11-6020-17359-6

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE ST. PAUL CITY COUNCIL

In the Matter of All Licenses Held FINDINGS OF FACT,

by DRJ, Inc., d/b/a Diva’s Overtime Lounge CONCLUSIONS OF LAW,

for the Premises Located at 1141 Rice Street AND RECOMMENDATION

in St. Paul, Minnesota.

The above matter came on for hearing before Administrative Law Judge Barbara L. Neilson on August 3, 2006, at City Hall in St. Paul, Minnesota. The record closed at the end of the hearing that day.

Rachel Gunderson, Assistant City Attorney, 400 City Hall, 15 West Kellogg Blvd., St. Paul, Minnesota 55102, appeared on behalf of the Office of License, Inspections and Environmental Protection (LIEP). Marshall H. Tanick, Attorney at Law, Mansfield, Tanick & Cohen, P.A., 220 South Sixth Street, Suite 1700, Minneapolis, MN 55402-4511, appeared on behalf of the Licensee, DRJ, Inc., d/b/a Diva’s Overtime Lounge.

This report is a recommendation, not a final decision. The St. Paul City Council will make the final decision after a review of the record and may adopt, reject or modify the Findings of Fact, Conclusions, and Recommendation. Under St. Paul Legislative Code § 310.05(c-1), the City Council shall provide the licensee an opportunity to present oral or written arguments alleging error in the application of the law or the interpretation of the facts and to present argument related to the recommended adverse action contained in this Report. Parties should contact Rachel Gunderson at the address above to learn the procedure for filing exceptions or presenting argument.

STATEMENT OF ISSUE

Should action be taken against the licenses held by DRJ, Inc., d/b/a Diva’s Overtime Lounge, because it allowed the after-hours display and consumption of alcohol in violation of St. Paul Legislative Code § 409.07(c)?

As discussed more fully below, the Administrative Law Judge concludes that the Licensee did allow the display and consumption of alcohol after hours and that an adverse licensing action is justified.

Based upon all the proceedings herein, the Administrative Law Judge makes the following:

FINDINGS OF FACT

1. The Licensee, DRJ, Inc., d/b/a Diva’s Overtime Lounge (“Diva’s”), holds an on-sale liquor license from the City of St. Paul and a permit from the State that authorizes a 2:00 a.m. closing time. Diva’s also holds several other City licenses, including Sunday on-sale liquor, cigarette/tobacco, gambling, limited restaurant, and entertainment licenses.[1]

2. The St. Paul LIEP Office has an unwritten policy that is well known to liquor licensees and the police department.[2] Although state law and city ordinance prohibit the sale[3] and display or consumption of alcohol[4] after 2:00 a.m. (where, as here, a licensee is authorized for a 2:00 a.m. closing time), the Office requires only that such licensees stop serving alcohol by 2:00 a.m. and stop allowing people to enter the premises after 2:00 a.m.; licensees have another half hour, until 2:30 a.m., to clear customers from the premises and ensure that no alcohol is being consumed or displayed. Under the City’s policy, patrons who were in the bar by 2:00 a.m. are permitted to remain until 2:30 a.m. to finish their drinks; however, everyone must be out by 2:31 a.m.[5]

3. At approximately 1:00 a.m. on Saturday, April 8, 2006, Sgt. Craig Gromek of the St. Paul Police Department arrived at Diva’s to observe activities around closing time. The observation was prompted by complaints received from neighbors and council members regarding noise, traffic, and public urination. Sgt. Gromek works in the vice unit and was there to document licensing issues with respect to Diva’s. Throughout the time he observed activities at Diva’s, he paid attention to the time of day as announced by the dispatch operators on the portable police radio he was carrying.[6]

4. At the time Sgt. Gromek arrived, there were approximately 25 people waiting in line to get into Diva’s, and security personnel at the door appeared to be checking IDs. Sgt. Gromek decided not to go into the bar at that time, and parked his unmarked vehicle in the parking lot located diagonally across the street from the bar, on the east side of the intersection with Rice Street. He had an unobstructed view of the front and rear doors of Diva’s on the east side of the building. Another officer, Sgt. Bandemer, was also present to observe Diva’s. Sgt. Bandemer parked on Rice Street, just north of the intersection. He later moved to a location west of the bar on Geranium Avenue.[7]

