Feature | Bar Battles: Fight the DABC or give in. Either way, you’ll likely lose. | Cover Story | Salt Lake City | Salt Lake City Weekly

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Feature | Bar Battles: Fight the DABC or give in. Either way, you’ll likely lose.

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Justin Angell sped out of the parking lot of The Detour—Richfield, Utah’s only private club—in his white Dodge pickup, just before midnight, bent on revenge.

It was Sept. 28, 2007. According to police reports, the former local county jail employee went home, loaded a semi-automatic rifle and handgun, put on a ballistic vest and Kevlar helmet and headed back to Main Street to “talk” to the people he later told police had earlier beat him up. Several Richfield cops intercepted and arrested him before he got to The Detour.

A bartender told the cops Angell “did not seem overly intoxicated” after drinking six to eight beers. But the law in Richfield had had enough of this bar. One cop, a friend of Angell’s, according to The Detour’s owner David Kunz, e-mailed the Salt Lake City-based Department of Alcoholic Beverage Control, requesting help. On Nov. 7, a seven-agent undercover team—“headhunters from Salt Lake” is how Kunz terms them—from the investigations division of the Utah Department of Public Safety rolled up on the private club’s doorstep.

Kunz was out of town. Three of his employees were off sick. And it was the busiest night in three months.

In January 2008, Kunz received a letter from the DABC informing him of five liquor-law violations from that November night. One was for overserving because an officer had ordered, and was served, five Jäger Bombs, an herbal liqueur mixed with an energy drink.

“They’re honest people, they make mistakes,” Kunz says of his beleaguered bar staff that night. “On a normal night, this would never have happened.” Send an undercover cop into any bar on a busy night, most bar owners will tell you, and people are going to get busted.

Kunz came up to Salt Lake City for a prehearing with Assistant Attorney General Sheila Page, who represents the state liquor agency and DABC regulatory director, Earl Dorius. Although Kunz disputed several of the violations, he took the 35-day license suspension and $800 fine plus court costs that Dorius and Page offered. The penalty is outlined in a violation grid featuring a range of penalties for each type of infraction. Repeat the offense, and the penalty gets tougher. The grid, Dorius says, ensures all licensees get equal treatment.

What bothers Kunz most is that the Jäger Bomb-serving bartender only got a $25 fine. He and the rest of his staff got clobbered with a month’s closure. Kunz always, he says, has followed the DABC’s instructions and regulations “to the letter of the law.” Until this January, he had no violations. For 16 years, he owned the only beer tavern in Richfield, a predominantly Mormon town in Sevier County. Three years ago, Kunz opened its first private club, The Detour.

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Kunz characterizes the local attitude toward him getting a club license: “Now the evil bastard is selling alcohol, so automatically, everyone’s getting drunk.” He started having problems with local law enforcement, he says. Kunz says every time a new cop joined the force, he could count on the officer’s visit, announcing plans to shut the club down.

Jim Brush, owner of Maggie McGee’s private club in Cottonwood Heights, sees similar “them-and-us” issues issues at play. “We’re a sinner in this state. We’re second-class citizens,” he says. What a bar owner amounts to, he adds sourly, is “an unpaid tax collector.”

Beverage Baron
In a state where the dominant religion views alcohol as a sin, second-class citizenry for liquor licensees might well lead to second class rights. Salt Lake City attorney Pat Shea thinks so. Last year, he told the DABC commission the treatment of licensee violations resembled something out of Soviet Russia, even going so far as to refer to Earl Dorius as “the Baron of Beverages.”

Dorius rejects Shea’s characterization. “Pat thinks I have far more power than I do,” he says. He describes his role of screening police reports for violations and overseeing settlements as “ministerial.” He does not, he says, “sic anybody on our licensees.” Nor, Dorius adds, “is my role to badger them.” Rather, his goal is to get the punishment for a violation as low as he and Page think they can go “and have the commission accept it.” If the licensee takes the deal, then the commission must approve it. “There’s nothing wrong with that process,” Dorius says.

