New York Restaurant Lawyers Blog

New York City's ban on restaurants serving Sunday morning brunch at outdoor tables may be coming to an end. According to a New York Post article by Rich Calder and Rebecca Rosenberg, City council members Daniel Gorodnick of Manhattan and Steven Levin of Brooklyn are trying to overturn the current city law which bans sidewalk table eating on Sundays before 12 noon.

The current law, which is fairly obscure and routinely overlooked, became an issue recently when Brooklyn's Community Board 1 complained to the city about early morning sidewalk overcrowding. Apparently, the brunchers took up so much space in Williamsburg and Greenpoint that some residents had trouble walking down the sidewalks on their way to church.

I'm pretty sure the local community board was not bombarded by angry residents who could not get to Church on Sunday morning because the sidewalks were just too crowded with Sunday brunchers. In my humble opinion, the more likely motive behind the crackdown: one or two community board members or their friends or family simply got going on a little power trip and decided to show the neighborhood who's the boss.

That said, it is just this type of 'petty' regulation and code enforcement issue which make it so hard for restaurant owners and operators to operate in New York City.

Question: how does the ban on serving breakfast on outdoor tables on Sunday before 12 noon affect your business? I'd love to know what you think.

A few days ago I was working with a restaurant owner on a possible appeal of the results of an inspection in New York City. Some of the alleged (and hotly contested) violations involved storing sealed, boxed, dry foods in an improper location.

While thinking about how to deal with the inevitable 'he said, he said' testimony at the hearing, it occurred to me that one way to resolve the problem would be to video tape the entire inspection. Either the city could add a video requirement to the inspection rules, or an owner/operator could tape the inspection as it occurred.

There are pros and cons to both ways of doing this, and there are good arguments that taping is either a good thing or a huge problem.

I'd love to know what you think about the idea.

The New York City Department of Health is considering a ban on beer and liquor drink specials that would effectively end Happy Hour in the city's bars and restaurants, according to an article by Gary Buiso in today's New York Post. The article has been picked up and reprinted or reported on in numerous media outlets throughout the day.

Apparently, the idea is so unpopular that Mayor Bloomberg has already issued a sharply worked blanket denial claiming that there is no chance such a ban is even being considered.

The thing that struck me as awfully strange about the article was the notion that the New York City Health Department seriously believes it has the authority to regulate beer and liquor prices or pricing policy. I'm pretty sure even the Health Department knows that there are actual limits on their power (despite what they would like to believe), so how is it that they think they can impose their will on New York City's bars and restaurants and their customers?

Well, buried in the 11th paragraph of the Post article is the answer: a change in New York State law is required. No kidding?! This inconvenient little fact basically takes all the hot air out of the Health Department's plans, and the Post article. But why let those pesky facts get in the way of a good story?

Now, because I represent bars and restaurants in New York and think that eliminating Happy Hour is a horrible idea, I'm not going to tell the Health Department that I know of at least 5 ways for them to reach their goal without having to pass legislation in the state legislature.

Hopefully, the Health Department will decide that banning Happy Hour is a bad idea and will work to create policies which actually help businesses prosper and keep the public safe. It's not impossible for those two goals to peacefully co-exist, but it takes a little more serious thought than the Health Department has displayed in today's Post article.

Today, the U.S. Equal Employment Opportunity Commission voted to revise its long-standing guidance to employers on how to properly evaluate job applicants' criminal histories in pre-employment screening. A copy of the new policies can be found here.

The effect on restaurant and bar employee hiring practices will be substantial. All restaurant and bar owners should now consult with their lawyers or human resources consultants to review and change their hiring procedures to make sure they comply with the new rules.

The revamped EEOC guidelines provide more detail and clarification on the standards for using criminal background checks for employment candidates, and make recommendations on how employers can avoid EEOC scrutiny.

The new guidance is the result of a two-year review of the issue by the EEOC. Denying jobs solely on the basis of criminal convictions is illegal, because it would disproportionately affect African-Americans and Hispanics, who have higher rates of arrest and criminal conviction.

Along with several detailed examples of policies that meet the "job-related" and "business necessity" standard, the new guidance analyzes the legal history of these standards in light of United States Supreme Court decisions on the subject.

The National Retail Federation expressed concern that the new guidelines recommend that employers not ask about convictions on initial job applications and that when they do, "the inquiries be limited to convictions for which exclusion would be job-related for the position in question."

Doing that would "restrict employers' ability to ensure the safety of their workers and customers," said David French, the federation's vice president for government relations. He said the federation would continue to discuss the issue with the EEOC and other business organizations.

For more information on the new rules, or to discuss other restaurant and bar employment issues, please call or email me.

Whether you are a veteran operator or opening your first establishment, negotiating and documenting a restaurant lease is critical to the success of your concept. The terms of your lease can make or break your restaurant financially.

