STATE OF NORTH CAROLINA ) IN THE OFFICE OF ) ADMINISTRATIVE HEARINGS COUNTY OF BUNCOMBE ) 00 ABC 0965 )

N. C. BEVERAGE CONTROL ) COMMISSION, ) Petitioner, ) RECOMMENDED DECISION FOR ) SUMMARY JUDGMENT AND vs. ) RECOMMENDED DECISION FOR ) UNDUE HARDSHIP RHONDA DAVIS LEMONS, Individual, ) T/A XCAPADES, ) Respondent. )

This cause was heard before the undersigned Administrative Law Judge upon Motion of Petitioner for Reconsideration of an Order Denying Petitioner’s Motion for Summary Judgment entered on August 15, 2000. This Motion was heard upon oral argument of Mr. Fred Gregory, Attorney for Petitioner, and Mr. Wade Hall, Attorney for Respondent, in the Henderson County Courthouse, Hendersonville, North Carolina, on the 5th day of October, 2000. Upon reconsideration of the denial of Petitioner’s Motion for Summary Judgment, and upon the argument and submissions of counsel, the undersigned concludes that there is no genuine issue as to any material fact and that the Petitioner is entitled to Summary Judgment as a matter of law.

The undersigned makes the following uncontroverted:

FINDINGS

1. Respondent, Rhonda Davis Lemons, entered an Alford Plea to a misdemeanor controlled substance offense and judgment was entered against her on June 5, 2000.

2. This plea resulted in a conviction pursuant to G.S. 18B-900(a)(5).

3. Because of the entrance of the plea under G.S. 18B-900(a)(5), Respondent is ineligible to continue to hold ABC permits except as the Petitioner Commission may decline to take action against Respondent under its authority to revoke pursuant to G.S. 18B-104 upon a showing of undue hardship pursuant to G.S. 18B-900(a).

4. Respondent operates an adult entertainment establishment in Buncombe County trading as “Xcapades” and has owned, operated, and managed this establishment for nearly five years preceding the hearing on this contested case. 5. Respondent holds ABC permits issued by the Petitioner.

6. Respondent has no prior ABC violations.

7. Respondent’s business establishment is located in a building in downtown Asheville, North Carolina. This building is designed as a bar with seating for patrons and a dance floor.

8. A substantial portion of the income from this establishment is made through the sale of alcoholic beverages.

9. Respondent, from the business proceeds generated by this establishment, pays a mortgage on the building which she leases from her mother. Respondent’s proprietor, Ms. Lemons, would be unable to make this mortgage payment without the income from the operation of the present business.

10. Respondent employs between fifteen (15) and twenty (20) female entertainers. A vast majority of these employees have children whom these employees support. There are approximately thirty (30) dependents in this category.

11. Ms. Lemons is divorced and has one child from her previous marriage. She provides the sole support for a male son, now age 14, who presently resides with her at her residence. This child swims competitively and has as his ambition to enter college in pursuit of a medical degree.

12. Ms. Lemons does not have marketable business skills or a post-high-school degree. She occasionally performs in this adult establishment in addition to her responsibilities as a manager.

13. Ms. Lemons also makes a mortgage payment on her personal residence where she and her son reside. The combined mortgage payment for both the Respondent’s business establishment and her home approximates four thousand dollars ($4,000) per month. A portion of this mortgage payment is recouped and reverts to her mother through lease payments.

14. Janet Helton, age 45, resides in Fairview, North Carolina. She is employed by Respondent. Ms. Helton has children as well as two grandchildren. She does not have a high school diploma and works as a dancer/entertainer at the Respondent’s establishment.

15. Laurie Donovan resides in Haywood County, North Carolina. She is employed by Respondent. She has three children ages nine (9), six (6), and three (3). She is a single parent who provides the support for her children. Ms. Donovan previously managed an apartment complex in Florida. She left Florida and moved to North Carolina when her employer became bankrupt. She earned approximately sixty to seventy thousand dollars ($60,000-$70,000) per year in her previous employment. In her current employment as a dancer/entertainer with the Respondent, she earns between one thousand and fifteen hundred dollars ($1,000-$1,500) a week. This income enables her to support her children and, because of her employment during the evening, allows her to spend more time with her children during the day. Ms. Donovan speculates that without her current employment, she would be forced to earn a minimum wage

2 supplemented by food stamps. The nearest alternative site for her present skills as a dancer is in Greenville, South Carolina.

