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. James R. McDonald, Jr., d/b/a McDonald Amusement, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
James R. McDonald, Jr., d/b/a McDonald Amusement, Billy Moses, d/b/a Dollar Bill 2
 
DOCKET NUMBER:
99-ALJ-17-0236-CC

APPEARANCES:
Carol I. McMahan
Attorney for Petitioner

Robert G. Rikard
Attorney for Respondents
 

ORDERS:

FINAL ORDER AND DECISION

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 (Department) alleges that Respondents violated S.C. Code Ann. § 12-21-2804(A) by applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five machines authorized under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1998) at a single place or premises. Specifically, the Department alleges violations of the "one separate employee" requirement of 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998).

For the alleged violations of § 12-21-2804(A), the Department seeks a $10,000 fine against each of the Respondents. Also, the Department seeks revocation of licenses for the ten Class III video game machines which were located in Dollar Bill # 2 and Dollar Bill # 4 , 2000 Highway 321 North, Clover, South Carolina, on December 8, 1998, and preclusion of the use of any Class III video game machine licenses at these businesses for six months.

The hearing of this matter was held on December 10, 1999 at the Administrative Law Judge Division. The issues before this tribunal are (1) whether Respondents violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998); and (2) if so, what are the proper penalties for these violations.

Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Respondent Billy Moses violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998) by utilizing video game machine licenses in contravention of these laws. Consequently, the licenses shall be revoked and no video game machine licenses shall be utilized at Dollar Bill # 2 and Dollar Bill # 4 for a period of six months from the date of revocation of the licenses. Further, the Department shall impose a fine of $5,000 against Respondent Billy Moses.



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 December 8, 1998, SLED agents Ben Moore and Stacy Snow conducted an inspection of the video gaming businesses located at 2000 Highway 321 North, Clover, South Carolina. After completion of the inspection that day, Agent Moore issued an administrative citation against Respondents for violating 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).
  2. At the time of the inspection, the facts relating to the "single place or premises" requirement of § 12-21-2804(A) and Regs. 117-190 were as follows:
  3. The location at 2000 Highway 321 North, Clover, South Carolina was a mall-type structure consisting of four separate rooms designated as Dollar Bill # 1, 2, 3, and 4. Each of the rooms contained video gaming machines.
  4. The main entrance into the structure opened into a common area, which contained a cash register bar, and the four rooms were accessible from this point.
  5. The agents were "undercover" and dressed in casual clothing. Upon entering the location, the agents observed Respondent Moses near the cash register bar and a female playing a machine in Dollar Bill # 1, whom they later determined to be Ms. Marie Moose, an employee of the businesses. No other individuals, including customers and employees, were present at the location during the investigation.
  6. Agent Moore entered Dollar Bill # 2 and played a Class III video poker machine for approximately ten minutes, unaccompanied by an employee or attendant of the business. Ms. Moose briefly left Dollar Bill # 1 to escort Agent Snow into Dollar Bill # 4, which was originally cordoned off. She left the agent unattended and returned to Dollar Bill # 1. Agent Snow played a Class III video gaming machine for approximately ten minutes.


  7. On December 8, 1998, the following Class III licenses were affixed to the machines in Dollar Bill # 2(*) and Dollar Bill # 4, respectively:
Machine Owner and Licensee License Number
McDonald Amusement 3008812*
3008811*
3008810*
3008566*
3928967*
3008815
3008814
3014869
3929022
3929499


  1. Respondent Moses held the retail licenses for the businesses.

  1. The Department seeks a $10,000 fine against each Respondent for a total of $20,000.


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 Respondents violated § 12-21-2804(A) and Regs. 117-190, by failing to have a separate employee in each of the businesses at 2000 Highway 321 North, Clover, South Carolina. See Anonymous v. State Bd. of Medical Examiners, 329 S.C. 371, 796 S.E.2d 17 (1998) (standard of proof in an administrative proceeding is the preponderance of the evidence). 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. Single Place or Premises Violation
  7. The Video Game Machines Act, which regulates video game machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. This Act is codified at S.C. Code Ann. §§ 12-21-2770 et seq. (Supp. 1998). 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. South Carolina Tax Comm'n, Nos. 6:93-1491-3 and 6:93-1493-3 (D.S.C. Nov. 15, 1993); see also Op. Att'y Gen. 94-21 at 51 (1994).
  8. South Carolina Code Ann. § 12-21-2804(A) (Supp. 1998) provides:

