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1 State Office of Administrative Hearings 0 ~ ~ 7 Fit=~t:J\ii:D tec l Cathleen Parsley Chief Administrative Law Judge l..al 17 December 2015 Sherry Cook, Administrator Texas Alcoholic Beverage Commission 5806 Mesa Drive Austin, Texas VIA REGULAR MAIL RE: SOAH Docket No ; TABC v Meacham LLC, d/b/a Bucks's Cabaret Dear Ms. Cook: Please find enclosed a Proposal for Decision in this case. It contains my recommendation and underlying rationale. Exceptions and replies may be filed by any party in accordance with 1 TEX. ADMJN. CODE (c), a SOAH rule which may be found at Sincerely, OBERT F. JO ES JR. ADMINISTRATI JUDGE STATE OFFICE OF ADMINISTRATIVE HEARINGS RFJ/cj Enclosure xc Sheila Lindsey-Sanders, Staff Attorney, Texas Alcoholic Beverage Commission. 427 W. 20'h Street, Suite 600, Houston, TX VIA REGULAR MAIL Emily Helm, General Counsel, Texas Alcoholic Beverage Commission, 5806 Mesa Drive, Austin, TX VIA REG ULAR MAIL Judith Kennison, Senior Attorney, Texas Alcoholic Beverage Commission, 5806 Mesa Drive, Austin, TX 7873 I - VIA REGULAR MAIL (with Certified Evidentiary Record and Hearing CD/s) Roger Albright, Attorney for Respondent, 3301 Elm Street, Dallas, Texas VIA REGULAR MAIL 300 W. 15u, Street, Suite 502, Austin, Texas 78701/ P.O. Box 13025, Austin, Texas (Main) (Docketing) (Fax)

2 DOCKET NO TEXAS ALCOHOLIC BEVERAGE COMMISSION, Petitioner v MEACHAM LLC D/B/A BUCKS'S CABARET Respondent BEFORE THE STATE OFFICE OF ADMINISTRATIVE HEARINGS PROPOSAL FOR DECISION The Staff of the Texas Alcoholic Beverage Commission (TABC or Commission) sought a suspension of the permit held by 2345 Meacham LLC d/b/a Bucks's Cabaret (Respondent). Respondent that it had taken all possible steps to prevent an employee from being intoxicated on the premises. The Administrative Law Judge (ALJ) recommends that Respondent's permit be suspended for 36 days or, in the alternative, Respondent be assessed a civil penalty of $300 per day for 36 days for a total penalty of$10,800. I. PROCEDURAL HISTORY The hearing in this matter convened before ALJ Robert F. Jones Jr. on October 22, 2015, at the State Office of Administrative Hearings (SOAH), in Fort Worth, Texas. Sheila A. Lindsey of the T ABC Legal Services Division appeared and represented Staff. Respondent appeared by its attorney, Roger Albright. Evidence was received and the record closed that day.

3 DOCKET NO PROPOSAL FOR DECISION PAGE2 II. DISCUSSION A. Background Staff alleged that Respondent violated Texas Alcoholic Beverage Code l l.6l(b)(l3), which authorizes the Commission to suspend a permit if the permittee was intoxicated on the licensed premises. The events which are the subject of this contested case took place in the evening of March 1, 2014, and the early morning of March 2, TABC Agent Denver Carleton led a squad of T ABC agents, namely Sergeant Charlotte Knox and agents Travis Shirley, Charles Cayea, and Christopher Nunnery, in an undercover investigation of the Respondent's premises, a sexually oriented business. Respondent holds Mixed Beverage Permit MB753709, which includes a Mixed Beverage Late Hours Permit and a Beverage Cartage Permit. Respondent's licensed premises are located at 2345 Meacham Boulevard, Fort Wo1th, Tarrant County, Texas The squad was split into two teams, the "undercover" team and the "open team." Agents Shirley and Cayea were the undercover team. Agent Carleton, Sergeant Knox, and Agent Nunnery, were the open team. On the undercover team's cue, the open team was to enter Respondent's club, approach the person alleged to have committed the violation, and investigate. The undercover team was to leave Respondent's premises after the open team entered and accosted the alleged violator. The undercover team was not to have contact with the alleged violator or investigate further. B. The Undercover Team Agents Shirley and Cayea entered Respondent's premises at approximately 11 :00 p.m. on March 1, They seated themselves at the bar of the club, where they had a view of the main dance stage, as well as several smaller stages scattered around the club. They also had a portion 1 Pet. Ex. I at 4.

4 DOCKET NO PROPOSAL FOR DECISION PAGE3 of the bar area near them under their observation. There were 150 to 200 patrons in the club and between five and eight floor managers or hosts working in the club. Kaitlyn Walls was a dancer at Respondent's bar. She began her shift at approximately 7:00 p.m. Agents Shirley and Cayea each testified they observed Ms. Walls dancing on the main stage and then on the smaller stages in rotation. Ms. Walls's demeanor, as they observed it from their seats, appeared normal to them. Ms. Walls was wearing a gold or yellow bikini and high heels which allowed the agents to distinguish her from the other dancers. Mr. Wangler was the general manager of Respondent in He had also observed Ms. Walls during this time period and agreed that Ms. Walls did not act as if she was intoxicated. Ms. Walls approached a customer and sat next to him at the bar near the agents. Ms. Walls took a black baseball cap from the customer's head and placed it on her own. According to the agents, the baseball cap fell off, and as Ms. Walls was leaning down and attempting to pick up the cap, she fell off her bar stool. The stool tipped over and fell on Ms. Walls. She had difficulty in rising and setting the stool upright. The agents noted that Ms. Walls was carrying a small glass containing brown liquid. Agent Shirley recalled that Ms. Walls remarked to the bartender that the drink "tastes like water. " 2 Neither agent saw any bartender serve Ms. Walls, and had no idea where she got the glass she was carrying or what was in it. Agent Cayea stated that Ms. Walls had a glassy, blank stare and disheveled hair. Although Agent Shirley did not recall it, Agent Cayea's report of the incident noted that a second man had approached Ms. Walls while she at the bar and spoke to her. The agents testified that when Ms. Walls left the bar she swayed while walking and ran into the door frame of the doorway leading to the club's dancer's dressing room. Based upon what they had seen, Agents Shirley and Cayea contacted the open team and informed them that they believed Ms. Walls was intoxicated. They sent the open team Ms. Walls' s description and her location in the dressing room by text message. Once the open team entered the club, the two agents left. 2 Ms. Walls testified she did not recall saying, "This drink tastes like water."

