Opinion
No. 35 C.D. 2013
05-12-2014
Crocodile Rock Corporation, t/a Crocodile Rock Café, Appellant v. Pennsylvania Liquor Control Board
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
This case was reassigned to the author on March 11, 2014.
This appeal involves an application for renewal of a liquor license pursuant to the Liquor Code. The Pennsylvania Liquor Control Board (PLCB) denied the renewal application filed by Crocodile Rock Corporation, t/a Crocodile Rock Café (Licensee) based on its citation history and incidents involving criminal activity by third-parties around the licensed premises. Licensee challenges the order of the Court of Common Pleas of Lehigh County (trial court), which affirmed the PLCB's non-renewal after hearing additional evidence. Licensee appealed, arguing the trial court erred in considering citations from prior licensing periods when it successfully remedied the causes. Licensee also contends the criminal incidents connected to its operations were infrequent and minor.
Act of April 12, 1951, P.L. 90, as amended, 47 P.S. §§1-101-10-1001.
The Honorable Carol K. McGinley, President Judge, presided.
Based on Licensee's citation history and the recurrent criminal incidents on or around its premises for which Licensee undertook no substantive affirmative measures, the trial court concluded the circumstances warrant non-renewal here. Discerning no abuse of discretion or error below, we affirm the trial court.
I. Background
Since 1999, Licensee has operated a music venue that seats over 1,300 patrons and regularly sells out. Licensee submitted an application for renewal of its liquor license No. R-15695 (License) for its operation of the nightclub at 520-524 Hamilton Street in Allentown, Lehigh County. This is about a block away from the Lehigh County Courthouse. The renewal request was for the two-year period effective May 1, 2010, and ending April 30, 2012.
Significantly, as to the previous license period, the PLCB Bureau of Licensing (Licensing Bureau) issued Licensee a letter dated February 2, 2009, that "warned [Licensee] to conduct properly [sic] your establishment and continue to take corrective measures ..." (Warning Letter). Appellee's Br., App. A.
Upon receiving the renewal application, the Licensing Bureau notified Licensee of its objections. The Licensing Bureau's objections were based on alleged violations of the Liquor Code resulting in eight citations over four years, including serving liquor without a license, and nine criminal incidents, four of which occurred in 2008 and 2009.
The Licensing Bureau presented evidence only as to five incidents between 2008 and 2009, two of which occurred the same night. For ease of reference, we describe only those incidents, numbered as one through four, combining the two that arose the same night into one incident.
Specifically, Licensee received the following Liquor Code citations:
1. Citation No. 05-0437X was issued for issuing five checks drawn on insufficient funds, for purchases of malt or brewed beverages. Reproduced Record (R.R.) at 181a.Notably, three of these citations occurred during the most recent licensure period.
2. Citation No. 06-2626 was issued for serving an alcoholic beverage to a minor on October 5, 2006. Licensee was fined $1,250.00. Id.
3. Citation No. 07-0841X was issued for issuing a check drawn on insufficient funds for the purchase of malt or brewed beverages. R.R. at 182a.
4. Citation No. 07-1937 contained six (6) counts for the following: issuing a check drawn on insufficient funds for the purchase of malt or brewed beverages; the purchasing of alcoholic beverages without using Licensee's checks, a cashier's check or money order; failing to appoint a full time manager for a one year period; failing to disclose the interest of the estate of a deceased partner; and, failing to notify the PLCB within 15 days of a change of manager. R.R. at 183a.
5. Citation No. 07-2656X was issued for issuing two checks drawn on insufficient funds for the purchase of malt or brewed beverages. R.R. at 184a.
6. Citation No. 08-1168 was issued on June 3, 2008, due to the sale of alcoholic beverages after Licensee's license lapsed. Id.
7. Citation No. 08-2461 was issued on October 22, 2008, for permitting a minor, 18 years of age, to play in a band at the Premises. R.R. at 185a.
8. Citation No. 09-0572 was issued on March 18, 2009, for failing to notify the PLCB within 15 days of a change of officers, directors and/or stockholders. Id.
There were also four incidents of disturbance in the 13-month period between July 2008 and August 2009, on or near Licensee's premises:
1. On July 13, 2008, Allentown Police were dispatched to Licensee's premises pursuant to a complaint of "Mr. Rydel." R.R. at 225a. Mr. Rydel claimed to have been struck by three men within the premises. Mr. Rydel required no medical attention, and police filed summary harassment charges against the individuals involved. Id.
2. On March 8, 2009, at approximately 12:41 a.m., Allentown Police were dispatched to the premises to dispense an agitated crowd leaving after a show. An hour later, the officers apprehended an individual with pepper spray in the public parking lot owned by the Allentown Parking Authority (Parking Authority) near Licensee's premises. R.R. at 257a-258a.
3. On May 25, 2009, at 12:00 a.m., Allentown Police were dispatched to Sacred Heart Hospital to interview Gregory Aquino (Aquino). Aquino claimed he was assaulted at the premises. However, Aquino was unable to provide any information regarding his assailant, and police did not conduct any further investigation. R.R. at 259a.
