United States District Court, D. South Dakota, Western Division
DAVID ELIASON, an individual; and 1141 LLC, a South Dakota Limited Liability Company, Plaintiffs,
CITY OF RAPID CITY, a South Dakota Municipality, Defendant.
JEFFREY L. VIKEN CHIEF JUDGE.
David Eliason and 1141 LLC brought this civil action under 42
U.S.C. § 1983 challenging portions of the municipal code
of Rapid City, South Dakota, (“the City”)
relating to the regulation of sexually oriented businesses.
(Docket 1). The court granted plaintiffs a preliminary
injunction and enjoined the City from denying them the
necessary city permit to open a sexually oriented business,
Dick & Jane's Super Spot. (Docket 24). Plaintiffs now
move for summary judgment, seeking a permanent injunction, a
declaration that portions of the Rapid City Municipal Code
are facially unconstitutional, and damages for lost profits
engendered by the City's permit denial. (Docket 33). The
City opposes the motion. (Docket 45). For the reasons given
below, the court grants plaintiffs' motion in part and
denies it in part. The court permanently enjoins the City
from enforcing certain sexually oriented business regulations
as to plaintiffs, finds one regulation facially
unconstitutional and denies summary judgment as to damages.
following recitation consists of the material facts developed
from the plaintiffs' statement of undisputed material
facts (Docket 38), plaintiffs' response to those facts
(Docket 44), and other evidence in the record where
indicated.These facts are “viewed in the light
most favorable to the party opposing the motion.”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986) (quotation omitted).
Eliason is a South Dakotan in the business of operating
sexually-themed retail stores. (Docket 38 at ¶ 37). In
2017, he began the process of opening a store in Rapid City,
South Dakota, now called “Dick & Jane's Super
Spot (“Dick & Jane's”). (Docket 31 at
¶¶ 2 & 4). The Rapid City Municipal Code
(“RCMC”) regulates businesses deemed “adult
oriented businesses” and “sexually oriented
businesses.” See RCMC §§ 5.70,
17.50.186. Plaintiffs intended to sell items which would
render the business sexually and adult oriented, including
“adult-themed novelties and sexual aids” and
“DVD's [sic] and magazines with sexual
themes[.]” (Docket 38 at ¶ 3). No party alleges
Dick & Jane's was improperly classified as a sexually
or adult oriented business.
April of 2017, Mr. Eliason met with Vicki Fisher, a City
planning official, to express his interest in opening a
sexually oriented business. Id. at ¶ 5. Ms.
Fisher advised him to meet with a wider array of officials.
Id. at ¶ 6. On May 9, Mr. Eliason and his
attorney met with four officials, including Carla Cushman, an
Assistant City Attorney. Id. at ¶ 7. At that
meeting, 1141 Deadwood Avenue was identified as a location
which would likely be compliant with City regulations
concerning the location of sexually oriented
businesses. Id. at ¶¶ 8-10. This
location is a strip mall building hosting commercial tenants.
(Docket 37-6 at pp. 2-4). On April 17, Mr. Eliason, on behalf
of REDE LLC, sent a letter to the owners of 1141 Deadwood
Avenue expressing his intent to lease a suite in that
building. (Docket 31-1).
26, Mr. Eliason, through project planner Renner Associates,
applied for a conditional use permit to open a sexually
oriented business as required by City
regulations. (Dockets 38 at ¶ 14 & 37-4). City
staff members evaluated the application and recommended
granting it. (Docket 37-5 at pp. 6-7). Specifically, staff
concluded the proposed business complied with City
regulations regarding the location of sexually oriented
businesses. Id. The Rapid City Planning Commission
unanimously approved the application on August 24. (Dockets
38 at ¶ 18 & 37-6 at pp. 10-12).
August 31, a martial arts studio serving children located
less than 1, 000 feet from 1141 Deadwood Avenue, Black Hills
Taekwondo LLC (“BHT”) (also known as
“Karate for Kids”), appealed the Planning
Commission's approval of Mr. Eliason's conditional
use permit. (Dockets 38 at ¶ 21 & 37-7). BHT argued
it was an “educational facility” under City
regulations. (Docket 37-7 at pp. 2-6). City regulation
prohibits sexually oriented businesses from operating within
1, 000 feet of an educational facility. RCMC §
17.50.186(D)(1)(b). The Planning Commission specifically
considered and rejected the argument BHT would be an
educational facility blocking Mr. Eliason's conditional
use permit. (Docket 37-12 at pp. 14-15).
