Jake's, Ltd., Inc. v. City of Coates

• Decision Date: 30 January 2004
• Docket Number: No. 02-2931.,No. 02-3835.,02-2931.,02-3835.
• Citation: 356 F.3d 896
• Parties: JAKE'S, LTD., INC.; Richard J. Jacobson, Plaintiffs — Appellants, v. CITY OF COATES, Defendant — Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

356 F.3d 896

JAKE'S, LTD., INC.; Richard J. Jacobson, Plaintiffs — Appellants, v. CITY OF COATES, Defendant — Appellee.

No. 02-2931.

No. 02-3835.

United States Court of Appeals, Eighth Circuit.

Submitted: October 22, 2003.

Filed: January 30, 2004.

Rehearing and Rehearing En Banc Denied March 12, 2004.

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Randall D.B. Tigue, argued, Minneapolis, MN, for appellant.

James J. Thomson, argued, Minneapolis, MN, for appellee.

Before LOKEN, Chief Judge, HEANEY and MORRIS SHEPPARD ARNOLD, Circuit Judges.

LOKEN, Chief Judge.

After the City of Coates, Minnesota, enacted zoning ordinances barring Jake's, Ltd., from continuing to offer live nude dancing at its existing location, Jake's and its owner, Richard J. Jacobson (collectively, "Jake's"), commenced this action, alleging that the ordinances violated their First Amendment rights. The City removed the action and counterclaimed for declaratory and injunctive relief. The district court dismissed Jake's complaint with prejudice. Jake's Ltd. v. City of Coates, 176 F.Supp.2d 899, 901 (D.Minn.2001). Three weeks later, at the City's request, the court amended its final order to enjoin Jake's "from operating a sexually-oriented business at their current location" in violation of the "relevant ordinances of the City of Coates." Jake's appealed the dismissal of its First Amendment claims. We affirmed in all relevant respects. Jake's Ltd. v. City of Coates, 284 F.3d 884 (8th Cir.), cert. denied, 537 U.S. 948, 123 S.Ct. 413, 154 L.Ed.2d 292 (2002). Jake's did not appeal the scope of the district court's injunction, even though federal courts have long disfavored "[b]lanket injunctions against general violation of a statute." Beatty v. United States, 191 F.2d 317, 321 (8th Cir.1951); see Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 49 L.Ed. 518 (1905).

The district court stayed its injunction pending Jake's prior appeal. When the stay expired on May 22, 2002, Jake's continued to offer live nude dancing. But Jake's eliminated the prior five dollar cover charge, instead charging a five dollar fee to park outside the establishment, regardless of whether a customer entered. In addition, Jake's began selling soft drinks outside instead of inside the building. The City filed a contempt motion. After a hearing, the district court held Jake's in contempt and ordered Jake's "to close the sexually-oriented business at 15981 Clayton Avenue in Coates" and to pay a civil contempt sanction of one thousand dollars per day for any future continued operation. In addition, finding that Jake's did not oppose the contempt motion "in good faith," the court ordered Jake's to pay the City costs and attorney's fees of $6,490.57. Jake's appeals these rulings in Case No. 02-2931.

A few days after the contempt order issued, Jake's reopened at the same location. The business no longer featured live nude dancing. Instead, bikini-clad dancers offered patrons "lap" or "couch" dances for twenty dollars and more private "VIP couch dances" for $140. After undercover law enforcement officers determined that these dances involved dancers rubbing their clothed breasts and groins on patrons' clothed genitals, the City again moved to hold Jake's in contempt for operating a sexually-oriented business on the premises. Finding clear and convincing evidence of willful and intentional violations of the court's prior orders, the district court again held Jake's in civil contempt. Applying the $1,000-per-day penalty established in the first contempt order, the court ordered Jake's to pay $68,000 into court for the sixty-eight days it had operated in continued violation of the injunction. In addition, the court increased the prospective fine for future violations to two thousand dollars per day, granted judgment to the City for $601.57 in additional costs and an unpaid deficiency relating to the first contempt order, and ordered Jake's to "close the sexually-oriented business" at its current location and "reopen only when they have complied fully with this Order." Jake's appeals this second contempt order in Case No. 02-3835. We consolidated the appeals and now affirm in part and reverse in part.¹

The First Contempt Order.

