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. B&C Enterprises, d/b/a Player's World IV, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
B&C Enterprises, d/b/a Player's World IV, and Collins Entertainment Corporation
 
DOCKET NUMBER:
99-ALJ-17-0297-CC

APPEARANCES:
Petitioner & Representative: South Carolina Department of Revenue, Jeffrey M. Nelson, Esquire

Respondents & Representatives: B&C Enterprises, d/b/a Player's World IV, pro se

Collins Entertainment Corporation, James H. Harrison, Esquire

Parties Present: All parties present except B&C Enterprises
 

ORDERS:

FINAL ORDER AND DECISION

I. Statement of the Case



The South Carolina Department of Revenue (DOR) seeks the imposition of a $5,000 fine against Collins Entertainment Corporation (Collins) as the machine owner and a $5,000 fine against B&C Enterprises, Inc. (B&C) as the location owner. In addition, DOR seeks the revocation of five machine licenses and further, for a six month period, seeks to prohibit the use of any machines in the game room that caused the violation. Collins asserts the administrative violation should be dismissed since not more than five machines were on a single place or premises. Further, Collins asserts that if a violation occurred, it is not liable for a fine. Finally, B&C asserts that if a fine is imposed, $5,000 is too severe and should be reduced.



The disagreement of the parties placed jurisdiction in the Administrative Law Judge Division (see S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1998)) and resulted in a hearing in this matter being held on September 7, 1999 at the Edgar Brown Building, Columbia, South Carolina. Based upon the evidence and the argument presented by the parties, no violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred. Accordingly, no fine is imposed on Collins or B&C and no licenses of Collins are revoked.



II. Issues



1. Did Collins or B&C violate S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998) by having more than five machines on a single place or premises?



2. If a violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, are Collins and B&C 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 are Collins and B&C denied the privilege of using the five machines for a period of six months from the time the revocation becomes final?



3. If a violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, is Collins as the machine owner not liable for a penalty due to having no involvement in the management affairs of the location?



4. If a violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, what monetary penalty, if any, is proper for Collins and B&C?

III. Analysis



A. Number of Machines At A Single Place or Premises



1. Positions of Parties



DOR first asserts that no employee was within the four walls of the game room identified as Player's World IV. From such an assertion, DOR concludes that Player's World IV did not constitute a single place or premises and that such a status resulted in more than five machines being located at a single place or premises. Collins disagrees and argues that the more-than-five-machines rule was not violated.



2. Findings of Fact



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



Collins holds several licenses for Class III video game machines with five of those licenses utilized at 1240 S. Kings Highway, North Myrtle Beach, South Carolina. The building at the North Myrtle Beach address contains a video game business in a mall-type structure housing four video game rooms. B&C holds the retail sales tax license for one of the game rooms known as Player's World IV. That game room has five machines with the following license numbers: 3922874, 3922876, 3922881, 3923037, and 3938598. The three other game rooms housed at the North Myrtle Beach location also have five licensed machines in each room.



On December 4, 1998 SLED conducted an inspection of the video game businesses at the North Myrtle Beach address. The inspection included walking into each of the four game rooms, listing the license numbers for machines located in the four game rooms, examining the business licenses, retail tax licenses, and utility meters for the location, and talking to an employee at the location.



For at least ten minutes during the inspection, the SLED Agent played one machine in the game room known as Player's World IV. No machines were played in any of the other three game rooms. Indeed, the other three rooms were closed. The SLED Agent was the only customer in the location and one employee was the attendant for the open game room. The employee remained outside the game room during the inspection and only entered the game room once to offer assistance. Thus, one game room was open and one employee of that game room was in attendance in a common area outside the four walls of Player's World IV.



Following the inspection, the SLED Agent issued a citation against Collins and B&C for violation of S.C. Code Ann. § 12-21-2804(A) for operation of more than five machines at a single place or premises. Copies of the Violation Report were left with the employee on duty. In addition to revocation and a six month prohibition on the use of Class III machines, DOR also seeks a $5,000 fine against B&C as the owner of the location and a $5,000 fine against Collins as the owner and licensee of the machines.



3. Conclusions of Law



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



A. Statutory and Regulatory Requirements for Single Place or Premises



A violation of S.C. Code Ann. § 12-21-2804 (Supp. 1998) occurs when a person "maintain[s] any licenses or permits for more than five [Class III] machines . . . at a single place or premises." To assist in determining whether more than the authorized five machines are located on a single place or premises, Regulation 117-190 explains what constitutes a single place or premises. In general, a single place or premises can be achieved in two configurations.



First, (omitting some requirements not pertinent to the issue at hand) a single place or premise is achieved by "a structure surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code." Regs. 117-190. Such a structure is the common stand-alone building providing an entrance from the outside and providing an exit from the building to the outside. Such a structure may lawfully house five machines. The more difficult determination is the second permissible structure.



