Oriental Health Spa v. City of Fort Wayne

• Decision Date: 15 December 1988
• Docket Number: Nos. 88-1773,88-1774,s. 88-1773
• Citation: 864 F.2d 486
• Parties: 27 Fed. R. Evid. Serv. 330 ORIENTAL HEALTH SPA, its Manager and Employees, and Martha Clampitt d/b/a Tender Touch, Plaintiffs-Appellants, v. CITY OF FORT WAYNE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 486

864 F.2d 486

27 Fed. R. Evid. Serv. 330

ORIENTAL HEALTH SPA, its Manager and Employees, and Martha Clampitt d/b/a Tender Touch, Plaintiffs-Appellants, v. CITY OF FORT WAYNE, Defendant-Appellee.

Nos. 88-1773, 88-1774.

United States Court of Appeals Seventh Circuit.

Argued Sept. 30, 1988.

Decided Dec. 15, 1988.

Hugh N. Taylor, Romero & Thonert, Stanley L. Campbell, Swanson & Campbell, Ft. Wayne, Ind., for plaintiffs-appellants.

J. Timothy McCaulay, Corp. Counsel City of Ft. Wayne, Helmke, Beams, Boyer & Wagner, Ft. Wayne, Ind., for defendant-appellee.

Before CUMMINGS, FLAUM and KANNE, Circuit Judges.

CUMMINGS, Circuit Judge.

Plaintiffs Oriental Health Spa ¹ and Martha Clampitt appeal from the district court's decisions granting summary judgment in favor of the defendant City of Fort Wayne. Plaintiffs are seeking equitable relief in the form of a declaratory judgment and a permanent injunction on the basis that the City of Fort Wayne's recently enacted ordinance regulating massage parlors is unconstitutional. We affirm.

I. Factual Background and Proceedings Below

In 1987 the City of Fort Wayne, Indiana, enacted an ordinance governing the regulation of massage and nude modeling establishments. The new ordinance, Massage and Nude Modeling, Special Ordinance No. S-46-87, reproduced in part in the Appendix hereto, is a licensing ordinance that supersedes a predecessor. When enacting the later ordinance, the City Council allegedly expressed as its legislative intent the elimination of prostitution at such establishments as well as the promotion of public health.

The ordinance requires a person seeking a license to operate a massage establishment to file an application, accompanied by a $500 annual licensing fee, with the City. The application must encompass a broad spectrum of detailed information, including backgrounds and photographs of managers, employees and investors associated with the establishment. Licenses may be denied or revoked for a variety of reasons listed in the ordinance. Among the reasons are incomplete application, failure to include the filing fee, prior conviction of the applicant or a manager for a felony involving force or a crime of sexual misconduct, and acts which would constitute prostitution, gambling or a narcotics offense. Certain operating requirements and limitations are also imposed. Massage and nude modeling establishments are limited to designated hours of operation, prohibited from using studio doors which are capable of being locked from the inside, and further prohibited from engaging in heterosexual massage.

In Appeal No. 88-1773 plaintiff Oriental Health Spa is a massage establishment located in Fort Wayne, Indiana. It originally filed suit in Allen County Circuit Court prior to the May 1, 1987, effective date of the new ordinance, seeking preliminary injunctive and declaratory relief from the ordinance premised upon a host of constitutional challenges. At the time, Oriental In Appeal No. 88-1774 plaintiff Martha Clampitt is a professional masseuse and the operator of Tender Touch, another massage establishment in Fort Wayne. She also filed suit in Allen County Circuit Court seeking relief from the new ordinance premised upon various constitutional claims. Again the City removed the action to federal court.

Health Spa was licensed under the previous ordinance but feared denial under the new ordinance. The action was removed by the City to federal court under 28 U.S.C. Sec. 1441.

On August 21, 1987, the district court dismissed a number of the claims. The remaining claims were decided by summary judgment in favor of the City on March 21, 1988 (Clampitt v. City of Fort Wayne, 682 F.Supp. 401 (N.D.Ind.1988)), and on March 22, 1988 (Oriental Health Spa v. City of Fort Wayne, unreported, No. F-87-114 (N.D. Ind. March 22, 1988)). Both plaintiffs appeal from the summary judgments against them. On the only viable claims here on appeal, Oriental Health Spa argues that the new ordinance denies due process of law as required by the Fourteenth Amendment. Clampitt argues that the new ordinance is a denial of equal protection as guaranteed by that amendment. Other constitutional challenges are no longer involved.

