My Convenience Inc. v New York City Dept. of Consumer Affairs

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My Convenience Inc. v New York City Dept. of Consumer Affairs 2020 NY Slip Op 31709(U) June 1, 2020 Supreme Court, New York County Docket Number: 150131/2020 Judge: Carol R. Edmead Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 06/03/2020 09:43 AM NYSCEF DOC. NO. 21 INDEX NO. 150131/2020 RECEIVED NYSCEF: 06/03/2020 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART HON. CAROL R. EDMEAD Justice ---------------------------------------------------------------------------------X MY CONVENIENCE INC. IAS MOTION 35EFM INDEX NO. MOTION DATE Plaintiff, 150131/2020 03/04/2020 001 MOTION SEQ. NO. -vNEW YORK CITY DEPARTMENT OF CONSUMER AFFAIRS, DECISION + ORDER ON MOTION Defendant. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 were read on this motion to/for ARTICLE 78 (BODY OR OFFICER) . Upon the foregoing documents, it is OREDERED that the branch of the petition seeking review of the OATH decision pursuant to Article 78 (Motion Seq 001) is dismissed as Petitioner failed to exhaust administrative remedies; and it is further ORDERED that the branch of the petition seeking review of the DCA decision is respectfully transferred to the Appellate Division, First Department, for disposition, pursuant to CPLR 7804(g). This proceeding involves an issue as to whether a determination made as a result of a hearing held, and at which evidence was taken, pursuant to direction of law, is, on the entire record, supported by substantial evidence (CPLR 7803(4)); and it is further ORDERED that Petitioner shall serve a copy of this order with notice of entry upon respondent(s) and the Clerk of the Court within 20 days of entry; and it is further ORDERED that the Clerk of the Court is directed to transfer the file to the Appellate Division, First Department, upon service of a copy of this order with notice of entry. FINAL DISPOSITION 150131/2020 MY CONVENIENCE INC. vs. NEW YORK CITY DEPARTMENT OF Motion No. 001 1 of 5 Page 1 of 5 [*FILED: 2] NEW YORK COUNTY CLERK 06/03/2020 09:43 AM NYSCEF DOC. NO. 21 INDEX NO. 150131/2020 RECEIVED NYSCEF: 06/03/2020 MEMORANDUM DECISION In this Article 78 proceeding, petitioner My Convenience Inc. seeks a judgment to annul: (i) the “Decision” dated September 20, 2019 by the Office of Administrative Trials and Hearing (OATH Decision); and (ii) the “Final Decision and Order” dated December 3, 2019 by the Department of Consumer Affairs (DCA Decision), for being arbitrary and capricious, unsupported by substantial evidence and in excess of jurisdiction. For the reasons set forth below, the Court denies the petition and dismisses this proceeding. BACKGROUND FACTS Petitioner is a general merchandise store licensed to sell tobacco. On July 8, 2019, an undercover inspection of Petitioner’s premises located at 29 John Street, New York City was conducted by two inspectors of Respondent, accompanied by a minor who posed as a cigarette buyer. Petitioner, through a part-time employee named Mr. Abul Hasan, sold a pack of cigarette to the minor without asking for identification. Consequently, Petitioner was summoned by Respondent for violation of the New York City (NYC) Administrative Code § 17-706(a) which prohibits the sale of cigarettes to a person under twenty-one years of age, as well as for violation of the New York Public Health Law § 1399-cc (2) which prohibits the sale of cigarettes to a person under eighteen years of age. A hearing ensued before Officer David Pantaleoni on September 13, 2019. During the hearing, Petitioner did not contest that Mr. Hasan sold cigarettes to the minor without asking for identification, but Petitioner requested that suspension or revocation of its license be waived (NYSCEF doc No. 12, p. 6). The OATH Decision After hearing, Mr. Pantaleoni issued the OATH Decision sustaining the charge against Petitioner for a violation of NYC Administrative Code §17-706(a). Accordingly, a civil penalty of 150131/2020 MY CONVENIENCE INC. vs. NEW YORK CITY DEPARTMENT OF Motion No. 001 2 of 5 Page 2 of 5 [*FILED: 3] NEW YORK COUNTY CLERK 06/03/2020 09:43 AM NYSCEF DOC. NO. 21 INDEX NO. 150131/2020 RECEIVED NYSCEF: 06/03/2020 $2,000 was imposed on Petitioner (NYSCEF doc No. 15). Despite Mr. Pantaleoni’s finding that this is Petitioner’s second offense, he declined to revoke Petitioner’s license. The OATH Decision informs Petitioner of its right to appeal, but no appeal was taken. The DCA Decision Mr. Pantaleoni also issued a recommendation for Respondent DCA to sustain the charge against Petitioner for violating, as a second occurrence, Public Health Law §1399-cc (2). Moreover, Mr. Pantaleoni recommended that a two-point violation be assigned to Petitioner’s license for its failure to demonstrate that “the person who committed the violation held a certificate of completion from a state certified tobacco trainer prior to the date of sale in question” (NYSCEF doc No. 16). On December 3, 2019, Respondent DCA adopted Mr. Pantaleoni’s recommendation assigning Petitioner a two-point violation (in addition to the two points already accumulated for a previous violation in 2016) and imposed a fine of $1500 and $50 surcharge. As Petitioner accumulated a