Category Archives: Case Studies

OLCC Case Summary: Lotsa Luck Bar & Grill

Case Studies, OLCC

OLCC Case Summary: Lotsa Luck Bar & Grill

“Learn from the mistakes of others. You can’t live long enough to make them all yourself. ”                                                                                                                  –Eleanor Roosevelt

Licensees can learn a lot by reviewing OLCC case decisions.  What mistakes are other licensees making?  What mistakes are the OLCC making?  What lessons can be learned to improve the safety, compliance and success of your business?  Here, I am summarizing one lesson that can be learned from a recent OLCC decision.

The Issue. Is an argument between patrons “disorderly activity” under Oregon law?  The OLCC argued that an argument between a male and female patron of Lotsa Luck Bar & Grill was disorderly activity.

The Law.  OAR 845-006-0347 prohibits licensees from permitting disorderly activities on the licensed premises or in areas that the licensee controls that are adjacent to or outside the licensed premises, such as a parking lot, outdoor seating area, smoking area, area in which patrons wait to enter the premises, etc.  Disorderly activities are defined as those that harass, threaten or physically harm another person.

The Facts.  A male and a female patron drove to the premises.  Video shows that they were arguing from the moment that they exited their vehicle, throughout the time that they were in the premises, and until they exited the premises.  They were in the premises for approximately 15 minutes.  Neither of them had an alcoholic beverage while at the premises and there is no indication that they were intoxicated.  They were arguing in normal voices about everyday issues.  At one point, the man told the woman to “get your shit out of my car.”  Just prior to leaving the premises, the man told the woman that he was going to “beat your ass.”

Discussion.  OLCC staff argued that the “beat your ass” comment constituted disorderly activity.  Such a comment could constitute disorderly activity if interpreted as a threat.  That being said, the testimony and evidence indicated that the comment was made in a normal voice with no suggestion of physical violence or accompanying physical violence.  If the comment would have been followed by physical violence, the statement along with the violence would very likely have been considered disorderly activity.  If the comment was made in a threatening manner, but without the physical violence, it would have been a closer call.

If a comment was determined to be “disorderly activity,” the OLCC would still need to show that the licensee “permitted” the activity.  I’ve previously highlighted what is required for a “permitting” violation.  While that is an issue here, it is not the issue of note.

The Take-Away.  Two patrons arguing with normal voice levels and no physical violence does not constitute “disorderly activity” under current Oregon law.  That being said, licensees should pay careful attention to patrons that are arguing and if there is any indication that the arguing may escalate to include suggestions of physical threat or violence.  While arguing alone will typically not rise to the level of “disorderly activity,” it may be a red flag that things are headed that way.  Intervening early may ensure that the argument remains just that.  As with many things, licensees and their staff must use sound judgment in light of all of the facts in determining what, if any, action is appropriate.  The devil is in the details.  Having well written house policies and regular trainings on how to handle such issues will help ensure that such issues do not escalate to the level of an OLCC violation.

Incident Logs: To Log or Not To Log Is a Question All Licensees Should Ask Themselves

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Incident Logs: To Log or Not To Log Is a Question All Licensees Should Ask Themselves

The OLCC recommends that licensees maintain incident logs, but licensees must be mindful of how they maintain incidents logs or they could be used against them later.

OLCC Recommendations.  The OLCC encourages you to keep an Incident Log.  Per the OLCC, examples of when you should make an entry in the log include anytime you or your employees intervene to prevent or stop customer conduct such as:

  • Refusing someone alcohol service
  • Cutting someone off or removing a drink
  • Arranging safe transportation home for someone who appears intoxicated
  • Stopping an argument, fight, or assault
  • Stopping other illegal activities
  • Asking a noisy customer to be quiet as they leave or drive away

 

The OLCC also recommends putting other activities in your log, including whenever an incident is reported to the police or OLCC, whenever you receive a complaint from a neighbor, or any other time you think it necessary.  The OLCC argues that the licensee will benefit from keeping an incident log because:

“Sometimes, complaints, investigations, or lawsuits do not surface until weeks, months, or years after the incident occurred. Gathering complete and accurate information immediately after an incident is  one of the best ways to document how you and your employees handled the problem.”

Reason for Concern.  The OLCC could potentially substantiate a history of serious and persistent problems violation solely based on a licensee’s incident log.  In a recent decision, the OLCC made it clear that it considers incident logs to be sufficiently reliable to document a serious incident in a history of serious and persistent problems violation.  In other words, entries in a licensee’s log book can be admitted into evidence at an administrative hearing and can be held against the licensee to prove a history of serious and persistent problems violation.  The proposed sanction for such a violation is license cancellation.

