1 ... T EX . R. A PP . P. 47. 4. 

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I GOT CH A, I NC . , AP P E L L ANT D/ B /A I L L US I ONS V . TEX A S A LCO H O LI C A PPELL EE B E VE R AGE CO M M I S S I ON

----- ----- -- FR O M THE 342ND DI STRI CT CO URT O F TARRA NT CO UN TY

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### M E M ORANDU M OP I NI ON 1

----- ----- -- I . I nt r oduc t i on In t w o is s u e s , a p p e l l a n tI G o t c h a , I n c . d /b /a Illu s io n s (I llu s io n s ) a p p e a ls f r om t he t r i al cou r t ’ s f i nal j udgm entaf f i r m i ng a ppe l l ee Texa s A l coh ol i c Be ver age C om m i ss i on’ s ( TA BC ) i m pos i t i on of a $13, 500 ci vi l pe nal t y f orvi ol at i ons oft he T e x a s A l c o h o l i c B e v e r a g e C o d e ( t h e “ C o d e ” ) . We a f f i r m.2 ... In o r d e rn o tt o o f f e n d t h e re a d e r , w e h a v e le f t o u tt h e e x p lic it

l ang uag e La w so n a l l ege dl y us ed. 2 I I . Bac kgr ound I l l us i ons , a t opl es s bari n Fo r tW ort h, i s t he hol derofa m i xed be ver age p e rm i t an d a m i x e d b e v e rag e l a te h o u rs p e rm i t i ss u e d b yT A B C . T h e se p e rm i ts
w er e or i gi nal l y i ssued by T A BC on D ecem ber16 , 19 83 , and hav e been
c o n ti n u a l l yre n e w e d . O n Febr uar y 12 , 20 05 , Taq ui sha Law s o n w as w or ki ng as a dancerat Il l u s i o n s u n d e r th e s ta g e n a m e “ S a s s y .” O n t h a t d a te , a t a b o u t 9 :0 0 p .m ., TA BC agent s Br i an M i er s and Ral ph M ay ent er ed t he pr em i ses i n an und er cover capaci t y and satata t abl e i n an open ar ea oft he cl ub neart he st age. W hi l e seat ed, M i er s an d M a y w er e appr oached by Law son, w ho j oi ned t hem att he t abl e and i nqu i r ed as t o w hy M i er s and M ay w er e atI l l usi ons t hat ni ght. M i er s r espond ed t hat t hey w er e “l ooki ng f or som e ki nd o f a n a fter p a r t y .” L a w s o n a n d M ie r s t h e n e n g a g e d in a c o n v e r s a t io n w h e r e in L a w s o n t o ld M i e rs t hats he w as ge t t i ng of fw or k a t2: 00 a. m , M i er s t ol d L aw so n t hathe and M ay had a hotel ro o m i n t ow n, and M i er s i nvi t ed Law son t o t hei rhot el
r oom af t ershe gotof fw or k. Law son t ol d M i er s i tw oul d costhi m $4 00 an hou rf orbot h M i er s and M ay, butt hatshe w oul d “gi ve t hem al l t he . . . t hey
c o u l d h a n d l e .” I n Law son’ s pr esence, M i er s l eaned over t o M ay and r el ayed 23

th e d e tai l s o f t h e co n v e rsa ti o n ; a l l thre e n o d d e d the ir h e a d s i n ag ree m e n t. T h e rea fter, M i e rs told L a w so n tha t he a n d M a y w e re l e a v i n g to m e e t up w i th
so m e f r i end s, but t hats om eon e w oul d be ba ckt o pi ckhe rup. L aw so n t ol d t he age nt s t hati ft heydi d notr et ur n t o pi ckhe r up, t hey “w oul d m i ss outon o ne g o o d [th i n g ].” Im m e d ia t e ly t h e r e a f t e r , M ie r s a n d M a y le f t Illu s io n s a n d c o n t a c t e d t h e ir
ar r es tt ea m . M i er s det ai l ed t he evi den c e s upport i ng a pr os t i t ut i on c har ge aga i ns tLa w so n a nd pr ovi ded a des cr i pt i on ofLa w so n’ s app ea r anc e, i ncl udi ng ski n col or , hai rst yl e, cl ot hi ng, and i denti f yi ng j ew el r y. Th e ar r est t eam ent er ed I l l u sion s, o b tai n e d a d ig i tal p h o to g rap h o f La w so n , a n d retu rne d to M i e rs to
c o n f ir m t h r o u g h p ic t u r e id e n t if ic a t io n t h a tt h e yh a d lo c a t e d t h e rig h tin d iv id u a l. T h e a rre s t te a m th e n a rre s te d L a w s o n fo r s o l i c i ta ti o n . O n Decem ber15, 2005 , t he TA BC i ss ued I l l us i ons a not i ce ofhe ar i ng cha r gi ng, Th e pl ace orm anneri n w hi ch [ I l l usi ons] condu ct s i t s busi ness w ar r ant s t he cancel l at i on or suspensi on of t he per m i tand/ orl i cense bas ed on t he gen er al w el f ar e, he al th , p e ac e, m or al s and s af et y of t he peo pl e a nd on t he pub l i c s ens e o fde ce ncyi n vi ol at i on of § § 1 1 .6 1 (b )(7 ) a n d /o r 6 1 .7 1 (a )(1 7 ) [o f th e C o d e ]. T h e n o ti c e all e g e d tha t O n o r ab o u t Fe b rua ry 1 2 , 2 0 0 5 , [I l l u sion s] an d /or i ts a g e n t, se rva n t, em pl oye e, Taqui sh a L aw so n, an d/ ors om e o t herpe r so n, on t he l i censed pr em i ses, of f er ed t o engag e or agr eed t o engag e i n sexual4

