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The director of the California Department of Alcoholic Beverage Control (ABC) today announced that he has upheld a pair of previous decisions to revoke the liquor licenses of Sidelines and Toby & Jack’s.

Does that mean these seedy staples of Arcata’s bar row will actually be shuttered? Well, maybe. But the state’s disciplinary process still leaves a couple of legal pathways open for the bars’ licensee. 

Both bars are owned by Costanzo’s Genco Olive Oil Company, Inc., whose principal officer is Salvatore Costanzo. (The name is a reference to The Godfather, wherein a company of the same name served as a front for the Corleone family’s illegal activities.)

The two liquor licenses have been in legal jeopardy since early last year. In April of 2018, a dozen people were arrested after a 10-month, multi-agency undercover sting operation revealed sales of cocaine and methamphetamine at both bars.

Here’s a very brief recap of the bureaucratic back-and-forth that’s occurred since then. In September 2018, a multi-day administrative law hearing was held in Eureka, and the evidence presented during those proceedings eventually led ABC Director Jacob A. Appelsmith to issue a pair of orders revoking the liquor licenses for both bars. That was in November 2018. 

Costanzo then appealed those rulings to the ABC Appeals Board, which is a separate agency from the ABC. And while the three-member Appeals Board upheld all the findings in Appelsmith’s rulings, it also said that revoking both liquor licenses would be an “exceptionally harsh” punishment. The board sent the matter back to the ABC and urged Appelsmith to reconsider. 

In the rulings issued today, Appelsmith effectively says, “Thanks, but I’ve considered it enough already.” He upheld his prior decisions.

The two rulings are very similar. (You can read them in full through the links at the bottom of this post.) Appelsmith writes in both that the owners, including Salvatore Costanzo and his children Michael and Nicole Costanzo, “had knowledge of the repeated illegal activity on the licensed premises concerning illegal drug use.”

He goes on:

Nicole Costanzo not only knew about the illegal drug activity, but she facilitated the illegal activity, for example, repeated sales of cocaine and methamphetamine, within the licensed premises … .

The ABC Appeals Board had noted Costanzo’s “long history of licensure” (25 years as a sole proprietor) and gave him credit for implementing some “mitigating measures” after the fact, including firing all the people involved in the drug activity and installing security cameras to prevent further crimes.

Appelsmith wasn’t impressed. He says those measures “were all taken a lengthy time after the accusation was filed by the Department and shortly prior to the [administrative] hearing date.”

Nor was Appelsmith moved by Costanzo’s longstanding ownership. 

“Notwithstanding this history,” his rulings say, “the evidence shows that all the corporate owners had some knowledge of the narcotics activities occurring at the licensed premises.”

Noting that Costanzo’s children were directly involved in the drug activity at the two bars, Appelsmith writes, “While Salvatore Costanzo’s prior lack of discipline is commendable, it was his choice to incorporate and include his children in the ownership of the corporation.”

Finally, given the repeated on-site deal-making and sales of cocaine and methamphetamine, with the express knowledge and participation of one of the owners, “outright revocation is warranted,” Appelsmith concludes.

As we noted above, however, that’s not necessarily the end of the road for the two bars. According to ABC spokesman John Carr, Costanzo can decide to again appeal the rulings to the ABC Appeals Board, if he thinks there’s grounds.

There’s also the possibility of appealing the matter to a district court of appeals. 

Reached by phone this evening, Costanzo said, “I need to review it with my attorneys.” 

For the time being, then, the bars will remain open.

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