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W W & I SUBHIS, INC.,

Appellant,

vs.

OHIO LIQUOR CONTROL COMMISSION,

Appellee.

^fn the

6UprerrYP Court Of OtjiD

Case No. 2007-0248

On Appeal from the Franklin County Court of Appeals, Tenth Appellate District

Court of Appeals Case No. 06AP-626

OHIO LIQUOR CONTROL COMMISSION'S MEMORANDUM IN OPPOSITION TO JURISDICTION

KURT O. GEARHISER (0021245) Attorney at Law

614-221-5151

MARK DANN (0039425) Attorney General of Ohio

Gearhiser Law Firm, Inc. 520 East Rich Street Columbus, Ohio 43215

PETER M. THOMAS (0040887) Chief, Executive Agencies Section CHARLES E. FEBUS* (0063213)

614-221-1778

Assistant Attomey General

Counsel for Appellant W W & I Subhis, Inc.

*Counsel ofRecord Executive Agencies Section 30 East Broad Street, 26th Floor Columbus, Ohio 43215-3400

p DD

MAY 14 2007

MARCIA J. MENGEL, CLERK SUPREME COURT OF OHIO

614-466-2980

614-728-9470 Facsimile

Counsel for Appellee

Ohio Liquor Control Commission

TABLE OF CONTENTS

 

Paee

INTRODUCTION

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STATEMENT OF THE CASE AND OF THE FACTS

 

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ARGUMENT

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A. This case is not a case of public or great general interest and does not involve a substantial constitutional question

:

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B. Once this Court determines Subhis' constitutional issues were not properly raised below, the appeal fails as no challenge was made conceming either the Connnission's authority, process, or calculations. Nonetheless, if this Court were to take this appeal, the Commission's orders would be upheld

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C. R.C. 119.12 specifically administrative sanctions

allows for judicial

review of

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CONCLUSION

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CERTIFICATE OF SERVICE

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INTRODUCTION

This case is simply a R.C. 119.12 administrative appeal from fifteen (15) orders

of

Appellee, Ohio Liquor Control Commission ("Commission"), revoking Appellant's,

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W & I Subhis Inc.'s ("Subhis"), liquor license. Employees and agents of the permit

holder used the permit premises to engage in a pattern of criminal misconduct which

resulted in their felony convictions. Subhis was cited to appear before the Commission.

After a hearing on the matter where Subhis stipulated to the facts of the case, the

Commission found Subhis in violation of O.A.C. 4301:1-1-52 ("Regulation 52") and R.

C. 4301.25(A). Regulation 52 is a Commission rule prohibiting improper conduct that

includes stolen property offenses occurring on the permit premises such as this case. The

extensive criminal misconduct, evidenced in part by the felony convictions of Subhis'

employees was the basis for the Commission's Order revoking Subhis' liquor license. It

is indisputable that the Commission's orders were supported by reliable, probative, and

substantial evidence and were in accordance with law. The stipulated facts clearly

supported the Commission's findings as well as the penalty imposed. Because Subhis

has nothing to rely on in hopes of keeping its liquor permit, it now claims that the penalty

imposed by the Commission was too harsh, and but for the long standing ruling in

Henry's Cafe v. Board of Liquor Control (1959), 170 Ohio St. 233, precluding a court

from dispensing a different penalty, Subhis would somehow be able to retain its liquor

permit.

STATEMENT OF THE CASE AND OF THE FACTS

Subhis held an Ohio liquor license. The Ohio Organized Crime Investigation

Commission formed Task Force 02-02 to investigate organizations involved in the

purchase of stolen property, trafficking in stolen property, and trafficking in food stamps

through liquor permit premises. The Ohio Department of Public Safety ("DPS") as a

member of Task Force 02-02 investigated allegations of corrupt activities at liquor pennit

premises that included Subhis. From August 2002-April 2003, several Subhis employees

(Firas Asha, Kamal Atwan, Bassam Shannack and Omran Saleh) committed crimes using

the permit premises. Asha, Atwan, and Shannack were convicted of felonies. All of the

criminal activities in this case occurred on the permit premises while the employees were

working and involved the receipt of stolen property. Following the employees' felony

convictions, DPS administratively charged Subhis with multiple counts of violating

liquor control regulations and laws including Regulation 52(B)(6) which provides:

4301:1-1-52 Entertainment -- Prohibition Against Improper Conduct

(B) Prohibited activities: no permit holder, his agent, or

employee shall knowingly or willfully allow in and upon

his licensed permit premises any persons to:

(6) Obtain or exert control over property or services of

another, with purpose to deprive the owner therefore, without the consent of the owner or person authorized to consent, or by deception, fraud or threat. Nor shall any permit holder, his agent, or employee, use the licensed permit premises to receive, retain, or dispose of property of another, knowing or having reasonable cause to believe

such property has been obtained through the commission of a theft offense.

