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On May 11, 2020, PA Governor Wolf stated in a press conference that there could be some significant consequences for those businesses defying his March 19, 2020 Order. While state and local governments may disagree on when businesses can reopen, the Governor informed counties and businesses to abide by the law. In addition to PA businesses losing insurance coverage for reopening prior to the state government lifting county restrictions, bars and restaurants serving food and alcohol improperly could lose their liquor licenses.
We’ve reached an odd inflection point in the American response to the COVID-19 crisis. There is good news and bad news, but infections do appear to be waning in some spots. That said, we’re also seeing an unprecedented economic downturn in Pennsylvania, as Governor Wolf’s Order on March 19, 2020, and subsequent amendments, have shuttered many businesses to slow the spread of the virus. This in turn, has led to record unemployment and business closures.
Because of these economic conditions, some states, counties and municipalities are beginning to chafe under the stay at home orders issued by individual governors. There are even some examples right here Pennsylvania, the Lehigh Valley and Berks County. Do these local governmental authorities defy the Governor of the Commonwealth, who is in turn in dispute with the President of the United States as to when and how to open up businesses?
Regardless of politics, this is a situation which nearly every governmental official laments and puts governmental officials in a Catch-22 that Joseph Heller himself would find impressive.
Initially, for business owners, the consequences to insurance is clearly the most dangerous. Without insurance, businesses could be open to any number of potential damages relating to property loss, damages or law suit arising from injury. The Pennsylvania Department of Insurance has issued guidance regarding these potential issues, located here.
For business owners who wish to open, there is a very real risk that their insurance coverage during the period of time between the Commonwealth’s opening and the local governmental entity’s opening, will not be honored. Even for insurance coverage which is not directly affected by the Pennsylvania Department of Insurance’s guidelines, the policy may contain exclusions to coverage.
It’s a good idea to reach out to your insurance provider, or an attorney, to review this coverage. While there may not be a definitive answer, an agent or attorney can help you calculate the potential risks associated with the “gray area” between governmental entities.
As to the liquor licenses, in a prior blog post, I had mentioned that take-out cocktails may be upcoming in Pennsylvania based on HB 327. That bill has now cleared the Pennsylvania House, and was approved unanimously by the Pennsylvania Senate’s Law and Justice Committee on May 11, 2020. The Senate is back in session May 18 – May 20, 2020 so, our liquor license owning clients may have a new source of income during this crisis.
Unfortunately, until that time, there are significant consequences for violating Pennsylvania’s Liquor Code 47 Pa.C.S.A. § 4-407(a). This includes possible citations, which can lead to enforcement action by the State Police, local municipal enforcement or the PLCB’s enforcement arm. Again, individual circumstances could modify whether you should consider opening up your bar or restaurant.
PA businesses reopening early should reach out to an attorney before you make such a decision to assess the potential risks and rewards to such an opening.
In future blogs, Attorney Jason A. Ulrich will address how breweries, wineries and distilleries can still find ways to profit, expand and abide by PA liquor laws during the coronavirus pandemic. He shared other liquor law insights in a recent edition of the Legal Intelligencer.