PAPERS CONSIDERED: (1) Order to Show Cause dated March 11, 2019; Verified Petition and Complaint and Exhibits; Affidavit of Robert L. Trone sworn to on March 6, 2019; Memorandum of Law in Support of its Verified Petition and Complaint; Affirmation of Victoria A. Graffeo dated May 6, 2019 and exhibit and Memorandum of Law in Reply. (2)Answer of Respondent-Defendant New York State Liquor Authority dated April 11, 2019 and exhibits; Affirmation in Opposition of Mark D. Frering dated April 11, 2019; Memorandum of Law in Opposition; Affidavit of Vincent G. Bradley sworn to on April 11, 2019. (3) Answer of Respondent-Defendant Interveners dated April 24, 2019 and Memorandum of Law For a Judgment under Article 78 and Section 3001 of the Civil Practice Law and Rules DECISION/ORDER/JUDGMENT Petitioner-plaintiff White Plains Fine Wine & Spirits LLC seeks judgment pursuant to CPLR Article 78 and CPLR 3001 and 3212 to (1) vacate and annul the determination of respondent-defendant New York State Liquor Authority (hereinafter the SLA) that denied its application for a license to sell liquor and wine at retail for off-premises consumption (commonly called and hereinafter referred to as a package store license); (2) for summary judgment on its declaratory judgment action; and (3) for an order directing the SLA to grant the application and issue the requested license. The SLA and the remaining respondents-defendants, interveners in this matter, oppose the relief requested. For the following reasons, the Court finds that petitioner-plaintiff failed to show that the SLA’s decision to disapprove its application for a package store license was made in violation of lawful procedure, affected by an error or of law, was arbitrary and capricious, or an abuse of its discretion. The Package Store License Application In August 2018, petitioner-plaintiff (hereinafter White Plains Fine Wine), by its principal and sole owner Robert Trone, filed an application for a package store license. It was anticipated that the store would be located in a retail shopping center in Hartsdale, New York, Westchester County, in a site encompassing approximately 21,093 square feet of which 17,271 square feet was to be devoted to retail space. Approximately 100 people would be employed, 75 of whom would be full-time. More than 9,200 wine items and 4,800 spirits would be sold, including 990 New York wines, 380 New York spirits and 50 New York ciders, and that the store would host educational events and daily tastings to the public. The application stated that Robert Trone had been in the alcoholic beverage retail business since 1985. He had an interest in approximately 169 businesses operating under some form of the name “Total Wine & More”, which were located in multiple states nationwide and sold alcoholic beverage products for off-premises consumption. The SLA’s record included gross annual sales from the five package stores closest to the proposed location and each store’s total square footage, to wit: Hartsdale Wine Shoppe Inc. 2,100 sq.ft. 2014 $1,466,233 2015 $1,530,444 2016 $1,564,754 2017 $1,418,886 2018 $ 772,016 (1/1-7/31) Westchester Wine Warehouse LLC 10,000 sq.ft. 2014 $17,096,688 2015 $17,463,317 2016 $17,046,564 2017 $16,420,390 2018 $7,203,880 (1/1-6/30) 128 Post Road Liquors Inc. Aries Wines & Spirits 2,600 sq.ft. 2014 $558,946 2015 $645,058 2016 $592,770 2017 $624,030 2018 $342,503 (1/1-6/30) Emirate Beverage LLC The Wine & Liquor Shop 950 sq. ft. 2014 2015 $252,023 (starting June 1, 2015) 2016 $534,382 2017 $559,008 2018 $293,512(1/1-6/30) C&S Wine & Liquors Inc. 1,400 sq.ft. 2014 $1,113,002 2015 $1,126,158 2016 $1,131,474 2017 $1,194,002 2018 $561,304(1/01-6/30) The record also contained maps of the major suburban shopping areas, the proposed store location and location of competitors, the proposed store floor plan, demographic data, marketing material and proposed in-store promotional signage and other documentary support for the application. Decision of the SLA On December 11, 2018, a special meeting of the SLA’s full board was held to consider the application. The board heard from the applicant and a number of state and local retailers, elected officials, and representatives of the four closest package stores, who voiced opposition to the application. The board noted that it had received many other written correspondence in support of and opposition to the application. At the conclusion of the hearing, the SLA unanimously disapproved the application. On February 8, 2019, a written decision stating the reasons for disapproval of the application was issued. In its written decision, the SLA concluded that public convenience, advantage and the public interest would not be served by issuing a license to operate a package store at the proposed location. In reaching that conclusion, the SLA considered several factors, including a downward trend in annual gross sales of the five closest package stores, the declining total sales of the closest 25 package stores, the existence of 200 package stores in Westchester County, 40 package stores within a five-mile