Jaguars Sues Dallas in Federal Court

Case 3:15-cv-00310-L Document 1 Filed 01/30/15
Page 1 of 15 PageID 1
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ROYAL35, L.L.C. and KEVIN
RICHARDSON,
Plaintiffs,
v.
CITY OF DALLAS, TEXAS, and
DAVID BROWN, solely in his
official capacity as Chief of Police,
Defendants.
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CIVIL ACTION NO.

____________________________
PLAINTIFFS ORIGINAL COMPLAINT

TO THE HONORABLE JUDGE OF SAID COURT:
Comes now the Plaintiffs, ROYAL35, L.L.C. (Royal) and KEVIN
RICHARDSON (Richardson) (collectively referred to as Plaintiffs), who bring this
action for declaratory relief, preliminary and permanent injunction and attorney=s fees
pursuant to 42 U.S.C. Sections 1983 and 1988(b) and for cause of action against the
Defendants would state the following:
I.
Jurisdiction and Venue
1.
This Court has jurisdiction of this action pursuant to 28 U.S.C. Section 1331
because this is a civil action arising under the Constitution of the United States to-wit: the
First and Fourteenth Amendments to the United States Constitution. Additionally this
Court has jurisdiction pursuant to 28 U.S.C. Section 1343(a)(3) because this is an action to
PLAINTIFFS ORIGINAL COMPLAINT Page 1
redress the deprivation of federal constitutional rights under Chapter 41A, Dallas City
Code, a municipal ordinance within the provisions of 42 U.S.C. Section 1983. The Court
may enter a declaratory judgment as provided in 28 U.S.C. Section 2201 and Rule 57,
Federal Rules of Civil Procedure.
2.
Venue of this case lies in the Northern District of Texas pursuant to 28 U.S.C.
Section 1391(b) because this is a civil action not founded on diversity of citizenship and
this claim arose in and Defendants reside in this district.
II.
Parties
3.
Plaintiff ROYAL35, L.L.C. is a Texas limited liability company with its
principal place of business in Dallas County, Texas. Plaintiff Kevin Richardson is its sole
member and manager. Royal35 with Kevin Richardson as Applicant applied for a license
to operate a sexually oriented business at 11327 Reeder Road in Dallas, Dallas County,
Texas on or about December 17, 2014.
4.
Defendant City of Dallas is a home rule city located in Dallas, Dallas County,
Texas. Defendant may be served with process through service upon Rosa A. Rios, City
Secretary of the City of Dallas, 1500 Marilla Street, Room 5DS, City Hall, Dallas, Texas
75201. David Brown is an individual residing in Dallas, Dallas County, Texas. Mr. Brown
is sued solely in his official capacity as Chief of Police. He may be served with process at
his office at 1400 S. Lamar, Dallas, Texas 75215.
III.
Facts Applicable to all Counts/Citys History
of Unconstitutional Enactments
5.
On June 18, 1986, the City Council of the City of Dallas adopted Ordinance
No. 19196 regulating sexually oriented businesses (SOBs). The ordinance required the
chief of police to approve the issuance of a license within thirty (30) days, but further
provided that the license may not issue if the premises to be used for the sexually oriented
business had not been approved by the health department, fire department, and the building
official as being in compliance with applicable laws and ordinances. The ordinance did not
set a time limit within which the inspection/approvals must occur. Multiple SOBs sued the
City contending that the new ordinance acted as an impermissible prior restraint on
protected speech. In F.W./P.B.S., Inc. v. City of Dallas, 493 U.S. 215, 223 (1990), the
Supreme Court agreed, concluding that the Citys licensing scheme lacked adequate
procedural safeguards, as the Citys regulatory scheme allowed indefinite postponement of
the issuance of a license. The court struck down the ordinance as violative of the First
Amendment stating the core policy that the license for a First Amendment-protected
business must be issued within a reasonable period of time, because undue delay results in
the unconstitutional suppression of protected speech and that two (2) safeguards are
essential: the licensor must make the decision whether to issue the license within a
specified and reasonable time period during which the status quo is maintained, and there
must be the possibility of prompt judicial review in the event that the license is erroneously
denied. Id. At 288. The City amended its Ordinance to eliminate the unconstitutional
prior restraint.
6.
On January 22, 1992, Defendant City amended Chapter 41A (the SOB
Ordinance). After various clubs filed suit, the United States District Court in Cause No. 392-CV-1090-H styled MD II Entertainment, Inc. d/b/a The Fare West v. City of Dallas,
Texas and The Permit and License Appeal Board of the City of Dallas, Texas (Judge
Sanders presiding) struck down portions of the amendments.
7.
In response, on October 13, 1993, the City of Dallas again amended Chapter
41A to purportedly address the infirmities found in 1992. Instead portions of the 1993
amendments were found to be unconstitutional as content-based restrictions on expression
by the United States District Court, Northern District of Texas, Dallas Division, in the case
styled MD II Entertainment, Inc. d/b/a The Fare West, Plaintiff v. City of Dallas, Texas,
Defendant, Civil Action No. 3:93-CV-2093-T (Judge Maloney presiding).
8.
On March 8, 2000, the City passed Ordinance No. 24206 to amend Chapter
41A to add yet another basis for denial of a license: Section 41A-5(a)(9) whereby the Chief
of Police was authorized not to issue a license if an applicant has not obtained a certificate
of occupancy for the premises on which the applicant intends to do business as a sexually
oriented business or the sexually oriented business or its location would otherwise be in
violation of the Dallas Development Code or any of the applicable City ordinances or state
or federal law. As was the case in F.W./P.B.S., there was no provision in this ordinance
wherein the City is required to make the decision whether to issue the license within a
specified and reasonable time period. On June 1, 2000, the Court in Baby Dolls, et al. v.
