Opinion
112730/05.
Decided March 17, 2006.
In this Article 78 proceeding, petitioner Robinson Wine and Spirits, LLC challenges a determination of the New York State Liquor Authority ("SLA"), dated July 6, 2005, which granted reconsideration of its February 16, 2005 denial of petitioner's application for a retail liquor store license and, upon reconsideration, again disapproved the application. Petitioner's principal, Brian Robinson, a wine expert, sought the license for a proposed boutique wine store to be located at 350 Myrtle Avenue in the Fort Greene section of Brooklyn. The SLA found that approval of the application "would not be conducive to proper regulation and control and that public convenience and advantage would not be promoted by the approval of this application."
In particular, the SLA noted that petitioner's principal had "conduct[ed] wine tastings for a fee coupled with receipt of commissions from retail liquor stores for placing orders." The SLA reaffirmed the finding in its original denial that "such conduct constituted trafficking in alcoholic beverages without a license." The SLA further stated that it "continues to have concern as to whether this applicant would operate a licensed premises in strict compliance with the provisions of the Alcoholic Beverage Control Law and the Rules of the Authority." The SLA's original denial also relied on independent findings as to the locations of other liquor stores in the vicinity and the marginality of the gross sales of the two closest stores. The determination on reconsideration reaffirmed these findings.
The sole issue before the court, in reviewing the determination of the SLA, is whether its disapproval of petitioner's application was arbitrary and capricious or an abuse of discretion. ( See Matter of Fabulous Steak House, Inc. v. New York State Liq. Auth., 163 AD2d 311 [2nd Dept 1990], appeal denied 77 NY2d 805. See generally Matter of Pell v. Board of Educ., 34 NY2d 222; CPLR 7803.)
Applying this stringent standard, the court concludes that the SLA's determination was arbitrary and capricious. The basis for the SLA's concern about petitioner's principal's fitness was his purported trafficking in alcoholic beverages without a license. However, the SLA does not contest petitioner's showing that the wine tastings that Mr. Robinson conducted, which were held at local restaurants for a modest fee, followed the model of wine tastings conducted by numerous groups throughout New York City. The SLA cites no legal authority whatsoever that the holding of such wine tastings constitutes trafficking in alcoholic beverages without a license. The SLA also contends in the instant proceeding that the Wine Coop, under whose auspices the tastings were conducted, sold wines to members after the tastings. However, the SLA's determination upon reconsideration did not make any finding to that effect. Nor does the Coop's website or any other evidence in the record support such a finding. Finally, to the extent that Mr. Robinson received commissions from the liquor stores that supplied the wines for the tastings, the SLA does not contend that the amount of such commissions was of any significance.
It is undisputed that petitioner's principal set up the Wine Coop with the advice of counsel experienced in the wine and spirits industry, in order to try to ensure that it met legal requirements. (Pet., ¶ 18.) It is also undisputed that Mr. Robinson conducted a total of only eight wine tastings and that, after the SLA cited the tastings as a basis for its initial disapproval of petitioner's application, Mr. Robinson voluntarily cancelled additional tastings that had previously been scheduled. The SLA does not contend that Mr. Robinson, who submitted numerous character references, and possesses extensive credentials in the wine field, was not otherwise fit to possess a liquor license.
Mr. Robinson served as the Director of the Wine Department at Phillips Auctioneers and as Lead Wine Specialist at Christie's New York. He has received the Higher Certificate, with Distinction, from the Wine and Spirit Education Trust, and is currently a candidate for the Diploma Degree from the same organization. (Pet., ¶ 14.)
Under these circumstances, petitioner's conduct of the tastings does not constitute a willful violation of the Alcoholic Beverage Control Law that would support the SLA's findings that petitioner is unfit to hold a license. ( See Matter of Shore Haven Lounge, Inc. v. New York State Liq. Auth., 37 NY2d 187; Matter of Fabulous Steak House, 163 AD2d at 311.)
The SLA's concern that petitioner would conduct business in violation of the Alcoholic Beverage Control Law, particularly given petitioner's principal's voluntary discontinuance of the wine tastings, is based on mere speculation and cannot justify the denial of the license. ( See Matter of Sled Hill Cafe, Inc. v. Hostetter, 22 NY2d 607; Matter of Santini Restaurants, Inc. v. State Liq. Auth., 32 AD2d 514 [1st Dept 1969].)
In its initial decision, the SLA also based its finding of petitioner's unfitness on the fact that petitioner's principal's investment in a licensed premises had not been disclosed to the SLA, in violation of the Alcoholic Beverage Control Law. In its application for reconsideration, petitioner submitted evidence that Mr. Robinson had relied on prior counsel to file the disclosure of his investment. Petitioner also pointed out that it had disclosed its principal's investment in the original application for a license to operate the retail liquor store an act inconsistent with any intent to conceal the investment. In addition, petitioner submitted evidence (Pet., Ex. 16) that new counsel had been retained to file an application for approval of corporate change reflecting petitioner's principal's investment in the licensee. In its July 6, 2005 determination upon reconsideration, the SLA does not cite petitioner's non-disclosure of the investment as a basis for finding unfitness. Nor would this technical non-willful violation of the Alcoholic Beverage Control Law constitute a rational basis for denial of the license. ( See Matter of Shore Haven Lounge, Inc. v. New York State Liquor Auth., 37 NY2d 187, supra.)
The SLA's denial of the license is also not supportable based on its consideration of the other licensed package stores serving the location. Specifically, the SLA found in its original determination that there were four established package stores within 2491 feet of the proposed location, and that two of the closest stores had reported sales for the past three years that were marginal to submarginal by industry standards. The original determination further held: "Having considered * * * the local economic conditions, the relatively low gross sales of two of the closest stores, the fact that a third store only began operations in 2004 and the demographics of the area, the Authority finds that the area where the proposed premises are located is adequately served by the existing package stores." The SLA also reasoned that "[s]tores in close proximity to one another that draw from the same customer base frequently have marginal businesses," and that, based on its extensive experience, it had "come to the realization that marginal stores are more apt to commit violations of the Alcoholic Beverage Control Law." The determination upon reconsideration found that the SLA's prior "statement as to the four closest stores and their distances from the proposed premises and their recent gross sales remains valid."
In concluding that the area was adequately served by the existing package stores, the SLA ignored that three of the four closest stores were package stores, with bullet-proof glass that separates the customers from the cashier, which primarily sell liquor or inexpensive wine, whereas petitioner's principal intends to operate an upscale boutique wine store, selling wines from Wine Spectator's Top 100 list. In opining that stores with marginal sales are more likely to commit violations of the Alcoholic Beverage Control Law, and in reaching its implicit conclusion that petitioner's store would have marginal sales, the SLA ignored its own caveat that nearby stores frequently have marginal sales if they "draw from the same customer base." There was absolutely no basis in the record for the SLA's assumption that petitioner's store and the existing stores would draw the same customers. On the contrary, the record was replete with uncontroverted evidence that Myrtle Avenue is an area in transition, and that a quality wine store there would serve different consumers than those served by the existing package stores. While not determinative, the SLA also ignored tremendous community support for petitioner's store from neighborhood residents, the local Community Board, politicians including the Brooklyn Borough President, and the Myrtle Avenue Revitalization Project.
A court may not substitute its judgment for that of the administrative agency. However, where, as here, there is no rational support for the agency's determination, the determination must be set aside.
It is accordingly hereby ORDERED that the petition is granted to the extent of remanding petitioner's application to the SLA for issuance of an order approving the application.
This constitutes the decision and order of the court.