Former cafe proprietor admits failing to provide toward workers’ city-mandated healthcare — and justifies it, because he accuses them of stealing.
It was Ernest Hemingway who best encapsulated how one falls into bankruptcy: “Gradually, then suddenly.”
That sounds about right. The end for the popular 12-year-old Mission Beach Cafe on 14th and Guerrero came suddenly, with an eviction notice this month affixed to its door Martin Luther-style by landlord Erich Pearson. But this was gradual, too.
Was it ever.
In addition to Pearson’s lament that restaurant proprietor Bill Clarke had long neglected to pay his water and garbage bills and then followed that up by failing to pay rent, the Department of Public Health had, on multiple occasions, shut down the cafe for serious sanitation violations.
The DPH was, additionally, in the process of revoking Clarke’s license to do business in this city after an audit by San Francisco’s Office of Labor Standards and Enforcement revealed that, between 2014 and 2017, Clarke did not make $114,250 in city-mandated healthcare payments toward his employees — and instead applied the money elsewhere. Despite this audit, and years of subsequent warnings from that office, Clarke continued to neglect his employees’ mandatory healthcare payments up until the day his restaurant was shuttered. None of Clarke’s employees apparently received any health benefits — with one incurring a $45,000 General Hospital ER bill during his time as a low-wage cafe worker.
Mission Beach Cafe diners were, nevertheless, tacked with a “Tax & SF Surcharge” bill on their receipts.
Okay, take a breath. We’re not done yet. There’s more.
Clarke was, in fact, sued by 10 former employees for this and other transgressions; his company was hit with a $1.3 million default judgment. But there was no money to pay it. He declared personal bankruptcy in 2017. He fell behind on mortgage payments, owes $53,000 in back taxes for Northern California properties, and $49,000 to the California Franchise Tax Board. That last bit led the state to revoke his business license.
The post-mortem for Mission Beach Cafe reads like Amy Winehouse’s toxicology report. Or Ernest Hemingway’s, for that matter.
It warrants mentioning, however, that Clarke’s state business license was suspended all the way back in 2014. All of this — the bankruptcies, the non-payments, the lines around the corner to brunch at what was, by all accounts, a great restaurant — has occurred since.
“It shows you how little regulation there really is,” says Carole Vigne, an attorney with Legal Aid at Work representing Clarke’s former employees pro-bono along with lawyers from the Golden Gate University School of Law Women’s Employment Rights Clinic.
“Things go under the radar all the time. People were lining up around the corner for Mission Beach Cafe even though they didn’t have a business license, they didn’t pay their Department of Public Health permit dues, they weren’t paying taxes and weren’t even paying the garbage bill. Meanwhile, our clients were threatened with eviction when their paychecks bounced. Their credit card rates went up.” That one guy hit his head and went to General Hospital and ended up with a $45,000 bill and no way to pay it.
It was, continued Vigne, “like the perfect storm.”
Until the end came. Gradually. Then suddenly.
The way Bill Clarke sees it, he had the rug pulled out from under him. Many rugs, in fact, pulled by many people.
That eviction, he says, came about because health inspectors — who had it in for him, he believes — conveniently arrived at just the time when they could shut him down, and deny him the end-of-the-month income he needed to make rent. This enabled his landlord to pull the trigger on an eviction. Was this a coincidence?
Who’s to say?
Clarke accuses the health inspectors of treating him more harshly than restaurants with even worse sanitation problems. And yet, as city officials have stated — repeatedly and publicly — the sanitation situation at Mission Beach Cafe isn’t what led San Francisco government to take the extraordinary step of attempting to rescind his business license.
Rather, it was the $114,250 in healthcare costs the Office of Labor Standards and Enforcement found he systematically did not pay. Following the office’s audit, says Maura Prendiville, its supervising compliance officer, Clarke spent a year and a half failing to respond to city communiques regarding how and when he would begin paying what he owed. He had, previously, been given four extensions to comply with the audit, and missed at least one hearing during which the fate of his business hung in the balance.
When asked why he didn’t pay voter-mandated healthcare costs, Clarke replied matter-of-factly it was because his staff was stealing from him.
“Healthcare, you know, it just seemed to me, with the theft going on, that became less of a priority,” he said. “They don’t get their double coverage.”
Clarke accuses his erstwhile workers of forming an organized cabal to fudge their hours, doctor receipts to add tips, and give away free drinks and pastries. It warrants mentioning that $114,250 could buy you a lot of pastries. When asked for proof of this alleged malfeasance, Clarke claims he would’ve brought this up at a pending permitting hearing — which is now moot, as he’s been evicted.
There’s “video evidence” that he says he’s not allowed to share. He didn’t call the cops because he’s “not confrontational.”
Attorneys for Clarke’s former workers dismissed these accusations. “There was no mention of videos,” says Vigne. “It was all very poorly supported. You and I both know that workers who steal are terminated.”
More to the point: Is that how this is supposed to work? Clarke failed to abide by this city’s voter-mandated healthcare provision during the three years covered in the audit — and, despite repeated warnings from the city, he continued to blow off city requirements and simply bag this money until his landlord put him out of business years later. The city’s healthcare mandate dates to 2008, and Prendiville suspects Clarke never complied with it.
So you’re entitled to simply not make these payments because you accuse your clients of stealing from you (and you don’t call the police or produce any evidence)? “Ohhhhh, probably not,” admits Clarke.
