SC Administrative Law Court Decisions

The South Carolina Department of Revenue (DOR) seeks a $400 fine against Kenneth L. Lilly (Lilly) for the sale of beer at a reduced price in violation of S.C. Code Ann. § 61-4-160 (Supp. 1997).⁽¹⁾ For the following reasons, I find that Lilly did not violate S.C. Code Ann. § 61-4-160 (Supp. 1997). Therefore, DOR's citation against Lilly is dismissed.

Did Lilly violate S.C. Code Ann. § 61-4-160 (Supp. 1997) by selling beer at a reduced price other than during happy hour?

1. Findings of Fact

a. General Background

Lilly holds Beer and Wine permit number BW-953766 for the location at 1900 N. Kings Highway in Myrtle Beach, South Carolina. On Thursday, May 29, 1997, at approximately 1:00 p.m., SLED Agent Williamson heard a radio advertisement that the location was having a special on Budweiser (Bud) draft beer for $.25. At approximately 8:45 p.m., a second SLED agent operating undercover, Agent Holden, ordered and purchased a Bud draft beer from the location for $.25. Agent Holden did not write a citation at that time since no evidence was obtained on the "price regularly charged." Rather, the agents returned to the location on Saturday, May 31, 1997 in an attempt to determine the regularly charged price.

On May 31, 1997, at approximately 12:45 a.m., Agent Holden re-entered the location in his undercover capacity and ordered a Bud draft. The bartender told Agent Holden that they did not have Bud draft that night. Agent Holden then ordered and paid for another brand of draft beer, Natural Light, at a price of $.75. Prior to leaving the location, the SLED agents wrote a citation against Lilly for a violation of S.C. Code Ann. § 61-4-160 (Supp. 1997).

b. Price Regularly Charged

Under the facts proven in this case, the "price regularly charged" for a Bud draft at Lilly's location is $ .25. Further, Bud draft is sold at the $ .25 price at all times.

The evidence supporting the conclusion that Bud draft has a price regularly charged of $ .75 is inconclusive. On May 29 and May 31, the signs in front of the location stated: "$ .75 draft." Considered in isolation, such a sign could form the beginning point for concluding that a Bud draft was also regularly sold for $ .75. However, for several reasons, the evidence never provides sufficient persuasion to reach that conclusion.

First, neither Agent Holden nor Agent Williamson ever purchased a Bud draft for $ .75; rather the only price ever paid for a Bud was $.25. Second, the manager of the location testified that the normal price for a Bud draft is $.25, and that Bud draft is always sold for $.25 to anyone who asks for it. The manager agreed that for economic considerations, the $.25 price is only advertised and promoted on Thursday. However, he testified that all bartenders are directed to serve Bud, when ordered, for $.25 regardless of the day of the week. That testimony is substantiated by Lilly's testimony.

Finally, the only significant evidence weighing against the manager's and Lilly's testimony that Bud drafts were available for $ .25 on all days is the fact that the SLED Agent was not served a Bud when he asked for one on a Saturday. However, that evidence is substantially weakened by the events occurring at the time of the SLED Agents' visit. In explaining the failure to serve the Bud draft to the SLED Agent, the manager, who was there the night of the SLED Agent's visit, concluded the bartender had simply been mistaken. Rather, upon learning that the Agent had been told that the location did not have Bud, the manager immediately disagreed with the bartender's statement and demonstrated to the Agent that Bud was available and that it was available at the normal price of $ .25. While the manager's statements are perhaps self-serving, those statements have an air of validity in that they were made contemporaneous with the unfolding events at the time of the agents' visit.

Thus, when all the testimony is considered as a whole, the evidence demonstrates that the "price regularly charged" for a Bud draft was $ .25 and that Bud draft was available at that price at all times. Such a conclusion is particularly compelling given the fact that no evidence shows a purchase of a Bud draft for a price other than $ .25.

2. Conclusions of Law

Section 61-4-160 states the following:

No person who holds a biennial permit to sell beer or wine for on-premises consumption may advertise, sell, or dispense these beverages for free, at a price less than one-half of the price regularly charged, or on a two or more for the price of one basis. Beer or wine may be sold at a price less than the price regularly charged from four o'clock p.m. until eight o'clock p.m. only. The prohibition against dispensing the beverages for free does not apply to dispensing to a customer on an individual basis, to a fraternal organization in the course of its fund-raising activities, to a person attending a private function on premises for which a biennial permit has been issued, or to a customer attending a function sponsored by the person who holds a biennial permit. However, no more than two functions may be sponsored each year, and must be authorized by the department. A person who violates this section is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars or imprisoned not less than three months, in the discretion of the court.

Under this section, three circumstances address selling beer at less than the normal price. First, an absolute prohibition is imposed on selling beer for less than one half the "price regularly charged" or for allowing the sale of beer at a price that is two or more for the price of one. Second, some discount is allowed from the price regularly charged, but that discount can be given only from 4:00 until 8:00 p.m., referred to by the industry as "happy hour." Third, beer cannot be given away for free except under four identified and limited circumstances. In this case, the dispute is whether beer was sold at a discount so as to give a sales price that is less than one half the "price regularly charged."

