Bar wars? Moon owner files lawsuit over 'special' liquor licenses, points to Edison, Wilbury

Jeffrey Schweers | Tallahassee Democrat

After decades of feuding with state alcohol regulators over how they conduct food and beverage audits of the local competition, Tallahassee venue owner Scott Carswell is finally taking the state Department of Business and Professional Regulation to court.

“I am not really sure the town’s biggest privately-owned entertainment venue serving alcohol needs to be publicly filing actions against the department that is charged with investigating his business for compliance, but I’ve gotten old enough to not care,” Carswell, who runs The Moon, told the Democrat.

The petition he filed in Leon Circuit civil court asks a judge to compel the DBPR and its division of Alcohol Beverages and Tobacco to appear in court. He wants them to explain their “ongoing disregard for Florida law,” in particular the stricter special act under which Leon County restaurants have operated since 1967.

“We are asking a judge to make them explain to us why they are not enforcing the law and then issue an order explaining the law and requiring them to enforce the law,” said WIlliam Spicola, Carswell’s attorney who once was general counsel and director of the ABT.

The case was assigned this week to Second Circuit Judge Angela Dempsey.

The petition raises a broader statewide question: If DBPR is ignoring its own stricter standard for Leon County’s special restaurant licenses, called SFS (special food service) licenses, “what other laws (are) the DBPR choosing not to enforce?” asked Spicola, who also was general counsel to Gov. Rick Scott.

A 'special' kind of license

Special restaurant licenses allow establishments to "sell beer, wine, and liquor for consumption on premises" so long as they get at least "51% of their revenue from food and non-alcoholic beverages," according to the state.

In effect, they're a way around the quota license system, which limits the number of liquor licenses by county population — one for every 7,500 residents based on latest U.S. Census data, according to the DBPR's website.

Liquor licenses are limited by population and when a new one becomes available the state conducts a lottery for interested parties to buy it. Such licenses also can be sold, and can fetch into the hundreds of thousands of dollars.

Tallahassee attorney Tony Glover, a former state regulator, advises members of the alcoholic beverage, hospitality and other regulated industries. He noted the petition focuses on the 1967 Leon County standards, not the more recent 2016 statewide general standards.

"The key question is whether the Leon County special act was superseded by later acts of the Legislature. If the answer is yes, the Division has been acting appropriately," said Glover, who represents clients holding conventional liquor licenses and SFS licenses.

Even though the petition is related to the Leon County special act only, Glover said, "if granted it could change the state's approach towards several other ancient special acts."

According to DBPR records, 12 other counties, including Alachua and Sarasota, and 9 municipalities, including Jacksonville, have their own special restaurant license acts.

“The Department has not been served with a lawsuit at this time but we will review upon receipt,” said Karen Smith, DBPR communications director.

Sen. Manny Diaz, R-Hialeah, has filed legislation (SB 912) that, among other things, revises the requirements for special licenses to certain food establishments. An identical bill (HB 689) has been filed in the House by Rep. Anthony Rodriguez, R-Miami.

It’s an issue well-known to Halsey Beshears, current secretary of DBPR.

When Carswell alerted Beshears about it three years ago when he was a Republican state representative for Leon and Jefferson counties, Beshears emailed back: “This does sound ridiculous. I am trying to come up with proposed legislation to remedy it. Hang in there.”

In the same email, Beshears directed the following comment to Laura Anstead, policy chief for the House Subcommittee on Business and Professions: “Laura, my thoughts are we have a buyout program for the quota licenses since DBPR is blatantly ignoring this portion of the SRX Licenses” — the old name for SFS licenses.

Beshears did not respond to three requests for comment.

'More bars than law allows'

The special licenses have been around for decades — and for decades liquor license holders have complained the restaurants are undercutting their sales.

They are vastly cheaper and easier to obtain than traditional liquor licenses and there is no limit to how many the state can issue.

“Really, what ABT does and has been doing for decades is allow thousands of more bars in Florida than the statute allows,” Carswell said.

During the 35 years he has operated the Moon, Carswell said he’s lost hundreds of thousands of dollars to the special licensees who are really running clubs under the guise of a restaurant.

He’s filed many complaints with the DBPR demanding compliance, made numerous public records requests, and attended many meetings with alcoholic beverage division staff over this auditing issue — with few results.

“It’s a long story for me," Carswell said, resulting in "very little success in enforcement.”

His complaints did manage to force the now-defunct 101 Restaurant to transfer its license to another applicant before the DBPR could revoke it in 2006.

101 was owned by Adam Corey, a former lobbyist who along with his longtime friend, former Tallahassee mayor and 2018 Democratic candidate for governor Andrew Gillum, got embroiled in a long-running undercover FBI investigation into political corruption in the capital.

Back story:

Carswell also claims his efforts were successful in getting DBPR to revoke the license in 2000 for Sloppy Joe's, a former restaurant on Kleman Plaza owned by former state Rep. Ron Saunders, D-Key West, and other investors .

Carswell also led the charge to get the city to change its ordinance that allowed restaurants with the special exemption to serve alcohol for two hours after bars were required to shut down.

Out of frustration, Carswell said, he’s finally decided to take the issue to court.

“This issue has eaten away at me for so long I just have to make it public and see if that will stop this madness in their licensing, auditing and enforcement of the special restaurant licenses that receive an exemption from having to have a license due to food sales,” he said.

In his petition, Carswell cites two other, more recent examples of DBPR auditors ignoring the portion of state law related to special restaurant licenses, resulting in the restaurants passing audits and getting licenses renewed when they shouldn’t have.

One was the Edison, a Tallahassee eatery built and operated by Corey until it underwent management changes in 2018.

The Edison reported facility rental sales as part of the gross, as required by law, but DBPR “inexplicably and unlawfully subtracts those sales from the gross sales when determining whether Edison has passed the audit,” the petition said.

City commissioner's business cited in complaint

The other restaurant cited locally is the Wilbury, owned by Tallahassee City Commissioner Jeremy Matlow and Ryan Smith. A December 2018 audit, exhibit five in the petition, showed food sales were less than 51 percent of gross sales from food consumed.

The Wilbury responded with additional income that would have resulted in a failed audit if it had been applied correctly, the petition said. Instead, the DBPR ignored the additional income resulting in the Wilbury reporting 51.57 percent in food sales.

"Our license is in good standing," said Ryan Smith, co-owner of the Wilbury. "We provide our numbers every year for our annual audit and comply with any directives from DBPR. I've always found the agency to be fair and effective at administering policy."

The DBPR said the Wilbury was re-audited in October.

Carswell said he was not targeting the Wilbury: "It just happens to be in the line of fire.”

He also said he wants to be clear that he is not against any restaurant that wants to sell alcohol and have entertainment.

“I am not trying to squash the competition,” he said, explaining the state just needs "to eliminate the quota license altogether and let anyone who wants one have one.”

Contact Schweers at jschweers@gannett.com. Follow him on Twitter @jeffschweers.