Comparing that process to Stalinist show trials is, on its face, extreme. Utah is hardly a Communist state. Its political and business culture is all about encouraging the entrepreneur to not only make a living but also a healthy profit—and free of government meddling. Except, that is, when it comes to regulating and punishing sin and sinners. Bar owners say the system is engineered to discourage their right to fight the allegations. Follow licensee violation prosecutions from the initial police report through to the conclusion, and at times, Shea’s Soviet Union analogy doesn’t seem all that far-fetched.

As one DABC violation hearing involving Salt Lake City private club The Hotel revealed last year, State Bureau of Investigation liquor-law agents receive little formal training for what they do. Whether that explains an at best haphazard approach to evidence gathering, including a lost evidence file in the Hotel case, is another matter. Certainly the standard for evidence needed to trigger a DABC violation charge is surprisingly low—no more than an officer’s observation of an apparent infraction. If The Hotel case is any measurement, it’s little wonder many barkeeps feel it’s open season on licensees all year round.

The DABC reports that out of 101 violations reported in the past fiscal year, 94 licensees settled with the agency rather than contest charges before a hearing examiner. Assistant Attorney General Page says that shows the system works well. “Violations presented by law enforcement were probably well-researched and accurate,” she says. “We have a regulated industry that is willing to take responsibility for problems in their clubs and fix them.”

Licensees offer another perspective. They complain of feeling so intimidated, some have left prehearings in tears. If they didn’t do what they’re charged with, they face the Hobson’s choice of taking the punishment anyway or facing legal costs and the probability of much stiffer penalties if they fight and lose. Not to mention the fear, warranted or not, that the DABC will come after them later.

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Things weren’t always like this, says Tony Chlepas, owner of the Cotton Bottom Inn, a popular beer bar in Holladay. In the 1970s when he joined his mother Helen in running the Cotton Bottom, “We were totally paranoid of the DABC,” Chlepas recalls. ‘They were the enemy, out to get us.” No one would sit down with bar owners and have a conversation about what they were supposed to be doing. Then in the mid ’80s, Chlepas had a visit from a DABC compliance officer. “We want to be your partner, educate you. We’re not here to punish you or to get you,” Chlepas remembers being told. The DABC wanted to help him become a responsible purveyor of alcohol.

Five years ago, things changed. Page points to an upswing in the State Bureau of Investigation and local law enforcement conducting Serving Intoxicated Persons [SIP] operations as key. Chlepas sees it in more personal terms. "Now it’s a gotcha game," he says.

Chaos at The Hotel

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One man who fought back after being “got” is Jordan Harwood. The wiry 32-year-old owns The Hotel on 155 W. 200 South. When he got a letter from the DABC informing him of seven violations at his club, he wasn’t happy. “I’m a law-abiding, tax-paying citizen. I’m not going to be a victim. The DABC works for us. Every bottle of alcohol I buy, they profit from.”

His only employee named in the violations, Kate Calder, told him she did nothing wrong. Facing a 10-day license suspension or possible revocation and fines up to $25,000 for just one of the counts, Harwood fought back. Unlike many licensees, Harwood could afford pricey counsel. Around the corner from The Hotel are the offices of Winder & Haslam, a well-established law firm. Harwood ended up paying $82,000 in legal fees in his battle to keep his club’s reputation clean. State Bureau of Investigation head of alcohol investigations Lt. Ed Michaud was unavailable for comment.

Winder administrative law expert Linette B. Hutton says defending The Hotel was an eye-opener. “What’s remarkable about this case is the violations imposed against The Hotel were made up of just opinions and speculation,” Hutton says. Assistant Attorney General Page has a different take: “We take police reports at face value,” she says. “Those are the things that have happened.”

On May 5, 2006, three men entered the crowded three-story club at 11:20 p.m. At 11:55 p.m. two more men arrived. The five were all State Bureau of Investigation agents. They had already visited five clubs: The Cell Block, The Depot, Head’s Up, Cabana and Club Sound. Last was The Hotel.

From a distance of 15 to 20 feet, SBI agent Doug Miller and another agent observed then-28-year-old server Kate Calder, on the second floor, fill 11 small plastic cups with a liquid, which a patron then passed to five different people. The patron handed over a credit card. Calder appeared to process it and had the customer sign a receipt. Neither agent got the customer’s name nor inspected the receipt to see what he’d paid for. That observation resulted in an overserving violation.

