Coe v. City of San Diego

Filed 9/28/16

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

SUZANNE COE, D068814

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2015-00009890-

CU-MC-CTL)

CITY OF SAN DIEGO,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County,

Randa Trapp, Judge. Affirmed.

The Gilleon Law Firm, Daniel M. Gilleon; Law Office of Steve Hoffman and

Steve Hoffman for Plaintiff and Appellant.

Jan I. Goldsmith, City Attorney, Mary T. Nuesca, Assistant City Attorney and

Paige. E. Folkman, Deputy City Attorney for Defendant and Respondent.

I

INTRODUCTION

Suzanne Coe appeals from a judgment denying her petition for writ of

administrative mandate challenging a decision by the City of San Diego (City) to revoke

her nude entertainment business permit.1 She contends certain sections of the San Diego

Municipal Code2 applicable to nude entertainment businesses are unconstitutionally

vague and do not give sufficient guidance to the permit holder or to the enforcement

agency. She further contends the City's decision to revoke her permit improperly relied

upon inadmissible hearsay evidence and there is otherwise insufficient evidence to

support the findings underlying the decision. Finally, she contends the penalty of

revocation violated her due process rights because it was arbitrary and capricious. We

are not persuaded by these contentions and affirm the judgment.

II

BACKGROUND

A

In San Diego, it is unlawful to operate a nude entertainment business without a

police permit. (§ 33.3603.) It is also unlawful for a responsible person to allow a nude

person within six feet of a patron (six-foot rule); an adult entertainer to intentionally

touch a patron or a patron to intentionally touch an adult entertainer during a performance

1 For purposes of this appeal, " '[n]ude entertainment business' means any

establishment or business operating at a fixed location where (a) any person engages in or

operates nude entertainment, or (b) there are live performances which are distinguished

or characterized by an emphasis upon the display of specified anatomical areas or

specified sexual activities. It includes nightclubs, bars, lingerie modeling studios, and

similar commercial establishments commonly known as 'topless' or 'nude.' " (§ 33.3602,

italics omitted.)

2 Further statutory references are to the San Diego Municipal Code unless otherwise

stated. (<https://www.sandiego.gov/city-clerk/officialdocs/legisdocs/muni> [as of

Sept. 26, 2016].)

2

(no-touch rule); or a person to touch, caress, or fondle specified anatomical areas of

another person (no-fondling rule).3 (§ 33.3609, subds. (c), (d) & (f).) Parallel

prohibitions apply to adult entertainers. (§ 33.3610, subds. (a)-(c).)

Coe has a permit to operate a nude entertainment business in San Diego. The

business is open from 12:00 p.m. to 2:00 a.m. daily. It employs approximately 40 people,

including managers, bartenders, waitresses, and security guards. As Coe lives in another

state, the managers oversee the business's daily operations.4

There are two private dance rooms in the back of the business, which are

monitored by a security guard positioned between them. One room, the couch room, is

bordered with couches where patrons may sit and view a dance for $10 to $20 per dance.

The other room, referred to by the parties as the VIP room, has stalls with benches inside

where patrons may sit to view dances. The stalls are shallow, which allows the adult

entertainer to be seen by the security guard, but provides relative privacy to the patron.

The VIP room is more expensive than the couch room because the VIP room has a five-

dance, or $100, minimum.

Coe considers the adult entertainers who perform at her business to be independent

contractors. Before adult entertainers may perform at the business, they must sign a

3 A responsible person includes a person "who is otherwise responsible for the

operation, management, direction, or policy of a police-regulated business. It also

includes an employee who is in apparent charge of the premises." (§ 33.0201, italics

omitted.)

4 The parties do not dispute Coe and the managers of her business are responsible

persons within the meaning of section 33.3609.

3

contract, which recites the six-foot, no-touch, and no-fondling rules. These rules are

explained to them and they are shown a dance compliant with the rules. The business

does not require the adult entertainers to undergo a reference check or a background

check apart from the criminal background check required for an adult entertainer to

obtain an adult entertainer permit from the City.

