STATE OF IOWA BEFORE THE DEPARTMENT OF COMMERCE ALCOHOLIC BEVERAGES DIVISION IN RE: ) ) DOCKET NO. D-2009-00034 Water-B, Inc. ) DIA NO. 09DOCBL044 d/b/a Studio 13 ) 13 South Linn Street ) ) PROPOSED DECISION ) [DEFAULT] Liquor License No. LC-32306 ) On March 6, 2009, the Iowa Department of Public Safety (DPS) filed an administrative hearing complaint against Water-B, Inc. d/b/a Studio 13 (licensee). The hearing complaint alleged that on or about October 24, 2008, the licensee or an employee or agent of the licensee sold or supplied an alcoholic beverage, wine or beer to a person under the legal age, in violation of Iowa Code section 123.49(2)(h). A hearing was held before Administrative Law Judge Margaret LaMarche on May 14, 2009 at 10:00 a.m. at the office of the Iowa Department of Commerce, Alcoholic Beverages Division, 1918 S.E. Hulsizer, Ankeny, Iowa. Assistant Attorney General John Lundquist represented DPS. The licensee did not appear for the hearing. THE RECORD The record includes the Hearing Complaint, Notice of Hearing, Proof of Service, the testimony of the witness, and the following exhibits: DPS Exhibit 1: DPS Exhibit 2: DPS Exhibit 3: DPS Exhibit 4: DPS Exhibit 5: Iowa City Police Department Report Voluntary Statement, LD Voluntary Statement, AH Licensing Information Photographs
Page 2 FINDINGS OF FACT 1. Brett Thomas is the 60% owner and William Haynes is the 40% owner of Water-B, Inc., the corporation that owns and operates Studio 13 at 13 S. Linn Street in Iowa City, Iowa. The licensee was served with the Hearing Complaint and Notice of Hearing by restricted certified mail on April 8, 2009. Brett Thomas signed the return receipt card on behalf of the licensee. (Hearing Complaint; Notice of Hearing; Proof of Service; DPS Exhibit 4) 2. On October 24, 2008, the Iowa City Police Department conducted an alcohol compliance check to determine whether licensed liquor establishments would sell alcohol to underage persons. Police officers arranged for an eighteenyear-old male (AH) and a twenty-year-old male (LD) to participate in the compliance check. On the day of the compliance check, Police Officer Zach Diersen took a photograph of LD, verified his age, and made a copy of his Iowa driver s license. The driver s license was printed vertically, which signified that LD was under the legal age when the driver s license was issued. In addition, the words Under 21 until 6/2/2009 were printed on a red band next to LD s photograph. Officer Diersen gave both underage persons money to pay cover charges and to make alcohol purchases. He also searched them to ensure that they carried no other identification or money. Officer Diersen told both of them that they should not misrepresent their ages and should present their drivers licenses if asked for identification. (Testimony of Zach Diersen; DPS Exhibits 1, 5) 3. LD entered Studio 13 on October 24, 2008 at approximately 12:05 a.m. Earlier that evening, LD visited another bar and his hand had been marked with an X, which was the common symbol used by Iowa City bars to indicate that a patron was under 21. LD had attempted to remove the X from his hand but it was still faintly visible. The doorman asked LD for his driver s license, examined it, and then put a blue bracelet on the same hand that had the faint X. The blue bracelet signified that the patron was over 21. Officer Diersen identified himself as a police officer to the doorperson and then followed LD into the bar. LD walked up to the bar and ordered a Budweiser Light beer. The bartender served LD the beer and took payment from him. LD then handed the beer to a police officer and walked out of the establishment. (DPS Exhibits 1, 2, 5; Testimony of Zach Diersen)
Page 3 4. AH tried to enter Studio 13, but a doorman refused him entry after examining his driver s license. AH was only 18, and Iowa City s ordinance prohibits anyone under 19 from entering a licensed liquor establishment. (Testimony of Zach Diersen; DPS Exhibits 1, 3) 5. Officer Diersen spoke to the manager and to the door person who checked LD s identification. When Officer Diersen showed the doorman LD s driver s license, the doorman commented that he must have mistaken the "88" in LD s birth year as an "86." Officer Diersen pointed out the red band next to the driver s photograph that clearly shows when a person will turn 21 so the doorman would not make the same mistake in the future. Officer Diersen did not issue any criminal citations because the bartender relied on the doorman to check LD s identification. (Testimony of Zach Diersen; State Exhibits 1, 5) CONCLUSIONS OF LAW 185 IAC 10.22(1) provides that if a party to a contested case fails to appear or participate in a hearing after proper service of notice, the presiding officer may adjourn, enter a default decision, or proceed with the hearing and render a decision in the absence of the party. The licensee was properly served with the Hearing Complaint and Notice of Hearing by restricted certified mail but failed to appear. 185 IAC 10.6. The hearing proceeded without the licensee s participation. Iowa Code section 123.49(2)(h)(2007) provides, in relevant part: 2. A person or club holding a liquor control license or retail wine or beer permit under this chapter, and the person's or club's agents or employees, shall not do any of the following:... h. Sell, give, or otherwise supply any alcoholic beverage, wine or beer to any person, knowing or failing to exercise reasonable care to ascertain whether the person is under legal age, or permit any person, knowing or failing to exercise reasonable care to ascertain whether the person is under legal age, to consume any alcoholic beverage, wine, or beer. The Iowa Code defines "legal age" as twenty-one years of age or more. Iowa Code section 123.3(19)(2007).
