Written by Edward Smith
Even as restaurants have largely been shuttered for the last seven months, various operating fees are still due. Lawyers filing a lawsuit representing restaurants throughout California hope a ruling in their favor will change how state and local governments treat the businesses they regulate.
Each year, county health departments as well as the State of California — through agencies such as the Department of Alcoholic Beverage Control and the California Office of Tourism — collect fees from restaurants and bars to allow them to serve alcohol and even operate, says Brian Kabatek, managing partner for Los Angeles-based Kabatek, LLP. He represents restaurants in the matter that could make up a class if the government agencies choose not to settle the claim.
“The reason for the lawsuit to recover fees that we have not been able to use,” said Chuck Van Fleet, president of the Fresno chapter of California Restaurant Association. Van Fleet also owns Vino Grille & Spirits in Fresno. “We have been shut down but the bills keep coming. We are being unjustly charged for services we cannot use.”
Kabatek estimates the fees could exceed $100 million statewide.
Right now, claims have been filed in San Diego, Orange, Los Angeles, Sacramento and Placer counties. Claims will soon be filed in Fresno and San Francisco counties once representatives are found within those jurisdictions.
A claim was also filed against the State of California.
Kabatek hopes to have all of the larger counties included in the class action before it goes to court.
“The very government that tells them they have to pay these fees is forcing them to close,” said Kabatek. “That’s unprecedented.”
Much like fishing licenses or day-use fees at lakes, Kabatek says, fees are used to allow someone to do something. Once they are no longer allowed to do those things, those charges become taxes, he contends.
Multiple calls to Gov. Gavin Newsom’s office to comment for this story were not returned.
Restaurants pay annual fees to Alcoholic Beverage Control (ABC) as well as county health departments. For restaurants that already have their licenses, these annual fees can be in the thousands of dollars, depending on the population of the city. In the case of county health departments, those fees are dependent on seating.
Other industries are looking into being included in the class. Banquet halls, event centers all have special ABC licenses. Kabatek said people representing amusement parks even called about being included. At the moment, the lawsuit only includes restaurants.
In 2019, ABC built in a new fee structure after what they said had been decades without updating license requirements. The last major update was in 1983, according to the ABC website.
The website specifically stated that fee structures for restaurant-type licenses would not increase under the 2019 budget.
A representative with the agency said they could not comment on pending litigation.
Kabatek said these fees cost from $5,000 to $10,000 a year.
“Is it a huge amount of money in the scheme of things? No,” Kabatek said. “But at this point, $5,000 or $10,000 for a restaurant could mean the difference between life and death. It could be the difference between keeping people employed. It could be the difference between having to close your restaurant or not.”