c o n d u c t f o r a f e e i n v i o l a t i o n o f § 4 3 . 0 2 ( a ) ( 1 ) o f t h e T e x as Penal C ode an d/ or § 104 . 01( 7) oft he Texa s A l coh ol i c Be ver age Code and / or§ 35. 31( a) ( b) ( 1) ( c) ( 12) oft he Texa s A l coh ol i c Be ver age C o m m i s s i o n R u l e s . O n M ay 8, 2006 , an ad m i ni st r at i ve l aw j ud g e a t th e St at e Of f i ce of A d m i n i s tra ti v e H e a ri n g s (th e “ A L J ” ) h e l d a h e a ri n g a t w h i c h M i e rs a n d Il l u s i o n s ’s
ow ner , W al tD unc an, t es t i f i ed. La w so n w as not ci t ed and di d notap pea ratt he h e a ri n g . D o c u m e n taryev i d e n c e o f I l l u sion s’s C o d e v i o l a ti o n h i sto ry a n d i ts i n d e p e n d e n t i n v e s ti g a ti o n i n to th e i n c i d e n t w a s i n tro d u c e d . A ppr oxi m at el y t w o m ont hs l at er , on J ul y 1 0 , 2 0 0 6, t he A LJ i ss ued a pr opos al f orde ci si on, con cl udi ng i n r el eva nt partt hat“ [ I l l us i ons ’ s] em pl oye e, on t he l i censed pr em i ses, of f er ed and agr eed t o engag e i n sexual condu ctf ora f ee, i n v i o l a t i o n o f [ s e c t i o n s 1 1 . 6 1 ( b ) ( 7 ) a n d 1 0 4 . 0 1 ( 7 ) o f t h e Co d e ] . ” T h e A LJ
r ec om m end ed a s i xt y da y s us pen si on ofI l l us i ons ’ s per m i t s or , i n l i e u of
s us pe ns i on , a $13, 500 c i vi l p e na l t y. Su bs e qu e nt l y, o n O c t ob e r30, 2006 , TA B C i s s u ed a f i nal or derad opt i ng t he A LJ’ s Jul y 10, 2006 pr opos al an d
or der ed Il l u s i ons ’ s per m i t s su sp end ed f ora per i od ofs i xt y da ys be gi nni ng on Jan uar y 3, 2007 , unl es s I l l us i ons pa i d a $13, 500 ci vi l pe nal t y t o TA BC on o r b e fo re 1 2 :0 1 a .m . o n D e c e m b e r 2 7 , 2 0 0 6 . Ther ea f t er , I l l us i ons f i l ed al l ne ce ss ar y no t i ce s and r equ es t s f or re c o n s i d e ra ti o n a n d a p e ti ti o n fo r j u d i c i a l re v i e w . [A E x ] T h e tri a l c o u rt3 ... S ee T EX . A LCO . B EV . C ODE A NN . § 1 1 .6 7 (b )(V e rn o n 2 0 0 7 ); T EX . G OV ’ T

C ODE A NN § 2 0 0 1 . 1 7 5 ( V e r n o n 2 0 0 0 ); se e a l so Tex. A lcoh ol

i c Be ver age C om m ’ n v. W i sh now , 7 0 4 S .W .2 d 4 2 5 , 4 2 7 (T e x . A p p .— H o u s to n [1 4 D i s t.] th 1 9 8 5 , n o w ri t).

4 ... S e eT

ex . He a lth F

a ci l iti e sC o m m ’n v. Ch a rter Me d.-D a l l a s, I n c ., 665 S. W . 2d 446, 4 5 2 (T e x . 1984) ( ci t i ng G ers t v. Ni x o n, 411 S . W . 2d 350, 354 (T e x . 1 9 6 6 )); C en t. Po w er & L i gh t v. Pub l

i cU ti l. Co m m ’n , 36 S. W . 3d 547, 561 (T e x . A p p .— A u s ti n 2 0 0 0 , p e t. d e n i e d ).

5 ... Tex . S ta teBd. o f M e d. E x a m i n ersv. Bi

ren b a um , 891 S . W . 2d 333, 3 3 7 (T e x . C i v . A p p .— A u s ti n 1 9 9 5 , w ri t d e n i e d ).

6 ... L e wi s v. Me trop o l

ita n S . & L . A s s ’n, 5 5 0 S .W .2 d 1 1 , 1 3 (T e x . 1 9 7 7 ).

