The Ninth U.S. Circuit Court of Appeals has ruled the City of San Diego’s method for suspending and revoking nude dancing licenses is unconstitutional because it allows an adult business to be closed down while the business appeals the city’s action.

The Ninth Circuit said adult businesses have the right to prompt judicial review of suspensions and revocations. The court also ruled businesses that engage in protected speech, such as nude dancing clubs, must be allowed to stay open until a judge rules on the suspension or revocation.

The court expanded on its 1998 ruling in Baby Tam & Co., Inc. v. City of Las Vegas, 154 F.3d 1097, in which the court held that a business had a right to prompt judicial review when a city denied a permit application. "We conclude that we must extend Baby Tam’s requirement of an opportunity for a prompt hearing and decision by a judicial officer in license denial cases to license suspensions or revocations as well," Chief Judge Procter Hug Jr. wrote for the unanimous three-judge panel.

San Diego’s ordinance and California statutes do not contain "express time limits or guarantee of a prompt hearing or decision, and are therefore similar to the Nevada statute found to be inadequate in Baby Tam," Hug wrote. Moreover, under California law, the granting of a stay of the revocation or suspension pending a judicial decision is discretionary, not mandatory. Thus, San Diego’s scheme lacks sufficient judicial safeguards and could result in an unconstitutional suppression of free speech, the court ruled.

Courts have consistently ruled that strip clubs, although they are often unpopular land uses, must be allowed to locate somewhere within a city. The San Diego case is another in which the courts scrutinized a method for a city to shutter a business with live adult entertainment.

The case came about when San Diego cited 4805 Convoy, Inc., for violating two rules of its 1987 nude entertainment license. An inspector found that during an amateur night, unlicensed women danced topless within six feet of patrons. Under San Diego municipal code, nude dancers must be licensed by the city and they must remain at least six feet from patrons. On October 3, 1995, the city suspended Convoy’s license for 14 days. Convoy then proceeded through the city’s administrative appeal process — during which the 14-day suspension was held in abeyance — and it filed a lawsuit in federal district court. After the city reduced the license suspension to seven days, Convoy sued in San Diego County Superior Court. On April 7, 1997, the trial court ruled for the city, although the judge stayed the license suspension pending the outcome of the federal court lawsuit.

In federal court, Convoy argued that San Diego’s provisions for the issuance, suspension and revocation of nude entertainment permit licenses were unconstitutional. Convoy argued that San Diego failed to provide adequate procedural safeguards to prevent suppression of protected speech. Southern District of California Judge Napoleon Jones disagreed and granted the city summary judgement on October 22, 1996.

In reversing Judge Jones, the Ninth Circuit considered challenges to San Diego’s revocation and suspension procedures, but not its licensing provisions because Convoy was not subject to getting a new license.

Hug cited the U.S. Supreme Court’s decision in FW/PBS v. City of Dallas, 493, U.S. 215 (1990). The ruling, on which the Ninth Circuit based its Baby Tam decision, mandated at least two procedure safeguards. "First ‘the licensor must make the decision whether to issue the license within a specified and reasonable time period during which the status quo is maintained.’ … Second, ‘there must be the possibility of prompt judicial review in the event that the license in erroneously denied.’"

Cities may get around the prompt review mandate so long as the status quo is maintained indefinitely because then there is no risk of suppressing protected speech, Hug reasoned. However, the San Diego municipal code and state law do not guarantee the status quo will be maintained.

The Ninth Circuit enjoined San Diego from enforcing license suspension or revocations during the 90-day period for filing suit, or from enforcing a suspension or revocation until a lawsuit has been decided.

"This injunction will remain in place so long as the city’s ordinance and the California statutory scheme fail to provide for a prompt hearing and decision by a judicial officer, or for the maintenance of the status quo pending a judicial decision on the merit," Hug wrote.

The Case:

4805 Convoy, Inc., v. City of San Diego, No. 97-55295, 99 C.D.O.S. 5594, 1999 Daily Journal D.A.R. 7159, filed July 14, 1999.

The Lawyers:

For Convoy: A. Dale Manicom, (619) 232-3255.

For San Diego: Grant Richard Telfer, deputy city attorney, (619) 533-5800.