ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
The
above-captioned case comes before this court pursuant to S.C. Code Ann. § 61-2-260
(Supp. 2007), S.C. Code Ann. § 1-23-600(B) (Supp. 2007), and S.C. Code Ann. §§
1-23-310 to -400 (2005 & Supp. 2007) for a contested case hearing. In this
matter, Petitioner South Carolina Department of Revenue contends that
Respondent Northwoods Blvd. Express, Inc., d/b/a Northwoods Blvd. Express has
committed a violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2007) by
knowingly allowing an underage individual to purchase beer from its convenience
store located at 2330 Ashley Phosphate Road in North Charleston, South Carolina.
For this alleged third violation in as many years, the Department seeks to
suspend Northwoods’ off-premises beer and wine permit for this location for a
period of forty-five (45) days. In response, Northwoods 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 March 13,
2008, 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 Northwoods’ 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. Northwoods
is the holder of an off-premises beer and wine permit issued by the Department for
the location at 2330 Ashley Phosphate Road in North Charleston, South
Carolina. Northwoods is licensed under permit number 32030177-P7B.
2. On March
8, 2007, at approximately 1:21 p.m., South Carolina Law Enforcement Division
(SLED) Special Agents Tina Bailey and Roger Jowers, in conjunction with a nineteen-year-old
underage confidential informant (UCI), conducted an underage investigation at
the above location.
3. During
this investigation, the SLED agents provided $10 in State funds to the UCI, who
was knowingly allowed to purchase a 24 ounce can of Miller Light beer from the
clerk, Rhonda Fuller. Rhonda Fuller was an agent and/or employee of Northwoods
on this date. Rhonda Fuller requested the UCI’s driver’s license, but still
sold her the beer.
4. Rhonda
Fuller was criminally charged with the sale of beer to a person under the age
of twenty-one in violation of S.C. Code Ann. § 61-4-90 (Supp. 2007). Northwoods
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. Northwoods
has had two prior alcohol violations within a three year period at this location.
Both violations, committed on February 22, 2006, and July 20, 2006, were for permitting
the purchase of beer by a person under the age of twenty-one.
6. The
Department issued to the licensee a Notice of Intent to Suspend the permit for
45 days on March 28, 2007. Northwoods timely appealed pursuant to the Revenue
Procedures Act by filing a Request for a Contested Case Hearing with the
Administrative Law Court on April 23, 2007.
7. Further,
the parties agreed to enter the following Petitioner’s Exhibits into evidence
without objection:
1. Stipulation of Facts;
2. Department Determination dated June 12, 2007;
3. Copy of the SLED citation issued to Northwoods Blvd.
Express, Inc.;
4. Copy of the criminal citation issued to the store clerk,
Rhonda Fuller;
5. Copy of the UCI’s State issued driver’s license;
6. Copy of UCI’s Buy Statement;
7. Copy of SLED AEU Seizure Report;
8. Copy of photo of UCI taken on March 8, 2007;
9. Department’s records of prior violations;
10. Revenue Procedure #04-4 (September 13, 2004).
10. Further,
at the hearing, the parties agreed on the record in open court to enter the following
Respondent’s Exhibits into evidence without objection:
1. Photos of store signs for employees to
Check ID;
2. We Card program mailer catalog;
3. We Card program calendar catalog;
4. Employment agreement signed by Gloria
Clark;
5. Employment agreement signed by Lisa
Holiday;
6. Employment agreement signed by Rhonda
Fuller;
7. Employment agreement contract;
9. Central Indus. invoice & work order
7/20/06;
10. Postings in store for employee review;
11. Employee attention to policy document.
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. Northwoods
convenience store is located at 2330 Ashley Phosphate Road in North Charleston,
South Carolina. Robert Walsh is the owner of Northwoods, which has eight
employees. Mr. Walsh took over operating the store in March 2003, when the
person who was leasing the property and operating the store for the previous
nine years could not pay the rent. In the five years he has owned the store,
it has had 40 to 50 employees with a high turnover rate. Northwoods is located
at the intersection of Northwoods Blvd. and Ashley Phosphate Road, one of the
busiest intersections in North Charleston. There is another convenience store
on the corner across from Northwoods and three more across the street. Northwoods
is open 24 hours a day, 7 days a week. Regarding traffic, 80,000 cars go past
the location per day, and 3,000 to 4,500 people come in the store daily.
Suspending the beer and wine permit for forty-five days would mean a loss of
$30,000 per month and would likely require Northwoods to lay off two or three
employees.
2. Ms. Rhonda
Fuller, who was the employee directly responsible for the current violation,
was immediately terminated from Northwoods’ employment. In making the sale,
she checked the UCI’s driver’s license, but made the sale anyway. She had put
in her own date of birth to the register on the sale constituting the
violation. Both of the clerks who sold to underage persons for the two prior
violations were similarly immediately terminated.
3. Northwoods
has a computerized cash register system with an “age verification” program that
requires an employee to enter the date of birth of a purchaser who is buying
alcohol or tobacco in order 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
(ID). Further, this system does not detect if the ID is authentic and
unaltered. Previously, the system did not require the cashier to enter a date
of birth. However, within days before or after the second violation, the
system was modified so that the cashier is required to 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. Since this third violation, Mr. Walsh is attempting to have
the register system modified to require employees to input their own date of
birth in addition to their ID number when they sign in so that if they input
the same date of birth as their own on an alcohol sale, the register will lock
and prevent the transaction.
