Updated at 2:31 p.m.
The District of Columbia Court of Appeals ordered (PDF) the city's Alcoholic Beverage Control Board to take a second look at whether a Dupont Circle restaurant can end an agreement with neighborhood residents five years ago, exchanging shorter liquor service hours for support in getting a liquor license.
The three-judge panel found that in order to terminate the voluntary agreement, the restaurant, Hank's Oyster Bar, had to show that it first made good-faith efforts to negotiate with the group. The alcohol board was wrong to say that all it needed was a finding that ending the agreement wouldn't have an "adverse impact on the neighborhood," Judge Anna Blackburne-Rigsby wrote.
The court reversed the alcohol board's decision to terminate the agreement and ordered the board to go back and decide whether Hank's did attempt to contact the neighborhood group and negotiate.
According to the opinion, Hank’s applied in 2005 to transfer its liquor license to add a sidewalk café. Neighborhood groups protested, worried about noise, effects on traffic and parking, and other issues. In May of that year, however, Hank’s entered into a voluntary agreement with the neighborhood groups, agreeing to restrict the amount of seating and stop serving alcohol earlier than was required by law.
In March 2010, according to the opinion, Hank’s petitioned the board to end that agreement. A group of residents protested again, arguing that Hank’s failed to prove it had made good-faith attempts to negotiate first. The board denied the residents’ request, stating that all it had to do was find that ending the agreement wouldn’t have a negative effect on the neighborhood.
The appeal turned on an interpretation of wording in the D.C. Code. The introductory paragraph of the section in question references what the board needs to do to “amend or terminate” a voluntary agreement, but the board argued that sub-sections dealing with whether there were good-faith efforts to negotiate only apply to petitions to amend an agreement, and not terminations.
Blackburne-Rigsby wrote that the court was “not persuaded.” Before the board can approve a termination, she wrote, it first has to decide whether an amendment would be possible, so the board can’t skip certain steps. She added that the court rejected an interpretation of the law that would allow one party to end a voluntary agreement with no involvement from the other parties involved. Judge John Fisher joined in the opinion and Senior Judge Frank Schwelb issued a concurring opinion.
“Terminating this voluntary agreement…without first attempting to salvage the agreement by amending it, was unfair,” she wrote (emphasis in the original). “[D]oing so would result in Hank‘s having the full benefit of being able to extend its hours and increase the number of people to which it can serve alcohol, while petitioners have completely relinquished their rights to protest the license and have their voices heard at a hearing.”
The lead attorney for the neighborhood group, Michael Hibey of Washington’s Mitchell & Hibey declined to comment. David Mallof, one of the residents challenging the termination of the voluntary agreement, said that he is “delighted for the quality of life that residents are continually challenged to maintain at the administrative agencies within D.C." Asked about his next steps, he said that “we have an in-force voluntary agreement and we would like to maintain an ongoing discussion on impacts and cost-shifting that can occur when neighbors abut neighbors.”
A representative of Hank’s said in an e-mail that restaurant owner Jamie Leeds is consulting with her attorney about the court’s ruling. Fred Moosally, director of the alcohol board, declined to comment, except to say that the board would be scheduling a hearing.