### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN

NO. 03-01-00442-CV Ephen Stephe ns, Inc. d/b/a Ander son Mill

Taver n, Appellant v. Texas A lcoholic Beverage Commiss ion, Appellee

FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 126T H JUDICIAL DIST RICT NO. GN00 3480 HON ORABLE JOHN K. DIETZ , JUDGE P

RESIDIN G App ellant Eph

en Ste ph ens, In c. d/ b /a A n ders on Mi l l Ta v er n , a pp ea l s th e d i str ic t cou rt ’s j udg

men t af f i rm i ng an orde r of ap pe l l ee , th e Texa s A

l coh ol i c B evera

geCom m i ss i on ( “T ABC ”) , co nc lud ing t ha t ap pe llant ’s emp lo yee so ld al coh ol to an i ntox i ca ted pe rs on i n v i ol ati on of the Texa s Al cohol

i c Beverage C ode (“ Code” ). SeeTe x. Alco . B ev. Code An n. § 11.16(b)(14) (West Su pp. 200 2) . B ase d in par t on t hi s find ing , t he T ABC su sp en de d a pp ella nt ’s lice nse t o se ll alc o ho lic beverag es and assessed an admi nistrat ive penal

ty. Appellant co ntends t hat t he TABC’s finding th at a pp el l an t’s em pl oy ee sol d al coh ol to an i ntoxica ted person was not based on the c orrect l eg al sta n da rd an d w as n ot s up por

ted b y su b sta n ti al ev i den ce . We w i l l

af f i rm th e j udgm

en t. At a heari ng be fore an adm

in is trat iv e l aw j udge (“A

LJ”), TABC i

nve stigators test if

ie d that t hey saw a cus t omer st umble into a nea rby t able. An invest igat or follow ed t he cus t omer into t he rest r o o m, wh er e she fou nd t he cu st omer mumbli ng and at t empt ing t o u rinat e into t he sink. The cust omer’s ey

es were bl oodshot , her speech

sl urred, and he

r ba l ance poor. W

he n s he even tua l l y got1 T he ALJact ually used t he bar t ende r’s name her e. As ap pellant not es, t he us e o f the

bart ender’s nam

e was o bvio us ly a mis st at eme nt ; t he ALJ sho uld ha ve pu t t he cu st o mer ’s na me there in stead. Bot h the summaries of test im ony and the ALJ’s pro pose d fin ding usin g t he cust omer’s na me 2 i n to a s t all, sh

e s tum b l ed i n to the walls . She l eft the restroo m traili ng toilet paper from h

er clothi ng. She th en di sr up ted a g am e of pool an d a ttem pte d vai n l y to dan ce. T he invest igat or des cr ibed t he customer as “n ot al l there.” Th e c us tomer m ad e h er way to abarstool at “l ast call,” but when que ried f oran order sh e coul d not answe

r; the b arten

der returne d to her af

ter a bi t, t ook her order, and served her drinks. Appellant’s bartender re call ed that loud musi

c was play in g at last call. He

re called t he customer si tti ng on a ba rs tool and seem in g in deci si ve, so he we nt t o s er ve o t her cus t omer s while she
ma de up her m

in d. He testifi

ed that when h

e returned, she ordered, and he serv ed the drin

ks. He t es t ified t ha t he did not recall notici ng an y of the comm

on in dic ator s of i

ntoxica tion such as sl urred spe ech, i m pai red m otor ski l l s, com

pl ai ni ng a bout the atm osphere i n the b ar, or moo d shift s; he sa id that t he smo ke a nd fo g and late ness o f the hou r r ende r blo od sho t eye s a n in ac cu rate i nd i ca tor of i ntoxi cation i n a ba r at cl osi ng ti me. The ALJ propo sed find ing t ha t an emp lo yee o f ap pe llant se r ve d a n a lco ho lic beverage to an into xicat ed p er so n and c onc ludi ng th at appe l l an

t thereb y vi ola ted state l

aw. See Code § 11.61( b)(14) ( West

Supp. 2 002). T he ALJ ’s pr o po se d fin din gs an d c o nc lus io ns w er e b as ed o n his
sum mari es of the wit nesse s’ t est imony and his disc uss ion se ct ion in which he s t at ed t hat “[t ]he preponderanceof the evi dence s uggests that [t he customer] was c le arly in to xicated, a fact that Resp ond ent does not dispu te. A l thou gh

