The Gold Room, Inc. v. PA LCB

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
The Gold Room, Inc. :
:
v. : No. 1656 C.D. 2019
: ARGUED: November 12, 2020
Pennsylvania Liquor Control Board, :
Appellant :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge (P)
HONORABLE ELLEN CEISLER, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE CEISLER FILED: December 16, 2020
The Pennsylvania Liquor Control Board (Board) appeals from the October 23,
2019 order of the Court of Common Pleas of Delaware County (trial court), which,
following a de novo hearing, sustained the appeal of The Gold Room, Inc. (Licensee)
and reversed the Board’s denial of Licensee’s application for renewal of its
restaurant liquor license (the License). In reversing, the trial court considered the
evidence presented at an April 27, 2018 administrative hearing and at hearings held
before the trial court on January 24-25, 2019, and concluded that non-renewal of the
License was not warranted under Section 470(a.1) of the Liquor Code (Code).1 After
careful review, we reverse.
I. Background
Licensee operates a restaurant and bar located at 518-520 Edgemont Avenue,
Chester, Pennsylvania (the Premises). Reproduced Record (R.R.) at 251a. The
License for the Premises is subject to a July 11, 2012 conditional licensing
1
Act of April 12, 1951, P.L. 90, as amended, 47 P.S. § 4-470(a.1).
agreement (CLA),2 which requires, in pertinent part, that Licensee direct one security
person to patrol the exterior of the Premises at least once per hour from 9:00 p.m.
until one-half hour after closing. R.R. at 250a-51a. Per the CLA, Licensee is
required to document, in a log, the time, date, and personnel involved in each patrol.
This log is required to be maintained as a business record pursuant to Section
493(12) of the Code, 47 P.S. § 4-493(12).3 Id. at 251a. The CLA further requires
that Licensee attend quarterly meetings with the chief, or other designated officer,
of the Chester City Police Department (CCPD) to discuss the safe operation of the
Premises. Id. at 252a. Such meetings are to continue until the CCPD police chief,
or his designee, indicates in writing that meetings are no longer necessary. Id.
Licensee must also maintain records of the date, time, and substance of such
meetings pursuant to Section 493(12) of the Code. Id. The terms of the CLA are to
remain in effect until rescinded by a subsequent agreement. Id. at 253a.
By letter dated November 20, 2017, the Board’s Bureau of Licensing (Bureau)
notified Licensee that its review of the Premises’ operations indicated that Licensee
may have abused its licensing privilege. R.R. at 237a. The allegations of abuse were
based on a September 20, 2010 adjudicated citation for permitting smoking where
prohibited and several incidents of disturbances “at or immediately adjacent” to the
Premises from December 1, 2015, to the present. Id. at 237a, 243a-46a. These
2
A CLA is an agreement between the Board and an applicant that places additional
restrictions on the license in question. Section 470(a)(1) of the Code, 47 P.S. § 4-470(a)(1). Such
an agreement is binding on the applicant. Id. The basis for Licensee’s CLA is a September 20,
2010 adjudicated citation for permitting smoking where prohibited on the Premises and 12
incidents of disturbance at or adjacent to the Premises. R.R. at 244a-45a, 248a-49a.
3
Section 493 of the Code sets forth unlawful acts relative to liquor, malt and brewed
beverages, and licenses. 47 P.S. § 4-493. Paragraph 12 of Section 493 makes it unlawful for a
licensee to “fail to keep for a period of at least two years” records covering the operation of the
licensed business. 47 P.S. § 4-493(12).
2
incidents included “fights, disorderly operations, drugs, shootings, homicide, and
assaults.” Id. at 237a. The Bureau further alleged Licensee’s President, Hong T.
Huynh (Huynh), and Secretary/Treasurer, Chhoeung V. Ngo (Ngo), may no longer
be reputable as required by Sections 102 and 470 of the Code.4 Id. In furtherance
of its review, the Bureau sought business records from December 1, 2015, to the
present, relating to security patrols of the Premises and meetings held with the
CCPD, as required by the CLA. Id. at 238a.
By letter dated February 27, 2018, the Bureau reiterated its prior records
request and expanded the applicable time frame to include those documents retained
from July 11, 2012, to the present. Id. at 258a-59a. The Bureau stated that it would
presume that any records not received by April 13, 2018, did not exist. Id. at 259a.
Subsequent correspondence from the Bureau dated April 17, 2018, indicated that it
had not received the records sought. Id. at 264a.
A hearing on the renewal of the License was held on April 27, 2018. The
Bureau called several members of the CCPD to testify as to the alleged incidents of
disturbance taking place on the Premises. Licensee presented the testimony of Brian
Clore, manager of the Premises, and Licensee’s President, Huynh.
A. Bureau Evidence
1. February 2016 Incidents
The Bureau introduced two police reports detailing incidents that took place
outside the Premises. The first, dated February 7, 2016, alleged that a verbal
altercation took place between bar manager Clore and Roosevelt Turner, an officer
4
Section 102 of the Code defines restaurant in pertinent part as “a reputable place operated
by responsible persons of good reputation . . . .” 47 P.S. § 1-102. Section 470(a)(1) of the Code
relevantly provides that the Board may deny renewal of a license if the applicant has “by his own
act become a person of ill repute . . . .” 47 P.S. § 4-470(a)(1).
