Healdsburg’s Costeaux French Bakery files class action lawsuit over pandemic-era business fees

Costeaux French Bakery, one of Sonoma County's most prominent food brands, sued the county and the state on Monday seeking reimbursement of business fees paid while public health orders meant to curb COVID-19’s spread constrained or closed the operation and others across the state.

The lawsuit seeks repayment of public health permit and business licensing fees, and the state’s liquor control fees. It was one of seven similar class-action lawsuits filed in recent days against counties and the state over pandemic public health orders plaintiffs contend were overly intrusive on businesses.

“It’s offensive and tone-deaf for these entities to enforce these rules and charge fees for licenses and permits these businesses couldn’t use,” Brian Kabateck, a Southern California attorney representing Costeaux French Bakery and other restaurants around the state, said in a press statement accompanying the lawsuit.

The Healdsburg bakery has roots in town going back to the early 1920s. Will Seppi, a second-generation family owner, agreed to serve as a lead plaintiff in the local case. He has not returned calls for comment over the past week, but has previously been outspoken about the damage the pandemic has wrought on his business, spurring dozens of staff layoffs.

The bakery is represented by Kabateck’s Los Angeles-based firm, which filed similar lawsuits in six other counties — Contra Costa, Santa Clara, Monterey, San Bernardino, Riverside and Placer — in recent days. The wave of suits follows similar cases in San Diego, Orange, San Francisco, Sacramento and Los Angeles counties filed in January.

“We view this as significant government overreach,” Kabateck said in the statement.

The lawsuit itself may spur the counties to reimburse business owners for fees without going to court, Kabateck said in an interview last week. “We’re still hoping these counties do the right thing,” he said.

The bakery is seeking unspecified damages of more than $25,000, according to the lawsuit. In total among the various lawsuits, plaintiffs are seeking reimbursement of fees that are in the tens of millions of dollars, if not more than $100 million, Kabateck said.

Sonoma County’s lawyers have been aware of the pending lawsuit since Costeaux bakery filed a claims notice with the county in December. “We have not found any merits to the claims,” Paul Gullixson, the county’s communications manager, said on Monday.

The county’s Department of Health Services has offered permitting extensions and a wide range of other services to minimize the impact on local businesses, including restaurants, during the pandemic, he said.

The Sonoma County Board of Supervisors in January directed the county to use a $2.8 million fund to support businesses that paid operating fees but haven’t been able to fully open or operate at all during the pandemic, Gullixson said. Officials have been working on criteria for administering that money and are scheduled to report to the board again on April 29.

But the lawsuit cites widespread harm to the restaurant industry. Food and beverage service industries are generally considered one of the hardest hit sectors of the state’s economy, hampered by strict restrictions designed to slow the contagion by keeping people apart from each other, in particular indoors.

“California’s restaurant owners are struggling to pay their bills and keep workers employed,” according to the 20-page complaint, filed April 9 in Sonoma County County Superior Court. “Nearly 70% of California’s restaurant owners are at risk of being evicted from their property as the bills pile up, including fees, taxes, and other charges levied by the same government entities that are restricting the restaurants’ ability to fully operate.”

Supervisor James Gore, who represents Healdsburg, said he pushed for that measure in response to frustrations like those put forward in the lawsuit.

“One of the reasons I fought to get those fees either canceled or back filled with county funds is because I do believe that its bothersome in the least that you charge people with fees while they’re closed down,” Gore said last week.

Gore declined to answer questions about the lawsuit itself. The Board of Supervisors discussed the bakery’s claims behind closed doors last week.

“I know the owner very well,” Gore said of Seppi, and “I know his frustration.”

In January, Costeaux French Bakery and Seppi, the company’s president and CEO, were among a group of 50 restaurants, wineries and hotels in Sonoma and Napa counties to sue Gov. Gavin Newsom over his public health orders, and specifically over restrictions against outdoor dining. The group, which called itself the Wine Country Coalition for Safe Reopening, is not involved in the new lawsuit.

Seppi’s latest crusade puts the bakery in the middle of touchy pandemic-era debate in Sonoma County, where public health orders have had solid support but also plenty of critics.

But Kabateck sought to distinguish his many lawsuits from the political tug-of-war over public health orders.

“Our case isn’t political,” he said. The government should not have charged fees at a time that it constricted businesses’ ability to operate, Kabateck said. “That’s really all that it’s about,” he said.

The class action lawsuit is likely to draw allies among the business community who stand to benefit from the return of the fees.

“I do think the state should have forgiven a lot of things and [fees are] one of them or they at least should’ve been reconsidered,” Cynthia Ariosta, the owner of Pizzeria Tra Vigne in St. Helena and a spokesperson for the Wine County Coalition, said in an interview last week.

The group’s original lawsuit against Newsom has been paused since business restrictions were lifted early this year. It could be refiled if the governor reverses that course in the face of the persistent pandemic, she said.

Costeaux French Bakery operates four retail shops and a wholesale bread business. In January, Seppi told The Press Democrat that he had lost millions of dollars over the 10 months of limited operations and shutdowns because of the virus. Earlier in the pandemic, he laid off more than 60% of his 125-person workforce. Restored jobs have left him with about 80 employees, many working only part time while outdoor dining is prohibited, he said in January.

The Cousteaux Bakery lawsuit name names as defendants the County of Sonoma, its Department of Health Services and the California Department of Alcoholic Beverage Control.

Click here to read the lawsuit.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88