The second permissible structure that may be used to establish a single place or premises is that of "a structure surrounded by exterior walls [which] has two or more areas where video game machines are located." The "areas where video game machines are located" are interior configurations and those interior configurations are eligible for consideration as a "single place or premises" under two determinations. First, when considering the interior configuration, "each [must be] surrounded by exterior walls or firewalls." Second, before each interior configuration can become a single place or premises, DOR "must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines." That review may include many factors but must include at least the four factors of having a separate electric utility meter, having at least one separate employee on the premises during business hours, having a separate local business license where required, and having a separate state sales tax license.



In the instant case, the structure under review housed four game rooms. The evidence establishes that Class III machines were physically located within each of the game rooms and that each of the machines was licensed by DOR. Thus, the structure under consideration is "a structure surrounded by exterior walls [which] has two or more areas where video game machines are located." Accordingly, each of the four areas can be designated a separate place or premises if each area has the proper four wall construction and meets the four factors of having a separate electric utility meter, having at least one separate employee on the premises during business hours, having a separate local business license where required, and having a separate state sales tax license.



B. Law Addressing Employee on the Premises



The dispute in this case concerns the failure to have an employee on the premises during business hours. DOR asserts the game room identified as Player's World IV is not a single place or premises since no employee was within the four walls of the game room. See Regs. 117-190. However, in deciding if an employee is required to be within the four walls of the game room, a difference of opinion has developed in the decided cases.



One view is that an employee is not considered to be "on the premises" when the employee is working outside the game room and the Class III video game machines are operational and accessible to customers; i.e., an employee must be present in the room. (The four-walls position.) S.C. Dep't of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996). A contrary view is that the requirement is met even if the employee is outside the four walls so long as the employee's physical position enables the employee to observe the room and the employee is performing his job functions at the employee's location. (The within-view-of-the-four-walls position). South Carolina Department of Revenue v. Great Games, Inc., Docket No. 96-ALJ-17-0204-CC, (January 22, 1997). In a similar vein, a view exists that an employee's absence from the room is permissible if the absence is for a short period and the absence is for a justifiable reason, e.g., personal physical needs. (The short-legitimate-absence position). DOR v. Ace Music Company of Spartanburg, Inc., 97-ALJ-17-0309-CC (October 19, 1997).



I agree with the four-walls position and respectfully disagree with both the within-view-of-the-four-walls position and the short-legitimate-absence position. While at first blush it may seem reasonable to provide exceptions to the four-walls rule, closer analysis dictates otherwise.



First, relying upon the rules of statutory construction to justify exceptions to the plain language is unwarranted. The language "on the premises" is not ambiguous and must be taken in its literal and ordinary meaning. Lail v. Richland Wrecking Company, Inc., 280 S.C. 532, 313 S.E.2d 342 (Ct. App. 1984). To employ the rules of statutory construction to find that "on the premises" allows an employee to be "away from the premises" violates the principle that the rules of statutory construction are provided to remove doubt but never to create doubt. See 73 Am Jur 2d Statutes § 146, citing Englewood Water Dist. v Tate, 334 So 2d 626 (Fla. App. 1976).



Here, the language of the statute and the regulation is clear. The statute allows no more than five machines in a single place or premises, as defined by the regulation. Where, as is the case in this matter, at least two interior structures exist with machines inside those structures, each interior structure is a "video game area." None of the video game areas can acquire the status of a single place or premises unless an employee is "on the premises during business hours." The premises, upon which the employee must be "on," is the space identified as the "video game area." An employee cannot be on the premises of an identified space if the employee is physically someplace else. Accordingly, once the employee physically leaves the space of the video game area, the employee is no longer "on the premises."



Second, a court can not seek ways to rewrite statutes or regulations. To depart from the plainly expressed meaning causes the tribunal to legislate rather than interpret since "[t]he responsibility for the justice or wisdom of legislation rests with the Legislature, and it is the province of the courts to construe, not to make, the laws." Creech v. South Carolina Pub. Serv. Auth., 200 S.C. 127, 146, 20 S.E.2d 645, 652 (1942) (superseded on other grounds by S.C. Code Ann. § 5-7-30). In short, an ALJ cannot add conditions to the "on the premises" language of the regulation in an effort to provide exceptions that seek to improve upon what the General Assembly has plainly promulgated.



Finally, the purpose of the regulation under review dictates a holding that "on the premises" means exactly what it says. The purpose of the regulation is to provide a high degree of certainty to defining a separate place or premises. The very reason for the promulgation is that no statutory definition was provided.



In accordance with the purpose sought, the regulation adopts site specific criteria. Indeed, the regulation counts walls, limits openings in the walls, prevents access from one area to another, and even details that the walls must be one-hour firewalls. Given the regulations's site specific analysis, the most consistent view is that the plain language of "on the premises" limits the employee to the physical space of the four walls. On the contrary, inconsistency with the regulation results if "on the premises" requires examining whether the employee's line of sight covers more than one area or whether the reason the employee is away is a proper reason. In short, the regulation is site specific and requires that "on the premises" be within the four walls of the area under review.



