Apr 12 2016

Americans with Disabilities Act Compliance

ada-logoThe Americans with Disabilities Act (ADA) is one of the most important national civil-rights laws dealing with the rights of people with disabilities. The ADA prohibits discrimination on the basis of a disability in areas of employment, places of public accommodation, housing, public services, transportation, and telecommunications. However, a barrage of ADA lawsuits have recently been filed against New York restaurants and bars and a great deal of them really have nothing to do with assisting those with disabilities.

I very recently defended another NY restaurant in an ADA case where the Plaintiff was claiming that the bathrooms were not ADA compliant because the mirrors were too high, the pipes under the sink were not properly insulated, and the bathroom sign was placed too high and didn’t contain the word “bathroom” in braille. In that case the Plaintiff was correct. These issues were in fact violations of the ADA and the Defendant restaurant had no choice but to settle the legal action. The settlement included a nominal payment to the Plaintiff himself, a much larger payment to the Plaintiff counsel for their legal fees (prevailing Plaintiffs are entitled to legal fees in ADA cases so these amounts are always worked into a settlement), and an agreement to fix the violations. The total settlement payment was over $10,000.00 plus tack on another $6,000.00 for legal defense fees bringing the cost of that legal action to over $16,000.00.  The actual cost incurred to fix the violations . . . .$95.00.

Defendants with any ADA violations, if sued, must ultimately make a business decision. That business decision almost always requires the Defendant to settle the case rather than proceed forward running up their own legal defense fees along with the plaintiff’s legal fees.

The point of this post is simple. Be fully ADA compliant. The ADA law is very technical and even a minor violation may result in a very expensive lawsuit from an “enterprising” plaintiff counsel. Be proactive. Retain qualified legal counsel and have them do a walk-through of your establishment ensuring compliance and pointing out any and all issues.

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Sep 25 2015

Community Boards and Liquor License Applications (Q and A)

fb_meeting_web_siteAre Community Boards notified of when the NYSLA receives applications in their neighborhoods?

For certain types of establishments, Community Boards are notified before the NYSLA receives an application. The Alcoholic Beverage Control Law requires that anyone applying for an on-premises license notify their community board of their intention to apply for a liquor license 30 days before filing an application with the State Liquor Authority. Proof of the 30 day notice must be submitted with the application. The community board may submit an opinion, either in favor of or against granting the license. That opinion will become part of the record used by the NYSLA in deciding whether to approve the application.

What are the different types of licenses granted by the NYSLA?

There are several types of licenses granted by the NYSLA, the following are the four basic ones issued: On-Premises Liquor: Generally considered to be the standard “bar” license. Allows on-premises consumption of liquor, wine and beer and also allows for sale of beer (only) for off-premises consumption.  Food, such as soups and sandwiches, MUST be served. Grocery Beer/Wine: Off-premises beer license as listed above, see “Grocery Store Beer”. Additionally a “wine product” is defined as a beverage containing wine with added juice, flavoring, water, citric acid, sugar and carbon dioxide, not containing more than six percent alcohol by volume (typically referred to as “wine coolers”).  Catering: Allows providers of food for banquet halls, dining halls, etc., to provide liquor, wine and beer for consumption for an assemblage for a particular function (i.e. retirement dinner, wedding reception, private party) to which the general public is not admitted. This license is for this type of function only. Liquor Store: For the sale of liquor and wine (no beer) for consumption off the premises. The only additional items allowed to be sold, such as ice and corkscrews, are listed in the ABC Law. Only one license is allowed per person (corporation, partnership, etc.).

