South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Winner's World, Inc., d/b/a Babs, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Winner's World, Inc., d/b/a Babs, d/b/a Hampton, d/b/a Dizzy; Casino Games, Inc., d/b/a Front Nine, d/b/a The Paddock; Rudy L. Williams, d/b/a Taz, d/b/a Mickey Mouse, d/b/a Mirage; and J.M. Brown Amusement Company, Inc.
 
DOCKET NUMBER:
97-ALJ-17-0248-CC

APPEARANCES:
Jeffrey Nelson, Esquire, for Petitioner

C. Tyrone Courtney, Esquire, for Respondent

Mike Daniel, Esquire, for Respondent
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann. § 12-4-30(D) and § 1-23-310 et seq. (Supp. 1996), upon Respondents' request for a contested case hearing after being cited by the South Carolina Department of Revenue (hereinafter referred to as "DOR") for administrative violations of the Video Game Machines Act, S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996). The primary issue for determination is whether the Respondents failed to have at least one separate employee on each of the premises during business hours.

After notice was sent to each of the parties, a hearing on this matter was held before the undersigned Administrative Law Judge on January 5, 1998. Based upon the relevant and probative evidence and the applicable law, I find that Petitioner failed to meet the burden of proof, and the violations are hereby dismissed.



DISCUSSION

DOR's entire case is based upon Agent Ritchie Way's testimony and drawings, notes, and checklists made during and after his inspection. His testimony lacked definitiveness and clarity, his memory of the facts was confused, and his notes were contradictory. Accordingly, the credibility and probative value of Way's testimony are dubious. Because of the contradictory nature of the evidence and inconclusive testimony as to the facts, it is utterly unclear which of the eight game rooms were open and which of the open rooms lacked the required employee.

When Way entered the location, five or six individuals were socializing in the common area. They dispersed upon Way's entrance. Way then identified himself to the manager and conducted an inspection of each separate game room. He found eight open game rooms. Six of the eight open game rooms had an individual employee on the premises. Agent Way testified that he believed the employees in those six game rooms were the same individuals he had seen in the common area when he first arrived; however, he admitted that he had not actually seen the faces of any of the persons in the common area.

According to the violation report issued by Way, two of the eight open game rooms did not have employees present at the time of his inspection. The location diagram drawn by Way indicates these two rooms were open for business; however, in his inspection checklist and notes, there is a notation that indicates the two businesses were closed. Upon cross examination, Way offered no explanation for the discrepency. There were several other inconsistencies within the checklist, including marks indicating no employee in a room, followed by a name and social security number in a space provided for the employee located in that room.

Because of the evidence presented was contradictory and/or inconclusive, I am unable to I find a violation of the single place or premises provision in any of the specific game rooms cited. DOR simply failed to prove by a prepondenrence of the evidence that the violations occurred.

FINDINGS OF FACT

I find the following by a preponderance of the evidence:

1. The Administrative Law Judge Division has personal and subject matter jurisdiction in this case.

2. Notice of the time, date, place, and subject matter of the hearing was given to Respondents and DOR.

3. On June 13, 1996, DOR agents Ritchie Way and Wick Fischer conducted an inspection of 2229 Highway 17 North, Little River, South Carolina.

4. The location is a mall-type arrangement with 12 video game rooms and a common area.

5. Upon entry into the common area, the Department agents observed five or six individuals in the common area who dispersed upon their arrival.

6. At the time of inspection, eight game rooms were open for business.

7. At the time the agents inspected the individual game rooms, six of the open game rooms had employees present on the business premises.

8. The evidence is inconclusive whether two of the game rooms alleged to be in violation were open or closed for business.

9. The evidence is inconclusive whether these employees were the same individuals that were in the common area when the agents first arrived at the location.

10. The eight game rooms alleged to be in violation are: Babs (room #1), Hampton (room #2), Dizzy (room #3), Front Nine (room #4), The Paddock (room #5), Taz (room #6), Mickey Mouse (room #7) and Mirage (room #8).

11. A diagram of the location attached to the proposed violation report made at the time of the inspection indicates that game room #2 was open, but a notation on a following page indicates that this room was closed.

12. The proposed violation report lists five rooms that are checked "no" for employee presence in the room, but a name and social security number directly follow that notation in a space marked "If yes, Employee Name . . . SS#."

13. The employee listed as present in the Mirage game room (room #8) was Julie Aylward.

14. Julie Aylward was walking the halls of the location when the revenue agents arrived and greeted the agents in the common area.

