FINAL ORDER

****** ***** ***** ***** *****

Introduction

This case was brought on for hearing before the Kentucky Alcoholic Beverage Control Board on April 12, 2005, pursuant to an Order directing the Licensee to show cause, if any it could, why its alcoholic beverage licenses should not be suspended or revoked because of alleged violations of: (1) KRS 244.080(1), Sale or Permitted Delivery to a Minor; (2) KRS 244.085(6), Minor on Premises; (3) KRS 243.390(2), Bad Corporate standing with Office of Secretary of State; (4) KRS 244.290(3)(a), Sale of Distilled Spirits and Wine at Prohibited Time; (5) KRS 244.480, Sale of Malt Beverages at Prohibited Time; (6) 804 KAR 9:010 Section 2 (4)(b), Failure to Maintain Minimum Seating Capacity; and, (7) 804 KAR 9:010, Section 2 (4)(c), Failure to Provide Satisfactory Proof of Compliance with License Requirements.

The hearing was held with full Board present, Malt Beverage Administrator John Barton presiding. Notice of hearing was mailed by certified mail and signed for by Mr. Francis E. Riggs, Process Agent and President of the Licensee corporation. Notice of hearing was also mailed by certified mail and signed for by the Hon. Candace Engle-Gray.[1] Despite said notice, no officer or representative of the Licensee voluntarily appeared at the hearing. The Hon. David W. Barr represented the Office of Alcoholic Beverage Control (hereinafter “Office”).

Findings of Fact/Conclusions of Law

Based upon the testimony and evidence presented at the hearing, the record herein, having considered the arguments, and being otherwise sufficiently advised, the Board, pursuant to KRS 243.550, hereby makes the following findings:

The Licensee, Black Jack Bar-N-Cue, Inc., d/b/a, Black Jack Bar-N-Cue[2] (hereinafter “Black Jack”), holds a Restaurant Drink License and a Retail Beer License, and is located at 4828 Raywick Road, Raywick, Kentucky. Black Jack operates as a nightclub/bar with very limited (lunch) food service.

Investigator Loren Wells testified that he visited Black Jack on December 4, 2004 while assisting other ABC investigators in an investigative detail. At 12:45 a.m., he observed a Juvenile sitting at a table in back of the premises with his head laid on a table. The Juvenile was passed-out, and it took Investigator Wells some time to awaken him. Investigator Wells identified himself and requested the Juvenile’s ID. The juvenile initially provided a fake ID to Investigator Wells, but then produced his valid identification showing him to be a juvenile aged sixteen (16) years. Investigator Wells quickly determined that the Juvenile was intoxicated by his slurred speech and manner. Investigator Wells did not observe any food being consumed, served, or prepared at Black Jack and there were only a few chairs at tables.

Investigator Lisa Hampton testified that she was also at Black Jack on December 3, 2004, and entered the premises at 11:35 p.m. with ABC Investigator Treg Brooks in an undercover capacity. Investigator Hampton was charged a $5.00 cover charge and received a wrist bracelet which indicated that she was over the age of 21 years. Investigator Hampton testified that the atmosphere inside the premises was that of a bar, not a restaurant: a cover charge was charged; there was a large crowd; people were smoking; loud music was played; people were dancing on a dance floor and in steel cages; people were standing around playing pool; and no food was served. Based upon her experience and training as an ABC investigator, Investigator Hampton opined that such activity was characteristic of a bar, not a restaurant.

Investigator Brooks also paid a $5.00 cover charge, his identification was checked and he received a wrist bracelet. Investigator Brooks did not observe any food being sold, eaten, or served while he was at the premises that evening and he stated that the premises was a nightclub: patrons were playing pool, dancing, and drinking. The crowd in attendance was very young looking and most appeared to be in their early 20’s.

