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Tuesday, June 24, 2014

Does Your Lease Contain a Demolition Clause - Why You Should Be Scared

If you have opened a new restaurant or bar in the last two years, you have likely noticed that New York City landlords are becoming steadfast in their demand that all new leases contain demolition clauses.  Old office and residential buildings are potential redevelopment opportunities which landlords are no longer willing to overlook.  Landlords, of course, want to maintain a steady income from the property while also maintaining their flexibility to terminate leases and/or relocate tenants if the need arises.  If a landlord has redevelopment in mind, then a right to terminate existing leases so that demolition or substantial renovation can occur may be necessary. However, from a tenant's viewpoint, such a right, without limitation, can be less than satisfactory. Sometimes arriving at an appropriate middle ground can be impossible. Just ask Wylie Dufresne whose restaurant wd~50, is closing because the building is being torn down for renovation.    Similarly, according to Eater NY, P.J. Clarke’s is in the middle of a $40 million dollar lawsuit with its landlord who is allegedly attempting to push them out so as to make room for Pastis.  In short, tenants cannot overlook a landlord’s desire to evict them should an opportunity arise.  For that reason, when negotiating a new lease, Tenants must consider things such as:

  • Is there a restriction as to when the right to terminate can be exercised – e.g. after the 5th year;
  • How is "substantial renovation" defined and what restrictions should be placed on it – e.g. 50% or more of the rentable area of the building in which the premises is situated, whether or not the premises are directly affected;
  • What proof is required to support the bona fide nature of landlord’s intention to demolish or substantially renovate the building – e.g., architect’s plans, DOB permits, etc.;
  • What advance notice should be required;
  • Is there a payout or other form of compensation for the remaining value of the tenant's leasehold;
  • Will the landlord pay for those costs associated with finding a new location for your restaurant or bar, including moving expenses and broker fees? 

Landlords are not stopping at demolition, however.  A related trend finding its way into lease agreements is the “sale provision” which essentially gives a landlord the right to terminate a lease if the landlord intends to sell the building. Such a provision will often require that there be an actual purchase agreement between the landlord and a potential buyer before the right to terminate kicks in. A tenant will want to ensure that any such agreement is "bona fide" and not merely an agreement between related parties entered into for ulterior motives. However, when the trigger for the exercise of the landlord's right of termination is an actual purchase agreement having been signed, the notice period is likely to be relatively short so that evictions, if necessary, can be accomplished on or before closing.

You might ask, “Why would a landlord want to terminate a lease agreement when selling their building since the income from the building is likely part of the attraction?”  Depending on the type of building, the desire to terminate and provide vacant possession of some or all of the building may be desirable. If the property contains a number of underperforming tenants, the landlord may want the ability to terminate those tenancies on the basis that the new development will be more attractive without them.. With this in mind, when the lease is being negotiated a savvy tenant with sufficient bargaining strength might insist that any such termination be conditional upon the landlord terminating all other tenants (or at least a portion of them based on a specified percentage of other premises or within a defined area of the mall), making it more difficult for a landlord to discriminate among its tenants in the exercise of the termination right.

In short, an owner's desire to get the most out of its property is a natural instinct in the world of commercial real estate but the impact of these provisions can be devastating to a tenant’s business.  Tenants need to be savvy in their lease negotiations to ensure the survival of their restaurant or bar for at-least, the duration of the lease. 

 


Tuesday, June 24, 2014

Top 10 Considerations When Buying a Restaurant or Bar

1.  Buying the Assets vs. Buying the Company

Buying a business can be structured as an asset sale or as the purchase of an ownership interest in the legal entity that owns the restaurant. There are critical differences between these two options which come into when dealing with the State Liquor Authority, Sales Tax Department and a myriad of vendors.  Generally speaking, if you only buy the assets of a restaurant you will not be responsible for the prior owner’s liabilities unless you specifically agree to assume them.  This is true with the exception of the prior owner’s sales tax liability, if any, for which you must obtain a waiver from the tax department.

Despite this, sometimes it is in your best interest to buy the company itself, even though the seller’s liabilities might remain. This is particularly true when you intend to apply for a liquor license in a difficult community in New York City.   Only by reviewing all of the facts can you best determine how to structure your deal.

