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Civil Litigation

Oct. 27, 2020

Restaurants seek refund of government fees paid during shutdown

Between liquor licenses, health permits and state tourism assessments, refunds could make a real difference to restaurants trying not to go out of business, said the plaintiffs' attorney, Brian Kabateck of Kabateck LLP in Los Angeles.

Attorneys for several restaurants filed claims for refunds of state and local fees paid during the period Gov. Gavin Newsom ordered them closed because of the coronavirus pandemic.

The plaintiffs' attorney, Brian S. Kabateck, said the amounts for each restaurant are not "staggeringly high." But between liquor licenses, health permits, and state tourism assessments, refunds could make a real difference to restaurants trying not to go out of business, said the founder and managing partner of Kabateck LLP in Los Angeles.

"When you start adding the fees all up, probably your average restaurant is paying $10,000 a year in fees," Kabateck said. "The key about this case is we're not saying we want all the fees back. We just want that portion of the fees when the restaurant wasn't able to operate because of a state order."

He added, "These restaurants complied with the law. They closed when they were supposed to close. They didn't cheat and try to open or make some sort of challenge to the governor or the county orders."

Kabatack's firm filed the claims with the state and in the counties of Los Angeles, Monterey, Orange, Sacramento and San Diego. Each identifies the entity that charges the fees, such the Los Angeles County Public Health Environmental Health Division or the Sacramento County Department of Finance.

Newsom's office responded in an email on Tuesday: "From the start of the pandemic, the administration has been deeply sympathetic to the difficulties facing restaurants across the state. Early on, the state provided various forms of regulatory relief to restaurants, such as allowing the sale and delivery of alcohol to go, provided fee relief by postponing annual renewal fees for 30 days without penalties, and quickly approving temporary catering authorizations that allow for an expanded footprint for Alcoholic Beverage Control licensed businesses, giving them more room to serve patrons and still allow for social distancing."

But Jot Condie, CEO of the California Restaurant Association, said in a news release Monday announcing the claims: "Restaurants have not received any form of relief. Easing fees would help enable establishments to stay open and keep vulnerable workers employed."

The release also stated plans to file claims with San Francisco, Fresno and Placer counties in the coming days. The state has 45 days to respond, and filing a government claim "is the first step before pursuing a class action lawsuit," the release said.

Each claim also outlines some of the damage done by the closures. For instance, "Close to 70% of the state's restaurant owners are at risk of being evicted." The letters also say 60% of restaurants in the state are owned by people of color.

"This claim does not dispute the propriety of the health and safety orders. It simply demands fairness," each letter states. "If the government closed or limited our operation, return to the restaurant operators the fees and taxes you never should have been allowed to collect in the first place."

In August, the California Restaurant Association issued a news release warning nearly a third of restaurants in the state were in danger of closing. The industry employed 1.4 million Californians before the pandemic, according to association figures.

But the fees in dispute also amount to tens of millions of dollars for state and local governments that are also short on cash. The Legislature and Gov. Gavin Newsom had to close a $54 billion budget gap for the 2020-2021 fiscal year. The budget analyst for the city of Los Angeles warned last week the city was facing a shortfall or at least $400 million.


Malcolm Maclachlan

Daily Journal Staff Writer

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