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. § 12-60-460 (Supp. 2007). 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. After proper notice of the hearing was given to the Petitioner
and the Respondent, a hearing was held before me on July 8, 2008, at the
offices of the Administrative Law Court.
STIPULATIONS
OF FACT
1. The
Pantry, Inc., d/b/a Kangaroo Express 3150 (Kangaroo) is the holder of an off
premises beer and wine permit issued by the South Carolina Department of
Revenue (Department) for the location at 1390 Highway 501 E. in Conway, South
Carolina. Kangaroo was licensed under permit number 32015028 on August 15,
1996. The Department subsequently renewed this permit and Respondent held this
permit on June 21, 2007.
2. On
June 21, 2007, at approximately 10:05 p.m., South Carolina Law Enforcement
Division, (SLED) agents in conjunction with an 18 year old underage
confidential informant (UCI) conducted an investigation at the above location.
During this investigation, the clerk, Jeffery Santella knowingly allowed the
UCI to purchase one 24 ounce can of Bud Light beer. Jeffery Santella was an
employee of Kangaroo on this date. Jeffery Santella did request the UCI’s
driver’s license, but still sold her the beer.
3. Jeffery
Santella was charged with the transfer of beer to a person under the age of
21. Kangaroo was issued a regulatory violation for knowingly permitting a
person under 21 to purchase beer on the permitted premises in violation of 23
S.C. Code Ann. Regs. 7-200.4 (Supp. 2007). Kangaroo has had two prior violations
within a three year period at this location. The prior violations were for
permitting the purchase of beer by a person under the age of 21 and were
committed on April 24, 2005 and November 21, 2005. Kangaroo paid a fine of
$500 for the first prior offense and a $1,000 fine for the second offense.
4. Kangaroo
admits that it committed the violation of Regulation 7-200.4 on June 21, 2007
in that its employee did knowingly permit a person under the age of 21 to
purchase beer on the permitted premises. Kangaroo further admits that this is
the 3rd such violation within a three year period at this location.
5. The Department issued its Department Determination
on February 14, 2008. Kangaroo appealed the Agency’s Department Determinations
by timely filing a request for a contested case hearing with the Administrative Law Court (ALC or Court) on March 17, 2008.
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. The
parent company of Kangaroo Express, The Pantry, operates over 1,600 convenience
stores in eleven states in the southeast. Approximately 300 of those stores are
located in South Carolina. The beer sales at this particular store account for
approximately 17 % of all in-stores sales, which is a large amount compared
with other Kangaroo convenience stores. Kangaroo Express 3150 had $201,683.00
in beer sales in 2006 and $214,099.00 in 2007. Furthermore, Kangaroo Express
has approximately 14 employees.
2. Once
an employee is hired, they begin their training at the Computer Based Training
(CBT) store in their district. The new employee must complete three days of
training at the CBT store. That training includes approximately two and half
hours of computer training on the first day, followed by on the job training
with the store manager. A portion of the computer based training is spent on
age restricted sales, which includes the sale of alcohol, cigarettes, adult
magazines, lottery tickets, fireworks and stimulants. The employee is also required
to take a test during the CBT on age restricted sales and must make a score of
at least 80 percent to pass that test.
3. In
addition to the initial training of an employee, The Pantry takes multiple
other measures to ensure that new employees are aware of the law regarding the sale
of age restricted items. Upon hiring, employees must sign an Age Restricted
Product Sales Agreement. Employees are also provided a Handbook which they must
read and agree to comply with its provisions. The Handbook outlines the policy
on age restricted sales and criminal offenses related to the unlawful sale of
age restricted material.
Once
an employee begins employment with The Pantry, the company takes further
measures in an effort to achieve compliance the law regarding the sale of age
restricted items. It requires that before any convenience store employee can
clock in to be paid for work, the employee must click through a computer screen
which reminds the employee to check identification on everyone under 35. Furthermore,
cashiers are provided with a “We Card” calendar by the cash register and an
electronic identification checker to assist the employee in verifying the
customers age. Lastly, employees must initial a commitment form on a daily
basis. The first item on that commitment form reads “I must check the
identification of any customer who appears to be under the age of 35 years old,
even if they appear to be over legal purchasing age.” The form goes on the
read “I understand that if I sell any alcoholic beverage or tobacco product to
an underage customer, I will be terminated immediately.”
4. Shirley Howard, an employee of The Pantry,
testified regarding The Pantry’s policy and procedure for training new
employees on age restricted sales. Ms. Howard has been employed by The Pantry
for eighteen years and is currently one of three corporate facilitators. This
job entails training new store managers and initiating training programs. Ms.
