In re Con-Elec Corporation

In re Con-Elec Corporation  (96-487); 168 Vt. 576; 716 A.2d 822

[Filed 19-Jun-1998]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 96Ä487

                              MARCH TERM, 1998


In re Con-Elec Corporation      }     APPEALED FROM:
d/b/a Wolf's Lair               }
                                }
                                }     Liquor Control Board
                                }
                                }
                                }     DOCKET NO. None


               In the above-entitled cause, the Clerk will enter:

       Licensee Con-Elec Corporation, d/b/a Wolf's Lair, appeals from a
  decision of the Vermont Liquor Control Board, which revoked its first-class
  and third-class licenses to sell alcoholic beverages for on-premises
  consumption.  Licensee contends that (1) the Board exceeded its authority
  by partially basing the revocations upon proscribed activities, which are
  beyond the scope of the Board's enabling legislation, and (2) the factual
  findings, with regard to licensee's violation of several of the Board's
  regulations, were clearly erroneous and unsupported by the evidence.  We
  affirm.

       After a hearing before the Board, licensee was found to have violated
  the Board's General Regulation No. 9 (illegal gambling), No. 19
  (intoxicated patrons), No. 41 (disorderly conduct), and No. 49 (refilling
  bottles), and the Board's Credit Regulation No. 2 (credit sales). Due to
  these violations, licensee's liquor licenses were revoked.  This appeal
  followed.

       With regard to the violation of Regulation No. 9,(FN1) licensee's sole
  argument on appeal is that the Board exceeded its authority by promulgating
  a regulation prohibiting illegal gambling on licensed premises.  In its
  decision, the Board found, and the licensee does not dispute, that the
  licensee's employees sold break-open tickets on the licensed premises from
  the time it was first licensed in 1994 until the present case was filed in
  1996.  The evidence before the Board indicated that the gambling was
  constant and that "the proceeds were substantial."(FN2)

       This Court has not hesitated to strike down a Liquor Control Board
  regulation where there is no "nexus between the regulation and the
  consequences of excessive use of alcohol." In re Club 107, 152 Vt. 320,
  324, 566 A.2d 966, 968 (1989).  In Club 107, we held that "the mere
  coincidence of the sale of liquor and some other activity is not ÄÄ by
  itself ÄÄ sufficient to allow the Board to regulate the other activity. " 
  Id.  Central to our decision in Club 107 was the fact that the Legislature
  had not spoken about live entertainment in establishments serving alcoholic
  beverages, nor had it authorized the Board to regulate the activity at
  issue.  See id. at

 

  325, 566 A.2d  at 969; accord SBC Enterprises, Inc. v. City of S. Burlington
  Liquor Control Comm'n, 7 Vt. L. W. 362, 363 (1996) ("The Board may not,
  through promulgation of regulations, expand its authority into areas of
  activity that are beyond the focus of Title 7.").

       Thus, licensee's reliance on Club 107 is misplaced.  Unlike the
  challenged regulation in Club 107, the Legislature has spoken directly and
  clearly about the distribution of break-open tickets on premises licensed
  to sell alcoholic beverages.  Section 10203(f) of Title 32 provides in
  relevant part:

     Break-open tickets shall not be sold at premises licensed to sell
     alcoholic beverages except at clubs as defined in subdivision 2(7)
     of Title 7.  However, a nonprofit organization may sell break-open
     tickets at premises licensed to sell alcoholic beverages if,
     notwithstanding 13 V.S.A. § 2143(e), all proceeds from the sale
     of break-open tickets are used by the nonprofit organization
     exclusively for charitable, religious, educational and civic
     undertakings . . . .