The Commission conducted a hearing on May 18, 2005. At the hearing, Subhis,

through counsel, stipulated to the facts included in the investigators' reports. The reports,

which detailed the violations, as well as certified copies of Subhis employee/agent's

convictions were admitted without objection and considered by the Commission. The

stipulated reports included the following relevant facts:

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Commission Case No. 824-05

On February 5, 2003, Agents visited Subhis' permit premises located at 1820

Vine Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold fifteen

(15) cartoons of cigarettes to Asha for $225.00. Asha took the money from cash register

used for the Ohio Lottery sales and paid the agent.

Commission Case No. 825-05

On November 22, 2002, Agents visited Subhis' permit premises and while at the

permit premises sold twenty (20) cartons of purportedly stolen cigarettes to Atwan and

Asha. The cigarettes were carried into the store in a duffel bag. $300.00 was paid for the

cigarettes, well below retail value and the money was taken from the cash register used

for the Ohio lottery to pay for the cigarettes.

Commission Case No. 826-05

On October 25, 2004, Firas Asha was convicted in the Hamilton County Court of

Common Pleas for Receiving Stolen Property, a fifth degree felony. The copy of the

conviction was entered into evidence without objection.

Commission Case No. 827-05

On November 1, 2002, Agents visited Subhis' permit premises located at 1820

Vine Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold fifteen

(15) cartons of cigarettes to Asha and Atwan for $225.00. Asha took the money from

cash register used for the Ohio Lottery sales and paid the agent.

Commission Case No. 828-05

On October 24, 2002, Agents visited Subhis' permit premises located at 1820

Vine Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold

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seventeen (17) cartoons of cigarettes, twelve (12) boxes of Tylenol brand caplets, and six

(6) boxes of Sudafed to Shannock and Asha for $300.00. Asha took the money from cash

register used for the Ohio Lottery sales and paid the agent.

Commission Case No. 830-05

On September 11, 2002, Agents visited Subhis' permit premises located at 1820

Vine Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold fifteen

(15) cartoons of cigarettes to Asha for $225.00. Asha took the money from cash register

used for the Ohio Lottery sales and paid the agent.

Commission Case No. 831-05

On August 15, 2002, Agents visited Subhis' permit premises located at 1820 Vine

Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold one (1)

carton of cigarettes, nine (9) packs of cigars and one (1) box of Duracell AA batteries to

Asha for $40.00. Asha took the money from cash register used for the Ohio Lottery sales

and paid the agent.

Commission Case No. 832-05

On August 12, 2002, Agents visited Subhis' permit premises and while at the

permit premises sold eighteen (18) cartons of purportedly stolen cigarettes to Asha. The

cigarettes were carried into the store in a duffel bag. Asha paid $270.00 for the

cigarettes, well below retail value and the money was taken from the cash register used

for the Ohio lottery to pay for the cigarettes.

Commission Case No. 833-05

On August 3, 2002, Agents visited Subhis' permit premises located at 1820 Vine

Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold thirteen (13)

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cartons of cigarettes to Asha and Atwan for $190.00. Asha took the money from cash

register used for the Ohio Lottery sales and paid the agent.

Commission Case No. 841-05

On January 16, 2002, Agents visited Subhis' permit premises and while at the

permit premises sold ten (10) cartons of purportedly stolen cigarettes to Asha. The

cigarettes were carried into the store in a duffel bag. Asha paid $120.00 for the

cigarettes, well below retail value and the money was taken from the cash register used

for the Ohio lottery to pay for the cigarettes.

Commission Case No. 842-05

On October 17, 2002, Agents visited Subhis' permit premises located at 1820

Vine Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold

nineteen (19) cartons of cigarettes to Asha and Atwan for $285.00. Asha took the money

from cash register used for the Ohio Lottery sales and paid the agent.

