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Acott Ventures, LLC v. District of Columbia Alcoholic Beverage Control Board

Court of Appeals of Columbia District

March 17, 2016


         Argued January 19, 2016.

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          On Petition for Review of a Decision and Order of the District of Columbia Alcoholic Beverage Control Board. (PRO-149-13).

         Matthew August LeFande for the petitioner.

         Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, Loren L. AliKhan, Deputy Solicitor General, and Richard S. Love, Senior Assistant Attorney General, filed a statement in lieu of a brief in support of the respondent.

         Cornish F. Hitchcock for the intervenors.

         Before THOMPSON and EASTERLY, Associate Judges, and KRAVITZ, Associate Judge, Superior Court of the District of Columbia.[*]


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         Neal E. Kravitz, Associate Judge:

         The Shadow Room nightclub challenges a decision of the District of Columbia Alcoholic Beverage Control Board requiring the club to retain a reimbursable Metropolitan Police Department detail as a condition of the renewal of its liquor license. Shadow Room contends that the Board misallocated the burden of proof and erroneously admitted hearsay and unqualified expert testimony at a contested hearing on its application for the renewal of its license. Shadow Room contends further that the Board lacked legal authority to condition the renewal of its license on its hiring of a police detail and that the Board's decision was not supported by substantial evidence in the record. Finally, Shadow Room argues that the Board's decision must be set aside because the neighbors and representatives of the local

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Advisory Neighborhood Commission who protested its application acted with an unlawful discriminatory motive. We reject the club's contentions and affirm the decision of the Board.

         I. Factual and Procedural History

         A. Background

         Shadow Room is owned and operated by the petitioner, Acott Ventures, LLC. The club is located on the ground floor of a commercial building at 2131 K Street, N.W., in a mixed downtown neighborhood along with other commercial establishments, office buildings, hotels, apartments, condominiums, and a hospital. The main campus of George Washington University is a few blocks away.

         This appeal is the latest installment of a decade-long dispute between Shadow Room's owners and neighbors over the impact of the club's operations on the area surrounding the club. The dispute began in 2006, when Shadow Room first sought a liquor license from the Alcoholic Beverage Control Board. The club's application drew protests from a " group of five or more" neighbors residing in the West End Place condominiums, at 1099 22nd Street, N.W., and from ANC 2A, the local Advisory Neighborhood Commission. See D.C. Code § § 25-601 (2) & (4) (2012 Repl.).

         The Board granted Shadow Room's application despite the protests and issued the club a Retail Class C/N liquor license in September 2007. See D.C. Code § 25-113 (d)(2)(A) (2012 Repl.). To address concerns about unruly patrons making noise late at night, the Board set limits on the club's hours of operation and maximum number of customers. By law, the club's license was valid for three years, subject to renewal via application to the Board. See D.C. Code § 25-104 (b) (2012 Repl.).

         Shadow Room opened for business shortly after it obtained its license. A year later, in September 2008, the club applied to the Board for an extension of its hours of operation and a doubling of its capacity, from 300 to 600 customers. ANC 2A protested the application. Before the matter proceeded to a hearing, however, Shadow Room and ANC 2A reached a settlement agreement under which the club's hours were extended but its occupancy cap was maintained at 300; the club also promised to monitor the exterior of the premises and the conduct of its incoming and outgoing customers. See D.C. Code § § 25-445, -446 (2012 Repl.). The Board issued an order on November 12, 2008 approving the terms of the settlement agreement. See 23 DCMR § 1608.2 (2008).

         In 2009, the owners of Acott Ventures, LLC formed a separate limited liability company, Panutat, LLC, and through that entity applied to the Board for a Retail Class C/N liquor license for a nightclub named Sanctuary 21 to be housed in the basement of Shadow Room's building. A " group of five or more" neighbors and ANC 2A protested the application, arguing that the application was intended as an end-run around the occupancy cap set forth in the settlement agreement between Acott Ventures, LLC and ANC 2A. The parties protesting the application also contended that the presence of a second nightclub at the same address as Shadow Room would adversely affect pedestrian safety, real property values, and the peace, order, and quiet of the neighborhood.

         After two contested hearings and an interim trip to this court, the Board issued an order on January 11, 2012 denying the application of Panutat, LLC for a liquor license to open a nightclub in the basement of 2131 K Street, N.W. The Board concluded that it was not appropriate to approve a license for a second nightclub to operate directly beneath Shadow Room because

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the two clubs together would be able to circumvent the occupancy cap set forth in the settlement agreement, to the detriment of nearby residents. We affirmed the Board's denial of Panutat, LLC's application. Panutat, LLC v. District of Columbia Alcoholic Beverage Control Bd., 75 A.3d 269, 272 (D.C. 2013).

         In the meantime, Shadow Room submitted an application to the Board in 2010 seeking the renewal of its license for a second three-year period, as well as permission to open a summer garden on the sidewalk in front of the club. A " group of five or more" neighbors and ANC 2A protested the application, and the Board held a contested hearing. In an order issued on January 11, 2012, the Board granted Shadow Room's request for the renewal of its liquor license on the conditions that the club not distribute flyers to its patrons on the premises and that it keep the front and immediate vicinity of the establishment free of debris and litter. The Board denied Shadow Room's request for a summer garden, concluding that the outdoor lounge envisioned by the club would lead to an increase in the number of disturbances in the neighborhood caused by the club's customers.

