Follies is still fighting, but it's not looking good
doctorevil
Evil Lair
By Kelcey Caulder ·
Law360 (January 26, 2023, 8:04 PM EST) -- The Eleventh Circuit on Thursday seemed unlikely to revive a strip club's claims that ordinances adopted by an Atlanta suburb were unconstitutional and forced it to close its doors, calling the club's argument that it would have remained open if the new laws weren't imposed "wholly speculative."
J. Michael Murray of Berkman Gordon Murray & DeVan, who represents the shuttered club, told the appeals court that the club, known as Follies, would have been able to continue its business if it weren't for ordinances that imposed bans on all-nude dancing and mandatory closing times for adult entertainment clubs.
Those bans made three critical components of the club's business model — nude dancing, alcohol sales and the ability to stay open late — illegal, Murray said, forcing Follies to permanently shut down and lose its lease.
But the judges questioned whether the club's closure was actually a result of those ordinances, pointing to an administrative ruling that denied the club its alcohol license as a result of its failure to derive 50% of its sales from food, as was required under the city's alcohol code. The club didn't appeal that ruling, something they say now presents a hurdle for Follies.
Failing to appeal the food sales ruling shouldn't "stand in the way" of the case, Murray responded, because the city's alcohol code was later amended to allow applicants who were originally denied the chance to reapply after three months. Under the amended code, if the reason for the initial denial was the failure to meet the food sales requirement, Murray said all an applicant needed to show was that, during the three months since the first application, it had met that requirement.
"But your client hasn't done those things," Judge Robin Rosenbaum said. "Your client is out of business. Why isn't it wholly speculative to base standing, at least with respect to the alcohol provisions, on the notion that, at some point in time, your client might go back into business; might be able to show that at least half of its sales came from food and not alcoholic beverages and might apply for a permit?"
"Even if they couldn't get an injunction for the purpose of opening elsewhere, there's still money damages," Murray said.
The judges acknowledged that the club may still be entitled to money damages, but said they may not be able to help "in any way" with respect to injunctive and declaratory relief as far as the alcohol provisions are concerned because Follies is still subject to the ruling that it can't get a license as a result of not meeting the food-sales threshold.
It would be entirely speculative, the judges said, to assume the club might be able to meet that threshold in the future, were it to ever reopen.
"I think the key to the problem you're talking about is the three-month rule and the ability to go back, notwithstanding whatever happened in the past," Murray said. "All you have to show is that you didn't fail to meet the requirement during those three months."
"Why isn't it appropriate for you to come back to us in the future after you've met the requirement and been denied?" Judge Rosenbaum asked. "Right now, it's completely speculative that you'll ever have a problem with this in the future because you don't have a business, you don't have a lease, you haven't sought a permit, you haven't done any of these things, and you haven't told us about any imminent plans for you to do so."
"Except that I think Your Honor agreed with me that we can get money damages," Murray said. "That's all we need to establish our standing to challenge the constitutionality of these ordinances."
Scott D. Bergthold of the Law Office of Scott D. Bergthold PLLC, who represents the city, told the judges that the club's appeal has a "fatal redressability problem" that requires its dismissal.
Because Follies isn't challenging the denial of its alcohol license as a result of the food sales requirement, Bergthold said a ruling on other denial grounds wouldn't redress Follies' grievance or entitle it to damages. Bergthold also pointed out that Follies was denied a general business license on six different grounds under the city's occupational tax code.
"That's also not challenged here. So, that's a fatal redressability problem because they don't challenge a law that precludes their business from operating at all," Bergthold said. "They couldn't have been incurring damages because they couldn't have legally operated without a business license."
Asked by the judges whether Follies ever appealed the denial of its occupational tax license, Murray responded no.
"But, Your Honor, that's because these ordinances, they claimed, didn't allow us to have an occupational license," Murray said. "If you take those away, we have the license. It was futile to file another appeal."
It may have been futile, the judges said, but it would have preserved the club's rights.
Murray said he believed the club preserved its rights by claiming, "from day one," that the ordinances were designed to put the club out of business and deprive it of its rights.
"If they are unconstitutional as we maintain, then everything flows from that and they no longer have a basis for claiming we're not entitled to an occupational license. And if we meet the 50% threshold, they would have no basis for saying we couldn't have had a liquor license," Murray said. "It cannot be separated."
According to court records, Follies sued the city in 2018, saying the ordinances violated the club's First Amendment rights by restricting free expression and barring the sale of alcoholic beverages.
The club also argued that the city's actions violated the U.S. Constitution's contract clause because the ordinances impermissibly impaired contractual obligations set out in a settlement agreement Follies reached with DeKalb County in 2001, before the land it leased was annexed by the city of Chamblee. The DeKalb County arrangement allowed Follies to continue offering fully nude dancers and alcohol sales until nearly 5 a.m. in exchange for a fee paid to the county.
In July 2021, U.S. District Judge Steven Grimberg granted summary judgment in favor of the city against Follies' claims that the ordinances are unconstitutional, finding that the club couldn't show they were intended to force it out of business or were otherwise unconstitutional.
On the contract clause front, Judge Grimberg said that Chamblee wasn't a party to the agreement between Follies and DeKalb County, so the terms of the settlement didn't apply to the city.
Follies subsequently appealed in August 2021.
"It was error for the district court to grant Chamblee summary judgment and conclude that [ordinances] 752 and 754 were constitutional by testing the laws under intermediate scrutiny because first. The facts demonstrate that the laws' predominant purpose was to force the city's only adult nightclub to close, and that improper purpose demanded that they be measured by strict scrutiny," the club told the court in a brief filed earlier this month.
Follies is represented by J. Michael Murray of Berkman Gordon Murray & DeVan, and Cary S. Wiggins of Wiggins Law Group.
The city of Chamblee, Georgia, is represented by Scott D. Bergthold and Bryan A. Dykes of the Law Office of Scott D. Bergthold PLLC.
The case is WBY Inc. v. City of Chamblee, Georgia, case number 21-12776, in the U.S. Court of Appeals for the Eleventh Circuit.
Got something to say?
Start your own discussion
6 comments