Commission Case No. 843-05

On October 8, 2002, Agents visited Subhis' permit premises located at 1820 Vine

Street, Cincinnati, Ohio 45210. While at the permit premises, an agent sold nine (9)

cartons of cigarettes, as well as boxes of Tylenol brand caplets and boxes of Sudafed to

Shannock and Asha for $150.00. Asha took the money from cash register used for the

Ohio Lottery sales and paid the agent.

Commission Case No. 844-05

On January 12, 2004, Kamal Atwan was convicted in the Hamilton County Court

of Common Pleas for Receiving Stolen Property, a fifth degree felony. The copy of the

conviction was entered into evidence without objection.

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Commission Case No. 845-05

On April 27, 2004, Bassam Shannock was convicted in the Hamilton County

Court of Common Pleas for Receiving Stolen Property, a fifth degree felony. The copy

of the conviction was entered into evidence without objection.

The Commission considered: (1) Subhis' admission to the charges;' (2) Multiple

felony convictions of Subhis' employees for criminal activity that occurred on the permit

premise; (3) the stipulated investigators' reports and attached documentation; (4) witness'

testimony; and (5) the arguments of counsel. The Commission then issued orders

revoking Subhis' permit. Subhis appealed, the trial court consolidated the cases, and then

i Subhis entered a denial with a stipulation to the charges. A"stipulation" has been held to be an admission made in a judicial proceeding by parties conclusively proving the facts contained therein. It is absolutely binding on both the trier of fact and a reviewing court. Knowlson vs. Bellman (1953), 160 Ohio St. 359; Market vs. Bosley (1965), 2 Ohio Misc. 109. The Ohio Supreme Court has also held that where the parties enter a joint

stipulation of facts, the result is in the nature of a special verdict or special finding of fact, and the only fnnction of the trier of facts is to apply the law to the facts so placed before

it.

Cunningham vs. J.A. Myers Co. (1964), 176 Ohio St. 410. With specific reference to liquor cases, courts have consistently held that a

stipulation to operable facts constituting the elements of a violation automatically satisfies the evidentiary requirement and may be equated to an admission plea. In Liquor Commission vs. Woodgay (September 23, 1981), Summit App. No. 10145, unreported, the court states, at page 3:

The effect of its stipulations, like the guilty plea in Department of Liquor

was equivalent to

testimony on his part that those charges were correct, and accurately stated

his wrongful and unlawful

any additional evidence was unnecessary. In this case Woodgay

stipulated

These admissions are sufficient to support the judgment,

Control vs. Santucci (1969), 17 Ohio St.2d 69, 72,

.' The Court in Santucci held that

Arlen vs. State (1980), 61 Ohio St.2d 168, and it was error for the court of

common pleas to fmd the decision of the Commission to be unsupported by reliable, probative, and substantial evidence.

Subhis' stipulation therefore equated to an admission. Subhis' admission was sufficient evidence to support the allegations. See University Carryout, Inc. v. LCC (Nov. 9, 1999), Franklin C.P. No. 99C VF 11-9675.

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affirmed the Commission's orders. The 10th District Court of Appeals unanimously

affirmed the decision. This appeal followed.

ARGUMENT

A. This case is not a case of public or great general interest and does not involve a substantial constitutional question.

This case does not present any issue of public or great general interest. It does not

concern a question of statewide interest, nor does it involve a substantial constitutional

question. First, it does not involve the constitutional claims Subhis discusses in its

jurisdictional memorandum, since those claims were waived by being raised for the first

time in their Memorandum in Support of Jurisdiction. Second, the factual disputes do not

raise a question of statewide interest; they concern only this particular exercise of

authority the Commission is statutorily granted as it applies to this specific permit holder

. The General Assembly has entrusted the Commission with enforcing Ohio's liquor

laws. As part of this enforcement, the Commission has the jurisdiction to suspend or

revoke liquor licenses when permit holders violate Ohio's liquor laws. This case presents

one run-of-the-mill example of the Commission's exercise of that authority to revoke a

permit holder's license as a penalty for breaking the rules; specifically committing

repeated felonious criminal behaviors on the liquor permit premises.

