South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Flipside 2, Inc., d/b/a Revolutions

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioner:
South Carolina Department of Revenue

Respondent:
Flipside 2, Inc., d/b/a Revolutions
 
DOCKET NUMBER:
05-ALJ-17-0371-CC

APPEARANCES:
Dana R. Krajack, Esquire, for Petitioner

Kenneth E. Allen, Esquire, for Respondent
 

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. §§ 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.

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. 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”[1].

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.[2] 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[3] to determine if Revolutions was in fact serving hot meals[4] 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[5]” 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.”[6] 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



[1] Fat Tuesday is a similar establishment down the street from Respondent.

[2] Agent Wright asked the manager for a menu. The manager in turn asked the bartender for a copy of the menu, which the bartender could not provide. The manager finally located one down the hall in his office.

[3] 8:00 a.m. for breakfast, 11:00 a.m. for lunch and between 6:00 and 8:00 p.m. for dinner.

[4] 23 S.C. Code Ann. Regs. 7-401.3 (2004) requires that an establishment holding a sale and consumption license pursuant to S.C. Code Ann. 61-6-1610 must prepare for service to customers hot meals at least once each day the business establishment chooses to be open.

[5] “Munchies” includes French fries, pretzels, chicken fingers, mozzarella sticks, mini corn dogs, mini cordon bleu, meatball sandwich, barbeque sandwich and hot dogs.

[6] Since the issuance of Brunswick the term “primarily” has been defined in Regulation 61-401 .3 (B)(3). However, it does not appear that the Regulatory definition of ‘primarily” would alter the holding in Brunswick.


Brown Bldg.

 

 

 

 

 

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