What is the 500 foot rule and how does this apply to community boards? When the NYSLA receives an application, there is a general presumption that it will be approved unless there is a good reason not to approve it. However, for on premises license applications falling under the 500 foot rule, (meaning there are already 3 or more existing establishments with the same type of license within 500 feet of the proposed applicant), the presumption switches, and by law the application cannot be approved unless the SLA finds that issuing the license would be in the public interest. The 500 foot law requires the NYSLA to consult with the community board and conduct a hearing to gather facts to determine whether the public interest would be served by issuing the license. Generally speaking, if there is no opposition to the application, and no other issues presented that requires consideration by the Members of the Authority, the application is acted on by the NYSLA’s Licensing Bureau. In cases where the community board or other interested parties oppose the application, or there are other issues requiring review by the Members of the Authority, the matter is referred to the Members for determination. It is important to note that the fact that there is opposition to an application does not necessarily mean that the Authority will disapprove the application. The Authority may also applications even when there is no opposition. In situations where there is opposition to an application, applicants may come to an agreement on stipulations concerning the operation of the establishment (e.g. closing hours, live music, etc). In such cases, the applicant may incorporate those stipulations into the approved method of operation. These stipulations then become conditions of the license privilege and failure to comply subjects the licensee to disciplinary action. The SLA can impose certain conditions on the operation of the establishment without the consent of the applicant if there is good cause to do so.

Stipulations: Before a license is issued, if a Community Board and applicant agree to certain conditions of the license, some of which can be written into the license and some that cannot, how can the Community Board handle this? If the Community Board and the applicant reach an agreement with respect to the operation of the establishment, the applicant can incorporate into the application those conditions that are relevant to the operation of a licensed establishment.

What is the 200 foot rule? Under the “200 Foot Rule” an establishment cannot be licensed to sell liquor at retail if it is on the same street and within 200 feet of a school, church, synagogue or other place of worship. The rule also applies to wine stores. It does not apply to on premises establishments that are licensed for wine and/or beer only and to grocery stores. There are two exceptions under the law if the establishment existed prior to the enactment of the law in 1934 or if the location was licensed prior to the existence of the school or place of worship and has been continuously licensed ever since.

What weight does the CB have in recommending approval or denial of retail license? While not binding on the Members of the Authority, the NYSLA considers input from community boards in all licensing decisions. However, courts have held that, for applications not subject to the 500 foot rule, community opposition alone is not sufficient to disapprove an application.

How do I know what Community Board represents me? The following link is from the Mayor’s Community Affairs Unit.

Can a bar or nightclub “transfer” their license to another owner? Does the Community Board need to be notified? Does a transfer require NYSLA approval? Licensees may not “transfer” a license, in the way transfer is commonly understood (i.e. licenses may not be sold or given from one person or company to another). The NYSLA’s Licensing Bureau staff uses the terms “transfer” and “new” applications only to differentiate between an application for an establishment that is currently licensed and selling their business (transfer) and an establishment that is not currently licensed (new). In both cases, the license applicant must go through the same process, including notifying their CB and holding a 500 foot-hearing if applicable. A corporate licensee may have a change of officers, directors and stockholders without going through the entire application process. In such a case the licensee has to submit information regarding the new persons coming into the corporation and the financing involved.

How do temporary permits work? If a license applicant gets a temporary, does this mean they will get a full liquor license? A license applicant who is purchasing the existing business that is currently licensed to sell alcoholic beverages may file an application for a Temporary Retail Permit. This allows the license applicant to begin operating the business and serving alcoholic beverages while their application for a permanent license is being reviewed. In order to qualify for this permit, the establishment must have been open and operating at least 30 days prior to the filing of the application. The permit is granted at the discretion of the NYSLA for a period of 90 days, and may be renewed. Issuance of the permit is not a guarantee that the licensee will be approved for a permanent license.

Does the license expire once the licensee’s establishment ceases to exist? A liquor license is connected to the individual and a specific location. If the establishment ceases to exist their license certificate must be returned to the NYSLA. If the entity has vacated the premises is considered abandoned, the NYSLA Licensing Bureau sends out an abandonment letter to verify if the prior tenant has vacated the premises. When a licensee closes their business, they are required to alert the NYSLA and hand in their license, this is referred to as “surrendering” the license. Licensees are entitled to a refund on the unused portion of their licensing fee.

