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HomeMy WebLinkAbout8.b. Resoultion Imposing Civil Penalty on PCS Liquors, LLC, D/B/A Rosemount Liquor and Wine CellarAk A6 R0"SEMOU r 1 EXECUTIVE SUMMARY CITY COUNCIL City Council Meeting: February 1, 2010 AGENDA ITEM: Resolution Imposing Civil Penalty on AGENDA SECTION: PCS Liquors, LLC, D /B. /A Rosemount Old Business Liquor and Wine Cellar PREPARED BY: Gary Kalstabakken, Chief of Police AGENDA NO. S.b. ATTACHMENTS: Resolution APPROVED BY: RECOMMENDED ACTION: Motion to approve a resolution imposing civil penalty of a 30 day license suspension and $2000 civil penalty on PCS Liquors, LLC, D /B /A Rosemount Liquor and Wine Cellar for a violation of the City's liquor license regulations. BACKGROUND Compliance checks utilizing a cooperating underage purchaser were conducted on December 15, 2009 at each of the City's licensed liquor establishments. The purchaser entered Rosemount Liquor and Wine Cellar and was sold an alcohol beverage by an employee of Rosemount Liquor. This is a criminal violation by the employee and a violation of the City's ordinance regarding liquor licensees. This is the fifth violation for sale to an under age person that has occurred at the establishment since June 2005. SUMMARY AND RECOMMENDATION The City of Rosemount has imposed penalties for violations by liquor licensees on a case -by -case basis. In the situations when it has been a first violation at a business, the penalty has been consistently applied. When violations have been repeated the penalty has been imposed after a review of all circumstances involved, including the length of time between violations. PCS Liquors, LLC, d /b /a Rosemount Liquor and Wine Cellar is the only liquor license holder that has had more than three (3) violations; there is no precedent in the community for dealing with repeated violations of this nature. The penalty proposed initially to PCS Liquors for the December 15, 2009 violation of a 30 day license suspension and $2000 civil penalty is within the authority granted to the City Council by state statute and City Code to impose. In addition, the penalty is within the norm of penalties that other communities would impose for a similar violation. City staff recommends that the City Council impose a penalty of a 30 day license suspension $2000 civil penalty upon PCS Liquors, LLC. ISSUE The owners of PCS Liquors are not contesting that the violation occurred; however, they have requested to appear before the City Council because they believe the proposed penalties are too severe. Staff believes that the proposed penalties are justified based upon the pattern of repeated violations at Rosemount Liquor and Wine Cellar. In addition, the penalties are reasonable in comparison to the practices of other communities. Previous violations at the business include: • June 5, 2005 Compliance check • February 23, 2006 Investigation • November 22, 2006 Compliance check • April 24, 2008 Compliance check • December 15, 2009 Compliance check The imposition of penalties for violations of liquor license regulations must be done within the parameters contained in Minnesota state statutes. State law allows a great deal of latitude in imposing penalties. MSS 340A.415 states that when a violation is determined to have occurred, the licensing authority "may revoke the license or permit, suspend the license or permit for up to 60 days, impose a civil penalty of up to $2,000 for each violation, or impose any combination of these sanctions." PCS Liquors is the only license holder within the City of Rosemount that has ever had this number of violations within a 55 month time period, which is the time frame in which the violations at PCS Liquors has occurred. In fact, no other license holder has had more than three (3) violations at their business in any time frame. The City does not have a penalty matrix adopted for Presumptive Penalties as some cities have done. Each case involving a violation has been viewed in its totality when it has occurred. This includes the history of prior violations at the license holder's business, time between violations, policy and procedures adopted by the licensee and the actual performance of these procedures by the licensee and the licensee's employee. This allows the penalty to be established in light of all circumstances known for each case and is not predetermined through a presumptive penalty matrix. An exhaustive review of penalty matrixes has not been conducted but a review of several cities' matrixes has been done several times by staff in recent years and in preparing to address this most recent violation by PCS Liquors. Penalties and "look back" time periods in presumptive penalty matrixes adopted by licensing authorities are not standardized or consistent from city -to -city. Each city has adopted a matrix based upon the community's standards and practices. The time frame used as a "look back" period is the period used in the matrix system is determine if a violation is considered a first, second, third, etc. violation. While the time period of 36 mos. appears to be the most common time period used it is not the only time period used. "Look back" periods range from 12 mos. to 60 mos. in the matrix systems reviewed. It is important to note that virtually all city codes that do include a penalty matrix include a clause that specifically states that the matrix is only a guideline and that the Council may