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The owner of Arcata Plaza bars Sidelines and Toby & Jack’s may yet get to hold onto his liquor licenses for the two businesses. This despite a months-long investigation into drug dealing at the two watering holes; a recommendation from an administrative law judge to yank the licenses; and even a decision from the director of the state Department of Alcoholic Beverage Control (ABC) to revoke the liquor licenses.

Sal Constanzo, the principle officer of Costanzo’s Genco Olive Oil Company, which owns the two bars, appealed the ABC ruling, and in a decision announced yesterday the ABC Appeals Board upheld the appeal.

The three-member board called outright revocation of the liquor licenses “exceptionally harsh,” as first reported by the Times-Standard, and remanded both cases back to the ABC. In other words, the appeals board, which is a separate governmental entity from the ABC proper, told ABC director Jacob Appelsmith to reconsider his decision … but try to be nicer this time.

To recap a bit, a 10-month, multi-agency undercover operation resulted in a dozen arrests for possession and sales of illegal drugs, conspiracy, weapons violations and other charges. After a four-day hearing in Eureka, an administrative law judge ruled that Costanzo should lose both licenses due to “a mountain of evidence” showing “pattern of illegal sales of controlled substances” including cocaine, ecstasy and meth. 

Less than two weeks later, Appelsmith upheld that recommendation and ruled to revoke the licenses. He’s now been told to rethink that decision.

In the Toby & Jack’s ruling (which is very similar to the one for Sidelines), the appeals board said that while revoking the licenses outright is “technically within the bounds” of the ABC’s authority, they felt that the administrative law judge failed to consider Costanzo’s “long history of licensure” (25 years as a sole proprietor).

The appeals board also called it “an abuse of discretion” not to consider other factors, such as Costanzo firing the offending employees, removing his daughter (who was implicated in the crimes) as an officer of the corporation, increasing employee training and security measures, and installing surveillance cameras.

“Fundamental fairness,” they said, required them to reconsider the penalty.

Reached by phone this afternoon, Costanzo said the matter is in the hands of his San Francisco attorneys, and he’s hardly had time to think about it. But when asked directly if he was relieved by the appeals board’s ruling he said, “Oh, definitely.”

By upholding the appeal, the Alcoholic Beverage Control Appeals Board puts the ball back in ABC’s court. According to ABC spokesman John Carr, either party — ABC or Costanzo — could appeal the appeals board decision. (It’s unlikely to be Costanzo, obviously.) The matter could conceivably wind up getting appealed to the district court level or even the state Supreme Court.

The appeals board said Costanzo should at least be given the opportunity to take other measures, including selling the bars or taking further steps to prevent future drug activity.

Earlier today the ABC issued a somewhat defiant response:

The ABC has received the Appeals Board ruling on the matter concerning two bars in Arcata, Toby & Jack’s and Sidelines, which orders the ABC’s Director to reconsider the ABC’s revocation of these licenses.

The ABC established, and the Appeals Board upheld, that drug crimes were committed in the two bars that put people in danger, and that these crimes, which included the sale of MDMA methamphetamine and cocaine, were facilitated and permitted by the management and employees of the establishments.

The ABC is still reviewing the Appeals Board decision, after which it will act in accordance with its obligation to ensure public safety and provide licensees with due process.

While all that’s going on, Sidelines and Toby & Jack’s will remain open for business.

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