2.  What Assets are Included

Every restaurant and bar has a myriad of assets, both tangible and intangible. Some assets are owned outright while others are frequently leased (e.g. dishwashers, soda machines, POS systems).  Be sure to identify each and every asset you are acquiring in the purchase and which assets the Seller has no right to transfer.  If the Seller is leasing equipment, does he/she expect you to assume his lease agreement and if so, what are the terms of the lease.  No buyer wants to close on a purchase only to discover that the many of the assets have been removed from the restaurant because the seller was under a different impression as to what was  being sold.

3.  Valuation

It is necessary to accurately value the assets or the company that you are buying. An unreasonably high purchase price lends itself to failure of your business.  Unfortunately, both parties are emotionally invested when it comes to the purchase price, and often buyers are distracted by the allure of owning you’re their first restaurant or bar, that they overvalue what they purchasing.   There are many formulas when valuing a business or its assets, but often that is skewed by the intangible mystic that comes with purchase of a restaurant or bar in New York City.  In short, carefully review and analyze all available financial data (e.g. profit and loss statements, tax records) and speak to a knowledgeable restaurant broker who can discuss comparable sales in the area.

4. Seller Financing

A buyer’s purchase price can be paid in many ways, including the transfer of cash at closing, waiver of debt, property exchange, and in many cases, seller’ financing.  The payment method can affect the total purchase price and have important tax consequences for you (and the seller).  It is surprising just how often seller financing is overlooked.  Seller financing can be as simple as an extension of credit to you through a promissory note or loan agreement, or as complex as an exchange of services in the continuing operation of the business (e.g. consulting services). In either scenario, the cash required to be paid by Buyer at closing is reduced.

5.  Monitoring Period

Buying a restaurant’s assets or an ownership interest in a restaurant (regardless of the percentage), without performing a due diligence review of the seller is a recipe for disaster.  How do you protect yourself?  Consider the inclusion of monitoring period in your purchase agreement that will give you free and transparent access to seller’s business, cash flow, accounts receivable and company debts.  

During this monitoring period you will be able to review the seller's books and records, inspect the restaurant and its assets, speak to key employees, speak with the local police precinct and community board about the seller’s license history, and generally, see what you can find out about the business from third parties.  While you are not guaranteed to find every problem with the business, a monitoring period is certainly a good start.

6. Seller’s Warranty

Even with the monitoring period, you cannot be sure that you are getting all of the necessary information? Have you missed something? Or, worse, has the seller misrepresented pertinent details of the business?   In New York, a seller has no legal obligation to tell you anything about its business.  You have all heard the expression “Buyer Beware," well so long as the seller hasn’t actually lied to you, it’s your problem, not his, once you close on the deal.   Once again, how do you protect yourself?  Simple, have the seller make written representations in the purchase agreement pertaining to the assets, ownership, debts, etc. of the company.  In doing so, you shift responsibility to the seller in that, if any representation or warranty is discovered to be false, you have a right to seek reimbursement from the seller for any damages you sustain.  If you fail to obtain these representations, in writing in the purchase agreement, you will have no claim after you close.

Determining which representations and warranties to include in the purchase agreement is not an easy task and is probably the one of the most negotiated points of a purchase agreement.  Without these representations and warranties, you are left to blindly trust the seller and hope that what you think you are buying, is what you will actually get. 

7.  Conditions to Closing

Many times things happen which warrant the cancelation of a purchase agreement.  For example, having one’s liquor license denied by the Community Board or the State Liquor Authority would spell disaster for a restaurant or bar.  In short, things happen between the execution of a purchase agreement and closing that make it problematic to close.  Other examples include:  (a) denial of loan application, (b) loss of critical investor, (c) landlord refusal to accept lease assignment, (d) rejection of building plans by Landmarks or the DOB, etc. 

If you fail to identify those conditions which permit you to cancel an agreement, you are liable to lose any down payment made under the terms of the agreement, but also you open yourself up to a lawsuit for damages or worse, being required to perform under the agreement.

