Hamilton's Bogarts, Inc. v. Michigan

• Decision Date: 30 August 2007
• Docket Number: No. 06-1436.,06-1436.
• Citation: 501 F.3d 644
• Parties: HAMILTON'S BOGARTS, INC.; Kathleen Polzin, Plaintiffs-Appellants, v. State of MICHIGAN; Michigan Liquor Control Commission; Jennifer Granholm; Nida Samon, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

501 F.3d 644

HAMILTON'S BOGARTS, INC.; Kathleen Polzin, Plaintiffs-Appellants, v. State of MICHIGAN; Michigan Liquor Control Commission; Jennifer Granholm; Nida Samon, Defendants-Appellees.

No. 06-1436.

United States Court of Appeals, Sixth Circuit.

Argued: January 31, 2007.

Decided and Filed: August 30, 2007.

ARGUED:

Timothy P. Murphy, St. Clair Shores, Michigan, for Appellants. Rosendo Asevedo, Jr., Michigan Liquor Control Commission, Farmington, Michigan, for Appellees.

ON BRIEF:

Timothy P. Murphy, St. Clair Shores, Michigan, Michael L. Donaldson, Livonia, Michigan, for Appellants. Rosendo Asevedo, Jr., Michigan Liquor Control Commission, Farmington, Michigan, for Appellees.

Before: MARTIN, BATCHELDER, and McKEAGUE, Circuit Judges.

MARTIN, J., delivered the opinion of the court, in which McKEAGUE, J., joined. BATCHELDER, J. (p. 654-55), delivered a separate concurring opinion.

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

Plaintiffs Hamilton's Bogarts, Inc. — operator of an adult entertainment establishment with a Michigan liquor license — and Kathleen Polzin — an exotic dancer — brought this lawsuit to challenge a Michigan statute and regulations that prohibit entities with liquor licenses from allowing exotic dancers to perform fully nude, or mimick sexual acts, on stage. The district court denied plaintiffs' requests for injunctive relief. For the following reasons, we REVERSE the district court's decision.

I.

On April 14, 1998, the Michigan legislature passed the challenged statute, which only appears relevant for its definition of the terms "topless" and "nudity"¹:

As used in this section:

(a) "Nudity" means exposure to public view of the whole or part of the pubic region; the whole or part of the anus; the whole or part of the buttocks; the whole or part of the genitals; or the breast area including the nipple or more than 1/2 of the area of the breast.

(b) "Topless activity" means activity that includes, but is not limited to, entertainment or work-related activity performed by any of the following persons on the licensed premises in which the female breast area, including the nipple, or more than 1/2 of the area of the breast, is directly exposed or exposed by means of see-through clothing or a body stocking:

(i) A licensee.

(ii) An employee, agent, or contractor of the licensee.

(iii) A person acting under the control of or with the permission of the licensee.

Mich. Comp. Laws § 436.1916(15). The statute requires that holders of liquor licenses are required to obtain a permit from the state Liquor Control Commission before allowing topless activity to be performed,² but does not otherwise appear to prohibit nudity or topless activity on its own terms. The Commission had passed the following two rules in 1981 that specifically deal with such activity:

Mich. Admin. Code 436.1409 ("Rule 9"):

(1) An on-premise licensee shall not allow in or upon the licensed premises a person who exposes to public view the pubic region, anus, or genitals or who displays other types of nudity prohibited by statute or local ordinance.

(2) An on-premises licensee shall not allow in or upon the licensed premises the showing of films, television, slides, or other electronic reproductions which depict scenes wherein any person exposes to public view the pubic region, anus, or genitals or displays other types of nudity prohibited by statute or local ordinance. This prohibition does not apply to any publicly broadcast television transmission from a federally licensed station.

Mich. Admin. Code 436.1411 ("Rule 11"):

(1) An on-premise licensee shall not allow in or upon the licensed premises a person who performs, or simulates the performance of, sexual intercourse, masturbation, sodomy, bestiality, fellatio, or cunnilingus.

(2) An on-premises licensee shall not allow in or upon the licensed premises the showing of films, television, slides, or other electronic reproductions which depict scenes wherein a person performs, or simulates performance of, sexual intercourse, masturbation sodomy, bestiality, fellatio, or cunnilingus. This prohibition does not apply to any publicly broadcast television transmission from a federally licensed station.

