City of Kenosha v. Bruno

PETITIONER:City of Kenosha
RESPONDENT:Bruno
LOCATION:United States Department of Agriculture

DOCKET NO.: 72-658
DECIDED BY: Burger Court (1972-1975)
LOWER COURT:

CITATION: 412 US 507 (1973)
ARGUED: Apr 18, 1973
DECIDED: Jun 11, 1973

ADVOCATES:
James A. Walrath – for appellees Sleepy’s Inc. and others
Leroy L. Dalton –

Facts of the case

Question

Audio Transcription for Oral Argument – April 18, 1973 in City of Kenosha v. Bruno

Warren E. Burger:

Mr. Dalton you may proceed whenever you are ready.

Leroy L. Dalton:

Mr. Chief Justice and may it please the Court.

This is an appeal from the three-judge District Court in the Eastern District of Wisconsin.

This case involves the liquor licenses of three bars in the City of Racine and six bars in the City of Kenosha.

Kenosha is a city of about 70,000 or more on the border of Wisconsin and Illinois, just north of Chicago.

Racine is the city of about 90,000 to 95,000 just a few miles north of Kenosha.

This appeal is from a judgment holding that Wisconsin’s statutes which permit legislative hearings in liquor license renewals and original granting are in violation of a due process clause.

The Court said that insofar as those statutes permit the denial of the renewal of licenses, granting of licenses without a judicial type hearing, the statutes violate the Fourteenth Amendment.

The judgment is so broad against these two cities that when the licensing year which is approaching arrives, these cities are enjoined from denying any renewals.

A motion is pending before the three-judge Court to modify that, but is un-acted upon.

I would like to take the Court back through our liquor licensing regulations in Wisconsin.

We have what may be compared to the old town meeting type of legislation.

Since the Twenty-first Amendment, we permit what we call local option.

That means that each of the over 7,000 local municipalities in Wisconsin have the authority to grant or not to grant licenses for the sale of beer or intoxicating liquor or both.

This is a legislative grant to these municipalities and at the present time about a 150 municipalities do not permit the total package.

There are some that permit beer, of course, the majority permit beer and liquor but there are some that permit neither.

Now, these cities, towns and villages are the ultimate authority in our state to determine whether or not beer and intoxicating liquor would be served within their borders.

Potter Stewart:

The option is exercised by the voters?

Leroy L. Dalton:

Either the voters or the governing body.

Potter Stewart:

I thought the basic option was exercised by the voters, but then that the governing body decided who to license?

Leroy L. Dalton:

The governing body can refuse to issue any licenses under our —

Potter Stewart:

They can’t without the —

Leroy L. Dalton:

But there can be referendum here initiated by the voters to put the issue up to election as to whether or not there shall be.

If there is say it can be taken away, if there is not by referendum it can be granted by the voters, but then it is up to the –-

Potter Stewart:

There has to be a petitioner, a referendum petitioner?

Leroy L. Dalton:

Yes, then it’s up to the governing body each year to decide which licenses will be issued.

Potter Stewart:

Right.

Leroy L. Dalton:

This is under other —

Warren E. Burger:

Under Wisconsin statutes could they have a program of saying each person gets a license for one year and just rotate it?

Would that be lawful under your structure?

Leroy L. Dalton:

Our statute provides that the license runs for one year from July 1st to the succeeding June 30th.

Byron R. White:

(Inaudible) they canceled it in midway (Inaudible)

Leroy L. Dalton:

It can be revoked, but then there has to be what amounts to an adjudicatory-type hearing.

There is a special statute applying to revocation of the license or suspending of it during the period of its life.

William J. Brennan, Jr.:

And that is determined by what agency?

Leroy L. Dalton:

The licensing body.

William J. Brennan, Jr.:

Which is the local governing caveat —

Leroy L. Dalton:

Yes.

William J. Brennan, Jr.:

And it has to give an adjudicatory hearing before revocation?

Leroy L. Dalton:

Yes.

Potter Stewart:

Is there a judicial review?

Leroy L. Dalton:

There is by certiorari.

Potter Stewart:

On a revocation.

Leroy L. Dalton:

Yes.

We just went through one of those in the town of Madison, what surrounds the city of Madison where we had another nude bar and before they could get away, by going to the State Court for certiorari, they went into the Federal Court, and the Federal Court enjoined the town from revoking.

Byron R. White:

Got to the revocation?

Leroy L. Dalton:

Yes.

Byron R. White:

And the Federal Court enjoined it?

Leroy L. Dalton:

Yes, Your Honor.

These annual licenses must be applied for by April 15 each year.