[th e b arte

nd er] tes ti f i ed tha t he di d n ot noti cesi gn s of into xicat ion, the evi

dence fr o m t he T ABC ag en t s is co nvin cin g. I t is highly i mpro bable t hat anyone in contact with [the cus

to me r 1 ] would f

ai l to notice he

r con di ti on. ” B as ed

on th i s a nd a c onc l us i onas t he into xicat ed p er so n sup po rt t his revisio n of t he disc uss ion se ct ion. 2 Though the clerk’s record on appeal contain s the transcr ipti on of t he hea ring be for e t he ALJ, it does not co ntain

any documen ts fi le d in the adm in is trat iv e proceedin

g— e.g. , th e p ropos al

f or dec ision, the exc eptions to the proposal f or decision, the

m otion f or rehe ari ng, a nd th e TA BC’ s order. The parties h av

e a ttach ed th es e l i ste d d ocu men ts as a ppe ndices t o t heir ap pellat e br iefs. Be cau se t he parties have not objected to t he docum ents co ntai ned i

n the appen

dic es, we will

proceed without del ay in g proceedin

gs f or preparat ion of

a suppl em

ental cl erk’s record. 3 that ap pe l l an

t’s em pl oyeewa s i

ntox i ca ted on it s prem i ses i n v i ola tion of C ode se cti on 11.6 1(b )(13), t he A LJ rec om men de d s uspe nd

i ng ap pe l l an t’s pe rm i ts f orfourte en day s unless appella nt paid $2800 in civ il penalti es. The TA BCad opte d the A

LJ ’s prop ose d f

i nd i ng s of f ac t an d c onc l us i ons of law as we ll
as the re com

mended p en al

tie s. The dist rict co ur t re ver sed t he TABC’s concl usi on regardin

g Code
sec tion 11.61( b)(1 3), but af

f i rmed as to the vi ola tion of C ode se cti on 11.6 1(b )(14). Appel la nt rais es two issues on appeal . It co ntends that the f in din g that its em

ploy ee so ld al coh ol to an i ntox i ca ted pe rs on wasnot

base d o n t he co rr ect st anda rd and was not support ed by substantial

evi dence. The TABC contends

that appell

ant fai le d to preserve these

is sues on appeal because it di d n ot rai se the m i n i ts m oti on for rehearing bef

ore t he ALJ. 2 We ha

ve he l d that, “ [i ]n

i ts m oti on f orrehearing, a complain

in g part y m ust dire ct t he re gul ator

y b ody to (1 ) the p ar

ti cul ar f i n di n g of f ac t, con cl us i on of law, ru ling, o r o t her act ion by t he ag ency t hat t he com pl ai ni ng p arty ass erts wa s error; an d (2 ) th e l eg al ba si s u pon wh i ch the cl ai m of error r ests.” See Central Pow er & Light Co./Cities of Alice v. Pu blicUtil. Comm ’n , 36 S.W .3d 547 , 569 (Te x. A pp.—A usti n 20 00, pet. deni ed); Burke
v. Cent ral Ed uc. Agen cy , 725 S.W .2d 393 , 397 (Tex. A pp.—A usti n 19 87, wri

t ref ’d n .r.e.). Asse ssed strictly agai nst the Burkesta

nd ard , ap pe l l an t’s m oti on f orre hear ing did no t pr ese rve t he4

errors as se r t ed he r e b ec au se t he mo t ion d id no t expressl y di rect t he TAB C to r ej ect a particul ar propo sed f

in din g or any ex

pression of the standard of rev ie w. A ppe l l an t did, h owe ve r, re que st i

n i ts m oti on f orre hear ing t hat t he TABC consi der appellant’s ex ce pt io ns t o t he ALJ ’s pr o po se d d ec isio n. I n t ho se ex ce pt io ns, ap pe llant ex pr es sly excepted t o t he prop osed fi

ndi ng that its em

ploy ee served a

n al coholi c bev erage to an in

to xicated per so n. A

pp el l an t re qu es ted

i n ste ad a f i n di n g th at it s e mp loy

ee unknow

ingly se r ve d a n a lco ho lic beverage t o a n into xicat ed p er so n, a nd requesteda c onc l

us i on th at suc h s erv

i cedi d n ot vi ol atese cti on 11.61( b)(1 4). We ne ed

not d ec i dewhether th

i s p res en tati on of the se com pl ai nts pre serv ed

err orf or th i s a pp ea l , howev er , b ec au se

we f i n d th at a pp el l an t’s argu men ts l ac k m eri t. B y i ts f i rs t issue, appel

la nt argues that the TABC’s order i s bas ed on an i mproper st anda rd . S ect ion 1 1. 61 list s base s for sus pend ingperm i ts f or not m ore t han 60 days if “any of t he fo llowing is true : . . . (14) the permi tt ee sold or del

iv ered an al coholi c bev erage to an in

to xicated pers on.” Id. § 11 .6 1( b). The ALJ co nclude d t hat app ellant vio late d t his st at ut e wit hou t re quir ing that ap pe l l an

t knew the cu stom er w asi ntox i ca ted . A ppe l l an t ad voc ate s i m porti ng the sta nd ard of proof app licable to t he dr am sho p liabili t y and im posing i t o n the permi

t-r evocation stat utes. See Te x. A l co. Bev. Code Ann. §§ 2.02 ( Dram Shop Act) & 11. 61(b)(14) (permit revocat ion) (West1995 & Supp. 2 002). The Dram Shop Act sta tes in part as foll ows: (b) Providi