15. Agent Way gave Julie Aylward, Manager of Winners World, the Regulatory Violation and Proposed Assessment Report citing J.M. Brown Amusements Co., Inc. with a violation of S.C. Code Ann. 12-21-2804(A) (Supp. 1996) and S.C. Code Ann. Regs. 117-190 (Supp. 1996) for failing to have an employee on a single place or premises.

16. The Final Agency Determination citing J.M. Brown Amusements Co., Inc., Winner's World, Inc., Rudy Williams and Casino Games, Inc. with a violation of S.C. Code Ann. 12-21-2804(A) (Supp. 1996) was issued on May 1, 1997. The Final Agency Determination sought a $5,000 fine from each Respondent, revocation of 40 machine licenses, and no licenses issued at the location for a period of six months.

17. Respondent J.M. Brown Co., Inc., is the machine licensee for all the game machines involved.

18. Respondent Casino Games, Inc. holds the retail licenses for the game rooms Front Nine (lic. # 026391333) and The Paddock (lic. # 026391351).

19. Respondent Winners World, Inc. holds the retail licenses for the game rooms Babs (lic. # 026418118), Hampton (lic. # 026418145) and Dizzy (lic. # 026418136).

20. Respondent Rudy Williams holds the retail licenses for the game rooms Taz (lic. # 026405998), Mirage (lic. # 026405621) and Mickey Mouse (lic. # 026405970).

21. The facts are insufficient to determine which specific game rooms, if any, were open for business without an employee on the premises.

CONCLUSIONS OF LAW

Based upon the Findings of Fact, I conclude as a matter of law the following:

The Administrative Law Judge Division has jurisdiction to hear and decide this matter pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp. 1996).

The Video Game Machines Act (Act) which regulates video game machine activity in South Carolina was enacted in 1993, became effective on July 1, 1993, and is codified at S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1996). The purpose of the Act is to regulate the video game machines industry and to prevent large scale casino-type gambling operations in the State of South Carolina. See Reyelt v. S.C. Tax Comm'n, 6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct., Greenville, S.C., Nov. 15, 1993); see also 94-4 Op. Att'y Gen. 21 (1994).

S.C. Code Ann. § 12-21-2804(A) prohibits a person from applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five Class III machines at a single place or premises.

27 S.C. Code Ann. Regs. 117-190 (Supp. 1996), promulgated by DOR, clarifies the meaning of the phrase "single place or premises" as set forth in Section 12-21-2804(A). The regulation provides in pertinent part (emphasis added):

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.

. . . .

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 purposes of the Video Game Machines Act.

5. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) expressly authorizes DOR to enforce the provisions of this section and also provides that the penalty for exceeding the maximum number of video game machines permitted in a single place or premises requires the revocation of the licenses of machines located in the establishment.

6. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 29 Am. Jur. 2d Evidence § 127 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1994). DOR is the party asserting the affirmative in this case; therefore, DOR must prove by a preponderance of the evidence that Respondents violated § 12-21-2804(A) and R. 117-190 by failing to have a separate employee in the businesses which are the subject of this case.

7. The preponderance of the evidence "is evidence which is of the greater weight or more convincing than the evidence which is offered in opposition to it . . . ." Black's Law Dictionary 1182 (6th ed. 1990). "The preponderance of the evidence means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the mind the belief that what is sought to be proved is more likely true than not true." Sanders, supra, § 9:5 Quantum of Evidence in Civil Cases (1994), [citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)].

8. The trier of fact must weigh and pass upon the credibility of evidence presented. See S.C. Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge who observes a witness is in the best position to judge the witness's demeanor and veracity and evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Mann v. Walker, 285 S.C. 194, 328 S.E.2d (Ct. App. 1985).

9. The testimony of Agent Way lacked clarity and credibility.

10. DOR did not show by a preponderance of the evidence that Respondent failed to satisfy any requirement of the single place or premises requirements of S.C. Code Ann.

§ 12-21-2804(A) (Supp. 1996) or S.C. Code Ann. Regs. 117-190 (Supp. 1996).

11. The evidence does not support a finding of a violation against any of the Respondents.

12. Pursuant to ALJD Rule 29(B), any issues or motions raised at the hearing but not addressed in this Order are deemed denied.





ORDER

IT IS THEREFORE ORDERED that the action against the Respondents in the above-captioned case, bearing Docket Number 97-17-0248-CC, is hereby dismissed with prejudice.

AND IT IS SO ORDERED.



__________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

February ____, 1998

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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