Page 4 185 IAC 4.8 states that the violation of the Act (Iowa Code chapter 123) by any employee, agent, or servant of a licensee or permittee shall be deemed to be the act of the licensee or permittee and shall subject the license to suspension or revocation. The burden of going forward with the evidence to establish a violation is on the party filing the hearing complaint, but the alcoholic beverages division places the burden of proving compliance with the statute on the licensee. See McCrea v. Iowa Department of Transportation, 336 NW2d 427 (Iowa 1983); Iowa Code section 17A.18(3)(2007). The preponderance of the evidence established that on October 24, 2008, the licensee s employees gave a twenty-year-old customer a wrist band signifying that he was old enough to legally purchase alcohol and then sold him a Budweiser Light beer. Iowa Code section 123.49(2)(h) provides, in relevant part, that it is a violation to fail to exercise reasonable care to ascertain whether a person is under the legal age prior to selling alcohol. The Alcoholic Beverages Division has consistently held that the reasonable care standard requires more than just requesting identification. Licensees and their employees must carefully examine the customer s photo identification to verify that the person presenting the ID is in fact over the age of 21. See, e.g. Administrator s Final Decisions in D- 2006-00030, A-2006-00016. A careful examination of the driver s license in this case would have revealed that LD would be under 21 until June 2, 2009. The licensee s employee should not have given LD the wristband that permitted him to purchase alcoholic beverages. It is irrelevant that the licensee chose to divide the duties of checking identification and serving alcohol between two different employees. The licensee is responsible for the actions of both employees and is legally responsible for the illegal sale of alcohol to the underage person. Iowa Code section 123.50 provides, in relevant part: 123.50 Criminal and civil penalties.... 3. If any licensee, wine permittee, beer permittee, or employee of a licensee or permittee is convicted or found in violation of section 123.49, subsection 2, paragraph "h", the administrator or local authority shall, in addition to criminal penalties fixed for violations by this section, assess a civil penalty as follows:
Page 5 a. A first violation shall subject the licensee or permittee to a civil penalty in the amount of five hundred dollars. Failure to pay the civil penalty as ordered under section 123.39 shall result in automatic suspension of the license or permit for a period of fourteen days. Pursuant to Iowa Code sections 123.50(3)(a), the administrative sanction for a first offense sale to an underage person is a $500 civil penalty. ORDER IT IS THEREFORE ORDERED, pursuant to Iowa Code sections 123.50(3)(a) and 123.39(4), that for a first offense sale to an underage person occurring on October 24, 2008, Water-B, Inc., d/b/a Studio 13, Liquor License No. LC-32306, shall pay a civil penalty of five hundred dollars ($500) to the Alcoholic Beverages Division within thirty (30) days of the issuance of this proposed decision. Motion to Vacate Default Default decisions or decisions rendered on the merits after a party has failed to appear or participate in a contested case proceeding become final agency action unless, within 15 days after the date of notification or mailing of the decision, a motion to vacate is filed and served on all parties or an appeal of a decision on the merits is timely initiated within the time provided by rule 10.27(17A). A motion to vacate must state all facts relied upon by the moving party which establish that good cause existed for that party's failure to appear or participate at the contested case proceeding. Each fact so stated must be substantiated by at least one sworn affidavit of a person with personal knowledge of each such fact, which affidavit(s) must be attached to the motion. 185 IAC 10.22(3). The time for further appeal for which a timely motion to vacate has been filed is stayed pending a decision on the motion to vacate. 185 IAC 10.22(4) Appeal On The Merits Pursuant to the administrative rules of the division, any adversely affected party may appeal a proposed decision to the Administrator of the Alcoholic Beverages Division within thirty (30) days after issuance of the proposed decision. In
Page 6 addition, the Administrator may initiate review of a proposed decision on the Administrator's own motion at any time within thirty (30) days following the issuance of a proposed decision. 185 IAC 10.27(1) and (2). Requests for review shall be sent to the Administrator of the Alcoholic Beverages Division, 1918 S.E. Hulsizer, Ankeny, IA 50021. Unless otherwise ordered, each appealing party may file exceptions and briefs within thirty (30) days of the notice of appeal or order for review. Within thirty (30) days thereafter, any party may file a responsive brief. The Administrator may shorten or extend the briefing period as appropriate. The Administrator may resolve the appeal on the briefs or provide an opportunity for oral argument. 185 IAC 10.27(6). The administrator may affirm, reverse or modify the proposed decision. A party who is adversely affected by the proposed decision shall not be deemed to have exhausted administrative remedies unless the adversely affected party files a request for review of the proposed decision within the time provided and the Administrator has reviewed the proposed decision and has affirmed, reversed, or modified the proposed decision. Dated this 3 rd day of June, 2009 Margaret LaMarche Administrative Law Judge Iowa Department of Inspections and Appeals Division of Administrative Hearings Wallace State Office Building-Third Floor cc: See attached mailing list
Witnesses: Officer Diersen Iowa City Police Department 410 E Washington St Copies to: Margaret LaMarche Administrative Law Judge Department of Inspections & Appeals Administrative Hearings Division Wallace State Office Bldg-3 rd Fl., 502 E 9 th John Lundquist Assistant Attorney General Department of Justice Hoover State Office Building Lt. Randall Jones ISP, District #11 5400 16 th Ave SW Cedar Rapids, Iowa 52404-2240 Chief R J Winkelhake Iowa City Police Department 410 E Washington St Marion Karr City Clerk City Hall 410 E Washington Street John Henry Ellison, Chief Investigator Iowa Lottery 2323 Grand Avenue Des Moines, Iowa 50312 Beverly Zylstra Social Gaming Unit Lucas State Office Bldg Gayle Collins Commissioner Iowa Alcoholic Beverages Division 1918 SE Hulsizer Rd Ankeny, Iowa 50021 Brett Thomas Water-B, Inc. 270 Lencester North Liberty, Iowa 52317