The statute sets out a procedure that each of the municipalities must follow as to time.

They must begin to act on the licenses, May 15 and they must make final determinations by June 15.

This gives a leeway of at least two weeks between the time of the final determination by the municipality, and the succeeding licensing year.

During this period of time, the aggrieved parties of course, can avail themselves of one of two court proceedings in the state.

Now, no liquor license can be issued in Wisconsin unless the applicant has first obtained a beer license.

The beer license if it is denied, if the application is denied, can be reviewed by a procedure in any Court of record in the county.

This is an original action brought by the applicant to test the revocation or denial of a license in the county court or circuit court.

Warren E. Burger:

Is that under review de novo or a trial de novo?

Leroy L. Dalton:

Trail de novo.

Warren E. Burger:

Not to just review on any records?

Leroy L. Dalton:

No it’s a trial de novo and there are limits set by the Wisconsin’s statute as to when the Court must act so that any aggrieved parties can have a prompt determination of the issues.

The other type of Court review is by certiorari and I think the court has without any question set out the procedures that are to be followed in that type of proceedings.

William J. Brennan, Jr.:

That is discretionary with the writ or is that —

Leroy L. Dalton:

The writ of certiorari is discretionary.

William J. Brennan, Jr.:

And in what court does that goes?

Leroy L. Dalton:

That’s in the Circuit Court, that is the Court of general jurisdiction within the state.

Now, there is another feature in Wisconsin law.

William J. Brennan, Jr.:

Now, that is a review, isn’t it, that’s not a de novo?

Leroy L. Dalton:

That’s a review including all constitutional questions.

Potter Stewart:

There is no record, isn’t it?

Leroy L. Dalton:

Yes, there are the notes that are made in court in review.

Potter Stewart:

But there is no transcript?

Leroy L. Dalton:

There is no transcript of testimony, no verbatim transcript, but if there is a denial, of course, the statute requires a statement of the reasons for denial be made in the record and all of the notes of the licensing body in the case of the City Council that are subsequently printed and they are part of the record in this case would go to the Circuit Court for review.

Byron R. White:

Does there has to be some reason for (Inaudible) renew a license?

Leroy L. Dalton:

The reasons should be stated according to our statute whenever renewal is refused, renewal.

Byron R. White:

That’s on renewal.

Leroy L. Dalton:

But not for original application.

Byron R. White:

For original application, they just deny it, but on renewal there has to be a determination of some kind — some kind of conduct?

Leroy L. Dalton:

Yes and our Supreme Court has indicated that, that is to facilitate the certiorari so that the Court can determine whether or not any action taken was arbitrary or capricious.

Byron R. White:

So, it is different than an original application.

Leroy L. Dalton:

Yes, Your Honor.

Thurgood Marshall:

That’s the first time he finds out what the Board acted on?

Leroy L. Dalton:

No, he would find out at the time.

These are all public hearings and public meetings.

Thurgood Marshall:

These limits etcetera that you say are kept for the certiorari right hearing.

Does he see those before the certiorari hearing?

Leroy L. Dalton:

He may yes they are public records.

Thurgood Marshall:

They are printed and available?

Leroy L. Dalton:

They would be, I imagine would be available.

I am not sure how fast these are printed, but there would be some record in the Clerk’s office.

Thurgood Marshall:

But that is after the hearing?

Leroy L. Dalton:

That’s after the City Council has acted.

Thurgood Marshall:

Well, what does the applicant have before the City Council acts?

Leroy L. Dalton:

He files an application each year.

He files an application with the City Council and by our law he must pay for having that printed in the local paper.

The burden is always on the applicant to carry forward his request to the governing body to license him for a one-year period.

On renewal it’s the same as the original but —

Thurgood Marshall:

Maybe I am using the word hearing wrong, but does he get a hearing?

Leroy L. Dalton:

Well, this is a difficult term.

Hearing is I think it depends on what situation you are in.

Now, we have run up repeatedly in the Federal Court system where —

Thurgood Marshall:

But do you know what notice means?

Leroy L. Dalton:

Yes.

Thurgood Marshall:

Does he get a notice?

Leroy L. Dalton:

A notice of what, Your Honor?

Thurgood Marshall:

Of why there is a possibility that it will not be renewed?

Leroy L. Dalton:

He understands, each year when he applies that there will be hearings on all licenses that have been filed, that the applications have been filed for on 15th of April.

He knows, he should know that each one of these Boards and Committees will have to act upon these licenses between May 15 and June 15.

The notice, I think what you are talking about is when the licensing body is going to hear these requests for license.

Thurgood Marshall:

His request.

