Florida: Leveraging Liquor Licenses To Enforce COVID-19 Rules

Source: https://www.law360.com/

By Nathan Hale

June 24th

Florida has significantly escalated its enforcement of COVID-19 rules for businesses by going after liquor licenses, as it did with an Orlando bar late Monday, a big turn in a state where the governor had been focusing heavily on loosening restrictions, attorneys told Law360.

The Department of Business and Professional Regulation cut off sales of alcohol indefinitely at The Knight’s Pub near the University of Central Florida, based on violations observed on June 5 and 6, it said. The state said 13 employees and at least 28 customers have tested positive for the coronavirus.

At a press conference Tuesday in Orlando focused on the pandemic, Gov. Ron DeSantis said warnings could be issued for businesses that appear to be making good-faith efforts at following his emergency orders – which require operating at 50% of customer capacity and social distancing, among other rules – but he said multiple times there would be “no tolerance” for blatant violations.

“Just suspend the license and then we’ll move on,” he said. “And I hope that will get the message [out] that these guidelines are in place for a reason.”

The governor also said DBPR Secretary Halsey Beshears could become like the “Grim Reaper for business licenses,” with visits from his staff potentially having grave consequences for offenders.

Beshears said at the press conference that his agency is working with sheriffs around the state and that personnel from the DBPR’s Division of Alcoholic Beverages and Tobacco have already started conducting inspections each night.

“We’re going to continue until we get this right,” he said.

The Knight’s Pub did not immediately respond to a request for comment Tuesday.

The decision to leverage businesses’ operating licenses represents a notable step up in the state’s enforcement efforts, which had previously been handled mostly at the local level, several attorneys said.

“It is everyone’s Achilles’ heel in the hospitality business. When you target someone’s liquor license, you’re really crippling these businesses,” said Marbet Lewis, a founding partner at South Florida regulatory and business compliance law firm Spiritus Law LLC. “I think people are realizing we let our guard down and this is not over.”

The state’s actions came as reported cases rose past 100,000 on Monday, prompting several local and county governments to announce additional rules and regulations. On Monday, several of Miami-Dade County’s densest cities said they would require people to wear face masks at all times in public, and Tampa’s Hillsborough County and Orlando’s Orange County also have approved new mask requirements in recent days.

And late last week local authorities closed three Miami restaurants – including one where the city’s mayor was photographed not practicing social distancing. On top of existing threats of fines and jail time, Miami-Dade County also said businesses closed for noncompliance must attest in writing that they completed remedial steps before they can reopen. Noncompliant business operators in Miami-Dade County also can face a $500 fine and up to 180 days in jail.

The three restaurants – Swan and Astra in the Design District and Wynwood neighborhoods and El Secreto Bar & Grill in Little Havana -could not be reached for comment or did not respond to requests for comment Tuesday, but a local television station reported that Swan and Astra had already filed affidavits and reopened.

Lewis, whose practice focuses on alcohol regulations and the hospitality sector, said Monday that seeing three business ordered closed in one city was “alarming” and suggested ahead of the DBPR’s announcement that business licenses, and liquor licenses in particular, could be officials’ next target if conditions did not improve.

She pointed to Texas officials’ suspension of a dozen bars’ liquor licenses Monday and said New York Gov. Andrew Cuomo’s threat last week to do the same “should be an eye-opener for any business.”

Lewis and other attorneys said the state views licensed industries, which in Florida range from drinking establishments to barbershops to construction companies, as a privilege and said the DBPR is probably on good footing exercising its broad discretion in these enforcement actions.

But Richard Blau, chair of the alcohol beverage and food department at GrayRobinson PA, also noted that there are several disincentives to suspending or revoking liquor licenses – which takes away both tax revenue for the state and an option for the community and is likely lead to legal fights.

“Several considerations would probably mitigate against doing that,” he said.

Increases in coronavirus cases and reports of social distancing not taking place forces enforcement bodies to look at their role and methods, said Samantha Padgett, general counsel for the Florida Restaurant & Lodging Association, but she told Law360 that her interactions with regulators had left her with the impression that they are looking more “to educate and not necessarily to drop the hammer.”

Indeed, at Tuesday’s press conference, DeSantis stressed he did not mean to harp on restaurants and said that most have “done a great job.”

“I do think people are going to respond positively to” the enforcement efforts, he said.

The idea that businesses might welcome stricter rules and enforcement is not far-fetched, according to the attorneys.

While businesses are struggling with costs and modifying internal practices, they also have struggled with confusion arising from regulations coming from multiple layers of government and differing from one community to the next.

Allowing local communities to tailor regulations realistically reflects the state’s range of urban and rural regions, but many businesses – especially those that operate across multiple cities or counties – are looking for more consistency, the attorneys said.

“There was a more universal understanding of what the regulations were and how to comply and what the expectations of the licensee was and what the interaction with the regulator would be,” Padgett said of how things ran before the pandemic. “We’re [now] in sort of a whole new universe where there’s not one clear standard of how to comply or operate.”

Clarity and objective standards facilitate compliance, but it is also important not to be so stringent with requirements as to prevent businesses from adapting and operating in ways that might be perfectly safe but not what a regulator envisioned, Padgett added.

“It’s a very delicate balance,” she said.

With enforcement increasing and ongoing uncertainty about the pandemic’s path, the attorneys suggested it is best for businesses to take a longer-term view and accept “that there is no going back to the way things were,” as Lewis put it.

Businesses can make their spaces more conducive to compliance, such as by closing a restaurant bar to prevent from people congregating, and use social media to educate customers about these efforts, she said.

“It takes time, but it’s not impossible,” Lewis said. “The fact of the matter is, pouting and fighting against it is not going to make the virus go away and it’s not going to make your business more profitable.”