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NABCA 26th Annual Legal Symposium

In News by Flaherty & O'Hara

National Alcohol Beverage Control AssociationWe are excited that one of our partners, Stan Wolowski, was an invited panelist at the 2019 NABCA Legal Symposium earlier this week at the Crystal City Marriott in Arlington / D.C. Stan, a former liquor violation prosecutor, presented a well-received presentation on the manner in which the PLCB and State Police Bureau of Liquor Control Enforcement responds to nuisance bars and bars that cease to qualify as license holders in PA. Stan also made recommendations on how licensees can best avoid falling into the nuisance bar category. For all things related to citations against your license, in Pennsylvania and across the country, call or email Stan Wolowski in our Pittsburgh office.

Session Summaries: NABCA 26th Annual Legal Symposium

Source: NABCA  |  March 19, 2019

Three robust sessions concluded the Legal Symposium. To follow are summaries of the final day.
Private Labels

Pamela Erickson, president & CEO of Public Action Management, moderated the first morning session. She described a report that her organization published in 2015 about private labels and defined several issues related to this practice, most notably the uneven playing field between small operators and large companies.

Arthur J. Decelle, counsel at McDermott Will & Emery LLP, explained that most states do not have a formal definition of private label brands, and said there are common themes amongst those that have formal definitions. Mr. Decelle gave considerations and posed questions for regulators at the end of his presentation.

Rodrigo Diaz, chief counsel at the Pennsylvania Liquor Control Board (PLCB), explained the alcohol marketplace in the state. In Pennsylvania there are no agency stores or package stores, only Fine Wine & Good Spirits stores, wineries, breweries, distilleries, Wine-to-Go retailers and direct wine shippers. The PLCB introduced private labels in 2011 and 2012 to give consumers more, better and low-cost alcohol choices as well as to increase funds to the General Assembly. However, as a result of criticism, this was phased out. Act 39, passed in 2016 to modernize alcohol in the state, provided a new definition of private label and prohibited the PLCB from selling private label products.

John Guadnola, executive director at the Association of Washington Spirits & Wine Distributors, asked what is private label and why do we care? He mentioned the competition between small and large distilleries and wineries, and even the competition within the same company among producers. He ended his presentation by saying, “Private label alcohol is here to stay.”

Summary Suspensions and Other Public Safety Cases

Travis Hill, CEO of the Virginia ABC Authority, moderated the session where the panel of experts shared regulatory and enforcement tools to address nuisance establishments.

Stanley “Stan” Wolowski, partner of Flaherty & O’Hara, discussed nuisance bars and the tools to address them in Pennsylvania. One tool is the local District Attorney who can file a petition with the local police to padlock or close the establishment. This does not happen often. The second tool is through the Pennsylvania Liquor Control Board (PLCB) which, through the liquor code, can refuse to renew the liquor license of a “nuisance bar” and where upon application for renewal, may solicit feedback and reports from local police to better understand situations that have occurred. If the PLCB determines the documentation is enough, it will hold a hearing where the licensee can present its case.

More recently, the PLCB has analysts who can immediately suspend the license if a licensee is not operating within the scope of their license type. The LCB does not take the license, but the licensee must get into compliance with its license type before it can sell alcohol again.

Tom King, assistant city manager of State College, Pennsylvania, expressed the importance for municipalities to have a strong working relationship with all state agencies that are responsible for alcohol regulation within the state. For Pennsylvania, they include the PLCB, the state police, the Bureau of Liquor Control Enforcement and the Office of Administrative Law Judge.

Mr. King shared that not all communities are alike and described the makeup of State College where seven of 10 residents are between 18-24-year-old and where the alcohol environment has changed to where there is now an increase in wine and spirits sales. He addressed the increase in the number of alcohol-related hospital admissions among students, which grew between 2003 to 2016, and about several alcohol-related deaths and serious injuries among college students.

He also detailed how the city managed a nuisance bar, using Conditional License Agreements, which placed several conditions on the license, including a requirement that the establishment close by 1 am, provide no drink specials after 9 pm, use ID scanners and metal detectors, and maintain a food-to-drink ratio. When the bar ownership changed, these conditions transferred because it was tied to the license.

Mr. King also shared a story about the city’s “21st Birthday No-Liquor Bar Policy,” which is a voluntary program where all bars from midnight to 2:00 am refuse to serve a person turning 21. This is the result of a story he shared where one individual, on their 21st birthday drank 21 drinks each at two bars and upon hospitalization, had a blood alcohol level of over six percent. This voluntary participation program has nearly 100% compliance among the bars.

Mr. Hill discussed the Summary Suspension Tool which the Virginia Alcoholic Beverage Control Authority, a regulatory authority with enforcement power created four years ago. Prior to 2015, the location of the license is what created the violation, but this was a hard charge to prove. There were hurdles in getting the licensee to take “reasonable measures” to mitigate harms. Hearings would take to 12-18 months to complete before adjudication, and the burden of proof was high. The Authority wanted the ability to address these cases faster when there were 1) serious bodily injury, 2) a death either on or in the immediate adjacent premise, and 3) when there was a continuing threat to public safety. Following the adoption of the Summary Suspension law, the Authority can now immediately suspend the license and begin to investigate an incident that meets the criteria. Within 60 days, the licensee has the outcome.

Final thoughts were shared by Mr. Wolowski who suggested the following standards of operations for licensees:
  1. All employees at every licensed establishment should undergo an in-person responsible service training. They should be recertified every two years.
  2. Institute a 100 percent carding policy and that the identification card be verified with a transaction scanning device.
  3. Hire former state enforcement officers who can serve as consultants for licensees.
  4. Pay good wages to help ensure employees value their job and adhere to internal business processes.