Hamiltons Bogarts v. MI

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 07a0351p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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Plaintiffs-Appellants, -

HAMILTON’S BOGARTS, INC.; KATHLEEN POLZIN,

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No. 06-1436

v.

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STATE OF MICHIGAN; MICHIGAN LIQUOR CONTROL -

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Defendants-Appellees. -

COMMISSION; JENNIFER GRANHOLM; NIDA SAMON,

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Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 06-10081—Julian A. Cook, Jr., District Judge.

Argued: January 31, 2007

Decided and Filed: August 30, 2007

Before: MARTIN, BATCHELDER, and McKEAGUE, Circuit Judges.

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COUNSEL

ARGUED: Timothy P. Murphy, St. Clair Shores, Michigan, for Appellants. Rosendo Asevedo,

Jr., MICHIGAN LIQUOR CONTROL COMMISSION, Farmington, Michigan, for Appellees.

ON BRIEF: Timothy P. Murphy, St. Clair Shores, Michigan, Michael L. Donaldson, Livonia,

Michigan, for Appellants. Rosendo Asevedo, Jr., MICHIGAN LIQUOR CONTROL

COMMISSION, Farmington, Michigan, for Appellees.

MARTIN, J., delivered the opinion of the court, in which McKEAGUE, J., joined.

BATCHELDER, J. (p. 9), delivered a separate concurring opinion.

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OPINION

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BOYCE F. MARTIN, JR., Circuit Judge. Plaintiffs Hamilton’s Bogarts, Inc. — operator of

an adult entertainment establishment with a Michigan liquor license — and Kathleen Polzin — an

exotic dancer — brought this lawsuit to challenge a Michigan statute and regulations that prohibit

entities with liquor licenses from allowing exotic dancers to perform fully nude, or mimick sexual

acts, on stage. The district court denied plaintiffs’ requests for injunctive relief. For the following

reasons, we REVERSE the district court’s decision.

1

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 2

I.

On April 14, 1998, the Michigan legislature passed the challenged statute, which only

appears relevant for its definition of the terms “topless” and “nudity”1:

As used in this section:

(a) “Nudity” means exposure to public view of the whole or part of the pubic region;

the whole or part of the anus; the whole or part of the buttocks; the whole or part of

the genitals; or the breast area including the nipple or more than 1/2 of the area of the

breast.

(b) “Topless activity” means activity that includes, but is not limited to,

entertainment or work-related activity performed by any of the following persons on

the licensed premises in which the female breast area, including the nipple, or more

than 1/2 of the area of the breast, is directly exposed or exposed by means of see-

through clothing or a body stocking:

(i) A licensee.

(ii) An employee, agent, or contractor of the licensee.

(iii) A person acting under the control of or with the permission of the

licensee.

Mich. Comp. Laws § 436.1916 (15). The statute requires that holders of liquor licenses are required

to obtain a permit from the state Liquor Control Commission before allowing topless activity to be

performed,2 but does not otherwise appear to prohibit nudity or topless activity on its own terms.

The Commission had passed the following two rules in 1981 that specifically deal with such

activity:

Mich. Admin. Code 436.1409 (“Rule 9”):

(1) An on-premise licensee shall not allow in or upon the licensed premises

a person who exposes to public view the pubic region, anus, or genitals or

who displays other types of nudity prohibited by statute or local ordinance.

(2) An on-premises licensee shall not allow in or upon the licensed premises

the showing of films, television, slides, or other electronic reproductions

which depict scenes wherein any person exposes to public view the pubic

region, anus, or genitals or displays other types of nudity prohibited by

statute or local ordinance. This prohibition does not apply to any publicly

broadcast television transmission from a federally licensed station.

Mich. Admin. Code 436.1411 (“Rule 11”):

1

The statute was amended on December 16, 2005, but the amendment did not change the definitions of

“topless” or “nudity.”

2

The statute’s licensing requirement provides that:

[a]n on-premises licensee shall not allow topless activity on the licensed premises unless the licensee

has applied for and been granted a topless activity permit by the commission. This section is not

intended to prevent a local unit of government from enacting an ordinance prohibiting topless activity

or nudity on a licensed premises located within that local unit of government. This subsection applies

only to topless activity permits issued by the commission to on-premises licensees located in counties

with a population of 95,000 or less.

