Restaurant’s to-go sales of liquor may get the kibosh

Judge: Ducey goes beyond authority by allowing them

PHOENIX – A little-noticed provision in a court ruling this week on bars and alcohol sales could end up curtailing business at some restaurants and force them to close.

In her decision Tuesday, Maricopa County Superior Court Judge Pamela Gates upheld the actions by Gov.

Doug Ducey in keeping bars shuttered while allowing restaurants to remain open and continue to serve alcohol. She said that was within his authority to protect public health.

But Gates did not look so kindly on a decision by the governor to tell his own Department of Liquor Licenses and Control to look the other way when restaurants decided to sell beer, wine and liquor out the front door, a move that was designed to help the financially struggling businesses.

That directive, the judge said, hardly fits within the actions Ducey is permitted to take in emergencies. And she said Ducey’s decision to suspend enforcement of

a liquor law “impermissibly stretches’’ the governor’s power.

What remains to be seen is whether the governor will rescind that part of his order.

“We are reviewing the ruling,’’ said Ducey press aide Patrick Ptak.

But any move in that direction will get opposition from the Arizona Restaurant Association.

In March, Ducey used the emergency powers he had to close all bars and restaurants to patrons. But he agreed to pleas from the restaurant owners to allow them to continue to sell beer, wine and alcoholic beverages to customers who also were getting food to go.

Only thing is, such off-premises sales are illegal under state law. So Ducey instructed agents for the liquor department to simply turn a blind eye to the violations.

Dan Bogert, chief operating officer of the restaurant group, said that move provided a “key lifeline’’ to restaurants.

“They are helping to keep those places in business and employees employed,’’ he said.

Since that time, Ducey has loosened the restrictions – at least on restaurants. They can provide dine-in services, but only at 50% of capacity. Bars remain closed unless they agree to operate under additional restrictions.

But the directive to liquor agents to ignore the violations by restaurants of law banning off-premises sales remains.

Ptak said the directive was – and is – justified, calling it one of the “tough decisions’’ that the governor has had to make.

“This has been a way for many establishments to maintain their operations while continuing to prioritize public health,’’ he said.

Gates, in her ruling, gave the governor a lot of leeway in deciding the steps he needed to take using his authority to protect public health. That’s why she left undisturbed his orders shutting bars.

“A clear purpose of (the law) is to grant to the governor emergency powers and the authority to establish an agency plan for and coordinate the state’s response to natural or manmade disasters and to alleviate extreme peril to persons or property,’’ she wrote.

But telling liquor agents to ignore the law, Gates said, doesn’t seem to fit.

“The court finds the executive order banning enforcement of a Series 12 licensee’s violation of off-premises sales of spirituous liquors impermissibly stretches the governor’s power’’ he is granted under state laws, the judge said. “Said another way, the court fails to find that the enforcement ban against Series 12 licenses in (the executive order) effectuates the purposes of (the laws on emergency powers).’’

Bogert argued that restaurants still need the state to keep ignoring the violations of selling alcohol to go. He said many remain in precarious financial condition.

He said a survey done in July, after in-house dining was again allowed, found that 40% of restaurants said they would be forced to close, permanently, within 90 days.

“And what I’m saying is that number would be higher without the to-go alcohol privilege,’’ Bogert said.

The only reason any of this came to the attention of Gates is the lawsuit filed by more than 100 bar owners challenging the authority of the governor to shut down their operations, especially while allowing the serving of alcohol to patrons dining at restaurants.

Attorney Ilan Wurman pointed out the only distinction is strictly legal.

Restaurants are issued a Series 12 license by the Department of Liquor Licenses and Control. They must generate at least 40% of their revenues from sales of items other than alcoholic beverage.

Bars, licensed as Series 6 for all alcohol sales or Series 7 for bar and wine sales only, have no such restriction. That is part of the reason it costs so much more to acquire a state license to operate a bar, coupled with the fact that the state issues only a limited number of bar licenses in each county.

And there’s something else: Bars – and only bars – can sell alcoholic beverages to go. Wurman said the governor’s executive orders only added insult to injury, forcing the bars to close while at the same time giving the restaurants they normally compete with one key edge they had.

More to the point, Wurman said there’s nothing in the governor’s executive powers that entitle him to simply suspend enforcement of the ban on off-premises sales from restaurants.

Legally speaking, nothing in Gates’ Tuesday ruling requires state liquor authorities to immediately go out and start enforcing the law. That remains for a future hearing.

But she has now put the governor on notice that she is likely to issue a final order saying he has been violating the law and ordering him to stop if he hasn’t done so already.