ALJDEC decisions subject to certification as final

07A-0019-LIQ · Liquor Licenses and Control · 2007-06-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 4, 2007 APPEARANCES: Camila Alarcon, Assistant Attorney General, appeared for the Department. Peter Schelstraede, Esq., appeared for the Licensee-Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ Findings of Fact 1. The licensed location is a two story structure in Tempe, Arizona. The lower floor includes a large recording studio (Studio A), two smaller recording studios[1], a kitchen type area, a private bar with a hot tub[2] and shower, rest rooms, and possibly some rooms not identified on the record. The upstairs portion of the premises has a balcony, and an interior bar area. Normally, access to the downstairs area is restricted but access can be obtained if the person knows the code for the key pad for first floor entry or is allowed entry by way of stairs from the second floor premises. Access to the upstairs general public premises usually requires going up outside stairs to the balcony and gaining interior entry through a door from the balcony. Once interior entry is obtained upstairs, access to the first floor by use of the stairs is usually limited. 2. On January 1, 2007, at approximately 2:40 a.m., Department of Liquor Licenses and Control (Department) investigators, Keith Turner (Turner) and Adam Palubeskie (Palubeskie), drove to the licensed business and parked in the business parking lot. Turner testified he observed three persons go upstairs and attempt to gain entry. Two of the persons left without success. The third finally gained entry. Turner testified he could see inside the premises and saw 15 to 20 people with some of them on the interior staircase. 3. According to Turner, he gained access to the premises by following a person who had gained downstairs access using a security code. Turner testified he observed 10 to 15 persons inside the premises. 4. There were a number of separate downstairs areas. Turner contacted the Licensee’s agent, Jon Harris (Harris), and they went to one of the downstairs areas which consisted of a bar, hot tub and shower. There were seven or eight people in this area. Turner saw numerous partially empty glasses (initial testimony was 15 to 20, subsequent testimony placed the number as about the same as the number of persons in the room) on a counter-bar area. Some of the glasses contained spirituous liquor. 5. Turner noted a person identified as Sara Sanford (Sara), wife of the assistant manager, John Sanford (Sanford), with a glass of white (yellow colored) wine in front of her. The glass was half to three quarters filled with ice cubes. According to Turner’s report , he asked Sara if that was her wine and she answered “yes” whereupon others in the bar said the drink was not hers or that it was just water. Harris testified Sara then said it was her glass but that it was just water. According to Turner’s written report (Exhibit 1), he took the glass and asked Sara “Is this White Zinfandel” to which Sara answered “yes”. Sanford testified his wife suffers a rare illness and takes various medications for her condition. According to Sanford, his wife does not consume alcohol because it is incompatible with some of the medication and Sara’s condition and the medications she is taking may cause emotional swings. 6. Palubeskie attempted to gain entry through the upstairs entrance. The gate was barred by a padlock and chain. Palubeskie had to wait for an employee to unlock the gate. 7. According to the Licensee’s witnesses, on the night in question, both the upstairs and downstairs were being used as the licensed premises. The Licensee employed seven disc jockeys, three barbacks, seven bartenders, and eight security persons. In addition, the Licensee (Harris), the Assistant Manager (John Sanford), Sara, and a person identified as Michael Holmes (Holmes) were also present. This brings the possible total for claimed employees to 29[3], which is within the estimate of persons on the premises, made by Turner. According to Harris these persons were engaged in activities such as loading equipment or waiting for payment. 8. Harris testified Holmes was subcontracted as the limousine liaison and waiting to pay for the limousine services. Holmes was paid $150.00 in cash with no record made of the payment or as a business expense. Harris also testified that Sara did not receive direct compensation but was helping out by providing VIP[4] lists to security. Conclusions of Law The Complaint and Notice of Hearing charges violations of A.R.S. §4- 228 which prohibits locking of the front entrance of an on sale licensee if persons other than the licensee and the licensee’s on duty employees are on the premises. The statute allows one employee and one non employee to be on the premises immediately after closing. Count one alleges persons other than on duty employees were present on the premises when the front entrance was locked. Count two charges a violation of A.R.S. §4-244(17) which makes it unlawful for a licensee to allow a person to consume or possess spirituous liquor on the premises between 2:30 a.m. and 6:00 a.m.[5] The allegation asserts the Licensee allowed Sara to consume spirituous liquor at approximately 2:55 a.m. 1. The State has the burden of proof by a preponderance of the evidence under Culpepper v. State, 187 Ariz. 431 (1996 App.) and A.A.C. R2- 19-119. 2. A “preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence, §5 (1960). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary, 1182 (6th ed. 1990). 3. The evidence in an administrative hearing must be “substantial, reliable, and probative” (A.R.S. §41-1092.07(F)(1)). This means the Department has the affirmative responsibility to present sufficient competent evidence to meet the preponderance standard. The less demanding evidentiary standard in the administrative hearing does not mean that any type of evidence is entitled to serious consideration or significant weight. Although hearsay is admissible in administrative proceedings, the hearsay must be of a nature which would strongly indicate if not establish that the information is accurate and reliable. 4. “Substantial evidence is evidence possessing something of substance and relevant consequence and which furnishes substantial basis of fact from which issues tendered can be reasonably resolved.” Black’s Law Dictionary, Special Deluxe Fifth Edition, (St. Paul Minn.: West Publishing Co., 1979) p. 1281, citing State v. Green, 218 Kan. 438, 544 P. 2d 356, 362. 5. As to Count one, the Licensee does not dispute the front entrance was locked. The Licensee does contend persons on the premises were employees. A.R.S. §4-101(16) defines “employee” as anyone who performs a service on the licensed premises with the consent of the licensee. Although the mere number of “employees” still on the premises raises suspicions of whether they were all “on duty employees”, the only two persons identified as possible non employees by the State, were Holmes and Sara. According to the Licensee, Holmes and Sara were providing a service and were therefore employees at the time. The statute requires the persons remaining on the premises to be “on duty employees”. The Licensee testified Holmes was still on the premises to pay for the limousine service. The testimony regarding the Licensee’s payment to Holmes for his services, was questioned by the Administrative Law Judge (ALJ), but the testimony was not refuted by the State. Absent evidence to the contrary or inherent unreliability, the testimony of the Licensee must be given some weight regarding Holmes. This leaves only Sara as a possible non- employee. Although Sara was the wife of the assistant manager, the statue makes no allowances for spouses of employees remaining on the premises. Harris testified Sara was providing a service by providing the VIP lists to security. This may have been a service at the beginning of the evening when people who were VIP classified persons were arriving. However, at 2:40 a.m., if only employees were on the premises, the service was no longer being provided. Based on the evidence most favorable to the Licensee (only employees on the premises) Sara could not have been providing the designated service (VIP customer lists to security), at the time in question. Sara was not an on duty employee. To this extent Count One is proven by substantial evidence. 6. As to Count two, the evidence presented at the hearing creates a problem because according to Turner’s report, Sara identified her purported wine as White Zinfandel which is known to be a pink color and not yellow. The problem is that Sara either did not know what she was identifying or Turner was not holding up a yellow colored wine. The statement in Turner’s report and his testimony at the hearing are therefore conflicting. If Turner’s report is considered accurate, the conflict would be attributable to Sara who is identifying a yellow colored wine as a White Zinfandel. If this is accepted, Sara’s hearsay is suspect with respect to what she is identifying. Added to this questionable hearsay by Sara, is Turner’s testimony that Sara was intoxicated, swaying, and had slurred speech. Given this state of affairs, one would be hard put to conclude that Sara’s intoxicated hearsay regarding what was in the glass and who the glass belonged to, had the indicia of reliability[6]. The alternative is to conclude Sara was not impaired and did not misidentify the wine referred to in which case Turner’s recounting of the events would be suspect. In either case, the evidence does not meet the legal criteria for substantial evidence[7] and the Count is recommended for dismissal. Recommended Order It is recommended Count two be dismissed. It is further recommend Count the Licensee be found in violation of Count one of the Complaint and that a penalty of two hundred ($200.00)[8] be assessed for that violation to be paid by the effective date[9] of the Order in this case.

