Real stories and lesson from the trenches at the NY Liquor Authority

Second Chances Are Harder to Get These Days

If you have a retail liquor license with a history of violations, you may be denied an application for a retail license for a second license at another location. Recently, the Authority has been denying retail licenses at an increased rate to applicants holding one NY liquor license with an adverse history (violations) when the licensee seeks a second retail license simultaneously. The Full Board wants to see that the licensee principals have successfully operated the first location for 1-3 years violation-free. In some cases, the Full Board invites applicants to reapply in one year. However, that is not any guaranty because in at least one case, more than one year was not sufficient for a history with several underage sales.
This is bad news for licensees who have an adverse history but good news for those businesses that are legally compliant.

Don’t make a mistake in your application

The Authority’s Licensing Bureau has exhibited a near zero tolerance for mistakes (that they deem “misinformation”) in license applications, especially personal questionnaires. License applications have been summarily denied to principals and businesses based on “unfit character” for applications a failure to report a prior arrest and conviction that an applicant mistakenly thought was not reportable or misunderstood what the question asked. There is often a question as to how to deal with “sealed records.” (Note: That was not the case in the actual situation described but one where we predict this same decision by the SLA is likely.) Similar denials were issued for failure to report a previous application when an applicant withdrew or was denied and then reapplied shortly thereafter. Denials have also been issued for an applicant that that did not list a church location that was not on the SLA LAMP report.
In our experience, reconsideration requests are often denied and an entirely new application is required. In one case, the proof was submitted that the SLA was, in fact, incorrect about the existence of an operating church that formed the basis of denial. While the property was owned by a former church, it had not operated in that location for at least 3 years and based on information from nearby residents and business owners, probably 10 or more years. The proof was also submitted that the Authority had previously issued other licenses within 200 feet and that other licenses did not report the alleged church on their applications. Nonetheless, two requests to reconsider based on this information were summarily denied. The Authority would not even reconsider the matter and review the applicant’s documentation. The Authority required the Applicant to go to court if it wanted to have a wrongful denial reviewed.
New York is not always friendly to business.

Failure to Get a Liquidator’s Permit Gets High Fines

In a recent disciplinary matter, the Authority offered a $10,000 fine for failure of a liquor store business owner to obtain a $36 liquidator’s Permit to purchase leftover inventory from another liquor store that closed. In this case, the seller did obtain a liquidator’s permit in connection with the sale of the business. The total inventory was over $250,000 but the sale contract limited inventory purchase to only $200,000 based on the bank maximum loan terms and there was more than $50,000 in leftover inventory. That leftover inventory was sold to this liquor store but they did not obtain a second liquidator’s permit because the Authority told the seller it was not necessary because she already had one. Further, the liquidator’s permit did not list a particular transferee and gave the impression it was valid considering the advice from the Authority’s own helpline telephone call center.
When the seller provided telephone records supporting her statement that she called the Authority to ask whether she needed a second liquidator’s permit, Legal Counsel reduced the fine to $7,000 or have the liquor store owner surrender the license, but did not feel the Authority’s call center’s incorrect answer was a defense. The licensee trying to everything the right way was not enough. Contacting the Authority to confirm that she was doing the right thing was not enough. Too bad, so sad. Legal Counsel acknowledged that the call center regularly gives incorrect information and people should not rely on the answers given. Wondering what the law really was? It was true that the licensee did not need to pay a second $36 liquidator permit fee. It was not true, however, that she did not need to fill out a second application listing the second transaction details.

The takeaway is to be very careful when relying on answers from the call center. I have found many times when improper answers were provided by the call center, even advising the licensing staff and Legal Counsel’s office of the misinformation being given out from time to time. Without written proofs or a recording of the call, the Authority will not stand behind its official advice. Legal Counsel will not accept statements or testimony about what you were told, they must have the actual conversation produced to them. I advise you to get all answers in writing by e-mail from the Authority or record calls with the Authority. I am sad to think the public is forced to do this to avoid disciplinary matters or denial of a license application after following the Authority’s own guidance, but that is where we are at the moment. C’est la vie.
Even better, seek experienced counsel for advice. Even as an experienced practitioner, I e-mail questions and retain the responses for future reference because I have encountered this situation quite a few times where inconsistent answers are given by the SLA and their position is that they are not bound by the statements and advice of official employees despite how unfair that is to the public that it can’t rely on its own government. A do-it-yourself approach can be costly if mistakes are made.

You May Need To Cancel Your Vacation or Business Trip if You Have a Full Board Meeting

When you file an application, you have no way of knowing when it will be reviewed, and if it goes to the Full Board for any reason, when that meeting date will be. Cases can take anywhere between 3 and 12 months. When a case goes to the Full Board, you generally get less than 10-15 business days notice that you have been placed on the calendar. There have been applicants who have been placed on the Full Board calendar but had pre-scheduled vacations, business trips or other reasons they were unavailable to attend.
The Full Board did not take kindly to the situations, even when the applicant’s attorney appeared on its behalf on the scheduled date. The Board also did not take kindly to a request or an adjournment within a few days of the scheduled Meeting. The Full Board stated it would deny the application if the applicant was not personally present, sometimes allowing the possibility to adjourn to the next meeting. It appears from the comments made by the Full Board that they actually do deny cases on the basis that the applicant was unable to appear. The Full Board has made comments like “I’d like a vacation too” and inferring the applicant was completely irresponsible because it was unable to be present and that if it didn’t care about its business, the Full Board didn’t need to review it. It made clear it expected the vacation to be canceled if the applicant wanted the Board to even consider their application on the scheduled date and sending your attorney was not sufficient.

What do you need to do if you find yourself in this situation? Within a day or two of receiving the notice to appear, contact the Secretary to the Full Board and request an adjournment. Do this in writing and explain the reason you are asking to be delayed to another meeting. This will, however, add another 3 weeks or more to the resolution of your application. If the delay is harmful to your business, you may need to cancel that vacation or business trip.