  The Legislature has imposed a flat prohibition against the sale of tickets
  on licensed premises by any entity other than a non-profit organization. 
  See also 13 V.S.A. § 2101 (Cum. Supp. 1997) (banning games of chance unless
  conducted by non-profit organizations as provided in 13 V.S.A. § 2143). 
  Regulation No. 9 merely prohibits what the Legislature has proscribed.  The
  Board has not presumed to define and outlaw any gambling activity that is
  otherwise legal or to impose further regulation in a field fully occupied
  by the Legislature.  Regulation No. 9 protects "the public welfare [and]
  good order", 7 V.S.A. §1, by conditioning the license privilege on
  compliance with a statute that regulates gambling on licensed premises, and
  thus, its promulgation and enforcement did not exceed the Board's
  authority.

       Licensee also claims that the Board's Findings of Fact, with regard to
  violations of General Regulation Nos. 49, 19, and 41, are clearly erroneous
  and unsupported by the evidence. We disagree.  The Board found that
  licensee instructed its bartenders "to funnel liquor from gallon bottles
  into smaller bottles (`fifths')," a violation of Regulation No. 49,(FN3) and
  if questioned, "to say that it was done strictly for catering purposes." 
  The Board's findings are supported by the testimony of two witnesses, one a
  former bartender who testified that the practice occurred possibly
  "hundreds" of times.  The owner, the bar manager, and a present bartender
  contradicted this testimony, but as we have stated often, credibility of
  witnesses "is a matter for the trier of fact to judge."  In re Johnston,
  145 Vt. 318, 322, 488 A.2d 750, 753 (1985).  There was no error.

       In regards to the violation of Regulation No. 19,(FN4) the Board found
  the following:  That on March 12, 1996, a patron visited the licensed
  premises in the afternoon, left, and then returned in the early evening. 
  She consumed three or four alcoholic beverages on her first visit and "more
  than four or five" on her second visit.  By her own account, "she became so
  intoxicated that she was unable to [recall] many of the later events of the
  night."  Other patrons readily observed that the woman was "hammered",
  "drunk" and "highly intoxicated," and that she was crying, stumbling, and
  slurring her words.  The woman had as many as three drinks

  

  in front of her at one time, and she tried to take a drink from another
  patron thinking it was hers.  The licensee did not intervene until the
  intoxicated patron fell down while attempting to leave the bar, at which
  point the woman was helped back into the bar by the licensee and allowed to
  remain.  It was not until the police arrived in response to a fight on the
  premises, that she was removed by the police from the premises.  Testimony
  indicated that she spent the night in the detoxication unit at a
  correctional facility.

       The Board found that "the licensee had permitted [the patron] to
  consume vastly excessive amounts of alcoholic beverages and to remain on
  the premises for far too long for her safety and for the safety of the
  general public."  Licensee argues that the patron was "shut off" as soon as
  her intoxication was noticed.  Further, licensee argues that the patron
  failed to cooperate with licensee's attempts to send her home and that
  licensee "did all that it could" to remove her in a timely manner, and that
  the Board failed to consider the licensee's efforts.  The evidence supports
  the Board's findings and its conclusion that the licensee allowed an
  intoxicated patron to remain on the licensed premises.  Regardless of the
  efforts made by licensee, it was within the Board's discretion to decide
  that those efforts were too little too late and that the licensee had
  failed in its duty to prevent the loitering of an intoxicated person.   We
  find no error.

       The evidence also supports the Board's finding that the licensee
  failed to control the conduct of its patrons and allowed fighting to occur
  on the premises in violation of Regulation 41.(FN5) The findings of the Board
  describe a physical altercation in the bar between two patrons that then
  escalated into a parking lot fight.  Following a shoving incident in the
  bar, the licensee's owner separated the men, but took no further action. 
  The patrons were not ejected and the police were not called.  Instead, the
  owner allowed both men to remain on the premises, and to continue to drink
  at the bar.  Continuing a verbal offensive, one of the patrons repeatedly
  made "very explicit" threats of further physical contact, specifically
  requesting a fight with the other.  Only after one of the men "sucker
  punched" the other man did the licensee's owner eject the man who was
  punched.  As the ejected patron exited the bar, the other man followed
  immediately, and the fight recommenced just outside the bar.

