Local diner sues Sacramento County, state over business fees assessed during pandemic
Brookfields is leading a class action lawsuit against Sacramento County and the California Department of Alcoholic Beverage Control, alleging restaurants shouldn’t have to pay full governmental fees while hampered by COVID-19 health orders.
Attorney Brian Kabateck of Los Angeles-based law firm Kabateck LLP has filed sister lawsuits on behalf of restaurateurs in San Francisco, Los Angeles, San Diego and Orange counties, with Placer, Monterey, Alameda, Contra Costa, Riverside and San Bernadino counties to follow.
The state’s 60,000 or so restaurants pay about $100 million annually for things like licensing fees, local government taxes and public health permits, Kabateck said. Brookfields’ lawsuit also lists the Sacramento County Environmental Management Department and Department of Finance, Tax Collection and Licensing as defendants.
Though Brookfields’ revenue has been down 30-50% across the diner’s three locations in north Sacramento, Rancho Cordova and Roseville, financial recuperation is only part why owner Sam Manolakas sued.
“You can think of the amount of money the state is looking at in this lawsuit,” Manolakas said. “When you’re talking about 60,000 restaurants with health permits and ABC fees, it’s substantial amount of money, so hopefully they will take notice and say ‘we need to do a better job at this.’”
Operating restrictions have varied frequently and abruptly throughout the pandemic, most recently with Gov. Gavin Newsom’s surprise announcement Tuesday night that Sacramento-area restaurants can reopen for outdoor dining. Sacramento County restaurants have also been open for 25% capacity indoor dining and closed for all but takeout service for months of the pandemic.
Newsom’s proposed budget, unveiled earlier this month, included $45 million in ABC fee waivers for California restaurants and bars.
No matter the stage, restaurateurs have reported shriveled profits compared to a normal year. More than 110,000 across the United States, or one in six, have closed permanently or long-term since the start of the pandemic, according to a National Restaurant Association study published last month.
California Restaurant Association president Jot Condie, whose organization supports the lawsuit, said normal fees aren’t fair without indoor dining.
“This action delivers a clear message about the willingness of restaurants to go the distance to recover fees. We expect thousands of restaurants will be willing to join the class action in their respective counties with the aim of total reimbursement for the fees and taxes that were inappropriately levied,” Condie said in a media release.
A Sacramento County spokesperson declined to comment on the lawsuit, citing the county policy against speaking about pending litigation.
The lawsuit follows a similar claim seeking reimbursement, which was filed Oct. 26 against the 11 counties that have since been sued. Each county had 45 days to respond.
None of Brookfields’ locations face a serious risk of closure because the company bought each property years ago, Manolakas said. But even with a $10,000 investment in outdoor seating, he’s only able to staff half the employees he used to.
Paycheck Protection Program loans helped last summer, and Brookfields is applying for more, Manolakas said. The restaurant group also faces a former manager’s accusations of unpaid wages, labor code violations and unlawful firing due to disability in a separate Sacramento County Superior Court lawsuit filed last month.
More than 77,000 Sacramento County residents have been diagnosed with COVID-19 and more than 1,000 have died as of Thursday, according to the county dashboard. The 13-county greater Sacramento area has about 10% ICU capacity.
This story was originally published January 16, 2021 at 6:56 AM.