New York Law Review

Tag: Managerial Authority

  • Matter of Plato’s Cave Corp. v. State Liquor Authority, 61 N.Y.2d 646 (1984): Managerial Authority and Licensee Responsibility for Bartender Conduct

    Matter of Plato’s Cave Corp. v. State Liquor Authority, 61 N.Y.2d 646 (1984)

    A liquor licensee can be held responsible for violations of the Alcoholic Beverage Control Law by an employee, such as a bartender, if that employee has been vested with managerial authority, even without a pattern of misconduct or the licensee’s actual knowledge.

    Summary

    Plato’s Cave Corp., a liquor licensee, was found in violation of the Alcoholic Beverage Control Law due to the conduct of its bartender. The New York Court of Appeals affirmed the Appellate Division’s judgment, holding the licensee responsible because the bartender had been delegated sufficient managerial authority. The court reasoned that the bartender’s responsibilities, including dealing with disorder and ensuring orderly operation, justified imputing his conduct to the licensee. Furthermore, the licensee’s awareness of prior issues with prostitution on the premises and warning letters from the State Liquor Authority provided additional support for holding the licensee accountable.

    Facts

    Plato’s Cave Corp. held a license to serve liquor. The State Liquor Authority (SLA) alleged a violation of subdivision 6 of section 106 of the Alcoholic Beverage Control Law based on the conduct of the corporation’s bartender. The bartender was responsible for dealing with any disorder on the premises and ensuring orderly operation. The licensee admitted to being aware of problems with prostitutes on the premises and had received multiple warning letters from the SLA regarding violations of subdivision 6 of section 106.

    Procedural History

    The State Liquor Authority found Plato’s Cave Corp. in violation of the Alcoholic Beverage Control Law. The Appellate Division affirmed the SLA’s determination. The New York Court of Appeals reviewed the Appellate Division’s judgment.

    Issue(s)

    Whether a liquor licensee can be held responsible for a violation of the Alcoholic Beverage Control Law, specifically subdivision 6 of section 106, based on the conduct of its bartender, when the bartender has been vested with managerial authority over the premises, despite the absence of a pattern of conduct or the licensee’s actual knowledge of the bartender’s specific actions.

    Holding

    Yes, because where an employee is found to have managerial authority over the operation of licensed premises, their conduct may be imputed to the licensee in establishing a violation of subdivision 6 of section 106 of the Alcoholic Beverage Control Law, even without a pattern of conduct or actual knowledge by the licensee.

    Court’s Reasoning

    The Court of Appeals relied on Matter of Falso v. State Liq. Auth., 43 NY2d 721, which established the principle that a licensee can be held responsible for the conduct of an employee vested with managerial authority. The court reasoned that the licensee’s testimony indicated that the bartender had significant responsibility, including maintaining order on the premises. This delegation of authority was sufficient to hold the licensee accountable for the bartender’s actions. The court also emphasized that the licensee’s awareness of previous issues, such as problems with prostitutes, and the numerous warning letters from the SLA, suggested that the licensee should have been aware of the events leading to the violation through “due diligence and proper supervision.” The court stated, “Based on this testimony, there was substantial evidence to support the hearing officer’s determination that the bartender had been delegated sufficient managerial authority to hold the licensee responsible for his conduct.” This aligns with the policy of holding licensees accountable for maintaining order and preventing illegal activities on their premises. There were no dissenting or concurring opinions noted in the memorandum.

  • 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.