Later, a man in a tuxedo named Kevin Handron took a bottle of champagne Calder had placed on the bar and walked away with it, Miller wrote in his report. Miller described the bottle as screw top. Handron, Miller said, removed the top and swigged from the bottle. Hotel staff told Hutton champagne bottles came only with corks.

While the SBI agents did not confiscate or photograph the bottle, they did break cover to take Nevada-resident Handron to the manager’s office. To them, he appeared drunk. The agents didn’t take a breath sample or ask him to perform a field sobriety test. Nor was the issue of impairment or disability that might be confused with drunkenness raised. The agents added to the list another citation for serving to an intoxicated person.

Six agents returned to The Hotel on May 12. A bartender unidentified by the agents mixed a drink in a tall glass with ice. He metered the initial alcohol, then added flavorings. In SBI agent Jerry Walters’ written opinion, “The drink likely contained more than 2.75 ounces of alcohol.” Walters did not inspect the drink itself.

The Believers
DABC’s Dorius requires that SBI send its reports of violations to him promptly, several agents said in deposition. If they were not sent within two weeks, Dorius would not pursue them. The May 2006 Hotel reports, an agent said, “slipped through the cracks.” Dorius received them as background information in September after SBI had returned to The Hotel and found several more violations. To the surprise of one agent, Dorius nevertheless pursued the May infractions with the September charges, despite the former being filed so late.

The Sept. 2, 2006, visit provided further examples of questionable evidence gathering. Agent Rolynn Snow intercepted a man with poor balance outside the club. He didn’t get his name, but he did get him to blow on a portable breath tester [PBT], which read a potentially dangerously high .241. Snow testified the unnamed boozehound “could barely speak” and was not “lucid.” Despite such communication problems, Snow was able to glean from the man he’d been drinking inside The Hotel, moving around the six bars to avoid being tossed out for drunkenness. Neither Snow, nor any of his colleagues, saw the apparently incoherent man in The Hotel while they were on the club’s premises. The drunk was sent off with a semi-sober friend on foot.

Other SBI agents caught five minors near the club. They all submitted to Breathalyzer tests. Three said they had entered the club with fake IDs. The cops took the IDs. But by the time of the July 2007 depositions, the Sept. 2 visit file, containing operation details and the fake IDs, had vanished. “I have to say I wasn’t happy about [the lost file],” Page says. “It’s the only time it’s ever happened.” The defense wasn’t pleased, either. “Beyond the undocumented alleged statements of these [minors],” Winder case documents stated, “there is no evidence to establish that any of these individuals were served or were consuming alcohol inside The Hotel.”

The nature of undercover operations, Page says, means “there’s a limit to the information you can secure and provide.” This doesn’t sit right with Hutton. “When the entire state is coming down on you alleging misconduct, and they don’t have a single thing—not even an employee name to begin an investigation—that’s a little bit too undercover.”

Page acknowledges that an officer’s testimony is sufficient to lead to a violation charge. Which, in turn, makes good report-writing by liquor-law agents key. The quality of a report written five days after a visit, though, might be debatable. The agents did not compile their reports of the Sept. 2 violations until five days after visiting The Hotel. They took very few notes during or immediately after the visit, relying on memory.

“Many of the conclusions of the agents involved violate the due process rights of” The Hotel and Calder, a document that Hutton filed with the DABC examiner states. The lawyers couldn’t defend their clients because there was no factual evidence that could be disputed in court. Page disagrees. “Due process is served by the hearing process, the discovery process,” she says. “They had every opportunity to gain the evidence that they did to represent themselves.”

The Hotel’s lawyers see holes throughout the case. Evidence was scant to prove Kevin Handron was overserved. There was no evidence to link Handron and Calder in any financial transaction. No record existed of Handron’s intoxication level. No one questioned him about medication he may have taken. “Why didn’t they do a breath test on Handron? Why didn’t they ascertain whether he was drunk or not?” Hutton says.