Rapid City Common Council, the municipal legislative body,
took up BHT's appeal during its September 18 meeting.
(Docket 38 at ¶ 28). Prior to the meeting, Assistant
City Attorney Cushman wrote a memorandum to the Common
Council concluding BHT was not an educational facility.
(Docket 37-10). At the meeting, 15 members of the
public-including four leaders of local Christian churches and
a representative from the Family Heritage Alliance-urged the
Common Council to grant BHT's appeal and deny Mr.
Eliason's conditional use permit. (Docket 37-13 at pp. 18-44).
No member of the public spoke in favor of denying the appeal.
Following public comment, some Council members made remarks
concerning their religious and moral opposition to sexually
oriented businesses, in addition to the issue of whether BHT
qualified as an educational facility. Id. at pp. 45-51.
The Common Council voted 6-4 to grant BHT's appeal.
(Docket 38 at ¶ 30).
president of REDE LLC, Mr. Eliason executed a five-year lease
for suites 9 and 10 of 1141 Deadwood Avenue on September 11.
(Docket 31-2). On September 15, Mr. Eliason, on behalf of
REDE LLC, assigned the lease to 1141, LLC
(“1141”). After the Common Council denied the
conditional use permit, Mr. Eliason informed his new landlord
via e-mail and stated the decision “would have no
impact on the lease” because he would be
“modifying the inventory list and operation to a level
that a conditional use permit is not required[.]”
Eliason and 1141 brought the present suit on October 18,
2017. (Docket 1). Plaintiffs moved for a preliminary
injunction enjoining the City from enforcing RCMC §
17.50.186 against them. (Dockets 14 & 17). The court held
a hearing on plaintiffs' motion on January 19, 2018.
(Docket 22). Two witnesses testified at the hearing and the
court received 15 exhibits into evidence. (Dockets 22 &
23). On January 29, the court entered a preliminary
injunction enjoining the City from continuing to deny
plaintiffs a conditional use permit. (Docket 24).
& Jane's opened for business on February 14, 2018.
(Dockets 31 at ¶ 35 & 44 at p. 24). Plaintiffs
assert Dick & Jane's could have been open by May 14,
2017, had there been no conditional use permit requirement or
had the Common Council not denied the permit on October 14,
2017. (Docket 38 at ¶¶ 38-39). The City vigorously
disputes these assertions and argues Dick and Jane's
could not have opened earlier than January of 2018. (Dockets
44 at ¶¶ 38-39 & 45 at pp. 10-14). Plaintiffs
did not apply for the necessary adult oriented business
license-which is distinct from the conditional use permit
required to open a sexually oriented business-until February
9, 2018. (Dockets 42-1 & 42-2). The permits were approved
on March 1. Id.
Federal Rule of Civil Procedure 56(a), a movant is entitled
to summary judgment if the movant can “show that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Once the moving party meets its burden,
the nonmoving party may not rest on the allegations or
denials in the pleadings, but rather must produce affirmative
evidence setting forth specific facts showing that a genuine
issue of material fact exists. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986). Only disputes over facts
which might affect the outcome of the case under the
governing substantive law will properly preclude summary
judgment. Id. at 248. “[T]he mere existence of
some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no
genuine issue of material fact.”
Id. at 247-48 (emphasis in original).
dispute about a material fact is genuine, that is, if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party, then summary judgment is not
appropriate. Id. However, the moving party is
entitled to judgment as a matter of law if the nonmoving
party failed to “make a sufficient showing on an
essential element of her case with respect to which she has
the burden of proof.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). In such a case,
“there can be ‘no genuine issue as to any
material fact,' since a complete failure of proof
concerning an essential element of the nonmoving party's
case necessarily renders all other facts immaterial.”
Id. at 323.
determining whether summary judgment should issue, the facts
and inferences from those facts must be viewed in the light
most favorable to the nonmoving party. Matsushita,
475 U.S. at 587-88. The key inquiry is “whether the
evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.”
Anderson, 477 U.S. at 251-52.