         In the matter now before us, Shadow Room applied to the Board in 2013 for yet another renewal of its liquor license. At the time, the club was open for business three nights each week: Thursdays from 10:00 p.m. until 2:00 a.m. and Fridays and Saturdays from 10:00 p.m. until 3:00 a.m. Featured music at the club was hip-hop on Thursday nights, a mix on Fridays, and " house with a little bit of hip-hop" on Saturday nights. The club advertised its Thursday night offerings as " Instant Chaos."

         A " group of five or more" neighbors and ANC 2A again opposed Shadow Room's application for renewal. Stating that they were most concerned about loud and unruly behavior in the streets around the club after closing time on Thursday nights, the protestants argued for the denial of Shadow Room's application or, in the alternative, for an order requiring the club to hire a reimbursable Metropolitan Police Department detail as a condition of the renewal of its license.

         B. The Protest Hearing

         The Alcoholic Beverage Control Board, with all seven of its members present, convened an evidentiary hearing on Shadow Room's renewal application on March 12, 2014. The first witness, called by the Board, was John Suero, an investigator with the Alcoholic Beverage Regulation Administration (ABRA) assigned to investigate the appropriateness of the club's request. Mr. Suero testified that he and other ABRA investigators made a total of seventeen documented visits to the club at varying times of night in February 2014. Mr. Suero gave a favorable report, stating that on his visits he heard no noise in the alley behind the club and observed no loitering, fighting, or police activity out front. Mr. Suero stated further that he did not see an excessive number of cars parked on the street outside the club and that the trash receptacle and alley behind the club were well maintained. He conceded that none of the visits by ABRA investigators occurred at closing time on a Thursday night and that only one visit occurred at closing time on a Friday or Saturday night. He also stated that the investigation was conducted during an unusually cold period and that the weather might have had a chilling effect on the behavior of Shadow Room's customers leaving the club.

         Shadow Room then called Swaptak Das, an owner and manager of the club, as its only witness. Mr. Das testified that Shadow

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Room employs a team of eleven or twelve people to handle security inside and outside the club every night the club is open. He testified further that the club has taken significant steps to ensure the quiet and orderly departure of its customers. Specifically, Mr. Das stated that the disc jockey makes an announcement every night at closing time asking customers to be quiet as they leave the club, that signage and security personnel reinforce this message as patrons depart, and that customers waiting for their cars at a valet parking kiosk in front of the club are required to line up in the direction of 21st Street, N.W. (and away from the nearest residences, located on 22nd Street, N.W.). In addition, Mr. Das stated, all visitors on Thursday nights are patted down for weapons as they enter the club, and the club brings in an expert from California to conduct monthly security trainings for its staff.

         Regarding security outside the club, particularly at closing time, Mr. Das testified that the club's security staff is permitted to go all the way up and down the 2100 block of K Street, N.W., as necessary to ask customers to be quiet and orderly as they leave the club and move on to their next destinations. Mr. Das acknowledged, however, that the club's security personnel are not allowed to intervene in altercations occurring outside the club except within a seven-foot-by-seven-foot-square area directly in front of the club's entrance; in the event of an altercation involving a Shadow Room customer occurring beyond this designated area, the club's security staff is prohibited from doing anything other than notifying management and calling 911.

         Mr. Das nonetheless denied that Shadow Room's customers are frequently loud and unruly as they leave the club at closing time. To the contrary, he testified, the club's patrons are mostly educated, well-dressed professionals who travel to and from the club by taxi and cause no trouble in the neighborhood. Mr. Das assured the Board that the club's security team is able to handle the crowd and that a police detail would be not only prohibitively expensive, but unnecessary.

         The first witness for the protestants was Derek Crumbley, a licensed private investigator with twenty-one years of experience. Mr. Crumbley explained that he was retained by the homeowners' association at West End Place, 1099 22nd Street, N.W. His task was to monitor Shadow Room's front entrance from 10:00 on a Thursday night until 3:00 the following morning.

         Mr. Crumbley testified that he positioned himself inside a car parked in the service lane of the 2100 block of K Street, N.W. beginning at 10:00 p.m. on Thursday, March 6, 2014. Mr. Crumbley watched from a distance of thirty to thirty-five feet as 150 to 200 people entered the club over the next several hours and " a large mob" then exited the club shortly after 2:00 a.m. and began a loud pushing and shoving match on the sidewalk. The pushing and shoving quickly escalated into fisticuffs involving three or four people, one of whom was struck in the back of the head before the altercation spilled out into the street directly in front of the club. At some point, security personnel from the club restrained one of the men involved in the fight but then released him, enabling the man to return to the fight, which continued for three or four minutes before everyone was separated. The police arrived fifteen or twenty minutes later, after the fight had ended and the people involved had dispersed and left the area. Mr. Crumbley videotaped the incident from inside his car, and his video was admitted in evidence and played for the Board.

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          Over Shadow Room's objection, Mr. Crumbley testified that a police detail stationed outside the club would have led to the handling of the fight in a more timely manner and would have prevented the incident from escalating as it did. Mr. Crumbley later acknowledged on cross-examination that he had no training or experience in law enforcement or nightclub security.

         The next witness for the protestants was Lieutenant Donald Craig, a twenty-four-year veteran of the Metropolitan Police Department assigned to the police district in which Shadow Room is located. Lt. Craig testified that he had compiled police reports and 911 call records for incidents involving the club's customers from 2009 through 2013. He then walked the Board through the reports of several of the incidents, including an assault with a dangerous weapon (brandy glass) that occurred inside the club in 2013 and a fight among thirty of the club's ...

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