The owner of the Velvet Grill & Creamery has paid Modesto $10,000 to settle the action the city brought against its two restaurants for serving customers indoors in violation of public health restrictions put in place to stop the spread of the new coronavirus.
The Dale Road and McHenry Avenue restaurants had faced combined civil penalties of $90,000 after the city started fining each restaurant $1,000 per day Aug. 29 for continuing to serve customers indoors.
Modesto also has reached a settlement with Tru-Fitness for violating the restrictions against gyms operating indoors. The downtown gym has paid the city $1,000.
California eased some of the restrictions Oct. 13 in Stanislaus County after it reached a benchmark for reducing the prevalence of the virus. Restaurants can now offer indoor dining at 25 percent capacity, and gyms can operate indoors at 10 percent capacity. Restaurants had been limited to outdoor dining and takeout, and gyms could operate outdoors.
Both settlements were signed by all parties and the payments made this week, according to city spokesman Thomas Reeves.
These are the only businesses Modesto has taken punitive action against for not following the pandemic restrictions. Reeves said in other instances the city’s approach of gaining voluntary compliance through educating businesses has worked.
Fined after several attempts at compliance
Modesto started fining the Velvet Grill restaurants after several attempts to gain compliance.
Velvet Restaurants Inc. — the corporation that owns the restaurants — appealed the fines, saying the public health order was not constitutional and disputed the city’s claim the restaurants had created a public nuisance by violating the order.
The $90,000 was based on the daily fines for each restaurant from Aug. 29 to Oct. 12. The hearing officer at the Oct. 13 appeal hearing could have waived, reduced or upheld them.
But the hearing never got underway because more than 100 Velvet Grill supporters packed the 3,400-square-foot hearing room, exceeding its physically distanced capacity of about 50 seats for members of the public. Those without seats refused to leave. The hearing then was expected to be held at a later date.
Reeves said the Velvet Grill’s attorney asked the city about reaching a settlement. Reeves said in the interest of fairness the city then asked Tru-Fitness whether it wanted to try to settle. Tru-Fitness was set to have a hearing Oct. 20.
The Velvet Grill restaurants were in violation well before the city fined them. The settlement states city code enforcement determined the restaurants were not in compliance July 8. The city issued cease and desist orders Aug. 11 and then notices and orders Aug. 28 giving the restaurants one day to stop indoor dining or be fined.
The settlement states Modesto and Velvet Restaurants “agree and acknowledge that Velvet conducted indoor dining at its two (2) restaurant locations, in violation of the Health Orders from August 29, 2020, to October 12, 2020.”
Tru-Fitness was also was facing steep fines after Modesto imposed daily fines of $1,000 in early September. Modesto also went through several attempts at gaining compliance before imposing fines after determining Aug. 18 the gym was operating indoors. Tru-Fitness acknowledged in its settlement that it violated the public health orders from Sept. 4 to Oct. 12.
“We are operating in unprecedented times, and coming up with an equitable fine and settlement structure for businesses that are not following COVID-19 health orders is uncharted territory,” Reeves wrote in an email responding to whether the settlements were fair. “The City’s number one priority is the health of its citizens, and we achieve that by educating our community on these health orders. The evidence of success is compliance, not the severity of the punishment.”
Reeves said it is important to note that both business still face hefty fines if they don’t stay in compliance.
The settlements state the businesses agree to comply with the public health restrictions, and if they don’t during the first 45 days in which the settlements take effect, the city can schedule a hearing to determine whether the businesses will pay fines for their violations before the settlements.
The settlements’ effective dates are Oct. 13 for the Velvet Grill and Oct. 20 for Tru-Fitness. The Velvet Grill settlement also states the restaurants will have 24 hours to come into compliance when notified by the city that they are not in compliance with a public health order.
Tru-Fitness, Velvet Grill decline to comment
Tru-Fitness managing member Jake Keidel signed the settlement. He declined to comment Friday morning at his gym. It was not busy, and just one person was observed working out.
Velvet Restaurants Inc. Secretary Bill Owen signed the Velvet Grill settlement. He did not return two phone calls and a text seeking comment. The McHenry Avenue Velvet Grill appeared to be about one-third full around 11:45 a.m. Friday based on a quick observation. An employee disputed that and said the restaurants was operating within the guidelines.
Reeves said the settlements also state Modesto will use the $11,000 in settlement money to help small businesses. He said that is in keeping with the city’s effort to help businesses during the pandemic.
Modesto code enforcement officers have opened more than 140 cases against businesses suspected of violating whatever restrictions were in place since they started enforcing them in late April. Modesto police enforced them before that. The city investigates based on receiving a complaint about a business.
Complaints can be emailed to the Stanislaus County Health Services Agency at [email protected], and they will be forwarded to the appropriate city.