By Order to Show Cause, dated November 9, 2006, petitioner United Deli Corp. ("United Deli"), seeks an Order vacating and annulling the determination of the respondent New York State Liquor Authority ("the Liquor Authority"), made on September 20, 2006, which revoked the beer license issued to the petitioner for the premises located at 290 Knickerbocker Avenue, Brooklyn, New York and which imposed a $2,500 fine and a $1,000 bond claim against the premises at 290 Knickerbocker Avenue.

On or about October 11, 2001, the Liquor Authority issued a grocery beer license for off-premises consumption to United Deli for the premises located at 290 Knickerbocker Ave. In the initial license application, Hizam Omar was listed as the sole principal and officer of the corporation. A surety bond was filed with the application, as required by Section 112 of the Alcoholic Beverage Control Law, and the license was duly issued as number Kings AX1117271.

Subsequently, at some time in 2006, the Liquor Authority received a referral report from the State Department of Taxation and Finance regarding violations which had allegedly occurred on the premises at 290 Knickerbocker Ave on February 28, 2006.

By Notice of Pleading, dated May 10, 2006, the Liquor Authority commenced revocation proceedings against petitioner for possessing untaxed cigarettes on the premises and selling cigarettes with a suspended certificate of registration, in violation of Rules 36.1 (n) and 36.2 of the Rules of the Authority.

By Notice of Hearing, dated July 27, 2006, the matter was scheduled for a hearing [*2]on September 5, 2006, at the office of the Liquor Authority.

Mr. Omar did not request an adjournment prior to the date of the hearing, and he did not appear in person for the hearing on September 5, 2006. A Mr. Khalid Ali did appear on September 5, 2006, and claimed that Mr. Omar was out of the country and that he possessed the authority to appear on behalf of United Deli. The Liquor Authority did not permit Mr. Ali to appear at the hearing, as he was a not corporate principal or office of record and did not possess written authorization to appear on behalf of the petitioner. A plea of "No Contest" was entered on behalf of petitioner and a report was prepared for the Members of the Authority regarding the alleged offenses and the history at the premises in question.

On September 20, 2006, at a meeting of its members, the Liquor Authority sustained the charges against United Deli, revoked the license in question, and imposed a $2,500 civil penalty and a $1,000 bond forfeiture.

Section 121 of the Alcoholic Beverage Control Law authorizes Article 78 actions to seek a review of the Liquor Authority's determination to revoke a license. It is axiomatic that in an Article 78 proceeding the court's function is to determine whether the action of an administrative agency had a rational basis or was arbitrary and capricious (Pell v Bd. of Educ., 34 NY2d 222, 230-231 [1974]). "Arbitrary action is without sound basis in reason and is generally taken without regard to the fact" (id. at 231). A rational basis exists where the determination is " [supported] by proof sufficient to satisfy a reasonable [person], of all the facts necessary to be proved in order to authorize the determination'" (Ador Realty, LLC v DHCR, 25 AD3d 128, 139-14 [2005] quoting Pell, 34 NY2d 231).

Commiserate with the authority to conduct hearings, the Liquor Authority also possesses the discretion to grant adjournments upon good cause (see e.g. Taylor, 106 NYS2d at 303, 9 NYCRR 52.4). In light of a petitioner's right to put forth a defense and the potential consequences of losing such a hearing, courts have found the failure to adjourn such a hearing to be arbitrary, capricious and without a rational basis when there appears to be a reasonable basis for such an adjournment and the agency fails to articulate a countervailing reason to deny an adjournment or otherwise express that it would incur some prejudice if the hearing was adjourned (see e.g. Messina v Bellmore Fire Dist. Commn., 242 AD2d 631 [1997]; Crimi v Droskoski, 217 AD2d 698 [1995]; Leonard v Kirby, 84 AD2d 538 [1981]; Matter of Milrad, 44 AD2d 287 [1974]). [*3]

In this case, the matter was initially scheduled for September 5, 2006. On that date, Mr. Ali sought to make an appearance on behalf of United Deli, represented that he was authorized to appear on behalf of United Deli, and was turned away because he lacked an authorization in writing. United Deli does not appear to have been represented by an attorney at any time in the course of the proceedings, and neither Mr. Omar nor Mr. Ali are attorneys. The reasonable course of action at that point would have been to adjourn the matter for Mr. Ali to obtain the proper written authorization, for Mr. Omar to appear himself, or for an appearance by another duly authorized representative on behalf of United Deli. The proceedings had not been adjourned previously, there seemed to be no indication that Mr. Ali could not obtain such authorization if afforded a reasonable opportunity, and it does not appear that either Mr. Ali or Mr. Omar were attempting to delay the proceedings. Furthermore, the Liquor Authority has failed to articulate any countervailing reason which would warrant against adjourning the matter or that it would suffer any prejudice if it did. Finally, the Liquor Authority was not faced with a circumstance where a party clearly failed to appear and defaulted at a hearing, but rather a situation where a non-attorney of some association attempted to appear on behalf of a party, and represented to the authority that the party was out of the country and otherwise unable to appear. Accordingly, in the interest of justice, it is

ORDERED and ADJUDGED, that the petition is granted to the extent that the matter is remanded to the New York State Liquor Authority for a new hearing, upon proper notice and a reasonable opportunity for a duly authorized representative of United Deli to appear, and it is further

ORDERED, that pending a new hearing, the petitioner's license is reinstated and respondent, New York State Liquor Authority, or any other law enforcement agency, their agents, servants and/or employees are hereby stayed and restrained from enforcing the Revocation Order of September 20, 2006 against petitioner and from otherwise interfering with the lawful activities occurring on the premises at 290 Knickerbocker Avenue, Brooklyn, New York.

Dated: January 19, 2007

ENTER,

_________________________

IRA B. HARKAVY

J.S.C.