While inside, Investigator Hampton walked around and identified several underage individuals. At midnight, Investigators Brooks and Hampton went to the bar area to check for after-hours sales of alcoholic beverages. Both Investigators Hampton and Brooks observed Black Jack employees selling and serving distilled spirits and malt beverages after midnight. The local Marion Co. ordinance prohibits alcoholic beverage sales after midnight, although premises are allowed to remain open until 1:00 a.m.. Investigator Brooks criminally charged bartender, James Todd Hamilton, for illegally selling alcoholic beverages at a prohibited time. Mr. Hamilton entered a plea of guilty in Marion District Court and paid a fine.

Investigator Mark Roney was also part of the investigative detail at Black Jack on December 3 & 4, 2004, and his testimony mirrored that of Investigators Wells, Hampton and Brooks. Ms. Kathleen Cecil, an employee/agent of Black Jack, required Investigator Roney to pay $5.00 cover charge to enter the premises. Ms. Cecil is a one-fourth (1/4) owner of the real property where the licensed premises are located.[3] During his inspection of the premises, Investigator Roney noticed that distilled spirits were not under lock and key after midnight.

The Office alleged in part that Black Jack violated KRS 244.290(3)(a), which provides, in pertinent part:

(3) Except as provided in KRS 243.050, a premise for which there has been granted a license for the sale of distilled spirits or wine at retail shall not remain open for any purposes between midnight and 6 a.m. or at any time during the twenty-four (24) hours of a Sunday, unless:

(a) The licensee provides a separate locked department in which all stocks of distilled spirits and wine are kept during those times; or….

Evidence was presented which proved that on December 4, 2004, after midnight, the licensee sold distilled spirits and failed to lock its stock of distilled spirits and wine. Based, upon the testimony and evidence presented, the record and being otherwise sufficiently advised, the Board finds that Black Jack violated KRS 244.290(3)(a).

The Office also alleged that Black Jack violated KRS 244.480, which provides, in pertinent part:

(2) [N]o retailer shall sell, give away, or deliver any malt beverages between midnight and 6 a.m. or at any time during the twenty-four (24) hours of a Sunday or during the hours the polls are open on a primary or regular election day.

Based upon the testimony, evidence and the record herein, and being otherwise sufficiently advised, the Board finds that Black Jack violated KRS 244.480 by selling malt beverages after midnight.

During his inspection of the premises, Investigator Roney also noticed that there were only sixty-nine (69) chairs at tables. Pursuant to 804 KAR 9:010, Section 1 (4)(b), a licensee must maintain a minimum seating capacity of 100 seats at tables in order to hold a Restaurant Drink License. Based, upon the testimony and evidence presented, the record and being otherwise sufficiently advised, the Board finds that Black Jack violated 804 KAR 9:010, Section 2 (4)(b).

During his inspection, Investigator Roney discovered that several minors possessed alcoholic beverages inside the licensed premises. Investigator Roney charged Eva Lee, DOB 10/16/85, a minor, with Minor not to possess alcohol, and Giving an officer a false name and address. Ms. Lee entered a plea of guilty in Marion District Court and paid a $325.50 fine. Investigator Roney also charged Joseph D. Clan, DOB 10/6/84, a minor, with Possession of alcoholic beverages by a minor. Mr. Clan entered a plea of guilty and paid a $225.50 fine in Marion District Court.

The Office alleged that Black Jack violated KRS 244.080(1), which provides, in pertinent part:

[A] retail licensee shall not sell, give away, or deliver any alcoholic beverages, or procure or permit any alcoholic beverages to be sold, given away, or delivered to … A minor [.]”

Based, upon the testimony and evidence presented, the record and being otherwise sufficiently advised, the Board finds that Black Jack violated KRS 244.080(1), by permitting minors to possess alcoholic beverages inside the licensed premises.

