ORDERS:
FINAL ORDER AND DECISION
I. PROCEDURAL
HISTORY
This
matter came before the Court upon a request for a contested hearing made by the
Respondent, through its attorney, Richard Breibart, Esquire. The Department of
Revenue (“the Department”) issued a notice of intent to revoke the ABL licenses
of the Respondent on October 25, 2006. The Respondent timely protested this
notice of intent. The protest triggered a Department Determination. According
to the Department Determination issued by the Department, SLED conducted an
investigation of the Respondent’s establishment located at 1320 Lindsay Street,
Newberry, South Carolina, on September 9, 2006, at approximately 11:00 p.m.
The SLED report alleged that the Respondent violated 23 S.C. Code Regs.
7-401.4(K) by permitting the consumption of alcohol by a person who was not a
member of the private social club or a bona fide quest. As a result, the
Department issued its Department Determination on February 16, 2007. The
Department determined that the revocation was the appropriate sanction.
II. FINDINGS OF FACT
Having observed the
witnesses and exhibits presented at the hearing and taking into consideration
the burden and the credibility of the witnesses, I make the following findings
of fact by a preponderance of the evidence:
1. Blue Moon of Newberry, Inc., is the holder of an
on-premises beer and wine permit, permit number 32030643-PBW, and liquor by the
drink permit, permit number 32030643-PSC. Further, Blue Moon of Newberry, Inc.,
operates a private social club doing business as “Blue Moon Sports Bar.”
2. Blue Moon Sports Bar (“Blue Moon”) is managed by
Denise K. Polifrone. At all times relevant to the matter before the Court, Rachael
Zeigler, Steve Malone, and William Lindler were employees of Blue Moon.
3. On the evening of September 9, 2006, Blue Moon
exhibited a poster (Petitioner’s exhibit three) which advised nonmembers to
call “276-7282” to gain entry into the establishment. Denise K. Polifrone knew
of the exhibition of the poster which read “If you are not a member call before
you get to the door 276-7282.”
4. Prior
to exhibiting the poster described in Paragraph 3, supra, Denise Polifrone
consulted with legal counsel, Attorney James Harrison, as well as members of
law enforcement officials, including John Kirkland. Both Mr. Harrison and Mr.
Kirkland opined to Ms. Polifrone that the use of the poster and the procedure
described therein for admitting non-members were in compliance with South Carolina law. Ms. Polifrone testified that she used the poster and the procedure
described therein in reliance on the advice of Mr. Harrison and Mr. Kirkland.
5. On September 9, 2006, SLED agent Quincy Ford
attempted to enter Blue Moon as a nonmember, and was initially denied
admission. Instead, he was directed by the doorman, William Lindler, to the
poster described above. In accordance with the directions on the poster, Agent
Ford called 276-7282. The person who answered the phone asked Agent Ford his
name and advised Agent Ford to reenter Blue Moon. Agent Ford testified that he
did not know the identity of the person to whom he spoke on the telephone prior
to entering Blue Moon. Following the phone call, Agent Ford entered the club
after telling the doorman his name and paying a $2.00 entrance fee. The doorman
also verified Agent Ford’s identification prior to allowing him to enter. Upon
entering, Agent Ford ordered a mixed drink of Crown Royal and Coke, for which
he paid $5.50.
Although
he testified that he ordered an alcoholic beverage and was served an alcoholic
beverage, Agent Ford did not testify at the hearing that he ever consumed any
portion of the drink.
6. Denise
K. Polifrone knew that 276-7282 was the telephone number of Blue Moon and that
she or an employee would answer the telephone. Ms. Polifrone was present at Blue
Moon on September 9, 2006. Ms. Polifrone testified that the person to whom
Agent Ford spoke on the night in question was Steve Malone. She testified
further that Mr. Malone was a member of the club, and also an employee of the
club. She added that Mr. Malone was vested with some managerial authority,
including the authority to admit guests to the club.
7. On September 9, 2006, SLED Agent Causey issued a
violation against Blue Moon for Permitting Consumption of Liquor by a Nonmember
of a Private Social Club. The violation citation is made part of the Court’s
record and listed at SLED case number 54-06-1230.
8. Blue Moon has incurred two prior violations for
permitting alcohol consumption on the premises by nonmembers. The first violation
occurred on February 29, 2004, and Blue Moon paid a fine of $400.00. The
second violation occurred March 18, 2005, and Blue Moon paid a fine of $500.00.
III. CONCLUSION 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. The Court’s conducts a de novo review of
the Department’s actions and the Court is not bound by the Department’s prior
determination of a violation.
2. Permits and licenses issued by the State of South Carolina 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. The General Assembly has been granted
constitutional powers to prohibit and to regulate the manufacture, sale, and
retail of alcoholic liquors or beverages within the State. South Carolina
Constitution, Article VIII-A, Section 1 (2005 Act No. 19, Section 1, effective March 17, 2005). Further, the General Assembly is
empowered to license establishments to sell alcoholic liquors or beverages for
on-premises consumption only to restaurants, hotels and private social clubs.
4. A bona fide nonprofit corporation organized
under the laws of the State of South Carolina may be licensed to sell alcoholic
beverages to its limited membership as long as the sale of the beverages is
incidental to the main purpose of the organization. 23 S.C. Code Ann. Regs.
7-401.4(A) (Supp. 2007).
5. Only bona fide members and bona fide guests of
members of such organizations may consume alcoholic beverages upon the licensed
premises. 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2007). Further, bona fide
guests shall be limited to those who accompany a member onto the premises or
for whom the member has made prior arrangements with the management of the
organization. 23 S.C. Code Ann. Regs. 7-4-1.4(K) (supp. 2007).