Leroy L. Dalton:

Well, all of them.

They usually set license matters for hearing on a certain date and there are requirements that — within the city law that they hold license hearings on specific dates and that notice is posted on the City Council bulletin board and it is printed in the newspaper.

Thurgood Marshall:

And does he know whether or not there is going to be opposition?

Leroy L. Dalton:

Not necessarily.

Thurgood Marshall:

You mean a law.

Leroy L. Dalton:

It is very possible.

Thurgood Marshall:

And the people testify against him?

Leroy L. Dalton:

Well, they testify, yes if they want to.

Thurgood Marshall:

Under oath.

Leroy L. Dalton:

No, unless he asks and makes a motion.

Leroy L. Dalton:

The City Council is an administrative body.

It acts in a legislative capacity. It acts on quasi-judicial capacity.

Sometimes it acts in administrative capacity.

It has the power to do many things, but the liquor licensing function is not what we consider to be a contested matter.

The man comes in and applies and he has the burden of convincing the licensing body that he should have a license for the succeeding year.

Now, he has the burden from the beginning of convincing that legislative body and I want to emphasize that at that point, the City Council is not sitting as a quasi-judicial body.

It’s sitting as a legislative body.

It has been delegated the authority by the state legislative body, the state legislature.

Thurgood Marshall:

So, the only hearing he gets is in a Court?

Leroy L. Dalton:

The only one practice, Your Honor is the hearing that’s granted is legislative type hearing.

The same as would be —

Thurgood Marshall:

Well, the only non-legislative he gets is in the Court?

Leroy L. Dalton:

If he asks for it, but I am not ruling out that if he asks for a fact-finding hearing before the Board that he wouldn’t be entitled to it.

Thurgood Marshall:

What provision of the law says it gives him that right?

Leroy L. Dalton:

There is no provision in the law, but the City Council may sit as a fact-finding body.

Byron R. White:

But your state Supreme Court has ruled that he is not entitled on a renewal proceeding?

Leroy L. Dalton:

They have held that a legislative hearing comports with due process.

Byron R. White:

Yes, they have held that so it is not (Inaudible) hearing that the fact-finding hearing or a final-type hearing was —

Leroy L. Dalton:

Right but if there is an —

Byron R. White:

Now, let’s assume he is not renewed then he goes to Court over, you say he has a trail do novo?

Leroy L. Dalton:

Yes in the County Court.

Byron R. White:

And meanwhile nothing happens to it.

Is his license suspended or he may go on selling while he gets reviewed.

Leroy L. Dalton:

That depends upon the Court order.

Byron R. White:

But the Court has —

Leroy L. Dalton:

He can convince the Court that he should continue during the litigation, the Court could, the same as the lower did here, grant a temporary restraining order.

Byron R. White:

And this gentleman is not out of business yet?

Leroy L. Dalton:

There are nine of these and Your Honor, I must say that I understand that three of them are on a business but they have been protected by the Federal Court for almost two-and-a-half years by different orders allowing them to continue nude dancing and the selling of alcohol.

Byron R. White:

But anyway if he went through judicial review there would have to be some finding of some kind of conduct dis-entitling him to renewal in order to sustain the refusal.

As I understood a while ago that on renewal as distinguished from original applications that there must be some finding of some conduct dis-entitling him to renewal by a Court in order to sustain the —

Leroy L. Dalton:

When he starts his Court action, he must make allegations that he has some legal right that’s being violated.

Byron R. White:

Alright.

Leroy L. Dalton:

And one of those I was suggesting is that the licensing body has come to a wrong conclusion as to some facts.

Byron R. White:

Right.

Leroy L. Dalton:

So, he could have a factual determination by the Court

Byron R. White:

By the Court.

Leroy L. Dalton:

And then that could be applied to the denial of the renewal and his legal rights would be protected.

Byron R. White:

But now the district, in order to affirm the refusal to renew the Court is going asked to define or is going to have to agree with the City Council with respect to this alleged conduct?

Leroy L. Dalton:

If you are talking about the 66.054, our Supreme Court has not yet interpreted the breadth of that provision.

Apparently, no one has ever really carried a case under that statute all the way through.

They usually use the certiorari provision and there our Supreme Court has said that they are limited to a review of arbitrary, capricious action.

William J. Brennan, Jr.:

Well now, that connection Mr. Dalton and I am looking at the record here page 44, I do not know which of the cases I see three of them and there appears there a report of the Committee on Licensing & Welfare with the recitation in five paragraphs of the reasons why the license was not renewed, and then that was followed by a later report which speaks of the alleged of violence and threats of violence and feuding between the management of the Pussycat and the whatever the other one is.

