THE COURT OF APPEALS OF VIRGINIA
W. LEMONS CHIEF JUSTICE
appeal from a state employee grievance proceeding, we
consider whether a hearing officer's decision upholding
the termination of a special agent with the Virginia
Department of Alcoholic Beverage Control ("ABC")
was contrary to law.
Facts and Proceedings
K. Swim ("Swim") submitted an application to ABC
requesting a retail alcohol license for a restaurant known as
the Bent Mountain Bistro ("Bistro"). ABC special
agent David C. Scott ("Scott") was assigned to
review and investigate the application, and special agent
Nathan L. Osburn ("Osburn") assisted Scott.
review of the application, Scott and Osburn developed
questions regarding ownership of the Bistro. Although the
application stated that Swim was the sole owner, Scott and
Osburn were concerned that a man named Benjamin Ward
("Ward") was an undisclosed co-owner. This concern
merited further investigation because, if true, Ward's
undisclosed ownership was a potential ground for ABC to deny
the pending application.[*]
scheduled a meeting with Swim and a site visit of the Bistro
for August 9, 2013. At that time, ABC's Operations Manual
03 ("operations manual") instructed ABC agents to
"conduct a site visit to ensure sufficient inventory of
qualifying items" before issuing a license. Va.
Dep't of Alcoholic Beverage Control, Operations Manual
03, § III(A)(19)(2009).
they arrived for the scheduled site visit, Scott and Osburn
entered the Bistro through the front door. Scott then
remained in the dining area and spoke with Swim while Osburn
proceeded to the kitchen. There, Osburn conducted an
inspection to ensure that the Bistro was a functional and
fully stocked restaurant, as required by ABC regulations.
inspecting the kitchen, Osburn walked through an open door
into a business office in the back of the Bistro. Once
inside, Osburn searched the office. He opened desk drawers
and a filing cabinet, and photographed various documents
uncovered in the process. One of those documents indicated
that Ward was the owner of the Bistro. Osburn did not ask for
permission to enter the office, and he did not encounter
anyone while conducting his search.
application was not approved and, in October 2013, she sent
complaints to the Office of the Governor and various members
of the General Assembly. Swim's complaints asserted that
Osburn and Scott engaged in "professional
misconduct" during the site visit. Among other things,
Swim alleged that Osburn "rummage[ed] through [her]
business records with deliberate indifference to [her]
rights" and "seiz[ed] evidence in violation of [her
Fourth Amendment] rights."
conducted an internal investigation and, on April 3, 2014,
issued a "Group III" Written Notice
("Notice") terminating Osburn's employment. The
Notice stated that Osburn's conduct during the site visit
was "contrary to general order/policy" and
"constitute[d] an egregious violation of [Swim's]
Fourth Amendment [rights]."
filed a grievance challenging his termination and, pursuant
to Code § 2.2-3000 et seq., requested a hearing
before a hearing officer appointed by the Virginia Department
Resources Management ("DHRM"). A two-day hearing
ensued, where Osburn argued that the office search was
permissible under the highly regulated industry exception to
the warrant requirement because it was authorized by Code
§ 4.1-204(F), which states that ABC agents "shall
be allowed free access" to certain places within the
Commonwealth. Alternatively, Osburn argued that he had
consent, express or implied, to conduct the search.
the hearing, ABC countered that "[Osburn's] entry
into the office as part of an applicant investigation . . .
[was] not covered under the general inspection provisions as
it would be for a [licensee]." ABC asserted that "a
site visit of [an applicant] . . . has never risen to the
level of an inspection of a licensed premise for which there
is statutory and regulatory authority." In addition, ABC
presented testimony that "it has not instructed,
trained, or permitted its agents to conduct warrantless,
non-consensual searches of license applicants or their
considering the arguments and evidence, the hearing officer
upheld Osburn's termination. The hearing officer
determined that the warrantless search was not permissible
under the highly regulated industry exception because
"[t]here is no statutory or regulatory provision that an
applicant automatically forfeits [F]ourth [A]mendment rights
by merely applying for a license." In addition, the
hearing officer found that there was "insufficient
evidence that [Swim] or anyone else gave consent, expressed
or implied, [for] [Osburn's] search of the office."
Accordingly, the hearing officer concluded that
"termination was warranted and appropriate under the
circumstances" because ...