Are there any routine unannounced inspections of establishments by NYSLA’s enforcement unit to ensure compliance with the Alcoholic Beverage Control Law or is it complaint driven? The SLA conducts unannounced undercover inspections as part of its investigation of a licensee. An investigation by the SLA may include: 1. on-site inspections of a licensed establishment; 2. on-site undercover investigations by NYSLA Investigators and other law enforcement agencies; 3. a review of reports and investigations by other law enforcement and regulatory agencies; and 4. interviewing potential witnesses/complainants and collecting evidence of potential violations. Information comes to the NYSLA from a variety of sources, including police and other law enforcement agency referrals, complaints by other government agencies or officials, and complaints made by the public. The identity of a person making a complaint is kept confidential.

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Sep 08 2014


Yelp logo. (PRNewsFoto)
The Ninth Circuit Court of Appeals in San Francisco has recently ruled that Yelp can revise, edit and prioritize business reviews based on advertising money that the site receives from the business.

This high profile ruling really destroys the veil of impartiality that Yelp was benefitting from for all these years.  Now its crystal clear that Yelp may (although they have not admitted that they did) delete bad reviews for a restaurant that places an ad on its site and similarly delete positive reviews given for a restaurant that refuses to place ads on the Yelp site.

Seems that this is a real wake up call for all of us (myself included) who thought that Yelp reviews were not being edited, deleted or possibly even created by Yelp itself.

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Mar 19 2014

NYSLA Says Certain Brunch “Bottomless Glass” Specials Are OK?

bottomless Glass BrunchUnlimited drink specials are illegal in New York (with limited exception for private events).   This Prohibition included “bottomless glass” of champagne brunch specials but it is regularly ignored because most owners are simply not aware of it. However, the prohibition was recently placed into the spotlight and the New York State Liquor Authority (NYSLA) issued the following statement on Feb. 26, 2014 which was supposed to ease and clarify the prohibition:

“Serving unlimited drinks to a patron is prohibited under the Alcoholic Beverage Control law, and instances of over serving by our licensees will be investigated and prosecuted.   However, there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials.  Even under these limited exceptions, licensees still have a legal obligation not to over serve patrons.  The SLA will continue to take a balanced regulatory approach by allowing licensees to conduct specials where alcohol is an accompaniment, while simultaneously cracking down on specials that promote excessive drinking.”   -New York State Liquor Authority

The New York City Hospitality Alliance publicly commended the NYSLA for issuing this statement and for providing such clarity.  However, all the rest of us must have missed the “clarity” that the NYC Hospitality Alliance apparently saw in that statement.

“…there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials.”  When is the service of alcohol incidental to the event/brunch?  Always?  Sometimes?  When there are pancakes on the menu? Why just brunch?  If the service of alcohol can now be now deemed incidental during brunch, why is it not deemed incidental during lunch or dinner as well?

The reality is that the NYSLA statement provides no clarity whatsoever on the prohibition and in fact causes more confusion because now there appears to be some new exception to the prohibition that applies to certain brunch specials . . .but leaves us all in the dark as to the necessary elements of this exception.  Until there is some actual clarification or specifically stated exception to the prohibition, we still recommend that you do not offer any unlimited drink specials during brunch, lunch, dinner or otherwise.


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Jan 27 2014

NY Restaurants and Bars Must Obtain a License to Play Music.

party-disco-restaurantMusic is protected by copyright law, which provides exclusive rights to copyright owners to perform or play their songs. If a restaurant or bar plays music without permission, they are infringing on the copyright, and copyright law allows the owner to recover damages ranging from $750 per violation, to $150,000 if a court decides the infringement was willful.