Now, this goes up on certiorari to your circuit court.

Now, is the review on — is that the record which is reviewed that we’re looking that these two —

Leroy L. Dalton:

Whatever notes are in the —

William J. Brennan, Jr.:

Well, this case (Inaudible)

Leroy L. Dalton:

That was the report of this Committee.

The Committee reports to the Council and then the Council acts based upon —

Byron R. White:

You mean on certiorari Is the review on a record, I thought it was de novo?

Potter Stewart:

That’s what I am trying to get at.

Leroy L. Dalton:

No it is not de novo on certiorari.

Byron R. White:

You have not called any witnesses then?

Leroy L. Dalton:

No.

William J. Brennan, Jr.:

And it’s discretionary whether or not of the Circuit Court will give you that review, isn’t it?

Leroy L. Dalton:

Yes, I think certiorari is discretionary writ which —

William J. Brennan, Jr.:

How does the applicant seeking a renewal get any fact determination?

I thought you suggested to Mr. Justice White that if his allegations set up a fact issue he can get a fact determination in certiorari in the Circuit Court, can he?

Leroy L. Dalton:

No.

William J. Brennan, Jr.:

He cannot.

Leroy L. Dalton:

I am sorry, I misled you.

Leroy L. Dalton:

Section 66.054 applies to the beer license.

You can’t have a liquor license unless you first have a beer license.

Now, this statute which has not been really interpreted by the Wisconsin Supreme Court as to its breadth says that if the Council revokes or does not grant a license for good cause then a regular Court proceeding may be held to determine whether or not there was good cause.

William J. Brennan, Jr.:

Now what do you mean by regular court proceeding?

Leroy L. Dalton:

A de novo trial.

William J. Brennan, Jr.:

A de novo trial, judicial trial.

Leroy L. Dalton:

Yes.

William J. Brennan, Jr.:

With witnesses and fact findings and all that?

Leroy L. Dalton:

Yes.

William J. Brennan, Jr.:

Alright, now when does the alternative of certiorari come in?

Leroy L. Dalton:

That’s the applicants choice as to whether he wants to move by this route or by a certiorari.

Byron R. White:

Can he move this way —

Leroy L. Dalton:

If he has factual, excuse me, if he has factual issues which he wishes to be determined, let’s take for instance in this case.

Let’s say that an applicant said, well, you told me that I was permitting nude dancing and you wouldn’t renew my license because of that and I wasn’t permitting nude dancing and he wants a factual determination of that.

Now I suggest that he can either ask the council and this basically is not required under the statute, nor Supreme Court said it was necessary, but I am saying that he could ask the council for a hearing on that point and could ask to bring in his own Court reporters and to have testimony taken.

The council is perfectly capable under rules of Administrative law of setting its all —

William J. Brennan, Jr.:

Now he doesn’t have to do that and so he doesn’t do it then what may he do.

Leroy L. Dalton:

Then he may choose one of these two judicial routes.

William J. Brennan, Jr.:

Either way in which he gets a fact-finding as I understand it, is that if he follows the de novo route.

Leroy L. Dalton:

Right.

William J. Brennan, Jr.:

If he follows a certiorari route he does not get it?

Leroy L. Dalton:

There is one exception, the certiorari court could weigh evidence and determine whether or not there is substantial evidence.

William J. Brennan, Jr.:

Now wait a minute, you mean take testimony?

Leroy L. Dalton:

No, they could refer it back to the Administrative body.

William J. Brennan, Jr.:

Oh, I see.

Byron R. White:

Now where is this provision that you are talking about where you get an actual judicial trail?

Leroy L. Dalton:

It is on page four of our brief Section 66(054).

Byron R. White:

Now is that as a right?

Leroy L. Dalton:

The action of any city council, yes.

Byron R. White:

I see, a when it comes up renew he is turned down, the council alleging that he has done and finding if he has done A and B.

Byron R. White:

Now, that he has then a right, a legal right to go to Court and have a de novo hearing if he chooses the right procedure?

Leroy L. Dalton:

Yes.

Byron R. White:

And meanwhile —

Leroy L. Dalton:

But that’s only on the beer license which is a necessary step to get a liquor license?

I guess we qualify first for beer license —

Byron R. White:

What was not renewed here?

Leroy L. Dalton:

Both

Byron R. White:

For the same reason?

Leroy L. Dalton:

Yeah.

William J. Brennan, Jr.:

May you have a renewal of the beer license and yet be denied a renewal of the liquor license?

Leroy L. Dalton:

Yes.

