07-737Council File #
Green Sheet # �a
RESOLUTION
CTTY OF SAINT PAUL, MINNESOTA
Presented By
Referred To
Committee: Date
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1 WHEREAS, DRJ, Ina d!b/a Diva's Overtime I,ounge (Lic. ID# 20050001998), received
2 a Notice of Intent to Revoke Licenses dated December 13, 2006 seeking adverse acrion for
3 multiple violations of Sections 310.06 (b)(5}, 310.06 (b)(3), and 310.06 (b)(8} of the Saint Paul
4 Legislative Code; and
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WHEREAS, a hearing was held on the Intent to Revoke before Administrative Law Judge
Eric Lipman (hereinafter "Lipman Hearing") on March 21-23 and then continued to Apri15, 20Q7.
Each pariy was represented by Counsel and submitted oral testimony and documents into the record
at the hearing and, later, submitted written final arguments; and
WHEREAS, a Report was issued regarding the Lipman Hearing on June 28, 2007, in which
the Administrative Law Judge found that there was sufficient proof of six violations and insufficient
proof of the allegarion that the licensee violated St. Paul Legislative Code § 310.06 (b) (8); and
WHEREAS, the ALJ also found that adverse action is appropriate based on Lipman Hearing
but did not recommend license revocation; and
WHEREAS, DRJ, Inc. d/bfa Diva's Overtime Lounge, received another Notice of Violation
dated Aprii 24, 2007 alleging a failure to comply with license condition number Four and service
of alcoholic beverages to an obviously intoxicated person; and
WHEREA5, a hearing was held before Administrative Law Judge Linda Close (hereinafter
"Close Hearing") on May 7, 2007. Each party was represented by Counsel and submitted oral
testimony and the City submitted documents into the record; and
WHEREAS, a Report was issued regarding Close Hearing on May 30, 2007, in which the
Administrative Law Judge found that there was sufficient proof of both violations; and
WHEREAS, the ALJ also found that adverse acfion is appropriate based on the Close
Hearing; and
WHEREA5, at a public hearing on August 1, 2007, the Council of the City of Saint Paul
considered all the evidence contained in the record for both hearings, both AL7s' Findings of Fact,
Conclusions of Law, and Recommendations, and the oral arguments presented before the Council;
now, therefore, be it
RESOLVED, that these two separate actions having come before the Council at one time are
mare efficiently given one sancrion; and be it
FURTAER RESOLVED, that the Council ofthe City of Saint Pau1 issues this decision based
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1 upon consideration ofthe recard of the entire proceedings herein, including the hearings before the
2 ALJ on March 21-23, Apri15, and May 7, 2007, all the documents and e�ibits introduced therein,
3 the Findings of Fact and Conclusions of L,aw as referenced above and amended below, tYte oral
4 argument from the August 1, 20Q7 public hearing and the deliberations of the council in open
5 session of that hearing; and be it
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FL7RTHER RESOLVED, that the Fmdings of Fact, Conclusions of Law and Memorandum
of the Administrative Law Judge issued on May 30, 2007 regarding the Close Hearing are hereby
adopted as the Findings and Conclusions of Law of the City Council in this matter and be
incorporated herein by reference; and be it
FIJRTHER RESOLVED, that the Findings of Fact of the Administrative Law Judge issued
on June 28, 2007 regarding the Lipmau Hearing, with the exception of Findings Number Eighteen
(18) and Twenty-eight (28), in this matter are hereby adopted as the Findings of the City Council
in this matter and be incorporated herein by reference; and be it
FURTHER RESOLVED, that in place ofFinding of Fact Eighteen from June 28, 2007, the
Council adopts the following Finding of Fact:
18. Soon after, Saint Paul Police Officer Eric Skog, while otherwise on routine patrol,
approached the scene in his squad car. At the time of his approach, the number of
patrons fighting in the street ballooned to appmximately 12 people and the crowd
watching the fight was at least 50 people. The crowd of people fighring and
watching continued to grow as patrons exited Diva's bar. While Officer Skog (and
later-arriviag Sergeant Thomas Radke) worked to disperse the crowd that had
assembled, an unidenrified male threw a cylindrical outdoor ashtray into the air
hitting Diva's patron Roy W. Fulson in the head causing a loss of teeth and
lacerations to his face that required medical attention. As Fulson collapsed and lay
on the ground bleeding, a cry from the crowd went up to the effect that "the police
beat him down, they did iY' — a false claim that made the scene increasingly hostile
and dangerous for police. With the intervention of at least 14 squads arriving on the
scene, however, Officers Radke and Skog wexe able to restore order. The indivi duals
involved in the fight were patrons of Diva's.
and be it
FURTHERRESOLVED, that inplace ofFinding ofFact Twenty-eight regardingthe Lipman
Hearing, the Council adopts the following Finding of Fact:
28. Following the enachnent of an ordinance which banned smoking in the interior of
bars within the city limits of Saint Paul, Debra Johnson sought to establish a place
at or near Diva's where her customers could smoke cigarettes, while still complying
with the new ordinance. The Office of LIEP sent information to a11 licensees,
including Debra 7ohnson, explaaning the legal requirements for building a patio.
and be it
FURTHER RESOLVED, that the Council adopts the following additianal Findings of Fact
regarding the Lipman Hearing:
18a. Between June of 2005 and March of 2007, the Saint Paul Police Deparhnent
responded to 117 calls to 1141 Rice Street. In the same amount oftime immediately
priar to Diva's Overtime Lounge taking over management, police responded to yust
43 ca11s to 1141 Rice Street. COURT OF APPEALS
NIJMBER A07-1599
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18b. The Saint Paul Police Deparhnent had a policy of directing police officers assigned
to the area azound 1141 Rice Street to drive by the establishment to help control the
crowds and even directed police officers who were assigned to other areas of the City
to drive by Diva's in an attempt to control the unruly patrons. Furfher, the SPPD
directed police officers who were assigned to other areas of the city to drive by
Diva's in an attempt to contro] the patrons and fights in the street with up to 200
patrons as participants andJor onlookers. Saint Paul Police Officers routinely
addressed fights and other disturbances at Diva's and often did not write police
reports.
and be it
FURTHER RESOLVED, that the Conclusions of Law of the Administrative Law Judge
reguding the Lipman Hearing from June 28, 2007 with the exception of Conclusion Numbers Four
(4) and Five (5) in this matter aze hereby adopted as the Conclusions of Law of the City Council in
this matter; and be it
FURTHER RESOLVED, that in place of Conclusion of Law Four from the Lipman Hearing
the Councii adopts the following Canalusion of Law:
4. The City established by a preponderance of the evidence that the Licensee operated,
maintained or permitted conditions that unreasonably annoyed, injured or
endangered the safety, health, morals, comfort and repose of the surrounding
community.
and be it
FURTHER RESOLVED, that in place ofConclusion of Law Five from the Lipman Hearing
the Council adopts the foliowing Conclusion of Law:
DRJ, Inc. was noC in compliance with its obligations to make recordings of its video
surveillance camera "immediately available to the Saint Paul Police Department and
the Office of License, Inspections and Environmental Protection, upon requesP' on
both September 13, 2006 and November 11, 2006.
and be it
FURTHER RESOLVED, that the following violations, with one prior sustained adverse
acfion, form a sufficient basis far license revocation, ha�ing all occurred within 24 months of
obtaining a license:
1. Apri13, 2006 (approximately). Construction of a patio without a building permit,
July 3, 2006 failure to remove or obtain permit as ordered. Judge Lipman found a
violarion.
2. 7uly 20, 2006 (approximately). City discovered exhaust hood installed improperly
and without permits, August 21, 2006 fail to remove or bring into compliance,
October 18, 2006 fail to remove or bring into compliance. Judge Lipman found a
violation.
3. September 13, 2006. Failure to provide video in violation of License Condition
Number Four. Judge Lipman a found violation.
4. September 20, 2006. City discovered temporary si�s on display without a permit
and in excess ofmaYimum square footage, October 4, 2006 failure to remove excess
square footage as ordered. Judge Lipman a found violation.
5. October 27, 2006. Failure to pay fine imposed by Council for prior adverse action.
Judge Lipman a found violation. COURT OF APPEALS
NLJMBER A07-1599
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6. November 11, 2006. Failure to provide video in violafion of License Condition
Number Four (second violation of this nature). Judge Lipman a found violation.
7. March 3, 2007. Service of an obviously intoxicated patron. 7udge Close found a
violation.
March 16, 2007. Failure to provide video in violation of License Condition Number
Fow (third violation af this nature). Judge Close found a violation.
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and be it
FURTHER RESOLVED, that the Council also finds that the ownership and management of
DRJ Inc., dlb/a Diva's Overtune I.ounge unresonably operated the establishments in violation of St.
Paul Legislarive Code § 310.Ob (b)(8) based on the evidence at the Lipman Hearing including but
not limited to the following:
1. The violations found proved by 7udge Lipanan demonstrate that the establishment
was being operated contrary to law and regulations.
2. Dramatic increase in police calls from prior licensee to this licensee during the same
period of time.
3. Lazge fights in the street involving patrons.
4. Saint Paul Police Deparhnent modified its patrol patterns in attempt to accommodate
this esCablishment.
5. Noise in the neighborhood.
6. Police officers concerned for their own safety, large crowds and large number of
squad cars required to respond.
7. Proximity to a residential neighborhood, a K-12 school and a church.
8. Citizen complaints made directly to Bob Kessler and at several communitymeetings.
9. Unsuccessful community attempts to resolve issue with establishment.
and be it
FURTHER RESOLVED, that the penalty matrix found in Chapter 310.05 (m) calls for a
$2,000 fine and a 10 day suspension of all licenses, however the Council finds the following are
substantial and compelling reasons to deviate from this presumptive penalty:
l. Both Notices alleged more than one license violation, and in both cases more than
one license violation was proved.
2. The violation of St. Paul Leg. Code § 310.06 (b)(8) is a serious violation that
indicates Diva's poses an immediate threat to public safety.
3. Ifthe individual violations had been sepazate appearances before the Council, license
revocation would have been justified under Chapter 310.05(m) after just four
violations.
4. Following the agreement to add license conditions in August of 2006, Diva's failed
to produce video upon request three times in violation of condition number four (4),
refused to come into compliance with the building code regarding the kitchen
exhaust hood, violated the zoning code regarding temporary signs, failed to pay their
fine on time, and over-served a patron. These violations demonstrate that additional
license conditions will not bring this licensee into compliance.
5. Many violations have aggravating circumstances, for example the patio and exhaust
hood which required foliow up before there was compliance.
and be it
FURTHER RESOLVED, that all licenses held by DRJ Inc., dib/a Diva's Overtime Lounge
are hereby revoked effective upon passage and signature of this resolution pursuant to Chapter 6 of
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the Saint Paul City Charter for the reasons set forth above and contained in the record; and be it
FURTHER RESOLVED, that the motion to intervene made on behaif of 1141 Rice Street
-1, LLC and 1141 Rice Street -2 LLC is hereby denied for the following reasons:
1. Fred Macalus is an owner of 1141 Rice Street -1, LLC and 1141 Rice Street -2 LLC.
2. Fred Macalus, identified by Judge Lipman as Debra Johnson's "paranaour", has been
involved on a daily basis with the operation of the establishment.
3. Fred Macalus was present during the Lipman Hearing and gave testnnony at that
hearing.
4. Fred Macalus testified at the Lipman hearing that he was aware of the proposed
penalty and aware of the consequences that penalty would have on his properiy
interest.
5. Fred Macalus made no motion to intervene until two days prior to the Public Hearing
before the Council.
and be it;
FINALLY RESOLVED, that a copy of this resolution, as adopted, shall be sent by first class
mail to the Administrative Law Judge and to the license holder. �� �'���/e7
Requested by Department of:
By: _�
Approved
By: _
Hy: �� t-9.MlU..4 � � ��
Form Approved by City Attorney
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Appxove y ox for� uY�iissi to Council
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COURT OF APPEALS
NUMBER A07-1599
DOCUMENT#1
Adoption Certified 6y �uncil Secsetazy
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
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s, -�tof��.&�;o� ��A��-0� - � Green Sheet NO: 3042622
CorHact person & PBOne;
Rachel Gunderson
266-8710
Doc.Type: RESOLUTION
E-0ocument Required: Y
Documefrt Contact: Julie Kraus
Contact Phwie: 266-8776
� I ueoaronent sent ro aerson
0 t ofSafe & Ios ons l
Assign I 1 ofSaf &I ections { De artmentDirettor
Numher 2
For City Attorney
Routing 3 ,�1aVOr's Office MavodASSistant
Order 4 ouaciL �
f 5 i C7erk Ci C7erk
ToWI # of Signature Pages �(Clip All Locations for Signature)
Memorializing CiTy Council action taken August 1, 2007 imposing adverse action xevoking all licenses held by DRJ, Ina, dlb/a
Diva's Overlime L.ounge (License ID #20050001998) for the premises located at 1141 Rice 5treet in Saint Paul.
or
Pianning Commission 1. Has this personlFlrm ever worked under a contrad for this department?
CIBCommittee Yes No
Civl Service Commission 2. Has this persorJfirtn ever been a city employee?
Yes No
3. Does this person/firm possess a skill not normally possessed by any
current city employee?
Yes No
Explain ail yes answers on separete sheet and aMach to green sheet
Initiating Problem, lssues, Opportunity (Who, What, When, Where, Why):
A public hearing was held to discuss the May 30, 2007 and June 28, 2007 Administradve Law 7udges' Findings of Fact, Conclusions
of Law and Recommendafions from two sepazates administrative hearings held on Much 21-23, Apri15, and May 7, 2007.
AMantages If Approved:
Memorialization of Courrcil acrion taken as a result of the public heazing.
Disadvantages If Approved:
None.
Disadvantages If Not Approved:
Trensaction:
Funtling Source:
Financial Information:
(Explain)
CoSURevenue Budgeted:
Activity Number:
_ ' _ _ �
i
August 6, 2007 4:12 PM
COURT OF APPEALS
Page 1 NUMBER A07-1599
DOCUMENT # �
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Alleged Violations by DRJ Inc., d/b/a Diva's Overtime Lounge
1. Apri13, 2006 (approx): Construction of patio without building permit.
July 3, 2006: fail to remove patio or obtain permit. (ALJ Lipman
found violation}
2. July 20, 2006: Discovery of exhaust hood improperly installed and
without permits; August 21, 2006 fail to remove hood or bring into
compliance; October 18, 2006 fail to remove hood or bring into
compliance. Ongoing violation. (ALJ Lipman found violation)
3. September 13, 2006: Fail to turn over video in violation of license
condition # 4. (ALJ Lipman found violation)
4. September 20, 2006: Discovery of temporary signs without a permit
and in excess of allowed square footage; October 4, 2006 fail to
remove signs in excess of allowed square footage. (ALJ Lipman found
violation)
5. October 27, 2006: Fail to pay fine imposed by Council for prior
adverse action. (ALJ Lipman found violation)
6. November 11, 2006: Fail to turn over video in violation of license
condition # 4. (ALJ Lipman found violation)
7. March 3, 2007: Over service of patron. (ALJ Close found violation)
8. March 16, 2007: Fail to produce video as requested by LIEP in
violation of condition # 4. Video ultimately produced did not show
requested video (arguably 2 violations). (ALJ Close found violation)
4. Since Licensure: Unreasonable operation of establishment. (ALJ
Lipman found no violation)
COURT OF 9PPEALS
NUMBER A07-1599
DOCITMENT #2
OFFICE OF THE CITY ATTORNEY
John J. Choi, CityAttomey
v
C I1 1 �F' SC1A1� 1 PAUL CivilDivisian
Christopher B. Co7eman, Mayor 400 CiryHaZl
IS Y7est Kel7oggBZvd
Saint Paul, Minnesota SSIO2
w.�r
July ]7, 2007
NOTICE OF COUNCIL HEARING
Andrew J. Dawkins
Attorney at Law
Mansfield Tanick & Cohen, P.A.
1700 U. S. Bank Plaza South
Minneapolis, NIlV 55402-4511
Telephone: 651266-8770
Facsimide: 651298-5619
?
RE: All Licenses held by DRJ, Inc., d/b!a Diva's Overtime Lounge for the premises at
1141 Rice Street in Saint Paul
OAH Docket No. 8-6020-17788-2 (March 21, 22, 23 and April 5, 2007 Hearings)
Please take notice that a hearirg to discuss the report of the Administratice Law 7udge
concerning the above-mentioned licenses has been scheduled for Wednesday, August 1, 2007, at 5:30
p.m. in the City Council Chambers, Third Floor, Saint Paul CityHall and Ramsay County Courthouse.
You have the opportuniry to file exceptions to the report with the City Clerk at any time during
normal business hours. You may also present oral or written argument to the council at the hearing. No
new evidence will be received ar testimony taken at this heariug. The Council will base its decision on the
record of the proceed'mgs before the Administrative Law 7udge and on the azguments made and
exceptions fi1ed, but may depart from the recommendations of such Judge as permitted by law in the
exercise of its judgment and discretion.
I am filing exceptions to the Administrative Law Judge's report on behalf of the Department of Safety
and Inspecfions (DSn. At the public hearing, I will ask the Council to adopt those exceptions and follow
the proposed recommendation. A copy of those exceptions are attached.
Sincerely,
�� , Gw�t1C
Rachel Gunderso
Assistant City Attorney
cc: Diane Nordstrom, O�ce of Administrative Heazings, 100 Washington Square,
Suite 1700, 100 Washington Avenue South, Minneapolis, MN 55401
MaryErickson, Council Secretary
Christine Rozek, Deputy Direetor of LTEP
Debra 7ohnson, Diva's Overtune Lounge, 1141 Rice Street, St. Paul, MN 55117
Kerry Antrim, Community Organizer, District 6 Planning Council
213 Front Avenue, St. Paul, MN 55117
AA.-ADA-EEO Employer
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT#3
STATE OF MIrINESOTA)
) ss.
COLTNTY OF RAMSEY )
a7����
Julie Kraus, being first duly sworn, deposes and says that on the 17"` day of Ju1y, she
served the attached NOTICE OF COUNCIL HEARING by placing a true and conect copy
thereof in an envelope addressed as foliows:
Andrew J. Dawkins
Attorney at Law
Mansfield Tanick & Cohen, P.A.
17QQ U. S. Bank Plaza South
Minneapolis, MN 55402-4511
Diane Nordstrom
Office of Administrative Hearings
lOQ Washington Squaze, Suite 1700
100 Washington Avenue South
Minneapolis, MN 55401
Debra Johnson
Diva's Overtime Lounge
1141 Rice Street
St. Paul, MN 55117
Kerry Antrim, Community Organizer
District 6 Planning Council
213 Front Avenue
St. Paul, MN 55117
(which is the last known address of said person) depositing the same, with postage prepaid, in
the United States mail at St. Paul, Minnesota.
. �
ulie Kraus
Subscribed and sworn to befare me
this 17`� day of July, 2007
f / `'�� 1 �.�___—! %� ��`� ��
Not'ary Public
AI+FIDAVIT OF SERVICE BY U.S. MAIL
RITA M. BOSSARP � COURT OF E�Pp$Aj,S
NpTARY %18LIC -MYNAIESOTA
MY COMMtSSiON NLJ��•jZ A�'�-1J
EXPtRES JAN. 31. 2 0 1 0 D�ci TMEN #3
STATE OF MiNNESOTA
OFFICE OF ADNIINISTRATIVE HEARINGS
100 Washington Square, Suite 1700
100 Washington Avenue South
Minneapolis, Minnesota 55401-2138
TE�EPHONE: (612) 341-7600
TTY: (612) 347-7346
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July 9, 2007
Andrew J. Dawkins, Esq.
Mansfield, Tanick & Cohen, P.A.
Suite 1700
220 South Si�h Street
Minneapolis, Minnesota 55402-4511
���`�`' �� � .� ���?�
Rachel Gunderson, Esq.
Assistant City Attorney
Suite 400
15 West Kellogg Boulevard
St. Paul, MN 55102
Re: ln the Matter of the Licenses Held by DRJ, lnc, d/b/a Diva's
Overfime Lounge; OAH Docket No. 8-6020-17788-3
Dear Counsel:
Attached pfease find an Amerde� Fi�al Repor� in the abav�-refier�n�ed
matter. The second sentence of the fifth full paragraph on page 16 of the original
report should have read as follows: "He testified that he did not observe any
problems with over service of alcohol or other inducements by the Licensee
toward anti-social behavior."
Very truly yours,
�. ,
�
ERIC L. LIPMAN
Administrative Law Judge
Telephone: (612) 341-7601
ELL:dsc
�
COURT OF AppEALS
NUMBER A07-1599
DOCUMENT#4
Providing Impartial Hearings for Government and Citizens
An Equal Opportunity Employer
Administrative Law Division & Administrative Services Workers' Gompe�sation Hearings Division Workers' Compe�sation Settlement Division
Facsimile: (612) 349-2665 Facsimile: (612) 349-2691 Facsfmile: (612) 349-2634
D�-�3�
OAH Docket No. 8-6020-17788-2
STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE SAiNT PAUL CITY COUNCiL
In the Matter of All Licenses Held AMENDED
by DRJ, Inc., d/b/a Diva's Overtime FINDINGS OF FACT,
Lounge CONCLUSIONS AND
RECOMMENDATION
This matter came on for hearing before Administrative Law Judge �ric L.
Lipman on March 21, 22 and 23 and April 5, 2007, at City Hall in St. Pauf, MN
55102. The record closed following the receipt of post-hearing submissions of
the parties on May 16, 2007.
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). Andrew J. Dawkins,
Attorney at Law, 22Q South Sixth Street, Suite 1700, Minneapolis, MN 55402-
4511, appeared on behalf of the Licensee, DRJ, Inc., d/b/a Diva's Overtime
Lounge (DRJ or Licensee).
STATEMENT OF 1SSUES
Should action be taken against the ficenses held by DRJ, Inc., d/b/a Diva's
Overtime Lounge, because the L+censee has maintained or permitted a condition
that unreasonably annoys, injures or endangers the community?
As detailed below, the Administrative Law Judge concludes that a severe
licensing actian, but not license revocation, is warranted on this record.
Based upon ali the proceedings herein, the Administrative Law Judge
makes the following:
F1NDINGS OF FACT
General Background
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. Diva's also holds
severai other City licenses; including authorizations for the on-site sale of liquor
COURT OF APPEALS
1VITMBER A07-1599
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b�7-73�
on Sundays, the sale of tobacco products, the sale ofi certain pre-packaged
foods, conducting qualified charitable gaming and providing entertainment.'
2. Diva's Overtime Lounge is located at 1141 Rice Street in Saint Paul,
Minnesofa. Diva's sits at the southwest corner of fhe intersection of Rice Streef
and Geranium Street. Rice Street is a busy north-souih route in Saint Paul and
includes a number of business and refail establishments. Geranium Street is a
street that is fijpical of those in the North End of Saint Paul, lined with older,
single-family homes on urban-sized lots.
3. Diva's — and its principal, Debra R. Johnson — suCCeeded to the
management of the Rice Street location in June of 2005, through a management
agreement with the prior owner and liquor licensee, Mobandi.
4. At or around the same time, Ms. Johnson's paramour, Mr. Fred
Maclus, purchased the building and the land at 1141 Rice Street. While not a
principal of DRJ, Mr. Macfus is often at diva's during operating hours.
5. On September 27, 2005, Ms. Johnson accepted, on behalf of Diva's,
a set of six licensing conditions imposed by LIEP on issuance of a liquor license
to DRJ (License 20050001998). Among the conditions that were agreed to,
were:
[Condition 4] The licensee must provide working video surveillance
camera and recorders on the premise to provide documentation of
activities in the interior and exterior of the establishment. This
equipment must be in operation during a11 business hours. Tapes
must be maintained for thirty days and must be immediately
available to the Saint Paul Police Department and the Officer of
License, Inspections and Environmental Protection, upon request.
[Condition 5] The licensee must maintain a list of customers
banned from the establishment for assaultive, disorderly or
disruptive behavior. This list will contain the name and description
of the banned person, as well as the date that he/she was banned.
The list must be immediately available to the Saint Paul Police
' See, Exhibits 1, 9 and 12.
2 See, e.g„ Ex. 43.
3 See, Ex. 1 and 7estimony of Fred Madus; compare generally, Saint Paul Leg+slative Code
§ 409.11 (h) (http.11www.ci.stpaul.mn.us/code/Ic409.html#sec409.11).
° ld,� see also, Exs. 35, 36.
5 See, Test. of F. Maclus; see also, Exs. 12, 13.
COURT OF APPEALS
1VLJMBER A07-1599
2 DOCIJMENT #4
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Department and the Officer of License, lnspections and
Environmental Profection, upon request.
6. Following a series of disturbances inside or adjacent to Diva's in the
ten months that foffowed, Ms. Johnson accepted imposifion of ten additional
licensing conditions. License Conditions 7 through 16, were: = - ._. _ .-__ _ > -. _ :
[Condition 7] Security personnel shali be assigned to each
entrance starting at 9PM every day, and shafl remain until af!
patrons have left the licensed premises. Security personnel shall
"wand" (using a metal detector) each pafron and check all
handbags and packages carried by patrons. Security personnei
shall verify the age of patrons by checking state or federally issued
identification cards (no picture ID, no entrance). Customers re-
entering the estatilishment shall be subject to the same security
measures as customers entering the establishment for the first
time.
[Condition 8] The license holder shall retain a licensed and bonded
security company to supervise security personnel. The license
holder shall pertorm a criminal background check of ali security
personnel. License holder and the security company shall work
with the District Council (District 6 Community Council) to establish
what criteria wiil be applied prior to hiring any security personnel.
The criteria will be no less than that outlined in St. Paul Legislative
Code Chapter 376.16(e).
{Condition 9] The security personnel shall not fraternize with the
patrons.
[Condition 10] The license holder shali not allow new patrons to
enter the establishment after 12:00 midnight on Thursday, Friday,
and Saturday nights. This condition shall remain in effect through
September 5, 2006. Beginning September 5, 2006, the license
hoider shall not allow new patrons to enter the establishment after
1:OQ AM on Thursday, Friday, and Saturday nights.
[Condition 11] All smokers shall be monitored by the security
personnei to keep patrons from congregating in front of the
establishment. Security personnel shall also insure that there is no
excessive noise outside of the establishment. The security
personnel shall keep smokers on the Geranium Street side of the
estab{ishment. The license .holder sha11 work with police to make
s See, Ex. 12.
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�� ���
sure that the security cameras are proper(y aimed to provide
surveillance of the Geranium Street sidewalk.
[Condition 12] Employees (including the license hofder) shall not
drink alcoholic beverages while on duty.
[Condition 13] The license holder, security staff, and employees of ~��
the establishment shall cooperate with the police by calling for
assistance when there is a threat of violence or other criminal
behavior.
{Condition 14] All doors and windows must be closed from 8:00 PM
until closing to avoid exposing the neighborhood to excessive
noise.
[Condition 15] The license holder shal! make sure that al! refuse
and trash from the establishment is removed from the licensed
premises and the surrounding sidewalks and alley by noon on a
dai{y basis.