5 c on du c t e d a h e a r i ng o n I l l u sion s’s p e t i t i on f orr e vi e w a nd o n Apr i l 5, 2007 , si gned an or dera ff irm in g TA BC ’ s O ct ober30 , 20 06 f i nal or der . Thi s appeal fo l l o w e d . I I I . St andar d ofRev i ew W e r eview an adm i ni st r at i ve r ul i ng of t he T A BC undert he subst ant i al evi dence r ul e. Gener al l y s pea ki ng, a cou r tr evi ew i ng a n a dm i ni st r at i ve ac t i on 3 und ert he subst ant i al evi dence r ul e i s onl y concer ned w i t h t he r easonabl eness of t he adm i ni st r at i ve or der , not w i t h i t s cor r ect ness. An adm i ni st r at i ve dec i si on 4 is re aso na bl y su pp ort ed by su bs t an t i al ev i de nc e i f t he ev i de nc e as a w ho l e is
su ch t hatr ea so nab l e m i nds co ul d ha ve r ea che d th e s am e c onc l us i on t hatt he age ncyr ea che d. The r ul e i s des i gne d t o di sc our age co urt s f r om ad m i ni st er i ng 5
r egul at or y st at ut es enact ed by t he l egi sl at ur e. 67 ... S ta teBa n ki ngBd. v. A l

l i e d Ba n k Ma rb leF

a l l s, 748 S . W . 2d 447, 448 (T e x . 1 9 8 8 ).

8 ... S ee T EX . G OV ’ T C ODE A NN . § 2 0 0 1 .1 7 4 (V e rn o n 2 0 0 0 ); se ealso A u to C o n vo yC o . v. R.R. Co m m ’n o f T ex ., 5 0 7 S .W .2 d 7 1 8 , 7 2 2 (T e x . 1 9 7 4 ). 9 ... A u to C o n vo yC o ., 507 S . W . 2d a t722.
10 ... S ub urb a n U ti

l. Co rp . v. Pub . U ti

l. Co m m ’n o f T

ex ., 652 S . W . 2d 358, 3 6 4 (T e x . 1 9 8 3 ).

11 ... Imp eri

a l A m . R e s . F

un d v. R.R. Co m m ’n o f T ex ., 557 S . W . 2d 280, 2 8 6 (T e x . 1 9 7 7 ). 6 A co urtm ay noti nva de t he f ac tf i ndi ng a ut hor i t y ofan ad m i ni st r at i ve age ncy . N or m ay a cou r t su bs t i t ut e i t s j udgm ent f or t he age ncy ’ s on the

7

w e i g h t oft he evi den ce on q ues t i ons co m m i t t ed t o a gen cy di sc r et i on. A 8
r e v ie w in g c o u r t m a y o n lyd e t e r m in e w h e t h e rt h e c o n t e s t e d o r d e ris re a s o n a b ly suppo r t ed by subst ant i al evi dence. 9 A n age n c y ’ s a c t i o n wi l l b e s u s t a i n e d i f t h e e v i d e n c e i s s u c h t hat
r ea so na b l e m i nds co ul d ha ve r ea che d t he con cl us i on t he age ncym us tha ve
r ea che d i n or dert o j us t i f y i t s ac t i on. 10 A n a gen cy’ s f i ndi ngs an d c onc l us i ons ar e p r es um ed t o be s upport ed by
su bs t ant i al ev i den ce , and t he bur den i s on t he oppon ent t o pr ove ot her w i se by sh o w i n g tha t no su b sta n ti a l ev id e n c e e x is ted at th e ti m e o f t h e h e a ri n g to
s u p p o rt th e o rd e r. Fi nal l y, w e m us tupho l d t he age ncy ’ s dec i si on e ven i ft he 11 evi den ce ac t ual l y pr epo nde r at es ag ai ns tt he age ncy ’ s f i ndi ng s o l ong a s eno ugh12 ... G ers t v. G o ldsb ury, 4 3 4 S .W .2 d 6 6 5 , 6 6 7 (T e x . 1 9 6 8 ); s e ea l s o S w. Pub . S erv. v. Pub . U ti l. Co m m ’n o f T

ex ., 962 S. W . 2d 207, 215 ( Tex. A p p .— A u s ti n 1 9 9 8 , p e t. d e n i e d ). 7 evi den ce s ugge st s t he age ncy ’ s det er m i nat i on w as w i t hi n t he bound s of
r easonabl eness. 12 I V . Sub st ant i alEvi dence I n i t s f i r sti ss ue, I l l us i ons as se r t s t hatt he t r i al co urter r ed i n s us t ai ni ng t he A LJ’ s f i ndi ng t hatI l l us i ons vi ol at ed se ct i ons 11. 61( b) ( 7) an d 104. 01( 7) oft he C o d e . S p e c i fi c a l l y , I l l u sion s c o n ten d s th a t t h e re w a s n o su b sta n ti a l ev i d e n c e to
su pport a f i ndi ng t hatLa w so n w as an em pl oye e o fI l l us i ons , t hatLa w so n so l i c i ted M i e rs a n d M a y , o r t h a t t h e p l a c e o r m a n n e r i n w h i c h I l l u sion s c o n d u c ts i ts b u s i n e s s w a rra n te d s u s p e n s i o n o f i ts p e rm i ts . I n or dert o pr evai l on i t s com pl ai nt , TA BC had t o est abl i sh by subst ant i al evi dence t hatI l l usi ons vi ol at ed sect i ons 11 . 61 ( b) ( 7) and 10 4. 01 ( 7) oft he C ode. Th ose sect i ons pr ovi de as f ol l ow s: § 11. 61. C a n c e lla t io n o rS u s p e n s io n o fP e r m it

