California Restaurants Prepare to File Class Action Lawsuit Over Permit Refunds
California’s restaurants that have been financially battered by the coronavirus pandemic have filed government claims to recover more than $100 million in fees for liquor and health permits and tourism charges that they say were assessed even though their businesses were closed or only partially operating due to COVID-19 restrictions.
According to an Associated Press report, restaurant owners say despite the closures, they have had to pay state and county governments fees for liquor licenses, health permits and tourism assessments. Owners contend that they have been unjustly punished for following the law and are being charged for permits they cannot use. A government claim, filed on behalf of businesses, is a required initial step before filing a class action lawsuit against government agencies in California. Officials have 45 days to respond.
According to the AP report, one owner who owns a restaurant in Hollywood said he pays about $7,000 each year in government fees in addition to property taxes, including for his liquor license and operating a valet service. He says he has been unable to get the fees reduced or deferred and is now being charged late fees of up to 50% for failing to pay on time even though the restaurant has been closed for most of the time since mid-March. Business owners say with their restaurants closed they have had no income. Thousands of restaurants have shut down permanently because of the financial strain and laid off many employees.
Under state rules, counties with the highest infection rates are limited to outdoor dining only along with takeout and delivery. If the infection rates improve, restaurants can operate with 25% capacity indoors or 100 patrons, whichever is fewer. Restaurant industry executives say these stringent rules will doom many more restaurants. California has nearly 60,000 restaurants employing 1.5 million workers.
The Benefit of Class Action Lawsuits
The pandemic has generated a slew of class action lawsuits from businesses as well as consumers. In this particular case, it is unfair for restaurants to have to pay permit fees to government services when they have been shut down or have been offering only limited services during the shutdowns. The benefit of a class action lawsuit is that a number of restaurants can band together and file the action against a larger entity such as a state or federal government agency so they can be made whole.