Cloister Café filed suit against the New York State Liquor Authority claiming the SLA based the suspension on a video posted to Instagram rather than first-hand accounts, thereby violating due process.
"There is an ongoing irreparable harm," attorney Robert Garson said.
The restaurant claimed an inspection of its East Village location on August 6 found no coronavirus-related violations.
Rather, the lawsuit claimed, the SLA suspended the restaurant's liquor license because a Gothamist article alleged the Cloister Café was hosting "illegal, illicit pandemic parties."
The article included an Instagram post "showing dancing, no social distancing, and partying."
The SLA said the claim was untrue.
"We are mystified as to why we have to be in federal court," Assistant Attorney General James Cooney said. "We are doing things in our city and our state to stop or ameliorate the spread of COVID and that's what the State Liquor Authority has done here."
This appears to be the first time a restaurant tried to retaliate in federal court against state authorities enforcing pandemic-related social distancing rules.
"The stakes are high," Judge Lewis Kaplan said. "The question is in a perfectly lawful desire to prevent this pandemic from doing more damage to New York has a Constitutional line been crossed."
The judge agreed to take under advisement the restaurant's request for a temporary restraining order that would suspend the suspension of the liquor license and, effectively, allow Cloister Café to resume operating.
The restaurant is also seeking compensation for lost revenue.
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