Here are 7 important legal issues which must be addressed in your lease and some ideas for how to solve them:

1. Rent Escalations & Pass Through Charges: Yearly rent increases should be tied to either pre-negotiated fixed yearly rent increases. If this is not possible, the next best option would be to link rent increases to the Consumer Price Index (CPI) with a ceiling but no floor. You should try as hard as humanly possible to avoid leases which base the rent on the percentage of your sales.

Also, restaurant owners need to pay very close attention to pass through costs, such as Common Area Maintenance (CAM) charges, trash fees, snow removal/landscaping costs, tax increases, capital improvements, etc. These additional fees can very easily get out of control in the middle and later years of a lease, and every effort should be made to eliminate or at least cap them in the lease.

2. Exclusive and Prohibited Use: Leases contain clauses specifying the exclusive use of the property. Restaurant owners and operators will typically try and negotiate for an exclusive use clause which excludes all competing concepts. Landlords will generally try to obtain a clause which is very specific, so that they have more flexibility to lease their other spaces. For prohibited use clauses, the roles are reversed: owners and operators will want a very narrow prohibited use clause which makes it easier to assign or sublease the space, or change the concept, and Landlords will want clauses which are very broad so that they can control the use of the space in the future,

3. HVAC/Kitchen Hood/Power Supply: Because restaurants use more HVAC and power than many other commercial tenants, a restaurant lease must account for these additional costs. This includes issues such as: (a) who pays for improvements to the HVAC system and electrical system before the lease period begins, (b) which contractors can do the work, and (c) which party pays for rate and cost increases in electrical power. In addition, there are a number of issues surrounding the condition or construction of a kitchen hood which must be negotiated, including: (a) the cost of construction or bringing the hood and its exhaust/venting system up to code, (b) responsibility for the roofing and walls and spaces through which the venting passes, and (c) payment of costs for code changes regarding the hood and ventilation systems.

Continue reading "Restaurant Leasing: 6 Important Issues to Consider " »

For most restaurant and bar owners in New York, one of the most serious and dangerous charges that can be made against you is that you have violated the state's liquor laws. If you are accused of a liquor law violation, your ability to remain open for business is at stake. Consulting with an experienced restaurant and bar lawyer before responding to a violation can help reduce the damage a violation can cause to your business if it is not handled properly.

If you are accused of a violation, the New York State Liquor Authority will issue a Notice of Pleading which will contain the formal charges against you and will specify when the violation occurred and the exact nature of the alleged infraction.

The most commonly alleged violations include: (a) sale of alcohol to a minor, (b) sale of alcohol to an intoxicated person, (c) maintaining a disorderly premises, (d) sale of alcohol during prohibited hours, (e) gambling, and (f) illegal employment of a minor.

Once you have received your Notice of Pleading, you have three options for resolving the problem:

Continue reading "New York Liquor Law Violations: Protecting Your Business and Your License When You Are Accused" »

I read an article recently in the Wall Street Journal about the rise of pop-up restaurants. Pop-up restaurants are temporary eateries that set up shop for a few days, weeks or months in spaces such as hotel lobbies or other restaurants that close for the night. The concept is definitely interesting, and I'm amazed at how quickly these pop-ups come, go, and change.

But being the lawyer that I am, I could not help but wonder about how these pop-ups work from a legal standpoint, and whether the operators have considered all of the legal issues involved.

So, here is my list of 5 questions every pop-up operator must ask to make sure the operation is legal and the operators are legally protected as much as possible under the circumstances.

1. Whose Liquor License Are You Using? This is a critical issue for pop-up operators. Are you going to get a temporary liquor license and buy your own alcohol, or will you order and sell under the property's license. If so, who is responsible for violations and compliance? These issues must be discussed and agreed to in advance, since a violation or mistake can result in license suspensions.

2. What Happens If Something Breaks or Someone Gets Injured? What insurance is in place for accidents involving customers, vendors, or employees? What insurance is there for damage to the building, equipment, etc? Again, the parties should sort these questions out in advance, and all required insurance should be in place when the doors to the pop-up event open.

Continue reading "Pop Up Restaurants: 5 Legal Questions Every Operator Must Ask" »

The New York State Liquor Authority has launched a new interactive map, plotting each and every licensed establishment, all pending applications, and the violations history of each licensed location
Now, anyone will be able to scroll across the map, zoom in and out, and search active and pending licenses by address, company and business name. When they click on a point, the map will display all license details and disciplinary histories. The map, which will be updated every night and span across the state, will also plot the locations of churches and schools, which are taken into account when applications are considered.

While much of the data is already available on the agency's website online, the maps will provide additional information that was previously only available through phone calls and Freedom of Information Law requests to the Liquor Authority.

For a link to the map, click here.

