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A & J Companies International v. Governing Body of the Township of Irvington


May 11, 2012


On appeal from the New Jersey Department of Law and Public Safety, Division of Alcoholic Beverage Control, Docket No. 7529.

Per curiam.


Submitted: January 11, 2012

Before Judges Axelrad and Sapp-Peterson.

Petitioner, A & J Companies International, Inc, t/a Joyce's Tropical Garden, appeals from the December 6, 2010 final conclusion and order of the Director, Division of Alcoholic Beverage Control (Director) affirming the decision of the Administrative Law Judge (ALJ) sustaining eight charges occurring on two dates and revoking petitioner's plenary retail consumption license. We affirm in part, reverse in part, and remand.


This case has its genesis in a Resolution and Order adopted on October 27, 2009, by the Irvington Council acting as the Alcoholic Beverage Control Board of the Township of Irvington (respondent). Following a hearing, respondent found petitioner, the holder of plenary retail consumption license no. 0709-033-020-007, guilty of eight charges for conduct occurring at 1371 Springfield Avenue in Irvington, and revoked its license effective immediately. The charges were that: (1) on April 3, 2009, petitioner caused or allowed narcotics and other illegal activity on the licensed premises, N.J.A.C. 13:2-23.5(b) and (c) (charges 2 and l); caused the licensed premises to be conducted in such a manner as to become a nuisance (police intervention -public safety violated), N.J.A.C. 13:2-23.6(a)(3) (charge 3);*fn1 and caused or allowed lewd activity on the licensed premises and with audience participation, N.J.A.C. 13:2-23.6(a)(1) (charges 4 and 5); and (2) on May 6, 2009, petitioner failed to conspicuously display its license, N.J.A.C. 13:2-23.13(a)(1) (charge 6); allowed the sale of alcohol to an intoxicated person, N.J.A.C. 13:2-23.1(b) (charge 7); and caused the licensed premises to be conducted in such a manner as to become a nuisance (police intervention - public safety violated), N.J.A.C. 13:2-23.6(a)(3) (charge 8). Three charges relating to May 22, 2009 were withdrawn by the prosecutor.

Petitioner appealed to the Director. A consent order was entered on December 3, 2009 by the Acting Director staying the revocation of petitioner's license with conditions. The appeal was referred to an ALJ who conducted a hearing on June 2, 2010. On September 10, 2010, the ALJ issued an initial decision affirming the action of respondent on all eight charges and the revocation penalty.

Petitioner filed exceptions with the Director who, by final conclusion and order of December 6, 2010, affirmed the decision of the ALJ without further comment, and revoked petitioner's license. This appeal ensued. On February 17, 2011, petitioner filed a motion with the Appellate Division seeking summary disposition and a stay of the license revocation, which was opposed by respondent. By order of April 1, 2011, we denied petitioner's motion.


The following testimony and evidence was presented at the hearing before the ALJ. Irvington Police Officer Shaun Green testified for respondent that at about 11:30 p.m. or midnight on April 3, 2009, he and several officers were on routine patrol in their marked vehicles. When they drove past Joyce's Tropical Garden (Tropical Garden), he observed a male, later identified as Bernard Jackson, standing in the doorway with four or five individuals around him, and he appeared to be placing a handgun in the waistband of his pants. Jackson saw the officers and fled inside the Tropical Garden. Approximately ten to twelve officers responded to the scene. Officer Green pursued Jackson through the crowded bar towards the rear and into the "strip club portion" of the establishment, at which point Jackson discarded the weapon and was arrested. The gun, a 357 magnum, was loaded with one hollow point bullet. The officer later ascertained that Jackson had two outstanding warrants and did not have a permit to carry the gun.

Officer Green also testified he saw a patron toss a bag of marijuana to the floor and he observed "a marijuana bag on the bar as well as a discarded marijuana cigarette on the floor." He further observed an abandoned jacket on the chair at the bar with two bottles of alcohol in its pockets.