3
with the CCPD. Id. at 267a. As a result of this altercation, Clore was charged with
terroristic threats, obstructing the administration of law, failure to disperse, and
disorderly conduct. Id. The second report, dated February 20, 2016, alleged that an
individual was observed urinating outside the Premises. Id. at 270a. A baggie
containing what appeared to be cocaine was found following a search of his person.
Id.
2. May 1, 2016 Incident
Katrina Blackwell, a sergeant with the CCPD, testified that she worked in the
vicinity of the Premises during an overnight shift on May 1, 2016. R.R. at 9a-10a.
Sergeant Blackwell called dispatch to report a fight after observing “a lot of
movement” in the Premises. Id. at 11a. She described the atmosphere inside as
“chaotic,” with approximately 150 people present and several fights taking place.
Id. at 12a-13a. The patrons involved were “throwing punches and throwing chairs.”
Id. at 12a. Licensee’s security personnel attempted to intervene, without success.
Id. at 13a-14a. Sergeant Blackwell called for additional law enforcement, which
resulted in approximately 15 different police departments located within Delaware
County responding to the incident. Id. at 14a. While clearing patrons from the
Premises, Sergeant Blackwell received a call that shots had been fired nearby. Id. at
15a. That incident resulted in a homicide, which Sergeant Blackwell later
understood took place in a “total[ly] different location” from the Premises. Id. at
18a, 26a.
Victor Heness, a detective with the CCPD, investigated the May 1, 2016
homicide, which occurred at the intersection of Fifth Street and City Hall Place. Id.
at 126a. As part of his investigation, Detective Heness gathered video surveillance
4
recordings from businesses located nearby, including the Premises and a barbershop
located on Fifth Street. Id. at 127a, 140a.
Footage acquired from the Premises depicted known members of a “specific
gang within the city” leaving the Premises at approximately 1:18:45 a.m. Id. at 132a,
240a; April 27, 2018 Administrative Hearing, Exhibit B-11. These individuals
retrieved guns from their vehicles after leaving the Premises. R.R. at 141a. Shortly
thereafter, at 1:20:13 a.m., a fight between two gangs began inside the Premises. Id.
at 132a, 138a; April 27, 2018 Administrative Hearing, Exhibit B-11. Officers with
the CCPD broke up a second fight, which resulted in one arrest. R.R. at 132a. The
CCPD did not have enough officers present to effectuate more than one arrest that
night. Id. at 148a. The victim of the May 1, 2016 homicide, Anthony Moore, was
involved in one of the fights. Id. at 132a. Detective Heness described the scene
inside the Premises as a “complete melee.” Id. at 145a.
Security equipment from the barbershop on Fifth Street recorded the
perpetrators of Moore’s murder, the identified known gang members, standing on
the corner of Fifth Street and Edgemont Avenue and “wait[ing] for [Moore]” at
approximately 1:21:09 a.m.5 Id. at 141a, 143a; April 27, 2018 Administrative
Hearing, Exhibit B-11. Moore’s homicide was recorded by the barbershop’s
security equipment at 1:22:31 a.m. Id. at 150a; April 27, 2018 Administrative
Hearing, Exhibit B-11. The fight inside the Premises was ongoing at that time. R.R.
at 144a. Detective Heness testified that between 15 and 20 police cars from
neighboring law enforcement agencies arrived to assist with the altercations
5
The time stamp from the barbershop’s video footage indicates this took place four hours
later, at 5:21 a.m. April 27, 2018 Administrative Hearing, Exhibit B-11. Detective Heness
testified that the time stamp for this was off by four hours. R.R. at 140a.
5
occurring inside the Premises and with the homicide at Fifth Street and City Hall
Place. Id.
3. July 16, 2016 Incident
Jonathon Ross, an officer with the CCPD, responded to a report of shots fired
near the Premises on July 16, 2016, at 1:41 a.m. Id. at 104a-05a. When Officer Ross
arrived at the scene, he observed 20 or 30 people quickly exiting the Premises and
other individuals running in the street. Id. at 106a. Officer Ross spoke with
Licensee’s staff, who advised that a fight had taken place and the patrons involved
were ejected from the Premises. Id. Those individuals walked north after leaving
the Premises. Id. at 107a, 120a. Shots were fired thereafter. Id. at 107a. The CCPD
recovered shell casings from a location approximately 25 to 30 yards north of the
Premises. Id. at 108a, 110a.
Officer Ross did not know the identities of those involved in the shooting or
whether they had been patrons of the Premises. Id. at 115a. Officer Ross recalled
that one patron was injured during the fight inside the Premises, but he refused
medical treatment. Id. at 108a.
4. August 13, 2017 Incident
Merlyn Lee, a captain with the CCPD, testified that she was dispatched to the
Premises on August 13, 2017, at approximately 1:30 a.m., for a report of fighting.
