Dep’t of Health & Mental Hygiene v. Root 4 You LLC d/b/a Here & Now OATH Index No. 1460/24 (Feb. 16, 2024) ______________________________________________________ After ordering respondent to immediately close its business and cease operations for violating a Commissioner’s Order and City and State laws, petitioner commenced this permit revocation proceeding. ALJ determined that petitioner failed to schedule a hearing and afford respondent the opportunity to be heard within 15 days of the closure, as required by its rules and the State Sanitary Code. ALJ grants respondent’s motion to dismiss the petition and recommends lifting the closure order. ______________________________________________________ NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of DEPARTMENT OF HEALTH & MENTAL HYGIENE Petitioner - against - ROOT 4 YOU LLC d/b/a HERE & NOW Respondent ______________________________________________________ REPORT AND RECOMMENDATION SEON JEONG LEE, Administrative Law Judge Petitioner, the Department of Health and Mental Hygiene (“the Department”), commenced this permit revocation proceeding against respondent, holder of a food service establishment permit, for willful violation of a Commissioner’s Order and willful and/or serious violations of the New York City Health Code (“Health Code”) and the New York State Sanitary Code (“Sanitary Code”), including the sale of adulterated foods (ALJ Ex. 1). Health Code §§ 5.17(a)(1), 81.39(c) (Lexis 2024); Sanitary Code § 14-1.194(b) (Lexis 2024). The Department also seeks to continue closure of respondent’s establishment and its suspension of respondent’s permit while this proceeding is pending (ALJ Ex. 1). It is undisputed that on November 2, 2023, following an inspection, the Department ordered respondent to close immediately (“the closure order”) (ALJ Exs. 1 at ¶ 13, 2 at ¶ 13). - 2 - On November 17, 2023, the Department filed a “Petition and Notice of Conference,” providing notice to respondent of a remote conference to be held at the OATH Trials Division on December 1, 2023 (ALJ Ex. 5). Four days later, on November 21, 2023, it filed a revised “Petition and Notice of Conference” that included the link to the remote conference (ALJ Ex. 6). The Department scheduled the matter for conference only, not for trial. On November 30, 2023, respondent filed an Answer to the petition in which it sought relief from the closure order, including dismissal of the petition (ALJ Ex. 2). On December 7, 2023, the Department filed a “Petition and Notice of Trial,” with notice to respondent of a remote trial to be held at OATH Trials Division on December 13, 2023 (ALJ Ex. 1). At the trial held before me by videoconference on December 13, 2023, petitioner and respondent each presented documentary evidence and one witness. For the following reasons, I grant respondent’s motion to dismiss the petition and recommend lifting the closure order. BACKGROUND Native to Southeast Asia, the root of the Kava plant and the leaves of Kratom, a tropical tree, are sold in the United States for consumption (Pet. Exs. 2 at 1, 4 at 1-2). There is no dispute that respondent, a café, sold Kava-Kava (“Kava”) and Kratom as tea by mixing Kava powder and Kratom leaves in water (ALJ Ex. 4 at 1; Tr. 96-101). In December 2022, respondent submitted an application for a food service establishment permit with the City 1 to open a Kava café (Pet. Ex. 7 at 1; Tr. 89-90, 92). As authorized by the Department’s rules, 21 days after submitting the application, respondent opened for business on January 14, 2023 (Tr. 40, 90-92). Six months later, on July 13, 2023, the Department conducted the initial pre-permit inspection (Pet. Ex. 7; Tr. 25, 39-40, 92). Respondent’s co-owner testified that, during the inspection, the Department inspectors told him to discard the Kava and Kratom or else the business would be closed, so he complied (Tr. 89, 92-94, 107). The Department issued respondent a summons that was returnable to the OATH Hearings Division, alleging violations of the Health 1 The Department of Consumer and Worker Protection receives the online permit application and notifies the Department when the application is completed. The Department then schedules an inspection (Tr. 41, 74-75). - 3 - Code for, among other things, possessing and offering for sale foods or beverages containing Kava or Kratom, which the Department determined were adulterants not permitted to be offered for human consumption at food service establishments (ALJ Ex. 1 at ¶ 7; Pet. Ex. 8; Tr. 93-94, 107). According