A state appellate court has upheld the City of Los Angeles's refusal to grant a conditional use permit for the sale and on-site consumption of alcohol at an adult cabaret.
SP Star Enterprises, which has certificate-of-occupancy permits to operate the nude entertainment club, contended that the city's decision amounted to an unconstitutional infringement on its free speech. But the court ruled that the decision to deny a permit strictly concerned alcohol and did not prohibit the expression of protected speech.
Star's facility, which is permitted to seat up to 177 patrons, is located in a converted industrial building at Ducommon and Vignes streets in the burgeoning Arts District north of Little Tokyo. The city-issued building and occupancy permits allow Star to operate the club between 11 a.m. and 2 a.m. daily. Star, which holds a franchise for a Penthouse adult cabaret, applied for a conditional use permit (CUP) for the sale and on-site consumption of alcohol at the club, and a city zoning administrator granted the CUP for one year.
The Los Angeles Hompa Hongwanji Buddhist Temple and Fukui Mortuary, which are located near the club, appealed the decision to the Central Area Planning Commission (APC). A temple representative contended that the CUP would result in an unsafe environment for the families and children who attend day care and events at the temple. The mortuary owner argued the sale of alcohol at the club would disrupt services and upset grieving people.
Other foes of the decision to grant the club a CUP also surfaced. Representatives of two Los Angeles city councilmembers, as well as the Central City East Association, argued that the alcohol permit would set back the area's revitalization drive. Two Los Angeles Police Department lieutenants said the sale and consumption of alcohol at the club had the potential to increase crime in the area.
Star's attorney countered that the company had invested more than $1 million in the club and that its agreement with Penthouse required that the facility be upscale. He added that the club is in a concrete box that would emit no noise, that there is adequate parking on-site and that security would be provided at all times. The attorney also noted that the mortuary is 518 feet from the club, while the temple is more than 1,000 feet away.
In reversing the city zoning administrator's decision to grant the CUP, the Central Area Planning Commission (APC) found that the sale and consumption of alcohol at the club would not be desirable to the public convenience and welfare, would be detrimental to the character of the community and would not be in harmony with the area's general plan. The vote was 3-1 to deny the permit.
Star sued the APC, arguing that the CUP request must be reviewed under the "strict scrutiny" standard because Star features constitutionally protected expression – nude dancing. Los Angeles County Superior Court Judge Dzintra Janavs disagreed, finding the city's decision to deny the alcohol permit was permissible no matter what standard of review applied.
In its appeal, Star continued to argue that the APC's decision was an unconstitutional restraint of protected speech that a court must review independently. But a three-judge panel of the Second District Court of Appeal, Division Three, said the issue was alcohol – not nude dancing.
"It is clear that an initial application for a conditional use permit to sell alcohol for on-site consumption does not involve a fundamental vested right or Star's right of free speech," Presiding Justice Joan Klein wrote for the court, citing Yu v. Alcoholic Bev. etc. Appeals Bd., (1992) 3 Cal.App.4th 286, 296. "On the contrary, it is generally accepted that ‘the liquor business is fraught with danger to the community, and may therefore be either entirely prohibited, or permitted under such conditions as are prescribed by the regulatory agency, which has broad power in this respect.'"
Because the issue did not involve the protected activity of nude dancing, the Second District panel of judges held, the lower court properly applied the more deferential "substantial evidence test," rather than the independent-judgment standard and the strict-scrutiny test.
The appellate court found that the APC's references to "general welfare," general plan "harmony" and "proper" uses were not overly vague, as Star had contended, and that the club's proximity to a day-care school was an appropriate factor to weigh in deciding the CUP request. The commission's consideration of crime and alcohol in the broader downtown area was also proper, and the testimony of neighbors and the police regarding neighborhood character and integrity constituted substantial evidence, the court ruled.
The Case:
SP Star Enterprises, Inc. v. City of Los Angeles, No. B204045, 2009 DJDAR 6152. Filed April 28, 2009.
The Lawyers:
For Star: Stuart Miller, Wellman & Warren, (949) 580-3737.
For the city: Tayo Popoola, city attorney's office, (213) 978-8068.
