Appeals court to weigh in on Iron Waffle case as it challenges injunction, questions health dept. authority | Brainerd Dispatch

Arguing on behalf of the Iron Waffle Coffee Co., Attorney Richard Dahl sought to make the case the Minnesota Department of Health lacked the authority to revoke food and beverage licenses in response to violations of Gov. Tim Walz’s executive orders in the first place, citing a number of state statutes he said collectively define emergency enforcement.

Dahl also argued the health department failed to properly notify owner Stacy Stranne of the revocation — doing so only by mail and not in person — which nullified her opportunity to contest the action through an administrative hearing. He further stated the district court erred in issuing the temporary injunction on the business, given Walz’s orders were no longer in force in May 2021.

Richard Dahl

“It’s a void order,” Dahl said in a recording of the oral arguments posted on the Minnesota Judicial Branch’s website. “It’s an order with which they have no power to enforce whatsoever.”

The appeal comes amid an ongoing civil lawsuit against the Iron Waffle, first initiated in December 2020 by the Minnesota Attorney General’s Office on behalf of the Minnesota Department of Health. The lawsuit was the next step at the time after months of inspections, fines and other administrative actions failed to prevent the business from disobeying executive orders concerning mask usage and indoor dining restrictions while continuing operation.

Judges presiding over the case have since granted the state’s motions for both a temporary injunction and a contempt of court finding for the business for continuing to open its doors and sell food and beverages, despite not having a license. Thus far, the business faces $120,000 in fines — $2,000 for each day the health department documented the Iron Waffle was open after the license revocation.

Judge Jeanne M. Cochran

Judge Jeanne M. Cochran, one of three appeals court judges who heard the Dec. 7 oral arguments, said Dahl’s presentation sought to question the basis for revocation of the license itself rather than the matter before the district court, which made its decision to issue the temporary injunction based on the fact the restaurant did not have a license to operate.

“The complaint was based on operation without a license, and so that was the focus of the district court proceeding,” Cochran said. “What legal authority can you cite us to that would give the district court the authority to hear a challenge in that proceeding to the Department of Health decision — the underlying decision to revoke the license? Because … the law is clear that if you want to challenge the revocation of the license, that has to be done by requesting a contested case hearing.”

The Iron Waffle Coffee Co. owner Stacy Stranne, pictured here in a 2016 file photo.
Steve Kohls / Brainerd Dispatch

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Dahl said the district court always has the ability to challenge subject matter jurisdiction, or a given court’s power to hear a given claim brought before it.

“I went to the University of Chicago, which is a top 10 law school, and the first thing they taught us was subject matter jurisdiction is always challengeable,” Dahl replied. “That’s ridiculous to even argue that. Are you saying as a judge, that subject matter jurisdiction is not challengeable at any time and any place? I’ve never heard a judge say anything so ridiculous, if you want my honest opinion.”

Judge Francis J. Connolly

Judge Francis J. Connolly asked Dahl to explain the reasoning behind his argument that Iron Waffle should have received in-person notice of the license revocation, without which the business owners’ due process rights were violated. Dahl acknowledged state law does not specifically require notice in person, but said courts have the flexibility to interpret the laws to determine people’s rights.

“When I’m referring to the administrative code, it has, you can serve by mail, personal service — it provides all the possibilities,” Dahl said. “And as this court knows, oftentimes in the administrative code, it doesn’t say anything, and so the court has to interpret this. And one of the indications that I think that the court should consider with my argument on this point is that the agency usually charged with enforcing the law is entitled to deference.

“The (health department) agency didn’t serve you with one case — one case — that said they were entitled to deference. You know why they didn’t say that? Because they weren’t entitled to deference. … They don’t get to revoke licenses at will.”

Arguing on behalf of the state, Assistant Attorney General Kaitrin Vohs dismissed Dahl’s arguments as irrelevant to the proceedings.

“This case is plain and simply about a restaurant, the Iron Waffle Coffee Co., that as you have mentioned is operating without a license,” Vohs said. “The Iron Waffle attempts to switch the focus of the hearing, and really this case in general, to the governor’s authority under the Minnesota Emergency Management Act during an emergency, a peacetime emergency. But the real focus of this case is that the restaurant was operating without a license.

RELATED: Judge finds Iron Waffle owner in contempt for operating without license

“ … The department determined that this presented a threat to public health. … Very simply, the department requested a court order directing the Iron Waffle to comply with the law, just as every other restaurant in the state of Minnesota is required to do.”

Asked for further explanation on the timeline of notices and how that impacted the Iron Waffle’s ability to appeal, Vohs said it’s the position of the health department that personal service is not required.

“Opposing counsel has not pointed to a statute where that’s required and the case law surrounding due process states that service by mail is sufficient if it gets to the right address,” Vohs said.

Vohs said although the district court was not the proper venue for Iron Waffle to question the legitimacy of the revocation, Judge John H. Guthmann issued a thorough order and addressed some of those arguments anyway.

“He does address those issues and found that service was proper, the department did have the authority to revoke the license in the first place, and so this court has the benefit of a very detailed order that addresses all of those issues,” Vohs said.

In a rebuttal, Dahl questioned the state’s definition of irreparable harm caused by the Iron Waffle opening.

“My clients stayed closed from when they got the order served on them in December until May, after the orders were revoked. The client didn’t open during that time whatsoever. And frankly, under the cases I’ve cited, she should have automatically either had her license back or the state should have granted her a new license,” Dahl said. “They don’t get to have a grudge match hating on my client and refusing to give her a new license, which she requested, just because they don’t like my client and she defied Jan Malcolm and the state of Minnesota. That’s not the way the law works.”

Judge Tracy M. Smith

Also presiding over the case was appeals court Judge Tracy M. Smith. The appeals court has 90 days from the date of oral arguments to issue a ruling. The next hearing scheduled as part of the civil lawsuit is a status/schedule conference set for 3 p.m. Jan. 10.

Separately, Iron Waffle is contesting the denial of its reapplication for a food and beverage license through the Office of Administrative Hearings. That process has yet to reach the evidentiary hearing stage, according to a staff attorney in that office.

In the year since the license revocation and the three months since the most recent fines were issued for contempt, the coffee shop has frequently advertised its hours of operation on its social media accounts. A post made Tuesday, Dec. 21, stated, “Let us make your Christmas special! We will be open December 23rd, 24th, and 26th!! Come out and visit us or place an order for cinnamon or caramel rolls!!”

CHELSEY PERKINS, community editor, may be reached at 218-855-5874 or [email protected]. Follow on Twitter at twitter.com/DispatchChelsey.