ORDERS:
FINAL DECISION
STATEMENT OF THE CASE
This matter comes before me pursuant to S.C. Code Ann. § 12-4-30 (D)(Supp. 1995) and
S.C. Code Ann. § 1-23-320, et seq. (Supp. 1995) pursuant to a request for a contested case hearing
by Collins Entertainment, Inc., owner/licensee ("Collins"). The South Carolina Department of
Revenue ("Petitioner" or "Department") issued a citation against the Respondent Collins for alleged
administrative violations of S.C. Code Ann. § 12-21-2804(A)(Supp. 1995) of the Video Game
Machines Act ("Act") and S.C. Code Regs. 117-190 (Supp. 1995) ("Regulation") at the business
operated by Double Dagger, Inc. ("Double Dagger") located at 4309 Mineola Avenue, Little River,
Horry County, South Carolina ("location"). Specifically, the Department alleges that the Respondent
Collins has violated the Act by placing its machines in a location which did not have a separate
employee within each of four single places or premises ("game rooms") at the location during
business hours on June 13, 1996. Respondent Collins denies any violation of the Act or the
Regulations.
The Department seeks revocation of the fifteen (15) Class III video poker licenses at the
location, a $5,000.00 fine and an Order prohibiting the licensing, usage and placement of any Class
III video poker licenses at the location for the four game rooms formerly known as Donut Hole 1,
3, 4, and 5 for a period of six months from the date of this Order.
After timely notice to the parties, a contested case hearing was held at the Administrative
Law Judge Division ("Division") offices, Columbia, South Carolina at 10:00 a.m. on March 6,
1997.
Based upon a thorough review of the record, post-hearing legal briefs, the relevant and
probative evidence and applicable law as set forth hereafter, I conclude that the Respondent Double
Dagger violated S.C. Code Ann. §12-21-2804(A) and S.C. Code Regs. 117-190 on June 13, 1996
and that the licenses of the machines located in the establishments in question must therefore be
revoked. However, the Department did not present sufficient evidence to warrant the imposition of
a fine against the Respondent Collins pursuant to S.C. Code Ann. § 12-21-2804(F) (Supp. 1995).
ISSUES
1. Was there a violation of the "single place" or "premises" provisions of S.C. Code
Regs. 117-190 (Supp. 1996) and S. C. Code Ann. Section 12-21-2804(A) (Supp. 1996) for the
failure of Respondent Double Dagger to have an employee within each of the four game rooms on
June 13, 1996?
2. If there is a violation, what is the appropriate penalty which may be imposed against
the Respondent Collins?
FINDINGS OF FACT
Having carefully considered all testimony and arguments presented at the hearing, taking into
account the credibility of the witnesses, the accuracy of the evidence and having reviewed all the
exhibits carefully, I make the following findings by a preponderance of the evidence:
1. This Division has personal and subject matter jurisdiction.
2. Notice of the date, time, place and nature of the hearing was timely given to the parties.
A notice of the hearing was mailed to Archie Parmentier, owner of the Respondent Double Dagger, but
was returned to the Division with the notation "Box Closed--Unable to Forward". The Respondent
Collins also attempted to contact Mr. Parmentier to ask him to testify at the hearing. However, Mr.
Parmentier failed to attend the hearing.
3. On June 13, 1996, Respondent Double Dagger owned and operated six (6) separate video
game businesses within a building located at 4309 Mineola Avenue, Little River, South Carolina. The
businesses were known as Donut Hole 1, Donut Hole 2, Donut Hole 3, Donut Hole 4, Donut Hole 5, and
Donut Hole 6.
4. The building was divided into six (6) single rooms containing licensed video machines
as well as an office and an empty room. The business, Double Dagger, Inc., was owned by Archie
Parmentier. See Petitioner's Exhibit # 3.
5. Each single game room, contained inside the building, met the statutory and regulatory
physical requirements of Regs. 117-190 to qualify as a "single place" or "premises".
6. Each of the six (6) game rooms had Class III video game machines located inside. The
owner/licensee of the video game machines was Collins Entertainment Corp. Collins had contracted
with Mr. Parmentier, individually, and with Double Dagger, Inc., d/b/a The Donut Hole, to provide coin
operated machines to the businesses at the location.
