Is Managerial Knowledge Required to Sustain A Charge of “Disorderly Premises”?

It is no secret or surprise that one of the most common liquor license violations is the charge of “disorderly premises,” particularly with respect to nightlife establishments such as bars and nightclubs, and triggers a proceeding to revoke or cancel the liquor license.  According to Alcoholic Beverage Control Law 106(6), “No person licensed to sell  alcoholic  beverages  shall  suffer  or permit gambling on the licensed premises, or suffer or permit such premises to become disorderly.”  The SLA has used the broad scope and vague language of this section as a vehicle to shut down establishments which have been the subject of complaints from community boards and police departments.

However, as a matter of law, to sustain a violation of ABC Law 106, it must be demonstrated that the licensee had knowledge or the opportunity through reasonable diligence to acquire knowledge of the alleged acts.  Moreover, absent evidence that a licensee or someone vested with managerial or supervisory authority whose knowledge could be imputed to the licensee knew or should have known of the improper activity, a finding that the licensee suffered or permitted improper conduct cannot be sustained.

For example, in one case, the SLA found that Island Mermaid Restaurant violated ABC Law 106(6) in that it “suffered or permitted” the establishment to become disorderly.  At the hearing, it was revealed that one of the restaurant’s employees verbally abused patrons and then became involved in a physical altercation in the process of ejecting these patrons from the premises.

Nonetheless, the court overturned the SLA’s determination and dismissed the violation that Mermaid Restaurant had permitted the premises to become disorderly and thus violated ABCL Law 106(6) because the evidence was insufficient to establish that the licensee “suffered or permitted” disorderly conduct.

In this case, the incident in question involved a non-managerial employee, was spontaneous, and of very brief duration. No testimony was provided that the manager of the premises on the night in question was even aware that the incident was taking place.  No evidence that the employee involved in the incident was previously involved in any other such incident, or even that any disorder had ever taken place on the licensee’s premises.

Citation: In the Matter of Island Mermaid Rest. Corp. v. New York State Liq. Auth., 52 A.D.3d 603 (2nd Dep’t 2008).