No person shall apply for, receive, maintain, or permit to be used, and the commission shall not allow to be maintained, permits or licenses for the operation of more than eight machines authorized under Section 12-21-2720(A)(3) at a single place or premises for the period beginning July 1, 1993, and ending July 1, 1994. After July 1, 1994, the commission 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. . . .



S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) (emphasis added).

  1. On June 23, 1995, regulations were promulgated which further clarified the provisions of the Video Game Machines Act, and, as such, these regulations have the force and effect of law. See Young v. South Carolina Dep't of Highways and Pub. Trans., 287 S.C. 108, 336 S.E.2d 879 (1985); Faile v. South Carolina Employment Sec. Comm'n, 267 S.C. 536, 230 S.E.2d 219 (1976). Specifically, Regulation 117-190 was promulgated to clarify the meaning of the phrase "single place or premises" as set forth in § 12-21-2804(A). This regulation, effective June 23, 1995, provides, in relevant part:

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 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.

27 S.C. Code Ann. Regs. 117-190 (Supp. 1998) (emphasis added). The Supreme Court of South Carolina held this regulation to be valid and a natural amplification of § 12-21-2804. McNickel's, Inc. v. South Carolina Department of Revenue, 331 S.C. 629, 503 S.E.2d 723 (1998).

  1. It is well established that in interpreting a statute, the court's primary function is to ascertain the legislative intent. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First South Sav. Bank, Inc. v. Gold Coast Assoc., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977). In ascertaining the intent of the legislature, a court should not focus on any single section or provision, but should consider the language of the statute as a whole. Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 20 S.E.2d 645 (1942). Furthermore, in construing statutes, the language used should be given its plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Home Health Serv., Inc. v. South Carolina Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994); Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. 1985 Ford F-150 Pick Up, 308 S.C. 68, 417 S.E.2d 85 (1992); Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977). "[A] statute should be so construed that no word, clause, sentence, provision or part shall be rendered surplusage, or superfluous. . . ." 82 C.J.S. Statutes § 346 (1953); see also Savannah Bank & Trust Co. of Savannah v. Shuman, 250 S.C. 344, 157 S.E.2d 864 (1967). This tribunal has no legislative powers, and the justice or wisdom of statutes rests exclusively with the General Assembly. See Smith v. Wallace, 295 S.C. 448, 369 S.E.2d 657 (Ct. App. 1988).
  2. Whether an establishment is being operated as a "single place or premises" is determined by evaluating the facts against the standard set forth in Regulation 117-190. With respect to the "employee" requirement, Regulation 117-190 requires that each entity or business have at least one separate employee on the premises of that respective entity or business during business hours to comply with the "single place or premises" requirement of § 12-21-2804(A).

If a game room containing operational Class III video game machines is accessible to customers and no employee is present in that room, the room is being operated in violation of the regulatory standard. 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 South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (Mar. 8, 1996). This application is consistent with the intent of the General Assembly to prevent large-scale, casino-type gambling. See Singletary v. South Carolina Dep't of Educ., 316 S.C. 153, 447 S.E.2d 231 (Ct. App. 1994), citing State v. Thrift, 312 S.C. 282, 440 S.E.2d 341 (1994) (legislative intent must prevail if it can be reasonably discovered and language of a statute must be construed in the light of the intended purpose of the statute).