. . . . ( b) The com m i ss i on orad m i ni st r at orm ay su sp end f ornot m o r e t h a n 6 0 d a y s o rc a n c e l a n o r ig in a l o rre n e w a l p e r m itif i ti s f ound, af t ernot i ce and hea r i ng, t hat any of t he f ol l ow i ng i s t r ue:

. . . .13 ... T EX . A LCO . B EV . C ODE A NN . § 1 1 .6 1 (b )(7 ) (V e rn o n 2 0 0 7 ).
14 ... Id. a t § 1 0 4 .0 1 (7 ) (V e rn o n 2 0 0 7 ). 8 ( 7) t he pl ace or m anner i n w hi ch t he p e rm it t ee con duc t s hi s bus i nes s w ar r ant s t he ca nce l l at i on or suspensi on of t he per m i t based on t he gener al w el f ar e, he al t h, pea ce , m or al s, an d s af et y oft he peo pl e a nd on t he publ i c s ens e o fde ce ncy . 13 § 1 04 . 01 . Lew d, I m m or al , I ndecen tC ond uct N o p e rso n au th o ri ze d to s e l l b e e r at r e tai l , n o r hi s a g e n t, se r van t , orem pl oye e, m ay eng age i n or per m i t con duc ton t he pr em i se s of t he r et ai l er w hi ch i s l ew d, i m m or al , orof f ens i ve t o pub l i c d ec enc y, i ncl udi ng, butnotl i m i ted t o, an y oft he f ol l ow i ng act s:

. . . ( 7) per m i t t i ng sol i ci t at i ons ofper sons f ori m m or al orsexual pur poses. 14 A . “Em pl oyee” I l l us i ons con t end s t hatt he su bs t ant i al ev i den ce doe s nots upporta f i ndi ng t hatLaw son w as an em pl oyee of I l l usi ons. I l l usi ons assert s t hatLaw son w as a n i n d e p e n d e n t c o n tra c to r. Th e pr i m ar y di st i nct i on betw een an i ndep enden tco n tr a c to rand an
em pl oyee i s t hatt he i ndep enden tcont r act orm er el y agr ees t o acc o m p li sh
r esul t s, w her eas an em pl oyee yi el ds cont r ol overhi s orhert i m e a n d physi cal15 ... 41 A m . Jur . 2d I NDE P EN DE NT C ONTRACT ORS§ § 1

– 2 3 (2 0 0 8 ). 16 ... S ee T EX . G OV ’ T C ODE A NN . § 3 1 2 .0 0 2 (V e rn o n 2 0 0 5 ).
17 ... S e eT

h o mp s o n v. T

ra velersIn dem . Co ., 789 S. W . 2d 277, 279 ( Tex. 199 0) ; Fa rre l

l v. Gre a ter Ho us to n T ra n sp . Co ., 908 S. W . 2d 1, 3 ( Tex. A p p .— H o u s to n [1 D i s t . ] 1 9 9 5 , w ri t d e n i e d ); T ra velersIn s . Co . v. Ra y, 262 st S .W .2 d 8 0 1 , 8 0 3 (T e x . C i v . A p p .— E a s tl a n d 1 9 5 3 , w ri t re f’d ).

18 ... Ro s s v. Tex . O n eP ’sh i p, 79 6 S . W . 2d 20 6, 21 0 ( Tex . A pp. — D al l as 1 9 9 0 , n o w ri t); Sh era rd v. Sm ith, 778 S. W . 2d 546, 548 ( Tex. A pp. — C or pus C h ri s ti 1 9 8 9 , w ri t d e n i e d ); W asson v. Str

acener, 786 S . W . 2d 414, 420 ( Tex. A p p .— T e x a rk a n a 1 9 9 0 , w ri t d e n i e d ). 9 a c ti v i ti e s to th e e m p l o y e r. The t er m “em pl oyee” i s not def i ned i n t he C ode. 15 Th er ef or e, w e appl y i t s or di nar y m eani ng i n ouranal ysi s. 16 Em pl oyees ar e or di nar i l y def i ned as a per son i n t he ser vi ce o fanot her unde r a c o n t r a c t o f h i r e , e x p r e s s o r i mp l i e d , o r a l o r wr i t t e n , wh e r e by t he
e m p lo y e rh a s t h e r ig h t t o d ir e c t t h e m e a n s o rd e t a ils o ft h e w o r ka n d n o tm e r e ly t he r es ul t t o b e a c c o m p l i sh ed. W hi l e t he em pl oyer ’ s “cont r ol ” i s t he m ost 17 i m port antf ea t ur e o fan em pl oym entr el at i ons hi p, Texa s cou rts h a ve f ound
se ver al r el at ed f ac to r s t o be he l pf ul i n di st i ngui sh i ng e m pl oye es f r om i n d e p e n d e n t c o n tra c to rs , i n c l u d i n g (1 ) th e i n d e p e n d e n t n a tu re o f th e w o rk e r’s bus i nes s; ( 2) t he w or ke r ’ s ob l i g a ti on t o f ur ni sh ne ce ss ar y t ool s, s uppl i es an d
m at er i al ; ( 3) t he hi r i ng part y’ s r i ght t o con t r ol t he pr ogr es s oft he w or k; ( 4) t he l e n g th i n ti m e o f t h e em p l o y m e n t; an d ( 5 ) th e m e th o d o f pa y m e n t. 1810