[Condition 16] The DJ shall make an announcement 30 minutes
before closing asking all patrons to respect the community by
leaving in an orderly and quiet manner.�
Facts Relating to the City's Unreasonable Operation Claims
7. On November 20, 2005, Saint Paul Police Officers Susan Hartnett
and Christopher Hoyt observed a street fight while their squad car was on routine
patrol. The fighting involved approximately 30 persons, in sma{{er clusters, at the
intersection of Rice and Geranium Streets. As the squad car approached the
scene, and the o�cers gave instructions for the combatants to disperse, another
group of persons emerged Prom Diva's bar and joined the fighting $ Responding
to Officers Hartnett and Hoyt's radio call for assistance, several additional squad
cars arrived at the scene and aided the team in dispersing this crowd.
8. A later police report invoiving the November 20 disturbance includes
the statement of Tara Parshall. Ms. Parshall informed investigating officers that
the fight began inside Diva's when a group of four males clashed with a friend of
Ms. Parshall.'
� See, Exs. 6, 7 and 11; see also, Testimo�y of Robert Kessler.
$ See, Testimony of Susan Hartnett and Christopher Hoyt; see also, F�c. 32.
9 Id.
70 See, Ex. 32 at 6.
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9. On January 29, 2006, a similar incident occurred. As detaiied in the
Police Report on the incident, iwo Caucasian patrons of the bar — Bryan J.
Pettiford and Randal G. Taylor — took umbrage at the facf that a female friend of
their's was talking to two African-American patrons of the bar — Angelo D. Pernell
and Edward G. Robinson. Wl�ile Pemell and Robinson were conciliatory when
fiirst approached by Pettiford and Taylor, Pettiford and Taylor provoked the other
two men into fighting. Pettiford and Tay{or were later arrested for disorderly
conduct.��
10. Two weeks later, on February 11, 2006, Saint Paul Police responded
to a report that gunshots had been fired outside of Diva's bar. Officer James
McKnight, Jr., who was nearby, and _the first to arrive at the scene, was not able
to identify any particular person as having been involved in the shooting.
Further, while a series of shell casings were found on Geranium Street, at a
distance of approximately of 10 feet from a side door of Diva's bar, police
interviews couid not determine whether or not a patron of Diva's was involved in
the firing of the weapon.
11. On March 6, 2006, while on an evening patrol of Rice Street, Saint
Paul Police Officer Steven Petron observed 3 men on Geranium Street squaring
off in a fighting stance. The men were building owner Fred Maclus, Diva's
security staffer Lawrence Stoehr and Diva patron Kenard D. Green.
12. Moments eariier, Stoehr and Maclus had insisted that Green leave
Diva's, as Green was bothering other patrons. Green responded to this directive
by attempting to punch the two other men. Together, Stoehr and Maclus then
pressed Green out the exit door. Green continued to be aggressive toward the
men outside of the bar.
13. As detailed in Officer Petron's later report, Green matched the
description of a man for whom St. Paul Police were otherwise searching that
evening. Earlier on March 6, the St. Paui Police Department received two
reports regarding a man, simiiarly dressed, who was engaging in threatening
behavior. Because of a charge of disorder{y conduct, and an earlier and active
warrant for trespassing, Officer Petron took Green into custody.
14. On March 18, 2006, Joshua J. Thomas, a tourist from Markham,
lilinois, was a customer of Diva's bar and was asked to leave by Diva's
management. Angry at this request, Thomas forcefu{ly kicked open the side door
�� See, Ex. 33; Testimony of Erik M. Johnson.
' See, Ex. 34; Testimony of James J. McKnight, Jr.
73 See, Ex. 35; Testimony of Steven J. Petron; see also, Test. of F. Maclus.
'" See, Ex. 35.
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��-���
of Diva's as he exited the bar. Additionally, as he walked westbound along
Geranium Sfreef, Thomas shouted through a double-paned window at the
customers and empioyees that were stiii inside the bar. Thomas then broke this
window with a single blow from a closed fist. Saint Paul Po(ice Officers Diana
Olsem and Nicole Sack, who were parked in a squad car nearby, observed
Thomas' exit from the bar and quickly took Thomas into custody:- Thomas was ._
subsequently booked by police on a charge of felony criminal damage to
proPe is
15. On the ne>ct evening, March 19, 2006, Antonio M. Adams was asked
to leave Diva's bar by its management. In the view of Diva's staff, Mr. Adams
and his companions were being too loud and boisterous. When Adams refused
the directive to leave, Derrick Davis of Secure Force (Diva's then-security
company) ejected him from the bar. The security team then detained Adams
until the arrival of Saint Paui Police.� Adams was charged with disorderly
conducf and released into the custody of a friend.��
16. On April 28, 2006, Sergeant Craig Gromek, of the Saint Paul Police
Department's Vice Squad, undertook an undercover alcohol campliance
investigation. From a parked car approximately 80 feet away, Sergeant Gromek
obsenred a crowd of Diva's patrons conversing — many times loudly. and
profanely — outside of the bar's front door on Rice Street. In Sergeant Gromek's
estimation, the security personnel on duty that night did not sufficiently disperse
this crowd or respond effectivefy to these patrons' loud and profane talk.
17. On June 17, 2006, a still-unnamed patron of Diva's bar became loud
and threatening to another customer. When fisticuffs began between these
customers, Diva's security officers separated the combatants, ejecting them both
from the bar, although through separate doorways. Once outside, the unruly
patron thaf had been ejected through the Geranium Street exit made his way
around to the other door, to re-engage with his target. As this patron resumed
fighting with the other customer and security personnei, other Diva's patrons
spilled from the doors to watch the fracas.
18. Soon after, Saint Paul Police Officer Eric Skog, while otherwise on
routine patrol, approached the scene in his squad car. At this time, the number
of those fighting in the street ballooned to approximately 12 people. While
�ificer Skog (and a later-arriving Sergeant Thomas Radke) worked to disperse
75 See, Ex. 36; Tesfimony of Diana L. Olsem; see a/so, Test, of F. Maclus.
� See, Ex. 37; Testimony of S. Hartnett; Testimony of D. Davis.
" See, Ex. 37 at 4.
' See, 6c. 8; Testimony of Craig Gromek.
' See, Test. of F. Maclus.
20 See, Ex. 38; Testimony of Eric Skog.
0
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DOCUMENT #4
D7�'13�
fhe crowd that had assembled, an unidenfified male threw a cylindrical outdoor
ashtray into the air hitting Diva's patron Roy W. Fulson in the head. As Fulson
collapsed and lay on the ground bleeding, a cry from the crowd went up to the
eifect thaf "the police beaf him down, they did it" — a false claim that made the
scene increasingly hostile and dangerous for the police. With the infervention
of several other police squads arriving on the scene, however;'Officers Radke --. - _=-
and Skog were abfe to restore order.�
19. On September 12, 2006, Saint Paul Police were called twice fo
disturbance calls at Diva's. On both occasions that evening, police were calied
to respond to fighting among three individuals: Matthew J. Burns, Francisco
Contreas an.d Joseph R. Lewis. While officers disbursed the trio from the street
during the first visit to Diva's, with the instruction that none of the three should
return to the bar, that instruction went unheeded. Approximafely 30 minutes
later, the combatants were again fighting outside of Diva's, and police were
summoned a second time. As the squad cars returned to the scene, the
suspects fled, evading capture Z3
Facts Relating to the License Condition Noncompliance Claims
20. Because one of the persons involved in the fighting outside of Diva's
on September 12 (described most immediately above), was a person who had
substantial gang ties, Saint Paui Police sought to obtain a copy of the video tape
from Diva's surveillance cameras. To that end, on September 13, 2006, the day
following the fighting, Licensing Inspector Kristina Schweinler traveled to Qiva's
and made a request for copies of the relevant video tapes. The bartender then
on-duty, William Schally, was not able to furnish her with the requested
recordings. Following a series of requests made by tefephone to Debra Johnson
and her counsel, a video cassette was furnished to city officials on
September 20, 2007.
21. No cfear images were perceptible on this tape and it appeared to
police investigators that the cassette was blank.
22. Diva's management subsequently furnished a second video
surveiilance tape to city officials, this time with discernible images, on October 4,
2006. Notwithstanding the proffer, city o�cials still doubt whether the correct
Z ' Id; Testimony of Pedro Girhalva, Jr.
ZZ See, Ex. 38 at 7; Testimony of Eric Skog.
Z3 See, Ex. 27; Testimony of David Sfokes; Testimony of Michael McGinn.
24 See, Stipulation of April 5, 2007; Exs. 28 and 46; Testimony of Kristina Schweinler; Testimony
of Christine Rozek.
z5 See, Stipulation of April 5, 2007; Test. of K. Schweinler; Test. of C. Rozek.
� /d.
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v�-���
recording was furnished, as fhe date line af the fop of the images was not
September 12, 2006?'
23. Early in the moming on November 11, 2006, as Debra Johnson and
her team were exiting Diva's after closing time, a Saint Paul Police squad car
approached the building. The officers had been called to the scene by-a-report �_ -,_ ___
that shots had been fired in the area and inquired if Johnson or her employees
knew anything about those events. A brief exchange was had about the
existence of outdoor surveiliance cameras at Diva's although no request for
copies of that evening's recordings was made at fhis time?
24. As the police investigation of the shooting intensified, Police
Sergeants Richard Munoz and William Gray telephoned Debra Johnson at home
— Sergeant Munoz at approximately 3:15 a.m. and Sergeant Gray approximately
45 minutes later. While police requested Ms. Johnson to return to Diva's and
produce copies of the surveiliance recordings, Ms. Johnson noted that she would
need assistance from her technician in order to provide the requested copies.
She instead pledged to contact the video technician and furnish the requested
tapes later that morning.
25. Because Saint Paul Police officers were not abie to obtain copies of
the sought-after surveillance tapes by mid-morning, and had difficulty in reaching
either Debra Johnson or her technician by cellular telephone, an angry set of
exchanges between police and Johnson followed when Johnson arrived at Diva's
at approximately 11:00 a.m. During the confrontations, officers undertook a
check of Johnson's driver's license. Upon learning that Johnson's driver's
license had expired, police ofiFicers took her inio custody.
26. Shortly after, when Johnson's counsel, Jerome Rudawski, Esq.,
arrived at Diva's, he observed a team of uniformed officers pressing against the
{ocked door of the office in which the survei{lance video equipment was housed.
Rudowski inquired of Sergeant Munoz as to whether the officers had a warrant
authorizing their entry into this otFice. In an apparent acknowledgement that
they had no such warrant, officers withdrew to complete a warrant application.
27. At 2:33 p.m. that day, the Honorable Judith M. Tiisen of the District
Court approved a search warrant authorizing the seizure of both the surveillance
Z ' See, Test. of K. Schweinler; Test. of C. Rozek.
28 See, Stipulation of April 5, 2007; Test. of D. Johnson.
29 See, Ex. 31; Stipulation of April 5, 2007; Test. of D. Johnson.
3o See, Ex. 31; Testimony of Jerome Rudawski.
37 See, Test. of J. Rudawski; see also, Ex. 31.
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8 DOCUMENT #4
�-���
recordings and the underlying recording system 3 Police completed the seizure
of tapes and recording equipment at 2:45 p.m. on November 11 ZOOE.
Facts Relating fo the Code Noncompliance Claims
The Smoker's Patio:� ==_-
28. Following the enactment of an ordinance which banned smoking in
the interior of bars within the city limits of Saint Paul, Debra Johnson sought to
establish a place at or near Diva's where her customers could smoke cigarettes,
while still complying with the new ordinance.
29. A key part of this plan was the fact that outdoor areas, such as
patios, were specifically excluded from the reach of the new ordinance.
30. Further, because noise from patrons congregating near the Rice
Street and Geranium Street exits of Diva's had been a source of compiaints in
the past, Johnson commissioned the construction of a patio at the south-west
corner of Diva's building — at a point that was farthest from Geranium Sfreet.
31. Before beginning construction, however, neither Johnson nor anyone
else from DRJ, obtained the required building permit3 More problematic stiil,
the structure of the patio consumed at least one parking space that Diva's had
earlier pledged, as part of its licensure, to make available for customer parking.
32. Fo4lowing the receipt of a report that construction of a patio was
underway at Diva's, and later confirming that such a patio was in piace, LIEP
sent DRJ an Enforcement Notice 3 The Notice, dated June 26, 2006, directed
DRJ to compiete one of two actions before July 3, 2006: DRJ could either
furnish a complete site plan for the patio and proof that two repiacement parking
spaces had been obtained, or, in the alternative, remove the patio.
3 � See, Ex. 31; Stipulation of April 5, 2007.
33 See, Stipulation of April 5, 2007.
34 See, Test. of D. Johnson.
� See, Saint Paul Legislative Code § 238.02 (2) ("Licensed liquor establishment means an
establishment that has an on-sale intoxicating liquor license ... but does not inc(ude outdoor
areas") and § 238.02 (3) ("Smoking is prohibited in restaurants, pool halls, bowling centers, rental
halis, bingo halls and licensed liquor establisFiments") (emphasis added).
3s See, Exs. 41 and 43; Test. of D. Joh�son.
37 See, Testimony of Robert Kessler.
38 See, Exs. 15, 16, 17, 18, 41 and 43; Test. of D. Johnson.
39 See, Exs. 15, 16, 17, 18.
40 See, Ex. 18; compare a/so, Licensee's Exhibit 8.
�``
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NCJNIBER A07-1599
DOCUMENT #4
0�-'73�
33. While Debra Johnson and DRJ did make some efForts to qualify the
patio as a conforming sfrucfure, those efforEs were not complefed by July 3,
2006, or a later extended deadline of July 28, 2006 4 The patio structure was
removed on or about Augusf 1, 2006.
Upgrades to the Kitchen Equipment: -.:. __---.- -�;�
34. While DRJ's Restaurant C license permits it to offer pre-packaged
foods — such as potato chips — for sale to its customers, Debra Johnson
harbored grander plans for Diva's. Because of her long professional history in
the hospitality and catering industries, Johnson hoped to augment her
Restaurant C license and obtain authorizations that would permit her to prepare
and sell a broader menu of food.
35. As part of her upgrade plan, Johnson undertook the removal and
replacement of an antiquated, unsanitary and sub-standard kitchen exhaust
system that was over an existing stOVe 44
36. The upgrades that Johnson received from her contractors included
an exhaust hood that was not welded in place and which was connected to a
grade of round pi�e that was insufficient to meet the requirements of the City's
rnechanical code. 5 Similarly, the venting of the exhaust system was inadequate
to comply with the current requirements of the Saint Pauf building code as
Foliowing a routine restaurant inspection, Senior Inspector Ronald Haider wrote
to DRJ that "[t]his work was improperfy installed end without the required p{ans,
permits and inspections," and that because of fihe defects, use of the equipment
would be hazardous 4
37. Haider's July 28, 2006 letter further directed that sufficient repair or
removal of the exhaust system needed to occur before Auqust 31, 2006 4 This
performance date was later extended to October 18, 2006."
47 See, Ex. 6; Licensee's Exhibit 8; Test. of D. Johnson; Testimony of Jeffrey Johnson.
A2 See, Testimony of Robert Gunther.
43 See, Test. of D. Johnson.
aa /d.
45 See, Ex. 48 and 49; Testimony of Ronald Haider.
46 See, Ex. 48 and 50; Test. of R. Haider.
" See, Exs. 1 and 21.
48 See, Ex. 21
49 See, Ex. 22. -
{�
COURT OF APPEALS
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DOCUMENT #4
07-� � 7
38. While DRJ contacted at least two vendors as to its need to mqdify the
kitchen facilities, neither the upgrade nor the remova! of the non-conforming
equipment was completed by the exfended deadline of October 18, 2006.
Temporary Signs:
39. Diva's is located in a TN2 — or traditional neighborhood — zoning �� �
district of Sainf Paul. Within such a district there are strict limitations as to the
display of temporary business signs on commercial properties. Among the
limftations are:
a. a temporary sign permit must be obtained before the sign is displayed;
b. the totai area of such signs is limited to 32 square feet; and,
c. display of the permitted signs may not occur more often than 3
nonconsecutive 30-day periods in a singie year.
40. In the autumn of 2006, LIEP received a complaint about the display
of temporary business signs at Diva's — a complaint which prompted both a
review of LIEP's licensing records and a visit from LIEP Inspector Yaya Diatta.
LIEP's records did not reveal DRJ as holding a temporary sign permit at the
time � Further, an inspection of Diva's facility reveaVed that 5 temporary signs,
measuring a total of 126 square feet, were on display.
41. Following the inspection, Mr. Diatta sent Diva's an Enforcement
Notice directing the removai of the non-conforming signs within 10 days.
42. On September 27, 2006, Diva's obtained a permit which authorized
the display of 32 square feet of temporary signage.
43. Inspection visits on October 3` and 4 however, revealed that the
banners posted outside of Diva's exceeded 32 square feet. Diva's was not in
compliance with the limits of its earlier-issued permit until October 6, 2006.
so See, Test. of D. Johnson.
51 See, Ex. 54.
5z See, Saint Pau! Legislative Code § 64.203 (a) ("Permits") and § 64.503 (b) (4) (Temporary
signs in traditional neighborhoods); Ex. 54 and Testimony of Yaya Diatta.
sa See, Exs. 1 and 54 and Test. of Y. Diatta.
ea Id.
� See, E�. 54 and Test. of Y. Diatta.
ss Id.
57 See, Ex. 1.
sa Test. of Y. Diatta.
COURT OP APPEALS
N[.JMBER A07-1599
11 DOCUMENT #4
Overdue Remittances:
��/���
-
44. Following the receipt of the Administrative Law Judge's report,
relafing to a separate claim of after-hours display of alcohol, on September 27,
2006, the Saint Paul City Council adopted a resolufion sanctioning DRJ. As
part of its adverse licensing action, the Council revoked DRJ's 2:00 a.m. dosing ��-: =• .
license and imposed a fine and costs #otaling $3,300. Addifionally, the Council
directed that the $3,300 assessment was due and payable within 30 days of its
adoption of the resolution — October 27, 2006 sz
45. When the $3,300 assessment was not received by LIEP or the City
by November 7, 2�06, a Notice of Intent to Suspend DRJ's Licenses was issued.
The Notice advised that the City would proceed with suspension unless the entire
past-due sum was received by November 20 ZOO6.
46. On November 20, 2006, a credit card payment in the amount of
$3,300 was made in favor of the City on behalf of DRJ.
Procedural Matters
47. On December 13, 2006, following a review of reports from various
City Departments, the City i$sued a Notice of intent to Revoke DRJ's Licenses.
The Notice informed DRJ of the bases for the proposed action and the
opportunity to request a hearing before an Administrative Law Judge.
48. With the receipt of a timely request for a Hearing, the City Attorney's
office issued a Notice setting an initial hearing date for March 21, 2007.
49. On April 4, 2007, the Administrative Law Judge entered an lnterim
Order precluding the City Attorney from adducing evidence to the effect that the
shootings that occurred on Juiy 14, 2006 or November 11, 2006, at or near
Diva's, established that the Licensee permitted conditions to exist that were
contrary to Saint Paul City Code 310.06 (b) (8). As detailed in this Order,
$9 See, !n the Matter ofAll Licenses Held by DRJ, lnc., d/b/a Diva's Overtime Lounge, OAH
Docket No. 11-6020-17359-6 (2006) (http:/lwww.oahstate.mn.uslafigase1602017359.rt.htm).
so See, F�cs. 23, 24 and 25.
s ' See, Ex. 23.
sz /d.
s3 See, Ex. 25.
64 See, Ex. 26; Test. of J. Johnson.
65 See, Ex. 39.
66 See, Ex. 40.
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1vLl�ER A07-1599
� 2 DOCUMENT #4
��-���
because the events on those evenings were then the subject of active criminal
prosecufions, and key fact witnesses in the Saint Paul Police Department are
pnvileged against disclosing defails of those events prior to the completion of the
criminaf triafs, "these matters �could not] be the subject of either discovery or
examination by fhe Licensee." In order to balance the "various and competing
interests," the Administrative Law Judge permitted testimony as to "the events of
July 14, 2006 or November 11, 2006, in fhe same manner as to which other
historical events in the hearing record — such as meetings, inspections or police
calis — are referenced," but precluded these events from forming a separate
basis for the City's adverse licensing action. To the e�ent that those events
may provide a basis for an adverse licensing action, but were not litigated in this
proceeding, the Licensee was advised that they may be the subject of a future
proceeding on another day.
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 5t. Paul
Legislative Code § 310.05.
>
2. The Gity 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 a certain action be taken, the City has the
burden of proving facts at issue by a preponderance of the evidence.
4. The City did not establish by a preponderance of the evidence that,
by way of misconduct, the Licensee operated, maintained or permitted conditions
that endangered the community.
5. DRJ was not in compliance with its obligations to make recordings of
its video surveillance camera "immediately available to the Saint Paul Police
Department and the Office of License, Inspections and Environmental Protection,
upon request."
6. DRJ was not in compliance with its obligation to apply for a building
permit before undertaking construction of an adjacent patio structure or with its
67 See, Interim Order, OAH Docket No. 8-6a20-1778$-2 (Apri! 4, 20�7).
68 See, id.
69 See, Minn. R. 1400.7300 (5) (2005).
i3
COURT OF APPEALS
NUMBER A07-1599
AOCUMENT#4
0���3�
duty to -maintain a minimum level of parking following the _installation .of the-______
pafio.
7. DRJ was not in compliance with its obligation to apply for a building
permit before undertaking renovation of .its kitchen exhaust system or with its
duty to have that system inspected foliowing completion_ of=the_ renovations.--- _.-_ ---. _�.
Additionally, DRJ was not in compliance with its obligation to remo�te`the non- --- ==
conforming equipment by October 18, 2006.
8. As demonstrated by the events in late September and early October
of 2006, DRJ was not in compliance with its obligation to apply for a temporary
sign permit before dispiaying advertising banners on its building. Additionaily,
DRJ was not in compliance with its obligation to limit those temporary dispiays to
a total area of 32 square feet.
9. DRJ did not remit in a timely fashion the $3,300 in fines and costs
assessed by the City Council of Saint Paul on September 27, 2006.
10. The Memorandum that follows below explains the reasons for these
Conclusions. To the extent that the Memorandum includes matters that are more.
appropriately described as Conclusions, the Administrative Law Judge
incorporates those items into these Conclusions.
11. Further, the Administrative Law Judge adopts as Conclusions any
Findings of Fact that are more appropriately described as Conclusions.
Based upon the above Conclusions of Law, the Administrative Law Judge
makes the following:
RECOMMENDAT{ON
It is hereby recommended that the that the St. Paul City Council impose a
weighty administrative sanction against the licenses of DRJ, Inc., d/b/a Diva's
Overtime Lounge — but not revoke these licenses.
Dated: June 28, 2007.
s/Eric L. Lipman
ERfC L LIPMAN
Administrative Law Judge
Reported: Taped, 15 tapes
No transcript prepared
70 See, Saint Paul Legislative Code §§ 61.101 through 61.104 and 409.06 (g) (2).
COURT OF APPEALS
NUMBER A07-1599
�� DOCUMENT #4
D��7��
NOTICE
r
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.
15
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #4
D��� �7
MEMORANDUM
The case pivots on fhe question of accountability. The binders of exhibits,
the testimony from a chain of wifnesses, and fhe detailed arguments from
counsel are all focused on a key quesfion: What misconduct, occurring at or
near Diva's during the past 18 months, is attribufable to DRJ?
The City's Unreasonable Operation Claims
Pointing to a stack of police reports, the City argues that because there
have been so many public safety calis to this one establishment, DRJ's
operations must be defective. Only a defect in the management, continues this
argument, could result in so many serious events at one locale.
While there is some support for the view that DRJ is "responsible" for
anything that occurs on its premises — obliging the licensee to be the guarantor of
the good behavior of anyone who walks into or near its establishment — this is
not the best reading of.the law. The better �nd more complete view is that DRJ
may be held to account in the licensing process for acts that it undertakes, or
acquiesces to, which undermine public order.
To be sure, some of Diva's patrons have been frighteningly quick to
violence. Yet the record as a whole does not establish that DRJ or ifs employees
prompted this violence, encouraged it or were slow to confront it when it erupted.
Indeed, to the contrary, the record contains considerable detail as to the efforts
made by DRJ staff to contain and eliminate misbehavior; even at times when the
personai risks of moving against violent patrons were substantial.
Likewise significant is Sergeant Gromek's testimony — who posed as a
Diva patron during undercover liguor control investigations, on a number of
occasions and at different times of the day. He testified that he did not bbserve
any problems with over service of alcohol or other inducements by the Licensee
toward anti-social behavior. Similarly, many of the police officers who
responded to disturbance cails at Diva's did not link DRJ's management
practices with their being called to the scene. Thus, while the City points to a
very troubling array of police calls, the causal connections between the
Licensee's actions, and #he violent misconduct of its patrons, have never been
made clear.
�� See, Saint Paul Legislative Code § 409.08 (5) ("Every licensee is hereby made responsible for
the conduct of his place of business and required to maintain order and sobriety in such place of
business").
� See, Test, of C. Gromek.
73 See, e.g., Test. of S. Petron; Test. of M. McGinn; Test. of E. Skog; Test. of E. Johnson.
COURT OF APPEALS
N [ TMBER A07-1599
16 � DOCUMENT #4 �
��-���
The importance of this factual link can hardly be overstated. While
"municipal licensing authorities have. broad discretion to decide the manner in
which liquor licenses are issued, regulated and revoked," in fhis case, the
authority is nof without its limits. The Councii's chosen words in Section 310.06 -
namely thaf the Licensee has "operated," °maintains or permits" harmful
conditions - all suggest that regulatory sanctions will follow from -misconduct= -_= --_
which the Licensee has participated in, or the least, supported. As to-the =_. -�--
violence occurring at Diva's, the record does not establish such supporf or
participation by the Licensee. Accordingly, even if Saint Paul could have enacted
a far broader and less-forgiving fiquor ordinance in the first instance, it is not
proper now to substitute the words `bvhere violence occurred" for these narrower,
culpability-based standards.
Second, the case law seems to confirm the conclusion that revocation is a
proper resuit only whether fhe Licensee is genuinely culpable for an intolerabie
condition. In the case of C.L. Hinze, Inc. d/b/a Chuck's Bar v. City of St. Paul
(cited by the City in its post-hearing submission), the owner-licensee's role in "a
significant act of violence" against an intoxicated and vu{nerable patron, his
attempts "to interFere with the licensing proceeding and dissuade the patron from
testifying," and an earlier history of obstructing police responses to an emergency
call, all combine to suggest that-license revocation is reserved for licensees who
engage in more aifiirmative misconduct than is established by this record.�
Third, and likewise important, this case points up the fact that Licensees
like DRJ sit atop a razor's edge of competing legal obligations. On the one hand,
establishments like Diva's are "public accommodations," as to which licensees
may not deny access on the basis of suspect classifications.�� Our lav�r
guarantees that regardless of the color, creed, gender, sexual orientation or
74 See, e.g., Sabes v. City of Minneapolis, 120 N.W2d 871, 875 (Minn. 1963); Bourbon Bar &
Cafe Corp. v. City of St. Paul, 466 N.W 2d 438, 440 (Minn. App. 1991).
