Bar owners’ COVID mask appeal comes up dry

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The Minnesota Court of Appeals ruled last week that the state’s health department had the authority to enforce COVID-19 restrictions and impose penalties against food and drink establishments that violated them.

The decision was in response to an appeal by a pair of bars in outstate Minnesota — Mission Tavern in Merrifield and Norm’s Wayside in Buffalo. The two bars had had their liquor licenses suspended for remaining open in violation of rules set by the Minnesota Department of Health (MDH) in 2020.

During the pandemic, MDH received a number of complaints about the two bars and their lack of compliance with various COVID-19 emergency executive orders issued by Gov. Tim Walz. Those orders prohibited restaurants and bars from serving food and beverages for on-premises consumption between mid-March 2020 and early June 2020.

After a spike in case levels during the fall of 2021, the prohibition was renewed until January 2022. When allowed to reopen, restaurants and bars were required to restrict indoor occupancy and to implement a COVID-19-preparedness plan. Another order issued earlier required face coverings to be worn indoors at restaurants and bars, with an exception allowing customers to remove them while eating and drinking.

In response to the complaints received about Mission Tavern and Norm’s Wayside, MDH found repeated violations of the executive orders. The department suspended Mission Tavern’s license, suspended and then revoked the license for Norm’s Wayside and fined both $10,000.

The two bar owners contested MDH’s enforcement, and separate contested case proceedings were held before an administrative law judge. Neither owner disputed the facts underlying the violations, but they challenged the authority of MDH to enforce the executive orders and argued that the orders were unconstitutional because they lacked a rational basis.

The administrative judge recommended that the agency’s motions be granted in both cases. In the Mission Tavern case, MDH determined that the recommendation would “constitute the final agency decision,” and returned the matter to the judge to consider disciplinary action, including the length of Mission Tavern’s license suspension. The judge eventually imposed a 40-day suspension of Mission Tavern’s food and beverage license, with 20 days conditionally stayed for one year; and an administrative penalty of $7,500, with $2,500 conditionally stayed for one year.

In the case of Norm’s Wayside, MDH issued an order finding that the owner committed “knowing, intentional, serious, and repeated” violations of various emergency orders. It revoked his food and beverage license but conditionally stayed the revocation; and affirmed a 60-day suspension of the owner’s food and beverage license, with 30 days conditionally stayed. The agency also affirmed the $10,000 administrative penalty.

The owners of the two bars appealed. One issue to be dealt with by a three-judge panel of the Minnesota Court of Appeals was whether MDH had the statutory authority to enforce the provisions of emergency executive orders. The agency’s actions were based on violations of provisions covering executive orders in the 1996 Minnesota Emergency Management Act (MEMA). That act gives the governor the authority to declare a peacetime emergency and to “make, amend, and rescind the necessary orders and rules to carry out the provisions” of the act.

MEMA expressly says that emergency executive orders have “the full force and effect of law.” In her opinion, presiding Judge Tracy M. Smith wrote, “We thus conclude that the rescission of the executive orders did not extinguish MDH’s authority to penalize violations that occurred while the executive orders were in effect.”

Another issue before the court was whether contested case provisions of the Minnesota Administrative Procedure Act (MAPA) apply to MDH enforcement of emergency executive orders. (MAPA governs procedures for state administrative agencies to propose and issue regulations.)

The bar owners had argued that without the opportunity to challenge MDH’s enforcement action through a contested case proceeding, their right to due process would be violated. The appellate court pointed out that MAPA, in addition to providing for contested case proceedings, contains detailed requirements and procedures for agency rulemaking.

“It thus makes logical sense to exempt emergency powers from MAPA’s time-consuming procedures for rulemaking,” wrote Smith. “This exemption, however, does not deprive (an administrative law judge) of subject-matter jurisdiction to conduct contested case proceedings when it is otherwise authorized by law.”

As for whether the emergency executive orders lacked a rational basis, that standard requires that a law serves a public purpose and is within the power of the government to enact. The appellate court said that MDH had statutory authority to enforce the executive orders under the Minnesota Health Enforcement Consolidation Act of 1993.

“The burden of proof to demonstrate that the executive orders lacked a rational basis remained at all times on (the bar owners),” wrote Smith. “The executive orders set out more than ample grounds to satisfy the rational-basis test.”

Steve Wells, a Dorsey & Whitney partner whose practice areas include food and beverage law, said he was not at all surprised by the court’s decision.

“It was not a close call,” he said. “The three questions were a technical challenge to the Minnesota Department of Health’s authority to enforce the law. The (bar owners) were essentially saying that the department is not allowed to do that.”

The attorney for the two bars, Richard Dahl of Brainerd, told reporters that his clients are prepared to take the matter further and possibly even sue the judges who ruled against them.