Deja Vu Showgirls of Las Vegas, LLC v. Nev. Dep't of Taxation
| Decision Date | 18 September 2014 |
| Docket Number | No. 60037.,60037. |
| Citation | 130 Nev. Adv. Op. 73,334 P.3d 392 |
| Parties | DEJA VU SHOWGIRLS OF LAS VEGAS, LLC, A Nevada Limited Liability Company, d/b/a Deja Vu Showgirls; Little Darlings of Las Vegas, d/b/a Little Darlings; K–Kel, Inc., d/b/a Spearmint Rhino Gentlemen's Club; Olympus Garden, Inc., d/b/a Olympus Garden ; Shac, LLC, d/b/a Sapphire; The Power Company, Inc., d/b/a Crazy Horse Too Gentlemen's Club; and D. Westwood, Inc., d/b/a Treasures, Appellants, v. NEVADA DEPARTMENT OF TAXATION ; Nevada Tax Commission; and The State of Nevada Board of Examiners, Respondents. |
| Court | Nevada Supreme Court |
Lambrose Brown and William H. Brown, Las Vegas; Shafer and Associates and Bradley J. Shafer, Lansing, Michigan, for Appellants Deja Vu Showgirls of Las Vegas, LLC; Little Darlings of Las Vegas; K–Kel, Inc.; Olympus Garden, Inc.; The Power Company, Inc.; and D. Westwood, Inc.
Greenberg Traurig, LLP, and Mark E. Ferrario and Brandon E. Roos, Las Vegas, for Appellant SHAC, LLC.
Catherine Cortez Masto, Attorney General, Blake A. Doerr and David J. Pope, Senior Deputy Attorneys General, and Vivienne Rakowsky, Deputy Attorney General, Carson City, for Respondents.
BEFORE THE COURT EN BANC.
In this opinion, we consider whether, on its face, Nevada's Live Entertainment Tax violates free speech rights under Article 1, Section 9 of the Nevada Constitution or the First Amendment to the United States Constitution. We also address whether the district court was required to entertain appellants' as-applied challenge to the Tax when they failed to exhaust their administrative remedies on that issue. Regarding appellants' facial challenge, we conclude that the Tax does not violate the First Amendment as related to speech (i.e., dance), and we therefore affirm the district court's summary judgment as to this issue. As for appellants' as-applied challenge, we hold that appellants were required to exhaust their administrative remedies on this issue before seeking relief in the district court, and thus, we affirm the district court's dismissal of the as-applied challenge for lack of subject matter jurisdiction.
In 2003, the Nevada Legislature enacted the Live Entertainment Tax, which imposes an excise tax on certain business transactions completed at facilities providing “live entertainment.” See NRS 368A.200(1). “ ‘Live entertainment’ means any activity provided for pleasure, enjoyment, recreation, relaxation, diversion or other similar purpose by a person or persons who are physically present when providing that activity to a patron or group of patrons who are physically present.” NRS 368A.090(1). Nevada's Live Entertainment Tax (NLET) imposes a ten-percent tax on any amounts paid for admission and for food, refreshments, and merchandise provided within a live-entertainment facility having a maximum occupancy of less than 7,500 persons. NRS 368A.200(1). When a live-entertainment facility has a maximum occupancy of at least 7,500 persons, however, NLET only imposes a five-percent tax on admission charges. Id.
At its inception, NLET provided ten exemptions dependent on, inter alia, the location and size of a facility providing live entertainment, the entity status of a provider,1 and, in several instances, the type of entertainment provided.2 NRS 368A.200(5) (2003). Among other things, the 2003 version of NLET included an exemption for “[l]ive entertainment that [was] not provided at a licensed gaming establishment if the facility in which the live entertainment [was] provided [had] a maximum seating capacity of less than 300.” NRS 368A.200(5)(d) (2003). The initial statutory scheme also provided an exemption for gaming establishments “licensed for less than 51 slot machines, less than six games, or any combination of slot machines and games within those respective limits, if the facility in which the live entertainment [was] provided [had] a maximum seating capacity of less than 300.” NRS 368A.200(5)(e) (2003).