Permanent injunction & types of constitutional
standard for issuing a preliminary or permanent injunction is
essentially the same, excepting one key difference. A
permanent injunction requires the moving party to show actual
success on the merits[.]” Oglala Sioux Tribe v. C
& W Enters., Inc., 542 F.3d 224, 229 (8th Cir.
2008). “If a court finds actual success on the merits,
it then considers the following factors in deciding whether
to grant a permanent injunction: (1) the threat of
irreparable harm to the moving party; (2) the balance of
harms with any injury an injunction might inflict on other
parties; and (3) the public interest.” Id.
(citing Dataphase Systems, Inc. v. C.L. Systems,
Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc)).
may challenge a legislative enactment either facially or as
applied to itself only. To succeed on a facial challenge,
plaintiffs “would have to establish that no set of
circumstances exists under which the ordinance would be
valid[.]” Phelps-Roper v. City of Manchester,
Mo., 697 F.3d 678, 685 (8th Cir. 2012) (en banc)
(internal quotation and citation omitted). “An
ordinance may also be invalidated on a facial First Amendment
challenge as overbroad if a substantial number of its
applications are unconstitutional, judged in relation to its
plainly legitimate sweep.” Id. (internal
quotation and citation omitted). “An as-applied
challenge consists of a challenge to the statute's
application only as-applied to the party before the court. If
an as-applied challenge is successful, the statute may not be
applied to the challenger, but is otherwise
enforceable.” Phelps-Roper v. Ricketts, 867
F.3d 883, 896 (8th Cir. 2017) (internal quotation and
motion for summary judgment has two distinct aims. First,
they seek a declaration that four City regulations are
unconstitutional. (Docket 34 at pp. 6-12). Second, plaintiffs
seek summary judgment on the existence and amount of profits
they allegedly lost due to the City's unconstitutional
permit process. Id. at pp. 12-15. In response, the
City argues Mr. Eliason does not have standing to bring any
claim, that BHT's move from the area moots one of
plaintiffs' claims, that its regulations are not facially
unconstitutional, and that there are genuine questions of
material fact regarding plaintiffs' damages. (Docket 45
at pp. 15-18, 23-38). The court agrees with plaintiffs on the
merits in part, but concludes genuine factual disputes exist
court first concludes Mr. Eliason has standing to litigate
this matter. The City argues Mr. Eliason suffered no injury
from the permit denial as 1141 is the entity operating Dick
& Jane's. (Docket 45 at pp. 17-18). In the City's
view, the general rule against shareholders asserting
standing on behalf of their corporation bars his claim.
Id. (citing Potthoff v. Morin, 245 F.3d
710, 716-18 (8th Cir. 2001)). It asserts Mr. Eliason has no
claim independent of 1141's claims. Id.
Plaintiffs respond that Mr. Eliason's injury is distinct
from 1141's, establishing his separate standing. (Docket
52 at pp. 25-26).
irreducible constitutional minimum of standing contains three
elements.” Lujan v. Defs. of Wildlife, 504
U.S. 555, 560 (1992).
First, the plaintiff must have suffered an “injury in
fact”-an invasion of a legally protected interest which
is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical. Second, there must
be a causal connection between the injury and the conduct
complained of-the injury has to be fairly traceable to the
challenged action of the defendant, and not the result of the
independent action of some third party not before the court.
Third, it must be likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.
Id. at 560-61 (internal quotations and citations
In the First Amendment context, two types of injuries may
confer Article III standing to seek prospective relief.
First, [Mr. Eliason] could establish standing by alleging an
intention to engage in a course of conduct arguably affected
with a constitutional interest, but proscribed by a statute,
and there exists a credible threat of prosecution thereunder.
Second, [Mr. Eliason] can establish standing by alleging that
Missourians for Fiscal Accountability v. Klahr, 830
F.3d 789, 794 (8th Cir. 2016) (internal citations and
quotations omitted). “When a statute is challenged by a
party who is a target or object of the statute's
prohibitions, there is ordinarily little question that the
statute has caused him injury.” St. Paul Area
Chamber of Commerce v. Gaertner, 439 F.3d 481, 485 (8th
Cir. 2006) (internal citation and alteration omitted).
City's argument does not take into account Mr.
