By Andrew Jacobsohn.
In an effort to combat the surge of COVID-19 cases in Arizona over the summer, GovernorDoug Ducey (R) on June 29 issued the executive order “Pausing of Arizona’s Reopening—Slowing the Spread of COVID-19,” which, among other provisions, shut down bars until at least July 27. This order has been repeatedly extended and is still in effect. On August 10th, the Arizona Department of Health Services (“ADHS”) announced the guidelines for bars and other affected businesses to begin reopening. Broadly, these guidelines include requirements of the business (such as following certain sanitation requirements), and benchmark requirements that are independent of the bars’ control, such as the percentage of COVID-19 tests that return positive. Specifically, until the county achieves a less than 3% positivity rate, bars that serve food must convert to a restaurant space and open at only 50% capacity, and bars that don’t serve food must remain closed entirely.
Over 130 bars joined in a lawsuit against Governor Ducey and the State over this executive order and the corresponding ADHS requirements. The bars are represented by attorney and Arizona State University Sandra Day O’Connor College of Law associate professor Ilan Wurman. The lawsuit alleges that the State unfairly discriminated against the affected bars and that Ducey’s executive order is unconstitutional.
What’s a “Bar,” Anyway?
On the surface, Ducey’s bar-closing executive order ostensibly follows prevailing public health recommendations: bars are widely considered potential major hotspots for COVID transmission. But across Arizona, many establishments that look awfully
like “bars” have remained legally open—and many establishments that might better be categorized as “restaurants” or otherwise have been forced to close. Some “bars” that appear well-suited for safe reopening remain shuttered—despite demonstrating ample well-ventilated/outdoor spaces and willingness to comply with ADHS/CDC guidelines. Conversely, some restaurants have packed unsafe amounts of patrons into poorly-ventilated spaces and flaunted mask and sanitation requirements with few repercussions. This disparity can be explained by the Arizona liquor licensing scheme.
Arizona has more than twenty-one different types of liquor licenses for businesses, including different license types for categories like “restaurants” (series 12), “hotel” bars (series 11), “microbreweries” (series 3), “bars” (series 6), and “beer and wine bars” (series 7). While a series 12 license costs only about $1,500, series 6 and 7 licenses can cost more than $100,000. To qualify for the cheaper series 12 license, the establishment must derive at least 40% of its sales from food. Bars that don’t serve food are obviously ineligible for series 12 licensing, but many that do serve food choose the more expensive series 6 and 7 licenses for their added benefit: series 6 and 7 licenses enable the bar to sell packaged alcoholic beverages for off-site consumption.
The executive order applies only to series 6 and 7 bars, so many “bars” remain open. Hotels, wineries, breweries, and restaurants who opted not to spring for the more expensive license are all unaffected by the order. Ducey’s order thus has the strange result of satisfying neither side of the “should Arizona reopen?” debate. On one hand, many “bars” remain open and continue to facilitate transmission of COVID-19. On the other, many small businesses remain closed due to perceived government overreach.
Arizona bar owners make two principal arguments in their lawsuit. They first argue that Ducey’s order is an exercise of law-making power, which is constitutionally reserved to the state legislature. In order to ensure that power is not concentrated into the hands of one individual, state and national governments limit their respective chief executives (governors and presidents) to the job of executing the law.
The bar owners’ second argument is one of discrimination. They allege that series 6 and 7 licensees have been completely denied the opportunity to operate their businesses, while their competitors who chose a series 12 (or other) license are able to operate with essentially no restrictions. In fact, the complaint documents at least one example of series 12 “restaurants” in Tucson converting to fully-packed nightclubs in the evenings.
Governor Ducey defends these arguments primarily by refutation, arguing that Ducey did have the power to issue the order given the state of emergency caused by the pandemic, and that no discrimination occurred in limiting the series 6 and 7 licenses. The defendants also point to the overwhelming public health interest served by closing bars during the pandemic.
Plaintiffs requested a preliminary injunction (temporary cancellation) of Ducey’s order, claiming that several bars would close permanently if they were unable to reopen in the coming weeks. On September 4th, the morning of the hearing, more than 1,000 pages of new legal briefing were filed. Arizona Attorney General Mark Brnovich, a fellow Republican, filed his own brief in support of the plaintiffs, claiming that Ducey’s order “arbitrarily discriminate[d]” against bar owners. On September 8th, a Maricopa County Superior Court judge denied the preliminary injunction, stating that “public interest is overwhelmingly in favor of the continuation” of the order.
Because of the severity of the COVID-19 pandemic, any perceived attempt to skirt regulations intended to preserve public health will be heavily scrutinized. It may be impossible for bar owners to overcome the widespread understanding of bars as COVID-19 transmission hotspots. Ducey’s defense will surely capitalize on that knowledge. Given the harshness and universality of the pandemic, no court will likely overturn Ducey’s order if it appears to be a triumph of public health—even if it is unconstitutional or discriminatory.
To be successful, plaintiffs will have to demonstrate that the executive order did not meaningfully curb the transmission of COVID-19. They will point to the numerous “bars” that have been allowed to remain open (and potentially spread COVID-19) with no restrictions merely because they chose not to purchase a series 6 or 7 license. If this evidence is persuasive to the court, the bar owners will have a clear path to success.
In the meantime, bars that do not serve food remain closed indefinitely. Thankfully, COVID-19 numbers in most Arizona counties have slightly improved, so bars that serve food have been able to reopen—albeit under significantly greater restrictions than those imposed on their series 12 competitors. If Arizona experiences another spike in cases, they will be forced to close again, while the other licenses remain open for business.