Paey Associates, Inc. t/a 40 Below, Appellant
Pennsylvania Liquor Control Board
Argued: September 12, 2013.
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ANNE E. COVEY, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.
Paey Associates, Inc. t/a 40 Below (Licensee) appeals from the Northampton County Common Pleas Court's (trial court) January 3, 2013 order denying Licensee's appeal from the Pennsylvania Liquor Control Board's (PLCB) refusal to renew Licensee's Restaurant Liquor License No. R-15950 (License). The issues for this Court's review are: (1) whether Licensee was prejudiced because it did not receive the PLCB's April 2010 warning letter; (2) whether inadmissible hearsay was admitted at the trial court hearing; (3) whether police incidents established a pattern of illegal activity at Licensee's premises sufficient for the PLCB to refuse to renew the License; (4) whether the evidence supporting a connection between illegal activity and the licensed premises was sufficient for the PLCB to refuse to renew the License; and, (5) whether a single 2008 citation for a "Ladies Night" was sufficient evidence for the PLCB to refuse to renew the License.
Licensee has held its License since October 2006. In accordance with Section 470 of the Liquor Code,  47 P.S. § 4-470, Licensee applied to renew its License for the premises located at 40 West Broad Street, Bethlehem, Pennsylvania for the period beginning May 1, 2012 and ending April 30, 2014. By April 18, 2012 letter (Objection Letter), the PLCB's Bureau of Licensing (Licensing) objected to the License renewal based upon Citation No. 08-1427, and 19 police incidents at or immediately adjacent to the licensed premises occurring between May 1, 2010 and April 18, 2012 involving minors, assaults and drugs. The Objection Letter also stated:
In April 2010, the [Bureau] issued a warning . . . [warning letter] to conduct properly your establishment as your license liquor (sic) and/or malt beverages is a privilege that can be rescinded. Failure to comply with the Pennsylvania [l]aws governing the sale of alcohol[ic] beverages could result in denial of a subsequent license renewal. Since said warning, nineteen (19) incidents of minors, assaults and drug[s] were reported by the Bethlehem City Police Department.
Any of the above-stated reasons is sufficient in and of itself to warrant non-renewal of your license.
Reproduced Record (R.R.) at 11a-12a. By May 9, 2012 letter, Licensee was notified that a hearing would be held before a hearing examiner on May 31, 2012 relative to the Bureau's objections. At the May 31, 2012 hearing, Licensing presented evidence of 11 incidents of misconduct at or near Licensee's premises that included public drunkenness, assaults, fights, intoxicated minors and unconscious patrons. Licensing also presented Citation No. 08-1427, which charged Licensee with violating Section 5 of the Pennsylvania Human Relations Act by conducting a "Ladies Night" on April 4, 2008, whereby female patrons were admitted free of charge and were offered drinks at a reduced price, while male patrons were charged admission and full drink prices. Licensee admitted the charge and paid a $100.00 fine. Based upon the evidence presented to the hearing examiner, she recommended that the PLCB refuse to renew Licensee's license. On August 8, 2012, the PLCB refused to renew the License.
Licensee appealed to the trial court, which held a de novo hearing on December 19, 2012, during which the PLCB's hearing record was admitted, and Licensee's owner/manager James D. Paey (Mr. Paey) testified about not receiving the April 2010 warning letter and about the measures Licensee took before August 2012 to prevent misconduct at its premises. On January 3, 2013, the trial court denied Licensee's appeal. Licensee appealed to this Court.
Licensee first argues that it was prejudiced because it did not receive the April 2010 warning letter. When Licensee applied to renew its License for the licensing period May 1, 2010 through April 30, 2012, Licensing conducted a preliminary review of Licensee's licensing history and purportedly issued an April 21, 2010 warning letter which stated:
After careful consideration of your current and prior operating history, the [PLCB] has decided to approve your application . . . . However, the decision to renew your license does not diminish the serious nature of the allegations of fights, an assault by bouncers and a minor reported by the Bethlehem Police Department during the time [from] May 2008 to [the] present.
This letter serves as a warning that you, as a licensee, must take affirmative steps to prevent violations of the Liquor Code and/or prevent employees and patrons from engaging in inappropriate activities in and around your premises through increased cooperation with the Bethlehem Police Department and the Bureau of Liquor Control Enforcement of the Pennsylvania State Police [BLCE] in order to retain your licensing privilege. Failure to do so could result in further action against your licensed business.
R.R. at 14a. The April 2010 warning letter also declared: "Pending issuance of a formal license, this letter constitutes your authority to dispense liquor and malt or brewed beverages . . . for a period of thirty (30) days effective May 1, 2010." R.R. at 14a.
Despite that the April 2010 warning letter was sent to "Paey Associates, Inc. t/a 40 Below" at 40 West Broad Street, Bethlehem, which is the address Licensee provided to Licensing, and is the same address to which the Bureau sent Licensee's 2012 Objection Letter and notices, the trial court found that "Licensee did not receive the April 21, 2010 [warning] letter." R.R. at 429a. The trial court concluded, however, that "Licensee's failure to receive the [PLCB]'s April 2010 warning letter did not prejudice him in the within matter."