8.  Shady Sellers

Between the time you sign the purchase agreement and the time you close, the seller has ample opportunity to harm your purchase if they are so inclined.  I frequently handle sales where the seller, in an effort to save money, reduces their customary inventory, fires key personnel, cuts utility services, refuses to pay suppliers and although infrequent, takes a loan out using the assets as collateral.   If you are purchasing a business which you intend to continue operating without change, reductions such as these will undoubtedly alienate your customers, suppliers and employees.  Moreover, if you haven’t identified what inventory or assets are being transferred, the loose definition of “all assets” is bound to be tested by the seller. 

Alternatively, if you are buying an ownership interest in seller’s business (say 40% for $100,000) take steps to ensure that the seller is restricted from issuing any additional stock or equity in the company to other people without your permission. This is common where the buyer is intended to be a “silent investor”.  If you are not careful, what you end up with may be very different from that which you thought you were buying. 

9.  Non-competition

If the seller has a good reputation in the community you might consider inserting a non-compete provision in your purchase agreement.  Most buyers do not include non-compete provisions into their purchase agreements and my experience tells me that this is because of a prevailing notion that non-competes are unenforceable, but that is not accurate.  Carefully constructed non-compete provisions are enforceable, especially when there is something unique to the skill, trade or business of the parties, or when a business is being purchased. Provided that the agreement is carefully tailored to confine the agreements terms (i.e. reasonable geographic limitations, duration, and independent value received for entering into the agreement), they are enforceable and may be the only thing standing in the way of seller challenging you on what is now your own turf.

10.  UCC Liens on Assets Purchased

The last think you want to discover is that the assets you are buying are not actually owned by the seller, or that there is a lien on the assets by a third-party.  Asset (UCC) liens are very common and can be verified by a simple background check at the State and Federal levels.   The purpose of filing a UCC lien is to place all potential buyers of the assets on notice of a debt owed by the seller and secured by the seller’s assets.  Failing to perform a UCC lien search is a great way to assume the seller’s debt up to the fair market value of the assets purchased. 


Monday, June 02, 2014

Top 15 Reasons Why Restaurants Fail

I came across this list. “The Top 15 Reasons Why Restaurants Fail”:

1. Lack of experience, 2. Lack of capital, 3. Poor locations, 4. Inventory, 5. Equipment, 6. Poor credit practices, 7. Personal expenses, 8. Premature expansion, 9. Bad attitude, 10. Too many expenses, 11. Poor collections, 12. Low sales, 13. Inventory mismanagement, 14. Competition, and 15. Crime

I’m not sure that I agree with the list entirely. Let me start by saying that I am not a restaurant owner. I am a restaurant attorney. So, I may be wrong (and often am) but many of my clients who have sold their business express different reasons as to why their business failed. This is what I’ve gathered to be their top reasons why restaurants fail:

(1) Lack of Concept. A successful restaurant needs a clear concept. Owners that can’t describe their concept beyond the food that they prepare seem to drift from idea to idea. When an idea fails, they change again. They try to appeal to the greatest audience but in doing so, become too general and possess no identity that lets them stand out from their competitors.

(2) Family. The support of one’s family cannot be underestimated. My clients whose families are supportive of their endeavor tend to succeed. However, this seems to be a double edge sword. Supportive families usually mean a good family structure. I find that many of my clients have difficulty in balancing work/life. They see all that their family is doing to support them, and they in turn, want to be with their family. Running a restaurant is hard and very time consuming and does not leave much time for one’s family. Some owners find this very difficult and when they try to carve out too much time for their family, their business can sometimes suffer. My clients that most often succeed seem to be single or divorced. Now I’m not suggesting that families are bad for business (quite the opposite) but balancing family and work seems more difficult for restaurant owners given the time requirements they want (and need) to dedicate to both.

(3) Lack of Capital. I would further divide this into three categories:

(a) not having enough money at the start,

(b) having just enough money to run a restaurant, but mismanagement causes your cash funds to deplete quicker than expected. Things such as (i) spending too much money on equipment, atmosphere, food/beverage, advertising, (ii) not watching the number of employee hours worked, (iii) not employing a restaurant bookkeeper to keep taxes in check, (iv) getting into a lease agreement that is too costly, (v) expanding too fast, etc.