Subhis' proposition of law claims that the court of appeals erred when it found the

orders were in accordance with law and violated the United States and Ohio Constitutions

because the penalty imposed was excessively harsh. Subhis failed to raise these

constitutional violations in a timely fashion, so these issues are not properly before this

Court. Subhis' first opportunity to raise its constitutional challenges to the severity of the

sanctions was in its appeal to the common pleas court. However, Subhis did not raise any

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constitutional challenges there. This Court has ruled many times that an argument not

raised at the fust available opportunity is waived.

State, ex rel. Chagrin Falls, v. Geauga

County Bd of Comm'rs (2002), 96 Ohio St.3d 400; State v. Issa (2001), 93 Ohio St.3d

49. Subhis' failure to raise these constitutional challenges in the courts below constitutes

a waiver of these issues.

B. Once this Court determines Subhis' constitutional issues were not properly raised below, the appeal fails as no challenge was made concerning either the Commission's authority, process, or calculations. Nonetheless, if this Court were to take this appeal, the Commission's orders would be upheld.

Subhis urges this Court to change existing precedent and hold that any time the

Commission issues an order revoking a permit holder's liquor license, the revocation

order is open for a court to review the matter for "harshness."

A well-settled principle of

Ohio administrative law holds that the choice of the appropriate sanction is squarely

within the province of the administrative agency, once the evidence has established that a

licensee has committed a violation of the governing statutes. The courts have

consistently ruled that in a R.C. Chapter 119 appeal, the reviewing court cannot modify

or overtum the sanction imposed by the agency, so long as the order is supported by

reliable, probative, and substantial evidence, and the sanction imposed is authorized by

law.

Henry 's Cafe, supra.

Subsequent courts, including the Tenth District Court of

Appeals on numerous occasions, have followed Henry's Cafe, holding that, as a general

matter, judicial second-guessing of administrative sanctions is improper. Indeed, the

lower court followed Henry's Cafe in affirming the orders at issue here.

Permit holders do have sufficient interest in their permit that they are entitled to

procedural due process when the pennit may be suspended or revoked. Plainly,

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R.C. Chapter 4301 provides this due process. In general, however, licenses and the

revocation or suspension of licenses are not subject to a constitutional takings analysis.

See, State ex red. Zugravu v. O'Brien (1935), 130 Ohio St. 23, 27.

Realizing that the liquor industry requires such regulation, Ohio has not granted

irrevocable permits in the nature of vested property rights to retail liquor businesses, but

instead has issued "licenses." A "license" has been consistently considered by courts as a

personal and temporary permit or privilege, and not a natural right, to be enjoyed only so

long as the conditions and restrictions governing its continuance are complied with

"

Salem v. Liquor Control Commission

(1973), 34 Ohio St.2d 244;

Zugravu, supra;

Abraham v. Fioramonte (1952), 158 Ohio St. 213.

It is well-established that the states have a substantial interest in regulating the

sale and use of alcoholic beverages within their borders.

See, Capital Cities Cable, Inc.

v. Crisp (1984), 467 U.S. 691, 712

As part of this strict regulation, the General

Assembly has required permits to sell alcohol, creating classes of permits with

restrictions specific to these permits.

See R.C. 4303.02 - 4303.22.

Further, R.C. 4303.25

prohibits any person from selling alcohol without a permit. Because the liquor industry is

so heavily regulated, a liquor permit is a privilege; it is not a right. "Since the advent of

the Eighteenth and Twenty-First Amendments to the United States Constitution, it is

generally recognized that intoxicating liquor is peculiarly subject to regulation by the

state and is not afforded the same type of constitutional rights as might be afforded other

business pursuits."

Scioto Trails Company v. Ohio Dept. of Liquor Control (10th Dist.

1983), 11 Ohio App.3d 75, 76.

See also Zugravu, supra, at p. 27. (Permits to carry on

the liquor business are mere licenses, revocable as provided, and create no property

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right.) Failure to comply with the prohibitions and restrictions governing the liquor

permit may result in the loss of the privilege.' R.C. 4301.25 allows the Commission to

suspend or revoke a liquor permit for a violation of a Commission rule.

C. R.C.119.12

specifically allows for judicial

administrative sanctions.

review of

Subhis essentially argues that the Commission violated its constitutional rights

because the Commission is empowered to impose even the harshest sanctions, in any

case, free from judicial review.