Irvington Detective Jerry Ramos testified that he responded as back-up to a police radio transmission indicating the police apprehension of a suspect in possession of a handgun inside the Tropical Garden. He reported that eleven officers and six detectives were at the premises that night. After observing the suspect was in custody and the premises appeared to be safe, he commenced his investigation regarding the liquor license. While inspecting the premises, the detective observed several used condoms behind a wooden structure about waist-high on the patron side of the bar. In close proximity to the condoms, he observed stains on the wall that he "believed to be semen" but which were never confirmed. He also observed "a couple of bags of marijuana and a marijuana cigarette" and "pint size bottles [of liquor] on the patron side of the bar on the floor directly behind the bar . . . where the patron would have their feet . . . if they had their stool pulled up to the bar."

As a result of the investigation, Detective Ramos testified he filed a report noting, in part, that "[a] suspect was arrested in possession of a handgun inside of the establishment and in addition two separate suspects were arrested for possession of CDS" and recommended the following five charges regarding the licensed premises: (1) illegal activity; (2) narcotic activity; (3) nuisance; (4) lewd activity; and (5) lewd activity with audience participation. He based the nuisance charge on the numerous charges on this particular date and, based on his review of the computerized system of the police call logs (CAD report), explaining, "the fact . . . that we had responded to this particular establishment on numerous occasions in the past . . . two dozen or more [times]." That evening he walked with the manager throughout the establishment, explained to her the violations, and pointed out his observations to her (with the exception of the loaded gun, which was taken from the premises).

With regard to the purported events of May 6, 2009, Detective Ramos testified to an administrative report he prepared on May 30, 2009, based solely on a report prepared by Sergeant Brennan, who the detective testified was "currently not on duty" due to a back injury. There was no testimony regarding an ABC investigation purportedly conducted by Sgt. Brennan on May 22, 2009, that resulted in the three charges; the report was merely marked for identification. No exhibits were admitted into evidence at the hearing.

Betty Oster testified for petitioner. She stated that she was the manager of the Tropical Garden, and was in charge of it on the night of April 3, 2009. She explained she erroneously told police she was the owner because she is the one who is always present and in charge. Oster testified that Jackson was not employed by the licensee and she had never seen him prior to his being chased by Officer Green into and through the establishment that night. She explained that during the commotion one of the dancers fainted, so she took her outside and when the other police arrived she was standing outside the side door. According to Oster, there were about fifteen to twenty people in the Tropical Garden that night. Oster was not aware that any patrons or employees possessed drugs or marijuana on the licensed premises that night or that any of the employees were arrested by the police that night, and did not observe anyone tossing marijuana. She also had no knowledge of any condoms being on the licensed premises or of any semen being on the wall, and was unaware the police found condoms there. Oster acknowledged she presented her license to Detective Ramos that night but denied he discussed any violations with her. She further stated she had a security person standing at the front door; however, there were no further questions on this issue.

The ALJ affirmed the action of respondent on the five charges arising from the April 3, 2009 incident and the three charges arising from the May 6, 2009 investigation, as well as the revocation penalty. The ALJ's decision was affirmed by the Director. This appeal ensued.


On appeal, petitioner argues the record does not contain sufficient evidence to support a finding on any of the charges. Petitioner also argues the ALJ improperly placed the burden on it to disprove the charges by a preponderance of the evidence and applied an incorrect review standard of whether respondent's guilty finding and penalty was "unreasonable, arbitrary or capricious."

Specifically, as to the first two charges, petitioner contends the record is devoid of evidence that it allowed, permitted or suffered illegal possession of narcotics or any illegal activity at the Tropical Garden pursuant to N.J.A.C. 13:2-23.5(b) and (c) either by allowing the activity on the premises or failing to prevent such activity after it "knew or should have known" of its occurrence. See Benedetti v. Bd. of Comm'rs of Trenton, 35 N.J. Super. 30, 34 (App. Div. 1955). It further contends "[t]here was absolutely no showing of wrongdoing or culpable conduct" on its part. See Ishmal v. Div. of Alcoholic Beverage Control, 58 N.J. 347, 351-52 (1971). Petitioner urges that it was the police who caused Jackson to enter the establishment with a loaded gun when they chased him (charge one), and that its security personnel had no obligation to search its patrons for weapons prior to their entry.

