South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Tim's Amusements, Inc, d/b/a Dilli Delli II and Dilli Delli III

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Tim's Amusements, Inc, d/b/a Dilli Delli II and Dilli Delli III
 
DOCKET NUMBER:
99-ALJ-17-0103-CC

APPEARANCES:
Petitioners & Representative: South Carolina Department of Revenue,

Jeffrey M. Nelson

Respondents & Representative: Tim's Amusements, Inc, d/b/a Dilli Delli II and Dilli Delli III James M. Griffin

Parties Present: All Parties
 

ORDERS:

FINAL ORDER AND DECISION

I. Statement of the Case

The South Carolina Department of Revenue (DOR) seeks the imposition of a fine of $10,000 and the revocation of 10 Class III video game machine licenses along with an order that no Class III licenses shall be used at the location for a period of 6 months. Tim's Amusements is the machine owner and also the location operator for the two game rooms of Dilli Delli II and Dilli Delli III at 1717 E. Durst Avenue, Greenwood, South Carolina. Tim’s Amusements opposes DOR's position and asserts no violation occurred. Accordingly, Tim’s Amusements assert no fine or revocation is warranted.

This disagreement places jurisdiction in the Administrative Law Judge Division. S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1998). The hearing in this matter was held April 19, 1999 at the Edgar Brown Building, Columbia, South Carolina. Based upon the evidence and the arguments presented by the parties, the 10 Class III licenses are revoked, the six month prohibition applies to the machines but not to the location, and Tim’s Amusements is liable for an $8,000 fine.

II. Issues

1. Is Tim's Amusements lack of a separate employee on the premises not a violation of the single place or premises requirement of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998) since the business hours of the establishments in question had ended?

2. If a violation of the single place or premises requirement occurred, do the revocation provisions of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) apply to Tim's Amusements, or is revocation required only for a violation of the now unconstitutional requirement that the primary and substantial portion of the establishment's gross proceeds must be from a source other than the Class III machines?

3. If a violation of the single place or premises requirement occurred, is Tim's Amusements denied the use of any Class III machines at the location for a period of six months from the time the revocation becomes final, or is Tim's Amusements denied the privilege of using the ten machines for a period of six months from the time the revocation becomes final?

4. If a violation of the single place or premises requirement occurred, what monetary penalty, if any, is proper for Tim's Amusements?

III. Analysis

A. Single Place or Premises: Employee & Closed Business

1. Positions of Parties

DOR asserts that Tim's Amusements failed to have an employee on the premises of the game rooms in question here, and further, that the business hours of the game rooms had not ended at the time of the inspection. Tim's Amusements disagrees and asserts the rooms were closed at the time of the inspection.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

A. Background Facts

The factual dispute is whether Dilli Delli II and Dilli Delli III were closed or open. The location operator argues Dilli Delli II and Dilli Delli III were closed and that such a fact removed any obligation to have an employee on the premises. These facts are examined here.

The normal practice at the location is that only two of the three game rooms would be operational. One employee would work in the bar area (which housed five machines) and one employee would work in whichever of the remaining two game rooms was open. Just prior to the SLED inspection, one employee was in Dilli Delli II and another employee was in the bar area. The door to Dilli Delli III was closed and contained a sign stating, "Do not enter unless attendant in room."

As to the game room known as Dilli Delli II, initially an employee was within the four walls of that room. However, the employee in that room left to go to the restroom and closed the door to Dilli Delli II. The door was not locked. In fact, the door contained no locking mechanism. The door to Dilli Delli II also contained a sign stating, "Do not enter unless attendant in room." Accordingly, when the employee left to go to the restroom, both Dilli Delli II and III had the doors closed to each game room. Upon leaving the restroom, the employee did not return to Dilli Delli II. Rather, she began assisting in the bar area. Thus, no employee was within Dilli Delli II or III immediately prior to the SLED inspection.