decide to impose a penalty either less or more severe based upon the circumstances of the violation and conduct of the license holder. Cities within Dakota County have varied approaches in dealing with liquor violations. Eight cities have adopted presumptive penalty matrixes while three cities — including Rosemount - have not. Of the eight (8) cities with a penalty matrix the "look back' period varies. Two (2) cities use a five year period, one (1) begins with a two year period but extends the period up to four years to evaluate repeated violations, e.g. 4''' in 4 years. One city uses a similar extension of the "look back" but only to three years. One city uses three years and three (3) cities use two years as the "look back" period for all violations. One nuance in one of the 24 month look back cities is that the 24 month look back only applies to underage sale violations while all other violations in that city have up to a four year period to determine a fourth violation. 2 The matrix system in the Dakota County cities are varied and do not bind the City of Rosemount in imposing a penalty for a liquor violation that is an average or the norm. A review is useful in showing the varied approaches taken by cities and determining if any penalty imposed by the City of Rosemount is outside the norm. Based upon the review of the cities' matrixes, PCS Liquors would presumptively be penalized with the following in other cities: • Fifth Violation — License Revocation — Two (2) cities • Fourth Violation - License revocation in one (1) city • Third Violation — No Cities • Second Violation — Range of Penalties - Five (5) Cities Range includes $750 fine as low and $1500 fine with 6 day suspension as high • Unknown — Two cities with penalties up to state statute maximum The proposed 30 day license suspension and $2000 penalty is within the range of penalties that would be imposed in other Dakota County cities according to their published City Codes. A more severe penalty, such as a longer suspension or revocation, is within the penalties that other cities would clearly consider and likely impose. From staff review of city codes from communities outside Dakota County, it appears that Dakota County cities' policies are reflective of the policies in other metro and out -state communities. 3 CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION NO. RESOLUTION IMPOSING CIVIL PENALTY AND SUSPENSION ON PCS LIQUORS, LLC, d /b /a ROSEMOUNT LIQUOR MART WHEREAS, the City of Rosemount (the "City ") has issued a license for the sale of alcoholic beverages to PCS Liquors, LLC, d /b /a Rosemount Liquor Mart (the "Licensee "); and WHEREAS, illegal activity has occurred on the licensed premises of the Licensee, specifically, service of an alcoholic beverage to a person under the age of 21 by an employee of Licensee on the following dates: March 24, 2005; February 23 and November 22, 2006; April 24, 2008; and December 15, 2009 ("the Dec. 15, 2009 Violation "), all in violation of Minnesota Statutes Section 340A.503; and WHEREAS, the occurrence of the above - referenced Violations is not disputed by the Licensee; and WHEREAS, the Licensee has waived its right to an administrative hearing and requested that the City Council consider the issue of the appropriate penalty for the Dec. 15, 2009 Violation; and WHEREAS, Licensee appeared before the City Council on February 1, 2010, for that purpose; and WHEREAS, the City Council regards such activities as very serious matters warranting the sanctions herein; and WHEREAS, the Licensee has established an ongoing pattern of illegal sales of alcohol; and WHEREAS, due to the ongoing nature of the Violations, the Council has determined that a severe penalty is reasonable, necessary and in the best interests of the public. ON THE BASIS OF THE FOREGOING, THEREFORE, IT IS RESOLVED THAT THE CITY COUNCIL ORDERS THE FOLLOWING: 1. The Licensee will pay to the City Finance Director, within ten days of the date of this Resolution, the sum of Two Thousand Dollars ($2,000.00). 2. The Licensee's license will be suspended for a total of thirty (30) consecutive business days starting March 1, 2010. 1 A -1 By Order of the City Council of the City of Rosemount this _ day of )2010. ATTEST: City Clerk Mayor A -1 4ROSEMOUNT ADMINISTRATION M E M O R A N D U M To: Mayor and Council embers From: Dwight Johnson, Ity Administrator Date: February 1, 2010 Subject: Council Agenda Update ADDITIONAL INFORMATION: OLD BUSINESS 8.b. Resolution Imposing Civil Penalty on PCS Liquors, LLC, D /B /A Rosemount Liquor and Wine Cellar. Attached please find the following information regarding the liquor violation: 1) January 22, 2010 letter from Gary Kalstabakken to Rosemount Liquor regarding the hearing waiver; 2) January 31, 2010 letter from Rosemount Liquor to Rosemount City Council regarding video submitted to the Rosemount City Council; and 3) Letter from Daniel J. Fluegel, City Prosecutor to Gary Kalstabakken regarding the criminal charges related to the case. January 22, 2010 Rosemount Liquor and Wine Cellar Attn: Mr. Charles Christ or Mr. Sean Schumacher 3440 150`h Street West Rosemount, MN 55068 Dear Mr. Christ and Mr. Schumacher: This is a follow -up to our recent meeting regarding the proposed penalty for the liquor violation at your business on December 15, 2009. You have indicated that you did not wish to request a hearing before a hearing examiner, even though it is your legal right to do