South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. KCP, Inc., d/b/a KC Mart

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
KCP, Inc., d/b/a KC Mart
 
DOCKET NUMBER:
07-ALJ-17-0406-CC

APPEARANCES:
Craig M. Pisarik, Esquire
For Petitioner

Scott F. Talley, Esquire
For Respondent
 

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 KCP, Inc., d/b/a KC Mart, 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 439-A Duncan Bypass in Union, South Carolina. For this alleged fourth violation in three years, the Department seeks to revoke KC Mart’s off-premises beer and wine permit for this location. In response, KC Mart 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 April 22, 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 KC Mart’s violation is a 21-day suspension of its off-premises beer and wine permit and a $1,000 fine.

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. KC Mart is the holder of an off-premises beer and wine permit issued by the Department for the location at 439-A Duncan Bypass in Union, South Carolina. KC Mart is licensed under permit number 32033419-PBG.

2. On April 3, 2007, at approximately 3:55 p.m., South Carolina Law Enforcement Division (SLED) Special Agents James Jackson and James Causey, in conjunction with an eighteen-year-old underage confidential informant (UCI), conducted an underage investigation at the above location.

3. During this investigation, the SLED agents provided State funds to the UCI, who was knowingly allowed to purchase a 24-ounce can of Bud Light beer from the clerk, Bhupenbhai Patel. Bhupenbhai Patel was an agent and employee of KC Mart on this date. Bhupenbhai Patel requested the UCI’s driver’s license, but still sold him the beer.

4. Bhupenbhai Patel 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). KC Mart 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. KC Mart has had three prior alcohol violations within a three-year period at this location. All prior violations, committed on May 6, 2004, February 7, 2005, and July 21, 2005, 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 Revoke the permit on April 19, 2007. KC Mart timely appealed pursuant to the Revenue Procedures Act by filing a Request for a Contested Case Hearing with the Administrative Law Court on June 6, 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 July 23, 2007;

3. Copy of the SLED citation issued to KCP, Inc., d/b/a KC Mart;

4. Copy of the criminal citation issued to the store clerk, Bhupenbhai Patel;

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 April 3, 2007;

9. Department’s records of prior violations;

10. Revenue Procedure #04-4 (September 13, 2004).

8. 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. Employee Agreement;

2. 11 Photos of store showing ID signs/21 to purchase alcohol;

3. DVD of store tape of UCI transaction.

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. KC Mart convenience store is located at 439-A Duncan Bypass in Union, South Carolina. Chirag Patel is the owner of KC Mart, which averages six employees. Mr. Patel owns four convenience stores in South Carolina that hold off-premises beer and wine permits, as well as the liquor store next door to the KC Mart at issue here. He has owned convenience stores for five years and has been in business almost ten years. KC Mart used to be open 24 hours a day, but, since January, it is now open from 6:00 a.m. until 12:00 midnight. The liquor store next door, which Mr. Patel also owns, is a separate corporation with two employees.

2. Bhupenbhai Patel was the employee directly responsible for the current violation. Although he had no prior incidents, he was immediately terminated from KC Mart’s employment. All clerks who had sold to underage persons for prior violations had been similarly immediately terminated. There has been no pattern to the UCI sales; different clerks had different excuses. For instance, one clerk on a prior violation worked part-time at KC Mart as a second job and was so tired from her other job that she made a mistake.

In making the April 3, 2007 sale, Bhupenbhai Patel checked the UCI’s driver’s license, but made the sale anyway. The in-store DVD shows that he typed in “10-10-10” for the date of birth. Chirag Patel tells his employees that they may use that date and not check IDs for patrons who appear to be 35 years or older.

3. Bhupenbhai Patel had worked in Tennessee convenience stores for 2½ years. He was specifically asked if he knew South Carolina laws regarding underage sales, and he said that he did. He signed the Employee Agreement indicating that he understood the law. The clerk was employed for 5-6five to six weeks before the UCI sale.

4. Prior to the instant UCI sale, Willie Hardy, the manager of Chirag Patel’s liquor store next door, saw the UCI walk by and saw the SLED truck parked in the Wal-Mart parking lot nearby. He has been employed for four years at that location, was employed under the prior owners, and has been employed longer than anyone else there. He testified that he knows most of the SLED people and takes underage alcohol sales very seriously, being retired military. He has formal training, some provided by KC Beverage and some on his own. He has PTI tapes for employees to review and keeps employees trained on not selling to underage individuals. He can see through the glass into the convenience store and tries to keep an eye on things, but he is not in charge of the register and cannot monitor the store all the time.

As seen on the DVD viewed in the hearing and as testified to by Hardy, upon seeing the UCI enter the KC Mart, Mr. Hardy went up to the clerk, Bhupenbhai Patel, pointed out the UCI, and said specifically, “He’s SLED. Don’t sell to him.” The clerk acknowledged he understood, but then a few transactions later, checked the UCI’s ID and made the sale. After the sale, Mr. Hardy came back over and confronted the clerk, who laughed about the incident. The clerk had reason to know that the UCI was underage and that he should not sell to him, based on Mr. Hardy’s warning. Nonetheless, the clerk displayed a blatant disregard of specific instructions by a Mr. Hardy manager not to make the underage sale. Chirag Patel asserts that he tries to ensure that his employees do not sell to underage individuals but does not know what to do when they do not care. Such an employee’s attitude goes beyond training.

5. After the initial violations, KC Mart implemented 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). 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.

6. KC Mart has several signs posted around the store, indicating that it checks IDs and that the legal age for purchasing alcohol is 21. Those signs were in place before the initial violation occurred.

7. All clerks receive one week of training by Chirag Patel or the store manager, including five to six hours of training on alcohol laws and not selling to underage. The store uses CDs, DVDs, brochures, and one-on-one training. KC Mart usually sends all employees to Union County’s TIPS training. However, the county holds these trainings infrequently based on demand. Mr. Patel inquired about training the clerk who made the sale but had to wait for an opening in the county program. Thus, Bhupenbhai Patel was not TIPS certified, but all other employees were. After the third violation, Mr. Patel implemented more frequent training: an hour for each employee every other week on underage alcohol and tobacco sales.

8. Mr. Chirag Patel contends that the penalty sought by the Department is too harsh in light of the store’s ongoing efforts to prevent underage sales; the clerk’s blatant disregard of Mr. Hardy’s directive not to sell; and the fact that the oldest violation was almost more than three years ago. His four permitted convenience stores and the liquor store have had no violations since the last one at this location in 2005.

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:

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). KC Mart 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. 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 provides only 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 21-day suspension and a $1,000 fine 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 underage sales in the future, as the failure to do so may subject Respondent 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 fourth 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 KC Mart store at 439-A Duncan Bypass in Union, South Carolina for 21 days and impose a $1,000 fine.

AND IT IS SO ORDERED.

_____________________________

May 828, 2008 JOHN D. GEATHERS

Columbia, South Carolina Administrative Law Judge

1205 Pendleton Street, Suite 224

Columbia, South Carolina 29201-3731


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