In Range Road Music, Inc. v. East Coast Foods, Inc., the Court of Appeals found a restaurant violated copyright laws when it played music without a license. The court awarded the Performing Rights Organization (PRO) nearly $200,000 in damages and attorney’s fees. PROs employ investigators that visit businesses to see whether songs are played without a license.

One exception to the rule allows restaurants or bars under 3,750 square feet to play music from a radio, television, or similar household device without a license, provided there are fewer than six speakers (with limits on the placement of speakers), and customers aren’t charged to listen.

Songwriters, composers and music publishers generally join one of three Performing Rights Organizations that license their work to the public: the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC . The PROs send royalties to the copyright owners.

However, obtaining a license from one PRO doesn’t necessarily mean you’re in the clear — you only have a license for that PRO’s copyright holders. For example, the composer of a song may be represented by ASCAP, while the lyricist may be with SESAC. To avoid this problem, most restaurants and bars choose to purchase a blanket license from each of the PROs, which allows the licensee to play any of the music from each PRO’s library. Blanket licenses can range from the low hundreds to several thousands of dollars per year.  Like any other agreement, these licenses are fully negotiable.   When it comes time to securing one of these PRO licenses, hire an experienced attorney as they will be able to negotiate the best price for your specific establishment.

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Jan 10 2014

Mandatory Tip Policy? Consider Ditching it.

money tips In January of 2014, the IRS will begin cracking down on how restaurant owners pay out mandatory tips (e.g. the typical 18% mandatory tip for parties of 6 or more).  Going forward, these tips must be classified as service charges that are taxable as regular wages and subject to payroll tax withholding (aka more paperwork and accounting), rather than pooled into the tip cash servers divide at the end of their shift (which has been common practice until now).

Though the policy isn’t a new one, having been issued in June 2012, the implementation was delayed until 2014 to give restaurants time to comply.  Some restaurateurs have already chosen to ditch the mandatory tip altogether rather than having to deal with the increased paperwork and fees.

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Jan 10 2014


There are a two ways to buy a restaurant in New York. You can do it by purchasing the ownership shares of the seller or you can purchase the assets of the seller. Each has its advantages and disadvantages in New York but an asset purchase is almost always more beneficial for the buyer. With an asset purchase, the buyer is only assuming certain specified liabilities of the seller. With a purchase of the ownership shares (stock certificates if seller is a corporation and membership interests if seller is a Limited Liability Company), the buyer will be assuming ALL of the liabilities of the seller, known and unknown. In either scenario, a lien and judgment search must be performed on the seller’s business.

GENERAL RULE: Buy the restaurant by means of a bulk asset sale / purchase rather than a purchase of the ownership shares.

You must review the existing lease carefully to determine if the seller is able to assign it to you. If they are able to assign it, you must determine whether the existing clauses are acceptable to you including the term remaining on the lease, the rent amount, the security deposit, the personal guaranty, etc. If they aren’t able to assign the lease, the landlord needs to be contacted to inquire if they are willing to let the tenant “off the hook” and issue a new lease directly to you.

The purchase agreement, which will either be a stock purchase agreement or bulk asset purchase agreement, will need to state all of the terms of the sale including, but not limited to, the purchase price, the amount being held in escrow, the amount to be paid at closing, the specific assets being purchased, the date for closing, any contingencies to closing (e.g. liquor license granted to Buyer), and any personal representations and indemnifications. A Bill of Sale should accompany the purchase agreement along with a corporate resolution from the seller authorizing the sale. Remember, even with an asset purchase agreement, the buyer will be responsible for any unpaid New York State sales tax owed by the seller. This is why it’s very important to (i) file the appropriate bulk sales notice (form AU 196.10), (ii) have the seller personally represent that no taxes are owed and have him/her agree to personally indemnify the buyer for any unpaid taxes, or other liabilities, that were incurred on or before the closing date, (iii) set the closing date to occur after a tax release letter is received from the New York State Department of Taxation stating that no taxes are owed, and/or (iv) have a large portion of the purchase price held in escrow until the release letter is received from the Department of Taxation. This article is intended to give you a general idea regarding what to look out for but you should retain an experienced restaurant attorney if you are considering purchasing a restaurant or bar in New York.

