Monthly Archives: August 2013
We enjoy liquor licensing because there are almost always surprises. Makes it interesting.
Then again, we are lawyers – odd birds that have fun with purely academic challenges most folks find tedious and useless.
For those residing in the real world, the hurdles to obtaining beer and liquor licenses in Tennessee are one of the biggest hassles for starting a restaurant or bar. David Howard recently opened foodie favorite Husk and told Jamie McGee at the Nashville Business Journal:
“The alcohol licensing was difficult,” Howard said. “That is a very challenging process for a restaurant to open and get a liquor, beer and wine license in the state of Tennessee. … If the state wants to encourage investments, the alcohol licensing process can be simplified.”
This is all old news to licensing veterans.
The real news is that the Tennessee Alcoholic Beverage Commission has been rolling out new forms for liquor licensing. New forms are available for download here.
Based on our quick review, most of the “new” forms are quite familiar. Perhaps the biggest change is eliminating the requirement to print on legal-sized paper.
Informally, the ABC indicates that it will accept old forms, for at least a while. This is a big help to those that have applications in process.
We encourage folks to start using the new forms going forward and to check the ABC website for updates as they roll out more new forms.
Tennessee is tough on sales of alcoholic beverages to minors.
State law imposes strict liability. If your liquor store, restaurant or bar sells to a minor, for any reason, or a minor is caught with a drink, the ABC or beer board will hold the owner responsible. Even if someone 21 or over breaks the law and passes alcohol to a minor, for example.
Adding insult to injury, Tennessee license holders often get citations from both the ABC and the beer board for the same sale.
A classic 1965 hit song from Jonny Cash comes to mind:I hear the train a comin’ It’s rolling round the bend And I ain’t seen the sunshine since I don’t know when, I’m stuck in Folsom prison, and time keeps draggin’ on
Careful carding is critical. Having a zero tolerance policy where employees know they will be fired if they sell to a minor, for any reason, seem to help.
Beer boards often suspend beer permits for a second or third sale to minors. The ABC may be changing its policy and also looking to suspensions for second or third sales.
Check back for updates about changes to ABC sanctions for sales to minors.
A client recently posed a good question about carding:
“If two young people walk up to the register and one can produce a valid ID over the age of 21, and the other one either does not have an ID or has an ID, but is under 21, what is the proper protocol per TABC?”
There really is no clear answer, but here is guidance on some fact scenarios.
If someone over 21 purchases alcohol with an ID, you have no obligation to card the friend. If the friend puts the alcohol on the shelf or pays, you must card the friend. Anyone involved in the purchase should be carded.
If someone attempts to purchase and is under 21, we advise not selling to his buddy that subsequently pulls out an ID showing he is over 21. It is a crime for someone over 21 to purchase for someone under 21.
The facts really have to be examined, but this is good guidance.
Newsflash for all liquor license holders in Tennessee. The Alcoholic Beverage Commission has a new form for the dreaded ABC Declaration of Citizenship.
Over the past year or so, restaurants, bars, wholesalers, distilleries and other liquor license holders have learned about a new Tennessee ABC requirement: a Declaration of Citizenship must be filed for each owner and officer. The ABC requires declarations for renewals and new applications.
Most of the information for the declaration is already disclosed on ABC Questionnaires. The declaration adds two new requirements: disclosing full middle names and a copy of a driver’s license or other proof of citizenship.
For owners and officers that are not US citizens, a copy of a green card or other proof of legal rights to be in the US is required.
We find ourselves humming Sting’s 1988 hit “I’m an Englishman in New York”
I’m an alien, I’m a legal alien
I’m an Englishman in New York
Unlike some folks in the back of the house, Sting sings of his pride in being a legal – as opposed to illegal – alien.
The ABC declaration is generally regarded as a pain and an example of useless red tape. We suspect that ABC officials quietly think the same. It is the result of a classic unfunded federal mandate.
Today, August 20, 2013, we learned that the Tennessee ABC published a new form for the Declaration of Citizenship. Although the new form asks for two forms of identification, the ABC informs us that supplying the last four digits of the social security number in response to question 11 will be accepted.
Here is the new form:
We hear it all the time. Restaurant, hotel, bar and other on-premises liquor license holders change their doing business name, add a new owner, or add a patio or private dining room.
What is required for my liquor license?
Previously, the Tennessee ABC asked license holders to send in a letter disclosing the change, and for new owners or officers, new ABC Questionnaires.
Not so simple anymore.
For some reason, Jack Nicholson’s infamous line from Stanley Kubrick’s 1980 psychological horror film The Shining comes to mind:
All work and no play makes Jack a dull boy.
The Tennessee ABC now requires that an application be filed and approved before any name, premises or ownership change. The application process is streamlined, but includes the $300 application fee. And of course, ABC Questionnaires and Declarations of Citizenship for new officers and owners.
The work that really drives Jack nuts is making the Tennessee Department of Revenue happy. In our experience, the ABC application triggers changes at Revenue, and most maddening, tax clearance.
In all defense to the ABC, the new liquor-by-the drink rule is consistent with rules that have applied for decades to retail package stores, wholesalers and distilleries.
Requirements for beer boards are all over the map, making compliance with liquor laws even more complicated.
What is next? We expect the ABC to issue citations if changes are made and not properly disclosed to the ABC in advance.