A tt he hea r i ng be f or e t he A LJ, th e p a rt i es i nt r oduc ed t he f ol l ow i ng evi den ce : ( 1) da nce r s atI l l us i ons m us tf i l l outpa per w or k a nd pr ovi de I l l us i ons
w i th , a m o n g o th e r th i n g s , th e i r n a m e , s ta g e n a m e , a d d re s s , te l e p h o n e n u m b e r, and soci al secur i t y num ber ; ( 2) dancer s ar e gi ven a “r ul e book” t hatt hey m ust
r ea d a nd s i gn; ( 3) da nce r s ar e br i ef ed by I l l us i ons ’ s m ana gem ent as t o t he cl ub
r u le s t h a tt h e ya r e e x p e c t e d t o f o llo w ; ( 4 ) I llu s io n s d o e s n o t p r o v id e w e e k ly
w o rks c h e d u l e s — th e d a n c e rs j u s t “ s h o w u p ” ; (5 ) so m e o f th e d a n c e rs a re tr a n sien t an d n o t aro u n d v e ry l o n g ; (6 ) I l l u sion s m a y “s w a p ” d a n c e rs a m o n g i ts cl ubs on a ny g i ven ni ghtt o e ns ur e t hatt her e a r e e nough dan ce r s atea ch cl ub; ( 7) da nce r s si gn i n on a door sh ee t ; ( 8) dan ce r s ar e r equ i r ed t o pay a $10 st age f ee ea ch ni ghtt heype r f or m ; ( 9) da nce r s r equ es tm us i c fro m th e di sc j ock ey; ( 10) I l l us i ons di r ec t s how t he dan ce r s r ot at e ar ound t he st age a n d h o w m any songs t he dance rs p e r f or m ateach pol e on t he st age; ( 11 ) I l l usi ons’ s “house
m om ” pr ovi des assi st ance w i t h hai rand m a keup, snacks, and cl ot hi ng as nee ded , an d s he gua r ds t he dan ce r s’ m one y w hen t heyar e n otar ound; ( 12) t he
o n lyc o m p e n s a t io n d a n c e r s r e c e iv e f r o m Illu s io n s is a c o m m is s io n f o rd r in k s s o ld att he cl ub, an d t hei rco m pen sa t i on i s pr i m ar i l y de r i ved f r om ti p s t heyr ec ei ve f r om cust om er s; and ( 13 ) I l l usi ons does not f i l e t ax st at em ent s on t he dancer s. Revi ew i ng t hi s evi den ce i n l i ght of t he f ac t or s l i st ed abo ve, w e c onc l ude t hatt her e i s su bs t ant i al ev i den ce t o s upport t he A LJ’ s con cl us i on t hatI l l us i ons19 ... S e eVel a v. S ta te, 776 S. W . 2d 721 , 724 –25 ( Tex. A p p .— C or pus C hr i st i 19 89 , no pet . ) ( hol di ng dancer w as em pl oyee w hen dancer w o r ked n i g h ts , e n te re d c l u b th ro u g h d re s s i n g ro o m , a n d d a n c e d o n s ta g e s e v e ra l ti m e s ); Bru c ev. S ta te, 7 4 3 S .W . 2 d 3 1 4 , 3 1 5

– 1 6 (T e x . A p p .— H o u s to n [1 4 D i s t.] th 198 7, no p et . ) ( hol di ng da nce rem pl oye e w hen dan ce r f i l l ed out app l i ca t i on a nd h a d to g e t pe rm i ss i o n b e fo re p e rf o rm i n g , c lu b ’ s d i sc j o c k e yca l l e d d a n c e r t o st age t o pe r f or m , cl ub pr ovi ded dr es si ng r oom cl os ed of ff r om cl ub pa t r ons , an d d a n c e r re c e i v e d a c o m m i s s i o n fro m d ri n k s s o l d a t c l u b ); b u t c f . R eich v. Circle C . In v . , In c ., 9 9 8 F .2 d 3 2 4 , 3 2 7 (5 C ir . 1 9 9 3 )( f o c u s in g o n t h e “ e c o n o m ic th r ea l i t y” an d c ons i der i ng t he deg r ee of con t r ol exe r ci se d byt he cl ub, t he ext ent oft he r el at i ve i nve st m ent s, t h e d e gr ee t o w hi ch t he dan ce r ’ s opport uni t y f or p r o f ito rlo s s w a s d e t e r m in e d b yt h e c lu b , t h e s k ill a n d in it ia t iv e re q u ir e d in p e rfo rm i n g th e j o b , a n d th e p e rm a n e n c yo f th e re l a ti o n s h i p ).

