Is your ABC Settlement Agreement putting your bar in double jeopardy?

 An ABC Settlement Agreement can be more than just a ‘pain-in-the-ass’ for owners.

In a regulatory environment perfect for owners, there would be no such thing as an ABC Settlement Agreement.  But, the regulatory environment isn’t perfect. The government has always allowed the public to ‘weigh-in’ on how a new liquor license or change to an existing license might affect the neighborhood.

Many owners and industry advocates think the Settlement Agreement process is unduly coercive.  Applicants are in a difficult position where they either have to capitulate to neighborhood demands and restrict operations or face months of fighting on often meritless protest issues.  The fight comes when an owner is least able to afford it, usually when there are expenses and no income.

Regardless of your position on the issue, Settlement Agreements are a fact-of-life and must be dealt with. However, before you just sign off on a standard ANC form agreement loaded with ‘boilerplate’ language, you need to carefully consider the ‘double jeopardy’ that you will be put in.

Owners are punished twice for an infraction if the same conduct also violates a settlement agreement.

Let’s consider a typical situation. At the outset, the ANC hands the Owner a “standard” form Settlement Agreement and says “here, we give this to all of the licensees, sign it.”

You look at it.  It’s a 3-4 page contract, made up mostly of pro forma language, typically including a statement of your hours of operation, occupancy and quotations from the D.C. Code or Municipal Regulations.

If the ANC has particular ‘hot-button’ issues, such as trash storage or noise concerns, additional provisions are included as well.

You think, “well, I have to follow the law anyway, and I can live with this other stuff, might as well sign and get my doors open.”

You might not realize that when you accept an Agreement which restates the law, you agreed to double punishment for the same violation.

 A case study of ‘Double Jeopardy’ in an ABC Settlement Agreement case.

Here is a practical situation that has played itself out time and again before the ABC Board.  Assume an establishment has a liquor license and a certificate of occupancy that allows for 99 people. Additionally, the ABC Settlement Agreement contains some typical language such as “the establishment shall have a maximum capacity of 99.”

OK, so your maximum occupancy is 99 because of your license and certificate of occupancy.  So, as an owner, why would you care if the ABC Settlement Agreement also says that you are limited to 99? You are not agreeing to any additional restrictions. What’s the difference?

Simple.  If you have 150 people in your establishment, you have violated your license and C of O.  You have ALSO violated your Settlement Agreement.  That means an additional fine and an additional strike against your license.

This was precisely the case in the recent Board decision of Prospect Dining, LLC t/a Chinese Disco (DCABCB 17-CMP-00033 March 28, 2018)

The Board fined the establishment $2,000 for violating its license and C of O. This is the maximum amount for a first offense primary tier violation.  Then, the Board fined the licensee an additional $750 for the same conduct because it also violated the Settlement Agreement. $750 is the minimum fine for a third secondary tier violation.  The Board even explained in the Order that the minimum fine was because of the  “similarity to the other offense.”

Similarity, right.  How about exactly identical?

So there you have it. One violation turns into two because the ABC Settlement Agreement states that the law applies to the establishment.

Avoiding the ‘Double Jeopardy’ problem.

Agreeing to include quotes from the D.C. Code, Municipal Regulations or restatements of an establishment’s legal obligations, such as occupancy or hours, is NOT harmless, extraneous boilerplate.

It gives the Board permission to punish you twice for the same offense.

The remedy is to simply say no. There is no requirement that you quote the law in a Settlement Agreement.  In light of the Board’s demonstrated position on the issue, there are compelling reasons to refuse such language.

True that this might mean a delay in your opening or change in operations. But, you may be thankful down the road. Suffering additional fines and suspension days for violations is perhaps worse than an untimely opening.

If you are applying for a new license or changing an existing one, I welcome further discussion with you.  Simply contact me, or book an appointment for a free case evaluation at a time that is convenient for you.

 

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