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Friday, May 9, 2014

UPDATE: O say can you BYOB?

Restaurants: Don't worry (*unless you do)

In various tweets, Facebook statements, and formal comments made over the course of the past week, Mayor Kasim Reed made clear what he thought about the continuing Atlanta BYOB story first reported here last week, calling it out as: garbage, misleading, patently false, a waste of time, inaccurate, absolute nonsense, manufactured, with no basis in fact. He wanted the restaurants and diners of Atlanta to know that there had been "no recent policy change or directive to step up enforcement" of restaurant BYOB programs. Carlos Campos, the mayor's director of communications, reaffirmed that, "there is no crackdown on bottle house permits. As long as a restaurant has an on-premises consumption license, they will not be cited for BYOB violation."

Case closed? Well, not quite.

There's still confusion about to what situations the BYOB ordinance applies. Several restaurants around town remain hesitant to go back to their BYOB ways. Fifth Group Restaurants (La Tavola, Ecco, South City Kitchen, etc.) is one that has its doubts, and says that there's still too much risk in offering BYOB when the penalties set last year by the city are so stiff. Based on the latest penalty schedule set by the city, a first offense means a minimum 5 to 10 days of liquor license suspension, plus potential fines of $2500 to $5000. Robby Kukler, one of the partners with Fifth Group, put it simply: "As soon as the city officially rewrites the code to clarify that the consumption license allows BYOB, we will go right back to our policy of letting diners bring in wine. And we look forward to that."

Atlanta City Councilman Alex Wan is trying to do just that. He says the city has an opportunity "to make the code clearer - that a restaurant does not need a bottle house license to allow BYOB if they have an on premises consumption license." He hopes to have something ready for the City Council's Public Safety and Legal Administration Committee to consider next week.

To better understand the situation, I spoke with a number of restaurant operators, as well as Mike Sard, who was a member of the recent city-established Alcohol Technology Advisory Group II and is a partner at law firm Sard & Leff, which focuses on liquor law and compliance here in Atlanta. The GRA's April 22 warning derived in large part from information Sard & Leff shared with its clients on the topic of BYOB citations and the increased penalties set by the city. Some observers have speculated that the GRA warning and the actions by a few prominent restaurants are an attempt to force the city's hand. That may or may not be true. Regardless, the warning and the fear of penalties by restaurants are not without cause.

Here are a few key items we've learned since last week:

1. There have been BYOB citations made against two different restaurants this year (not one, as initially reported) - Ration & Dram on March 18 and Cafe Lapin on Feb. 22. It is very important to note that both sets of citations were for allowing BYOB without any liquor license at the time, and not for allowing BYOB with a regular liquor consumption license. So these citations should not, in and of themselves, be cause for concern among restaurants with a valid liquor consumption license in place - only those that have been allowing BYOB without any license. Also, Sard informed me that the citations against Cafe Lapin were dismissed on May 6, which leads me to point out that...

2. On April 8, the City of Atlanta License Review Board approved a consumption liquor license AND a bottle house license for Cafe Lapin. If, as the mayor's office insists, a liquor consumption license allows for BYOB, why would the city approve both that and the theoretically duplicative bottle house license for the same restaurant? That would seem to set a precedent that the two licenses are distinct and indeed both necessary for a restaurant that wants to serve alcohol and allow BYOB. To this, Campos replied, "the bottle house code is still on the books. If someone applies for it, they can get it." Meanwhile, Sard noted that, to his knowledge, not a single bottle house license had been issued in at least 15 years in the city of Atlanta until Cafe Lapin.

3. The steep liquor license penalties that the GRA mentioned in its warning are indeed a relatively recent change in city policy - they were approved by the Atlanta City Council just last August, and, according to Sard, without consultation with the industry or reference to the ATAG recommendations. That may not mean anything for the clarity of the BYOB ordinance, but the harshness of the new penalties is what now has restaurants in fear of being cited for violations. Sard noted, "that's what has really raised the stakes here with local businesses... in the past there's not really been enforcement of BYOB laws, and if there were, the risk was a small monetary penalty. Now's there's a mandatory suspension of the liquor license which changes the risk factor dramatically."

Taken together, these recent developments have contributed to a level of concern by some city restaurants that want to understand how to best comply with the law, and thus how to avoid harsh penalties. The mayor has said don't worry, but the risk for restaurants in offering BYOB is still perceived as high. The city has an opportunity to work with restaurants and community members to clarify any confusion. It would demonstrate the city's support for a regulatory environment in which restaurants and bars can operate without uncertainty across the panoply of liquor laws.

For example, if a restaurant is awaiting approval on its liquor consumption license, can it allow BYOB in the meantime? This has not historically been enforced, but the letter of the law seems to say that restaurants should avoid that practice. For restaurants that only want to offer BYOB and not serve liquor, is the rarely issued bottle house license mandatory? Again, historically, this has not been enforced, but recent citations would indicate so. And what about happy hour specials? Officially not legal, but commonly practiced by restaurants. Bottomless brunch mimosas? Same thing.

Rachel Bell at the GRA expressed optimism for the city's efforts: "We are delighted to hear, according to the mayor's office, that there will not be enforcement of the bottle house license and we hope this remains to be true. We also hope the City Council will follow the recommendation of the ATAG II and clarify the bottle house license requirement in the City Code, to avoid potential confusion in the future."

Sard also suggested another more specific action item, saying, "ATAG gave a litany of recommendations. Starting with the penalty structure and working with the industry to come up with a reasonable penalty schedule would be a strong first step of indicating that the city is going to work with the hospitality industry ... restaurants want to comply. They're not looking for ways to break the law, they just want to know what the laws are and how they will be enforced." Wan is acting quickly to at least address the most pressing issue of clarifying the bottle house ordinance.

Finally, I wanted to note that a lawyer who has been contributing to the comment section of the previous posts on this story, Amanda Farahany of Barrett & Farahany, LLP, has said that her firm is "willing to defend - for free - anyone with a license for drinks by the glass who is charged with not having a second license for BYOB, as we are confident that it won't happen."

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