Howard testified that The Pantry recognizes its responsibility concerning the
sale of beer and wine and therefore seeks to insure that all employees are
properly trained. In the case at hand, Jeffrey Santella, the employee who made
the unlawful sale, was terminated immediately in accordance with corporate
policy. Moreover, Mr. Santella, who had been employed with Kangaroo Express
for twenty months prior to his termination, had been instructed throughout his
employment concerning the Pantry’s prohibition of sales to underage persons.
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. 2007) grants jurisdiction to the Court to hear
contested cases under the Administrative Procedures Act. Specifically, S.C.
Code Ann. § 61-2-260 (Supp. 2007) 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 Commission, 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 beer and wine
permit. 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2007). Such a violation
constitutes sufficient grounds for either suspension or revocation of the
permit. Id. The term “knowingly” in Regulation 7-200.4 includes not
only actual knowledge, but also knowledge that could be gained by reasonable
inquiry when the circumstances are such as would cause a prudent man to
inquire. See Feldman, 203 S.C. 49, 26 S.E.2d 22. A
person may be found to act “knowingly” where it appears that the person “[shut]
his eyes to avoid knowing what would otherwise be obvious.” State v.
Thompkins, 263 S.C. 472, 484, 211 S.E.2d 549, 554 (1975).
4. Furthermore,
the permittee is responsible for the acts of his servants, agents, or employees
and cannot seek to avoid the consequences of a violation for lack of personal
knowledge. See, e.g., Crystal Ice Co. of Columbia, Inc. v.
First Colonial Corp., 273 S.C. 306, 309, 257 S.E.2d 496, 497 (1979) (“It is
well established that a principal is affected with constructive knowledge of
all material facts of which his agent receives notice while acting within the
scope of his authority.”); S.C. Law Enforcement Div. v. The “Michael and
Lance,” 284 S.C. 368, 327 S.E.2d 327 (1985) (determining that civil
forfeiture of a corporation’s boat based upon an employee’s illegal transporting
of drugs was warranted even though the corporation claimed that the use of the
boat to transport drugs was without its knowledge); 48 C.J.S. Intoxicating
Liquors § 259 (1981) (a permit holder is responsible for the actions and
conduct of employees utilizing the permit upon the permitted premises).
5. The
Department seeks a forty-five (45) day suspension of Respondent’s beer and wine
permit for violating 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2007). The Pantry,
however, argues that though it committed the violation, the evidence reflects
mitigating facts that should be considered in determining the appropriate
penalty in this case. Clearly, 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. 2007). On
the other hand, 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. South Carolina 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).
In fact, the
Department’s 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.
The sale in this case
was to a sixteen (16) year old minor. This violation is even more important in
light of the potential grave consequences that can occur as a result of a sale
to a minor. On the other hand, the sale in this instance clearly did not
represent the Pantry’s philosophy concerning sales to minors. Furthermore, the
Pantry has made significant efforts to impel its employees not to sell to
minors. Though the Pantry’s offending employee did not complete a training
program recognized by the Department, the employee was instructed concerning
the laws regarding underage sales and tested on that knowledge. Moreover, The
Pantry, in accordance with its policy that is made clear and enforced upon all
of its convenience store employees, promptly terminated the offending employee.
Concerning in-house
training, The Pantry did not establish that it gave any formal in-house
training to the offending employee on a regular basis after his initial
training. Nevertheless, The Pantry’s clock in system reminded the employee
each time he clocked in to check identification on everyone under 35.
Furthermore, cashiers at this location were provided both a “We Card” calendar
and an electronic identification checker which expressly verified the customers
age. Finally, the company policy required employees to initial a commitment
form every day they worked which stated: “I must check the identification of
any customer who appears to be under the age of 35 years old, even if they
appear to be over legal purchasing age.” The form also stated: “I understand
that if I sell any alcoholic beverage or tobacco product to an underage
customer, I will be terminated immediately.” Here, the employee who made the
sale had been employed with The Pantry for twenty months and thus certainly
knew the company’s prohibition against selling beer or wine to an underage
person.
Finally,
the evidence established that there indeed was a large number of clerks and a
high volume of beer sales at this location. In accordance with the
Department’s policy this is a mitigating factor. Though I recognize that this
is a proper factor to assess in determining the appropriate sanction, I also
recognize that with an increased number of sales should come an increased
effort to insure that no sales are made to underage persons. In that regard,
though the Pantry does seek to train its employees concerning the proper sale
of beer or wine, despite the previous violations, The Pantry did not use a
“mystery shopper” program or employ any additional training. To that end, the
Pantry argued that certainly the offending employee knew the sale to the
underage person was unlawful. I recognize the legitimacy of that reasoning but
also recognize that heightened training can emphasize the importance of
following the laws regarding underage sales.
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 thirty
(30) days beginning September 1, 2008.
AND IT IS SO ORDERED.
______________________________
Ralph
King Anderson, III
Administrative
Law Judge
July 23, 2008
Columbia, South Carolina
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