revocation violated her due process rights because it was arbitrary and capricious. We
are not persuaded by these contentions and affirm the judgment.
II
BACKGROUND
A
In San Diego, it is unlawful to operate a nude entertainment business without a
police permit. (§ 33.3603.) It is also unlawful for a responsible person to allow a nude
person within six feet of a patron (six-foot rule); an adult entertainer to intentionally
touch a patron or a patron to intentionally touch an adult entertainer during a performance
1 For purposes of this appeal, " '[n]ude entertainment business' means any establishment or business operating at a fixed location where (a) any person engages in or operates nude entertainment, or (b) there are live performances which are distinguished or characterized by an emphasis upon the display of specified anatomical areas or specified sexual activities. It includes nightclubs, bars, lingerie modeling studios, and similar commercial establishments commonly known as 'topless' or 'nude.' " (§ 33.3602, italics omitted.)
2 Further statutory references are to the San Diego Municipal Code unless otherwise stated. (<https://www.sandiego.gov/city-clerk/officialdocs/legisdocs/muni> [as of Sept. 26, 2016].) 2
(no-touch rule); or a person to touch, caress, or fondle specified anatomical areas of
another person (no-fondling rule).3 (§ 33.3609, subds. (c), (d) & (f).) Parallel
prohibitions apply to adult entertainers. (§ 33.3610, subds. (a)-(c).)
Coe has a permit to operate a nude entertainment business in San Diego. The
business is open from 12:00 p.m. to 2:00 a.m. daily. It employs approximately 40 people,
including managers, bartenders, waitresses, and security guards. As Coe lives in another
state, the managers oversee the business's daily operations.4
There are two private dance rooms in the back of the business, which are
monitored by a security guard positioned between them. One room, the couch room, is
bordered with couches where patrons may sit and view a dance for $10 to $20 per dance.
The other room, referred to by the parties as the VIP room, has stalls with benches inside
where patrons may sit to view dances. The stalls are shallow, which allows the adult
entertainer to be seen by the security guard, but provides relative privacy to the patron.
The VIP room is more expensive than the couch room because the VIP room has a five-
dance, or $100, minimum.
Coe considers the adult entertainers who perform at her business to be independent
contractors. Before adult entertainers may perform at the business, they must sign a
3 A responsible person includes a person "who is otherwise responsible for the operation, management, direction, or policy of a police-regulated business. It also includes an employee who is in apparent charge of the premises." (§ 33.0201, italics omitted.)
4 The parties do not dispute Coe and the managers of her business are responsible persons within the meaning of section 33.3609. 3
contract, which recites the six-foot, no-touch, and no-fondling rules. These rules are
explained to them and they are shown a dance compliant with the rules. The business
does not require the adult entertainers to undergo a reference check or a background
check apart from the criminal background check required for an adult entertainer to
obtain an adult entertainer permit from the City.
The adult entertainers set their own schedules. Between 12 to 15 adult entertainers
perform on a day shift and an average of 50 adult entertainers perform on an evening
shift. The adult entertainers pay a flat fee to perform and they keep any payment or tips
they receive for private dances. At the end of their shift, they "tip out" by giving a
percentage of their receipts to the shift manager, the disc jockey, and the doorman, which
is then shared with other employees, including the security guards.
B
In 2006, the City issued a 30-day suspension to Coe for multiple violations of the
six-foot and no-touch rules occurring during overt and covert inspections between
September 2005 and September 2006. Coe appealed the suspension. The parties
subsequently settled the matter in January 2007 with Coe admitting to no-touch violations
occurring between March and September 2006 and paying a $10,000 fine.
In July 2012 the City issued a 15-day suspension to Coe for multiple violations of
the six-foot, no-touch, and no-fondling rules occurring between March 2011 and April
2012. Coe appealed the suspension. The parties settled the matter in February 2013 with
Coe admitting the violations, agreeing to a three-day suspension, and paying a $20,000
4
civil penalty. Coe also agreed to mandatory training, which she and the business's
managers, security guards, and disc jockeys attended on March 5, 2013.
