At the height of the Covid-19 pandemic, Southern California restaurants were limited to 25% capacity for indoor dining and prohibited from offering outdoor dining options, and yet they were still expected and required to pay liquor license and health permitting fees.
In response, plaintiff attorney Brian Kabateck, of Kabateck LLP, of Los Angeles, filed a class action lawsuit in January 2021 on behalf of restaurant owners in the Superior Courts of California against multiple counties and the California Department of Alcohol Beverage Control (ABC).
Since then, Orange County has agreed to pay a $1.7 million settlement and San Diego County has settled for $4.5 million.
As part of the settlement, operational fees will be reimbursed to every OC restaurant, including those that did not survive the Covid-inspired government-mandated closures and reduction in services.
“We're still waiting for some of the other counties like Los Angeles, San Bernadino, and Riverside to follow the lead that Orange County has set,” Kabateck said.
Orange County settled for less than San Diego because it had previously allocated about $10.75 million of more than $75 million of financial support to small businesses, according to Kabateck.
“I was surprised that they had paid as much money as they had to restaurant owners before we got involved in the lawsuit,” he said.
Another $10 million was provided for grant money under the Safe Dining Restaurant Program to protect staff and customers from Covid, and $1 million was set aside to help businesses establish outdoor dining areas.
“This settlement is additional money to refund their fees when they couldn’t open or operate their restaurant either entirely or in part,” Kabateck said.
Other counties that were targeted included Los Angeles, San Francisco, Sacramento, Monterey, Sonoma, Santa Clara, San Bernardino, Riverside, Contra Costa, Fresno, and Placer counties.
“San Francisco did everything we asked before we filed the lawsuit, so we dismissed the lawsuit against them,” Kabateck said. “Sonoma did what we asked them to do, and Fresno resolved the case before we had to file. So, we're satisfied that some of these counties have done the right thing.”
The lawsuit alleged unjust enrichment, and violation of a law that does not allow the state to tax other than what has been approved by the legislature.
“These restaurant fees were relatively small amounts of money with restaurants paying a couple of thousand dollars a year maybe,” Kabateck said. “But it's symbolic. You got to collect money and they weren't able to use the license that they paid for. You should give them at least some of that money back.”