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Scofflaws or victims? Businesses that broke COVID rules seek amnesty

By Brian Bakst

When Jane Moss opened the Boardwalk Bar and Grill late last year to dine-in customers against state COVID-19 orders, the East Grand Forks restaurant owner knew the defiance could invite sanctions.

“What is being done is illegal and unconstitutional and I need to do what is my right for my employees and my patrons,” Moss said in December.

The opening did have almost immediate ramifications. A state agency suspended the establishment’s liquor license and the attorney general’s office moved to impose fines and go after any money brought in during the four days Boardwalk was improperly open. A court case is still pending.

The Boardwalk’s attorney, Marshall Tanick, said in a May interview that reversing punishments like the one his client faces would help put the COVID ordeal to rest.

“This has been a very volatile issue, one that not only has political ramifications but social and economic ramifications,” Tanick said. “And I think the right thing to do is roll back any fines and penalties that have been imposed.”

The move for amnesty for coronavirus rule violators — restaurants, gyms, event centers and others — is tangled up in the deliberations over a new state budget ahead of a special session set to convene this month. It faces stiff opposition from lawmakers who argue those who broke the rules did so with full awareness of the penalties they could face and that the actions endangered public health.

Affected businesses should know in the next two weeks whether lawmakers will intervene.

Republicans in the Minnesota Senate have pushed to void penalties for any businesses that didn’t adhere to Gov. Tim Walz’s executive orders that he says were meant to mitigate virus spread. Senate Majority Leader Paul Gazelka has raised the punishment waiver during private negotiations with Walz and leaders of the DFL-controlled House.

“There were some small businesses that were very frustrated and didn’t know if they were going to make it,” Gazelka said recently. “This is an opportunity as we get out of the pandemic, to just take away these penalties and let everybody back to normal. I think it would send a powerful message that we are completely back and we’re through this.”

In public, Walz hasn’t closed the door entirely to leniency. But he said there need to be consequences for those who thumbed their nose at the orders. He points out that enforcement actions were taken against only a small number of businesses.

Of all regulated businesses in Minnesota, Walz said, “99.998 (percent) complied without any even written notice. It’s a much smaller number that ever received a citation for this. I think it should be noted that the good actors in this did that. These things were upheld in court as being legal.”

The Department of Public Safety was one of the agencies that had a role in enforcing the rules. Agents from the Alcohol and Gambling Enforcement Division made more than 1,300 site visits and issued 18 warning letters. That’s out of 6,500 bars and restaurants in Minnesota with a liquor license.

Of those that had to be warned, only eight establishments had liquor licenses suspended or revoked, with those actions resulting in settlements or being upheld by administrative law judges.

“The COVID-19 pandemic has damaged lives and livelihoods every bit as much as a tornado, or a flood, or an earthquake. Such calamities can quickly destroy years’ worth of effort spent building a business, a brand and a clientele. Boardwalk’s misfortunes are very real,” Administrative Law Judge Eric Lipman wrote as he upheld a 60-day suspension of the restaurant’s liquor license. “Likewise, clear is the legal authority of the Governor to issue Executive Orders regulating the occupancy of structures during an emergency and for AGED to punish licensees who violate local liquor licensing restrictions.”

The Minnesota Department of Health took action against almost three dozen restaurants, imposing administrative fines of up to $10,000 and moving to suspend or revoke operating licenses in most of the cases. The agency settled with about 15, and there are four active lawsuits.

The health department has tracked outbreaks in the hospitality sector through COVID-19 contact tracing, which depends on infected people voluntarily discussing how they moved about prior to and after their diagnosis.

Only three of the restaurants punished for violating service rules had outbreaks linked to their establishments.

The Attorney General’s office was brought in to help in several of the cases, either to pursue injunctions or move to uphold punishments. DFL Attorney General Keith Ellison said despite the attention that scofflaws stirred up, the cases that resulted in fines were rare. Even in those instances where civil penalties were assessed, most had those punishments stayed or reduced if the business changed course.

“Most people complied. The ones who didn’t comply, we called them and they voluntarily complied after a phone call,” Ellison said. “The ones we actually had to sue? A very small percentage.”

Ellison said wiping the slate clean would send the wrong message.

“I think it’s a slap in the face to everybody who did all they could to protect their neighbors and their fellow workers and their customers and their employees from COVID and who obeyed the restrictions,” he said.

He said blanket amnesty could also undermine actions his office took against rental landlords who improperly evicted tenants despite a moratorium that’s still intact.

Minneapolis attorney Davis Senseman represents several restaurants and retail businesses that also struggled through the pandemic restrictions. But she said her clients adhered to the rules to minimize virus exposure.

She said letting violators off the hook would also mean they got to keep the spoils for operating normally when their rivals couldn’t.

“Then you’re definitely ahead. There’s been no downside for you,” Senseman said. “And so we’ve completely incentivized you to really do what and kind of disregard any law that’s in place that you don’t tend to agree with.”

In the case of Boardwalk in East Grand Forks, Moss submitted a court affidavit saying she lost $9,300 after paying staff and covering other overhead during the time the cafe went rogue.

Tanick, the restaurant’s attorney, said that’s on top of losses from the months of service restrictions.

“It’s a matter of equity and compassion and putting this matter to rest and moving on in a more productive manner that any kind of fines or other kind of imposition of penalties be set aside,” he said.