4. On August 23, 2009, a man and a woman were shot in a public parking lot that Licensee's patrons used while patrons were leaving a rap concert. The shots were fired from the window of a moving vehicle adjacent to the public parking lot. An eyewitness did not recognize any of shooters as Licensee's patrons. R.R. 259-263a.
A hearing examiner held a hearing in October 2010, at which the PLCB presented testimony of eight witnesses in support of its objection to renewal, including that of police officers dispatched to disturbances at or near the premises, and eyewitnesses. Licensee presented testimony of its head of security, Michael Tone (Head of Security), Melissa Sterner, corporate Secretary and the director of operations (Director of Operations) and Tom Erkinger, who coordinates public relations, disc jockeys, and organizes entertainment (Production Manager).
A. Evidence Submitted at the Administrative Hearing
At the initial hearing, Licensee and the PLCB presented evidence regarding the alleged criminal activities and Licensee's operations generally.
1. Citations
The hearing examiner admitted evidence as to all eight citations, including the five citations pre-dating the relevant licensure period. The citations date back to 2005. The citations involved a wide-range of conduct from serving a minor, to operating without a license, and failing to inform the PLCB of managerial changes. Fines for the citations totaled $5,750, with one day of suspension.
2. Criminal Incidents
The PLCB submitted the testimony of Officer Bill Williams regarding an assault in July 2008 that involved Licensee's patrons (First Assault). Officer Williams wrote an incident report after interviewing the victim known as "Mr. Rydel." R.R. at 225a. Officer Williams determined Licensee's patrons struck Mr. Rydel. As a result of the victim's identification, three patrons were escorted off the premises and placed under arrest. The testimony is unclear whether the assault occurred inside or outside the premises. However, there is no dispute that the fight began inside as an altercation.
The PLCB also submitted testimony of Officer Thomas Cunningham regarding a fight outside the premises in March 2009 (Second Assault). Officer Cunningham testified that after he was dispatched, he observed a single security guard trying to defuse the screaming crowd.
In addition, Officer Vincent Rush testified about his dispatch an hour later to the large fight that gave rise to the Second Assault. He explained that when he arrived, other officers reported pursuing a perpetrator through the adjacent parking lot. When Officer Rush engaged the perpetrator, he needed to subdue him with pepper spray in the neighboring parking lot owned by the Parking Authority. Officer Rush reported he did not interview Licensee's staff regarding the pepper spray incident because it occurred outside the premises, and seemed related to the police presence.
Officer Louis Gogel testified regarding an assault in May 2009 that the hospitalized victim reported occurred at Licensee's premises (Third Assault). The victim, Gregory Aquino, could not describe his assailants. Therefore, the officer did not follow-up with Licensee about the incident. The victim's statement was the only proof of any connection of this incident to Licensee.
In this appeal, the PLCB did not assert this incident as among those connected to Licensee's operations, and the trial court did not rely upon it.
As to a shooting that occurred after the show featuring rap artist "Fabolous" in August 2009 (Shooting Incident), the PLCB presented the testimony of subpoenaed eyewitnesses in addition to police. Witnesses testified the incident occurred in the parking lot Licensee's patrons use. After an SUV crashed into a Mercedes, an unknown assailant fired between five and seven shots shortly after the Fabolous concert ended, injuring two individuals. Officers dispatched to the scene faced an unruly crowd, requiring a canine unit, and resulting in at least one arrest for disorderly conduct. No one connected the shooter to Licensee's operations.
Sergeant Brian Brader is the contact at the Allentown Police Department for the "extra-job" security program, using off-duty officers. R.R. at 271a. Sergeant Brader's primary contact is Licensee's Director of Operations. Licensee generally requests off-duty officers to work from 9:30 p.m. to 12:30 a.m., to assist with crowd control following concerts. Usually, Licensee contacted Sergeant Brader regarding additional security needs three to four weeks in advance.
Despite its security concerns about the artist, Licensee did not obtain additional security for the night of the Fabolous concert. The Parking Authority does not provide additional security at the lot on show nights. Licensee also did not procure additional security from the off-duty police officers who provide security services. Licensee did not speak with the police department about the potential need for more security until the night before the rap concert. R.R. at 196a-197a. With only one day's notice, off-duty officers were not available. Despite its inability to engage extra security, Licensee proceeded with the show.
3. Licensee Operations
Licensee presented the testimony of Director of Operations, Head of Security and the Production Manager. Director of Operations, who oversees daytime operations from payroll to ordering, scheduling, ticket sales and the restaurant, testified about her contacts with police for additional security. Additional off-duty officers are requested to provide extra security for up to an hour after the scheduled end of a show. Licensee has 16 cameras in the building. The cameras cover the main areas of the club. None of the cameras allow for viewing of the parking area. One camera views a portion of Law Street, adjacent to the parking lot, through double-glass doors. Although patrons of the club regularly use the lot operated by the Parking Authority, Licensee has no agreements with the Parking Authority as to parking or security. Significantly, Licensee has no exterior security cameras.