(c) having just enough money to run a restaurant, but poor legal decisions cause your cash funds to deplete quicker than expected. Things such as (i) liquor license and health code violations/fines, (ii) employee mismanagement and lawsuits for discrimination and harassment, (iii) failure to obtain proper insurance for things such as employee lawsuits, dram shop lawsuits, etc., (iv) partnership and shareholder disputes over salaries and profits, etc.


Monday, May 12, 2014

Primer on Liquor License Violations

When the State Liquor Authority (“SLA”) commences an investigation, they can do so in one of many ways including:  (a) on-site inspections; (b) on-site undercover investigations by SLA Investigators and other law enforcement agencies; (c) a review of reports and investigations by the police and regulatory agencies; and (d) speaking to witnesses and gathering evidence of suspected violations.

The information is then evaluated to see whether there is sufficient evidence to initiate charges against an establishment. If there is sufficient evidence, the SLA issues a Notice of Pleading that describes the violations that are being charged.  It is at this point where the license holder enters a plea of not guilty, no-contest, or conditional no-contest. 

If a plea of not guilty is entered, a hearing is scheduled at which both the establishment and the SLA can present evidence and witnesses in support of their case.  The Administrative Law Judge will make findings based on the evidence presented and then present his or her findings to the Members of the Authority which makes the final determination. 

If the establishment pleads no-contest, the case is sent directly to the Members of the Authority to determine a suitable penalty.    When a conditional no-contest plea is entered, the establishment suggests a penalty and if the Members of the Authority accept the suggestion, the penalty is imposed.  If not, the case is scheduled for an administrative hearing.

Penalties can include any of the following:  License suspension, cancellation or revocation; a monetary penalty; bond forfeiture; or proscription (revocation plus a two-year ban against the issuance of a license to any part of the building containing the revoked licensed premises).

James D. DiPasquale, Attorney

DiPasquale Law Group


Wednesday, April 30, 2014

Vaping Banned from NYC Restaurants

If you entered a restaurant in NYC prior to 2002, the hostess was quick to ask two questions: “How many?” and “Smoking or non-smoking?” After a major crackdown that banned tobacco in all public places including bars, restaurants, parks, sports venues and subway stations, one question was eliminated from the hostess’ standard repertoire and slowly but surely smoke cleared from all eateries throughout the city. Over the past few years, however, cigarette smoke has been replaced with the vapor of e-cigarettes.

Although e-cigarettes have been hailed as a safe alternative to the tobacco and tar found in traditional cigarettes, many opponents of “vaping” (the act of smoking an e-cigarette) fear the long-term health implications, arguing that these have yet to be studied. In response to these concerns, on his second to last day in office, former NYC Mayor Michael Bloomberg extended the Smoke Free Air Act to include e-cigarettes, prohibiting the use of these battery powered devices in all public places, including restaurants and bars. This ban goes into effect later this week and violators may be subject to hefty fines.

As with the initial tobacco ban of 2002, the onus of compliance falls onto restaurant owners. In the wake of these changes in the law, it’s important that management take the time to speak with employees and educate them about the new regulations so they too can help with enforcement efforts and inform customers about the new statute. While your establishment may already have “no smoking” signs, you might also consider revising these signs to include a warning about e-cigarettes.

While restaurant owners were some of the most vocal opponents of the original tobacco ban, this recent addition to the tobacco ban hasn’t caused the same kind of outcry, but that doesn’t mean it’s without its challenges. In March, a smokers’ group, Citizens Lobbying Against Smoker Harassment, filed a lawsuit in Manhattan Supreme Court citing that the law is unfair and does nothing to protect New Yorkers from second-hand smoke since e-cigarettes only emit water vapor.

If you own a restaurant in NYC, it’s important that you consult with a seasoned restaurant attorney to ensure ongoing compliance with all local regulations. If you fail to comply with the prohibition of e-cigarettes, the penalties can be severe with significant fines and even the suspension or revocation of your establishment’s permit after multiple violations. Attorney DiPasquale has advised countless restaurateurs throughout the five boroughs and can help to address any concerns you may have regarding the e-cigarette ban.