Id. at 32a-33a. When Captain Lee arrived, accompanied by four other officers, she
observed many patrons leaving the Premises who appeared to be
“riled up,” although they were not engaged in a physical confrontation. Id. at 33a,
35a. Most of the crowd dispersed, but Captain Lee testified that patrons involved in
the fight inside the Premises continued to “mill[] about” and argue with one another.
6
Id. at 38a. Captain Lee stated that it was “[n]ot unusual at all” for the CCPD to
respond to a call from the Premises around closing time. Id. at 33a.
Approximately 10 minutes after Captain Lee arrived, she heard gunfire
coming from the south, at a location 40 to 50 yards from the Premises. Id. at 39a.
Captain Lee identified three victims of the shooting incident as patrons of the
Premises. Id. at 42a-43a. One victim was armed and he advised Captain Lee that
he fired his weapon in retaliation after a friend of his was shot. Id. at 65a.
Captain Lee did not know if the shooter had been a patron of the Premises or
whether any weapons used in the shooting were inside the Premises prior to the
incident. Id. at 45a, 62a. A brief video provided by one of Licensee’s patrons
allegedly showed another patron carrying a gun while inside the Premises; however,
Captain Lee could not identify the individual. Id. at 57a-58a.
Captain Lee agreed that other businesses, including a boxing gym, the Fifth
Street barbershop, and a jazz club, are located within the vicinity of the shooting,
which occurred at the intersection of Fifth Street and Edgemont Avenue. Id. at 52a,
56a. However, those establishments were not open at the time of the incident. Id.
at 53a.
B. Licensee’s Evidence
Clore testified that he has managed the Premises since 2015 and he oversees
its security and operations. Id. at 160a-61a. He works every day from 11:00 a.m. to
2:30 p.m. and 6:00 p.m. to 2:00 a.m. Id. at 189a. A metal detector, identification
(ID) scanner, and metal detector wand are located at the front entrance to the
Premises. Id. at 165a. Patrons must pass through the metal detector prior to entering
the building. Id. at 166a. These security measures have existed since the Premises
opened. Id. IDs are scanned at the front entrance after 9:00 p.m. Id. at 196a. Prior
7
to that time, IDs are checked at the bar. Id. Male patrons are patted down and female
patrons are “wanded.” Id. at 167a. During the week, Licensee employs four security
personnel, one stationed near the bathroom and three roaming the floor. Id. at 168a.
On Fridays and Saturdays, Licensee employs two armed security guards in addition
to the regular security personnel. Id. One of Licensee’s security personnel patrols
the perimeter outside the Premises every hour to make sure “everything is calm.”
Id. at 180a, 193a.
Clore acknowledged that he is aware of the CLA’s terms. Id. at 206a. He
discusses the Premises’ security measures with the CCPD Commissioner, Otis Blair,
once a month. Id. at 185a, 204a. These discussions take place by telephone, unless
a “dire need” arises to discuss matters in person. Id. at 204a. As a result of these
meetings, Licensee has an arrangement with the CCPD to provide police assistance
at closing time. Id. at 186a. Commissioner Blair has not lodged any complaints
about the Premises with Clore. Id. Licensee provides law enforcement access to
its security footage when requested. Id. at 174a.
Clore admitted that fights have taken place inside the Premises but he advised
that Licensee bans the patrons involved. Id. at 171a, 173a. Banned patrons are
identified through photos taken by the front door security cameras and kept in a
folder by the security station at the front entrance. Id. at 198a-99a. The security
equipment on the Premises consists of 64 cameras on the inside of the Premises, 7
cameras outside at the front of the building, and 4 cameras in the rear. Id. at 202a.
A digital video recorder (DVR) stores surveillance footage, which is recorded
“24/7.” Id. If a fight occurs on the Premises, one of Licensee’s employees calls the
police from the kitchen. Id. at 169a-70a. The purpose of this policy is to “get the
8
police out front,” so that any ejected patrons will “act accordingly because the police
are there.” Id. at 170a.
Huynh is the president of Licensee and its sole owner. Id. at 225a, 228a.
Huynh’s husband, Ngo, transferred his shares of Licensee to her in November 2017.
Id. at 228a.
C. Bureau Recommendation and Board Decision
Having reviewed the evidence presented by the parties, the hearing examiner
agreed with the Bureau that Licensee had abused its licensing privilege. Id. at 371a.
This conclusion was based on a finding of disorderly operations in and outside the
Premises, which the hearing examiner attributed to owners Huynh and Ngo, whom
the hearing examiner deemed no longer reputable. Id. at 371a-72a. The hearing
examiner also found that Licensee failed to produce business records related to
security patrols made on the Premises and meetings held with the CCPD. Id. at 372a.
The hearing examiner recommended that the License be renewed, placed in
safekeeping, and sold to a bona fide third party. Id.
The Board disagreed with the hearing examiner’s recommendation and denied
Licensee’s renewal application. Bd. op. at 33. The Board opined that Licensee’s
adjudicated citation from 2010 alone demonstrated an abuse of the License and an
unwillingness to comply with the Code and/or Board regulations. Id. at 25. The
Board was further troubled by the charges filed against Clore, which involved a
verbal altercation with a CCPD police officer. Id. at 27. The Board found it
problematic that Licensee “permitted” an intoxicated individual to urinate outside
the Premises. Id. Moreover, despite Licensee’s employment of security personnel,
violent incidents continued to occur within and outside the Premises. Id. Licensee’s
9
failure to provide the business records requested by the Bureau violated the terms of
the CLA. Id. at 29.
