City Bar, Inc. v. Edwards
| Decision Date | 30 August 2022 |
| Docket Number | 2021 CA 1437 |
| Citation | 349 So.3d 22 |
| Parties | CITY BAR, INC., Rosie's Tavern, LLC, Big Dan's Bar, Inc., Big Tyme Investments, LLC d/b/a Big Daddy's Pub & Grub, CD Enterprises of Houma LLC d/b/a Larussa's Lounge, CKBCPB5 LLC d/b/a The Chatter Box, DE & BC Enterprises, LLC d/b/a D&B Sports Bar, Doug McCarthy Enterprises, Inc. d/b/a "501", Jom LLC d/b/a Just One More, Longshots 1, LLC d/b/a Longshotz, My Place Bar & Grill, LLC, The Outer Limits Bar, LLC, Paradise Sports Bar & Daiquiris, LLC d/b/a Epic Lounge, Pool Do's Sports Bar LLP, R&J Lapeyrouse, LLC d/b/a Jeaux's New Horizon, R. Heasley, LLC d/b/a Ram Rod's Saloon, Sandi's Anchor Lounge, LLC d/b/a DA Camp, Tap Dat, LLC d/b/a The Brass Monkey, Tipsy Cajun, LLC Wanous, LLC, d/b/a AJ's 2nd St. Pub, 910 E Main 33, LLC d/b/a Quarter Tavern, Gros Marine Services, Madisonville Riverside Bar, LLC. Swiderski Investments LLC DBA Lenny's and Ye Olde Memories, LLC v. John Bel EDWARDS, in His Official Capacity as Governor of the State of Louisiana |
| Court | Court of Appeal of Louisiana — District of US |
Jimmy R. Faircloth, Jr., Mary Katherine Price, Richard F. Norem, III, Alexandria, LA, Attorneys for Plaintiffs/Appellants, City Bar, Inc. et. al.
James M. Gamer, Darnell Bludworth, Joshua S. Force, Christopher T. Chocheles, Josie N. Serigne, Jack M. Weiss, New Orleans, LA, Matthew F. Block, Baton Rouge, LA, Attorneys for Defendant/Appellee, John Bel Edwards, In His Official Capacity as Governor of the State of Louisiana
BEFORE: GUIDRY, HOLDRIDGE, AND CHUTZ, JJ.
On January 11, 2021, City Bar, Inc. and other Louisiana business owners operating bars serving alcohol and/or food pursuant to lawfully issued permits by Louisiana authorities (sometimes referred to collectively as the "bar owners"), filed this class action lawsuit against John Bel Edwards in his official capacity as the Governor of Louisiana. In the petition, the bar owners alleged that they were uniquely singled-out by a series of Executive Orders (sometimes referred to collectively as the "Bar Closure Orders") closing and restricting the operation of bars statewide for the purpose of slowing the spread of COVID-19. They sought just compensation for the taking of their property, permits, business operations, and income, to serve the public good under the Governor's authority to confiscate or commandeer private property pursuant to Article I, Section 4 of the Louisiana Constitution and the Louisiana Health Emergency Powers Act, La. R.S. 29:760 et.seq. (LHEPA).
In their original and amended petitions, the bar owners alleged the following facts: On March 11, 2020, the World Health Organization declared a global pandemic in response to the spread of COVID-19, an infectious disease. That same day, Governor Edwards declared a statewide public health emergency under LHEPA as a result of the imminent, yet then-unknown threat posed to Louisiana citizens by COVID-19. On March 22, 2020, Governor Edwards signed 33 JBE 2020, commonly referred to as the "Stay at Home Order," directing Louisiana citizens to stay at home unless taking essential trips and ordering the closure of non-essential businesses. The Stay at Home Order mandated the closure of pool halls, concert and music halls, and bars.
Beginning in April of 2020, the Federal Government released a series of guidelines for opening up America again," which included a three-phased approach to re-opening the country based on advice of public health experts. On April 30, 2020, Governor Edwards renewed the statewide Stay at Home Order, and three weeks later, issued an order moving Louisiana into Phase 1 of reopening. The order permitted certain businesses, including bars with a state-issued food services permit, to reopen at 25% occupancy. However, bars without food service permits issued by the Louisiana Department of Health remained closed to the public.
On June 5, 2020, Governor Edwards issued an order moving Louisiana into Phase 2 of the reopening, initially permitting bars, which had been shuttered for nearly two and a half months, to be reopened. Bars serving food were allowed to operate at 50% capacity. However, on July 11, 2020, the Governor issued another order mandating the re-closure of all bars, but no other businesses, for on-premises consumption. On July 23, 2020, the Governor extended the Bar Closure Order, but permitted all other non-essential businesses to reopen under certain restrictions. In August of 2020, the Governor extended the Bar Closure Order on August 6th and 26th.