City of Dallas, Cause Number 3:97-CV-1331-R entered an Order preventing the City from
applying Ordinance No. 24206 to Plaintiffs/Intervenors.
9.
In response, the City passed Ordinance No. 24440 on October 25, 2000.
Therein, the SOB Ordinance, as amended, provided that (such as in the instant case as
discussed hereinbelow) if a license is revoked, the licensee may not apply for a new license
for the same location for one full year (Section 41A-10(e)). The amendments further
expanded the definition of licensee so that even the holder of less than one percent (1%)
interest in a corporation whose sexually oriented business license had been revoked would
now be foreclosed from holding a sexually oriented business for a year from the revocation
even though he may never have been remotely involved in the management of the business.
In Adventure Plus, Inc., et al. v. City of Dallas, Cause No. 3:00-CV-2500-H in November,
2000 raised various constitutional infirmities in the 2000 Ordinance including the fact
that the new definition of licensee to include any ownership interest was an unjustified
effort to stifle the operation of sexually oriented businesses in the City by preventing certain
persons from holding a license without any substantial justification in violation of the First
Amendment and the principles enunciated in United States v. OBrien, 391 U.S. 367,
(1960).
10.
In response, the City amended the SOB Ordinance on August 13, 2001
wherein the definition of licensee was yet again changed. The not even one drop
ownership rule was eliminated, but was replaced by the a new provision wherein a licensee
would now include each individual who exercises substantial de facto control over a
sexually oriented business for which a license has been issued under this Chapter regardless
of whether the individuals name or signature appears on the license application. The
Adventure Plus litigation was still pending and had not been resolved when these
amendments were enacted. By this time, there were no less than a dozen cases pending
between the City and members of the SOB industry. Despite the fact that the industry had
generally been successful throughout its fifteen (15) year history of litigation with the City,
the SOB industry proposed various agreements which were ultimately accepted and which
have resulted in the adult cabarets relocating to industrial zoning districts in the northwest
quadrant of the City and the parties generally enjoying a state of peaceful co-existence.
Issues created by the Citys then most recent enactment such as the new definition of
licensee were reserved for the future (e.g., the Adventure Plus litigation was resolved by an
Order of Continuance and Abatement dated March 24, 2004 wherein it was ordered that if
the City took any action relating to Section 41A-2(18) [the definition of licensee now
recodified as 41A-2(21)], the parties could file appropriate pleadings seeking relief
regarding such actions from that Court).
Causes of Action
11.
JGC Dallas, L.L.C. d/b/a Jaguars (Jaguars) has held a City of Dallas SOB
license to operate an adult cabaret at 11327 Reeder Road, Dallas, Texas since 2012. On
December 11, 2014, the City claimed there was a basis to revoke Jaguars license based
upon the allegation that either a licensee or an operator of Jaguars had knowingly allowed
the possession, use or sale of controlled substances on the premises. That revocation is
stayed in Jaguars pending appeal in state court litigation commenced by the City. Plaintiffs
herein are not parties to that litigation nor otherwise named in the revocation proceedings.
12.
Becoming aware of the threatened revocation, ROYAL35 entered into a
contract with JGC Dallas to acquire its leasehold rights to the Reeder Road premises and to
purchase the assets of the business being operated by JGC Dallas known as Jaguars. The
purchase price is approximately $2.3 Million Dollars payable over the next twenty-four (24)
months to JGC-Dallas plus rent payments to the Landlord under the lease. Plaintiff Kevin
Richardson is a qualified and experienced operator having applied for and obtained licenses
from various governmental entities including a dance hall license from the City of Dallas.
The qualifications to obtain a dance hall license as contained in Chapter 14, Dallas City
Code are virtually identical to the qualifications to obtain a SOB license contained in
Chapter 41A. Plaintiff Richardson through his unrelated entity, Strategic Hype, L.L.C., as
recently as December, 2014 received a dance hall license from the City of Dallas and by
unanimous vote by the City Council obtained a renewal of the specific use permit required
to operate that business in downtown Dallas.
13.
On December 17, 2014, Royal35 and Kevin Richardson as its sole member
and manager made application for a sexually oriented business license for 11327 Reeder
Road. By response dated January 16, 2015, that application was denied by the City solely
on the basis that:
(a)
the license held by JGC Dallas had been revoked;
(b)
the licensee shall not apply for or be issued a sexually oriented
business license for the same location for which the license was revoked for one year after
the date the revocation becomes effective; and
(c)
Kevin Richardson as a person who exercised substantial de facto control
over Jaguars . . . [was] a licensee under the previously issued and revoked license. The
City does not contend that Richardson is an Owner, Employee, Officer, Designated
Operator or Operator of JGC Dallas as those terms are defined in the Ordinance. Instead,
the City contends that in his individual capacity he has exercised substantial de facto control
not over the business for which he filed an application, but rather another business whose
license is being, but has not yet been, revoked since the alleged basis for the revocation of
the JGC license has not yet been subjected to judicial scrutiny.
14.
The Citys attempt to deny Royal35/Richardson a license based upon alleged
past conduct of officers/employees of a different business/company is an unconstitutional

