South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Charles Raley, Jr., d/b/a Raley's 903 Superette, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Charles Raley, Jr., d/b/a Raley's 903 Superette, Mickey H. Stacks, d/b/a Red Dot Amusement Co., d/b/a Venus Distributing, MHS Enterprises, Inc.
 
DOCKET NUMBER:
97-ALJ-07-0146-CC

APPEARANCES:
Carol I. McMahan, Esquire, for Petitioner

David E. Belding, Esquire, for Respondent
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE

This matter is before the Administrative Law Judge Division pursuant to S.C. Code Ann. §§ 1-23-310, et seq. (Rev. 1986 and Supp. 1996) and S.C. Code Ann. § 12-4-30(D) (Supp. 1996) on an administrative citation issued by the Department of Revenue (Department) for violation of the "single place or premises" provisions of the Video Game Machines Act. After notice to the parties, a hearing was conducted on July 1, 1997. Based upon the evidence presented, the Respondents Charles Raley, Jr., Mickey Stacks d/b/a Red Dot Amusement Co., and MHS Enterprises, Inc. violated the provisions of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996). Any issues raised in the proceeding or hearing of this matter that are not specifically addressed in this Order are deemed denied. ALJD Rule 29.



FINDINGS OF FACT

I make the following findings of fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence, and taking into account the credibility of the witnesses:

1. On June 13, 1996, revenue officers of the Department conducted an inspection of Raley's 903 Superette at Rt. 2, Jefferson, South Carolina for compliance with video gaming laws. 2. Raley's 903 Superette, a convenience store, contained fifteen (15) licensed Class III video poker machines in three separate rooms. "Ann's Place" contained five Class III video game machines. "Charlie's Place" contained five Class III video game machines. "Buddy's Place" contained five Class III video game machines.

3. "Ann's Place," "Charlie's Place," and "Buddy's Place" each had a separate retail license for operation within the structure. The retail licensee for all three businesses is Charles Raley, Jr.

4. At the time of the inspection, Class III video game machine licenses were affixed to the machines in "Ann's Place," "Charlie's Place," and "Buddy's Place." The licenses, which all expired on May 31, 1997, were numbered as follows:

Retailer License Number Machine Owner

"Ann's Place" 040283 MHS Enterprises, Inc.

040282 MHS Enterprises, Inc.

040281 MHS Enterprises, Inc.

040290 MHS Enterprises, Inc.

040289 MHS Enterprises, Inc.

"Charlie's Place" 040284 MHS Enterprises, Inc.

040285 MHS Enterprises, Inc.

040276 MHS Enterprises, Inc.

039873 Mickey Stacks, d/b/a Red Dot Amusement Co.

039872 Mickey Stacks, d/b/a Red Dot Amusement Co.

"Buddy's Place" 040288 MHS Enterprises, Inc.

039219 Mickey Stacks, d/b/a Red Dot Amusement Co.

039128 Mickey Stacks, d/b/a Venus Distributing

039178 Mickey Stacks, d/b/a Red Dot Amusement Co.

039223 Mickey Stacks, d/b/a Red Dot Amusement Co.

5. The owners of the above listed fifteen (15) video game machines are MHS Enterprises, Inc., Red Dot Amusement Co., and Venus Distributing. Mickey H. Stacks is the owner of Red Dot Amusements Co., Venus Distributing, and the president of MHS Enterprises, Inc.

6. At the time of the inspection, the doors of all three businesses were open, the lights were on, and all of the video poker machines were turned on and available for play. No signs were posted on any of the machines to indicate that they were not operable. There were no signs indicating that the rooms where the machines were situated were closed.

7. Two employees were located at the cashier desk in the convenience store area.

8. There were no players on the premises of "Ann's Place" at the time of inspection, and no employees were located inside the room.

9. One player was on the premises of "Charlie's Place" at the time of inspection. There were no employees in this room.

10. Two players were on the premises of "Buddy's Place" at the time of inspection. According to the Department, there was one spectator in this room. Photographs taken by the revenue officers depict a male standing inside the doorway facing the machines. This person was identified by Respondents' witness as an employee of Charles Raley, Jr.

11. The Department's agents did not inquire whether the spectator was an employee of on the retail businesses.

12. Donald Ray Blackmon testified on behalf of the Respondents. Mr. Blackmon was employed by MHS Enterprises, Inc. for three to four years. His job entailed collecting money, fixing machines, and keeping up with machines on a route that included approximately nine to ten stores.

13. On June 13, 1996, Blackmon was at the location servicing the video machines by changing the configuration of the operating system so that the nickels and dimes machines would become quarters and dollars machines. This servicing required the machines to be temporarily inoperable, and the machines should not have been plugged in and operable. Blackmon testified that he was not present during the inspection and did not know whether the machines were plugged in.

14. On June 13, 1996, the Department issued a Regulatory Violation and Proposed Assessment Report against Charles W. Raley, Jr. and Red Dot Amusement Co. In this report, the Department alleged a violation of the single place or premises requirement of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Regs. 117-190 (Supp. 1996), because the operator of the business at Rt. 2, Jefferson, South Carolina allowed the operation of machines in a single place or premises without an employee present during business hours.

15. The Department amended the violation in its Final Determination and Amendment of Violation dated on March 19, 1997, to show that the violation was issued against Charles Raley, Jr., d/b/a Raley's 903 Superette, Mickey H. Stacks, d/b/a Red Dot Amusements Co., Mickey H. Stacks, d/b/a Venus Distributing, and MHS Enterprises, Inc.