5. Diva’s security officers left the front door of the bar at approximately 1:45 a.m., when the line dissipated, and no one controlled the entrance to the bar between 1:45 and 2:15 a.m. People continued to walk in and out of Diva’s without restriction during that time. At 2:15 a.m., a uniformed security guard stood outside of the front door and a steady stream of people left the bar. Between 2:15 and 2:36 a.m., Sgt. Gromek observed approximately 50 to 60 people who had come outside Diva’s walk back into the bar. Neither the security guard nor other employees who came outside Diva’s to smoke after 2:00 a.m. prevented anyone from re-entering Diva’s.[8]

6. Several disturbances occurred between 1:45 and 2:30 a.m. Sgt. Gromek observed a man who appeared to be intoxicated leave Diva’s, yell at another person, stagger around the corner of the building, and urinate. He saw another man walk out of Diva’s carrying a plastic cup containing an orange juice drink and shout about how he was going to have his cocktail and go to a party at another nearby bar. Sgt. Gromek also saw a man grab a woman who had come out of the bar yelling and swearing and carry her to a car while she continued yelling. Diva’s security personnel did not intervene in any of these situations.[9]

7. At approximately 2:15 a.m., Sgt. Gromek called Sgt. Rothecker, his supervisor, and asked that a two-person uniformed patrol squad be sent to Diva’s to walk through the bar and count how many people remained inside. Sgt. Gromek made this request because he works undercover and was not wearing a uniform, he did not want to reveal his identity to Diva’s staff, and bar owners are required to open their doors to uniformed officers.[10] This request was approved, and Officers Susan Hartnett and Christopher Hoyt arrived at Diva’s shortly before 2:30 a.m. They spoke briefly with Sgt. Gromek, then knocked on the front door of Diva’s. Sgt. Gromek left his car to approach Diva’s at 2:29 a.m. and was a short distance (approximately ten yards) away from Officers Hartnett and Hoyt as they knocked on the front door of the bar.[11] Sgt. Gromek was monitoring the time for documentation purposes and noted that it was 2:32 a.m. when Officers Hartnett and Hoyt knocked at the front door of the bar.[12] Fred Macalus, owner of the building in which Diva’s is located, came to the door first and responded that he did not have a key. He left the door for more than one minute. Another employee came to the door, fumbled with several keys, and finally opened the door.[13] Sgt. Gromek and Officer Hartnett both believed that Diva’s employees were slow to unlock the door because they were stalling for time.[14] After the front door of the bar was opened, Officer Hoyt walked inside and saw some employees and possibly some customers. Although some people were holding containers, Officer Hoyt did not see them actually drinking and cannot say for sure that they were drinking alcohol.[15]

8. When it took so long for Diva’s staff to open the front door, Officer Hartnett went around to the back of the bar. She saw approximately 30 people leave the building from the back door. She entered the bar through the back door and saw at least ten people in the rear of the bar holding what appeared to be drinks in their hands. Several other people in the bar were identified as employees. She told the patrons that the bar was closed and they had to leave. It took approximately ten minutes to clear out the bar.[16]

9. While the employee was fumbling with the keys at the front door, Sgt. Gromek saw at least 40 people leave by the back door. Sgt. Gromek walked around the building and looked in several windows between 2:29 and 2:36 a.m. He first looked inside the windows on the north side of the bar and saw 12-14 people sitting inside the bar. He observed one man drinking a Miller Lite as he talked to the bartender, who was cleaning up, and one woman seated at the north end of the bar drinking a Michelob Golden Lite beer. Sgt. Gromek then walked to the west side of the bar and looked in other windows. By this time it was 2:36 a.m. Sgt. Gromek saw the pool table/game room area and another group of approximately 25 people milling around. He saw what appeared to be mixed drinks on some of the tables and observed three different people drinking. Two were drinking from beer bottles and one appeared to be drinking a mixed drink.[17]