The adult entertainers set their own schedules. Between 12 to 15 adult entertainers

perform on a day shift and an average of 50 adult entertainers perform on an evening

shift. The adult entertainers pay a flat fee to perform and they keep any payment or tips

they receive for private dances. At the end of their shift, they "tip out" by giving a

percentage of their receipts to the shift manager, the disc jockey, and the doorman, which

is then shared with other employees, including the security guards.

B

In 2006, the City issued a 30-day suspension to Coe for multiple violations of the

six-foot and no-touch rules occurring during overt and covert inspections between

September 2005 and September 2006. Coe appealed the suspension. The parties

subsequently settled the matter in January 2007 with Coe admitting to no-touch violations

occurring between March and September 2006 and paying a $10,000 fine.

In July 2012 the City issued a 15-day suspension to Coe for multiple violations of

the six-foot, no-touch, and no-fondling rules occurring between March 2011 and April

2012. Coe appealed the suspension. The parties settled the matter in February 2013 with

Coe admitting the violations, agreeing to a three-day suspension, and paying a $20,000

4

civil penalty. Coe also agreed to mandatory training, which she and the business's

managers, security guards, and disc jockeys attended on March 5, 2013.

At the end of April 2013 the City sent Coe a warning letter advising her of

multiple violations of the no-touch and no-fondling rules by 14 adult entertainers. The

violations occurred during covert inspections in late March and April 2013, after Coe and

her staff had completed the mandatory training.

In May 2013 Coe and the business's managers met with police department

representatives. The parties discussed the recent violations and what measures Coe might

employ to reduce their occurrence. The police representatives warned Coe the next

penalty for further violations would be a 15-day suspension.

Coe took a number of steps to prevent further violations. These steps included

hiring a security consultant; improving lighting; posting a security guard in the corridor

between the private dance rooms; installing monitors in the private dance rooms to allow

for remote observation and correction of violating conduct through an intercom system;

posting the six-foot, no-touch, and no-fondling rules on the walls, in the bathrooms, and

in the dressing rooms; and using secret shoppers to check for rule compliance. She also

began keeping track of adult entertainers and using a progressive discipline policy against

adult entertainers found violating the rules.

Nonetheless, violations continued to occur at Coe's business. In August 2013 the

City sent Coe a warning letter advising her of multiple violations of the no-touch and no-

fondling rules by 10 adult entertainers occurring during covert inspections in May, June

and July 2013. In October 2013 the City sent Coe a warning letter advising her of

5

violations of the no-touch and no-fondling rules by one adult entertainer occurring during

a covert inspection in September 2013. In February 2014 the City sent a warning letter to

Coe advising her of multiple violations of the no-touch and no-fondling rules by nine

adult entertainers occurring during overt and covert inspections in January and February

2014. In April 2014 the City sent Coe a warning letter advising her of multiple violations

of the no-touch and no-fondling rules by three adult entertainers occurring during covert

inspections in February 2014.5

Later in April 2014 the parties met to discuss the continuing violations. Coe

expressed frustration with the delay between the violations and the receipt of the warning

letters, believing the delay prevented her from adequately identifying and disciplining the

adult entertainers or the security guards. In May 2014 the City sent Coe a letter

recapping the meeting and indicating additional violations, depending on the severity,

would most likely result in the revocation of her nude entertainment business permit.

In June 2014 the City notified Coe it was revoking her nude entertainment

business permit for repeated violations of the six-foot, no-touch, and no-fondling rules.

5 One sentence in one of the reports documenting the violations misnamed an adult

entertainer. The report correctly named the adult entertainer in 13 other places. The

error occurred because the officer who prepared the report had used another similar

report as a template. The officer noted the error and corrected it two months later, before

the City sent the warning letter to Coe.

6

The notice cited 12 violations of these rules occurring during overt and covert inspections

after the parties' April 2014 meeting.6

Most of the conduct described in the various warning letters occurred in the

private dance rooms. At least fifteen separate officers or detectives observed the conduct.