20 ... S wi l le yv. Hugh e s, 4 8 8 S .W .2 d 6 4 , 6 7 (T e x . 1 9 7 2 ); see al so Great A m . R e s erveIn s . Co . v. Sa n A n to n i o Plum b i

ngS upp lyC o ., 391 S . W . 2d 41, 47 (T e x . 1 9 6 5 ); C o ch ra n v. Wo o l Gro w ersC en t. S to rag eC o ., 140 T e x. 184, 191, 1 6 6 S .W .2 d 9 0 4 , 9 0 8 (T e x . 1 9 4 2 ). 11 exer ci sed suf f i ci entcont r o l o v e rLaw son’ s danci ng act i vi t i es t o m ake heran em pl oye e o fI l l us i ons on t he ni ghti n que st i on. 19 B. I nt er es t ed W i t nes s Tes t i m ony I l l us i ons fu rth erco nt end s t hatt he A LJ’ s r ul i ng i s nots upport ed by
su bs t ant i al ev i den ce be ca us e t he onl y e vi den ce t hatLa w so n s ol i ci t ed M i er s and M ay i s t est i m ony fr om an i nt er est ed w i t ness. I n or derf ort he t est i m ony o fan i n te re s te d w i tn e s s to e s ta b l i s h a fa c t, a s a m a tte r o f l a w , i t m u s t b e “ c l e a r, di r ec tan d pos i t i ve, ” w i t h “ no c i r cum st anc es i n e vi den ce t end i ng t o di sc r edi tor i m p e a c h s u c h te s ti m o n y .” 2021 ... S . Un i o n G a sC o . v. R.R. Co m m ’n o f T ex ., 692 S. W . 2d 137, 141– 42 (T e x . A p p .— A u s ti n 1 9 8 5 , w ri t re f’d n .r.e ).

22 ... F o rd Mo to r Co ., v. T

ex . D ep ’t o f T

ra n sp ., 936 S . W . 2d 427, 429– 30 (T e x . A p p .— A u s ti n 1 9 9 6 , n o w ri t). 12 M ei r s w as t he onl y w i t nes s t o t es t i f y c onc er ni ng t he eve nt s f or m i ng t he b a s is o fT A B C ’s c o m p la in t . H e t e s t if ie d t h a tL a w s o n v o lu n t a r ilya p p r o a c h e d h im and M ay, t al ked di r ect l y t o hi m , agr eed t o go t o a hotel r oom w i t h hi m and M ay
w hen s he gotof fw or k a t2: 00 a. m . , an d t ol d hi m i tw oul d c os t$400 an hour fo r b o th h i m a n d M a y , th a t s h e w o u l d “ g i v e th e m a l l th e . . . th e yc o u l d h a n d l e ,” and , t hati ft heydi d notco m e b ac k t o ge the r , t hey“ w oul d m i ss outon o ne g o o d [t h in g ]. ” M e ir s f u r t h e rt e s t if ie d t h a th e re la t e d t h is in f o r m a t io n t o M a yin L a w so n ’s p res e n c e an d tha t t h e thre e o f th e m n o d d e d th e i r h e a d s i n ag ree m e n t. I n a co nt es t ed ca se he ar i ng, t he adm i ni st r at i ve l aw j udge , as t he f i nde rof f act , i s t he sol e j udg e oft he w i t ness’ s cr edi bi l i t y and i s f r ee t o acceptorr ej ect t he t es t i m ony ofan y w i t nes s orev en ac ce pt“ partoft he te s ti m o n y ofone
w i tn e s s a n d d i s re g a rd th e re m a i n d e r.” A rev i e w i n g c o u rt i s n o t pe rm i tted to 21
su bs t i t ut e i t s j udgm entf ort he adm i ni st r at i ve l aw j udge ’ s rega r di ng t he
cr edi bi l i t y of w i t nes se s and m us t r es ol ve evi den t i ar y am bi gui t i es i n f avo roft he adm i ni st r at i ve or derw i t h a f i ndi ng ofs u b s ta nt i al ev i den ce t o s upportt he adm i ni st r at i ve l aw j udge ’ s dec i si on. 2223 ... S e eGre a t A m . Re s erve, 3 9 1 S .W .2 d a t 4 7 ; C o ch ra n, 16 6 S . W . 2d at

