Today's Lounge of Oneonta, Inc. v. N.Y. State Liquor Auth.

• Decision Date: 28 February 2013
• Citation: Today's Lounge of Oneonta, Inc. v. N.Y. State Liquor Auth., 103 A.D.3d 1082, 962 N.Y.S.2d 430, 2013 N.Y. Slip Op. 1315 (N.Y. App. Div. 2013)
• Court: New York Supreme Court — Appellate Division
• Parties: In the Matter of TODAY'S LOUNGE OF ONEONTA, INC., Petitioner, v. NEW YORK STATE LIQUOR AUTHORITY, Respondent.

103 A.D.3d 1082

962 N.Y.S.2d 430

2013 N.Y. Slip Op. 01315

In the Matter of TODAY'S LOUNGE OF ONEONTA, INC., Petitioner,

v.NEW YORK STATE LIQUOR AUTHORITY, Respondent.

Supreme Court, Appellate Division, Third Department, New York.

Feb. 28, 2013.

Konstanty Law Office, Oneonta (James E. Konstanty of counsel), for petitioner.

Lisa Bonacci, New York State Liquor Authority, Albany (Mark D. Frering of counsel), for respondent.

Before: MERCURE, J.P., SPAIN, STEIN and McCARTHY, JJ.

MERCURE, J.P.

Proceeding pursuant to CPLR article 78 (transferred to this Court by order of the Supreme Court, entered in Otsego County) to review a determination of respondent which, among other things, revoked petitioner's on-site liquor license.

Petitioner operates a tavern, known as Today's Lounge, and was issued a liquor license by respondent. Following a joint investigation by respondent and police into underage drinking at the tavern, respondent commenced a proceeding to revoke petitioner's license. Respondent alleged that petitioner served alcohol on January 28, 2012 to individuals under the age of 21, failed to maintain proper business records, employed unlicensed security guards and failed to exercise adequate supervision over its clientele. An Administrative Law Judge sustained the charges after a hearing, and respondent adopted the determination. Petitioner then commenced this CPLR article 78 proceeding challenging the determination and seeking reinstatement of its liquor license.

Petitioner asserts that the determination that it sold alcohol to underage patrons was not supported by substantial evidence because respondent failed to call the patrons as witnesses, produce copies of the patrons' photo identifications or present proof that the beverages served actually contained alcohol. In essence, petitioner's challenges are grounded in its argument that hearsay evidence cannot constitute substantial evidence to sustain a determination. We disagree and, therefore, confirm.

Alcoholic Beverage Control Law § 65(1) directs that “[n]o person shall sell, deliver or give away or cause or permit or procure to be sold, delivered or given away any alcoholic beveragesto ... [a] person, actually or apparently, under the age of [21] years.” To establish a violation, respondent must prove “that the proscribed conduct was open, observable and of such nature that its continuance could, by the exercise of reasonable diligence, have been prevented” (Matter of S & R Lake Lounge v. New York State Liq. Auth., 87 N.Y.2d 206, 209, 638 N.Y.S.2d 575, 661 N.E.2d 1355 [1995] [internal quotation marks and citations omitted] ). Contrary to petitioner's argument, “direct nonhearsay testimony establishing the precise manner in which the minor obtained the alcoholic beverage is not a prerequisite to establishing a violation of section 65(1) where ... there is strong circumstantial evidence that the illegal conduct was open and observable” ( id. at 210, 638 N.Y.S.2d 575, 661 N.E.2d 1355 [citations omitted] ). That is, “ ‘[h]earsay evidence is admissible in administrative hearings and may, under appropriate circumstances, form the sole basis of an agency's determination,’ unless [the hearsay evidence] is seriously controverted” (Matter of JMH, Inc. v. New York State Liq. Auth., 61 A.D.3d 1260, 1261, 877 N.Y.S.2d 737 [2009], quoting Matter of McGillicuddy's Tap House, Ltd. v. New York State Liq. Auth., 57 A.D.3d 1052, 1052–1053, 868 N.Y.S.2d 383 [2008];see Matter of Surf City Enters. of Syracuse, Inc. v. New York State Liq. Auth., 96 A.D.3d 1458, 1458, 945 N.Y.S.2d 908 [2012];Matter of Cumberland Farms v. New York State Liq. Auth., 290 A.D.2d 915, 916, 736 N.Y.S.2d 790 [2002],lv. denied98 N.Y.2d 607, 746 N.Y.S.2d 691, 774 N.E.2d 756 [2002];see also Matter of Ridge, Inc. v. New York State Liq. Auth., 257 A.D.2d 625, 626–627, 684 N.Y.S.2d 251 [1999];see generally Matter of Gray v. Adduci, 73 N.Y.2d 741, 742, 536 N.Y.S.2d 40, 532 N.E.2d 1268 [1988] ).

Here, police officers testified that numerous underage patrons were permitted to enter petitioner's establishment based upon false identification, identification containing no date of birth, identification indicating an age under 21 years or no identification. Investigators employed by respondent, John Meyer and Bart Gottesman, testified that three additional patrons admitted that they were underage and drank a pitcher of beer. Gottesman, who was sitting at the bar, further stated that he observed the bartender pour the pitcher of beer from a tap labeled Bud Light and serve it to the patrons, who consumed it in front of her. Gottesman also witnessed an underage agent enter petitioner's establishment without being asked for identification and order a Coors Light beer, which the bartender served him. Supporting depositions from Gottesman and the underage agent, as well as signed written statements from the three patrons who were served the pitcher of beer, confirmed the testimony. In contrast, petitioner called no witnesses and did not seriously...