The evidence showed that Black Jack had divided and designated a portion of the licensed premised as a restaurant area. That evening, the door between the nightclub and restaurant was locked. Investigator Roney asked a Black Jack employee/agent, Mr. Byron Bickett, to open the door. Investigator Roney took pictures of the kitchen, which showed the kitchen was not able to provide meals to one hundred (100) customers, i.e., there was very little food, all eating utensils were plastic, etc. Investigator Roney testified the atmosphere of Black Jack was that of a bar, not a restaurant. Patrons were charged a $5.00 cover charge and patrons were permitted to dance in cages, no food was observed being sold, served or delivered or cooked; all bar practices.

The Office next alleged that Black Jack violated KRS 244.085(6), which provides, in pertinent part:

[A] licensee, or his or her agent, servant, or employees shall not permit any person under twenty-one (21) years of age to remain on any premises where alcoholic beverages are sold by the drink or consumed on the premises [.]

Pursuant to KRS 13B.090(7), the Office has the burden of proving a violation of this statute. Since it is undisputed that minors were present on the licensed premises on or about December 4, 2004, Black Jack did violate KRS 244.085(6) absent any applicable exception. The burden of proving an exception is with Black Jack.

The Board heard the evidence in this case on the same date that it heard evidence in other cases against Black Jack as follows: (1) Case No. 04-ABC-246 for violations on February 20, 2004; (2) Case No. 04-ABC-247 for violations occurring on June 4, 2004, and, (3) Case No. 05-ABC-033 for violations on December 17, 2004, and January 17, 2005. The Board takes administrative notice of the evidence presented in Case No. 04-ABC-246, Case No. 04-ABC-247 and Case No. 05-ABC-033.

KRS 244.085(6)(a) does provide exceptions and a possible defense to Black Jack’s.[4] Minors are allowed on the premises if, “the usual and customary business of the establishment is a …restaurant.” Id. Evidence shows that on the evening of June 5, 2004, the atmosphere and activities at Black Jack more closely resembled a bar than a restaurant. Patrons were charged a $5.00 cover charge to enter the premises, a practice associated with bars, not restaurants. After paying this fee, patrons under the age of twenty-one (21) years received an “X” on their hand made by a black marker pen and persons over twenty-one (21) years of age received a wrist bracelet. Loud music was played. Minor patrons packed the premises (around 200 to 250, mostly minors). Many patrons were walking, drinking and talking to each other. There were few tables and chairs. No food was sold, served or being eaten by patrons seated at tables, etc. Again, all of these are bar practices and activities.

The Board fully understands and appreciates the legal distinction between whether a business is “a restaurant that sells beer,” or “a bar that sells food.” Although the line separating a bar from a restaurant is sometimes blurry, the legal consequences in alcoholic beverage law are significant. KRS 241.010(37) defines a “restaurant” as:

[A] facility where the usual and customary business is the serving of meals to consumers that has a bona fide kitchen facility, and that receives at least fifty percent (50%) of its gross receipts from the sale of food.

The Board is an administrative agency, and is required to examine a licensee’s business practices to ascertain whether they are a “sham” designed to subvert public policy or to circumvent “regulatory obligations.” See, Commonwealth of Kentucky, Natural Resources and Environmental Protection Cabinet v. Neace, Ky., 14 S.W.3d 15, 19 (2000).

In Daniel v. Paul, 395 U.S. 298, 89 S.Ct. 1697, 23 L.Ed. 318 (1969), the United States Supreme Court dealt with a situation where an amusement park did not want to comply with the newly enacted Civil Rights Act of 1964, Title II. In an attempt to avoid the new law, the park began calling itself a “private club” and charged a twenty-five cent ($.25) membership fee to each “member.” For this fee, “members” received a membership card, and were allowed to enter the park. Not surprising, blacks were not allowed to join the “private club.” The Supreme Court held that it was proper to ignore what a business calls itself and to examine the true nature of the business. Based on a review of business operations, the Court held that the conclusion that the park was, “not a private club is plainly correct.” Id., at 302.