II. Summary Judgment

Summary judgment is properly granted only when no genuine issues exist as to any material facts, and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). We must review all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Beard v. Whitley County REMC, 840 F.2d 405, 410 (7th Cir.1988). The party opposing summary judgment may not simply rest on the pleadings but must affirmatively demonstrate, by specific factual showings, that there is a genuine issue of material fact requiring trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). Tangential issues not relevant to the determination of the case are not material, and disputes as to such issues are insignificant for summary judgment purposes. The materiality of a fact is judged according to the substantive law governing the case. Anderson, 477 U.S. at 254-55, 106 S.Ct. at 2513.

At the summary judgment stage, the district judge's function is not to weigh the evidence to determine the truth but rather to determine whether there is an issue for trial. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968). If there is no triable issue, the district judge should enter judgment. The proper standard mirrors the directed verdict standard, Fed.R.Civ.P. 50(c), viz., the district judge must direct a verdict if under the governing law there can only be one reasonable conclusion as to the verdict. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511 (additional citations omitted).

III. Procedural Due Process

Plaintiff Oriental Health Spa challenges the ordinance on due process grounds, arguing that insufficient procedural due process is accorded to license denials and revocations. Rather than consider the merits, we are compelled to dismiss Oriental Health Spa's claim for lack of jurisdiction. Oriental Health Spa lacks standing to complain about the license denial provisions of the ordinance and does not yet have a ripe claim for review as to the revocation and suspension provisions of the ordinance. Where an appellant lacks standing to assert its claim or the claim is not ripe for review, Article III mandates that the claim be dismissed.

Oriental Health Spa is a massage establishment located in Fort Wayne, Indiana. Oriental Health Spa was licensed as a massage establishment under Fort Wayne's Despite the fact that it has been granted a license and has never been threatened with license revocation or suspension, on appeal Oriental Health Spa challenges only the license denial and suspension and revocation provisions of the 1987 ordinance under the due process clause of the Fourteenth Amendment. According to Oriental Health Spa, the ordinance violates procedural due process by failing to provide for "notice of the accusation to the accused and ... opportunity to be heard" upon denial of a license. The ordinance also violates due process, this plaintiff says, because it fails to require a stay of revocation pending a hearing when the City seeks a license revocation or suspension.

1977 ordinance regulating massage establishments. Following the amendment to the massage ordinance in 1987, Oriental Health Spa applied for and received a new license to engage in the massage business. Oriental Health Spa admitted at oral argument that under neither the present ordinance nor the predecessor ordinance has it ever been threatened with revocation or suspension of its license.

Oriental Health Spa lacks standing to assert that the license denial provisions violate the due process clause. In order to have standing the plaintiff " 'must show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant; and that the injury is likely to be redressed by a favorable decision.' " Heckler v. Mathews, 465 U.S. 728, 738, 104 S.Ct. 1387, 1394, 79 L.Ed.2d 646 (1984) (citations omitted) (emphasis added). In this case Oriental Health Spa has suffered neither actual nor threatened injury by virtue of the license denial provisions of the 1987 ordinance.

Oriental Health Spa admits that it received a license under the ordinance but states that the threat of denial is sufficient to sustain this action and cites Illinois Psychological Association v. Falk, 818 F.2d 1337, 1344 (7th Cir.1987), to support this position. Initially, even if plaintiff's reading of Falk were correct, it has not been threatened with denial of its license. To the contrary, Oriental Health Spa did receive a license under the statute. More importantly, Falk does not support this plaintiff's position. In Falk, the plaintiffs were a group of psychologists who claimed that a rule, which would have had the effect of denying them hospital staff membership, was passed without notice and hearing in violation of the due process clause. The court, without discussing the issue of standing, reached the merits of the plaintiffs' due process claim. The court reached the merits in Falk because the challenged rule clearly "threatened injury" to the psychologists. The same cannot be said of the provision here. Oriental Health Spa offered no evidence that the ordinance presented a threat of injury to its interests. Thus it lacks standing to challenge the license denial provisions of the ordinance under the due process clause.

Similarly, Oriental Health...