radius of the proposed location, and 50 package stores within a ten minute drive, which the SLA concluded were sufficiently addressing the needs of consumers in the immediate area. The SLA also noted the lack of any major commercial growth in Westchester County and the fact that the population had grown only around 3 percent in the last eight years, which to them was not significant enough to show an increase in demand for alcoholic beverages. The SLA also held that the opening of a Total Wine store in Westbury, New York by David Trone, Robert Trone’s brother, also affected their decision. The SLA stated that it had been convinced that their approval of the Total Wine store in Westbury, which used the same business model as proposed by White Plains Fine Wine, would draw customers from Long Island, metropolitan New York City area ‘and perhaps farther’, with a customer base 100 miles to the west and 50 miles to the east. The SLA was advised that the Westbury Total Wine store it would set up an online store and a warehouse for online sales in Bronx County, as well. The SLA stated that it granted the Westbury Total Wine license “because of its uniqueness” and the “regional convenience created by the addition” of the store, which — in their opinion “was sufficient to overcome the fact that it was surrounded by numerous existing package stores.” With those facts in mind, the SLA noted that the proposed White Plans Fine Wine store would be only 40 miles to the north of the Westbury Total Wine store and 30 miles from two other Total Wine stores, one in River Edge, New Jersey and one in Norwalk, Connecticut. Contrary to White Plains Fine Wine’s claim, the SLA found insufficient evidence that the White Plains Fine Wine store would draw customers from all over Westchester County, Rockland County, Bronx County and southern Connecticut, including customers who were currently shopping at New Jersey Total Wine store or the Norwalk, Connecticut Total Wine store. Moreover, the SLA could not find that White Plains Fine Wine would be a “regional destination” given evidence that the 25 closest package stores located within Westchester County experienced a decrease in sales of close to one million dollars over the last three full years. This suggested to them that there had been no significant increase in the demand for alcoholic beverages in the county. The SLA also found no support for the assertion that the store would be a “regional destination” given the fact that there was no major commercial growth in Westchester County and the fact that there were already Total Wine stores that carried the same products and offered the same customer service in the surrounding communities as well as the representation by Robert Trone’s brother that he planned to extend the Westbury Total Wine store customer base by reaching into the areas overlapping with White Plains Fine Wine’s proposed extended trade area. Given the lack of an increase in population and alcoholic beverage sales, the SLA found no reason to add the retail space proposed, which was ten times the size of the closest store and over twice the size of all the stores within two miles of the proposed location. Recognizing the “unprecedented” opposition to the application, the SLA concluded that the public convenience, advantage, and the public interest would not be served by issuing a license to operate a package store at the proposed location because the area was adequately served and arguably over saturated with retail liquor outlets and because the proposed store would add more, but not anything different, to the current situation. Contentions White Plains Fine Wine contends that the SLA’s decision was arbitrary, capricious and effected by error in law and must be vacated and annulled. It argues that the justification for disapproving the license is inconsistent and irreconcilable with its decision to grant a license for the Westbury Total Wine store, which shared the same distinct characteristics as the proposed White Plains store in terms of business model, product selection, customer service and events, factors that the SLA found met the “public convenience, advantage and interest” standard. White Plains Fine Wine argues that the SLA erred in finding that its store would be in the same retail trade area or serve the same customers as the Westbury Total Wine store, which was located 40 miles away. Citing Matter of Hub Wine & Liquor Company v. State Liquor Authority (16 NY2d 112, 117 [1965]), it contends that the SLA acted irrationally by finding that the proposed location was too close geographically to the Westbury Total Wine store and the two Total Wine stores in Connecticut and New Jersey, which is inconsistent with SLA precedent and irreconcilable with the Legislature’s abolishment of a minimum-distance requirement for retail “package” stores. White Plains Fine Wine maintains that the SLA was influenced by improper factors, including (1) anti-competitive protectionism; (2) political opposition; and (3) the applicant’s status as a nonresident. It contends that the SLA denied its application