so under both state law and city ordinance. You also indicated that you were not contesting the facts or the occurrence of the violation, and only wished to be heard by the Rosemount City Council in order to request consideration of a more lenient penalty. The City Council has agreed to give you that opportunity at its meeting on February 1, 2010. The purpose of this letter is to obtain your written agreement that you are waiving your right to a hearing and that any action taken by the City Council on this matter will be a final decision, subject to any appeal rights that you may have under state law. Please confirm your agreement with this by signing below and return the letter to me. Sincerely, Gary D. Kalstabakken Chief of Police PCS Liquors, LLC DBA: Rosemount Liquor and Wine Cellar Liquor License Violation of December 15, 2009 We have agreed to waive our right to a hearing on this violation. Sean Schumacher Charles Christ Date 4ROSEMOUNT POLICE DEPARTMENT January 22, 2010 Rosemount Liquor and Wine Cellar Attn: Mr. Charles Christ or Mr. Sean Schumacher 3440 150`h Street West Rosemount, MN 55068 Dear Mr. Christ and Mr. Schumacher: This is a follow -up to our recent meeting regarding the proposed penalty for the liquor violation at your business on December 15, 2009. You have indicated that you did not wish to request a hearing before a hearing examiner, even though it is your legal right to do so under both state law and city ordinance. City Council has agreed to give you that opportunity at its meeting on February 1, 2010. The purpose of this letter is to obtain your written agreement that you are waiving your right to a hearing and that any action taken by the City Council on this matter will be a final decision, subject to any appeal rights that you may have under state law. Please confirm your agreement with this by signing below and return the letter to me. PCS Liquors, LLC DBA: Rosemount Liquor and Wine Cellar Liquor License Violation of December 15, 2009 We have agreed to waive our right to Sean Schumacher I -a8 -lo Date SPIRIT OF PRIDE AND PROGRESS Rosemount City Hall • 2875 145th Street West • Rosemount, MN 55068 -4997 Emergency 911 • Non - Emergency 651 - 423 -4491 • TDD /TTY 651 - 423 -6219 • Fax 651 - 423 -4485 www.ci.rosemount.mn.us Domeier, Amy From: Sean Schumacher [sschumacher4 @msn.com] Sent: Sunday, January 31, 2010 10:51 AM To: Rosemount City Council; Domeier, Amy; Johnson, Dwight; Kalstabakken, Gary Subject: Letter to Council regarding PCS Liquors, LLC Attachments: Letter to Council for Feb 1, 2010.doc Mayor and Council Attached is a letter that we wanted to include as part of your packet for Monday nights council meeting. You hopefully have already received the videos that we provided to Amy on Friday. Please read it as it explains the reasons we requested the time extension to be able to present our case to you. If for any reason you can't read the letter or view the videos please contact us. We would also appreciate any feedback and are open to meeting with any and /or all of you to discuss the events of December 15th prior to the meeting on Monday night. We will make ourselves available any time on Monday. Sincerely, Sean Schumacher 952 - 484 -4479 Charles Christ 651 - 206 -3330 Hotmail: Trusted email with powerful SPAM protection. Sign up now. January 29, 2010 Dear Mayor and Council Members: We are writing to you about the hearing that will be held on Monday night in regards to the matter of PCS Liquors, LLC. We have waived our rights to present our case to a hearing examiner because ultimately you, the five members of the City Council, are the final judge and jury on this matter as to what constitutes a fair and just punishment. However, we strongly believe that you must listen to all the facts of the case from both sides to make a reasonable judgment. This letter will attempt to outline the reasons as to why we believe that the proposed penalties do not fit the alleged crime and therefore do not constitute a fair and just punishment. We provided the City Clerk, Amy Domeier, with six (6) copies of a DVD with the video of the two compliance checks that were performed at our store on the 15`h of December. We feel that is very important to watch the videos carefully so as to understand what occurred in our store before reading on. If for any reason you did not receive a copy of the DVD please let us know immediately. The DVD contains the following files: File #1 A five second video of the first cooperating minor entering the building. File #2 A forty second video showing the first cooperating minor's attempt to purchase. File #3 A five second video of the second cooperating minor entering the building. File #4 A five minute video showing the second cooperating minor's attempt to purchase. File #2 shows the first cooperating minor bringing the alcohol up to the counter. Our clerk scans it and then bags it. The cooperating minor hands the clerk cash and then the clerk clearly asks for and waits for identification to verify age. The cooperating minor checks her person for ID and then attempts to persuade the clerk to sell it to her anyway. The clerk refuses and hands the cooperating minor back her money and she exits. After the cooperating minor leaves she allegedly mentions to the police officer in charge that the clerk was close to making a sale. We obviously believe this is absolutely false. The cash drawer never opens and the cooperating minor is