Penthouse International, Ltd. v. Putka

• Citation: 436 F. Supp. 1220
• Decision Date: 23 August 1977
• Docket Number: Civ. A. No. C77-779.
• Parties: PENTHOUSE INTERNATIONAL LTD., Plaintiff, v. Andrew C. PUTKA, Director, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

436 F. Supp. 1220

PENTHOUSE INTERNATIONAL LTD., Plaintiff, v. Andrew C. PUTKA, Director, et al., Defendants.

Civ. A. No. C77-779.

United States District Court, N. D. Ohio, E. D.

August 23, 1977.

COPYRIGHT MATERIAL OMITTED

Clarence D. Rogers, Jr., Rogers, Horton & Forbes, Cleveland, Ohio, Niki Z. Schwartz, Gold, ROTATORI, Messerman & Schwartz, Cleveland, Ohio, Roy Grutman, Eaton, Van Winkle, Greenspoon & Grutman, New York City, for Penthouse Intern. Ltd.

Howard H. Fishkin, Asst. Law Director, Cleveland, Ohio, for Andrew C. Putka, Director, Ralph J. Perk, Mayor, and the City of Cleveland.

Morlee A. Rothchild, Michael H. Diamant, Kahn, Kleinman, Yanowitz & Arnson, Cleveland, Ohio, for Aero Cleveland, Inc.

MEMORANDUM AND ORDER

KRUPANSKY, District Judge.

On July 20, 1977 the Court granted plaintiff's Motion for a Temporary Restraining Order which enjoined the City of Cleveland, its Mayor and officers from invoking paragraph 6.11 of the Concession Agreement between the City of Cleveland and Aero Cleveland, Inc. so as to restrict or limit the sale and distribution of Penthouse magazine at newsstands and concession facilities at the Cleveland Hopkins International Airport. Thereafter, on August 8, 1977, this matter came on for a hearing on plaintiff's Motion for a Preliminary Injunction. In addition to the testimony and evidence and memorandums of law presented at the hearing, the parties filed joint stipulations of fact, the relevant portions of which are set forth below:

1. Plaintiff, Penthouse International, Ltd., is a New York corporation, whose principal offices in the United States are located at 909 Third Avenue, New York, New York, which regularly publishes, among other publications, an internationally circulated magazine called "Penthouse".

2. Defendant, Ralph J. Perk, is the duly elected Mayor of the defendant, City of Cleveland, a municipal corporation in, and of, the State of Ohio. Defendant, Andrew C. Putka, is the duly appointed (by defendant Perk) Director of the Department of Port Control of the City of Cleveland, having jurisdiction over Cleveland Hopkins Airport, among other facilities.

3. Defendant, Aero Cleveland, Inc., is a corporation which, pursuant to a contract with the City of Cleveland entitled Concession Agreement No. 27571 . . ., operates the newsstand concessions at Cleveland Hopkins Airport.

4. All defendants are citizens of the State of Ohio.

5. On June 3, 1977, defendant Putka, acting upon the instructions of defendant Perk, directed Herbert Gruber, Manager of Hopkins Airport Newsstands for Aero Cleveland, Inc., to remove all magazines and books which contain explicit pictures of nudity or explicit descriptions of sexual activity from its newsstands at Cleveland Hopkins Airport and any other facility controlled by the Department of Port Control. The oral directive of June 3, 1977, was confirmed by letter dated June 8, 1977, from defendant Putka to Manager Gruber . . ..

6. Defendant, Aero Cleveland, Inc., immediately complied with the directive of June 3, 1977, and removed from its newsstands the July issue of Penthouse . ., together with a number of other publications listed in a letter dated June 8, 1977, to defendant Putka from Bruce Taylor, Assistant Director of Law of the City of Cleveland . . .. Penthouse Magazine has not been sold at the Cleveland Hopkins Airport since said time, despite Penthouse's desire to resume sales.

7. Neither prior to, nor following, the removal of "Penthouse" from the newsstands at the Cleveland Hopkins Airport on June 3, 1977, was plaintiff given notice or opportunity to be heard on the constitutionality or legality of said removal.

The testimony and evidence presented at the hearing further disclosed that the City of Cleveland is the owner of the Cleveland Hopkins International Airport; that on April 5, 1976, the City entered into a contract (Concession Agreement No. 27571) with Aero Cleveland, Inc. (Aero), wherein Aero agreed to manage and operate newsstand concessions at the airport "in order to provide reading materials and certain sundry items to air travelers and patrons of the Airport."

