This
matter comes before the Administrative Law Court (ALC or Court) pursuant to
S.C. Code Ann. §§ 61-2-260 (Supp. 2004), 1-23-600(B) (Supp. 2004), and S.C.
Code Ann. 1-23-310 et seq. (2004). The South Carolina Department of Revenue
(Department) seeks to revoke Respondent’s on-premises beer and wine permit and alcoholic
beverage (minibottle) license. A hearing was held before me on March 23, 2006,
at the offices of the Administrative Law Court in Columbia, South Carolina.
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. Notice of
the time, date, place and subject matter of the hearing was given to the
Petitioner and the Respondent.
2. Respondent
possesses an on-premises beer and wine permit and alcoholic beverage (minibottle)
license. The alcohol license requires that the establishment be primarily and
substantially engaged in the preparation and serving of meals. The Department
issued a violation report to Respondent for not being engaged primarily and
substantially in preparation and serving meals and not having a proper kitchen
and kitchen equipment necessary to demonstrate food service.
3. On
March 20, 2004, at approximately 12:30 a.m., South Carolina Law Enforcement
Division (SLED) conducted an undercover inspection of Respondent’s restaurant
to determine if they were serving food. Agent Steven Wright determined that
Respondent was not primarily and substantially serving food and issued
Respondent a warning for failure to maintain proper kitchen equipment. The
kitchen was equipped with a 3 tiered sink, food prep table, microwave oven and
a 20 cubic foot walk-in refrigerator. Agent Wright concluded that the
microwave was not sufficient to provide the required food service and
recommended the owners look at the ventless oven in the kitchen of “Fat
Tuesday”.
4. Craig
Smith, general manager and part owner of Revolutions, subsequently notified
Agent Wright that he had purchased a ventless oven to rectify the problem of
insufficient kitchen equipment. The oven purchased was an Air Master Oven, the
same kind used in the kitchen at “Fat Tuesday”.
5. Agents
Williams and Wright later conducted a follow up inspection on January 23, 2005,
at approximately 12:30 a.m. A large number of people were at the location
during that inspection. However, no wait staff was taking orders or serving
food, no customers were eating and no menus were readily available.
Moreover, there was not a sufficient amount of food in the kitchen to serve a
minimum of forty (40) patrons. In fact, except for a small refrigerated “ice
cream” box, the refrigerators were used to store beer, wine, or alcoholic
liquors. Petitioner testified that there was no food in the location because
the food had been transferred to one of his other businesses earlier that
night. However, the kitchen equipment appeared to not have been used that
night and, indeed used rarely. The kitchen area was also exceptionally small
for a business substantially engaged in the preparation and serving of meals.
Additionally, prior to the inspection on January 23, 2005,
Agent Wright visited the location on several occasions during regular meal times to determine if Revolutions was in fact serving hot meals during any point in the day. The evidence established that Revolutions did not
serve breakfast, lunch or dinner during any regular meal times other than the
“munchies” available
from 8 p.m. to 10 p.m. Moreover, Craig Smith testified that food service is a
“very minor” portion of his business comprising less than 5% of his revenue.
The most recent records reflect that food service is, in fact, between 1 to 3 %
of Revolutions monthly revenue.
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. 2004) grants jurisdiction to the Court to hear
contested cases under the Administrative Procedures Act. Specifically, S.C.
Code Ann.
§ 61-2-260
(Supp. 2004) grants the ALC the authority to hear contested case hearings in
matters governing alcoholic beverages, beer and wine.
2. The
Department is charged with the responsibility of administering the laws and
regulations governing the sale of alcoholic beverages in South Carolina. See
S.C. Code Ann. § 61-2-80 (Supp. 2004). Pursuant to that authority the
Department may suspend or revoke an alcoholic license or beer and wine permit
that violates the provisions of S.C. Code Ann. §§ 61-6-1830 or 61-4-590 (Supp.
2004).
3. As
set forth above, Respondent possesses an on-premises beer and wine permit and
alcoholic beverage (minibottle) license. S.C. Code Ann. § 61-6-1820 (1) (Supp.
2004) requires that a mini-bottle license be granted only to a “bonafide”
business “primarily and substantially” engaged in either the business of “preparation
and serving of meals or furnishing lodging.” S.C. Code Ann. § 61-6-20(2)
(Supp. 2004) sets forth:
‘Bona fide engaged primarily and substantially
in the preparation and serving of meals’ means a business which has been issued
a Class A restaurant license prior to issuance of a license under Article 5 of
this chapter, and in addition provides facilities for seating not less than
forty persons simultaneously at tables for the service of meals..
Furthermore, 23
S.C. Code Ann. Regs. 7-401.3(A) (2004) states that a holder of a license pursuant
to Section 61-6-1610 must:
a. Be equipped
with a kitchen that is utilized for the cooking, preparation, and serving of
meals;
b. Have readily
available to its guests and patrons either "menus" with the listings
of the various meals offered for service or a listing of available meals and
foods, posted in a conspicuous place readily discernible by the guest or patrons;
c. Prepare for
service to customers hot meals at least once each day the business
establishment chooses to be open; and
d. If such
establishment advertises, a substantial portion of its advertising must be
devoted to its food services.
The definition
of “meal” is also limited by regulation to not include “[s]andwiches, boiled
eggs, sausages and other snacks prepared off the licensed premises but sold
thereon . . . .” 23 S.C. Code Ann. Regs. 7-19 (B)(1)(Supp. 2004).
Additionally, “primarily” is defined in 23 S.C. Code Ann. Regs. 7-19(A) (Supp.
