Revolutions wins legal food fight

By David Wren

The Sun News

A circuit court judge said this week that Revolutions nightclub doesn't have to sell food to keep its alcoholic beverage license, reversing a decision in April by the state's Administrative Law Court and possibly setting a precedent for nightclubs statewide.

Circuit Court Judge John Breeden signed the decision late Tuesday afternoon, more than two months after hearing arguments Aug. 1 from Revolutions and the S.C. Department of Revenue, which regulates alcoholic beverage licenses.

The Revenue Department, which had Revolutions' liquor license revoked because of a lack of food sales at the nightclub, said Wednesday it will appeal Breeden's decision to the S.C. Court of Appeals.

It typically takes a year or longer for an appeal to be heard by the court's three-judge panel.

"We respectfully disagree with the trial judge's [Breeden's] decision and will file an appeal within 30 days," said department spokeswoman Adrienne Fairwell.

Revolutions will continue to operate and sell liquor while that appeal is pending, said Dominic Starr, the nightclub's lawyer.

Breeden said in his ruling that nightclubs must have seating for 40 customers and meet the state's requirements for a "Grade A" food permit to qualify for a liquor license.

The state's Department of Health and Environmental Control inspects restaurants and has strict food, storage and kitchen regulations for businesses that get a retail food permit.

Food must be available for customers to purchase, but Breeden said the amount of food sales plays no factor in whether a liquor license can be issued.

Breeden's ruling was based in part on the General Assembly's decision in June to clarify language in the state's liquor licensing laws. Breeden said the state legislature "made clear that the only requirement, other than seating, is to maintain a Grade A permit."

"Judge Breeden's order accurately reflects the legislative intent, which is to allow business establishments to have an alcoholic beverage license without having to maintain a specific percentage of revenue from food sales," Starr said.

The ruling is a blow to the Revenue Department, which has argued for years that food sales must make up a substantial part of a nightclub's revenue for it to qualify for a liquor license.

Liquor licenses for on-premises consumption, according to the state constitution, can only be given to hotels and lodging establishments, nonprofit groups operating private clubs and "businesses engaged primarily and substantially in the preparation and serving of meals."

There is no separate category for nightclubs so they are licensed under regulations that apply to meal-serving businesses.

The state constitution does not mention revenue and does not define what "primarily and substantially" means.

In 1996, the state legislature clarified "primarily and substantially" to mean that a business has seating for 40 people and a Grade A food permit.

In the ensuing years, the Revenue Department said nightclubs must meet those requirements and get substantial revenue from food sales.

In June, the legislature clarified the law again by saying that state agencies can't add more restrictive requirements than the seating and food permit requirements that were approved a decade ago.

That means revenue from food sales can't be considered, according to Breeden's order.

"The ruling is pretty much cut-and-dried - it will allow bars to continue operating without any question about the percentage of food sales," said Tom Sponseller, president of the Hospitality Association of South Carolina, which lobbied the state legislature for the June clarification to the state law.

The Revenue Department in March asked the state's Administrative Law Court to revoke Revolutions' liquor license because food sales accounted for 3 percent or less of the nightclub's revenue.

The revocation was a result of investigations of Revolutions by the State Law Enforcement Division, which enforces the state's liquor laws and refers violations to the Revenue Department for further administrative action.

The administrative law court revoked the nightclub's license in April, and Revolutions appealed the case to the circuit court. Revolutions was allowed to continue operating pending Breeden's ruling.

Sponseller said that Breeden's ruling will apply to nightclubs statewide and that he hopes the Revenue Department drops its plans to appeal.

Starr said he also thinks Breeden's decision "will apply to any other similar business in the state."

Breeden also said in his order that "several of the facts surrounding SLED's dealings with Revolutions are troubling" and that state officials might have targeted the nightclub for personal reasons.

Breeden's order referred to information contained in court filings that said the SLED investigator who cited Revolutions is having a romantic relationship with the ex-wife of one of the nightclub's owners. Those filings also questioned the timing of SLED's inspections, including one that occurred at 12:30 a.m. the day before Revolutions was set to close for several months for renovations.

SLED spokeswoman Bobbi Schlatterer declined to comment on the Revolutions case "because it is under appeal."

Sponseller has said he doubts any nightclub gets a substantial part of its revenue from food sales. Starr said that he is not aware of any other Myrtle Beach area nightclub that has been investigated by SLED in recent months because of a lack of food sales.

"It doesn't make any sense to me other than there is some targeting of Revolutions for other reasons," Starr said.

Contact DAVID WREN at 626-0281 or dwren@thesunnews.com.