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Big Business Entertainment, L.L.C. v. Municipal Board of Alcoholic Beverage Control of the City of Passaic


July 8, 2009


On appeal from the Department of Law and Public Safety, Division of Alcoholic Beverage Control, Appeal No. 7159.

Per curiam.


Argued April 20, 2009

Before Judges Lisa and Sapp-Peterson.

Appellant, Big Business Entertainment, L.L.C., trading as the Dynasty Club (the club or premises), is the licensee of a private social club in Passaic that appeals from the December 13, 2007 order of the Director, Division of Alcoholic Beverage Control (Division), affirming the action of the Municipal Board of Alcoholic Beverage Control of the City of Passaic (Passaic ABC) revoking its plenary retail consumption license based upon violations of the Alcoholic Beverages Control Act (Act), N.J.S.A. 33:1-1 to -96, and the Act's implementing regulations, N.J.A.C. 13:2-1.1 to -8.

Passaic ABC filed forty-one charges against the club. Thirty-seven of the charges involved the alleged sales, service, delivery or consumption to or by an underage person. N.J.A.C. 13:2-23.1. The remaining charges alleged that narcotics activities occurred on the premises, N.J.S.A. 13:2-23.6(a); the licensee had an incomplete employee list, N.J.S.A. 13:2-23.13(a); and the licensee allowed the premises to become a nuisance and also suffered an act of violence on the premises, N.J.A.C. 13:2-23.6(a).

An April 5, 2006 resolution by Passaic ABC revoked the licensee's plenary retail consumption license. Appellant filed an appeal of the revocation to the Division and the matter was transferred to the Office of Administrative Law as a contested proceeding and assigned to an Administrative Law Judge (ALJ) who conducted a de novo hearing over two days in January 2007.

The evidence presented at the hearing focused upon two events held at the club in February 2006. The first event was held on February 6. The club's proprietor, Pedro Benitez,*fn1 allowed his sister to host a Mexican-themed Valentine's Day party that she advertised through a flyer that was written in Spanish. As translated, the flyer stated: "No need for you to have identification, if none don't worry. Family admission to include the smallest baby to grandfathers."

Testimony at the hearing disclosed that identification checks were performed, and those persons twenty-one years old and older were given bracelets so that they could be served alcoholic beverages, while those under twenty-one did not receive bracelets and were therefore not served any alcohol. Police arrived at the party and, although they did not personally observe any minors consuming alcoholic beverages, they interviewed patrons, some of whom were minors who admitted consuming beer. Also while on the premises, police learned that Benitez did not have an employee list that identified all of the members of the club's security detail. Further, suspected narcotics paraphernalia were found on the premises, although no narcotics were found.

Witnesses who testified at the hearing on behalf of the club included minors who denied consuming alcohol but who recalled observing persons with wristbands consuming alcohol. The police testified that there were minors present who stated they were engaged in underage alcohol consumption. These minors, who police claimed admitted consuming alcohol, were not called as witnesses; nor were they identified by name or otherwise in the police report prepared in connection with the investigation of the February 11 incident.

The second event from which charges emerged against the club took place on February 25, when the club hosted a private party for members of the "Bloods" street gang to celebrate the life and death of one of its members. Police were initially dispatched to the club during the late evening of February 24 to inspect for ABC violations and crowd capacity violations. No violations were observed at that time, but a Passaic police officer, Edwin Ramirez (Ramirez), pulled Benitez aside to inquire whether Benitez was aware that the club was hosting a party for a deceased member of the "Bloods" street gang. Ramirez also alerted Benitez that police had received information "that there was going to be a retaliation from Paterson and [he] suggested to [Benitez] at that point that [Benitez] should close down." Benitez denied knowing that the party was being held by members of the Bloods gang. The party was not shut down. Hours later, between 11:00 p.m. on February 24 and 3:00 a.m. on February 25, police responded to a report of a shooting inside the premises. An individual, not a member of the Bloods gang, was able to gain access to the club. Five persons were wounded as a result of the shooting.

Based upon the testimony and documentary evidence admitted, the ALJ concluded:

In this case, there is no corroboration of the ultimate fact question whether licensee Pedro Benitez suffered minors to consume alcohol on his premises. The rule properly protects the licensee who did not have the opportunity to cross[-]examine witnesses against him. Moreover, respondent's witnesses qui[te] candidly admitted that they saw no minors actually consuming alcohol. The most that could be said was that alcohol was present on tables at which or next to which minors were sitting or standing. Therefore, the April 5, 2006 ABC Board resolution finding that appellant directly or indirectly allowed minors to ". . . purchase, be served and consume alcoholic beverages. . . ." is manifestly mistaken, improperly grounded in the facts and, therefore, not sustainable.

Appellant did not maintain an adequate employee list which should have included security personnel regardless of their employment by an independent contractor. There was no dispute on this point. Therefore, the Board properly found appellant violated N.J.A.C. 13:2-23.13(a)(3).

The ABC found that appellant had allowed controlled substance[-]related activity including the unlawful possession of or activity pertaining to drug paraphernalia. . . . Appellant denied knowledge of these envelopes and testified that only security people were allowed in the balcony area to observe the premises. The police witnesses did not testify that they found the envelopes in anyone's possession or otherwise observed persons engaged in any related unlawful activity. Therefore, although in a broad sense, the licensee suffered a plastic bag to be introduced on his premises, there is no evidence that any related unlawful activity ever occurred there. At some time, a patron or a bouncer might have smoked a blunt off premises and later discarded an empty plastic envelope in the balcony. The evidence simply engenders speculation rather than proves a violation of section 23.5 of the regulations. Therefore, the Board's conclusion to the contrary is improperly grounded in the facts.

