Healdsburg’s notable Costeaux French Bakery filed a class action lawsuit against the County of Sonoma and the state on Monday in an effort to obtain reimbursement of business fees, public health permit fees and state liquor licensing fees paid while public health orders forced the business and others to close and or open with constraints during the COVID-19 pandemic.
The lawsuit is one of seven other similar lawsuits recently filed in Contra Costa, Santa Clara, Monterey, San Bernardino, Riverside and Placer counties.
The plaintiffs are being represented by Los Angeles-based law firm Kabateck LLP.
The suit claims that the county and the state failed to provide refunds for fees, taxes or charges that were paid, even though the government orders specifically prevented the plaintiff and the class from operating their businesses.
“We view this as significant government overreach," lead plaintiff attorney Brian Kabateck said in a statement. "The defendants collected these fees at a time during the pandemic when officials were ordering the business to shut down or drastically limit operations."
According to the lawsuit filed in Sonoma County Superior Court on April 9, Costeaux is seeking unspecified damages of over $25,000.
The lawsuit claims that despite the closure and or the severe operation limitations on businesses, the county and the state continued to charge the businesses permit and licensing fees as well as late charges.
“It's offensive and tone-deaf for these entities to enforce these rules and charge fees for licenses and permits these businesses couldn't use," Kabateck said in the statement.
According to the lawsuit, “Specifically, at issue in this action are the following fees, taxes and/or charges (and any penalty fees) levied by the County and State entities against Plaintiffs and the proposed Class:
a) Sonoma County Public health permit and licensing fees and/or tax; and
b) State of California Department of Alcoholic and Beverage Control fees and/or tax. Further, the County and State entities have failed to provide refunds for fees, taxes, and/or charges that were paid, even though the government orders specifically prevented Plaintiff and the Class from operating their businesses. The County and State entities received these fees, taxes, and/or charges from Plaintiff and the Class but failed to use the money for their benefit as intended.”
The lawsuit identifies several defendants in the case, including the County of Sonoma, County of Sonoma Department of Health Services (environmental health and safety section) and the California Department of Alcoholic Beverage Control.
“It’s the principle of the matter, doing the right thing,” Costeaux President and CEO Will Seppi said of the lawsuit. “A lot of businesses out there have had a tough go of it, being shut down for periods of times (and) having had to continue to pay for fees and permits and things like that. It’s an unreasonable component that should certainly be resolved.”
Seppi said he’s confident the Sonoma County Board of Supervisors and District 4 Supervisor James Gore will find a solution.
“I am confident that Supervisor Gore and his colleagues on the board of supervisors will do the right thing. I foresee there being county support to the many businesses that have paid fees, licenses and taxes on operations that have been curtailed due to acts of civil authority with some type of waiver, forgiveness or pro-rata billing based on certain metrics,” Seppi said.
In January, restaurant owners filed similar class action lawsuits in San Diego, Orange, San Francisco and Sacramento counties.
Throughout the COVID-19 pandemic, restaurants have been one of the hardest hit industries.
The lawsuit cites a survey by the National Restaurant Association published in September 2020 which found that nearly one in six restaurants — representing almost 100,000 restaurants — closed either permanent or long-term.
Sonoma County has also seen drastic impacts on its restaurant and tourism industries.
Economist Chris Thornberg, who spoke at the county’s annual Economic Development Board Fall Economic Forecast in September said that local “bread and butter” retail would suffer and predicted that a visible number of local restaurants were likely to shutter their doors forever.
A number of eateries and tasting rooms have closed this past year in Healdsburg, including the Brass Rabbit, the b & b lounge and bar on Healdsburg Avenue and others.
Seppi said at the start of the pandemic three of their retail operations were fully closed and the bakery continues to follow the various health orders issued by the state and the county, including the changes of capacity from 25 to 50%.
“All of those things have impacted business and mine has been no exception,” Seppi said.
In 2020 Seppi also had to lay off 80 employees in the course of three days which he said was, “Devastating, one of the worst days of my professional and family career.”
According to the restaurant association’s survey, the industry is on track to lose nearly $240 billion in sales by the end of the year.
The lawsuit emphasizes that the action does not dispute the “propriety of the health and safety orders,” rather it demands fairness.
It says if the government closed or limited the plaintiff’s business operations then it must return the fees, taxes and or charges “that it should have never been allowed to collect during this pandemic.”
In March, at the beginning of the pandemic, the federal government did open up small business loans and the city of Healdsburg even launched its own small business loan program.
Up to $15,000 was offered to small brick and mortar Healdsburg businesses with six to 25 full-time employees. Loans were awarded to over 90 applicants with over 50% of the loans tentatively awarded to microbusinesses with five or less full-time employees.
Yet, the restaurant association survey found that most restaurants are struggling to survive and do not expect their position to improve in the next six months.
Healdsburg has also faced the double-edged sword of business impacts from smoke and recent wildfires.
A request for comments from a county spokesperson regarding the lawsuit were not returned in time for publication.
Now that the county is in the orange tier of the state’s Blueprint for a Safer Economy, eateries can operate at 50% capacity, however, Seppi said they’re still operating at about 25% indoor guest capacity.
“It's a welcome sight, but it’s not like switching the lights back on,” Seppi said of moving to 50% capacity.
He said now Costeaux is back up to about 75 employees and is looking to grow and hire more.
“We’ve been rebounding, hiring back looking for people to rejoin us,” Seppi said.
The first case management conference in the lawsuit is set for Aug. 10, 2021 with judicial officer Patrick Broderick. Case management conferences can help determine if the parties can come to a settlement or resolution before going to trial.
Correction: Moustache Baked Goods closed their brick and mortar location due to the pandemic but they are not closed. They are continuing on as a wedding and event company.