908; s e ea l

s o S wi l le y, 488 S . W . 2d a t67.
24 ... I l l us i ons as se r t s w i t hout ar gum ent or aut hor i t y t hat sw or n t es t i m ony o f a p a tte rn m u s t b e e s ta b l i s h e d to s u p p o r t a p l a c e o r m a n n e r v i o l a ti o n . W e h a v e fou n d n o a u th o ri ty— sta tu to ry, c a se l a w , o r oth e rw i se — req u i ri n g tha t a p a tte rn b e e s ta b l i s h e d t o s u p p o rt a p l a c e o r m a n n e r v i o l a ti o n . Buts eeTex. A lc o h o l i c B e verag e C o m m ’n v. I G o tc h a In c ., 2 0 0 6 W L2 0 9 5 4 4 9 , a t * 2 , 4 ( Tex . A pp. — A m ar i l l o Jul y 28 , 20 06 , pet . deni ed) ( m em o op. ) ( f i ndi ng subst ant i al evi den ce t o s upportA LJ’ s fi n di ngs an d c onc l us i ons ofa “p at t er n of i n a p p ro p ri a te c o n d u c t” ). 13 U pon condu ct i ng a t hor o u g h re v i ew oft he r ecor d, w e f i nd no evi dence t endi ng to d is cr edi tM i er s’ s t est i m ony co ncer ni ng t he events t hatt ook pl ace b e tw ee n M i er s and M ay, an d L aw so n i ns i de I l l us i ons on t he ni ghtofFe br uary 12 , 20 05 . M i er s’ s t est i m ony i s cl ear , di r ect , and posi t i ve. A ccor di ngl y, t he A LJ coul d pr oper l y consi der M i er s’ s t est i m ony i n f i ndi ng t hat Law son had sol i ci t ed M i er s and M ay f orsexual pur poses. 23 C . Pl ac e o rM ann erV i ol at i ons Illu s io n s a ls o c o n t e n d s t h a tt h e o n e in c id e n to n w h ic h T A B C ’s c la im is based i s i nsuf f i ci e n t to s u p p or ta f i ndi ng t hatt he pl ace orm anneri n w hi ch I l l us i ons ope r at es i t s bus i nes s j eop ar di z es t he peo pl e’ s gen er al w el f ar e, he al t h, pea ce , m or al s, ors ens e o fpubl i c d ec enc y. 24 W h e th e r a p e rm i tte e c o n d u c ts i ts b u s i n e s s s o a s to j e o p a rd i z e th e p e o p l e ’s gen er al w el f ar e, he al t h, pe ac e, m or al s ors e n s e o f p ubl i c d ec enc y c ann otbe25 ... F o ur S ta rs F

o o d Ma rt, In c . v. Tex . A lc o h o l i cBe verag eC o m m ’n, 923 S. W . 2d 266, 272 ( Tex. A pp. — FortW ort h 1996, no w r i t); Ex p arte Vel as co, 2 2 5 S .W .2 d 9 2 1 , 9 2 3 (T e x . C i v . A p p .— E a s tl a n d 1 9 4 9 , n o w ri t).

26 ... F o ur S ta rs, 9 2 3 S .W .2 d a t 2 7 2 ; Vel a s c o, 2 2 5 S .W .2 d a t 9 2 3 . 27 ... F o ur S ta rs, 923 S . W . 2d a t272.
28 ... S ee supra Pa r tI V. B. 29 ... O n e o f t h e v i o l a ti o n s c o n c e rne d a b rea c h o f t h e p e a c e co n tr a ry to C ode s e c ti ons 28. 11 and 11. 61( b) ( 2) . The t r i al co urtr eve r se d t hi s vi ol at i on because i tw as notsuppor t ed by subst ant i al evi dence. The charge i n t hat m at t erdi d notch ar ge t he cl ub w i t h a vi ol at i on, butonl y t he dan ce r s i nvol ved . The r ec or d doe s not r eve al t he nat ur e o ft he r em ai ni ng t hr ee vi ol at i ons . Att he t i m e oft he hea r i ng, I l l us i ons ha d a cc ept ed and pa i d t he ci vi l pe nal t y on one , t he t r i al cour thad r em anded one t o T A BC f or f ur t her consi der at i on, and one w as o n a p p e a l . 14 det er m i ned by a setf or m ul a. T h e a g e n c y h a s g r e a t d is c r e t io n in m a k in g t h is 25 det er m i nat i on, and w e w i l l notdi st ur b i tunl ess i ti s a p p a re n t th a tt he agency
ac t ed ar bi t r ar i l y a nd un r ea so nab l y. W e w ill u p h o ld t h is c o n c lu s io n o fla w ifit 26 i s suppor t ed by subst ant i al evi dence. 27 The s ubs t ant i al evi den ce sh ow s t hat La w so n di d so l i ci tM i er s and M ay f or se xua l pur pos es i n vi ol at i on ofs ec t i ons 11. 61( b) ( 7) an d 104. 01( 7) oft he C ode. I n addi t i on, TA BC i nt r odu ced I l l usi ons’ s per m i tvi ol at i on hi st or y t hat

28 de mo n s t r a t e d t h a tI l l u s i o n s h a d b e e n c i t e d f o u rp r e v i o u s t i me s f o rCode vi ol at i ons. 2930 ... S ee T EX . A LCO . B EV . C ODE § 11 . 64 ( b) ( V er non 20 07 ) ( pr ovi di ng t hat

