SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before this Court pursuant to S.C. Code Ann. § 61-2-260 (Supp. 2004), S.C. Code Ann. § 1-23-600(B) (Supp. 2004), and S.C. Code Ann. §§ 1-23-310 et seq. (2005). Petitioner South Carolina Department of Revenue (Department) contends that Respondent Li’l Cricket Food Stores (Li’l Cricket), knowingly allowed an underage individual to purchase beer from its convenience store at 1523 Savannah Highway, Charleston, South Carolina, in violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2004). For this fourth such violation in three years, the Department seeks revocation of Li’l Cricket’s off-premises beer and wine permit for the location in question. In response, Li’l Cricket concedes that the alleged violation did occur, but further 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 28, 2006, at the South Carolina Administrative Law Court in Columbia, South Carolina. Based upon the testimony and exhibits presented at the hearing, I find that the appropriate penalty for Li’l Cricket’s violation is the imposition of a sixty (60) day suspension of Li’l Cricket’s off-premises beer and wine permit.

FINDINGS OF FACT

Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. Li’l Cricket Food Stores (Li’l Cricket) owns and operates the convenience store located at 1523 Savannah Highway, Charleston, South Carolina.

2. On June 22, 2005, Tranetta Palmer, an employee of Respondent Li’l Cricket, allowed a fifteen-year-old Underage Cooperating Individual (UCI) working with the South Carolina Law Enforcement Division (SLED) to purchase beer at its location at 1523 Savannah Highway, Charleston, South Carolina. Ms. Palmer completed the sale of the beer to the UCI without requesting identification. The sale of the beer constituted a knowing violation of South Carolina law and the violation was Li’l Cricket’s fourth such violation within a three-year period. Tranetta Palmer had only been working for Li’l Cricket a very short period of time when the violation occurred and her employment was terminated as a result of the sale to the Underage Cooperating Individual.

3. Li’l Cricket has made good-faith efforts to prevent the sale of alcoholic beverages to underage individuals. For example, Li’l Cricket actively participates in a program provided by Anheuser Busch designed to prevent alcohol sales to underage individuals. Training programs are held twice a year at four different areas in the state of South Carolina. The program also provides signage to be posted throughout stores to discourage underage sales of alcohol. Li’l Cricket believes that the Anheuser Busch training program effectively addresses its problem with sales to underage individuals.

4. Li’l Cricket has strengthened its efforts to prevent underage sales by implementing its current policies and procedures regarding sales of alcoholic beverages. These efforts include:

(1) strict policies and procedures concerning checking the identification and verifying the age of customers purchasing alcoholic beverages (e.g., under company policy, cashiers must request proof of age from all customers purchasing alcoholic beverages and any cashier caught not checking for such identification is terminated);

(2) technological safeguards against illegal alcohol sales (e.g., the company uses a "legal age" cash register that requires the cashier to enter the date of birth of the customer before completing a sale of alcohol and has available to the cashier an ID scanner that calculates the age of the customer for the cashier);

(3) training programs regarding the prevention of underage sales (e.g., the company trains new employees thoroughly regarding the laws and company policies governing the sale of alcoholic beverages and reiterates that training frequently); and,

(4) methods of monitoring whether its employees are complying with the laws and company policies related to the sale of alcoholic beverages (e.g., the company operates a "secret shopper" program that checks its stores and the company's managers review samples of the video surveillance of each cashier's shift on a daily basis).

These efforts are indicative of Li’l Cricket’s commitment to prevent the sale of alcoholic beverages to underage individuals and are relevant for determining the appropriate penalty to be imposed in this matter.

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. 2004).

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 years of age to purchase or possess or consume beer or wine in or on a licensed establishment 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. 2004). Respondent Li’l Cricket concedes 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. 2004). 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. 2004); 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2004); see also S.C. Code Ann. § 61-4-270 (Supp. 2004) (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 and 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. In lieu of such suspension or revocation, the Department may also impose a monetary penalty upon a permittee for selling beer and wine to minors. S.C. Code Ann. § 61-4-250 (Supp. 2004). 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 95-7 (1995) sets forth the Department's penalty guidelines for violations of the alcoholic beverage control laws. For retail beer and wine permits, Revenue Procedure 95-7 provides for a $400 fine for the first violation by a permittee, an $800 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 95-7, at ¶ 4 ("These are guidelines only and this advisory opinion does not establish a binding norm."). As such, Revenue Procedure 95-7 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. However, Respondent should be reminded that the purpose of the statutory prohibition against selling alcohol to underage individuals is to protect both 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 violation.

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. 2004) within three years, the Department shall SUSPEND Respondent’s off-premises beer and wine permit for a period of sixty (60) days.

AND IT IS SO ORDERED.

__________________________________

JOHN D. MCLEOD

Administrative Law Judge

April 4, 2006

Columbia, South Carolina