STATE OF NEW JERSEY, DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF ALCOHOLIC BEVERAGE CONTROL v. SAZ, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3413-04T53413-04T5

STATE OF NEW JERSEY,

DEPARTMENT OF LAW AND

PUBLIC SAFETY, DIVISION

OF ALCOHOLIC BEVERAGE

CONTROL,

Petitioner-Respondent,

v.

SAZ, INC., t/a

SHAKERS,

Respondent-Appellant.

________________________________________________________________

 

Submitted October 19, 2005 - Decided

Before Judges Wecker and Graves.

On appeal from the Department of Law and Public

Safety, Division of Alcoholic Beverage Control.

Kearns, Vassallo, & Kearns, and Ben J. Zander,

attorneys for appellant (John F. Vassallo, Jr.,

and Mr. Zander, of counsel; Mr. Vassallo and

Patricia J. Szymanski, on the brief).

Peter C. Harvey, Attorney General, attorney for

respondent (Lorinda Lasus, Deputy Attorney General,

of counsel; Andrew R. Sapolnick, Deputy Attorney

General, on the brief).

PER CURIAM

Saz, Inc., t/a Shakers (Shakers), appeals from an order entered by the Director of the Division of Alcoholic Beverage Control on February 10, 2005, granting summary decision in favor of the Division of Alcoholic Beverage Control (the Division or ABC). Shakers argues that the order granting summary decision should be vacated "because there are disputed material facts which can only be decided in an evidentiary hearing." We agree.

Shakers, a bar located on Pacific Avenue in Wildwood, holds a plenary retail consumption license. In October 2001, the Division charged Shakers with three violations of serving alcoholic beverages to underage patrons on May 27, 2001, in violation of N.J.A.C. 13:2-23.1(a):

No licensee shall sell, serve or deliver or allow, permit or suffer the sale, service or delivery of any alcoholic beverage, directly or indirectly, to any person under the legal age to purchase or consume alcoholic beverages, or allow, permit or suffer the consumption of any alcoholic beverage by any such person in or upon the licensed premises.

The charges were referred to the Office of Administrative Law (OAL) for adjudication. Prior to a hearing, Shakers by its president, Stacey Zane, and the Division agreed to settle the case in a consent order, which was approved by the Administrative Law Judge on August 27, 2002. In the consent order, Shakers entered a non-vult plea to the charges and the parties agreed: (1) Shaker's license would be suspended for forty-five days; (2) thirty of those days would be converted to a $4,575 monetary compromise in lieu of suspension; and (3) the Division would stay the remaining fifteen days for two years from the order's final date. Paragraph 7 of the consent order dated August 27, 2002, reads as follows:

The remaining 15 days of the 45 day suspension will be stayed for a period of 2 years.

In the event that there are no violations found of a nature similar to those charged in the instant matters within 2 years of the date of this Order, the 15 days stayed above will be automatically dismissed.

In the event that the Division finds the existence of further actions similar in nature to those charged in the instant matter within 2 years of the date of this Order, the Division can seek a hearing before the Director (at which the respondent/licensee will have an opportunity to be heard). Upon a finding at such hearing that new violations, similar in nature to those charged in the instant matters, have occurred on the licensed premises, (or after a finding of quilt by an OAL Judge or the municipal issuing authority which is affirmed by the Director), the licensee will be required to serve the 15 days which have been stayed unless licensee takes a further appeal from any such determination, in which case the 15 days shall not be served until the matter is finally decided by the Division or the appropriate Court on appeal. No compromise offer in lieu of suspension will be accepted with regard to these 15 days.

[Emphasis added.]

The present matter concerns additional charges filed after the entry of the consent order on August 27, 2002. On the evening of September 12, 2003, and morning of September 13, 2003, ABC investigators together with members of local police departments and the Cape May Prosecutor's Office, conducted an undercover operation at Shakers. During the course of this undercover investigation, a patron was observed dancing on a bar at Shakers and exposing his penis while a female patron gave him money. Investigators also observed two twenty-year-old female patrons drinking alcoholic beverages, and one of the women was also seen dancing on the bar and exposing her breasts to patrons who were groping her. When questioned, both women claimed that no one had asked to see their identification when they entered the bar or when they ordered their drinks. Subsequently, these two women both pled guilty to a municipal ordinance prohibiting the underage purchase and consumption of alcoholic beverages. Each of the young women was fined $250 and $30 for court costs.

