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S & B Restaurant, Inc. v. Pennsylvania Liquor Control Board

Commonwealth Court of Pennsylvania

February 4, 2015

S & B Restaurant, Inc. t/a the Woodlands
v.
Pennsylvania Liquor Control Board, Appellant

 Submitted, May 9, 2014

Publication Ordered April 29, 2015.

Appealed from No. 5477 of 2013. Common Pleas Court of the County of Luzerne. Hughes, III, J.

Justin E. Blake, Assistant Counsel, Harrisburg, for appellant.

Richard S. Bishop, Kingston, for appellee.

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE JAMES GARDNER COLINS, Senior Judge.

OPINION

Page 1107

LEADBETTER, JUDGE

The Pennsylvania Liquor Control Board (Board) appeals from the order of the Court of Common Pleas of Luzerne County, which reversed the Board's refusal to renew the liquor license for S & B Restaurant, Inc. t/a The Woodlands. The Board asserts error in the court's failure to disqualify The Woodlands from license renewal based upon a pattern of misconduct for which remedial measures were inadequate and in terminating the Conditional Licensing Agreement (CLA) executed between the Board and The Woodlands. After review, we are constrained to affirm the renewal of the license but we reverse the termination of the CLA.

The Woodlands is located in Plains Township, just outside of Wilkes-Barre and consists of multiple bars, restaurants, banquet facilities, a nightclub, cottages, and a 10,000 square foot hotel. It frequently hosts weddings, business conferences, conventions, and other large scale events, resulting in the admission of thousands of patrons per week. It has been in this location operating with a liquor license since 1970. The Woodlands filed a timely application to renew its liquor license for the period beginning September 1, 2012 and ending August 31, 2014. By letter

Page 1108

dated August 20, 2012, the Bureau of Licensing (Bureau) objected to the renewal of the license based upon ten citations, issued between 1987 and 2010, for violations of The Liquor Code[1] and over forty reported incidents of disturbance. Bureau's Objection Letter, Exhibit B-2, R.R. Vol. 2, at 491a. The objection letter also asserted that the numerous incidents of disturbances documented a breach of the CLA so as to justify nonrenewal of the license.[2] Id. After the Bureau lodged its objections,[3] a hearing followed to determine whether the objections warranted nonrenewal of the license.[4]

At the hearing, in addition to offering evidence of citation history, the Bureau presented testimony from several Plains Township Police Officers and other witnesses

Page 1109

regarding the incidents of disturbances. These incidents involved allegations of fights on the dance floor of the nightclub, instances of verbal altercations, assaults, reports of underage drinkers and visibly intoxicated, unruly persons. Some of the incident reports alleged assaults had occurred at the facility but lacked information as to the person or persons involved or the particulars of the incident. Many incidents had been resolved by the time police responded. In many of the incidents, Woodlands' security personnel had pepper sprayed the persons involved after those individuals responded aggressively or behaved in a threatening manner. Several of those subjected to pepper spray complained that security personnel sprayed them for no reason. On behalf of The Woodlands, several members of the security personnel, as well as the Director of Security, explained the policies regarding the use of pepper spray, as well as the training provided and their observations as to its effectiveness in controlling unruly patrons.

The Hearing Examiner recommended the renewal of the liquor license " conditioned upon" a prohibition against continued operation of the nightclub and limited to " the operation of its hotel, banquet facilities and restaurants." Hearing Examiner's Recommended Opinion, R.R. Vol. III, at 1235a. The Board, however, denied license renewal. In rendering its decision, the Board noted the ten adjudicated citations dating from 1987 through 2010, for which the Woodlands had paid various amounts in fines and been subjected to temporary suspensions of its liquor license. In addition, the Board described, in a 133 page opinion, each of the forty reported disturbances. The Board concluded that the Woodlands had not undertaken appropriate measures to correct the various problems and had abused its privileges under the license. Following the nonrenewal of its license, the Woodlands appealed to common pleas.

On appeal, common pleas considered the record from the proceeding before the hearing examiner and heard additional testimony on behalf of both parties. On behalf of the Woodlands, Chief Financial Officer, Michelle Valenti, its Director of Security, Cathy Kaminski, and its President, Gary Kornfeld, each testified, explaining that the facility employs a uniformed (shirts stating " Security" ) professional security staff, many with police training, who receive special training in recognizing and controlling gang related activity, as well as in the use of pepper spray for controlling violent or disruptive behavior. In addition, chaperones, located in bathrooms and the dance floor, are present during under-21 events. The facility maintains a list of prior patrons who are barred due to past bad behavior. It also conducts a " wand" search for metal or weapons before patrons are permitted entry and scans each patron's identification. Patrons are required to adhere to a dress code in order to minimize gang-related clothing. Valenti explained that since 2007 the business has shifted its focus from the bar operations to hotel and food service and has chosen musical bands and marketing strategies intended to attract a more mature clientele. Pursuant to the CLA, sixteen additional cameras and additional lighting had been installed. Plains Township Police Officer Richard Lussi, testified that the Woodlands is in an area primarily occupied by other hotels and businesses; an area without frequent crime. Officer Lussi testified that The Woodlands is " very cooperative" with the Plains Township Police Department and has been proactive in trying to control problems at the establishment, mentioning the surveillance, the security, and the substantial decrease