because existing retailers feared they could not compete for customers against it and that it was arbitrary and capricious and an error in law for the SLA to be swayed by such political and special interest opposition to the license. It contends that the SLA wrongfully considered Robert Trone’s out-of-state residency in denying the application and unconstitutionally discriminated against him as an out-of-state resident in favor of in state retailers in violation of the dormant Commerce and Privilege and Immunities Clauses of the United States Constitution. White Plains Fine Wine claims that the denial of a license was arbitrary and capricious because the record showed that the proposed store would substantially benefit and promote the New York alcoholic beverages and agricultural industries, consistent with Alcoholic Beverage Control Law §2, by offering more New York products than any other licensee in the area and promoting New York products and tourism through events and opportunities not offered by the existing stores in the area. It argues that the primary purpose of the Alcoholic Beverage Control Law §2 is to “promote the health, welfare and safety of the people of the state, promoting temperance in the consumption of alcoholic beverages”, with a secondary purpose of “to the extent possible, supporting economic growth, job development, and the state’s alcoholic beverage production industries and its tourism and recreation industry”, but that the SLA failed to consider the second statutory prong and incorrectly concluded that White Plains Fine Wine would only offer more of the same. Finally, White Plains Fine Wine argues that the SLA’s decision was arbitrary and capricious because it ignored the evidence that the proposed store would benefit New York consumers by meeting consumer demand, offering options not currently existing, by providing greater selection, and competitive pricing and services not found in the area. It claims that the SLA ignored evidence that the sales of existing retailers proximate to the proposed location are increasing at a healthy pace, and that the trade area is booming economically. SLA opposition to the petition The SLA argues that White Plains Fine Wine failed to meet its burden to show that its decision was irrational. It offered the affidavit of the SLA’s Chairman, Vincent G. Bradley, who detailed the reasons for his vote to disapprove the application. Specifically, his disapproval was based on evidence of the 40 package stores that were located within a five-mile radius of the proposed location, the 50 package stores that were located within a ten-minute drive, and the 200 package stores already located in Westchester County, the downward trend in gross sales of the five closest package stores over the last several years and the decrease of close to $1,000,000 in sales of the closest 25 package stores in Westchester County, all of which suggested that there was a decreasing demand for alcoholic beverages in the county. He also relied on the lack of major commercial growth in Westchester County and the existence of other Total Wine stores that were located within 30 miles of the proposed location that carried the same products and offered the same services in more developed retail shopping areas than the Hartsdale proposed location. Those factors led him to conclude that there was no net gain, no public convenience, and no advantage to the community by adding another identical Total Wine store in an area already served by existing Total Wine stores and in an area where there is a slow growth in population over the last eight years and in an area that is sufficiently served and arguably over saturated with retail outlets for liquor and wine. Bradley averred that the application was not disapproved based on the applicant’s out-of-state residence. He stated that the board was mindful of and did consider economic growth and job development as they were bound to do in accordance with Alcoholic Beverage Control Law §2, but recognized that it was not subordinate to the primary policy consideration of promoting the health, welfare and safety of the people of the state and to promote temperance in the consumption of alcoholic beverages. Respondent-Defendant Interveners opposition The interveners contend that the SLA’s disapproval of White Plains Fine Wine’s application was rationally based and should not be disturbed. Among other things, they maintain that any suggestion that the White Plans Fine Wine store would offer a selection of wine and liquor that was not available in any existing store has no merit and is contrary to the Alcoholic Beverage Control Law, which provides that there can be no product sold by one store that cannot be sold by any other store in the area or State of New York (Alcoholic Beverage Control Law §101-b). Moreover, the interveners argue that the only unique facet of the applicant’s store is the fact that it will be two times larger than any store in the area and, at 21,000 square feet, would be bigger than the combined square footage of all of the stores in the immediate