In Hendriks v. Commonwealth, Ky., 865 S.W.2d 332 (1993), the Kentucky Supreme Court dealt with a similar issue. In Hendricks, an adult entertainment establishment wanted to avoid a Newport city ordinance, which prohibited public nude dancing, so the business began calling itself a “private club.” A state trooper entered the premises, paid a five dollar ($5.00) cover charge, received a membership card and entered the premises. The Court examined the business practices and determined that the business was not a private club, and that its operational change, “was established for the sole purpose of avoiding the requirements of a newly enacted city ordinance regarding nudity in a public place.” Id., at 335.

In the present case, the Board acknowledges that Black Jack has a kitchen. However, simply having a kitchen does not make a business a restaurant. A reasonable person of ordinary prudence, upon entering an establishment purporting to be a restaurant, would not expect to pay a $5.00 cover charge. Black Jack charged this non-refundable cover charge even if a patron did not eat any food, or did not intend to eat any food. A reasonable person would expect a restaurant to have a minimal menu available, but Black Jack did not have one. A reasonable person would expect a restaurant to have its kitchen open and food cooking. Black Jack's kitchen was closed and locked. A reasonable person would expect to see most, if not all, restaurant patrons seated and eating at tables. Few patrons were observed sitting at tables, most were milling around the premises, talking and drinking. A reasonable person would not expect a restaurant to permit patrons to dance in steel cages. Black Jack permitted patrons to dance in steel cages.

Based, upon the testimony and evidence presented, the record and being otherwise sufficiently advised, the Board finds that Black Jack violated KRS 244.085(6), by allowing minors in the premises. The Board further finds that Black Jack failed to meets it burden of proving an affirmative defense that it was a restaurant. The Board finds that evidence demonstrates that Black Jack is a bar/nightclub, not a restaurant as defined in KRS 241.010 (37).

The Board previously found that Black Jack violated 804 KAR 9:010, Section 2 (4)(b), by failing to maintain a minimum seating capacity of 100 people at tables. The evidence further shows that Black Jack has also violated 804 KAR 9:010, Section 2 (4)(c), by its failure to provide satisfactory proof of compliance with license requirements regarding the seating requirement and food sales percentages.

The Office alleged that Black Jack violated KRS 243.390(2), which states in pertinent part:

If, after a license has been issued, there is a change in any of the facts required to be set forth in the application, a verified supplemental statement in writing giving notice of the change shall be filed with the board within ten (10) days after the change.

At time of their application, Black Jack maintained good standing with the Secretary of State’s office. The evidence shows that Black Jack failed to notify the Office that its corporate status is in bad standing with the Office of Secretary of State. Based upon the testimony and evidence presented, the record and being otherwise sufficiently advised, the Board finds that Black Jack violated KRS 243.390, Section (2).

At the hearing, Mr. Robert “Robbie” Wayne Bickett testified and admitted that he was employed by Black Jack as an administrative assistant from February 2004 through August 2004.[5] Mr. Bickett stated that he was not employed by Black Jack nor was he at the premises on the evening of December 4, 2004. Mr. Bickett owns a one-fourth (1/4^th) undivided interest in the real property where the licensed premises are located.[6] On April 11, 2004, Mr. Robbie Bickett came to the Office’s Frankfort office and attempted to surrender the licenses. However, the Board refused said surrender since Mr. Bickett was not an officer of the licensee corporation and surrender was otherwise prohibited by KRS 243.630(9).

The premises located at 4828 Raywick Road in Raywick, Marion County, Kentucky, has quite a history and is well known by the Board. Said premises were originally licensed as Bickett’s Inn, d/b/a Bickett’s, and also held a Restaurant Drink License and a Retail Beer License. The Restaurant Drink License was revoked on March 16, 1998, and Bickett’s failed to renew the beer license in July 1998.