Petitioner claims the second charge was deficient because the charge alleged it "caused or allowed narcotics activity in the licensed premises" but omitted the word "unlawful" as contained in N.J.A.C. 13:2-23.5(b)*fn2 and the ALJ did not find petitioner guilty of allowing "unlawful" narcotics activity. Petitioner additionally renews the argument it made to the ALJ that the Director's unpublished decision in Nancy Lee Baldwin v. City Council of Elizabeth, Division of Alcoholic Beverage Control Bulletin 2341 (March 10, 1980) is directly on point. In Baldwin, the Director reversed a municipal finding of guilty as to this regulation where patrons had discarded drugs upon police entry and it was satisfied the testimony did not establish the licensee or employees had actual or constructive knowledge of the presence of the drugs. Petitioner further asserts the ALJ erroneously imposed an obligation on it to "screen" all patrons for drugs at the doorway upon their entry to the premises.

As to the third charge of operating its business so as not to constitute a nuisance,*fn3 similar to its first argument, petitioner emphasizes the fact that a dozen officers were summoned to the Tropical Garden on the night in question was as a result of Officer Green chasing Jackson inside, not as a result of petitioner's operation.

Petitioner next argues the discovery of several used condoms on the patron side of the bar as supporting the ALJ's guilty finding on charge four, causing or allowing lewd activity on the premises, and five, permitting lewd activity with audience participation, N.J.A.C. 13:2-23.6(a)(1). Petitioner argues that the condoms, in and of themselves, are not "lewd" and there was no evidence that petitioner knew or should have known of their presence or that any particular activity involving them occurred on the premises at any particular time.

As to charges six through eight, petitioner emphasizes that there was no evidence pertaining to any activity on May 6, 2009. Petitioner notes that the only mention in the record was testimony by Detective Ramos that he reviewed an administrative report regarding an incident occurring on that date that mentioned three violations. The officer who prepared the report did not testify and the report was not introduced into evidence.

Petitioner also challenges the penalty of license revocation as inappropriate and too severe. Petitioner urges that it should be reversed as an abuse of discretion.

We first address petitioner's argument that because this was a de novo appeal of a disciplinary action, respondent was required to prove its charges by a preponderance of the evidence and it was not petitioner's burden to disprove the charges. We disagree. N.J.A.C. 13:2-17.1 sets forth the procedure for all appeals from actions of a municipality "concerning the issuance, denial, renewal, transfer, suspension or revocation of a retail [liquor] license." (emphasis added). N.J.A.C. 13:2-17.6 expressly addresses the burden of proof, stating:

All appeals shall be heard de novo and the burden of establishing that the action of the respondent issuing authority was erroneous, and should be reversed, shall rest with appellant.

Accordingly, the standard applied by the ALJ, on which the Director relied, i.e., that petitioner failed to prove by a preponderance of the credible evidence that respondents finding petitioner guilty on each of the charges was "unreasonable, arbitrary or capricious," was the proper burden of proof.

We turn now to a review of the agency's findings, recited by the ALJ, on each of the charges. The scope of our review in an appeal from a final decision of an administrative agency is limited. Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009). The "generally accepted gauge of administrative factual finality is whether the factual findings are supported by substantial evidence" in the record. Hornauer v. Div. of Alcoholic Beverage Control, 40 N.J. Super. 501, 504 (App. Div. 1956). We must sustain the agency's action in the absence of a "'clear showing' that it is arbitrary, capricious, or unreasonable" or "lacks fair support in the record[.]" Circus Liquors, supra, 199 N.J. at 9. In reviewing an agency's action, we consider:

(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. [Id. at 10 (quoting Mazza v. Bd. of Trs., 143 N.J. 22, 25 (1995)).]

