Matter of Plato’s Cave Corp. v. State Liquor Authority, 41 N.Y.2d 672 (1977)
It is an error of law for the State Liquor Authority to base the disapproval of a liquor license renewal, even in part, on the fact that a shareholder, director, and officer of the applicant was arrested and indicted for a criminal charge that was subsequently dismissed.
Summary
Plato’s Cave Corp. sought review of the State Liquor Authority’s (SLA) decision to cancel its existing liquor license and deny its renewal application. The SLA based its decision partly on the arrest and indictment of Harry Gordon, a shareholder, director, and officer of Plato’s Cave, for a criminal charge that was later dismissed. While independent evidence supported findings of prostitution on the premises and a high risk to law enforcement if the license were renewed, the Court of Appeals held that the SLA’s partial reliance on the dismissed criminal charges was an error of law. The court modified the Appellate Division’s judgment and remanded the renewal application for reconsideration of the sanction without considering the dismissed charges.
Facts
Plato’s Cave Corp. held a restaurant liquor license. The State Liquor Authority (SLA) initiated proceedings to cancel the license and deny a renewal application. The SLA’s determinations, both dated October 25, 1976, were based, in part, on the arrest and indictment of Harry Gordon, a shareholder, director, and officer of Plato’s Cave, for a criminal charge that was subsequently dismissed. The SLA also presented independent evidence of prostitution occurring at the licensed premises.
Procedural History
Plato’s Cave Corp. initiated an Article 78 proceeding to challenge the SLA’s determination. The Appellate Division upheld the SLA’s decision. Plato’s Cave Corp. appealed to the New York Court of Appeals.
Issue(s)
Whether the State Liquor Authority committed an error of law by basing its disapproval of Plato’s Cave Corp.’s liquor license renewal application, even partially, on the fact that Harry Gordon was arrested and indicted for a criminal charge that was subsequently dismissed.
Holding
Yes, because under Executive Law § 296, subd. 14 (effective Sept. 11, 1976), it was an unlawful discriminatory practice to act adversely to an individual based on any arrest or criminal accusation which was followed by a termination of that criminal action or proceeding in favor of such individual.
Court’s Reasoning
The Court of Appeals reasoned that at the time of the SLA’s determination, Executive Law § 296(14) prohibited adverse actions based on arrests or criminal accusations that were followed by a termination in favor of the individual. The court acknowledged that the SLA could consider independent evidence of the conduct underlying the criminal charges. However, it held that basing the disapproval of the renewal application, even partially, on Gordon’s arrest and indictment for a dismissed charge was an error of law. The Court stated, “Thus, though there was substantial evidence for the determination in respect to cancellation, it is not for courts to speculate what penalty would have been imposed if the dismissed criminal charges had not been made one of the bases for respondent’s determination in respect to renewal.” The court could not determine what the SLA’s decision would have been had the dismissed charges not been considered. Therefore, a remand was necessary for the SLA to reconsider the sanction based solely on the other findings.