7. Each of the game rooms was surrounded by interior walls within the building which
constitute exterior walls for purposes of each individual business.
8. The video game rooms contained video game machines with the following assigned
biennial license numbers (see Petitioner's Exhibits #3 and #6):
a. Donut Hole 1 (depicted as Room #6 on Petitioner's Exhibit #3)--3805530, 0345530, 3805523, 3805531, 3805501
b. Donut Hole 2 (depicted as Room #2 on Petitioner's Exhibit #3)--034696,
3805528
c. Donut Hole 3 (depicted as Room #5 on Petitioner's Exhibit #3)--027629, 027630,
028636, 027778, 028634
d. Donut Hole 4 (depicted as Room #4 on Petitioner's Exhibit #3)--3805524,
042970, 042969
e. Donut Hole 5 (depicted as Room #3 on Petitioner's Exhibit #3)--3805529,
042576, 3805527
f. Donut Hole 6 (depicted as Room #1 on Petitioner's Exhibit #3)--03805525, 3805526, 034697, 034568
9. Each of the six game rooms or businesses had a separate State sales tax license and a
separate electrical meter.
10. Julian Adams is presently operating the same six game rooms as separate video game
machine businesses. They are known as Mardi Gras Too-A, Mardi Gras Too-B, Mardi Gras Too-C,
Mardi Gras Too-D, Mardi Gras Too-E and Mardi Gras Too-F. He has contracted with Collins to place
video game machines at the location.
11. On June 13, 1996, at approximately 2: 30 p.m., Revenue Officer Ritchie Way went to
the location at 4309 Mineola Avenue, Little River, Horry County, South Carolina. He walked into the
rooms, inspecting each one separately. He observed the following:
a. five (5) video game machines in Donut Hole #1 (large area as one enters into the building) with an employee on duty inside the room.
b. four (4) video game machines in Donut Hole #6 with no employees within the room. The interior lights and the machines were on.
c. two (2) video game machines in Donut Hole #2 with an employee within the
room. The door was open and the lights and machines were on.
d. three (3) video game machines in Donut Hole #5 with no employees within the room. The door was open and the lights and machines were on.
e. three (3) video game machines in Donut Hole #4 with no employees within the room. The door was open to that room, and the lights and the machines were turned on.
f. five (5) video game machines in Donut Hole #3 with no employees within the room. Again, the door was open and the lights and the machines were turned
on.
g. The biennial license numbers on the video game machines within the separate
game rooms were as listed on Petitioner's Exhibit # 6.
There were no other employees within the premises/location at the time of the inspection.
12. Revenue Officer Way wrote up a Regulatory Violation and Proposed Assessment Report
("citation report") on June 13, 1996 against Collins for violation of the "single place" or "premises"
provisions of S.C. Code Ann. Section 12-21-2804(A) and Regs. 117-190. However, no citation report
was written against Double Dagger. See attachment to the Department's "Determination Letter" dated
November 8, 1996, which is a part of the Department's prehearing report.
13. The biennial licenses on the fifteen (15) video game machines located in Donut Hole #
3, 4, 5, and 6, which were inspected by Revenue Officer Way at the location on June 13, 1996, were
purchased by Respondent Collins and the numbers were assigned to Collins by the Department.
14. I find that the testimony of Revenue Officer Way is unrefuted and that all six (6) game
rooms were open for business on June 13, 1996 when Revenue Officer Way conducted his inspection
at the location. I further find that there were no employees at the location assigned to the game rooms
known as Donut Hole 3, Donut Hole 4, Donut Hole 5, and Donut Hole 6 at the time of the inspection.
CONCLUSIONS OF LAW
Based on the foregoing Findings of Fact, I conclude, as a matter of law, the following:
1. Pursuant to S.C. Code Ann. § 12-4-30 (D) (Supp. 1996) and Chapter 23 of the Title 1
of the 1976 Code, as amended, the South Carolina Administrative Law Judge Division has jurisdiction
in this matter.
