SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before the Administrative Law Judge Division (ALJD or Division) pursuant to S.C. Code Ann. §§ 61-2-20 and 61-2-260 (Supp. 2002). The South Carolina Department of Revenue (Department) seeks revocation of the Respondent’s off-premise beer and wine permit for its fourth violation of 23 S.C. Code Ann. Regs. 7-200.4 (effective June 27, 2003). A hearing was held before me on January 22, 2004 at the offices of the Administrative Law Judge Division in Columbia, South Carolina.

STIPULATIONS OF FACT

At the hearing on this matter and pursuant to ALJD Rule 25(C), the parties entered the following written stipulations of fact into the Record:

1.At the location, Hwy. 11 and I-85, Gaffney, South Carolina, Southern Convenience Stores, Inc., d/b/a Southern Convenience 136 (Southern) holds a permit issued by the South Carolina Department of Revenue (Department) that permits it to sell beer and wine for off-premise consumption.

2.On June 16, 2003, South Carolina Law Enforcement Division (SLED) agents, in conjunction with an underage cooperating individual (UCI), Clayton Otruba, entered the location at the above-referenced address. Clayton was fifteen (15) years of age. Clayton picked up a 24 oz. Bud Light Beer from the cooler and took it to the clerk on duty. The clerk requested identification from Clayton. Clayton presented his South Carolina Beginners Permit. In the upper right-hand corner of this permit is the phrase “UNDER 18 UNTIL 07-12-2005.” The clerk, Southern’s employee Alisha Kimbrell, then permitted the UCI to purchase the beer.

3.Ms. Kimbrell was charged with the transfer of beer to an individual under the age

of twenty-one (21). She was subsequently found guilty of this charge. Additionally, Southern was issued an administrative citation for knowingly permitting an under-aged person to purchase beer on a licensed premises, in violation of 23 S.C. Code Ann. Regs. 200.4 (effective June 27, 2003).

4.Southern has had three prior violations within a three-year period at this specific location. All of these violations were for “permitting the purchase of beer by a person under the age of twenty-one.” The first violation was committed on August 23, 2000. Southern paid a fine of $400.00 for this violation. For the second such violation on February 18, 2002, Southern paid a fine of $800.00. For the third violation on April 7, 2003, Administrative Law Judge John D. Geathers ordered Southern to pay a fine of $500.00 and serve a suspension of its permit for a period of twenty-one days. See South Carolina Department of Revenue vs. Southern Convenience Stores Inc., d/b/a Texaco, Highway 11 at Interstate 85, Gaffney, South Carolina, 03-ALJ-17-0306-CC (issued October 8, 2003).

5.Southern admits that on June 16, 2003, its employee, Alisha Kimbrell, permitted

Clayton Otruba to purchase beer at its Gaffney location. Southern further admits, that it, as the beer and wine permittee at this location, violated for the fourth time within a three-year period, Regulation 7-200.4 by “knowingly permitting the purchase of beer by a person under the age of twenty-one.”

6.The Department issued its Final Department Determination in this matter on

September 15, 2003, in compliance with the Revenue Procedures Act, S.C. Code Ann. §§ 12-60-10 et seq. (2000 & Supp. 2002) and the Administrative Procedures Act, S.C. Code Ann. §§ 1-23-10 et seq. (1986 & Supp. 2002).

7.Southern timely appealed the Final Department Determination pursuant to the Revenue Procedures Act on October 8, 2003.

8.This matter was timely transmitted to the Administrative Law Judge Division for

a contested case hearing on October 15, 2003.

9.The Department filed its Exchange of Evidence and Foundation for Documents

with attachments on November 19, 2003.

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the evidence:

1.Notice of the time, date, place and subject matter of the hearing was given to the

Petitioner and the Respondent.

2. As set forth in the Stipulations of Fact, the Respondent’s sale to the UCI constitutes a fourth violation at that location within a three-year period.

3.Respondent Southern Convenience Stores has thirty-two locations in South Carolina. The Gaffney location where this violation occurred has been in business since 1989. Southern’s President and CEO, Michael Frost, appeared on behalf of the corporation. Mr. Frost’s experience in convenience stores dates back to 1957 when he started as a clerk for the Seven/Eleven chain. He testified that the under-aged sales at the Gaffney store are an embarrassment to the corporation and are simply inexcusable.

The Respondent has a written policy of checking identification to which its employees must adhere. To that end, Southern holds a three-day training session for all new employees. During that training, the employees receive approximately two hours of instruction devoted specifically to checking customer identification regarding the purchase of alcohol and tobacco products. At the conclusion of that training, employees are required to sign a statement that they understand the law and procedures regarding selling to under-aged patrons. Each Southern location has utilized the “Ruby System” for about ten years. This is a type of cash register that requires the cashier to enter the age of an individual purchasing alcohol or tobacco. Managers of each location are trained to check behind employees to insure they are using the system. However, the cashiers can override the system by entering fictitious dates of birth. Employees are also promptly terminated for under-aged sales and the manager of a particular location where an under-aged sale has occurred receives at a minimum a warning in their employment file, regardless of whether they were at the location at the time of the illegal purchase. Managers have also been instructed to randomly check surveillance tapes to monitor if the cashiers are checking ids. The cashier and manager of the Gaffney location are no longer employed by Southern.