This argument fails for several reasons. First, Subhis waived any constitutional

arguments by not raising them at the trial court level. Second, R.C. 119.12 does not limit

judicial review of the Commission's orders. histead, R.C. 119.12 creates a right of appeal

for that very purpose that Subhis chose to exercise by filing this appeal. R.C. 119.12

provides:

Any parry adversely affected by any order of an agency

revoking

a license, may appeal from the order of the

agency

The court may affirm the order of the agency if it finds, upon consideration of the entire record and such additional evidence as the court has admitted, that the order is supported by reliable, probative and substantial evidence and is in accordance with law. In the absence of such a finding, it may reverse, vacate, or modify that order or make such other ruling as is supported by reliable, probative, and substantial evidence and is in accordance with law.

(Emphasis added.)

Contrary to

Subhis' argument,

R.C. 119.12's clear

language authorizes a

reviewing court to "reverse, vacate, or modify the (Commission's) order" if the court

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finds the order to be unsupported by reliable, probative, and substantial evidence and not

in accordance with law.

This Court addressed the reviewability of Commission orders in Henry's Cafe,

supra.

The Court held, "Unquestionably, the court of common pleas may reverse, vacate

or modify an order of any agency" if it finds the evidence does not support the requisite

threshold. Id at 236. Rather than following Henry's Cafe, Subhis urges this Court to

find that R.C. 119.12 allows a court to substitute its judgment for that of the Commission.

Contrary to Subhis's claim, the Commission's revocation orders are proportionate to the

violations. As previously stated, R.C. 4301.25(A) empowered the Commission to revoke

Subhis' license because its agents and employees committed multiple criminal acts,

utilizing the liquor permit premises, over a long period of time resulting in felony

convictions for receiving stolen property.

Under R.C. 4301.25 the Commission can revoke a license based on only one

violation.

Teresa Tolbert v. LCC (Dec. 3, 1998), Franklin App. No. 98AP-285. Here,

there were multiple violations committed by several individuals over an extended period

of time. Additionally,

"The

Commission can mete out maximum penalties

as

long as a violation; however minor, is found."

Aida v. Liquor Control Comm'n (2002),

Franklin App.

No. OIAP-1178,

2002 Ohio

App. LEXIS

2604. Here, the record

establishes that the Commission considered the facts of and severity of the events.

Moreover, once the Commission has properly determined the license holder

violated the law, the Commission has the discretion to impose various penalties,

including revocation, and the Commission's penalty decision cannot be altered on appeal.

Stop-N-Go of Wadsworth, Inc. v. Liquor Control Comm'n (May 4, 2000), Franklin App.

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No. 99AP-687; McCartney Food Market v. LCC (June 22, 1995), Franklin App. No.

94APE10-1576);

Domsitz v.

LCC

(Feb. 19,

2002), Franklin

App. No. 01AP-810.

Consequently, this Court should defer to the Commission's revocation order.

The Commission provided Subhis with notice and an opportunity to be heard and

the Commission satisfied Subhis' due process rights. Subhis has raised no substantial

question to the contrary.

CONCLUSION

For the above stated reasons, this case does not raise a substantial constitutional

question nor one of public or great general interest. Therefore, the Commission

respectfully requests this Court decline jurisdiction.

Respectfully submitted,

MARI^. DANN ((0039425)

Atty{(ey,General of OW

CHARLES E. FEBUS ((0063213) Assistant Attorney General Executive Agencies Section 30 East Broad Street, 26s' Floor Columbus, Ohio 43215-3400 (614) 466-2980

(614) 728-9470 Facsimile

Counsel for Appellee Liquor Control Commission

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CERTIFICATE OF SERVICE

This is to certify that a copy of the foregoing Ohio Liquor Control Commission's

Memorandum In Opposition To Jurisdiction has been served via U.S. Mail, this 14th day

of May, 2007, upon:

Kurt O. Gearhiser Gearhiser Law Firm, Inc. 520 East Rich Street Columbus, Ohio 43215

Counsel for Appellant W W & I Subhis, Inc.

\Liquor\Appeals\W W&I Sup.Ct.Memo in Opp

CHARLES E. FE$U Assistant Attorney General

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