Court Opinion

ID: 5695090
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:32:41.719668+00
Date Added: 2024-06-11T08:40:13.391484
License: Public Domain

Catterson, J. (dissenting).
Because I believe that the State Liquor Authority (hereinafter referred to as SLA) exceeded the discretion given to it by section 107-a (2) of the Alcoholic Beverage Control Law, I respectfully dissent.
The petitioner applied for three different registrations for “Passion Cocktail,” “Cherry Fusion,” and “Lemon Stinger.” The product in question is an alcoholic beverage that is intended to be frozen prior to consumption. The proposed label indicated that the product contains alcohol, it included the ubiquitous government warnings concerning dangers associated with consumption of alcohol, and the label prominently noted “Do not serve to children!”
Prior to the SLA’s determination, the petitioner in a letter submission to the SLA outlined the precautions that the petitioner would undertake in the distribution of “Freaky Ice”:
“Each carton of product sold by [petitioner] will contain instructions to the retailer which shall include the following:
“This product is an alcoholic beverage and may not be sold to anyone under the age of 21.
“Although it is recommended that this product be consumed frozen, it is not necessary to sell this product in a frozen (or refrigerated) state.
“We strongly advise that if the retailer has no freezer wholly dedicated to alcoholic beverages, then the product should be sold at room temperature. Under no circumstances should the product be mingled with non-alcoholic beverage products in a retailer’s freezer.
“When selling the product at room temperature, we strongly recommend that such product be kept separate and apart from any other non-alcoholic beverage products and only be included in those areas dedicated to alcoholic beverages.
“Whether the retailer sells the product in a frozen state or at room temperature, we strongly recommend that the retailer indicate, in writing, near to where such product is displayed, that it is an alcoholic beverage and will not be sold to anyone under the age of 21.
*165“In addition to the above instructions, . . . each carton containing the individual packets of the product will clearly state that same is an alcoholic beverage product and is not to be sold or consumed by anyone under the age of 21.”
On August 13, 2004, respondent disapproved petitioner’s application, stating:
“The product for which the label is sought is proposed to be sold in grocery stores. It is recommended by the manufacturer that the product be frozen for 7 hours prior to sale. It is further recommended that it be sold in a frozen state . . .
“Advertising for the product. . . promotes it as the only alcoholic frozen popsicle in the world.
“The Authority is not satisfied that a product advertised as a popsicle which is a product not usually associated with one containing alcohol is an appropriate product to be sold in an environment where very similar non-alcoholic products are sold, and where persons under the age of 21 are more likely to frequently shop, or that the sale of such product would not be conducive to proper regulation and control.
“Non-alcoholic frozen popsicles are a standard item sold in many premises licensed to sell beer and wine products for off-premises consumption. The statement that this popsicle contains alcohol is printed in small type, as is the warning not to sell to anyone under 21. However, the possibility of underage customers purchasing this product appears to be too feasible.
“The Authority determines that approval of this brand label registration would create a high degree of risk in the administration and enforcement of the Alcoholic Beverage Control Law and that public convenience and advantage would not be promoted by such approval.”
It is uncontested that the SLA undertook no investigation independent of the underlying application. There is no evidence of record that the product at issue was promoted as the “only alcoholic frozen popsicle in the world” or that the marketing of the product was not “conducive to proper regulation and control.”
*166Alcoholic Beverage Control Law § 107-a states, inter alia:
“1. The liquor authority is hereby authorized to promulgate rules and regulations governing the labeling and offering of alcoholic beverages bottled, packaged, sold or possessed for sale within this state.
“2. Such regulations shall be calculated to prohibit deception of the consumer; to afford him adequate information as to quality and identity; and to achieve national uniformity in this field in so far as possible.”
It is beyond cavil that section 107-a is concerned solely with consumer deception, adequate information on labeling concerning quality and identity, and national uniformity.
In this case, the SLA failed to point to any part of the label that was deceptive or misleading. Indeed, there is no equivocation or deception on the label whatsoever as it clearly indicates in two different locations that the product contains alcohol. Absent a showing of deception, the SLA was without the authority to impose its perception of the product as encouraging underage consumption of alcohol on the bare record before it. Intentio inservire debet legibus, non leges intentioni. (See Matter of Hawkeye Distilling Co. v New York State Liq. Auth., 118 Misc 2d 505, 506 [Sup Ct, NY County 1983] [“Once it appears that neither the bottle nor its label are misleading, the authority’s writ runs no farther”]; Cabo Distrib. Co., Inc. v Brady, 821 F Supp 601, 613-615 [ND Cal 1992] [construing similar federal regulation]; see also CIBCO Distrib. Co. v State Liq. Auth., NYLJ, Feb. 9, 1988, at 7, col 2 [Sup Ct, NY County].)