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Jan 09 2014


When considering the execution of a commercial lease, all of the clauses must be given careful consideration. However, when taking a space for a bar or restaurant, there are certain lease clauses that warrant special attention. Following are some key clauses that are a crucial part of every restaurant/bar lease and, if negotiated properly, will allow the restaurateur/bar owner to increase the value of his/her establishment even prior to its opening and to operate with a greater peace of mind.

1) Duration of Lease: Generally, the longer the duration of the lease the better. Especially if given the ability to assign the lease with a minimum of Landlord intervention. Typically, I attempt to negotiate for a 15-year initial term with an annual increase of no more than 3%, and an option to renew the lease for another five-year term exercisable at the discretion of the restaurateur. Do your homework to determine the fair market rental value for the premise and don’t simply rely on your broker’s advice.

2) Assignment: Always attempt to retain the ability to assign the lease to a third party (e.g. in the event you want to, or are forced to sell your restaurant). The Landlord will insist that he must give his prior written consent for any assignment to be valid, but you must in turn, insist that his consent can not be unreasonably withheld, delayed or conditioned. Too many restaurateurs do not realize the importance of having the ability to assign their lease until they are at the point where they have decided to sell their restaurant. At that point, the sale of the restaurant will be thwarted because they will not have the ability to offer the lease to the potential purchaser and the Tenant will be forced to just walk away from the premise with nothing. Also be sure that the lease and personal guaranty shall void in the event of a valid lease assignment. Otherwise, you remain liable for any damages, included but not limited to unpaid rent, caused by your Assignee.

3) Liquor License Contingency Clause: If you intend to apply for a liquor license for your premise, most restaurant attorneys strongly advise that you insert an “escape clause” in your lease in the event that your liquor license application is rejected by the NYSLA. A fair escape clause would be that the tenant gets to void the lease in the event their NYSLA application is rejected BUT are required to pay all rent incurred (included any abated months) to the date of rejection. The personal guaranty, if any, must also void as of that date.

4) Free Rent: Attempt to get the premise rent-free until the latter of (i) the day Tenant opens the establishment to the public, or (ii) the date Tenant receives its liquor license from the NYSLA. Most landlords will agree to this request with some limitation or outside rent commencement date depending on the present demand for the premise and the caliber of the proposed restaurant tenant.

5) The Personal Guaranty: Generally, if the lease is going to be signed in the name of a corporation, all landlords will ask for your personal guaranty. Most landlords, however, will waive this personal guarantee if he/she is presented with other options that may reduce his/her risk in the event of your breach. For example, if you request that the landlord remove the personal guarantee clause and he/she initially refuses, you can offer him a larger security deposit in exchange for eliminating the clause. The larger security deposit will give him/her a greater level of comfort in the event of your default; his goal for including the personal guarantee in the first place. If you don’t have the capital to offer a greater security deposit, then you can offer to compromise and provide the Landlord with a limited personal guarantee or a “Good Guy Clause” which provides that you will be personally liable only up to the date that you surrender the premises back to the Landlord (a/k/a give him the keys).

GENERAL RULE: Lock in the longest lease term possible with the right to assign the lease.  Get a Liquor License contingency clause and make sure the lease and guaranty void in the event of an assignment or a failure to obtain the Liquor License.

There are many other clauses in a commercial restaurant lease and just because I highlighted the ones above does not mean that the others don’t warrant great attention.  A restaurant lease negotiation and review should be handled by a qualified restaurant attorney.

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Jan 07 2014

BYOB: Not Legal in New York

unlimited_drinks_NYSLABYOB, or “Bring Your Own Bottle,” where owners of establishments allow their customers to bring alcoholic beverages to their premises to be consumed on site, is NOT PERMITTED in unlicensed businesses in New York State unless the Certificate of Occupancy for the premise is for less than 20 people.

