7th Circuit Court of Appeals Finds Strip Club Owner Had Standing to Challenge City’s Ordinances that Had Been Repealed After He Sought Initial License

Editor’s Note: This summary is reposted from the Illinois Municipal League Caselaw Summaries here: http://legal.iml.org/page.cfm?key=10308&parent=4196

The plaintiffs were two companies that wanted to open strip clubs. In 2010, one of the strip clubs applied for the necessary licenses pursuant to the city’s ordinances, while the other (Ferol) did not due to the ordinances’ restrictions. The plaintiffs challenged the ordinances on First Amendment grounds seeking injunctive relief and damages. After the ordinances were repealed, the plaintiffs dropped their requests for injunctive relief, but continued to pursue damages for lost profits.

The city filed a motion for summary judgment, claiming Ferol did not have standing to challenge the ordinances because Ferol was not injured by the ordinances because it had never sought a license. The district court denied the city’s motion on this ground. Thereafter, the district court determined that the ordinances were unconstitutional because they lacked the necessary procedural safeguards required by the First Amendment. The jury then found that Ferol would have opened the club had it not been for the existence of the ordinances and awarded Ferol compensatory damages for its lost profits.

On appeal, the city maintained its argument that Ferol lacked standing to challenge the ordinances because it suffered no injury traceable to the city’s conduct. The Seventh Circuit disagreed with the city’s contention and affirmed the district court’s decision. According to the court, Ferol established that it suffered an injury by alleging an intention to engage in a course of conduct protected by the First Amendment, but that conduct was proscribed by the ordinances, and the company had a credible threat of prosecution under those ordinances. Ferol would have opened an adult entertainment club in 2010 had the city not had its open-ended and unpredictable licensing scheme, and those ordinances had an immediate chilling effect on its protected speech. Thus, Ferol refrained from protected speech in response to the city’s unconstitutional ordinances. Therefore, Ferol had standing to challenge the ordinances.

Six Star Holdings, LLC v. City of Milwaukee, No. 15-1608 (7th Cir. April 13, 2016)