On November 24, 1998, Squire’s, Inc. applied for a retail beer license but then Malt Beverage Administrator Stephen G. Horner denied application based on numerous protest letters received. Squire’s appealed the denial and the Board held a hearing on the appeal. On August 11, 1998, the Board entered a final order in Case No. 98-ABC-104, and Squire’s was granted a beer license with stipulations. The reason for this stipulation was that Cecil and Robert Wayne Bickett were listed as Lessors on the Lease that was filed with the application. Stipulation (3) in Order No. 98-ABC-104 stated “Charlie Bickett, Kathleen Cecil and Robert Wayne Bickett shall not be employed by the applicant, shall have no ownership interest in the applicant nor shall they be involved in the management or business affairs of the applicant in any way, direct or indirectly;”. A retail beer license was issued to Squire’s on November 24, 1998. The president of Squires was Mr. Earl Ray Bickett.

Squires continued the Bickett “family tradition” of violating ABC law. The Board takes administrative notice that in Case No. 01-ABC-285, Squires was charged with violations of KRS 244.080(1), Sales to minors; and, KRS 244.085(6), Minors on Premises - 10 counts. In Case No. 03-ABC-138, Squires was next charged with the following violations: (1) KRS 244.080(1), Sale to a Minor; (2) KRS 244.480, Unauthorized Sunday Sales; (3) KRS 244.085(6), Minor on Premise, three (3) counts; (4) KRS 243.500(4)(b), Two (2) Alcohol-Related Misdemeanor Convictions; and, (5) KRS 243.390(2), Bad Standing. By letter dated August 4, 2003, Mr. Louis Earl Bickett, admitted the violations and physically surrendered its retail beer license to resolve this case under threat of revocation.

Black Jack filed its application for a Restaurant Drink License and a Retail Beer License on April 15, 2004. Robert Wayne Bickett was listed on the Lease, filed with the Office on April 27, 2004, as a Lessor. Relatives of Mr. Bickett have owned, operated, or leased the premises located at 4828 Raywick Road, Raywick, Kentucky since 1998 when the premises was initially licensed for alcoholic beverage sales. Since that time the licensed premises has continued to violate ABC law.

The Board takes administrative notice of the fact that by separate orders of even date, the Board has found as follows:

Case No. 04-ABC-246

On February 20 to 21, 2004, Black Jack committed the following violations: (1) KRS 244.120, Disorderly Premises; (2) KRS 244.085(6), Minors on Premises; and, (3) KRS 244.080(1), Sales or Permitted Delivery to a Minor.

Case No. 04-ABC-247

On June 5, 2004, Black Jack committed the following violations: (1) KRS 244.290(3)(a) and 804 KAR 7:030, Remaining Open and Selling Distilled Spirits or Wine after Midnight; (2) KRS 244.085(6) (two hundred (200) counts), Minors on Premises; (3) KRS 244.080(1), Sales or Permitted Delivery to Minors; (4) KRS 244.080(2), Sale to an Intoxicated Person; (5) KRS 244.360 and 804 KAR 7:050, Failure to Print Name and Numbers on Front of Premises; (6) KRS 244.083, Failure to Post Minor Warning Sign; (7) KRS 243.895, Failure to Post Pregnancy Warning Sign; (8) KRS 244.120, Disorderly Premises; (9) KRS 244.290 and 804 KAR 9:010, Section 2 (4)(b), Failure to Maintain a Minimum Seating; (10) KRS 244.290 and 804 KAR 7:030, Failure to Maintain its Stock of Distilled Spirits and Wine in a Locked Compartment; and, (11) KRS 243.390(2), Failure to Notify of Change In Application.

and,

Case No. 05-ABC-033

On December 17, 2004, Black Jack committed the following violations: (1) KRS 244.080(1), Sale or Permitted Delivery to a Minor; (2) KRS 244.085(6), Minors on Premises. Also, on January 7, 2005, Black Jack committed the following violations: (3) KRS 244.080(1), Sale or Permitted Delivery to a Minor; (4) KRS 244.085(6), Minors on Premises; and, (5) KRS 243.390, Failure to Notify of Change in Application.