prior restraint on freedom of expression. It is long settled that Plaintiffs proposed adult
cabaret entertainment falls within the scope of expression protected by the First
Amendment. Various cases including the Supreme Court in F.W./P.B.S. have set forth the
core policy that the license for a First Amendment protected business must be based upon
clear objective standards. The Citys prevention of Plaintiffs exercise of their current and
future First Amendment freedoms on the basis of alleged past instances of conduct is
certainly within the ambient of Universal Amusement Company, Inc. v. Vance, 587 F.2d
159 (5th Cir. 1978), en banc, affirmed, 445 U.S. 308 (1980). Therein, the Fifth Circuit
noted that a prior restraint of expression comes before [the] Court with a heavy
presumption against its constitutional validity Id. at 165 citing Bantam Books v. Sullivan,
372 U.S. 58, 70 (1963).
15.
Moreover, denial of the license is not justified under United States v. OBrien,
391 U.S. 367, 377 (1968). Content-neutral regulations burdening expressive activity such
as the provision at issue herein must be judged under a four-factor test of OBrien. The
OBrien test states that a content-neutral ordinance survives constitutional challenge despite
its adverse impact on the exercise of First Amendment rights only when:
(1)
it is within the constitutional power of the government;
(2)
it furthers an important or substantial governmental interest;
(3)
the asserted governmental interest is unrelated to the suppression of
free expression; and