Security personnel wand the patrons at the two entrances, and pat patrons down for weapons for large shows. As to weapons, the Head of Security's policy is to ask patrons to keep the weapon in their vehicles, or not to enter. He did not refuse entry to patrons who stored their weapons upon his request.
The Head of Security testified he oversees a staff of between 10 and 20 security personnel. The number of security personnel depends on the ticket count. For all "hip hop" and rap shows, the Head of Security "goes heavy" on security. PLCB Op., 2/27/12, Finding of Fact (F.F.) No. 131. On the night of the Shooting Incident, he deployed all 21 security staff because Fabolous was a rap artist. Id. All security personnel wear black t-shirts stating either "Security" or "Public Relations." F.F. No. 143. The Head of Security does not include off-duty police officers as part of his security detail. He testified the off-duty officers usually stay outside and are near the doors when the club lets out.
The Head of Security was aware of the First Assault, and the crowd control issues related to the Second Assault. He was also aware of the Shooting Incident. On the night of the shooting, he did not recall any specific crowd control issues, and he did not recall turning anyone away for carrying a weapon.
The Head of Security did not recall the pepper spray incident in March 2009. As to the Second Assault the same night, he recalled the incident began inside the club as an argument over the victim's girlfriend.
Licensee is the only business open for operation in the area at night. Licensee's hours of operation vary depending on the entertainment. For concerts targeted at teenage girls, Licensee may be open until 10:00 p.m., whereas the club may be open until an hour beyond the club show for a rock act, or a rap act.
Production Manager worked for Licensee in his current capacity for seven years. He explained scheduling of entertainment is largely random and depends on promoters and availability of acts for a secondary market. At times, as with Fabolous, he has little advance notice for a booking. This is because an artist may only confirm the week before the scheduled performance.
On this record, the hearing examiner recommended license renewal. The PLCB disagreed, issuing an order refusing renewal based on Licensee's citation history and the incidents at or near the premises, and the February 2009 Warning Letter. In its opinion, the PLCB noted Licensee took corrective measures to resolve many issues underlying its citations. However, the PLCB emphasized that Licensee's operations led to significant crowds outside, for which it had no security cameras, and insufficient security staff to manage without police assistance.
Licensee appealed to the trial court.
B. Evidence Submitted to Trial Court
The trial court conducted a de novo hearing. Licensee presented the testimony of Susan Clark, the owner of Licensee (Owner), and office manager Barry Szajkovics (Manager). The PLCB rested on the record created before the hearing examiner.
When it opened in 1999, Owner co-owned the club with a partner. Upon the partner's death in 2003, the License should have transferred to Owner. However, the License lapsed while attorneys completed the proper paperwork. R.R. at 340a. Owner claimed Licensee corrected the citations related to drawing on insufficient funds by purchasing a new accounting program and by arranging for weekly visits by Licensee's accountant.
Owner testified security varies depending on whether there is a show, and the size of the show. For "big shows," seating over 800 patrons, security staff "wands" all patrons at the door, R.R. at 343a, and Licensee will employ 20 security personnel. R.R. at 349a. For shows of less than 800 patrons, it is less clear. Notably, if there is no show, there is no security. Id.
Security staff patrols the perimeter of the club during and after shows. Security staff also occasionally patrols the nearby parking lot. However, there is no set schedule for such patrols. Owner testified she plans to purchase exterior cameras to view the parking lots and surrounding area, and a card machine to swipe all drivers' licenses. As of the date of hearing, Licensee had not undertaken either security measure.
Manager testified he handles the day-to-day operations of the club. He researched the costs of potential additional security measures. For exterior cameras, the cost would be between $12,000 and $16,000. For a card swiper, the cost would be between $400 and $500.
Manager testified there are two bars in the area for the largest shows. Licensee employs between 8 and 15 bartenders, and between 10 and 30 security personnel. Licensee's regular hours of operation are until 10:00 p.m.; however, after shows, Licensee remains open until the last patron leaves. He noted this is always before 2:00 a.m. Manager coordinates with the police department regarding additional security needs whenever the club expects to come close to capacity, depending on the genre of music. For example, for a sold-out country show, Licensee may use 10 security staff. Security may also be light for a show targeted to minors, which may end well before midnight. By contrast, Licensee employed 21 security staff for the Fabolous show, where there are between 400 and 600 attendees, which is less than half of the venue's capacity.
The trial court adopted findings of fact from the PLCB's decision, Nos. 1 through 116. The trial court also made its own findings, Nos. 117 through 125, based on the additional evidence. Based on the evidence, it issued an opinion sustaining the PLCB's refusal to renew the License. Specifically, the trial court concluded Licensee's violations were significant, lacking an adequate explanation. It also agreed with the PLCB that Licensee's security measures were insufficient, "even if the [Shooting Incident] is not considered." Tr. Ct., Slip Op., 1/2/13, at 5.
