Oregon businesses threaten class action lawsuit over coronavirus restrictions

timber lawsuit

Attorney John DiLorenzo.Albany Democrat-Herald

Three Oregon businesses have threatened a class action lawsuit against the state over restrictions implemented by Gov. Kate Brown to slow the coronavirus pandemic.

An attorney representing the businesses argued that Oregon officials should draft a plan to compensate small business owners for financial hardship caused by those restrictions.

The demand letter was filed on behalf of a Linn County salon, a Coos County bowling alley and the Wilsonville Family Fun Center, better known as Bullwinkle’s.

“As a result of your orders, my clients and many other businesses like theirs closed as ordered and thousands of workers found themselves without employment,” attorney John DiLorenzo wrote in a tort claim letter to the state Friday.

Brown’s office said Monday it doesn’t comment on pending or potential litigation.

DiLorenzo is one of the state’s most high-profile attorneys, having successfully battled the city of Portland over improper expenditures by the water and sewer bureaus and, most recently, scoring a $1 billion jury verdict against the state for failing to maximize timber harvests. The state has appealed.

DiLorenzo is staking his latest cause on one of many state laws Brown cited in March when she ordered the closure of a long list of businesses to slow coronavirus. The closures included amusement parks, gyms, spas, malls, theaters, tattoo parlors and yoga studios.

DiLorenzo isn’t challenging Brown’s authority. Instead, he argued that a related provision in state law calls for reasonable compensation when the government takes real or personal property during a declared emergency.

DiLorenzo argued that’s exactly what’s happened. He claimed the state’s closures deprived businesses of “goodwill,” or the intangible assets that come along with a business when it’s sold – such as a customer base or brand recognition.

“Here, the governor closed, shuttered the business and destroyed the goodwill,” DiLorenzo said in an interview. “The goodwill is personal property. The goodwill was destroyed for a public purpose, the public purpose being to limit the spread of coronavirus and COVID-19. So no question it was a taking.”

Brown lifted many of her business restrictions beginning in May. Bullwinkle’s, for instance, had been partially open for businesses this summer but later closed, according to its website. The company cited unspecified “changes in occupancy regulations.”

DiLorenzo in his letter invited the state to share any compensation plans for impacted businesses “if you are of a mind to attempt to address this issue without resort to litigation.”

-- Brad Schmidt; bschmidt@oregonian.com; 503-294-7628; @_brad_schmidt

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