Escheat, Inc. v. Pierstorff

• Decision Date: 21 February 1973
• Docket Number: No. 72-C-329.,72-C-329.
• Citation: 354 F. Supp. 1120
• Parties: ESCHEAT, INC., a Wisconsin corporation, d/b/a the Whiskey A-Go-Go, Plaintiff, v. Donald PIERSTORFF et al., Defendants.
• Court: U.S. District Court — Western District of Wisconsin

354 F. Supp. 1120

ESCHEAT, INC., a Wisconsin corporation, d/b/a the Whiskey A-Go-Go, Plaintiff, v. Donald PIERSTORFF et al., Defendants.

No. 72-C-329.

United States District Court, W. D. Wisconsin,

February 21, 1973.

Bruce Protzmann, Marc Dorfman, Madison, Wis., for plaintiff.

John G. Gerlach, Madison, Wis., for defendants.

OPINION AND ORDER

JAMES E. DOYLE, District Judge.

This civil action for injunctive relief challenges the constitutionality of the revocation of plaintiff's liquor license. Plaintiff operated a tavern in the Town of Madison which featured nude and semi-nude entertainment. Defendant Meier is the Clerk of the Town of Madison, and the remaining three defendants constitute the Board of Supervisors of the Town Board of the Town of Madison. In an earlier proceeding in this case plaintiff sought a preliminary injunction preventing defendants from conducting the license revocation hearing. I denied plaintiff's motion and the hearing took place, resulting in a decision by the Board of Supervisors to revoke plaintiff's liquor license. Plaintiff has now moved for a preliminary injunction ordering the reinstatement of its license. For the sole purpose of deciding this motion I find as facts those matters set forth under the heading "facts."

FACTS

Plaintiff is a Wisconsin corporation which operates a tavern in the Town of Madison known as "The Whiskey A-Go-Go." Entertainment at the tavern includes nude and semi-nude dancers, some of whom have engaged in sexual contacts with members of the audience. No person under 18 years of age is admitted to the tavern. A sign posted upon the only public entrance warns potential customers of the nude entertainment.

On September 1, 1972, Terry C. Volk, president of the plaintiff corporation, was served with a summons and complaint pursuant to Wis.Stat. § 176.11 (1969), which, in conjunction with § 176.12, establishes a procedure for the revocation of liquor licenses by local authorities.¹ The summons states that the ground for the complaint is that plaintiff maintained "an indecent house by presenting performances of lewd, obscene and indecent matter." The Board of Supervisors of the Town Board of the Town of Madison, composed of defendants Frederick, Pierstorff, and Schwengle, conducted a hearing on September 7, 8, and 12, 1972, to determine whether plaintiff's liquor license should be revoked. At the hearing stenographic notes were taken, witnesses were sworn, and plaintiff's counsel were given the opportunity to cross-examine adverse witnesses and to present testimony. On October 2, 1972, the Town Board voted to revoke plaintiff's liquor license on the ground that plaintiff maintained "an indecent house" by presenting "lewd, obscene, and indecent" performances.

Although it was unable to serve liquor "The Whiskey A-Go-Go" remained open and continued to provide entertainment similar to that provided in the past. After the loss of its license, plaintiff's net revenues dropped considerably. Although approximately 70 to 150 persons per day attended these performances, plaintiff operated at a net loss of approximately $1,000 per week after the loss of its license. Because of the growing losses, Terry Volk closed the "Whiskey A-Go-Go" indefinitely on October 30, 1972.

OPINION

Jurisdiction is present. 28 U.S.C. § 1343(3); 42 U.S.C. § 1983.

Plaintiff advances three theories in support of its claim: (1) defendants improperly applied the standards of obscenity in determining that plaintiff operated an "indecent house;" (2) because the revocation of a liquor license constitutes a "grievous loss," such a revocation must be preceded by appropriate procedures, which include a judicial decisionmaker; (3) because the effect of the revocation of plaintiff's liquor license was to prevent the presentation of performances arguably protected by the first amendment, such a revocation may be constitutionally accomplished only by a procedure providing for prompt judicial review, initiated by defendants. In order to prevail on its motion for a preliminary injunction, plaintiff must demonstrate that it has a reasonably good chance of success on the merits and that it will suffer irreparable harm if the injunction does not issue.