Licensee appealed the trial court's decision to this Court.
Our review in a liquor license renewal case is limited to a determination of whether the trial court's findings of fact were supported by substantial evidence, whether it abused its discretion, or whether it committed an error of law. St. Nicholas Greek Catholic Russian Aid Soc'y v. Pa. Liquor Control Bd., 41 A.3d 953 (Pa. Cmwlth. 2012).
II. Discussion
The trial court is required to review the evidence de novo pursuant to Section 464 of the Liquor Code, 47 P.S. §4-464. Specifically, Section 464 provides: "The court shall hear the application de novo on questions of fact, administrative discretion and such other matters as are involved ...." Id. A trial court reviewing a decision of the PLCB not to renew a liquor license may sustain, alter, modify, or amend the PLCB's order. Todd's By The Bridge, Inc. v. Pa. Liquor Control Bd., 74 A.3d 287 (Pa. Cmwlth. 2013); Two Sophia's, Inc. v. Pa. Liquor Control Bd., 799 A.2d 917 (Pa. Cmwlth. 2002). In Two Sophia's, we explained, "[d]e novo review contemplates an independent evaluation of the evidence, which has already been presented." Id. at 922. Neither the statute nor decisional law requires a trial court to modify the PLCB's findings of fact when it hears additional evidence.
As an appellate court, we recognize the trial court, as fact-finder, is entitled to deference here. Buffalo Twp. v. Jones, 571 Pa. 637, 813 A.2d 659 (2002).
Licensee argues that its most recent citations are not likely to recur, and that its prior citations should not be considered. Further, Licensee asserts the criminal incidents are relatively few in the context of a large music venue with a 1,300 seat capacity, and such minor infractions do not warrant non-renewal. Lastly, Licensee contends it undertook sufficient affirmative measures.
A. Citations
Under the Liquor Code, renewal of a liquor license is not automatic. The Legislature granted the PLCB broad police powers for the protection of the public welfare, health, peace and morals of the citizens of the Commonwealth. U.S.A. Deli, Inc. v. Pa. Liquor Control Bd., 909 A.2d 24 (Pa. Cmwlth. 2006). Section 470(a.1)(2) of the Liquor Code provides that the PLCB may, in its discretion, refuse to renew a liquor license for many reasons including "if the licensee ... has one or more adjudicated citations under this or any other license issued by the [PLCB]." Added by Act of June 18, 1998, P.L. 664, 47 P.S. §4-470(a.1)(2) (emphasis added).
Licensees are strictly liable for violations of the Liquor Code. Pa. Liquor Control Bd. v. TLK, Inc., 518 Pa. 500, 544 A.2d 931 (1988). The PLCB has specific authority to refuse to renew a liquor license based on a single adjudicated citation. Hyland Enters., Inc., v. Pa. Liquor Control Bd., 631 A.2d 789 (Pa. Cmwlth. 1993). "[I]n renewal proceedings, the [PLCB] ... may consider all past Liquor Code violations, no matter when they occurred." St. Nicholas Greek Catholic Russian Aid Soc'y v. Pa. Liquor Control Bd., 41 A.3d 953, 959 (Pa. Cmwlth. 2012); see also Pa. Liquor Control Bd. v. Bartosh, 730 A.2d 1029 (Pa. Cmwlth. 1999).
Here, there is no dispute that Licensee has several adjudicated citations of varying levels of severity, resulting in a total of $5,750 in fines and one day of suspension. The trial court focused on two of the last three citations in the immediately preceding licensure term for which Licensee had "weak" explanations. Tr. Ct., Slip Op. at 5.
We agree with the trial court that two of the most recent citations related to violations that are "substantial in nature." Id. Licensee sold alcoholic beverages without a license, because, as a result of lax record-keeping, the License lapsed. Licensee also failed to notify the PLCB of a change in officers so that in 2009, Licensee still listed a partner who died in 2003.
The trial court may consider corrective measures taken by a licensee in response to adjudicated citations to determine whether those measures warrant renewal of a liquor license. Goodfellas, Inc. v. Pa. Liquor Control Bd., 921 A.2d 559 (Pa. Cmwlth. 2007). However, there must be some evidence showing that a licensee took steps to quell the cited activities. I.B.P.O.E. of W. Mount Vernon Lodge 151 v. Pa. Liquor Control Bd., 969 A.2d 642 (Pa. Cmwlth. 2009).
Here, the record does not show Licensee remedied its more significant violations. The only remedies Licensee undertook pertain to citations related to its book-keeping and accounting. As to serving minors and permitting minors to play in bands it hosts, Licensee did not prove corrective measures. Licensee considered card readers to identify underage patrons and bandmates, but it did not undertake that step. Tr. Ct., Slip Op., F.F. No. 125. Although the card readers would cost between $400 and $500, Licensee established no reason for not implementing that measure as a means of monitoring the minors it permits in its establishment.
