A class-action lawsuit was filed Monday on behalf of restaurant owners in Los Angeles County in an effort to recoup money spent on state and local fees, with officials saying that it is “offensive and tone-deaf” to force owners to pay fees for licenses and permits that they cannot currently use.
Los Angeles County, the Los Angeles County Department of Public Health (LADPH), and the California Department of Alcohol Beverage Control (DABC) are listed as defendants in the class-action suit, which aims to help restaurant owners recover the money they were forced to spend on fees such as liquor licenses, health permits and state tourism assessments.
“We’re talking a couple of thousand dollars for the county permit and a couple of thousand dollars for the alcohol permit depending on the size of the restaurant and we recognize that, on an individual basis, it’s not a lot of money for these restaurants but even returning a few thousand dollars right now can make the difference between them succeeding, laying people off or not laying people off,” said Brian Kabateck, lead plaintiff attorney, in a statement Monday. “We simply want the government to return those fees to those restaurants who followed the law and closed.”
Kabateck said that all restaurants within the county are automatically part of the class in the suit, which seeks to force relevant state and county agencies to reimburse restaurant owners involved in the suit, as well as have injunctive relief preventing the county and state from levying fees, taxes, and other charges against the owners.
“In just principles of fairness and equities of the law, you can’t close somebody down and still keep their money,” Kabateck told KHTS over the phone on Tuesday. “It’s not fair and it’s not reasonable.”
The ongoing COVID-19 pandemic has forced restaurant owners across the county and state to face “unprecedented challenges to stay open and maintain cash reserves amid new operating restrictions.”
“It’s offensive and tone-deaf for these entities to enforce these rules and charge fees for licenses and permits these businesses can’t use,” Kabateck said in Monday’s statement.
Lead plaintiff Walter Schild, the CEO of Culinary Lab, which operates 33 Taps gastropub in Hollywood, says that he had “no choice but to file a lawsuit” after he was unable to get his roughly $7,000 in fees reduced or delayed.
“We kept getting bills, then they were sending late payments, then they were threatening to revoke my license,” he told KHTS in a phone interview Tuesday.
Schild was being charged late fees as large as 50% for failing to pay fees, despite the fact that his restaurant had been closed for almost the entire time period since March.
“I’m not a McDonalds, most small restaurants that do take-out actually lose money,” he said. “My restaurant is out of business.”
See Related: Santa Clarita Restaurants Crippled By Latest Shutdown Of Outdoor Dining
Schild’s business is one the over 31,000 restaurants in Los Angeles County that was forced to close their outdoor dining operations in November after the LADPH modified the county’s Public Health Order.
Officials with the Los Angeles Economic Development Corporation (LAEDC) estimated that 700,000 jobs in the food industry would be lost in this shutdown, 75 percent of which would be for those earning $50,000 or less.
“Even when the restrictions are lifted, the devastating impact on the restaurant industry will extend for years,” said Jot Condie, president and CEO of the California Restaurant Association. “Restaurants have not received any form of relief. Easing fees would help enable establishments to stay open and keep vulnerable workers employed.”
The impacts of COVID-19 health restrictions have been felt throughout California, and across the nation. According to the complaint issued Monday, nearly 70% of California’s restaurant owners are currently at risk of being evicted.
Additionally, a survey by the National Restaurant Association published in September found that out of the nearly 100,000 restaurants they represent nationwide:
- Nearly 1 in 6 are closed either permanently or long-term
- Nearly three million restaurant employees are out of work
- The restaurant industry is on track to lose $240 billion in sales by the end of the year
- Most don’t expect their position to improve over the next six months.
“Ironically, the same County and State government officials who forced the closure of these businesses have also been continuing to collect a wide range of government fees under the threat of revoking licenses and permits,” the complaint reads.
According to Kabateck, both Los Angeles County and the DABC have within 30 days of being served the suit to respond.
“I’m still holding out hope here that the County of Los Angeles (…) will come to their senses and come up with some kind of solution,” he told KHTS. “It’s pretty hard to disagree with this case, given what these small business owners have had to go through.”
Kabateck added that the lawsuit could take anywhere from six months to several years to reach a conclusion.
Similar class-action suits are expected to be filed in the coming weeks in places such as San Francisco County, Orange County, San Diego County, Sacramento County, Monterey County and Placer County.
“Someone has to hear us,” Schild said. “We’re doing our part to keep everyone safe with COVID, now it’s time for the county to do theirs.”
The class-action suit was filed less than a week after Judge James Chalfant ruled against Los Angeles County’s decision to ban outdoor dining in the county, stating that county officials “acted arbitrarily,” and that the decision “lacks a rational relationship to a legitimate end.”
“The County clearly has failed to perform the required risk-benefit analysis,” Chalfant wrote on Dec. 8. “As part of the risks of the closure, the County could be expected to consider the economic cost of closing 30,000 restaurants, the impact to restaurant owners and their employees, and the psychological and emotional cost to a public tired of the pandemic and seeking some form of enjoyment in their lives.”
See Related: L.A. County Health Officials Respond To Ruling Against Ban On Outdoor Dining
Chalfant’s ruling means that the department can not extend the outdoor dining ban after the initial deadline of Dec. 16 without conducting the “appropriate risk-benefit analysis.” However, outdoor dining is set to remain closed until at least Dec. 27 due to California’s Stay at Home Order, which was issued on Dec. 6.
“By failing to weigh the benefits of an outdoor dining restriction against its costs, the County acted arbitrarily and its decision lacks a rational relationship to a legitimate end,” Chalfant wrote.
Chalfant cited the department’s own data in his ruling, which tracks all non-residential settings at which three or more laboratory-confirmed COVID cases have been identified. Out of the 204 locations on the list, fewer than 10% are restaurants, and of the 2,257 cases identified on the list, fewer than 5% originate from restaurants.
For their part, LADPH officials called their approach “scientific and common sense,” citing that COVID-19 cases and hospitalizations were beginning to surge at the time they were considering the outdoor dining ban, and stating that Chalfant “incorrectly analyzed” the decision by Public Health Officer Dr. Muntu Davis to issue the order.
“Davis made the decision to issue the restaurant closure order based on the evidence that COVID spreads most easily when individuals from different households are in close proximity to one another for prolonged periods of time, without wearing masks,” reads a portion of the department’s response listed in the over 50-page injunction. “Restaurant dining was the only remaining setting where this was largely still permitted, and while dining outdoors is less risky than dining indoors, the nature of dining together at a restaurant still presents a substantial risk of viral transmission.”
Within the injunction, the department admitted that they had “not conducted a clinical study on how outdoor dining affects the transmission rates of COVID,” arguing that such a study would “provide minimal value in deciding how to respond to an emergency like the COVID pandemic.”
“There is wide consensus that risk reduction in a pandemic does not require definitive proof that a particular sector or activity is the cause of an increase in cases,” the county’s evidence portion of the injunction reads. “Best practices dictate that public health departments identify those sectors and activities that present a higher risk of transmission and take steps to mitigate those risks, especially during a surge in cases and hospitalizations like we are now experiencing.
An additional 11,194 coronavirus cases were reported in Los Angeles County on Tuesday, along with 86 additional deaths. In the Santa Clarita Valley, 150 new COVID-19 cases were reported.
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