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. The Spinx Company, Inc., d/b/a Spinx 116

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioner:
South Carolina Department of Revenue

Respondent:
The Spinx Company, Inc., d/b/a Spinx 116
 
DOCKET NUMBER:
05-ALJ-17-0446-CC

APPEARANCES:
Carol I. McMahan, Esquire, for Petitioner

David M. Yokel, 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. §§ 61-2-20 and 61-2-260 (Supp. 2005). The South Carolina Department of Revenue (Department) seeks a 45 day suspension of Respondent’s permit for its violation of 23 S.C. Code Ann. Regs. 7-200.4 (eff. 6/27/03). A hearing was held before me on April 25, 2006, at the offices of the Administrative Law Court in Columbia, South Carolina.

STIPULATIONS OF FACT

At the hearing into this matter and pursuant to ALC Rule 25(C), the parties entered the following written stipulations of fact into the Record:

1. The Spinx Company, Inc., (Spinx) is the holder of an on-premise beer and wine permit, for the location at 94 Allen Street, Greenville, South Carolina.

2. That on April 5, 2005, at approximately 3:44 p.m., an Underage Confidential Informant (UCI) purchased one sealed 24 oz. can of Busch beer from Spinx.

3. That Najjel Dixon was an employee and/or agent of Spinx, and sold the beer in question to the UCI.

4. That the UCI, Anthony Steven Tolbert, was an 18 year old black male at the time of the purchase of the subject beer.

5. That Najjel Dixon requested identification from the UCI. The UCI presented his South Carolina Driver’s license that showed he was 18 years of age, having been born on July 21, 1986.

6. That Spinx, by and through its employee, Najjel Dixon, was put on notice of the UCI’s age by virtue of the information on the UCI’s drivers license.

7. Najjel Dixon permitted the UCI to purchase the beer notwithstanding the information produced on his driver’s license. Najjel Dixon was charged with transfer of beer to an individual under the age of twenty-one. Spinx was issued an administrative citation for knowingly permitting an underage person to purchase beer on a licensed premises pursuant to 23 S.C. Code Ann. Regulation 7-200.4.

8. Spinx has committed three prior underage violations during a four year and three month period. The first violation was committed on January 19, 2001. Spinx paid a fine of $400 for this violation. The second violation was committed on February 25, 2003. Spinx pad a fine of $800 for this violation. A third violation was committed on November 19, 2003. The Department and Spinx entered into an agreement on June 9, 2004 whereby Spinx served a 10 day suspension from 6/14/04 through 6/23/04 and paid a $2,500 fine. This fourth violation occurred approximately 17 months after the last violation.

9. The Company admits that it violated Regulation 7-200.4 on April 5, 2005 by “knowingly permitting the purchase of beer by a person under the age of twenty-one”, when its employee, Najjel Dixon, permitted an 18 year old UCI to purchase beer at the aforesaid location.

10. The Department issued its Final Department Determination regarding this violation on October 3, 2005. Spinx timely requested a contested case hearing on this matter.

11. Spinx admits such violation and that the sole issue before this Court is the penalty to be imposed for its violation of Regulation 7-200.4 on April 5, 2005.

12. The parties request the Court take judicial notice of the fact that the Department’s consistent administrative practice for the imposition of penalties for violation of the alcohol statutes and regulations is set forth in S.C. Revenue Procedure 04-04.

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. As of August 2004, Respondent implemented a six-step hiring process to curtail hiring employees that are likely to sell alcohol to underage persons. The screening process includes an application, phone screening, reference check, background check, math test[1], and interview. Furthermore, they conduct a personality test, otherwise known as an ESQ, which appraises the risk of on the job delinquent behaviors. Once the employee is hired, they go through a half-day orientation program, of which 1½ to 2 hours is devoted to age sensitive sales training.

Respondent has also implemented other methods to prevent underage sales. A secret shopper program, run by Greenville Family Partnership, conducts visits and reports their findings to the manager. If the employee follows procedure, the store is given a green card, and if they fail to follow procedure, they are given a red card and the employee is suspended for a week without pay. They must then participate in the training program again before they can come back to work. Furthermore, in May of 2004, Spinx # 116 acquired a Telebucks Scanner. This scanner reads the magnetic strip and/or the bar code on a driver’s license to determine the age of holder. While it is possible to circumvent this machine by overriding it, if the employee follows the procedure as they are instructed, a valid I.D. must be swiped before an alcohol sale can be made. Management compares the number of times the Telebucks machine is used to the number of alcohol sales on a weekly basis to substantiate that the employees are consistently checking identification and not overriding the I.D. system.

Additionally, Respondent established an incentive program for managers and supervisors in which they are encouraged to ensure that company policy regarding age sensitive sales is followed. Under that program, the managers and supervisors receive bonuses if a store follows the age sensitive sales policies and, conversely, are financially penalized when a store fails to comply with Greenville Family Partnership’s secret shopping or when SLED issues a citation.

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. 2005) grants jurisdiction to the Court to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2005) 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. Holders of beer and wine permits are forbidden from permitting or knowingly allowing a person under the age of twenty-one (21) to purchase or possess beer upon the licensed premises. Such a violation constitutes sufficient grounds for either suspension or revocation of the beer and wine permit. 23 S.C. Code Ann. Regs. 7-200.4 (eff. 6/27/03).

4. The permittee is responsible for all acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. Following that principle, the South Carolina Supreme Court upheld a civil forfeiture of a corporation’s boat based upon an employee’s transporting drugs even though the corporation claimed the use of the boat to transport drugs was without its knowledge. South Carolina Law Enforcement Division v. The "Michael and Lance,” 281 S.C. 339, 315 S.E. 2d 171 (Ct. App. 1984). The Court held that “[a] principal is affected with constructive knowledge of all material facts of which its agent receives notice while acting within the scope of his authority.” Id. at 173, citing Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E. 2d 496 (1979). Likewise, the license holder is responsible for the actions and conduct of employees utilizing the permit upon the permitted premises. 48 C.J.S. Intoxicating Liquors § 259 (1981).

5. In this case, the Department imposed a forty-five (45) day suspension of the Respondent’s beer and wine permit for a third violation of Regulation 7-200.4 within the past three (3) years. See Revenue Procedure 04-4. Inherent in and fundamental to the powers of an Administrative Law Judge, as the trier of fact in contested cases under the Administrative Procedures Act, is the authority to decide the appropriate sanction when such is disputed. Walker v. South Carolina ABC Comm’n, 305 S.C. 209, 407 S.E. 2d 633 (1991). 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, the Respondent clearly violated the provisions of Regulation 7-200.4 by permitting the purchase of beer by an individual under the age of twenty-one (21). Moreover, despite Respondents efforts to screen and train its employees, those efforts did not prevent this violation from reoccurring. Nevertheless, Respondent promptly terminated the offending employee. Furthermore, since the past violation, Respondent has made extraordinary efforts to hire employees that will not sell beer or wine to minors, intentionally or negligently. Respondent has also made notable efforts to ensure that its employees know the law and comply with its requirements.

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 twenty-one (21) days beginning June 4, 2006.

AND IT IS SO ORDERED.

__________________________________

Ralph King Anderson, III

Administrative Law Judge

May 12, 2006

Columbia, South Carolina



[1] Two questions upon the math test assess the applicants’ abilities to determine a person’s age based upon their birth date. If an applicant fails either of those questions they are not permitted to make beer or wine sales.


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