ORDERS:
ORDER AND DECISION
This matter comes before me for a hearing pursuant to S.C. Code Ann. § 61-1-55 (Supp.
1995) and S.C. Code Ann. § 1-23-310, et seq. (Supp. 1995). Petitioner seeks revocation of the
beer and wine permit of Lola R. Wouters, d/b/a Pink Pussycat Lounge ( "the Lounge") for an
alleged violation of S.C. Code Ann. § 61-9-410(5) (Supp. 1995). Petitioner contends that, under
the facts of this case, the act of prostitution on a licensed premises by a dancer of the licensed
premises constitutes the permission of an act which is a crime under the laws of this State, and is
thus violative of S.C. Code Ann. § 61-9-410(5) (Supp. 1995).
After timely notice to the parties, a hearing was conducted at the Administrative Law
Judge Division, Columbia, South Carolina. Based upon the testimony and evidence presented,
Petitioner's request that Respondent's beer and wine permit be revoked is granted.
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. Respondent holds a beer and wine permit for a location at 2046 Meeting Street,
Charleston, South Carolina, d/b/a Pink Pussycat Lounge.
2. The Lounge is a bar which has exotic female dancers who perform on a daily basis
during its hours of operation.
3. On September 27, 1995, Sergeant T. K. Zayac and another detective of the
Charleston County Sheriff's Office entered the Lounge undercover at approximately 8:00 p.m. to
observe the operation of the Lounge. The Charleston County Sheriff's Office had received
complaints by telephone of acts of prostitution taking place on the premises of the Lounge.
4. On September 27, 1995, the interior of the Lounge was approximately 700 square
feet. On this date, the Lounge had the following layout: a few gaming machines were located to
the immediate left upon entering the premises; a dance floor was located beside the video poker
machines; a bar was located along the back wall and was directly in the line of view upon entering
into the side entrance; a men's restroom was located to the right of the bar; two back rooms
which were located to the right upon entering the premises; and, a women's restroom/dressing
room was located across from the back rooms. The two back rooms were approximately four
feet wide and five feet long. These rooms were dimly lit and veiled with curtains which were
suspended from the ceiling and hung approximately twelve inches from the floor. There was an
unobstructed view of the back rooms from the bar. There were approximately five to six tables
arranged in the center of the floor.
5. There were approximately five dancers working at the Lounge on September 27,
1995. The dancers performed in three cycles, in which they progressively undressed during each
stage.
6. The dancers were also allowed to give private dances in the dimly lit back rooms
of the Lounge. The private dances were monitored by management and were limited to two
songs.
7. On September 27, 1995, Sergeant Zayac was seated inside the Lounge at the bar
where he overheard dancer Toni Branstad telling a male customer that "she could make him feel
good." Sergeant Zayac observed the male customer, Steven Oakley, pay the bartender of the
Lounge $45 for a drink and a trip to one of the back rooms. Shortly thereafter, Mr. Oakley
entered the men's restroom and purchased a condom from a dispenser machine located inside the
restroom. Ms. Branstad and Mr. Oakley entered one of the back rooms and remained for
approximately ten minutes. Upon leaving the back room, both Ms. Branstad and Mr. Oakley
were readjusting there clothes. When confronted by Sergeant Zayac, Mr. Oakley tearfully
admitted that he paid $45 and a tip to Ms. Branstad and he had sex with her. Ms. Branstad was
arrested for committing an act of prostitution.
8. On October 4, 1995, Magistrate Richard Ganaway found dancer Toni Branstad
guilty of prostitution.
9. SLED Agent John Ramey issued an administrative citation against Lola Wouters,
d/b/a the Pink Pussycat Lounge for permitting a criminal act on a licensed premises.
10. Ms. Wouters was previously found guilty of the following violations at the
Lounge: (1) permitting the criminal acts of promoting obscenity on six occasions between
September 29, 1992 and April 2, 1993; (2) permitting lewd entertainment on six (6) separate
occasions between September 29, 1992 and April 2, 1993; and, (3) permitting the criminal act of
solicitation of prostitution on three (3) occasions between September 29, 1992 and April 2, 1993.
11. The prostitution for which Ms. Branstad was convicted occurred on the premises
of the Lounge.