In a $20 million lawsuit, Michael Chow alleged that his former pupil, defendant Philippe Chow, stole his restaurant's name - one of the most common family names in China - as well as its recipes and even its ambiance. The case has been described by described by some as a classic case of teacher versus student.

Philippe Chow counter-sued for defamation, stating that, not only did he become a high-level chef in his 25 years at Mr. Chow, but that he, along with mentor Sik Chung Lam, helped create the restaurant's menu.

An 11-person Miami jury granted Philippe Chow an impressive victory of 15 out of 16 wins, clearing the fast growing Chinese restaurant brand on all counts of trademark infringement, unfair and deceptive trade practices, and misappropriation of trade secrets. Philippe Chow was cleared on 16 out of 16 counts in California and Florida and 14 out of 16 counts in New York.

To me, the most interesting part of the litigation was the allegation that Philippe Chow 'stole' Mr. Chow's recipes, because one of the questions I get asked often by clients and potential clients is whether they can protect their recipes.

The answer is yes, you can absolutely protect the value of your recipes. Copyright protection is available for your written description of the way the ingredients are assembled and prepared in order to create the food. The ingredient list itself is not copyrightable, but the manner and order in which the ingredients are assembled, and possibly even the plating presentation of the food is in fact protected.

Another aspect of your food which can be protected is the name you give to your dish or food. You may be able to trademark the name of your dish, which could be important if you market or sell the food using its name. The trademark process is a little bit more complicated than the copyright process, but a good restaurant lawyer should be able to handle both tasks efficiently.

If you would like more information about how you can copyright your recipe or trademark the name of your dish or food item, please call or email me.

A recent article posted on MSNBC's website by Alan Boyle revealed that a scientist working at a university in the Netherlands is working on a project to grow animal meat in a laboratory using funding provided by a private investor. If the scientist, whose name is Mark Post, succeeds, it just might revolutionize the entire restaurant industry. Let's take a look at a few of the legal issues that restaurant owners would have to confront if lab grown meat were to become a reality:

1. Government Regulation: It's a certainty that any lab grown meat product which would be available for sale to the general public in a restaurant will be heavily regulated by the government at the federal and state levels. Much like the regulations affecting beef fed with various hormones and supplements, I expect comprehensive disclosure and use regulations to be in place before the government allows any restaurant owner to serve artificial meat to be served to the public. These rules will probably cover every stage of the food production process, from creation to disposal after the meal is served.

2. Advertising and Marketing: If you are going to serve lab made meat, you are now going to have to deal with the question of how to promote the product to your customers. The legal issues involved will include various consumer truth- in-advertising laws, disclosure laws, and anti-fraud rules. What your advertising and marketing can and cannot say about the lab meat will of course depend on the regulations on the use of the meat imposed by the government, and the products you are going to serve.

Continue reading "How The Restaurant Industry Might Be Affected By Plans to Grown Meat In A Lab" »

New restaurant owners can sometime be intimidated by the legal process needed to build a new establishment. Here is a general outline of the legal steps required to build and launch your new restaurant.

• Zoning: Your location must be zoned to allow a restaurant. Zoning restrictions can sometimes be changed, so don't give up if you realize the zoning does not currently allow a restaurant. A good restaurant lawyer can help you apply to change the zoning to permit your concept.

• Site Approval: Every new building must be reviewed and approved to make sure it complies with the local master plan or building restrictions as to size, type, and features. Check with the planning board or commission for a site approval.

• Public Hearing: A public hearing allows people to voice their objections concerning businesses in the community. These hearings address issues relating to the businesses' impact on the environment, the traffic and the overall community. For example, these issues may arise if a restaurant serves alcohol. Make sure to attend these hearings to find out if there are any possible objections. Be prepared to address and respond to them in case they do arise.

Continue reading "7 Legal Steps You Will Need to Complete to Build Your New Restaurant" »

One of the first decisions you will have to make when you decide to open a restaurant or bar in New York is the type of corporation you want for the establishment. There are a few to choose from, but the two most commonly used corporate forms are an S-Corp. and an LLC.

Each has its advantages and drawbacks. In the end, the best way to decide which corporate form suits your unique situation is to consult an experienced restaurant and bar lawyer and accountant.

That being said, some of the things you should consider in selecting your corporate form are:

Continue reading "Choosing a Corporate Form for Opening a New Restaurant or Bar in New York: S-Corp or LLC? " »

A few days ago I met with a client to discuss his options for buying a restaurant in New York City. He was extremely hesitant about applying for a new liquor license, even though I explained to him the very real legal risks of buying the current shares of the existing restaurant company. No matter how I tried to explain the legal and financial benefits of forming a new company to run the restaurant, my client was completely focused on the sheer agony of a new liquor license application.