6. The Department is charged with the
responsibility of administering the laws and regulations governing the
manufacture, distribution, and sale of alcoholic beverages in South Carolina. See S.C. Code Ann. §§ 61-2-20, 61-2-80 (Supp.2007). The Department’s
responsibilities include the prosecution of administrative violations against
alcoholic beverage licenses. S.C. Code Ann. § 61-6-1830 (Supp. 2007).
7. The Department seeks to revoke the licenses held
by Blue Moon for violating 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2007).
Blue Moon argues that it did not violate this regulation because the guest in
this case was invited by a member, who had made prior arrangements with Blue
Moon management prior to the guest’s admission to the club.
8. The only issue in this case involves the meaning
of the term “bona fide guest” as that term is used in 23 S.C. Code Ann. Regs.
7-401.4(K). According to Black’s Law Dictionary, “bona fide” is defined as
meaning “[m]ade in good faith; without fraud or deceit” and “[s]incere;
genuine.” See Black’s Law Dictionary 168 (7th. ed. 1999). Regulation
7-401.4(K) states, in pertinent part, that bona fide guests are limited to
those for whom a the member has made prior arrangements with the management of
the organization.
The
testimony of Ms. Polifrone was that Steve Malone was an employee of Blue Moon
who was working on the evening of September 9, 2006. Ms. Polifrone testified that
Steve Malone answered the telephone at Blue Moon on the evening of September 9,
2006. She testified that SLED agent Quincy Ford would have spoken to Steve
Malone when he called 276-7282. Moreover, Ms. Polifrone testified that she did
not hear the telephone conversation between agent Ford and Steve Malone and
that she did not know what was said. Mr. Malone was not present to testify at
the hearing. Ms. Polifrone testified on cross examination that she had vested
Steve Malone with authority to admit guests to the club.
9. S.C. Code Ann. Regs. 7-401.4(J) & (K)
conjunctively seek to limit the consumption of alcoholic beverages at a
nonprofit private social club to its members and their bona fide guests. The
guests can either accompany a bona fide member or be admitted upon prior
arrangements made by a member with club management. The regulation does not
prescribe a definite period of time that the “prior arrangement” must be made
between the member and management, but appears to only require that the
arrangement be made prior to the guest’s admission to the club.
10. The regulation enacted by the Department does not
on its face require that the “arrangement” between the member and management be
of substantial duration; the only requirement appearing on the face of the
regulation is that the “arrangement” precede the admission of the guest. If the
Department or the General Assembly wished to require a definite waiting period
between the making of arrangements and the admission of the guest, either
entity could so require. While the Department argues that the position
espoused by Blue Moon leads to ridiculous results, I disagree and find that the
plain language of the regulation speaks for itself.
A prior arrangement,
of no definite duration, between management and a member is sufficient to
permit the legal admission of a non-member guest.
11. Although not binding on this Court, the decision
of Judge Geathers in South Carolina Department of Revenue v. MIR, Inc. d/b/a
Alley Gator Sports Bar and Grill, 04-ALJ-17-0409-CC (S.C. Admin. Law Judge Div. 2005), is informative. There,
Judge Geathers was faced with a similar issue: the definition of “bona fide
guest”. The Department argued in MIR that the purported guest was not a
“bona fide” guest. The Department makes the same argument in this case.
Similarly, the Department argued in MIR that the guest and the member
must have some pre-existing social relationship. Judge Geathers rejected the
Department’s contention:
[A] more natural and rational
interpretation of this provision is that the member must simply be physically
present on the licensed premises to “sponsor” his guest in order for the person
to be a “bona fide” guest. Regulation 7-401.4(K) is not aimed at setting forth
certain formalities for how guests must enter a club’s premises, but at ensuring
that persons who claim to be guests of club members are, in fact, bona fide
guests of members. Accordingly, Regulation 7-401.4(K) does not require a
member and his guest to walk into the premises arm-in-arm in the order to
validate the guest’s status, but merely required that the guest’s status be
verified by the sponsoring member, either by the member accompanying his guest
when he signs in as a guest or by the member making prior arrangements with the
club’s management to register his guest. That is, the regulation precludes a
private club from accepting the “word” of an individual that he is a guest of a
member without verification from the member, but allows the club to accept a
person as a bona fide guest if his status is confirmed by the presence or prior
notification of a member, regardless of how he physically enters the club’s
premises. . . .
Second, beyond the technicalities
of Regulation 7-401.4(K), it must be remembered that the general aim of the
regulation is to determine when a person is a “bona fide guest” of a member.
This language does not require that the member and his guest be longstanding
friends since childhood or even prior acquaintances of several meetings, but
rather only that the member genuinely, sincerely, and without fraud or deceit,
intends a person to be his guest at the club, even if he has only just met the
person. See Black’s Law Dictionary 168 (7th ed. 1999) (defining
“bona fide” as meaning “[m]ade in good faith; without fraud or deceit” and
“[s]incere; genuine”). Id.
IV. ORDER
Based upon the
Finding of Fact and Conclusions of Law stated above,
IT IS HEREBY ORDERED that, because a member of the club made prior arrangements with
management to sponsor Agent Ford as a guest, Petitioner has failed to establish
by a preponderance of the evidence that Respondent violated Regulation
7-401.4(1). The Department’s request for revocation of all of the ABL licenses
and permits held by the Respondent for this alleged violation is therefore DENIED.
AND IT IS SO ORDERED.
September 2, 2008
_____________________________________
Carolyn
C. Matthews, Administrative
Law Judge
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