Finally, the Board's finding that appellant committed or suffered an, ". . . act of violence, disturbance . . ." within the meaning of section 23.6(a)2 is clearly unreasonable. Whether appellant knew that the February 25, 2006 event was arranged for the Bloods street gang is beside the point. Earlier that evening, the police inspected the premises and found no violations. It was only later that an interloper gained entry and fired on five patrons. The shooting occurred despite the security personnel who frisked patrons. The short of the matter is that the assailant was not a business invitee whose presence was authorized by the appellant. Therefore, appellant was as much a victim as were his patrons. Accordingly, the facts do not demonstrate that he "suffered" violence on his premises, and that any finding to the contrary is clearly unreasonable.

The ALJ ordered that appellant's license be restored.

The Director accepted the ALJ's factual findings and legal conclusions as to all charges except the charge that appellant suffered an act of violence on the premises. In rejecting the AlJ's determination on this charge, the Director reasoned that the ALJ's decision was influenced by the absence of any fatalities and stated: "I find absolutely no consolation or mitigation in the fact that no one died when an unknown person entered the licensed premises and shot five people." The Director also placed no weight upon the club's argument that the shooter had not been an invited guest:

What can clearly be ascertained is that the interloper was unimpeded in entering the licensed premises. The licensee has offered no evidence to demonstrate steps taken to deny entry to this interloper. Moreover, the licensee, in hosting a party for the "Bloods" street gang, should have known that extraordinary security measures might have been required. In this case, the licensee failed to meet its duty and may have invited danger by allowing a street gang to use its premises for a party.

As for the charge alleging consumption of alcohol by underage patrons on the licensed premises, the Director determined that although he adopted the findings and legal conclusion of the ALJ that this charge had not been substantiated, he found "the event demonstrates the very careless manner in which the licensed business was being operated, and taken together with the shooting, constitutes aggravating factors that may be considered for penalty purposes." The specific act of carelessness to which the Director referred was having such a large amount of underage patrons in the premises without a corresponding effort of due diligence. This is especially so, since the licensee actively encouraged the presence of underage persons. Although the Judge considered the out[-]of[-]court admissions by the minors to be inadmissible hearsay, the record clearly . . . establishes a routine of continuing course of conduct of carelessness by the licensee operating his business.

With respect to the Passaic ABC resolution revoking the club's license, the Director noted that in the first instance, the penalty imposed rests within the sound discretion of the local license issuing authority and that the power to reduce or to modify the penalty on appeal required proof of an abuse of discretion. The Director, applying that standard, was satisfied the shooting of five persons on the premises was "sufficiently egregious to warrant revocation of the license," and that there were aggravating circumstances present that were sufficient to further substantiate the penalty. He concluded that "[t]he licensee has exhibited a conscious disregard for his obligation on the most fundamental and dangerous levels." The present appeal followed.

On appeal, appellant raises the following points for our consideration:





We have considered the points raised by appellant in light of the record, legal principles and arguments of counsel. We affirm substantially for the reasons outlined in the Director's December 13, 2007 order and the amplification of his Final Conclusion and Order dated January 23, 2008. Nonetheless, we add the following comments.

Our standard of review of a final administrative agency decision is quite limited. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). We accord a strong presumption of reasonableness to such decisions and do not substitute our judgment for the wisdom of agency action if that action is statutorily authorized and not arbitrary or unreasonable. Bd. of Educ. of Englewood Cliffs v. Bd. of Educ. of Englewood ("Englewood I"), 257 N.J. Super. 413, 456 (App. Div. 1992), aff'd, 132 N.J. 327, cert. denied, 510 U.S. 991, 114 S.Ct. 547, 126 L.Ed. 2d 449 (1993). As long as the agency decision is contemplated under its enabling legislation, the action must be accorded a presumption of validity and regularity. Ibid.

The relationship between the findings and conclusions leading to a recommendation from an ALJ and the final decision reached by the Director is set forth in the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -24, which states in pertinent part:

In reviewing the decision of an administrative law judge, the agency head may reject or modify findings of fact, conclusions of law or interpretations of agency policy in the decision, but shall state clearly the reasons for doing so. . . . In rejecting or modifying any findings of fact, the agency head shall state with particularity the reasons for rejecting the findings and shall make new or modified findings supported by sufficient, competent, and credible evidence in the record. [N.J.S.A. 52:14B-10(c).]

We are in complete agreement with the Director that the "Bloods" gang "is steeped in a history of violence" and that to the extent a licensee would permit the licensed premises to be used by such patrons, a licensee cannot expect to avoid a finding that it suffered an act of violence on the premises by pointing to the fact that police had earlier inspected the premises and found no violations. Further, the fact that the shooter was uninvited and that there were no fatalities are likewise not mitigating factors, particularly when police, just hours before the shooting, alerted the licensee to information forecasting potential violence and recommended that the club be shut down at that time. We are therefore satisfied that in rejecting the ALJ's determination that Passaic ABC failed to sustain the charge of suffering an act of violence on the premises, and upholding Passaic ABC's resolution revoking appellant's license, the Director's decision was supported by sufficient, competent, and credible evidence in the record.


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