A slap and a thank you
Problems relating to the lack of contestable evidence in liquor-law cases wasn’t the only thing the depositions revealed. Agents complained about a lack of training and of outdated investigation policies. One agent described as “embarrassing” that SBI investigation guidelines were last written in 1991 and said they didn’t “necessarily apply directly to alcohol.” Instead of a policy, they have a checklist to fill out on issues such as membership and flavorings. There were undercover courses related to drug training, not alcohol—although one agent learned how to distill whiskey. Rookie agents, it seemed, learned mostly on the job.

That Hutton and her co-counsel were challenging the agents over their descriptions upset one SBI agent, Hutton recalls. “He was really annoyed with us,” she says, and came to the deposition wearing his gun. That same agent said he had not drunk anything alcoholic in his life—“Never a drop.” Another said he’d buy a Bud Light out of an expense account for inspections, then take it to the restroom, empty it and refill it with water.

The agents “believed in what they were doing,” Hutton says. Some of them clearly thought, “These people need to be punished for selling and consuming alcohol.”

And punishment was administered, albeit after an unexpected turn of events. In mid-September 2007, server Kate Calder, who now works in real estate, independently settled with the DABC and paid a $250 fine. With Calder admitting the violation, she was confirming some of the state’s charges against The Hotel. “It didn’t hurt our case,” Page says.

Hutton couldn’t believe it. “The only individual they had IDed in the story, and they were letting her go with a slap and a thank you.”

The hearing judge, Carol Clawson, told the two sides to work it out. Having started with a possible permanent closure, Page ended up closing The Hotel for seven days and a fine plus costs of $2,715 for three violations.

Despite his bruising battle with the DABC, The Hotel’s owner Harwood is still in fighting mood. “In my humble opinion, the biggest thing we have to do is put our foot down with the DABC. They work for you and I. We are paying large taxes. Their job is not to hand out punishment. It is the continuous flow of alcohol in Utah.”

Lewd Mood
“Every time a bar owner makes a [prehearing] settlement, we all lose,” Harwood says. Bar owners “are very uneducated to what their legal rights are.”

Troy Peterson owns Club Allure, previously known as Sandy Station. His private club is a sprawling building east of Interstate 15 at 9000 South. It’s not just he who suffers when the club is hit, he says. It’s his employees and ancillary workers, as well.

Peterson, who comes from Wyoming with a background in oil, is new to Utah. He bought Sandy Station in March 2007 as “a great investment.”

At the end of last year, he brought in Chippendales male strippers. He decided to repeat the successful event. He told the screaming, female audience they couldn’t touch the dancers. One Chippendale dancer, however, grabbed a dollar out of a woman’s cleavage.

Peterson made $22,000 that night. Three weeks later, the DABC notified him his club had committed three violations. An investigator had come to the Chippendales show, armed with a buttonhole camera. Two counts were related to unlawful sexual activity, a third to nonmember entry. Peterson went alone to a prehearing with AG Page. As a new bar owner, he hoped for leniency. He didn’t get it. The DABC wasn’t there to pick on him, Page said. Then, he says, she told him he’d have to close for 22 days and pay fines and costs of $405. When did he want to close, she asked?

What bothered Peterson most was the lewdness charge. Everyone knows, he argues, that Chippendales perform in an overheated sexual atmosphere. The DABC wasn’t interested.

He had just bought a home in Utah and was in talks to buy a transportation company so he could provide free rides from the club over the weekends. “I backed out of that,” he says. The DABC left him with a bad taste in his mouth. “I feel like I’m on eggshells here,” he says.

Peterson was able to keep his staff on through the closure and remodel the bar with an elevated VIP section. He relaunched recently under the new name Club Allure, a common—though expensive—tactic bar owners often employ after a closure.

“It amazed me they didn’t come up with another solution than closing our doors and hurting not just the owner but employees and indirect workers, too,” Peterson says. He cites his Budweiser rep who works on commission and told him, “This is really going to hurt me and my family.” He ticks off a list: the Coors rep, the Cisco food reps, the night cleaners, the karaoke promoters, the people who cleaned employees’ shirts and the club’s rugs. They all suffered. Peterson took the biggest hit. In total, he says his lost income and other costs for the 22 days amounted to $133,072.67.