10. After Diva’s closed on April 8, 2006, several employees went to the home of bartender Michelle Martinez to celebrate the birthday of another employee and watch a videotape of a boxing match.[18] Mr. Macalus arranged for a mini-bus to come to the bar to pick up employees for the party.[19] The mini-bus arrived at Diva’s at 1:35 a.m., and 6 or 7 women left the bus and went into the bar. The bus left with a group of people from the bar after 2:53 a.m.[20]

11. Sgt. Gromek saw the last patron leave Diva’s at 2:53 a.m. He checked his radio set to verify the time. At that time, people were still leaving the pool table area to go to the mini-bus. He observed another 8 to 12 people still in the bar, including Mr. Macalus.[21]

12. Sgt. Gromek prepared an incident report with respect to the closing activities at Diva’s later in the day on April 8, 2005.[22] Officer Hartnett prepared an incident report on April 12, 2005.[23] After reviewing Officer Hartnett’s report, Sgt. Gromek prepared a supplemental report on April 25, 2006, stating what time it was when Officers Hartnett and Hoyt knocked on Diva’s door on April 8, 2006.[24] Sgt. Gromek prepared another supplemental report on May 3, 2006, correcting an error he had made in the April 25 supplemental report regarding the date on which the incident occurred.[25]

13. After the LIEP Office reviewed police reports regarding the April 8, 2006, incident and consulted with the City Attorney’s Office, the City determined that the Licensee had violated the St. Paul Legislative Code and issued a Notice of Violation on May 17, 2006. Because this was the Licensee’s first violation for after-hours display or consumption of alcohol, LIEP determined that a penalty of $500 was warranted under the penalty matrix set forth in St. Paul Legislative Code § 409.26. The Notice of Violation informed the Licensee of the nature of the violation, the proposed fine, and the opportunity to request a hearing before an Administrative Law Judge.[26]

14. On May 25, 2006, counsel for Diva’s notified counsel for the LIEP Office that Diva’s was requesting a hearing before an Administrative Law Judge.[27]

15. On June 14, 2006, the City Attorney’s office issued the Notice of Hearing setting the hearing for August 3, 2006.[28] The hearing took place as scheduled.

Based upon the above Findings of Fact, the Administrative Law Judge makes the following:

CONCLUSIONS OF LAW

1. The Administrative Law Judge and the St. Paul City Council have jurisdiction to hear this matter pursuant to Minn. Stat. § 340A.415 and St. Paul Legislative Code § 310.05.

2. The City of St. Paul gave proper notice of the hearing and has fulfilled all relevant substantive and procedural requirements of law and rule.

3. As the party proposing that certain action be taken, the City has the burden of proving facts at issue by a preponderance of the evidence.[29]

4. State law and St. Paul ordinance both prohibit the sale of intoxicating liquor between the hours of 2:00 a.m. and 8:00 a.m. on the days of Monday through Saturday.[30] In addition, a local authority may impose further restrictions and regulations on the sale and possession of alcoholic beverages within its limits.[31] Pursuant to this authority, the St. Paul Legislative Code further provides that no person shall consume or display or allow consumption or display of liquor upon the premises of an on-sale licensee at any time when the sale of such liquor is not permitted.[32]

5. Based on a finding that a license holder has failed to comply with an applicable statute, rule, or ordinance relating to alcoholic beverages, the commissioner of the Department of Public Safety or the authority issuing a retail license may revoke the license, suspend the license for up to 60 days, impose a civil penalty of up to $2,000 for each violation, or impose any combination of these sanctions.[33]

6. The St. Paul Legislative Code provides that, for a first violation, the sanction for after-hours display or consumption of an alcoholic beverage is a fine in the amount of $500.[34] The City Council may deviate from this penalty in an individual case where the Council finds that substantial and compelling reasons exist making it more appropriate to do so.[35]

7. There are no substantial or compelling reasons in the record to justify a deviation from the presumptive penalty in this case.

