Bad news for Avenue B residents - Le Souk's liquor license has been reinstated. In a shocking decision, the New York State Appellate Division, First Department overturned a decision that resulted in the cancellation of Le Souk's license, saying it was "not based upon substantial evidence because it relied on a "guesstimate" in determining that Le Souk was overcrowded on the night of Jan. 13, 2007." The holder of a liquor license is held under a high standard, and according to the law, "must exercise a 'high degree of supervision' and will be held 'strictly accountable' for any violation", so when Le Souk was busted for being overcapacity during the night in question, they were issued a code violation that led to their license being revoked. However, the Court ruled that just because Le Souk's owner, Sameh Jakob was present on the night of the violation, he did not knowingly permit the lounge to be overcapacity. The majority also question the validity of the officers scribbled summons saying "300 people" were in the room. Le Souk intends to reopen and will ask the liquor authority to re-issue the license.
Full story after the jump![via NY Law Journal SS Req'd]
Split Panel Faults 'Guesstimate' of Bar Crowd, Annuls Agency's Revocation of Liquor License
May 22, 2009
The New York State Liquor Authority acted ultra vires in revoking a Lower East Side establishment's liquor license, a split panel of the Appellate Division, First Department, ruled yesterday.
In the 3-2 decision, the majority found that the liquor authority canceled the license of Le Souk bar/restaurant on Avenue B based on two rules that are at odds with the rule-making authority the Legislature had given the agency. The revocation, the majority said, was not based upon substantial evidence because it relied on a "guesstimate" in determining that Le Souk was overcrowded on the night of Jan. 13, 2007.
The majority annulled the authority's revocation of the liquor license.
Justice James M. Catterson (See Profile) wrote for the majority in In re 47 Ave. B. East v. New York State Liquor Authority, 105195/08, that the rules on which the authority relied applied a "no fault" approach without "the requisite element of awareness" on the part of either Le Souk's owner or its top managers.
The First Department decision appears on page 32 of the print edition of today's Law Journal.
In dissent, Justice Peter Tom (See Profile) countered that Le Souk's owner was present on the evening liquor authority agents issued the violations and observed the overcrowding, and the owner did nothing to alleviate the condition "until instructed by the police to restrict entry by patrons."
The authority sustained three violations against Le Souk based on failure to exercise adequate supervision of the two-level establishment (9 NYCRR §48.2) and failure to comply with city regulations related to the level of occupancy of the premises, including building, fire and other local codes (9 NYCRR §48.3).
Both of those rules as applied to Le Souk did not conform to the "undisputed statutory predicate," Justice Catterson wrote, that "[n]o person licensed to sell alcoholic beverages shall . . . suffer or permit [the licensed] premises to become disorderly," Alcohol Beverage Control Law (ABC) §106(6).
Following a line of precedent, Justice Catterson noted, the Court of Appeals in 1992 had specifically concluded that the "suffer or permit" language of ABC §106(6) contains a "specific mandate of an awareness element" to sustain a disorderly conduct finding, Matter of Beer Garden, 79 NY2d 266.
The supervision requirement (Rule §48.2) stipulates that the holder of a liquor license must exercise a "high degree of supervision" and will be held "strictly accountable" for any violation "suffered or permitted" on its premises by "any manager, agent or employee or such licensee."
It is "patent" under a "plain reading" of that rule, Justice Catterson wrote, that it "improperly imputes an employee's knowledge of improper activity" to Le Souk's owner, Sameh Jakob.
The other rule, which bars violations of applicable New York City codes (Rule §48.3), Justice Catterson wrote, contains no requirement that the holder of a liquor license "suffer or permit" a violation. As a consequence, license holders can be held responsible for violating "any one of a multitude of applicable governmental regulations" even though there is no evidence that they knew about a violation, he concluded.
Joining in the majority were Justices David B. Saxe (See Profile) and Leland G. DeGrasse (See Profile).
In the dissent, Justice Tom, joined by Justice Karla Moskowitz (See Profile), found Le Souk distinguishable from Beer Garden because there was substantial evidence the owner, Mr. Jakob, was present at the time liquor authority agents and police officers observed overcrowding in the establishment.
According to that evidence, Justice Tom wrote, Mr. Jakob did nothing to correct the condition and failed to properly oversee the doorman to make sure the occupancy limits specified in the bar/restaurant's certificate of occupancy were not exceeded (61 in the cellar and 135 on the main floor).
The majority and dissent parted company over the question of whether there was substantial evidence to sustain a finding that Le Souk exceeded those limits on Jan. 13, 2007.
Justice Tom found that the requirement of substantial evidence was met by the liquor authority investigator's testimony at an administrative hearing that there were "approximately 75 to 100" persons in the cellar and patrons were "standing shoulder to shoulder" throughout the premises.
Justice Tom also noted that a police officer had issued a summons charging Le Souk with overcrowding that night, saying "approximately 300 persons" were on the premises. The judge added that the fact that the summons was later dismissed for failure to prosecute was not "preclusive."
Justice Catterson saw the authority's evidence in a different light. The investigator's testimony that there were between 75 and 100 people in the cellar was nothing more than a "guesstimate," he wrote, and could not be considered substantial evidence.
He also rejected the notion that the police officer's notation that 300 people were present "scribbled on a summons" could constitute substantial evidence.
Justice Catterson dismissed the dissent's reliance on the investigator's observation that patrons were "shoulder to shoulder," writing "it does not warrant further conjecture" as to the potential for finding establishments throughout Manhattan liable for State Liquor Authority violations "based solely upon evidence that patrons were standing 'shoulder to shoulder.'"
Article 78 challenges that administrative determinations were not based on substantial evidence - such as Le Souk's challenge to the State Liquor Authority's revocation of its license - are heard by the applicable department of the Appellate Division.
Le Souk has been closed since shortly after its license was revoked said its attorney, Martin Mehler, of Mehler & Buscemi. He said Le Souk intends to reopen and that he will ask the liquor authority to re-issue the license.
The liquor authority was represented by Scott A. Weiner of its legal staff.