Mich. Comp. Laws § 436.1916 (3).

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 3

(1) An on-premise licensee shall not allow in or upon the licensed premises

a person who performs, or simulates the performance of, sexual intercourse,

masturbation, sodomy, bestiality, fellatio, or cunnilingus.

(2) An on-premises licensee shall not allow in or upon the licensed premises

the showing of films, television, slides, or other electronic reproductions

which depict scenes wherein a person performs, or simulates performance of,

sexual intercourse, masturbation, sodomy, bestiality, fellatio, or cunnilingus.

This prohibition does not apply to any publicly broadcast television

transmission from a federally licensed station.

Plaintiffs brought this action under 42 U.S.C. § 1983, alleging that the statute and rules

violate the First, Fifth, and Fourteenth Amendments,3 and requesting declaratory and injunctive

relief. Plaintiffs moved for a preliminary injunction arguing that the statutes at issue were

overbroad, void for vagueness, and in violation of the First Amendment. On February 13, 2006, the

district court issued an order denying their claim for a preliminary injunction, based on its rejection

of plaintiffs’ likelihood of success on the merits.

II.

This Court normally reviews a district court’s decision regarding a preliminary injunction

for an abuse of discretion. Nightclubs, Inc. v. City of Paducah, 202 F.3d 884, 888 (6th Cir. 2000)

(overruled on other grounds, City of Littleton v. Z. J. Gifts D-4, L.L.C., 541 U.S. 774, 784 (2004)).

Four factors must be considered and balanced by the district court in making its determination: “(1)

whether the plaintiff has established a substantial likelihood or probability of success on the merits;

(2) whether there is a threat of irreparable harm to the plaintiff; (3) whether issuance of the

injunction would cause substantial harm to others; and (4) whether the public interest would be

served by granting injunctive relief.” Id. “‘The district court’s determination will be disturbed only

if the district court relied upon clearly erroneous findings of fact, improperly applied the governing

law, or used an erroneous legal standard.’” Id. (quoting Connection Distrib. Co. v. Reno, 154 F.3d

281, 288 (6th Cir. 1998)).

The Court explained in Nightclubs, Inc. that in a First Amendment case, “the crucial inquiry

is usually whether the plaintiff has demonstrated a likelihood of success on the merits. This is so

because, as in this case, the issues of the public interest and harm to the respective parties largely

depend on the constitutionality of the statute.” Id. (citations omitted). Here, the likelihood of

success on the merits is primarily a legal question, and there is little or no factual dispute. Thus,

even though the district court’s denial of injunctive relief is generally reviewed for an abuse of

discretion, because the issue before us is limited to the purely legal question of whether the district

court “improperly applied governing law or used an erroneous legal standard,” we review the district

court’s decision de novo. See Jones v. City of Monroe, 341 F.3d 474, 476 (6th Cir. 2003) (under the

abuse of discretion standard in the context of a preliminary injunction, “we must review the district

court’s legal conclusions de novo and its factual findings for clear error”).

3

The Fifth and Fourteenth Amendment claims were based on alleged due process violations (despite the fact

that the Fifth Amendment only prohibits due process violations by the federal government). On appeal, plaintiffs appear

to primarily rely on the First Amendment claim, although they include reference to the Fifth Amendment in their void

for vagueness argument. Because the case involves state law, the reference should be to the Fourteenth Amendment’s

due process clause, to the extent due process is a necessary component of a void for vagueness argument.

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 4

A. Preclusion and Void for Vagueness

At the outset, the state suggests in its brief that the doctrine of res judicata (or claim

preclusion) should bar the plaintiffs’ action here in light of a prior suit that Hamilton’s Bogarts

brought challenging the Liquor Control Commission’s Rule 11 after it was ticketed numerous times

for violating the rule. In that action, heard by this Court on appeal, Bogarts challenged the Rule as

unconstitutionally vague, which it again does here. See Hamilton v. Roberts, 165 F.3d 27 (Table),

1998 WL 639158, at *6-7 (6th Cir., Sept. 10, 1998) (unpublished opinion). This Court upheld the

district court’s rejection of this challenge at summary judgment, ruling that the provision was not

vague whatsoever. Id.