(4)
the incidental restrictions on alleged First Amendment freedoms is no
greater than is essential to the furtherance of that interest. 397 U.S. at 377.
16.
The third prong of OBrien is violated when the governmental interest is
related to the suppression of free expression. 391 U.S. at 377. Section 41A-2(21)(E) as
read and used by the City in conjunction with Section 41A-10(e) is constitutionally suspect
because it does not relate to or further the governmental interests of assuring law-abiding
licensees: Richardson has been shown to be a law-abiding licensee, has been granted other
licenses by the City of Dallas and in fact, under the language of Section 41A-10(e) could
indeed obtain a sexually oriented license for his company Royal35 at any other location in
the City except this particular location.
17.
The fourth prong of OBrien is likewise violated because the regulation in
question is not narrowly tailored to do only what is necessary to achieve a substantial

governmental interest. Denial of a business license based solely upon allegations of
employees of another business knowingly allowing criminal acts by a customer, rather than
being based on conduct or knowledge on the part of this applicant, Kevin Richardson, is a
greater restriction on free expression than is essential to furtherance of the governmental
interests because the alleged basis does not tend to show that Kevin Richardsons
management would be perilous, reckless or intolerable.
18.
Subsection (E) of Chapter 41A-2(21) allows for subjective discretion by the
City to limit protected speech in violation of the First and Fourteenth Amendments of the
United States Constitution. Subparts (A) through (D) provide clear, objective standards.
Who is listed on the application? Who is an officer? Who is a 20% owner? On the other
hand, Subpart (E) Who exercises substantial de facto control? is defined only in the mind
of the City. This new definition of licensee is an unjustified effort to stifle the operation
of sexually oriented businesses in the City by preventing certain persons from holding a
license without any substantial justification in violation of the First Amendment as
enunciated in OBrien.
19.
Plaintiffs aver that this expansion of the definition of licensee taken together
with the expansive use of the revocation procedures are properly viewed as a mere pretext
to suppress and prohibit the expression Plaintiffs would feature. The denial of a new,
separate business license to Plaintiffs because of prior contacts with an entity whose license
is under threat of revocation causes the license requirement itself to be a prior restraint
designed to suppress the content and the expression violative of the First Amendment to the
United States Constitution. Plaintiffs would show that the Citys denial of a sexually
oriented business license is based upon a standard so arbitrary, capricious and unreasonable
as to deny substantive due process protections and constitute an unconstitutional prior
restraint.
20.
There is absolutely no evidence or allegation that the Applicant, Plaintiff
Kevin Richardson, knowingly allowed prohibited criminal acts on the premises operated by
JGC Dallas, L.L.C. Under the City=s Ordinance (see Section 41A-5(8)(a)(i)(aa)), even a
drug conviction against the applicant could not be the basis for the denial of a license. In
other words, the City could not use the conduct alleged as the basis for the revocation of
JGCs license as the basis to deny the issuance of the license to Royal35. Instead in an
effort to frustrate Plaintiffs= due process rights, the City revokes the existing license and
then even though the revocation is not yet effective, denies issuance of the new license
based on the interlocutory revocation which is based on the mere allegations of a
wrongdoing by entertainers/employees of the licensee.
21.
The use of mere allegations by the City to deny a license has already been
found to not pass constitutional scrutiny. See Dumas v. City of Dallas, 648 F.Supp. 106
(N.D. Tex., 1986) wherein Judge Buchmeyer struck down provisions of the SOB Ordinance
allowing the denial of a license to an applicant who was Aunder indictment or misdemeanor
information@. Therein the Court found that Aan indictment or information is not evidence of
an applicant=s guilt, but merely indicates . . . an ex parte procedure navigated solely by a
prosecutor . . .@. Id. at 1074. The City is using mere allegations to revoke one license. The