Licensee disclaims responsibility for its more serious violations. Licensee blamed its License lapse on its accountant's failure to pay the correct amount of tax. Licensee blamed the deceased partner's estate for the delay in changing the designation of the responsible officers. However, Licensee retains ultimate responsibility for maintaining its license and for proper reporting under the regulations. Thus, the trial court properly concluded that Licensee's explanation for its violations does not excuse its responsibility for compliance. Given the significant and repeated violations committed, the trial court did not abuse its discretion in holding Licensee's citations warrant non-renewal.
B. Criminal Incidents
Licensee also contends there is no relationship between its operations and the two Assaults and the Shooting Incident; therefore, it cannot be liable for them. Licensee asserts the two Assaults should be viewed in context of the number of patrons Licensee serves, and its primary purpose of providing musical entertainment. Also, Licensee underscores that both the trial court and the PLCB did not connect the Shooting Incident in the parking lot to Licensee's operations.
Section 470 of the Liquor Code provides in pertinent part:
(a.1) The Director of the Bureau of Licensing may object to and the board may refuse a properly filed license application:47 P.S. §4-470(a.1)(4) (emphasis added).
* * *
(4) due to the manner in which this or another licensed premises was operated while the licensee, its shareholders, directors, officers, association members, servants, agents or employes were involved with that license. When considering the manner in which this or another licensed premises was being operated, the board may consider activity that occurred on or about the licensed premises or in areas under the licensee's control if the activity occurred when the premises was open for operation and if there was a relationship between the activity outside the premises and the manner in which the licensed premises was operated. The board may take into consideration whether any substantial steps were taken to address the activity occurring on or about the premises.
For non-Liquor Code related violations of law, including the Crimes Code, 18 Pa. C.S. §§101-9352, the PLCB may refuse to renew a license where a licensee "(1) knows or should have known of ongoing criminal activities; and (2) [...] failed to take substantial affirmative steps to prevent such activities." Rosing, Inc. v. Pa. Liquor Control Bd., 690 A.2d 758, 761 (Pa. Cmwlth. 1997) (citing TLK, 518 Pa. at 504, 544 A.2d at 933). As a two-pronged standard, both parts must be met for a third-party crime to form the basis for not renewing a license. Id.
The criminal activities at issue here are two assaults and a shooting over a 13-month period. The First Assault (July 2008), began inside the premises, the Second Assault (March 2009), happened amidst an unruly crowd outside the premises (collectively Assaults). The Shooting Incident (August 2009) occurred outside the premises in the neighboring parking lot. Based on these incidents, the trial court found "Licensee is disturbingly casual about the safety of its clients and the public." Tr. Ct., Slip Op. at 5.
Significantly, Licensee undertook no additional exterior security measures following the First Assault. The Second Assault, which involved a number of patrons, underscored the deficiencies in Licensee's exterior security. Police dispatched to the Second Assault observed a single security guard trying to defuse the screaming crowd. Even with police on the scene, security could not manage the sizeable crowd.
Licensee had notice of both Assaults. One incident suffices to place a licensee on notice of circumstances within its control that contribute to criminal activity. Here, the wholly inadequate exterior security contributed to the Second Assault. Accordingly, Licensee knew or should have known that it had inadequate exterior security following the First Assault.
There is also no doubt the Assaults related to Licensee's operations. Both Assaults began inside the premises, and escalated when the patrons exited the premises. Both Assaults continued outside the premises, where Licensee has no security cameras, and only occasional, unscheduled patrols of security staff. Although both Assaults resulted in arrests, Licensee did not undertake any security measures to prevent future violence outside the premises after the Second Assault.
The Shooting Incident occurred almost six months after the Second Assault. Again, the crime and surrounding significant crowd control issues highlight Licensee's insufficient security to handle the mass exodus of patrons from a concert. And again, Licensee took no measures to increase exterior security after the Shooting Incident.
Although the trial court did not "tax" Licensee with the shooting, it found the incident relevant. Tr. Ct., Slip Op., 1/2/13, at 5. Importantly, the trial court reasoned "the incident is relevant to show that the heightened security claimed by the club manager is not effective, because the incident happened on the night of a large concert when extra security was in place." Id. (emphasis added).
We agree with the trial court that the Shooting Incident demonstrated deficiencies in Licensee's exterior security when Licensee hosts a large concert. Considering its notice of escalating fights outside the premises, and unruly crowds when large shows ended, Licensee should have known to increase exterior security.
In sum, substantial evidence supports Licensee's knowledge of the Assaults, and the connection of the Assaults to Licensee's operations. We next consider the trial court's conclusion that Licensee failed to undertake necessary steps to address these criminal incidents.
C. Substantive Affirmative Measures
Licensee bears the burden to prove that its efforts are both substantial and affirmative. TLK. Whether measures are deemed "substantial and affirmative" depends in part on when the measures are instituted. I.B.P.O.E. Remedial measures must be taken at a time when the licensed establishment knows or should know that improper activity is occurring on the licensed premises. Id. (finding measures taken weeks before hearing too late). Timeliness of the action is calculated from the time the licensee should have known of the illicit activity. Pa. Liquor Control Bd. v. Can, Inc., 651 A.2d 1160 (Pa. Cmwlth. 1994) (interpreting TLK).