  1. Dollar Bill # 2 and # 4 failed to meet the "one separate employee" requirement set forth in Regulation 117-190 by failing to have an employee on the premises. While Respondent was in the common area and an employee was nearby in Dollar Bill #1, no employee was present in Dollar Bill # 2 and # 4 during business hours as required by the regulation.
  2. Penalty
  3. It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an administrative penalty, as established by the legislature, after the parties have had an opportunity for a hearing on the issues. See, e.g., Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).
  4. It should be emphasized that S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) clearly precludes any person, not just the licensees, from applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five Class III video game machines in a single place or premises. The term "person" is not defined in the Act, but its common and ordinary meaning clearly encompasses any individual or business entity, including the licensee or machine owner. See Black's Law Dictionary 1142 (6th ed. 1995). Further, § 12-21-2804(A) mandates that the Department revoke the licenses of machines located in an establishment that fails to meet the requirements of this section. Hence, § 12-21-2804(A) mandates revocation of the licenses so used, even if the machine licensee was not directly involved in applying for, receiving, maintaining, or permitting its licenses to be used in contravention of the statute. Under § 12-21-2804(A), a license on a video game machine must be revoked by virtue of its misuse under the Act, whether the actual violator is the licensee, machine owner, or lessee. Such an interpretation is consistent with the plain language of the statute. Because § 12-21-2804(A) has been violated, the ten Class III video game machine licenses designated herein are subject to revocation.

However, a monetary fine under § 12-21-2804(F) may be imposed only on the person who violates § 12-21-2804(A). When applying for a machine license, a licensee violates the statute if when he applies for a license, he knows it will be used for the operation of more than five machines at a single place or premises. The statute does not state, as the Department would like this tribunal to construe it, that a person who applies for a license which is subsequently used for the operation of more than five machines at a single place or premises without his knowledge is in violation of the statute. In the instant case, the operator of the business, Respondent Billy Moses, violated the video gaming statute by his day-to-day operation and maintenance of the businesses. However, the Department has not established that Respondent James Mc Donald, Jr., d/b/a McDonald Amusement violated the statute when applying for the licenses or that he knowingly allowed more than five of his machines to be used at a single place or premises. Therefore, no monetary penalty should be imposed on Respondent McDonald.

  1. Section 12-21-2804(A) further provides: "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 revocation." The clear meaning of this language precludes the utilization of new licenses for machines to be placed in an establishment for a six month period after that establishment has had a machine license revoked. Hence, as the machines in Dollar Bill #2 and #4 have been rendered inoperative by their respective license revocations, and no new machine licenses may be utilized at these business locations for six months, it logically follows that Dollar Bill # 2 and # 4 must cease operations for six months. The Department does not issue machine licenses for use at specified locations, but rather to individuals who may utilize them at any licensed location in the State. Consequently, section 12-21-2804(A) would be rendered meaningless if it were read not to require an establishment whose licenses have been revoked to cease operations for six months. See Singletary v. South Carolina Dep't of Educ., 316 S.C. 153, 447 S.E.2d 231 (Ct. App. 1994), (citing State v. Thrift, 312 S.C. 282, 440 S.E.2d 341 (1994)) (legislative intent must prevail if it can be reasonably discovered and language of a statute must be construed in the light of the intended purpose of the statute).
  2. S.C. Code Ann. § 12-21-2804(F) provides that a person who violates S.C. Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000. S.C. Code Ann. § 12-21-2804(F) (Supp. 1998) (emphasis added). Here, the violation occurred, and Respondent Moses was sufficiently identified as the operator of the businesses. Consequently, he is subject to a $5,000 fine for a single violation of § 12-21-2804(A) by maintaining in excess of five machines on a single place or premises. See S.C. Dep't of Revenue v. Quick Foods, Inc., Dkt. No. 99-ALJ-17-0159, 15-19 (Aug. 3, 1999).
  3. Pursuant to ALJD Rule 29(C), issues raised in the proceedings but not addressed in this Order are deemed denied.


ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that, as mandated by S.C. Code Ann. § 12-21-2804(A) (Supp. 1998), the Department shall revoke the licenses for the ten machines which were located in Dollar Bill # 2 and # 4 on December 8, 1998.

IT IS FURTHER ORDERED that no Class III video game machine licenses shall be utilized in these businesses for a period of six months from the date of revocation of the licenses.

IT IS FURTHER ORDERED that the Department shall impose a fine of $5,000 against Respondent Billy Moses, d/b/a Dollar Bill # 2 and # 4.

AND IT IS SO ORDERED.



______________________________

JOHN D. GEATHERS

Administrative Law Judge

December 14, 1999

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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