Warren E. Burger:

When the council fails to renew that after the end of one year to distinguish it from a revocation, when they fail to renew it they must give a statement of reasons, is that correct?

Leroy L. Dalton:

That is right, Your Honor.

Warren E. Burger:

And it’s on that statement of reasons that whether a Court of general jurisdiction that decides whether to grant a review by certiorari?

Leroy L. Dalton:

That is right, Your Honor.

And then it’s tested by Arbitrary Capricious Act.

Thurgood Marshall:

Now, Where are the statement of reasons in these cases?

Leroy L. Dalton:

The statement of reasons were just referred to by Justice Brennan.

Warren E. Burger:

What page, where do we find in here in the Appendix?

Thurgood Marshall:

You mean the Committee on License wrote that?

Well, that doesn’t look anything to me like a statement of reason, it says, the report of the Committee.

Leroy L. Dalton:

That was the Committee report.

Thurgood Marshall:

But you keep saying that you have to have a statement of reasons, is that correct what you said?

Leroy L. Dalton:

Yes.

Thurgood Marshall:

Well, where is that in this case, “a statement of reason?”

Leroy L. Dalton:

Well, the statement of reason that was adapted by the Council was because these bars had nude dancing.

Thurgood Marshall:

But where is that in the record?

Warren E. Burger:

Tell us the page, where do we find it in here?

Leroy L. Dalton:

It is in the — these were stipulations of facts that were entered.

Warren E. Burger:

Where do we find the stipulation then?

Leroy L. Dalton:

On page 28 of the Appendix.

The stipulation of facts which relate to all of the issues involved in the case.

Thurgood Marshall:

Is the statement of reason is in the stipulation of facts?

Leroy L. Dalton:

Yes, Your Honor, on page 32 number 26, that such statutes perform both in customs and in the news.

Thurgood Marshall:

You keep saying statement of reasons and you know what stipulation of facts, is that statement of reasons?

Statement of reason is that as I understood here was a piece of paper that the council wrote up as statement of reasons for denying John Jones renewal of his license.

And am I correct there is no such instrument?

Leroy L. Dalton:

Other than the report of the committee.

Thurgood Marshall:

Then there is no such instrument as the statement of reasons?

Leroy L. Dalton:

Well, they adapted the committee report.

Thurgood Marshall:

Oh, then when you say statement of reason you mean the Committee report?

Leroy L. Dalton:

Yes, Your Honor.

Potter Stewart:

Well, under the law the committee itself could have acted with out reference to the council as I read in the statute and that’s what the complaint of your brothers on the other side, they did not even know which body was going to act, whether it was going to be the committee or the council as a whole.

Leroy L. Dalton:

Well, the council as a whole made the final determination.

Potter Stewart:

Well, that’s not what the law seems to say.

It says, all town and the village boards and county councils or the duly authorized Committees of such councils and so on a point made in the —

Leroy L. Dalton:

But these cases they were all referred to the city council.

Potter Stewart:

They were in fact in these cases to find out.

Leroy L. Dalton:

They were in fact referred to city council and they adapted the reports of the Committee.

Now, the Committee reports are in fact the basis for the legislative action.

The reasons why the legislative body decided that they would resolve not to have nude dancing within their municipality.

Now, it’s true that this record is not specifically set out that resolution.

And I think that, that is a not a federal constitutional question.

That’s a question of state law as to whether or not the city council in these cases actually followed the state law when they adapted the resolution that they would not license nude bars within their communities.

Now, to give you a little more background on what happened, the two cities when faced during the 1970 license year with nude dancing in several bars and after receiving over two thousand petitions in the city of Kenosha and upward of 25,000 in the city of Racine, the councils in both cities passed ordinances which regulated costumes in cabarets.

This required the dancers to cover the sexual organs.

Both cities were enjoined by the Federal District Court in December of 1970.

From that point until the next licensing year in 1971, the city which — both these cities were faced with a dilemma of how to control nude dancing in the bars in those cities.

The test of obscenity was difficult.

The county prosecutor —

Warren E. Burger:

Do you have to spend much time on that view with the holding in the rule, isn’t this basically a procedural problem now?

Leroy L. Dalton:

Yes, the rule we think solves that and I want to point out that after the rule, the District Court released the injunctions that had permitted the nude dancing to take place in these two cities, but while this injunction was in effect, the city decided that they would not re-license these bars and they sat as a legislative body in doing this.

They did not sit and adjudicate each one of these cases.

They decided that they would not permit nude dancing in their cities and each one of these bars in each city, the bars were treated as a group and they made a policy statement and I agree that the Committee report here probably does not satisfy the Wisconsin statute in regard to the reasons why the denials were made, but that is not a Federal constitutional question.

