SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter is before this tribunal for a contested case hearing pursuant to S.C. Code Ann. §§ 1-23-310, et seq. (Supp. 1998) and S.C. Code Ann. § 12-4-30(D) (Supp. 1998) on alleged administrative violations. The South Carolina Department of Revenue alleges that on September 18, 1995, Respondent violated S.C. Code Ann. § 12-21-2720(C) by failing to purchase a separate license for each station of a multi-player coin-operated device subject to licensing under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1997). For the alleged violations of § 12-21-2720(C), the Department seeks a $10,000 fine against Respondent ($2,500 for each station not licensed).

The hearing of this matter was held on March 23, 1999. The issues before this tribunal are (1) whether Respondent violated S.C. Code Ann. § 12-21-2720(C) (Supp. 1997) and, (2) if so, what is the proper penalty for the violations. Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Respondent violated S.C. Code Ann. § 12-21-2720(C) by failing to purchase licenses for four stations of a five-station Blackjack machine in contravention of the law. Consequently, Respondent is subject to the $10,000 fine.

FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. On September 18, 1995, the Department's agent, Robert Gardner, conducted an inspection of the Lucky Lady located at 940 Lake Arrow Head Road, Myrtle Beach, South Carolina. After completion of the inspection that day, the agent issued an administrative citation against Respondent for violating S.C. Code Ann. § 12-21-2720(C) (Supp. 1997) by failing to purchase licenses for four stations of a five-station Blackjack machine.
2. On the date of inspection, a multi-player Blackjack machine was maintained at the Lucky Lady. Respondent was the licensee of the machine at that time. The machine, which is subject to licensure under section 12-21-2720(A)(3), had five stations; however, only one of the stations was licensed.
3. The Department seeks a $10,000 fine against Respondent.

CONCLUSIONS OF LAW AND ANALYSIS

1. Jurisdiction
2. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1998) and S.C. Code Ann. § 1-23-320 (Supp. 1998), the Administrative Law Judge Division has jurisdiction to hear this matter.
3. Burden of Proof
4. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 2 Am. Jur. 2d Administrative Law § 360 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1994). The Department is the party asserting the affirmative in this case; therefore, the Department must prove by a preponderance of the evidence that Respondent violated § 12-21-2720. 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)).
5. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See South Carolina Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Furthermore, a trial judge, who observes a witness, is in the better position to judge the witness's demeanor and veracity and evaluate his testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
6. Analysis

S.C. Code Ann. § 12-21-2720(C) (Supp. 1997) provides:

The owner or operator of any coin-operated device which is exempt from section 16-19-60 and is subject to licensing under section 12-21-2720(A)(3) and which has multi-player stations, shall purchase a separate license for each such station and any multi-player station counts as a machine when determining the number of machines authorized for licensure under section 12-21-2804(A).

(Emphasis added).

At the time Respondent purchased his license, only one license was required for a multi-station Class III coin-operated machine. However, in an act which became effective July 1, 1995, the South Carolina General Assembly amended § 12-21-2720(C) to require a license for each station of a multi-player machine. Although Respondent contends that he relied on the license he obtained prior to this amendment as adequate licensure for his multi-player Blackjack machine, the South Carolina Court of Appeals has held that such reliance is misplaced. In South Carolina Dep't of Revenue v. Rosemary Coin Machines, Inc., 331 S.C. 234, 500 S.E.2d 176 (Ct. App. 1998), the Court stated, "[a]s of the date it became effective, the amendment required that a multi-player machine must have licenses for each of its stations. The license purchased by Rosemary Coin prior to May 31, 1995 was still in effect on July 1, 1995, and acted to validly license one of the five stations on the Blackjack machine." Rosemary Coin, 331 S.C. at 245, 500 S.E.2d at 182.⁽¹⁾

Respondent argues that he was not given fair warning of the requirement of amended section 12-21-2720(C) and its applicability to him, and therefore the imposition of any penalty for his failure to follow this statute would violate his due process rights. Respondent asserts that he purchased a license for the machine in question prior to June 1, 1995, and that he relied on the Administrative Law Judge's ruling in South Carolina Dep't of Revenue and Taxation v. Rosemary Coin Machines, Inc.,⁽²⁾ and the circuit court's affirmance of that ruling, finding that the amendment, effective July 1, 1995, did not apply to machines licensed prior to June 1, 1995. Respondent reasons that these rulings had the effect of law at the time the Department issued its citation against him in April, 1996, since the Court of Appeals' reversal of these rulings did not occur until later.⁽³⁾ I disagree.

The rulings of the Administrative Law Judge and the circuit court are not binding on the Department unless they remain unappealed or until affirmed by a court of last resort. See S.C. Code Ann. § 1-23-380 (Supp. 1997) (a party who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case is entitled to judicial review); S.C. Code Ann. § 1-23-390 (Rev. 1986) (an aggrieved party may obtain a review of any final judgment of the circuit court under the Administrative Procedures Act by appeal to the Supreme Court); S.C. Code Ann. § 14-8-200 (Supp. 1997) (jurisdiction of Court of Appeals shall extend to all questions of law and equity arising in the course of the proceedings of the circuit court); S.C. Code Ann. § 14-8-260 (Supp. 1997) (providing for transfer of cases to Court of Appeals after notice of intent to appeal filed with Supreme Court). Because the Department timely appealed the rulings of the Administrative Law Judge Division and the circuit court in Rosemary Coin, these rulings were not binding on the Department at the time it issued a citation against Respondent in this case.