u n d e r ce rt a i n sta tu to ry c i rcu m sta n c e s s e t f o rt h the rei n , th e re is d i sc reti o n to “r el ax any pr ovi si on of t he cod e r el at i ng t o t he su sp ens i on orca nce l l at i on oft he per m i torl i cense” and asses s a j ustsanct i on, or r ei nst at e t he per m i torl i cense dur i ng t he su sp ens i on per i od upon pay m ent of a f ee of “n ot l es s t han $75 nor m o re th a n $ 5 0 0 ” ). 15 A p p l y i n g th e re q u i s i te d e fe re n ti a l s ta n d a rd , w e c a n n o t s a yth a t th e A L J ’s concl usi on t hatt he pl ace orm anneri n w hi ch I l l usi ons cond uct ed i t s busi n e ss
w as co nt r ar y t o t he peo pl e’ s gen er al w el f ar e, hea l t h, pe ac e, m or al s, s af et y a nd
s e n s e o f p u b l i c d e c e n c yw a s u n re a s o n a b l e . H a v i n g c o n c l u d e d th a t th e re i s s u b s ta n ti a l e v i d e n c e to s u p p o rt th e A L J ’s f i ndi ng t hatI l l usi ons vi ol at ed sect i ons 11 . 61 ( b) ( 7) and 10 4. 01 ( 7) oft he C ode,
w e o v e rru l e Il l u s i o n s ’s fi rs t i s s u e . V . Sec t i on 11. 64( b) I l l us i ons ne xtas se r t s t hatby i m pos i ng a ci vi l pen al t y pur su antt o s ec t i on 11. 6 4 , t h e A L J s h o u l d h a v e c o n s i d e r e d mi t i g a t i n g f a c t o r s a n d a p p l i e d s e c t i on 11. 64( b) oft he C ode t o “ r el ax” t he pen al t y a ss es se d. 30 I n de t er m i ni ng t he am ount of a pen al t y as se ss ed i n l i eu ofs us pen si on or ca nce l l at i on ofa per m i t , t he age ncym us tco ns i dert he t ype ofpe r m i the l d, t he t ype ofvi ol at i on, an y a ggr ava t i ng oram el i or at i ng c i r cum st anc es co nce r ni ng t he vi ol at i on, i ncl udi ng t hos e enu m er at ed by st at ut e, and t he per m i t t ee ’ s pr evi ous31 ... S e ei d. § 1 1 .6 4 1 (a ), (c) (V e rn o n 2 0 0 7 ). 32 ... Id. § 1 1 .6 4 1 (b ). 33 ... T EX . A LCO . B EV . C ODE A NN . § 1 1 .6 4 (a ). 34 ... F a y-Ra y C o rp . v. Tex . A lc o h o l i cBe verag eC o m m ’n, 959 S. W . 2d 362, 3 6 9 (T e x . A p p .— A u s ti n 1 9 9 8 , n o p e t.).

35 ... Id. 16 vi ol at i ons. The pen al t y canno tbe based on t he vol um e ofal coho l i c bever ages

31
so l d, t he bus i nes s r ec ei pt s , ta x e s pa i d, ort he f i nan ci al co ndi t i on oft he per m i t t ee. The pen al t y ca nnot be l es s t han $15 0 or m or e t han $25, 000 f or

32
ea ch dayt he per m i tw as t o ha ve bee n s us pen ded . A n agency has br oad 33 di scr et i on i n det er m i ni ng w hi ch sanct io n bestser ves t he st at ut or y pol i ci es c o m m i tted to th e ag e n c y ’s o v e rsi g h t. An agen cy’ s dec i si on i n de t er m i ni ng t he 34
a p p r o p r ia t e p e n a lt yw ill n o tb e re v e r s e d u n le s s a n a b u s e o fd is c r e t io n is sh ow n. 35 Sect i on 11. 64( b) pr ovi des t hatt he age ncy m ay r el ax anypr ovi si on oft he C ode r el at i ng t o suspensi on of t he per m i ti fan em pl oyee of t he per m i t t ee vi ol at ed t he C ode w i t houtt he kno w l edg e o f t he per m i t t ee , t he per m i t t ee di d not36 ... T EX . A LCO . B EV . C ODE § 1 1 .6 4 (b )-(c ). 37 ... A l len -Burch, I

n c . v. T ex . A lc o h o l

i cBe verag eC o m m ’n, 104 S . W .3 d 345 , 352 ( Tex. A pp. — D al l as 200 3 , n o pet . ) ( r ec ogni z i ng pr ovi si on d i s c re ti o n a ry ); Tex . A lc o h o l i cBe verag e C o m m ’n v. T op o f th eS tri

p, I n c ., 993 S . W . 2d 24 2, 25 2 ( Tex . A pp. — A ust i n 19 98 , pet . deni ed) ( “The o per at i ve phr ase i s m ayre l a xth e p ro v i s i o n s o f th e c o d e .” )(e m p h a s i s i n o ri g i n a l ). 17 know i ngl y vi ol at e t he C ode, ort he v i ol at i on cou l d not r easonabl y have been pr eve nt ed. H ow eve r , t hi s pr ovi si on i s di sc r et i ona r y.

36 37 The pe nal t y i m pos ed by t he A LJ w as w i t hi n t he st at ut or y gu i del i nes . The A LJ di d not abu se he rdi sc r et i on i n r ef us i ng t o r el ax t he pen al t y un ders ec t i on 1 1 .6 4 (b ) o f th e C o d e . W e o v e rru l e Il l u s i o n s ’s s e c o n d i s s u e . V I . Concl us i on H avi ng ov er r ul ed I l l usi ons’s tw o i ssues on appeal , w e af f i r m t he t r i al
c o u rt’s j u d g m e n t a ffir m i n g th e T A B C ’s O c to b e r 3 0 , 2 0 0 6 fi n a l o rd e r.
P E R CU R I AM PA N EL A : CA YC E, C. J. ; H O LM A N an d W A LKER, JJ. DEL I VERE D: J ul y 31, 2008