City then uses the pending Arevocation@ to deny Plaintiffs= application. Without a license,
Plaintiffs are unable to operate their business and thus, are effectively denied the right of a
hearing on the grounds for denial. Plaintiffs are being arbitrarily denied their license and
Plaintiffs are therefore denied procedural and substantive due process. Similar provisions
in the current SOB Ordinance have also been reviewed and overturned as unconstitutional.
In Cause No. 3:01-CV-0857-G styled Millennium Restaurant Group, Inc. d/b/a Cabaret
Royale, Steve W. Craft, Club Hospitality, Inc. d/b/a Lipstick and Nick Mehmeti, Plaintiffs v.
City of Dallas, Texas and Terrell Bolton, Chief of Police. Judge Fish, by Memorandum
Order entered February 21, 2002, found that the City=s attempt to revoke a sexually oriented
business license even on the basis of criminal convictions was an unconstitutional prior
restraint of First Amendment rights if based solely on employee conduct citing Universal
Amusement Company, Inc. v. Vance, 587 F.Supp. 159 (5th Cir. 1978) en banc, aff=d., 445
U.S. 308 (1980) and holding that the license revocation was not justified under the third and
fourth prongs of O=Brien, 391 U.S. 367, 377 (1968).
22.
If the Defendants are allowed to proceed with the denial of Plaintiffs= license,
under Chapter 41A, Section 41A-2(21)(E) and/or 10(e) irreparable harm will result to
Plaintiffs should an injunction not issue. The threatened injury to Plaintiffs outweighs the
threatened harm to the Defendants. The granting of injunctive relief will not disserve the
public interests and there is a substantial likelihood that Plaintiffs will prevail on the merits.
A strong presumption of irreparable injury exists in threatened infringement on First
Amendment rights, including protected expression as featured by Plaintiffs= business.
Plaintiffs will also lose the customers and goodwill which they are purchasing which was
created over a number of years; a monetary loss which is difficult to calculate. Plaintiffs
request that a preliminary injunction be entered restraining the Defendants from denying the
Plaintiffs= sexually oriented business license until this Court adjudicates the constitutionality
of Chapter 41, Section 41A-2(21)(E) and 10(e). All conditions precedent to the filing of the
Complaint have been met, there are no pending administrative proceedings, and further
proceedings under the Ordinance would be futile.
24.
It was necessary for Plaintiffs to retain counsel to represent them in this
litigation. The Plaintiffs request the Court to render an award for reasonable and necessary
attorneys fees and costs pursuant to 42 U.S.C. Section 1988.
WHEREFORE PREMISES CONSIDERED, Plaintiffs pray that the Court grant
judgment:
(1)
declaring Section 41A-2(21)(E) to be unconstitutional and violative of the
First Amendment;
(2)
declaring Dallas City Code Sections 41A-10(e) and 41A-2(21)(E), as applied,
unconstitutional as a prior restraint violative of the First Amendment of the United States
Constitution in that they deny substantive due process and equal protection in violation of
the Fourteenth Amendment of the United States Constitution;
(3)
declaring Sections 41A-2(21)(E) and 41A-10(e) unconstitutional both facially
and as applied to Plaintiffs pending SOB license application, and as a prior restraint in
violation of Plaintiffs rights guaranteed by the First and Fourteenth Amendments to the
United States Constitution;
(4)
declaring that the definition of Licensee within Section 41A-2(21)(E)
unconstitutional in violation of the First Amendment to the United States Constitution both
facially and as applied as same is vague, overbroad and denies substantive due process;
(5)
granting a preliminary and permanent injunction enjoining Defendants from
enforcement of Chapter 41A-2(21)(E) and Chapter 41A-10(e) against the Plaintiffs as a
result of, or on the basis of, the Citys allegation that a licensee or operator of JGC Dallas,
L.L.C. knowingly allowed possession, use or sale of controlled substances on the premises
at 11327 Reeder Road;
(6)
for a reasonable attorneys fee as allowed under 42 U.S.C. Section 1983 and
(7)
costs of court; and
(8)
such other and further relief that the Court may deem proper and just.
1988;
Respectfully submitted,
/s/ Roger Albright__________________
Roger Albright
(Bar No. 009 745 80)
Email: ralaw@rogeralbright.com
Law Offices of Roger Albright
3301 Elm Street
Dallas, Texas 75226
214.939.9222
214.939.9229 (Telecopier)
COUNSEL FOR PLAINTIFFS