2. Petitioner alleges that on June 13, 1996, respondent Collins violated S.C. Code Ann.
§12-21-2804(A) (Supp. 1995) and 27 S.C. Code Regs. 117-190 (Supp. 1995) by permitting the use of
its licenses for the operation of more than five (5) Class III video game machines at a single place or
premises. Section 12-21-2804(A) provides:
No person shall apply for, receive, maintain, or permit to be used, and
the commission shall not allow to be maintained, permits or licenses
for the operation of more than eight machines authorized under Section
12-21-2720(A)(3) at a single place or premises for the period beginning
July 1, 1993, and ending July 1, 1994. After July 1, 1994, the
commission may not issue nor authorize to be maintained any licenses
or permits for more than five machines authorized under S.C. Code
Ann. § 12-21-2720(A)(3) at a single place or premises. . . . (emphasis
added).
3. Machines licensed pursuant to the provisions of S.C. Code Ann. § 12-21-2720(A)(3)
include video games with free play feature operated by a slot in which a coin or thing of value is
deposited. S.C. Code Ann. § 12-21-2720 (Supp. 1995).
4. Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1995), the Department is authorized
to promulgate regulations to assist in the administration and enforcement of the Video Game Machines
Act.
5. S.C. Code Regs. 117-190 (Supp. 1995) defines "single place" or "premises" for
purposes of interpreting the Video Game Machines Act, including § 12-21-2804(A). It provides as
follows:
A "single place" or "premises" means a structure surrounded by
exterior walls or fire walls consistent with the requirements of the
applicable building code (or where no building code is applicable, a
one hour rated firewall), provided such exterior walls and fire walls
may not have any windows, doors or other openings leading to another
area where video game machines are located.
If a structure surrounded by exterior walls has two or more areas where
video game machines are located, each surrounded by exterior walls or
fire walls as defined and required above, the Department must review
all the facts and circumstances to determine if each area in reality
constitutes a single place or premise for video game machines. In
determining whether each entity is in fact a single place or premises,
the Department of Revenue will consider the following factors: (1)
Does each entity or business have a separate electric utility meter? (2)
Does each entity or business have at least one separate employee on the
premises during business hours? (3) Does each entity or business have
a separate local business license where required? (4) Does each entity
or business have separate sales tax licenses? A positive answer to
these four questions is required for each area to be considered a "single
place or premise" for purposes of the Video Game Machines Act.
6. The primary issue before this tribunal is whether any person "permitted" the use of
permits or licenses for the operation of more than five Class III video game machines at a single place
or premises, in violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Regs. 117-190.
7. It is well established that in interpreting a statute, the court's primary function is to
ascertain the intention of the legislature. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First
Savings Bank, Inc. v. Gold Coast Assoc., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990); State v. Harris,
268 S.C. 117, 232 S.E.2d 231 (1977). In ascertaining the intent of the legislature, a court should not
focus on any single section or provision but should consider the language of the statute as a whole.
Creech v. S.C. Public Service Authority, 200 S.C. 127, 20 S.E.2d 645 (1942). Furthermore, in
construing statutes, the language used should be given its plain and ordinary meaning without resort to
subtle or forced construction to limit or expand the statute's operation. Bryant v. City of Charleston, 295
S.C. 408, 368 S.E.2d 899 (1988); Home Health Service v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d
375 (1994). Where terms of a statute are clear and unambiguous, they must be applied according to their
literal meaning. Medlock v. Ford F-150 Pick Up, et al., 308 S.C. 68, 417 S.E. 2d 85 (1992); Green v.
Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977).
It should be emphasized that S.C. Code Ann. § 12-21-2804 (A) clearly precludes any person,
not just the licensees, from permitting the use of more than five Class III video game machines in a
single place or premises. The term "person" is not defined in the Act, but its common and ordinary
meaning clearly encompasses an individual or a business entity, as well as a licensee or machine owner.
See Black's Law Dictionary 1142 (6th ed. 1995). Further, Section 12-21-2804(A) mandates that the
Department revoke the licenses of the machines located in an establishment which fails to meet the
requirements of this section. Hence, even if the licensee, in this case Collins, was not directly involved
in permitting its licenses to be used in violation of the statute, the use of its licenses by Double Dagger,
Inc. in contravention of the statute mandates the revocation of the licenses so used. Such an
interpretation is consistent with the plain language of the statute. However, Collins argues that its lack
of knowledge of the improper use of its licenses precludes revocation of the licenses. This argument is
not supported by the law. The existence or nonexistence of knowledge on behalf of the licensee under
the facts of this case would not compel a result other than the revocation of the licenses. See Mickey
Stacks, d/b/a Red Dot Amusement Co. v. S.C. Dep't of Revenue and Taxation, Court of Common Pleas,
County of Richland, 96-CP-40-0239 (April 20, 1995).