area. This fact, it is alleged, has always been a negative element against an applicant trying to get a new package store license in a particular area. Standard of Review In reviewing an agency determination, the court’s role is limited to ascertaining whether there is any rational basis for the decision (see, Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 230-231 [1974]; CPLR 7803 [3]). “[T]he determination of an agency acting pursuant to its authority and within its area of expertise is entitled to judicial deference” (Matter of Riverkeeper, Inc. v. Johnson, 52 AD3d 1072 [3d Dept 2008], Iv denied 11 NY3d 716 [2009]). “If the court finds that the determination is supported by a rational basis, it must sustain the determination even if the court concludes that it would have reached a different result than the one reached by the agency” (Matter of Peckham v. Calogero, 12 NY3d 424, 431 [2009]). Relevant Law The Alcoholic Beverage Control Law empowers the SLA to “determine whether public convenience and advantage will be promoted by the issuance of licenses to traffic in alcoholic beverages, the increase or decrease in the number thereof and the location of premises licensed thereby, subject only to the right of judicial review…” (Alcoholic Beverage Control Law §2). It has the authority to “issue or refuse to issue any license or permit” (Alcoholic Beverage Control Law §17 [1]) and is “given wide latitude in the exercise of its powers” (Matter of Galaxy Bar & Grill Corp. v. New York State Liq. Auth., 154 AD3d 476, 478 [1st Dept 2017], appeal dismissed 30 NY3d 1046 [2018]). Such authority is to be exercised in “the public interest…for the primary purpose of promoting the health, welfare and safety of the people of the state, promoting temperance in the consumption of alcoholic beverages; and, to the extent possible, supporting economic growth, job development, and the state’s alcoholic beverage production industries and its tourism and recreation industry; and which promotes the conservation and enhancement of state agricultural lands; provided that such activities do not conflict with the primary regulatory objectives of this chapter” (Alcoholic Beverage Control Law §2). “Public convenience” has been defined as “the accessibility of stores and involves considerations of distance [and] overcrowding of present facilities”; the broader term ‘public advantage’ refers to considerations that include “social and similar problems, and…the State’s general policy as to the sale of alcoholic beverages for off-premises consumption” (Matter of Forman v. New York State Liq. Auth., 17 NY2d 224, 230 [1966]; see Matter of Circus Disco v. New York State Liq. Auth., 51 NY2d 24 [1980]). Analysis The SLA’s determination — which must be judged by the court based on the reasons given and the facts that support them — is rationally based (Matter of Hansen v. State Liq. Auth., 77 AD2d 703 [3d Dept 1980], affd 53 NY2d 693 [1981]). The SLA cited a number of factors that supported its conclusion. Specifically, it found that existing licensees were addressing the needs of consumers in the immediate area as evidenced by more than 200 package stores in Westchester County, including one in the same retail plaza, 40 package stores located within a five-mile radius, and 50 package stores located within a ten-minute drive. It concluded that there was a downward trend in liquor sales in the immediate area, as shown by reports of the total annual sales over several years of the five licensees closest to the applicant’s location. It found no evidence of a significant increase in the demand for alcoholic beverages in Westchester County as evidenced by a population growth of only 3 percent in eight years and a decrease in annual sales of close to $1,000,000 for the 25 closest package stores in the preceding three years. The SLA noted the lack of evidence of major commercial growth in Westchester County, which led it reject White Plains Fine Wine’s claim that it would be a ‘regional destination location’, particularly in light of the three Total Wine stores located within 30 to 40 miles of the proposed location, all of which used the same business model, carried the same products, and offered the same services but in more developed retail shopping areas. Moreover, the SLA had been led to believe during discussions on licensing of the Westbury Total Wine Store that it planned to extend its customer base by reaching into the area that would overlap with White Plans Fine Wine’s proposed extended trade area. Given the lack of an increase in population and alcoholic beverage sales, the SLA found no reason to add a store with retail space ten times the size of the closest store and over twice the size of all the stores within two miles of the proposed location. The SLA recognized that the licensees in the area may not offer the same variety of products that White Plains Fine Wine can offer, but concluded that based on the unique set of facts that was before it, the existing licensees were offering the products and services that were sought by the consumers in the