to the Department, because respondent took immediate corrective action by discarding the Kava and Kratom and said it would not sell them, the Department allowed respondent to remain open and approved the permit (Tr. 40, 74-75). On August 29, 2023, the Department issued to respondent an Order of the Commissioner mandating that it cease and desist, among other things, from serving, adding to food or beverages, storing, or offering for sale Kava and Kratom (ALJ Exs. 1 at ¶ 8, 2 at ¶ 8; Pet. Ex. 9; Tr. 94, 107- 108). On November 2, 2023, the Department conducted a second inspection and observed respondent continuing to maintain and sell Kava and Kratom. The Department issued to respondent another summons that cited violations for maintaining and selling Kava and Kratom and for violating the August 29, 2023 Order of the Commissioner. The summons was scheduled to be heard at the OATH Hearings Division (ALJ Ex. 1 at ¶¶ 9-12; Pet. Ex. 11; Tr. 25-26, 95). The Department also ordered respondent to close the business immediately. The inspector noted in the November 2, 2023 inspection report the following, “The establishment is order[ed] closed by order of the Department; All food & beverages processing, preparation, sale & transfer into or out from establishment must cease immediately & not commence again w/out [sic] prior authorization of department; Owner Jake Rubin must contact the Department to initiate the re-opening process . . . Closing Sign posted on front door.” (Pet. Ex. 10). On November 17, 2023, respondent had a hearing before the OATH Hearings Division on the summons it received on November 2, 2023, to defend against imposition of monetary penalties for alleged Health Code violations (Resp. Ex. E). Respondent’s permit, if not renewed, was set to expire on December 31, 2023 (ALJ Ex. 1 at ¶ 1). ANALYSIS Health Code section 5.17(a)(1) authorizes the Department to order suspension or revocation of a permit for “[w]illful or continued violation of this Code or for such other reason as the Commissioner or Board determines is sufficient grounds for suspension or revocation.” The - 4 - Department’s rules also provide that, “[w]hen permanent revocation of a permit is sought or a permitted entity is ordered to close and its permit is ordered suspended, if the Department determines that such permit should be permanently revoked, or such suspension continued, the Department shall schedule a hearing at the City Office of Administrative Trials and Hearings (OATH) within 15 days of closure.” Health Code § 5.17(b). The hearing affords an opportunity to the permittee “to show cause [as to] why its continued operation is not a public health or imminent health hazard and why it should be allowed to reopen.” Id .; see also Health Code § 81.39(c) (“Any person ordered to cease operation and service pursuant to this Article shall comply with such order immediately, and shall thereafter be provided with an opportunity to be heard pursuant to rule of the Department.”). The rule further provides that, after the hearing, the Commissioner will receive “a copy of the report and recommendation of an OATH administrative law judge . . . .” Health Code § 5.17(c). Similarly, Sanitary Code section 14-1.194 authorizes the Department to revoke a permit for “serious, repeated or persistent violations of any of the requirements of this Subpart . . . after notice and an opportunity for a hearing has been provided by the permit-issuing official.” Sanitary Code § 14-1.194(b). This rule also gives the Department authority to “suspend a permit and order immediate cessation of operations and service of food at a food service establishment” if it believes that “continued operation is an imminent hazard to public health.” Sanitary Code § 14-1.194(c). It further states that “[a]ny person so ordered [by the Department] is to comply immediately, and within 15 days is to be provided with an opportunity to be heard and to present proof that continued operation does not constitute a danger to the public health.” Id Pre-trial motion At the start of trial, respondent moved to dismiss the petition on two grounds, one of which included untimeliness of the trial (Tr. 10-11). 2 Respondent argued that section 5.17(b) of the Health Code required the Department to afford respondent a hearing within 15 days of the closure, but petitioner failed to comply. Respondent was ordered to close immediately on November 2, 2023; however, petitioner only filed its petition at this tribunal within 15 days on November 17, 2023, and the trial took place on December 13, 2023, well after the mandated time frame. 