Indiana Appeals

Seventh Circuit Upholds City of Gary's "Sexually Oriented Business" Ordinance

In Andy's Restaurant & Lounge, Inc. v. City of Gary, the Seventh Circuit upheld under both the First Amendment of the Constitution and Indiana Law, the Gary City "Sexually Oriented Business" Ordinance.  The ordinance applies to all sexually oriented businesses (adult book stores, arcades, novelty stores, theaters, and dancing establishments), requires all such businesses to obtain licenses (revocable upon a violation of the ordinance) and prohibits physical contact between semi-nude employees and customers, prohibits the placement of doors, curtains or other materials on private booths so that an employee is able to look into a booth at all times.  The ordinance also contains numerous sanitation provisions, including a prohibition on rugs or carpet, a requirement of non-porous, easily cleanable surfaces, and waste disposal procedures as well as other obligations for employees, such as ensuring that no sexual activity occurs on the premises.      

While the ordinance did not fall neatly into either the "zoning ordinance" line of First Amendment cases under which the court would use a "time, manner, place" analysis nor the intermediate analysis used for public indecency statutes, because the parties briefed the former, the court relied upon it in its analysis. The court first found that the ordinance was content neutral in that it was not a direct regulation of speech but was rather a regulation of the secondary effects. The court next found that the law was designed to serve a substantial governmental interest and did not unreasonably limit alternative venues of communication.  Because the Indiana law issues were not properly before the court, they were dismissed.

Back To State Court

The Seventh Circuit Court of Appeals certified questions of state law to the Indiana Supreme Court in DFS Secured Healthcare Receivables Trust vs. Caregivers Great Lakes, Inc.. The complaint was based on the Indiana Uniform Fraudulent Transfer Act. Federal jurisdiction was based on diversity. The Seventh Circuit certified several issues for consideration by the Indiana Supreme Court, in part, because of new and novel theories advanced under the Act, which had not been previously decided by an Indiana state court.

Seizures May Constitute Disability

In Barnett v. Barnhart, the Seventh Circuit Court of Appeals found that an Administrative Law Judge erred, in part, by failing to give careful consideration to medical records predating an abandonment of full time employment. The Court remanded the case for further proceedings to determine if the plaintiff, who suffered from seizures, is entitled to disability insurance benefits pursuant to 42 U.S.C. 423(a)(1).

The Fugitive-Disentitlement Doctrine Applied to Immigration Cases

The Sapoundjiev family had been told by an immigration judge that they were not entitled to asylum nor to withholding of removal, and so on May 13, 2004, the family was to report for custody and removal from the United States. A judge on May 12, 2004, entered a temporary stay of removal pending a response from the Attorney General. However, the Sapoundjiev family still failed to report to the immigration officials. The Attorney General asked for the temporary stay to be vacated due to the family’s failure to report. In Sapoundjiev v. Ashcroft, decided on July 22, 2004 by the Seventh Circuit, the court held that the fugitive-disentitlement doctrine applies to immigration cases. Therefore, aliens who avoid lawful custody, even after a temporary stay has been granted, lose their right to judicial review. The court, however, did note that since the Sapoundjievs were not being removed due to serious crimes, they would have been entitled to seek conditional release while the petition for review was pending, but they made no such request. Important to remember, then, is that in immigration cases, if an alien is to report for custody, the alien should be motivated to do so, or else their right to any judicial review will be lost, and their departure will occur sooner, rather than later, if it would have at all.

You Get What You Pay For

The Seventh Circuit held fast to capitalist ideals by enforcing an arbitration clause indicating that consumers get what they pay for in Carbajal v. H&R Block

“People are free to opt for bargain-basement adjudication-or, for that matter, bargain-basement tax preparation services; air carriers that pack passengers like sardines but charge less; and black-and-white television. In competition, prices adjust and both sides gain. ‘Nothing but the best’ may be the motto of a particular consumer but it is not something the legal system foists on all consumers”.

Consumers seeking bargain-basement services are advised: the fine print on the back of the ticket, or just before the signature line, may bar their case from being decided in the Seventh Circuit.