Done this day, June 6, 2007

______________________________________ Allen Reed Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

Jerry Oliver, Director Arizona Department of Liquor Licenses and Control 800 W. Washington St., 5th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] The Licensee testified he has had a recording studio at the location for over 17 years. He obtained a liquor license at the insistence of the City of Tempe after the city learned persons using the recording studio were allowed to bring and consume liquor on the then unlicensed premises. [2] During the hearing the term “Jacuzzi” was used. This is a brand name which has taken on a generic meaning. The term “hot tub” will be used throughout this decision. [3] There was some evidence that persons from a limousine service being paid by the Licensee were possibly present. [4] The Licensee was providing limousine service, a bar tab, and other amenities for the New Year celebration, for $120 per couple. [5] 10:00 a.m. on Sunday [6] It is difficult to conclude that hearsay statements of an intoxicated persons would be given similar credibility as statements made by a person who is not intoxicated. [7] The ALJ is well aware of Turner’s testimony that the glass contained what smelled like spirituous liquor. The fact remains that Sara’s statement that the glass was hers is not considered reliable for the reasons given in paragraph six of the Conclusions. It must also be noted the allegation claims Sara was allowed to “consume” after hours. There was no specific evidence with respect to after hours consumption by Sara. [8] The minimum penalty is recommended because the only person shown not to be an “on duty employee”, was the wife of the assistant manager. [9] The date specified by the Director of the Department, or if the decision is certified by the Director of the Office of Administrative Hearings, forty (40) days from the date of certification.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826