68 N.Y.2d 650 (1986)

An administrative agency cannot impose penalties, such as fines, in settlement agreements if the enabling legislation does not authorize those penalties, even if the licensee agrees to the penalty as part of a compromise.

Summary

La Cucina Restaurant faced disciplinary action from the New York State Liquor Authority (SLA) for mislabeling alcohol and illegal gambling. The restaurant utilized the SLA’s “offer in compromise” procedure, proposing a bond forfeiture, license suspension, and a fine. The SLA accepted but also ordered the removal of gambling machines. La Cucina challenged the SLA’s authority to impose the fine. The New York Court of Appeals held that the SLA could not impose a fine as part of the compromise because the legislature had not authorized the SLA to levy fines. The court emphasized that while settlements are permissible, the resulting penalties must fall within the statutorily authorized range of sanctions.

Facts

The State Liquor Authority (SLA) initiated proceedings against La Cucina Restaurant to revoke or cancel its liquor license.

The allegations included mislabeling alcoholic beverages in violation of Alcoholic Beverage Control Law § 106 (2) and permitting gambling on the premises by maintaining a “Joker Poker” video game in violation of Alcoholic Beverage Control Law § 106 (6).

La Cucina invoked the SLA’s “offer in compromise” procedure, offering a maximum penalty of bond forfeiture ($1,000), a seven-day license suspension for the gambling charge, and a fine of $1,750 for the mislabeling charge.

The SLA accepted the proposal but also directed La Cucina to remove the “Joker Poker” machines from the premises.

Procedural History

La Cucina commenced a proceeding challenging the SLA’s authority to establish the “offer in compromise procedure” and to impose a fine.

The Supreme Court annulled the SLA’s determination and remanded for a hearing, concluding that the SLA’s regulations contemplated compromises only in connection with suspension proceedings and that the offer exceeded the terms of the regulations.

The Appellate Division affirmed, relying solely on the latter ground.

The Court of Appeals granted the SLA permission to appeal and certified the question of law.

Issue(s)

Whether the State Liquor Authority has the power to impose a fine as part of a settlement agreement (