Matter of Playboy Club of N.Y., Inc. v. State Liquor Authority, 23 N.Y.2d 541 (1969)

A licensee is not responsible for every single isolated act of an employee unless the licensee or manager knew or should have known of the disorderly condition and tolerated its existence; a single act of self-defense by an employee against an unruly patron does not automatically render the premises disorderly.

Summary

The Playboy Club challenged a 15-day suspension of its liquor license imposed by the State Liquor Authority after an employee allegedly assaulted a patron. The New York Court of Appeals reversed the suspension, holding that the evidence did not support the Authority’s conclusion that the club “suffered or permitted” the premises to become disorderly. The court emphasized that the club was authorized to use reasonable force to maintain order and that the employee’s action appeared to be a single instance of self-defense against an unruly patron, for which the club could not be held responsible absent a showing of knowledge or tolerance of the disorderly conduct.

Facts

Michael Kendall, a heavily intoxicated patron at the Playboy Club, became disruptive while arguing with a coatroom attendant about a missing check stub. Kendall blocked other patrons from accessing the coatroom. Bruce Graziano, another employee, escorted Kendall to a service area away from public view and asked him to leave. Kendall refused and, according to Kendall’s testimony, Graziano struck him in the eye after Kendall drew back his fist to strike Graziano. The club provided Kendall with ice for his injury.

Procedural History

The State Liquor Authority suspended the Playboy Club’s license for 15 days (5 days deferred). The club initiated an Article 78 proceeding seeking to annul the Authority’s determination. The lower courts upheld the suspension. The New York Court of Appeals granted leave to appeal and reversed the lower court’s decision, annulling the State Liquor Authority’s determination.

Issue(s)

Whether the State Liquor Authority’s finding that the Playboy Club “suffered or permitted” the premises to become disorderly, based on the actions of its employee in an altercation with a patron, was supported by substantial evidence.

Holding

No, because the evidence indicated a single, isolated act of self-defense by an employee against an unruly patron, and there was no evidence that the club management knew or should have known of the potential for such an incident or tolerated any disorderly conduct.

Court’s Reasoning

The court reasoned that the club was justified in removing Kendall from the coatroom area due to his disruptive behavior. The court emphasized that allowing Kendall’s behavior to continue would itself constitute suffering or permitting disorder. Referencing previous guidance from the Authority, the court acknowledged that the club was permitted to use reasonable force to maintain order. The court then examined Kendall’s testimony, noting that it established that Graziano struck Kendall in self-defense, after Kendall had drawn back his fist to strike Graziano first. The court stated, “When an unruly patron, who refuses to leave the premises, threatens an employee with an upraised fist, a single punch, thrown to counter the anticipated blow, does not render the premises disorderly.”

The court also addressed the issue of licensee responsibility for employee actions, stating that “a licensee cannot possibly control—and, hence, is not to be held responsible for—every single act of all persons in his employ.” The court reaffirmed the rule that conduct is not “suffered or permitted” unless “‘the licensee or his manager knew or should have known’ ” of the asserted disorderly condition on the premises and tolerated its existence. The court found no evidence that the club management was aware of or could have anticipated the incident. The Court cited Matter of Missouri Realty Corp. v. New York State Liq. Auth., 22 N.Y.2d 233, for the principle that awareness or foreseeability is required for a licensee to be held responsible.

Thus, the court concluded that there was no basis in fact or law for finding a violation of Section 106 of the Alcoholic Beverage Control Law, and it reversed the lower court’s order and annulled the Authority’s determination.