8. A fine in the amount of $500 as a sanction for after-hours display or consumption of alcohol is consistent with the authority granted by Minn. Stat. § 340A.415.

Based upon the above Conclusions of Law, the Administrative Law Judge makes the following:

RECOMMENDATION

IT IS HEREBY RECOMMENDED that the St. Paul City Council take appropriate action against the license of DRJ, Inc., d/b/a Diva’s Overtime Lounge.

Dated: September 5, 2006. s/Barbara L. Neilson

________________________________

BARBARA L. NEILSON

Administrative Law Judge

Reported: Tape recorded (two tapes)

NOTICE

The St. Paul City Council is requested to serve notice of its final decision upon each party and the Administrative Law Judge by first-class mail.

MEMORANDUM

The only issues in this case are whether the police officers in fact observed consumption or display of alcohol after 2:30 a.m. on April 8, 2006, and whether there were extenuating circumstances that evening that either caused people to continue entering Diva’s Overtime Lounge after hours or prevented them from leaving at closing time.

With respect to the first argument, Diva’s asserted that the City did not provide convincing evidence of consumption or display of alcohol occurring after 2:30 a.m. Diva’s emphasized that neither Officer Hartnett nor Officer Hoyt knew the precise time at which they entered the bar, and Officer Hartnett was not sure of the time at which she observed people in Diva’s holding what she presumed to be alcoholic drinks. Because Officer Hartnett reported that she and Officer Hoyt arrived at Diva’s at approximately 2:15 a.m. and proceeded to knock on the door shortly thereafter, Diva’s argues that any individuals that were observed after their entry were merely customers permitted to finish their drinks by 2:30 a.m. in accordance with City policy. Diva’s also argues that the City failed to carry its burden because none of the officers present on April 8 tested the drinks to verify that they contained alcohol.

Officer Hartnett merely stated in her report that it was “approximately” 2:15 when Sgt. Gromek asked her squad to conduct a count of patrons drinking or inside Diva’s, and Officer Hartnett made it clear in her testimony at the hearing that she did not know what time it was and this was merely an approximation. Officer Hoyt also was not sure of the exact time, but just knew that it was after 2:00 a.m., and stated that he would trust Sgt. Gromek’s timing. Officer Hartnett also indicated that she did not know how long she and Officer Hoyt spoke to Sgt. Gromek before they walked over to Diva’s front door or how long they stood by the front door while Diva’s staff fumbled for keys. More importantly, Sgt. Gromek provided convincing testimony about the timing of the events that evening. He serves in the Vice Unit, was familiar with City policy about bar closing, and was observing Diva’s that evening to document possible licensing issues. As a result, he was paying strict attention to the time, which he verified by listening to his portable police radio.

Based on Sgt. Gromek’s testimony, which the Administrative Law Judge believes was more accurate and reliable, Officers Hartnett and Hoyt in fact knocked on the door to Diva’s at 2:32 a.m. Thus, there is persuasive evidence that it was after 2:30 a.m. when Officer Hartnett observed ten people in Diva’s with drinks in their hands. Sgt. Gromek also provided credible testimony that it was 2:36 a.m. when he observed three people consuming alcoholic beverages in the pool table area. Two of the three were drinking from beer bottles. It is reasonable to presume without testing that the substance inside the beer bottles was, in fact, beer. Even if Sgt. Gromek was mistaken about the mixed drink he believed the third individual was drinking, and even if Officer Hartnett was incorrect about the alcoholic nature of the beverages she observed being held by ten individuals in the bar, there is convincing evidence that at least two individuals were drinking beer at Diva’s at 2:36 a.m. The City therefore demonstrated by a preponderance of the evidence that consumption or display of alcohol occurred at Diva’s after 2:30 a.m. on April 8, 2006.[36] Because the City ordinance prohibits consumption or display of liquor at any time when the sale of such liquor is not permitted, it is not necessary for the City to show that police officers observed actual service or sales of liquor.