The inspection of the premises by SLED began at 12:52 p.m. on October 2, 1998. At that time both employees were in the bar area. Upon entering the front door of the location, the SLED agent proceeded to Dilli Delli II. The door to the game room was open, and a player was in the room playing one of the machines. No employee was in the room. The SLED agent then entered Dilli Delli III. The door to that room was also open, and two players were playing two separate machines. No employee was in that room either. After identifying the license numbers on the machines and concluding the inspection, the SLED agent issued a citation for maintaining more than five machines at a single place or premises.

B. Disputed Facts

The ultimate finding of fact in dispute is whether the game rooms were open or closed. In addition, an evidentiary fact dispute exists on whether the doors to the two game rooms in dispute were open or closed at the time of the inspection. I find the doors to both Dilli Deli II and III were open at the time of the inspection, and I further find the game rooms of Dilli Deli II and III were open at the time of the inspection.

While I do not doubt that the doors to the two rooms were closed earlier in the day by the employees, I find that the doors to both Dilli Deli II and III were open at the time of the inspection. Indeed, no persuasive evidence refutes the fact that one player was in game room II and two players were in game room III. I conclude those players opened the doors to the respective rooms and entered the rooms for the purpose of playing the machines.

Further, I find the game rooms of Dilli Deli II and III were not closed at the time of the inspection. The ease with which members of the public gained access to the two rooms supports a finding that the rooms were not closed. The lights in the rooms were on, the doors were not locked, the machines were fully operational in those rooms, and the employees were less than diligent in supervising the access to the two rooms. Accordingly, when considered as a whole, the business hours of the two rooms had not ended at the time of the inspection.

3. Conclusions of Law

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

A. Applicable Law of Closed Business Hours

DOR asserts that at least one game room at the Greenwood location was without a separate employee on the premises "during business hours." Regs. 117-190. In establishing this allegation, DOR bears the burden of proving when the location's business hours began and when they ended. See 2 Am. Jur. 2d Administrative Law § 360 (1994) (burden of proof generally rests with the party who asserts the affirmative of an issue).

Business hours begin at the moment a location opens for the transacting of its business. See Jolly v. Marion Nat. Bank, 267 S.C. 681, 231 S.E.2d 206, (1976) (a shareholder’s access to records during business hours is allowed as long as the access is for those hours of those days during which business could be transacted). However, deciding when business hours conclude is a factual issue based upon the totality of the circumstances for the time period in dispute. See Dym v. Merit Oil Corporation, 36 A.2d 276 (Conn. 1944) (even for a facility which appeared to be closed for the night, a weighing of the facts can find a facility open where no closed sign is conspicuously displayed at the entrance to the premises and where doors at the facility are unlocked.). In this case, when considered as a whole, the evidence demonstrates that the business in dispute was open for business at the time of the SLED Agents’ inspection.

B. Law Applied to Facts

Here, the facts demonstrate that, notwithstanding the sign on the door, the rooms were accessible to the public. The doors were not locked and no barrier impeded the public from gaining access to the rooms. Further, the sign itself does not inform the public that the room is closed. Rather, the sign indicates the room is open and that an attendant is required before entering. Such a notice is not a sufficient indication that the business hours of the location have ended. Under the facts proven in this case, the game rooms of Dilli Delli II and Dilli Delli III had business hours that were still in progress at the time of the inspection. Accordingly, Dilli Delli II and Dilli Delli III were not closed at the time of the inspection on October 2, 1998.

B. Revocation: Gross Proceeds

1. Positions of Parties

Tim's Amusements argues that even if a violation occurred, the revocation provision of S.C. Code Ann. § 12-21-2804 does not apply. Rather, Tim’s Amusements asserts the revocation applies only to the requirement that the primary and substantial portion of the establishment's gross proceeds must be from a source other than the Class III machines. Such being the case, Tim’s Amusements argues that the "gross proceeds" provision was declared unconstitutional by Reyelt v. South Carolina Tax Commission, 6:93-1491-3 and 6:93-1493-3 (U.S. Dist. Ct., Greenville, S.C., Nov. 15, 1993) and, therefore, the revocation cannot apply.