Moreover, while it is arguable that amended section 12-21-2720(C) should not apply to machines licensed prior to June 1, 1995, the question of whether the plain language of the statute gave fair warning to machine owners and operators of the new licensing requirement, and its application to them, involves a separate framework of analysis. The right to due process of law requires only that a person have "'fair warning . . . in language that the common world will understand, of what the law intends to do if a certain line is passed.'" United States v. Lanier, 117 S.Ct. 1219 (1997) (citing McBoyle v. United States, 51 S.Ct. 340 (1931)). All that is required is that the statute is reasonably clear at the relevant time as to its requirements. See United States v. Lanier, 117 S.Ct. at 1225 (1997).

I find that the plain language of amended section 12-21-2720(C), the law as it existed on the date of the violation, gave Respondent fair warning of the requirement the Department now seeks to enforce, that is, the purchase of four additional licenses for the five-station Blackjack machine in question.

Despite Respondent's argument to the contrary, I find that the Court of Appeals' opinion in Rosemary Coin neither expanded the scope of the plain language of the statute nor applied an unforeseeable construction to it, as the South Carolina Supreme Court did in Bouie v. City of Columbia.⁽⁴⁾ Therefore, Respondent's argument that "[t]o apply the Court of Appeals construction of § 12-21-2720(C) retroactively to [his] conduct . . . denies [him] due process of law" has no merit.

1. Penalty

Respondent contends that if violations are found, fairness dictates a suspension of the fine under the facts of this case. South Carolina Code Ann. § 12-21-2738 (Supp. 1996) provides the penalty for failure to license a machine. It states, in pertinent part, "If the violation under this section relates to a machine licensed pursuant to Section 12-21-2720(A)(3), the applicable penalty amount is two thousand five hundred dollars, no part of which may be suspended."⁽⁵⁾ (Emphasis added).

Although the 1997 amendment to section 12-21-2738 deleted the words "no part of which may be suspended," this amendment was not effective until June 6, 1997. It is undisputed that the violation in this case took place prior to the effective date of the 1997 amendment. Therefore, the $2,500 penalty is mandatory in this case. Further, even if this tribunal had the discretion to suspend or reduce the penalty amount, I find that $2,500 is an appropriate penalty for each violation in this case.

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that, pursuant to S.C. Code Ann. § 12-21-2738 (Supp. 1996), the Department shall impose a fine of $10,000 upon Respondent. The payment of such fine, however, shall be held in abeyance until the South Carolina Supreme Court disposes the pending case South Carolina Department of Revenue v. Rosemary Coin, Inc.

IT IS FURTHER NOTED THAT, pursuant to ALJD Rule 29(c), issues raised in the proceedings but not addressed in the Order are deemed denied.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

April ____, 1999

Columbia, South Carolina

1. The South Carolina Supreme Court has granted a writ of certiorari to review the Court of Appeals decision in this case.

2. Docket No. 95-ALJ-17-0498-CC. This ruling was issued in December, 1995 and was affirmed by the circuit court in May, 1997.

3. See South Carolina Department of Revenue and Taxation v. Rosemary Coin Machines, Inc., 331 S.C. 234, 500 S.E.2d 176 (Ct. App. 1998).

4. 378 U.S. 347, 84 S.Ct. 1697, 12 L.Ed.2d 894 (1964). In Bouie, the South Carolina Supreme Court's expanded interpretation of a criminal trespass statute was found to violate the defendants' due process rights. The South Carolina Supreme Court had departed from not only the plain language of the statute in question, but also from 95 years of consistent case precedent construing the statute as it was plainly written. Bouie, 84 S.Ct. at 356-357 (1964). Conversely, the Court of Appeals' opinion in Rosemary Coin is the first appellate opinion in the State to interpret the 1995 amendment to section 12-21-2720(c), a relatively young piece of legislation.

5. Section 12-21-2738 was amended to delete the words "no part of which may be suspended" by Section 8A of Act 53 of 1997, effective June 6, 1997. However, "'there is a presumption that statutory enactments are to be considered prospective rather than retroactive in their operation unless' the statutes are remedial or procedural in nature." Smith v. Eagle Construction Co., Inc., 282 S.C. 140, 143, 318 S.E.2d 8, 9 (1984) (citing Hercules, Inc. v. South Carolina Tax Comm'n, 274 S.C. 137, 143, 262 S.E.2d 45, 48 (1980). "'Statutes are remedial and [retroactive], in the absence of directions to the contrary, when they create new remedies for existing rights . . . enlarge the rights of persons under disability, and the like, unless [they] . . . violate some contractual obligation.'" Smith v. Eagle Construction Co., Inc., 282 S.C. 140, 143, 318 S.E.2d 8, 9 (1984) (quoting Byrd v. Johnson, 220 N.C. 184, 16 S.E.2d 843 (1941).

In the instant case, the amendment is not remedial (and thus not retroactive) and the date of the violations was September 18, 1995, prior to the effective date of the amendment. Thus, the amendment does not apply.