GENERAL RULE: BYOB is illegal in New York.

You MUST have a license or permit to sell/serve beer, wine or liquor to the public. Venues without a license or permit may not allow patrons to “bring their own” alcoholic beverages for consumption.  In addition, owners of businesses may not give away alcoholic beverages to their patrons.  Those that do are in violation of the NYS Alcoholic Beverage Control Law.

Applicants should be aware that allowing BYOB without a license may jeopardize their chances for approval of their license.

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Jan 01 2014


The New York City Health Department requires that restaurants publicly post A, B, or C letter grade cards that summarize their sanitary inspection scores.  Not posting a grade card – or posting it incorrectly – is a serious violation that may result in large fines or loss of your permit. To avoid penalties, food service operators and their representatives and attorneys should follow these instructions carefully.

1. Where does the grade card have to be posted?
The grade (or grade pending) card must be posted on a front window, door or outside wall where it is easily seen by people passing by. The card must be within 5 feet of the entrance and from 4 to 6 feet off the ground or floor. If there is no direct entrance to the street, the Health Department sets the place to post the card. The Health Department tracks each grade card by its serial number. It may issue a Notice of Violation to any establishment that fails to post the right card, or posts it in the wrong place.

2. When am I required to post the grade or grade pending card?
The restaurant must post the grade or grade pending card as soon as the inspector provides it. If the restaurant receives both a grade card and a grade pending card, the operator has the choice of posting one of these two cards immediately, until it has had the chance for a hearing at the Administrative Tribunal.
3. Are there penalties for failing to post the grade card, or posting it incorrectly?
Yes. Not posting a grade card can result in fines of up to $1000. Posting the grade card incorrectly can result in a $200 fine. Repeated violations may result in loss of your permit.
4. How do I get a hearing at the Administrative Tribunal?
Everyone who receives a Notice of Violation has the right to a hearing at the Administrative Tribunal. Your scheduled hearing date is printed on the front of the Notice. Directions for how to respond to the Notice are on the back.
5. I had my hearing, and I was given a new grade card. What should I do with it?
When a restaurant receives a grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision changed the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card issued by the Tribunal, and
• DESTROY the letter grade card and grade pending card that the inspector gave you
at the inspection.
6. I had my hearing, but I was not given a new grade card. Which card do I post now?
If you did not receive a new grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision did not change the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
7. My restaurant accepted a settlement offer. Which card do I post now?
If you accepted a settlement, your inspection score and grade did not change.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
8. What if I miss my hearing date at the Administrative Tribunal?
If you do not respond to your Notice of Violation by 1) accepting a settlement offer;
2) appearing at the Tribunal on your hearing date; 3) writing to the Tribunal for a hearing by mail; or 4) asking on or before your hearing date for an adjournment:
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
9. I asked for a new hearing date (“adjournment”). What card do I post in the meantime?
If this is the first adjournment you requested, you can continue to post your grade card, or grade pending card. If you ask for another adjournment or miss your second hearing date, you must post the letter grade card the inspector gave you at the inspection.
10. What if I receive a default decision?
If you received a default decision, it means that you did not respond to your Notice of Violation. You were required to post your grade card on the day you missed the hearing. If your grade card is not posted when you receive a default decision:
You must immediately:
• Post the grade card the inspector gave you at the inspection, and
• DESTROY the grade pending card.
11. Do I have to post the actual grade card? Can I post a photocopy or fax instead?
You must always post the actual letter grade card as required (see Question 1). You cannot substitute a photocopy or fax for the real grade card.
12. How do I replace a lost or damaged card?
You can get a new card at the Health Department’s Bureau of Food Safety and Community Sanitation, 253 Broadway (between Murray and Warren), 12th Floor, in Manhattan.

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