Warren E. Burger:

Well, I submit to you that at the bottom of your page 32 that you referred to us, paragraph number 26, and on the opposite page, at the bottom page 33, paragraph 32 both ascribe that direct and indirectly as reasons for not finding the renewal in the Committee reports and if the Committee reports were adapted by the legislative body that would be quite adequate statement of reasons to satisfy me as to why they had failed to renew.

Leroy L. Dalton:

Maybe the —

Potter Stewart:

(inaudible) itself is on page 34 and 35?

Leroy L. Dalton:

Yes.

Potter Stewart:

Now the —

Leroy L. Dalton:

But my point is these are the underlying reasons for the legislative resolution.

The legislative resolution is why these licenses were denied.

They all were featuring nude dancing.

Both these communities that decided that they would not permit nude dancing anymore and the reasons why they would not permit nude dancing were the item set out in the Committee report.

William H. Rehnquist:

(Inaudible) Wisconsin law would be common council of Racine or Kenosha be permitted to deny a renewal of a license simply on the ground that they felt they had too many places in Kenosha or Racine selling hard liquor without giving any more reason than that?

Leroy L. Dalton:

Our Supreme Court has so held.

We have the power to do away with all bars.

Each municipality can decide one year or the next.

They can wipe out every bar within the municipality by proper legislative action.

Thurgood Marshall:

And not reissuing licenses, just by not issuing, not renewing the licenses?

Leroy L. Dalton:

Yes, sir.

Warren E. Burger:

Your time is up now, Mr. Dalton and Mr. Walrath, will you be the only one acting, speaking on behalf of the respondents, the appellee is here?

James A. Walrath:

Yes, Your Honor.

May it please the Court.

I would like to begin by responding to some of the points that have risen during the course of Mr. Dalton’s argument.

First of all, the argument is made that these two municipalities have been enjoined under all circumstances from denying when a — license renewals that they have been foreclosed from in any way taking these licenses away from the individual appellees in this case.

I would submit that that is not a correct statement of the situation and I would refer the Court specifically to page 55 of the Appendix which contains a statement of the summary judgment order of the District Court which indicates that the municipalities are free to act on the applications at such time that their actions are commensurate with the due process clause of the Fourteenth Amendment.

So, the municipalities are not foreclosed from considering these applications or denying them, should they follow the procedures which were outlined by the three-judge Court below.

Byron R. White:

Could you have gotten — could these applicants have gotten a trial type hearing in some court by some procedure after their renewal was denied by the City Council?

James A. Walrath:

Our position is, Your Honor, that they could not and that was the next point I want to raise.

The procedures which must be followed now, I have specific reference, first of all, to when a liquor license as opposed to a beer license or malt beverage license is not renewed.

Byron R. White:

Is your colleague essentially correct with respect to the beer license?

James A. Walrath:

I would submit that he is not because both —

Byron R. White:

Alright, well then you take it your own way.

James A. Walrath:

Okay.

First of all, Your Honor, as far as the liquor licenses are concerned, when a liquor license application is not renewed, the remedy, exclusive remedy, as I understand it under Wisconsin law is by certiorari and —

Byron R. White:

In which event, no evidentiary hearing, all on records, reasons and notes?

James A. Walrath:

Yes, all on handwritten notes or typed notes by city clerks, whatever is there.

In the present situation there was very little of any sort of record as far as what statements were made at the hearings.

Byron R. White:

That isn’t our question here, whether it was arbitrary?

James A. Walrath:

But there definitely is no entitlement to a trial de novo, excuse me.

I am sorry.

Thurgood Marshall:

On certiorari, the judge could not give a hearing?

James A. Walrath:

That is correct.

On certiorari, the only thing that the reviewing Court can do is look at the return which is filed with it by the municipality.

That return would, in most instances, merely contain the notes from the clerk of the municipality which would state under, as required by state statute, the reasons why —

Warren E. Burger:

How about the statement of reasons?

James A. Walrath:

It would, it contain statement of reasons, yes.

William J. Brennan, Jr.:

Well,would it specifically be what appears at page 44 to 46?

Would that be a sample of the return?

I know this is not the return because no certiorari proceeding is brought.

This is in the Federal Court.

Is this what a return would like?

James A. Walrath:

I would submit that the return could include that document, yes.

William J. Brennan, Jr.:

And —

James A. Walrath:

If this document was in fact adapted by the City Council as its reason for denying the license.

William J. Brennan, Jr.:

And in addition then there would be what, notes you said?