In weighing these considerations, we must acknowledge, when appropriate, an agency's "'expertise and superior knowledge of a particular field.'" Circus Liquors, supra, 199 N.J. at 10 (quoting Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992)). We also generally afford "substantial deference" to a determination of the Director enforcing the State's regulations regarding the sale of alcoholic beverages. Circus Liquors, supra, 199 N.J. at 10.

Our review of the record in light of the legal standards satisfies us that respondent's decision was reasonably supported by the evidence presented with regard to charges two, four and five and petitioner failed to sustain its burden of demonstrating that respondent's finding of guilt on those charges was erroneous. Accordingly, we affirm the ALJ's determination that on April 3, 2009, petitioner "allow[ed], permit[ted] or suffer[ed]" unlawful possession of narcotic drugs and "lewdness or immoral activity" at the Tropical Garden.

As found by the ALJ, Oster's assertion that she had no knowledge that any patrons possessed marijuana and did not observe anyone tossing marijuana, or observe the condoms, even if assumed true, is not dispositive. "A licensee is responsible to maintain control of its patrons and its licensed and surrounding premises." Antoine Servs., Inc. v. Mun. Bd. of ABC, Linden, 97 N.J.A.R.2d (Vol. 2) 9, 18-19 (Div. of ABC) (citing In re Nathan's Realty, Inc., 96 N.J.A.R.2d (Vol. 2) 25, 13 (Div. of ABC)). This strict rule is justified because "[t]he liquor business is an exceptional one and courts have always dealt with it exceptionally." Borough of Fanwood v. Rocco, 33 N.J. 404, 411 (1960). As the Supreme Court reiterated in Division of Alcohol Beverage Control v. Maynards Inc., 192 N.J. 158, 180 (2007), "[i]t has long been the law in New Jersey that, in the context of the regulation of alcoholic beverages, the word 'suffer' . . . imposes responsibility on a licensee, regardless of knowledge, where there is a failure to prevent the prohibited conduct by those occupying the premises with his authority." (quoting Essex Holding Corp. v. Hock, 136 N.J.L. 28, 31 (Sup. Ct. 1947).

The ALJ noted it was undisputed that police observed two bags of marijuana and a marijuana cigarette on the patron side of the bar and two patrons were arrested for possession of CDS that evening. Officer Green observed a bag of marijuana on the bar separate from the bag a patron tossed to the floor. The bag of marijuana in plain sight on the bar is surely an item that, at a minimum, was visible to the bartender. Moreover, considering Oster's assessment that the establishment "wasn't packed" that night, if she were carrying out her duties as manager, Oster also should have been aware of the presence of the illegal narcotics on the premises. See Benedetti, supra, 35 N.J. Super. at 34. Considering petitioner's burden to establish that respondent's finding of guilt of the charge was erroneous, Oster's mere denial of knowledge was insufficient. Although Oster noted there was a security person standing at the front door, she presented no testimony as to his job duties and responsibilities, whether he had any specific instructions to screen, in any way, patrons upon their entry to the establishment, or of his observations of the patrons that evening. Petitioner could also have brought in the security guard or bartender to testify but chose to rely solely on the vague testimony of its manager. Thus petitioner cannot avail itself of the defense asserted in Ishmal, supra, 58 N.J. at 350-52, as it presented no testimony that it took reasonable and repeated steps to prevent customers from possessing drugs or engaging in drug transactions.

Petitioner correctly states that condoms, in and of themselves, cannot be considered lewd. However, the items discovered by police were used condoms, and as found by the ALJ, their presence "in a bar that employs female dancers" reasonably suggests that lewd activity took place on the premises. Moreover, they were discovered on the patron side of the bar behind a waist-high wooden structure in the area described by Officer Green as the "strip club portion" of the establishment with a possible semen stain on the nearby wall, strongly suggesting that the dancers engaged in sexual activities with the patrons.

