OC restaurateurs sue for state, county fees paid while they were closed

Restaurant owners in Orange County became the latest to sue local and state governments to recoup liquor license and other operational fees after being forced to close their businesses during the coronavirus pandemic.

Class counsel Brian Kabateck of Kabateck LLP, who filed similar class actions last month on behalf of restaurant owners in Los Angeles, San Diego, San Francisco and Sacramento counties, said he planned to file more in other counties in the coming weeks.

"This case is about fundamental fairness. It's not about any political issue involving the pandemic and restaurants. It's about a government telling a restaurant it has to close and at the same time collecting money for a permit to operate a restaurant they just closed," Kabateck said in a phone interview Wednesday after filing the Orange County suits on Monday. "It seems that it is so fundamental and so fair, I'm surprised that more officials haven't jumped on this and tried to do the right thing."

While he is unlikely to file a lawsuit in all 58 counties in California, Kabateck said the lawsuit in Orange County seeks injunctive relief from the state, which means if restaurant owners are successful in arguing the state should be precluded from collecting operational fees in Orange, restaurant owners in all counties would benefit and recoup fees they already paid. Along with injunctive relief and damages, the suit seeks a judicial declaration that the fees were invalid. Pizzeria Ortica LLC v. County of Orange, 30-2021-01178203. (O.C. Sup. Ct., filed Jan. 11, 2021).

The class action also demands a refund from the California Department of Alcohol Beverage Control for annual fees paid "in the event that the license application is withdrawn or denied."

When the first batch of class actions were filed last month, John Carr, a spokesman for the department, said he could not comment on ongoing litigation. Carr also declined to comment on the Orange County suit, in an email Wednesday.

"The department understands the effect this pandemic is having on ABC businesses," Carr wrote in a statement. "ABC has offered multiple forms of regulatory relief including an extension of the time in which a business may pay its annual renewal fee."

When Gov. Gavin Newsom released the state's budget this month, his proposal included $70 million to provide immediate relief for small businesses including personal services providers and restaurants. Of this amount, $45 million is proposed to provide fee waivers to approximately 59,000 restaurants and bars heavily impacted by the health and safety restrictions, according to the department.

However, Kabateck said this money would only serve as prospective relief for restaurants whose liquor license and other permit fees are up for renewal before February 2021. The budget did not include any relief for restaurants owners who already paid their license fees in 2020, Kabateck said.

California is home to more than 75,000 restaurants and bars, employing over 1.8 million workers, according to the National Restaurant Association. In almost every region in the state, these establishments have been ordered closed to indoor dining by local and state governments.

"For more than 10 months, restaurants have modified business operations, reduced hours, and, far too often, temporarily or permanently closed down. Still, restaurateurs are expected to pay burdensome state and local fees," Jot Condie, president and CEO of the California Restaurant Association said in a statement Wednesday.

"This action delivers a clear message about the willingness of restaurants to go the distance to recover fees," Condie continued. "We expect thousands of restaurants will be willing to join the class action in their respective counties with the aim of total reimbursement for the fees and taxes that were inappropriately levied."