2 Prior to trial, the tribunal directed the parties to submit legal memoranda on the pre-trial motion (ALJ Exs. 3, 4). 48 RCNY § 1-34(c) (Lexis 2024). - 5 - Therefore, respondent argued that the closure order must be lifted, and the petition dismissed with prejudice (ALJ Ex. 4 at 4; Tr. 10-11). Petitioner opposed the motion and argued that filing a petition with the OATH Trials Division to begin the hearing process within 15 days of the closure satisfies section 5.17(b) (Tr. 11-12). Petitioner filed the “Petition and Notice of Conference” on November 17, 2023, within 15 days of the closure order. It asserted that there is no OATH case law interpreting Health Code section 5.17(b) to require a hearing to take place within 15 days of the closure and no case law challenging the Department’s long-time practice of filing a petition within 15 days. It further asserted that the Department “cannot on its own guarantee that OATH Trials Division has available trial dates within 15 days of the closure date” (ALJ Ex. 3 at 7; Tr. 11). Additionally, petitioner contended that respondent’s hearing at the OATH Hearings Division on November 17, 2023 on the summons issued to it on November 2, 2023, satisfied this rule because respondent believed this hearing controlled the closure determination (ALJ Ex. 3 at 8). Lastly, petitioner noted that respondent did not object to the pre-trial conference, nor did it request the conference date be converted to a hearing, and contended that respondent was not prejudiced by the delay because, on November 19, 2023, the café was observed reopened and operating despite the closure order (ALJ Ex. 3 at 8; Tr. 12). Motion to dismiss for failure to schedule a timely hearing Petitioner’s argument that a hearing is not required within 15 days of closure or that the hearing before the OATH Hearings Division on November 17, 2023 satisfied this requirement are unavailing. The starting point of statutory construction is the plain language of the statute. See Nostrom v. A.W. Chesterton Co. , 15 N.Y.3d 502, 507 (2010) (“[T]he text of a provision is the clearest indicator of the enactors’ intent, ‘and courts should construe unambiguous language to give effect to its plain meaning’”) (citation omitted). First, petitioner’s contention that filing a petition at the OATH Trials Division within 15 days satisfies section 5.17(b) is contrary to the plain language of that rule, which states, “the Department shall schedule a hearing at . . . [OATH] within 15 days of closure.” Health Code § 5.17(b) (emphasis added). Similarly, the Sanitary Code states that “within 15 days” of an order to cease operations immediately, respondent “is to be provided with an opportunity to be heard and to present proof” in support of continued operation. Sanitary Code § 14-1.194(c); see Gfs Inc. v. Frieden , 2008 N.Y.L.J. LEXIS 3519 at *5 (Sup. Ct. - 6 - N.Y. Co. Jan. 4, 2008) (holding that permittee complying with an order to close immediately per Sanitary Code section 14-1.194(c) was “entitled to a hearing to allow it to present proof that continued operation did not constitute a danger to public health within 15 days of the closure.”). Second, section 5.17(c) states that the hearing afforded to permittees under subsection (b) will be heard by an OATH administrative law judge (“ALJ”), meaning a judge serving in the Trials Division and not the Hearings Division. Charter §§ 1048, 1049 (Lexis 2024); compare 48 RCNY § 1-21 (assigning OATH ALJs to hear cases at the OATH Trials Division) with 48 RCNY § 6-11 (assigning judicial “Hearing Officers” to preside over hearings at the OATH Hearings Division). Petitioner asserted that respondent was afforded the opportunity to be heard within 15 days in accordance with its rules because the summons issued to respondent on the closure date, November 2, 2023, was heard at the OATH Hearings Division within 15 days. Petitioner’s argument, however, does not comport with the plain language of its rules that require a hearing before an ALJ and an opportunity for respondent to show cause in support of reopening the business. See Health Code § 5.17(b), (c). The November 17, 2023 Hearings Division proceeding was before a Judicial Hearing Officer adjudicating alleged Health Code violations charged in the summons for which monetary penalties may be assessed rather than afford respondent the opportunity to seek relief from the closure order (Resp. Ex. E). Therefore, the November 17, 2023 hearing did