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Oklahoma restaurants, consumer activists continue fight over mixed drink tax

Most sued restaurants are fighting accusations they overcharged customers for mixed drinks. At stake in the dispute are millions of dollars. Around 100 restaurants have paid settlments.. The Legislature last year changed the law to prevent future lawsuits.
by Nolan Clay Modified: July 27, 2014 at 3:00 pm •  Published: July 27, 2014
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For six years or so, former attorney Tom Erbar traveled across the state, buying mixed drinks at more than 2,000 restaurants and bars.

Often, he took along his mother, Gladys Erbar.

An acquaintance, John Truel, was doing the same, along with eight others who call themselves consumer activists.

They claim they were charged too much for their alcohol hundreds of times.

In February 2011, Truel and his group sued more than 750 businesses and asked a judge to make their lawsuit a class-action case. Two weeks later, Tom Erbar and Gladys Erbar filed a separate lawsuit against many of the same businesses.

More than three years later, those lawsuits are still pending in Canadian County District Court.

At stake is a lot of money.

“This is a case of first impression,” said attorney Mark Henricksen, who represents Truel’s group. “If we are correct, then about a third of the licensees in Oklahoma overcharged the consumers by several millions of dollars.”

More than 80 of the defendants already have paid settlements in the Truel case. El Tapatio Inc., of Stillwater, for instance, agreed in June to pay a $2,245 settlement in the first case, records show. It did not admit liability.

About 100 defendants have settled separately with Tom Erbar whose mother died Feb. 13.

Many businesses are still fighting the accusations even if the most supposedly overcharged on a $10 drink, for example, is around $1.50.

The larger chains named in the first lawsuit stand to lose hundreds of thousands of dollars and possibly millions of dollars if they are forced to pay a class-action judgment covering every drink they sold in Oklahoma for years.

The restaurants’ attorneys claim the suing consumers are simply wrong — that the consumers were not overcharged and that their whole claim is based on a twisted interpretation of the law.

“You can’t just pull something out of context,” said Jim Larimore, an attorney for the Hal Smith Restaurant Group.

Even if they win in the end, the defendants will be out thousands of dollars in legal fees. Such costs could result in higher prices for Oklahoma diners.

At a hearing last week, about 40 attorneys representing restaurants and bars filled a Canadian County courtroom. Many waited their turns to speak in the section normally set aside for spectators. Others waited in the jury box.

Larimore told District Judge Gary Miller the case is like none other. The attorney said those suing really weren’t injured — that they voluntarily went to place after place to set up the litigation.

Attorneys were more blunt about the situation after the hearing ended Wednesday. “It’s a shakedown,” one attorney said to another as they left the courtroom.

Key to the claims

At issue in the dispute is the taxes charged on a drink.

The suing consumers rely on a single sentence in the liquor tax law about the “advertised price of a mixed beverage.”

The law had been on the books for years before it was amended in 2013.

The suing consumers claim the law — before the change — required the drink price on the menu to include the liquor tax.

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by Nolan Clay
Sr. Reporter
Nolan Clay was born in Oklahoma and has worked as a reporter for The Oklahoman since 1985. He covered the Oklahoma City bombing trials and witnessed bomber Tim McVeigh's execution. His investigative reports have brought down public officials,...
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The 2011 liquor tax lawsuits are based on a single sentence in state law that since has been changed. The sentence was: “The advertised price of a mixed beverage shall be the sum of the total retail sale price and the gross receipts tax levied thereon.”

The Legislature amended the sentence in 2013, changing “shall” to “may.”

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