James A. Walrath:

Possible notes, if they had been taken.

Byron R. White:

But if the City Council gives no reason at all, is it automatically arbitrary to deny renewal?

James A. Walrath:

I would submit yes under State law, if there is a reason.

Byron R. White:

There must be a reason for denying renewal?

James A. Walrath:

Yes, by state statute.

Byron R. White:

And so the arbitrariness of denying renewal simply turns on whether it states a reason or not?

James A. Walrath:

Well, our claim here, Your Honor, is not all — is more than that.

We are claiming that the procedures were arbitrary because prior to the council’s taking the action that they did, they did not grant each of the appellees a hearing.

Byron R. White:

Oh, I understand that.

I understand —

James A. Walrath:

But that is the other aspect of arbitrariness that we referred to?

Byron R. White:

But I would suppose that there would be a different case if you had a right to a complete de novo hearing on review of the renewal where you could call witnesses and statement had to call it?

James A. Walrath:

Yes, no question about it.

William J. Brennan, Jr.:

Then you would not be here, would you or you would not have brought the action?

James A. Walrath:

We would have gone to State Court.

William J. Brennan, Jr.:

You would have gone to State Court and let me understand this clearly now.

You say that under liquor license renewal, the only way open to you in the way of Judicial review is certiorari on the record below.

James A. Walrath:

Yes, that is correct.

William J. Brennan, Jr.:

Well, what is the connection of the beer license to the liquor license?

I thought Mr. Dalton tell us you never get to a liquor license question until you have been granted a beer license?

James A. Walrath:

You cannot have a liquor license unless you have a beer license first.

William J. Brennan, Jr.:

Well, now what about these appellees?

James A. Walrath:

In each instance, I do not believe there is an indication in the record as to whether in each instance, their beer license is worth denial.

I would have to rely on the representations of state in that regard that they were.

William J. Brennan, Jr.:

And if they were, then as I understand, you might have gone into one of the County Courts or the circuit court and got a de novo hearing?

James A. Walrath:

Well, that is the argument on the state, Your Honor, but I would submit that that does not comport with a reading of the state statute which provides for renewal of or which provides for procedures on beer licenses, Section 66054 sub 14 —

William J. Brennan, Jr.:

What page now?

James A. Walrath:

Page 4 of the brief of the appellants.

That provision starting at the very bottom of page 4 mentions that the action of any City Council in granting or the revocation of any license or the failure of said City Council to revoke any license for good cause may be reviewed by any court of record.

William J. Brennan, Jr.:

But what, isn’t granting cover renewal, toward granting, does that cover renewal or not?

James A. Walrath:

Well, our point, Your Honor, is that there is no express declaration in this statute to cover the situation where renewal is denied.

We are not in a revocation situation.

We are in a denial of renewal situation which is not covered by the stature.

William J. Brennan, Jr.:

Oh, I see.

William H. Rehnquist:

Would you say that basically is at 66.054 is more devoted to the outraged citizen who feels that a license has been improperly granted or it is not been revoked when in —

James A. Walrath:

Yes, or to the outraged tavern keeper who has gone to revocation procedures which are separate from what this case involves.

Byron R. White:

Well, the provision that your colleague referred to for a de novo hearing on denial of a beer license renewal, that provision was not considered by the three-judge court, I understand?

James A. Walrath:

That’s correct.

Byron R. White:

It did not consider that as a matter of Wisconsin law or in connection with its due process ruling?

James A. Walrath:

It did not consider, if my recollection of the lower court opinion is correct, it did not consider that remedy is a viable one for these individuals.

Byron R. White:

Let’s assume or didn’t even considered it?

James A. Walrath:

I am not sure what the opinion on the point states, Your Honor.

Byron R. White:

Well, let’s assume for the moment that each of these gentlemen had his beer license renewal refused and could have gone to court and had a de novo hearing —

James A. Walrath:

Yes sir.

Byron R. White:

— as to what are the reasons alleged existed or not and let’s assume that were true.

Would you be here or not?

James A. Walrath:

Then the question would be if they did get a remedy in state court and they did get a beer license, then the next problem is that they still did not get their liquor licenses back and —

Byron R. White:

I know but those reasons that the liquor licenses depended on the existence of some reasons and if they spend the term, then those reasons did not exist?

James A. Walrath:

Then I would say the municipality (Voice Overlap) states would have to provide them with the liquor license, yes.

Byron R. White:

That’s right.

James A. Walrath:

But there is nothing in the statutory procedure which would compel them to do it.

Byron R. White:

Well, I was just curious to know whether the District Court addressed itself to this matter at all?