not satisfy the Department’s obligation under its rules. The Department’s obligation to schedule a prompt post-deprivation hearing at the OATH Trials Division is not permissive, it is mandatory. See Health Code § 5.17(b) (“the Department shall schedule a hearing”) (emphasis added); Health Code § 81.39(c) (“Any person ordered to cease operation and service . . . shall thereafter be provided with an opportunity to be heard pursuant to rule of the Department.”) (emphasis added). The concern stemming from an immediate closure order is the risk of erroneous deprivation and protection of permittees’ private interest in the ability to operate a business to earn a living. See S pinelli v. City of New York , 579 F.3d 160, 171 (2d Cir. 2009) (finding, in a licensing case, that a business owner has a strong private interest in the ability to operate a business and thereby “pursuing a particular livelihood”) (citation omitted); Camuglia v. City of Albuquerque , 448 F.3d 1214, 1219-20 (10th Cir. 2006) (restaurant owner had a protected property interest in a permit to operate a food service or processing establishment); see also Cloister East, Inc. v. N.Y. State Liquor Authority , 483 F.Supp. 3d 221, 233 - 7 - (S.D.N.Y. 2020) (finding that a restaurant has a strong private interest in a liquor license that gives a competitive advantage to earn additional revenue). The deprivation to food service establishments caused by the Department's closure order is analogous to summary suspension of taxi drivers’ licenses by the Taxi and Limousine Commission (“TLC”). In Nnebe v. Daus , 931 F.3d 66 (2d Cir. 2019), the Second Circuit addressed the due process implications of an agency rule that authorizes a summary suspension of taxi driver licenses following a driver’s arrest that resulted in criminal charges that might have public safety consequences. The process required is determined by balancing the three factors identified in Mathews v. Eldridge , 424 U.S. 319, 335 (1976): “First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.” The district court in Nnebe applied the Mathews framework and found that there was an “‘undoubtedly significant’ private interest at stake,” but noted that “‘the deprivation of a protected interest is mitigated by the availability of prompt post-deprivation review.’” 931 F.3d at 75 (citing Nnebe v. Daus , 665 F.Supp. 2d 311, 324 (S.D.N.Y. 2009)). The Second Circuit’s holding in Krimstock v. Kelly , 306 F.3d 40 (2d Cir. 2002), further underscores the importance of affording a prompt proceeding following a pre-hearing deprivation of a protected property interest. Krimstock addressed the procedural due process defect in failing to provide claimants with a prompt hearing after the New York City Police Department seizes a vehicle as an instrumentality of a crime. Id The Second Circuit held that due process of law requires claimants “be afforded a prompt post-seizure” hearing to contest the legitimacy of the seizure and remanded the matter to the district court to formulate the appropriate remedy. Id . at 67, 69-71. On remand, the district court ordered that a hearing be commenced within ten business days after the Police Department receives a written demand for such a hearing. See Krimstock v. Kelly , 2007 U.S. Dist. LEXIS 82612 at *6 (S.D.N.Y. 2007) [3d amended order] (“the Krimstock Order”). This tribunal has dismissed untimely petitions in both taxi driver licensing summary suspension and vehicle retention hearings regarding seizure of motor vehicles by police where the agency failed to meet the statutory, regulatory, or court-ordered deadlines prescribed for affording - 8 - a prompt hearing. In taxi driver license suspension cases, this tribunal has consistently granted respondent’s motion to dismiss the petition and recommended lifting the license suspension where the agency failed to hold a hearing within ten days as mandated by its own rules. Taxi & Limousine Comm’n v. Singh , OATH Index No. 1245/20 at 5-7 (Jan. 30, 2020), adopted , Comm’r Dec. (Feb. 5, 2020); Taxi & Limousine Comm’n v. Sow , OATH Index No. 467/20 at 14 (Oct. 15, 2019), adopted , Comm’r Dec. (Oct. 17, 2019). Likewise, this tribunal has dismissed vehicle retention petitions by the Police Department and restored vehicles to their owners or drivers where the Police Department failed to comply with the time frames set forth in the Krimstock Order. See Police Dep’t v. Ramirez , OATH Index No. 2418/07, mem. dec. at 4 (July 16, 2007) (“[D]ue to the constitutional bases underlying the Krimstock