DOR disagrees. It argues the revocation provision is triggered by any violation of the single place or premises requirement. Hence, the failure to have an employee on the premises is a sufficient basis for revoking the ten licenses involved in this case.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

A violation of the single place or premises requirement occurred at the Tim’s Amusements location on October 2, 1998. Of the ten machines found in violation, all are owned by Tim's Amusements and all are housed in the game rooms identified as Dilli Delli II and III.

3. Conclusions of Law

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

DOR "shall revoke the licenses of machines located in an establishment which fails to meet the requirements of this section." S.C. Code Ann. § 12-21-2804(A) (Supp.1998). Here, the establishment does not meet the demands of the single place or premises requirement. Accordingly, the machine licenses located therein must be revoked.

I disagree with the view of Tim's Amusement that the revocation is limited to the gross proceeds requirement of S.C. Code Ann. § 12-21-2804(A) (Supp.1998). Rather, revocation is appropriate for "the licenses of machines located in an establishment which fails to meet the requirements of this section." S.C. Code Ann. § 12-21-2804(A) (Supp.1998). The statute's use of the plural word "requirements" obviously means the licensee must meet more than one requirement and that the failure to satisfy any requirement invokes the revocation. See Emerson Elec. Co. v. Wasson, 287 S.C. 394, 339 S.E.2d 118 (1986) (the legislature's use of the plural "taxpayers" instead of "taxpayer" indicates more than one).

Here, the establishment must meet at least two requirements. The first is the single place or premises requirement. S.C. Code Ann. § 12-21-2804(A) (Supp.1998). The second is the gross proceeds requirement. S.C. Code Ann. § 12-21-2804(A) (Supp.1998). Thus, even treating the gross proceeds requirement as no longer a part of the law, a failure to satisfy the single place or premises requirement still triggers the revocation. Accordingly, Tim's Amusements ten licenses for the Class III machines located in the game rooms identified as Dilli Delli II and Dilli Delli III must be revoked.

C. Six Month Prohibition

1. Positions of Parties

DOR asserts the statute requires a prohibition on the use of any Class III machines at the location for a period of six months from the time the revocation becomes final. Tim's Amusements argues a six month prohibition should be imposed on the machines, not on the location.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

Tim's Amusements placed fifteen Class III machines in three game rooms at the Greenwood location. At the time of the inspection on October 2, 1998, Tim’s Amusements operated five machines housed in Dilli Delli II and held the retail license issued by DOR pursuant to Chapter 36 of Title 12 of the S.C. Code. Likewise, Tim’s Amusements operated five machines as Dilli Delli III and held a retail license in that game room as well. At the time of the inspection, both game rooms were licensed establishments.

Judicial notice is taken of the published decisions of the Administrative Law Judge Division and of the numerous instances in which DOR has argued before the Division that S.C. Code Ann. § 12-21-2804(A) imposes a six month prohibition on the use of any Class III machine at the offending location. However, judicial notice is also taken of the extensive opposition to DOR’s view. In hearings before the Division, license holders routinely and repeatedly object to DOR’s position.

3. Conclusions of Law

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

A. Prohibition Applicable to Machines or to Location

1. Introduction

The following language of § 12-21-2804 is in issue:

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 the revocation.

This language has produced two interpretations. DOR’s interpretation is that once a license for a Class III machine in a location is revoked, the location is prohibited from having any Class III machines on its premises for a period of six months from the date of the revocation. This view is the "dead location" interpretation. Tim's Amusement’s interpretation is that once the location has a revocation of a Class III machine license, the machines within the establishment (but not the establishment itself) are prohibited from being re-licensed as Class III machines for a period of six months from the date of the revocation. This view is the "dead machines" interpretation. Considering the plain language of the statute and applying the legislative intent as gleaned from applicable factors, the six month prohibition applies to the machines involved and not to the location involved.