returned her money almost immediately. Our system is set up to prevent a sale unless a valid ID is either swiped or a full VALID birth date of legal age is manually entered. The request for ID is always the last step in the process because ID is not required for pop, ice, mixes and other miscellaneous items and this is when customers are pulling out their purses and/or wallets for payment anyway. Perhaps, because of the way the system is set up it was inferred that the clerk was close to a sale, but in fact the system worked as it was supposed to. File #4 shows that the second compliance check was proceeding along the same as the first, up until the point where the cooperating minor was asked for and could not produce his ID. Instead of leaving when asked for identification, which has been understood to be the standard operating procedure used in these compliance checks, and also possibly the assumption that you, the Council, has made in your minds, a long exchange occurs between the clerk and the cooperating minor that lasts almost exactly one minute. The cooperating minor checks several pockets and possibly two wallets before waving his arms at the clerk in an attempt to pressure the clerk into making the sale. The clerk ultimately ends up manually entering a VALID birth date of January 28, 1987, as provided by the cooperating minor, only after considerable hesitation and contemplation. Using the quote in the Executive Summary for Monday's meeting, any sanctions that you plan to impose upon PCS Liquors, LLC are based upon the assumed fact that "this is a criminal violation by the employee ". Our basis of contention on this matter lies in the fact that our clerk is likely to be found not guilty of a "criminal violation" because of entrapment. As evidenced by the video our employee will very likely "establish by a fair preponderance of the evidence that the state induced the defendant to commit the offense by improper pressure, badgering, or persuasion" and then "the burden shifts to the state to prove beyond a reasonable doubt that the defendant was predisposed to commit the offense." Otherwise this will be considered entrapment in a criminal Court of Law. We believe that it is fairly obvious by the way our cashier rubs his head over and over, and by the way that the cooperating minor is waving his arms at the cashier that there indeed was improper pressure and persuasion. We should also mention the fact that the minor lied about his age, which should also be construed as improper persuasion. During discussions with the Minnesota Licensed Beverage Association, (MLBA) and a lawyer that works closely with them, we were told that many municipalities, including both Minneapolis and St. Paul, require that the minor be sent in and present their true ID when asked, so as to be clear that they are not entrapping the establishment under false pretenses. Based on these facts, a judge or jury would then have to somehow come to the conclusion that, even without the pressure, badgering and /or, persuasion used by the cooperating minor, that the clerk was going to make the sale anyway. We don't think there is any possible way for the state to prove this beyond a reasonable doubt provided that we have the video clearly showing that the clerk passed the first compliance check hours earlier. This begs the question then, if the state can't prove that the employee acted in a criminal matter, should the owners of PCS Liquors be treated as if a criminal violation ever occurred? If in fact, first and foremost, that you still believe even after watching the video evidence that the events that occurred on December 15, 2009 were "criminal in nature" then our second basis for disagreement with the penalty is in regards to the look back period. The main reason for this argument is that we have made wholesale changes to our business practices since 2006. In 2006 we were tagged with two violations virtually simultaneously, but that is now over three years ago. As a result of the violations in 2006, we fired our original manager, changed our hiring procedures, required online alcohol server training for all employees through the SALES training provided by the Minnesota Licensed Beverage Association and integrated an ID and age verification scanner into our point of sale software. We do believe that we have the most safeguards in place to prevent underage sales among all of the liquor establishments in the City of Rosemount. If you don't believe us, then I encourage you to ask any of our customers who claim "this is the only place in town I still get carded." While we do believe that we have many processes in place to prevent sales to minors, at the end of the day we do need to rely on our employees to follow all of the policies and procedures that we have put in place. Ultimately, the clerk in question did not follow our procedures and was terminated immediately as Sean immediately came back at 9:15 p.m. to close the store. All we can possibly do is to try and be the conscience in our employees' heads at all times, but in practicality we can not be there all day long six days a week. To add to this, all the other consent orders recently signed by the City Council directly mention a three -year period. However, PCS Liquors is arbitrarily being singled out. By doing so and with this proposed penalty you are in fact suggesting to everyone that it is your belief that NO improvements have been made and that