4. As
further evidence of its efforts to prevent underage sales, Northwoods has “We
ID” cards posted around the register area and a “We ID” calendar beside the
register that the manager changes each morning. Northwoods has posted in
large capital letters a reminder sign which alerts cashiers to “CHECK ID’s.” There
are signs in the office, over the sink, over the time clock, in the front
window, and at the register reminding employees to check ID’s and not sell
alcohol to underage individuals. To receive their weekly paychecks, employees
must sign a sheet reminding them of the company policy not to sell to underage
individuals.
5. Mr.
Walsh stated he was willing to pay a fine for the violation, to pay for
technology to prevent such sales, and to work with SLED. However, he contends
the penalty sought by the Department is too harsh in light of the store’s
continual training and reminders and ongoing efforts to prevent such sales. Mr.
Walsh already has a Mystery Shopper program in place wherein people he knows
are sent in to make sure cashiers treat customers well with friendly and prompt
customer service, but he is unwilling to send in underage individuals to buy
alcohol to test his employees because it is against the law.
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. 2007).
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. 2007). Northwoods 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. 2007). 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. 2007); 23 S.C. Code Ann. Regs.
7-200.4 (Supp. 2007); see also S.C. Code Ann. § 61-4-270 (Supp. 2007)
(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 or 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 or wine to minors. S.C. Code Ann. § 61-4-250 (Supp. 2007). For
retail beer and wine permittees, this monetary penalty must be no less than $25
and no greater than $1,000. Id.
4. Although
Mr. Walsh indicated he would be willing to pay a fine in lieu of license
suspension,
it would appear the
Department is precluded from accepting, and the Administrative Law Court is
precluded from approving, an administrative fine in excess of the statutorily
prescribed maximum amount, even if the excessive fine is voluntarily and freely
agreed to by the licensee. However, given the relatively narrow range of
administrative fines available for violations, this restriction would significantly
limit the Department’s ability to settle serious violation cases with a
monetary penalty without resorting to license suspensions or revocations.
John D. Geathers
& Justin R. Werner, The Regulation of Alcoholic Beverages in S.C. 272
(S.C. Bar CLE Div., 2007).
5. 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)).
6. While
Northwoods Blvd. argues it is inequitable to impose such a sanction as
suspension of its permit for acts of its employees in contravention of the
continual training and reminders and efforts to prevent such sales, it simply
must be considered part of the cost of doing business.
It is generally
recognized that an alcoholic beverage licensee may have his license suspended
or revoked, or have an administrative fine imposed upon him, for violations
committed by his employees, even for acts the employees committed against the
licensee’s instructions or without his knowledge, and even for acts by
employees, which, although committed on the licensed premises, are not within
the scope of their employment. Courts have routinely
found that this broad vicarious liability for alcoholic beverage licensees is
necessary for the effective administrative enforcement of the alcoholic
beverage control laws. In adopting such a rule in 1957, the North Carolina
Supreme Court expounded upon the reasoning for the imposition of vicarious
liability upon liquor licensees:
The petitioners, the
licensees, elected to operate their retail beer business at least in part with
employees, and they must be responsible to the licensing authority for their
employees’ conduct in the exercise of their license, whether they know about it
or not, else we would have the absurd result that beer could be sold at
forbidden hours on the premises by their employees and whiskey sold on the
premises by their employees, and the licensees would be immune to disciplinary
action by the State Board of Alcoholic Control, if they had no knowledge of
it. Such a result would cause a complete breakdown of beverage control by the
State, and cannot have been contemplated by the Legislature. In a number of
cases the courts have upheld revocation, cancellation or suspension of liquor
licenses because of improper, or wrongful or unlawful acts of the licensees’
employees or agents, although such acts are committed against the instructions
of the licensee or without his knowledge or consent. This is sound law, which
we adopt.
For similar reasons,
this general principle of vicarious liability is likely applicable to all
administrative violations under South Carolina’s alcoholic beverage laws.
Beyond such general principles, a number of provisions in Title 61 and its
accompanying regulations contain language specifically imposing such vicarious
liability on alcoholic beverage licensees. For example, Section
61-4-580 provides that a retail beer and wine permit may be suspended or
revoked if the permittee “or a servant, agent, or employee of the permittee”
knowingly commits a prohibited act, such as selling beer or wine to an underage
individual or permitting a game of chance, on the premises covered by the
permit. Thus, it appears that an
alcoholic beverage licensee in South Carolina is generally vicariously liable,
and his license subject to sanction, for any administrative violations of the
alcoholic beverage laws committed by his employees on or around the licensed
premises, even where he did not approve, consent to, or have knowledge of the
violations.
Id. at
286-88.
7. 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).
8.
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).
9. A
fourteen-day suspension is adequate to deter Respondent from further violations
and thus serve as an appropriate penalty for Respondent’s violation.
10. 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 administrative
citation.
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. 2007) within three years, the Department shall SUSPEND Respondent’s off-premises beer and wine permit for its Northwoods Blvd. store
at 2330 Ashley Phosphate Road in North Charleston, South Carolina for fourteen
(14) days.
AND
IT IS SO ORDERED.
_____________________________
March 26, 2008 JOHN
D. GEATHERS
Columbia, South Carolina Administrative
Law Judge
1205 Pendleton
Street, Suite 224
Columbia, South
Carolina 29201-3731
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