In evaluating whether measures are substantial in nature, this Court considers how the measure is designed to prevent the illegal activity. See St. Nicholas Greek Catholic Russian Aid Soc'y. In Rosing, we explained the steps a licensee may take to meet its burden of showing substantial affirmative measures:
[T]he Owners here took substantial affirmative measures because they made a zealous effort and incurred a financial burden to prevent drug-related activities on the premises while maintaining a reasonable zone of safety for themselves and their personnel. They installed exterior spotlights which were kept on all night. They hired a doorman to patrol the entrance, assess the patrons, and use a metal detector to inspect for weapons. They subsequently hired an armed security guard to assist. The [o]wners kept all entrances locked and recently installed a buzzer on the front entrance. The [o]wners disseminated letters to patrons indicating that suspicious or non-spending patrons would be removed. Finally, the ownership posted signs inside and outside the premises prohibiting the sale of drugs anywhere near the premises. ... This evidence, as a whole, is relevant evidence that a reasonable mind would accept as adequate to support the conclusion that the [o]wners ... took substantial steps to prevent criminal activity on their premises ....690 A.2d at 762-63 (emphasis added).
Here, the illegal activity is an escalation of violent incidents that arose inside, and concluded outside the premises. Significantly, Licensee has minimal, irregular security outside the premises and no exterior cameras. The First Assault placed Licensee on notice of its deficient exterior security. Together, the Assaults establish a pattern that Licensee made no efforts to redress. The Shooting Incident highlighted Licensee's continued inadequate exterior security six months later.
On this record, Licensee did not establish that it responded to these criminal incidents with substantial affirmative measures designed to quell the activities. The trial court, like the PLCB, "[was] not convinced that Licensee has taken all of the steps necessary to ensure the safety and well-being of its patrons, particularly in light of the fact Licensee caters to underage patrons. Licensee's actions, or inactions, demonstrate irresponsibility, apathy, and an abuse of its licensing privilege." Tr. Ct., Slip Op. at 6 (citing PLCB Op. at 57-58).
Licensee is the only business in the area that is open at night. Licensee does not have regular hours of security detail. Despite its history of problems with crowd control, it does not have regular procedures whereby security staff is assigned to oversee and guide leaving patrons. Licensee varies the number of security staff depending on the reputation of the artist. However, Licensee revealed the type of artist varies, and scheduling is random, permitting little advance planning for security. Moreover, Licensee did not identify any objective criteria or minimum security staffing for outside the premises. Significantly, Licensee has no exterior security cameras to alert staff to disturbances outside.
The record demonstrates that despite its knowledge of the Assaults, Licensee failed to implement any substantial affirmative measures in exterior security. In addition, Licensee did not reschedule Fabolous after learning it would be unable to obtain off-duty officers to supplement its deficient security. Licensee proceeded with the show in spite of insufficient exterior security for this event, and the Shooting Incident occurred that night. Further, Licensee only used extra off-duty police officers for one show (Insane Clown Posse) since the Shooting Incident.
Licensee minimizes the criminal incidents as "infrequent and minor." Appellant's Br. at 15. Rather than showing its efforts to reduce the need for police assistance, it represents that with the large number of patrons at shows, totaling 85,000 attendees annually, "[i]t is inevitable that there is a risk of disorderly conduct." Id. Faced with four criminal incidents requiring police intervention, this Court is troubled by Licensee's lack of concern for its patrons' safety.
Although Owner testified Licensee intended to add exterior cameras to increase exterior security, Licensee did not implement that measure as of the date of the trial court's de novo hearing. The liquor license renewal process would become unworkable were this Court to abandon objective evidence of affirmative measures in favor of a licensee's subjective aspirations.
Unlike the licensee in Rosing, here, Licensee opted to refrain from incurring a financial burden to remedy an identified problem. Also in contrast to Rosing, Licensee did not install additional exterior lighting, or attempt to create a reasonable zone of safety for its staff and its patrons. As it did not implement a single measure designed to increase exterior security, Licensee wholly failed to prove any substantial and affirmative measures to justify license renewal.
III. Conclusion
Our precedent requires evidence that a licensee comply with the Liquor Code, and make efforts to remediate past transgressions to show entitlement to the privilege. Licensee's citation history alone constitutes sufficient grounds to refuse renewal to this Licensee. In combination with the disturbances related to Licensee's operations, we see no abuse of the discretion by the trial court in upholding the PLCB's denial of renewal here.