Over 40 separate nude entertainers committed the violations, which included rubbing

breasts against faces; grinding breasts and buttocks against groins; and rubbing groins or

hands against legs, chests, or groins. Some violations occurred when no security guard

was present. Others occurred when a security guard was present, but the security guard

did not intervene. Still others occurred when a security guard was present and

intervened, but then allowed the adult entertainer to continue with the violating conduct.

Several adult entertainers said they had been advised to change their stage names often to

avoid identification and notices of violation.

C

Coe administratively appealed the revocation.7 A hearing officer conducted a

four-day evidentiary hearing. At the conclusion of the hearing, the hearing officer upheld

the revocation. The hearing officer found based on the above evidence the City had

6 One of the reports documenting the violations incorrectly stated the report had

been approved in March 2014 when it had actually been approved in April 2014 on the

same day the reported violation occurred. The error was noted and corrected a week

later.

7 At the end of September 2014, while the administrative appeal was pending, the

City sent Coe a warning letter advising her of multiple violations of the six-foot, no-

touch, and no-fondling rules by 16 adult entertainers occurring during covert inspections

in July and August 2014.

7

established: (1) the business's adult entertainers had committed numerous and continuing

violations of the six-foot, no-touch, and no-fondling rules; (2) Coe was aware of these

rules; (3) she negligently failed to supervise the business resulting in a pattern of

violations; and (4) she demonstrated an inability to perform the duties required of a nude

entertainment business permit holder. In particular, the hearing officer found that,

despite numerous rules violations, Coe never disciplined any security guards for failing to

properly monitor the adult entertainers. The hearing officer also found the business's

compensation structure created an incentive for security guards to allow violations

because the more touching that occurred, the more compensation adult entertainers were

likely to receive, which increased the security guards' share of the adult entertainers' tips.

D

Coe subsequently filed a combined complaint for civil rights violations and a

petition for writ of administrative mandate (petition). The petition challenged the hearing

officer's decision on the grounds the decision was in excess of jurisdiction, not supported

by the evidence, and not based on a fair hearing. The petition also challenged the

decision on the grounds certain municipal code sections were unconstitutionally vague

and overbroad.

After briefing and oral argument, the superior court denied the petition. As

relevant to the issues raised in this appeal, the court found the reports prepared by the

police officers and detectives who inspected the business were admissible as official

records under Evidence Code section 1280. The court also found this evidence along

with the other documentary and testimonial evidence presented at the hearing showed

8

numerous, continuing rules violations by the business's adult entertainers resulting from

the negligent failure or inability of Coe and her staff to adequately supervise them. The

court noted Coe had taken some measures to prevent violations, but these measures were

ineffective and the business's staff had a monetary incentive to ignore violations. The

court further found the challenged municipal code sections were not unconstitutionally

vague and the delay between when the violations occurred and when the City notified

Coe of them did not deprive Coe of due process of law.8

III

DISCUSSION

A

A petition for a writ of administrative mandate presents "the questions whether the

respondent has proceeded without, or in excess of, jurisdiction; whether there was a fair

trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is

established if the respondent has not proceeded in the manner required by law, the order

or decision is not supported by the findings, or the findings are not supported by the

evidence." (Code Civ. Proc., § 1094.5, subd. (b); Fukuda v. City of Angels (1999) 20

Cal.4th 805, 810 (Fukuda).)

All of these questions, except the question of whether the findings are supported

by the evidence, are questions of law, which we review de novo. (See, e.g., JKH

Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046,

8 The court entered a judgment denying the petition for writ of mandate after Coe

dismissed the companion civil rights complaint.

9

1058-1059 (JKH Enterprises); Gilliland v. Medical Board of California (2001) 89

Cal.App.4th 208, 219; Rosenblit v. Superior Court (1991) 231 Cal.App.3d 1434, 1443.)

