The petitioner Lena Bagels is a corporation with its principal place of business located at 3854 Richmond Avenue, Staten Island, New York and is authorized to transact business within the State of New York, and has been incorporated since June 4, 2001. The petitioner brings this Order to Show Cause, pursuant to Article 78 of the CPLR to annul the determination of the

Department of Consumer Affairs finding of guilt for the sale of a tobacco product to an individual under eighteen years of age pursuant to New York City Administrative Code Section 17-620 (hereinafter "Tobacco Product Regulation Act") and New York State Public Health Law § 1399-cc(1); declaring that the penalty imposed upon the petitioner in the amount of three thousand five hundred dollars ($3,500.00) is void; requiring the Respondent to accept the renewal application of Petitioner; and granting an interim order staying any suspension of Petitioner's tobacco license pending the determination of this petition and if this petition should be transferred to the Appellate Division, then during the pendency of the determination by the Appellate Division.

The petitioner seeks to annul the Administrative Law Judge Mitchell B. Nisonoff's recommendation and the order of approval by the Deputy Director of Adjudication, Bruce M. Dennis, dated August 24, 2009. Said determination ordered LENA BAGELS to pay a total fine of $3,500.00 and assigned one (1) point to LENA BAGELS' cigarette/tobacco products retail dealer's registration record. Since Petitioner had already accumulated two (2) points on October 17, 2008 ^[FN1] and now has a total of three (3) points, the respondent suspended Petitioner's Department of Consumer Affairs license to sell cigarettes, effective immediately for six (6) months. In addition to the above, the Commissioner of the State Department of Taxation and

Finance and the Director of the New York State Lottery were each notified to suspend the Petitioner's State cigarette/tobacco product retail dealer's registration and lottery license for six (6) months. [*2]

In the affidavit of Michael J. Cambridge, Director of the New York State Department of Health, he explains that a retail dealer of tobacco products who is found to have sold tobacco products to minors is assessed points. If the retailer accumulates three or more points, the Department of Health must direct the New York State Commissioner of Taxation and Finance to suspend the dealer's registration to sell tobacco for six (6) months, pursuant to PHL §§ 1399-ee(3)(e); Tax Law §§ 480-a(4)(d); 1607(h)(1). Similarly, if a retailer violates the Act four times within a three-year period, the dealer's registration to sell tobacco and the dealer's lottery sales agent license will be revoked for one year. PHL § 1399-ee(3)(b); Tax Law §§ 480-a(1)(d)(i); 1607(h)(2). If a retail dealer violates the Act while the dealer's tobacco registration is suspended, the dealer's tobacco registration will be permanently revoked. PHL §§ 1399-ee(4)(a); Tax Law § 480-a(1)(d)(i).

At the time of this action, the petitioner possessed a valid "Retail Dealer Certificate of Registration for Cigarettes and Tobacco (ID number 13-4174778). Administrative hearings before the Department of Consumer Affairs were held on July 6, 2009 and August 3, 2009. The department found that the respondent had met their burden of proof and imposed a fine of $3,500.00 on the petitioner and assessed one point for the violation of Public Health Law 1399-cc(2) on August 24, 2009. At the hearing, Hany Nasralla, an inspector from the City of New York Department of Consumer Affairs, asserted that the respondent's employee Suzanne Ford, sold cigarettes on April 11, 2009 to a person who was under the age of eighteen and that Ms.

Ford did not request identification from this person as required by the New York City Administrative Code.

Petitioner argues that the facts surrounding the April 11, 2009 transaction establish that Lena Bagels was misled into selling cigarettes to an undercover minor. Petitioner also contends that Ms. Ford was trained and took a class offered by the New York State Department of Health for a Certificate of Tobacco Sales Training. Ms. Ford testified that at the time of the April 11, 2009 transaction, she sold a pack of Parliament Lights to an individual. She testified that the individual indicated that he was over eighteen (18) so she sold him the cigarettes. Ms. Ford further testified that she did not ask the individual to show identification because he appeared to be between 27-30 years old, was very tall, had a full beard, a deep voice and "Member's Only" jacket.

The petitioner contends that its policies are consistent with the New York City Administrative Code and that the store takes active measures to ensure compliance with the Code. Lawrence Chiarappo, President of Lena Bagels, Inc. testified on the July 6, 2009 hearing as to various measures the store takes in order to comply with the New York Public Health Law. Mr. Chiarappo testified that there was a video surveillance camera in the store on said date. He also testified that the store employs approximately thirty (30) individuals, all of whom are trained to comply with the New York City Administrative Code. Lena Bagels also purchased a new cash register system which includes an automated messaging system which reminds employees to check the identification of all individuals who purchase alcoholic beverages and tobacco products. This compliance reminder comes up every time an employee "clocks in" for the day, [*3]and an employee cannot proceed to use the register until he or she has specifically acknowledged the compliance reminder with a touch of the register screen. Mr. Chiarappo also testified that each employee is instructed to check the identification of every customer seeking to

buy tobacco products, irrespective of their apparent age. As a result of this sale, Ms. Ford was terminated in order to set an example to the other employees that they must abide by the New York City Administrative Code.