In this argument, the state appears to confuse the doctrines of res judicata and collateral

estoppel (issue preclusion). The state argues that “[t]his Court’s prior determination in Hamilton

v. Roberts, that Liquor Control Commission Rule 11 was not void for vagueness is res judicata as

to Appellants’ identical First Amendment challenge to that rule in this case.” Appellees’ Br. at 15.

We “may look to the common law or to the policies supporting res judicata and collateral estoppel

in assessing the preclusive effect of decisions of other federal courts.” Allen v. McCurry, 449 U.S.

90, 96 (1980). In contrast, when considering the preclusive effect of a state court judgment, we must

look to the law of that state. Id.; see also 28 U.S.C. § 1738. Because the judgment upon which the

State relies for its preclusion argument was issued by a federal court, we look to federal law to

determine its preclusive effect. This Court has described res judicata as “extinguish[ing] ‘all rights

of the plaintiff to remedies against the defendant with respect to all or any part of the transaction,

or series of connected transactions, out of which the action arose.’” Walker v. General Tel. Co., 25

F. App’x 332, 336 (6th Cir. 2001). The broad sweep of res judicata is likely inapplicable here, as

one of the required elements is that the 4issues raised in the subsequent action were raised or should

have been raised in the first lawsuit. Id. Here, although Rule 11 was challenged in the first lawsuit,

Rule 9 was not, presumably because it was only Rule 11 under which Bogarts was penalized at the

time. The state has not argued or made any showing that Bogarts should also have challenged Rule

9 at the time. Because the current suit also includes additional challenges to both Rules beyond void

for vagueness claims, it would be inappropriate to apply res judicata to the plaintiffs’ claims in their

entirety.

Even so, the related and narrower doctrine of collateral estoppel may well affect the void for

vagueness claim that has already been litigated. This Court has listed four requirements for the

application of collateral estoppel:

(1) the precise issue raised in the present case must have been raised and actually

litigated in the prior proceeding; (2) determination of the issue must have been

necessary to the outcome of the prior proceeding; (3) the prior proceeding must have

resulted in a final judgment on the merits; and (4) the party against whom estoppel

is sought must have had a full and fair opportunity to litigate the issue in the prior

proceeding.

NAACP, Detroit Branch v. Detroit Police Officers Ass’n (DPOA), 821 F.2d 328, 330 (6th Cir. 1987).

4

The elements of res judicata are, in their entirety, that “(1) there is a final decision on the merits of the first

action by a court of competent jurisdiction; (2) the second action involves the same parties, or their privies, as the first;

(3) the second action raises an issue actually litigated or which should have been litigated in the first action; and (4) there

is identity of claims.” Walker v. General Tel. Co., 25 F. App’x 332, 336 (6th Cir. 2001).

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 5

Because collateral estoppel precludes future litigation of one specific issue, and because that is what

the state effectively asks us to find, we construe their argument as one for collateral estoppel rather

than res judicata, despite the substitution of one term for the other in the state’s brief.5

The void for vagueness challenge to Rule 11 meets all four of the requirements for collateral

estoppel, as it was actually litigated in the prior case, it was essential to the holding that Rule 11 was

constitutional, there was a final judgment on the merits, and so far as we can tell, the plaintiffs had

a full and fair opportunity to litigate the issue. With regard to the fourth element, the plaintiffs fail

to address the preclusion issue at all in their brief, giving us little reason to conclude otherwise.

Further, although Polzin was not a named party in the first suit, this Court has stated that collateral

estoppel extends to “privies” of the party to the first lawsuit. Verizon North Inc. v. Strand, 367 F.3d

577, 583 (6th Cir. 2004); see also Evans v. Pearson Enter., Inc., 434 F.3d 839, 850 n.5 (6th Cir.