Additionally, Licensee’s failure to notify the Board that Ngo’s ownership
interest in Licensee transferred to Huynh, as required by Section 5.91(a) of the
Board’s regulations,6 demonstrated Licensee’s failure to operate the Premises within
the requirements of the Code and the Board’s regulations. Id. at 32. Finally, the
Board deemed Huynh and Ngo to be no longer reputable, as they were ultimately
responsible for the Premises and failed to implement sufficient and timely corrective
measures to address problems with its operations. Id. at 33.
Licensee appealed to the trial court, which heard the matter de novo, and took
additional evidence at hearings held on January 24-25, 2019.
D. Trial Court Evidence
Clore reiterated his prior testimony regarding security equipment and
procedures implemented at the Premises. R.R. at 379a-87a. He further testified that
security patrols are detailed in a logbook, which is also used to document the security
personnel working on a given evening as well as any incidents that take place on the
Premises. R.R. at 387a. Id. Clore indicated that “there has always been a logbook”
on the Premises. Id. at 411a. Licensee introduced a logbook documenting security
patrols that occurred after the April 27, 2018 administrative hearing. Id. at 392a.7
6
Section 5.91(a) of the Board’s regulations requires that any change in a licensee’s officers,
directors, or stockholders be reported to the Board within 15 days. 40 Pa. Code § 5.91(a).
7
The Board objected to the introduction of the logbook as irrelevant. R.R. at 388a. The
trial court accepted the document but made it clear that only remedial measures taken prior to the
April 27, 2018 administrative hearing would be considered. Id. at 391a-92a.
10
Huynh testified that she has never been arrested or charged with any criminal
offense. Id. at 427a. Her husband, Ngo, does not hold any position or office for
Licensee. Id. at 426a.
Cyphodeen Simpson, a paralegal for Licensee’s counsel, testified that he
attempted to file documents relating to the transfer of Ngo’s interest in Licensee to
Huynh. Id. at 431a. The Board’s electronic filing system would not allow Simpson
to complete the filing, however, as the License was under review and not “active.”
Id. at 431a-33a. Simpson did file the relevant documents with the Pennsylvania
Department of Revenue. Id. at 436a.
CCPD Commissioner Blair confirmed that, during the period from 2015 to
2018, he met with Clore to discuss the safety of Licensee’s patrons. Id. at 461a.
Commissioner Blair stated that Licensee’s management and security personnel were
cooperative with the CCPD “99.9 percent of the time,” and they complied with the
CCPD’s security recommendations “99 percent of the time.” Id. at 461a, 492a.
These recommendations concerned “various topics at various time[s],” and included
methods for improving the control of patrons entering and exiting the Premises. Id.at 491a. Commissioner Blair instructed his officers, if available while on duty
between 1:30 a.m. and 2:00 a.m., to assist Licensee with crowd control and traffic
flow and to act “as a deterrent.” Id. at 491a, 498a. Commissioner Blair testified that
he took such action earlier in his career as a captain and sergeant “when [the
Premises] first opened [its] doors.” Id. at 499a.
Commissioner Blair described the crime scene from the May 1, 2016
homicide as a “very large area” that extended away from the Premises, up the street
several thousand feet, and around a corner. Id. at 484a, 489a-90a.
11
In an order dated October 23, 2019, the trial court reversed the Board’s
decision to not renew the License. The trial court found Clore’s testimony before
the trial court to be credible and consistent with his testimony before the hearing
examiner; the additional witnesses who testified on January 24-25, 2019,
Commissioner Blair, Huynh, and Simpson, were also deemed credible. Trial Ct.
Finding of Fact (F.F.) Nos. 32-33.
With regard to the February 7, 2016 arrest of Clore by Officer Turner, the trial
court noted that docket entries of the incident reflected that all charges against Clore
were dismissed. Trial Ct. op. at 34. The trial court concluded that no causal
connection existed between Licensee and the February 20, 2016 incident involving
a person urinating outside the Premises, as the record failed to demonstrate that the
individual was a patron of the Premises. Id. at 35.