Diva’s also argued that extenuating circumstances explained the number of people that were observed to be in the bar after 2:00 a.m. Diva’s witnesses testified that some of the individuals present were employees who had gathered to go to a birthday celebration at a bartender’s home. However, there is no evidence that Diva’s had given prior written notice to the City under St. Paul Legislative Code § 409.07(d) that it was holding a private after-hours party or that the gathering was otherwise exempt from the usual bar closing requirements. In addition, two bartenders (Clint Kaufenberg and Michelle Martinez), a bouncer (Batholomew Roach), and building owner Fred Macalus all testified at the hearing that a car accident occurred in front of the bar around 2:00 a.m. on April 8, 2006. They asserted that one of the drivers tried to flee from the scene and that police officers set up a road block on Rice Street and Geranium Avenue, making it difficult for people to leave the area by car. They further claimed that, when the man tried to fight with police after he was caught and customers of Diva’s ran over to watch, police officers instructed patrons to go back in the bar and told Diva’s bouncers not to let people leave.[37]

Sgt. Gromek, who was present during the early morning hours of April 8, did not see any accident, and Officers Hartnett and Hoyt did not mention any accident in their testimony. When called by the City as a rebuttal witness, Sgt. Gromek stated that he had checked police records relating to accidents at Rice and Geranium and had not found any record of an accident in the early morning hours of April 8.[38] He did, however, find a record of a hit and run accident that occurred the night before (Friday night, April 7, 2006), at 9:07 p.m. The driver was caught, arrested at 9:15 p.m., and processed for DWI. He was booked into jail at 11:45 p.m. on April 7. The squad handling the incident finished booking the suspect and writing all reports and was back on patrol by 1:33 a.m. on April 8, 2006.[39] The suspect was later charged in Ramsey County District Court with third degree DWI and leaving the scene of an accident.[40]

Based upon all of evidence provided at the hearing, the Administrative Law Judge is convinced that the Diva’s witnesses were mistaken about the time at which the accident occurred. The City provided credible evidence that the accident in fact occurred more than five hours before the bar’s closing time and the driver was jailed by 11:45 p.m. on April 7. The accident thus does not provide any excuse for the presence of numerous individuals in the bar after 2:30 a.m. on April 8. Accordingly, there are no substantial or compelling reasons in the record to warrant a deviation from the presumptive $500 penalty in this case.

B. L. N.

[2] Testimony of C. Rozek, Sgt. Craig Gromek, Clint Kaufenberg, Michelle Martinez.

[4] St. Paul Legislative Code § 409.07(a), (c).

[5] Testimony of C. Rozek. The only exception is for private after-hours parties during the Christmas season, in situations where a licensee has provided prior notice to the City. See St. Paul Legislative Code § 409.07(d). There is no evidence that there was a sanctioned after-hours party at the Licensee’s establishment on April 8, 2006.

[11] Testimony of Sgt. Gromek, Officer Susan Hartnett, Officer Christopher Hoyt; Exs. 2, 3, 4, 5.

[13] Testimony of Sgt. Gromek, Officer Hartnett, Officer Hoyt, Fred Macalus; Exs. 2, 4, 5.

[14] Testimony of Sgt. Gromek, Officer Hartnett; Exs. 2, 3.

[16] Testimony of Officer Susan Hartnett; Ex. 3.

[18] Testimony of C. Kaufenberg, M. Martinez, Fred Macalus, Bartholomew Roach.

[30] Minn. Stat. § 340A.504, subd. 2; St. Paul Legislative Code § 409.07(a).

[34] St. Paul Legislative Code § 409.26(a), (b).

[36] In contrast, there was not convincing evidence that it was after 2:30 a.m. when Sgt. Gromek looked inside the windows on the north side of the bar and observed a man drinking a Miller Lite while talking to a bartender and a woman seated at the bar drinking a Michelob Golden Lite. Sgt. Gromek was only able to state that it was 2:29 a.m. when he started to look in these windows.

[37] Although Diva’s obtained a subpoena for Sgt. Thomas Radke to testify about a hit and run accident occurring at about closing time on April 8, Diva’s did not call Sgt. Radke at the hearing or produce any records relating to the alleged accident.