Page 1110

in the amount of calls the police department received regarding the premises. In addition, testimony from John Fronzoni, explained the training received by the Woodlands security staff in the use of pepper spray, which he considers a very effective means for controlling disturbances, and opined that the facility had been proactive and very serious about addressing security issues, and has a " very high level staff." Ronald Filippini, a Township Commissioner for over forty years and life-long township resident, explained that The Woodlands is one of the largest employers in the township, is a vital business in the township and that he was not aware of any complaints against the establishment.

Based on the evidence, common pleas concluded that:

In sum, the Board's objections to renewal of [Licensee's] liquor license, either standing alone or taken in the aggregate, do not warrant non-renewal of the liquor license. [Licensee] has a very minor history of citations, the incidents of disturbances over the past two years do not present a pattern of illegal behavior and in any case [Licensee] has taken substantial affirmative measures to correct and prevent such disturbances, and the allegations of gender discrimination are neither credible nor substantiated. [Licensee] has undertaken substantial corrective measures in response to prior violations of the liquor code and incidences of disturbances on the premises.
[Licensee] has not abused its liquor license and has complied with all of the conditions of the CLA. The CLA is therefore terminated.

Common Pleas' Opinion, R.R. Vol. IV, at 1385a-1386a. Based on these conclusions, common pleas reversed the Board's decision and granted renewal of the license. The Board filed the present appeal.

In this appeal, the Board contends that common pleas erred: (1) in concluding that the forty incidents of disturbances did not establish a pattern of misconduct sufficient to warrant nonrenewal; (2) in finding that the Woodlands took timely and substantial remedial measures consistent with the CLA to address violations and disturbances; and (3) in terminating the Conditional Licensing Agreement.

The renewal of a liquor license is discretionary. I.B.P.O.E. of W. Mt. Vernon Lodge 151 v. Pa. Liquor Control Bd., 969 A.2d 642, 648 (Pa.Cmwlth. 2009). Section 470(a.1) of the Liquor Code (Code), 47 P.S. § 4-470 (a.1), provides that the Board may refuse to renew a license:

(1) if the licensee . . . its directors, officers . . . agents or employes [hereinafter collectively referred to as the " licensee" ] have violated any of the [Commonwealth's laws or the Board's regulations];
(2) if the [licensee has] one or more adjudicated citations under this or any other license issued by the [B]oard . . . .
. . . .
(4) due to the manner in which this or another licensed premises was operated while the [licensee] [was] involved with that license. When considering the manner in which this or another licensed premises was being operated, the [B]oard 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 [B]oard may take into consideration whether any substantial steps were taken to address the activity occurring on or about the premises.

Page 1111

Section 470(a.1)(1), (2) and (4). Pursuant to Section 464 of the Liquor Code, 47 P.S. § 4-464, when an appeal is taken from a Board decision, the trial court hears the matter de novo. The trial court must make its own findings of fact and conclusions of law based upon the record of the proceedings below, if introduced by the Board, together with any other evidence that is properly submitted during the de novo hearing. Two Sophia's, Inc. v. Pa. Liquor Control Bd., 799 A.2d 917, 921 (Pa.Cmwlth. 2002). The trial court may sustain, alter, modify or amend the Board's decision, even if it does not make findings of fact materially different from those made by the Board. Todd's By the Bridge, Inc. v. Pa. Liquor Control Bd., 74 A.3d 287, 296 (Pa.Cmwlth. 2013); U.S.A. Deli, Inc. v. Pa. Liquor Control Bd., 909 A.2d 24, 27 (Pa.Cmwlth. 2006). We may reverse when the " trial court ignored substantial, uncontradicted evidence in the record, and the strong inferences drawn from it," see Philly International Bar, Inc. v. Pa. Liquor Control Board, 973 A.2d 1, 3 (Pa.Cmwlth. 2009) (quotations, citation and emphasis omitted), or when there is, inter alia, a " manifestly unreasonable exercise in judgment, or a final result that evidences partiality, prejudice, bias, or ill-will." I.B.P.O.E of W. Mt. Vernon Lodge 151, 969 A.2d at 648 (citation omitted).

