by Scott McClallen
A Macomb County restaurant group has filed a lawsuit against Gov. Gretchen Whitmer and other state entities.
In the lawsuit filed Feb. 8 in Macomb County Circuit Court, the Macomb County Restaurant, Bar, and Banquet Association (MCRBBA) alleges top state officials violated the state Constitution’s Taking Clause by closing businesses for the past 11 months with just compensation and are seeking damages.
The restrictions “devastated us,” Samuel Backos, the owner of Ernie’s Mediterranean restaurant in Clinton Township, told The Center Square. “Our business is over 70% down.”
Backos has owned Ernie’s for 44 years, which is a staple in the community.
But less than a year under Whitmer’s administration’s orders, it may not survive, to no fault of Backos.
“We’re hemorrhaging money,” Backos said. “We don’t have very much longevity this way. This is going on year number two.”
Whitmer quietly extended the 25% capacity and 10 p.m. restaurant restrictions until March 29, which will mark more than a year operating under restrictions.
“We don’t even know at the end of March if the restrictions will be fully lifted,” Backos said.
Backos said the ongoing restrictions trap hospitality owners because they negate the property value.
“Our 44 years of equity, retirement, investment, everything we’ve hoped to gain has been wiped out,” Backos said.
Although they’ve been shut down or restricted at 25% capacity for a year, struggling restaurant owners will still be taxed at old market values.
Scott Ellis, the executive director of the Michigan Licensed Beverage Association (MLBA), said businesses are losing money operating at 25% capacity, and they only opened hoping restriction won’t last for long.
“We can’t survive like this,” Ellis said. “It’s just mathematically impossible. 25% doesn’t pay the mortgage. 25% doesn’t pay your property tax.”
In the suit, attorneys Albert B. Addis and Shaun A. Kelley of Michigan Justice PLLC allege the state violated the Takings Clause of the state Constitution, requiring citizens to be justly compensated for government takings that substantially interfere with property use.
“For some reason, the state of Michigan just said, ‘We’re going to close down an entire industry, put thousands out of work, close what’s now been 3,000 restaurants forever, and we’re not going to give them anything,’” Addis said in a phone interview with The Center Square.
Michigan has granted some businesses grants, but not enough to keep afloat roughly 3,000 permanently closed businesses.
MCRBBA’s attorneys argued: “It is a fundamental rule of democracy as recognized in the Michigan Constitution, that the government cannot destroy the value of these businesses and properties through government fiat without proper just compensation.”
The lawsuit claims emergency orders “did not provide any well-reasoned rationale” why restaurants, bars, and banquet halls are regulated differently than other businesses and lacked science to justify targeting the industry.
Fred Fox, the association president, said in a statement: “We have shown that we know how to safely operate our businesses. If the State refuses to allow us to operate, it is only right that we be compensated for our losses. No other industry has been shut down like this without just compensation. Without compensation the restaurant business in this county will not recover.”
Roughly 50 businesses have joined the MCRBBA, some of which have already closed permanently.
On Jan. 20, bowling alleys filed the same takings lawsuit in federal court seeking more than seven figures. Whitmer relaxed those contested regulations on Feb. 1.
“Why the governor is releasing restrictions on some but not others, it’s because of the pressure that’s been applied,” Backos said. “We have been unfairly and unjustly stigmatized as an industry.”
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.