SP Star Enterprises, Inc. v. City of Los Angeles
173 Cal. App. 4th 459, 93 Cal. Rptr. 3d 152, 2009 Cal. App. LEXIS 635 (2009)
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Rule of Law:
An application for a conditional use permit to sell alcohol does not involve a fundamental vested right, even if the venue offers constitutionally protected entertainment. Therefore, a court reviews an administrative agency's denial of such a permit under the deferential substantial evidence standard, not with independent judgment or strict scrutiny.
Facts:
- SP Star Enterprises, Inc. (Star) held a certificate of occupancy permitting it to operate an adult club with nude entertainment in a converted warehouse in Los Angeles.
- Star, which also held a franchise for a Penthouse-branded cabaret, applied for a conditional use permit to sell and serve alcohol for on-site consumption.
- The Los Angeles Hompa Hongwanji Buddhist Temple (the Temple), located near the club, opposed the permit, citing concerns for its daycare center, youth programs, and evening religious services.
- The Fukui Mortuary, also located nearby, opposed the permit, testifying about existing problems with disruptive patrons from another bar in the area and the negative impact on its funeral services.
- Los Angeles Police Department officers testified that, based on their experience, combining alcohol with this type of late-hour establishment would likely lead to an increase in crime.
- Representatives for city council members and community associations also testified that the proposed alcohol use was not compatible with the area's revitalization and the development of residential and community spaces.
Procedural Posture:
- The City of Los Angeles's zoning administrator granted Star’s application for a conditional use permit for one year.
- The Los Angeles Hompa Hongwanji Buddhist Temple and the Fukui Mortuary appealed the zoning administrator's approval to the City’s central area planning commission (APC).
- Following a public hearing, the APC upheld the appeal, resulting in the denial of the conditional use permit to Star.
- Star filed a petition for a writ of administrative mandate in the trial court, seeking to overturn the APC's decision.
- The trial court denied Star’s writ petition, ruling that the APC's decision was supported by substantial evidence.
- Star, as appellant, appealed the trial court's judgment to the Court of Appeal.
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Issue:
Does the denial of a conditional use permit for the sale of alcohol at an adult entertainment venue, which already has a permit to operate, implicate a fundamental vested right in free expression, thereby requiring a court to apply a heightened standard of judicial review?
Opinions:
Majority - Klein, P. J.
No, the denial of a conditional use permit for the sale of alcohol does not implicate a fundamental vested right in free expression. The court's review of the administrative decision is therefore limited to determining whether it is supported by substantial evidence. The central issue is the right to sell alcohol, which is not a protected activity, rather than the right to engage in protected speech, which Star already possessed via its existing permit. The impact of the permit denial is purely economic, not an infringement on First Amendment activities. The standards used by the planning commission, such as whether a use is 'desirable to the public convenience or welfare,' are not unconstitutionally vague for regulating commercial enterprises. The court found substantial evidence in the administrative record to support the denial, including testimony from community members about the negative impact on the neighborhood's character, concerns about safety from police officers, and testimony regarding the area's redevelopment plans. The opposition was centered on the secondary effects of alcohol consumption, not animosity towards the content of the entertainment itself.
Analysis:
This decision solidifies the legal distinction between the regulation of core First Amendment expression and the regulation of associated commercial conduct like the sale of alcohol. By classifying the liquor license application as an economic matter not implicating a 'fundamental vested right,' the court allows municipalities to use a more deferential 'substantial evidence' standard of review. This gives local governments considerable latitude to deny alcohol permits to adult businesses based on generalized community concerns, police testimony, and redevelopment plans, without triggering strict scrutiny. The ruling makes it more difficult for adult entertainment venues to challenge such denials on First Amendment grounds, as they must overcome the presumption that the regulation targets the secondary effects of alcohol, not the expressive content.