5 DOCKET NO PROPOSAL FOR DECISION PAGE4 Mr. Wangler testified that the Respondent's dancers drank alcohol while dancing. The club did not have a set limit on the amount they could consume. The bartenders and wait staff were instructed to monitor the dancers' intake and warn management if they believed a dancer was or was becoming impaired. Respondent employed a "house mom," stationed in the dancer's dressing room, to oversee the dancers on the premises. Mr. Wangler testified that for the purposes of 11.6I(b)(13) the Code, Respondent's dancers were employees. Mr. Wangler testified he, and Respondent, took all reasonable and appropriate steps to monitor alcohol consumption by dancers and patrons on the premises. Respondent's policy was to send any dancer home if she became or was becoming intoxicated. Mr. Wangler knew Ms. Walls very well. She had been dancing at the club for four years. She had no history of intoxication at work and as far as Mr. Wangler knew did not have a drinking problem. Mr. Wangler observed Ms. Walls that night as she was dancing at the main and subsidiary stages, and also observed her approach the patron at the bar. Ms. Walls did not appear impaired to him. Mr. Wangler testified that Ms. Walls did not fall off the stool. Instead, he believed that Ms. Walls pushed back from the bar, and the stools back legs caught on a "lip" formed by the juncture of the tile floor and the rug that covered most of the club floor. The catch on the lip caused the stool to over-balance and fall, with Ms. Walls landing on top ofit. Mr. Wangler testified he approached Ms. Walls at the bar and spoke with her. 3 Mr. Wangler reported that Ms. Walls told him she had taken her "pills." From closer observation, he did not believe that Ms. Walls was intoxicated, but also was concerned that Ms. Walls was not "right." Mr. Wangler testified he had the perception that something was "a little off" or "different" with Ms. Walls, which he attributed to "her pills or whatever." Mr. Wangler related that Ms. Walls had lived in his home for a period and based upon his familiarity with her he was convinced she was not impaired but believed she should have something to eat and take a cab home. He sent her to the dressing room. Mr. Wangler stated he was not "taking any chances" and he sent her home "in case she was impaired." Mr. Wangler had never had to send Ms. Walls home before. 3 Mr. Wangler was the second man at the bar mentioned in Agent Cayea's report

6 DOCKET NO PROPOSAL FOR DECISION PAGES After Mr. Wangler directed Ms. Walls to go to the dressing room he told Jonathon George, a floor manager on duty, to get her something to eat. Mr. Wangler did not think Ms. Walls was actually impaired or intoxicated because "she did not smell like alcohol or anything like that." Mr. Wangler did not observe Ms. Walls to be unsteady when walking or have difficulty standing upright. He ordered her something to eat because he always did that in similar situations. Mr. Wangler testified he did not know what type of pills Ms. Walls had taken but he was aware that Ms. Walls was taking medication. 4 He had never asked her about the medication or its side effects. Mr. Wangler instrncted the house mom on duty not to allow Ms. Walls back on the floor. Mr. George was a floor manager or "host" at Respondent's premises and was working the night of March I, Mr. George was required to monitor the alcohol intake of dancers and customers at the club and to intervene if needed to cut off a customer, offer food, and offer a car ride. He watched for signs of intoxication or rising aggressiveness in patrons and dancers. Mr. George did not have any particular interaction with Ms. Walls prior to the open team's entry in the club. He did not observe anything out of the ordinary. Mr. George recalled seeing Ms. Walls at the club's bar during that night, but did not see her drinking and did not witness the incident with the barstool. Ms. Walls testified that she began her shift at approximately 7:00 p.m. She had not eaten that day. She was allowed to drink while on a dancing shift, and that night had two or three "crown and cokes" between 7:00 p.m. and midnight. Ms. Walls also took her anxiety medication that night. She knew that the club had a policy that dancers could not be intoxicated on the premises. Ms. Walls explained that when she was first hired she was instrncted that if she was intoxicated she would be fired or lose her right to dance at the club. Prior to March I st she had not been sent home for any reason. Ms. Walls testified she was not intoxicated. Ms. Walls stated she was steady on her feet that night. She stated she did not walk, or almost walk, into a door frame. Ms. Walls testified 4 Ms. Walls testified that Mr. Wangler was aware she was taking medication.

7 DOCKET NO PROPOSAL FOR DECISION PAGE6 the barstool fell because she had hooked her high-heeled shoes on the barstool's foot rest and leaned back pushing with her hands on the bar. The stool caught on the carpet and overbalanced. She was caught in the stool by her high-heels and fell or stumbled with it. She testified that Mr. Wangler approached her, told her to eat something, and said he might send her home. Mr. Wangler sent Ms. Walls home because her chair had fallen down and, in her words, "I made a fool of myself." C. The Open Team Just prior to the TABC agents entering the club, Mr. Wangler told Mr. George that he was sending Ms. Walls home. Mr. Wangler did not tell Mr. George that Ms. Walls was intoxicated, but said she was not feeling well or words to that effect. Mr. George was going to the front entrance to call a cab when he saw the T ABC open team enter the club. He recognized them as agents he had met before. He observed that the agents were intent on a "mission" and did not stop to speak to a manager as they usually did on a bar check. He followed the agents to the dressing room. They began questioning Ms. Walls after apparently identifying her from a picture or description on one of the agent's cell phone. Mr. George noted that Agent Knox had most of the preliminary contact with Ms. Walls. During the course of the questioning, an agent asked Ms. Walls how she was going to get home, and she responded that she had called her mother to pick her up at the club. Agent Nunnery was a part of the open team. He testified the team went to the club dressing room as directed by the undercover team. Sgt. Knox made the initial contact with Ms. Walls while Agent Nunnery stood in the doorway of the dressing room to secure the location. Agent Nunnery testified that he subsequently came into close contact with Ms. Walls. She "seemed intoxicated." Her speech was slurred. Ms. Walls had her cell phone in her hand or pocket, but kept asking the officers where her cell phone was. Agent Nunnery observed that Ms. Walls nearly fell down twice as she was dressing, and attempted to place her left shoe on her right foot. 5 Ms. Walls dressed in pants, at-shirt, and tennis shoes. 5 Mr. George did not recall Ms. Walls having any confusion over the location of her cell phone or putting a shoe on the wrong foot.