       Licensee contends that the owner did "take immediate and appropriate
  preventative action as warranted by the situation."  We disagree.  The
  language we used in In re Capital Investment, Inc., where the facts were
  strikingly similar to those at bar, fits the present case well:

 

     
       [T]he Board pointed to the fact that licensee deposited one
       combatant to the original altercation outside the premises, still in
       a combative mood, without supervision, despite his obvious state
       of intoxication and his threats of dire harm to the other participant
       of the fight, who remained inside the premises. . . .  The Board
       properly construed General Regulation No. 41 in finding that
       licensee had permitted or suffered prohibited conduct on its
       premises, and the evidence supports the Board's conclusion that
       licensee failed in its affirmative duty to keep the public areas
       adjacent to the premises from becoming a public nuisance.

  150 Vt. 478, 483, 554 A.2d 662, 666 (1988) (emphasis added).

       Similarly, the licensee in this case did not take appropriate
  affirmative action.  After physical contact between the combatants and
  clear signs of escalation, the owner permitted both to remain at the bar. 
  Only after a second fight inside the bar did the owner eject one of the
  combatants.  The owner, however, did nothing to prevent the other combatant
  from following the first outside, or prevent the fight to resume. 
  Licensee's failure to meet its "affirmative duty" was clear and
  substantial.

       Finally, licensee does not challenge the Board's finding that licensee
  violated the Board's Credit Regulation No. 2 by "routinely and repeatedly"
  selling drinks on credit, and allowing customers to run tabs "exceeding
  $100 and even $200."(FN6) Instead, licensee claims that it was not aware of
  the regulation and that the violations were de minimis.  We need not reach
  the question of whether these credit violations were serious enough to
  warrant revocation of licensee's liquor licenses.  Given the full record in
  this matter, we conclude that licensee's violations of the Board's General
  Regulations were substantial and covered a wide variety of misconduct. 
  Thus, the Board was within its rights to revoke the licensee's liquor
  licenses, and the licensee will not be heard to argue that the revocation
  hangs on a technicality.

       Affirmed.



                              BY THE COURT:


                               _______________________________________
                              John A. Dooley, Associate Justice

                              _______________________________________
                              James L. Morse, Associate Justice

                              _______________________________________
                              Denise R. Johnson, Associate Justice

                              _______________________________________
                              Marilyn S. Skoglund, Associate Justice


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                                  Footnotes



FN1.  General Regulation No. 9 reads in pertinent part: "No licensee
  shall . . . permit said [licensed] premises to be used for illegal gambling
  purposes."

FN2.  At the hearing before the Board, licensee maintained that the
  gambling activity conducted on the premises had been organized and executed
  on behalf of a non-profit corporation.  See 13 V.S.A. § 2143 (permitting
  non-profit organizations, in limited circumstances, to organize and operate
  games of chance).  The Board, however, found that licensee, a for-profit
  business, had purchased the tickets with its own funds and then sold the
  break-open tickets at retail. Licensee abandons this argument on appeal.

FN3.  General Regulation No. 49 states that "Licensees shall not
  reuse, refill or tamper with any bottle of alcoholic liquor, nor shall such
  licensee adulterate, dilute, fortify, or cause any substitution of any
  nature to be made in or to the contents of any bottle of alcoholic liquor."

FN4.  General Regulation No. 19 provides in part that "No person under
  the influence of alcoholic liquor shall be allowed to loiter on the
  licensed premises."

FN5.  General Regulation No. 41 provides in part that "It shall be the
  duty of all licensees to control the conduct of their patrons at all times.
  . . .  No disturbances, brawls, fighting, unlawful conduct, shall be
  permitted or suffered upon any licensed premises; nor shall such premises
  be conducted in such a manner as to render said premises or the streets,
  sidewalks or highways adjacent thereto a public nuisance."

FN6.  Credit Regulation No. 2 provides in part that "No malt or vinous
  beverages or spirituous liquor shall be sold on credit by any licensee
  holding a first or third class license, except hotels to their registered
  guests."