First, there exists no statutory or judicial mandate that Licensing issue a licensee a written reminder to operate lawfully. Despite the April 2010 warning letter, Licensing renewed Licensee's May 1, 2010 License. Contrary to Licensee's contention, no due process was required here.
Due process is a flexible concept and imposes only such safeguards warranted by the situation. Although notice is essential to due process, due process notice requirements are non-technical. Adequate notice for purposes of procedural due process consists of, at a minimum, a sufficient listing and explanation of the charges. The meaningful opportunity to be heard requirement of procedural due process entails an appropriate hearing. In assessing an alleged denial of procedural due process, demonstrable prejudice is a key factor.
Moore v. Dep't of Transp., Bureau of Motor Vehicles, 19 A.3d 1200, 1204 (Pa. Cmwlth. 2011) (citations omitted).
Section 470(a.1)(4) of the Liquor Code authorizes Licensing to object to a renewal application, inter alia, "due to the manner in which [the] . . . licensed premises was operated while the licensee . . . [was] involved with that license." 47 P.S. § 4-470(a.1)(4). Under Section 470(a.2) of the Liquor Code, the PLCB may refuse to renew a license only after the Bureau gives the licensee "at least ten days' notice, stating the basis for the objection[.]" 47 P.S. § 4-470(a.2). The due process required by Section 470 of the Liquor Code was met by the April 2012 Objection Letter. There is no similar requirement for the April 2010 warning letter where the PLCB renewed the License but warned Licensee that it must operate lawfully.
There is also no merit to Licensee's claim that the Commonwealth Court in Can, Inc. mandated the PLCB to send the April 2010 warning letter by certified mail. See Licensee Br. at 15. Can, Inc. involved Section 471(a) of the Liquor Code, which expressly requires the BLCE to send violation notices in enforcement actions "by registered mail." Section 470, relating to license renewals, does not have a similar registered mail requirement. Moreover, in Can, Inc., this Court expressly "decline[d] to legislate an actual notice requirement where the General Assembly failed to act." Can, Inc., 651 A.2d at 1164. Thus, it is clear that the PLCB was not directed by the Commonwealth Court to use certified mail to send the April 2010 warning letter.
Second, Licensee suffered no prejudice. The April 2010 warning letter addressed activity that took place on or near Licensee's premises during licensing period May 1, 2010 through April 30, 2012 for which Licensee's License was renewed. The April 2010 warning letter did not in any manner discuss the May 1, 2012 through April 30, 2014 licensing period at issue here. However, to the extent the April 2010 warning letter impacts the 2012 licensing period, this Court has held that a party's full participation in a trial court's de novo hearing, as was the case here, will cure a prior notice deficiency. Appeal of Concord Ranch, Inc., 578 A.2d 1339 (Pa. Cmwlth. 1990); Locy v. Pennsylvania Liquor Control Bd., 557 A.2d 1164 (Pa. Cmwlth. 1989).
The April 2010 warning letter notified Licensee to take steps to prevent the types of activities – fights, assaults, and minors on the premises – between May 2008 and April 2010 about which the Bethlehem Police Department notified Licensing. Licensee here claims it was unaware of those incidents and, therefore, the 2012 Objection Letter was a "ton of bricks" dropped on him. Licensee Br. at 15. However, Pennsylvania law is clear that a licensee is strictly liable for violations of the Liquor Code, and may also be held accountable for non-Liquor Code violations, if it can be established that there was a pattern of illegal activity on the licensed premises about which the licensee knew or should have known, and the licensee failed to take substantial steps to prevent such activity. 47 P.S. § 4-470(a.1); Pennsylvania Liquor Control Bd. v. TLK, Inc., 518 Pa. 500, 544 A.2d 931 (1988). Because the incidents included an assault by bouncers and involved the local police, they were or should have been known by Licensee and were a matter of public record. Accordingly, Licensee either knew or should have known of the incidents referred to in the April 2010 warning letter.
This Court has held: "One who accepts such license must be deemed to consent to all proper conditions and restrictions which have been or may be imposed by the legislature in the interest of public morals or safety." Hyland Enters., Inc. v. Pennsylvania Liquor Control Bd., 631 A.2d 789, 791 (Pa. Cmwlth. 1993). Having held the subject License since October 2006, Licensee is obligated to know, even without the April 2010 warning, that it must prevent violations of the Liquor Code and/or prevent employees and patrons from engaging in inappropriate activities in and around its premises, or risk losing its License. Licensing was not required to issue, and Licensee certainly should not have needed a written reminder to operate lawfully. Thus, Licensee was not prejudiced because it did not receive the April 2010 warning letter.
Licensee next argues that inadmissible hearsay was admitted at the trial court hearing. Licensee specifically argues that the trial court's decision was based on police reports which "must then be cleaned of any further hearsay." Licensee Br. at 20. Hearsay is generally inadmissible in any court proceeding. D'Alessandro v. Pennsylvania State Police, 594 Pa. 500, 937 A.2d 404 (2007); Pa.R.E. 802. "[Police] incident reports constitute hearsay, because they contain out-of-court statements offered to prove the truth of the matters asserted therein." First Ward Republican Club of Phila. v. ...