8 DOCKET NO PROPOSAL FOR DECISION PAGE7 Ms. Walls recalled that she went to the dressing room to wait and shortly afterward the TABC open team entered. Ms. Walls stated she was looking for her phone in her garment or dance bag. According to Ms. Walls, Sergeant Knox grabbed her bag. When Ms. Walls found her phone, Sgt. Knox told her to call her mother to pick her up. Ms. Walls called her mother and at Sgt. Knox's insistence, allowed Sgt. Knox to speak with her mother to arrange a pick-up. Because Ms. Walls and her mother lived in Lewisville, 45 minutes away, Sgt. Knox decided Ms. Walls needed to take a cab. According to Ms. Walls, as she was dressing one of the officers grabbed her purse and began searching it. Ms. Walls stated that there was a prescription bottle in the purse for what she called her anxiety medication. According to Ms. Walls, the officer told her they had permission to go through her purse, or were authorized to because of the presence of the prescription bottle. Ms. Walls stated that she did not eat that day and had taken her medication that day. She Said the medication "affects [her] on an empty stomach." None of the officers asked Ms. Walls the name of the medication she was taking, for a copy of the prescription, or if she had taken any that night. Ms. Walls testified that after she was dressed, she and the officers went to the manager's office. As Ms. Walls recalled, the only field sobriety test was "looking in her eyes," and the agent said they were glassy and red. Mr. George recalled that at the agents' request he took Ms. Walls and the agents to the manager's office. He noted that the agents did not use a portable breath tester (PBT) or any other type of breath test device. Mr. George stated he mediated between Ms. Walls and the agents in the manager's office. Mr. George stated that Ms. Walls was cooperative though anxious, confused, and agitated. Mr. George observed that Ms. Walls stood balanced in the dressing room speaking to the officers, while she was getting dressed, and while speaking on the phone with her mother. The only time he observed her as unsteady was during the field sobriety

9 DOCKET NO PROPOSAL FOR DECISION PAGES test. Mr. George stated that Ms. Walls told the agents that "she has an eating problem and that if she doesn't eat she will feel weak and unstable and that she hadn't ate all day." 6 Mr. George observed Agent Nunnery conduct a field sobriety test and heard him conclude that Ms. Walls was intoxicated. Mr. George witnessed Agent Nunnery attempt to conduct the horizontal gaze nystagmus (HGN) with Ms. Walls. He noted the agent told Ms. Walls to follow the pen he used as a stimulus with her eyes, and not to move her head or body. Mr. George noted that as Agent Nunnery conducted the test, Ms. Walls twice stumbled to her right side. 7 According to Mr. George, once he had conducted the HGN, Agent Nunnery told Agent Carleton "he had all he needed." According to Mr. George, Agent Nunnery stated he believed Ms. Walls was intoxicated on more than just alcohol. He asked Ms. Walls if she was taking any prescription medication. Ms. Walls stated she was taking a prescription medication, but Mr. George did not recall or write down what the medication was. Mr. George stated that he took Ms. Walls outside to wait for the cab, and at some point he re-entered inside the club. When Mr. George returned outside, he saw Agent Nunnery searching Ms. Walls' s purse. According to Mr. George, Agent Nunnery found a prescription bottle and told Ms. Walls the "narcotics" he had found justified the search. According to Mr. George, Agent Knox asked him to be sure Ms. Walls took the cab, and the agents left before Ms. Walls's cab arrived. Agent Nunnery personally observed Ms. Walls in the manager's office. She had the odor of an alcoholic beverage on her breath and person, had glassy eyes, had slurred speech, and swayed standing. Agent Nunnery is trained in field sobriety tests. In particular, Agent Nunnery is certified to conduct the HGN examinations. Agent Nunnery testified that HGN "identifies the level of intoxication." Agent Nunnery started the HGN and observed Ms. Walls that exhibited two clues - lack of smooth pursuit in both eyes. Agent Nunnery had Ms. Walls conduct the test 6 7 Resp. Ex. I at 2. Resp. Ex. I at 2.