The OLCC reasoned that the incident logs should be considered reliable because they would not be considered hearsay under the Oregon Evidence Code.  Specifically, log entries fall within a hearsay exception as a statement made by a party opponent under ORS 40.450(4)(b) and as business records kept in the ordinary course under ORS 40.460(6).  Because incident logs fall within these hearsay exceptions and would be admitted in civil litigation, the Commission concluded that incident logs are reliable under the applicable evidentiary standard set out in ORS 183.450(1).

The OLCC tries to soften this conclusion by pointing out that evidentiary value of incident logs would be reduced to the extent that there was not corroborating evidence or testimony concerning the events in the incident log.  Even with that being the case, it’s clear that a poorly kept incident log can cost a licensee their license under certain circumstances.

Best Practices.  Keeping an incident log can be very beneficial to operating a successful, profitable and compliant business.  The three most important aspects of keeping a log book are:

  1. Regular review of the log book,
  2. Documentation of proactive steps taken in response to problems, and
  3. Training staff regarding how to draft a log entry.

Regular Review.  To maximize the benefit and minimize the potential downsides, an owner or manager should regularly review log entries and should take appropriate steps in the light of documented incidents and trends in incidents.  The best practice is to review the log books every day.  If there is a serious incident, the owner or manager can investigate while the incident is still fresh in the minds of their staff.  In addition, if the business has video cameras, the owner or manager can review the applicable video records and preserve copies of the videotape before they are recorded over.

Proactive Steps.  If there is a troubling incident or trend in incidents, the business is well advised to take immediate steps to prevent or control the problems.  The scope and nature of the proactive steps will depend on the scope and nature of the incidents.  Getting ahead of problems can potentially prevent expensive and time consuming issues with the OLCC, law enforcement and the local government.

Drafting Entries.  If you do not direct your staff in how and when to prepare a log entry, you should not be surprised if the log entry seems to highlight the severity of a particular incident and fails to mention how it was resolved.  Specifying the basic components to an entry is a good first step, such as date, time, staff name, name of involved individuals, police called or involved, description of incident, proactive steps taken, etc.  Entries in log books should describe the incident in plain English without undue commentary, i.e. “there was a huge fight on the patio tonight, more like a riot.  We totally lost control of the crowd and it looked two people were almost killed …”  The log should focus more on how the business quickly identified and resolved the issue.

Take Away.  There are many reasons why a bar or restaurant should keep an incident log, but merely keeping an incident log without any regular review or follow up may do more harm than good.  Licensees should consider incident logs to be one of many potential tools to run a compliant business, such as regular staff trainings, secret shoppers, video cameras, etc.  Using the tool properly can be beneficial, but keeping an incident log just because you think it’s the right thing to do with no further action probably involves more risk than reward.

I regularly help clients review their compliance practices and would appreciate the opportunity to talk to you about your current practices and how to improve them going forward.

 

OLCC Case Profile: The OLCC Dismissed Two “Permitting” Violations in Bradley’s Bar & Grill

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The OLCC dismissed two “permitting” violations in Bradley’s Bar & Grill.  In doing so, the case provides some useful guidance to existing licensees.

The Law.  “Permitting” violations requires that the OLCC show two elements.  The first element is a showing that the licensee had knowledge of the proscribed activity.  The second element is a showing that the licensee failed to take reasonable steps to prevent or control the proscribed activity.

The proscribed activity may be unlawful activity, disorderly conduct, or having a minor in an area in which minors are prohibited.  Knowledge may be shown in a number of ways: actual, constructive, or imputed.  Constructive knowledge is where the nature of the proscribed activity was such that it would have been evident to persons working in the establishment.  The knowledge can also be imputed to the licensee from one of the licensee’s agents or employees.

First Alleged Violation.  The first alleged violation was that the licensee permitted unlawful activity when a patron sold drugs to a confidential reliable informant (a “CRI”).  It was undisputed that the employee on duty had no actual knowledge that a CRI was attempting to buy drugs in the bar.  In addition, it was not evident to persons working at the bar that the two patrons talking privately near the bar were negotiating a drug sale.

OLCC staff contended that licensee’s employees should have monitored the private conversation between the patrons and thus should have been aware of the drug sale.  The Commission determined that that was not a reasonable expectation.  Even if the employee in question had stopped performing their duties and focused entirely on drug transaction, the Commission determined that it would have not been evident to a reasonable person that a drug transaction was occurring.