75 Compare, Saint Paul Legislative Code § 310.06 (b) (8) ("Such adverse action may be based
on one or more of the following reasons ... [t]he licensed business, or the way in which such
business is operated, maintains or permits conditions that unreasonably annoy, injure or
endanger the safety, health, morals, comfort or repose of any considerable number of inembers
of the public").
76 Compare, C.L Hinze, Inc. d/b�a Chuck's Bar v. City of St Paul, 1996 Minn. App. LEXIS 909
(unpub{ished) (reprinted in full in the City's Posi-Hearing Submission, at 24); see also, Hymanson
v. City of St. Paul, 329 N.W.2d 324, 326 (Minn. 1983) (revocation appropriate where the licensee
stipulated to after-hour displays of alcohol and indecent exposure by male dancers).
" Com are, Minn. Stat. 363A.03 34 200&
p § ()( )("'Place of public accommodation' means a
business, accommodation, refreshment, entertainment, recreation, or transportation facilityof any
kind, whether licensed or not, whose goods, services, facilities, privileges, advantages or
accommodations are extended, offered, sold, or otherwise made available to the publiC') with
Minn. Stat. § 363A.11 (a)(1) (2006) (`It is an unfair discriminatory practice... to deny any person
the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and
accommodations of a'place of public accommodation because ofi race, color, creed, religion,
disability, national origin, marital sfatus, sexual orientation, or sex..").
COURT OF APPEALS
� 7 NUMBER A07-1599
DOCUMENT #4
o�=r��
nationai origin of would-be patrons, when Diva's opens its doors, they are. open _
equally wide to all members of the public. Yet, because the City was also
holding Diva's accounfable for the "cliente4e it attracted;' DRJ institufed a set of
controls that were aimed at bad behavior but did not, arbifrarily, exclude whole
classes of customers. Among the changes thaf DRJ made were: prohibitions on -- .
the wearing of dew rags (a type of tight-fitting skull cap with=a=legionrraire flap,. _:<- =_<<__,_____
that is popular among gang members); prohibitions on references to gang activity=:_. ..__ __=-_
or the wearing of gang-related colors; changes to music format; changes in the
age of admission; and enhanced security procedures. In combination, these
measures appear to have been effective and suggest the route to obtaining still
better results for the North End of Saint Paul.
Last, the proposed license revocation raises important questions as to the
overall proportionality of the sanction. As the Council is well aware, in Saint
Paul, revocation of a liquor license for cause is an adverse action that runs not
only against the errant licensee but also against the underlying property. A
successful revocation, therefore, is a permanent bar to later use of the land and
structures for on site liquor sales. Such a consequence is truly profound.
Minnesota Gourts have apparently considered the breadth of this sanction
only once — and in that case, incompletely. The licensee in the case of Chuck's
Bar, cited above, attacked the Saint Paul ordinance wFiich forbids later licensure
as a"regulatory taking;" a matter that the Minnesota Court of A�peais deciined to
reach because it was not presented to the District Court below. °
Even without direct guidance from the state courts as to the viability of a
permanent bar to re-licensure, the concerns expressed by the courts as to
license forfeitures in general, should give the Council pause. In the view of the
Administrative Law Judge, applying a potent set of other restrictions and
regulatory controls, short of revocation, would yield a better and sturdier result.,
The City's Remaining Claims
As detailed in the Findings of Fact and Conclusions above, DRJ's failures
to make video surveillance tapes available in a timely fashion to police; its
unauthorized and unlawful construction of a patio; its unauthorized and
potentially hazardous upgrades to kitchen equipment; its posting of
78 See, Testimony of Thomas Radke; Test, of J. Johnson.
79 See, Saint Paul Legislative Code § 409.03 (a)(1)(a).
80 Compare, C.L. Hinze, Inc. d/b/a Chuck's Bar v. City of St. Paul, 1996 Minn. App. LEXIS 909 at
* 9(unpublished) (reprinted in full in the Citys Post-Hearing Submission, at 24).
8 ' Compare, generally, In re Revocation oiFamily Child Care License of Burke, 666 N.W2d 724,
728 (Minn. App. 2003); ln re lns. Licenses of Kane, 473 N.W.2d 869, 874 (Minn. App. 1991). _
82 See generally, Saint Paul Legislative Code § 409.10.
COURT OF APPEALS
1vIJMBER A07-1599
18 DOCUMENT #4
D���3�
nonconforming temporary signs; and its failure to pay remittances in a timely __ __
manner, make the imposition of a licensing sancfion appropriate on this record.
E.L.L.
COURT OF APPEALS
NUMBER A07-1599
� a DOCUMENT #4
o�-���
8-6020-17788-3
STATE OF MINNESOTA
OFFICE OF ADMINISTRAT{VE HEARINGS
FOR THE C1TY COUNCIL OF SAWT PAUL, MINNESOTA
{n the Matter of All Licenses Held by
DRJ, Inc., d!b/a Diva's Overtime
Lounge
INTERIM ORDER
The discovery motions discussed below came before Administrative Law
Judge Eric L. Lipman during the course of the evidentiary hearing in this matter
on March 22, 2007.
Andrew J. Dawkins, Mansfield, Tanick & Cohen, P.A., 220 South Sixth
Street, Suite 1700, Minneapolis, MN 55402-4511, appeared on behalf of the
Licensee, DRJ, Inc. d/bla Diva's Overtime Lounge ("DRJ" or "the Licensee").
Rachel Gunderson, Assistant City Attorney, 15 West Kellogg Boulevard, Suite
400, Saint Pauf, MN 55102, appeared on behalf of the City of Saint Paul, Office
of License, inspections and Environmentai Protection ("Yhe City" or "�IEP").
Based upon afi of the fiies, records, and proceedings herein, and for the
reasons set forth in the accompanying Memorandum,
IT IS HEREBY ORDERED THAT, for the purposes of this proceeding:
1. The Gity may not rely upon the fact that a shooting occurred on either
July 14, 2006 or November 11, 2Q06, to establish that the Licensee permitted
conditions to exist that are contrary to Saint Paul City CQde 310.06 (b) (8);
2. The City may submit and adduce testimony that refiers to the events
of July 14, 2006 or November 11, 2006, +n the same manner as io which other
historical events in the hearing record — such as meetings, inspections or police
cails — are referenced.
Dated this 4`" day of Aprii, 2007.
�! - �i ..�
0
ERIC L. LIPMAN
Administrative Law Judge
COURT OF APPEALS
NL7MBER A07-1599
DOCUMENT #5
D�j-73`7
MEMORANDUM
Among the contsntions made by the City of Saint Paul in this litigation is
that is that the {icensee operated her esfablishment in such a manner as to give
rise to two viofent shootings – one on du{y 14, 2006 and another an November
11, 2006. Further, pointing to secfion 31d of the Saint Paul Code, the City
asserts that the licensee's practices, and the resulting viofence, unreasonably
annoys and endangers "the safety, health, morals, comfort or repose of a
considerable number of inembers of the public,"'
Unquestionably, the parficular facts ralating to these shootings are
reievant bofh to the City's proposed action and the {icensee's defense. However,
as counsei for the City has noted, both shootings are the subject of active pofice
investigations and pending criminal prosecutions. Further, so as to maintain the
integrity of the paraliel proceedings, counsei for the City wiil instruct any police
officers subpoenaed by the licensee not to testify as to matters regarding events
of July 14, 2006 or IVovember 11, 2006 before the conclusion of the related
criminal prosecutions.
In cases referred to the Office of Administrative Hearings under Section
310 of the St. Paui City Gode, the Adminisirative Law Judge has the authority to
enter orders in aid of the discovery of relevant evidence and to ensure due
process of Iaw.
The case at bar presents a difficult intersection of competing interests and
statutory requirements. On the one hand, guaranteed to the licensee are
statutory rights of cross-examination and due process assurances that she may
present a meaningful defense to the City`s regulatory action. Binding the
contested case process, however, are specific instructions on the handling of
confidential data relating to criminal investigations. The Office of Administrative
Hearings is specifically directed to "give effect to the rules of privilege recognized
by law" — and among these is the prohibition on the receipt of testimony by "a
pubiic ofiFicer" as to "communications made to the officer in official confidence
when the public interest would suffer by the disclosure,i The Minnesota
' See, St. Pau( leg. Gode. Sec. 310.06 ('The Iicensed business, or the way in which such
business is operated, maintains or permits conditions that unreasonably annoy, injure or
endanger the safety, health, morals, comfort or repose of any considerable number of inembers
of the pubfiC') (h�://www stpauLqov/code/{c310.htmi).
Z See, Minn. Stat. §§ 14.50, 14.51 (2006); Minn. R. 1400.5500 (&) (D), (J) and (Q) (2005).
3 See, Minn. Stat. §§ 14.50, 14.51. 14.60 (3) (2006); Minn. R. 1400.7300 (6) (2005).
' Compare generally, Mathews v. Eldridge, 424 U.S. 319, 333 (1976) ("The fundamental
requirement of due process is the opportunity to be heard at a meaningful time and i� a
meaningful manner").
5 See, Minn. Stat. § 14.60 (1) (2006); Minn. R. 1400.7300 (1) (2005).
6 See, Minn. Stat. § 595.02 (1) (e) (2006).
COURT OF APPEALS
2 NUMBER A07-1599
DOCUMENT #5
.. � 0�-7��
Supreme Court f�as eariier heid that "the statutory privilege broadfy enunciated in
Section 595.02, subd. 1(e) covers communications made to po{ice officers,
inciuding fhose made during the course of ... investigations."'
Likewise important, the Minnesota Data Practices Act designates as
"protected nonpublic" information "investigative data collected or created by a law
enforcement agency in order to prepare a case against a person, whether known
or unknown, for the commission of a crime or other offense for which the agency�
has primary investigative responsibility ... while fhe investigation is active."
Moreover, the data pract+ces act confers upon the District Court for Ramsey
County the power to entes orders requiring the disclosure of criminai investigative
data of the Saint Paul Police Department whi{e a related invest+gation is active.
The proper balancing of these various and competing interests is to
exclude, as a basis for the City's regu�atory action, the events surrounding the
shootings on Juty 14, 2006 or November 11, 2006. As these matters cannot be
the subject of either discovery or examination by the licensee, while the parailel
criminal proceedings are underway, due process requires that they not form the
basis of an adverse licensing action.
With that said, it is important to emphasize that as the question of whether
the Licensee permitted conditions to exist that gave rise to the shootings on July
14, 2006 or November 11, 2006 to occur, is excluded, this question is not one
that was, or may be, fuliy and fairly litigated in fhis proceeding. Accordingly, in
fhe view of the Administrative Law Judge, application of the doctrines of issue
preclusion or merger and bar should not fater estop the City from proceeding
against the Licensee on these grounds, 'rf and when, the information relating to
those incidents becomes discoverabie and subject to cross-examination.
E.L.L.
' See, Erickson v. MacArthur, 414 N.W2d 406, 408 (Minn. 1987).
8 See, Minn. Stat. § 14.82 (7) (2006).
9 Id.
' Compare, genera/!y, Hauser v. Mealey, 263 N.W.2d 8Q3, 8D6 (Minn. 1978) ("The principles of
merger and bar operate where a subsequent action or suit is predicated on the same cause of
action which has been determined by a judgmenY') (citations omitted}.
COURT OF APPEALS
3 NUMBER A07-1599
DOCUMENT #5
o�-���
SAINT PAUL CITY COUNCIL
In Re adverse action against all licenses held by
DRJ, Inc. d/b(a Diva's Overtime Lounge.
AEPARTMENT OP SAFETY AND
INSPECTION'S EXCEPTIONS TO
JUNE 28, 2007 REPORT OF
ADNLINISTRATIVE LAW JUDCsE
EXCEPTIONS TO JUNE 28, 2007 REPORT OF AAMIlVISTRATIVE LAW 7TJDGE :
In his Findings of Fact, the Administrarive Law 7udge (°AL7") £ound, in finding nusnber
18, "Soon after, Saint Pau1 Police Officer Eric Skog, wtule otherwise on routine patrol,
approached the scene in his squad car. At this time, the number of those fighting in the
street ballooned to approxunately 12 people. While Officer Skog (and a later-arriving
Sergeant Thomas Radke) worked to disperse the crowd that had assembled, an
unidentified male threw a cylindrical outdoor ashtray into the air hitting Diva's patron
Roy 4�. Fulson in the head. As Fulson collapsed and lay on the gzound bleeding, a cry
from the crowd went up to the effect that "the police beat him down, they did iY' — a false
claim that made the scene increasingly hostile and dangerous for the police. With the
ir.teventian of several other palice sqnads art:ving on the scene, howeve�, Oificers Radke
and Skog were able to restore order.
Officer Skog testified that the crowd fighting and observing the fight was at leat 50
people large. Exhibit 38-7 demonstrates that at least 14 squads were required to get the wu-uly
crowd under control. Given the testimony at the hearing, there is no evidence to suggest that the
individuals fighting were from anywhere other than Diva's. In fact, Officer Skog testified that at
least some of the individuals he observed exlt Diva's and become involved in the fight.
Far these reasons, the Depariment of Safety and Inspections requests that this Council
amend this finding as follows:
Finding No. 18: Soon after, Saint Paul Police Officer Eric Skog, while otherwise on
routine patroi, approached the scene in his squad car. At this fime, the number of �se a�trons
fighting in the street ballooned to approximately 12 people and the crowd watching the fi t was
at least 50 peaple. The crowd of neoule fi�hting and watclun continued to ow as a�ns
exited Diva's bar. While Officer Skog (and a later-arriving Sergeant Thomas Radke) warked to
disperse the crowd that had assembled, an unidenrified male threw a cylindrical outdoor ashttay
into the air hitting Aiva's patron Roy W. k�xlson in the head causin� a loss of teeth and
lacerations to lus face that reqired medical attention As Fulson collapsed and lay on the ground
bleeding, a cry from the crowd went up to the effect that "the police beat him down, they did iY'
— a false claun that made the scene increasingly hostile and dangerous for the police. With the
intervention of at least 14 severa}"o{}ier�olice squads arriving on the scene, however, Officers
Radke and Skog were able to restore order. The individuals involved in the fight were patrons of
COURT OF APPEALS
NUMBER A0�-1599
DOCUMENT #6
D�����
Diva's.
2. Sgt. Craig Gromek testified, based on records maintained by the Saint Paul Police
Department that were aduzitted at fhe hearing, that Saint Paul Police have responded to
117 calls to Diva's between June of 2006 and Mazch of 2007. In that same tune span
prior to her management, police responded to just 43 polace calls.
For these reasons, the Department of Safety and Inspections requests that the Council
make the following additional Finding of Fact:
18a. Between 7une of 2006 and March of 2007, the Saint Paul Police Depariment
responded to ll 7 calls fo 1141 Rice Street. In the same amount of time immediately
prior to Diva's Overtime Lounge taking over management, police responded to just 43
calls to 1141 Rice Street.
3. There was testimony about the methods the Saint Paul Police Department has gone to in
order to attempt to control the unruly crowds at Diva's. Officers McKnight and Skog
tesrified that they were directed by their supervisors to drive by Diva's in slower times
just to deter criminal behavior and try to keep problems from escalating. Officer
McKnight testified about responding to lazge fights involving patrons that were a threat
to officer and citizen safety. Officer Olsem testified that even officers assigned to other
parts of town were directed to drive by Diva's if they had time. Other police officexs
testified about the large crowds of fighters and that often the goal of the police was to get
the situation under control and they were unable to make any anests or write police
reports. Officer Hoyt tes6fied that in the some situations at Aiva's, he was not worried
about making arrests but rather just wanted to make sure he made it home that night.
For these reasons, the Deparhnent of Safety and Inspecrions requests that the Council
make the following additional factual finding:
18b. The Saint Paul Police Department had a policy of directing police officers
assigned to the area aroivad ll 41 Rice Street to drive by the establishment in
attempt to control the unruly patrons. Further, the SPPD directed police officers
who were assigned to other areas of the city to drive by Aiva's in an attempt to
control the patons and fights in the street with up to 200 patrons as participants
andlor onlookers. Saint Paui Police Officers routinely addressed fights and other
dasturbances at Diva's and often did not write police reports.
4. In his Finding of Fact number 28, the Administrative Law Judge found that "Rollowing
the enachnent of an ordinance which banned smoking in the interior of bars within the
city litnits of Saint Paul, Debxa Johnson sought to establish a place at or near Diva's
where her customers could smoke cigarettes, while still complying with the new
ordinance".
Christine Rozek testified at the hearing that the Office of LIEP (now ASl� sent
information to all license holders regarding the smoking ban and informed all owners of the
COURT OF APpEALS
NUMBER A07-1599
DOCUMENT #6
v��-���
process that licensees must go through befare building a pario.
For this reason, the Department of Safety and Inspections requests that the Council
atnend Finding of Fact number 28 to:
Following the enactment of an ordinance which banned smolang in the interiar of bars
within the city limits of Saint Paul, Debra Johnson sought to establish a place at or near Diva's
where her customers could smoke cigarettes, while still complying with the new ordinance. The
Office of LIEP sent information to all licensees including Debra Johnson explainin� the legat
requirements for buildinp a pario.
In his Conclusion of Law Number Four, the Administrative Law Judge found that "The
city did not establish by a preponderance of the evidence that, by way of misconduct, the
Licensee operated, maintained or permitted condifions that endangered the community."
During the hearing, many officers testified that Diva's as an establishment with chronic
problems and that the Saint Paul Police Department had developed procedures to try to keep the
patrons under controL The Police departrnent re-routed officers by Diva's during down tune,
and even sent officers &om other parts of the City for proactive drive-by's. Fig�ts at Diva's bar
resulted in injuries to patrons. Multiple squad cars had to respond in order to gain control of the
patrons. Security personnel at Diva's were o$en unable to control the patrons. During the time
Diva's Cvertime Lou�ige has been operating at 1141 Rice Street, the police calis nave nearly
hipled. It is proper far the Council to infer negligent management as a cause for the nuisance from
the evadence at the hearing. BAL, Inc. v. City of St. Paul. 469 N.W.2d 341 (Minn. Ct. App. 1991).
In addition to police activity, Diva's Overtime Lounge violated the health and safety codes of the
City of Saint Paul by failing to remove an unsafe kitchen exhaust hood, installing a patio without
a building pernut and failing to cooperate with a criminal investigation by failing to inunediately
produce a video upon request of the Saint Paul Police Deparhnent.
For the above-stated reasons, the Department of Safety and Inspections requests that the
Council adopt the following amended Conclusion of Law:
The city di� by a preponderance of the evidence that, �Ry-ef
misearn��ct; Licensee operated, maintained or permitted conditions that endangered the
community.
6. Tn his Conciusion of L,aw Number Five, the Administrative Law 3udge found that "DRJ
was not in compliance with its obligations to make recordings of its video surveillance
camera "immediately available to the Saint Paul Police Deparhnent and the Office of
License, Inspections and Environmental Protecfion, upon request."
During the hearing, there was evidence and tesfimony that this violation occurred on both
September 13, 2006 and November 11, 2006, The ALJ's Findings of Fact 20 - 27 include
findings regarding both these dates.
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT#6
o�����
For the above-stated reasons, the Department of Safery and Inspections requests that the
Council adopt the following amended Conclusion of Law:
DRJ was not in compliance with its obligations to make recordings of its video
surveillance camera "immediately available to the Saint Paul Police Department and the Office
of License, Inspections and Environmental Protecfion, upon requesY' on both September 13,
2006 and November 11. 2006.
The Department of Safery and Inspecrions fi�rther requests that the Council decline to
adopt the accompanying memorandum of the Administrarive Law Judge for the above-
stated reasons.
Respectfully Submitted,
Dated: � ^ � � �
` �—�!G �
Rachel A. rson
Assistant City Attorney
Representing the Office of LIEP/ DSI
COURT OF AppEALS
NUMBER A07-1599
DOCUMENT#6
OFFICE OF Tf� CITY ATTORNEY
Tohn J. Chai, Ciry At[orney
� ��� ��
�1-1- 1 OF JC�11V 1 rt'�l-1L CiviZDivis3on
Christopher B. Catem¢n, �I¢yor ¢00 Ciry Hall Telephone: 65I 266-8770
15 West Kellogg Blvd Facsimile: 657 ?98-56T 9
Samt Paul, M"nmesoia SSIO2
i
.ruly 17, aoo�
NOTICE OF COUNCIi. HEARING
A ndrew J. Dawkins
Attomey at Law
Mansfield Tanick & Cohen, P.A.
1700 i3. S. Bank Plaza South
Minneapolis, MN 5 5402-45 1 1
RE: All Licenses held by DRd, Inc., dlbia Diva's Overtnne Lounge for the premises at
1141 Rice Street in Saint Faul
OAH Aocket No. 58-602�-180Q8-3 (May 7, 2007 Aearing)
Please take notice that a hearing to discuss the report of the Administrative Law 7udge
concerning the above-mentioned licenses has been scheduled for Wed¢esday, August 1, 2007, at 5:3�
pm. in the City Council Chambers, Third Floor, Saint Paul City Hall and Ramsey County Courthouse.
You have the opporhmity to file exceptions to the report cvith the City Clerk at any rime during
normal business hours. You may also present oral or written argument to the council at the heazing. No
new evidence will be received or testimony taken at this hearing. The Council will base its decision on the
record of the proceedings before the Adnninistrative Law Judge and on the azguments made and
excepfions filed, but may depart from the recommendations of such 7udge as permitted by law in the
exercise of its judgment and discrerion. �
Sincerely,
�
Rachel Gunderso
Assistant City Attorney
cc: Diane Nordstrom, O�ce of Administrative Hearings, 100 Washington Square,
Suite 1700, 100 Washington Avenue South, Minneapolis, MN 55401
Mary Erickson, Council Secretary
Chrisrine Rozek, Depury Director of LIEP
Debra Johnson, Diva's Overtime Lounge, 1141 Rice Street, St. Paul, NIN 55117
Kerry Antrim, Community Organizer, District 6 Planning Council
213 Front Avenue, St. Paul, MN 55117
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #7
AA-ADA-EEO Employer
STATE OF NIINNESOTA)
) ss.
COUNTY OF RAMSEY )
v�'� ��
3ulie Kraus, being first duly sworn, deposes and says that on the 17t day of 7uly, she
served the attached NOTTCE OF COTJNCIL HEARING by placing a hue and correct copy
thereof in an envelope addressed as follows:
Andrew S. Dawkins
Attorney at Law
Mansfield Tanick & Cohen, P.A.
1700 U. S. Bank Plaza 5outh
Minneapolis, MN 55402-451 I
Diane Nordstrom
Office of Administrative Heazings
100 Washington Square, Suite 1700
100 Washington Avenue South
Minneapolis, MN 55401
Debra Johnson
Diva's Overtime Lounge
1141 Rice Street
St. Paul, MN SS ll7
Kerry Antrim, Community Organizer
District 6 Planning Council
213 Front Avenue
St. Paul, MN 55117
(which is the last known address of said person) depositing the same, with postage prepaid, in
the United States mail at St. Paul, Minnesota.
�
3ulie Kraus
Subscribed and sworn to before me
this 17�' day of July, 2007
� �' � �/�/ . ��`� A�
No t�`a y Public
- ° v -=-�.a�-o•,a,
RITA PA. BOSSARD
SpTARY PUBLIG - MINNESOTA
MY COMMISSION
pCPIRES JAN. 37, 20 1 0
AFFIDAVIT OF SERVICE BY U.S. MAIL
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT#7
STATE O�' MINNE:SOTA
OFFICE OR AD�tISTRATIVE HEARINGS
100 Washington Square, Suite 1700
1�0 Washington Avenue South
Minneapolis, Minnesota 55401-2138
b7-�3�
TELEPHONE: (612) 34'1-7660
TTY:(612)341-7346
May 30, 2007
Shari Moore
St. Paul City C{erk
290 City Hall
15 W Kellogg Bfvd
St. Paul, MN 55102
Re: M the Matfer of Adverse Action Rgainsf All Licenses Held by
DRJ, (nc., dfb/a Diva's Overtime Lounge
OAH Docket No. 58-6020-18008-3
Dear Ms. Moore:
Enc'osed herewith and served upan you by mai; is a copy of ths Findings
of Fact, Conclusions of Law and Recommendation in the above-entitled matter.
The original Report, together with the official record and copies of the three
hearing tapes will be sent to you under separate cover. Our fife in this matter is
now being closed.
Sincerely,
��;�,�c,�,�, ��.�- ��,
LINDA F. CLOSE
Administrative Law Judge
LFC:dsc
Enclosure
cc: Rachei Gunderson
Andrew J. Dawkins
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MAY 3 ? 2001
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COURT OF APpEALS
NUMBER A07-1599
Providing Impartial Hearings for GovernmeM and Citizens DOCUMENT #8
An Equal Opportunity Employer
Administrafive Law Division & Administrative Services Workers' Compensation Hearings Division Workers' Compensation Settlement Division
Facsimi{e: (6't2) 349-2665 Facsimiie: (612) 349-2691 pacsimile: (612) 349-2634
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0'I�7�i�
OAH 58-6020-18008-3
STATE OF MINNESOTA
OFPICE OF ADM)NiSTRATIVE HEARINGS
FOR THE ST. PAUL GITY COUNCIL
ln the Matter of Adverse Action Against FINDINGS OF FACT,
Aii Licenses Held by DRJ, Inc., d/bia CONCLUSIONS OF LAW,AND
Diva's Overtime Lounge RECOMMENDATfON
The above matter came on for hearing before Administrative Law Judge
Linda F. Close on May 7, 20�7, at City Hall in St. Paul, Minnesota. The record
closed on May 11, 2007, upon receipt from counsel ofi a Stipulation about a
videotape described in testimony during the May 7 hearing.
Rachei Gunderson, Assistant City Attorney, 40d City Hafl, 15 West
Kellogg Blvd., St. Paul, Minnesota 55102, appeared on behalf of the O�ce of
License, Inspections and Environmental Protection (LIEP) of the City of St. Paul
(the Cify). Andrew J. Dawkins, Of Counsel to Mansfield, Tanick & Cohen, P.A.,
220 South Sixth Street, Suite 1700, Minneapolis, MN 55402-4511, appeared on
behaff of DRJ, inc., dibla Diva's Overtime Lounge (the Licensee}.
This report is a recommendation, not a final decision. The St. Paul City
Councii 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 ora{ or written arguments alleging error in the
appiication of the law or the interpretation of the facts and to present argument
related to the recommended adverse action contained in this F2eport. Parties
should contact Rachel Gunderson at the address above to learn the procedure
for filing exceptions or presenting argument.
STATEMENT OFISSUES
1. Did the Licensee violate Minn. Stat. § 34QA.502 and St. Paul
Legisfative Code § 310.06(6)(a) by fumishing alcohol to an obviousiy intoxicated
person?
2. Did the Licensee vio{ate St. Paul Legislative Code §_310.06(b)(5} by
failing to compiy with a condifion of its license that requires it to maintain
videotapes and make them immediately availabfe to the St. Pauf Police and
LI EP?