10 DOCKET NO PROPOSAL FOR DECISION PAGE9 standing. He stopped the test when she lost her balance twice. Agent Nunnery had Ms. Walls sit down. He testified that the HGN cannot be conducted when the subject is seated. As a consequence, Agent Nunnery testified he could not complete the test. Agent Nunnery agreed he asked Ms. Walls if she was taking any medication, because "narcotics" could affect the HGN results. According to Agent Nunnery, Ms. Walls denied taking any medications. When asked by Agent Nunnery, Ms. Walls stated she had consumed three whiskey and cokes. Agent Nunnery stated that Ms. Walls was sent home in a cab, and he waited outside the club with Ms. Walls to assure she left. 8 He noted that Mr. George was also outside. Agent Nunnery testified that Ms. Walls dropped her purse, and the contents spilled, including cigarette rolling papers. Agent Nunnery asked Ms. Walls what the papers were for, and she replied, "for marijuana." Agent Nunnery asked Ms. Walls if she had possession of any illegal drugs and she replied she had "already smoked it all." 9 Agent Nunnery testified that Ms. Walls consented to a search of her purse, and Agent Nunnery searched her purse. He found nothing. He specifically denied finding a prescription bottle. The cab arrived and Ms. Walls was released. Ms. Walls was not arrested that night. Respondent was issued an administrative notice for violation of 1 l.61(b)(l3) of the Code. D. Respondent's Policies and Procedures Curtis Wise is the owner of Respondent. Mr. Wise was not present at the premises on March 1, Mr. Wise is familiar with the statute prohibiting a permittee's employee from being intoxicated on the licensed premises. Mr. Wise did not object and did not correct 8 Ms. Walls did not recall any of the agents waiting outside with her for the cab. Instead, she recalled that Mr. George, Mr. Wangler, the three agents, and she waited in the office for the cab, and when it arrived, Mr. George walked her out to the cab. 9 Mr. Wangler stated he did not know if Ms. Walls had smoked marijuana that night and also related that she did not smoke in his house during the eleven months she lived there. Ms. Walls stated it was possible she had cigarette rolling papers at the bottom of her purse, because she had carried the purse for years. She denied smoking marijuana that night. Ms. Walls also denied dropping her purse. Mr. George did not recall a discussion of rolling papers or marijuana use. No witness testified that they smelled the odor of burned marijuana on Ms. Walls's person.

11 DOCKET NO PROPOSAL FOR DECISION PAGElO Mr. Wangler's testimony that Respondent's dancers were employees for the purposes of 1 l.61(b)(13) of the Code. Mr. Wise listed a number of actions Respondent takes to assure compliance with l 1.61(b)(13). A doorman is on duty every night to screen patrons for intoxication before they enter. Further, four to seven or eight managers work each night. On March 1, 2014, aside from Mr. George and Mr. Wangler, four other managers would have been working the floor. The managers conduct daily pre-shift meetings with wait staff and bartenders to emphasize the need to monitor alcohol consumption and signs of intoxication in dancers and patrons. All the bartenders are T ABC seller/server certified. The bartenders and wait staff were instructed to monitor the dancers' intake and warn management if they believed a dancer was or was becoming impaired. Floor managers were required to monitor the alcohol intake of dancers and customers at the club and to intervene if needed to cut off a customer, offer food, and offer a car ride. Respondent employed a house mom, stationed in the dancer's dressing room, to oversee the dancers on the premises. Mr. Wise asked TABC to conduct an alcohol awareness class and required all employees and dancers to attend. 10 Mr. Wise stated that Respondent has a "breathalyzer" that is kept on the premises. The device is used as a guideline to see what an employee's breath alcohol concentration might be, if the employee is acting out of the ordinary or may be intoxicated. In the past, a manager sent an employee home after the employee failed an in-house breathalyzer test. Respondent does not request patrons to use the device. Mr. Wise did not recall what make or model the device was but did note that it had to be sent to the manufacturer for calibration. Mr. Wise explained that if a wait staff employee or dancer had to be sent home, it would be the manager's decision and Mr. Wise would not need to be consulted. The matter would be discussed at the weekly management meeting when discipline would be decided: a second chance; a reduction of time (a week or a month off); or a termination. There was such a meeting after the March 1, 2014 incident. Mr. Wise and his mangers discussed what happened and what could have been done to prevent it. Mr. Wise could not recall what discipline might have been imposed on Ms. Walls. 10 The class may have been given in conjunction with Respondent's settlement of an earlier violation. Resp. Ex. I.

12 DOCKET NO PROPOSAL FOR DECISION PAGE 11 After the March!st event, Mr. Wangler told Mr. Wise that Ms. Walls was on medication, and Mr. Wise asked Mr. Wangler what medication she was taking. Mr. Wangler sent Mr. Wise a text and Mr. Wise looked up the medication which he identified as citalopram. That drug is an antidepressant marketed as Celexa. However, the medication was not positively identified, nor was the medication's interaction with alcohol established, in the record of this case. Mr. Wise testified that Respondent does not have a policy with respect to an employee or a dancer taking prescription drugs. E. Applicable Law The T ABC may suspend a permit for not more than sixty days if "the permittee was intoxicated on the licensed premises." 11 "Permittee" means "a person who is the holder of a permit provided for in this code, or an agent, servant, or employee of that person." 12 "Intoxicated" means "not having the normal use of mental or physical faculties by reason of the introduction of alcohol, a controlled substance, a drug, a dangerous drug, a combination of two or more of those substances, or any other substance into the body." 13 The Staff has the burden of proof by a preponderance of the evidence. 14 F. Parties' Arguments Staff argued that a preponderance of the evidence proved that Respondent's employee, Ms. Walls, was intoxicated on the licensed premises on March I, Ms. Walls displayed clear signs of intoxication: she was unsteady on her feet (both in high-heeled shoes and in tennis shoes); Ms. Walls used other objects for support when walking; appeared confused; had glassy eyes; and had the odor of an alcoholic beverage on her breath. Ms. Walls's testimony contradicted that of Mr. George: he (as well as Agent Nunnery) stated they waited outside for the Tex. Alco. Bev. Code (the Code) I l.61(b)(l3}. 1.04(11) of the Code. Tex. Penal Code 49.01(2)(A). I Texas Administrative Code (TAC)