area and that the applicant did not demonstrate that public convenience, advantage and the public interest would be served by issuing a license to operate a package store at that location. The saturation of package stores in the proposed area, a decline in recent annual gross sales for alcoholic beverages, a stagnant population growth, the lack of commercial growth in the area, and evidence that the community is adequately served by existing package stores, are rational grounds to support the SLA’s decision that public convenience and advantage would not be served by the issuance of a package store license (see Matter of 401 E. 138th St. Wine & Liq. Corp. v. New York State Liq. Auth, 75 AD2d 731 [1st Dept. 1980]; Matter of Mandee Liqs. v. Roth, 57 AD2d 961 [2nd Dept 1977], affd 44 NY2d 653 [1978]; Matter of Collins v. New York State Liq. Auth., 49 AD2d 1000 [3d Dept 1975]; Matter of Oliver v. State Liq. Auth., 34 AD2d 676 [2nd Dept 1970]; Matter of K & C Liqs. Inc. v. New York State Liq. Auth., 60 Misc3d 1219 [A] [Sup. Ct. Bronx Cty 2018]). The record does not support the contention that the SLA disapproved the application based on artificial geographic distance limitations. The SLA “must decide each application submitted to it on its own merits” and consider whether “public convenience and advantage” will be promoted, rather than applying predetermined minimum-distance requirements for retail package stores, as was the case prior to changes in the law (Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 NY2d at 119). In this case, the SLA did not find that the proposed White Plains Fine Wine store would be a ‘destination’ store and in so concluding considered many factors, including the location of the proposed store and the accessibility of other retail stores in the area and the distance between them, which are proper considerations in determining whether public convenience and advantage will be promoted (see Matter of Forman, 17 NY2d at 224). Nothing in the SLA’s decision convinces the Court that it impermissibly applied an arbitrary minimum-distance requirement between stores in denying the application. Nor does the Court find that the SLA’s decision was based on improper factors such as anti-competitive protectionism and political opposition. It is well settled that the SLA may not deny a liquor license “solely on the grounds that its grant may tend to increase competition in a given geographic area” (Matter of Hansen v. State Liq. Auth., 101 Misc2d 691, 697 [Sup Ct Greene Cty 1979], reversed on other grounds 77 AD2d 703 [3d Dept 1980], affd 53 NY2d 693 [1981]) or “without a reason other than the recommendation or view thus expressed” by the public or community members (Matter of Circus Disco, 51 NY2d at 38). “[P]ublic or community reaction alone, unrelated to the other standards set forth in the law, [cannot] be a basis for denial of a license” (id). In this case, while the SLA noted the “unprecedented” opposition to the application by public officials and retailers, the SLA articulated other reasons, unrelated to the opposition, that supported its disapproval. As detailed above, the SLA found that the area was adequately served by existing package stores and there was no public convenience or advantage to adding another store 10 times the size of any store in the area, which “would not add anything different to the current situation, merely adding more.” In light of those reasons, and absent any other evidence to the contrary, White Plains Fine Wine has not shown that anti-competitive protectionism or political opposition to the application impermissibly influenced the SLA’s decision. Nor does a review of the transcript of the SLA’s December 2018 hearing or the written decision support the contention that the SLA improperly relied upon Robert Trone’s out-of-state residency as a basis to deny the application. Finally, the Court does not find that the SLA acted irrationally and ignored that part of the Alcoholic Beverage Control Law §2 that declared the policy of the State, to the extent possible, was to support “economic growth, job development, and the state’s alcoholic beverage production industries and its tourism and recreation industry”. Bradley averred that, in reaching its decision, the SLA was, in fact, mindful of and did consider economic growth and job development as they were required to do in accordance with Alcoholic Beverage Control Law §2, but recognized that it was not subordinate to the primary policy consideration of promoting the health, welfare and safety of the people of the state and to promote temperance in the consumption of alcoholic beverages. White Plains Fine Wine’s remaining arguments have been considered and are found to be without merit. Accordingly, the petition is denied. This shall constitute the Decision and Order of the Court. All papers are being returned to the attorney for respondent New York State Liquor Authority. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provisions of that rule regarding filing, entry and Notice of Entry. Dated: September 16, 2019 Albany, New York