three point-violation within a 36-month period, Respondent DCA directed the Department of Taxation and Finance to suspend Petitioner’s state cigarette/tobacco products retail dealer’s registration for a period of six (6) months pursuant to § 1399-ee (3)(e). Petitioner now challenges the OATH and DCA Decisions on the grounds that they are not supported by substantial evidence or are otherwise arbitrary and capricious. Petitioner also maintains that the undercover inspection was a violation of due process. In its Answer, Respondent argues that the portion of the Petition which seeks to annul the OATH decision should be dismissed for Petitioner’s failure to exhaust administrative remedies, while the portion relating to the DCA Decision should be transferred to the Appellate Division, First Department for review of “substantial evidence”. DISCUSSION 150131/2020 MY CONVENIENCE INC. vs. NEW YORK CITY DEPARTMENT OF Motion No. 001 3 of 5 Page 3 of 5 [*FILED: 4] NEW YORK COUNTY CLERK 06/03/2020 09:43 AM NYSCEF DOC. NO. 21 INDEX NO. 150131/2020 RECEIVED NYSCEF: 06/03/2020 Failure to Exhaust Administrative Remedies It is well-settled that one who objects to the act of an administrative agency must exhaust available administrative remedies prior to litigating the matter in a court of law (see e.g. Irizarry v New York City Police Dep't, 260 A.D.2d 269 [1st Dept 1999]). Here, the portion of the Petition that challenges the OATH Decision must be dismissed as Petitioner failed to exhaust its administrative remedies. According to Title 48 of the Rules of the City of New York (RCNY), a party may appeal an OATH Decision in whole or in part with the Appeals Unit which can affirm, reverse, remand or modify the decision (§ 6-19[a][1] and [g][1]). It is the decision of the Appeals Unit that is considered a final determination subject to judicial review pursuant to Article 78 of the CPLR (§ 6-19 [g][2]). Since Petitioner did not appeal the OATH Decision with the Appeals Unit, Petitioner has unequivocally failed to exhaust administrative remedies. This Court therefore may not review the OATH Decision finding Petitioner in violation of the NYC Administrative Code. “Substantial Evidence” Question Although Article 78 proceedings are initiated in the Supreme Court, CPLR 7804 (g) provides that if the “substantial evidence” question is raised, “the court shall first dispose of such other objections as could terminate the proceeding . . . If the determination of the other objections does not terminate the proceeding, the court shall make an order directing that it be transferred for disposition to a term of the appellate division . . ." "[A] 'substantial evidence' question is presented only where a quasi-judicial evidentiary hearing has been held. Substantial evidence 'is related to the charge or controversy and involves a weighing of the quality and quantity of the proof ... More than seeming or imaginary, it is less than a preponderance of the evidence, overwhelming evidence, or evidence beyond a reasonable doubt’” (Matter of Halperin v City of New Rochelle, 24 AD3d 768, 769 (2d Dept 2005) [internal citations omitted]). 150131/2020 MY CONVENIENCE INC. vs. NEW YORK CITY DEPARTMENT OF Motion No. 001 4 of 5 Page 4 of 5 [*FILED: 5] NEW YORK COUNTY CLERK 06/03/2020 09:43 AM NYSCEF DOC. NO. 21 INDEX NO. 150131/2020 RECEIVED NYSCEF: 06/03/2020 As Petitioner warrants that the DCA decision is not supported by substantial evidence, the Court finds that review of the DCA decision must be transferred to the Appellate Division, as this proceeding involves an issue as to whether the evidentiary record at hearing already held is supported by substantial evidence (CPLR 7803(4)). Therefore, while the branch of the petition that seeks review of the OATH decision is dismissed, Petitioner’s claims regarding the DCA decision are transferred to the Appellate Division, First Department. CONCLUSION ACCORDINGLY, for the foregoing reasons it is hereby OREDERED that the branch of the petition seeking review of the OATH decision pursuant to Article 78 (Motion Seq 001) is dismissed as Petitioner failed to exhaust administrative remedies; and it is further ORDERED that the branch of the petition seeking review of the DCA decision is respectfully transferred to the Appellate Division, First Department, for disposition, pursuant to CPLR 7804(g). This proceeding involves an issue as to whether a determination made as a result of a hearing held, and at which evidence was taken, pursuant to direction of law, is, on the entire record, supported by substantial evidence (CPLR 7803(4)); and it is further ORDERED that petitioner shall serve a copy of this order with notice of entry upon respondent(s) and the Clerk of the Court within 20 days of entry; and it is further ORDERED that the Clerk of the Court is directed to transfer the file to the Appellate Division, First Department, upon service of a copy of this order with notice of entry. 6/1/20 DATE CHECK ONE: x CASE DISPOSED GRANTED NON-FINAL DISPOSITION DENIED GRANTED IN PART APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT 150131/2020 MY CONVENIENCE INC. vs. NEW YORK CITY DEPARTMENT OF Motion No. 001 5 of 5 x OTHER REFERENCE Page 5 of 5

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