Thursday, October 05, 2006

SLA Suit On Moratorium

In today's NY Sun the paper's Russell Berman uncovers the first lawsuit against the State Liquor Authority challenging the agency's recently adopted moratorium. The operator of Barramundi, a Lower East Side bar claims in court papers that will be losing their entire $4.15 million investment because of the SLA's action. As the court papers say: "If the petitioner loses the ability to continue in business, all will be lost."

The tragedy here is that the bar's owner, Tony Powe, had already gotten the approval of the local community board and in any previous SLA scenario there would have been no reason for the authority to turn the license application down. As we had predicted, and as the Sun underscores, the license ban was bound to"catch innocent businesses in a wide net aimed at the industry's few negligent operators."

In addition, the case of Barramundi highlights the capricious nature of the ban since the bar had been operating on a temporary license after closing on the purchase of an existing business. This is a common industry practice that assumes the official approval of the temporary license by the SLA. There has never been a case in our memory where the SLA refused to grant a license under these conditions (certainly not when the local community board signed off).

The court, in recognition of the exigencies of the situation and perhaps also realizing that the petitioner had a strong case, granted the bar its emergency petition to remain open at least until the next court date on October 19th. As the bar's lawyer remarked about the moratorium, "You can't, in one fell swoop, condemn everybody."