There are basically two ways to buy a restaurant: (a) buy the shares of the existing company, or (b) buy the assets of the restaurant and form a new corporation to own them. In my opinion, buying the assets is almost always the preferred way to purchase a restaurant. Here is why:

Continue reading "Buying a New York Restaurant: Would You Rather Transfer the Existing License or Start a New Company and Get a New License? " »

With the Super Bowl less than 2 weeks away, many restaurants and bars are busy planning and promoting their Super Bowl parties. Of course, beer and alcohol sales are usually a large component of your Super Bowl event, and every once in a while (I'm told) one or more of your customers is going to get drunk. And since that drunk customer is going to leave your establishment after the game is over, there is some chance that her or she will hurt someone else on their way home. If that actually happens, your restaurant or bar may get sued under New York's Dram Shop Act.

In light of these facts, now would be a good time to refresh your staff's understanding of the Dram Shop Act's requirements and review your company's policies and procedures for reducing your legal exposure to a lawsuit.

The Law:

The Dram Shop Act provides that a restaurant or bar can be sued for unlawfully sells or assists in procuring alcohol to any person apparently under the age of 21 or who is visible intoxicated. Specifically, New York General Obligations Law § 11-100 and §11-101, and New York Alcoholic Beverage Control Law § 65, are the New York's Dram Shop Act. Section 11-100 allows for a lawsuit against "any person who knowingly causes such intoxication or impairment of ability by unlawfully furnishing to or unlawfully assisting in procuring alcoholic beverages for such person with knowledge or reasonable cause to believe that such person was under the age of twenty-one years."

Section 11-101 provides a cause of action against any person who unlawfully sold or assisted in procuring liquor for such intoxicated person and caused or contributed to such intoxication. The unlawful conduct set forth in §11-100 and § 11-101 is defined in New York Alcoholic Beverage Control Law § 65, which provides that "no person
shall sell, deliver or give away or cause or permit or procured to be sold, delivered or given away any alcoholic beverages to (1) Any person, actually or apparently, under twenty-one years and (2) Any visibly intoxicated person."

These rules apply only to the commercial sale of alcohol, in other words, for profit. There are a number of situations in which the activities in question do not constitute the commercial sale of alcohol. It is important to consult with an experienced restaurant or bar attorney to determine whether your Super Bowl event qualifies for possible Dram Shop liability.

Continue reading "New York Restaurants and Bars Hosting Super Bowl Parties Should Review Alcohol Serving Policies and Procedures To Help Reduce Dram Shop Liability Risk " »

An article in today's Wall Street Journal reported that the U.S. Supreme Court refused to hear Applebee's International Inc.'s challenge to a lawsuit by more than 5,500 bartenders and servers who alleged the restaurant chain failed to properly apply the 'tip credit' and as a result underpaid them.

The plaintiffs, who are all current and former bartenders and servers, alleged that Applebee's required them to spend a substantial amount of time doing cleaning and general preparation work. The workers claim that Applebee's improperly took the tip credit against that work. Applebee's argued that it was allowed to take the tip credit because the work in question was a normal part of the employees' tip-producing jobs as bartenders and servers.

The federal district court for the Western District of Missouri denied Applebee's motion for summary judgment, and rejected Applebee's interpretation of the tip credit regulations. The Court succinctly summarized the rules for determining whether or not an employer can take the tip credit:

Thus, FLSA regulations and the Handbook indicate that a tipped employee's duties must fall into one of three categories. The first category includes all tip producing duties. An employer may take the tip credit for any employee time that falls within the first category. If an employee's duty is not' tip producing, then it must be incidental to one of the employee's tip producing duties (the second category), or it must be a duty that is unrelated to any of the employee's tip producing duties (the third category). If the duty falls within the second category, then the employer may take the tip credit for the time the employee spent on incidental duties so long as the incidental duties do not exceed 20 percent of the employee's overall duties. If the employee's second category duties exceed 20 percent of the employee's overall duties, then the employer may not take the tip credit for any of the employee's time spent on second category duties. Finally, an employer may not take the tip credit for any employee time that falls within the third category because third category duties are treated as separate and distinct occupations.

The Court then considered, and summarily rejected, Applebee's view of the tip credit rules:

Applebee's contends that an occupation-based analysis is the only appropriate analysis, and that the Handbook supports this conclusion. The Court disagrees. Applebee's argues that the Handbook's 20 percent limit on "general preparation work or maintenance" should "be construed to mean tasks that are not part of the regular duties of the `tipped employee' occupation, but instead are general tasks performed as part of a distinct, non-tipped occupation." (Reply at 12 (emphasis omitted).) Applebee's interpretation, however, would render the Handbook's 20 percent limit superfluous.

Continue reading "APPLEBEE'S RESTAURANTS TIP CREDIT APPEAL REJECTED BY US SUPREME COURT" »