Jaguars Sues Dallas in Federal Court

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Jaguars Sues Dallas in Federal Court

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Case 3:15-cv-00310-L Document 1 Filed 01/30/15

IN THE UNITED STATES DISTRICT COURT

CIVIL ACTION NO.

PLAINTIFFS ORIGINAL COMPLAINT

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

Plaintiff ROYAL35, L.L.C. is a Texas limited liability company with its

PLAINTIFFS ORIGINAL COMPLAINT Page 2

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PLAINTIFFS ORIGINAL COMPLAINT Page 4

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PLAINTIFFS ORIGINAL COMPLAINT Page 5

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

PLAINTIFFS ORIGINAL COMPLAINT Page 6

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

Becoming aware of the threatened revocation, ROYAL35 entered into a

PLAINTIFFS ORIGINAL COMPLAINT Page 7

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

the license held by JGC Dallas had been revoked;

the licensee shall not apply for or be issued a sexually oriented

Kevin Richardson as a person who exercised substantial de facto control

The Citys attempt to deny Royal35/Richardson a license based upon alleged

past conduct of officers/employees of a different business/company is an unconstitutional

PLAINTIFFS ORIGINAL COMPLAINT Page 8

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

it is within the constitutional power of the government;

it furthers an important or substantial governmental interest;

the asserted governmental interest is unrelated to the suppression of

free expression; and

the incidental restrictions on alleged First Amendment freedoms is no

The third prong of OBrien is violated when the governmental interest is

PLAINTIFFS ORIGINAL COMPLAINT Page 9

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

The fourth prong of OBrien is likewise violated because the regulation in

question is not narrowly tailored to do only what is necessary to achieve a substantial

Subsection (E) of Chapter 41A-2(21) allows for subjective discretion by the

PLAINTIFFS ORIGINAL COMPLAINT Page 10

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

There is absolutely no evidence or allegation that the Applicant, Plaintiff

PLAINTIFFS ORIGINAL COMPLAINT Page 11

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PLAINTIFFS ORIGINAL COMPLAINT Page 12

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

PLAINTIFFS ORIGINAL COMPLAINT Page 13

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

It was necessary for Plaintiffs to retain counsel to represent them in this

declaring Section 41A-2(21)(E) to be unconstitutional and violative of the

declaring Dallas City Code Sections 41A-10(e) and 41A-2(21)(E), as applied,

declaring Sections 41A-2(21)(E) and 41A-10(e) unconstitutional both facially

declaring that the definition of Licensee within Section 41A-2(21)(E)

granting a preliminary and permanent injunction enjoining Defendants from

enforcement of Chapter 41A-2(21)(E) and Chapter 41A-10(e) against the Plaintiffs as a

PLAINTIFFS ORIGINAL COMPLAINT Page 14

Case 3:15-cv-00310-L Document 1 Filed 01/30/15

costs of court; and

PLAINTIFFS ORIGINAL COMPLAINT Page 15

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