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #8
d�-�3�
Based upon all the proceedings herein, the Administrative Law Judge
makes the fol{owing:
FINDINGS OF FACT
1. The Licensee has held an on-sa{e {iquor license from the City since
Ocfober of 2005. When the Gifij first licensed the Licensee, it authorized a
2:00 a.m. closing time. Effective October 4, 2006, the City revoked that authority
and required the Licensee to close at 1:00 a.m.'
2. LIEP requires some licensees to maintain video systems to record
events on the licensed premises? When ths Licensee received its license in
October of 2005, condition number four on the license was the following:
The licensee must provide working video surveillance cameras and
recorders on the premise [sic] to provide documentation of activities
on the interior and exterior of the establishment. This equipment
must be in operation during all business hours. Tapes must be
maintained for thirty (30) days and must be immediately available to
the Saint Paua Police Department and the Office of License,
lnspections and Environmental Protection, upon request.
3. The Licensee, ±hroa�h ;ts ow.n�r Debea Sohrs�n, agreed to th�
above condition at the time of the issuance of the license 4 The Licensee has
seven or eight cameras which is the number required to show the entire interior
of the estab{ishment as well as its exterior. At some point in fime, City officials
adjusted the camera angles.
4. At 1:17 a.m. on March 3, 2007, two St. Paul Police Department
officers were on patroi near the Licensee's establishment. They saw a small
group of people outside the bar. One of the group, who was later identified as
Martin Joh�son, was yelling at a security guard and waving his arms in the air.
As the officers approached, Martin Johnson ran at the security guard and began
trying to hit him. After announcing themselves as officers and ordering Martin
Johnson to stop the assault, the o�cers interceded. When Martin Johnson
continued his attack, one of the officers used a Taser device to stun him. At that
point, Martin Johnson feil to the ground.
5, One of the o�cers spoke with the Licensee's security guard, Pedro
Grijalva. Grijafva reported that he had removed Martin Johnson from the
' Testimony of Christine Rozek; Ex. 1.
2 Test. of C. Rozek.
3 Ex. 2.
4 Test. of C. Rozek; Ex. 2.
5 Testimony of Kristi�a Schweinler.
6 Tesfimony of Debra Johnson.
7 Testimony of Officer Eric Skog; Ex. 3.
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NUMBER A07-1599
DOCUMENT #8
�`1 ��3�
licensed premises because Martin dohnson was too infoxicafed and had acted
inappropriately inside the bar. The officers arrived shortly after Grijalva had
ejected Martin Johnson from the bar.
6. The arresting officers observed that Martin Johnson smelled of
alcohol and his speech was slurred. Due to Marfin Johnson's intoxicated state,
the officers had to drag him to the squad car. They had difficulty getting him into
the squad car because of his condition. They arrested Martin Johnson for
disorderly conduct and took him to the Law Enforcement Center. Once there,
Martin Johnson admitted he was "drunk."
7. The police prepared a report about the March 3rd incident and
forwarded it to LIEP. Upon review of the report, L4EP deputy director Christine
Rozek wrote a letter to the Licensee requesting the establishmenYs videotapes
firom the evening ofi March 2-3. Rozek requested all tapes from all cameras
inside and outside the establishment. The fetter, dated March 5, 2007, gave the
Licensee until Friday March 16, 2007, to produce the tapes. Rozek made the
request because she was concerned that the Licensee may have served Martin
Johnson when he was intoxicated.�
8. On March 7, 20o7, Debra Johnson, the Licensee's owner, called
Rozek, asking for more sp�cific information about the time frame for the tapes.
Rozek returned the ca�l, leaving a message that she wanted all tanes from 9:00
to midnight on March 2 and midnight to 1:30 a.m. on March 3`a'3 `
9. On the morning ofi March 19, 2007, Rozek received a videotape
from the Licensee. Upon review of the videotape, Rozek discovered that it did
not show camera angles from outside the establishment. The videotape
revealed only about one-fourkh of the service area inside, There was a clear `
view of security checking patrons as they entered the bar. Aithough the
videotape did show Martin Johnson entering the establishment, the viewer could
not see whether he was served.'
10. Kristina Schweinfer is the senior iicense inspector with LEIP. She
viewed the tape with Rozek. Upon review, she saw that the tape switched
beiween one date and another and switched from biack and white to color. In
some shots, patrons wore shorts and short sleeves, although the tape was to
have recorded March 2" when the whether was cold. 1n other shots, patrons
were smoking, indicating that the video could not have been from March 2, 2007,
by which date smoking had been bannsd entirely from bars. The portion of the
$ Test. of E. Skog; Ex. 3.
9 Test. of E. Skog; Ex. 3.
tQ Test. ofi E. Skog; Ex. 3.
'� Ex.4.
' Test. of C. Rozek.
13 Test. of C. Rozek; Ex. 4
"Test. of C. Rozek
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- 3 NUMBER A07-1599
DOCUMENT #8
07 �3�
tape from March was recorded at 16 fimes normal speed at points. 5chweinler
found fhat the tape was useless for determining whether the Licensee had
served Marfin Johnson when he was intoxicated. The videotape did not inciude
video from ail cameras both inside and outside of the establishment for fhe
requisite hours and dates.
11. On April 12, 2007, the Assistant City Attorney for fhe LIEP O�ce
issued a Notice of Violation re4ating to the above events. The cited violations
included the Licensee's failure to comply with the deadline set for producing the
videotape and failure to provide videotapes of all cameras and camera angles.
The Notice gave the Licensee three options for disposing of this matter. First,
the Licensee could pay a fine of $1,000.00." Second, the Licensee could admit
the facts and refer the matter to the City Council, where it would be combined
with a pending adverse action against the Licensee in which LEIP would
recommend license revocation. Third, the Licensee could request a hearing
before an Administsative Law Judge.
12. On Apr+! 23, 2007, Licensee's counsel notified the Assistant City
Attorney for the LIEP Office that the Licensee was requesting a hearing before
an Administra�ive Law Judge.�
13. On Apri{ 25, 2007, the Assistant City Attarney for the LlEP Office
issued an Amended Notice of Violation and Notice of Administrative Hearing.
The Notice stated the time and place for the May 7�' hearing and amended the
charges io inciude violation of Minn. Stat. § 340A.502, furnishing afco� olic
beverages to an obviousfy intoxicated person?
14. At the May 7, 2007, hearing, the Licensee's bartender, Clint
Kaufenberg; Pedro Gryalva, the security person; and the owner's husband,
Jeffrey Johnson, ail test�ed about Martin Johnson's condition on the night of
March 2" and the early morning hours of March 3`
15. Kaufenberg served Martin Johnson vvith iwo drinks after Martin
Johnson came into the bar bekween 11:00 and 1130. Kaufenberg observed
nofhing unusual about Martin Johnson's behavior at that time. Martin Johnson
left the bar and returned later. When it was past serving time, Martin Johnson
ordered another drink, but Kaufenberg refused to serve him because of the hour.
'$ Test. of K. Schweinler.
16 Stipulation of the Parties dated May 10, 2007.
" Since this was a second viofation, the penalty was set at $'I,000.00 pursuant to the penalty
matrix. Ex.5-2.
� Ex. 5-2.
79 Ex. 6.
Zo Ex. 7:
27 The Licensee quits serving afcohol at 12:45. Testimony of Cfint Kaufenberg.
COURT OF APPEALS
1VLTMBER A07-1599
4 DOCUMENT#8
0���3�
Martin Johnson thereupon threw money at Kaufenberg and then threw his watch
against the walL�
16. Gri}aiva first saw Martin Johnson in the bar between 11:00 and
midnight. When Martin Johnson entered the bar he acfed fine, but his demeanor
changed later. Grijalva saw him throw the watch against the wall. At that point,
Grijalva approached Ma�tin Johnson and then escorted him from the bar. Once
outside, Martin Johnson began attacking Grijafva.
17. Jeffrey Johnson heips with the Licensee's bookkeeping. He arrived
at the bar around 11:30 p.m. on March 2" He saw Markin Johnson piaying pull
tabs at the bar, but he saw nothing unusual about Martin Johnson's conduct.
Martin Johnson did not appear to be intoxicated at the time. Jeffrey Johnson
went outside to check the parking lot and then returned to the bar. Around 12:30
or quarter to one, Jeffrey Johnson saw Martin Johnson throw the money.
Based upon the above Findings of Fact, the Administrafive Law Judge
makes the following:
CONCLUSIONS OF LAW
1. The Administrative Law Judge and the St. Pauf City Council have
jurisdiction to hear this matter pursuant to St. Paul Legislative Code §§ 310.05-
06.
2. LEIP gave proper notice of the hearing and has fulfilled all relevant
substantive and procedurai requirements of !aw and ru{e.
3. As the party proposing that action be taken, LEIP has the
burden of proving facts at issue by a preponderance of the evidence.
4. Minn. Stat. § 340A.502 prohibits the sale of aicohofic beverages to
a person who is "obviously intoxicated." Pursuant to this authority, the St. Paul
Legislative Code further permits the City to impose license sanctions, inciuding
license revocation, u�on a licensee who serves alcohol to a person who is
obviously intoxicated. 5
5. LEIP has shown, by a preponderance of the evidence, that the
Licensee served alcoholic beverages to a person who was obviously intoxicated.
6. St. Paul Legislative Code § 310.06 f b) authorizes the Council to
take adverse action against a Iicensee who violates a condifion of the license.
ZZ Test. of C. Kaufenberg.
23 Testimony of Pedro Grijalva.
24 Tesfimony of Jeffrey Johnson.
2$ St. Paul Legfsiative Code § 40926 (b) (4).
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5 DOCUMENT #8
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Adverse acfion includes a variety of discipfinary acfions ranging from fines to
license revocation 26
7. LEIP has shown, by a preponderance ot the evidence, that the
Licensee violafed a condition of her {icense by failing to provide requested
videotapes in a timely manner.
8. LEIP has shown, by a preponderance ofi the evidence, that the
Licensee violated a condition of her license by failing to provide all videotapes
requested by LEIP.
Based upon the above Conclusions of Law, the Administrative Law Judge
makes the following:
RECOMMENDAI'ION
IT 1S HEREBY RECOMMENDED that the St. Paul City Council take
app�opriate action against the licenses of DRJ, Inc., d/b!a Diva's Overtime
Lounge.
Dated: May 30, 2007 � � �� .�
LlND,^-, F. CLOS�
Administrative Law Judge
Reported: Tape recorded (three 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.
26 St. Paul Legislative Code § 310.01.
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NUMBER A07-1599
6 DOCUMgNT #8
�7'����
MEMORANDUM
The . only doubiful issue in this case is whether the Licensee served
alcohol to an obviously intoxicated person. Three persons with close fies to the
Licensee—the owner's husband, the bartender and the security person—all
testified that signs of MarEin Johnson's intoxication did nof emerge untii ciosing
time at.the bar. 1n addition, the owner tesfrfied that MarEin Johnson did not
appearfo be infoxicated untii late in the evening.
For many reasons, the ALJ has discounted this testimony, Here, actions
tndy speak louder than words. Foremost 'ss the owne�'s destruction of the very
evidence that woufd have shown Martin Johnson's condition when the bartender
admit#edly served him. The purpose of requiring a licensee to maintain and turn
over videotapes is to deter ilfegal behavior by the licensee and to prove a case of
violation when the licensee does viofate the law. The Licensee did not maintain
the tapes as required and, in fact, tampered with them in an effort to avoid
prosecution for the violation that occurred on the evening of March 2° The
evidence tampering was blatant—video from the summer months was spliced
into tape of an early March evening. Tape from the pre-smoking ban time period
was also spliced in. Black and white tape from the outdoor cameras was
combined with tape from the color, interior tape. The incident of Martin Johnson
throwing money and his watch was not on the tape at.all, apparently 2
In addition to the owner's actions, the actions of Martin Johnson speak to
whether he was served at a time when he was intoxicated. His violent behavior
in the bar led to his expulsion from the bar. The police arrived very soon after
c{osing. Martin Johnson was so intoxicated that he did not even respond to the
presence of the police when they ordered him to stop attacking the security
officer. The officers had to stun him to deter his attack on the security officer.
Because of his condition, the officers could barely get Martin Johnson into the
squad car. From this, it can be inferred that Martin Johnson had been intoxicated
for a significant period of time, during which time he was in the bar. Based on all
the circumstances, the likely scenario is that the Licensee served Martin Johnson
alcohol and confinued to serve him when he was already intoxicated.
The _ ALJ also rejects the testimony of the Licensee's w+tnesses for
additional reasons. The owner's testimony was replete with inconsistencies. In
particular, she steadfastly rnainta+ned that the videotapes were complete and
accurate when she reviewed them. Obviously, only she had access to tape that
was spliced in from times predating the March 2-3 events. Her testimony about
Martin Johnson's character was also inconsistent—at one point, she imp{ied that
27 Test. of K. Schweinler.
28 The smoking ban became effective on March 31, 20�6, so the video of patrons smoking and of
ash trays placed about the estabfishment obviously predated the March 2, 2007 incidents. The
tape included footage of Debra Johnson talking with customers as they smoked. Test. of K.
Schweinler.
COURT OF APPEALS
� NUMBER A07-1599
DOCUMENT#8
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Martin Johnson was known for being a troubiemaker who had.to be wafched in
tfie bar. Later, she denied that. The owner's testimony simply canno.t be
credited. �
The bartendePs testimony is discounted because of his obvious self-
inferest in this matter and because his testimony about serving Martin Johnson
was inconsistent. He testified at one time that he retused to serve Martin
Johnson at 12:15 or 12:30 because he thought Martin Johnson had had enough.
Later, the bartender said service was refused after bar closing time. Moreover,
aithough Martin Johnson apparently left the bar, the evidence is that he left only
to smoke outside. There is no evidence that he wenf elsewhere to consume
alcohol_ The testimony of the owner's husband and the security guard was
credib{e, but it shed no light on Martin Johnson's conditio� or on how much he
was served before closing.
Whether the Licensee violated a condition of her license by failing to
provide. complete videotapes in a timely manner also cannot be seriously
debated. The Licensee argues that her failure to provide the videotape by the
cfose of business on Friday, March 16, 20�7, is inconsequential, given that a
tape was provided to LEIP on Monday morning, March 19 � While the time
lapse by itseif might be overlooked in other circumstances, when it is placed in
the context of the larger picture, the failure to timeiy comply with LEIP's directive
is significant. The larger p;cture i^c;udes the owner's deliberate alteration af the
tapes to eliminate evidence of the Licensee's vio{ation of the prohibition on
serving alcohof to an obviously intoxicated person.
The City's legislative code inc{udes a matrix of presumptive penalties 30
The City Council may deviate from the mairix ifi there are "substantiai and
compelling reasons making it appropriate to do so." In this case, there is no
evidence to support a downward departure from the matrix. On the contrary, the
evidence may support an upward departure. In any event, the evidence supports
adverse action as to the license.
L. F. C.
29 Debra dohnson testified that she arrived at the LEIP offices just after closing on Friday,
March16�'. in preparation for a licensure action scheduled to begin the foilowing week,_she had
been serving subpoenas on police officers that afternoon and ran out of time. Test. of D.
Johnson. Jeffrey Johnson testified that he dropped the videotape off the following Monday
morning. Test. of J. Johnson.
3o See St. Paui Legisiative Code § 301.05 (m)
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��1�' 1i11L�'�K�Ii1►��
In re A11 Licenses Held by DRJ, Inc., MEMORANDLTM IN SUPPORT
OF JIJNE 28, 2007, REPORT OF
dba Diva's Overtixne Lounge ADMINISTRATNE LAW JIJDGE
OAH #: 8-6020-17788-3
FIRST ARGUMENT
After four days of testimony and a score or more of witnesses, Administrative
Law Judge Eric L. Lipman concluded that "The City did not establish by a preponderance
of the evidence that, by way of misconduct, the Licensee operated, maintained or
permitted conditions that endangered the community."
All the evidence and testimony in the record supports a finding that to the extent
there ever was a public nuisance at Diva's, it was confined to the pre-murder period.
After the murder at Diva's bar on July 14, 2007, Deb 3ohnson, the Licensee, took
appropriate steps to make sure she and the bar did not maintain or permit conditions that
could lead to any public nuisance, threat or endangerment. This was the testimony of
Saint Paul Police Officers Petron, McGinn, Skog, and E. 3ohnson, among others.
This is important because in the matter of All Licenses Held by Metro Bar and
Grill, Inc., dba Arnellia's, the Saint Paul City Council, in Council File #06-927,
determined (as evidenced by the tlmended Resolution dated l OJ04/2006 attached hereto)
that the standard for taking action against a bar where there has been a murder includes
taking into consideration the bar's recent history in reforming how it operates. The
COURT OF APpg�,S
N(IMBER A07-1599
DOCUMENT #9
D�����
evidence in this case is that Diva's has successfully reformed its operations and neither
the Administrative Law Judge, nor this City Council, can point to one nuisance event in
the record after the 7uly 14 murder.
It would not be reasonable, nor would it be honest, to not consider this when
deciding the administrative sanction in this case, as it was considered in the case of
Arnellia's.
In Diva's case, the post-murder period does not even have any allegations of
public nuisance, be it noise or whatever, after July 14, 2006—with one exception, the
September 12, 2006 incident.
However, there is not even a scintilla of evidence that Diva's maintained or
permitted a condition that caused a public nuisance or endangerment as to the September
12 incident: All the evidence is uncontroverted that
• there was a confrontation in the bar;
• the individuals involved in the confrontation were told to leave and escorted to the
door;
• the individuals were officially banned from the bar;
• when they tried to come back, they were not allowed in and the police were
called.
It was the City's police department that contributed to any nuisance when the
police uncuffed the individuals and allowed them to leave (and return). But they weren't
allowed in.
COURT OF APPEALS
N[JiViBER A07-1599
DOCUMENT #9
D7��3�
In fact, Richard Andre, the security consultant hired by the Licensee after the
murder, testified that he checked with the Police Deparhnent after the September 12
incident to make sure his heightened security protocol was followed, and the police told
him the bar did everything right as to the September 12 incident.
If before the murder, then certainly not since the murder, has Diva's been a threat
to the public safety. The City's witnesses said as much—iY s been all quiet there.
This was the consideration in Arnellia's case, where there had been several
murders, to not consider it in Diva's case would be oppressive, arbiri and capricious.
SECOND ARGUMENT
The Saint Paul City Attomey has filed "exceptions" to Administrative Law 7udge
(AL7) Lipman's Findings, Conclusions and Recommendation.
Exception #1 deals with a June 17, 2006, fight in the street in the pre-murder
period. The City Attorney is asking you, the Council, to find that it was exclusively
Diva's paisons who were in the fight. You, yourselves, the Saint Paul City Council, did
not hear the evidence. The ALJ did. The record is clear that an individual who entered
the bar, but was not served, instigated the fight. The record is clear that Police Officer
Radke ordered all patrons to exit the bar as it was closing time. The record is clear that
there were often individuals at the corner of Rice & Geranium that were not patrons of
Diva's. There is no evidence, and therefore no ALJ finding, that all the people engaged
in the street fight were patrons of Diva's. There is evidence in the record that the City
Attorney is wrong to say it was exclusively Diva's patrons. Since you were not present at
COURT OF APpEALS
NUMBER A07-1599
DOCUMENT #9
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the hearing, to take in all the evidence and testimony, you cannot reach conclusions that
exceed the AL7's findings.
Exception #2 asks you, the Council, to add a finding that the ALJ chose not to
make. If you choose to fmd facts when you were not there to heaz the evidence, you
should lrnow that Sgt. Gromek, in response to questions from the ALJ and Diva's
attomey, admitted that he had no personal knowledge of the purpose or basis for the
police visits, that the visits might very well have been for calls to the intersection, a failed
traffic light at the corner, an alarm call, and not anything to do with nuisance behavior
that the Licensee should be held accountable for. His testimony went in the opposiYe
direction from what the City Attorney is suggesting. During the many times he was
undercover at Diva's, he testified that he did not observe any problems with over-service
or other inducements by the Licensee towards anti-social behavior. He testified that all
has been quiet at Diva's since the 7uly 14 murder.
Exception #3 asks you to find that there were "fights in the street with up to 200
patrons as participants...." The testimony on that proved not credible. If you listen to the
tapes of the hearing, you should conclude, as the ALJ did, that the officer was not in any
way, shape or manner capable of counting to 200 individuals.
Exception #5 is to a conclusion of law. The Saint Paul City Attorney wants you to
first make a fact finding that "security personnel at Diva's were often unable to control
the patrons." How much more diameh opposite can something be than what the
ALJ found: "...the record contains considerable detail as to the efforts made by ARJ
staff to contain and eliminate misbehavior, even at times when the personal risks of
COURT OF APPEALS
d NUMBER A07-1599
DOCUMENT #9
�-�3�
[doing so] were substantial." For more, see Judge Lipman's Findings #12, #14, #15 and
#17.
Also in Exception #5, the City Attorney appears to be azguing that tl�e issues
regarding the patio, the kitchen and the failure to turn-over video rise to the sanction of
license revocation. These are second appearance matrix violations, and revocation is
only appropriate if the Licensee committed a felony on the premises. Moreover, there
was no evidence in the record that the capped exhaust hood endangered the public, or that
the patio endangered the public, or that the turn-over of video made any public safety
difference (that the timing of when the police got their videos had any adverse affect on
public safety).
As to Exception #7, the City Attomey is asking you to decline to adopt the
Memorandum of ]udge Lipman, and the reason is obvious It militates against revoking
Diva's license. The Licensee's response is that you can't exclude the Memorandum from
the recard; it is part of the record; you can choose to disregard it at your own peril.
THIlZD ARGUMENT
IF THERE ARE NOT GROi.JNDS TO REVOKE BASED ON A NUISANCE THEORY,
EITHER BECAUSE ANY NCTISANCES WERE NOT DUE TO THE LICENSEE'S
MISCONDUCT, OR BECAUSE DIVA'S HAS REFORMED ITS OPERATIONS,
THEN WHAT IS AN APPROPRiATE SANCTION?
The Patio
The smoking deck was put up to take smokers off the corner, to decrease the
opportunity of creating a public nuisance. The drawings were taken downtown. A fee
was paid, and city officials told her the next step was to secure additional parking to
replace the two spots taken by the deck. And thaYs exactly what she attempted to do.
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #9
07�73
Most certainly the City has to be estopped from complaining when she did exactly what
she was told to do. When the additional parking spots did not materialize, she voluntarily
took down the deck because, as LIEP Director Bob Kessler testified, "It would be a
symbolic gesture of good will to the neighbarhood if it came down before the Rice Street
Parade."
The City must be estopped from asserting that the failure to get a permit or license
is a license violation that can be considered as a basis for license revocation when the
City's own Exhibit #16 (Hawkins email to Rozek dated 5-16-06) says "No permit or
license can be issued until the parking is resolved."
To establish equitable estoppel, the Licensee must show (1) a representation made
by the City, (2) upon which the Licensee relied, and (3) it will be to her detriment if not
estopped. See Brown vs. Minnesota Department of Public Welfare, 368 N.W.2d 906, 910
(Minn. App. 1985). Here, the representation was to deal with the parking first, upon
which representation the Licensee relied, which is the course she followed; and to now
say she should have taken a different course, and be penalized for not having done so, is
the harm.
Remember too, LIEP's Customer Service "Go to Guy," Larry Zangs, testified that
it was reasonable far the Licensee to have understood, in fact his advice would haue
been, the next step for the Licensee to take ��ould be to secure the additional parking,
NOT do more of a site pian or get a permit.
COURT OF APPEALS
6 NUMBER A07-1599
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The Kitchen
As for the kitchen exhaust hood, once again the City has to be estopped from
complaining when the Licensee did what she was told to do. The seriousness of the
alleged infraction has to be kept in mind as we11 because the City is alleging this as a
basis far license revocation. All she did was replace a cockroach infested hood vent with
a new one. She never advanced to food preparation. There was never any danger to the
public. There is no contradictory evidence or testimony as to these facts.
LIEP witness Bill Gunther testified that he had a conversation with the Licensee's
attorney to the effect of "Call me when she's ready to move forward with plaals for the
kitchen, so you and I can make sure it gets done right." The Licensee testified she got
attorney advice: "Don't use the kitchen, but when you're ready to go fonvard on plans to
get it up to code, call and I'll work with the city on what steps to take." And the
Licensee's plumber, Jeff Seawell, testified he called the City regarding her plans to go
forward and was told "forget it, iYs out of our hands, iYs off our desk."
The City must be estopped from asserting that the failure to get a permit far the
exhaust hood is a license violation that can be considered as a basis for license revocation
when the City, by its o�vn admission, in Licensee Exhibit #6 (Kessler letter to Johnson,
cc Dawkins, dated 7-26-06) says "... (do) not use (emphasis added) the exhaust hood
until ... given written approval." And thaYs exactly what her lawyer told her and
exactly what she did She kept it in place, but she didn't use it.
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Again, the dochine of equitable estoppel as enunciated in Brown, supra, applies.
The represenfation by the City was that it was okay so long as not used; the reliance is
the course she took; and the harm is being penalized for not following a different course.
The City is trying to make this into a more serious alleged infraction, claiming it
was a dangerous condition, but both the Licensee's witness, Mr. Seawell, and the City's
witness, Ron Haider, tesrified it was not dangerous so long as it wasn't used—and with
the gas lines capped, it was incapable of being used.
Finally, LIEP's Customer Rep. "Go to Guy," Mr. Zangs, when presented with the
fact situation as a hypothetical question, testified that given the letters she received, given
the advice she got, that it was reasonable for her to act the way she did.
The Sign, Video Turnover and Payment of Fine Violations
There is evidence in the record to find violations of these licensing requirements.
There is also evidence in the recard that mitigates the culpability of the Licensee. The
fine got paid on tkie last day before license suspension because the Licensee was
considering an appeal based on this City Council increasing the ALJ recommended fine
from $500 to $3300. The video tapes were turned over as best the Licensee was capable
of doing. The signs came down once it was learned they were over-sized.
The question is: Do these infractions wanant the serious sanction of license
revocation?
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The Matrix
The City's penalty matrix is "presumed to be appropriate for every case." Saint
Paul J_,egislative Code Sec. 310.05(m). The matrix scheme is based on apnearances
before the City Council. This is Diva's second appearance before the Council. The
presumptive penalty is a$1,000 fine. It makes no difference whether this second
appearance is for one violation or multiple violations, the presumptive penalty remains
$1,000. Saint Paul Legislative Code Secs. 310.05(m)(ii) and (m)(iii). Multiple
violations may be grounds to deviate from the matrix if the Council finds substantial and
compelling reasons to do so. Saint Paul Legislative Code Sea 310.05(m).
No Substantial and Compelling Reasons to Deviate
As to whether the sign, video turn-over and fine payment violations amount to a
substantial and compelling reason to deviate from the $1,000 presumed penalty and
justify revocation, consider:
(a) The kind of conduct that the Minnesota Court of Appeals found
substantial and compelling to justify revocation in C.L. Hinze vs. City
ofSt. Paul (1996 Minn. App. LEXIS 909, unpublished, copy
attached), to-wit: two previous license suspensions, the bar owner's
physical assault of a vulnerable patron, a refusal to allow police entry,
and a$500 "bribery" attempt to get the witness not to testify;
(b) compared to the type of conduct in the record in the instant case
which tends to mitigate the culpability o£ the Licensee.