Since its enactment, the Legislature has amended NLET's provisions on multiple occasions. In 2005, the Legislature, among other things, created eight exceptions to NLET's definition of “live entertainment.”3 NRS 368A.090(2)(b) (2005). Additionally, the Legislature changed the maximum seating capacity language in NRS 368A.200(5)(d)-(e) (2003) to “maximum occupancy,” and reduced that provision's occupancy from 300 to 200. NRS 368A.200(5)(d)-(e) (2005). The Legislature also added six new exemptions, including exempting certain National Association for Stock Car Auto Racing (NASCAR) events from being subject to the tax. NRS 368A.200(5)(k)-(p) (2005). Two years later, the Legislature added another exemption from the tax for professional minor league baseball contests, events, and exhibitions. NRS 368A.200(5)(p) (2007).4
In April 2006, appellants, which are all exotic dancing establishments, filed suit against respondents in the United States District Court for the District of Nevada seeking a declaration that NLET is facially unconstitutional for violating the First Amendment to the United States Constitution, an injunction against its enforcement, and a refund of all taxes paid under the statute. The federal district court later dismissed this action on respondents' motion, concluding that appellants had failed to show that Nevada's state court and administrative systems deprived them of a plain, speedy, and efficient remedy. Appellants appealed that decision to the United States Court of Appeals for the Ninth Circuit, which later affirmed the lower court's determination.
While the appeal of the dismissal of their federal action was still pending before the Ninth Circuit, appellants filed a de novo action in the Eighth Judicial District Court seeking a declaration that NLET is facially unconstitutional, injunctive relief, a refund of all taxes paid under NLET, and attorney fees and costs (Case 1). Appellants later amended their complaint in Case 1 to include an as-applied constitutional challenge to NLET. Even though Case 1 was pending in the district court, appellants K–Kel, Olympus Garden, SHAC, The Power Company, and D. Westwood filed individual tax refund requests with the Nevada Department of Taxation pursuant to NRS 368A.260(1) on the ground that NLET was facially unconstitutional under the First Amendment. The Department later denied these refund requests and the Nevada Tax Commission affirmed the Department's decision by a written order entered on October 12, 2007, determining that NLET was facially constitutional.
Based on the Department's and Commission's denials of their refund requests, appellants filed a second de novo action in the Eighth Judicial District Court on January 9, 2008 (Case 2). In this complaint, appellants argued that NLET was facially unconstitutional and sought a refund, declaratory and injunctive relief, and damages. Nearly three years later, appellants amended their Case 2 complaint to include an as-applied challenge to NLET. The district court then entered an order coordinating Cases 1 and 2 and consolidating their declaratory relief claims.
After hearing arguments on respondents' re-noticed motion for partial summary judgment and motion to dismiss the as-applied challenge, the district court entered an order limiting Case 1 to only appellants' facial challenge to NLET and permanent injunction request. In doing so, the district court dismissed the pending as-applied challenge in Case 1 for lack of subject matter jurisdiction based on appellants' failure to exhaust their administrative remedies and dismissed Case 2 in its entirety, also on subject matter jurisdiction grounds, because appellants had filed a de novo action instead of a petition for judicial review per NRS 233B.130. Appellants subsequently appealed the dismissal of Case 2 to this court, and that appeal is before us in the companion case addressed in Deja Vu Showgirls v. State, Department of Taxation (Deja Vu I ), 130 Nev. ––––, 334 P.3d 387, 2014 WL 4656428 (Adv.Op. No. 72, September 18, 2014).
Appellants and respondents ultimately filed competing motions for summary judgment on the remaining issues in Case 1. The district court granted respondents' summary judgment motion, denying appellants' summary judgment motion in the process. The district court concluded that NLET did not facially violate the First Amendment because it is a content-neutral and generally applicable tax that does not target constitutionally protected activity. In making its determination, the district court only considered the statute's language. Additionally, as a consequence of its decision, the district court necessarily rejected appellants' request for a permanent injunction.
We first address whether the district court erred by dismissing appellants' as-applied challenge from Case 1 for lack of subject matter jurisdiction.
In Nevada, a district court lacks subject matter jurisdiction to consider a taxpayer's claim for judicial relief unless that taxpayer has exhausted its administrative remedies. State v. Scotsman Mfg. Co., Inc., 109 Nev. 252, 254, 849 P.2d 317, 319 (1993).5 We have recognized limited exceptions to that rule, however, when a statute's interpretation or constitutionality is at issue, or when the initiation of administrative proceedings would be futile. Id. at 255, 849 P.2d at 319. With those exceptions in mind, appellants contend that the district court improperly dismissed their as-applied challenge to NLET because that challenge involved constitutional issues.6 Whether the district court erred by dismissing appellants' as-applied challenge for lack of subject matter jurisdiction is a question of law that we review de novo. See Ogawa v. Ogawa, 125 Nev. 660, 667, 221 P.3d 699, 704 (2009).
It is undisputed that appellants failed to exhaust their administrative remedies for their as-applied constitutional challenge. And while appellants argue that there is a general exception for claims involving constitutional...
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