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by Justice Paul E. Pfeifer
In February 2003, the Montgomery County Sheriff’s Office was keeping watch over the goings-on at WCI, an adult nightclub in West Carrollton, Ohio. As it turned out, they had good reason.
On the night of February 6, and again on the 13th, detectives conducted undercover drug buys at the nightclub. They made two separate purchases of cocaine from Brooke Orshoski, a dancer at the club. In late February, WCI fired Orshoski; a month later she was convicted of felony drug trafficking.
In January 2004, the Ohio Liquor Control Commission issued notices to WCI informing the club that it was in violation of Ohio liquor laws, in part because of Orshoski’s felony conviction.
At a hearing regarding Orshoski’s violation, WCI’s manager testified that he terminated the dancer before she was even indicted for the crime because he suspected that she was using or dealing drugs on the premises. Nevertheless, the commission suspended WCI’s liquor permit for 30 days.
The commission made its decision based on an Ohio law that states: “The liquor commission may suspend or revoke any permit…for the following causes: Conviction of…the holder’s agent or employee…for a felony.” According to the commission’s interpretation of that law, it was irrelevant whether or not the permit holder still employed the person at the time of the conviction.
WCI filed an appeal, but a trial court affirmed the commission’s order. Later, when the court of appeals reviewed the case, it reversed the trial court’s judgment. After that, the case came before us – the Supreme Court of Ohio – for a final review.
Because WCI fired Orshoski well before she was convicted, the club maintained that she was not an employee at the time of her conviction, as contrasted with the time of the unlawful act underlying the conviction. Thus, WCI argued, the commission lacked authority under the law to suspend the nightclub’s permit.
By a four-to-three vote, our court agreed. According to the four-vote majority, the unambiguous language of the law requires that the conviction must occur during the employee’s employment with the permit holder.
The Liquor Control Commission took a different position on the matter. The commission believed that if the law did require the convicted felon to be employed by the permit holder at the time of conviction, then permit holders would be able to allow their employees to engage in illegal activities but avoid license suspension by simply firing employees before they are convicted.
However, the majority maintained that the commission’s fear was unfounded. The majority argued that while the law is clear that the conviction must occur while the employee still works for the permit holder, the Ohio Administrative Code provides a safeguard against the commission’s fear that permit holders could fire employees before they are convicted.
The Ohio Administrative Code is the set of regulations, derived from statutes, which guide state agencies such as the Liquor Control Commission. Among other things, the Code prohibits permit holders from knowingly allowing on their licensed premises a wide range of misconduct, including the use or sale of any dangerous drug.
According to the majority, under the Administrative Code, the triggering mechanism for sanctions is not the employee’s conviction but the permit holder’s awareness of the employee’s illegal conduct.
The majority maintained that the Code is designed to prevent a permit holder from allowing criminal conduct by its employees and then avoid sanctions by firing the employees after they get caught but before they get convicted. Both the law and the Administrative Code take into account that a permit holder has no control over whether a former employee is convicted of illicit conduct in the nightclub but does have control over that person’s continued employment.
Therefore, according to the majority, the law and the Code provide protection to innocent permit holders by sanctioning only those who fail to fire employees when it’s discovered that they are engaged in illicit behavior.
Justice Robert Cupp, Justice Terrence O’Donnell and I disagreed with this conclusion. We found nothing in the language of the law which would require that the conviction occur while the employee still worked at the establishment.
Interpreting the law so that it requires that the conviction and employment must be concurrent allows a permit holder to easily evade its responsibility to maintain an establishment free of illegal employee activity.
In his dissenting opinion, Justice Cupp wrote, “A permit holder who knows of, or should know of felonious employee conduct will now be able to allow the conduct to continue until the employee is caught. Then, the permit holder can insulate itself from any consequences simply by firing the employee before he or she is convicted. Thus, the majority’s reading of the statute, in effect, divests the commission of its authority to proceed” under the provisions of the law.
Justice Cupp also said that the Ohio General Assembly’s decision to include a conviction requirement in the law “was not without purpose. By requiring a conviction before the commission may take action against a permit holder, the statute protects the permit holder from losing its license without proof beyond a reasonable doubt that an employee or former employee actually committed the felonious act.”
The three of us who dissented believed that the General Assembly gave statutory authorization for the commission to act against permit holders under circumstances similar to those in this case “to further the public-policy goal of preventing felonious activity in liquor establishments. Clearly the statute places a burden on the permit holder, who would be in the best position to prevent such activity.”
As far as Justice Cupp, Justice O’Donnell and I were concerned, there is nothing in the language of the law requiring the conviction to be contemporaneous with employment. The majority, however, concluded otherwise, and thus the commission does not have authority under the law to suspend or revoke a permit holder’s liquor permit when a former employee is convicted of a felony for an act committed while employed by the permit holder.
EDITOR'S NOTE: The case referred to is WCI, Inc. v. Ohio Liquor Control Comm., 116 Ohio St.3d 547, 2008-Ohio-88. Case No. 2006-1360. Decided Jan. 17, 2008. Majority opinion written by Justice Maureen O'Connor.