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Six Star Holdings, LLC v. City of Milwaukee

United States Court of Appeals, Seventh Circuit

April 13, 2016

SIX STAR HOLDINGS, LLC, and FEROL, LLC, Plaintiffs-Appellees,
v.
CITY OF MILWAUKEE, Defendant-Appellant

         Argued November 9, 2015.

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[Copyrighted Material Omitted]

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          Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:10-cv-893 - Lynn Adelman, Judge.

         For Six Star Holdings, LLC, Plaintiff - Appellee: Jeff Scott Olson, Attorney, Madison, WI.

         For Ferol, LLC, Plaintiff - Appellee: Jeff Scott Olson, Attorney, Madison, WI.

         For City of Milwaukee, Defendant - Appellant: Adam B. Stephens, Attorney, Milwaukee City Attorney's Office, Milwaukee, WI.

         Before WOOD, Chief Judge, ROVNER, Circuit Judge, and SHAH, District Judge.[*]

          OPINION

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          Wood, Chief Judge.

          This case requires us to visit the world of strip clubs--establishments that

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no one seems to want, officially, but that are somehow quite lucrative. Prior to March 1, 2012, the City of Milwaukee had various licensing requirements for this type of place, but it no longer defends their constitutionality. The First Amendment imposes a " heavy presumption" against the " constitutional validity" of prior restraints on speech. Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70, 83 S.Ct. 631, 9 L.Ed.2d 584 (1963). Prior restraints that are viewpoint- and content-neutral and impose a limitation only on the time, place, and manner of speech are more likely to pass muster. See City of Lakewood v. Plain Dealer Publ'g. Co., 486 U.S. 750, 763, 108 S.Ct. 2138, 100 L.Ed.2d 771 (1988); Blue Canary Corp. v. City of Milwaukee, 251 F.3d 1121, 1123 (7th Cir. 2001). They are permissible if, and only if, there are procedural safeguards that ensure that the decisionmaker approving the speech does not have " unfettered discretion" to grant or deny permission to speak. Plain Dealer Publ'g. Co., 486 U.S. at 755-57; Freedman v. State of Maryland, 380 U.S. 51, 58-59, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965).

         Before us now are two Milwaukee ordinances, now repealed, that required certain licenses before a business was permitted to offer nude or partially nude entertainment. (When we say " nude," we mean to include both total and partial nudity; the difference between the two is immaterial for this case.) Two companies--Six Star Holdings, LLC, which applied for a license under one of these ordinances, and Ferol, LLC, which did not--challenged these ordinances, seeking injunctive relief and damages. Once the ordinances were repealed, the plaintiffs dropped their requests for injunctive relief but continued to pursue damages. The latter request saves the case from mootness. See Buckhannon Bd. & Care Home, Inc. v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 608-09, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). The district court held that the ordinances addressed time, place, and manner of expression, but that they did not include the necessary procedural safeguards. A jury then decided that but for the unconstitutional ordinances, Ferol would have opened a club providing nude entertainment. It awarded Ferol compensatory damages in the form of lost profits, and gave Six Star nominal damages.

         The City has appealed. It argues that Ferol had no injury and therefore no standing to challenge the ordinances. It also challenges Ferol's theory of causation and the award of nominal damages to Six Star. Finding no merit in any of these points, we affirm the district court's judgment.

         I

         Jon Ferraro saw a business opportunity in what he regarded as a shortage of nude-entertainment clubs in the Milwaukee area. He created, and is the majority owner of, the two plaintiff limited-liability companies: Six Star and Ferol. (He owns other similar venues elsewhere in Wisconsin.) Ferraro wanted to open two clubs in the downtown Milwaukee area. The one owned by Six Star would be called " Silk East," at 730 North Old World Third Street, and the other, owned by Ferol, would be called " Satin" and located at 117 West Pittsburgh Avenue.

         Under the licensing regime in place before March 1, 2012, there were three lawful ways to offer so-called adult entertainment. To operate an establishment that offered both alcohol and nudity, the proprietor was required to obtain a liquor license, sometimes called a tavern license, and a tavern- amusement license. See Milwaukee Code of Ordinances ...


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