Between the third and fourth violations at this location, Mr. Frost testified that he was in the process of implementing more stringent store policies but had not had time to fully institute those changes. Now, Southern is requiring its employees to sign monthly letters acknowledging their training and knowledge of the law regarding under-aged sales. Southern has also recently contracted with a “secret shopper” service that will randomly try to catch its employees selling to under-aged patrons. Furthermore, Southern is also going to have SLED train it employees regarding this issue. These changes have been implemented effective January 1, 2004. It is also noteworthy that this location has had no violations since the latest violation.

CONCLUSIONS OF LAW

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

1.S.C. Code Ann. § 1-23-600 (1986 & Supp. 2002) grants jurisdiction to the Division to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2002) grants the Division the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.

2.Permits and licenses issued by this state for the sale of liquor, beer and wine are privileges to be used and enjoyed only so long as the holder complies with the restrictions and conditions governing them. See Feldman v. S.C. Tax Commission, 203 S.C. 49, 26 S.E. 2d 22 (1943).

3.Holders of beer and wine permits are forbidden from permitting “any act, the commission of which tends to create a public nuisance or which constitutes a crime. . . . ” S.C. Code Ann. § 61-4-580(5) (Supp. 2002).

4.Permitting or knowingly allowing a person under the age of twenty-one (21) to purchase or possess beer upon the licensed premises is a violation against a license or a permit. Such a violation constitutes sufficient grounds for either suspension or revocation of the beer and wine permit. 23 S.C. Code Ann. Regs. 7-200.4 (effective June 27, 2003).

5.The permittee is responsible for all acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. Following that principle, the South Carolina Supreme Court upheld a civil forfeiture of a corporation’s boat based upon an employee’s transporting drugs even though the corporation claimed the use of the boat to transport drugs was without its knowledge. South Carolina Law Enforcement Division v. The "Michael and Lance,” 281 S.C. 339, 315 S.E. 2d 171 (Ct. App. 1984). The Court held that “[a] principal is affected with constructive knowledge of all material facts of which its agent receives notice while acting within the scope of his authority.” Id. at 173, citing Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E. 2d 496 (1979). Likewise, the license holder is responsible for the actions and conduct of employees utilizing the permit upon the permitted premises. 48 C.J.S. Intoxicating Liquors § 259 (1981).

6.In this case, the Department seeks revocation of the Respondent’s beer and wine permit for a fourth violation of 23 S.C. Code Ann. Regs. 7-200.4 (effective June 27, 2003) within the past three years. See Revenue Procedure 95-7.

7.Inherent in and fundamental to the powers of an Administrative Law Judge, as the trier of fact in contested cases under the Administrative Procedures Act, is the authority to decide the appropriate sanction when such is disputed. Walker v. South Carolina ABC Comm’n, 305 S.C. 209, 407 S.E. 2d 633 (1991). The Administrative Law Judge, as fact-finder, must impose a penalty based on the facts presented at the contested case hearing. To that end, an Administrative Law Judge must consider relevant evidence presented in mitigation. Mitigation is defined as a lessening to any extent, great or small. It may be anything between the limits of complete remission on one hand and a denial of any relief on the other. In a legal sense, it necessarily implies the exercise of the judgment of the court as to what is proper under the facts of the particular case. 58 C.J.S. Mitigation p. 834, 835 (1948).

In the present case, the Respondent clearly violated the provisions of Regulation 7-200.4 by permitting the purchase of beer by an individual under the age of twenty-one (21). Although the Respondent argues that employees are trained to check identification and that it utilizes a cash register to verify the purchaser’s age, the Respondent’s employee still sold beer to a minor. I agree with Mr. Frost that the sale in this case to a fifteen (15) year old minor is inexcusable. Moreover, revocation of a corporation’s license is the proper remedy when a company continues to disregard the requirements of its permit. This is even more important in light of the potential grave consequences that can occur as a result of a sale to a minor. Nevertheless, the sale in this instance clearly did not represent Southern’s philosophy concerning sales to minors. Furthermore, Southern has made significant efforts to impel its employees not to sell to minors. Those efforts in attempting to insure compliance with Regulation 7-200.4. the changes Southern was intending to implement before this violation occurred, the lessor penalties that have been levied in the past, and the fact that the Respondent was cited in this case before the penalty for the third offense was levied are proper factors of mitigation in this case.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that the Respondent’s beer and wine permit be suspended for one hundred twenty (120) days beginning March 1, 2004.

AND IT IS SO ORDERED.

___________________________

Ralph King Anderson, III

Administrative Law Judge

February 19, 2004

Columbia, South Carolina