At the end of April 2013 the City sent Coe a warning letter advising her of
multiple violations of the no-touch and no-fondling rules by 14 adult entertainers. The
violations occurred during covert inspections in late March and April 2013, after Coe and
her staff had completed the mandatory training.
In May 2013 Coe and the business's managers met with police department
representatives. The parties discussed the recent violations and what measures Coe might
employ to reduce their occurrence. The police representatives warned Coe the next
penalty for further violations would be a 15-day suspension.
Coe took a number of steps to prevent further violations. These steps included
hiring a security consultant; improving lighting; posting a security guard in the corridor
between the private dance rooms; installing monitors in the private dance rooms to allow
for remote observation and correction of violating conduct through an intercom system;
posting the six-foot, no-touch, and no-fondling rules on the walls, in the bathrooms, and
in the dressing rooms; and using secret shoppers to check for rule compliance. She also
began keeping track of adult entertainers and using a progressive discipline policy against
adult entertainers found violating the rules.
Nonetheless, violations continued to occur at Coe's business. In August 2013 the
City sent Coe a warning letter advising her of multiple violations of the no-touch and no-
fondling rules by 10 adult entertainers occurring during covert inspections in May, June
and July 2013. In October 2013 the City sent Coe a warning letter advising her of
5
violations of the no-touch and no-fondling rules by one adult entertainer occurring during
a covert inspection in September 2013. In February 2014 the City sent a warning letter to
Coe advising her of multiple violations of the no-touch and no-fondling rules by nine
adult entertainers occurring during overt and covert inspections in January and February
2014. In April 2014 the City sent Coe a warning letter advising her of multiple violations
of the no-touch and no-fondling rules by three adult entertainers occurring during covert
inspections in February 2014.5
Later in April 2014 the parties met to discuss the continuing violations. Coe
expressed frustration with the delay between the violations and the receipt of the warning
letters, believing the delay prevented her from adequately identifying and disciplining the
adult entertainers or the security guards. In May 2014 the City sent Coe a letter
recapping the meeting and indicating additional violations, depending on the severity,
would most likely result in the revocation of her nude entertainment business permit.
In June 2014 the City notified Coe it was revoking her nude entertainment
business permit for repeated violations of the six-foot, no-touch, and no-fondling rules.
5 One sentence in one of the reports documenting the violations misnamed an adult entertainer. The report correctly named the adult entertainer in 13 other places. The error occurred because the officer who prepared the report had used another similar report as a template. The officer noted the error and corrected it two months later, before the City sent the warning letter to Coe.
6
The notice cited 12 violations of these rules occurring during overt and covert inspections
after the parties' April 2014 meeting.6
Most of the conduct described in the various warning letters occurred in the
private dance rooms. At least fifteen separate officers or detectives observed the conduct.
Over 40 separate nude entertainers committed the violations, which included rubbing
breasts against faces; grinding breasts and buttocks against groins; and rubbing groins or
hands against legs, chests, or groins. Some violations occurred when no security guard
was present. Others occurred when a security guard was present, but the security guard
did not intervene. Still others occurred when a security guard was present and
intervened, but then allowed the adult entertainer to continue with the violating conduct.
Several adult entertainers said they had been advised to change their stage names often to
avoid identification and notices of violation.
C
Coe administratively appealed the revocation.7 A hearing officer conducted a
four-day evidentiary hearing. At the conclusion of the hearing, the hearing officer upheld
the revocation. The hearing officer found based on the above evidence the City had
6 One of the reports documenting the violations incorrectly stated the report had been approved in March 2014 when it had actually been approved in April 2014 on the same day the reported violation occurred. The error was noted and corrected a week later.
7 At the end of September 2014, while the administrative appeal was pending, the City sent Coe a warning letter advising her of multiple violations of the six-foot, no- touch, and no-fondling rules by 16 adult entertainers occurring during covert inspections in July and August 2014. 7
established: (1) the business's adult entertainers had committed numerous and continuing
violations of the six-foot, no-touch, and no-fondling rules; (2) Coe was aware of these
rules; (3) she negligently failed to supervise the business resulting in a pattern of
violations; and (4) she demonstrated an inability to perform the duties required of a nude
entertainment business permit holder. In particular, the hearing officer found that,
despite numerous rules violations, Coe never disciplined any security guards for failing to
properly monitor the adult entertainers. The hearing officer also found the business's
compensation structure created an incentive for security guards to allow violations
because the more touching that occurred, the more compensation adult entertainers were
likely to receive, which increased the security guards' share of the adult entertainers' tips.