As to the question of whether the findings are supported by the evidence, the parties

agree the superior court was required to exercise its independent judgment on the

evidence because a decision to revoke a nude entertainment business permit involves a

fundamental vested right. (Code Civ. Proc., § 1094.5, subd. (c); JKH Enterprises, supra,

at p. 1057.) Under this standard, an agency abuses its discretion if the superior court

determines the weight of the evidence does not support the agency's findings. (Code Civ.

Proc., § 1094.5, subd. (c); Fukuda, supra, 20 Cal.4th at pp. 810-811.) In exercising its

independent judgment, the superior court must accord a strong presumption of

correctness to the agency's findings and the complaining party has the burden of showing

the agency's decision was contrary to the weight of the evidence. (Fukuda, at pp. 816-

817.) On appeal, we review the superior court's determination for substantial evidence.

(Id. at p. 824.)

B

1

a

Section 33.0405, subdivision (a), provides: "Whenever regulatory action against a

permittee is based on a violation of law or this Article by an employee that occurs on the

premises or during the course of employment, it is sufficient to show that a responsible

person caused or condoned the violation, or failed to take reasonable corrective action

after timely written notice of the violation." (Italics omitted.)

10

Coe contends this section is unconstitutionally vague because the words "caused"

and "condoned" are not defined and there are no standards by which to judge whether a

responsible person's conduct meets this requirement. Coe similarly contends the section

is unconstitutionally vague because the phrase "reasonable corrective action" is not

defined and there are no standards by which to determine whether a responsible person's

corrective actions are adequate.

b

Section 33.0403, subdivision (a), provides: "In addition to any other penalties

provided by law, any permittee who does any of the following is subject to regulatory

action by the Chief of Police against his or her police permit: [¶] … [¶] (5) Negligently

fails to supervise the business resulting in a pattern of violations described by patrons,

employees, or both; [¶] (6) Manifests an inability to properly perform the duties relating

to the police-regulated activity as evidenced by the commission or omission of an act or

series of acts." (Italics omitted.)

Coe contends these provisions are unconstitutionally vague because they do not

provide sufficient guidance to police officers or responsible persons. More particularly,

she contends subdivision (a)(5) requires patrons, not police officers, to describe

violations, and subdivision (a)(6) lacks objective standards by which to judge Coe's

conduct, resulting in police officers exercising unbridled discretion.

2

"A law is void for vagueness only if it 'fails to provide adequate notice to those

who must observe its strictures' and ' "impermissibly delegates basic policy matters to

11

policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the

attendant dangers of arbitrary and discriminatory application." ' " (People v. Rubalcava

(2000) 23 Cal.4th 322, 332.) "What is constitutionally required is that terms be defined

with 'sufficient definiteness that ordinary people can understand what conduct is

prohibited and in a manner that does not encourage arbitrary and discriminatory

enforcement.' " (Tily B., Inc. v. City of Newport Beach (1998) 69 Cal.App.4th 1, 22.)

In evaluating vagueness claims, we consider the context of the challenged

language. "A contextual application of otherwise unqualified legal language may supply

the clue to a law's meaning, giving facially standardless language a constitutionally

sufficient concreteness." (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1116

(Acuna).)

We also consider the notion of reasonable specificity or certainty. (Acuna, supra,

14 Cal.4th at p. 1117.) "[P]erfect clarity and precise guidance have never been required

even of regulations that restrict expressive activity." (Ward v. Rock Against Racism

(1989) 491 U.S. 781, 794 [109 S.Ct. 2746, 2755, 105 L.Ed.2d 661]; Acuna, supra, at

p. 1117 [" '[F]ew words possess the precision of mathematical symbols, most statutes

must deal with untold and unforeseen variations in factual situations, and the practical

necessities of discharging the business of government inevitably limit the specificity with

which legislators can spell out prohibitions' "].) " 'All that is required is that the statute

be reasonably certain so that persons of common intelligence need not guess at its

meaning.' [Citations.] 'The requirement of reasonable certainty does not preclude the use

of ordinary terms to express ideas which find adequate interpretation in common usage

12

and understanding.' [Citation.] 'So long as the language embodies an objective concept,

it is constitutionally concrete.' " (People v. Linwood (2003) 105 Cal.App.4th 59, 68-69;

People v. Falck (1997) 52 Cal.App.4th 287, 294-295 [the terms of a statute need not be

defined or have a precise definition; long-established or commonly accepted usage can

satisfy the reasonable certainty requirement].)

