Milwaukee Owes Strip Club Owner $435,000

CHICAGO (CN) — A Milwaukee strip club is entitled to damages because now-repealed city licensing requirements blocked the opening of a new club in violation of the First Amendment.

Six Star Holdings and Ferol LLC sued the City of Milwaukee over two now-repealed ordinances that required them to obtain certain licenses before they could offer nude or partially nude entertainment.

Jon Ferraro, owner of both businesses, applied for liquor licenses, tavern amusement licenses, and theater licenses, but his applications stalled in city council and were eventually denied.

He claimed that the licensing requirements violated the businesses' First Amendment rights, arguing that city council's dislike of strip clubs was no legal reason to deny a permit.

A federal judge found for the city with respect to the challenges to the liquor licensing ordinance, because the city denied the license on the reasonable grounds that it would increase crime in the area and attract a disorderly clientele.

But the court granted Six Star and Ferol $435,000 in damages related to the theater license application, finding that without this ordinance, Ferraro would have opened dry strip clubs in Milwaukee.

On appeal, the Seventh Circuit upheld the damages award.

"Ferol alleged that, but for the ordinances, it would have engaged in protected speech, and a jury ultimately found this to be true. Damages redress the harm that Ferol suffered by replacing the lost profits Ferol would have earned if it had been able to open its club at the planned time," Chief Judge Diane Wood said, writing for a three-judge panel.

The Chicago-based appeals court noted that the city was especially concerned that other plaintiffs might bring suits against it claiming "they too would have undertaken protected First Amendment activities but for now-repealed statutes."

However, that argument is "sheer speculation," Wood wrote.

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