For all the foregoing reasons, we affirm.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 12th day of May, 2014, the order of the Court of Common Pleas of Lehigh County is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
DISSENTING OPINION BY JUDGE LEAVITT
The Pennsylvania Liquor Control Board rejected the recommendation of its hearing examiner that the liquor license of Crocodile Rock Corporation, t/a Crocodile Rock Café (Licensee) should be renewed in spite of the opposition of the Board's Bureau of Licensing. Instead, the Board ordered Licensee's liquor license to be non-renewed on the basis of Licensee's citation history over a four-year period. The Board also cited criminal activity in or near Licensee's premises. That activity was shown to consist of a single assault that took place inside the bar and a post-concert crowd that gathered outside and refused to leave until the police intervened. Licensee acted promptly to address each incident cited by the Board. Because I believe the Board abused its discretion in rejecting its hearing examiner's recommendation, I would reverse the trial court's decision to affirm the Board. Accordingly, I respectfully dissent.
Most of the citations took place in prior license periods and were deemed too insignificant to warrant a non-renewal. Only three citations took place in Licensee's most recent license period.
The majority correctly points out that under Section 470(a.1) of the Liquor Code, 47 P.S. § 4-470(a.1), the Board may refuse to renew a liquor license on a number of grounds, including one or more adjudicated citations. The licensee's entire record of violations may be considered. Pennsylvania Liquor Control Board v. Bartosh, 730 A.2d 1029, 1033 (Pa. Cmwlth. 1999) ("[R]egardless of when they occur the Board may consider all code violations committed by a licensee in determining whether to renew a liquor license."). However, the purpose of looking at the citation history is to determine whether there is a pattern in the violations. St. Nicholas Greek Catholic Russian Aid Society v. Pennsylvania Liquor Control Board, 41 A.3d 953, 959 (Pa. Cmwlth. 2012).
Act of April 12, 1951, P.L. 90, as amended, 47 P.S. §4-470(a.1). Section 470(a.1) of the Liquor Code states, in relevant part:
(a.1) The Director of the Bureau of Licensing may object to and the board may refuse a properly filed license application:
47 P.S. §4-470(a.1).
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(2) if the licensee, its shareholders, directors, officers, association members, servants, agents or employes have one or more adjudicated citations under this or any other license issued by the board or were involved in a license whose renewal was objected to by the Bureau of Licensing under this section[.]
In upholding the Liquor Control Board, the trial court focused on two citations that occurred in the most recent license period. The first, Citation No. 08-1168, related to Licensee's sale of liquor for two days after its license had automatically lapsed for non-payment of taxes. Licensee explained that it corrected the problem immediately by requiring its accountant to spend one day each week onsite. The trial court characterized this response as "weak." Trial Court Opinion at 5; R.R. 392a. However, the trial court did not identify what more Licensee could have done, and the problem did not recur. The second, Citation No. 09-0572, arose from the fact that Licensee did not notify the Liquor Control Board that Michael Kullman, one of the two original shareholders of the corporation, died in 2003. Licensee's witnesses explained that complications in settling Kullman's estate caused Licensee's oversight in not reporting Kullman's exit from the business and replacement with a new officer. The trial court also described this response as "weak." However, this is not the type of violation that is likely to be repeated; it certainly cannot be considered part of a pattern. Further, there was no evidence presented that this corporate housekeeping matter adversely affected the safe sale of alcoholic beverages.
The majority focuses on a citation issued in 2006 after Licensee served alcoholic beverages to an underage patron, for which it paid a penalty of $1,250. I agree that this is a serious matter, but it was never repeated. Further, the Board renewed the license at least once after this citation. Licensee was later cited for allowing a member of a band to play even though he was not 21 years of age, a fact not known to Licensee. More importantly, there was no evidence that this band member was allowed to partake of alcohol. In short, there is no pattern to be discerned.
The citations, in toto, over a five-year period generated less than $6,000 in fines, and there was no pattern to the citations. For this reason alone, I believe the Liquor Control Board abused its discretion in non-renewing Licensee's license.
The criminal incidents relied upon by the Board are no more compelling. Section 470(a.1)(4) of the Liquor Code allows the Liquor Control Board to consider criminal "activity that occurred on or about the licensed premises" so long as there is "a relationship between the activity outside the premises and the manner in which the licensed premises was operated." 47 P.S. §4-470(a.1)(4). Accordingly, the Liquor Control Board may refuse to renew a license where a licensee "(1) ... knows or should have known of ongoing criminal activities; and (2) ... failed to take substantial affirmative steps to prevent such activities." Rosing, Inc. v. Pennsylvania Liquor Control Board, 690 A.2d 758, 761 (Pa. Cmwlth. 1997) (citing Pennsylvania Liquor Control Board v. TLK, Inc., 544 A.2d 931, 933 (Pa. 1988)). The Board cited four criminal incidents that occurred "on or about the licensed premises:" two assaults; a drive-by shooting; and a refusal of a post-concert gathering to disperse.
First, the two assaults were actually one. One alleged assault was never substantiated and, thus, did not result in criminal charges. Nevertheless, the Board used this unsubstantiated allegation of an assault to non-renew Licensee's license. The trial court rejected this logic of the Board and refused to consider the unsubstantiated assault. The second assault was the only criminal incident to take place on Licensee's premises, and it was not a serious crime. The victim did not need medical attention, and his assailants were charged with summary offenses.
