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

Decision Date17 November 1980
Docket NumberNo. 77-2990,77-2990
Citation630 F.2d 1029
PartiesALADDIN'S CASTLE, INC., Plaintiff-Appellant, Cross-Appellee, v. The CITY OF MESQUITE, Defendant-Appellee, Cross-Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

Thomas L. Case, Louis P. Bickel, Dallas, Tex., for plaintiff-appellant, cross-appellee.

Elland Archer, City Atty., Mesquite, Tex., for defendant-appellee, cross-appellant.

Appeals from the United States District Court for the Northern District of Texas.

Before AINSWORTH, VANCE and ANDERSON, Circuit Judges.

VANCE, Circuit Judge:

This case arises from Aladdin's Castle, Inc.'s attempt to operate a coin-operated amusement center in Mesquite, Texas. Two questions dominate these appeals. First, did the district court correctly rule that Mesquite's licensing statute for owners of coin-operated amusement centers was unconstitutionally void for vagueness? Second, did the district court properly sustain as constitutional a Mesquite ordinance which barred individuals under seventeen years of age from entering such establishments to operate the machines unless accompanied by an adult? We affirm on the vagueness issue. We reverse on the age limitation issue and remand for further proceedings consistent with our opinion.


Aladdin's Castle, Inc. 1 owns and manages approximately one hundred family amusement centers throughout the United States, including three centers in Texas. Typically located in suburban shopping areas, each Aladdin's center contains a variety of coin-operated amusement devices. Adults run and supervise the patrons' use of these centers. Their duties include the enforcement of Aladdin's rules prohibiting loitering, gambling, smoking, and the consumption of food, nonalcoholic drinks and alcoholic beverages on the premises. These rules exist in all such centers operated by Aladdin's. Aladdin's Castle also enforces a rule that bars school children from the establishment during school hours.

Approximately five years ago, Aladdin's began discussions with Homart, Inc., a subsidiary of Sears Roebuck and Co., concerning the possibility of opening a coin-operated family amusement center in the Town East Mall that Homart was developing in Mesquite. During these negotiations, Aladdin's discovered two legal obstacles to the proposed deal. First, the Town East Mall was not properly zoned for Aladdin's proposed business use. Second, Mesquite had an ordinance, No. 1103, prohibiting children under the age of seventeen from playing coin-operated games. 2

After making these discoveries, representatives of Aladdin's attended a meeting of the Mesquite City Council. Aladdin's expressed its interest in opening an amusement center in Town East. It asked whether the city would change its zoning to allow Aladdin's to do business in the Town East Mall and whether the city would remove ordinance No. 1103, which restricted children and young adults from using coin-operated products and games. Aladdin's informed the council that unless the age restriction was revoked it could not open a profitable center. After considering the manner in which Aladdin's operated its amusement centers, the city council agreed to Aladdin's requests. The council explicitly encouraged Aladdin's investment in Mesquite, although it noted that Aladdin's would not be issued a license until it had finished building its store.

On April 5, 1976, Mesquite passed two ordinances pursuant to Aladdin's requests. Ordinance No. 1314 amended Mesquite's comprehensive zoning ordinance to authorize the establishment of a coin-operated amusement center at Town East Mall. 3 Ordinance No. 1310 amended ordinance No. 1103 to permit children to utilize coin-operated amusement devices in certain establishments. 4 The features of such establishments were defined in terms of Aladdin's own policy and rules. The exempted amusement centers should, inter alia, be located in an enclosed shopping mall and must not "offer for sale or allow the consumption of food, drink or other merchandise." Ordinance No. 1310. The zoning change, likewise, incorporated Aladdin's council presentation: "the operation is to be conducted as presented (by Aladdin's) at the public hearing." Ordinance No. 1314.

Following enactment of these ordinances, Aladdin's entered into a ten year lease with Homart at a monthly rental of $2,433.75. 5 Aladdin's expended an additional $80,000 preparing its property for business.