13 DOCKET NO PROPOSAL FOR DECISION PAGE 12 cab. Ms. Walls denied it. Accordingly Staff argued that her testimony should not be considered to be credible. The Staff noted that Mr. Wangler testified that something was wrong or "off" with Ms. Walls. He took steps to remove Ms. Walls from the club floor. Petitioner argued that Ms. Walls had too much to drink, or was under the influence of her medication (which the Staff termed a narcotic) or both. The Staff argued that Ms. Walls, more likely than not, knew she was taking medication that should not have been mixed with alcohol, due to a possible adverse interaction. The Staff asserted that Mr. Wangler's action in taking Ms. Walls off the dance floor corroborated the testimony of Agents Shirley and Cayea who observed Ms. Walls. The Staff recommended a 36 day suspension of the Respondent's permit or, in the alternative, a civil penalty of $300 per day for the recommended 36 days for a total penalty of $] 0, Respondent argued that Agent Nunnery's testimony was not credible due to his failure to recollect details about the evening, such as who was present or which agent performed which act. Respondent argued that the Staff was asserting that the permittee is "strictly liable" for an employee being intoxicated on the premises. That is, if the Staff could show that the person was an employee, was physically present on the premises, and was intoxicated, then the violation would be proved. Respondent argued that SOAH ALJs recognized a further issue that must be proved: whether the employee was working at the time, and was in the course and scope of their employment, citing Texas Alcoholic Beverage Commission v Duluth Restaurant and Bar dlbla La Chatte. 16 Respondent argued that Mr. Wrangler's actions took Ms. Walls out of her course of employment. The Respondent's reliance on La Chatte is misplaced. The Commission's Final Order in the case specifically rejected the notion that an employee had to be acting in the course and TAC34.2. SOAH Docket No (July 6, 2011).

14 DOCKET NO PROPOSAL FOR DECISION PAGE 13 scope of employment to be treated as a permittee. The Commission stated, "It is not necessary to decide whether the employee is on the clock in order to decide whether she is treated as the permittee. The Code does not contain that proviso. Nor does the Code require that an employee be engaged in the work she is hired to do in order for her to be treated as the permittee." 17 Respondent further argued it had done everything it could to monitor and prevent Ms. Walls or any dancer from becoming intoxicated and took action to send Ms. Walls home when something appeared to be wrong. Respondent argued that if Ms. Walls was intoxicated, some or all of it could be ascribed to her medication. In Respondent's view, the purpose of l l.61(b)(13) is to police persons with easy access to alcohol, which Respondent asserted it had done. Ms. Walls's use of her medication was beyond Respondent's control. Respondent argued that if a penalty is imposed in this contested case, Respondent would be entitled to a variance from the standard penalty chart because of the steps Respondent has taken to avoid a violation of l l.61(b)(13) of the Code. 18 G. Analysis Staff has to prove by a preponderance of the evidence that Ms. Walls was Respondent's employee and that she was intoxicated on the licensed premises. Respondent did not dispute that Ms. Walls was Respondent's employee on March I, 2014, for the purposes of l l.61(b)(13) of the Code. Since Ms. Walls's opportunity to dance and earn money through Respondent's customers was contingent on her following Respondent's rules and policies, Ms. Walls is fairly described as Petitioner's employee for the purposes of this Proposal for Decision Texas Alcoholic Beverage Commission, Board Final Order, TABC Docket No (SOAH Docket No ) (January 18, 2012) at (a)(3) and 11.64(c) of the Code. Villatoro v. Tex. Alcoholic Bev. Comm 'n, No CV (Tex. App.-Dallas June 3, 2013, no writ).

15 DOCKET NO PROPOSAL FOR DECISION PAGE 14 Ms. Walls testimony established that she had not eaten on March 1, 2014; had consumed at least two, and pmt of a third, mixed drinks; had consumed the drinks between 7:00 p.m. and midnight; and that she had taken her prescribed anxiety medication some time during the day. The exact medication she had taken was not established. Ms. Walls was not asked to identify the medication that night or at the hearing, nor was she asked to produce, or subpoenaed to produce, a copy of the prescription. Mr. Wise's identification of the drug as citalopram or Celexa was based upon information he received from Mr. Wangler and cannot be considered as dispositive. Further, assuming Ms. Walls was taking citalopram or Celexa, that particular drug's interaction with alcohol was not established. There was no evidence that Ms. Walls smoked marijuana that night. The undercover team stated that Ms. Walls had a glassy, blank stare and disheveled hair; swayed while walking; and ran into the frame of the doorway leading to the dressing room. Agent Nunnery testified that Ms. Walls "seemed intoxicated:" her speech was sinned; Ms. Walls had short term memory loss ( concerning her cell phone); nearly fell down twice as she was dressing, and attempted to place her left shoe on her right foot; had the odor of an alcoholic beverage on her breath and person; had glassy eyes; and swayed standing. Although Ms. Walls admitted drinking alcohol that night, Mr. Wangler testified he did not believe that Ms. Walls was intoxicated, but he also was concerned that Ms. Walls was not "right." Mr. Wangler testified he had the perception that something was "a little off' or "different" with Ms. Walls. Mr. George observed that Ms. Walls stood balanced while she was dressing and speaking on the phone with her mother, but lost her balance twice during the field sobriety test. Agent Nunnery conducted the HGN and observed Ms. Walls that exhibited two clues, lack of smooth pursuit in both eyes. He stopped the test when she lost her balance twice causing Agent Nunnery to have Ms. Walls sit down. Agent Nunnery interpreted the two HGN clues as sufficient to conclude that Ms. Walls was intoxicated. However, Ms. Walls was not so intoxicated that she was arrested for public intoxication, that is, for being "intoxicated to the degree that [Ms. Walls might] endanger [herself] or another." Tex. Penal Code 49.02(a).