2. Legislative Intent

Courts do not legislate. Rather, when asked to interpret the meaning of a statute, the task is solely that of seeking to effectuate the legislature’s intent. Laird v. Nationwide Ins. Co., 243 S.C. 388, 134 S.E.2d 206 (1964). In deciding legislative intent, the first and most basic inquiry is whether the language of the statute is plain and unambiguous and whether the statute conveys a clear and definite meaning. If the answer is yes, no occasion exists for employing rules of statutory interpretation, and the court has no right to look for or impose another meaning. Paschal v. State Election Comm’n, 317 S.C. 434, 454 S.E.2d 890 (1995).

However, where an ambiguity prevents the statute from conveying a clear and definite meaning, the court must find the legislative intent through statutory construction. See Abell v. Bell, 229 S.C. 1, 91 S.E.2d 548 (1956) ("But where the language of the statute gives rise to doubt or uncertainty as to the legislative intent, the search for that intent may range beyond the borders of the statute itself; for it must be gathered from a reading of the statute as a whole in the light of the circumstances and conditions existing at the time of its enactment.") An ambiguity arises when the meaning of the language is doubtful or provides "doubleness of meaning." Chapman v. Metropolitan Life Ins. Co., 172 S.C. 250, 173 S.E. 801, 803 (1934); see also Southeastern Fire Ins. Co. v. S.C. Tax Comm'n, 253 S.C. 407, 171 S.E.2d 355 (1969) (language is ambiguous when it is capable of being understood by reasonably well-informed persons in either of two or more senses.).

Here, I am not convinced that the language is devoid of a clear and definite meaning. A plain and unforced reading requires a dead machine result and does not support a dead location result. However, even if the statute creates an ambiguity, an inquiry into statutory construction still leads me to conclude that the legislature imposed a six month prohibition on the machines and not on the location.

a. Plain Meaning

The plain meaning of a statute is best determined by reading the statute as a whole so that phraseology of an isolated section is not controlling. City of Columbia v. Niagara Fire Insurance Company, 249 S.C. 388, 154 S.E.2d 674 (1967). When read as a whole, S.C. Code Ann. § 12-21-2804(A) states that DOR is required to "revoke the licenses of machines located in an establishment which fails to meet the requirements of [§ 12-21-2804]." Under that language, a failure to satisfy the single place or premises requirement causes a revocation of all of the machine licenses in the establishment that failed to meet the test. As a result of that violation, an establishment becomes filled with unlicensed machines.

In fact, that is precisely what has happened in this case. Tim's Amusement’s ten machines effectively became unlicensed, and those unlicensed machines were incapable of being lawfully operated until new licenses were issued. See S.C. Code Ann. § 12-21-2776 (Supp. 1998) (all machines must be licensed). This factual and legal background supplies the proper context for an unforced reading of the plain language of the six month prohibition.

Following the statutory language revoking the machine licenses in the offending establishment, the statute immediately and succinctly states "[n]o 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 the revocation." In other words, the specific machines that lost their licenses due to the revocation are prohibited from receiving a new machine license until a six month period has elapsed.

When relying upon the plain meaning of words in a statute, the words must be applied without resorting to a subtle or forced construction to limit or expand the statute's operation. Stephen v. Avins Constr. Co., 324 S.C. 334, 478 S.E.2d 74 (Ct. App. 1996). The interpretation expressed above provides a plain, unforced reading that answers an obvious need raised by the revocation language. Obviously, to make the revocation meaningful, a fixed period is needed. Otherwise, the owner would be able to acquire a new license the same day as the revocation and begin operating the same machine almost immediately. In my view, the six month period simply tells the owner that the machine is dead for six months and serves to give teeth to the revocation of the machine license.

In contrast to the plain reading of the language that supports the dead machine interpretation, a reading giving a dead location requires a forced construction. For example, to impose a six month limitation on the location requires reading additional language into the statute so that the statute states "no license may be issued for a machine TO BE PLACED in an establishment in which a license has been revoked for a period of six months from the date of the revocation." (Capitalized words added). Obviously, a court may not add words to a statute but can only apply the statutory language given by the General Assembly. Banks v. Columbia Ry., Gas & Electric Co., 113 S.C. 99, 101 S.E. 285 (1919).