And on this Clarke, labor attorneys, and the Office of Labor Standards and Enforcement finally agree. This is no way to behave. There’s a term for that: wage theft.
So, in summation, Clarke says his problems stem from vindictive health department inspectors who may or may not have been acting in cahoots with his landlord, so he could be evicted.
Those health inspectors previously wronged him by assigning such punitive scores that his cafe was flagged on Yelp, which led to his business cratering, bankruptcy, and an inability to make the payments the city demanded. Sure, that bankruptcy was in 2017 and Clarke was documented failing to make those healthcare payments (and many others) years prior — but those workers, and their “free lawyers,” were conspiring to filch from him. More generally, “this is why labor law kind of sucks for restaurants. It doesn’t take into account how our business model operates.”
By the way, while all this was happening, while all these debts were left unpaid, Clarke was putting scores of thousands of dollars into a potential second restaurant at the former Luna Park site.
After I recite back the above litany to him, Clarke pauses.
“You’re making it sound like I’m blaming everyone else and not taking any of the blame.”
Clarke blames himself, all right: “I should not have been so lenient.”
“I could have made better choices,” he continued. “I could have hired a manager. I tried to do too much. But I don’t want to beat myself up too badly.”
He laments that none of the obituaries for his restaurant mentioned his devotion to the place — he got up at 3 every morning to bake those pastries. They didn’t mention the great food or the magical atmosphere of a hopping neighborhood joint.
“My focus was the employees, yes. But the customers even more so,” Clarke says. “And the food most of all. That was my main love of what I did. Being with food.”
Sadly, that dream died. For Clarke. For his workers. For his customers. For everyone.
Gradually. Then suddenly.
I live one block away and tried this restaurant twice. Both times the food was all but inedible. I could never understand the allure of going to this place other than the peer pressure component of wanting to be where “all the cool kids are”. This place will not be missed.
Place went from decent to just plain awful
My friend and I ate there right before they closed, not knowing about the money and health department issues.
In our last visit, the waiters messed up our order, tried to charge us for something we did not order, and my friend got food poisoning. Mission Beach definitely gave us the trifecta.
Good article. Last time I ate at MBC, the food was completely inedible. Just awful. Couldn’t believe they were still in business!
I read this with great satisfaction. My partner worked at Mission Beach in its early days and Bill was the worst–the worst manager, the worst owner, the worst businessman, the worst person, ever. He routinely changed hours on timecards, delayed paying OT for months and then finally paid in cash but, never close to enough. So, if he didn’t pay employees, his landlord, the city, the state, where the fuck did all the money go?
I would think that the IRS has had their sights on this guy for years…..
I always thought that that place was an overrated restaurant. I live right down the street and used to laugh at all the fools waiting outside to eat their crappy overpriced food.
This is a true, true, true blessing.
Not to get into this guy’s faults cause at 75 I’m on the clock.
But, Erich Pearson is a true millennial genius.
The visionary and straight-shooting Pot Entrepreneurial
trusted and admired by all.
“Every thing he does has square corners.”
That’s what the brass used to say about the enlisted men
and NCO’s when I listened to them on the bridge when I
delivered Top Secret message boards to them 50 years
Hopefully, Erich will do another restaurant.
Everybody will get paid.
Every ‘T’ and ‘dot’ will get done.
Joe, any idea what will happen now with the old Luna Park site?
Very nicely written, by the way.
Interesting business model there; am I the only person who sees parallels between the how the cafe did business, and how the whole damned tech industry does business? Think of the ride-share mob skimming tips and/or shorting drivers’ pay by two bits per ride. Or the classic ‘act first, ask permission later’ caper, beloved by Silly Con Valley. Of course, tech isn’t the only hinky industry in town: have they fixed what was up with the wrong rails set down for the new subway? Any old-timers remember the ruckus over the way the Emporium building got done over for mall?
I also raise an eyebrow at all the people who’d flock to MBC to eat, not because of the health department issues (granted: Ewwww), but because issues over wage theft, etc., at MBC had already been made public. Nobody walks on water, but we should make an effort to support businesses who at least play fair with their employees and comply with local regulations.
But…Valencia Street is now a sad, over-designed shell of it’s old self–or ‘selves’, for those of us who’ve lived in the area long enough. It’s just a sunnier Noe Valley, which went from a blue-collar neighborhood to a ‘yupscaled’ place full of shops and services devoted to being thin, styled, and expensively dressed. So with Valencia Street. We’re all told this is totally a good thing, but we need to ask: good for who?
To be honest with you, I prefer to go to the restaurants below “Valenciaization” of the Mission. I appreciate the “real Mission” which is from Mission Street to Bryant because of all the mom and pop stores and restaurants that really give meaning to the culture of the Mission. Bye-bye ? to the bourgeois restaurant with poor habits paying bills and taking care of properly sanitizing ?
It’s sad to say a lot of stealing did occur there as I witnessed plenty of employees do every day. As a former maintenance employee off the books I could see this coming to the tragic end. For Bill it did seem those health care officials were out to get him. But the stealing I know for a fact occurred constantly and those caught, fought to get back what they felt were lost wages or because a check bounced. I always got paid in cash but if I had not I probably would have resulted in stealing too not for sport but to recant my loses. I would have told bill of the stealing but it wasn’t my place to do that. I went there to work not to investigate.
Maybe if he treated them right and paid them a good wage, they wouldn’t have been stealing from him.