Coe v. City of San Diego

• Decision Date: 28 September 2016
• Docket Number: D068814
• Citation: 3 Cal.App.5th 772,208 Cal.Rptr.3d 73
• Court: California Court of Appeals Court of Appeals
• Parties: Suzanne COE, Plaintiff and Appellant, v. City of SAN DIEGO, Defendant and Respondent.

3 Cal.App.5th 772

208 Cal.Rptr.3d 73

Suzanne COE, Plaintiff and Appellant,

v.City of SAN DIEGO, Defendant and Respondent.

D068814

Court of Appeal, Fourth District, Division 1, California.

Filed September 28, 2016

The Gilleon Law Firm, San Diego, Daniel M. Gilleon ; Law Office of Steve Hoffman and Steve Hoffman for Plaintiff and Appellant.

Jan I. Goldsmith, City Attorney, Mary T. Nuesca, Assistant City Attorney and Paige. E. Folkman, Deputy City Attorney for Defendant and Respondent.

McCONNELL

, P.J.

I

INTRODUCTION

Suzanne Coe appeals from a judgment denying her petition for writ of administrative mandate challenging a decision by the City of San Diego (City) to revoke her nude entertainment business permit.¹ She contends certain sections of the San Diego Municipal Code² applicable to nude entertainment businesses are unconstitutionally vague and do not give sufficient guidance to the permit holder or to the enforcement agency. She further contends the City's decision to revoke her permit improperly relied upon inadmissible hearsay evidence and there is otherwise insufficient evidence to support the findings underlying the decision. Finally, she contends the penalty of revocation violated her due process rights because it was arbitrary and capricious. We are not persuaded by these contentions and affirm the judgment.

II

BACKGROUND

A

In San Diego, it is unlawful to operate a nude entertainment business without a police permit. (§ 33.3603.) It is also unlawful for a responsible person to allow a nude person within six feet of a patron (six-foot rule); an adult entertainer to intentionally touch a patron or a patron to intentionally touch an adult entertainer during a performance (no-touch rule); or a person to touch, caress, or fondle specified anatomical areas of another person (no-fondling rule).³ (§ 33.3609, subds. (c), (d) & (f).)

Parallel prohibitions apply to adult entertainers. (§ 33.3610, subds. (a)–(c).)

Coe has a permit to operate a nude entertainment business in San Diego. The business is open from 12:00 p.m. to 2:00 a.m. daily. It employs approximately 40 people, including managers, bartenders, waitresses, and security guards. As Coe lives in another state, the managers oversee the business's daily operations.⁴

There are two private dance rooms in the back of the business, which are monitored by a security guard positioned between them. One room, the couch room, is bordered with couches where patrons may sit and view a dance for $10 to $20 per dance. The other room, referred to by the parties as the VIP room, has stalls with benches inside where patrons may sit to view dances. The stalls are shallow, which allows the adult entertainer to be seen by the security guard, but provides relative privacy to the patron. The VIP room is more expensive than the couch room because the VIP room has a five-dance, or $100, minimum.

Coe considers the adult entertainers who perform at her business to be independent contractors. Before adult entertainers may perform at the business, they must sign a contract, which recites the six-foot, no-touch, and no-fondling rules. These rules are explained to them and they are shown a dance compliant with the rules. The business does not require the adult entertainers to undergo a reference check or a background check apart from the criminal background check required for an adult entertainer to obtain an adult entertainer permit from the City.

The adult entertainers set their own schedules. Between 12 to 15 adult entertainers perform on a day shift and an average of 50 adult entertainers perform on an evening shift. The adult entertainers pay a flat fee to perform and they keep any payment or tips they receive for private dances. At the end of their shift, they “tip out” by giving a percentage of their receipts to the shift manager, the disc jockey, and the doorman, which is then shared with other employees, including the security guards.

B

In 2006, the City issued a 30–day suspension to Coe for multiple violations of the six-foot and no-touch rules occurring during overt and covert inspections between September 2005 and September 2006. Coe appealed the suspension. The parties subsequently settled the matter in January 2007 with Coe admitting to no-touch violations occurring between March and September 2006 and paying a $10,000 fine.

