Restaurant Law Blog

Friday, December 26, 2014

Too Much of a Good Thing Can Be Bad

What are ‘Interlocking Interests’?

One aspect of obtaining or renewing a liquor license is the consideration of any liquor related businesses you have an interest in. Earlier this year this issue came up involving Mario Batali and the Bastianich family.

The New York State Liquor Authority (NYSLA) looks at an applicant’s “interlocking interests” with other liquor related businesses when a person or entity is seeking to obtain or renew a liquor license. Applicants are required to disclose any interest, whether it’s direct or indirect, in any premises currently licensed by the NYSLA and/or any business that manufactures alcoholic beverages or transports or sells such beverages at wholesale. The second step has been interpreted broadly by the NYSLA, so any interest in such a business, anywhere, brings up these concerns. 

An investigation by the NYSLA resulted in Mario Batali and Joe Bastianich closing the wine store inside their Italian food emporium Eataly for six months and paying a $500,000 fine to the state.  Batali and Bastianich reached a settlement with the NYSLA after it charged the two with skirting the law prohibiting liquor-license holders from also being producers of wine, locally or internationally (which would be considered “interlocking interests”). Bastianich and his mother own an Italian winery. The NYSLA also charged Batali with "suppressing information" and not fully disclosing his partners' wine business interests. The issue came up in 2012 when the wine store's license was up for renewal. The license could have been revoked if the issue had not settled. 

This case shows that applicants need to consider their interests in liquor related businesses before finalizing NYSLA applications. Because of those interests, a license application or renewal may be rejected and the applicant may need to consider which business is most important and/or whether an interest in one business needs to end in order to obtain or renew a liquor license. There also needs to be full disclosure, especially in the current days of websites and social media. Apparently while Joe Bastianich’s winery interests were not fully disclosed to the NYSLA, Eataly’s own website proclaimed, “that Joe Bastianich ‘returned to his roots in Northeast Italy’ where he is ‘creating wines’ from (Italy’s) Friuli region.”

If you are in New York City and have any questions about liquor licenses and your business interests, contact the liquor license attorneys at the Dipasquale Law Group today by calling (646) 383-4607.

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