Take Away Point.  Licensees are responsible for taking reasonable steps to prevent drug activity at or adjacent to the licensed premises.  If their employees become aware that such drug transactions are occurring or such activity becomes conspicuous, a licensee is responsible to taking reasonable steps to prevent such drug activity.  That being said, if the drug activity is “surreptitious and subtle” and the licensee does not have actual or constructive knowledge of it, a licensee will not be sanctioned by the OLCC.  The take away is that licensees should take care to train their staff to be observant of their surroundings and to report any criminal or suspicious activity to the manager or owner.  Communication between staff and management is essential and there are a number of tools that licensees can put into place to mitigate risk here.

Second Alleged Violation.  The second alleged violation was that the licensee permitted a minor to be on the licensed premises where minors were prohibited.  For this type of violation, the knowledge element can be met either by showing that the licensee had (1) actual knowledge that the minor was on the licensed premises or (2) sufficient time and opportunity to detect and determine the minor’s presence at the premises.

In this case, it was undisputed that the licensee’s employee was unaware of the minor’s presence at the bar.  As a result, the case turned on whether the licensee’s employee had “sufficient time or opportunity” to discover the minor.

The Commission has determined that 10 or 15 minutes is “sufficient time and opportunity” exists when a premises is busy.  Here, the minor was in the bar for a little over 9 minutes and the bar was busy.  The unique fact presented was that two other patrons that were sitting at the table where the minor was seated caused a disturbance for much of the 9 minutes.   Accordingly, the server’s attention was rightfully focused on resolving the immediate situation.  In this case, the Commission found that the server did not have sufficient opportunity to detect the minor’s presence because of the disruptive behavior of the other patrons.  The disruptive behavior constituted an immediate public safety concern and required the immediate attention of the server.

 

OLCC Case Profile: The OLCC Canceled the Liquor License of Liquid Club & Lounge in Bend, Oregon for License Restriction Violations

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The OLCC canceled the liquor license of the Liquid Club & Lounge located in Bend, Oregon in later October. The basis for cancelling the liquor license was that the licensee violated a number of license restrictions imposed on the license when it was issued. It serves as a good case study about the risks of having a liquor license with restrictions. Here, the OLCC imposed restrictions on the liquor license because the previous licensee had its license cancelled for a history of serious and persistent problems.

The OLCC can impose restrictions on a liquor license when there is a basis for denying an applicant’s application. The denial basis may be related to characteristics or the compliance history of the applicant, or it may be related to recent compliance problems at the location to be licensed. Applicants should carefully consider whether to accept a license with restrictions. Depending on the situation, it may make sense to appeal the restrictions or simply walk away from the business opportunity. If an applicant decides to accept license restrictions, they need to take great care to ensure total compliance with the restrictions going forward.

The reason that license restrictions are so serious is that the standard penalty for a first license restriction violation is license cancellation. The license restrictions at issue here were as follows:

• Licensee shall limit each person to possessing no more than one container of alcohol at one time and limit the amount of alcohol in a container to no more than 16 ounces of malt beverage, 6 ounces of wine, or 1.5 ounces of distilled spirits.
• Licensee shall ensure that the parking lot area under the licensee’s control and the outside area adjacent to the premises are patrolled on Friday and Saturday at lease every five minutes starting at 10:00 pm and continuing until 30 minutes after the close of business to discourage loitering and illegal activity.

The OLCC showed that the licensee violated the license restrictions on five separate occasions. In order to cancel the license, the OLCC must show that restriction violations are substantial enough to warrant cancellation. The Commission considers four factors in determining whether a restriction violation is substantial enough to warrant the presumed penalty of cancellation.

• Timing—with breaches soon after the license issues considered to be more serious. Here, the violations occurred almost immediately.
• Willful—restriction violations that are committed willfully by the licensee are considered to be more serious. Here, the licensee was found to be aware of the restrictions and voluntarily allowed them to be violated.
• Number of violations—five separate violations are considered to be more serious than an isolated incident.
• Hardship—breaches that strike at the heart of the restriction are considered to be more serious than more peripheral violations.

In this case, the OLCC found that all four of these factors weighed against the licensee and that license cancellation was thus warranted.

Licensees that currently have license restrictions should consider requesting their removal as soon as is practical, but should take care that they have a plan for ensuring 100% compliance while the OLCC is considering the request. The OLCC will typically not seriously consider requests to remove restrictions if the restrictions have been in place for less than one year. The burden is on the licensee to show that the original basis for imposing the restrictions no longer exists and explaining how they will ensure compliance going forward. Applicants that are facing a decision about whether to accept a license with license restrictions should also think carefully about the practical realities of operating with license restrictions and what other business opportunities are available.