The concession agreement permits the City to exercise considerable control over the daily operation and management of Aero's concession facilities. For example, in describing the sales rights and limitations of Aero, paragraph 1.2 of the contract states:

Concessionaire may operate the concession granted and use the concession premises solely for the purpose of selling the following items and for no other purpose whatsoever: (a) Newspapers (Local and out of town); (b) Magazines, periodicals and tobacco products not exceeding Two Dollars ($2.00) in price; (c) Gum, candies, and packaged candies not exceeding One Dollar ($1.00) in price; (d) Novelties, souvenirs, and postal cards not exceeding three dollars ($3.00) in price; (e) Ten cent (10¢) gum and candy mints and fifteen cent (15¢) candy bars, which items must be made available for sale to the public at all times; (f) Paper backed books of all price ranges; (g) Such specified additional items as the Commissioner of Airports may from time to time in writing authorize the Concessionaire to sell, provided, however, it is expressly understood and agreed between the City and Concessionaire that the Commissioner of Airports may at his sole discretion either authorize or disapprove the sale of any specified additional item.

Article two of the contract discusses the location, size, condition and improvement of the leased concession premises. Articles three and four provide the term of the concession rights, rental payments and termination of the agreement. Rent is established as the greater of 14% of Aero's gross receipts or a certain guaranteed annual sum.

Article 5 provides that Aero shall maintain business records and accounts which shall be made available to the City for inspection or audit upon reasonable notice. In Article 6, Aero agreed to "appoint a highly qualified local business manager," to provide trained personnel who "shall wear name tags and shall be neatly dressed and/or appropriately uniformed, if required by the Commissioner of Airports." Paragraph 6.4 directs Aero to "control the conduct, demeanor and appearance of all its employees, and upon objection by the Commissioner of Airports concerning any such conduct, demeanor or appearance, Concessionaire shall remedy the cause for objection."

Several of the remaining paragraphs of Article 6 further demonstrate the pervasive municipal influence over the Aero concessions operation:

6.5 Initially, Concessionaire shall be open for business between the hours of 6 a.m. to 12 midnight daily. The Commissioner of Airports may require such extensions of business hours up to and including a twenty-four hour operation, as he deems necessary from time to time to properly serve patrons of the Airport. Reductions in authorized business hours may be made only upon the prior written approval of the Commissioner of Airports.

6.6 Prior to commencing operations hereunder, Concessionaire shall prepare and submit to the Commissioner of Airports for approval, a proposed price list for the various items of merchandise Concessionaire is authorized to sell from the premises. Prices for such items of merchandise to be sold shall be comparable to prices for such items in other similar airport newsstand facilities. Once approved, such prices shall not be changed without the prior written approval of the Commissioner of Airports.

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6.8 Concessionaire shall not install any fixtures to the premises nor alter or modify said premises in any manner without the prior written approval of the Commissioner of Airports.

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6.10 Concessionaire shall not erect, maintain or display any placards, signs or any form of advertising on its equipment, areas or elsewhere at the Airport without the prior written consent of the Commissioner of Airports. Any placard, sign or other form of advertising erected, maintained or displayed without such consent may be removed by City at Concessionaire's expense.

6.11 Upon notice from the Commissioner of Airports, Concessionaire shall cease selling from the premises any item of merchandise which said Commissioner determines to be inappropriate for sale at the Airport newsstands.

Indeed, it was the exercise of municipal authority pursuant to paragraph 6.11 that gave rise to this action.

As the parties have agreed by stipulation, Penthouse magazine, along with several other magazines and paperbacked books, was removed from the Airport newsstands, as directed by Mayor Ralph J. Perk, and Andrew C. Putka, Director of Port Control, in accordance with the authority vested in the municipal government by paragraph 6.11 of the concession agreement. The parties have agreed, indeed the testimony has shown, that prior to the removal of the allegedly obscene publications, there was no independent judicial determination that any of those publications were in fact obscene. Upon these facts, plaintiff asserts that the foregoing acts constitute an unreasonable and unconstitutional prior restraint, abridging plaintiff's exercise of its freedom of speech and of the press, as guaranteed by the First and Fourteenth Amendments to the Constitution of the United States. The jurisdiction of the Court is properly invoked pursuant to the Civil Rights Act of 1871, 42 U.S.C. § 1983, and 28 U.S.C. §§ 1331 and 1343. Plaintiff also asserts a violation of the Sherman Antitrust Act, 15 U.S.C. § 1. The Complaint requests declaratory judgment and injunctive relief, together with punitive damages and attorneys fees.

Initially, the Court is constrained to observe that the purported obscenity of Penthouse magazine is not here in issue. Rather, that issue may be properly placed before the appropriate state tribunal. The sole issue before this Court is the charge of prior restraint, and the asserted infringement of First Amendment rights resulting from the...