It is true, as the lower court noted, that the Court of Appeals in Matter of Affiliated Distillers Brands Corp. v State Liq. Auth. (24 NY2d 31, 36 [1969]) stated that “[t]he Authority may, undoubtedly, exercise discretion to refuse to approve a label which would help an applicant to violate any part of the Alcoholic Beverage Control Law.” However, the SLA’s claim that petitioner’s label would help petitioner violate the sections of the Alcoholic Beverage Control Law prohibiting the sale of alcohol to persons under 21 is simply without any support in the record. On the contrary, the record is replete with precautions that petitioner will take so that retailers will not sell its product to persons under age 21.
In a case postdating Affiliated Distillers, the Court of Appeals stated that “[d]enial of a license on the speculation that it will *167be operated in violation of law is impermissible. The likelihood of future violation can furnish a basis for denial only when there are facts in the record which rationally support doing so.” (Matter of Circus Disco v New York State Liq. Auth., 51 NY2d 24, 35-36 [1980] [citations omitted]; see also Matter of Sled Hill Cafe v Hostetter, 22 NY2d 607, 612-613 [1968] [“(w)here the Authority’s conclusions are based on speculative inferences unsupported by the record its determination should be annulled”].)
A number of courts have set aside denials of applications despite the SLA’s concerns about the possibility of underage alcohol consumption. For example, in one case the SLA denied petitioner’s application for a restaurant liquor license because the restaurant was in close proximity to New Jersey. (See Matter of Matty’s Rest. v New York State Liq. Auth., 21 AD2d 818, 819 [2d Dept 1964], affd 15 NY2d 659 [1964].) While New York permitted the sale of alcohol to persons over the age of 18, at that time, New Jersey law did not permit the sale of alcoholic beverages to persons under the age of 21 years. The SLA surmised that underage persons from New Jersey would be attracted to the New York premises but the Court found that the SLA’s actions did not have a rational basis and annulled the determination. (Id. at 818-819.)
In CISCO (supra), a case remarkably similar to the instant petition in many respects, the SLA disapproved a label for “Nude Beer.” The label depicted a woman wearing a bikini top, but the top could be scratched off to reveal bare breasts. (NYLJ, Feb. 9, 1988, at 7, col 2.) The SLA maintained that “the label would encourage underage drinking by appealing to a youthful market” and that “the bottle could be redeemed for refund in grocery stores where young children are present and would probably be sold largely for off-premises consumption so that the scratched-off labels would be accessible to persons of all ages.” (Id. at col 3.) However, the court correctly ordered respondent to approve the label, stating:
“[T]he SLA’s conclusion that the proposed label would encourage underage drinking by appealing to a youthful market is wholly unsupported in the record and constitutes mere speculation .... Denial of brand label registration based upon speculation that the beverage will be sold in violation of state law is impermissible in the absence of facts on the record which rationally support such a conclusion.” (Id.)
*168In Bad Frog Brewery, Inc. v New York State Liq. Auth. (134 F3d 87, 91 [2d Cir 1998]), the SLA denied Bad Frog’s application for a beer label that depicted a frog “giving the finger.” The SLA held that the gesture, plus the slogan, “He just don’t care,” enticed underage drinkers and encouraged the public to disregard the health warning on the label about the dangers of alcohol. (Id.) The SLA also noted that “the label could appear in grocery and convenience stores, with obvious exposure ... to children of tender age.” (Id.) However, the Second Circuit stated, “The truth of these propositions [that the frog appeals to youngsters and promotes underage drinking] is not so self-evident as to relieve the state of the burden of marshalling some empirical evidence to support its assumptions.” (Id. at 100.)
Finally, in Cabo, the federal Bureau of Alcohol, Tobacco and Firearms (BATF) revoked certificates of label approval for “Black Death Vodka.” (Cabo Distrib. Co., Inc. v Brady, 821 F Supp 601 [1992].) The plaintiffs argued that they were denied their rights under the Administrative Procedure Act and the Fifth Amendment. The court granted the plaintiffs summary judgment finding that the agency had acted in an arbitrary and capricious manner. The court noted that the BATF presented no consumer surveys indicating that the product is associated in any way with underage drinking. (Id. at 615.) The court also pointed out that the BATF had approved other death-evoking labels and stated that “[f]or the BATF to single out plaintiffs’ ‘Black Death’ vodka . . . because it somehow . . . misleads young people into believing it is part of a death cult is inconsistent and unfair to plaintiffs.” (Id.)
In the instant case, I believe the SLA acted in an arbitrary and capricious manner when it denied petitioner’s application without any empirical evidence that the proposed label was deceptive to the general public.
Andrias and Sweeny, JJ., concur with Friedman, J.; Mazzarelli, J.P., and Catterson, J., dissent in a separate opinion by Catterson, J.
Judgment, Supreme Court, New York County, entered on or about December 27, 2004, affirmed, without costs.