A $1.4 million award of damages to the owners of a San Bernardino adult cabaret has been thrown out by the state Supreme Court. In a unanimous ruling, the state high court said that an appellate court had answered the wrong question when it decided the City of San Bernardino was liable for Flesh Club's expenses and lost income during a 53-month period when the cabaret was shut down.
At issue is whether the city must pay damages because it sought and received a court injunction to close the nightclub based on a city zoning ordinance that was later found to be unconstitutional.
"[T]he Court of Appeal focused on whether the city was immune from liability because it had relied in good faith ‘on a preliminary injunction duly issued by a trial court,'" Justice Ming Chin wrote for the state high court. "However, the critical question is not whether the city is immune from liability, but whether the city's seeking a preliminary injunction and a stay were acts in violation of the First Amendment that caused injury to [Flesh Club] for which the city could conceivably be liable under [42 U.S.C.] § 1983."
The city could be liable only if it made material misrepresentations to the court while seeking the injunction, ruled the state Supreme Court, which sent the case back to the trial court to determine whether important misrepresentations were made.
Although both sides have claimed victory with the Supreme Court ruling, Flesh Club has asked for a new hearing. The cabaret contends that the basis for the decision is wrong, and the issues for trial court reconsideration should be broader.
San Bernardino has been trying to close down Flesh Club ever since owner Waldon Randall Welty and his Manta Management Corporation converted a comedy club on Hospitality Lane into a nude dancing club in 1994. At the time, the city's zoning ordinance limited adult businesses to "commercial heavy" and "industrial light" zoning districts. The ordinance further required a buffer of 2,000 feet from other adult businesses and 1,000 feet from a school, church, public park, residence or residentially zoned land. Flesh Club complied with the buffer requirements but was in the wrong zone.
The city sued in January 1995, seeking to shut down what the city called a public nuisance. A San Bernardino County Superior Court judge granted a preliminary injunction ordering Manta to cease operating an adult cabaret. Manta appealed and filed a cross-complaint seeking damages under § 1983, the federal civil rights law.
Manta had sued the city over the constitutionality of the ordinance in 1994, and in 1996, a Superior Court judge declared the law unconstitutional because it did not serve a substantial governmental interest and did not allow for reasonable alternative avenues of communication. In 1999, the Fourth District Court of Appeal upheld the lower court and dissolved the injunction (People v. Manta Management Corp., No. E019635).
The two sides returned to Superior Court, where Judge Donald Alvarez ruled that the city's requesting and obtaining a preliminary injunction and a stay pending appeal to enforce a law that was unconstitutional established a basis for liability under § 1983. A jury later awarded $1.4 million for Flesh Club expenses and lost profits during the 53 months it was ordered closed. The Fourth District upheld the award in 2006 (see CP&DR Legal Digest, June 2006).
But the state Supreme Court determined the lower courts were wrong about awarding damages. The issue, Chin wrote, is whether the act of asking the court to enforce the city's ordinance "caused the harm suffered by Manta to the extent that the city is liability for damages." In other words, was there a direct link between the city's legal action and the alleged damages? The court said maybe not.
"[W]e hold that, where a court is provided with appropriate facts to adjudicate a motion for preliminary injunction or a motion for a stay pending appeal, the courts' intervening exercise of independent judgment breaks the chain of causation for purposes of § 1983 liability. We also hold that this general rule of superseding causation does not apply when the judicial officer reached an erroneous decision as a result of being pressured or materially misled as to the relevant facts," Chin wrote.
"[W]e conclude that Manta does not need to prove that the city's failure to provide the court with accurate information was intentional," Chin continued. "Instead, Manta needs to show only that the misrepresentations were material, in that they would have undermined the courts' ability to exercise independent judgment on the issues presented."
The central "misrepresentation" concerns how much territory was available for an adult night club under the city's old ordinance. Back in 1995, the city said 224 acres met the criteria but much later conceded it was closer to 80 acres. Whether that discrepancy was "material" to the courts' earlier approvals of the injunction and stay is now a question for the trial court.
Meanwhile, Flesh Club is closed again, the result a new order by Judge Alvarez in a separate "red light abatement" suit filed by the city. City officials argued that Flesh Club is a "whorehouse" where prostitution is a regular occurrence. Although nude dancing is protected by the First Amendment, the club's activities went beyond mere dancing, Alvarez determined in a ruling issued in August 2007.
"The ongoing nature of the Flesh Club activities graphically demonstrate a pervasive climate of blatant promiscuous and lewd behavior that in the court's view finds no sanctuary under the umbrella of First Amendment protection," Alvarez wrote at the conclusion of a lengthy trial. He ordered an eight-month closure and fined Manta $25,000. The club closed in November.
The Case:
Manta Management Corp. v. City of San Bernardino, No. S144492, 2008 DJDAR 5845. Filed April 24, 2008.
The Lawyers
For Manta: Roger Jon Diamond, (310) 399-3259.
For the city: Christopher Lockwood, Arias, Lockwood & Gray, (909) 890-0125.