Accordingly, § 12-21-2804(A) imposes a six month prohibition on the issuance of licenses for those Class III machines that were in an establishment at the time a license for a machine in that establishment was revoked. No prohibition is imposed on the location itself.

b. Statutory Construction

While I believe a plain reading requires a dead machine interpretation, even if resort to statutory construction is required, such an inquiry does not support a dead location view.

A commonly applied rule of statutory construction is that where the same words are used in an enactment more than once, it is presumed the words have the same meaning throughout unless a different meaning is necessary to avoid an absurd result. Busby v. State Farm Mut. Auto. Ins. Co., 280 S.C. 330, 312 S.E.2d 716 (Ct. App. 1984). Likewise, when the legislative body defines a term, the use of that term in the enactment must be interpreted as having the defined meaning. Windham v. Pace, 192 S.C. 271, 6 S.E.2d 270 (1939).

In the Video Game Machines Act (Act), Class III machines must be licensed under Article 19 before placement or operation on the premises of a "licensed establishment." S.C. Code Ann. § 12-21-2778 (Supp. 1998). The legislature defined "licensed establishment" as an "establishment owned or managed by a person who is licensed pursuant to Article 19 of this chapter for the location of coin-operated nonpayout video machines with a free play feature." S.C. Code Ann. § 12-21-2772(4) (Supp. 1998). To impose a location penalty, the legislature could simply have stated the establishment may not be a licensed establishment for six months. No such statement was made.

Additionally, Article 20 imposes a further license beyond the establishment license required by Article 19. Specifically, Article 20 requires a location license since "[e]ach . . . licensed establishment must be licensed by [DOR] pursuant to Article 19 of this chapter and this article before a machine . . . is placed for public use in this State." S.C. Code Ann. § 12-21-2784 (Supp. 1998) (emphasis added). The location license of Article 20 is identified as an "establishment license for machine placement." S.C. Code Ann. § 12-21-2788 (Supp. 1998). In fact, DOR is required to revoke "an establishment license for machine placement" when the placement of machines does not meet "the provisions of Article 19 of this chapter and the [corresponding] rules and regulations promulgated by [DOR]." Id.; S.C. Code Ann. § 12-21-2786 (Supp. 1998). Again, the General Assembly could have easily penalized the location by revoking the establishment license for machine placement.

Finally, the location may not house Class III machines "unless the location is licensed pursuant to the provisions of Chapter 36 of Title 12." S.C. Code Ann. § 12-21-2703 (Supp. 1998). Again, the General Assembly could have directed that the retail license be revoked if it wished to close the location for six months. It did not so direct.

Accordingly, at least three areas of location or establishment licenses are available for revocation. Despite these location licenses, § 12-21-2804(A) directs the revocation of only "licenses of machines" and not location licenses. These statutes demonstrate that the General Assembly was cognizant of the difference between a license for a machine and a license involving an establishment or location. Being aware of the difference, the statutory language of § 12-21-2804(A) provided for the revocation of the licenses for the machines and made no mention of revocation of an establishment license.

Such a conclusion is consistent with a plain and unforced reading of the statute which shows that a symmetry exists between the revocation of the machine licenses and the imposition of a six month prohibition on re-licensing the affected machines. The symmetry is broken by the dead location view since the revocation of a machine license produces a closure of a location for six months. Had the General Assembly meant to revoke the establishment or location license it could have easily done so by specifying the revocation of a specific establishment license. Accordingly, the normal rules of statutory construction support the dead machine interpretation.

c. Deference To Agency

DOR argues its position should be followed since it is the agency charged with administering the video games law. DOR believes the facts are well established that it has consistently applied its interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998). Further, under such circumstances, DOR believes that its position is reasonable and should be accorded great deference. Finally, in deciding whether to deviate from DOR’s position, DOR asserts compelling reasons must be established. In significant part, I disagree with DOR's analysis as it relates to the weight to be accorded that agency's interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998).

i. Consistently Applied Position

No doubt exists that DOR has consistently applied its position. Judicial notice is taken of the published decisions of the Administrative Law Judge Division and of the numerous instances in which DOR has advanced its position in hearings before the Division. DOR has consistently viewed S.C. Code Ann. § 12-21-2804(A) as imposing a six month prohibition on the use of any Class III machine at the offending location.

