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PENNSYLVANIA LIQUOR CONTROL BOARD v. TLK (07/27/88)

decided: July 27, 1988.

PENNSYLVANIA LIQUOR CONTROL BOARD, APPELLEE,
v.
TLK, INC., T/A PETER P'S, APPELLANT



Appeal from the order of the Commonwealth Court dated January 15, 1987, docketed to No. 201 C.D. 1986, which affirmed the order of the Court of Common Pleas of Dauphin County, Civil Division, at No. 639 M.D. 1985.

COUNSEL

James G. Morgan, Jr., Harrisburg, for appellant.

Eileen S. Maunus, Asst. Counsel, Kenneth Skelly, Chief Counsel, Harrisburg, for appellee.

Nix, C.j., and Larsen, Flaherty, McDermott, Zappala, Papadakos and Stout, JJ. McDermott, J., files a concurring opinion.

Author: Flaherty

[ 518 Pa. Page 502]

OPINION OF THE COURT

This appeal from the revocation of a restaurant liquor license presents a question never before addressed by this Court: the extent to which a licensee may be liable for illicit drug transactions by an employee. We hold that a strict liability standard is inappropriate and that at least some degree of scienter is required. When violations of the Liquor Code and its attendant laws and regulations are not the conduct under review, a licensee is liable only if he knew or should have known of the illegal activity and if he fails to prove substantial affirmative measures taken to eliminate a known pattern of illegal activity.

The facts of the case are as follows. In January, 1984, Ron Jacobs was employed as a doorman at Peter P's, the licensed premises. On January 25, inside the restaurant, an informant and an undercover agent arranged to purchase heroin from Jacobs for $30. Jacobs refused to deliver the heroin in the restaurant, so the parties left and the exchange was made off the premises.

Following a hearing, the Pennsylvania Liquor Control Board (PLCB) revoked Peter P's liquor license due to the sale of heroin by Jacobs. The PLCB found: "The licensee, by its servants, agents or employes permitted the use of its licensed premises in the furtherance of the traffic in or use of a controlled substance, on January 25, 1984 . . . ." On appeal, a de novo hearing was held, and the court of common pleas sustained the license revocation. The Commonwealth Court, in an unreported opinion, affirmed the order of the common pleas court, reasoning that the violation occurred on the licensed premises. The court relied on its decision in Bates v. Commonwealth, 40 Pa. Commw. 426, 397 A.2d 851 (1979). Bates, where the violation occurred on the licensed premises, held that "violation of the laws regarding the use or sale of controlled substances by an employee, regardless of whether the licensee had knowledge of the conduct, constitutes proper grounds for license suspension," citing Sobel Liquor License Case, 211 Pa. Super. 129,

[ 518 Pa. Page 503235]

A.2d 623 (1967). We allowed this appeal to address the question whether a liquor license may be suspended or revoked due to illegal activity which is unknown to the licensee or whether the licensee must have knowledge of the misconduct.

A violation of the Liquor Code or its attendant laws and regulations places a liquor license in jeopardy on a basis of strict liability -- that is, a license may be suspended or revoked for such a violation regardless of whether the licensee knew or should have known of the ...


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