As a result of this investigation, Shakers was charged with two counts of serving alcoholic beverages to underage patrons, in violation of N.J.A.C. 13:2-23.1(a), and two counts of allowing, permitting or suffering lewd or immoral activity, in violation of N.J.A.C. 13:2-23.6(a)(1). On March 23, 2004, Shakers pled not guilty to each of these charges.

In May 2004, based on certifications signed by undercover investigators and the guilty pleas by the two twenty-year-old women, the Division filed a motion for a summary decision. In response to the Division's motion, Shakers submitted two certifications: one from Edward Bukowski, the doorman at Shakers on the date of the alleged violations, and the other from James Farley, the bar manager. Bukowski certified that he "personally carded every single person that approached [him] to enter the premises," and Farley "emphatically" denied that Shakers allowed or permitted any illegal activities to take place. Farley's certification included the following:

2. With regard to the evening/morning in question, September 13, 2003, I can state that the evening/morning was a memorable one (other than for the ABC raid) due to the fact that this was the annual convention of paid and volunteer fire departments, which was held in Wildwood. As such, I was aware that we were almost at full capacity that evening, and were especially diligent, specifically in relation to carding patrons.

3. It is Shaker[s'] strict policy to card each and every person at the door. Each and every person that passed through the doors on September 13, 2003 had to have been carded, since that is our policy. Moreover, I myself relieved our doorman, EDWARD BUKOWSKI when he needed a break from the door-tending duties. Other than myself, no one else was allowed to act as a doorman.

4. At the end of busy evenings, it is not unusual for our employees to find numerous so-called "id's" lying around on the floor, etc., suggesting, at least to me, that some people could have had false licenses or id's. To limit the possibility of false id's, Shakers has installed several security systems, specifically, an ultraviolet light to highlight (literally) phony id's or licenses; as well as an id swipe machine that catches obvious fake id's too well done for the naked eye. I expect an id "photo" machine to be delivered shortly that records the photo of the id user. However, on the night/day in question, the UV light and id swipe machine were used to verify id.

5. It is the policy of Shakers to remove rowdy or inappropriate customers as soon as they are spotted, as well as immediately "cutting them off." If the bartender cannot manage the customer, the line or bar manager is called to remove the customer. If that still does not resolve the matter, I will remove the customer.

6. I did not see, nor was there reported to me by any employee, any of the actions set forth in the Investigators' reports . . . .

7. With regard to the balance of the allegation regarding the bar's "permitting" or "allowing," I emphatically deny that Shakers "allows" or "suffers" anything; to the contrary, we are the most compliant and strict bar in all of Wildwood.

On February 10, 2005, the Director granted summary decision in favor of the Division and against Shakers on all four charges. The Director held that no genuine issue of material fact existed as to Shakers' guilt and that the Division was entitled to prevail as a matter of law. The Director found Shakers guilty of two violations of N.J.A.C. 13:2-23.1(a), and two violations of N.J.A.C. 13:2-23.6(a)(1).

The Director determined that "the total presumptive penalty in this case is 135 days." But he also found that there "may be a basis for mitigation of penalty"; therefore, he transmitted the matter to the OAL to determine whether mitigation existed that warranted a reduction in penalty. Nevertheless, the Director imposed a fifteen-day license suspension for violation of the 2002 consent order, and he ordered that Shakers' license be suspended effective at 2:00 a.m. on Friday, July 1, 2005, through 2:00 a.m. on Saturday, July 16, 2005.

On March 17, 2005, Shakers filed a timely notice of appeal with this court, and it sought a stay from the Division. On March 24, 2005, the Director certified the February 10 decision as a final decision pursuant to R. 4:42-2. But the decision was stayed pending final disposition of this appeal.

We will first address the fifteen-day suspension for violating the consent order dated August 27, 2002. That order was entered in connection with the three initial charges alleging the sale of alcohol to underage patrons. Those three charges were mailed to the owner of Shakers on October 10, 2001, together with a letter indicating that if the charges were not disputed, then "this matter will be administratively concluded without a hearing." The cover letter also advised the owner of Shakers that she was entitled to a hearing "in the form of a trial" if she entered a not guilty plea to the original charges:

If you plead "Not Guilty," or if you fail to enter a plea, this case will be sent to the Office of Administrative Law (OAL) for a hearing. That hearing will be in the form of a trial which will take place before an Administrative Law Judge. After the Division presents its case you will be given a full opportunity to show why you are not guilty and/or why your license should not be suspended or revoked, as well as why any cash, evidence, alcoholic beverages or property seized should not be forfeited. The Division must prove the truth of the charges or they will be dismissed.