Second, the trial court also discounted as irrelevant the drive-by shooting incident cited by the Board because it took place on the streets of Allentown. Further, witnesses confirmed that the shooters had not visited Licensee's premises that evening. The trial court correctly concluded that the incident could not be attributed to Licensee's management of the premises.
Third, there was a post-concert crowd that gathered outside Licensee's premises that did not disperse until the police intervened. Notably, Licensee's concert events attract 85,000 attendees over the course of a year. This was another isolated event.
The criminal activity within the licensed premises consists of a single criminal assault during ten years of operation. This was an isolated incident and, as noted, relatively minor. A crowd that lingers likewise cannot be attributed to Licensee's management of the premises, and the crowd was dispersed by police without arrests being made.
In cases where this Court has upheld the non-renewal of licenses based upon criminal activity, that activity occurred inside the premises and involved serious offenses such as drug trafficking and shootings. See, e.g., I.B.P.O.E. of West Mount Vernon Lodge 151 v. Pennsylvania Liquor Control Board, 969 A.2d 642 (Pa. Cmwlth. 2009) (shooting on premises); Pennsylvania Liquor Control Board v. Bartosh, 730 A.2d 1029 (Pa. Cmwlth. 1999) (illegal drug activity inside licensed establishment); Pennsylvania State Police, Bureau of Liquor Enforcement v. Can, Inc., 651 A.2d 1160 (Pa. Cmwlth. 1994) (illegal drug dealing and use inside and contiguous to licensed establishment). Here, unlike in those cases, there was no illegal drug trafficking and neither the assault inside Licensee's premises nor the unruly crowd exiting Licensee's premises involved the use of deadly weapons. More importantly, neither incident could be related to "the manner in which the licensed premises was operated" with any specificity. 47 P.S. §4-470(a.1)(4). Simply, the trial court erred in holding that these two incidents warranted non-renewal because there was no "relationship between the activity outside the premises and the manner in which the licensed premises was operated." 47 P.S. §4-470(a.1)(4).
Licensee argues that the trial court erred in finding that it had not taken substantial affirmative measures to address its citations and the alleged criminal incidents. I agree.
A licensee's corrective measures undertaken in response to an adjudicated citation should be considered in a liquor license renewal case. Goodfellas, Inc. v. Pennsylvania Liquor Control Board, 921 A.2d 559, 566 (Pa. Cmwlth. 2007). The licensee must show that its efforts have been substantial and affirmative. TLK, 544 A.2d at 933. Whether measures are deemed "substantial and affirmative" depends in part on when the measures are instituted. I.B.P.O.E., 969 A.2d at 649. Remedial measures must be taken at the time when the licensee learns or should know that illicit activity is occurring on the licensed premises. Id. This Court has explained that a licensee meets its burden of showing it has taken substantial affirmative measures if it offers "relevant evidence that a reasonable mind would accept [the corrective measures] as adequate to support the conclusion that the [o]wners of the licensed corporation took substantial steps to prevent criminal activity on their premises ...." Rosing, 690 A.2d at 763.
Here, Licensee offered evidence of substantial corrective measures taken in response to the citations and criminal activity. It has increased its security personnel, installed additional security cameras and plans to add more. It has purchased a new accounting program and has its accountant working onsite. Licensee is committed to instituting additional security measures if its liquor license is renewed, including the installation of additional cameras and the purchase of a device that scans patrons' driver licenses. The trial court criticized Licensee for not yet purchasing the card reader, but this criticism is unwarranted considering that Licensee's liquor license is in limbo. A card reader serves no purpose if Licensee cannot sell alcoholic beverages.
In sum, I would hold that Licensee offered evidence sufficient to show that it has taken substantial steps to address the citations and criminal activity and that it intends to expand those efforts if its license is renewed. If the trial court or Board were concerned about whether Licensee would follow through with making this purchase, the renewal could have been made conditional on Licensee doing so, pursuant to Section 470(a) of the Liquor Code, 47 P.S. §4-470(a).
Section 470(a) provides, in relevant part:
The board may enter into an agreement with the applicant concerning additional restrictions on the license in question. If the board and the applicant enter into such an agreement, such agreement shall be binding on the applicant. Failure by the applicant to adhere to the agreement will be sufficient cause to form the basis for a citation under section 471 and for the nonrenewal of the license under this section.47 P.S. §4-470(a). --------
Selling alcoholic beverages is a highly regulated business. No licensee can ever guarantee perfect compliance. The Liquor Control Board's policy of denying renewal for any prior violation will only discourage a licensee from taking prompt remedial action. There is no point in making such an investment if the licensee is going to be non-renewed at the next anniversary date.
For these reasons, I would reverse the decision of the trial court and of the Board to non-renew Licensee's liquor license.
/s/_________
MARY HANNAH LEAVITT, Judge