C. Law of Employee on Premises Applied to Facts Established



Under the facts of this case, all parties agree that three of the rooms are separate places or premises since the proper wall configuration exists, and the above four factors are satisfied. Obviously, the lack of an employee on the premises of each of the three closed game rooms is not a prohibiting factor since no employee is required for a closed game room, i.e. since an employee is required on the premises only "during business hours," no employee is required on the premises when the business hours have ended by being closed.



While the lack of an employee for a closed business is not a concern here, the lack of an employee on the premises of the open game room, Player's World IV, is a concern. As to that game room, no employee was within the four walls of the game room. Rather, the employee remained outside the room and entered only once during the SLED Agent inspection. Accordingly, the space occupied by the five machines in Player's World IV is not a single place or premises since at the time of the inspection no employee was within the four walls of the game room.



D. Conclusion From Finding Player's World IV Is Not a Separate Place or Premises



The lack of an employee on the premises of Player's World IV means the game room is not a single place or premises. However, finding that an area is not a single place or premises does not automatically determine that a violation of the five machine limit has occurred. Indeed, the General Assembly did not create a violation for attempting but failing to create a specific area as a single place or premises. Rather, the statute creates a violation only when more than five machines are "at a single place or premises." S.C. Code Ann. § 12-21-2804(A) (Supp. 1998). Accordingly, the question is, "Once a specific area has been found not to be a single place or premises, what is the area that comprises the 'single place or premises' used to count the number of machines in that area?"



DOR argues that once an area has been found not to be a single place or premises, all of the machines in the entire structure must be utilized in the counting of machines. Applying such a view to the instant case gives twenty machines on a "single place or premises" and creates a violation. I cannot agree with DOR's analysis.



In my view, the area that comprises the "single place or premises" for the purpose of determining whether the five machine limit of § 12-21-2804(A) has been violated is that area not otherwise determined to be a "single place or premises." For example, in the instant case, three of the game rooms at the location qualify as a "single place or premises." Therefore, the remaining square footage of the structure, comprised primarily of the fourth game room (Players World IV) and the common area, is to be examined for the existence of more than five machines. Another example is a structure housing a common area and four game rooms, two of which do not qualify as a "single place or premises." The square footage comprised of the two non-qualifying game rooms and the common area would be examined for the existence of more than five machines to determine whether § 12-21-2804(A) is violated.



The plain meaning of § 12-21-2804(A) establishes that for the purpose of determining whether the five machine limit of § 12-21-2804(A) has been violated one looks to the area that has not otherwise been determined to be a "single place or premises." For example the plain langauge of § 12-21-2804(A) imposes a duty to count the machines "at a single place or premises." (Emphasis added). In deciding the meaning of "single" it is elementary that the primary rule of statutory construction is to ascertain and give effect to the legislature's intent or purpose as expressed in the statute. Green v. Thornton, 265 S.C. 436, 219 S.E.2d 827 (1975). Also, the legislature's intent should be ascertained primarily from the plain language of the statute. 82 C.J.S. Statutes § 322 (b), at 571 (1953). Further, unless a statute requires a different interpretation, the words used must be given their ordinary meaning. Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975).



Here, "single" means "unaccompanied by others: lone, sole." Merriam-Webster: WWWebster Dictionary 1999; www.m-w.com/dictionary.htm (9 September 1999). Thus, based on the plain meaning of the word "single," the controlling logical syllogism is as follows:



A single place or premises is unaccompanied by any other area.

The three closed game rooms are single places or premises.

The three closed games rooms are unaccompanied by any other area.



Accordingly, the three game rooms that are admittedly separate "single place or premises" cannot be combined with some other area for the purpose of counting machines in that "other area." Rather, having once counted the machines at the three separate place or premises to establish the five machine limit for each of those areas, a second counting of those same machines is improper as being contrary to the statute's plain use of the term "single" in reference to a "single place or premises." Accordingly, no violation of § 12-21-2804(A) occurred on December 4, 1998 at the video gaming businesses located at 1240 S. Kings Highway, North Myrtle Beach, South Carolina.



B. Other Issues Not Addressed



Since no violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, no need exists to address the dependent issues of penalties or revocation of licenses resulting from a violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998). Accordingly, no other issues require analysis.



IV. Order



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



DOR shall impose no fine against Collins Entertainment Corporation and shall impose no fine against B&C Enterprises, Inc. In addition, DOR shall not revoke the licenses on the five Class III machines located at 1240 S. Kings Highway, North Myrtle Beach, South Carolina in a game room known as Player's World IV.



AND IT IS SO ORDERED.



____________________________

RAY N. STEVENS

Administrative Law Judge



Dated: September 9, 1999

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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