the "black eye" from 2005 -2006 and the previous management should never go away. We would most certainly be more understanding of this anger and angst that is being directed towards us, if this was in fact true. If, in fact, the video evidence presented to you actually showed there to be a blatant disregard of the law, i.e. if the minor was again NEVER even asked for ID, you might be just in asserting that no improvements have ever been made. Perhaps this might actually be yours and the public's current misperception because of the misinformation that has been circulated. For example, the report in the Rosemount Town Pages stated that "the equipment was in place last month, but Kalstabakken said the clerk used a manual override to enter the underage customer's (false) birth date and never asked to see identification." This is obviously flat out untrue and when we asked the Chief about it, he claimed he was misquoted. We would also like to add that we have had two other liquor stores over the last five years and have never had a violation at either of them. Also, even though we both work around 60 hours per week between the stores, neither of us have ever personally had a violation. The violations and/or alleged violations have always occurred in our absence. We believe that we have tried to do everything within reason to prevent underage sales. Not only is it illegal and irresponsible to sell to minors, it is bad business! We have zero tolerance for this kind of behavior. We are asking you to realize that, although we share in the responsibility of our employees' actions, that we have also been the victims on a personal level. We have provided all of the tools and training necessary to do the job, but when an employee fails, we as owners, are getting the majority of the punishment. As discussed with Chief Kalstabakken the total fines to date by all of the employees that have failed is likely less than $1,500.00 in total. We have already been fined $5,000.00 and our license has been suspended a total of 45 days. Those 45 days that we have been closed have easily cost us in excess of $200,000 in lost sales revenues and a corresponding net profit totaling somewhere in the range of $40,000 - $50,000. These numbers also do not include any lawyer fees, all the time and energy involved in resolving these issues, or the proposed fine of $2,000.00 and 30 days of suspension for the current alleged violation. Again, do you really believe that we are so negligent in our business practices as owners that the proposed sanctions taken constitute a fair and just punishment? Ultimately, the sanctions imposed, if any, may be of little consequence as we were forced to make the decision to sell our business before even getting our "day in court." But to enforce such penalties would be to take all this information and still believe that we were truly negligent in our actions as owners. It would be a public indictment, that despite likely lacking a criminal case against our employee that we, the owners, should still be harshly punished. We do still have a lot of pride in the business we have built in the last three years. We have invested our hearts and souls into staying competitive in town and are very proud of the results. It is not a business that deserves to be made a public disgrace. We have always been open to any suggestions by the City Council and/or the Rosemount Police Department for improvement. We would also like to invite you to come to our store at any time to see first hand what we do to try to ensure compliance and also see the thousands of wonderful citizens (of legal age) of Rosemount and the surrounding communities that patronize our establishment on a daily, weekly, or monthly basis. Sincerely, Sean Schumacher & Charles Christ FLUEGEL LAW FIRM P.A. Donald J. Flue 'gel * Attorneys At Law Daniel J. Fluegel 1303 South Frontage Road, Suite 5 Sean R. McCarthy Hastings, MN 55033 -2477 William J. Marker( Jr. February 1, 2010 Chief Gary Kalstabakken Rosemount Police Department 2875 145`h Street West Rosemount, MN 55068 Re: Rosemount Liquor Mart Compliance Check Failure David Jon Dyrstad - Criminal Charges Dear Chief Kalstabakken: Telephone 651 -438 -9777 Fax 651 -438 -9775 I have reviewed the incident report regarding the December 15, 2009 alcohol compliance check failure involving the employee, David Jon Dyrstad, at Rosemount Liquor Mart in the City of Rosemount. I have also reviewed the January 29, 2010 letter from the owners of Rosemount Liquor Mart. Based on my review of the incident report I do believe probable cause exists to charge David Jon Dyrstad with Furnishing Alcohol to Minors in violation of M.S. 340A.503. I will be preparing and filing the criminal Complaint within the next few days. As you are aware, any claim of entrapment can be raised as a defense during the criminal prosecution process but based on the facts 1 have reviewed, I see nothing to suggest a valid defense of entrapment may exist. Minnesota Appellate Courts have specifically ruled that police use of an underage under cover purchaser to conduct compliance checks does not constitute the type of government over involvement with criminal conduct that may be a basis for any entrapment defense. As always, please let me know if you have any questions or would like any additional information on this matter. DAN/ham Very truly yours, P LAW FIRM P.A. egel City Prosecutor * Also admitted to practice in Wisconsin