CONCLUSIONS OF LAW

Based upon the foregoing 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. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) prohibits the operation of more than five machines authorized under Section 12-21-2720(A)(3) at a single place or premises.

3. Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1996), the Department is authorized to promulgate regulations to assist in the administration and enforcement of the Video Game Machines Act.

4. 27 S.C. Code Regs. 117-190 defines "single place or premises" for purposes of interpreting the Video Game Machines Act, including Section 12-21-2804(A). It provides:

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 space 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 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 the purposes of The Video Game Machines Act. (emphasis added).

5. With respect to the employee requirement, the regulation requires that in a building with two or more areas where video games are located, each individual game room containing the Class III licenses and machines have a separate employee working in that room at all times during business hours. If a game room is accessible to customers and no employee is present in that room, the room is being operated in violation of Section 12-21-2804(A). An employee working in a common area or anywhere else outside the game room is not considered to be "on the premises" of the game room. See S.C. Dep't of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996).

6. In this case, the evidence indicates that there were two employees in the common area at the time of the inspection, no employees in "Ann's Place" or "Charlie's Place," and one employee in "Buddy's Place." Furthermore, the evidence indicates that all premises were open for business at the time of the inspection. The machines were turned on and available for play; the doors to the game rooms were open; and the lights were on. Although there was testimony that the machines were being serviced and should not have been operable, there was no evidence to contradict the revenue officer that the machines were turned on and available for play. The Department failed to establish its burden of proof that there was no employee in "Buddy's Place." The revenue officer did not make any inquiry of the "spectator" to ascertain whether he was an employee. Through testimony elicited by the Respondents' witness, the "spectator" was identified as an employee. I find no violation with respect to "Buddy's Place."

7. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S. C. Cable Tel. Ass'n. v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Conflicts in the testimony regarding whether there was an employee or spectator in "Buddy's Place" at the time of inspection has been resolved in favor of the Respondents, based upon the credibility of the witness and the weight assigned to his testimony. 8. The Department's policy with respect to the enforcement of Regulation 117-190 has been that a structure with multiple rooms containing Class III video game machines is required to have an employee in each the room where the machines are located. The Respondents produced no evidence to demonstrate the reasons for the employees not to be present in the games rooms.

9. The Respondents Charles Raley, Jr., Red Dot Amusement and MHS Enterprises, Inc. violated Section 12-21-2804(A) by failing to have an employee present in "Ann's Place" and "Charlie's Place" during business hours.

B. Penalty

10. The Department seeks a $5,000 fine against Charles W. Raley, Jr. for an alleged violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), a $5,000 fine against Mickey H. Stacks d/b/a Red Dot Amusements and Venus Distributing for an alleged violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), a $5,000 fine against MHS Enterprises, Inc. for an alleged violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), revocation of fifteen (15) Class III video game machine licenses located at these businesses on June 13, 1996, and preclusion of the use of any Class III video game machine licenses at "Ann's Place" and "Charlie's Place," Rt. 2, Jefferson, South Carolina for a period of six months from the date of revocation.

11. The penalty for failure to comply with the limitation on the number of machines permitted within a "single place or premises" is the mandatory revocation of the licenses of machines located in the establishment. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996). In addition, no license may be used for the operation of a machine in an establishment in which a license has been revoked for a period of six months from the date of revocation. Id.

12. Section 12-21-2804(F) provides that a person who violates Section 12-21-2804(A) is subject to a fine of up to five thousand dollars ($5,000.00).

13. As the finder of fact, it is the administrative law judge's prerogative "to impose an appropriate penalty based on the facts presented." Walker v. S.C. ABC Comm 'n, 305 S.C. 209, 211, 407 S.E.2d 633, 634 (1991). In the present case, the administrative law judge has the authority to establish the monetary fine within the allowable range provided for by Section 12-21-2804(F). S.C. Code Ann. § 12-4-30(D) (Supp. 1996).

14. Based upon the facts and the violation for two of the three rooms, the appropriate penalty is $2,500 for each person under the statute.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

ORDERED that the Department properly issued a citation against Respondent Charles Raley, Jr. d/b/a Raley's 903 Superette for violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Regs. 117-190. The following ten (10) licenses of the video poker machines located in "Ann's Place" and "Charlie's Place" on June 13, 1996, have expired and therefore revocation is a meaningless act:

"Ann's Place" 040283 "Charlie's Place" 040284

040282 040285

040281 040276

040290 039873

040289 039872

IT IS FURTHER ORDERED that no licenses shall be used for the operation of the Class III machines in "Ann's Place" and "Charlie's Place" for a period of six (6) months from the date of this Order.

IT IS FURTHER ORDERED that the Department properly issued a citation against Respondents Charles Raley, Jr., Mickey Stacks d/b/a Red Dot Amusement Co. and MHS Enterprises, Inc. for violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Regs. 117-190. Respondents Charles Raley, Jr., Mickey Stacks d/b/a Red Dot Amusement Co. and MHS Enterprises, Inc. are hereby ordered to pay to the Department a monetary fine of $2,500 each, for a total of $7,500.

AND IT IS SO ORDERED.




ALISON RENEE LEE

Administrative Law Judge

July __, 1997.

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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