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This might be a different case if the failure to tum-over the video tapes in a
timely manner amounted to a serious threat to the public safety, but the evidence in this
case is clear that the City had (and has) the ability to immediately get the tapes if
necessary to protect the public safety. First of all, Kim Moline from the Police
Departrnent's Crime Lab was brought to Diva's and taught how to download the
surveillance tapes. Secondly, the Police Deparhnent demonstrated its abiliry to quickly
seize the tapes when it executed its search wanant on November 11, 2007. See
STIPULATION signed by both counsel.
Further, there is testimony from Brad Morrison, Diva's video technician,
about email exchanges he had with Ms. Moline as early as July 20, 2006, within one
week of the July 14 murder, and there is testimony that the enrire bard drive system was
given to the police to assist in the murder investigation. Finally, there is testimony from
City witness, Kristina 5chweinler, that the Septamber 13, 2006, request for tapes "was
just a test." The public safety was not threatened by any delay in this turn-over.
The length of time it took the Licensee to turn-aver a"viewable" video should
not be considered a substantial and compelling reason to deviate from the presumptive
penalty. Again, referring to the parties' STIPULATION, there was a Septembex 13
request; the video was provided September 20 but not "viewable;" a"viewable" video
was provided October 4. As to the interval between 5eptember 13 and September 20,
consider the mitigating testimony as to the Licensee's dyslexia and the Licensee's
daughter being in a car accident. As to the interval between September 20 and October 4,
there is no evidence in the record as to when the City discovered the tape was
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"unviewable" and notified the Licensee to produce another. For all we know, the
notification could have been on October 3 and the turn-over on October 4.
To conclude on this argument that Diva's should not lose its license for non-
public nuisance incidents, the mahix is "presumed to be appropriate for everv case"
(emphasis added) unless there are substantial and compelling reasons to deviate, such as
"bribery" and past suspensions like in the C.L. Hinze case, supra. This is a high standard
and the City has not met it. As to the violations for signs, video tum-over and late
payment, there are no compelling reasons to deviate.
FOURTH ARGUMBNT
SHOULD DNA'S LOSE ITS LICENSE FOR PUBLIC NUISANCE
INCIDENTS ALLEGED PRE-MUDER?
�
No, Because there is NO Proof the Nuisance Tncidents were the Result af
Conditions Maintained or PermiYted by the Licensee.
There is substantial and compelling evidence that:
(a) The bar is on a corner with a bus stop where passers-by and other non-patrons
congregate.
(b) The North End is a neighborhood in transition. According to Wilder
Foundation research, the white population is declining, while the number of
blacks, Hispanics and Asians is rising.
(c) The bar is in a neighborhood with more than its fair share of crack houses,
problem properties, and other issues the bar can't be held responsible for.
Given that milieu, can it be said with any certainty that the person who fired the
shots in the parking lot on February 11, 2006 was a passerby or a patron? The answer is
no, but more likely the person was not a patron when the evidence is considered—the
casings were found in the parking lot, there was wanding at the bar's door to detect a gun
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coming in, and the police testified there were nearby problem properties (where the
shooter could have come from).
What did Diva's do to maintain or permit conditions that led to this February ll,
2006 public disturbance? Beyond simply being a bar? Beyond simply being a baz in a
tough neighborhood? There is no such evidence. The evidence is to the conh
known gangsters are not allowed in, there's a dress code, the music format was changed
to appeal to a less "hip hop" crowd, the doors were kept closed to keep the noise from
emanating, there was �vanding at the door, there was no over-service of customers, drinks
were not allowed outside—in fact every condition that LIEP witness Kristina Schweinler
could come up with was in place or put in place.
As to whether Diva's did what she could to maintain a nuisance-free bar in a
nuisance-filled neighborhood, consider the testimony of the several police officers:
Officer Steven Petron: "Nothing security could have done different or
better." (as to 3-6-06)
Officer Eric Johnson: "The bouncer did his job as he was supposed to."
(as to 1-29-06)
Officer Tom Radke: "The bar did nothing wrong." (as to 6-17-06)
Taking each alleged nuisance incident in the pre-murder period one at a time yields
no evidence of conditions maintained or permitted that led to nuisance activities.
On 11-20-06 there's a fight in the street at closing time. There is no evidence that
the disorderly persons were Diva's customers, or whether they were individuals arriving
from a nearby establislunent and not allowed in, or whether they were nearby neighbors
hanging on the corner, or whether they were at the corner waiting for the bus.
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Because it was closing time, there may well have been customers of ISiva's present,
and because of the excitement in the street, the throng may have increased in size because
Diva's customers came out to see what was going on, but there is no evidence that Diva's
maintained or pernutted conditions that caused the street &ght. There is no evidence that
Diva's patrons started the fight or engaged in the fight. The testimony is the opposite—
one of Diva's exiting patrons became a victim.
How is Diva's even connected to this incident other than simply being a bar in the
wrong neighborhood at the wrong time? There is no evidence Diva's permitted the
crowd to gather, or failed to help disperse the crowd, or that the fight started from over-
served patrons. The evidence is the opposite—the fight didn't start inside the bar and
there was no over-service of patrons.
As to tbe 1-29-06 incident, the bar did what it was supposed to do--it
bounced a disorderly patron and trespassed the person.
As to the 3-6-06 incident, the bar did what it was supposed to do – it
flagged down a squad to get assistance with a patron and had the patron arrested,
As to the 3-18-06 incident, an individual dis� over not being served
kicks the bar's door and breaks the bar's window. Again, the bar did what it was
supposed to do—it didn't serve an overly intoxicated person and had the person
arrested.
As to the 3-19-06 incident, again the bar did what it was supposed to do—
it bounced a disorderly patron and caused a citizen's arrest.
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As to the 6-17-06 incident, a I�own gang member starts a fight because
he wasn't served, and the bar's security does what it can to break up the ensuring
fight. The Licensee's witnesses identified the individual hit with the ashtray as
the same one who flashed gang signs, didn't get served and started the fight.
For each oF these incidents there is no evidence the bar did anything wrong, that the
bar maintained or permitted conditions that led to the disorderly conduct, or that the bar
over-served the disorderly individuals. In fact, the evidence is the opposite—the baz
didn't serve these individuals and that caused the trouble, or the bar did bounce these
individuals and that caused the trouble.
The only evidence that the bar ever did anything wrong as to these pre-murder
alleged nuisance incidents was with regards to the 4-28-06 incident when the outside
security personnel did little or nothing to quiet down a vulgar-mouthed, loud-mouthed
female. That security officer was fired. But this leads to the question whether or not a
"considerable number of inembers of the public" were disturbed by the vulgar loud
mouth.
•. :
Should Diva's Lose its License for Public Nuisance Incidents
Alleged Pre-Murder? No, Because there is NO Proof a
Considerable Number of Members of the Public were Affected.
To shut Diva's down as a public nuisance requires the City to prove two things:
(A) that conditions wexe maintained or permitted that led to the nuisance, and (B) that a
considerable number of the public were affected.
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14 DOCUMENT #9
����� /
This is the plain reading of Saint Paul Legislative Code Sec. 310.06(b)(8):
"The licensed business, or the way in which such business
is operated, maintains or pernuts conditions that unreasonably
annoy, injure, or endanger the safety, health, morals, comfort,
or repose of any considerable number of inembers of the public."
How can it be said that a considerable number were affected when not one member
of the public testified? This leaves the city to argue that the affected public is the
responding police officers themselves or Diva's customers. Well, not one of Diva's
customers came forward at any time—either by an email to the city before trial or at
trial—to say they were annoyed, or their safety, health, morals, comfort or repose were
endangered by Diva's.
As to the police officers who responded, they were there to do their job; they were
not there as innocent members of the public, annoyed and disturbed. Case law, as well as
common sense, tells us that "members of the publid' does not include responding police
officers as to who's being protected from suffering a public nuisance. The logic is that it
is the "protectable public," not the protecting police officers, that has to be disturbed.
In Commonwealth v. Mahramus, 211 Pa. Super. 376, 236 A.2d 572 (Penn. 1967),
police officers had received complaints about an alleged disorderly house. The owner
was anested and convicted of running a disorderly house. In reversing the conviction,
the Court held that the Commonwealth had failed to prove the elements of "comuion
nuisance and disturbance of the neighborhood..." In holding that the evidence was
insufficient, the Court noted that "none of the alleged [neighborhood] complaintants
mentioned by the Chief of Police were called to testify." Id. at 379, n.2.
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15 NUMBER A07-1599
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In Commonwealth v. Greer, 203 Pa. Super. 110, 198 A. 2d 626 (Penn. 1964), the
Court held the Commonwealth had failed to prove a"common nuisance and disturbance
of the neighborhood," and noted that (1) there must be evidence that the establishment
was "conducted in a manner to annoy the public," (2) general reputational evidence was
not admissible, and (3) no evidence had been introduced that persons in the neighborhood
had been affected. Id. at 114.
The Court likewise rejected a nuisance claim in City ofSunland Park v. Harris
News, Inc., 138 N.M. 588, 124 P.3d 566 (N.M. 2005). In that case the only testimony on
the nuisance allegation was given by a building inspector and police officer relating to the
affect of the establishment on one neighbor. In rejecting the nuisance claim the Court
held "the record ... does not indicate `a considerable number of people [haue] suffer[ed]
in the interference with their use and enjoyment of land."' Id. at 578 (citing 58 Am
Jur.2d Nuisances, Secs. 21, 33 and 134).
There is scant case law interpreting what a"considerable number" means, but the
holdings in Sunlarid Park, Greer and Mahramus, all sxpra, stand for the proposition that
"considerable" means worthy of consideration as much as quantity of number. In
Sunland Park, supru, the building inspector and the police officer were not worthy of
consideration as to the affect on the public. In Greer, supra, and Mahramus, supra, no
neighbors testified they had been affected.
Likewise in Diva's case, no neighbors were called to testify that they had been
disturbed. The only testimony came from police officers and inspectional staff. Their
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testimony was lunited to general reputation and surmisal, "might haves" and "could
haves," all things held by the courts to be insufficient or not worthy of consideration.
The City's argument that members of the public were affected "because they
called the police" (City's Closing Argument, p. 15) falls short. Even the main case relied
on by the Gity, BAL, Inc. v. City of St. Paul, 469 N.W.2d 341, (Minn. App. 1991), HAS
ORDINARY CITIZENS TESTIFYING, as well as police officers, to the loud music, the
public intoxication, the public urination and the public sex acts. Id. at 343.
The bottom line is there is no evidence that any member of the public was disturbed
by any of these pre-murder incidents at Diva's, or even aware of them. The only
evidence is from police officers testifying that folks could have been disturbed. It was
Officer Joseph Higgins who said, "If someone would have passed by...," not that an
innocent member of the public did pass-by and was annoyed or disturbed, much less that
person being called as a witness.
With regards to closing down Diva's because iYs a public nuisance, the City failed
to prove a causal connection to conditions (note the plural) maintained or permitted by
the Licensee that led to a considexable (note iYs considerable) number of the public being
annoyed, injured or endangered.
WhaYs missing from the City's case is the part about how Diva's initiated these
troubles beyond just being a bar in a tough neighborhood, something along the lines of a
failure to wand, ar a failure to bounce, or a failure to change the music format, or enact a
dress code, or over-service, but there was no evidence of any of that.
COURT OF APPEALS
17 NUMBER A07-1599
DOCiIMENT #9
��-� ��
And even if the City Council wants to look at the grander scheme of things —liquor
may have many defenders, but no defense—eliminating a baz may help stem a
neighborhood's deterioration, then the City Council has to consider that ALL OF THIS
WAS IN THE PRE-MURDER PERIOD; that subsequent to the murder the bar has been
totally quiet and nuisance-free; the City and the Licensee took acrion after the murder to
enhance Diva's security measures beyond whaYs normally required of a licensee; the
enhanced security has had the desired effect.
FIFTH ARGUMENT
WAAT DNA'S DID AFTER THE Mi JRDER TO REFORM ITS OPERARTIOIVS
There was a mwder at Diva's on July 14, 2006. The murder is not part of this case,
per the ALJ's "Interim Order," except as to how it led to a change in the way the City and
the Licensee worked together.
Not only was it important that the Licensee hired Richard Andre and his consulting
firm to upgrade her security and improve her standing in the neighborhood, it is also
important to note why she did it: She did it because she HATED having had a murder in
her bar; she did it because Club Cancun up the street had closed and its problems had
migrated down Rice Street; she did it because she couldn't get the additional help she'd
requested of Chief Harrington and Sheriff Fletcher; she did it because she WANTED to
cooperate wiYh the City; she did it because she wanted to stay in business and keep her
dream to be a chef with her own restaurant.
And what did she do after the murder to keep her dream alive? She initiated a
professional training program for her bouncers; she required her security to go through a
ig COURT OF APPBALS
NUMBER A07-1599
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background check; she sent staff to neighborhood meetings fo leam more about
neigt�borhood concems; she followed a community plan to go so faz as to pick up
discarded cigarette butts in the street.
Most importantly, all of this has had the desired effect. There is absolutely no
evidence of any culpability as to a nuisance incident after the murder. Almost all the
witnesses were asked on the stand, "WhaYs been the situation after 7uly 31?" (when the
additional licensing conditions went into effect). And to a person they have all testified
iYs been quiet.
First we have it from her witnesses, such as Troy Nadeau, Wolf Protective Agency,
licensed and bonded, an expert who has written a manual on quieting down nuisance
bars. He testified that there has not even been a single police call to the establishment
since he was hired except for an unrelated traffic accident.
But more importantly, we have it from the City's witnesses, such as LIEP Director
Bob Kessler, Deputy Director Christine Rozek, Police Sargeant Craig Gromek, and other
police officers. IYs been a11 quiet since July 31, 2006. Director Kessler testified that up
until the Novembex 11, 2006 attempted murder incident (no longer part of this case per
the Interim Order), there was "not sufficient evidence to take action up to this time"
There never would have been this AL7 hearing without the November ll, 2006
attempted murder incident, and this attempted murder incident is not part of this case. In
other words, it can be inferred from Directar Kessler's testimony that he would not have
proceeded to license revocation action based on any of the evidence that is part of this
19 CQ�T OF APPEALS
NUlVIBER A47-1599
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�� ���
case, maybe license action short of revocation for the signs, etc., but noY license
revocation based upon a threat to public safety.
The evidence is therefore compelling that the Licensee did everything within her
power and control to not maintain any conditions that would permit public nuisances, and
that she did so successfully.
SIXTH ARGUMBNT
At the close of the ALJ hearing the Licensee made a motion to have all aileged
misconduct that arose prior to July 31 dismissed based on equitable grounds. Judge
Lipman took the matter under advisement, but never ruled. The Licensee made the
following proffer as to the grounds: There was un-refuted testimony that the City and the
Licensee came to an agreement on July 31, 2006, that the Licensee would agree to new
and additional conditions being placed an her license in retum far the City allowing her
to stay in business so long as she complied with all requirements, licensing or otherwise.
The Licensee azgued then, and repeats the argument here, that implied in this agreement
was the notion that the past was forgiven and would not provide grounds for license
revocation.
The Licensee relied on this agreement to her deh She hired an expensive
and top-notch security consultant, among other things. The Licensee was reasonably led
to believe that so long as she followed the agreement, she would get to stay in business.
On equitable grounds the City should not be allowed to use information it had priar to
July 31 as later grounds to revoke.
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FINAL ARGUMENT
IT WOULD BE ARBITRARY AND CAPRICIOUS TO TAKE DIVA'S LICENSE
The law is clear that similarly situated licensees should receive similar treatment by
a municipality. E.T.D., Inc. v. Town ofMarion, 375 N.W. 2d 815, 819 (Minn. Sp. Ct.
1985). To not treat similarly, without adequate justification, is arbitrary and capricious.
Tamarac Inn, Inc. v. City of Long Lake, 310 N.W. 2d 474, 478 (Minn. Sp. Ct. 1981).
In Saint Paul we have a case that is strikingly similar, but no license revocation.
See Metro Bar & GrilZ, d/b/a Arnellia's v. City of St. Paul, 2001 4VL 436087 (Minn App.
2001), Not Reported in N.W. 2d, (copy attached hereto).
Metro Bar & Grill, hereinafter Arnellia's, is in a high crime area of Saint Paul. Id.
at L There was a homicide at Arnellia's in May, 1999, which resulted in Saint Paul's
LTEP office adding conditions to Amellia's license, including maintaining video
surveillance tapes and turning them over on request. Id. at 1. Thereafter, in September,
1999, there was a second shooting at Arnellia's and the police came to retrieve the
surveillance tapes, but the tapes wera not available (due to a failure to have put tape in the
machine). Id. at l. For this Arnellia's received a Notice of Violation from LIEP. Id_
at 1.
Then there was a third shooting and another homicide at Arnellia's in October,
1999. Once again the police came to get surveillance tapes, but this time they were not
viewable because the operator "must have hit the play button rather than the record
Uutton." Id. at 2. For this Arnellia's received a second violation notice from LIEP which
COURT OF APpEALS
21 NUMBER A07-1599
DOCUMBNT #9
�7-���
resulted in an ALJ recommending dismissal of the adverse action because the failure to
record was inadvertent. Id. at 2.
However, the Saint Paul City Council chose to reject the AL7 recommendation.
Did the Council move for revocation, like the case at bar? No, the penalty imposed was a
45 day suspension of the license with 15 days stayed. Id. at 2.
Eventually the Appellate Court upheld the suspension based on the history of
violence around Arneilia's, the egregiousness of the crimes, and the failure to follow
license conditions that were imposed to "address real violence and real problems caused
by patrons in and around Arnellia's" Id. at 5.
But thaYs tiot the end of the Arnellia's story. On October 4, 2006, the City's LIEP
Department sought a 60 day suspension for yet another homicide at Arnellia's. But what
did the Council do? It imposed a$1500 fine and stayed $500. See the attached Council
Resolution. And what was the Council's reasoning? From the record before the Council,
with what was read into the record by Council Member Benanav, and based on the
testimony of former City Council President Bill Wilson: "I think iYs unfortunate to hold
this establislunent responsible for some of the ills of society;" the reasoning was that the
bar shouldn't be held responsible for the ills of society; that the bar had reformed, had
imposed a dress code to prohibit baggy pants that could conceal weapons, had changed
the music format, had started to do background checks on employees, etc.
THESE ARE ALL THINGS THAT DIVA'S HAS DONE AS WELL. The whole
theory of Diva's case is that she has reformed; that all has been quiet since the July, 2006,
murder. In this regard, the Licensee respectfully requests the City Council take note of
22 COURT OF APPEALS
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a� ���
the facts contained in Judge Lipman's Memorandum on page 1 S in the top paragraph:
"DRJ instituted a set of controls that were aimed at bad behavior but did not, arbitrarily,
exclude whole classes of customers. Among the changes that DRJ made were:
prohibition on the wearing of dew rags.......; prohibition on references to gang activity or
the wearing of gang-related colors; changes to music format; changes in the age of
admission; and enhanced security procedures. In combination, these measures appear to
have been effective and suggest the route to obtaining still better results for the North
End of Saint Paul."
What kind o£ facts, if not the four shootings and three murders at Arnellia's, might
justify a license revocation? The City Attorney points to BAL, Inc., supra. But BAL,
Inc. is different from the case at bar. First, BAL, Ina (also known as the Wabasha Bar)
was in the period befare the City Council put the Arnellia's standard in place; to-wit: (1)
You can't blame a bar for all of society's ills; and (2) You can prove you've reformed.
Secondly, the conduct in BAL, Inc. was far more serious, including illegal sales of
alcohol, a prior suspension, and sexual acts being performed in publia Third of all, there
were "members of the public," ordinary neighborhood residents, who testified and said
they were annoyed andJor harmed by the conduct.
All of this is much different than the instant case regards Aiva's. Diva's is not
accused of illegal sales, does not have a prior suspension, did not allow or permit public
sex acts, all things far more serious than over-sized banners, delayed tape turn-over and
late payment of a fine. The same can be said with regazds to Chuck's Bar, the only other
time the City of Saint Paul has revoked a bar's license in the Kessler era. The situation
with Chuck's Bar was discussed earlier. See C.L. Hinze, supra. Chuck's had two prior
23 COURT OF APPEALS
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DOCUMENT#9
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suspensions, a"briber}�' attempt, a violent assault by the owner on a wlnerable patron,
and a refusal to allow the police to enter the premises after a 9ll call; all things far more
serious than we have with Diva's.
CONCLUSION
We don't have a fourth appearance before the City Council, so there needs to be
substantial and compeliing reasons to revoke Diva's license. Are there substantial and
compelling reasons as to the patio and kitchen alleged non-nuisance violations? There
are not, given that she did what she was told to do by the City. Are there substantial and
compelling reasons as to the over-sized signs, the video-turn-overs and late fine
payment? There are not, when the City's statutory matrix is consulted for an appropriate
sanction. This leaves the one reason that may be compelling — that this is a nuisance bar
and a danger to the public safety. But the City didn't prove that any pre-murder nuisance
allegations were the result of conditions maintained or permitted by the Licensee or that a
considerable number of inembers of the public were affected. Instead, the Licensee
proved that post-murder appropriate steps were taken and all has been quiet.
To justify license revocation, the City needed to show us something serious the
Licensee did wrong after 3uly 14 — something more than signs, video tum-overs and a
late fine payment — and the City didn't even allege something serious, a nuisance
violation, after July 14 except the September 12 incident where the evidence is
compelling that the bar did exactly whaC it was suppose to do.
COURT OF AppEAL,S
24 NUNIBER A07-1599
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Revocation must meet a kugh standard, and is rarely done. It should not be done
when there have been no previous suspensions and there is no evidence the bar is a
present danger to the public.
Date . OCO D �
#450858-v2
Respectfully submitted by:
�
Andre . Dawkins (#123493)
Attorney for the Licensee
1700 US Bank Plaza South
220 S. 6`�' Street
Minneapolis, MN 55402
Te1.651.222.4595
25
COURT OF APPEALS
NiJMBER A07-1599
DOCUMENT#9
Amended 10f04/2006
Council Fite # �
Green SheeE # 3 (j ( �
�'/ /
F2ESOLUTION ��
AIN�T PAi1L, MiNNESOTA �� ��
Preseatect by
��.,�
2 WI�REAS, adverse action was talcen against all the licenses hefd by Metro Bar & Csriil, Inc., d/b/a
3 Arnelli�s (License ID#0054523) foz the premises Iocated at 1 I83 iJniversiYy Avenue West in Saint Pau1,
4 by Notice of Violation dated Tvlazch 9, 2006, alleging on February Z0, 2004, a paS�on was shot to death
5 inside ficeLZSe�s establishment by another patron. The pairon responsible for tbe skooting was a minor_
6 While inside the establislament, the minor consumed alcohol in violation of Mum. Stat_�'340A.503; and
�
8 VJHEREAS, The Office of License, Tnspections and Bnviroximental Protection has recommended a
9$2,000 fine and a sixty (60) day suspension; and
10
11
12
13
14
15
16
17
18
I9
20
21
22
4VIIEREAS, the licensee has not contested the allegatians; now, therefore be it
RESOLVED, that all the licenses held by Metro Bar & Grill, I�c., d/6!a Arnelli�s for the premises
located at 1183 University Avenue West in Saint Paul are hereby fined �'',nn� �� -����
�ys. Said suspension shall become effecfive at I2:Oi a.m. on Wednesday, October 25, 2006 and Iast unril
11:59 p.m. Saturday, December 23, 2006.
This Resolution, and action taken above, is based upon facts contained in ihe March 9, 2006 NoYice
of Violation sent to the licansee and the arguments made at the Public Hearing on October 4, 2006.
a ten t10
ten
no same or s
Requested 6y Deputment af:
c
By:
Adoption Certified by CouncII Secretary
By: �
Approved y a r: ate 1/J ��—(��_____
&y:
Form�j, �ved by ity A orney
i
Hy.
Form Appraved by Mayor for $ubmission to Council
Sy_
COURT OF APPEALS
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DOCUMENT #10
Adopted by CouncIl: Date /ff1jj�/��pJ�
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Not Reported in N.W2d
Not Reported in N.W.2d, 2001 WL 436087 (Minn.App.)
(Cite as: Not Aeported in N.W.2d)
Metro Bar & Grill, Inc. v. City of St. Paul
Minn.App.,2001.
Only the V✓estlaw citation is currently available.
NOTICE: THIS OPINION IS DESIGNATED AS
UNPUBLISHEA AND MAY NOT BE CITED
EXCEPT AS PROVIDED BY MINN. ST. SEC.
480A.08(3).
Court of Appeals of Minnesota.
METRO BAR & GRILL, INC., d/b!a Amellia's,
Relator,
v.
CITY OF ST. PAUL, Respondent.
No. C6-00-1156.
May 1, 2001.
S. Mazk Vaught, St. Paul, MN, for relator.
Clayton M. Robinson, Jr., St. Pau] City Attorney,
Virginia D. Palmer, Assistant City Attorney, St.
Paul, MN, for respondent.
Gonsidered and decided by SF3iJMAKER,
Presidi�g J., RANDALL arid PETERSON, JJ.
UNPUBLISHED OPINION
RANDALL.
*1 Due to serious crime in the area, the St. Paul
licensing bureau imposed certain conditions on
relator's bar licenses, including that it maintain
video surveillance of its exterior. Afrer discovering
multiple instances in which the video failed to
record crimes, respondent moved to suspend
relator's licenses. After a hearing, the ALS
determined that relator was in at least substantial
compliance, and that relator's failure to comply with
the conditions was inadvertent. ABer a heazing,
respondent passed a resolution suspending relator's
license for 45 days, with 15 days stayed. Relator
seeks certiorari review. This court stayed the
suspension pending appeal. Relator contends that
respondenYs decision was arbitrary and capricious
and not supported by substantial evidence, that it
a� ���
Page 1
was denied due process and equa] protection rights,
and that respondent acted in violation of the St. Pau1
Legislative Code by engaging in ex parte contact.
We affirm.
FACTS
Relator Metro Bar & Grill, Inc., d/b/a Arnellia's
(Arnellia's), located in St. Paul, holds a liquor
license and Sunday on-sale liquor license, along
with several other licenses. The most recent
conditions placed on Arnellia's licenses were added
in the summer of 1999 after a homicide in May
1999 outside the bar. The conditions were imposed
after consultation with neighborhood '
representatives, the St. Paul Po(ice Department,
licensing staff, and Arnellia's employees. Arnellia's
agreed to the condiYio�s to the license that took
effect on July 8, 1999. Condition No. ll, requires
Amellia's to
maintain in good working order at least (four] video
surveillance cameras on the exterior of the building-
to constantly monitor the exterior of the premises.
Tapes must be maintained for [seven] days.
On September 23, 1999, there was an altercation
inside Amellia's between rivo individuals who then
left the bar and went to the rear parking lot and
alley area, where one individual shot the other with
a handgun. A police office wen"t to Amellia's to
retrieve the tape from the surveillance cameras and
was told by the owner, Arnellia Allen, that there
was no tape available and that there was no video
camera that would have taped !he incident. After
speaking with her son, Larry AIIen (Allen), Amellia
said that the cameras were not on and had not been
recording, so there was no tape. Later that day,
another police officer spoke with Arnellia and she
stated that the rear camera was broken and the tapes
she had available were full and she therefore had no
tapes to put in the VCR. At the hearing, A]len stated
that he had failed to turn the recorder on or put a
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tape in the recorder that day.
