New York Law Review

Tag: Alcoholic Beverages Control Law

  • Matter of Falso v. State Liquor Authority, 43 N.Y.2d 721 (1977): Licensee Responsibility for Managerial Employees’ Actions

    43 N.Y.2d 721 (1977)

    A licensee can be held responsible for violations of the Alcoholic Beverages Control Law committed by an employee if that employee exercises managerial authority, even without an official title, when the licensee is not present.

    Summary

    David Falso, a restaurant owner, appealed a decision by the State Liquor Authority (SLA) finding him responsible for a gambling violation committed by his brother, who was left in charge of the premises for several hours daily. The SLA argued that Falso’s brother exercised managerial authority during Falso’s absence, making Falso liable for his actions. The Court of Appeals affirmed the Appellate Division’s decision, holding that a licensee can be penalized for the actions of an employee who exercises managerial authority, even in the absence of a formal title or comprehensive management responsibilities. The dissent argued that there was no explicit finding that the brother had unequivocal supervisory responsibility.

    Facts

    David Falso owned the Palm Gardens Restaurant. Falso regularly left his brother in charge of the licensed premises for one hour in the morning and four hours in the afternoon. During one of these periods, Falso’s brother tolerated gambling on the premises. The State Liquor Authority sought to penalize Falso for this violation, arguing that his brother acted in a managerial capacity during those times.

    Procedural History

    The State Liquor Authority imposed a penalty on Falso. The Appellate Division confirmed the Authority’s determination. Falso appealed to the Court of Appeals.

    Issue(s)

    Whether a licensee can be held responsible for a violation of the Alcoholic Beverages Control Law committed by an employee who exercises managerial authority, even if that employee does not have a formal managerial title or comprehensive management responsibilities.

    Holding

    Yes, because a licensee is chargeable with the conduct of an employee who has been given managerial responsibility, even if that responsibility is limited to the operation of the premises and the conduct of the licensed activity thereon on other than a casual or temporary basis.

    Court’s Reasoning

    The Court of Appeals distinguished this case from Matter of Martin v. State Liq. Auth., where the penalty was based on the licensee’s alleged failure to discover a barmaid’s gambling activities. Here, the penalty was imposed because Falso’s brother, who was left in charge, exercised managerial authority. The court emphasized that it is not necessary for the employee’s management responsibility to extend to all aspects of the business. It suffices if the employee is responsible for the operation of the premises and the conduct of the licensed activity when the licensee is absent. The court stated, “It is not necessary that the management responsibility delegated to the employee be that for the conduct of the entire enterprise, e.g., including purchase and sale of supplies, physical maintenance of the premises; it suffices if the employee is given responsibility for the operation of the premises and the conduct of the licensed activity thereon on other than a casual or temporary basis.”

    The court found that there was substantial evidence to support the Appellate Division’s conclusion that Falso’s brother exercised managerial authority. The failure to confer a managerial title was not determinative. As a proposition of law, the court held that a licensee is normally chargeable with the conduct of an employee who has been given managerial responsibility for the purposes of the Alcoholic Beverages Control Law. The dissent argued that neither the hearing officer nor the SLA made an explicit finding that the brother was a manager or that Falso gave his brother unequivocal supervisory responsibility and that there was no direct evidence that the employee had managerial duties.

  • Matter of Bell Tavern, Inc. v. New York State Liquor Authority, 47 N.Y.2d 1034 (1979): Liquor License Revocation for Lewd Conduct

    47 N.Y.2d 1034 (1979)

    A liquor license can be revoked where substantial evidence supports a finding that the licensee permitted lewd and indecent conduct on the premises, even without direct contact between performers and patrons.

    Summary

    Bell Tavern, Inc. had its liquor license revoked by the New York State Liquor Authority (SLA) due to nude dancing performances on the premises, which the SLA found to be lewd and indecent. The licensee appealed, arguing insufficient evidence and constitutional concerns. The Court of Appeals reversed the lower court’s order, reinstating the SLA’s determination. The court found that substantial evidence supported the SLA’s findings of lewd and indecent conduct, justifying the license revocation under Section 106 of the Alcoholic Beverages Control Law. The court clarified that the duration of the acts and lack of physical contact were factors, but not definitive proof against lewdness.

    Facts

    Bell Tavern, Inc. held a liquor license in New York. The SLA conducted an investigation and found that on two occasions, nude dancers at the tavern engaged in lewd and indecent acts during their performances. There was no allegation of direct physical contact between the performers and the patrons. The SLA initiated proceedings to revoke Bell Tavern’s liquor license based on these findings.

    Procedural History

    The SLA revoked Bell Tavern’s liquor license. Bell Tavern appealed this decision. The lower court reversed the SLA’s determination. The SLA appealed to the New York Court of Appeals. The Court of Appeals reversed the lower court’s order and reinstated the SLA’s original determination to revoke the license.

    Issue(s)

    Whether the State Liquor Authority presented substantial evidence to support its finding that Bell Tavern permitted lewd and indecent conduct on its premises, justifying the revocation of its liquor license.

    Holding

    Yes, because there was substantial evidence to support the authority’s findings that the performances were lewd and indecent per se, in violation of section 106 of the Alcoholic Beverages Control Law.

    Court’s Reasoning

    The Court of Appeals determined that the hearing officer’s specific findings of lewd and indecent acts during nude dancing performances were supported by substantial evidence. The court referenced Section 106 of the Alcoholic Beverages Control Law, which prohibits licensees from permitting disorderly conduct on their premises. The court distinguished the case from others (e.g., Matter of Beale Props. v State Liq. Auth.) while aligning it with cases (e.g., Matter of Inside Straight v State Liq. Auth.) where similar conduct justified license revocation. The court clarified that factors like the temporal duration of the acts and the absence of direct contact between performers and patrons are merely circumstances to be considered by the fact-finders, not conclusive determinants. The court stated, “The temporal duration of the lewd and indecent acts and the lack of direct contact between performers and patrons were but circumstances for consideration by the fact finders in making their determination.” The court declined to address constitutional arguments, as the revocation was based on substantial evidence of lewd conduct, which is not constitutionally protected.