3

a

Regarding the language in section 33.0405, the words "caused" and "condoned"

have commonly accepted meanings. "Caused" means "a reason for an action or

condition" or "something that brings about an effect or a result." (Merriam-Webster's

Collegiate Dict. (11th ed. 2006) p. 196, col. 2.) "Condoned" means "to regard or treat

(something bad or blameworthy) as acceptable, forgivable, or harmless." (Id. at p. 259,

col. 2.) Likewise, the phrase "reasonable corrective action" is composed of words with

commonly accepted meanings. "Reasonable" means "being in accordance with reason,"

"not extreme or excessive," and "possessing sound judgment." (Id. at p. 1037, col. 1.)

"Corrective" means "intended to correct." (Id. at p. 280, col. 2.) "Action" means "a thing

done." (Id. at p. 12, col. 2.)

"[I]ndividually and collectively these words are understandable by persons of

ordinary intelligence." (People v. Linwood, supra, 105 Cal.App.4th at p. 69.) As used in

section 33.0405, and considered in the context of the City's nude entertainment business

permitting scheme, these words inform permit holders with the requisite reasonable

specificity or certainty that they will be held accountable for violations they personally

13

bring about, accept and allow to continue, or fail to take practical, sensible steps to

correct. We, therefore, conclude section 33.0405 is not unconstitutionally vague.

b

Subdivisions (a)(5) and (a)(6) of section 33.0403 also use ordinary words whose

common usage and understanding allow them to be interpreted with reasonable certainty

in the context of the City's nude entertainment business permitting scheme. Subdivision

(a)(5) informs permit holders their permits are subject to regulatory action if they

negligently supervise their business in a manner that results in a pattern of violations

described by employees or patrons, which in this case included undercover police officers

paying for private dances. Subdivision (a)(6) similarly informs permit holders their

permits are subject to regulatory action if their actions demonstrate an inability to

properly perform their duties as permittees. Both subdivisions preclude arbitrary,

unbridled enforcement by predicating regulatory action on the occurrence and

identification of specific acts establishing either negligent supervision or an inability to

perform permittee duties. Accordingly, we conclude section 33.0403 is also not

unconstitutionally vague.

C

Coe next contends the City's practice of accumulating violations before notifying

her of them denied her due process and a reasonable opportunity to take corrective action.

"Due process requires that when the government seeks to deprive a person of property, it

must provide the individual with notice and an opportunity to be heard. [Citation.]

When an individual claims governmental delay in imposing sanctions has violated the

14

guarantee of due process, the individual bears the burden of establishing actual

prejudice." (Krontz v. City of San Diego (2006) 136 Cal.App.4th 1126, 1141 (Krontz).)

In this case, the City admitted it purposefully delayed in sending Coe warning

letters to protect the identity of its undercover officers. However, the City's decision to

revoke Coe's permit was not based on a discrete violation, but on a persistent pattern of

violations over an extended time period. (Krontz, supra, 136 Cal.App.4th at p. 1141.)

Coe had ample notice of the violations because the City sent her multiple warning letters

detailing them. Police detectives also met with Coe, her attorney, and the managers of

her business to discuss the violations and provide training to help Coe and the managers

recognize and prevent the infringing conduct. Notwithstanding these efforts, additional

violations continued to occur—some in close proximity to the meetings, some during

overt inspections by police detectives, and some in the midst of the revocation

proceedings (see fn. 7, ante). As the revocation of Coe's permit was based on a persistent

pattern of violations rather than the existence of any single violation, Coe has not

established the delayed warning letters actually prejudiced her and, therefore, has not

established the City deprived her of due process of law.

