ORDERS:
FINAL DECISION
STATEMENT OF CASE
This matter comes before me upon request for a Hearing by the Respondent after being cited
for violating S.C. Code Ann. § 12-21-2804 (A)(Supp. 1996). The South Carolina Department of
Revenue (Department) contends that the Respondent operated more than five video poker machines
in a "single place or premise." A Hearing was held before the Administrative Law Judge Division
on April 10, 1997.
I find the Respondent violated Section 12-21-2804.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely
passed upon their credibility, taking into consideration the burden of persuasion by the Parties, 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. The Department issued a violation report against Scott's of Heath Springs (Scott's)
on June 14, 1996, charging the Respondent with having nine Class III video game machines in
Scott's. The Department offered no evidence as to whether each business located in Scott's had a
separate electric meter, business license or a State sales tax license. Rather the sole issue for
determination is whether the Respondent violated S.C. Code Regs. § 117-190 (Supp. 1996) by not
having "at least one separate employee on the premises during business hours."
3. On June 14, 1996, Revenue Officer Theresa King, conducted an investigation of
Scott's located at 3672 Kershaw Hwy., Kershaw, South Carolina. Scott's is a convenience store with
five rooms located in the back of the store. Two of those rooms, Rooms A and B, are operated as
video game businesses.
4. On June 14, 1996, Rooms A and B were open for business. Each of the two open
game rooms contained five video game machines. However, one of the machines in Room B was
out of order. The ten (10) Class III machines licenses located in the above businesses were owned
by Scott's. The following video game machine licenses were located in the respective game rooms:
Room A:
3807583
3807584
3807585
3807586
3807587
Room B:
040025
040026
040027
040028
040029 (out of order) 5. The only employees on the premises of Scott's were two cashiers located at the cash
register in the convenience store of the location. There were no employees located on the premises
of Room A or B.
6. The Respondent's Class III machines licenses in Room B expire on May 31, 1997 and
the licenses for the machines in Room A expire on May 31, 1998. The Department seeks the
imposition of a Five Thousand ($5,000.00) fine against the Respondent, revocation of the machine
licenses and the restriction that no license be issued for the Respondent's location for six months.
7. I find that the Respondent violated S.C. Code Ann. § 12-21-2804 by having more than
five machines in one location. I further find that the appropriate penalty in this case is a $750 fine
for each violation and revocation of the licenses affixed to the Class III machines in operation at the
location on June 14, 1996.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant
to S.C. Code Ann. § 12-4-30 (D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp. 1996).
2. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A)(Supp. 1996). That section provides:
After July 1, 1994, the commission [Department] may not issue nor
authorize to be maintained any licenses or permits for more than five
machines authorized under Section 12-21-2720(A)(3) at a single
place or premises.
3. Machines licensed under Section 12-21-2720(A)(3) include video games with a 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. 1996).
4. S.C. Code Ann. § 12-21-2804(A) (Supp.1996) states that the penalty for failing to
comply with the maximum number of machines in a "single place or premise" is the revocation of
the licenses of machines located in the establishment.
5. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) states that a person who violates
Section 12-21-2804(A) may be fined up to five thousand dollars.
6. The Video Game Machines Act ("Act") does not define the term "single place or
premise."
7. The Honorable G. Ross Anderson held that the term "single place or premise" is
"sufficiently defined and susceptible of a common and ordinary meaning to provide a person of
ordinary intelligence a reasonable notice of the prescribed conduct." Reyelt et al. v. South Carolina
Tax Commission, CA No. 6: 93-1491-3 (D.S.C. July 5, 1994). On June 23, 1995, S.C. Code Regs.
117-190 (Supp. 1996) became effective. It provides as follows:
The Video Game Machines Act, found in Article 20, Chapter
21 of Title 12, limits the number of machines that may be located in
a "single place" or "premises."
A single place or premises must be a fixed location. It does
not include moving property such as a boat or a train, unless such
property is permanently affixed to a specific location.
A "single place" or "premises" means a structure surrounded
by exterior walls or firewalls 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 firewalls
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 firewalls 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 have at least one 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 a separate
state sales tax license? 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.
8. The Respondent contends that this case should be dismissed because the
Department's violation report did not specifically charge each video game room with a violation. The
Respondent relies on the Final Decision of the Honorable Stephen P. Bates in S.C. Department of
Revenue v. Mickey Stacks Docket No. 95-ALJ-17-0742-CC. In that case Judge Bates held that:
A Violation Report must be written for each specific game room lacking a separate
employee working within its confines for which customers were able to enter and
operate machines. An officer must determine the specific game rooms in violation
and identify those with particularity in the citation, rather than merely subtracting the
total number of employees in the mall from the total number of game rooms and then
citing the appropriate number of game rooms on an arbitrary basis.
In this case there were no employees for the Department to subtract because neither Room A or B
had employees working on the premises. A notice must be "reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
306, 314 (1950). "Due Process requires that a litigant be placed on notice of the issues which the
court is to consider." Bass v. Bass, 272 S.C. 177, 249 S.E.2d 905 (1978). I find that the violation
report provided the Respondent with adequate notice of the violations committed in both game
rooms.
9. 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).
Prior to governmental restructuring, a commission, sitting in its adjudicatory capacity
imposed penalties for violations of statutory provisions administered by the Commission's
subordinate agency. In its capacity as the fact-finder, the Tax Commission would conduct an
adjudicatory hearing in all contested cases arising under Title 12 of the South Carolina Code, and
would render an order containing findings of fact and conclusions of law. As the fact-finder, it was
the commission'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). With the
advent of restructuring and the abolition of the Tax Commission, however, the Administrative Law
Judge Division was given the authority to hear "all contested cases, as defined by Section 1-23-310
and as previously considered by the three [Tax] commissioners. . . ." S.C. Code Ann. §12-4-30(D)
(Supp. 1996). The Administrative Law Judge, as the current 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 and the tribunal responsible for conducting
the contested case proceedings has the authority to decide the issues based on the facts presented,
and make the final decisions on all the issues, including the appropriate penalty.
ORDER
Based upon the Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that a fine of $750 is imposed for each offense upon the Respondent, resulting
in a total fine of $1,500.
IT IS FURTHER ORDERED that the following licenses for the nine Class III video game
machines located in Scott's game rooms A and B at 3672 Kershaw Hwy., Kershaw, South Carolina,
are hereby revoked:
Room A:
3807583
3807584
3807585
3807586
3807587
Room B:
040025
040026
040027
040028
IT IS FURTHER ORDERED that no licenses shall be issued for any Class III machine to
be operated in any of the above game rooms for a period of six (6) months from the date of this Final
Decision.
___________________________
Ralph King Anderson, III
Administrative Law Judge
Columbia, South Carolina
May 28, 1997 |