2006) (stating that employee who shares interest in litigation with his employer is in privity with

employer for collateral estoppel purposes). Because Polzin has an employment relationship with

Bogarts, shares a common legal interest in the outcome of this claim with Bogarts, and has presented

us with no argument as to why she should not be precluded based on her employer’s prior litigation

of an identical claim, we conclude that collateral estoppel can apply against both plaintiffs here with

respect to the void for vagueness challenge to Rule 11.

Although the vagueness challenge to Rule 9 was not actually litigated, and therefore cannot

be collaterally estopped, the prior panel’s rationale provides persuasive authority for rejecting the

void for vagueness challenge to Rule 9. See Hamilton, 1998 U.S. App. Lexis 22653, at * 21

(“[T]here can be no doubt as to what conduct the rule prohibits.”). If anything, Rule 9 is less vague

than Rule 11, as it specifically defines body parts that cannot be exposed in a licensed premises.

Plaintiffs seize on the words “other type of nudity” used in Rule 9. On its own, this term could well

be considered vague, but the full clause in which it is used makes clear that in addition to the Rule’s

independent prohibitions, it also prohibits “other types of nudity prohibited by statute or local

ordinance.” Thus, the clause in question would appear to simply seek to avoid preempting the

application of any other state laws or local ordinances that ban nudity. Even if it might be confusing

that nudity is governed by more than one statute or ordinance, this provision does not make Rule 9

itself vague, as the nudity it prohibits is fairly well defined. If there are indeed other statutes or local

ordinances that prohibit nudity and are incorporated into this rule, plaintiffs’ would have to at least

identify them for us before we can say that they are vague. For these reasons we affirm the district

court’s rejection of the plaintiffs’ void for vagueness argument with respect to both rules.

B. Plaintiffs’ First Amendment Challenge

1. Implications of the Twenty-First Amendment

In rejecting the plaintiffs’ First Amendment claim, the district court relied on New York State

Liquor Authority v. Bellanca, 452 U.S. 714, 715 (1981) and California v. LaRue, 409 U.S. 109

(1972). D. Ct. Op. at 6, 8. The rationale of these cases was that under the authority granted to the

states in the Twenty-first Amendment to regulate liquor sales, a state could prohibit nude dancing

in places where liquor is sold. The state relies almost entirely on this reasoning here. Unfortunately

for the state, the Supreme Court has entirely abandoned this rationale for upholding regulations that

raise First Amendment concerns in places where alcohol is sold. See 44 Liquormart v. Rhode Island,

517 U.S. 484, 516 (1996) (“Without questioning the holding in LaRue, we now disavow its

reasoning insofar as it relied on the Twenty-first Amendment. As we explained in a case decided

more than a decade after LaRue, although the Twenty-first Amendment limits the effect of the

dormant Commerce Clause on a State’s regulatory power over the delivery or use of intoxicating

5

Latin is a dead language anyway.

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 6

beverages within its borders, ‘the Amendment does not license the States to ignore their obligations

under other provisions of the Constitution.’ . . . . Accordingly, we now hold that the Twenty-first

Amendment does not qualify the constitutional prohibition against laws abridging the freedom of

speech embodied in the First Amendment.”); see also Odle v. Decatur County, 421 F.3d 386, 398

(6th Cir. 2005) (“LaRue’s rationale is no longer good law.”). Because the Bellanca case relied on

the same constitutional justifications as LaRue, the subsequent decision in Liquormart abrogated its

reasoning as well.

In reaffirming the holding of LaRue, the Liquormart Court stated that “the Court has

recognized that the States’ inherent police powers provide ample authority to restrict the kind of

‘bacchanalian revelries’ described in the LaRue opinion regardless of whether alcoholic beverages

are involved.” 517 U.S. at 515. Thus, a state is allowed implement restrictions on nude dancing to

combat the “secondary effects” that are likely to arise from the combination of liquor and nude

dancing. See City of Erie v. Pap’s A.M., 529 U.S. 277, 293, 296-97 (2000). Although liquor

consumption may well be a valid factor in a state’s consideration of secondary effects, it is no longer

correct to argue that the Twenty-first Amendment provides greater authority to regulate expressive

conduct wherever liquor is sold.