16 DOCKET NO PROPOSAL FOR DECISION PAGE15 The National Highway Transportation Safety Administration (NHTSA) publication states that "an officer must look for the following three criteria in the HGN test: (1) an inability to pursue smoothly an object, or stimulus, moving sideways across the suspect's field of vision; (3) distinct, or pronounced, nystagmus at the eye's maximum horizontal deviation; and (3) an angle of onset of nystagmus of less than or equal to 45 degrees. The officer must look for these criteria in each eye, for a total of six clues. If the officer identifies four or more clues, then the officer classifies the suspect as intoxicated." 21 Accordingly, Agent Nunnery was not justified to conclude Ms. Walls was intoxicated based upon the HGN alone. Mr. George noted that the agents did not use a portable breath tester (PBT) or any other type of breath test device. 22 Agent Nunnery was not issued a PBT by TABC and testified that a PBT result would not be admissible in court. Agent Nurmery testified he did not have the ability to give Ms. Walls an "intoxilyzer" or "breathalyzer" test. Agent Shirley, Agent Cayea, and Mr. Wangler, each at about the same moment, concluded that something was wrong with Ms. Walls. The physical indicators that Agent Shirley, Agent Cayea, and Agent Nunnery observed are associated with alcohol intoxication. Ms. Walls's recollection of events, especially the searching of her purse and her being escorted outside by Agent Nunnery and Mr. George, are contradicted by the testimony of both and their recorded observations. 23 Ms. Walls was and remains confused about the sequence of the events of the night, and that confusion is further evidence of her impairment Emerson at 766; NHTSA SFST Manual at VIII-8 (2006), found at Although Mr. Wise testified that Petitioner had an in-house PBT, neither Mr. Wangler nor Mr. George requested Ms. Wall to submit a specimen of her breath, before or after the TABC arrived. 23 Respondent argued that Agent Nunnery's written report contradicted his testimony that he stood outside with Ms. Walls waiting for the cab, in an effort to impeach his testimony. It is true that the report does not mention that episode. However, Mr. George's testimony and written memorandum agreed with and supported Agent Nunnery's testimony.

17 DOCKET NO PROPOSAL FOR DECISION PAGE16 The ALJ concludes that a preponderance of the evidence demonstrates that Ms. Walls, Respondent's employee, had lost normal use of her mental or physical faculties by reason of the introduction of alcohol on the licensed premises. 24 the Code. The ALJ recommends that the Commission find that Petitioner violated 1 l.6l(b)(13) of The Staff recommended a 36 day suspension of the Respondent's permit, or in the alternative, a civil penalty of$300 per day for the recommended 36 days or $10,800 for a second violation of 1 l.6l(b)(l3) of the Code. 25 According to Petitioner's administrative record, Petitioner had a prior violation of 1 l.61(b)(l3) which occmted on December 20, Petitioner was assessed an administrative penalty of $5,100 (the equivalent of a 17 day suspension), which was reduced to $4,500 (the equivalent of a 15 day suspension) after completion of an employee educational program on March 21, 2014, which was paid on March 26, A violation of is l l.6l(b)(13) a health, safety, and welfare violation. 27 Under the Commission's rule a "subsequent violation of the Code or rule will result in a sanction in the next higher violation level if the subsequent violation is for a health, safety and welfare violation and occurs within 36 months of the prior violation and the subsequent violation is issued during an undercover operation." 28 The subsequent violation was on March 1, 2014, which is within 36 months of the prior violation on December 20, The March 1, 2014, violation was issued during an undercover investigation. 24 Ms. Walls's anxiety medication was not identified, nor was any expert testimony offered on the effects of the mediation or its interaction with alcohol. For example, Ms. Walls testified that she had not eaten that day and that her medication "affects her on an empty stomach." However, Mr. George testified Ms. Walls told the agents that "she has an eating problem and that if she doesn't eat she will feel weak and unstable and that she hadn't ate all day." According to Agent Nunnery, Ms. Walls denied taking any medications. Given these contradictions, the ALJ recommends that no finding be made on whether Ms. Walls was intoxicated due to her medication or its interaction with alcohol TAC34.2. Resp. Ex. I. 16 TAC TAC 34.l(g)(J) and (4).

18 DOCKET NO PROPOSAL FOR DECISION PAGE 17 Respondent argued that the amount of civil penalty should be reduced upon a consideration of the "ameliorating circumstances concerning the violation." 29 The "ameliorating circumstances" cited by Respondent are Respondent's practices and policies, described above, and the fact that Mr. Wangler immediately removed Ms. Walls from the dance floor when he observed something wrong with her. The Commission has stated that Texas's policy is "for Neither the permit holder nor an agent, servant or employee of the permit holder to be intoxicated o the premises in the first place." 30 Moreover, Respondent's prior violation of l l.6l(b)(l3) is an aggravating circumstance under the same statute. 31 Respondent is not entitled to a reduction in the proposed suspension or penalty. The ALJ recommends that Respondent's permit be suspended for 36 days or, in the alternative, Respondent be assessed a civil penalty of $300 per day for 36 days for a total penalty of$10,800. III. FINDINGS OF FACT I. The Texas Alcoholic Beverage Commission (TABC) issued Mixed Beverage Permit MB753709, which includes a Mixed Beverage Late Hours Permit and a Beverage Cartage Permit to Respondent 2345 Meacham LLC d/b/a Bucks's Cabaret. 2. Respondent's licensed premises are located at 2345 Meacham Boulevard, Fort Worth, Tarrant County, Texas On March 1, 2014, TABC Agent Denver Carleton led a squad of TABC agents, namely Sergeant Charlotte Knox and agents Travis Shirley, Charles Cayea, and Christopher Nunnery, in an undercover investigation of the Respondent's premises. 4. Agents Shirley and Cayea were the undercover team. 29 l l.641(a)(3) of the Code. J l.64jnotes that "ameliorating circumstances" include "those enumerated in Section l l.64(c)." The circumstances listed in I l.64(c), namely, that the violation could not reasonably have been prevented by the permittee or licensee by the exercise of due diligence; that the permittee or licensee was entrapped; that an agent, servant, or employee of the permittee or licensee violated this code without the knowledge of the permittee or licensee; that the permittee or licensee did not knowingly violate this code; that the permittee or licensee has demonstrated good faith, including the taking of actions to rectify the consequences of the violation and to deter future violations; or (6) that the violation was a technical one, have no factual support in the record. 30 Texas Alcoholic Beverage Commission, Board Final Order, TABC Docket No (SOAH Docket No ) (January 18, 2012) at I I.641(a)(4) ofthe Code.