As previously noted, the consent order entered thereafter specifically provides that "[i]n the event that the Division finds the existence of further actions similar in nature to those charged in the instant matter . . . the Division can seek a hearing before the Director (at which [Shakers] will have an opportunity to be heard)." Shakers now argues that the summary decision circumvents the hearing, in the form of a trial, that the consent order provides for prior to a determination that the order has been violated. Based on our review of the record, including the cover letter from the Division to Shakers dated October 10, 2001, we find this argument persuasive.

We are also convinced that Shakers should have been afforded an opportunity to confront and cross-examine the two twenty-year-old women who pled guilty to the municipal ordinance prohibiting the underage purchase and consumption of alcoholic beverages. The investigators alleged in their certifications that these two individuals both stated that they did not show identification and were not asked for identification upon entering the bar or purchasing alcoholic beverages. These hearsay statements, however, were disputed, at least to some extent, by the two certifications submitted by Shakers. According to Shakers, the certifications of Bukowski and Farley demonstrate that each and every person that entered the premises was checked for identification on the date of the alleged violations.

Shakers also contends that the statements attributed to the two young women were inherently unreliable because the two twenty-year-old women "had a motive to lie about whether they used false identification" when they entered the bar. Shakers argues that if the two underage patrons acknowledged misrepresenting their age upon entering the premises, they could have been charged with violating N.J.S.A. 33:1-81(c), and, upon conviction, they would have been subject to a mandatory loss of driving privileges for six months and a fine of not less than $500. Thus, the young women may have been motivated to protect their own interests by claiming that they entered Shakers without misrepresenting their ages. Moreover, without the benefit of an evidentiary hearing, it was not possible to determine whether the appearance of the two young women "was such that an ordinary prudent person would believe [that they were] of legal age to [purchase alcohol]." N.J.S.A. 33:1-77.

We recognize that hearsay statements are generally admissible in the trial of contested administrative proceedings. N.J.A.C. 1:1-15.5(a). In this case, however, there was no trial, and the certifications of the investigators were apparently accepted as true even though they contained hearsay statements that were not necessarily reliable. In addition, the two individuals employed by Shakers on the night in question claimed that everyone who entered the premises was carded. Thus, there were "genuine issue[s] as to . . . material fact[s]," which should not have been resolved without the benefit of an evidentiary hearing. N.J.A.C. 1:1-12.5(b); Frank v. Ivy Club, 120 N.J. 73, 98 (1990) (noting that disputed issue of material fact requires administrative agency to hold an evidentiary hearing), cert. denied, 498 U.S. 1073, 111 S. Ct. 799, 112 L. Ed. 2d 860 (1991).

Both charges alleging lewd or immoral activity refer to conduct by patrons who were present at Shakers on September 13, 2003, and Shakers disputes that it allowed or permitted any lewd or immoral activity in violation of N.J.A.C. 13:2-23.6(a)(1). Based on the certifications of its employees, Shakers argues:

Even if the lewd activities occurred as alleged, there is a dispute as to whether Shakers was in a position to control the alleged activity. In order for Shakers to allow the lewd activity on its premises, Shakers had to have the ability to see, to prevent the alleged acts from occurring, and to stop the alleged acts. The activity was alleged to have been committed by patrons and not by employees. Shakers does not hire "go-go dancers." If the alleged lewd acts actually occurred, then they were the unauthorized acts of patrons and were not encouraged or allowed by Shakers. . . . If the alleged activities occurred, Shakers did nothing to promote or encourage this activity.

The Division implicitly contends that in addition to conduct that it encourages or condones, Shakers is liable for "lewd or immoral activity" on its premises that it knows or reasonably should know is occurring and fails to stop. We agree. An evidentiary hearing is necessary, however, to fairly resolve the disputed facts.

 
Reversed and remanded for further proceedings consistent with this opinion.

(continued)

(continued)

11

A-3413-04T5

December 2, 2005