The Cloister East, Inc. v. New York State Liquor Authority

CourtDistrict Court, S.D. New York
DecidedOctober 8, 2024
Docket1:20-cv-06545
StatusUnknown

This text of The Cloister East, Inc. v. New York State Liquor Authority (The Cloister East, Inc. v. New York State Liquor Authority) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Cloister East, Inc. v. New York State Liquor Authority, (S.D.N.Y. 2024).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x THE CLOISTER EAST, INC., etc., et al., Plaintiffs, -against- 20-cv-6545 (LAK) NEW YORK STATE LIQUOR AUTHORITY, et al., Defendant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x MEMORANDUM OPINION

Appearances: Robert Garson GARSON, SEGAL, STEINMETZ, FLADGATE LLP Attorneys for Plaintiffs Alice Goldenberg Katherine Rhodes Janofsky Assistant Attorneys General LETITA JAMES ATTORNEY GENERAL OF THE STATE OF NEW YORK Attorneys for Defendants LEWIS A. KAPLAN, District Judge. This case involves an effort by the New York State Liquor Authority (the “SLA”) to enforce COVID-19 guidelines promulgated by the New York Department of Heath (the “DOH”) during the depths of the pandemic. Plaintiffs — The Cloister East, Inc. (“Cloister”), which at relevant times operated a restaurant known as Cloister Café and held an on-premises liquor license, and its owners — now claim that the SLA (1) in 2020 improperly suspended Cloister’s liquor license 2 after an article published on the Gothamist.com reported that Cloister Café was hosting illegal “pandemic parties” and (2) later that year improperly revoked that license. They seek damages and declaratory relief pursuant to 42 U.S.C. § 1983 based on alleged violations of their due process rights.1 Now before the Court is defendants’ motion to dismiss the Second Amended Complaint

(“SAC”).2

Facts and Procedural History3 In August 2020, after the Gothamist.com published an online article claiming that Cloister Café was hosting “illegal, illicit pandemic parties,”4 the SLA issued an emergency order suspending Cloister’s liquor license (the “Suspension Order”) pursuant to an investigation and board meeting that plaintiffs allege were filled with inaccuracies and misrepresentations. Cloister then

filed this action against the SLA and sought principally an injunction reversing the license suspension. This Court denied Cloister’s motion for a preliminary injunction, principally on the ground that an adequate post-deprivation hearing would be available in the form of an Article 78

1 Dkt 102 (“SAC”) ¶¶ 120-38. 2 Dkt 105 (Def. Mot.). 3 The Court assumes familiarity with the underlying facts and the procedural history and thus provides the minimal background necessary to decide the motion. For a more complete accounting of the case background, see Cloister E., Inc. v. N.Y. State Liquor Auth., 563 F. Supp. 3d 90, 96-102 (S.D.N.Y. 2021). 4 SAC ¶ 36. 3 proceeding in state court.5 Plaintiffs then commenced an Article 78 proceeding in state court and initially obtained a temporary restraining order vacating the Suspension Order.6 But the SLA then rescinded the Suspension Order, thus mooting Cloister’s Article 78 proceeding.7 The SLA, however, then went on to hold an administrative hearing on its petition to revoke or cancel Cloister’s license.8

The administrative law judge sustained 16 of the SLA’s charges against Cloister, following which the SLA canceled its liquor license.9 Cloister then commenced a second Article 78 proceeding, this one challenging the SLA’s cancellation of the license.10 The New York Supreme Court, however, dismissed the petition on the ground that Cloister lacked legal capacity to sue because it had been administratively dissolved in 1993 under Section 203-a of the New York Tax Law for failing to pay certain taxes.11 The Appellate Division affirmed the dismissal on November 3, 2022, applying the same rationale.12

Cloister did not seek review in the state system of the Appellate Division decision. 5 Cloister E., 563 F. Supp. 3d at 101. 6 SAC ¶ 114. 7 Id. ¶ 115. 8 Id. 9 Id. ¶ 117. 10 Id. ¶ 118. 11 Id. ¶ 119. 12 Id.; see also Cloister E., Inc. v. N.Y. State Liquor Auth., 210 A.D.3d 453, 175 N.Y.S.3d 898 (N.Y. App. Div., 1st Dep’t 2022). 4 In December 2022, plaintiffs13 filed the SAC, which asserts claims against the three SLA members, the SLA’s general counsel, and an associate counsel of the SLA. It contains only two claims for relief. The first, against all defendants, asserts a procedural due process claim based on

the assertion that the Suspension Order deprived Cloister (and presumably its landlord and the Drobenko brothers, none of whom is said to have held a liquor license) of notice or a hearing before that order was entered.14 The second is brought only against SLA chairman Bradley, who allegedly was biased against Cloister and thus rendered the cancellation of Cloister’s license invalid under the due process clause.15 Defendants now move to dismiss the SAC. They argue principally that plaintiffs lack standing to sue because Cloister, the licensee, had been administratively dissolved in 1993, thus did not legally exist at the time it commenced this litigation, and therefore could not have sustained any

injury in fact.16 In the alternative, they contend that the claims against the Individual Defendants must fail for lack of personal involvement and, in any case, on the basis of qualified immunity, among other reasons.17 For the reasons discussed below, defendants’ motion is granted.

13 Cloister; Drobenko Bros. Realty, Inc., its landlord; and four Messrs. Drobenko who allegedly own Drobenko Bros. Realty. 14 SAC ¶¶ 120-27. 15 Id. ¶¶ 128-38. 16 Dkt 106 (Def. Mem.) at 16-22. 17 Id. at 22-35. The defendants argue also that the action must be dismissed as against the SLA on the ground of sovereign immunity. While the SAC continues to name the SLA as a defendant 5 Discussion Standing Article III of the U.S. Constitution limits federal court jurisdiction only to “cases” and “controversies.”18 “One element of the case-or-controversy requirement is that [plaintiffs], based

on their complaint, must establish that they have standing to sue” — that is, that they are “the proper party to bring [the] suit.”19 “To have standing, a plaintiff must ‘present an injury that is concrete, particularized, and actual or imminent; fairly traceable to the defendant’s challenged behavior; and likely to be redressed by a favorable ruling.’”20 And it long has been said, albeit as a very broad generalization, that jurisdiction must be established as a threshold matter before a court proceeds to the merits.21 Were that generalization to be applied uncritically here, it would involve this Court in

in its listing of the parties, SAC ¶ 7, neither of the two claims in the SAC identifies the SLA as a defendant against which the claim is brought, despite doing so for other defendants, id. ¶¶ 120-38. For this reason alone, the SAC is dismissed as to the SLA. In any event, the SLA’s sovereign immunity under the Eleventh Amendment would bar suit against it, Cloister E., 563 F. Supp. 3d at 102-05, which plaintiffs do not appear to contest, see Dkt 110 (Pl. Opp.) at 23. Finally, plaintiffs conceded in their motion for leave to file the SAC that they would “not proceed[] against [defendants] Stravalle and Donohue,” nor does the SAC assert any claims against them. See Dkt 84 at 2; SAC ¶¶ 120-38. Accordingly, defendants Stravalle and Donohue are dismissed from the case as well. 18 U.S. Const. art. III, § 2, cl. 1; see W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100, 106 (2d Cir. 2008). 19 Raines v. Byrd, 521 U.S. 811, 818 (1997) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)). 20 Dep’t of Com. v.

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The Cloister East, Inc. v. New York State Liquor Authority, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-cloister-east-inc-v-new-york-state-liquor-authority-nysd-2024.