To the winner goes the spoils... the Seventh Circuit Decides Petersen v. Gibson

The 7th Circuit, on June 16, 2004, decided the case of Petersen v. Gibson, holding that a party will not have an opportunity to receive judgment on attorney’s fees unless the party is considered a prevailing party. To be a prevailing party, the court held, that the party must have obtained judicially-sanctioned relief against the opposing party.
This decision is important to understand so that a practitioner, involved in a § 1988 claim, does not enter into a settlement without first realizing that a judgment on attorney’s fees will not be possible.
On June 13, 1995, Ms. Petersen had an appointment to get her hair colored at the Mario Tricoci Salon in Bloomingdale’s Stratford Square Mall. After three hours and two attempts to correct a botched coloring job, Ms. Petersen was left under a hair dryer while her stylist went to lunch. When the treatment began to burn her scalp and her stylist was nowhere to be found, Ms. Petersen, with the foils still in her hair, left the salon without paying.
The salon employees contacted the Bloomingdale police and Officer Gibson was dispatched to the scene. Officer Gibson contacted Ms. Petersen, who returned to the store. After hours of conversation, with Ms. Petersen offering to pay part of the bill, and the salon refusing to accept anything less than full payment, Officer Gibson arrested Ms. Peterson and detained her for two more hours at the police station. For seven months, the salon pursued Ms. Petersen’s prosecution, but then the state dismissed the charges. Ms. Petersen, thereafter, sued claiming false arrest and wrongful detention against Officer Gibson, malicious prosecution, battery and negligence against the salon, and conspiracy against all defendants.
The jury found that Officer Gibson violated Ms. Petersen’s constitutional rights by wrongly arresting and detaining her, that the salon was liable for malicious prosecution and that there was no conspiracy. The jury returned a verdict of $40,000 in compensatory damages and $10,000 in punitive damages against the salon, but only a $1.00 nominal damage award against Officer Gibson.
Ms. Petersen moved for a new trial on the damage award against Officer Gibson arguing the jury was given improper instructions, which the court granted. However, before a new trial began, the parties reached a settlement in which Officer Gibson paid $10,000. Ms. Petersen then moved for attorney’s fees against Officer Gibson. The court awarded $288,087.25 in fees and $20,840.03 in costs. Officer Gibson appealed the court’s award of attorney’s fees and costs.
Upon appeal, the 7th circuit found the main issue to be whether Ms. Petersen was a “prevailing party” under § 1988. To be a prevailing party, “a plaintiff must obtain formal judicial relief, and not merely ‘success.’” Crabill v. Trans Union, 259 F.3d 662, 667 (7th Cir. 2001). The only judgment in the case was the jury verdict for nominal damages, but it was vacated. The court noted that even if it had not been vacated case law demonstrates that while nominal damages can give a person prevailing status, the nominal damages allude to the fact that an essential element for monetary relief must be missing, and so the only reasonable fee is no fee at all. Farrar v. Hobby, 506 U.S. 103, 115 (1992).
A judgment will constitute relief only if it affects the behavior of the defendant toward the plaintiff. Rhodes v. Stewart, 488 U.S. 1, 4 (1988). Since the nominal damage award was vacated, it did not change the behavior of the parties, and, thus, cannot give Ms. Petersen prevailing party status. While case once held that a party “prevailed” if the lawsuit influenced the desired relief by bringing a voluntary change in the defendant, Buckhannon Bd. & Care Home, Inc. v. West Virginia Dept. of Health & Human Res., changed the law and required that the plaintiff obtain, specifically, a “judicially-sanctioned change” between the parties. 532 U.S. 598, 605 (2001).
Because Ms. Petersen received no relief from the judgment of the court, and because the settlement was not a “judicially-sanctioned” change, Ms. Petersen was not a prevailing party under § 1988, and was not entitled to attorney’s fees. However, since costs are not necessarily viewed in the same light as fees, the issue of costs was vacated and remanded for further analysis.