Nudie Bar Has a Case for Millionaire Party Rights
CINCINNATI (CN) - Barring a Michigan strip club from masquerading as a casino for charitable "millionaire parties" may have trampled the First Amendment, the 6th Circuit ruled.
Michigan law defines a millionaire party as an "event at which wagers are placed upon games of chance customarily associated with a gambling casino through the use of imitation money or chips that have a nominal equal to or greater than the value of the currency for which they can be exchanged."
All proceeds of such events must go to charity, and hosts must be licensed by the state. Michigan says an eligible host must be a "qualified organization" - a standard it describes as a "bona fide religious, educational, service, senior citizens, fraternal, or veterans' organization that operates without profit to its members."
Top Flight Entertainment's plans to host millionaire parties at its Inkster, Mich., topless bar Flight Club quickly caused waves in the community.
It had subleased some of its property to millionaire party organizer Flying Aces, which in turn had gotten the green light from the state's lottery commissioner in 2011.
Flying Aces, one of its "substantial" shareholders and Flight Club each sued Michigan Gov. Rick Snyder that year when the tried to cancel its billboard advertising of the millionaire parties based on the newly passed laws regulating advertisements for sexually oriented businesses.
The state ultimately enjoined the laws as facially unconstitutional , but Flying Aces and Flight Club then faced investigation by the state police. Authorities advised Flying Aces that they would be bringing administrative charges against several of the organizations that conducted its millionaire parties, and that the club would not receive another events license until the investigation wrapped up.
Top Flight Entertainment and Flying Aces filed suit in January 2012, alleging that the licensing holdup was retaliation for their challenge to the advertising law.
A federal judge in Detroit dismissed the suit, but a divided three-judge panel of the 6th Circuit revived the plaintiffs' First Amendment claim Friday.
"Plaintiffs have alleged a plausible reason - complaints about millionaire parties being held at their topless bar - that suggests defendants may have denied the licenses on the basis of protected conduct," Judge Helen White wrote for the majority.
Top Flight and Flying Aces may be able to prove that the denial of all future licenses denies them the opportunity to "redress their grievances," according to the ruling.
"Plaintiffs allege sufficient facts to state a claim of First Amendment retaliation," White wrote. "Although defendants dispute the reason for the license denials, we must accept plaintiffs' well-pleaded claims."
The majority added that "it is not implausible that the denial of necessary licenses to organizations seeking to hold millionaire parties at Flying Aces might cause economic injury sufficient to deter plaintiffs from filing future litigation."
Millionaire party licensing was transferred from the lottery commissioner to the head of the Michigan Gaming Control Board over a year ago, but the court found that lottery commissioner M. Scott Bowen can be sued in his official capacity.
Attorney General Bill Schuette is off the hook, however, based on the lack of allegations "that Schuette had knowledge of, or participated in, Bowen's alleged policy of denying all millionaire-party licenses for events at Flying Aces."
In a partial dissent, Judge Damon Keith said the lower court had properly dismissed all of the claims.
"If the commissioner chooses to issue a license for a Millionaire Party, that license is given to a charity - not the venue where the event will be held," Keith wrote. "There is no license to lease space for a millionaire party. There is no process for approving a would-be lessor. All of these facts are undisputed by Top Flight. Therefore, Top Flight has not identified any protected property interest in being an approved location. As the District Court held, Top Flight has provided no source in state law or regulations from which it derived any expectation of entitlement."