Monday, April 14, 2014

Celebrity Restaurant Lawsuit Illustrates the Complexities of Partnership Agreements

Celebrity Chef Gordon Ramsay Faces a Lawsuit by a Longtime Partner

Opening a bar or restaurant, or any business for that matter, in New York City has the potential to be expensive and risky, which can sometimes act as a deterrent for individuals who want to start a company of this kind on their own. Instead, partners and investors may be brought in to pool resources and talent. Restaurant partnership agreements vary greatly depending on each individual business, and disputes, misunderstandings and even potential cases of fraud can arise over such contracts. A recently filed lawsuit by an investor against celebrity chef Gordon Ramsay serves as a case in point.

Several years ago, Ramsay opened a Los Angeles restaurant called The Fat Cow with financial backing by Rowen Seibel, who had already worked with Ramsay on the opening of several other restaurants, including Gordon Ramsay Steak, Gordon Ramsay Pub & Grill and BurGR, all in Nevada. Seibel likely had little cause to anticipate a conflict, but quickly realized he wanted to pursue legal action.

According to the 34-page complaint, Ramsay chose the name The Fat Cow because he knew that the name was already in use by a Florida restaurant. Also according to the complaint, the ensuing trademark dispute quickly derailed the project, allowing Ramsay to complete his plan of closing The Fat Cow and creating a company that opened another restaurant in the same lease space.

Seibel seems to attribute the breach and falling out to Ramsay’s famously volatile and authoritarian personality. "Gordon Ramsay attempted to run the business and make decisions on behalf of [the parties involved] similar to his Hell's Kitchen on television - as a dictatorship," Seibel claimed. This alleged dictatorial behavior extended to a “dramatic money grab” that involved the shuttering of The Fat Cow and opening of restaurant without Seibel.

Seibel is seeking $10 million in damages.

As this case illustrates, partnerships between even long-established partners such as Seibel and Ramsay can be vulnerable to costly lawsuits. For this reason, it makes sense to work with a law firm dedicated to protecting the rights of restaurant, nightclub and bar owners. James DiPasquale of New York City's DiPasquale Law Group routinely represents restaurateurs in all aspects of their business and can provide qualified legal help. To contact our firm, call 646-383-4607.


Monday, March 31, 2014

How New York City's New Sick Leave Law Impacts Restaurant and Bar Owners

As of April 1, New York City restaurant workers have a financial safety net if they have to miss work because they're sick or have to care for a sick family member.

This is great for the employees receiving this type of compensation for the first time, but, how will the new sick leave law affect NYC restaurant owners?

Shiv Puri, owner of Manhattan's Bombay Sandwich Company, was concerned about the cost when he first heard about the law. However, after calculating costs and receiving more information, he is now confident about this new measure ,The New York Times reported. Puri said his eight employees were excited about this news, he said "It’s the law and it’s the right thing to do. It won’t bust the bank. It won’t put us (the business) in jeopardy.”

Puri pays his workers $10 an hour, which is $2 more than the state minimum wage rate, and considers himself a progressive employer, but as we stated, he was worried that the newly enacted regulation would negatively affect his business.

Some important things to note about NYC sick leave law:

  • An employee is only eligible for sick days after three months on the job; workers accrue leave based on their hours worked.
  • Current employees can start taking time in July, three months after the effective date of April 1
  • Companies with five or more employees are legally required to provide up to five paid days off to workers if they, or their close relatives, fall ill.
  • Approximately 1.2 million workers will have paid sick leave for the first time, according to Nancy Rankin, vice president for policy research at the Community Service Society of New York, a group that works on behalf of low-income New Yorkers.

After crunching the numbers, Puri was happy to learn he could absorb the potential costs, and that he could extend these benefits to his employees as required by law and continue to enjoy the success of his business.

Employees are please as well. A cook at Puri's restaurant said she ended up losing $325 when she missed an entire week in March due to an illness. Since the law went into effect, Blair Phoenix feels as if she has some protection if she's in that situation again. “It’s a relief, it gives you room to breathe," the NYT quoted.