Plaintiffs brought this action under 42 U.S.C. § 1983, alleging that the statute and rules violate the First, Fifth, and Fourteenth Amendments,³ and requesting declaratory and injunctive relief. Plaintiffs moved for a preliminary injunction arguing that the statutes at issue were overbroad, void for vagueness, and in violation of the First Amendment. On February 13, 2006, the district court, 2006 WL 334278, issued an order denying their claim for a preliminary injunction, based on its rejection of plaintiffs' likelihood of success on the merits.

II.

This Court normally reviews a district court's decision regarding a preliminary injunction for an abuse of discretion. Nightclubs, Inc. v. City of Paducah, 202 F.3d 884, 888 (6th Cir.2000) (overruled on other grounds, City of Littleton v. Z.J. Gifts D-4, L.L.C., 541 U.S. 774, 784, 124 S.Ct. 2219, 159 L.Ed.2d 84 (2004)). Four factors must be considered and balanced by the district court in making its determination: "(1) whether the plaintiff has established a substantial likelihood or probability of success on the merits; (2) whether there is a threat of irreparable harm to the plaintiff; (3) whether issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by granting injunctive relief." Id. "`The district court's determination will be disturbed only if the district court relied upon clearly erroneous findings of fact, improperly applied the governing law, or used an erroneous legal standard.'" Id. (quoting Connection Distrib. Co. v. Reno, 154 F.3d 281, 288 (6th Cir.1998)).

The Court explained in Nightclubs, Inc. that in a First Amendment case, "the crucial inquiry is usually whether the plaintiff has demonstrated a likelihood of success on the merits. This is so because, as in this case, the issues of the public interest and harm to the respective parties largely depend on the constitutionality of the statute." Id. (citations omitted). Here, the likelihood of success on the merits is primarily a legal question, and there is little or no factual dispute. Thus, even though the district court's denial of injunctive relief is generally reviewed for an abuse of discretion, because the issue before us is limited to the purely legal question of whether the district court "improperly applied governing law or used an erroneous legal standard," we review the district court's decision de novo. See Jones v. City of Monroe, 341 F.3d 474, 476 (6th Cir.2003) (under the abuse of discretion standard in the context of a preliminary injunction, "we must review the district court's legal conclusions de novo and its factual findings for clear error").

A. Preclusion and Void for Vagueness

At the outset, the state suggests in its brief that the doctrine of res judicata (or claim preclusion) should bar the plaintiffs' action here in light of a prior suit that Hamilton's Bogarts brought challenging the Liquor Control Commission's Rule 11 after it was ticketed numerous times for violating the rule. In that action, heard by this Court on appeal, Bogarts challenged the Rule as unconstitutionally vague, which it again does here. See Hamilton v. Roberts, 165 F.3d 27 (Table), 1998 WL 639158, at *6-7 (6th Cir., Sept.10, 1998) (unpublished opinion). This Court upheld the district court's rejection of this challenge at summary judgment, ruling that the provision was not vague whatsoever. Id.

In this argument, the state appears to confuse the doctrines of res judicata and collateral estoppel (issue preclusion). The state argues that "[t]his Court's prior determination in Hamilton v. Roberts, that Liquor Control Commission Rule 11 was not void for vagueness is res judicata as to Appellants' identical First Amendment challenge to that rule in this case." Appellees' Br. at 15. We "may look to the common law or to the policies supporting res judicata and collateral estoppel in assessing the preclusive effect of decisions of other federal courts." Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). In contrast, when considering the preclusive effect of a state court judgment, we must look to the law of that state. Id.; see also 28 U.S.C. § 1738. Because the judgment upon which the State relies for its preclusion argument was issued by a federal court, we look to federal law to determine its preclusive effect. This Court has described res judicata as "extinguish[ing] `all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.'" Walker v. General Tel. Co., 25 Fed.Appx. 332, 336 (6th Cir.2001). The broad sweep of res judicata is likely inapplicable here, as one of the required elements is that the issues raised in the subsequent action were raised or should have been raised in the first lawsuit. Id.⁴ Here, although Rule 11 was challenged in the first lawsuit, Rule 9 was not, presumably because it was only Rule 11 under which Bogarts was penalized at the time. The state has not argued or made any showing that Bogarts should also have challenged Rule 9 at the time. Because the current suit also includes additional challenges to both Rules beyond void for vagueness claims, it would be inappropriate to apply res judicata to the plaintiffs' claims in their entirety.

Even so, the related and narrower doctrine of collateral estoppel may well affect the void for vagueness claim that has already been litigated. This Court has listed four requirements for the application of collateral estoppel:

(1) the precise issue raised in the present case must have been raised and actually litigated in the prior proceeding; (2) determination of the issue must have been...