Given the numerous and repeated violations by Black Jack, the Board believes that Black Jack will continue to violate the alcoholic beverage laws if allowed to keep its licenses. As such, the Board finds that Black Jack’s alcoholic beverage licenses should be revoked.

Conclusion

IT IS, THEREFORE, ORDERED that Restaurant Drink License No. 078-RD-2277 and Retail Beer License No. 078-B-7393, issued to Black Jack Bar-N-Cue, d/b/a, Black Jack Bar-N-Cue, be and are hereby REVOKED, effective the close of business on Tuesday, July 12, 2005.

Appellate Rights

All final orders of the Board may be appealed to Franklin Circuit Court in accordance with KRS 13B.140(1). To appeal, you should file a petition in Franklin Circuit Court within thirty (30) days after the mailing date of this Final Order. Copies of the petition must be served upon the Office and all parties of record in this proceeding. The petition shall include the names and addresses of all parties of record in this proceeding, including the Office. The petition shall also present a statement of the grounds upon which the review is requested. A copy of this Final Order shall accompany the petition.

SO ORDERED this the _________ day of _______________, 2005.

ALCOHOLIC BEVERAGE CONTROL BOARD

_____________________________________

V. LAVOYED HUDGINS

CHAIRMAN

_____________________________________

STEVEN A. EDWARDS

DISTILLED SPIRITS ADMINISTRATOR

_____________________________________

JOHN C. BARTON

MALT BEVERAGE ADMINISTRATOR

ATTEST:

__________________________________

ANGELA F. DONAHUE

BOARD SECRETARY

SERVICE LIST:

CERTIFILED MAIL:

Black Jack Bar-N-Cue, Inc.

DBA Black Jack Bar-N-Cue

4828 Raywick Road

Raywick, KY 40060

Frances Edward Riggs, Process Agent

Black Jack Bar-N-Cue, Inc.

4828 Raywick Road

Raywick, KY 40060

REGULAR MAIL:

David R. Hourigan

County Judge Exec. & ABC Administrator

102 West Main Street

Lebanon, KY 40033

Investigators Roney, Wells, Brooks, Hampton, Wyatt

Files

[1] Ms. Engle-Gray notified Hon. Barr, by phone, prior to April 12, 2005, that she would not be present at the hearing to represent the Licensee.

[2] The premises was licensed previously as Squires, Inc., d/b/a, Bicketts and is still known locally as “Bicketts”.

[3] Ms. Cecil is listed as a Lessor on the Lease that was filed with Black Jack’s application.

[4] An affirmative defense is one in which a party seeks to avoid liability or guilt on some ground recognized by law. See, CR 8.05. A defense proceeding by way of confession and avoidance is an affirmative defense. Chaney v. Slone, Ky., 345 S.W.2d 484, 486 (1961). Where a statute prohibits certain conduct, but also contains an exception, which excuses or justifies the prohibited conduct, the listed statutory exception is considered an affirmative defense. Smith v. Sizemore, Ky., 300 S.W.2d 225, 228 (1957)(word “unless” creating exception); Banner Transfer Co. v. Morse, Ky., 274 S.W.2d 380, 381 (1954)(words “shall not apply” creating exception); Shamrock Coal Co. v. Taylor, Ky. App., 697 S.W.2d 952, 954 (1985).

[5] By Board Order No. 98-ABC-104, entered August 11, 1998, the board issued a retail beer license to Squire’s, Inc., 4828 Raywick Road, Raywick, Kentucky. In that Order, stipulation number 3 stated: “Charlie Bickett, Kathleen Cecil and Robert Wayne Bickett shall not be employed by the applicant, shall have no ownership interest in the applicant nor shall they be involved in the management or business affairs of the applicant in any way, direct or indirect;.. .”

[6] Deed, filed February 18, 1988, in Marion County. Mr. Bickett and his wife, Melissa Cecil, each acquired a one-fourth (1/4^th) undivided interest. Kathleen Cecil and Daniel Cecil, her husband, also each acquired a one-fourth (1/4^th) undivided interest.