However, judicial notice is also taken of the extensive opposition to DOR’s view. In hearings before the Division, license holders routinely and repeatedly object to DOR’s position. The validity of that position is now pending in the S.C. Supreme Court in the case of Gateway Enterprise, Inc., v. DOR. Thus, the position of DOR is not one which has found routine acceptance by the affected public. On the contrary, DOR’s position is far from a settled view.

ii. Deference To DOR’s Position

The issue in interpreting a statute is what did the legislature intend. Laird v. Nationwide Ins. Co., 243 S.C. 388, 134 S.E.2d 206 (1964). Depending upon the nature of the language under review, an agency’s view may or may not be entitled to deference.

 

 

-- Plain Meaning

No deference to an agency’s position is warranted where the language presents a clear meaning. Glens Falls Insurance Co. v. City of Columbia, 242 S.C. 237, 130 S.E.2d 573 (1963) (no occasion arises for considering an agency’s position where the language of the statute is plain and unambiguous and conveys a clear and definite meaning). Further, of particular significance to this case, the clear and definite meaning will always be applied despite an agency’s contrary but consistently followed position. Davidson v. Eastern Fire & Cas. Ins. Co., 245 S.C. 472, 141 S.E.2d 135 (1965) ("An uninsured motorist endorsement that contravenes the requirements of the statute is, to that extent, invalid, regardless of the Department's approval of it.").

Here, the statute in dispute is plain and unambiguous. The plain language of § 12-21-2804(A) imposes a six month prohibition on the issuance of licenses for those Class III machines that were in an establishment at the time a license for a machine in that establishment was revoked. Thus, having found that the plain meaning of the statute establishes legislative intent, no deference to DOR’s position is required.

-- Ambiguous Meaning

However, even if an ambiguity were found in the statute, a resort to rules of construction supports the view that the revocation affects the machines but not the location. In examining the rules of statutory construction, deference to DOR's view is not a meaningful indicator of legislative intent when compared to other more significant indicators.

When required to apply the rules of construction, the construction of a statute by an agency charged with administering that statute is entitled to most respectful consideration. Stephenson Finance Co. v. South Carolina Tax Comm'n, 242 S.C. 98, 130 S.E.2d 72 (1963). More particularly, however, the degree of respect rises to one of "great weight" only if the agency position "has been acquiesced in by the [Legislature] for a long period of time." Etiwan Fertilizer Co. v. South Carolina Tax Comm'n, 217 S.C. 354, 60 S.E.2d 682 (1950).

Here, the Video Game Machines Act became effective July 1, 1993. Thus, even assuming DOR’s position was announced, enforced or in some way made known to the Legislature from the first day the statute became effective, DOR’s position is five years old. Such a time frame is far too short to amount to a showing of acquiescence "by the Legislature for a long period of time." Id. Hence, the short period does not show strong evidence of acquiescence by the Legislature and does not allow "great weight" to be accorded to DOR’s position. Such is especially so where the agency position is challenged repeatedly by the affected public. At best, only respectful consideration is due.

