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Three Expo Events, L.L.C. v. City of Dallas

United States Court of Appeals, Fifth Circuit

October 24, 2018

THREE EXPO EVENTS, L.L.C., Plaintiff-Appellant
v.
CITY OF DALLAS, TEXAS, Defendant-Appellee

          Appeal from the United States District Court for the Northern District of Texas

          Before JOLLY, DENNIS, and ELROD, Circuit Judges.

          JAMES L. DENNIS, CIRCUIT JUDGE.

         Plaintiff, Three Expo Events, L.L.C. (Three Expo), is a Texas limited liability company engaged in the business of producing and presenting adult love- and sex-themed conventions in major cities of the nation. After staging such an event in the City of Dallas's Convention Center in August 2015 (Exxxotica 2015), the City and Three Expo informally agreed to a second convention (Exxxotica 2016) to be held at the Convention Center on May 20-21, 2016.

         Though well attended and successful economically, the 2015 event, which featured near nudity and sexually suggestive activities, drew opposition from some citizens on moral and civic grounds. Protesters gathered in the Convention Center lobby during the event, and several organizations reportedly asked Dallas's mayor to keep Exxxotica out of the Convention Center. The mayor publicly acknowledged that he was concerned about the City providing a forum for the event, but he and other city officials took the position at that time that the City could not legally and constitutionally deny use of the Convention Center to a group based on the content of its speech or expression. Consequently, the City and Three Expo proceeded to correspond and make plans for the proposed Exxxotica 2016.

         Three Expo followed its usual method of operations in effectuating Exxxotica 2015 and planned to do so again with respect to the 2016 convention: Three Expo, as producer, presenter, and manager of the convention events, paid the expenses of staging a convention and likewise received a large share of its revenues. For its own business reasons, however, Three Expo formed a subsidiary "ownership entity" in each city where it brought its Exxxotica convention (e.g., Exotica Chicago, LLC; Exotica Miami, LLC; etc.). Three Expo would then have the ownership entity enter and hold the lease of the public facility for the purpose of the convention. In keeping with this standard practice, Three Expo planned to have its ownership entity, Exotica Dallas LLC, enter the lease contract with the City to stage Exxxotica 2016 at the Convention Center.

         The record reflects that, as is true of Three Expo's other ownership entities, Exotica Dallas LLC is not an independent third party free of control by Three Expo-to the contrary, Exotica Dallas LLC was created by a member of Three Expo for the purpose of entering a lease with the venue for Three Expo's production and presentation of Exxxotica 2016 in Dallas. Moreover, Exotica Dallas LLC is bound by a Management and Services Agreement it entered with Three Expo wherein Exotica Dallas LLC appointed Three Expo as its agent with authority to enter into contracts in its behalf. The agreement authorizes Three Expo to "deal with[] any of the business and government contracts of [Exotica Dallas LLC] for all purposes, and to do, at Three Expo Events' option, all acts and things that Three Expo Events deems necessary in furtherance of the [Exxxotica events]." Thus, Exotica Dallas LLC is totally integrated with and under the control and domination of Three Expo.

         On January 19, 2016, the Convention Center advised Three Expo that it was in the process of drafting a contract for Exxxotica 2016. Indeed, a draft lease contract for the 2016 event was prepared by Convention Center staff. However, in early February 2016, Dallas's mayor advised the media that the he did not want the Exxxotica event to return to the Convention Center in 2016, reiterating the sentiments he expressed about the event in 2015. On February 3, 2016, the Dallas City Council, along with City Attorneys, Dallas police officers, and a representative from the Convention Center, held a private executive session concerning Exxxotica. After the meeting, the Convention Center's executive director for convention and event services, Ronald King, advised his employees to "wait" for "further information" before formally booking Exxxotica 2016. Three days later, news broke that the mayor was "trying to stop [Exxxotica] from coming to downtown Dallas."

         Indeed, the mayor directed the City Attorney to draft a resolution prohibiting the City Manager from entering into a contract with Three Expo for use of the Convention Center. He acknowledged publicly his belief that the Convention Center was not the place for "the business of sex and sexual products." The mayor also said that he was contacted by "dozens of citizens" about the event. One City Council member said she "might support the ban" of Exxxotica 2016 and that she "[didn't] like them being here." On February 6, one of downtown Dallas's most high-profile property owners emailed the City Council urging it to vote to prohibit Exxxotica 2016, saying he believed it "constitute[d] an activity that runs totally counter to the values, mores[, ] and beliefs of the vast majority of the citizens of the City of Dallas" and that the city's Convention Center was not "the proper venue" for the event. Some prominent women's organizations also publicly opposed the event.

         On February 10, 2016, the City Council met to discuss whether to adopt the resolution banning Exxxotica 2016 from the Convention Center as requested by the mayor. The news reports of the controversy stirred up much public debate. At the meeting, only one speaker-Jeffrey Handy, one of Three Expo's two governing members-spoke in support of Exxxotica 2016. The other eighteen speakers, including local religious and business leaders, spoke in opposition to allowing the event to be held at the Convention Center. Many City Council members voiced their opposition to the event as well, with one equating it to "the unbridled right to allow pornography to be displayed in a public facility," and another saying she "will always say no when it comes to this type of event in the City of Dallas." Other City Council members were more hesitant because the City Attorney advised that the resolution prohibiting Exxxotica 2016 might not pass constitutional muster. From their speeches and remarks at the meeting, it was evident that the mayor and a majority of the City Council clearly understood and intended that passage of the resolution would prevent Exxxotica 2016 from being held at the Convention Center.

         At the meeting, the City Council adopted Resolution No. 160308, which stated:

WHEREAS, Three Expo Events, LLC requests to contract with the City to hold a three-day adult entertainment expo at the Dallas Convention Center; Now, Therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DALLAS:
Section 1. That the City Council directs the City Manager to not enter into a contract with Three Expo Events, LLC, for the lease of the Dallas Convention Center.
Section 2. That this resolution shall take effect immediately from and after its passage in accordance with the provisions of the Charter of the City of Dallas, and it is accordingly so resolved.

         Ronald King, the executive director for convention and event services for the Convention Center, testified that he understood that the resolution "would prohibit [him] from entering into a contract that would allow for" the event to return. John Johnson, the assistant director for the City's convention and event services, testified that he was "shocked" by "the vote of City Council to prohibit the [event]," and he understood the resolution to mean he was "no longer authorized to enter into a contract to book" Exxxotica 2016.

         On February 24, 2016, Three Expo filed suit against the City in federal court and sought a preliminary injunction to prevent the City from enforcing the resolution. The district court denied Three Expo's motion for a preliminary injunction, and no Exxxotica event took place in Dallas in 2016.

         After the denial of the injunction, Three Expo amended its complaint, alleging that the City's actions and resolution in denying Exxxotica 2016 access to the Convention Center violated the First Amendment, the Equal Protection Clause, and the Bill of Attainder Clause of the United States Constitution. After discovery, the City filed a motion to dismiss for lack of jurisdiction, contending that Three Expo lacked standing to bring suit. The district court granted the City's motion, holding that Three Expo lacked Article III standing. Three Expo appealed.

         We REVERSE. The district court's decision that Three Expo lacked standing was based on: (1) clear errors in the district court's factual findings; and (2) the district court's manifest failure to apply the well-established principles of law governing Article III standing to the entire evidence of record in this case.

         I.

         The district court's findings of fact "must not be set aside unless clearly erroneous." Fed.R.Civ.P. 52(a)(6). "A finding is 'clearly erroneous' when[, ] although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been ...


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