Coe's reliance on Walsh v. Kirby (1974) 13 Cal.3d 95 (Walsh) and its progeny is

misplaced. In Walsh, the Department of Alcoholic Beverage Control determined a

retailer had violated a fair trade statute by selling alcohol at less than the minimum retail

price. (Id. at pp. 97-98.) The retailer had no record of prior violations. (Id. at p. 98.)

The penalty for a violation was $250 for the first offense, and $1,000 for each subsequent

offense. (Id. at p. 98, fn. 4.) The purpose of the penalty scheme was to compel

15

compliance with the statute, not to punish or eliminate a defaulting licensee by imposing

an insurmountable financial burden. (Id. at p. 102.) Rather than notify the retailer of the

first violation and allow the retailer an opportunity to comply with the statute, the agency

accumulated evidence of recurring violations and, in a single prosecution, assessed

cumulative penalties. (Id. at pp. 98-99, 103-104.) The California Supreme Court

concluded the agency acted arbitrarily and violated the retailer's due process by

proceeding against the retailer in a manner not intended to induce compliance with the

statute, but to impose excessive penalties resulting in a de facto revocation of the

retailer's license. (Id. at pp. 98, 104-106 & fn. 13.)

Here, the record does not show the City accumulated violations against Coe in

order to impose a more stringent penalty. Rather, the record shows the City repeatedly

warned Coe of the violations occurring at her business and of her need to take corrective

action. It also provided training to her and the managers of her business to help them

prevent violations from occurring. The City did not attempt to revoke Coe's permit until

it noted continuing violations at the business despite the City's warnings and efforts to

assist her. The Walsh case expressly did not apply to such situations. (Walsh, supra, 13

Cal.3d at p. 105, fn. 14 ["We do not express any view whether departmental conduct

similar to that in the instant case would be arbitrary if exercised against a licensee who,

the record would show, was [a] habitual offender and unwilling to conform"].)

16

D

1

Coe additionally contends the decision to revoke her permit was based entirely on

hearsay evidence, specifically the reports of the police officers and detectives who

overtly and covertly inspected Coe's business. The City counters the reports fall within

the official records exception to the hearsay rule in Evidence Code section 1280 and,

even if this exception does not apply to the reports, hearsay evidence is admissible in

administrative proceedings.

The superior court agreed with the City, ruling the reports were admissible under

the official records exception and, regardless, the reports were not the sole evidentiary

basis for the City's decision to revoke Coe's permit. We review the court's ruling for

abuse of discretion and we may not overturn the ruling except upon a clear showing of

abuse. (People v. Martinez (2000) 22 Cal.4th 106, 119-120; Glatman v. Valverde (2006)

146 Cal.App.4th 700, 703 & fn. 2.)

2

The official records exception to the hearsay rule provides: "Evidence of a writing

made as a record of an act, condition, or event is not made inadmissible by the hearsay

rule when offered in any civil or criminal proceeding to prove the act, condition, or event

if all of the following applies: [¶] (a) The writing was made by and within the scope of

duty of a public employee. [¶] (b) The writing was made at or near the time of the act,

condition, or event. [¶] (c) The sources of information and method and time of

preparation were such as to indicate its trustworthiness." (Evid. Code, § 1280.)

17

Coe contends the official records exception does not apply to the reports of the

police officers and detectives who inspected her business because the reports were not

prepared at or near the time of the observed violations. She also contends the method and

timing of the reports' preparation do not indicate trustworthiness.

a

Regarding the timeliness requirement, this "requirement 'is not to be judged … by

arbitrary or artificial time limits, measured by hours or days or even weeks.' [Citation.]

Rather, 'account must be taken of practical considerations,' including 'the nature of the

information recorded' and 'the immutable reliability of the sources from which [the

information was] drawn.' [Citation.] 'Whether an entry made subsequent to the

transaction has been made within a sufficient time to render it within the [hearsay]

exception depends upon whether the time span between the transaction and the entry was

so great as to suggest a danger of inaccuracy by lapse of memory.' " (People v. Martinez,

supra, 22 Cal.4th at p. 128; Miyamoto v. Department of Motor Vehicles (2009) 176

Cal.App.4th 1210, 1219.)