Ame]lia's received a violation notice from
respondent City of St. Pau] (the ci' ty) o�c'tober 1,
1999, alleging violation of license condition No. 11
for the failure to have a videotape of the September
23, 1999 incident. St. Paul, Minn., Legislative Code
§ 310.06(b)(5) (2000) allows the city to take
adverse action when a licensee or applicant "has
failed to comply with any condition set forth in the
license."
*2 On October 7, one week later, the police were
called to investigate yet another homicide at
Amellia's. Two customers at Ame]lia's got into an
argument, which continued in the parking lot, where
shots were fired. A vehicle in the east parking lot
struck one of the parties to the argument, and
carried him out into the street where he died. When
police arrived, they asked Arnellia's for the
surveillance tape, which they obtained and turned
over to the homicide unit. Review of the tape
indicated that the tape had not been operating until
after the victim was killed and the police were
called. Allen testified at the hearing that he was
responsible for taping on October 7, and that "he
must have hit the play button rather than the record
button."
ArneLia's :eceived a seco^A n nr;�� � s' ���nl�flop from
the ciry on November 10, 1999, again alleging
violation of ]icense condition No. 11 for the failure
to tape the October 7, 1999, incident, under St.
Paul, Minn., Legislative Code § 310.06(b)(5).
Amellia's requested a hearing before an A
pursuant to St. Paul, Minn., Legislative Cod
310.05(c) (2000), which took place on January
2000. The record was held open for submissions
written final arguments and closed on March
2000. The ALJ issued a report to the St. Pau]
Council (the council) in which the ALJ found t
Arnellia's was
in substantial compliance with the conditions of
license through the installatio� and operation o
videotaping system attached to its vi
surveillance cameras. The failure to cecord
images capture by the video surveillance came
outside the licensed premises on September 23
October 7, 1999 was inadvertent by the Licensee.
The ALJ recommended that the ciry dismiss the
adverse action against relator.
The Office of License, Inspections, arid
Environmental Protection (LIEP) filed exceptions
to the repoR and served them by mail upon
Arnellia's attomey on May 3, 2000. The public
hearing took place on June 7, 2000, before the
council, at which time the council requested a staff
report from LIEP, then allowed for public comment
with IS minutes allotted to both the people �in
support of the report and those opposed to the
report. The council deliberated after the public
hearing closed, moved to adopt the amended
findings of fact and conclusions filed by LIEP, and
imposed a penalTy of a 45-day suspension of the
licenses, with 15 of those days stayed. Arnellia's
petitioned this court for writ of certiorari seeking�to
reverse the council's decision.
DECISION
Standard ofReview
Municipal authorities have broad discretion in
deter,r.ining "the manner in which ]iquor ;icensas
are issued, regulated, and revoked." Bourbon Bar &
Cafe Corp. v. City of St. Paul, 466 N.W2d 438,
440 (Minn.App1991) (citing Sabes v. City of
Minneapolis, 265 Minn. 166, 171, 120 N.W2d
871, 875 (1963)).
[S]ome local units of govemment e3ther incorporate
by reference all or some of [MAPA's] procedural
provisions by officia] action, or statutes
occasionally direct that certain portions of them
apply to specified local proceedings.
*3 21 William J. Keppel, Minnesota Practice, §
1.03 (1998). It is uncertain whether the City of St.
Paul has adopted rules specifying whether their
proceedings will be governed by the Minnesota
Administrative Procedures Act (MAPA), MinaStat.
§§ 14.001-14.69 (2000). A notice of hearing letter
from the assistant city attorney, however, suggests
that their proceedings are governed by MAPA
LJ,
e §
26,
of
7,
City
hat
its
fa
deo
the
ras
and
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because the letter stated that "[t]he hearing will be
conducted in accordance with the requirements of
Minnesota Statutes sections 14.57 to 14.62:'
Sections 14.57 through 14.62 govem contested case
procedures under MAPA. Because the city e]ected
to be governed by MAPA, MAPA is applied in this
case.
Pursuant to MAPA, in a judicial review of a ciTy
council's decision,
[this] court may.affirm the decision of the agency or
remand the case for further proceedings; or it may
reverse or modify the decision if the substantia]
rights of the p8titioners may have been prejudiced
because the administrative finding, inferences,
conclusion, or decision are:
(a) In violafion of constitutional provisions; or
(b) In excess of the statutory authority or
jurisdiction ofthe agency; or
(c) Made upon unlawfu] procedure; or
(d) Affected by other ertor of law; or
(e) Unsupported by substantial evidence in view of
the entire record as submitted; or
(fl Arbitrary or capricious.
Minn.Stat. § 14.64 (2000). Review is ]imited to "[he
record before the city council at the time it made its
decision." In re License No. 000337 West Side
Pawn, 587 N.W.2d 521, 523 (Minn.App.1998)
(citing Minn.Stat. § 14.68 (1996)), review denied
(N1inn. Mar. 30, 1999). Where a council's decision
has a rational basis, "a xeviewing court has the duty
to exercise restraint and accord appropriate
deference to the city council in the performance of
its duties." Scott Counry Lumber Co. v. City oj
Shakopee, 417 N.W.2d 721, 727 (Minn.App.1988)
(citing White Bear pocking and Storage, Ine. v.
City of White Bear Lake, 324 N.W2d 174, 176
(Minn.19S2)), review denied (Minn. Maz. 23, 1988).
I. Council's Rejection of ALJ's Report.
Amellia's argues that the counci] acted arbitrarily
and capriciously by rejecting the ALJ's findings of
fact, conclusions of law and recommendation.
Arnellia's claims the council's condusion is not
supported by substantial evidence. Arnellia's further
claims that the council's failure to offer any
explanation for diverging from the ALJ's findings
and recommendation is proof of arbitrary and
capricious action.
First of all, it is settled that a ciry counci] may
accept, reject or modify the report of an
administrative law judge. St. Paul, Minn.,
Legislative Code § 310.05(c-I) (2000); BAL, lnc. v.
City of St Paul, 469 N.W2d 341, 343
(Minn.App.1991). On appeal, the par[y seeking
review bears the burden of proving the agency's
decision violates one or more provisions of
Minn.Stat. § 14.69. Sleepy Eye Care Ctr. Y.
Commissioner of Human Servs., 572 N.W2d 766,
769-70 (Minn.App.1998).
*4 This court reviews an agency's factual findings
under the substantial-evidence test. Henry v.
Metropolitan Waste Control Comm'n, 401 N.W2d
401, 404 (Minn.App.19S7). This court should use
the eebstantial-eviden�e test, after evaluating the
evidence on the record, and affirm an agency's
decision that is based on reasoned decisio�-making.
Reserve Mining Co. v. Herbst, 756 N.W .2d 808,
825 (Minn.1977). Substantial evidence is defined as
1) such relevant evidence as a reasonab]e mind
might accept as adequate to support a conclusion; 2)
more than a scintilla of evidence; 3) �more than
some evidence; 4) more than any evidence; and 5)
evidence considered in its en[ireTy.
Taylor v. BeZtrami Elec. Coop., Ine., 319 N.W2d
52, 56 (Minn1982) (quotation omitted).
Where an agency's decision represents its wil] and
not its judgment, the decision is subject to reversa]
as arbitrary and capricious. Markwardt v. State,
Water Resources Bd, 254 N.W2d 371, 374
(Minn.1977). An ALJ's findings should be given
due regazd even though they aze not binding. See In
re Application of Orr, 396 N.W.2d 657, 662
(Minn.App1986) (stating that hearing � examiner's
findings should not be taken lightly, although not
binding).
Here, the council adopted specific amended
findings of fact and conclusions of law. They are all
supported by the record. The record shows the
council added additional information to five of the
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ALJ's findings and rephrased one finding.
Otherwise the council did adopt the ALJ's findings.
The council's substantial change occurred in the
conc]usion, the penalty phase.
Based on the additional findings that the counci]
made, it reached a different conclusion than the
ALJ. Rather than finding Arnellia's in substantia]
compliance with the conditions, the counci] did not
conclude that the failure to have tapes of the two
homicides was inadvertent It did not view tl�e en�or
on two separate serious incidents as an excuse for
noncompliance. Also, the counci] concluded that
Arnellia's had not made serious enough efforts to
comply with the taping conditions. The council
noted that after receiving notice of a violation, just
one week ]ater, there was the second shooting
incident. Based on these findings and conclusions,
the council concluded that there was a basis for
takiog adverse. action for failure to comply with
liaense condil9ons.
While an agency's failure to explain its reasons for
rejecting an ALJ's finding is "evidence of the
agency's desire to exercise its will and not iTs
judgment," it does not require an outright reversal
of the agency's decision. Petition of Northern
States Power Gas Utility, 519 N.W2d 921, 925
(Minn.App.1994). Based on the entire record, the
seriousness of the a]]ey crimes, and the weak
excuses Arnellia's had for not having usable tapes
properly recording, it is reasonable that the council
reached a conclusion different than that reached by
the ALJ. "Where there is room for two opinions on
the matter, such action is not azbitrary and
capricious." In re Friedenson, 574 N.W.2d 463,
467 (Minn.App.1998) (quotation omitted), revieiv
denied (Minn. Apr. 30, 1998). On these facts, the
council's failare to specifically articulate all its
reasons, beyond the amended findings, for reaching
its conclusion cannot be called arbitrary or
capricious.
IL Public Testimony Before Councll.
x5 Arnellia's argues that the council considered
factual testimony not previously submitted or heard
by Yhe ALJ in reaching its conclusion thaT Arnellia's
violated the conditions placed on the ]icenses.
Amellia's claims that the testimony of rivo particular
witnesses was very factual and highly inflammatory
because it focused on the violence in the• community
around Amellia's. Arnellia's also states that that
testimony was "prejudicia]" because it supports the
council's conclusion and not the conclusion of the
ALr.
St. paul, Minn., Legislative Code § 310.05(c-1)
sta[es that
[t]he council shall consider the evidence contained
in the record, the heazing examiner's recommended
findings of fact and conclusions, and shall not
consider any factual testimony not previously
submitted to and considered by the hearing
examiner.
This section also requires the council to allow an
opportunity for oral or written azguments alleging
error by Yhe ALJ with regzrd to applying the ]a�v or
interpreting the facts and relating to the
recommended adverse action. Id. One of the steps
in a council meeting is a public hearing. Council
R.Pro. 10(j). This is generally where members of
the public are given an opportunity to comment for
or against an issue before the council.
The counci] did state in its resolufion that its
decisior. was �
based on the record of the proceedings before the
ALI, inc]uding the hearing on January 26, 2000, the
documents and exhibiTS introduced therein, the
findings of fact and conclusions of law of the ALJ *
**, the written submissions by counse] for the
parties, and the arguments and statements of the
parties and the deliberakions of the Council in open
session on June 7, 2000.
The council makes no reference to the testimony of
the people's sYatemenTS at the public hearing. There
is nothing in the amended findings and conclusions
that reference anything other than what was on the
record already. Arnellia's states in its own brief that
the tesYimony from fhe witnesses was irrelevanT. We
conclude that Arnellia's azgument on this issue is
❑ot persuasive.
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Page 5
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III. Due Process.
Amellia's argues that the council denied Arnellia's
its due process rights by not allowing it an
opportunity to rebut and cross-examine witnesses
who spoke during the time reserved for pubiic
comments.
St. Paul, Minn., Legislative Code § 310.05(c)
outlines relator's due process rights. In front of the
ALJ, Arnellia's had an opportunity to present
evidence and "meet adverse testimony or evidence
by reasonable cross-examination and rebuttal
evidence." Id During the council process, the
parties are provided opportunity to present oral or
written atguments alleging error_ of law and
interpretation of facts by the AL] and to present
argument regarding the adverse action proposed. Id.,
(c 1). There is no reference to an opportunity to
cross-examine and rebut citizens who rise to speak
to an issue in front of the city council at a public
hearing.
%6 We conc]ude Arnellia's was provided reasonable
due process throughout the proceedings, both
before the ALJ and the council.
IV. Equal Protection.
Arnellia's claims that the difference between the
ALJ's recommendation of dismissal and the
councit's imposition of a 45 day suspension is stark
enough in itself and arguably arbitrary and
capricious per se. Arnellia's further asserts that the
penalry becomes even more burdensome and
outrageous when measured against the penalties
contained in St. Paul, Minn., Legislative Code §
40926 (2000). Arnellia's argues that considering
the violations happened because of a broken camera
on one occasion and hitting "play" rather than "
record" the other time, the penalty is excessive
compared to penalties outlined for more serious and
deliberate acts.
Section 409.26 provides penalties for various
offenses regarding intoxicating and nonintoxicating
liquor licenses ranging from fines to IS-day
suspensions and tevocation. While these are
presumptive penalties, the council reserves the
discretion to deviate from the proposed penalties in
individual cases "where the council finds and
determines that there exist substantia] and
compe]]ing reasons" to do so. Id When they
deviate, they are required to give written reasons
specifying why the imposed penalty is more
appropriate than the presumptive penalty. Id
None of the presumptive penalties under Section
40926 specificaily reference violating conditions
placed on licenses. According to Section 40926, a
licensee may be penalized by revocation of its
]icense for committing certain violations, even if it
is the licensee's fust offense. Such violations
include "[c]ommission of a felony related to the
licensed activity" and "[s]ale of alcohol beverages
while �icense is under suspension." Further, if a
licensee "[r]efus[es] to allow city inspectors or
police admission to inspect premises" or "[f]ail[s]
to comply with statutory, and ordinance
requirements for liability insurance," the licensee
can be penalized with a IS-day suspension or
revocation, respecYively, if it is-the ]icensee's second
offense.
Based on the history of violence around Arnellia's,
the egregiousness of the crimes, and the conditions
that were already imposed on Arnellia's, which
Araellia's agreed .c 5ct did not fol;ow, it �vas not
unreasonable to impose a 45-day suspension with a
15-day stay for repetitively violating conditions of a
license. The conditions were placed on Arnellia's
license to address real violence and real problems
caused by patrons in and around Arnellia's. Afrer
receiving the first violation notice, Arnellia's did not
have sufficient safeguards in place to protect against
another serious mistake. The seriousness of the
violations cannot be disputed; both times the
problem was caused by Arnellia's personnel
incorrectly running the system.
Based on these facts, the imposed penalty was not
arbitrary and capricious. The penalty did not violate
Arnellia's equal protection rights.
V. Ex Parte Contacts.
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*7 Amellia's asserts that the council engaged in ex
parte communication with each other or others
regarding the adverse action. Arnellia's concedes
that there is no direct evidence that such contacts
occurred. This assertion is based on claimed
circumstantia] evidence, such as: (1) the cou�cil
iook thirty minutes to consider and reject the ALJ's
recommendation, (2) the council's president handed
the meeting over to council member Blakey, which "
seemed preananged," (3) only three of the counci!
members participated in the deliberations, (4)
$lakey, whose district includes Arnellia's
establishment, was the primary participant in the
discussion, (5) the severity of the penalty as
measured against the ALJ's recommendation, and
(6) the decision was so "swift and virtually
unopposed or questioned that it begs the question of
es parte contact." Arnellia's urges that this court
would be on "sound ground" to conclude that
improper contact among council members took
place and that the severe penalty had been
prearranged before the heazing.
Not Reported in N.W2d, 2001 WL 436087
(Minn.APP�)
END OF DOCUMENT
Ex parte contact is discussed in St. Paul, Minn.,
Legislative Code § 310.05(c-2) (2000). It states that
in cases of adverse hearings on license matters,
council members shal] not discuss the license matter
with each other or with any of the parties or
interested persons involved in the matter unless
such discussion occurs on the *ecord during the
hearings *** or during the council's final
deliberations.
The city argues rhat several of Arnellia's assertions
are standard procedure in council heazings, such as
the council membe� in whose district Amellia's is
located leading the discussion and Yhe total of thirry
minutes allowed for pablic testimony. The fact that
the council reached a different conclusion than the
ALJ does not, by itself, support an azgument of ex
parte contact. Finally, we no[e that the penalty
levied oa Arnellia's was less severe than the 60-day
suspension originally proposed by the O�ce of
LIEP.
Affirmed.
Minn.App,2001.
Metro Baz & Grill, Inc. v. City of St. Paul
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P�el
1446 Minn. App. LE�IS 909, *
4 of 12 DOCIMENTS
a7�7��
C,L. FTinze, Inc., d!b/a Chuck's Bar, Relator, vs. The City of St. Paul, Respondenf.
C8-95-2535
COURT OF APPEALS OF MINNESOTA
1996 Mtixn� App. LEXIS 909
A�gust 6, I996, Filed
NQTICE: ["1]' THIS OPINION WILL BE
UNPUBLISHED AND MAY NOT BE CITfiD BXC�PT
AS PROVIDLD BY MINNESOTA STATUTES.
PRIOR HISTORY: St. Pau3 City Council. Pile No. 95-
7 398.
DISPOSITION: AfFumed.
COUNSEL: John D. Hute, Thomas J. Nosby, Murnane,
Conlin, Wlvte �4c Braudt, 1800 Piper Jaffiay Plaza, 444
Cedar Street, St. Paul, MN 55101 (for Relator).
Timothy E. Mazx, St. Paul City Attomey, 7anet A. Reitei,
Assistant City Attoiney, 400 Ciry Hal2, 15 West Ketlogg
Blvd, St. Paul, MN 55102 (for Respondent).
JIiDGES: Considered and decided by Iialitowski,
Presiding 7udge, Paz�ker, Jndge, and Randall, Judge.
OPAVTON BY: KALITOWSKI
OPINION: UNPUBLISHED OPINION
KA.LITflWSKI, Judge
Appellant C.L. Hinze, Inc., d/b/a Chuck's Baz, challenges
the tevoearion o£ its city Iicetvses, inchiding a Gquor
license, pursuavt to a resolution adopted by the City oF
Sl. Paul. We affum.
FACTS
In the 30 mouths prior to t�ie present incident and
resulting revocation, the city twice susyended the liquor
license of C.L. Iiinze, Inc, including a 1-day suspension
foi selling alcohol tn an obviously iutoxicaCedperson and
a 15-day snspeivsion fos �efusing to admit police of�'icers
followmg a 911 call fro3n the bar.
Ov Apnl 17, [*2] 1995, Chazles Hinze, the ownec
of Chuck's Bar, allegedty assauIted an unnily and
into�cated female patron. Alffiough prosecutors neveL
chazged Hinze, the ciTy commenced license sanc±ion
proceedin�s. The Adminisnative Law Juc�ge {AI.�
contrnued the first heazmg due to the patron's failure ro
appeaz. Tlie patron later testified that prior to the first
hearing, Iiinz.es G2" and 240-pound friend came to her
apachnenY and, fox $ 500, convinced lier to sign a
°celease" petitioniug the AT,3 to dismiss the licensing
matter. Hmze's fi�ieud allegedly told the patron that
because she signed the ielease, she could ignore a
suUpoena and not testify. The pah�on was subsequevtly
cequired to testify.
The record at the second hearing revealed that tke
pauon and her flusband l�ad several drinks before goiug
to Louie's Baz. The pat�on was "cut off' at Louie's due to
her intoxication and may have been physically zemoved.
Tfie yatron and her husband proceeded up the street to
Chuck's Baz aad ptu'chased beezs. The patxon mentimied
being "cut off' at Louie's and became unruly. Ainze told
flie paffon she was "cut off." The patron then appazently
refused io re]inquisH l�er drink. Hinze called the pa4�on a
vidgar [*3] name and the pah responded with an
obscene gesture. According to the patron and her
husband, IIinze d�en came at the patron firom belund,
grabbed hei tluoat wiNi boih hands azid c7�oked her uniil
the pauou's husUand sepaz'ated the two. Accord"ang to
Hinze and Isis bartender, Hinze never giabbed fhe
patron's neck, buL iathex used reasonable force to remove
i�ex fiom tUe bar by placing his hand on her back. A
police officer later interviewed the pahon and her
husband. Althougb. the officer did not observe marks on
tl�e patron's neck, he believed she had told the 4ufli about
tl�e incideait _
Follow�ing the hearing, the ALJ died. The paihes
stipulated to another ALJ reviewing the record and
issuing £mdings and a iecommendation. The succeeding
ALI fotmd that Hinze placed "both of lus hands around
(the patron's] neck, in an attempt to physical)y remove
her from tha bzx." Based on tlus �.v.cident and the two
pi�ior suspensiovs, the AL7 recommended an 18-day
license susyension.
COURT OF APpEALS
NLIMBER A07-1599
DOCUMENT #11
, Page 2
, � 199b ivlinn App. LEXIS 909, * 07 ??�-',
The case pmceeded to the St. Paul City CoanciL The
city council adopted the AL7's findings and made
addirionaI fmdings based on [he record. The city council,
however, did not adopt the ALS's recommendation.
instead, the [M47 city couacil revaked the licenses of
C.L. $'vize, Inc. by a ananunous vote. The pazties a@reed
to stay revocation penrling an outcome oa this appeaL
DECISION
were violent and occuned against a vulneiably
into�cicated patron. This finding, howevez, is supported
by 2he testimony of the patron and her husband. C.L.
Hinze, Inc. also disputes the ciry cowicil fmding fhat
Hinze sought to nitezfere with the licensing pzoceeding
and dissuade fhe patron from testifying. This finding is
supported by the pafrons testimony and the release
drafted by Hinze's friend. We conciude the record
supports the challenged fmdings of the AL7 and the city
counci2, and so we uphold such S"indings.
L C.L. Hinze, Inc. presents two basic argumenu
challenging the license revocation. Fust, ii contests the
factual findings and ciedibility determinations made by
the AI,J and the city councff. Second, it argues the city
acted arbiharily and capnciously in concluding that
liceuse ievocation is wazranted.
Vlunicipal authoiities have broad discrerion in
detemiaung the manner in w]uch liquor licenses are
issued, zegulated, and revoked. &ourbon Brsr & Cafe
Co�y. v. City of SG Pau[, 46G N.W.2d 438, 440 (Minn.
App. 1991) (citing Sabes v. City of Mtnr+ett��olis, �65
Minn. 166, 171, !20 NW.?d 871, 875 (1963J). An
appellate couiPs xeview of a municipality's liquor license
revocarion is limited to whefher the ciry council
BXCTCISBQ ICd50113�1C t115C[Eilvff, OY rvii uac7 ii dGiEu
capnciously, arbihazily, or oppressivety. Zd. Further, a
c'rty eouucIl may aceept, ceject, or modify an ALJ's
findings, eovclusions, and recommeadauons. ]3AL, IHC.
v. City of St Paul, 469 MW.Zd 34/, 343 (*5) (Minn.
Ayp. l997).
l. Findi�zgs of Ract
C.L. Hinze, Inc. argues that some of the ALTs findings
aie inconsistent and erroneous. We disagree. The most
unportant finding by Uie AL7 was that Hinze "placed Iiis
hands around [tl�e patron's] neck, in an attempt to
physically zemove her from the bu Wl�ile �vitnesses
preseated conflicting evidence, ehere is record support
for tivs fmding. Accoxd'vigly, the contention of C.L.
Hivze, Inc. that the ALI en�ed by acceptuzg some of the
pahon's tesrimony and discreditiug othec portions of her
YesTimoiiy is meritless. See Roy etilaison Truck Lines,
Inc, v. MicJ+elin Tire Co�y., 277 N.W.Zd 36t, 362 (IVlimi.
1979) (trier of fact is the sole judge of witness aedibility
and may accept ali or only pazY o£ a wifness's festnnony).
Further, we are not pecsuaded Uy the azgument ihat
because the deceased AI,S witnessed the hearing the
sueceeding ALJ's eced�biliry detemunations shouId be
aceorded less deference. C.L. Huize, Ine. stipulated to
having fhe second ALJ review the cecord and make
findings.
TLe city council incorporated the findvigs of fhe
ALS aizd made additional fiudings. C.L. I-iinze, Inc.
disputes the ciiy councai finding that [*6� $inze's acfions
2. Condusions
The city couucil sought sancfions pwsuant to thiee
enumerated provisions of the Si. Paul Legislative Code,
undea which the city may take adverse action against a
}icensee who bas: (1) engaged in a pattern of conduct
indicatuig a lack of good chazacter, (2) created a serious
dwger to public safety or welfare, or (3) engaged in
violent actions or assaults. St. Paul, Minn., Legisladve
Cade §§ 3I0.06(b)(6){c), 310.06(b)(7), 310.06(b)(10}
(1995). Advezse acrion ine[udes license suspension. St.
Paul, Minn., Legislative Code § 310.01. Aere, the city
council's findings support adverse acflon under any of the
tluee listed provisions. [*7J
:.? .. T^C. COIIrwn�ig _ fl.a? ?yPr� if 7hiS CnUl?
upholds tlie fincliugs of fUe ALJ and ciry councit, the
revocation was azbihar}� and caprieiovs. C.L. Hinze, Ine.
stresses Uiat the city failed to follow its own presws�tive
penalty maerix for license violations. See St. Paul, Minn.,
Legislati.ve Code § 409.26 (b) (1994), Under the tnatrix,
Iicense revocation often does not reault until a Fouctli
violation appearance, whereas this incident was tl�e tlutd
appeasance fot C.L. Htuze, Inc. However, the matnx
applies to several listed offenses but does not iefer to
"assaul[ on a patron," TOus the present offense is
unlisted, and the ma�ix is not genecally applicable.
Further, cven if we applied ihe matrix by Tikening
assault to oue of the listed offenses, the matrix aliaws for
deviation from the presumpiive penalty where the city
council provides "substautial and compelling" reasons.
See St. Paul, Minu., Legislative Code § 409.26 (a). Here,
the city co�ncil articulated HTitten reasons in suppmrt of
its decision, including tfie faci tflat (1) C.L. Hinze, H�c.
has a history of vioFations, (2) H�nze committed the act
against the patron, rather than an employee, (3) the
patron ["`8] was iutoxicated and vulnexable, (4) Hinze's
grabbuig ftie patron around the ¢eck constituted a
significaut act of violence, (5) Hinze later attempted to
uiYerfere weth the licensitlg proceeding and dissuade the
patzon from tesrifying, and (6) St. Paul needs
progressively tongl�er penallies for multiple violarions. Tn
tight of these fmdiugs we couc]ude the city council
propeTly supported a deviafion wifh substantial aud
compelling reasoivs.
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #I1
• � ,
1996 Minn. App. LEYTS 909, * �`�..'1'/
/
The duly elecTed city council acted wiihin its bioad
discretion in rewking the licenses oF C.L. T-Tinze, Tnc.
Although revocation is a barsh remedy, the city council
has the authority to irnpose punisbment different than
that recommeAded by the AL7. BAL, Inc, 469 N. W.2d at
343. As ti�e svpreme court has stated no citizen has an
inherent or vested right w sell into�cating liquors, and
municipal authorifies ]�ave broad discretion within the'u
geographical jurisdiction to deternuue the mannez in
which liquox Iicenses shall be issued, aegalated, and
ievoked
Sabes, 265 Minri. at I71, 120 MW.2d at 875.