The trial court acknowledged that an altercation took place inside the Premises
on May 1, 2016, the same night as the homicide at Fifth Street and City Hall Place,
approximately a block and a half from the Premises. Trial Ct. op. at 35. Licensee’s
security personnel assisted the police to stop the fighting and disperse the patrons
inside the Premises, and Clore fully cooperated with the CCPD in providing access
to its video surveillance footage. Id. The trial court concluded that the record failed
to demonstrate that weapons or illegal drugs were found on the Premises the night
of the fight and used in commission of the homicide. Id.The July 16, 2016 incident involved a report of shots fired. Id. Licensee’s
security personnel notified Officer Ross, the CCPD officer responding to the
incident, that a fight had taken place inside the Premises and the patrons involved
were ejected. Id. at 35-36. The CCPD found shell casings approximately 30 yards
from the Premises. Id. at 36. The trial court concluded that, as with the May 1, 2016
12
incident, nothing in the record suggested that any guns, illegal drugs, or other
weapons were found on the Premises and used in the shooting that took place at a
separate location. Id.The trial court noted that the August 13, 2017 incident involved a fight inside
the Premises. Id. Captain Lee, the officer responding to the report, observed patrons
arguing outside the Premises but she did not witness any fighting. Id. Licensee’s
security personnel assisted the police in removing patrons from the Premises. Id.While outside the Premises, Captain Lee heard shots fired approximately 40 to 50
meters away. Id. Three of the shooting victims had been patrons of the Premises,
one of whom was armed. Id. Captain Lee did not know, however, if any of the
weapons used were in the Premises prior to the shooting incident. Id. She could not
identify the shooter and bullets recovered from the crime scene were not fired by the
injured patron. Id. at 36-37. The trial court again found that the evidence did not
establish a causal connection between the shooting and the Premises. Id. at 37.
Based on the above analysis, the trial court found that the incidents of
disturbance cited by the Board were not connected with, or attributable to,
Licensee’s business, and as such, were insufficient to justify non-renewal of the
License. F.F. No. 40.
The trial court recognized that neither Licensee nor its employees had the
authority to control the flow of traffic on the public streets surrounding the Premises.
Id. at 37. Despite this, Licensee’s security personnel made perimeter checks up and
down the block outside the Premises. Id. Commissioner Blair credibly testified that
he met with Clore from 2015-2018 to discuss security measures for the Premises and
Licensee’s security cooperated with the CCPD “99.9%” of the time. Id. at 38. The
trial court acknowledged that criminal activity occurs in the area in which the
13
Premises is located; however, Licensee has made a “zealous effort” to keep its
patrons and the public safe. Id. The trial court opined that, other than close its
business, Licensee “has done what it can to accomplish this goal.” Id. at 38-39.
Accordingly, the trial court concluded, the evidence supported a conclusion that
Licensee took substantial steps to prevent criminal activity on the Premises.
Regarding the CLA, the trial court determined that non-renewal of the License
was not warranted where the evidence demonstrated that Licensee substantially
complied with its terms and conditions and any violations thereof were de minimis.
Lastly, the trial court concluded that the evidence did not support a finding
that Huynh was not reputable, as she credibly testified that she had not been arrested
or charged with any criminal offense and her husband was no longer an officer of
Licensee. The trial court incorporated its prior analysis of the alleged incidents of
disturbance to the extent they related to the Board’s finding that Huynh was not
reputable. This appeal followed.8
II. Issues
On appeal, the Board argues that the trial court erred in finding that the
incidents of disturbance were not connected to Licensee’s business; in determining
that Licensee took timely and remedial measures to prevent unlawful activity on the
Premises; and in concluding that Licensee’s failure to comply with the CLA was de
minimis and did not warrant a non-renewal of its license.
8
This Court’s scope of review in a liquor license renewal case is limited to a determination
of whether the trial court’s findings of fact are supported by substantial evidence and whether the
trial court committed an error of law or abused its discretion. I.B.P.O.E. of W. Mt. Vernon Lodge
v. Pa. Liquor Control Bd., 969 A.2d 642, 647 n.6 (Pa. Cmwlth. 2009). Substantial evidence is
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
Rosing, Inc. v. Pa. Liquor Control Bd., 690 A.2d 758, 760 (Pa. Cmwlth. 1997), overruled on other
grounds, Pa. Liquor Control Bd. v. Richard E. Craft Am. Legion Home Corp., 718 A.2d 276, 278
(Pa. 1998).
14
III. Analysis
A. Incidents of Disturbance
First, we review whether the trial court erred when it found that the incidents
of disturbance cited by the Board were not chargeable, connected, attributable, or
tied to Licensee’s business, and that they were insufficient to justify non-renewal of
the License.
The renewal of a liquor license is discretionary. S & B Rest., Inc. v. Pa. Liquor
Control Bd., 114 A.3d 1106, 1110 (Pa. Cmwlth. 2015). Section 470(a.1)(4) of the
Code relevantly provides that the Board may refuse to renew a license:
(4) due to the manner in which this or another licensed
premises was operated while the licensee, its shareholders,
directors, officers, association members, servants, agents
or employes were involved with that license. When
considering the manner in which this or another licensed
premises was being operated, the board 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 board may take into consideration whether
any substantial steps were taken to address the activity
occurring on or about the premises.
47 P.S. § 4-470(a.1)(4).
When an appeal is taken from a decision of the Board, the trial court hears the
matter de novo. Section 464 of the Code, 47 P.S. § 4-464. The trial court may make
its own findings, and reach its own conclusions based upon those findings, even
when the evidence it hears is substantially the same as the evidence presented to the
Board. Two Sophia’s, Inc. v. Pa. Liquor Control Bd., 799 A.2d 917, 919 (Pa.
