City's Hearing Rejected For Violating Adult Business Owners' Due Process Rights
An administrative hearing that the City of Beverly Hills conducted for an adult business permit renewal violated the business's right to due process, the Second District Court of Appeal has ruled.
The problem was that a city attorney — who earlier had contended that the business failed to submit a complete permit renewal application — also advised the hearing officer who considered the business's appeal of the decision to deny the renewal application. The same person cannot serve both a prosecutory and an adjudicatory function, the court held.
Showgirls of Beverly Hills is an adult cabaret in Beverly Hills. Knowing that the city required their permit to be renewed every two years, the owners of Showgirls, Nightlife Partners, sought a permit renewal in early 2001. Nightlife Partners submitted an application in February of that year, but Assistant City Attorney Terence Boga contended that the application was incomplete. An attorney with Richards, Watson & Gershon who has also helped defend the city in an ongoing federal lawsuit over adult business regulation filed by Nightlife Partners, Boga said the cabaret owners were required to submit all documents, such as site plans and letters of justification, required for a new permit application. Nightlife Partners countered that neither the municipal code nor the application form required the documents.
In April, the city's finance director sent Nightlife Partners a letter denying the renewal application. The letter said the application was incomplete and that even if the application had been complete, the city would have denied it because the cabaret failed to comply with the city's design and performance standards.
Nightlife Partners filed an administrative appeal, which was heard in June by David Holmquist, an attorney and the city's risk manager. At the outset, Holmquist announced that he had never before presided over such a hearing and that Boga would be advising him. Throughout the hearing, the two men sat side by side, and they conferred from time to time. Nightlife Partners unsuccessfully objected to the fact that the hearing officer was a city official and to Boga's role.
In September, Holmquist issued a decision denying the appeal. With no further administrative process remaining, Nightlife Partners sued, alleging that the hearing and procedures were unfair and that they violated the cabaret owners' due process rights.
Los Angeles County Superior Court Judge Cesar Sarmiento ruled that Boga's participation in the hearing had constituted "actual bias" and that the city had violated Nightlife Partners' due process rights. Judge Sarmiento ordered the city to provide the cabaret owners with a new hearing.
The city appealed and a unanimous three-judge panel of the Second District, Division Three, upheld the lower court.
According to the appellate court, the issue was not whether there was actual bias, but whether the hearing met minimum constitutional standards of due process. The court said the hearing failed to meet those standards, which are essentially the same for an administrative hearing as for a judicial proceeding.
"Just as in a judicial proceeding, due process in an administrative hearing also demands an appearance of fairness and the absence of even a probability of outside influence on the adjudication," Justice Walter Croskey wrote for the Second District.
The state Administrative Procedure Act (which does not apply to local hearings), the Model State Administrative Procedure Act, various other state administrative procedure acts and the federal Administrative Procedure Act all separate the prosecutory function from the adjudicatory function, the court noted.
"[A] prosecutor, by definition, is a partisan advocate for a particular position or point of view. Such a role is inconsistent with the objectivity expected of administrative decision-makers. Accordingly, to permit an advocate for one party to act as the legal advisor for the decision-maker creates a substantial risk that the advice given to the decision-maker will be skewed, particularly when the prosecutor serves as the decision-maker's advisor in the same or a related proceeding," Croskey wrote.
"Boga had been city's advocate in connection with the decision to deny the application," Croskey continued. "Thus, Boga's presence as Holmquist's advisor was the equivalent of trial counsel acting as an appellate court's advisor during the appellate court's review of the propriety of a lower court's judgment in favor of that counsel's client."
The city cited a number of cases in its defense, but the court held that those cases did not apply because in none of them did an attorney act as both a partisan advocate and an advisor to the neutral decision-maker.
In addition to upholding the lower court, the Second District also ordered that the new hearing not be conducted by Holmquist or by any person who has advocated for the city in this case or the related federal litigation and that the hearing officer not be advised by anyone who has defended the city in the lawsuits.
Nightlife Partners v. City of Beverly Hills, No. B161436, 03 C.D.O.S. 3510, 2003 DJDAR 4445. Filed April 24, 2003.
For Nightlife Partners: Roger Jon Diamond, (310) 399-3259.
For the city: Laurence Wiener, Richards, Watson & Gershon, (213) 626-8484.