12. Petitioner alleges that Ms. Branstad committed the crime for which she was
convicted while she was a "servant, agent, or employee"of Respondent and, therefore,
Respondent violated S.C. Code Ann. § 61-9-410(5) (Supp. 1995). Respondent alleges that the
dancer Ms. Branstad is an independent contractor, and not an employee of the Lounge.
13. The facts pertaining to the issue of whether Ms. Branstad was an independent
contractor or an employee of the Lounge on September 27, 1995 are as follows:
a. Respondent furnished the lights, music, and stage for the dancers.
b. Once the dancers were scheduled to work on a particular night, the dancers
of the Lounge were required to be at work by a certain time and to dance in a particular order.
c. The dancers were subject to being fined if they failed to arrive on time.
d. Respondent dictated the amount of clothing which should be taken off during the dances.
e. The dancers were limited to dancing for only two songs, both on stage or in private.
f. Respondent has a list of rules by which the dancers had to abide.
g. Respondent "constantly" supervised the dancers to ensure adherence to the
rules of the Lounge.
h. Money from "hustling" drinks passed through Respondent's regular employees.
i. The tips earned while stage-dancing or mixing with the crowd were kept by the dancers.
j. The dancers received half of the money paid to the Lounge for private dances.
l. The dancers are responsible for furnishing their own costumes and any specialty equipment necessary.
m. The manager of the Lounge testified that she would fire the dancers if they violated Lounge rules and that she had, in fact, recently fired two dancers.
n. Respondent does not withhold taxes or social security payments from the money given to the dancers at the end of the night for private dances and drinks.
14. At the hearing of this matter, the bartender/manager stated that Ms. Branstad
worked for her and that she currently works at the Lounge because she never had a problem with
Ms. Branstad before this incident. Further, the bartender stated that she still does not believe Ms.
Branstad committed a criminal act.
CONCLUSIONS OF LAW AND DISCUSSION
The South Carolina Department of Revenue and Taxation ("Department" or "Petitioner")
is charged, inter alia, with the responsibility of administering and enforcing statutes and
regulations governing alcoholic beverages, including beer and wine. S.C. Code Ann. § 61-1-60
(Supp. 1995). Furthermore, the Department is authorized to revoke or suspend the beer and wine
permit of any licensee for committing a violation of the law pertaining to alcoholic beverages or
any regulation promulgated by the Department. See S.C. Code Ann. § 61-9-410 (Supp. 1995).
Where a conviction of a criminal offense on the licensed premises has occurred, the
conviction constitutes proof that the offense occurred and the record of such conviction is
admissible in a subsequent administrative hearing. S.C. Code Ann. § 61-13-295 (Supp. 1995).
Therefore, this tribunal does not need to revisit whether the proscribed conduct occurred.
Petitioner alleges that when Ms. Branstad committed the crime for which she was
convicted, she was a "servant, agent, or employee" of Respondent and, therefore, Respondent
violated S.C. Code Ann. § 61-9-410(5)(Supp. 1995). S.C. Code Ann. § 61-9-410(5) (Supp.
1995) provides, in pertinent part:
No holder of a permit authorizing the sale of beer and wine or
any servant, agent, or employee of the permittee shall knowingly do
any of the following acts upon the licensed premises covered by the
holder's permit:
. . .
(5) permit any act, the commission of which tends to create a public nuisance or which constitutes a crime under the law of this State; . . .
The issues before this tribunal are: (1) whether Ms. Branstad was an employee of
Respondent; and, (2) whether Respondent or her servant, agent, or employee knowingly
permitted prostitution to occur.
1. Ms. Branstad was an employee of the Lounge.
In South Carolina, the test for determining whether a master/servant relationship exists is
whether the purported master has the right or power to direct and control the servant in the
performance of his work and in the manner in which the work is done. Felts v. Richland County,
299 S.C. 214, 383 S.E.2d 261 (Ct.App. 1989), aff'd 303 S.C. 354, 400 S.E.2d 781 (1991);
Watkins v. Mobil Oil Corp., 291 S.C. 62, 352 S.E.2d 284 (Ct.App. 1986); Young v. Warr, 252
S.C. 179, 165 S.E.2d 797 (1969). Specifically, the proper test to be applied is not the actual
control exercised by the alleged master, but whether there exists the right and authority to control
and direct the particular work or undertaking as to the manner or means of its accomplishment.