2. Content based or content neutral?

The Supreme Court has stated that “nude dancing . . . is expressive conduct,” while nudity

itself is not. Id. at 289. As a result, laws that limit nude dancing are subject to First Amendment

scrutiny under one of two alternative standards of review. If “the governmental purpose in enacting

the regulation is unrelated to the suppression of expression,” then the law need only satisfy the

intermediate scrutiny inquiry from United States v. O’Brien, 391 U.S. 367 (1968). Pap’s A.M., 529

U.S. at 289. If, on the other hand, the “government interest is related to the content of the

expression, . . . then the regulation falls outside the scope of the O’Brien test and must be justified

under a more demanding standard.” Id. Thus, under the Supreme Court’s precedent, the threshold

question is whether the regulations here are content based — i.e. are they specifically directed at

nude dancing — or do the terms of the regulations target conduct alone. Id. 6

The distinction between content-based and content-neutral regulations is critical to their

validity, as it has great bearing on the justifications the state must raise to defend the rules. Where

a regulation is content-based, it is “considered presumptively invalid and subject to strict scrutiny.”

City of Los Angeles v. Alameda Books, 535 U.S. 425, 434 (2002). To satisfy the strict scrutiny

inquiry in the context of the First Amendment “the State must show that its regulation is necessary

to serve a compelling state interest and is narrowly drawn to achieve that end.” Simon & Schuster,

Inc. v. Members of the N.Y. State Crime Victims Bd., 502 U.S. 105, 118 (1991) (“If there is a

bedrock principle underlying the First Amendment, it is that the Government may not prohibit the

expression of an idea simply because society finds the idea itself offensive or disagreeable.”). On

the other hand, under Pap’s A.M., content-neutral restrictions must meet the four-part intermediate

scrutiny test from O’Brien, which requires a showing that 1) the regulation is within the

constitutional power of the government to enact, 2) the regulation furthers an important or

substantial government interest, 3) the government interest must be unrelated to the suppression of

free expression, and 4) the restriction must be no greater than is essential to the furtherance of the

government interest. Pap’s A.M., 529 U.S. at 296-301.

6

The Supreme Court plurality applied this approach in Pap’s A.M. as follows: “The ordinance here, like the

statute in Barnes, is on its face a general prohibition on public nudity. By its terms, the ordinance regulates conduct

alone. It does not target nudity that contains an erotic message; rather, it bans all public nudity, regardless of whether

that nudity is accompanied by expressive activity.” 529 U.S. at 290 (discussing Barnes v. Glen Theatre, Inc., 501 U.S.

560 (1991) (citations omitted)).

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 7

Unfortunately, instead of addressing whether the regulations are content-based or content-

neutral and articulating any state interest that is furthered by the regulations, the state merely relies

on its “broad discretion” under LaRue. As a result of this approach we have very little guidance in

analyzing the relevant factors. We do not doubt that it is within the state’s police power to pass a

nudity ban, to regulate places where liquor is sold, and to combat secondary effects that might be

related to adult entertainment. But we are7 left to guess about the governmental interest at stake and

how it is advanced by Rules 9 and 11, not to mention the critical question of which standard

governs this case.

Assuming arguendo that the lesser standard of intermediate scrutiny applies, it would not be

a difficult one to meet, but it is not toothless, and requires some showing of an important or

substantial interest that the regulations are essential to address. Turner Broad. Sys. v. FCC, 512 U.S.

622, 664 (1994) (“When the Government defends a regulation on speech as a means to redress past

harms or prevent anticipated harms, it must do more than simply ‘posit the existence of the disease

sought to be cured.’ It must demonstrate that the recited harms are real, not merely conjectural, and

that the regulation will in fact alleviate these harms in a direct and material way.” (citation omitted)).

Yet not only does the state fail to produce any evidence regarding secondary effects or the impact

of its rule, but it fails to even articulate what its interest is or how the regulations affect it.

