After a yearlong investigation, a state agency has determined there is insufficient evidence to support revoking the license of a Castro bar owner accused of discriminatory practices.
The California Department of Alcoholic Beverage Control announced in a one-page release last Thursday, July 14 that it had completed its investigation into accusations that Les Natali discriminated against African Americans at his bar San Francisco Badlands. The ABC said it had conducted a comprehensive investigation using a diverse team of investigators who interviewed numerous witnesses and performed multiple undercover operations at both SF Badlands and the Detour, which Natali also owns.
"ABC has determined there is not enough evidence to support a license denial in an administrative proceeding. ABC will continue to monitor Mr. Natali's businesses to ensure compliance with state discrimination law," stated the agency's release.
The ABC's findings are in stark contrast to the city's Human Rights Commission, whose staff concluded Natali had discriminated against both employees and patrons based on race. The state agency reviewed the HRC report and said it "respects the commission's work" but determined there is no evidence to suggest that Natali "lacks the qualifications to hold a license."
Natali, who has denied the charges against him, told the Bay Area Reporter he sees the ABC's decision as vindication and thanked both his employees and patrons for their support over the last 12 months.
"We all feel vindicated by the ABC. I am very grateful," said Natali. "I am very grateful that the ABC took their job very seriously and did a full and fair investigation. I want to thank my employees for their help and support this past year."
His supporters also thanked the ABC for its "fair" decision.
"I do see their decision as one that was expected," said Bennet Warren, a longtime customer of Badlands. "I do not see discriminatory practices being practiced in that establishment."
Natali said he was also thankful to Supervisor Bevan Dufty, whose district covers the Castro and wrote to the ABC last year regarding its handling of the case.
"I would like to thank Bevan Dufty for his demanding the ABC conduct a full and fair investigation and that the ABC wait and consider the HRC findings before they issued the report of their investigation," said Natali.
His attorney, Steve Goldstein, said the ABC's decision "is a complete exoneration of Mr. Natali" and should make the HRC question its own findings in the case. Natali has appealed the HRC's findings and the agency's response is expected this week.
"We are waiting on the HRC. I don't know to what extent they feel political pressure due to the investigation of the ABC. It was such a careful investigation, the HRC has to look twice at what they said before," said Goldstein. "It was a staff report, not the commission. They have to be a bit circumspect. You have two agencies who are coming to complete opposite conclusions based on the same complainants and the same evidence."
But Julius Turman, the lawyer for the complainants in the case, said the ABC's decision does not clear Natali of the HRC's findings.
"This is not by any means an exoneration for Mr. Natali by the ABC. They made a non-decision. They didn't side with us or against us. They certainly didn't say Mr. Natali is free," said Turman. "What the ABC did not see stands in stark contradiction to what the HRC found. We may have to go to federal court to get a declaration to find out who is right."
Leaders of the community group And Castro For All, which has called for a boycott of the Badlands and staged weekly Saturday night pickets outside the bar, denounced the ABC's decision.
"We are outraged that they didn't do more considering how strong the HRC finding was and their investigation was. We expected the ABC to do a thorough job and it looks like they didn't," said Paul Mooney, a spokesman for the group.
Natali suggested that the ABC didn't succumb to "political pandering" like the HRC did in making its findings.
"Certainly this is a politically motivated campaign against me. It's a smear campaign. style="mso-spacerun: yes"> It was from the beginning and I am so happy the ABC findings came out to set the record straight," he said. "I realize it is not over yet because the HRC hasn't responded yet. We were not optimistic from the beginning that the HRC would change their position."
In expectation that the HRC will not change course, Natali said he has retained an appellate lawyer and is ready to file suit against the city and the HRC.
"If we get a negative response or unfavorable response from the HRC, I am ready to go into Superior Court. We do believe we will prevail," he said.
Pendulum provisions
In addition to refusing to revoke Natali's Badlands license, the ABC also conditionally approved the transfer of the liquor license for the Pendulum to Natali. The ABC placed several conditions on the license transfer, including no person shall be excluded from the bar on the basis of race, color, sex, religion, ancestry, disability, marital status or national origin; posting signs at the bar's entrances clearly stating it does not discriminate based on such criteria; and requiring all employees to attend a licensee education on alcohol and drugs training class within 90 days of the beginning of their employment or within 90 days of the petition for conditional license.
Both Turman and AC4A point to the conditions as proof that the ABC's investigation turned up a reason for them to be concerned about Natali's ownership of the bar.
"The conditions imposed make clear the ABC's concern about the charges. They failed to find the fire that the city of San Francisco exposed and the community knows is in plain sight, but even from Sacramento they smelled the smoke," stated AC4A organizer John Newsome. "It's outrageous that they chose to do nothing but force Natali to put up antidiscrimination signage. That's not accountability. We should trust the finding of city's Human Rights Commission, which reviews civil rights allegations all the time, not a state agency that mostly enforces alcohol and drug law. The ABC appears to be incompetent to enforce city and state civil rights laws. Maybe we should limit their purview to noise and underage drinking and leave discrimination investigation to the professionals."