Felts v. Richland County, supra; Anderson v. West, 270 S.C. 184, 241 S.E.2d 551 (1978);
DeBerry v. Coker Freight Lines, 234 S.C. 304, 108 S.E.2d 114 (1959); Todd's Ice Cream. Inc. v.
South Carolina Employment Security Comm'n, 281 S.C. 254, 315 S.E.2d 373 (Ct.App. 1984).
The four factors generally used to evaluate a purported master's right of control are: (1) direct
evidence of right or exercise of control, (2) method of payment, (3) furnishing of equipment, and
(4) right to fire. South Carolina Worker's Compensation Comm'n v. Ray Covington Realtors.
Inc., 299 S.C. 214, 383 S.E.2d 261 (1995); Felts v. Richland Co., supra; Chavis v. Watkins, 256
S.C. 30, 180 S.E.2d 648 (1971); South Carolina Industrial Comm'n v. Progressive Life Ins. Co.,
242 S.C. 547, 131 S.E.2d 694 (1963). However, these factors are merely aids in evaluating the
underlying question of control, as no one factor is determinative. See Ray Covington Realtors,
supra. Rather, the totality of the circumstances must indicate that the requisite right of control
exists. Id. "The right or power of control retained by the person for whom the work is being
done is uniformly regarded as the essential criterion for determining whether the workman is an
employee . . . ." Watkins v. Mobil Oil Corp., 291 S.C. 62, 352 S.E.2d 284 (Ct. App. 1986).
In the present case, the evidence and testimony presented to this tribunal supports the
contention that Respondent had the right and authority to direct and control the dancers in the
performance of their work. In fact, Respondent exercised a great deal of control over the dancers
while they were at the Lounge. For instance, the order in which the dancers performed was
determined by Respondent; the dancers were subject to being fined if they were late for work;
Respondent has a list of rules by which the dancers had to abide; and, the dancers were
"constantly watched" to ensure compliance with the "twenty-five" rules of Respondent, which
included a restriction against physical contact with customers. Furthermore, the dancers were
limited to dancing for the length of two songs, when dancing on stage or when dancing in private.
Ms. Wouters also controlled the amount of clothing which could be taken off by the dancers.
The next two factors of this test, the method of payment and the furnishing of equipment,
do not lend a great deal to the analysis of the case. As to the method of payment, the tips earned
while stage-dancing or mixing with the customers were kept by the dancers, which suggests that
there was no control over the payment to the dancers. However, the dancers also received half of
the money paid to the Lounge for private dances, which suggests some control exercised by
Respondent over the method of payment. Furthermore, the money from the private dances was
collected by Respondent's bartender/manager and disbursed to the dancers at the close of
business. As to the furnishing of equipment, Respondent provided the stage, lights, and music
for the dancers while they were performing, however, the dancers were responsible for furnishing
their own costumes and any specialty equipment necessary. In the instant case, the record
suggests that the nature of the entertainment in question does not require either Respondent or
the dancers to furnish any equipment of consequence. For that very reason, little significance can
be placed upon the contributions of either Respondent or the dancers in providing the equipment
necessary for dancing at the Lounge.
It is clear from the testimony presented that Respondent had not in any way relinquished
control over her right to fire the dancers. Respondent's manager/bartender of the Lounge testified
that she would fire the dancers if they violated Lounge rules and that she had, in fact, recently
fired two dancers.
In conclusion, the totality of the circumstances indicates by a preponderance of the
evidence that the elements of control were present at the time the act of prostitution was
committed. Respondent extensively exercised control over the conduct of the dancers while they
were working at the Lounge. Therefore, Ms. Branstad was an employee of the Lounge on the
date of the alleged violation. This conclusion is bolstered by the statement made by the bartender
to Sergeant Zayac that Ms. Branstad was her employee. Furthermore, "where evidence relating
to whether an individual is an independent contractor or employee is conflicting or where more
than one inference can be derived therefrom, the question is one of fact" for the judge or jury to
decide. Todd's Ice Cream, Inc., supra.
Respondent argues that the dancers are independent contractors who merely operate
within the Lounge. However, in South Carolina, an independent contractor is defined as "one
who, exercising an independent employment, contracts to do a piece of work according to his
own methods, without being subject to the control of his employer except as to the result of his
work." Cooper v. Graham, 231 S.C. 404, 98 S.E.2d 843 (1957); Gomillion v. Forsythe, 218 S.C.