19 DOCKET NO PROPOSAL FOR DECISION PAGE Agent Carleton, Sergeant Knox, and Agent Nunnery were the open team. 6. Agents Shirley and Cayea entered Respondent's premises at approximately 11 :00 p.m. on March 1, Kaitlyn Walls was a dancer at Respondent's bar. 8. Ms. Walls was working that night, beginning at approximately 7:00 p.m. 9. Ms. Walls danced on the main stage and then on the smaller stages in rotation. 10. Ms. Walls approached a customer and sat next to him at the bar near the agents. 11. Ms. Walls and her barstool fell to the floor. 12. Ms. Walls had a glassy, blank stare and disheveled hair. 13. Ms. Walls swayed while walking and ran into the door frame of the doorway leading to the club's dancer's dressing room. 14. Agents Shirley and Cayea contacted the open team and informed them that they believed Ms. Walls was intoxicated. 15. The two agents sent the open team Ms. Walls's description and her location in the dressing room by text message. 16. Agents Shirley and Cayea left the club after the open team entered the club. 17. Agent Nunnery came into close contact with Ms. Walls. 18. Ms. Walls had slmted speech; was not aware of where her cell phone was, even though she was holding it; nearly fell down twice as she was dressing, had glassy eyes; swayed standing; and lost her balance twice during field sobriety testing. 19. Ms. Walls admitted to drinking three alcoholic beverages. 20. Ms. Walls displayed physical and mental indications of intoxication. 21. On March 1, 2014, Ms. Walls did not have the normal use of her mental or physical faculties by reason of the introduction of alcohol into her body. 22. On March 1, 2014, Ms. Walls was an employee of Respondent. 23. Petitioner had a prior violation of l l.6i(b)(l3) of the Texas Alcoholic Beverage Code (the Code) which occurred on December 20, Petitioner was assessed an administrative penalty which was paid on March 26, 2014.

20 DOCKET NO PROPOSAL FOR DECISION PAGE The violation which is the subject of this contested case was on March 1, 2014, which is within 36 months ofthe prior violation on December 20, The March 1, 2014, violation was issued during an undercover investigation. 26. On April 14, 2015, Staff issued its Notice of Hearing, which contained information regarding the date, time, and place of the hearing; the matters asserted; the statutes and rules involved; and the legal authorities under which the hearing would be held. 27. The hearing in this matter convened before Administrative Law Judge Robert F. Jones Jr. on October 22, 2015, at the State Office of Administrative Hearings (SOAH), in Fort Worth, Texas. Sheila A. Lindsey of the TABC Legal Services Division appeared and represented the Staff. Respondent appeared by its attorney, Roger Albright. Evidence was received and the record closed that day. IV. CONCLUSIONS OF LAW 1. TABC has jurisdiction over this matter. Tex. Alco. Bev. Code (the Code) Chapter SOAH has jurisdiction to conduct the administrative hearing in this matter and to issue a proposal for decision containing proposed findings of fact and conclusions of law. Tex. Gov't Code Chapter Proper and timely notice of the hearing was provided to Respondent. Tex. Gov't Code Respondent violated l l.6l(b)(l3) of the Code, which authorizes the Commission to suspend a pe1mit if the pe1mittee was intoxicated on the licensed premises. 5. A 36 day suspension of Respondent's Mixed Beverage Permit MB753709, which includes a Mixed Beverage Late Hours Permit and a Beverage Cartage Permit, or in the alternative, a civil penalty of $300 per day for the recommended 36 days a total of $10,800, is appropriate. l l.6l(b)(l3) and ofthe Code; 16 Tex. Admin. Code SIGNED December 17, OBERT F. JO ES JR. ADMINISTRATI, W JUDGE STATE OFFICE OF ADMINISTRATIVE HEARINGS

21 AGENCY: STYLE/CASE: SOAH DOCKET NUMBER: REFERRING AGENCY CASE: STATE OFFICE OF ADMINISTRATIVE HEARINGS FT. WORTH OFFICE 6777 Camp Bowie Blvd Suite 400 Fort Worth, Texas Phone: (817) Fax: (512) SERVICE LIST Alcoholic Beverage Commission, Texas (TABC) 2345 MEACHAM LLC DBA BUCK'S CABARET STATE OFFICE OF ADMINISTRATIVE HEARINGS REPRESENTATIVE/ADDRESS SHEILA LINDSEY - SANDERS STAFF ATTORNEY TEXAS ALCOHOLIC BEVERAGE COMMISSION 427 W. 20TH STREET, SUITE 600 HOUSTON, TX (713) (PH) (713) (FAX) ROGER ALBRIGHT ATTORNEY AT LAW 3301 ELM STREET DALLAS, TX (214) (PH) (214) (FAX) ralaw@rogeralbright.com ADMINISTRATIVE LAW JUDGE ALJ ROBERT JONES PARTIES TEXAS ALCOHOLIC BEVERAGE COMMISSION ROGER ALBRIGHT xc: Docket Clerk, State Office of Administrative Hearings Emily Helm GENERAL COUNSEL. TABC, Fax No Pagel of I

22 DOCKET NO TEXAS ALCOHOLIC BEVERAGE COMMISSION, Petitioner VS MEACHAM LLC D/B/A BUCK S CABARET, Respondent PERMIT MB753709, LB, PE TARRANT COUNTY, TEXAS (SOAH DOCKET NO ) ORDER BEFORE THE TEXAS ALCOHOLIC BEVERAGE COMMISSION CAME ON FOR CONSIDERATION this 14th day of October, 2016, the above-styled and numbered cause. After proper notice was given, this case was heard by the State Office of Administrative Hearings (SOAH), with Administrative Law Judge Robert F. Jones, Jr. presiding. The hearing convened on October 22, 2015 and the SOAH record closed the same date. The Administrative Law Judge made and filed a Proposal for Decision containing Findings of Fact and Conclusions of Law on December 17, The Proposal for Decision was properly served on all parties, who were given an opportunity to file exceptions and replies as part of the record herein. No exceptions were filed. After review and due consideration of the Proposal for Decision, I adopt the Findings of Fact and Conclusions of Law of the Administrative Law Judge that are contained in the Proposal for Decision and incorporate those Findings of Fact and Conclusions of Law into this Order, as if such were fully set out and separately stated herein. All motions, requests for entry of Proposed Findings of Fact and Conclusions of Law, and any other requests for general or specific relief submitted by any party are denied, unless specifically adopted herein. IT IS THEREFORE ORDERED that the privileges granted by the Commission and the activities authorized under the above permit by the Code will be SUSPENDED beginning at