Tennessee distillery owners celebrated many victories from the new 2013 Tennessee distillery law.
One important operational problem was not specifically addressed in the new law. We thought the new law fixed the problem. However, until today, August 13, 2013, the Tennessee ABC had not weighed in on the issue.
Previously, distilleries could sell bottles of Tennessee whiskey made at the distillery, offer tastings of the distillery’s whiskey for free and sell t-shirts and other merchandise.
Problem was, a distillery had to physically separate each as separate businesses. Distilleries had to have three separate stores to sell bottles, taste whiskey and sell merchandise. The logistics of POS systems, staffing and other issues was a real problem.
The new Tennessee distillery law removes the requirement for a separate retail liquor store license at distilleries. We saw this as eliminating the three store rule, and we now know, the Tennessee ABC agrees.
Below is from the ABC:
– Question: Can a manufacturer-retailer under PC 445 sell merchandise, do tastings, and sell alcohol all in the same room and with the same cash register?
– Answer: Yes. Since they can sell alcohol on their premises without a retail license under PC 445, then the restriction that retail licensees can only sell alcoholic beverages would not apply and the manufacturer-retailer could sell merchandise, do tastings and sell alcohol all in the same room and with the same cash register.
Bone McAllester Norton employment attorney Anne Martin led a winning defense for Coyote Ugly in a national class action trial in Nashville. A big shout out to Anne Martin and Marty Cook for the victory.
National legal publication Law 360 has the scoop:
A nationwide class of Coyote Ugly Saloon Development Corp. bartenders on Thursday lost their Fair Labor Standards Act case as a Tennessee federal judge ruled the nightlife chain did not illegally require them to participate in a tip pool with bouncers.
U.S. District Judge Aleta A. Trauger, ruling after a two-day bench trial, disagreed with class members that the tip-pooling policy violated FLSA because security guards were statutorily ineligible to participate in the arrangement. The class argued that bouncers get wages that are equal to or exceed the minimum wage and are not tipped employees as defined in FLSA.
“There is ample evidence in the record to demonstrate that security guards employed at company-owned Coyote Ugly saloons sufficiently interact with customers so as to constitute employees who ‘customarily and regularly receive tips’” under a Sixth Circuit precedent know as Kilgore v. Outback Steakhouse, Judge Trauger said.
The full story at Law 360 is here, but requires a subscription. Thanks to Law 360 for the coverage.
Our client and foodie favorite Husk Restaurant observes: “That is a very challenging process for a restaurant to open and get a liquor, beer and wine license in the state of Tennessee. … If the state wants to encourage investments, the alcohol licensing process can be simplified,” Husk’s David Howard told Jamie McGee at the Nashville Business Journal.
Read more here.
The TTB, the federal government agency regulating alcoholic beverages, reports that 85 distilleries, 40 breweries and 33 wineries failed TTB compliance checks in 2012. The TTB results were based on samples from 246 distilleries, 206 breweries and 196 wineries.
As we see the report, statistically, a high number manufacturers failed the tests.
For Australian rockers AC/DC, the problem with most distilleries is a good thing: too much alcohol. Reminds us of a classic:
Dizzy, drunk and fightin’
On tequila white lightnin’
My glass is getting shorter
On whiskey, ice and water
So come on and have a good time
And get blinded out of your mind
Although good fodder for joking, the TTB results are sobering for manufacturers. Industry members need to ensure compliance with federal laws. The TTB license to manufacture is a critical asset and avoiding violations of laws should be a priority.
Liquor laws can be harsh, particularly for small businesses. The owner of Family Wash found out the hard way.
Family Wash is a small quiet East Nashville pub and cozy music venue. Owner Jamie Rubin was a pioneer in East Nashville, opening Family Wash in 2005, at a time before the neighborhood became a hip place. Crime was part of daily living.
Family Wash has weathered the transition from neighborhood pioneer to neighborhood staple for nearly a decade.
But a nasty incident from the summer of 2012 has lead to a serious lawsuit against Family Wash. The Tennessean reports that: “last July, James DaSilva, a jazz guitar player, got into his car in Family Wash’s parking lot when an unidentified person shot him in the neck and tried to steal his car.”
The lawsuit is a sobering reminder that restaurant and bar owners in Tennessee have a duty to protect patrons in parking lots, if there is a reasonable concern about safety in the parking lot. A lawsuit against a Wal-Mart store in a dicey Memphis neighborhood imposed responsibility for criminal action on a parking lot against the store owner.
Makes us think of a classic Clash Song:
Well I’m running, police on my back
I’ve been hiding, police on my back
There was a shooting, police on my back
And the victim well he wont come back
Last month, Family Wash was overwhelmed by Nashville inspectors in what the city initially says was a routine compliance check. According to The Tennessean,
The group – comprised of two Metro Police officers, as well as Metro Codes, ABC beer board, health department and fire marshal officials – is called Metro’s Environmental Task Force. Its function is to ensure restaurants and bars are following alcohol, food, health and other codes.
Family Wash owner Jamie Rubin sees it differently:
They may want to call it a ‘spot check.’ But you can talk to anybody that was in there – employees, patrons – it was a raid. That’s what it was.
According to Mr. Rubin, the raid pretty much killed his crowd on a Friday night.
We have heard about other raids by the Environmental Task Force. We have also heard that the Family Wash raid may have been the last during prime time on a law abiding business.