Order, compliance with the time frames and notice requirements should be strictly construed against the petitioner.”); Police Dep’t v. Singletary , OATH Index No. 342/06, mem. dec. at 3, 5 (Aug. 24, 2005) (granting respondent’s motion to dismiss the Krimstock proceeding and ordering return of the vehicle where the Police Department scheduled a hearing 22 business days after receipt of respondent’s initial demand for a hearing, rather than the ten days required by the Order, noting that the lack of bad faith or intentional misconduct by petitioner, or prejudice to respondent, is not controlling); see also Police Dep’t v. Brandon , OATH Index No. 2062/19, mem. dec. at 4 (Apr. 17, 2019) (ordering Police Department to return vehicle where it failed to serve notice as required by the Krimstock Order, noting that this tribunal “has consistently held that the notice requirements in the Krimstock Order are not ‘an empty formality’”); Police Dep’t v. Peake , OATH Index No. 1282/12, mem. dec. at 5-6 (Feb. 24, 2012) (ordering release of vehicle for failure to serve vehicle seizure notice at the time of arrest); Police Dep’t v. Sica , OATH Index No. 1139/06, mem. dec. at 5-6 (Jan. 26, 2006) (noting that the Krimstock Order has been strictly construed against petitioner, ALJ granted motion to dismiss and ordered release of vehicle where the Police Department failed to comply with the Order’s notice requirements). Finally, the Department asserted that it “cannot on its own guarantee that OATH Trials Division has available trial dates within 15 days of the closure date” (ALJ Ex. 3 at 7). However, petitioner’s suggestion that this tribunal might not be able to schedule a hearing within 15 days of closure is unfounded. Indeed, the OATH Trials Division routinely schedules hearings within required time frames for expedited hearings in taxi driver license summary suspension and vehicle retention cases. Suffice it to say that there is no proof before me that suggests any difficulty with - 9 - the OATH Trials Division scheduling trials timely. See 35 RCNY § 68-15(b) (Lexis 2024) (mandating that TLC must request a hearing be held at OATH within ten calendar days of receipt of request for a hearing on the summary suspension); see also Krimstock Order at *6 (Police Department must commence a hearing at OATH within ten business days of receipt of written demand for a hearing). Here, respondent was not afforded an opportunity to be heard 3 within 15 days of closure in accordance with the Department’s rules because this hearing was scheduled to take place approximately 41 days after the closure. The Department’s failure to schedule a prompt hearing violates its own rules and the Sanitary Code. Under these circumstances, dismissal of the petition and lifting of the closure order is the appropriate remedy. To find otherwise would make meaningless petitioner’s obligation to follow its own rules governing the scheduling of a prompt hearing to give permittees an opportunity to seek relief from the closure order. See Sow , OATH 467/20 at 13-14 (in dismissing summary suspension petition based on failure to comply with required scheduling deadlines, ALJ notes, “[t]o hold otherwise would render meaningless petitioner’s obligation to adhere to its own rules governing due process proceedings after summary suspension of a driver’s license”). Having granted respondent’s motion to dismiss the petition as untimely, it is unnecessary to address respondent’s other contention raised in the motion to dismiss. In sum, respondent’s motion to dismiss the petition should be granted and the closure order lifted. 3 The right to a hearing could be waived, but an effective waiver must be knowing, intentional, and voluntarily, and respondent did not waive the right to a hearing. See Brookhart v. Janis , 384 U.S. 1, 4 (1966) (“There is a presumption against the waiver of constitutional rights . . . and for a waiver to be effective it must be clearly established that there was ‘an intentional relinquishment or abandonment of a known right or privilege.’”); Feinerman v. Bd. of Cooperative Educational Services , 48 N.Y.2d 491, 497 (1979) (“[A] waiver must be found to have been knowingly and freely given, and not the product of coercive tactics.”). - 10 - RECOMMENDATION I recommend lifting the closure order against respondent. Seon Jeong Lee Administrative Law Judge February 16, 2024 SUBMITTED TO: ASHWIN VASAN, MD, PhD Commissioner APPEARANCES: NOAH LINGWALL, ESQ. Attorney for Petitioner BENJAMIN NOREN, ESQ. Attorney for Respondent