Letting restaurants violate some liquor laws: Economic favoritism, or justified boon?

PHOENIX — Gov. Doug Ducey is justifying telling liquor investigators and police to ignore restaurants’ violations of some state laws, saying the eateries need the money from the otherwise illegal sales he is allowing them to make.

In new court filings, attorneys for the governor do not dispute that Arizona law prohibits restaurants from selling alcoholic beverages to go. That right is reserved for holders of other types of liquor licenses, including grocery stores and bars.

And they acknowledge that Ducey in March specifically directed that agents of the Department of Liquor Licenses and Control “shall not enforce the provisions of the Series 12 (restaurant) liquor license that prohibit the sale by restaurants of beer, wine and spirituous liquor off premises.” The governor’s order also keeps police from enforcing those laws.

That’s not fair, said attorney Ilan Wurman, who is suing Ducey on behalf of more than 100 bar owners.

“Giving the restaurants the off-sale privilege and letting restaurants stay open, all while closing down bars, seems to be a clear act of economic favoritism,” he said.

“It’s a powerful industry,” Wurman said. “And a lot of them give him money.”

But Brett Johnson, the private attorney who Ducey hired to defend all of his executive orders, said the governor was acting within his emergency powers.

Johnson is arguing that giving restaurants the “privilege” to sell beer, wine and liquor out the door “qualifies as a recovery and response activity because it aids restaurants.”

That is justified because they were previously closed for in-house dining, he said.

They have since been allowed to serve patrons. But Johnson said the restaurants still need the financial help because they remain “subject to capacity restrictions.”

Ducey press aide Patrick Ptak also defended the governor’s decision to block enforcement of the laws that prohibit restaurants from making off-site sales of alcoholic beverages. He called it one of many “tough decisions” Ducey had to make during the pandemic.

“This has been a way for many establishments to maintain their operations safely and responsibly while continuing to prioritize public health,” Ptak said. He said Ducey has “broad authority” relating to the enforcement — or non-enforcement — of laws.

Wurman said Ptak is partly right.

He said the laws do give Ducey the power to suspend laws dealing with things directly related to the pandemic, like regulation of doctors, hospitals and emergency medical technicians. Ducey already has done that, expanding the scope of practice allowed under state law to certain medical providers.

But Wurman said there is no basis for Ducey’s argument that he has pretty much unfettered ability to do anything as long as he says it involves “response and recovery” to the underlying emergency caused by COVID-19.

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That, he said, would include “anything that alleviates secondary economic, political, cultural, social damage or whatever.” Wurman said that is unconstitutional.

“It gives him essentially unlimited power,” he said.

The governor initially closed both bars and restaurants. Then he unilaterally took away the one legal advantage the bars had over the restaurants: the ability to sell alcoholic beverages to go even if they could not have customers.

Meanwhile, restaurants have been reopened while bars have not. But Ducey continues to allow restaurants to violate state liquor laws and sell beer, wine and liquor out the door.

There is reason to believe that Maricopa County Superior Court Judge Pamela Gates, who is hearing the legal arguments, may side with the bars and against Ducey on the question of whether he can simply direct that certain liquor laws be ignored.

She ruled earlier this month that Ducey did nothing wrong in shutting down bars while continuing to allow operation of restaurants with liquor licenses. Gates said his orders “are rationally related to expert data and guidance on minimizing the spread of COVID-19 in our community.”

But Gates said it appears to be quite something else for the governor to direct liquor investigators and police to ignore clear state laws, which say that those with Series 12 licenses — meaning restaurants — cannot sell alcoholic beverages to go.

“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.

However, Gates did not overturn Ducey’s order. Instead, she wanted to hear more arguments, which led to Johnson’s assertion that the financial health of the restaurant industry justifies the governor’s actions.

Johnson also offered another justification for Ducey’s directive. He said that closing bars for in-person operation while giving off-sale privileges to restaurants “encourages individuals to stay home, reducing the risk of COVID-19 transmission.”

Wurman, however, sees the action through a different lens: politics and campaign donations.

“That doesn’t mean it’s pay-to-play,” he said. “And it’s not corrupt. But it’s favoritism.”

Ptak did not answer questions about who from the restaurant industry lobbied Ducey for the right to ignore state laws about out-the-door sales of alcoholic beverages.

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