Aladdin's Castle, Inc. v. City of Mesquite

• Decision Date: 29 June 1977
• Docket Number: No. CA 3-77-0194-C.,CA 3-77-0194-C.
• Citation: 434 F. Supp. 473
• Parties: ALADDIN'S CASTLE, INC. v. The CITY OF MESQUITE.
• Court: U.S. District Court — Northern District of Texas

434 F. Supp. 473

ALADDIN'S CASTLE, INC. v. The CITY OF MESQUITE.

No. CA 3-77-0194-C.

United States District Court, N. D. Texas, Dallas Division.

June 29, 1977.

Louis P. Bickel, Bickel & Case, Glenn A. Portman, Johnson, Bromberg, Leeds & Riggs, Dallas, Tex., for plaintiff.

Elland Archer, Mesquite, Tex., for defendant.

MEMORANDUM OPINION

WILLIAM M. TAYLOR, Jr., District Judge.

Aladdin's Castle, Inc. (hereafter, A.C.I.), a corporation engaged in the business of owning and managing coin-operated amusement centers in various sections of the nation, brought this action seeking declaratory and injunctive relief from the enforcement of an allegedly unconstitutional ordinance of the City of Mesquite which (1) prohibits issuance of a license for a coin-operated amusement center to anyone having a "connection with criminal elements," and (2) restricts admission to coin-operated amusement centers to individuals age 17 or above. On February 11, 1977, this Court entered a temporary restraining order enjoining enforcement of such ordinance. After an evidentiary hearing, a preliminary injunction was entered on March 21, 1977. On June 10, 1977, the case was tried to the Court on the merits. For the reasons set forth below, this Court is of the opinion that those provisions of the ordinance purporting to deny a license to applicants who have a "connection with criminal elements" are unconstitutionally vague and overbroad. We are unable to say, however, that the challenged age restriction raises any Federal constitutional issue.

This action arises from the on-again, off-again legislative activity of the Mesquite City Council. In 1973, the Council enacted Ordinance No. 1103 which required licenses for coin-operated amusement establishments and limited access to such establishments to individuals 17 years of age or above. Individuals under age 17 were permitted access only if accompanied by parent or guardian. In 1976, A.C.I., through its president, approached officials of the City with respect to its interest in opening an amusement center at the Town East Mall within the city limits of Mesquite. A.C.I. owns and operates approximately one hundred other amusement centers at major shopping malls in metropolitan centers throughout the nation and has, as its mode of operation, the practice of keeping an adult manager on duty at all times in its stores to enforce its rules against gambling, smoking, and consumption of food and beverages on the premises. Apparently in consideration of the fact that A.C.I. operates what might be called a "high-class" amusement establishment and that A.C.I.'s president expressed a disinclination to open an amusement center at Town East Mall because of the age restriction, the Mesquite City Council, on April 5, 1976, enacted two ordinances to make operation of an amusement center at Town East more attractive to Plaintiff.

The April 5, 1976, ordinances first amended the Comprehensive Zoning Ordinance of Mesquite to authorize establishment of a coin-operated amusement center at Town East Mall; and second, amended the 1973 amusement center ordinance by exempting from the 17-year-old age restriction those:

"coin-operated establishments located in major shopping centers containing an enclosed mall and said establishments being operated only during the hours said mall is open and having no outside entrance and where said establishment does not offer for sale or allow the consumption of food, drink or other merchandise .."

The April 5, 1976, ordinance, No. 1310, required only that children under the age of 7 years be accompanied by parent or guardian.

Upon enactment of these ordinances on April 5, 1976, A.C.I. commenced to prepare for operation of a center at Town East by entering into a lease agreement with Homart Corporation, owner of the shopping center, and by investing approximately $80,000 in leasehold improvements. In July of 1976, A.C.I. proceeded to file its application for a license only to have such application denied by the City Manager upon the unfavorable recommendation of the Chief of Police.

Apparently, between April of 1976, when the City Council modified its zoning and amusement center ordinances, and July of 1976, when A.C.I. filed its license application, police investigation revealed that 100% of the stock of A.C.I. was owned by Bally Manufacturing Co., a corporation engaged in the manufacture and sale of coin-operated amusement machines. The Bally Manufacturing Co. and its president had at one time been the subject of a Federal criminal indictment in Louisiana charging participation in racketeering and gambling activities; upon trial, Bally and its president were acquitted of the charges. The police also appear to have information to the effect that Bally Manufacturing Co. is somehow linked to the "mafia" or the "Cosa Nostra." As of July of 1976, the ordinance then in effect, No. 1103, as amended by No. 1310, provided for denial of a license to applicants who had "a connection with criminal elements."

After denial of the license application by the City Manager, A.C.I. appealed the matter to the City Council which on August 16, 1976, affirmed the City Manager's decision. On September 10, 1976, A.C.I. filed a petition in State court seeking an injunction requiring issuance of a permit to operate an amusement center at Town East Mall. Upon trial to the District Court of Dallas County, 95th Judicial District, a final judgment was entered on January 14, 1977, granting A.C.I. the relief prayed for. The State court concluded as a matter of law that the ordinance then in effect, No. 1103, was unconstitutional under the 14th Amendment of the Constitution of the United States and that such ordinance was also repugnant to Article 1, Sec. 19 of the Constitution of the State of Texas in that the use of the words "connection with criminal elements" are so vague, general and indefinite as to deny A.C.I. due process of law. The State court further found that the City's denial of A.C.I.'s application was not supported by substantial evidence that A.C.I. has any connection with criminal elements.

In compliance with the State court judgment, the City duly issued a license to A.C.I. on January 14, 1977, and proceeded to appeal the State court judgment. A.C.I. opened its amusement center on February 5, 1977. On February 7, 1977, the City Council met and enacted Ordinance No. 1353 repealing Ordinance No. 1310 which had created the exception from the 17-year old restriction discussed earlier. The February 7, 1977, Ordinance went on to attempt to rehabilitate the original amusement center ordinance by adding a definition of the term "connection with criminal elements." The definition added on February 7, 1977, is as follows:

"Connection with Criminal Elements is defined as that state of affairs wherein an applicant, or an officer of, principal stockholder of, person having a substantial interest in or management responsibility for, a corporation or other organization wherein such organization is the applicant, directly or as parent, subsidiary or affiliate, has such association, acquaintance, or business association with parties having been convicted or not, to the extent that the fencing of stolen merchandise or illegally obtained funds, the procuring of prostitutes, the transfer or sale of narcotics or illegal substances is made more feasible or likely or the protection of those of tender years from unwholesome influences are rendered more difficult.

A determination by the United States Department of Justice that a party is a member of the `mafia' or `Cosa Nostra' family or that such party is engaged in or affiliated with a nationwide crime organization, whether formally or informally, shall be prima facie evidence, so far as the issuance of a license hereunder, that such person has `connections with criminal elements' and constitute, within the meaning of this ordinance, `criminal elements.'"

Upon learning of the enactment of the February 7, 1977, ordinance A.C.I. filed the instant action seeking injunctive and declaratory relief.

The initial challenge interposed by the Defendant goes to the question of subject matter jurisdiction; specifically, the City claims that less than $10,000 is in controversy. We believe the correct rule for determining damages is as follows:

"Where a business is threatened .. by a regulatory statute ... the amount in controversy is the difference between the value of the business unregulated ... and its value under the regulation . . ."

C. A. Wright, Law of Federal Courts, Ch. 5, § 33, (3rd Ed. 1976), citing McNutt v. General Motors Acceptance Corp. of Ind., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936) and...