D
Coe subsequently filed a combined complaint for civil rights violations and a
petition for writ of administrative mandate (petition). The petition challenged the hearing
officer's decision on the grounds the decision was in excess of jurisdiction, not supported
by the evidence, and not based on a fair hearing. The petition also challenged the
decision on the grounds certain municipal code sections were unconstitutionally vague
and overbroad.
After briefing and oral argument, the superior court denied the petition. As
relevant to the issues raised in this appeal, the court found the reports prepared by the
police officers and detectives who inspected the business were admissible as official
records under Evidence Code section 1280. The court also found this evidence along
with the other documentary and testimonial evidence presented at the hearing showed
8
numerous, continuing rules violations by the business's adult entertainers resulting from
the negligent failure or inability of Coe and her staff to adequately supervise them. The
court noted Coe had taken some measures to prevent violations, but these measures were
ineffective and the business's staff had a monetary incentive to ignore violations. The
court further found the challenged municipal code sections were not unconstitutionally
vague and the delay between when the violations occurred and when the City notified
Coe of them did not deprive Coe of due process of law.8
III
DISCUSSION
A
A petition for a writ of administrative mandate presents "the questions whether the
respondent has proceeded without, or in excess of, jurisdiction; whether there was a fair
trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is
established if the respondent has not proceeded in the manner required by law, the order
or decision is not supported by the findings, or the findings are not supported by the
evidence." (Code Civ. Proc., § 1094.5, subd. (b); Fukuda v. City of Angels (1999) 20
Cal.4th 805, 810 (Fukuda).)
All of these questions, except the question of whether the findings are supported
by the evidence, are questions of law, which we review de novo. (See, e.g., JKH
Enterprises, Inc. v. Department of Industrial Relations (2006) 142 Cal.App.4th 1046,
8 The court entered a judgment denying the petition for writ of mandate after Coe dismissed the companion civil rights complaint. 9
1058-1059 (JKH Enterprises); Gilliland v. Medical Board of California (2001) 89
Cal.App.4th 208, 219; Rosenblit v. Superior Court (1991) 231 Cal.App.3d 1434, 1443.)
As to the question of whether the findings are supported by the evidence, the parties
agree the superior court was required to exercise its independent judgment on the
evidence because a decision to revoke a nude entertainment business permit involves a
The regulation further provides an administrative hearing officer "may consider
hearsay evidence as part of [his or her] determination except that no finding may be
based solely on such hearsay evidence unless the hearsay evidence is supportive or
supplementary to other legally competent evidence. Hearsay may be used if it would be
admissible in a civil action." (San Diego Admin. Reg. No. 10.10, § 4.3, subd. (c); accord,
Gov. Code, § 11513, subd. (d).)
Here, in addition to the admission of the reports qualifying as official records,
seven of the 15 officers and detectives who prepared reports and observed violations at
Coe's business testified to their observations at the administrative hearing. Since the few
reports that may not have qualified as official records supported or supplemented this
20
evidence, they were properly considered and relied upon. (See, e.g., Komizu v. Gourley
(2002) 103 Cal.App.4th 1001, 1007.)
E
Coe further contends the finding she caused or condoned violations by entertainers
was not supported by the evidence and ignored the corrective actions she took to prevent
violations. We disagree.
The testimonial and documentary evidence showed a clear pattern of ongoing,
blatant violations of the six-foot, no-touch, and no-fondling rules at Coe's business.