We are not satisfied, however, that the record supported a finding of guilt of the first charge of permitting illegal activity on the premises. It is undisputed that Jackson was standing with other individuals outside the front door, which Oster testified would have been closed, and he entered the establishment only when he was chased by police. Oster testified that Jackson was not employed by the licensee and she had never seen him before, and there was no refuting testimony from police that, for example, Jackson was a "regular" there or they had previously encountered him at the establishment. Nor was there any testimony that Jackson had been making a commotion outside that should have been investigated by Oster. Accordingly, there is no evidence that Jackson had been permitted inside prior to Officer Green's observation of him. Nor would Oster have any reason to know he was armed.

Petitioner also is correct in its challenge to charges one, three, and the three charges arising out of an alleged May 6, 2009 incident (four through six). The ALJ's sole basis for the guilty finding on the third charge of permitting the premises to become a nuisance was that "petitioner operated its bar in such a fashion as to require substantial police intervention," specifically, that ten to twelve officers were summoned to the premises. It is undisputed the police presence was solely in response to Officer Green's observation of Jackson placing a gun in the waistband of his pants when he was standing outside the entrance door to the Tropical Garden.

We further note that although the CAD report was marked for identification, Detective Ramos did not provide any specific detail of prior police calls to demonstrate the establishment had repeated breaches of public peace or conduct contrary to the public health, safety or welfare requiring close police observation. Officer Green merely stated that on the night of April 3, 2009, he and the other officers were "on patrol . . . addressing quality of life issues" and they drove past the Tropical Garden. Detective Ramos stated in vague terms that police had previously "responded to this particular establishment" about "two dozen or more" times; he provided no explanation of the nature of the calls or the results. The ALJ presumably gave this generalized testimony no weight as she did not reference the prior police calls in her finding of nuisance.

There was no competent testimony presented regarding an ABC investigation purportedly conducted by Sgt. Brennan or evidence presented with respect to the May 6, 2009 incident or investigation. Detective Ramos merely identified an administrative report he prepared solely based on Sgt. Brennan's report and stated he recommended petitioner be cited for three violations -- license not conspicuously displayed, sale of alcoholic beverages to an intoxicated person, and business conducted in such manner to become a nuisance. Neither the police nor administrative report were admitted into evidence. On cross-examination, Detective Ramos acknowledged he did not observe that the license was not conspicuously displayed or the sale of alcohol to an intoxicated person. No testimony was presented as to the basis for the nuisance charge.

Accordingly, the record does not support the ALJ's finding that "[i]t is undisputed that petitioner's license was not in plain view on May 6, 2009." Nor did the ALJ have a factual or legal basis to rely on a purported statement in "the police report as well as an addendum report" regarding the license display or the statement that the "bartender admitted to serving an intoxicated patron." As noted by petitioner's counsel in his objection to Detective Ramos testifying solely as to what Sgt. Brennan purportedly put in his report, the problem of Sgt. Brennan being unable to testify could "be solved in many different ways, but not by [Detective Ramos] testifying as to what [Sgt.] Brennan found." Respondent chose not to present competent testimony or admit evidence to support the charges of May 6, 2009. Accordingly, those charges cannot be sustained on this record.

As to petitioner's challenge to the severity of the penalty of revocation of its license, we are mindful that our "'review of an agency's choice of sanction is limited'" and we "'generally afford substantial deference to the actions of administrative agencies such as the Board . . . because of the expertise and superior knowledge of agencies in their specialized fields[.]'" Maynards, supra, 192 N.J. at 183 (quoting In re License Issued to Zahl, 186 N.J. 341, 353 (2006)). We are unable to effectively review the revocation sanction imposed here because it was based on a finding of guilt of all eight charges. Since we have removed five of the charges from consideration, we do not know if respondent would have imposed the ultimate penalty of revocation of petitioner's license solely on the three charges we sustained -- permitting CDS and lewd activities on the premises -- or if the Director would have affirmed the sanction. Accordingly, we remand for reconsideration of the sanction.

Affirmed in part; reversed in part; and remanded for reconsideration of the sanction. We do not retain jurisdiction.

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