23 12:01 a.m. on November 30th, 2016 and shall remain suspended for THIRTY-SIX (36) DAYS, UNLESS a civil penalty in the amount of $10, is paid ON OR BEFORE November 22nd, This Order will become final and enforceable on the 15th day of November, 2016, unless a Motion for Rehearing is filed by the 14th day of November, SIGNED this the 14th day of October, 2016, at Austin, Texas. Sherry K-Cook, Executive Director Texas Alcoholic Beverage Commission CERTIFICATE OF SERVICE I certify that the persons listed below were served with a copy of this Order in the manner indicated below on this the 14th day of October, Martin Wilson, Assistant General Counsel Texas Alcoholic Beverage Commission

24 Robert F. Jones Jr. ADMINISTRATIVE LAW JUDGE State Office of Administrative Hearings 300 W. 15 th Street, Suite 502 Austin, TX VIA FACSIMILE: (512) Meacham, LLC d/b/a Buck s Cabaret RESPONDENT P.O. Box Flower Mound, TX VIA FIRST CLASS MAIL, CMRRR # Roger Albright ATTORNEY FOR RESPONDENT 3301 Elm Street Dallas, TX VIA FIRST CLASS MAIL, CMRRR # Shelia Lindsey ATTORNEY FOR PETITIONER TABC Legal Division VIA Shelia.lindsey@tabc.texas.gov

25 TEXAS ALCOHOLIC BEVERAGE COMMISSION CIVIL PENALTY REMITTANCE DOCKET NUMBER: REGISTER NUMBER: NAME: 2345 MEACHAM LLC TRADENAME: Buck s Cabaret ADDRESS: P.O. Box , Flower Mound, Texas DUE DATE: November 22, 2016 PERMITS OR LICENSES: MB753709, LB, PE AMOUNT OF PENALTY: $10, Amount remitted $ Date remitted You may pay a civil penalty rather than have your permits and licenses suspended if an amount for civil penalty is included on the attached order. YOU HAVE THE OPTION TO PAY THE CIVIL PENALTY ONLY IF YOU PAY THE ENTIRE AMOUNT ON OR BEFORE THE DUE DATE. AFTER THAT DATE YOUR LICENSE OR PERMIT WILL BE SUSPENDED FOR THE TIME PERIOD STATED ON THE ORDER. Mail this form with your payment to: TEXAS ALCOHOLIC BEVERAGE COMMISSION P.O. Box Austin, Texas Overnight Delivery Address: 5806 Mesa Dr., Austin, Texas You must pay by postal money order, certified check, or cashier's check. No personal or company check nor partial payment accepted. Your payment will be returned if anything is incorrect. You must pay the entire amount of the penalty assessed. Attach this form and please make certain to include the Docket # on your payment. Signature of Responsible Party Street Address P.O. Box No. City State Zip Code Area Code/Telephone No. Page 1 of 2

26 Page 2 of 2

27 DOCKET NO TEXAS ALCOHOLIC BEVERAGE COMMISSION, Petitioner VS MEACHAM LLC D/B/A BUCK S CABARET, Respondent PERMIT MB753709, LB, PE TARRANT COUNTY, TEXAS (SOAH DOCKET NO ) BEFORE THE TEXAS ALCOHOLIC BEVERAGE COMMISSION ORDER DENYING MOTION FOR REHEARING CAME ON FOR CONSIDERATION this 1st day of December, 2016, the above-styled and numbered cause. On October 14, 2016 an Order was issued in this cause suspending Respondent's permits for a period of 36 days unless a civil penalty in the amount of $10,800 was paid. A timely Motion for Rehearing/Reconsideration was filed by Respondent on November 11, 2016, and a Supplemental Motion for Rehearing was filed by Respondent on November 16, Petitioner filed a Response to Respondent's Motion for Rehearing/Reconsideration on November 22, Having considered Respondent's Motion for Rehearing/Reconsideration, Respondent's Supplemental Motion for Rehearing, and Petitioner's Response to Respondent's Motion for Rehearing/Reconsideration, Respondent's Motion for Rehearing/Reconsideration is DENIED. IT IS THEREFORE ORDERED that IF THIS ORDER IS NOT APPEALED WITHIN THE TIME ALLOWED BY ALCOHOLIC BEVERAGE CODE 11.67, the privileges granted by the Commission and the activities authorized under the above permits by the Code will be SUSPENDED beginning at 12:01 a.m. on January 25, 2017 and shall remain suspended for THIRTY SIX (36) CONSECUTIVE DAYS, UNLESS a civil penalty in the amount of $10, is paid in lieu of suspension ON OR BEFORE January 17, Page 1 of 3

28 IF THIS ORDER IS APPEALED AND THE DECISION IS AFFIRMED, IT IS ORDERED that the privileges granted by the Commission and the activities authorized under the above permits by the Code will be SUSPENDED beginning at 12:01 a.m. on the fifteenth (15 th ) day following the date the decision is affirmed, whether by Order or by operation of law, and shall remain suspended for THIRTY SIX (36) CONSECUTIVE DAYS, UNLESS a civil penalty in the amount of $10, is paid in lieu of suspension ON OR BEFORE the seventh (7 th ) day following the date the decision is affirmed, whether by Order or by operation of law. SIGNED this the 1st day of December, 2016, at Austin, Texas. Sherry K-Cook, Executive Director Texas Alcoholic Beverage Commission CERTIFICATE OF SERVICE I certify that the persons listed below were served with a copy of this Order Denying Motion for Rehearing in the manner indicated below on this the 1st day of December, Martin Wilson, Assistant General Counsel Texas Alcoholic Beverage Commission Page 2 of 3