is not only “to prevent consumption of alcohol by youthful drinkers so as to protect them from their own immature judgment,” but also to protect members of the public likely to be harmed by an underage drinker. Norton v. Opening Break of Aiken, Inc., 313 S.C. 508, 443 S.E.2d 406 (Ct. App. 1994). Here, Respondent’s efforts did generally fall short in utilizing the training that is available to prevent individuals from selling beer or wine to minors. Furthermore, the fact that this location has been cited for three violations for underage sales within a three-year period is a general indication in and of itself that more needs to be done at this location.
On the other hand, the Respondent has made great efforts to encourage its employees not to commit this serious offense. In fact, the Department’s own Revenue Procedure 04-4 provides that mitigating circumstances include that:
a. The employee committing the violation has completed a training program recognized by the Department. This training must have taken place within a reasonable period of time prior to the offense and must include training covering the violation at hand. The person claiming mitigating circumstances under this item must also provide the Department verification that the employee attended the training and an outline of the training conducted.
b. Documented in-house training given to the offending employee on a regular and frequent basis. This in-house training must contain instruction relevant to the type of violation at issue.
c. Documentation that an internal check (e.g. visit to the offending store by a mystery shopper) designed to ensure compliance occurred within a reasonable period of time prior to the offense. This internal check must be relevant to the type of violation at issue.
d. Automated age verification programs if the violation deals with age.
e. The volume of sales of beer, wine or liquor at a location. For example, a location with a large number of clerks and a high volume of beer sales is more likely to have a problem with violations than a location with a small volume of beer sales.
Here, in-house training was provided to the offending employee on a regular and frequent basis relating to the violation at issue. The offending store has been frequently checked by mystery shoppers with no instances of violations. The store also utilized an automated age verification program.
Furthermore, the employee who made the sale is an older gentleman who, having been a store manager, certainly knew the importance of not selling beer or wine to a minor. Moreover, there is no indication that he intentionally sold to a minor. Mr. Yarborough also appeared to be sincerely troubled by his actions. Therefore, the sale in this instance does not appear to be the result of a failure on behalf of the Respondent to stop the sale of beer or wine to minors.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that Respondent’s beer and wine permit be suspended for fifteen (15) days.
AND IT IS SO ORDERED.
______________________________
Ralph King Anderson, III
Administrative Law Judge
July 20, 2007
Columbia, South Carolina
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