Madison Square Garden v. The SLA: Round 1 to the SLA
The SLA has emerged victorious from the first round of the ongoing battle with James Dolan with respect to the issues involving his use of facial recognition software to enforce his policy of preventing attorneys from firms handling suits against his properties from entering his venues.
On March 30, the Supreme Court dismissed Dolan’s lawsuit on the grounds that the matter was not yet ripe for review. Dolan filed suit against the SLA to vacate the SLA’s pending charges against his entities with respect to this policy, and seeking to bar the SLA from pursuing these charges or taking any other action because of the policy.
In determining that the matter was not yet ripe for review, the Court noted that MSG had not yet suffered an injury as the SLA had not yet taken away their licenses or imposed any fines, and that the administrative hearing that is part of the SLA’s disciplinary process has the ability to “prevent or significantly ameliorate the damages that MSG anticipates.” The Court further concluded that the injunctive relief sought by MSG was improper as the damages at issue are purely economic in nature.
In rendering its Decision, the Court was required to rule on the issue of whether the SLA was acting outside of its jurisdiction in investigating whether MSG’s premises were truly open to the public. The Court ultimately rejected MSG’s argument that the requirement of being open to the public is limited solely to restaurants; finding that to be a “distinction without a difference” and that there was “no evidence demonstrating that the Court of Appeals intended to limit its policy concerns to only one class of on-premises licensees.”
While certainly a setback for Dolan, this decision is by no means the end to this battle. Dolan will be required to go through the SLA’s disciplinary process, which typically involves a hearing before an Administrative Law Judge. The ALJ will then make a determination, and if there is a finding in favor of the SLA, will almost certainly recommend a penalty against MSG, which would then go before the SLA’s Full Board for a final ruling.
Disciplinary penalties range widely in scope depending on the circumstances and the severity of the violations at issue. Typically, penalties involving the revocation of a license are limited to situations involving safety concerns or repeated, flagrant violations of the SLA’s rules. Given the situation at hand, it seems unlikely that the current charges would actually result in MSG’s licenses being revoked. A more likely outcome in this instance would be a financial penalty, and potentially also a prohibition on entrance policies which are not related to the safety and/or security of the premises.
At the end of this process, Dolan would have exhausted his administrative remedies, and if he believes that the decision was wrong and/or the assessed penalty unfair, he would then be able to again bring an Article 78 Proceeding, as the issue would then be ripe for review. In order to prevail, Dolan would need the Court to determine that the decision and penalty assessed against MSG was “arbitrary and capricious or an abuse of discretion.”
As this battle moves into the next stages, we will continue to observe. At this point, Round 1 goes to the SLA by virtue of the court’s decision; however, it was by no means a knockout.
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