ng, sel li ng, or servi

ng an alc o ho lic bev er ag e ma y be ma de t he b as is o f a statutory ca us e o f ac t io n u nd er t his c ha pt er an d ma y be ma d e t he b as is o f a re v oca ti on pr oce ed i n g u n der Se cti

on 6.0 1(b ) of

th i s c ode up on pr oof th at: (1) at t he t ime t he pr o visio n o cc ur r ed it was apparent to t he provider t hat t he in div idua l be i ng s old , serv

ed, o r provided wi

th an al coholi c bev erage was5 o bvio us ly into xicat ed t o t he ext ent th at h e p re se n ted a c l ea r d an ger to himself and ot her s; and (2) t he i ntox i ca ti on o f t he r ec ipie nt o f t he alc o ho lic b ev er ag e w as a p rox i mate caus e of the dam ages suf f ered. Id. § 2.02. Appel la

nt argu es th at the standard un der s ection 11.6 1 si

m i l arl y shoul d be

“w hether a
r ea so na bly

pr ude nt per so n in the positi on of the bartender would ha ve observ ed that the patro n was o bvio us ly int o xic at ed wh en he so ld t he alc o ho lic bever age t o he r. ” App ellant s ees no reason t o assess th e cul pa b i l i ty n ee de d to impose administr at ive sanctions on the sel le r of al coholi

c bev erages to an in to xi cated per so n who does not inj ure a third party dif feren tly than weassess

the cul pabi li ty ne eded to im pose civ il li abi li ty on the sel

le r of al coholi

c bev erages to an in

to xicated person who in

jures
another. We co nclude , ho weve r, t hat t he dist inctio n bet wee n t he two stan da rd s is b oth required by la w and rational
. The plain langua ge o f the st at ut es indica t es t hat different st anda rd s ap ply; the Dram Shop Act contain s the words “obvio usly into xicat ed” and “a ppa re nt t o t he provider” ( see id. § 2. 02) , bu t t he per mit-s usp ensio n st at ut e has no such re qui rem en t. See id. § 11.61. The rational ba sis for such a

dis tinction is that the g reater h arm (in jury of a thi rd party) creates exposure to gr eater l i ab i l i ty for the provide

r and requi

res m ore pro of. Under

th e s tatu tory sch em e, se rvi n g al coh ol to an in to xi cated pe rs on

wh o does n

ot harm an y one expos es the se l l er onl

y to adm i nistrati ve pen al tie s. See id . § 11. 61. But ser vingal cohol to an obvi ously in to xicated person who then harms s omeone else exposes the sel

le rnot o nl y to admi ni strat iv e penalty , but t o po tential ci vil dam ages. See id. § 2.02. We note that t he proof that triggers dram-s hop li abi li ty al so support s the adm

in is trat iv e pen al ties
. See Fay-Ray Corp. v. Texas Alcoh olic Be ver age C omm’n , 95 9 S . W. 2d 36 2, 36 6 ( T ex . Ap p. —A us t in 1998, n o pet.).6 W e c onc l ude tha t the A LJ prop erl y de cl i ne d to a ppl y the hi gher s tan da rd of se cti on 2.02 t o t he allege d vio latio n of 1 1. 61. We re so lve issue o ne i n f av or of th e d i str i ct- cou rt j udgm en t. By its sec ond is sue, appella

nt argues that the

A LJ ’s f i nd i ng of a v i ol ati on of se cti on 11.61(b)(14) was not support ed by substantial

evi dence. Our

re so lut ion o f the fi

rst issue m

oot s our con si de rati on of t his issue be cau se a ppe llant co nced es t hat “yes, [ t he customer] was i ntoxica ted and yes, [th e b arten der] s old her an alcohol i c b ev erage .” We further concl

ude that substantia

l e vi dence su ppor ts th e f i nd i ng of a v i ol ati on even under appella nt’s suggested standard. Al though the bartender testif ie d t hat he did no t not ice t hat t he customer was into xicat ed w hen he s old her alco hol, t he TABC agen ts test if ie d that t he customer was st um bling around the bar (though she was seated when she ordered her dri

nk at la st call

), had bl oods hot ey es and s lurred

speech, appea

redin to xicated, describ ed hersel f to in vestigator s as drunk, and h ad trou b l e a rti cul ati n g h er ord er to the bartender at la st call . There is substantial

evi dence to supp ort a fi

ndi ng that a reasonab ly

prude nt ba r t en de rwo uld ha ve no t ice d t ha t she wa s o bvio us ly i n tox i ca ted . W e a

l so r es ol v e iss ue two i n f av or of th e j udgm

en t. W e a f f i rm th e d i str i ct- cou rt j udgm en t.

Lee Yeakel, Justice Bef ore Chi ef J

ustice A boussie, Justices

B. A. Sm ith an d Yeakel Af fi rmed File d: March 28, 20027

Do No t Publis

h