Coe contends the timeliness requirement was not met because some of the reports

were not prepared until several days to a week after the incident, which created a danger

of inaccuracy from memory lapse. In support of this contention, she points to the reports

with admitted inaccuracies, including the report misnaming of an adult entertainer. (See

fn. 5, ante.)

However, the record includes multiple warning letters supported by over 40

reports. A custodian of records for the police department's vice unit testified the officers

18

and detectives who inspected Coe's business normally prepared their reports immediately

at the end of the shifts in which they witnessed violations. Sometimes, depending on

what other operations were occurring, they prepared their reports the next morning. If an

officer or detective had a day off, the preparation of the report might have been delayed

by a few days. The timing of the overwhelming majority of the reports appears

consistent with the normal practice of preparing reports at the end of a shift or the next

morning. Only a small number of reports appear to have actual or possible delays of

more than a day in their preparation. Of those reports which were actually or possibly

delayed, most are sufficiently detailed to dispel any suggestion of inaccuracy from

memory lapse. Thus, the overwhelming majority of the reports meet the timeliness

requirement for application of the official records exception.

b

Regarding the trustworthiness requirement, a police report normally satisfies this

requirement when, as here, it is based on the reporting officer's firsthand observations.

(Rupf v. Yan (2000) 85 Cal.App.4th 411, 430; McNary v. Department of Motor Vehicles

(1996) 45 Cal.App.4th 688, 695; Snelgrove v. Department of Motor Vehicles (1987) 194

Cal.App.3d 1364, 1375.) Although Coe contends the method of preparation was suspect

to the extent the officers and detectives used past reports as templates, she identifies only

a few reports containing errors attributable to this method and only one error she

characterizes as critical, which the City noted and corrected on its own. (See fn. 5, ante.)

Given the number of reports in the record, the few errors identified by Coe do not

establish the method of preparation rendered the reports inherently untrustworthy.

19

Accordingly, the trial court correctly determined the overwhelming majority of reports

were admissible as official records.

c

To the extent a few reports may not have met the requirements for the official

records exception to apply to them, their admission was nonetheless proper. San Diego

Administrative Regulation No. 10.10, section 4.3, subdivision (a), provides an

administrative hearing "need not be conducted according to the technical rules relating to

evidence and witnesses. Any relevant evidence shall be admitted if it is the sort of

evidence on which responsible persons are accustomed to rely in the conduct of serious

affairs, regardless of the existence of any common law or statutory rule which might

make improper the admission of such evidence over objection in civil actions." (San

Diego Admin. Reg. No. 10.10, § 4.3, subd. (a); accord, Gov. Code, § 11513, subd. (c).)

The regulation further provides an administrative hearing officer "may consider

hearsay evidence as part of [his or her] determination except that no finding may be

based solely on such hearsay evidence unless the hearsay evidence is supportive or

supplementary to other legally competent evidence. Hearsay may be used if it would be

admissible in a civil action." (San Diego Admin. Reg. No. 10.10, § 4.3, subd. (c); accord,

Gov. Code, § 11513, subd. (d).)

Here, in addition to the admission of the reports qualifying as official records,

seven of the 15 officers and detectives who prepared reports and observed violations at

Coe's business testified to their observations at the administrative hearing. Since the few

reports that may not have qualified as official records supported or supplemented this

20

evidence, they were properly considered and relied upon. (See, e.g., Komizu v. Gourley

(2002) 103 Cal.App.4th 1001, 1007.)

E

Coe further contends the finding she caused or condoned violations by entertainers

was not supported by the evidence and ignored the corrective actions she took to prevent

violations. We disagree.

The testimonial and documentary evidence showed a clear pattern of ongoing,

blatant violations of the six-foot, no-touch, and no-fondling rules at Coe's business.