(1) Standards of obscenity

Plaintiff urges that, in determining that "The Whiskey A-Go-Go" was an "indecent house," defendants improperly applied the standards of obscenity established by the Supreme Court in Roth v. United States, 354 U.S. 476, 77 S.Ct. 1304, 1 L.Ed.2d 1498 (1957) and Memoirs v. Massachusetts, 383 U.S. 413, 86 S.Ct. 975, 16 L.Ed.2d 1 (1966). In particular, plaintiff contends that, instead of evaluating the dancing performances as a whole, as required by Roth and Memoirs, defendants considered only isolated portions of the performances in making their determination.

Relevant to this theory is the recent decision of California v. LaRue, 409 U.S. 109, 93 S.Ct. 390, 34 L.Ed.2d 342 (1972). In that case various liquor licensees challenged rules promulgated by the California Department of Alcoholic Beverage Control regulating the type of entertainment which may be presented in licensed bars. The rules prohibit certain activities such as the "performance of acts, or simulated acts, of `sexual intercourse . . .,'" and the "actual or simulated `touching, caressing or fondling on the breast, buttocks, anus, or genitals.'" California v. LaRue, supra, at 111-112, 93 S.Ct. at 394. A three-judge court found that certain of the rules unconstitutionally abridged the plaintiffs' freedom of expression. Among other grounds for its holding, the three-judge court noted that the challenged rules focus on isolated portions of a performance rather than on the performance as a whole. LaRue v. State of California, 326 F.Supp. 348, 353 (C.D. Cal.1971).

A divided Supreme Court reversed. The majority reasoned that the state had determined that naked or lewd entertainment should not take place simultaneously with the sale of liquor by the drink. Because of the power conferred upon the state by the 21st amendment,² the majority held that the state could condition the holding of a liquor license upon the observance of the Department rules, even though the ambit of those rules includes first amendment activity.

"While we agree that at least some of the performances to which these regulations address themselves are within the limits of the constitutional protection of freedom of expression, the critical fact is that California has not forbidden these performances across the board. It has merely proscribed such performances in establishments which it licenses to sell liquor by the drink." 409 U.S. at 118, 93 S.Ct. at 397.

LaRue makes clear that the limitations imposed by the first amendment upon the state's power to regulate obscenity are substantially relaxed in the context of a proceeding for the revocation of a liquor license. Whatever standard of obscenity applies in that context, it is a standard which allows the state considerably more leeway than is allowed by the Roth-Memoirs standard. Thus in the instant case the test purportedly applied by defendants (the Roth-Memoirs standard) was a standard under which plaintiff would be allowed more freedom in presenting nude and semi-nude entertainment than plaintiff would be allowed under LaRue.

Plaintiff contends that the Roth-Memoirs standard was misapplied since defendants focused on particular incidents rather than on the performances as a whole. Yet it was precisely this type of relaxation of the Roth-Memoirs standard which the LaRue majority condoned. For these reasons I have determined that plaintiff has not shown a reasonably good chance of success in proving that defendant either applied an improper standard or misapplied a proper standard, in such manner as to infringe upon plaintiff's first amendment rights.

(2) Procedures required by the presence of a "grievous loss"

Plaintiff's second argument is that the revocation of its liquor license constitutes a "grievous loss" within the meaning of Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), and that the requisite procedures which must precede this loss include the right to a judicial decisionmaker. This argument does not depend upon the existence of alleged first amendment activity, but only upon the nature of the "loss" suffered by plaintiff.

In the case of Misurelli v. City of Racine, 346 F.Supp. 43 (E.D.Wis., 1972), plaintiff tavern owners challenged the defendant's denial of their applications for renewal of liquor licenses. A three-judge court determined that the impact upon the tavern-owner whose application for a renewal of his liquor license is denied, is such that the following procedures must attend such a denial: (1) notice of the charges against him; (2) an opportunity to respond to the charges; (3) an opportunity to present witnesses under oath; (4) an opportunity to confront and cross-examine witnesses under oath; (5) the opportunity to have a verbatim transcript made at plaintiff's own initiative and expense. Plaintiff does not contend that any of these procedures was omitted from the proceeding in which its license was revoked. I have concluded that the procedural steps required in Misurelli are a reasonable minimum in the context of a renewal or revocation of a liquor license, and that plaintiff has not shown a reasonably good chance of success in establishing that, without regard to first amendment considerations, plaintiff is also entitled to a judicial decisionmaker.³ Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L. Ed.2d 287 (1970).

(3) Whether presence of "expression" requires judicial determination

Plaintiff's final contention is that since the license revocation significantly affects plaintiff's capacity to present performances arguably covered by the first amendment, the revocation can be accomplished only by a procedure in which...