15
Cmwlth. 2002). The trial court is free to substitute its discretion for that of the Board
and it may modify, sustain, or reverse a Board decision to deny the license renewal,
even if there is substantial evidence to support the Board’s findings. Goodfellas,
Inc. v. Pa. Liquor Control Bd., 921 A.2d 559, 566 (Pa. Cmwlth. 2007); Two
Sophia’s, Inc., 799 A.2d at 921.
Licensees are held strictly liable for violations of the Code that occur on the
licensed premises. Pa. Liquor Control Bd. v. TLK, Inc., 544 A.2d 931, 933 (Pa.
1988). Licensees are also held accountable for activity occurring off-premises where
there is a causal connection between the licensed premises and the activity. St.
Nicholas Greek Cath. Russian Aid Soc’y v. Pa. Liquor Control Bd., 41 A.3d 953,
958 (Pa. Cmwlth. 2012). Criminal activity will support a license revocation where
the activity can be attributed to the manner by which the licensed premises is
operated. Allison v. Pa. Liquor Control Bd., 131 A.3d 1075, 1080 (Pa. Cmwlth.
2016). The Board may refuse to renew a license where the licensee (1) knows, or
should have known, of ongoing criminal activity, and (2) failed to take “substantial
affirmative steps to prevent such activity.” TLK, Inc., 544 A.2d at 933.
A licensee is not required to “do everything possible to prevent criminal
activity on the premises, act as [its] own police force, or close [its] business.”
Rosing, 690 A.2d at 762-63. It is only required to take “substantial affirmative
measures to prevent the misconduct.” Id. at 763. Such steps must be taken, however,
at a time when the licensed establishment knows or should know that illicit activity
is taking place on the premises. I.B.P.O.E., 969 A.2d at 650.
The Board maintains that the incidents which occurred on May 1, 2016, July
16, 2016, and August 13, 2017, are causally linked to the operation of Licensee’s
16
business and are sufficient grounds to deny Licensee’s renewal application,9 and the
trial court misapplied the relevant case law when it concluded otherwise. The Board
argues that the trial court failed to afford the proper legal significance to these
incidents, which indisputably began on the Premises and required the intervention
of law enforcement. The uncontested evidence established that all three shootings
involved Licensee’s patrons and occurred in the immediate vicinity of the Premises
at a time when no other businesses were open. The Board contends that, even if the
shootings that occurred off-premises are discounted, the fights inside the Premises
that took place beforehand required the intervention of law enforcement. In support
of its challenge to the trial court’s conclusions, the Board cites this Court’s decisions
in St. Nicholas and I.B.P.O.E.
In St. Nicholas, this Court affirmed a trial court’s decision to affirm the
Board’s denial of a licensee’s renewal application. The Board’s denial was based in
part on several incidents of misconduct, including an assault with a weapon, several
fights, one involving an attack on a police officer, and a stabbing, all of which
occurred on the licensed premises. This Court rejected the licensee’s argument that
the incidents were not causally related to the manner in which the premises was
operated, as they took place in an area under the licensee’s control, during or shortly
after the licensee’s hours of operation, and involved licensee’s customers who had
been drinking inside the licensed premises.
The incidents which led to the Board’s non-renewal of the license in I.B.P.O.E
included an assault inside the licensed premises, an argument initiated inside the
premises which escalated and led to a shooting directly outside, and an episode in
9
The Board has not challenged the trial court’s dismissal of the February 7, 2016 and
February 20, 2016 incidents as unrelated to Licensee’s operation of the Premises, or questioned
the trial court’s conclusions with regard to the reputations of Huynh and Ngo.
17
which a patron pointed a gun at the licensee’s bartender. The trial court reversed the
Board’s non-renewal of the license after considering remedial measures taken by the
licensee. This Court reversed after our review of the record failed to reveal what
affirmative measures were employed.
While our decisions in St. Nicholas and I.B.P.O.E. are certainly instructive,
the facts are somewhat distinguishable, as the shootings involved in the present
matter took place in areas that were not within Licensee’s control. The May 1, 2016
homicide, for example, was not captured by Licensee’s video surveillance
equipment. Rather, that evidence came from the security cameras installed at a
barbershop located on another street approximately one block away from the
Premises. Furthermore, the time stamps on the relevant video surveillance footage
indicates that the perpetrators of the May 1, 2016 homicide left the Premises a few
minutes before the fight broke out.
While Captain Lee testified to a video which purported to show one of
Licensee’s patrons armed with a gun while inside the Premises on August 13, 2017,
Captain Lee could not identify the patron, and the Board presented no evidence that
weapons were found on the Premises and used in the August 13, 2017 shooting that
took place 40 to 50 yards to the south. Furthermore, there is no evidence to suggest
that the July 16, 2016, and August 13, 2017 shootings were committed by any of
Licensee’s patrons.
This conclusion does not end our analysis, however, as the Board’s decision
to deny Licensee’s renewal application was in part predicated on the violent
incidents that occurred inside the Premises, despite the presence of security
personnel. Conspicuously absent from the trial court’s discussion is any
consideration of whether the verbal and physical altercations taking place inside the
18
Premises, and which precipitated the off-premises shootings, were sufficient to
justify non-renewal of the License.
In White House Cafe, Inc. v. Pennsylvania Liquor Control Board (Pa.