The work sectors experiencing the most growth in today's market are creating countless low-wage jobs- the job creation is great, but the pay allows workers to barely scrape by in some cases. This law will give low-wage workers, some of whom are restaurant employees, a sense of security they have not enjoyed previously.

The creation of this law makes New York City the largest in the nation to enact this sort of legal measure on businesses who employ certain categories of workers, guaranteeing job security to a vast majority of workers who might have otherwise lost their jobs or a portion of their paychecks if they became ill or had to care for a sick family member.

If you're a New York City restaurant or bar owner and have questions or concerns about the new sick leave law or any other matter related to restaurant law, contact DiPasquale Law Group of NYC at 646-383-4607.


Tuesday, March 18, 2014

"Bottomless Brunches" Are Legal in NYC After All

Many media outlets jumped on a (false) report that brunch deals which include unlimited drinks within a certain time period are illegal in New York City. This news shocked New York's die-hard brunch fans, but the panic quickly ceased when the media noted shortly thereafter that the deals aren't actually illegal. So, New York City brunch-goers are free to have their fill of weekend afternoon mimosas after all. More importantly, the city's restaurants aren't in violation of state law when they host brunch specials that include alcoholic beverages.

What caused this so-called panic? The New York Hospitality Alliance posted a reminder on its website recently that simply read: “NYC restaurant and nightlife operators should familiarize themselves with the law," in reference to N.Y. 117-A, which prohibits “selling, serving, delivering or offering to patrons an unlimited number of drinks during any set period of time for a fixed price.”

This law was created more than five years ago in response to complaints that restaurants and bars were over-serving patrons, leading to extreme intoxication, Business Insider reports. 

The publication contacted the New York State Liquor Association (SLA), and the organization responded by email, telling Business Insider that the law (NY 117-A) does not apply to bottomless brunches, which are considered “events.”

According to the SLA:

"Serving unlimited drinks to a patron is prohibited under the Alcoholic Beverage Control law, and instances of over serving by our licensees will be investigated and prosecuted. However, there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. Even under these limited exceptions, licensees still have a legal obligation not to over serve patrons. The SLA will continue to take a balanced regulatory approach by allowing licensees to conduct specials where alcohol is an accompaniment, while simultaneously cracking down on specials that promote excessive drinking."

Though the law surrounding bottomless brunches has been clarified, restaurants and bars should always exercise responsibility when serving alcoholic beverages to patrons. And, no restaurant is immune from an investigation by the SLA. Just a note for those who are interested, restaurants/bars can receive a punishment to the tune of $10,000 for violations involving the promotion of excessive drinking.


Friday, March 07, 2014

Are You Playing Music in Your Bar or Restaurant Without a Music Distribution License? A Recent Crackdown in NYC Could Cost You Thousands in Fines

If you play music in your restaurant (even as background music through your iPod) without the appropriate music distribution license, you may be fined up to $30,000 for each song played.  Even playing songs that you legally purchased is considered to be against the law because there is a difference between purchasing music for “personal use” versus “commercial use.” In recent weeks, a few of our clients have received letters from ASCAP (the American Society of Composers, Authors, and Publishers) – a Performing Rights Organization that represents thousands of artists. The other well-known Performing Rights Organizations include SESAC (the Society of European Stage Authors and Composers) and BMI (Broadcast Music, Inc.).

ASCAP’s letter notified these clients that they are in violation of Copyright Law due to their “unauthorized performances of copyrighted musical works.” ASCAP’s letter further explained that the courts may award damages that range from $750 to $30,000 for each song played plus the costs of the lawsuit. As an alternative to a costly lawsuit, owners could purchase an ASCAP license which allows the restaurant or bar to play all songs by members of ASCAP for a monthly or yearly fee.

Many restaurants and bars that play music do not have the appropriate licenses, but is it worth the risk? The internet has made it even easier for Performing Rights Organizations to identify which venues are playing music. If you do get caught, your chances of success are not good. One of the largest Performing Rights Organizations, BMI, has not lost a single lawsuit filed against copyright infringers in over 51 years. Obtaining a license does not have to be costly – for smaller venues, the license may be as little as $300 per year.