On September 11, 2020, the Governor issued an order moving Louisiana into Phase 3 of the reopening. Although all other businesses were allowed to operate at 75% capacity, bars were allowed to reopen at 25% capacity and under certain conditions: (1) the parish where the bar is located had 5% or less COVID-19 positivity for two weeks, and (2) the Parish elected to opt-in and reopen bars.
After being essentially closed for nine months, by mid-October to early November, bars around the state were beginning to reopen at 25% capacity. However, on November 24, 2020, in response to an increase in COVID-19 cases, the Governor issued an order moving Louisiana from a Phase 3 reopening to a modified Phase 2 shutdown effective through at least February 10, 2021. Modified Phase 2 order effectively forced bars to close again entirely.
The bar owners alleged that the Governor's Bar Closure Order and extensions thereof (referred to collectively as the Bar Closure Orders) deprived them of the lawful use of their permits, in particular, the right to sell alcohol for on-premises consumption, as the bars had been effectively closed since the March 2020 Stay at Home Order, except for brief, sporadic periods during the Phase 2 and Phase 3 orders when 25% occupancy was allowed.
The bar owners asserted three causes of action which they claimed entitled them to just compensation and damages caused by the Bar Closure Orders. In Count I of the petition, the bar owners asserted a cause of action for inverse condemnation under Article I, Section 4 of the Louisiana Constitution, which provides in part that "property shall not be taken or damaged by the state...except for public purposes and with just compensation paid to the owner or into court for his benefit." The bar owners based their takings claims on the three-pronged test for evaluating takings claims under the Louisiana Constitution enunciated by the Louisiana Supreme Court in State Through Department of Transportation and Development v. Chambers Investment Co., Inc., 595 So.2d 598, 603 (La. 1992). The bar owners alleged that the ownership of a business is a fundamental right protected by the Louisiana Constitution, and further, that they have constitutionally protected property rights in lawfully-issued alcohol permits and in business enterprises operating as bars. Plaintiffs alleged that their constitutional property rights were taken and damaged under the Bar Closure Orders for the express purpose of protecting the public by removing or reducing a risk to public health or safety and that the removal of a threat to public health or safety caused by the existing use or disuse of property constitutes a "public purpose" under Article I, Section 4 of the Constitution.
In Count II of the petition, the bar owners alleged that the Bar Closure Orders constituted a "regulatory taking" under Article I, Section 4 of the Louisiana Constitution and the jurisprudence construing that provision. The bar owners cited Louisiana jurisprudence recognizing that a regulatory taking occurs when a regulation destroys a major portion of the property's value or eliminates the practical economic uses of the property. They alleged that the Bar Closure Orders destroyed the value of their permits by preventing them from engaging in the sole economic use of those permits, on-premises consumption of alcoholic beverages. Therefore, the bar owners claimed, the closure of bars for on-premises consumption constituted a regulatory taking.
In Count III of the petition, the bar owners asserted a cause of action for the "statutory taking" of their property. They alleged that the Bar Closure Orders, which were issued under the authority of LHEPA, which provides that the Governor may, "[s]ubject to any applicable requirements for compensation, commandeer or utilize any private property if he finds this necessary to cope with the disaster or emergency." La. R.S. 29:766(D)(4) (Emphasis added). They also cited a similar provision contained in the Louisiana Homeland Security Assistance and Disaster Act, La. R.S. 29:724(D)(4). The bar owners asserted that the commandeering or utilization of property by executive order through the LHEPA is a particular kind of statutory taking under Louisiana law. They also cited La. R.S. 29:771(C), insisting that it mandates compensation for private property "lawfully taken or appropriated by a public health authority for its temporary or permanent use during a public health emergency declared by the governor...." According to the bar owners, the Governor promulgated the Bar Closure Orders closing their establishments for the express purpose of coping with the emergency declaration by protecting the public at large from the potential transmission of COVID-19 by their customers, not by or from the bar owners or their business activities. The bar owners maintained the closure of their businesses to protect some members of the public from other members of the public constitutes a statutory taking through the inverse commandeering or utilization of private property under LHEPA, entitling them to just compensation and damages caused by that statutory taking.
The Governor filed a peremptory exception raising the objection of no cause of action, asserting that the bar owners could not state cognizable takings claims under Louisiana law. The Governor argued that his exercise of the State's police power to implement life-saving measures in promulgating the Bar Closure...
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