An East Village hookah lounge that reportedly hosted “pandemic parties” has failed to secure a temporary injunction requiring the State Liquor Authority to reinstate its liquor license, and will now petition the New York Supreme Court.

Cloister Cafe sued the New York State Liquor Authority on August 17, arguing that its rights to due process were violated when its liquor license was suspended during an emergency meeting on Aug. 7. The meeting occurred just hours after an SLA investigator and members of the New York City Sheriff’s Office visited the East 9th Street hookah bar and allegedly found patrons being served indoors and failing to adhere to social distancing requirements.

The State Liquor Authority claims it acted on dozens of recent 311 complaints as well as videos on social media showing a party-like atmosphere, but Cloister Cafe argued it was targeted solely because of a Gothamist post, published just a few days before the SLA investigation, about “illicit, underground pandemic parties.”

In its petition for an injunction, Cloister Cafe argued that the SLA gave undue credence to “numerous uninvestigated and uninformed statements” in the Gothamist article. On Wednesday, New York Southern District Judge Lewis A. Kaplan dismissed this basis for an injunction, indicating that there was no evidence that the SLA relied solely on the article.

“The Court does not mean to discount the plaintiffs’ belief that they were treated unfairly,” Judge Kaplan wrote, regarding allegations that the article sparked prejudicial treatment. “But on this record, the most plausible inference is that the SLA acted rationally by suspending the plaintiffs’ liquor license in the interest of public safety when it possessed a not insubstantial amount of information that the plaintiffs were engaging in conduct that posed an imminent threat to the health and safety of New Yorkers.”

Cloister Cafe also argued that its 14th-amendment rights to due process were violated because it wasn’t given notice of the SLA’s emergency online hearing, or the opportunity to attend it. Judge Kaplan denied the cafe’s motion for a preliminary injunction on this basis as well, but left the door open for it to file an Article 78 petition against the State Liquor Authority in New York Supreme Court.

Robert Garson, the attorney at GS2 Law who is representing Cloister Cafe, says he will do just that, and noted that the judge’s decision had implications beyond just his client’s case. “It’s not just for the Dobrenkos,” Garson told Bedford + Bowery, referring to the family that owns Cloister Cafe. “Hundreds of licenses have been taken away by the SLA. If it’s argued that this is done for public safety, it just so happens that a large payment to the SLA will assuage any fears they have. It begs the question: Are they seeking to take from the already devastated industry to line their own pockets, or is it really about public health?”

Cloister Cafe was one of 38 bars whose liquor licenses were suspended over the course of a week in early August, for “egregious violations of coronavirus-related violations,” according to a press release that also touted the suspensions of East Village bars The Hairy Lemon, The Wayland, and Maiden Lane. Investigators who entered Cloister Cafe around 12:30am, well after the state’s mandatory 11pm curfew on liquor-serving restaurants, found “numerous patrons ignoring social distancing with lines of customers congregating in front of the premises without facial coverings, at least twenty patrons consuming alcohol indoors under a fixed roof, and no receipts for food purchases,” according to Gov. Cuomo’s announcement. “The inspection identified thirty-three significant fire and life safety violations, with the NYC Sheriff’s Office issuing seven criminal court summonses.”

Last week, 25 state senators signed a letter calling on the SLA to end the “strict enforcement guidelines and high fines” that were “destroying businesses’ chances to survive the economic catastrophe brought by the pandemic.” The letter noted that the SLA had “targeted nearly 165 businesses with violations and large fines,” which can range up to $10,000. Jessica Ramos, the state senator who penned the letter, singled out Cloister Cafe as one of the businesses targeted by a “kangaroo court”-like process. The cafe “was inspected and told they were in the clear,” Ramos told the New York Post. “Yet minutes later, a second squad or different task force came in and penalized the place. This is a 30-year-old business without any prior infractions.”

The SLA says it only suspends licenses “in the most extreme, egregious cases,” and Gothamist’s initial report about Cloister Cafe (going by the name Cafe Tuscano this summer) seemed to fit the bill. A source reported seeing “hundreds of people, nobody is social distancing, nobody is wearing masks. It’s like the normal club scene.” 

While Cloister Cafe’s lawyer acknowledged that the venue had been working with hospitality operators Mike Satsky and Brian Gefter, he objected to the term “parties,” and said the gatherings were “just people coming to eat and drink.” He noted that the New York City Sheriff’s Office said in its report that “all patrons were donning facial masks.” But in his decision, Judge Kaplan said that an investigator’s video showed that “a substantial majority of the individuals who appear to be patrons were not wearing masks, and that a bartender, who was wearing a mask and located in what appears to be an indoor bar, was serving alcohol to patrons within that space.”

“Put more simply,” Judge Kaplan’s decision reads, “the video appears to depict a nightclub-like party taking place in a lounge setting under a large tent covering.”

That tent covering lies at the heart of Cloister Cafe’s complaint against the SLA, which can be read in detail here. The cafe claims that the SLA investigator mischaracterized its courtyard’s canvas covering as a ceiling, and mistakenly claimed that the courtyard was enclosed by three walls when one of the walls was in fact a “half-wall with the upper half open for air flow.”

Whether or not the courtyard was fully enclosed and “indoor” dining and drinking actually occurred is still up for debate, as Cloister Cafe’s lawsuit against the State Liquor Authority remains ongoing. In addition, the SLA is expected to consider the matter when it decides whether to go ahead and fully revoke the cafe’s indefinitely suspended liquor license.

The State Liquor Authority had argued against an injunction, claiming that Cloister Cafe’s ultimate fate would be decided by the revocation hearing. Meaning: Because the emergency suspension wasn’t the SLA’s final say in the matter, it couldn’t be considered a violation of due process. But Judge Kaplan noted, in his decision, that the suspension was indefinite, and that Cloister Cafe would financially suffer from having to go without a liquor license during lengthy revocation proceedings. Garson, the cafe’s lawyer, told Bedford + Bowery that reopening as a liquor-free restaurant doesn’t make financial sense, and the cafe remains closed, with its 40 employees out of work.

Judge Kaplan declined to issue an injunction in part because the cafe is free to initiate an Article 78 proceeding, which allows for the appeal of decisions made by New York state or local agencies if they are “arbitrary and capricious,” or if they aren’t supported by substantial evidence.

As Judge Kaplan’s decision noted, the State Liquor Authority has, in the past, successfully argued in court that Article 78 proceedings shouldn’t apply to suspensions that occur, as Cloister Cafe’s did, under the New York State Administration Procedures Act. That act, also known as SAPA, allows the SLA to immediately suspend a liquor license without notice or hearing if public health or safety necessitates emergency action– so long as a revocation proceeding later takes place.

Judge Kaplan ruled that the SLA’s own laws acknowledge that Article 78 proceedings can be initiated in the case of suspensions, including SAPA ones. He also noted that the suspension of Cloister Cafe’s liquor license and the subsequent loss of income could be considered “actual, concrete injury,” the standard cited by the New York Court of Appeals for Article 78 proceedings.

Earlier today, Cloister Cafe’s lawyer indicated that he would file an Article 78 petition as soon as this afternoon, and directed harsh words against the State Liquor Authority. “If I were to take away someone’s livelihood,” he said, “I personally would think very long and hard about doing so, and I wouldn’t be doing so on a daily basis, affecting hundreds of people with the swish of a pen.”

Correction, Sept. 7: A previous version of this post was revised to correct Mike Satsky and Brian Gefter’s job descriptions.