While Peterson is a new hand to Utah’s liquor laws, Cotton Bottom Inn owner Chlepas has dedicated his life to negotiating the tricky waters of selling brews in Utah. He thought he’d kept his side of the deal with the DABC. He became a responsible barkeep, he says. He slowed down service at his Holladay beer hall to dissuade power drinkers. His famous garlic burger and sandwiches-to-beer ratio consumption went from 1 to 5, to 1 to 2.3. The Cotton Bottom is the bar you want in your neighborhood, he says.

“Then all of a sudden, they don’t trust that I’m a responsible bar owner,” Chlepas says. Cops try and catch him in a mistake, and when they do, “I get treated like a criminal.”

Why do they still need to sneak a minor in when they see everyone is carded, he demands? He doesn’t want young people in, he says. They become aggressive when drinking. They fight and steal. “This is not what I bought into,” when the DABC promised a partnership back in the 1980s, he complains.

Even though in his heart, Chlepas says, he knows the youth would have been carded and the beer taken, he accepts that violation. The second two, from an incident on Jan. 16 this year, raises his hackles. Two Salt Lake County detectives took a table. While they argued with the server over her request for their IDs, a cub went to the bar and asked for a Bud Light. The bartender asked for his ID, put the ID on the bar, walked to the other end of the bar and eyeballed the argumentative two men. Three drinkers at that end of the bar asked for three Bud Lights. The bartender went back to the cub, put three Bud Lights on the bar and proceeded to open them in front of him. One of the cops flashed his badge.

“But I didn’t serve him,” Chlepas says the bartender responded. The cub said the bartender had looked at the ID and gave him a beer.

A bartender from another bar was standing right beside the Cotton Bottom barman. “He refused to help us out, he was afraid of retaliation, of losing his job,” Chlepas says.

The Cotton Bottom got an 11-day liquor license suspension and a $1,000 fine. Chlepas lost a $1,000 a day but was able to serve burgers and pop. The servers make a living on their tips, he adds. They are single moms. With the liquor-license suspension, they were forced to live off credit cards. “It takes a year or two for them to dig themselves out from this,” he says.

Dorius acknowledges, “There are certainly some instances where I think the police work is poor.” He adds, “I don’t think we should do liquor-law enforcement by trickery.” He’s told law enforcement, he says, “If it’s only them that’s generating the problem, rather than a pattern that they’re seeing, that concerns me.”

What remains unclear is the exact nature of the relationship between the DABC and law enforcement. Dorius says his agency is solely a licensing bureau. Yet in The Hotel depositions, numerous agents said SBI works closely with the liquor agency. Utah Hospitality Association spokeswoman and attorney Lisa March McGarry says the two are “in a cozy little double bed together.” Bed partners or not, the thought of an unholy alliance between SBI and the DABC is enough to give many licensees nightmares. Especially now that, thanks to prompting from Mothers Against Drunk Driving, the Legislature increased funding for SBI, taking what MADD’s Jaynie Brown says is the DABC enforcement squad’s number from 15 agents to 21 in July.

War and Peace
“Our duties are to keep a good balance between drinkers and nondrinkers and to be able to give licenses where they belong,” DABC commission chairman Sam Granato says. He’s not going to handcuff anyone with a dream, money and ambition. He also wants to loosen the penalty grid. Recent first-time servings to minors violations have resulted in $1,200 fines instead of the usual five-day suspension—a development Dorius says he’s glad to see.

Whether Granato’s compassion will spill over into law enforcement is another matter. Some private-club owners have installed cameras to tape evidence for rebutting SBI allegations. For Chlepas, cameras would be the end of his neighborhood bar. It’s not the price of the equipment that stops him. It’s that the bar’s very essence would be threatened if he wires it up for image and sound. It’s an iconic, little holdout among the monster homes of Holladay. The noisy Interstate 215 interchange thunders to the east. But down in a leafy hollow, something sacred and profane beats to its own drum.

Chlepas conjures up a middle-age man on a Saturday afternoon who has finished mowing his lawn. He wants a burger and a beer or two to wash it down. He heads for the Cotton Bottom. But how does that man feel, Chlepas asks, when he looks up from his beer to see a camera lens coldly staring at him?

“It makes sense to do that to save your ass, but at what cost?” he all but snarls. “I hate that. There’s too much surveillance in this world already.”

 

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