16. Beverly Loving resides in Marshall, North Carolina. She is employed at Respondent’s business as a dancer/entertainer and has been so employed for the last two months prior to the hearing. She has two minor children of her own and a stepson. She resides with her husband and children where she provides the sole support. Previously, she was a housewife. Her husband previously worked as a sheetrock hanger making approximately two hundred fifty dollars ($250) a week. Their inability to support her family was the motivation for entering into her present occupation.

17. David Donaldson resides in Haywood County, North Carolina. He has worked in Respondent’s establishment as a bartender and disc jockey for the previous four (4) years. He is presently married and his wife is expecting a child. Previously, Mr. Donaldson was a plant supervisor for a manufacturing concern, a job he held for approximately ten (10) years. He has a technical college degree as a machinist.

18. Respondent has demonstrated that the revocation of her ABC permits would cause an undue hardship.

Based upon the recommendation for the entry of Summary Judgment against Respondent, and based upon the findings as to hardship, the undersigned makes the following:

CONCLUSIONS OF LAW

1. The Office of Administrative Hearings has jurisdiction of this contested case pursuant to Chapters 150B and 18B of the North Carolina General Statutes.

2. By the entry of Summary Judgment herein, Respondent becomes ineligible to hold ABC permits as a matter of law pursuant to a misdemeanor controlled substance conviction under G.S. 18B-900(a)(5) within the last two years.

3. Respondent has carried her burden of proof and established the requirements of an undue hardship. Under G.S. 18B-900(a), the undersigned concludes that she is entitled to this waiver due to the hardship that would occur to herself and her employees because of the prospective denial of income used to support the minor children and families of Respondent’s employees.

4. The finding as to undue hardship does not diminish the criminal conduct giving rise to the revocation; the nature of the business conducted in this establishment; or the deleterious impact that this establishment may have upon the surrounding business community. This finding is based solely upon the income that Respondent’s establishment generates for employees who would likely otherwise be required to engage in substitute minimum-wage employment and public assistance to support their families.

5. Respondent is ineligible to hold ABC permits pursuant to G.S. 18B-900(a)(5) until

3 June 5, 2002. Respondent has established that this period of ineligibility would cause undue hardship for Respondent and Respondent’s employees as provided in G.S. 18B-900(a). Based upon undue hardship, Petitioner should declare Respondent ineligible to hold ABC permits for only a period of sixty (60) days from Petitioner’s Final Decision. Thereafter, Respondent should be entitled to resume the operation of her business establishment after the sixty (60) day suspension and be entitled to offer for sale alcoholic beverages under the existing permits, upon probationary terms.

6. Respondent’s employees should now be on notice of the laws that govern the operation of Respondent’s business and to prepare themselves for alternative employment in the event of a recurrence of the conduct giving rise to the present violation under G.S. 18B-900.

RECOMMENDED DECISION

Based upon the foregoing Findings and Conclusions of Law, the undersigned recommends to the Petitioner that Respondent be declared ineligible to hold ABC permits for a period of sixty (60) consecutive days from the date of Petitioner’s Final Decision, and that thereafter, under the hardship exemption as found under G.S. 18B-900(a), that these permits be restored conditionally to the Respondent until June 5, 2002, upon the condition that the Respondent’s establishment maintain its operation in accordance with all applicable laws.

ORDER

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, 6714 Mail Service Center, Raleigh, North Carolina 27699-6714, in accordance with North Carolina General Statute 150B-36(b).

NOTICE

The agency making the final decision in this contested case is required to give each party an opportunity to file exceptions to this recommended decision and to present written arguments to those in the agency who will make the final decision. G.S. 150B-36(a).

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy to the parties' attorney of record and to the Office of Administrative Hearings.

The agency that will make the final decision in this contested case is the North Carolina Alcoholic Beverage Control Commission.

This the 5th day of February, 2001.

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4 Julian Mann, III Chief Administrative Law Judge

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