Small Businesses Fight Arbitrary Shutdowns

Small businesses, critical drivers of innovation and growth, play an important role in our free-market system.  They not only epitomize traditional American values of individuality, creativity, and self-sufficiency, but also present unique opportunities to achieve financial success.  In 2019, the Small Business Administration (SBA) reported that small businesses created two thirds of net jobs, generated 49.2% of private-sector employment, accounted for 44% of U.S. economic activity, and contributed 43.5% to the GDP.

No event in history has devastated small businesses like the coronavirus shutdowns.  In the first three months (February to April 2020) of the pandemic, mandates requiring restricted access, social distancing, and periodic closures caused the number of small business owners to fall 22%.  After seven months of such restrictions, a Federal Reserve survey found that 44% of small businesses had debts of more than $100,000, up from 13% in 2019.  Three out of every ten said they wouldn't survive 2021 without government assistance.  One report said 27% of small and medium businesses had to reduce their workforce, and 48% had to lay off at least half their employees.  Among the worst hit is the restaurant industry: 110,000 had closed for good by December 2020.

Federal relief, which could have served as a lifeboat, was poorly administered.  Less than two weeks after the SBA received its first application for the emergency Paycheck Protection Program (PPP), the money ran out.  The initial $350-billion fund was meant for businesses with under 500 employees, but it was disbursed on a first-come, first-served basis.  Big banks put their largest clients first at the expense of struggling small businesses.  The House Select Subcommittee on the Coronavirus Crisis found that billions of dollars in PPP loans might have been diverted to "fraud, waste and abuse rather than reaching small businesses truly in need."  Breaking rules, over $1 billion went to companies that received multiple loans.  U.S. subsidiaries of foreign firms were eligible for the PPP, so an estimated $192 million–$419 million went to more than 125 Communist Chinese–affiliated entities, including a Chinese military company.

However, amid these mandates that favored large corporations, an impressive cadre of small business owners fought back.  They questioned the inequity of orders that allowed big retailers to remain open while they were forced to shut down.  They stayed open, risking ostracism, fines, arrests, and other legal action.  Several went the extra mile to implement sanitary and social distancing and were rewarded with throngs of customers, generous donations, and nationwide support.

Following are the stories of three exceptional business-owners who risked all and fought back.

Haven's Garden, Lynd, MN

In March 2020, when Minnesota governor Tim Walz ordered a COVID shutdown for two weeks, Larvita McFarquar's restaurant-cum–event space, Haven's Garden, was deemed non-essential and subject to closure.  But she chose to stay open, moving tables six feet apart and securing mask exemptions from physicians for all employees.

Soon after, Walz eliminated COVID restrictions for Indian reservations, thus granting them a state monopoly on in-person dining.  Minnesota is home to 11 tribal nations, which enjoy sovereignty and operate under their own laws for the most part.  However, federal law (U.S. Code 25, Section 231) grants the state emergency powers to enforce sanitation and quarantine laws on tribal land.

Because her restaurant stayed open, the Southwest Health and Human Services (SHHS) department ordered Ms. McFarquar to cancel a planned event and threatened her with a daily penalty of $250.  Nevertheless, she held the event and faced action for violating public health requirements.  A temporary restraining order (TRO) and injunction were issued, and she was told to close the restaurant for 72 hours.  When she refused, the department found her in contempt, temporarily rescinded her restaurant license, and demanded she pay a $1,000 daily fine or face incarceration.

In December, her attorney, Nathan Hansen, appealed the TRO and injunction on the grounds that the actions violated the Equal Protection Clause of the Fourteenth Amendment.  He presented affidavits from those who visited packed restaurants on tribal land and contended that if COVID-19 were so dangerous, all restaurants should have been shut down.  When it comes to health regulations, claims of sovereignty of Indian reservations are irrelevant, he argued, and said his client had been illegally discriminated against since the right to equal protection under the law cannot be violated even in a health crisis.

Despite a court decision that Haven's Garden remain closed, Ms. McFarquar keeps it open as she awaits the result of a recent appeal.

The Original Pizza Cookery, Thousand Oaks, CA

Frustrated with having to open and close their pizzeria four times in nine months, Jordan and Barbara Klempner of Thousand Oaks, CA decided to remain open for both indoor and outdoor dining.  Jordan, a Vietnam veteran, and Barbara, the daughter of a Holocaust-survivor, have been in the restaurant business since 1975.  They were determined to persevere against what they thought was the unjust use of government power.  After losing 70% of their business and having to cut staff from 54 to 15, they invested in patio furniture and secured permits for an outdoor canopy.

At first, the Ventura County health department cleared the restaurant following a COVID inspection.  At that time, there was no mask mandate; in fact, the county's medical director had issued a report claiming that masks could be harmful.  But a short time later, the restaurant was ordered closed as a public health threat.

When the Klempners refused, they were issued a temporary restraining order (TRO) and lost their permit to serve food.  They continued to operate, and the county eventually sued them.  Although the county's board of directors voted 4-1 in January to commence legal action against businesses that flouted pandemic mandates, two months later, the lawsuits were dropped.

Following their long struggle to hold onto their business, the Klempners have joined with other businesses in the area to sue the county.

Lather Studio, Corona, CA

After almost twenty years in the hair industry, Kira Boranian opened her own salon just one and a half years before the COVID pandemic.  When the first shutdown was mandated, she complied for five weeks, leaving 35 stylists out of work and thousands of clients high and dry.  After a second lockdown was announced, Ms. Boranian decided that she would rather fight for her rights and suffer a possible business closure from non-compliance than obey arbitrary guidelines that would surely ruin her livelihood. 

In August, Riverside County slapped a TRO on her business.  At that point, Lather Studio had been open for several months and had served over 4,000 clients without a single COVID case.  Two days later, the TRO was rescinded after other businesses and community members demonstrated in front of the county's board of supervisors.

In November, officials of the California Board of Barbering and Cosmetology inspected Lather Studio after learning it was open for business.  They observed that customers and employees were without masks, there was no social distancing, and there were no shields between clients' chairs.  The board sued the salon for not following COVID guidelines, though there are no such requirements in the terms of its license.

Recently, the board ruled to permanently revoke Ms. Boranian's license.  But she is taking the case to superior court.  She is countersuing the county and the licensing board for harassment and overreach of power.  Compliance with pandemic restrictions is not a term enumerated on the license, so it's unenforceable.

These three undaunted small businesses have demonstrated the importance of fighting arbitrary mandates.  They should serve as role models to others struggling under oppressive shutdown orders.  Like them, many other businesses defied the arbitrary rules and found support from local communities.  In some cases, city officials and county sheriffs recognized that shutdown orders were unconstitutional and refused to enforce them.

The only way to preserve freedom is to fight back against tyranny.  Small businesses are putting up a valiant fight in the true American spirit.  All Americans must back them.

Image via Max Pixel.

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