2004) as:
[T]he serving of meals by a business
establishment constitutes a regular and substantial source of business to the
licensed establishment and that meals shall be served upon the demand of guests
and patrons during the normal "mealtimes" which occur when the
licensed business establishment is open to the public and that an adequate
supply of food is present on the licensed premises to meet such demand.
In Brunswick
Capitol Lanes v. S.C. Alcoholic Beverage Control Comm'n, 273 S.C. 782, 260
S.E.2d 453 (1979), the South Carolina Supreme Court addressed the precise issue
in this case of whether the appellant was “engaged primarily and substantially
in the preparation and serving of meals.” The Court held that “a business
which attributes only ten per cent of its gross revenues to food preparation
and sale does not fulfill the ‘primary’ and ‘substantial’ requirement of the
statute.” 260 S.E.2d at
783. In this case, food service is a “very minor” portion of his business
comprising less than 5% of his revenue. The most recent records reflect that
food service is, in fact, between 1 to 3% of Revolutions monthly revenue.
Therefore, Respondent is not primarily or substantially engaged in the
preparation and serving of meals in violation of Section 61-6-1820. Additionally,
the limited amount of food in the refrigerated storage and the fact that very
few of Respondent’s customers eat meals at the location at anytime whatsoever
further establishes that the service of food is neither a substantial nor
primary aspect of his business.
4. Respondent
argued that this violation violates due process and equal protection because
there is no state wide training used to train officers to enforce the State of
South Carolina’s laws relating to beer, wine, and alcoholic liquors because
none of these licenses have been revoked in the upstate. “The sine qua non of
an equal protection claim is a showing that similarly situated persons received
disparate treatment.” Grant v. South Carolina Coastal Council, 319 S.C.
348, 354, 461 S.E.2d 388, 391 (1995). Furthermore, in Weaver v. South
Carolina Coastal Council, 309 S.C. 368, 423 S.E. 2nd 340 (S.C.
1992), the South Carolina Supreme Court held that the equal protection and due
process provisions of the state and federal constitutions require that
individuals who are “similarly situated” are entitled to be treated in the same
manner as the Department has treated others. No specific evidence was offered
in this case to establish that individuals who were “similarly situated” were
treated in a dissimilar manner. Moreover, the evidence did not even establish
that a lack of training has resulted in a disparity of knowledge of the laws
regarding enforcement of beer, wine or alcohol laws. Nor did the evidence
reflect that there is a difference in how those laws are enforced throughout
the State. Thus, no violation of equal protection or due process was
established by Respondent.
5. The
Department seeks to revoke both Respondent’s on-premises beer and wine permit
and alcoholic beverage (minibottle) license. 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). S.C. Code Ann. § 61-6-1830 (Supp. 2004) provides
that the Department may suspend or revoke a beverage (minibottle) license that
no longer meets the criteria of S.C. Code Ann. § 61-6-1820 (Supp. 2004). Furthermore,
S.C. Code Ann. § 61-2-140 (E) (Supp. 2004) provides that the Department may “suspend
or revoke all other licenses or permits held by the person if the suspended or
revoked premises is within close proximity” to the licensed or permitted
business.
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). As set forth above, the
Department, and therefore the ALC, has jurisdiction to revoke or suspend
permits authorizing the sale of beer or wine or an alcoholic beverage
license. Furthermore, in lieu of suspension or revocation, a beer and wine
permittee may be fined not less than twenty‑five dollars nor more than
one thousand dollars for an infraction against Title 61, Chapter 4 or “for a
violation of any regulation pertaining to beer or wine and wine.” S.C. Code
Ann § 61-4-250 (Supp. 2004). See also S.C. Code Regs. 7-702.1.
The fine may range from twenty-five dollars to one thousand dollars for retail
beer and wine licensees. Id. Likewise, S.C. Code Ann § 61-6-4270 (Supp.
2004), provides that the ALC “may, in its discretion, impose a monetary penalty
upon the holder of a liquor license in lieu of suspension or revocation” for
violations of Chapter 6, Article 5. Retail liquor licensees may be fined for
those violations “not less than one hundred dollars nor more than one thousand
five hundred dollars.” S.C. Code Ann § 61-6-4270 (1) (Supp. 2004).
The
Administrative Law Judge, as fact-finder, must impose a penalty based on the
facts presented at the contested case hearing. 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
the present case, at the time of the inspection Respondent was not primarily or
substantially engaged in the preparation and serving of meals in violation of
Section 61-6-1820. Furthermore, the evidence did not establish a likelihood
that Respondent would come into compliance with the requisites concerning the
service of food. Accordingly, I find that Respondent’s alcoholic beverage (minibottle)
license should be revoked. Nevertheless, Craig Smith asserted that he cannot force
people to eat. I find that assertion not only to be true but also reflective
of efforts by Respondent and relevant to the appropriate penalty. Respondent has
made efforts to employ an individual to cook if requested and has also spent
significant funds to equip the kitchen with an Air Master Oven as suggested by
the SLED agent. Accordingly, I do not find that a penalty against Respondent’s
beer and wine permit is warranted.
ORDER
Based
upon the foregoing Findings of Fact and Conclusions of Law,
IT
IS HEREBY ORDERED that Respondent’s alcoholic beverage (minibottle) license
is revoked. It is further ordered that the violation against Respondent’s beer
and wine permit is dismissed.
AND IT IS SO
ORDERED.
__________________ ___ ______
Ralph
King Anderson, III
Administrative
Law Judge
April 4, 2006
Columbia, South Carolina