Bar fight: Lawsuit claims bias in regulating Hawaii businesses

It started with confusion, which led to frustration and anger. Now there is fear and a federal lawsuit, too.

But Oahu bar and nightclub owners — whose businesses have been closed for all but six weeks since late March because of COVID-19 emergency orders — are fighting back against what they say is unfair treatment by the government.

Most of those challenging the shutdown are trying to do so privately, fearing retribution. They claim biased enforcement and conflicting interpretations of liquor laws since the implementation of emergency orders closed bars twice this year.

Between 30 and 40 bar owners are “helping behind the scenes” with legal fees and information in a lawsuit filed Oct. 20, claiming civil rights violations and discrimination, said Bill Comerford, chairman of the Hawaii Bar Owners Association and owner of four of the five establishments listed as plaintiffs.

The suit seeks $50 million in damages. It also requests class action status to potentially benefit “several hundred members,” businesses with liquor licenses on Oahu, according to the suit.

The legal filings also request an injunction allowing bars to open immediately, to be heard Dec. 15, attorney for the plaintiffs James DiPasquale said.

The defendants are the state of Hawaii, Gov. David Ige, state Attorney General Clare E. Connors, the city and county of Honolulu and Mayor Kirk Caldwell.

>> Discerning restaurants from bars a matter of interpretation

Only the attorney general’s office responded to requests for comment: “The Governor’s actions throughout the pandemic have been based on science and facts and are squarely within his emergency authorities. The Department of the Attorney General will respond in due course.”

The Honolulu Liquor Commission said that from March through Oct. 21, 69 citations and 17 warnings have been issued to bars for violating the mayor’s emergency orders. Last year in the same period, most violations (71) were due to late sales reports.

“There is no significant difference in investigative or enforcement methodologies at this point in time between pre-pandemic and now,” commission officials said in an email. (The liquor commission would answer questions only in writing via email, and would not attribute answers to a specific official.)

The commission denied claims of unfair or heavy-handed enforcement.

“HLC investigators are directed to show no bias when doing their work. The investigative process is highly dependent on the type of complaint received or violations observed. There is no set investigative standard as each incident is different and calls for a different approach.”

One of the main complaints in the lawsuit is that certain establishments may continue to serve alcohol simply because they are not labeled as bars. Those classified as bars must remain closed even if they follow social distancing and other COVID-19 related rules, according to the suit.

An annual liquor license ranges in cost from $1,800 for most bars and restaurants to several thousand dollars annually, depending on the type of business. The liquor commission has allowed businesses to pay in installments due to the pandemic, but is not giving refunds to establishments closed by emergency orders.

The suit acknowledges the importance of the emergency orders in the early stages of the pandemic, but “the deference can’t go on forever,” and states that bar owners’ constitutional rights, including due process, have been violated.

The suit also points out that counties other than Hono­lulu have allowed bars to reopen, provided they follow safety guidelines.

Also according to the suit, some Oahu restaurants have been allowed to serve alcohol without food, but other establishments — including bars during the brief period they were allowed to open this summer — have been punished because patrons were served a drink before the food arrived.

“At Lanikai Brewing someone ordered a pizza and a beer,” Comerford said. “They closed ‘em for 24 hours because he had the beer in front of him but not the pizza yet.”

Lanikai owner Steve Haumschild could not be reached for comment, but he expressed frustration in a television news interview at the time, especially since he said his craft beer facility was doing 51% in food sales on the day in question.

“It’s absolutely ridiculous. There is nothing in the emergency orders or liquor commission rules and state law that says food must be served with alcohol,” DiPasquale said.

Stewart Shirasu, the owner of Club 939, suggested a reason for the inconsistency: “One of the things that has happened over the years is a lot of places classified as restaurants have become more like bars, and a lot of bars have become more like restaurants. That has added to the confusion.”

DiPasquale said bar owners fear recrimination if they go public with complaints. “There’s a lot of intimidation going on,” he said. “They don’t want to be the face of (the lawsuit) because there’s been too much targeting.”

Asked for examples, DiPasquale said investigators have been “staking out” some establishments, “and then they shut them down for reasons we think are very inappropriate.”

Comerford has worked in Honolulu bars since the 1970s, and been a bar owner since the 1990s. He said the liquor commission “has improved greatly in the past 10 years.” But he also said, “They’re acting under the mayor’s orders, with no uniformity or consistency. He’s using it as a strong arm.”

The mayor’s emergency orders say bars and nightclubs will not be allowed to open again until Tier 4, the fourth and final phase of the gradual reopening of public activities, and even then, they are listed as “to be determined.” Restaurants, including those that serve alcohol, were allowed to reopen for sit-down service in Tier 1, which started Sept. 24.

According to city guidelines, each tier will remain in place for a minimum of four weeks, which means the soonest Oahu can advance to Tier 4 would be mid-­December, contingent on declining COVID-19 case counts and positivity rates.

Comerford said he has tried unsuccessfully since March to meet with Caldwell to discuss the bar industry’s plight. “He is not going to do it,” Comerford said — referring to both meeting with him and reopening bars.

“The closing of our industry is frustrating when others are allowed to open with precaution and safety standards that we can follow,” Shirasu said.