Eliason's potential exposure to criminal liability under
City regulations. “It is unlawful . . . [f]or any
person to own, manage or operate an adult oriented business
without a valid . . . license issued by Rapid
City[.]” RCMC § 5.70.030(A)(1). The general
penalty for violating City regulations is “not less
than $1 nor more than $500” in fines “or 30 days
in jail, or both.” Id. at § 1.12.010.
“Each day any violation . . . continues shall
constitute a separate offense.” Id. The
Supreme Court held a statute poses a credible threat of
prosecution when it “on its face proscribes” the
conduct at issue and where “the [City] has not
disavowed any intention of invoking the criminal penalty
provision[.]” Babbitt v. United Farm Workers
Nat'l. Union, 442 U.S. 289, 302 (1979); see also
Gaertner, 439 F.3d at 485-86 (same). Under these
regulations, Mr. Eliason could be prosecuted for owning,
managing or operating Dick & Jane's in the absence of
the court's preliminary injunction. This “credible
threat of prosecution” grants Mr. Eliason standing to
pursue his First Amendment claims independently of
1141. Klahr, 830 F.3d at 794.
court next finds plaintiffs' claim that the definition of
educational facility found in RCMC § 17.50.186(D)(1)(b)
is unconstitutionally vague and has not been mooted. The City
asserts BHT's move to a new location mooted the
claim. (Docket 45 at pp. 34-35). Plaintiffs
respond that BHT's voluntary move does not moot their
constitutional claims and that, in any event, their claim for
damages would keep the whole case live. (Docket 52 at pp.
case becomes moot-and therefore no longer a ‘Case'
or ‘Controversy' for purposes of Article III-when
the issues presented are no longer ‘live' or the
parties lack a legally cognizable interest in the
outcome.” Already, LLC v. Nike, Inc., 568 U.S.
85, 91 (2013) (internal quotation omitted). “It is well
settled that a defendant's voluntary cessation of a
challenged practice does not deprive a federal court of its
power to determine the legality of the practice.”
Friends of the Earth, Inc. v. Laidlaw Envtl.
Servs. (TOC), Inc., 528 U.S. 167, 189 (2000) (internal
In accordance with this principle, the standard [the Supreme
Court] ha[s] announced for determining whether a case has
been mooted by the defendant's voluntary conduct is
stringent: A case might become moot if subsequent events made
it absolutely clear that the allegedly wrongful behavior
could not reasonably be expected to recur. The heavy burden
of persuading the court that the challenged conduct cannot
reasonably be expected to start up again lies with the party
Id. (internal quotations and citation omitted).
initial question might arise regarding whether BHT's
conduct in voluntarily moving from Dick & Jane's
vicinity can be imputed to the City for purposes of the
mootness analysis. The court expresses no view as to whether
the term “defendant” used in the Supreme Court
case law on this topic encompasses a third party nonlitigant
such as BHT. However, a more precise framing of the issue
directs the court away from that question. The court must
determine whether the City cannot reasonably be expected to
apply RCMC § 17.50.186(D)(1)(b) now that BHT has moved
from the area. If so, plaintiffs' claim is moot.
City has not carried its “heavy burden of persuading
the court” it will not apply the challenged regulation
to plaintiffs in future. Laidlaw, 528 U.S. at 189.
The most obvious scenario in which the City could subject
plaintiffs to the regulation, as they point out, is if Dick
& Jane's outgrows its current location and searches
for another within the City's municipal boundaries.
(Docket 52 at pp. 7-8). The City may also attempt to revoke
plaintiffs' conditional use permit, requiring plaintiffs
to prove their compliance with the sexually oriented business
regulations, including the challenged regulation. In either
scenario, plaintiffs would be forced to litigate anew the
question of the regulation's constitutionality. The court
accordingly concludes plaintiffs' claim against §
17.50.186(D)(1)(b) and their request for a permanent
injunction are not moot.
First Amendment claims
court now turns to whether plaintiffs are entitled to a
permanent injunction on their constitutional claims and, if
so, whether that injunction should be facial or as-applied.
Plaintiffs moved for summary judgment on three constitutional
1. Whether RCMC § 17.50.186(E), which requires sexually
oriented businesses to obtain a conditional use permit, is an
unconstitutional prior restraint ...