Petitioner also contends that the undercover individual was instructed by the Department of Consumer Affairs to misrepresent his age. Therefore, its defense is not merely based on the undercover minor's appearance, but also his active misrepresentation. Moreover, petitioner argues that the DCA's manner of enforcing 17 NYCRR 620 undermines due process and the rules of law insofar as its conduct amounts to unfair enticement of a small business owner's employee to unwittingly commit a regulatory violation. Petitioner also argues that the record does not legally establish that the undercover agent was a minor in that the birth certificate was only marked for identification and was not introduced into evidence.

With regard to the undercover's misrepresentation of his age, the petitioner proffered the testimony of one of the store's regular customers, Anthony Lacasio. Mr. Lacasio testified that he was present for the entire transaction, that he recalled hearing Suzanne Ford ask whether the undercover individual was over eighteen (18) years old. Michelle Napa, another employee of the petitioner, was also present on April 11, 2009. She testified that she witnessed Suzanne Ford inquire as to whether the individual who purchased the cigarettes was over eighteen (18) years old and that the individual replied in the affirmative. Ms. Napa further testified that the undercover individual was wearing a white baseball cap and a sweater and that he appeared to be over twenty-five (25) years old and also observed that he had facial hair. Another employee,

Suzanne Schettini, was also present on the date of this transaction and testified to the same facts as Ms. Napa.

The petitioner seeks review of that decision based on the following: The fact that deception and misstatements by the undercover agent violated due process of law and was unconscionable; that the Respondent did not establish by a preponderance of credible evidence that there was a violation of the Tobacco Product Regulation Act and New York State Public Health Law § 1399-cc(1); and that the Respondent's decision was arbitrary and capricious. Petitioner also argues that the penalty of suspending petitioner's license was arbitrary and capricious because of the extensive precautionary measures employed.

Respondents argue that the petitioner violated New York City Administrative Code § 17-620 and Public Health Law § 1399-cc by selling cigarettes to a minor and that the Administrative Law Judge's findings should be upheld and the relief sought in the petition should be denied. Respondents contend that the determination was rational, reasonable, and lawful in all respects and that the petitioner is not entitled to injunctive relief. Respondents argue that the Court should transfer the instant Article 78 proceeding to the Appellate Division for review of substantial evidence. (See CPLR § 7804(g)).

Respondent provides affidavits in support of the Administrative Law Judge's decision and [*4]in opposition of petitioner's application for a stay of the suspensions of its registration to sell tobacco products and its license as a lottery sales agent. In the affidavit of Michael J. Cambridge, director of the New York State Department of Health, respondent points to legislative findings which accompany the Adolescent Tobacco-Use Prevention Act as set forth in Public Health Law §§ 1399-aa, et seq, which state in part, "The legislature finds that most smokers begin the habit as minors - indeed, about one-half of all smokers begin before the age

of fifteen - despite the fact that in most states, including New York, it is illegal to sell tobacco products to minors less than eighteen years of age. According to 17 NYCRR 620, "Specified identification need not be required of an individual who reasonably appears to be at least twenty-five years of age, provided, however, that such appearance shall not constitute a defense in any proceeding alleging the sale of a tobacco product to an individual under eighteen years of age." Petitioner contends that not only did the individual appear to be at least twenty-five years of age, but also actively misrepresented his age. Petitioner relies on the case of People v. Arroyo, 12 Misc 3d 1003, 815 N.Y.S.2d 922 [Crim. Ct. Kings County 2006]. In People v. Arroyo, the Defendant was charged with larceny and criminal possession of stolen property after taking a bag of items that was left on a train by police. The Court held that the sting operation was deceptive and, in the interest of fairness, the case was dismissed.

In this matter, the petitioner contends that the individual's birth certificate was not properly admitted into evidence. However, "The rules of the department of consumer affairs allow introduction of relevant evidence' at an administrative hearing without regard to the technical or formal rules or laws of evidence in effect in the court of the State of New York." (In re Friendly Convenience, Inc. v. The New York City Department of Consumer Affairs, 2010 NY Slip Op 2485 [2010]). The petitioner also contends that the store will suffer irreparable injury from having its tobacco license revoked. However, in DiFabio v. Omnipoint Communications, 66 AD3d 635 [2009], the court found that if the petitioner does not establish a claim of noneconomic damages, there is not a basis to find irreparable harm. The court further

determined, "Irreparable injury, for purposes of equity, has been held to mean any injury for which money damages are insufficient." (Id.) "Conversely economic loss, which is

compensable by money damages, does not constitute irreparable harm." (Id.) (See also EdCia Corp. v. McCormack, 44 AD3d 991, 994 [2007]).

Accordingly, this Court finds the determination of the Administrative Law Judge regarding petitioner's fine and license suspension was not arbitrary and capricious. The Administrative Law Judge's determination and penalties imposed are within the framework of the New York City Administrative Code. Here, LENA BAGELS, INC. was on notice of its prior points and of the likelihood that they would be assessed more points, fined, and have their license revoked if there was another infraction.

Accordingly, the issue of substantial evidence as relied on in the determination of the Administrative Law Judge that the petitioner violated § 17-620 of the Administrative Code and § [*5]1399-cc of the Public Health Law shall be transferred to the Appellate Division for review and determination. It is hereby ordered the county clerk shall transfer this entire file to the Clerk of the Appellate Division, Second Department.

All temporary stays as previously granted are vacated.

This shall constitute the decision and order of the court.

ENTER

s/ Philip G. Minardo

J.S.C.