211, 62 S.E.2d 297 (1950). Respondent sought, as her "result", to have the dancers entertain
customers. For the previously stated reasons, it is evident that the dancers were restricted in the
time and manner in which they danced and subject to the control of Respondent. Accordingly, it
is apparent that the dancers were not independent contractors.
Concluding that Ms. Branstad was an employee only solves half of the equation because,
Petitioner must also prove by a preponderance of the evidence that Respondent or Respondent's
agent, servant, or employee knowingly permitted prostitution on the premises in violation of S.C.
Code Ann. § 61-9-410(5) (Supp. 1995).
2. Ms. Branstad knowingly permitted a crime on the licensed
premises in violation of S.C. Code Ann. § 61-9-410(5) (Supp. 1995).
As stated above, this section provides, in pertinent part:
No holder of a permit authorizing the sale of beer and wine or
any servant, agent, or employee of the permittee shall knowingly do
any of the following acts upon the licensed premises covered by the
holder's permit:
. . .
(5) permit any act, the commission of which tends to create a public nuisance or which constitutes a crime under the law of this State; . . . (emphasis added).
It is well settled that a person's knowledge can be proven through circumstantial evidence
or manifestations of the individual. See Eason v. United States, 281 F.2d. 818 (9th Cir. 1960);
State v. Attardo, 263 S.C. 546, 211 S.E.2d 868 (1975). Additionally, it should be noted that
another jurisdiction has held in negligence actions that one is deemed to have knowledge of his
own and his employees' acts. Forrest v. S.H. Kress & Co., 1 N.C. App. 305, 161 S.E.2d 225
(1968); Waters v. Harris, 250 N.C. 701, 110 S.E.2d 283 (1959); Copeland v. Phthistic, 245 N.C.
580, 96 S.E.2d 697, 63 A.L.R.2d 587 (1957). In the instant case, Ms. Branstad, an employee of
the Lounge, committed an act of prostitution on the licensed premises. The trier of fact, in
appropriate cases and under appropriate circumstances, may presume that a person involved in a
situation had knowledge of particular relevant facts. Alex Sanders, Deborah Neese, and John S.
Nichols, Trial Handbook for South Carolina Lawyers, § 12.3 (1994). For these reasons, this
tribunal concludes that Ms. Branstad should be attributed actual knowledge of her actions.
It is further concluded that Ms. Branstad permitted the act of prostitution on the licensed
premises. There is no South Carolina statutory or case law definition of "permit," therefore, this
tribunal consulted other authorities for a definition. "Permit" is defined as: "(1) [t]o allow the
doing of (something); consent to (2) to grant leave or consent to (someone); authorize (3) to
afford opportunity or possibility for." The American Heritage College Dictionary 1018 (3rd ed.
1993). Further, Black's Law Dictionary defines "permit" as: "(1) To suffer, allow, consent, let;
(2) to give leave or license; (3) to acquiesce, by failure to prevent, or to expressly assent or agree
to the doing of an act." Black's Law Dictionary 1140 (6th ed. 1990). In the instant case, Ms.
Branstad and Mr. Oakley mutually engaged in sexual acts on the licensed premises, in violation of
the laws of South Carolina. Therefore, it can be inferred that Ms. Branstad consented to,
allowed, and acquiesced in such acts. Accordingly, Ms. Branstad is found by this tribunal to have
knowingly "permitted" the act of prostitution which constitutes a crime under the laws of this
State, in violation of S.C. Code Ann. § 61-9-410(5).
In conclusion, Respondent had a master-servant relationship with Ms. Branstad at the time
the prostitution was committed, and Ms. Branstad "knowingly permitted" the prostitution to
occur. Furthermore, the revocation of Respondent's permit is within the authority of the
Department. Therefore, Petitioner's request that Respondent's beer and wine permit be revoked is
hereby granted.
ORDER
IT IS THEREFORE ORDERED that Petitioner's request to revoke Respondent's beer
and wine permit is granted and Respondent shall surrender the permit accordingly.
AND IT IS SO ORDERED.
_____________________________
JOHN D. GEATHERS
ADMINISTRATIVE LAW JUDGE
Edgar A. Brown Building
1205 Pendleton Street
Columbia, South Carolina 29201
May 17, 1996
Columbia, South Carolina |
