Sahar Nicolette  |  January 14, 2021

Category: Covid-19

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Restaurants in Orange County are filing a class action lawsuit for unfair taxes and fees

A group of restaurants in Orange County, California is taking legal action after being charged for business permits and licensing fees, despite not being able to operate their businesses due to the COVID-19 government order. 

Pizzeria Ortica, LLC, the lead plaintiff, joined forces with eateries in four other counties for the class action lawsuit, which demands that California, and counties of jurisdiction, refund all taxes, fees and charges collected, according to the complaint. 

The pizzeria stressed that the group does not dispute the government’s health and safety orders, but it does object to being charged fees and taxes when the government is closing or limiting the business’ operations. 

Throughout California restaurant owners are struggling to pay bills and keep workers employed. Nearly 70 percent of owners are at risk for eviction as bills pile up from fees, taxes and other charges imposed by the government, according to the suit. These levies are placed by the same entities that are restricting the restaurant’s ability to operate, the complaint states. 

“The defendants are collecting these fees while at the same time ordering the business to shut down or drastically limit operations,” lead plaintiff attorney Brian S. Kabateck said in a statement to Law 360. “We are encouraged, however, that some entities have reached out to say they are willing to do the right thing and return these fees and we’re hopeful other counties will follow suit.”

Chef in a closed restaurant due to COVID-19

The suit claims violations of California government code sections 53720 and 53723, which require voter approval of local government taxes, as well as asserting violations of the California Constitution’s Proposition 218, known as the “Right to Vote on Taxes Act,” and the state’s business and professions code.

Pizza Ortica is seeking financial damages, an injunction to prevent any additional fees from being collected, and a declaration stating that the collection of the fees and taxes is unlawful.

The restaurant industry has been hit hard by the COVID-19 pandemic, with a 2020 survey by the National Restaurant Association finding that nearly 1 in 6 restaurants (representing nearly 100,000 restaurants) is closed either permanently or long-term. In addition to government levies, restaurant and bar owners are fighting for their losses to be covered by insurance companies in COVID-19 business interruption lawsuits

Has your business been affected the COVID-19 pandemic? Share your experience in the comments below.

The Calif. COVID-19 Restaurant Class Action Lawsuit is Pizzeria Ortica LLC v. County Of Orange, Orange County Health Care Agency and California Department Of Alcohol Beverage Control, case number 30-2021-01178203-CU-MC-CXC, in the Superior Court of the State of California, County of Orange.

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