Although Coe had taken some measures to prevent violations, she did not take other

potentially more effective measures, including assigning an additional security guard to

monitor the private dance areas and reprimanding security guards, when appropriate, for

neglecting their duties. In addition, because Coe's employees received a percentage of

the money each adult entertainer earned from private dances, they had a financial

incentive to ignore rules violations. Indeed, there was evidence Coe's employees had

instructed the adult entertainers to change stage names frequently to hinder the detection

of rules violations. As another court in an analogous context aptly observed, when

violations "occur with alarming regularity, it is naive to suppose that these conditions of

the establishment prevailed without the permission and consent of the licensee." (Harris

v. Alcoholic Beverage Control Appeals Board (1963) 212 Cal.App.2d 106, 119.)

F

Finally, Coe contends the City abused its discretion in deciding to revoke her

permit because the decision was based on a vague "totality of the circumstances" standard

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rather than objective standards. "[W]e review de novo whether the agency's imposition

of a particular penalty on the petitioner constituted an abuse of discretion by the agency.

[Citations.] But we will not disturb the agency's choice of penalty absent ' "an arbitrary,

capricious or patently abusive exercise of discretion" ' by the administrative agency."

(Cassidy v. California Bd. of Accountancy (2013) 220 Cal.App.4th 620, 627-628.)

The San Diego Municipal Code allows revocation of a nude entertainment

business permit as one means of enforcing the rules applicable to nude entertainment

businesses. (§ 33.0401, subd. (a) ["Regulatory provisions are enforceable through the

issuance, denial, suspension, placing conditions upon, or revocation of the permit, and

through the issuance of verbal or written warnings, and notices of violation"], italics

omitted.) A nude entertainment business permit may be constitutionally revoked when

the permit holder has violated valid provisions of the permitting scheme. (Krontz, supra,

136 Cal.App.4th at p. 1134.)

" 'In reviewing the severity of the discipline imposed, we look to the correctness of

the agency's decision rather than that of the trial court.' [Citation.] ' "The penalty

imposed by an administrative body will not be disturbed in mandamus proceedings unless

an abuse of discretion is demonstrated. [Citations.] Neither an appellate court nor a

trial court is free to substitute its discretion for that of the administrative agency

concerning the degree of punishment imposed. [Citation.]" [Citation.] [¶] "In reviewing

the exercise of this discretion we bear in mind the principle 'courts should let

administrative boards and officers work out their problems with as little judicial

interference as possible … . Such boards are vested with a high discretion and its abuse

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must appear very clearly before the courts will interfere.' " ' [Citation.] 'The policy

consideration underlying such allocation of authority is the expertise of the administrative

agency in determining penalty questions.' " (Cassidy v. California Bd. of Accountancy,

supra, 220 Cal.App.4th at p. 633.)

Here, the City decided to revoke Coe's permit, instead of imposing the lesser

penalty of a 15-day suspension, based on the totality of the circumstances occurring after

the February 2013 settlement agreement and resulting three-day suspension. These

circumstances include the warning letters sent to Coe; the number, frequency and severity

of the violations occurring at her business; the meetings with Coe and her staff to

ameliorate the violations; and the ineffectiveness of the corrective actions taken by her

and her staff. These circumstances also necessarily include the evidence indicating Coe's

employees had attempted to hinder the detection of rules violations by advising or

requiring adult entertainers to change their stage names frequently. Under these

circumstances, the City could have reasonably concluded the lesser penalty of a 15-day

suspension would not have ameliorated the pattern of ongoing rules violations.

Consequently, we cannot conclude the City abused its discretion by acting arbitrarily and

capriciously in choosing revocation, rather than a 15-day suspension as the appropriate

penalty for the rules violations at Coe's business.

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IV

DISPOSITION

The judgment is affirmed. Respondent is awarded costs on appeal.

McCONNELL, P. J.

WE CONCUR:

IRION, J.

PRAGER, J.*

* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to

article VI, section 6 of the California Constitution.

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