We discern no merit in the Board's contention that common pleas abused its discretion in refusing to deny renewal based on the forty incidents of disturbances. After extensively reviewing the testimony and evidence regarding each incident, the trial court determined that: 1) the incidents all involved different individuals; 2) none of the incidents involved gangs and they did not have any other unifying element; and 3) " few if any resulted in serious injury to parties involved." Common Pleas' Opinion, R.R. Vol. IV, at 1379a. Moreover, common pleas found that none of the incidents resulted from " incompetent security or lazy operations," and, to the contrary, it found that many of the incidents were the result of security action to prevent intoxicated or underage individuals from entering the premises. Id. at 1381a. Common pleas opined that when an incident occurred " the record reflects that security personnel without fail responded timely to pacify these disturbances." Id. Further, common pleas did not credit much of the testimony of the witnesses involved in the incidents, as was its prerogative. Common pleas opined that it was " hard pressed to find any link between the operations of the club and the incidents of disturbances." Id. The court noted particularly that the evidence did not establish that intoxicated minors or adults involved in the disturbances had purchased alcohol at The Woodlands. Common pleas found that the number of incidences at the premises were not outlandish, a drain on police resources, or disproportionate to other businesses. See Todd's By The Bridge, 74 A.3d at 296. The evidence does not establish a pattern of misconduct on the part of the Woodlands but rather documents various unrelated incidences of misconduct and attempts, often successful, on the part of Woodlands security to contain such disturbances. As there is substantial support in the record for the court's findings and its conclusions are rationally based, we discern no abuse of discretion.

Likewise, we discern no error in common pleas' conclusion that The Woodlands took timely measures to prevent or guard against illicit activity and that the measures taken substantially complied with the requirements imposed under the

Page 1112

CLA.[5] The record contains ample evidence to establish that The Woodlands monitors patron activity via video cameras and additional lighting. It discourages disruptive behavior via metal detectors, identification scans, imposition of a dress code, as well as a ban on patrons who had been identified as repeatedly problematic and staff training to recognize subtle signs of intoxication so as to avoid serving alcohol inappropriately. It controls disruptions via use of pepper spray by security personnel who receive special training in its use. The fact that approximately sixteen incidents of disturbance occurred after enactment of remedial measures pursuant to the CLA does not mean, as the Board contends, that the measures taken were either insubstantial or ineffective. Licensees are not held to a standard of perfection, or required to demonstrate that they eliminated all incidents of disturbances or prevented all illegal activity from ever occurring at the licensed premises. See Todd's By The Bridge, 74 A.3d at 297 (licensee is not required to institute every possible safety measure); Rosing, Inc. v. Pa. Liquor Control Bd., 690 A.2d 758, 762 (Pa.Cmwlth. 1997) (licensee is not required to do everything possible to prevent criminal activity on the premises, act as their own police force, or close their business). The trial court did not ignore uncontradicted evidence here; it simply weighed that evidence differently than did the Board. We cannot say that its decision demonstrates a manifestly unreasonable exercise of judgment, partiality or bias. While the matter could have been decided differently, without a blatant disregard of evidence, as occurred in Philly International,[6] a material error of law, or clear abuse, we are bound by the trial court's exercise of discretion.

Lastly, we conclude that common pleas did err in terminating the CLA. By its terms, the CLA is a binding contract between the Board and The Woodlands unless and until the parties enter a subsequent agreement. When reviewing a licensing decision, common pleas " shall either sustain or over-rule the action of the board and either order or deny the issuance of a new license or the renewal or transfer of the license . . . to the applicant." 47 P.S. § 4-464. In Becker's Café, Inc. v. Pennsylvania Liquor Control Board, 67 A.3d 885 (Pa.Cmwlth. 2013), this court recently reversed a trial court's order which imposed a condition on the licensee's renewal of its liquor license. It follows that, if a trial court has no authority to impose conditions on a license, then neither does it have authority to remove conditions imposed on a license by a pre-existing

Page 1113

CLA. The policy considerations underlying the importance of de novo review, i.e., assurance that license suspensions will only be enforced when neutral judicial officers are satisfied that violations have been established, see Pa. State Police, Bureau of Liquor Control Enforcement v. Cantina Gloria's Lounge, Inc., 536 Pa. 254, 639 A.2d 14, 18 (Pa. 1994), does not support the conclusion urged by The Woodlands that the judiciary has broad independent authority to review all actions taken by the Board. Under the Liquor Code, negotiated conditional licensing agreements are specifically authorized and when such agreements are entered they " shall be binding on the applicant." 47 P.S. § 4-470(a). Having been properly negotiated and agreed to by the parties, the CLA remains in effect " on the licensee and on the premises unless and until a subsequent agreement is reached with the Board rescinding these restrictions." CLA, ¶ 10, R.R. Vol. IV, at 1418a (emphasis added).

Accordingly, we reverse common pleas' termination of the CLA. In all other respects, we affirm.

ORDER

AND NOW, this 4th day of February, 2015, the order of the Court of Common Pleas of Luzerne County in the above-captioned matter is REVERSED in part and AFFIRMED in part. Insofar as Common Pleas terminated the Conditional Licensing Agreement dated October 26, 2011, we REVERSE. In all other respects, we AFFIRM.

ORDER

AND NOW, this 29th day of April, 2015, IT IS HEREBY ORDERED that the above-captioned opinion filed February 4, 2015, shall be designated OPINION rather than MEMORANDUM OPINION and it shall be reported.


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