The Legislature is presumed to have knowledge of its own laws. See Ingram v. Bearden, 212 S.C. 399, 47 S.E.2d 833 (1948)(a machine was definitely outlawed by prior statute and the General Assembly was deemed to be aware of that fact). Respectful consideration to DOR’s position (which consideration relies upon a presumption that the Legislature has knowledge of and gives tacit approval to the agency’s actions) pales in comparison to the Legislature’s presumptive knowledge of its own laws. The Legislature intentionally created licensed establishments and created machine licenses. Further, the Legislature defined licensed establishments and demonstrated it clearly knew the difference between machine licenses and establishment licenses. Thus, reliance upon the Legislature’s knowledge of its own laws is a far superior indicator of legislative intent than reliance upon the respectful consideration of DOR’s position.

iii. Compelling Reasons

While others may exist, at least two compelling reasons warrant deviating from DOR’s view. First, DOR’s position is inconsistent with the plain meaning of the statute such that reliance upon DOR’s view places far too much weight on an administrative interpretation. See Stone Mfg. Co. v. South Carolina Employment Sec. Comm’n, 219 S.C. 239, 64 S.E.2d 644 (1951) citing F. W. Woolworth Co. v. United States, 91 F.2d 973, 976 (2d. Cir. 1937) ("At most, administrative practice is a weight in the scale, to be considered, but not to be inevitably followed. * * * While we are of course bound to weigh seriously such rulings, they are never conclusive."). Second, a compelling reason to deviate from DOR’s view is that following the position perpetuates an administrative error. Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958) (an interpretation presented by an administrative position is not so sacrosanct as to be beyond the correction of error; it need not perpetuate error). In short, sufficient and compelling reasons exist to deviate from DOR’s position.

D. Amount of Penalty

1. Positions of Parties

DOR asserts that a fine of $5,000 is due from Dilli Delli II as one location operator and $5,000 from Dilli Delli III as the second location operator. Tim's Amusements argues that only one $5,000 penalty is proper and even that penalty is too severe.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

Tim’s Amusements’ policy is that an employee must be assigned to a single game room but that employee need not be within the four walls of the room if the employee leaves the room and closes the door. Consistent with the stated policy, at the time of inspection on October 2, 1998, no employee was present in the game rooms known as Dilli Delli II or III. Tim's Amusements places the machines within Dilli Delli II and III and operates and manages the rooms. Thus management of the rooms is in Tim’s Amusements.

 

 

3. Conclusions of Law

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

A violation of section 12-21-2804(A) results in the imposition of a fine. S.C. Code Ann. § 12-21-2804(F) (Supp. 1998). In this case the person liable for the fine is Tim's Amusements. S.C. Code Ann. § 12-21-2804(F) (Supp. 1998).

Where the General Assembly authorizes a range for an administratively imposed penalty, the administrative adjudicator sitting as the fact-finder may set the amount of the penalty after a hearing on the dispute. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). When penalty disputes are part of the factual issues for decision, the fact-finder must receive evidence and make a determination on all such factual disputes arising from the contested case. S.C. Code Ann. § 1-23-350 (Rev. 1986).

Here, the evidence establishes that Tim’s Amusements attempted to operate three locations as Dilli Delli I, II, and III. Two of the locations violated section 12-21-2804(A). Both Dilli Delli II and Dilli Delli III have a policy of merely closing the doors to the premises but provide no means of locking the doors. Further, the sign on the door does not affirmatively state the room is closed and the expectation of being closed is not supported by actions of closure. For example, the lights in the rooms are not turned out. Under all of the circumstances, a fine is appropriate.

The amount of the fine is $4,000 for each violating location. The evidence demonstrates that the employees made a minimal effort to close the location. The door is closed and a sign warns the patron to obtain an attendant before entering. Such efforts are mitigating and warrant an imposition less than the maximum fine allowed by law. Accordingly, a fine of $4,000 for each offending location is proper. Thus, a total fine of $8,000 is imposed on Tim’s Amusements as the operator and license holder.

 

IV. Order

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

The ten Class III licenses held by Tim’s Amusements are revoked. The six month prohibition on issuance of licenses applies to the machines but does not apply to the location. Finally, Tim’s Amusements is liable for an $8,000 fine.

 

 

 

 

 

 

AND IT IS SO ORDERED.

 

RAY N. STEVENS

Administrative Law Judge

Dated: April 26, 1999

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

Copyright © 2022 South Carolina Administrative Law Court