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Pair of court rulings side with City in Love Shack cases

A U.S. District Court judge on Monday granted the City of Johns Creek's motion to dismiss a lawsuit filed by the Love Shack against Fulton County over the county's refusal to issue it a business license in 2006, effectively negating the business' attempt to be grandfathered into the city prior to incorporation.

Meanwhile, the city late Friday received a copy of a Fulton Superior Court order that not only finds the business in contempt of court but also holds the business owner and others associated with the enterprise personally liable for future violations under threat of a $3,000 a day fine, forces the business to turn over revenue records to the City if requested, and awards the City almost $20,000 in legal fees.

"In the past few days, two key decisions have gone in Johns Creek favor that further bolster our argument that this business must come into compliance with the city's licensing and zoning ordinances," Mayor Mike Bodker said.

District Court Judge Thomas Thrash Jr. previously allowed Johns Creek to intervene in the Fulton County case. In granting the city's motion for dismissal, Judge Thrash ruled that the business is now under Johns Creek's jurisdiction; therefore the case is moot and Fulton cannot be held liable for damages. He further notes that the business failed to exhaust its administrative remedies following Fulton's denial of a business license and therefore is not able to challenge that denial.

"We are excited and pleased that the judge ruled in favor of Johns Creek – and Fulton County," District 3 Commissioner Lynne Riley said. "It is gratifying to know that the county will not be subject to damages in a situation where we clearly should not be held liable."

Judge Ural Glanville's March 27 order found the Love Shack in contempt for violating an earlier ruling forbidding the business to operate without a City of Johns Creek business license and from operating a sexually oriented business at its current State Bridge Road location, which is not zoned for such use.

In issuing the order in the City's action against 10950 Retail, LLC, which found the business in contempt of his February 28 order, Glanville ruled that the Love Shack continued to operate a sexually oriented business between February 29 and March 9. The order:

• Imposes a $500 fine for the criminal contempt violation;
• Extends punishment for any continued violations of the February 28 order to individuals, including the business owner, corporate officers, agents, and employees of the Love Shack;
• Orders the business to turn over all relevant inventory and revenue data within three days of a request from the City;
• Imposes a $3,000 per day civil contempt fine if he business continues to operate in violation of the February 28 order; and,
• Awards the City $19,875 in legal fees related to the contempt motion proceeding.

Judge Glanville deferred ruling on the portion of his order regarding a city business license because the owner has submitted an application. The City has not yet taken action on the application.

"This is another major victory in the on-going effort to force this business to comply with the City's business and zoning laws," Mayor Mike Bodker said. "It is particularly important that the judge saw fit to now hold the owner and his employees personally liable if they continued to operate illegally."

Another significant component to the ruling relates to the business' records, the Mayor noted.

The City's ordinances consider a business to be sexually oriented one if it meets any of the following criteria:

• At least 25 percent of the establishment's displayed merchandise consists of adult materials.
• The establishment devotes at least 25 percent of its interior business space or at least 500 square feet of its interior business space to the display, sale and/or rental of such materials.
• The establishment regularly offers for sale or rental at least 1,000 adult items and limits access to the premises or to the portion of the premises occupied by such materials to adults only.

The City's testimony and evidence in the contempt hearing focused on these visual components. However, the definition also includes several financial-related criteria that are of particular interest to the City in fully assessing if a business is complying with the ordinance:

• At least 25 percent of the wholesale value of the establishment's displayed merchandise consists of adult materials.
• At least 25 percent of the retail value of the establishment's displayed merchandise consists of adult materials.
• At least 25 percent of the establishment's revenue is derived from the sale or rental of such materials.

"A business can play games with the amount of space devoted to adult materials or the number of such items on display," Bodker said. "The ability to examine the books and records will be another significant tool in our effort to determine the true nature of this business as well as ultimately enforce the laws of Johns Creek."