Accordingly, we conclude the revocation was neither
atbitrary nor capricious.
II.
���
1 /'� ) ;�'
C.L. Hinze, Inc. [�9] azgaes the city's action, whea 1
coup7ed wifh an ordinance tl�a.t would prahib�t
relicensing at the site of Chuck's Baz, amounts to a
regu3atary taking. This issue was neiiher addressed nor aY
issue below in Yhis liceasing acrion. Because tlus court
does not have originzl jtirisdicaon to consider flvs issue
for the fust time on appeal, we decline to do so_ See
Thiele x Stich, 425 N.W.1d 580, 582 (Minn. 1988)
(appellate court may only consider those matters
presented to and considered by the dishict court).
Afftrmed.
Page 3
CQURT OF AppEALS
NLTMBER A07-1599
DOCUMENT #i l
v7 ��-�
Donatd G. Heeman
612-373-8524
Fax: 672-338-0535
�mail: dheeman@felhaber.com
Reply to Minneapolis Offi.ce
JUly 3�, 2�0�
Rachel Gunderson
Assistant City Attorney
Office of the City Attorney
400 City Hall
15 West Kellogg Boulevard
St. Paul, NiN 55102
'� ' Y �?
.�U#� � � 20Q�
! , _ � -
RE: City of St. Paut v. Debra Johnson and DR.T, Inc., d/b/a Diva's Overtime Lounge, et al.
OAH Docket No. 8-6020-17788-Z (March 21, 22, 23 and Aprit 5, 2007 Hearittgs)
Our File Number 10903.21
Dear Rachel:
Enclosed and personally served upon you on behalf of 1141 Street-1, LLC and 1141 Rice
Street-2, LLC, are the following:
L Lessors' Motion to Intervene, Present Evidence, and/or Adopt ALJ
Recommendation; and
2. Memorandum of Law in Support of Lessors' Motion.
Please make sure the Motion and accompanying Memorandum are provided to the City
Council members in advance of the August 1, 2007 City Council hearing regarding DRJ's Iiquor
license.
If you wonld like to discuss any of the issues in the Motion and Memorandum, please feel
free to contact me in advance of Wednesday's hearing.
Sincerely,
DGH:cmn
Enclosures
cc: Fred Macalus (w/enclosures)
MPLS-Word 1720751
�� �.�/�C�,.=�/
Donald G. Heeman
COURT OF APPEALS
N[ IMBER A07-1599
DOCUMENT #12
��-���
SAINT PAUL CITX COUNCIL
OAH No. 8-6020-17788-2
In the Matter of All Licenses Held by LESSORS' MOTION TO INTERVENE,
DR7, Inc., d!b/a Diva's Overtime Lounge PI2E8ENT EVIDENCE, ANDlOR ADOPT
AI,J RECOMMENDATION
Lessors 1141 Rice Street-1, LLC and 1141 Rice Street-2, LLC ("Lessors"), by and
through their undersigned counsel o£record, hereby move as follows:
I. To intervene in above-entitled matter in order to protect Lessors' property
interests in the reai property which is presently leased to I,essee/Licensee DRT,
Inc., d/b/a Diva's Overtime Loixnge ("DRJ");
2. For a fu11 and fair hearing as to the effect of license revocation on Lessors'
property interests; and/or
3. To adopt the recommendation of the ALJ witi� respect to DRJ's liquor license.
This Motion is based upon the Minn. Stat. Ch. 340A, the Minnesota Administrative
Procedures Act, Minn. Stat. Ch. 14, SainY Paul Legislative and Administrative Codes, the
Minnesota Constitution, and the United States Constitutioa The undersigned respectfully
submits a Memorandum of Law, accompanying and incorporated in this Motion.
Dated: July 30, 2007 FELHA$ER, LARSON, FENLON & VOGT, PA.
�!„�.�z ���,�-''
Donaid G. Heeman, #286023
Eric J. Riensche, #309126
220 South Sixth Street, Suite 2200
Minneapolis, Minnesota 55402
Telephone: (612) 339-6321
Facsimile: (b12) 338-0535
Attorneys for Lessors
COURT OF APPEALS
MPLS-WOrd 172022.1 NUMBER A07-1599
DOCUMENT # 12
,
r�� ���
term of the I,ease commenced on 7uly 11, 2005, and is scheduled to end on June 30, 2010.
(Lease ¶ 1.)
The Lease specifies the appropriate use of the Premises as follows:
The Lessee may not use the Premises for any unlawful use. The demised
Premises shall be used by the Lessee for an on-sale liquor establishment puzsuant
to applicab2e licenses from the City of Saint Paul and/or State of Minnesota.
The Lessee agrees not to commit or permit any act to be performed on the
Premises or any commission to occur which will be in violation of any statute,
regulation, or ordinance of any governmental body, which wilI increase the
insurance rate on the building or which will be in violation of any insttrance
policy carried on the Premises by fhe Lessor. At the Lessee's sole expense, the
Lessee shall comply with all present and fature laws, ordinances, regulations and
orders of al] govermnental units having jmisdiction over the Premises.
(Lease ¶ 4.)
III. PROCEDUFLAI, BACKGROUND
The City Office of License, Inspecrion and Environmental Protect�on ("LIEP'� brought a
petition for adverse licensing action against DR7. The matter was referred to an Administrative
Law Judge ("ALJ"} of the Minnesota Office of Administrative Hearings. Lessors did not receive
notice that Yhe ALJ's decision (or that of the City Council) would or coul& affeet Lessors'
property interests. Nor did Lessors receive notice that they had a right to intervene in this matter
in order to protect their property interests.
IV. DISCUSSION
A. TLe decision of the City Council may adversely affect Lessors' property interests
In the Memorandum accompanying the AI,J's Findings of Fact, Conclusions and
Recommendation, the AL7 stated:
As the Council is well aware, in Saint Paul, revocation of a liquor Iicense for
cause is an adverse action that runs not only against the errant licensee but also
against the underlying property. A successful revocation, therefore, is a
COURT OF Al'PEALS
2 NL7MBER A07-1599
Mri s-wora i�zo26.i DOCUMENT # 12
D�'�
permanent baz to later use of the land and structures for on site liquor sales. Such
a consequence is huly profound.
Minnesota Courts have appazently considered the breadth of this sancfion only
once — and in that case, incompletely. The licensee in the case of Chuck's Bar,
cited above, attacked the Saint Paul ordinance which forbids later licensure as a
"regulatory taking;' a matter that the Miimesota Court of Appeals deciined to
reach because it was not presented to the District Court below.
Even without direct guidance from the state courts as to the viabiliYy of a
permanent bar to re-licensure, the concerns expressed by the cozu�ts as to lzcense
forfeihzres in general snou�a �ve the Cowzci] pause. In the view of the
Administrative Law Ju@ge, applying a potenY set of other restricfions arid
regulatory controls, short of revocation, woutd yield a better and shu result.
(ALJ Mem. at 18 (footnote omitted)).
As authority far this conctusion, the ALJ cites St. Paul Legisiative Code § 409.03, which
provides:
In the downtown business district, and in aII commercial development dishicts as
defined in section 17.071 of the City Charter, on sale Iicenses shall be issued only
to hotels, clubs, restaurants and estabiishments for the sale of on-sale liquors
exclusively. Tn all other areas of the city, licenses shail be issued only to hotels
and restaurants, provided however, that establishments holding licenses on the
effective date of this section ... shall not be affected by this limitation, but shall
be entitled to have such licenses renewed so long as they are in compliance with
all other requirements of law and there exist no grounds for adverse actions
against such licenses. Notwithstandine the foregoinQ, a new license mav be
issued for a location in such other areas of the citv if there had �reviouslv been an
on-sale intoxicatine liquor license issued for that location unless tlze rep violls
license (1) had been revoked bv the council or {2) had terminated or expired more
than two (2) years before the new license had been first applied for.
St. Paul Legislarive Code § 409.43 (emphasis added).
The ALJ has concluded that, should the City Council revoke DRJ's liquor license, such
revocation would trigger the nnderlined provision of the above-quoted ordinance, and would
operate to permanently prevent Lessors from using the Premises for an on-sale liquor
establishment. Lessors have not had sufficient opportunity to explore this conclusion. However,
MPLS-Word 172026.1
COURT OF APPEALS
3 1VIJMBER A07-1599 =
DOCUMENT #12
0��737
,
the ALJ's comment is quite iroubling to Lessors. If the t1L.T's view is correcf, then a revocation
of DR7's license will severely hann Lessors' property interests.
B. Lessors must be permitted to intervene in these liquor license proceedings
Retail liquor licenses are governed by Minnesota state law, Minn. Stat. §§ 340A.401 to
340A.419, and proceedings for revocation or suspension of a liquor license must conform with
the Minnesota Administrative Procedures Act. Minn. Stat. § 340A.4I5. Under the Minnesota
Administrative Procedures Act, Minn. Stat. Ch. 14, and its regulations, a person not named in a
notice of hearing may petition to intervzne:
The petition shall show how the petitioner's legal rights, duties, or privileges may
be determined or affected by the contested case; shail show how the petitioner
may be directiy affected by the outcome or that petitioner's participation is
authorized by statute, rule, or court decision; shall set forth the grounds and
purposes for which intervention is sought; and shall indicate peritioner's statutory
rig}�t to intervene if one should exist.
Minn. R. 1400.6200, subp. L Further, the City's own license procedures contemplate
intervention by an interested party. See St. Paul Legislative Code § 310.05(c).
Where the substantive rights of a non-party to an administrarive proceeding are at stake,
the govemment must give notice to the potentially-affected non-party, and an opportunity to
intervene. See Pinotta v. Indep. Sch. Dist. No. 347 396 N.W.2d 20, 23 (Minn. 1986). Indeed,
at least one other State Court has long held that a lessor who may be collaterally harmed by the
revocation of a license must be given notice and a hearing:
The act provides that ... in cases of revocation, not only shall the licensee be
disqualified from receiving any other license for a year, but `for the same period
no license shall be granted to sell spirituous, vinous, malt or brewed liquors in the
premises for which the forfeited license was granted.' The purpose and propriety
of requiring service of the papers on the owner of the premises are therefore plain.
"Fhe judgment of forfeiture is manifestly prejudicial to him, and the
disqualification of the premises by such judgment is so interwoven with that of
the Ficensee that in our view a proper judgment of forfeiture cannot be
MPLS-Word 172026.]
COURT OF APPEALS
4 NUMBER A07-1599
DOCUMENT #12
D�-��7
pronounced unless both licensee and owner aze in court and have had their
flearing-
Sawicki v. Keron 75 A. 477, 479 (N.3. 1910).
Here, as discussed above, the AL7 has coacluded that revocarion of DRJ's liquor license
will permanently preclude Lessors or its tenants from hoIding an on-sale Iiqnor license. If the
AL7's conciusion is correct, then the City Council's decision with respect to DRJ's liquor Iicense
will have a profound effect upon Lessors' property interests. Thus, Lessors' "legal rights, duties,
or privileges may be determined or affected by the contested case," and therefore Lessors must
be permitted to intervene in these proceedings.
C. Lessors must be given a hearing, with an opportunity to present evidence
Lessors were xiot given prior notice that the decision of the ALJ and/or the City Council
could affect their property interests in such a"profound" way. If Lessors had been given such
notice, Lessors: would have had the opportunity to study the relevant ordinances and their
potentiai effects upon Lessors' property interests; would have intervened in the proceedings
before the AL7; would have gathered evidence (e.g., of the potentia2 diminution in property
values caused by a permanent bar of on-sale liquor establishments at the Premises}; and would
have presented wimesses at the administrative hearing regazding DRJ's liquor license.
The City Council has an incomplete record before it. The record is devoid of evidence as
to the potentia] effect of revocation upon Lessors' property rights. Lessors have not been given
an opportunity to present wimesses, evidence, or arguments showing how license revocation will
affect their property rights. The City Attorney's Office is awaze of this problem, yet is urging
revocation here, despite the record's silence as to the potential collateral effects of suck
revocation. If the City Council were to revoke on this incomplete record, such a decision would
certainly be arbitrary and capricious.
MPLS-WOrd 172026.1
COURT OF APPEALS
5 NLTMBER A07-1599
DOCUMENT #12
D��`73�7
.
Beyond that, the City Council would be setting the stage for a govenunental taking, and a
potential inverse condemnation action. A taking occurs when a governmental regulation
deprives the property owner of all economically viable uses of the property, as judged by the
property owner's reasonable investment-backed expectations. Lucas v. South Carolina Coastal
Council 505 U.S. 1003, 1027-IQ31, 112 S. Ct. 2886, 2844-2401 (1992}. Here, the Premises
were putchased in order to house an on-saIe liquor establishment. The Premises are located in a
neighborhood where, as a practical matter, there aze limited options for economicalfy-viable use
of the land. There is a high risk, therefore, that a permanent bar to liquor sales on the Premises
would strip Lessors' of all economically-viable use of the land, and therefore will constitute a
govemmental taking.
Further, in Penn Central Transp. Co. v. City of New York, 438 U.S_ 104, 124, 98 S. Ct.
2646, 2659 (1978}, the United States Supreme Court held that a compensable governmental
taking may be found upon consideration of (1) the economic impact of the regulation on the
person suffering the loss, (2) the extent to which the regulation interferes with the landowner's
investment backed expectations, and (3) the character of the govemment action to assess whether
the complained of actlon effected a taking of private property for public use. The record before
the City Council is incomplete as to these factors, because Lessors were not given notice as to
the potential effect of these license proceedings, and were not given a hearing to develop the
record. However, as discussed above, Lessors clearly purchased the Premises anticipating that
the Premises would be used for on-sale liquor establishment. Given the nahu of the
neighborhood in which the Premises are located, it is quite likely that a complete bar to such
liquor sales would result in a precipitous decline in the value of the Premises.
COURT OF APPEALS
6 NUMBER A07-1599
MPLS-Word 772026.} DOCUMENT #12
��-���
It is true that the City has a strong governmental interest in reguIating Iiquor sales
establishments. But this govemmental interest does not justify a permanent bar on liquor sales
on the Premises, where less drastic remedies are readily available. For instance, the Lease
requires DR7 to comply with state and local iaws and regulations. If the City concludes that DR.T
should no Ionger be in the business of selling liquor, then a far Iess-drastic remedy would be for
the City to give Lessors the opportunity to cancel the Lease.
In saying this, Lessors are not suggesting that the City put the onus on Lessors to cancel
the Lease. Rather, Lessors believe that the City should accept the Recommendarion of the ALJ
(i.e., decline to revoke DRJ's liquor license). Lessors' only point is that, even if the City Council
is inclined to take more punitive action than recommended by the AL7, the CiTy CounciI should
not be quick use the most powerFul weapon in its arsenal, i.e., license revocation. As pointed out
herein, such drastic action would have severe coilateral consequences as to Lessors' property
interests, and would be overbroad in the sense that the same result could be achieved with less-
drastic action.
In short, the City Attomey's Office is asking the City Council to make an important
decision based upon an incomplete record. Lessars must be given an opportunity to present
evidence befare an ALJ as to the potential effects of revocation upon Lessors.
D. In the alternative, the City Council should adopt the recommendations of the ALJ
Of course, Lessors' concerns would be moot if the City Councii were to follow the
recommendation of the ALJ, and decline to revoke DR3's liquor license. If the City Councii
does not wish to grant Lessors a hearing as discussed herein, then the City Council must follow
the AL7's recommendarion.
MP1S-Word 172026.1
COURT OF APPEALS
7 NLJMBER A07-1599
DOCUMENT #12
a�-���
V. CONCLUSION
For the reasons discussed herein, Lessors request:
l. That the City Council permit Lessors to intervene;
2_ That the City Council grant Lessors an opportunity present evidence as to the
effect of license revocation upon Lessors' property interests; and
3. In the alternative, that the City Council adopt the recommendarion of the AL,J.
Dated: July 30, 2007 FELHABER, LARSON, FENLON & VOGT, PA.
��,./ � �,�,,,�.�
Donald G. Heeman, #286023
Eric J. Riensche, #309126
220 South Sixth Street, Suite 2200
Minneapolis, Minnesota 55402
Telephone: {612) 339-6321
Facsimile: (612) 338-0535
Attorneys for Lessors
MPLS-Word 772026.]
COURT OF APPEALS
8 NUiVIBER A07-1599
DOCUMENT #12
D7-���
sa�rT Paui, c1� eourrca.
�.�u��r.�:� � � ::
In the Matter of All Licenses Held by
DRJ, Inc., d/b/a Diva's Overtime Lounge
MEMORANDUM OF LAW
IN SUPPORT OF LESSORS' MOTION
TO INTERVENE, PRESENT EVIDENCE,
OR ADOPT ALJ RECOMiVIENDATION
I. INTRODUCTION
Lessors 1141 Rice Street-1, LLC and 1141 Rice Street-2, LLC ("Lessors") are the owners
of the premises occupied by Lessee/Licensee DRJ, Inc. ("DRJ" or "Lessee"). Lessors have
recently been informed that, if the City Council revokes DR3's liquor license, such revocation
may result in a permanent bar of any on-site liquor establishment on Lessors' land. Lessors were
not informed of this potential result prior to the administrative hearing. Nor have Lessors been
invited to intervene in this matter. Nor have Lessors been given an opporiwuty to present
evidence and arguments that a permanent bar to on-site liquor sales would be imprudent, and
would constitute a governmental taking. Lessors must be permitted to: (1) intervene in this
matter; (2) present evidence and arguments against revocation; and (3) present evidence and
arguments in support of the AL7's recommendarion that revocation wouId not be proper.
II. FACTUAL BACKGROUND
Lessors and LesseelLicensee DRJ, Ina ("DRJ") entered into a Buiiding Lease ("Lease")
on or about July 11, 2005. (Lease at l, i 1-12.) The property which is the subject of the Lease is
located at 1141 Rice Street, Saint Paul, Minnesota 55117, and is legally described as Lots 1 and
2, Block 1 l, Auerbach and Hands Addition to St. Paui ("Premises")_ (Lease at 1, Ex. A.) The
MPLSWOrd V2026.1
COURT OF APPEALS
NIJMBER A07-1599
DOCUMENT #13
� _..
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ANDREW J. DAWHINS
ATTORNEY AT LAW
� ��� �-� � , ��;a,� , . — �
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Of Counsel to
Mansfield Tanick & Cohen, PA
1700 U.S. Bank Plaza South
220 South Sixth Street
Minneapolis, MN 55402-4511
July 25, 2007
Ms. Rachel Gunderson, Esq.
Assistant City Attorney
City of Saint Paul
Suite 400 City Hall
15 W. Kellogg Blvd.
St. Paul, MN 55102
RE: All Licenses held by DRJ, Inc., dba Diva's Overtime Lounge
OAH Docket No. 58-602018008-3 (May 7, 2007 Hearing)
Dear Ms. Gunderson:
"?ii��
Tele: (651) 222-4595
Fa�: (612) 3393161
Email: adawldns@mansfieldtanick.com
Pursuant to our conversation of yesterday, enclosed please find Licensee's Exceptions to May
30, 2007 Report of the Administrative Law 7udge, which you agreed to have properly filed and
distributed prior to the August 1 City Council hearing. Thank you for your assistance.
Sincerely,
�
Andre , J. Dawkins
Attorney for Licensee
cc: Diane Nordstrom, Office of Administrative Hearings
COURT OF APPEALS
N C7MBER A07-1599
DOCUMENT #14
1
07� � �
SA1NT PAUL CITY COUNCIL
OAH 58-6020-18008-3
In the Matter of Adverse Action Against LICENSEE' S EXCEPTIONS TO
All Licenses Held by DRJ, Inc., d/b/a MAY 30, 2007, REPORT OF
Diva's Overtime Lounge ADMINISTRATIVE LAW NDGE
EXCEPTIONS TO MAY 30, 2007 REPORT OF ADMINISTRATIVE LAW NDGE
In her Conclusion of Law Number Five, the Administrative Law 7udge found that "LIEP
has shown, by a preponderance of evidence, that the Licensee served alcoholic beverages
to a person who was obviously intoxicated."
In her accompanying Memorandum, the Administrative Law Judge states this is a"doubtful
issue: ' During the hearing there was testimony that Martin Johnson was served two drinks,
left the bar, rehuned obviously intoxicated, and was refused further service. There was
specularion, based on past experience, that Mr. 7ohnson had "gotten high" in his caz. There
was no evidence that he was over-served.
For the above-stated reasons, the Licensee requests that the Council adopt the following
amended Conclusion of Law:
"LIEP has NOT shown, by a preponderance of the evidence, that the Licensee
served alcoholic beverages to a person who was obviously intoxicated."
2. The Licensee further requests that the Council decline to adopt the accompanying
Memorandum of the Administrative Law Judge for the foregoing reasons.
Respectfully Submitted,
Dated: �— � Y 'O � i �� �,��J•'�_�
ew J. Dawkins, #123493
Attorney for the Licensee
1700 US Bank Plaza South
220 South Sixth St.
. Mpls., MN 55402
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #14
��� 7/31/2007) Mary �Erickson - Fwd: August�1st Council��Meeting Page 1 i
From: Jennifer Dunn D � ' � � I
To: Wardi-7
Date: 7/31/2007 10:09 AM
Subject: Fwd: August lst Council Meeting
CC: Erickson, Mary; Gunderson, Rachel; Moermond, Marcia; Moloney, Trudy; ...
Please add this to #43 on the August lst Public Hearing agenda. Thank you!
»> "Gnffth, Steven" <SGriffith(a�mor.orq> 7/29/2007 529 PM »>
Dear Councitman Heigen;
I am wri4ng to you today in regards to the upcoming pubiic hearing regarding the status of the license of Diva'S Overtime Lounge
on Rice Street.
As you well know, there has been a extensive history of problems at Diva's. The Administrative Law ]udge fndings of May 30th and
June 28th of this year paint a picture of an establishment that is clearly out of control and an owner who appears to relish ignoring
the law, in matters as small as the size of temporary signage, to serving obviously intoxicated customers, all the way up to violent
flghts, shootings and deaths. The testimony in these findings show a continued pattern of lies and obstructions, of late payment of
fines and falsified video tapes.
It is well past time to tlose this pesthole permanently. Rite Street is at a tipping point; we can work to return our neighborhood to
its decent family origins, or we can surrender and let it go to the dogs. There are four bars within three blocks of Rice and
Maryland; Tin Cup's and Lonetti's seem to operate with minimal or no problems, the Sports Break is closed, and Diva's is a focus of
trouble. It is significant that the last hvo are owned by the same group of people, indicating that iYs not a problem of the
neighborhood, but rather of bad management and poor decisionmaking by a few.
My wife and I will be attending Wednesdays public hearing, and can certainly testify to the continuing negative impact Diva's has
on our neighborhood. We are no longer comfortable walking through our neighborhood, particularly at night and on weekends. We
should not have to be afraid in our own home.
I hope that we can rely on your good judgement and will take our concerns to heart. Now is the time to act, and there is only one
proper action to take: the revocation of ALL of Diva's licenses, and the permanent closing of this establishment.
Thank you for your attention to this urgent matter. We look forward to seeing you on Wednesday.
Very sincerely,
Steven and Theresa Griffith
1161 Marion Street
651-489-1165
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #15
(8/1/2007) Mary Erickson - Fwd: Diva's liquor license Page 1 j
From: Jennifer Dunn
To: Wardl-7
Date: 8/1/2007 3:18 PM
Subject: Fwd: Diva's liquor license
U�-�3 �
CC: Erickson, Mary; Gunderson, Rachel; Moloney, Trudy; Naylor, Racquel
another letter for item #43
»> "Lothian, Cecile M" <cecile.m.lothianCo�imco.com> 8/1/2007 3:15 PM »>
Lee Helgen,
I am writing you to let you know my dissatisfaction with Diva's bar on Rice St. i lived and grew up in the Rice St. area, went 12
years to Saint Bemard's schools, and am still actively involved in Saint Bemard's parish community. I think Diva's on Rice St. is a
very bad element in such close proximity to Saint Bemard's school. With the recent shootlng resulting in someone getting killed,
the neighborhood has taken a tum for the worse. Please revoke Diva's liquor license and shut her down.
Thank you,
C.M. Lothian
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #16
�
ANDREW J. DAWHINS
ATTORNEY AT LAW
of couns�t to
Mansfield Tanick & Cohen, PA
1700 U.S. Bank Plaza South
220 South Six[h Street
Minneapolis, MN 5 5 402-4 511
Kathy Lantry
President, St. Paul City Council
Third Floor, City Hall
15 West Kellogg Blvd.
St. Paul, MN 55102
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Tele: (651) 222-4595
FaY: (G12) 339-3161
Email: adawldns@mansfieldtanick.wm
Rachel Gunderson
Assistant City Attomey
Fourth Floor, City Hall
15 West Kellogg Blvd.
St. Paul, MN 55102
Re: In the Matter of All Licenses Held by DRJ, Inc., d/b/a Diva's
Overtime Lounge
Dear Council President Lantry and Ms. Gunderson:
I am writing �to you. jn �your. capacity as President of the. St: . Paul City
Council and as Assistant St. Paul City Attorney handling this matter for the
City.
As you know the City Council voted on August l, 2007 to revoke all of
the licenses held by DRJ, Inc., d/b/a Diva's Overtime Lounge ("Diva's").
Although that vote is not effective if the Mayor does not sign it, we are writing
to address the issue of a stay pending appeal should the Mayor approve the
City Council's action.
If the license revocation is signed by the Mayor, Diva's plans to seek a
Writ of Certiorari with the Minnesota Court of Appeals.
I am requesting that the license revocation be stayed pending final
determination of the case by the Minnesota Court of Appeals. This is
consistent with a request for a stay under Rule 108 of the Rules of Civil
Appellate Procedure. That rule contemplates a request be made to the trial
court but, since there is no trial court in this case, I am directing this request
to your offices, as representatives of the City of St. Paul.
The request for a stay is based upon the substantial harm that Diva's
and its owners will suffer if it is forced out of business by loss of its licenses
while its appeal is pending. Such harm includes loss of income to Diva's and
its owners, and loss of livelihood to the employees who will have to be laid off.
August 9, 2007
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #17
��-���
Kathy Lantry
Rachel Gunderson
August 9, 2007
Page 2
The building will be more susceptible to break in, theft and vandalism
while vacant, and may become an eyesore in the community. Loyal clientele
may find other establishments to frequent and may not return even if Diva's is
successful on appeal. In sum, loss of licenses pending appeal will create
substantial economic ha_� to the company, its owners, its employees, its
landlord and the vendors with which it does business.
At any rate, Diva's has functioned since July, 2006 without any alleged
nuisance violations. The Administrative Law Judge recognized that Diva's was
neither the cause of, nor complicit with, many of the incidents near the bar,
but in fact took considerable efforts to "contain and eliminate misbehavior;
even at times when the personal risks of moving against violent patrons were
substantial." Findings of Fact, Conclusions and Recommendation of
Administrative Law Judge Eric Lipman, p. 16. Moreover, neither the
undercover police officers present in the establishment nor the police officers
who responded to calls at or near Divas, linked management practices to the
misconduct of some of the patrons. Id. at 16. The ALJ correctly noted that
Licensees like Diva's "sit atop a razor's edge of competing legal obligations" not
to discriminate against patrons who are members of protected classes, yet
being held "accountable for the clientele it attracted...."' Id. at 17-18. As the
ALJ found, Diva's put in place a series of substantial changes which, "[i]n
combination ... appear to have been effective and suggest the route to obtaining
still better results for the North End of Saint Paul." Id. Therefore, there would
be no harm to the City if the revocation were stayed pending the final
dispcsition of ±ris case. If the fnal outcomP upholds the City's decision, the
revocation could then be imposed.