Cmwlth., No. 850 C.D. 2011, filed April 23, 2012), 2012 WL 8681520, an
unreported opinion of this Court,10 we affirmed the denial of a liquor license renewal
application based on homicides that took place adjacent to the licensed premises in
2006 and 2007. We agreed with the trial court’s decision to not renew the license,
as the licensee was on notice that the premises attracted patrons who resolved their
disputes with weapons. Slip op. at 7. The 2007 homicide was precipitated by a
“brawl” that took place inside the premises. Evidence of the homicide’s proximity
to the premises, its occurrence soon after the feuding patrons were ejected from the
bar, and the “inadequate efforts to separate the feuding patrons,” supported a finding
that the homicide was connected to the licensee’s operation of the premises. Id. at
7. We agreed with the Board that the licensee could not simply “put its problems
out on the street” by ejecting its patrons after a fight and then “wash its hands of
those problems.” Id.We further noted the licensed premises’ location within a high-crime area. Id.
at 8. The licensee knew that her mailman wore a bullet-proof vest and she took
several steps to increase security after a 2005 assault which occurred inside the
licensed premises. Id. Accordingly, as the licensee was aware of ongoing criminal
activity, the burden shifted to her to show she made substantial and affirmative steps
to guard against a known pattern of illegal activity. Id. Although the licensee took
efforts to improve security on the premises, they did not deter the 2006 and 2007
10
This Court’s unreported memorandum opinions may be cited for their persuasive value.
Section 414(a) of the Commonwealth Court’s Internal Operating Procedures. 210 Pa. Code §
69.414(a).
19
homicides. Id. at 9. In light of the magnitude of the risk, “the repetition of death
and serious bodily injury,” we agreed with the trial court that the licensee’s efforts
were not substantial enough to “deter further bloodshed.” Id.In the instant matter, while the perpetrators of the off-premises shootings on
July 16, 2016, and August 13, 2017, cannot be tied to Licensee’s patrons, the same
cannot be said of the May 1, 2016 homicide. The victim, Moore, was a patron
involved in one of the altercations that took place inside the Premises, and the
perpetrators (known gang members) were also Licensee’s patrons.
Detective Heness described the May 1, 2016 incident as a “complete melee,”
which consisted of multiple fights involving patrons who physically assaulted each
other with their fists and with chairs. R.R. at 145a. This incident necessitated a
county-wide police response involving 15 law enforcement agencies. Captain Lee
testified that it was “[n]ot at all unusual” for the CCPD to respond to calls from the
Premises at closing time. Id. at 33a. Police response by the CCPD was also required
for the July 16, 2016 and August 13, 2017 fights. Clore acknowledged that he
contacted law enforcement when fights broke out in the hopes that Licensee’s
patrons would “act accordingly” after being ejected from the Premises. Id. at 170a.
Such a policy demonstrates Licensee’s inability to prevent criminal activity on the
Premises without the intervention of law enforcement. Indeed, it suggests that
Licensee, rather than take affirmative steps to prevent violence from erupting inside
the Premises, relies on the CCPD to contain it after the fact. Like the proprietor in
White House Café, Licensee cannot simply wash its hands of the patrons it ejects
once they leave the Premises and rely on the CCPD to remedy any situation that
follows.
20
There is no dispute that the May 1, 2016, July 16, 2016, and August 13, 2017
altercations involved Licensee’s customers, they took place in an area under
Licensee’s control, and they occurred during Licensee’s hours of operation. In that
regard, the trial court’s dismissal of the altercations as unrelated to Licensee’s
business is simply not sustainable. Accordingly, we agree with the Board that the
trial court erred in finding that the May 1, 2016, July 16, 2016, and August 13, 2017
altercations were not connected to Licensee’s operation of the Premises.
B. Remedial Measures
Next, we address the Board’s argument that the trial court erred in concluding
that Licensee implemented timely and substantial remedial measures in response to
the incidents of violence occurring on the Premises.
The Board argues that the trial court, in concluding that Licensee “took
substantial remedial measures to resolve incidents of misconduct in violation of the
[Code] and to protect its patrons and the public,” improperly considered security
measures employed on the Premises, which were put in place at the time the
Premises opened and existed long before the May 1, 2016, July 16, 2016, and August
13, 2017 incidents. Trial Ct. op. at 37. The Board maintains that the evidence
instead demonstrates that Licensee took no action whatsoever in response to those
incidents.
For non-Code related violations of law, including the Crimes Code,11 the
Board may refuse to renew a license where the licensee (1) knows or should have
known of ongoing criminal activity and (2) failed to take substantial affirmative
steps to prevent such activities. TLK, Inc., 544 A.2d at 933. A licensee may defend
its license by demonstrating that it took substantial affirmative steps to guard against
11
18 Pa.C.S. §§ 101 – 9546.
21
a known pattern of illegal activities. Id. Remedial measures must be taken when
the licensed establishment knows, or should know, that illicit activity is taking place
on the premises. I.B.P.O.E., 969 A.2d at 650.
