A hearing officer issues a beer permit suspension and a fine to Paul’s Oasis for violating a health order and city ordinance.
UPDATE, 3:55 p.m. 2/3/21: This story has been updated throughout with Wednesday's ruling and penalties.
Paul’s Oasis will temporarily lose its beer license and pay a $7,000 fine for violating the city’s beer ordinance and the county’s mandatory bar closing-time order.
Hearing Officer Celeste Herbert declared the evidence presented at Tuesday's hearing justifies the license suspension and fine.
Knoxville Beer Board Hearing Officer Celeste Herbert issued her ruling today, following a three-hour hearing on Tuesday. She wrote that “all the evidence” led her to conclude that it was more likely than not that Paul’s Oasis was guilty of non-compliance, which justifies the license suspension and fine. The bar must also prove it has educated employees about all applicable laws and regulations.
Herbert said she found the testimony of Knoxville Police Department Sgt. John Coward, the city’s beer inspector, about owner Paul Osterbrink’s reaction to the citations to be particularly compelling.
“Mr. Osterbrink, the sole shareholder of the Permittee, waived the citation in the air as if violation of Ordinances and Board of Health Rules was some badge of honor,” she wrote. “Given the devastating effect of this virus, it is hardly cause for celebration for violating a rule enacted to protect the public.”
According to Coward, Osterbrink triggered such celebrations on more than one occasion. The hearing covered seven citations Paul’s Oasis received in November and December, and the bar has since been cited on four other occasions.
Rick Owens, Osterbrink’s attorney, was not immediately available for comment. A hearing officer’s decision can be appealed to Circuit or Chancery Court.
Knoxville Mayor Indya Kincannon said in a statement on Wednesday that the ruling was fair and just.
“We take no pleasure in suspending any business' beer permit,” she said. “But in this case, Paul's Oasis irresponsibly and flagrantly put its employees and patrons at risk by refusing to comply with the Board of Health's pandemic safety measures. We did what was appropriate and necessary to safeguard public health.
"I wholeheartedly support the science-based actions taken by the Board of Health, and I thank the overwhelming majority of bars and restaurants that are doing their part to keep us all safe. When we get through this pandemic, it will be because so many of us are doing the right things to protect each other."
During Tuesday’s hearing, evidence and testimony showed Osterbrink also complained on social media that pandemic-related public health orders and their enforcement amounted to facism. The establishment continued racking up citations even after COVID-19 raged through the staff.
“If you have the privilege of holding a beer permit here in the city of Knoxville, we're going to expect you to follow the law whether you like those laws or not,” said Alyson Dyer of the city’s Law Department. “I think most businesses understand this and we've been very fortunate here in the city of Knoxville to have the majority of businesses comply with all the new laws that have been enacted since the COVID pandemic began.”
Owens argued on Osterbrink’s behalf that the regulations are unclear and that the city could not prove Paul’s Oasis was actually serving alcohol after the county’s curfew.
The Knox County Board of Health passed an order on Sept. 16 mandating that bars and restaurants serving alcohol close at 11 p.m. to reduce the chances of spreading COVID-19 among patrons. The pre-pandemic cutoff for alcohol sales was 3 a.m. On Nov. 23, the board moved the closing time to 10 p.m. (Last week, the board returned the mandatory closing time to 11 p.m.)
City Council subsequently amended Knoxville’s beer ordinance to explicitly recognize health orders as legally binding and grounds for enforcement of beer permits issued by the Beer Board.
Owens argued that Paul’s Oasis patrons were shooting pool and throwing darts when police cited the business, as they might after 3 a.m. before the pandemic, and the city couldn’t prove the bar was actually serving alcohol after the curfew.
Dyer countered that all activities involving patrons being inside the bar had to end at the curfew. The Board of Health’s order states that bars and restaurants “shall close for on-premises consumption and activities.”
Dr. Patrick O’Brien, a member of the Board of Health, testified that the intent of the board was to have establishments shut down at the appointed time, except for carryout or delivery service.
“The intention was to close establishments so that people would not be congregated together,” he said.
KPD’s Coward wrote all the citations during site visits to the bar. Dyer walked him through each of the citations, which were issued between 10 p.m. and midnight on the dates in question.
Coward testified that when he would check on Paul’s Oasis he would notice vehicles in the parking lot and see customers through the windows of the business. He would meet Osterbrink outside to write the ticket.
On several occasions, he said, Osterbrink reentered the bar and waved the citation above his head to the delight of the patrons inside. “The first time it caught my eye was, I heard the cheers and turned to see what was going on,” Coward said. “Mr. Osterbrink had the ticket above his head and the crowd assembled in the bar were cheering.”
Though Coward stayed outside the bar to write the citations, he said he could see through the row of large windows across the front of the building. He said people would come and go, but never to pick up food or drink to go as allowed under the health order. Customers were drinking alcohol as they normally do, Coward said.
Asked by Owens how he could tell they were drinking alcohol, he responded, “I’m not blind.” He said beer bottles were clearly visible.
Dyer also highlighted bar payroll records indicating that bartenders worked long after 10 p.m., sometimes as late as 4:10 a.m.
During his testimony, Osterbrink invoked his Fifth Amendment right against self-incrimination 21 times, typically when asked if his employees were serving alcohol after the curfew.
Owens said his client would decline to answer questions that could be used if he is prosecuted individually in the future under state law for violating a public health order, which is a Class C misdemeanor. He previously failed to persuade Herbert to delay the suspension hearing until the Paul’s Oasis case could be heard in Municipal Court.
The enforcement of city ordinance violations is a civil matter, however. The Paul’s Oasis beer permit is held by PTO Inc., which is owned by Osterbrink, and corporations have no right against self-incrimination. Herbert explained each time that she could make a “negative inference” from his refusal to answer.
Dyer reviewed Osterbrink’s Facebook posts addressing the issue. In November he referred to the enforcement system as constituting facism. At one point he said he wished his business was located outside the city limits because the county Sheriff’s Office wasn’t enforcing the Board of Health’s curfew. Later in the month, when encouraging customers to drop by for music during the holidays, he posted, “Don’t let the socialists try to ruin our Thanksgiving.”
Osterbrink also confirmed a Facebook post from Jan. 6 that indicated much of his staff had COVID-19 and would close the next day to sanitize the bar. At one point, only one bartender was available for work. “The virus is kicking our ass,” he wrote, though he said that subsequently two ill employees tested negative for COVID-19.
In her closing argument, Dyer emphasized the simplicity of the case. “They weren't supposed to be open past 11, and they were,” she said.
Owens said the city didn’t prove its case. “There's no factual allegation in either of the complaints that alcohol was being served or consumed, or that food was being served or consumed,” he said. “They cited Paul’s Oasis for being open past curfew.”
Owens asked Herbert to delay penalties if she rules in the city’s favor. “I would ask for any suspension that the hearing officer gives to be held in abeyance until those ordinance violations can be heard,” he said.
Dyer countered that the city doesn’t have to wait for adjudication in Municipal Court to seek a permit suspension and that Paul’s Oasis shouldn’t be rewarded for repeated violations.
Paul’s Oasis is also at risk of losing its liquor license, which is issued by the Tennessee Alcoholic Beverage Commission. The TABC has issued two citations — the first amounting to a warning and the second carrying a $1,500 fine. A third strike would cost the bar its license.
Another West Knoxville establishment, Billiards & Brews Sports Bar, is scheduled for a beer permit suspension hearing on Feb. 9.
CORRECTION: The pre-pandemic cutoff time for service at Knoxville bars was 3 a.m., not 3 p.m. The story has been corrected.