SC Administrative Law Court Decisions

This matter comes before me upon request for a hearing by Respondent Worsley Operating Corporation, d/b/a Scotchman #91(Respondent) after it received its third citation for an administrative violation against its beer and wine permit within a three-year period. The South Carolina Department of Revenue (Department) seeks a forty-five day suspension of Respondent's permit for violating the Alcoholic Beverage Control Act. A hearing was conducted before me on September 19, 2002, at the Administrative Law Judge Division (ALJD) in Columbia, South Carolina.

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, and taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

• Notice of the time, date, place and subject matter of the Hearing was given to the Department and the Respondent.
• Respondent holds an off-premises beer and wine permit for its location at1813 Wright Boulevard, in Conway, South Carolina.
• As stipulated to by Respondent, on February 20, 2002, an underage cooperating individual (UCI), Ashley Shilling, entered the Respondent's subject location. The UCI's drivers license stated her age as nineteen (19) years old and was stamped "UNDER 21." While inside the store, the UCI purchased a twenty-four ounce can of Bud Light beer from Robert Gould, the clerk on duty. Mr. Gould requested the UCI's identification, appeared to look at it, but made the sale nonetheless. At the time of the purchase, the UCI was nineteen years old.

• As stated in Paragraph 4 of this Order, the Respondent readily admits that its clerk sold beer to a minor after asking for her identification. The Respondent also admits that this incident is a third violation against its beer and wine permit within three years. However, Respondent believes that several facts should be considered in determining the appropriate punishment for Respondent's third violation.
• It is the Respondent's policy to check the identification of its customers who purchase beer, wine and tobacco products. The company's policy requires its employees to check the identification of all persons appearing forty years of age or younger who are attempting to purchase beer or wine. In addition, the cash registers used by Respondent prompt the clerk to enter a birthdate anytime beer, wine or tobacco products are purchased. ⁽¹⁾ Moreover, the Respondent requires each of its employees to experience a forty-hour long orientation program. The orientation program devotes approximately two hours of its day-long classroom orientation to alcohol and tobacco transactions. In that segment of the training, the new hires are instructed on the laws regarding the sale of alcohol and tobacco products. In addition, the new hires receive training to enable them to read an ID and identify fake ID's. New employees also train for 32 hours with the store manager, who demonstrates the proper transaction method for alcohol and tobacco sales, which includes asking for identification and entering the birthdate of the purchaser at the prompt of the cash register. Finally, all employees are required to acknowledge in writing that the unlawful sale of alcohol or tobacco products may result in termination of employment and/or criminal charges.
• After the February 20 incident, Mr. Gould's employment was terminated in accordance with the Respondent's written policies. Additionally, at the subject location, the Respondent instituted a 100% carding policy, such that any person, regardless of appearance or age, must present an acceptable ID before an employee may sell alcohol or tobacco to him or her. The Respondent also placed in the subject location a scanner for South Carolina driver's licenses and South Carolina-issued identification cards.
• The Respondent violated the provisions of 23 S.C. Code Ann. Regs. § 7-9 (B) (Supp. 2001) by permitting the purchase of beer by an individual under the age of twenty-one. This is the Respondent's third violation within the past three years at this location.

Based upon the above Findings of Fact, I conclude the following as a matter of law:

• S.C. Code Ann. § 1-23-600 (Supp. 2001) grants jurisdiction to the ALJD to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2001) grants the ALJD the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.
• 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).
• Holders of beer and wine permits are forbidden from permitting "any act, the commission of which tends to create a public nuisance or which constitutes a crime . . . . " S.C. Code Ann. § 61-4-580(5) (Supp. 2001).
• Permitting or knowingly allowing a person under the age of 21 to purchase or possess beer upon the licensed premises is a violation against a license or a permit. Such a violation constitutes grounds for either suspension or revocation of the beer and wine permit. 23 S. C. Code Ann. Regs. 7-9(B) (Supp. 2001).
• 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 principal, 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 (S.C. 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).
• It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an administrative penalty after the parties have had an opportunity to have a hearing and be heard on the issues. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655 N.E. 2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W. 2d 835 (Mo. App. S.D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W. 2d 452 (Minn. App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan, 798 S.W. 2d 454 (Ky. 1990); Com., Dept. of Transp. v. Slipp, 550 A.2d 838 (Pa. 1988); Dept. of Transp. v. Miller, 528 A.2d 1030 (Pa. 1987); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994).
• The administrative law judge, as the fact-finder, must also impose a penalty based on the facts presented at the contested case hearing. Parties are entitled to present evidence on all issues arising out of the contested agency action. Moreover, the tribunal responsible for conducting the contested case proceedings has the authority to decide the issues based on the facts presented and to make the final decisions on all the issues, including the appropriate penalty.
• S.C. Code Ann. § 61-4-250 (Supp. 2001) authorizes the imposition of a monetary penalty in lieu of suspension or revocation. Such a penalty may not be set less than twenty-five dollars and not more than one thousand dollars. § 61-4-250(1). Additionally, the Department's "Penalty Guidelines" in Revenue Procedure 95-7 calls for a forty-five days suspension of the permit upon the commission of a third violation on the permit within three years. This is the penalty the Department is seeking against the Respondent. However, Revenue Procedure 95-7 also sets forth that it is only a guideline and does not establish a binding norm.
• The Respondent clearly violated the provisions of 23 S.C. Code Ann. Regs. § 7-9 (B) (Supp.2001) by permitting the purchase of beer by an individual under the age of twenty-one. This is the Respondent's third violation in three years. While I recognize the difficulties present in hiring individuals who will meticulously comply with Respondent's policies regarding the sale of alcohol, the fact remains that this is the third violation within the past three years at this location.
• It must be noted that S.C. Code Ann. § 61-4-250 does not permit this tribunal to impose both a monetary penalty and a suspension. In addition, that statute limits a fine imposed after the conduct of a contested case to $1000.00. In this case, such an amount is not sufficient to act as either an appropriate penalty or deterrent. However, a forty-five day suspension is excessive given the good faith of the Respondent. Accordingly, Respondent's permit shall be suspended for a period of fifteen days.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that Respondent's beer and wine permit shall be suspended for a period of fifteen days;

AND IT IS SO ORDERED.

_________________________________

C. DUKES SCOTT

ADMINISTRATIVE LAW JUDGE

September 24, 2002

Columbia, South Carolina

1. Unfortunately, the cash register prompt is merely that- an employee is not required to input a birthdate to complete the transaction. However, this tribunal received testimony that technology requiring birthdate information does not yet exist.