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Osburn v. Virginia Department of Alcoholic Beverage Control

Court of Appeals of Virginia

November 15, 2016


         FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE William D. Broadhurst, Judge

          Audra M. Dickens (Dale W. Webb; Frankl Miller & Webb, LLP, on briefs), for appellant.

          Ryan Spreague Hardy, Assistant Attorney General (Mark R. Herring, Attorney General; Rhodes Ritenour, Deputy Attorney General; on brief), for appellee.

          Present: Judges Humphreys, AtLee and Senior Judge Clements Argued at Lexington, Virginia



         Nathan Osburn ("Osburn") appeals the decision of the Roanoke City Circuit Court (the "circuit court") upholding the previous decisions of a hearing officer, the Department of Human Resource Management ("DHRM"), and the Department of Employee Dispute Resolution ("EDR"), terminating Osburn from his position as special agent for the Virginia Department of Alcoholic Beverage Control ("ABC") because Osburn violated an ABC license applicant's constitutional rights during a site inspection. Specifically, Osburn claims the circuit court erred in finding that Osburn violated the Fourth Amendment and erred in holding the "newly discovered evidence" of General Order 502 was collateral, corroborative, or cumulative.

         I. BACKGROUND

         Osburn was employed with ABC as a special agent who helped investigate applications for retail alcohol licenses. In August 2013, ABC received an application from Linda Swim ("Swim"), owner of Bent Mountain Bistro (the "Bistro"). Another special agent, David Scott ("Agent Scott"), was assigned to review and investigate the application, however, Osburn assisted Agent Scott in doing so.

         Although the application indicated that Swim was the sole owner of the Bistro, ABC's research into the company found that there was likely at least one other owner, Benjamin Ward ("Ward"), whom they suspected was a convicted felon. ABC issued subpoenas which "yielded good evidence" in regard to the undisclosed ownership. The record states that "Osburn had previously interacted with both Swim and Ward during [ABC] inspections of other establishments in which they were jointly involved." Further, Agent Scott received a phone call from the Bistro's landlord during which the landlord stated that the Bistro's owner was Ward. The landlord called back about twenty minutes later to state that Ward was in fact only a cook, and not an owner, of the Bistro. The agents also had a suspicion that there could be a third owner of the Bistro.

         Agent Scott scheduled a site visit to the Bistro with Swim for August 9, 2013. Osburn accompanied Agent Scott on that visit to help investigate. According to Agent Scott, the purpose of the visit was "to conduct a site inspection as well as follow up on a suspicion that there may possibly be someone else involved with the business that had not been disclosed to [ABC] during the application investigation."

         When they arrived, Agent Scott and Osburn entered the front door of the Bistro. Osburn went straight through to the kitchen to begin the site investigation. Agent Scott went to the back of the Bistro to speak with Ms. Swim. Neither Swim nor Osburn saw each other before Osburn began his site investigation. According to ABC's Operations Manual 03 ("OM-03") regarding retail investigations, the site inspection that was scheduled to occur on the date of Osburn's search was "to ensure sufficient inventory of qualifying items." Va. Dep't of Alcoholic Beverage Control, Operations Manual 03, § III(A)(19) (2009) [OM-03].

         Osburn began his investigation by walking around the kitchen and storage areas of the business, observing "the food, the equipment, the restaurant, facilities, the preparation area, the storage, " including "entry points [and] exit points." This portion of the investigation took approximately ten minutes. Osburn then came upon the business office, which had an open door and many documents lying around as though it had not yet been set up. Osburn entered the business office, picked up multiple documents, took photographs of documents, and opened drawers and a filing cabinet during his investigation. Osburn continued looking "more closely" because he found a document indicating the owner of the Bistro to be Ward. Osburn stated that his search was "thorough" and that he "went through pretty much everything, " but that he did not remove anything from the office.

         At some point during his investigation, Osburn spoke with a man he called Dwayne Powell ("Powell") and introduced himself as an ABC agent. Osburn first stated that the conversation occurred while Powell was "at the pizza oven in the back, " but later said that Powell was "outside, out back" of the Bistro. During the conversation, Osburn asked Powell such questions as how long Powell had worked there and whether he was on the payroll. Nothing in Osburn's testimony indicated that Powell knew Osburn was conducting a thorough search of the office.

         Shortly after the site visit, Swim wrote a complaint to the Office of the Governor and to her representative in the House of Delegates alleging that both Agent Scott and Osburn violated her Fourth Amendment rights during the inspection. After learning of the complaints, ABC began an internal investigation. Only two of Swim's allegations were substantiated against Osburn: (1) "[Osburn] seized evidence in violation of Swim's constitutional rights, " and (2) "[Osburn] rummaged through Swim's business records with deliberate indifference to her rights."

         On April 3, 2014, Osburn was terminated from employment with ABC and given a Group III Written Notice, which was issued for "Failure to Follow Instructions and/or Policy" (Offense Code 13) and "Other - Violation of Constitutional Rights" (Offense Code 99). In November 2014, an internal hearing officer upheld Osburn's termination. Osburn then appealed that decision to both DHRM and EDR. EDR remanded the case to the hearing officer for consideration of mitigating factors. On the second review, the hearing officer again upheld Osburn's termination, and Osburn again appealed to both DHRM and EDR. Both departments upheld the hearing officer's determination. Osburn then timely appealed those decisions to the circuit court, which upheld Osburn's termination.

         Osburn now appeals the circuit court's decision, arguing that his search of the Bistro's business office did not require a warrant, and thus did not violate the Fourth Amendment because (i) it fell under the highly regulated industry exception to the warrant requirement, (ii) he had consent to search the premises, and (iii) the language of ABC's authorizing statute gives ABC the authority to conduct warrantless searches of both licensees and applicants. Osburn also argues that General Order 502, a policy enacted by ABC after Osburn's ...

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