Although Coe had taken some measures to prevent violations, she did not take other
potentially more effective measures, including assigning an additional security guard to
monitor the private dance areas and reprimanding security guards, when appropriate, for
neglecting their duties. In addition, because Coe's employees received a percentage of
the money each adult entertainer earned from private dances, they had a financial
incentive to ignore rules violations. Indeed, there was evidence Coe's employees had
instructed the adult entertainers to change stage names frequently to hinder the detection
of rules violations. As another court in an analogous context aptly observed, when
violations "occur with alarming regularity, it is naive to suppose that these conditions of
the establishment prevailed without the permission and consent of the licensee." (Harris
v. Alcoholic Beverage Control Appeals Board (1963) 212 Cal.App.2d 106, 119.)
F
Finally, Coe contends the City abused its discretion in deciding to revoke her
permit because the decision was based on a vague "totality of the circumstances" standard
21
rather than objective standards. "[W]e review de novo whether the agency's imposition
of a particular penalty on the petitioner constituted an abuse of discretion by the agency.
[Citations.] But we will not disturb the agency's choice of penalty absent ' "an arbitrary,
capricious or patently abusive exercise of discretion" ' by the administrative agency."
(Cassidy v. California Bd. of Accountancy (2013) 220 Cal.App.4th 620, 627-628.)
The San Diego Municipal Code allows revocation of a nude entertainment
business permit as one means of enforcing the rules applicable to nude entertainment
businesses. (§ 33.0401, subd. (a) ["Regulatory provisions are enforceable through the
issuance, denial, suspension, placing conditions upon, or revocation of the permit, and
through the issuance of verbal or written warnings, and notices of violation"], italics
omitted.) A nude entertainment business permit may be constitutionally revoked when
the permit holder has violated valid provisions of the permitting scheme. (Krontz, supra,
136 Cal.App.4th at p. 1134.)
" 'In reviewing the severity of the discipline imposed, we look to the correctness of
the agency's decision rather than that of the trial court.' [Citation.] ' "The penalty
imposed by an administrative body will not be disturbed in mandamus proceedings unless
an abuse of discretion is demonstrated. [Citations.] Neither an appellate court nor a
trial court is free to substitute its discretion for that of the administrative agency
concerning the degree of punishment imposed. [Citation.]" [Citation.] [¶] "In reviewing
the exercise of this discretion we bear in mind the principle 'courts should let
administrative boards and officers work out their problems with as little judicial
interference as possible … . Such boards are vested with a high discretion and its abuse
22
must appear very clearly before the courts will interfere.' " ' [Citation.] 'The policy
consideration underlying such allocation of authority is the expertise of the administrative
agency in determining penalty questions.' " (Cassidy v. California Bd. of Accountancy,
supra, 220 Cal.App.4th at p. 633.)
Here, the City decided to revoke Coe's permit, instead of imposing the lesser
penalty of a 15-day suspension, based on the totality of the circumstances occurring after
the February 2013 settlement agreement and resulting three-day suspension. These
circumstances include the warning letters sent to Coe; the number, frequency and severity
of the violations occurring at her business; the meetings with Coe and her staff to
ameliorate the violations; and the ineffectiveness of the corrective actions taken by her
and her staff. These circumstances also necessarily include the evidence indicating Coe's
employees had attempted to hinder the detection of rules violations by advising or
requiring adult entertainers to change their stage names frequently. Under these
circumstances, the City could have reasonably concluded the lesser penalty of a 15-day
suspension would not have ameliorated the pattern of ongoing rules violations.
Consequently, we cannot conclude the City abused its discretion by acting arbitrarily and
capriciously in choosing revocation, rather than a 15-day suspension as the appropriate
penalty for the rules violations at Coe's business.
23
IV
DISPOSITION
The judgment is affirmed. Respondent is awarded costs on appeal.
McCONNELL, P. J.
WE CONCUR:
IRION, J.
PRAGER, J.*
* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 24
AI Brief
AI-generated · verify before citing
Holding. The court affirmed the revocation of a nude entertainment business permit, holding that the relevant municipal code sections were not unconstitutionally vague and that the City's enforcement actions, including the accumulation of violations and use of police reports, did not violate the permit holder's due process rights.
Issues
Whether San Diego Municipal Code sections regarding nude entertainment business permits are unconstitutionally vague.
Whether the City's practice of accumulating violations before notifying the permit holder violated due process.
Whether the administrative decision to revoke the permit was supported by sufficient evidence and admissible hearsay.