In July 2012 the City issued a 15–day suspension to Coe for multiple violations of the six-foot, no-touch, and no-fondling rules occurring between March 2011 and April 2012. Coe appealed the suspension. The parties settled the matter in February 2013 with Coe admitting the violations, agreeing to a three-day suspension, and paying a $20,000 civil penalty. Coe also agreed to mandatory training, which she and the business's managers, security guards, and disc jockeys attended on March 5, 2013.

At the end of April 2013 the City sent Coe a warning letter advising her of multiple violations of the no-touch and no-fondling rules by 14 adult entertainers. The violations occurred during covert inspections in late March and April 2013, after Coe and her staff had completed the mandatory training.

In May 2013 Coe and the business's managers met with police department representatives. The parties discussed the recent violations and what measures Coe might employ to reduce their occurrence. The police representatives warned Coe the next penalty for further violations would be a 15–day suspension.

Coe took a number of steps to prevent further violations. These steps included hiring a security consultant; improving lighting; posting a security guard in the corridor between the private dance rooms; installing monitors in the private dance rooms to allow for remote observation and correction of violating conduct through an intercom system; posting the six-foot, no-touch, and no-fondling rules on the walls, in the bathrooms, and in the dressing

rooms; and using secret shoppers to check for rule compliance. She also began keeping track of adult entertainers and using a progressive discipline policy against adult entertainers found violating the rules.

Nonetheless, violations continued to occur at Coe's business. In August 2013 the City sent Coe a warning letter advising her of multiple violations of the no-touch and no-fondling rules by 10 adult entertainers occurring during covert inspections in May, June and July 2013. In October 2013 the City sent Coe a warning letter advising her of violations of the no-touch and no-fondling rules by one adult entertainer occurring during a covert inspection in September 2013. In February 2014 the City sent a warning letter to Coe advising her of multiple violations of the no-touch and no-fondling rules by nine adult entertainers occurring during overt and covert inspections in January and February 2014. In April 2014 the City sent Coe a warning letter advising her of multiple violations of the no-touch and no-fondling rules by three adult entertainers occurring during covert inspections in February 2014.⁵

Later in April 2014 the parties met to discuss the continuing violations. Coe expressed frustration with the delay between the violations and the receipt of the warning letters, believing the delay prevented her from adequately identifying and disciplining the adult entertainers or the security guards. In May 2014 the City sent Coe a letter recapping the meeting and indicating additional violations, depending on the severity, would most likely result in the revocation of her nude entertainment business permit.

In June 2014 the City notified Coe it was revoking her nude entertainment business permit for repeated violations of the six-foot, no-touch, and no-fondling rules. The notice cited 12 violations of these rules occurring during overt and covert inspections after the parties' April 2014 meeting.⁶

Most of the conduct described in the various warning letters occurred in the private dance rooms. At least fifteen separate officers or detectives observed the conduct. Over 40 separate nude entertainers committed the violations, which included rubbing breasts against faces; grinding breasts and buttocks against groins; and rubbing groins or hands against legs, chests, or groins. Some violations occurred when no security guard was present. Others occurred when a security guard was present, but the security guard did not intervene. Still others occurred when a security guard was present and intervened, but then allowed the adult entertainer to continue with the violating conduct. Several adult entertainers said they had been advised to change their stage names often to avoid identification and notices of violation.

C

Coe administratively appealed the revocation.⁷ A hearing officer conducted a four-day evidentiary hearing. At the conclusion of the hearing, the hearing officer upheld the revocation. The hearing officer found based on the above evidence the City had established: (1) the business's adult entertainers had committed numerous and continuing violations of the six-foot, no-touch, and no-fondling rules; (2) Coe was aware of these rules; (3) she negligently failed to supervise the business resulting in a pattern of violations; and (4) she demonstrated an inability to perform the duties required of a nude entertainment business permit holder. In particular, the hearing officer found that, despite numerous rules violations, Coe never disciplined any security guards for failing to properly monitor the adult entertainers. The hearing officer also found the business's compensation structure created an incentive for security guards to allow violations because the more touching that occurred, the more compensation adult entertainers were likely to receive, which increased the security guards' share of the adult entertainers' tips.

D

Coe subsequently filed a combined complaint for civil rights violations and a petition for writ of administrative mandate (petition). The petition challenged the hearing officer's decision on the grounds the decision...