Because DOR is seeking a sanction against Lilly, it has the burden of proving all of the elements demanded for establishing a violation of section 61-4-160. See 2 Am. Jur.2d Administrative Law § 360 (1994)(generally, the burden of proof is on the party asserting the affirmative in an adjudicatory administrative proceeding, and the government is the proponent of an order seeking sanctions against a private party). The standard of proof in this administrative proceeding is a preponderance of the evidence. See Anonymous v. State Board of Medical Examiners, Op. No. 24754 (S.C. Sup. Ct. filed January 26, 1998)(Davis Adv. Sh. No. 5 at 11).

As the finder of fact, the judge has the authority to weigh the evidence presented and determine the credibility of witnesses. See Doe v. Doe, 324 S.C. 492, 478 S.E.2d 854 (Ct. App. 1996); Rogers v. Kunja Knitting Mills, Inc., 312 S.C. 377, 440 S.E.2d 401 (Ct. App. 1994), cert. dismissed, 318 S.C. 187, 456 S.E.2d 918 (1995). I find that DOR has not met its burden of proving that the $.25 price is less than half the price regularly charged for a Bud draft at the location.

Indeed, the evidence proves that the "price regularly charged" for Bud draft was $.25. The SLED Agents never purchased a Bud draft for any price except $.25. Having failed to purchase Bud draft on May 31, 1997, SLED could have come back another day to purchase a Bud draft to obtain evidence of the price regularly charged. Instead, SLED wrote the citation based on signs in front of the building.

DOR argues that the term "beer" in Section 61-4-160 is used in a generic sense and that the statute cannot be read to allow a "brand specific" application. DOR seems to assert that if the price of most of the beer brands at the location is $.75, then that is the "regularly charged price" of beer at a location, and the fact that a specific brand is always sold for $.25 is of no protection. Under DOR's interpretation of the statute, however, it would be difficult, if not impossible, to determine the "price regularly charged" for beer at an establishment that sells imported or unique brands as well as lesser quality brands. The logical extension of DOR's argument is that imported or unique beers should be sold at the same retail price as lesser quality beers, regardless of the differing costs to the retailer.

The cardinal rule of statutory construction is to ascertain and effectuate the intention of the legislature. Dorchester County Dept. of Social Services v. Miller, 324 S.C. 445, 477 S.E.2d 476 (Ct.App. 1996). Words of a statute should be given their plain and ordinary meaning without resorting to a subtle or forced construction in order to limit or expand the statute's operation. Id.

This is really nothing more than a rule of common sense, for it must be supposed that the legislature, in enacting a statute, intended that the words used therein should be understood in the sense in which they are ordinarily and popularly understood by the people, for whose guidance and government the law was enacted, unless there is something in the statute showing the words in question were used in some other sense.

Brewer v. Brewer, 242 S.C. 9, 129 S.E.2d 736 (1963). The plain and ordinary meaning of the phrase "price regularly charged" naturally encompasses different prices for different brands, as is the customary practice in the beer industry as well as most other industries.

Finally, DOR cites ABC Ruling 88-5 of April 18, 1989, which states that a license holder cannot offer a "reduced price" one day a week. DOR argues that this Ruling was adopted as DOR's official position and that it is controlling in this case. Because the evidence shows that Lilly's price was always the same for Bud draft and was not offered for just one day a week, ABC Ruling 88-5 is not applicable to this case. Further, internal agency rulings do not serve as binding authority. At most, these rulings are entitled to most respectful consideration. See Dunton v. South Carolina Board of Examiners in Optometry, 291 S.C. 221, 353 S.E.2d 132 (1987). Finally, since the facts of this case show that ABC Ruling 88-5 is not applicable, I do not address the correctness of the position established by the ruling. See Lucas v. South Carolina Coastal Council, 304 S.C. 376, 404 S.E.2d 895 (1991) (where Court declined to reach or express an opinion on issues not needed for a decision in the case); reversed on other grounds, Lucas v. S.C. Coastal Council, 505 U.S. 1003, 112 S. Ct. 2886, 120 L.Ed.2d 798 (1992).

Based on the foregoing, I find that DOR has failed to carry its burden of proving that Lilly violated S.C. Code Ann. § 61-4-160 (Supp. 1997).

Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered that DOR's citation against Kenneth L. Lilly for violation of S.C. Code Ann. § 61-4-160 (Supp. 1997) must be dismissed.

AND IT IS SO ORDERED.

RAY N. STEVENS

Administrative Law Judge

Dated: July 30, 1998

Columbia, South Carolina

1. Jurisdiction of this contested case vests in the Administrative Law Judge Division pursuant to S.C. Code Ann. § 61-2-260 (Supp. 1997) and S.C. Code Ann. § 1-23-600(B) (Supp. 1997).