In Case No. 02-2931, Jake's challenges the district court's first contempt ruling and the award of attorney's fees and costs as a civil contempt sanction. Jake's first argues that, after eliminating the cover charge and the sale of soft drinks where the live nude dancers performed, it no longer engaged in operating a "sexually-oriented business" as defined in the City's zoning ordinances and therefore did not violate the court's injunction. The ordinances define different types of sexually-oriented businesses. Relevant here is the "adult entertainment facility" category, defined as:

A building or space wherein an admission is charged for entrance or food or non-alcoholic beverages are intended for consumption and wherein may be observed live presentation or entertainment distinguished or characterized by an emphasis on matters depicting, describing or relating to specified sexual activities or specified anatomical areas as defined herein.

Jake's argues that its five dollar parking fee was not "an admission ... charged for entrance" because the parking fee was charged for any use of the parking lot and because patrons could enter and watch the live nude dancing without paying the five dollar fee if they arrived on foot, by taxi, or parked elsewhere. Jake's argues that selling soft drinks for consumption outside the building was not the sale "wherein [live nude dancing] may be observed."

The district court rejected these contentions. It concluded that Jake's had continued to operate a sexually-oriented business within the meaning of the ordinance because "[t]he `parking fee' is the functional equivalent of the admission charge Plaintiffs seek to avoid," and alternatively because "the mere relocation of non-alcoholic beverages from inside the bar to just outside the door does not change [the fact] that such beverages continue to be sold and are intended for consumption on the premises where nude dancing occurs." Noting that Jake's conceded it was operating a sexually-oriented business earlier in the litigation, the court held Jake's in contempt, refusing to allow Jake's "to dodge the force of the Court's orders by engaging in games of labeling and semantics."

We review the district court's decision to enter a civil contempt order for abuse of discretion, reviewing its factual findings for clear error. Wycoff v. Hedgepeth, 34 F.3d 614, 616 (8th Cir.1994); accord Mower County Human Servs. v. Swancutt, 551 N.W.2d 219, 222 (Minn. 1996). The party seeking a contempt order bears the burden of proving facts warranting such relief by clear and convincing evidence. Because the contempt power is a "most potent weapon," we review the imposition of contempt sanctions "more searchingly" than their denial. Indep. Fed'n of Flight Attendants v. Cooper, 134 F.3d 917, 920 (8th Cir.1998).

On appeal, Jake's argues that the district court failed to construe the zoning ordinances strictly in favor of the property owner, as Minnesota law requires. But the primary issue is whether Jake's violated the court's decree, not whether they violated the ordinances. In the proceedings leading up to that decree, Jake's conceded that live nude dancing was a "sexually-oriented business" within the meaning of zoning ordinances that prohibited conducting a sexually-oriented business at the location in question. Thus, when the district court rejected Jake's First Amendment attacks on the ordinances and granted the City injunctive relief, it obviously intended to enjoin Jake's from continuing to offer live nude dancing on the premises. Jake's post-decree conduct violated that core prohibition. The fact that the decree broadly and in our view improvidently incorporated entire ordinances by reference raises difficult issues that we must address in connection with the second contempt decree. But the breadth and potential ambiguity of the injunction do not undermine the district court's conclusion that the City demonstrated, by clear and convincing evidence, that Jake's acted in contempt of the injunction by continuing to offer live nude dancing, conduct Jake's had previously conceded would violate the ordinances.

Jake's further argues that the district court erred in awarding the City its attorney's fees and costs because Jake's opposition to the contempt motion had a basis in the ordinance and thus was made in good faith. In response, the City argues that even if Jake's had a good faith basis for opposing the contempt motion, we should still affirm the fee award because a lack of good faith need not be shown. In this circuit, "[a]lthough willfulness is not necessarily a prerequisite to an award of fees, it may properly be considered in deciding whether to tax costs and attorney's fees in an action to enforce compliance with an injunction." Hartman v. Lyng, 884 F.2d 1103, 1107 (8th Cir.1989) (citation omitted); see McComb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 93 L.Ed. 599 (1949); but see King v. Allied Vision, Ltd., 65 F.3d 1051, 1063 (2d Cir.1995).

When an injunction has issued at the request of a government agency, an award of reasonable attorney's fees and expenses incurred by the agency in seeking to enforce the decree is a form of compensatory relief that is well within a district court's remedial discretion in civil contempt proceedings. See United States v. Rue, 819 F.2d 1488, 1495 (8th Cir.1987). Here, Jake's argued that it did not violate the decree because it made minimal and tangential changes to the way it conducted an admittedly sexually-oriented business — live nude dancing. The district court did not abuse its discretion in rejecting that argument as nothing more than an artful dodge and in compensating the City for its legal expenses in bringing the...