## Facts

- Sioux Falls police ran an undercover operation using a 19-year-old college student to attempt to buy liquor at a Hy-Vee grocery store.
- The student selected a bottle of whiskey and took it to checkout wearing casual college clothing.
- The cashier initially handling the transaction was not old enough to sell alcohol and called an older employee to scan the item.
- The older employee scanned the bottle, and the first cashier accepted payment and completed the sale.
- Neither employee asked for identification or otherwise verified the purchaser’s age.
- Hy-Vee was charged under SDCL 35-4-78(1), which prohibits a licensee from selling alcoholic beverages to a person under 21; the offense is a Class 1 misdemeanor.
- The magistrate court found Hy-Vee guilty and imposed a $200 fine; the employees were not criminally charged.
- Hy-Vee appealed, arguing the statute was unconstitutional as applied because it imposed vicarious criminal liability on the corporation for employees’ conduct despite corporate policies against sales to minors.

## Issues

1. Whether imposing criminal liability on a corporate alcoholic-beverage licensee for an employee’s sale of alcohol to a minor, under SDCL 35-4-78(1), violates substantive due process under the South Dakota Constitution and the Fourteenth Amendment.

## Decision

- The Supreme Court of South Dakota affirmed Hy-Vee’s conviction.
- The court held that vicarious criminal liability for a corporate licensee based on employees’ unlawful sales to minors does not violate substantive due process.
- The court concluded SDCL 35-4-78(1) bears a real and substantial relation to the legitimate state interest in preventing underage access to alcohol.
- The court rejected Hy-Vee’s argument that internal compliance policies preclude criminal liability.
- The court noted the penalty imposed ($200) was modest and not constitutionally oppressive for a regulatory violation.

## Legal Principles

- Statutes are presumed constitutional, and a challenger must show unconstitutionality beyond a reasonable doubt.
- A corporation may be held criminally responsible for unlawful acts of employees committed within the scope of their authority and in furtherance of corporate business.
- For public-welfare regulatory offenses in closely regulated fields (including alcohol distribution), the legislature may impose strict or vicarious liability to protect the public without requiring proof of corporate mens rea.
- Assigning the risk of employee noncompliance to the licensee can be constitutionally justified as a means of inducing careful supervision and compliance.
- A corporate policy against illegal conduct does not negate statutory responsibility when the legislature places liability on the licensee for employees’ acts.
- Proportionality of the sanction is relevant to substantive due process; a fine for a regulatory violation is less likely to be arbitrary or oppressive.

## Conclusion

The court upheld a corporate liquor licensee’s misdemeanor conviction for employees’ sale of alcohol to a minor, ruling that vicarious liability for this regulatory public-welfare offense rationally advances the state’s interest in preventing underage drinking and does not violate substantive due process, even when the corporation maintains internal policies against such sales.


State v. Hy Vee Food Stores, Inc., 533 N.W.2d 147 (S.D. 1995)