The Board is correct that the security measures Licensee employed, including
the use of metal detectors, video surveillance, and security patrols, all existed prior
to the incidents at issue. While Clore met with Commissioner Blair to discuss the
safe operation of the Premises, these meetings were required by the terms of the
CLA and demonstrated Licensee’s compliance therewith, nothing more.
Commissioner Blair testified that he made recommendations to Clore during
discussions that took place between 2015 and 2018; however, such
recommendations related to the traffic flow of patrons entering the Premises and cars
parked on the streets outside. There is no evidence to suggest these
recommendations were intended to address and rectify the issues which led to the
May 1, 2016, July 16, 2016, and August 13, 2017 altercations. Licensee has not
argued it was unaware of the fights taking place on the Premises (nor could it). There
is no evidence demonstrating that Licensee took any action whatsoever following
the May 1, 2016 melee, or the fights that took place in the months and year afterward.
Based on our review of the record, we simply cannot agree that Licensee
implemented substantial affirmative steps to guard against a known pattern of illegal
activities. TLK, Inc., 544 A.2d at 933. Accordingly, we conclude that the trial
court’s determination that Licensee took substantial steps to prevent criminal activity
on the Premises is not supported by substantial evidence.
22
C. Violation of the CLA
Finally, we address whether the trial court erred in concluding that Licensee’s
violation of the CLA was de minimis and did not warrant the Board’s non-renewal
of the license.
Section 470(a) of the Code provides that:
[t]he [B]oard may enter into an agreement with the
applicant concerning additional restrictions on the license
in question. If the [B]oard and the applicant enter into such
an agreement, such agreement shall be binding on the
applicant. Failure by the applicant to adhere to the
agreement will be sufficient cause to form the basis for a
citation under section 471 and for the nonrenewal of the
license under this section.
47 P.S. § 4-470(a) (emphasis added). It is clear, therefore, that a licensee’s breach
of its CLA may establish a basis for non-renewal of a license. See Hotel Liquor
License #H-2892 v. Tabs Entm’t, Inc., 125 A.3d 487, 492 (Pa. Cmwlth. 2015)
(licensee’s failure to comply with requirements of a CLA sufficient cause for non-
renewal of license).
The trial court concluded that Licensee “substantially complied” with the
terms and conditions of the CLA based on a logbook introduced at the January 24,
2019 trial court hearing, which documented security patrols performed at the
Premises after April 27, 2018. Trial Ct. op. at 40. The trial court was also persuaded
by the security measures implemented on the Premises. Id.The Board notes that Licensee presented no evidence demonstrating it kept
records of meetings held with the CCPD or security patrols made prior to April 27,
2018. Licensee failed to produce any records whatsoever from the period of July
11, 2012, through February 27, 2018, the date of the Bureau’s second records
23
request. The Board maintains that Licensee’s failure to document the security
patrols and meetings with the CCPD is a material breach of the July 11, 2012 CLA,
as the CLA’s record-keeping requirements are necessary to ensure compliance with
its substantive provisions. The Board argues that such non-compliance evidences a
careless disregard of Licensee’s obligations.
As to that failure, we agree with the Board that Licensee’s failure to comply
with the terms of the CLA relating to record retention constitutes a material breach
thereof. Clore admitted that he was aware of the terms of the CLA. While Clore
testified that “there has always been a logbook,” R.R. at 411a, he provided no
specifics as to what those logbooks contained and Licensee presented no physical
evidence to show that it documented security patrols occurring prior to the April 27,
2018 administrative hearing. Licensee’s compliance with the record retention
provision of the CLA after April 27, 2018, as evidenced by the logbook introduced
at the January 24, 2019 trial court hearing, does not excuse its previous six-year
period of apparent non-compliance.
The relevant provisions of the CLA requires that Licensee must not only
document its security patrols and meetings with the CCPD, it must also maintain the
records for a period of at least two years. Licensee indisputably failed to produce
the records when requested by the Bureau and it made no attempt to explain why the
records were not provided. Furthermore, Licensee provided no testimony or
documentary evidence whatsoever to demonstrate that it ever maintained records
relating to monthly meetings held with members of the CCPD. Dismissing
Licensee’s failure to comply at any time with one of the CLA’s terms as a de minimis
breach would effectively render it a nullity. We decline to do so and the trial court
erred in concluding otherwise.
24
IV. Conclusion
The record demonstrates that the verbal and physical altercations which
precipitated the May 1, 2016, July 16, 2016, and August 13, 2017 off-premises
shootings are connected to Licensee’s operation of the Premises. As the record is
devoid of any facts to support a conclusion that Licensee took remedial steps to
prevent future criminal activity, the trial court erred in reversing the Board’s decision
to not renew the License. The trial court further erred in concluding that Licensee’s
breach of the CLA’s terms was de minimis. Accordingly, we reverse the trial court.
__________________________________
ELLEN CEISLER, Judge
25
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
The Gold Room, Inc. :
:
v. : No. 1656 C.D. 2019
:
Pennsylvania Liquor Control Board, :
Appellant :
ORDER
AND NOW, this 16th day of December, 2020, the order of the Court of
Common Pleas of Delaware County dated October 23, 2019, is hereby REVERSED.
__________________________________
ELLEN CEISLER, Judge