In July 1976, after Aladdin's had spent or committed this sum in reliance upon the agreed legislative changes and in anticipation of doing business, the city manager refused to approve Aladdin's license application. At the time, he refused to explain his decision. Aladdin's later discovered that the city manager denied its application relying on conclusions drawn by the police chief that Aladdin's parent company, Bally Manufacturing Company, was part of the "mafia." The police chief's conclusions were based on his department's inquiry, which revealed that Bally and its president had been the subject of a federal indictment in Louisiana on charges of participation in racketeering and gambling activities. The department's investigation also established that Bally and its president had been acquitted of all charges.

The city manager cited ordinance No. 1103, amended in other respects by ordinance No. 1310, as authority for denying Aladdin's license. Ordinance No. 1103 permits the chief of police to make recommendations concerning the licensing of coin-operated amusement centers on the basis, inter alia, of "the applicant's character and conduct as a law abiding person and shall consider past operations, if any, convictions of felonies and crimes involving moral turpitude and connections with criminal elements." Ordinance No. 1103 (emphasis added). 6 According to the chief and the city manager, Aladdin's possessed connections with criminal elements, specifically the mafia, through its parent, Bally.

After receiving notice of the city manager's action, Aladdin's appealed to the city council. On August 16, 1976, the council voted to affirm the city manager's decision. 7

On September 10, 1976, Aladdin's sued for injunctive relief in state court. On January 14, 1977, following trial, the court ruled that ordinance No. 1103 was impermissibly vague, general and indefinite under both the due process clause of the fourteenth amendment of the federal constitution and article 1, section 19 of the Texas constitution. Further, Mesquite was found to have exceeded its powers under article 11, section 5 of the Texas constitution and articles 1165 and 1175 of the Texas Revised Civil Statutes because it used vague and overbroad language. The state court also held that no substantial evidence supported the denial of a license to Aladdin's. Indeed, it found that neither Bally nor Aladdin's had any connection with the mafia or criminal elements. The court then ordered the city to issue Aladdin's a license immediately. The city issued the license on January 14, after accepting the required $100 filing fee. On January 20, 1977, the city gave notice of appeal. 8

Aladdin's once again prepared to commence business on February 5, 1977. On February 7, however, the city passed ordinance No. 1353, 9 which repealed No. 1310 and Aladdin's exemption under the seventeen year old age restriction of ordinance No. 1103. Ordinance No. 1353 included a new definition of "connection with criminal elements." 10 The city council thus reenacted the age restriction it had previously eliminated at Aladdin's request. The earlier contacts between Aladdin's and the city council indicate that the council knew that this change would clearly make Aladdin's Mesquite center unprofitable and force it to close. In short, Mesquite achieved the result denied it by the state court judgment.

Aladdin's then 11 sued in federal district court seeking injunctive relief to prohibit the city from enforcing ordinance No. 1353. Aladdin's asserted that the ordinance deprived it of various constitutional rights, including those of property and equal protection under both the federal and Texas constitutions. Aladdin's subsequently amended its complaint to include a challenge to the "connection with criminal elements" language, including the new definitional section added by ordinance No. 1353. Aladdin's especially contested the constitutionality of (1) the prohibition on the issuance of licenses for coin-operated amusement centers to anyone having a "connection with criminal elements," and (2) the age restriction on admission to such centers. On February 11, 1977, the court entered a temporary restraining order enjoining the ordinance's enforcement. After an evidentiary hearing, a preliminary injunction was entered on March 21, 1977. The case was then tried to the court on the merits. The court held that the language "connection with criminal elements," as amended by ordinance No. 1353, was unconstitutionally vague. It upheld the challenged age restriction, however, finding it to be rationally related to a legitimate state interest. Aladdin's Castle, Inc. v. City of Mesquite, 434 F.Supp. 473 (N.D.Tex.1977). Both parties appealed to this court.

A. Subject Matter Jurisdiction

The city challenges subject matter jurisdiction, claiming that the amount in controversy does not exceed $10,000. This contention misses the mark.

In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation.... Here, that object is the right of (Aladdin's) ... to conduct their business affairs ... free from the interference of the challenged statute. The value of that right is measured by the losses that will follow from the statute's enforcement.

Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 347, 97 S.Ct. 2434, 2443, 53 L.Ed.2d 383 (1977) (citations omitted). Aladdin's claims that it would suffer a...

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