In other words, we are asking that if the Mayor approves the revocation
decision that the City stay the revocation pending final disposition of the legal
proceedings which will be pending before the Minnesota Court of Appeals. This
request is made consistent with the spirit of Rule 108 of the Rules of Civil
Appellate Procedure.
Since there
pending appeal,
unnecessary.
is no cost to the city involved in staying the revocation
a supersedeas bond probably is inappropriate and
Please get back to me at your earliest opportunity.
COURT OF APPEALS
NUMBER A07-1599
DOCUMENT #17
D��'73�
Kathy Lantry
Rachel Gunderson
August 9, 2007
Page 3
Thanks for your consideration. I am going to be out of town beginning
today until August 19, 2007. In my absence please respond to Marshall H.
Tanick at this same address or by telephone at 612-339-4295.
Very traly yours,
ANDREW J. DAWHINS
.
,r /� /�
�'
A drew J. Dawkins
TJA
459003
COURT OF APPEALS
NIJMBER A07-1599
DOCUMENT #17
OFFICE OF Tf� CITY ATTORNEY
.Iohn J. Choi, CiryAttorney
6
CIT'Y OF SAINT PAUL
ChristopherB. Coleman, Mayor
r��r
Civil Division
400 CityHaZl
IS YYutKelloggBlvd.
Sa'vzt Pmd, Mirznesota 55702
Telephone: 65I 266-87I0
Facsnnile: 65l 298-56T 9
August 13, 2007
Andrew J. Dawldns BY U.S. MAII. AND FACSIlVIII.E
Mansfield, Tanick & Cohen, P.A.
1700 U.S. Bank Plaza South
220 South Sixth Street
Miuueapolis, MN 55402-4511
Re: All Licenses held by DRJ, Ina d/b/a Diva's Overtime L,ounge.
Deaz Mr. Dawldns:
T am in receipt of your letter informally requesting a stay of license revocation pending appeal to the
Court of Appeals. As you lrnow, the Council's decision revoking DRJ, Inc.'s licenses will not
become effecfive until the Council passes, and the Mayor signs, a resolution memorializing the
Council's August 1, 2007 decision to revoke. That Memorializafion Resolution is currently set on
the CounciP s Consent Agenda for August 15, 2007.
Following your letter received by myself and Council President Lanhy on Friday, August 10, 2007,
the Council has agreed to allow you to make your request for a stay pending appeal on the same
Council Agenda. This item will be introduced as a suspension item at the 3:30 Council hearing on
August 15, 2007 and you will be given an opportunity to be heard. You will receive 5 uunutes to
address the Council regarding the stay.
ffyou are not available far the August 15, 2007 hearing, the Memorializafion Resolution will still be
voted on by the Council. You may either elect to have the Council consider your letter without
making a statement to the Council, or have your request for a stay heard on the August 22, 2007
Consent Agenda at 3:30.
Please let me lmow if you would like to have an opporiunity to be heazd on August 22, 2007. If I do
noY heaz from you, the matter will be considered by the Council on August 15, 2007.
Sincerely,
� fn,�(�
V
Rachel Gunderson
Assistant City Attomey
cc: Marshall H. Tanick
Kathy Lantry
Christine Rozek
AA-ADA-EEO Employer
COURT OF APPEALS
NIJMBER A07-1599
DOCUMENT #18
STATE OF MINNESOTA
DRJ, Inc., d/b/a Diva's Overtime Lounge, Relator, vs.
City of St. Paul, Respondent
4?€C�iV��7
OGT 13 2��8
�t�°r �°�; c�ta��t
�EC��uEQ
ocr t 3 2oos
CITY CLERI(
JUDGMENT �� ��
Court of Appeals
Appellate Court # A07-1 �99
Trial Court'� Council File #07-737
Pursuant to a decision of Court of Appeals duly made and entered, it is determined and adjudged that
the decision of the City of St. Paul heYein appealed fvom be and the same hereby is AffiYmed and judgment is
entered accordingly. A certified copy of the entry of judgment and the court's decision is herewith transmitted
and made part of the remittitur.
Dated and signed: October 9, 2008
FOR THE COURT
Attest: Frederick K. Csrittner
r Elerk of the A ellate Courts
�� �//'"
�: � ��✓�� � G, ��
F Assistant CZerk
STATE OF MINNESOTA
COURT OF APPEALS
TRANSCRIPT OF
JUDGMENT
I, Frederick K Grittner, Clerk of the Appellate Courts, do hereby certify that the foregoing is a full and
true copy of the Entry of Judgment in the cause therein entitled, as appears from the original record in my
office; that I have carefully compared the within copy with said original and that the same is a correct
iranscript therefrom.
Witness my signature at the Minnesota Judicial Center,
In the City of St. Paul October 9 2008
Dated
Frederick K Grittner
Clerk of the Appellate Courts
�� �� �
$y . �� L�"✓ �'�-�_.
Assistant Clerk
��-�3�
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ,� 480A.08, subd. 3(2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
A07-1599
DRJ, Inc.
dibJa Diva's Overtime Lounge,
Relator,
vs.
City of St. Paul,
Respondent.
Filed Angust 26, 2008
Affirmed
Harten, Judge`
City of St. Paul
Council File No. 07-737
Marshall H. Tanick, Teresa J. Ayling, Mansfield, Tanick & Cohen, P.A., 1700 U.S. Bank
Plaza South, 220 South Sixth Street, Minneapolis, MN 55402; and
Andrew J. Dawkins, Law Office of Andrew J. Dawkins, 1700 U.S. Bank Plaza South,
220 South Sixth Street, Minneapolis, MN 55402 (for relator)
John Jung-Hoon Choi, St. Paul City Attomey, Rachel Gunderson Tierney, Assistant City
Attorney, 400 City Hall, 15 West Kellogg Boulevard, St. Paul, MN 55102 (for
respondent)
Considered and decided by HIaphake, Presiding Judge; Connolly, Judge; and
Harten, .Tudge.
� Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
� 7-��
UNPUBLISHED OPINION
HARTEN, Judge
Relator DR7 Inc., d/b/a Diva's Overtime Lounge (Diva's), challenges the
revocation of its licenses by respondent City of St. Paul (the city). Because evidence
supports the city's findings of fact and conclusions of law and because the revocation was
not arbitrary or capricious, we affirm.
FACTS
In June 2005, the bar at 1141 Rice Street in St. Paul began operating as Diva's.
Maintaining video surveillance cameras that operated during business hours was among
the conditions imposed when Diva's obtained necessary operational licenses from the
city.
In May 2006, the city filed a notice of violation, alleging that Diva's had permitted
after-hours consumption of alcohol and display of alcoholac beverages. Diva's appeared
before the St. Paul City Council (the city council), which imposed a$500 fine and $2,800
in costs and required Diva's to close at 1:00 a.m. instead of 2:00 a.m.
Two other events, not related to these violations, happened at Diva's later in 2006:
a murder was committed inside the building in July, and the attempted murder of a patron
leaving the building occurred in November.
In December 2006, the city served on Diva's a norice of intent to revoke its
licenses (the December notice). A hearing on the allegations in the notice was held in
March and Apri12007 before an administrative law judge (ALJ). During the hearing, the
ALJ ruled that: (1) the city could not rely on the incidents in July and November 2006
2
D`7- 737
because they were still under criminal investigation; (2) the city could "submit and
adduce testimony [about these incidents], in the same manner as ... other historical
events in the hearing record—such as meetings, inspections or police calls—are
referenced"; but (3) [the incidents may] not form the basis of an adverse licensing
action."
In April 2007, while the ALJ's decision on the December notice was pending,
Diva's received another notice of violation (the April notice). A hearing on the April
notice before a second AI,J resulted in that AL7 concluding that Diva's had violated
Minn. Stat. § 340A.502 (20Q6) by serving alcohol to an intoxicated person and had
violated St. Paul, Minn., Legislative Code § 310.06(b) (2006} by failing to compiy with
its obligation to provide the city's police with surveillance videotapes. The second ALJ's
order recommended that the city "take appropriate action against [Diva's] licenses."
The first ALJ released his order pertaining to the December notice in June 2007.
He concluded that Diva's committed six violations of code or license requirements, to-
wit: (1) and (2) Diva's twice £ailed to comply with the video surveillance requirement;
(3) Diva's did not obtain the required building permit before building a smoking patio;
(4) Diva's did not apply for a building permit before renovating a kitchen e�aust system;
(5) Diva's did not apply for a permit to display signs and violated limitations on the size
of signs; and (6) Diva's did not timely pay a fine imposed at Diva's inirial appearance
before tbe city council. The ALJ also concluded that the city did not establish by a
preponderance of evidence that Diva's conduct endangered the community and
3
V / �N /
recommended that the city impose "a weighty administrative sanction" but not revoke
Diva's licenses.
In August 200'7, the city council held a public hearing on the recommendations of
both ALJs. Following the hearing, the city adopted both ALJs' fmdings of violations
and found in addition that Diva's had unreasonably annoyed or endangered a number of
members of the publia The city council revoked Diva's licenses. Diva's challenges the
revocation.
DECISION
"[W]hen examaning quasi judicial municipal proceedings, we review the evidence
only to determine whether it supports the findings of fact or the conclusions of law, and
whether the municipality's decision was arbitrary or capricious." In re Dakota
Telecomm. Group, 590 N.W.2d 644, 646 (Minn. App. 1999).
1. Does Substantial Evidence Support the City's Findings?
Code § 310.06(b) provides that a license may be revoked because "(5) [t]he
licensee or applicant has failed to comply with any condition set forth in the license, or
set forth in the resolution granring or renewing the license," or "(8) [t]he licensed
business, or the way in which such business is operated, maintains or permits conditions
that unreasonably annoy, injure or endanger the safety, health, morals, comfort or repose
' Both the city and this court denied Diva's motions to stay the revocation pending
appeal. See DRI, Inc. v. City of St. Paul, 741 N.W.2d 141, 143, 45-46 (Minn. App. 2007)
(holding that the city's denial of Diva's motion for a stay pending appeal was not an
abuse of discretion).
4
o� - ��7
of any considerable number of inembers of the public." St. Paul, Minn., Legislative Code
§ 3io.o6�)(s�, {$� �aoo6).
a. Code § 310.06(b)(5)
The city based its revocation in part on the conclusion that "[eight] violations [of
laws, codes, or license conditions,] with one prior sustained adverse acrion, form a
sufficient basis for license revocataon." Diva's does not challenge three violarions:
failure to comply with signage requirements, failure to timely pay the fine imposed at
Diva's first appearance, and serving alcohol to an intoxicated patron.
Three of the remaining five violations involved failures to provide surveillance
videotapes. One ALJ found that, when police requested tapes far the night of 2-3 March
2007 to see if Diva's had served an obviously intoxicated individual, the tapes Diva's
provided were "useless for determining whether [Diva's] had served [the individual]
when he was intoxicated" because: (1) they "did not show camera angles from outside"
and "revealed only about one-fourth of the service area inside'; (2) they "switched
between one date and another and switched from black and white to color"; (3) "[i]n
some shots, patrons wore shorts and short sleeves, although the tape was to have [been]
recorded March 2nd"; (4) "[i]n other shots, patrons were smoking, indicating that the
video could not have been [recorded on 2 March 2007}, by which date smoking had been
banned entirely from bars"; and (5) at some points, "[t]he portion of the tape ... was
recorded at 16 times normal speed." The other ALJ found that, when police sought tapes
far the night of 12-13 September 2006 to investigate a fight, a videocassette Diva's
provided on 20 September was blank; a viewable tape was provided on 4 October but the
5
p�-�3�
date-line on it was not the tape for the date requested; and, about a month later, police
ulrimately obtained tapes and recording equipment with a warrant. Diva's does not
dispute any of the ALJs' videotape findings.
A fourth violation was the constructing, without the required permit, of a smoking
patio that did not comply with legal requirements. Diva's challenges this procedurally,
arguing that the city is estopped from considering the patio violation because the city
allegedly told Diva's to remove the patio by 2 August 2006 and Diva's removed it on 1
August. But the city found that the office of License, Inspection, and Environmental
Protection (LIEP) had informed Diva's, as it had informed all other licensees, of the
requirements for a smoking patio at the time the smoking ban came into effect. Diva's
then built a non-complyang patio, without a permit, in April 2006. On 26 June 2006, the
city directed Diva's to either furnish a site plan or remove the patio by 3 July 2006, or
face legal action. Diva's did not remove the patio. After the murder at the premises on
13-14 July 2006, Diva's was again told to remove the patio or bring it into compliance,
this time by 2 August 2006. Thus, Diva's ignored both the city's directives on how to
build a patio and its first order to remove the patio and complied only with a second
order, by which time the patio had existed for four months.
A fifth violation involved an exhaust hood in the kitchen. Diva's again argues that
the city is estopped from raising this issue because, in a letter dated 26 July 2006, the city
told Diva's that it "shall not use the kitchen exhaust hood unril the building inspectar has
given written approval" and the exhaust hood was never used. But Diva's estoppel
argument ignores two other letters Diva's received from the city, one on 28 July 2006 and
0
b�-7��
the other on 4 October 2006. Both letters said that the e�aust hood had to be removed
or brought up to compliance. The first letter provided 31 August 2006 as the last day to
comply.without penalty; the second letter referenced the first and set 18 October 2006 as
a"final opportunity" to correct the problem. Thus, failing either to remove the hood or to
bring it into compliance was a violation.
Substantial evidence supports the findings that Diva's in eight instances failed to
comply with the conditions set forth in its licenses, thereby violating Code § 310.06(b)(5)
and providing a basis for revocation.
b. Code § 310.06(b)(8)
The city based its conclusion that Diva's had violated Code § 310.06(b)(8) on
eight factors: (1) an increase in police calls to the area; (2). large street fights involving
Diva's patrons; (3) modification of police patrol patterns to accommodate Diva's;
(4) neighbarhood noise; (5) the concern of police officers for their own safety in dealing
with situations at Diva's because of large crowds; (6) proximity of Diva's to a residential
neighbarhood, school, and church; (7) citizen complaints; and (S) failure of community
efforts to resolve issues with Diva's.' Substantial evidence supports these factors.
Z Code § 310.06(b)(8) is almost identical to Minnesota's public nuisance statute, which
provides that it is a misdemeanor to "maintain[] or permit[] a condition which
unreasonably annoys, injures or endangers the safety, health, morals, comfort or repose of
any considerable number of inembers of the public." Minn. Stat. § 6Q9.74(1) (20Q6).
3 The city also gave "violations of the license conditions" as a factor supporting revoking
Diva's licenses under Code § 310.06(b)(8). While these violations furnish an
independent basis for revocation under Code § 310.06(b)(5), they do not meet the
"unreasonably annoy, injure or endanger the safety, health, morals, comfort or repose of
any considerable number of inembers of the public" criterion of Code § 310.06(b)(8).
7
v�����
The first factor, an increase in police calls, is supported by e�chibits showing that
there were 117 police calls to Diva's area between its June 2005 opening and March 2007
(22 months), as opposed to 43 police calls in the 22 months preceding June 2005, and that
many of the 117 calls were for fights and/or led to arrests.
The second, third, fourth, and fifth factors—street fights, changes in police patrol
patterns, neighborhood noise, and officers' concern for their own safety—are supported
by testimony from six polace officers.
One officer testified that, at about 2:00 a.m. on 20 November 2005, she was
driving past Diva's and observed about 30 people fighring in the street, that the people
did not respond to requests to clear the area, and that about ten squad cars were
summoned to assist. When asked, "Could you tell where the people were coming from?"
she answered, "They were coming out of Diva's bar." When asked, "Did you see them
coming out of Diva's bar?" she answered, "We did." The officer testified that she would
have been concerned for the safety of someone who happened to walk by and that the
situation was disruptive to the neighborhood.
A second officer testified that he was sent to Diva's on 17 June 2006 at about
2:00 a.m.; that he found one man unconscious in the street after apparently having been
hit with a brick; that the crowd numbered at least 30 people; that the officer assumed they
came from Diva's and knew of nowhere else they could have come from; that he did not
remember seeing Diva's security guards present; that at least 14 officers were needed to
control the situation; and that he was concerned far the officers' safety.
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A third officer testified that he was driving by Diva's at the time of the 17 June
2006 incident, saw a crowd of between 50 and 60 people, got out of his squad car to hy
to control the crowd, had to radio for assistance, and saw people coming out of Diva's
and fighting.
A fourth officer, testifying about yet another incident, answered the question,
"Was the crowd [outside Diva's] loud?" with "They were fighting, obnoxious, yelling."
A fifth officer testified that "It was known [to officers] that when it got close to
bar clos[ing time], that we had to go up around that [Diva's] area because of the
continued problems that we had up there as far as fights."
The sixth officer testified that, "The midnight sergeant said there was a lot of
problems at the Diva's Bar ... and he asked the officers if anybody had any downrime,
when they were not taking calls, to please drive up there and just make sure that there's
no problems going on up there." This officer also testified that she had used her
loudspeaker to tell two groups of fighting patrons "to break it up, go home, keep
walking," but that they "weren't listening to our orders to go home."
The testimony of these six officers provides substantial evidence to support the
findings that large fights involving Diva's patrons occurred in the street outside Diva's,
that police officers changed their patrol patterns because of the situation at Diva's, that
Diva's was a source of noise in the neighborhood, and that officers feared for their own
safety because of occurrences at Diva's.
' Diva's claims that "noise" was not an appropriate basis for the revocation because noise
was not mentioned in the notice of intent to revoke. But the notice of intent to revoke
L':
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The sixth, seventh, and eighth factors—D'ava's proximity to church, school, and
residence, citizens' complaints, and the failure of community efforts to resolve issues
with Diva's—were supported by testimony from the city's director of LIEP. Wl�en asked
how he became aware of Diva's, he testified that, soon after becoming LIEP director, he
"began to meet with neighborhood groups and organizations talking about the position,
and [Diva's) frequently came up." He recounted complaints made through a
computerized complaint system about loud music at all hours, about Diva's dumping
dirty water under a nearby store, about an obscene sign, about a sign saying "Smoking
permitted" because Diva's was a"private club," and about patrons so loud between 1:00
and 230 a.m. that a neighbor two blocks away had to close her windows. The LIEP
director reported that one complainant had said, "Diva's had brought a trashy element to
the neighborhood ... patrons wander the streets and yell at each other." The record also
includes a number of email complaints from neighborhood residents.
The LIEP director tesrified about complaints made to him personally about Diva's
"hours of operation, of late at night the loud music, reports of fights and unforiunately of
gunshots being fired and people actually being shot, killed and wounded." The LIEP
director also testified about an occasion in July 2006 when he
had an opporiunity to meet with over 150 neighbors in a very large
meeting, and to a person they expressed to rne their concern about public
safety as a result of the way that this particular establishment [Diva's] was
being operated. ...[I]t's the nature of the fights, of the large, loud
interactions of people outside of the establishment, and again the gunshots,
listed an incident on 28 April 2006 when an officer near Diva's observed "a large group
of people yelling who can be heard from 80 feet away."
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the people being shot, and the fear that people have far that establishment
being ... right across the sbreet from a school.
The LIEP director explained that he was familiar with the neighborhood where Diva's
was located and that what had been "a very safe, very sound neighborhood" was now a
place "where [people] feel threatened in their own particular neighborhood, where they
don't feel safe actually walking out of church at night to their cars." He believed that this
was "solely due to the way this particular bar is operating, when it has been a bar for
many, many, many years and we had not had complaints like that."
When asked how he responded to all the complaints, the LIEP director said, "[W]e
met in a number of ineetings ... to try to fashion conditions that would be placed on the
license [issued to Diva's] that would assure that the establishment could operate, continue
to operate, and at the same time would be safe to the rest of the neighborhood." He
testified that, after the murder at Diva's, meetings were held "to develop conditions to
assure the safe operation of that establishment, to protect the neighborhood and to
maintain the license holder's right to operate." This testimony supports the findings that
Diva's was close to a school, a church, and private residences; that citizens had
complained about Diva's; and that efforts to resolve issues with Diva's had failed.
Diva's argues that some evidence indicates that Diva's did not violate Code
§ 310.06(b)(8), i.e., that it did not "maintain[] or permit[] conditions that unreasonably
annoy, injure or endanger the safety, health, morals, comfort ar repose of any
considerable number of inembers of the public." But the city's findings must be
supported by substantial evidence, which is "such relevant evidence as a reasonable mind
11
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might accept as adequate to support a conclusion." Nat'1 Audubon Soc'y v. Minn.
Pollution Control Agency, 569 N.W.2d 211, 215 (Minn. App. 1997), review denied
(Minn. 16 Dec. 1997). It is unnecessary that all the evidence favor the finding of a
violarion.
To summarize, substantial evidence supports the findings that Diva's, in eight
instances, "failed to comply with any condition set forth in the license, or set forth in the
resolution granting or renewing the license" under Code § 310.06(b)(5); and that Diva's,
or the way in which Diva's was operated, in eight further instances, "maintain[ed] or
permit[ted] conditions that unreasonably annoy, injure or endanger the safety, health,
morals, comfort or repose of any considerable number of inembers of the publid' under
Code § 310.06(b)(8).
2. Was the Decision to Revoke Diva's Licenses Arbitrary or Capricious?
Code § 310.05(m) provides a matrix of penalties for violations based on the
number of appearances the licensee has had before the city council. St. Paul, Minn.,
Legislative Code § 310.05(m) (2006). For example, violations of conditions placed on a
5 Diva's also argues that the city council erred in relying on evidence of the murder and
the attempted murder occurring on Diva's premises, but admits that "it may never be
known with certainty whether the City Council improperly considered the July and
November 2006 incidents[] when it voted to revoke." The ALJ ruled that the city council
"may not rely on [these incidents] � to establish that [Diva's violated] ... Code
310.06(b)(8)" but that the city could "submit and adduce testimony [about these
incidents] in the same manner as to which other historical events in the hearing record—
such as meetings, inspections or police calls—are referenced." The ALJ also noted that
"due process requires that [the incidents] not form the basis of an adverse licensing
action." The only extensive testimony about the murder was provided by Diva's manager
in response to questions from Diva's counsel, over the city's objection. The city
produced ample evidence, exclusive of these incidents, to justify the revocation. Thus,
those incidents did not form the basis of this adverse licensing action.
12
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license or of relevant provisions of the code are punishable by a�500 fine after the first
appearance; a$1,000 fine after the second appearance; a$2,000 fine and a ten-day
suspension after the third appearance; and revocation after the fourth appearance. Id.
Code § 409.26(b) provides another matrix specifically for those holding licenses to sell
alcoholic beverages. St. Paul, Minn., Legislative Code § 409.26(b) (2006). For example,
the sale of an alcoholic beverage to an intoxicated person is punishable at the first
appearance by an unspecified fine; at the second appearance by an unspecified fine; at the
third appearance by a suspension of the license for up to 18 days; and at the fourth
appearance by revocation of the license. Id.
The penalties stated in the matrices "are presumed to be appropriate for every
case; however the council may deviate therefrom in an individual case where [it] finds
and determines that there exist substantial and compelling reasons making it more
appropriate to do so." St. Paul, Minn., Legislative Code §§ 310.05(m), 409.26(a). When
deviating, the city council must "provide written reasons that specify why the penalty
selected was more appropriate." Id.
Diva's argues that, because this was only its second appearance before the city
council, it was subject only to a fine of $1,000 under Code § 310.05(m) or an unspecified
fine under Code § 409.26(b), and not to revocation. But the city council "considered all
the evidence contained in the record for both hearings" before the ALJs and resolved
"that these two separate actions having come before the Council at one time are more
efficiently given one sanction." Therefore, the appearance at issue here was in reality a
consolidation of what would haue been Diva's second and third appearances.
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In revoking Diva's license, the city council treated this as a fourth appearance,
saying it found "[five] substantial and compelling reasons to deviate from [the]
presumptive penalty [for a third appearance under Code § 310.05(m)]." First, "[b]oth
Notices alleged more than one license violation ... and in both cases more than one
license violation was proved." Second, "[t]he violation of ... Code § 310.06(b)(8) [wa]s
a serious violation that indicates Diva's poses an immediate threat to public safety."
Third, if Diva's had had a separate appearance before the city council for each violation,
revocation would have been imposed after the fourth violation. Fourth, Diva's had
multiple violations after it agreed to add conditions to its license, demonstrating that
adding conditions to its license was ineffective. And fifth, in some instances Diva's had
not complied with license conditions until the city took further action.
Diva's claims that one member of the city council "tried to blur the distinction
between violations and appearances in determining the penalty." But the code clearly
intends to make penalties commensurate with the type of violation and the number of
times it was committed, not with the number of times an offender appears before the
council. See St. Paul, Minn., Legislative Code §§ 310.05(m)(ii)-(iii), 409.26(c)
(providing that "[t]he occurrence of multiple violations shall be grounds for depariure
from such penalties [in the matrix] in the council's discretion"; and that unless the
licensee admits the facts of a subsequent violation and stipulates to its addition to the
notice, "violations occurring after the date of the formal notice of hearing shall be the
subject of a separate proceeding and dealt with as a`2nd [or subsequent] appearance'
before the counciP').
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Diva's contrasts its situation to that in BAL, Inc. v. City of St. Pau1, 469 N.W.2d
341 (Minn. App. 1991) (uphoiding revocation of a bar's license), to argue that the
revocation was not permitted by the code and was arbitrary and capricious because
Diva's was given the same penalty as another licensee whose violations were more
severe.
As happened here, the city council in BAL revoked the license of The Wabasha
Bar on its third appearance, even though the ALJ had not recommended revocation. 469
N.W.2d at 342-43. This court affirmed the revocation. Id. at 343. Diva's argues that
BAL is distinguishable on its facts but the distinctions are insignificant. In BAL,
"[w]itnesses and police officers testified they saw bar patrons leave the premises with
drinks, congregate outside, and engage in loud and sometimes unruly behavior," id.,
whereas here, several police officers, but no other witnesses, testified to similar behavior
of Diva's patrons. In BAL, the owner of a neighboring apartment building testified that
he had lost business because of the bar; here, the LIEP director testified to complaints he
had received from neighborhood residents and business owners. Moreover, The
Wabasha Bar did not violate its on-sale license conditions or the building code. The
situation of The Wabasha Bar in BAL is sufficiently similar to that of Diva's to show that
imposing the same penalty on Diva's was not arbitrary or capricious. Thus, BAL does not
indicate that the revocation of Diva's license was arbitrary or capricious.
15
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We conclude that substantial evidence supports the findings that Diva's violated
the conditions of its licenses and operated in such a way as to endanger members of the
public and that the city's decision to revoke its license was not arbitrary or capricious.
Affirmed.
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