ABC spokesman John Carr said the agency decided to impose the conditions because it felt they "would serve the best interests of the community and send a strong message that discrimination is illegal and won't be tolerated." But he stressed that, "the investigation conclusion is the ABC is not able to substantiate the complaints to support an accusation and judicial proceeding."
Natali's decision to sell the Pendulum, however, would make such conditions moot. Natali bought the 18th Street bar, which caters to an African American clientele, last year but last week decided to sell his stake in the business to John MacNeil to settle a lawsuit. MacNeil and a business partner had sued Natali and Rod Kobila, the Pendulum's former owner, for breach of contract, claiming they had an oral agreement with Kobila to purchase the bar.
"During a court-ordered settlement conference he made me an offer which I found to be a very good offer. We had been trying to work out the details on how to put a deal together," Natali said when asked why he sold the bar. "As for the timing, I had no idea this would be so close to the timing of the ABC. Certainly, it had nothing to do with the ABC issuing their finding."
Warren, who said he also patronizes the Pendulum, said he was sad to learn of Natali's decision to sell the bar.
"I was hoping that would show he is for the African American community and other minorities," he said.
The sale of the Pendulum complicates how the complainants in the case can appeal the ABC's decision regarding Natali's Badlands license. According to the ABC's release, since Natali's request for the Pendulum license was protested, a hearing will be held to allow complainants the opportunity to present evidence before an administrative law judge. If a state administrative and judicial process results in a final determination that Natali is unqualified to hold a license, the department said it may follow up with accusations against his other licenses.
"The case that would go to a judicial proceeding would be the license for the Pendulum" not Badlands, said Carr.
However, once MacNeil applies for the Pendulum's license there will be no need to hold such a hearing, according to Carr.
"If there is a change in owners or whatever is occurring at the Pendulum, we will deal with that and with the parties involved once we are given the information," said Carr.
Carr said the agency learned Natali had sold the bar after it was reported in last week's B.A.R. As of Monday, Carr said the agency still had not been informed by Natali that he was withdrawing his application, and until he does, a hearing date could be set within 60 days.
Turman said he and his clients "are considering whether or not we have a right to pursue options before an administrative law judge with the ABC" regarding the agency's decision not to revoke Natali's Badlands license.
As for his clients, he said, "Their vigor and desire for redress is not dampened one bit by what the ABC found or didn't find for that matter. We are not a bunch of vigilantes; we are a bunch of citizens who followed the process. You take it to the next step until justice is delivered."
Mediation now possible
With the ABC ending its investigation, it clears away one hurdle that had prevented both sides from entering into mediation. Natali had long insisted he preferred mediation not take place until after the ABC released its findings.
Mayor Gavin Newsom has asked former Mayor Willie Brown to serve as mediator in the case. Goldstein said he has informed Newsom and Brown in writing that he and his client agree to mediate with Brown and Scott Emblidge, a former city attorney.
"We are happy to talk. Just because we won with respect to the ABC doesn't mean we don't want to hear peoples' concerns and deal with them," said Goldstein. "Les wants to have a happy community. He is happy to sit down and talk to the people who have filed these protests and work through whatever issues there are to talk about."
"It's really time for everyone to make peace and wrap this up. I hope it's all coming to an end," said Goldstein.
Natali added, "I am hopeful we could mediate soon."
Turman said his clients are also ready to enter into mediation and expected the first meeting would take place by the middle of next week. Though they do have concerns regarding Brown's ties to political strategist Jack Davis, who is also friends with Natali.
"The complainants do have one conflict of interest issue they would like to discuss with Mayor Brown and mediator Emblidge before the process, but I don't anticipate that is going to be a barrier," said Turman. "Mr. Davis appears to be participating in the process to some extent. I have seen letters in support in the B.A.R. and him standing in support outside the bar giving advice on how Mr. Natali should proceed, which then appears in the paper the next day, so we are concerned about that. They want to talk to [Brown] about it before mediation proceeds, it should take probably a minute or so."
And AC4A appeared to back away from its previous demand that Natali issue an apology prior to mediation. Mooney said the group saw no reason for the two sides not to enter into mediation.
"We hope we can now enter mediation tomorrow as far as we are concerned," said Mooney. "I don't know where things stand with the apology. I do know Julius is meeting with the complainants to talk about what they wanted. But assuming that Les Natali keeps his promise that he would mediate once the ABC finding is out, we should all be able to mediate now."
As for the weekly pickets, Mooney said the group planned to suspend the protests once mediation began. But the group would still call for a boycott of the bar.
"What we said is we would continue to boycott until the city and state enforced penalties. The ABC is not the only agency that has that power," said Mooney. "Earlier, we said the picket would last until at least the end of July. If we enter into mediation, we won't be picketing at the same time. The complainants still have the option of filing civil suits. We won't necessarily be picketing for that long, but we will continue to boycott."
Warren called on AC4A to stand by its word to end the demonstrations now that the ABC has acted in the matter.