As an alternative to obtaining a license with ASCAP, SESAC, or BMI, more options are becoming available to restaurant owners. The popular music website www.Pandora.com is currently offering a business subscription for $24.95/month.


Thursday, February 27, 2014

NYC Restaurants May Be Required to Install Carbon Monoxide Detectors

A New York City lawmaker is sponsoring a bill that will require all New York City bars and restaurants to install carbon monoxide detectors. Coincidentally, City Councilman James Vacca co-sponsored this legislation several weeks ago, but he is now seeking to expedite it after it was reported that a leak at a New York restaurant last week resulted in the death of the manager and sickened more than two dozen other people.

Vacca is hoping to prioritize the bill, aiming for the council committee to pass it as soon as possible. The councilman said this potential law should never have been omitted, as restaurants and bars present the same dangers in terms of carbon monoxide poisoning as private homes. New York State fire codes only require carbon monoxide detectors in places where people sleep.

Police evacuated the Legal Sea Foods restaurant located in the Walt Whitman Shops on Long Island after they received reports that a woman had collapsed in the basement of the establishment. A spokesman for the Town of Huntington, where the restaurant is located, said investigators found a leak in the flue pipe of the water heater.

The town official who inspected the restaurant last March didn't find any issues. Legal Sea Foods was due for another inspection in March, as it is subject to them annually. Although authorities said the carbon monoxide appeared to be limited to the basement of the restaurant, the entire restaurant and surrounding businesses were evacuated Saturday.

Local plumbing and heating experts say that they are unsure why it wasn't previously mandated that carbon monoxide detectors be installed anywhere people gather. It may be New York State law to have one in private residences, but it won't be a requirement by law for restaurants and bars until the passing of this bill.

Legal Sea Foods and nearby Panera Bread can't reopen until the town's plumbing inspector confirms there are no leaks and gives the restaurants proper certification.


Wednesday, February 12, 2014

Little Known New York City Restaurant Law Repealed

Did you know that a majority of New York City restaurants break the law every time a patron walks through their doors?

Well, neither did many city restaurateurs.

Until now, it was illegal for restaurant staff to automatically serve customers water.

Since at least as far back at 1991, eateries in the city of New York have been legally required to ask every one of their customers if they would like water before a glass is poured for them. This regulation was enacted when the city was facing a drought emergency in the early nineties, but has barely been enforced since then.

More than 10 years after the legislation was enacted, in 2002, the city experienced another drought emergency and the Department of Environmental Protection issued warnings to 14 restaurants.  

Mayor Michael Bloomberg's administration repealed the regulation during his final days in office. As of 30 days from Jan. 23, when the final rule was published in the city record, it will be perfectly legal for restaurant staff to serve water to patrons whether or not they ask for it. However, this repeal does not mean that restaurants are legally obligated to pour water for every patron.

Numerous New York City restaurant owners were quoted as saying  they weren't even aware of the longtime law. Some noted they usually ask customers if they would prefer tap water (at no charge) or mineral water. Despite all of the chatter surrounding the little known recently repealed law, restaurateurs have always had a financial incentive to sell soda and alcoholic drinks rather than water.

The installation of more accurate water metering in the last decade allows the city to keep a closer eye on water consumption. Energy and conservation efforts, such as more efficient toilets and timers on spray showers in parks have led to a significant decrease in the number of gallons of water New York City consumes each day. In the mid-1970s the city's consumption reached its peak at 1.5 billion gallons per day, and currently the city barely consumes 1 billion gallons. The city's consumption hasn't been this low since the 1960s, when the it was experiencing a drought and the population was substantially smaller.

If you have questions about your restaurant’s compliance with these recent changes, contact the New York City office of the DiPasquale Law Group for a free consultation at 646-383-4607.


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The DiPasquale Law Group is a full service law firm that assists Restaurant and Nightclub Owners in all legal aspects of their business. Serving Manhattan, Brooklyn, Queens, and the Bronx in New York City. Attorney James DiPasquale, Principal.



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