There are alternative, valid reasons to view the regulations in question here under either

standard, but we need not address this threshold question because the state has advanced no relevant

governmental interest and made no showing as to how Rules 9 and 11 advance such an interest. The

Rules therefore cannot survive either strict or intermediate scrutiny. Accordingly, because the

plaintiffs have made the requisite showing of success on the merits, a preliminary injunction should

issue.

C. Overbreadth and Balancing of the Harms

Plaintiffs raise two final arguments, that the Rules are impermissibly overbroad in violation

fo the First Amendment and that the district court improperly balanced the harms to them and to the

public against those of the government in denying them a preliminary injunction. While we note

that plaintiffs’ appear to have a stronger case for overbreadth than even the plaintiffs in Odle and

Triplett Grill, Inc. v. City of Akron, 40 F.3d 129 (6th Cir. 1994), where we held the statutes at issue

would proscribe expressive conduct in theatrical and other types of performances which there is no

reason to believe had any negative secondary effects and were therefore impermissibly overbroad,

it is not necessary for us to engage in an in-depth analysis of plaintiffs’ overbreadth and balancing

of the harms arguments in light of our holding above.

7

Nor are these inherently straightforward questions that we would somehow be suited to address on an

undeveloped record. The Supreme Court’s opinion in Pap’s A.M. demonstrates the complicated nature of the analysis.

Although five Justices voted to uphold the regulation in Pap’s A.M., two of them, Justices Scalia and Thomas, relied

primarily on their determination that the case was moot and that the plaintiff lacked standing, reasoning alternatively that

the city could ban nude dancing based on a determination that it was immoral, without facing First Amendment

limitations. 529 U.S. at 310 (Scalia, J., concurring). As a result, only a plurality of four Justices applied the O’Brien

intermediate scrutiny test, and found that the regulation met its requirements. Justice Souter, writing in dissent, agreed

that this test applied, but disagreed that the city met its burden, due to a dearth of evidence regarding “the harm [the city]

claims to flow from the expressive activity, and for the alleviation expected from the restriction imposed.” Id. at 313

(Souter, J., dissenting). There thus appears to be a difference in the evidentiary standard that the plurality and Justice

Souter would require, with the plurality endorsing the government’s reliance on prior judicial opinions that addressed

secondary effects, and the findings expressed by the Erie City Council in its preamble to the ordinance. Id. at 296-298.

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 8

III.

We hold that preliminary injunctive relief is necessary in this case. Of course the

proceedings remain in the preliminary stages, and hopefully the case will be litigated differently

after remand.8 Accordingly, we REVERSE the district court’s denial of plaintiffs’ motion for

preliminary injunction, and REMAND with instructions to grant plaintiffs’ motion and issue a

preliminary injunction.

8

It is also worth noting that the state itself is not a properly named defendant, as it is shielded from suit under

the doctrine of sovereign immunity. States are protected by the Eleventh Amendment even from suits brought under

section 1983, because the statute only creates a cause of action against a “person” who causes the deprivation of

another’s Constitutional rights. See Will v. Michigan Dep’t of State Police, 491 U.S. 58, 71 (1989). Suits against state

officials in their official capacity for money damages are similarly barred, as a “suit against a state official in his or her

official capacity is not a suit against the official but rather is a suit against the official’s office.” Id. The same is not true

for suits seeking only injunctive relief: “a state official in his or her official capacity, when sued for injunctive relief,

would be a person under § 1983 because ‘official-capacity actions for prospective relief are not treated as actions against

the State.’” Id. at 71 n.10 (quoting Kentucky v. Graham, 473 U.S. 159, 167 n.14 (1985)).

No. 06-1436 Hamilton’s Bogarts, Inc., et al. v. State of Michigan, et al. Page 9

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CONCURRENCE

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ALICE M. BATCHELDER, Circuit Judge, concurring. I concur in Judge Martin’s opinion.

I write separately only to express my suspicion that, like the reports of Mark Twain’s death, see The

New Dictionary of Cultural Literacy (Third Edition, 2002), the report of the death of Latin in the

majority opinion’s footnote 5 is greatly exaggerated.