8. The business owner, Double Dagger, Inc., clearly permitted licenses to be used for the
operation of more than five Class III video game machines in a single place or premises. As stated
above, whether an establishment is being operated as a "single place or premises" is determined by
evaluating the facts against the factors set forth in Regs. 117-190. With respect to the "employee"
requirement, Regs. 117-190 requires that each business entity have a separate employee at the location
and available to perform job functions with respect to that business entity during business hours in order
to comply with the "single place or premises" requirements of Section 12-21-2804(A). See S.C. Dep't
of Revenue v. Great Games, Inc., 96-ALJ-17-0204-CC (March 18, 1997). In this case, the
uncontroverted evidence indicates that game rooms 1, 3, 4, and 5 had no employees at the location who
were assigned to those game rooms. Furthermore, the evidence indicates that those game rooms were
open for business at the time of the inspection. Therefore, I conclude that the businesses formerly
known as Donut Hole 3, Donut Hole 4, Donut Hole 5, and Donut Hole 6 have violated Section 12-21-2804(A) by permitting licenses to be used for the operation of more than five Class III video game
machines in a single place or premises. Consequently, the respondent Collins' licenses are subject to
revocation because Double Dagger, Inc., the operator of those businesses, utilized the machines on
which Collins' licenses were displayed, in a manner which contravened Section 12-21-2804(A).
9. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) provides that the penalty for exceeding
the maximum number of video gaming machines permitted in a single place or premises is the
mandatory revocation of the licenses of machines located in the establishment. Additionally, no license
may be issued
for a machine in an establishment in which a license has been revoked for a period of six months from
the date of revocation.
10. Acting as fact-finder, it is the administrative law judge's prerogative "to impose the
appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C.
209, 407 S.E.2d 633, 634 (1991). If an the administrative law judge finds and concludes that a violation
has occurred, then he has the authority to establish the monetary fine within the allowable range
provided for by S.C. Code Ann. § 12-21-2804(A) (Supp. 1995). S.C. Code Ann. § 12-4-30(D) (Supp.
1995).
11. S.C. Code Ann. § 12-21-2804(F) (Supp. 1995) provides that a person who violates S.C.
Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000. In this case, the Department has not
cited the person who directly utilized the video game machines in violation of Section 12-21-2804(A),
namely Double Dagger, Inc. See Mickey Stacks, d/b/a Red Dot Amusement Co. v. S.C. Dep't of
Revenue and Taxation, supra at 8-9. Under Section 12-21-2804(A), a license on a video game machine
must be revoked if it is misused under the Act, regardless of whether the person directly responsible for
committing the violation is the licensee, machine owner, or the business owner. However, a monetary
fine under Section 12-21-2804(F) may only be imposed on the person directly involved in the violation
of Section 12-21-2804(A). In this case, that is Double Dagger, Inc., which was not cited for a violation.
Furthermore, no evidence was presented at the hearing which would establish a nexus between Collins
and Double Dagger, Inc., sufficient to impute knowledge of Double Dagger's failure to maintain the
proper number of employees at the location to Collins. Therefore, the imposition of the $5,000 fine
against the respondent Collins must fail for the foregoing reasons.
12. An administrative law judge possesses the same powers at chambers or in open court
as do circuit court judges and may issue such remedial writs as are necessary to give effect to its
jurisdiction. S.C. Code Ann. § 1-23-630 (Supp. 1996).
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY
ORDERED that the Department shall revoke the video game machine licenses located at 4309 Mineola
Avenue, Little River, South Carolina, in the game rooms formerly known as Donut Hole 3, 4, 5, and 6,
as shown on Petitioner's Exhibit #6; and IT IS FURTHER ORDERED that no video game machine
licenses shall be issued for those game rooms for a period of six months from the date of this Order.
IT IS FURTHER ORDERED that the Department shall suspend the monetary fine; and that
the revocation of the licenses cited above does not affect the machines to which those licenses are
attached, and those machines may be re-licensed on other premises.
AND IT IS SO ORDERED.
___________________________________
Marvin F. Kittrell
Chief Judge
April 21, 1997
Columbia, South Carolina |