OLCC Case Profile: Aroma Restaurant’s License Suspended

Permitting unlawful activity is a category III violation under Oregon law. The OLCC has determined that the provision of security services by an individual without DPSST certification constitutes unlawful activity under Oregon law. Aroma Restaurant was sanctioned for permitting unlawful activity of this nature.

This case is interesting for two reasons. First, it illustrates the OLCC’s escalating penalty schedule and the OLCC’s discretion in increasing or decreasing the sanction based on aggravating or mitigating circumstances. Second, it highlights the importance of promptly addressing compliance issues after a violation and having systems in place to avoid “low hanging fruit” violations.

The OLCC’s sanction guidelines suggest the following penalties for category III violations:

• First in two year period. $1,650.
• Second in two year period. $4,950 or a 30 day suspension.
• Third in two year period. Mandatory 30 day suspension.
• Fourth in two year period. Cancellation.

Here, the licensee had a previous category III violation for a similar incident within the last two years. The standard sanction would be a 30 suspension or a civil penalty of $4,950. Here, the OLCC found aggravating circumstances and imposed a sanction of either a 32 day suspension or a $4,950 civil penalty and 2 day suspension. So, in either case, the licensee faced a mandatory suspension. For licensees with video lottery, the imposition of a mandatory suspension is particularly important because the Lottery will turn off the video lottery machines for the length of the suspension, at a minimum. The Lottery has the discretion to terminate the retailer contract under such circumstances.

The second lesson from this case is just as important. After settling a violation or losing at a contested hearing (or, ideally, as soon as the compliance problem comes to their attention), a licensee must take the time to ensure that the underlying problem has been addressed. The escalating penalty schedule provides for increasing sanctions for violations of the same category within a 2 year period of time. Generally speaking, violations serve as a red flag to OLCC enforcement and may lead to increased scrutiny of a licensee’s business. So, in addition to ensuring that the issued underlying the violation has been addressed, such a licensee would be well served to audit its alcohol service policies and procedures to ensure future compliance, or to have a third party conduct such an audit. DPSST and service permit violations are low hanging fruit violations that can be easily avoided with sound systems and regular compliance checks. In addition to avoiding violations, ensuring that your staff is appropriately trained and permitted helps the business to stay in compliance generally.

I provide compliance audits for licensees and would be happy to talk with you if you have concerns about the compliance of your licensed business.