James A. Walrath:

Not in the way that we have just gone through it.

Potter Stewart:

Mr. Walrath, I appreciate you hardly a chance to get the first sentence out of here, the arguments you intended to make.

So I apologize for interrupting you again but I have a basic question here which is this, the Due Process Clause of course, covers deprivations of life, liberty or property and those alone, I wondered and obviously license isn’t involved here and I wonder now how you define what, if any, liberty and/or property is involved.

James A. Walrath:

Your Honor, if I may, the situation is this that the — first of all, we submit that both liberty and property interests under the definition or the analysis provided in Board of Regents versus Roth, both concepts of liberty and property were involved in this situation.

Both the liberty of these tavern keepers and the property of this tavern keepers was impaired by the decisions not to renew their liquor licenses.

Potter Stewart:

Well, these are a one-year licenses by their terms and under state law that’s what they were and that is all they could be?

James A. Walrath:

Yes.

Potter Stewart:

And that is right, so that’s very much like a —

James A. Walrath:

It is similar to Roth.

Potter Stewart:

And like Mr. Roth, a teaching contract.

James A. Walrath:

But there are some very significant differences from the Roth situations.

Potter Stewart:

(Inaudible)

James A. Walrath:

Now, the first significant difference is that in Roth, the action taken with regard to Roth was not — the reasons for not renewing Roth’s teaching contract were never stated, were not required to be stated, were never made public.

In other words, Roth was not one of the significant factors in the Roth case, I would submit is that Roth was never faced with a situation where the reasons for his non renewing his contract or communicated to anyone and if those reasons had been one reasons which alleged dishonesty on his part or immorality in his affairs and they had been communicated to public, this Court said that his case quite clearly would have been a different way.

And I would submit, Your Honor, that the situation is very analogous in our own case in that, by statute —

Potter Stewart:

The Court indicated he would then have been given an opportunity to clear his name if the charges were false?

James A. Walrath:

That is correct.

Potter Stewart:

I didn’t understand there was any claim here that this kind of dancing did not warrant in these bars?

James A. Walrath:

No, but that is not the central point.

The municipalities did not say that they were denying the renewal of these licenses because of nude dancing.

They said and I want to be very specific first of all, and refer it to the appropriate parts of the record, first of all, the municipality of Racine, you will know it on pages 35 and 36 of the Appendix, there are the reasons which the municipality of Racine or at least the License Committee gave for recommending that the license is not to be renewed.

Now that — those statements make no reference whatsoever to nude dancing.

They do attribute to the tavern keepers’ conduct or operations which foster an increase in prostitution and venereal disease.

They also attribute as reason F, they attribute instances of serving minors on the premises.

They attribute matters of fights or altercations and violence on their premises.

None of these reasons are directly related or in any way stated by the municipalities to involve nude dancing.

As far as the municipality of Kenosha is concerned, the statement of reasons in that situation with regard to the six Kenosha tavern keepers may be found on page 7 of our red covered brief.

And again, there is — nowhere in this record is there simply an assertion by these municipalities that they are not renewing these licenses merely because they do not like nude dancing.

What they did —

Thurgood Marshall:

I am perplexed about this criminal complaint on page 69 as they give on the record.

James A. Walrath:

On page 69 of the Appendix, Your Honor?

Thurgood Marshall:

Yes.

James A. Walrath:

The document on that page and on the following page; both of those documents were inserted into the record below as part of the affidavits on motions for summary judgments.

Both of these complaints I would stress relate to matters which occurred long after or after any of these license renewal denials occurred.

In other words, the facts that are stated in those complaints are not — and the filing of those complaints are not relevant to the reasons.

Thurgood Marshall:

What are doing in the appendix?

How did they get in there?

I still don’t know how did they get in there?

James A. Walrath:

I think they were inserted as part of the documents that accompanied the motion for summary judgment by the state.

Thurgood Marshall:

Then we do have something in this record about nude dancing?

James A. Walrath:

Well, there is definitely something in this record, yes.

Thurgood Marshall:

Well, this record in this case?

James A. Walrath:

Well, the question is whether there was anything in the record before the Licensing Committee and the City Council and whether they said specifically or only that the only reason they were denying these licenses is because of nude dancing.

Thurgood Marshall:

Then you don’t know whether this report is from the City Council or not?

James A. Walrath:

I am sorry.

I didn’t hear.

Thurgood Marshall:

Do you know whether these complaints were before the City Council or not?

James A. Walrath:

They could have not been, Your Honor, because they were —

Thurgood Marshall:

Did you object to them being putting in the record?

James A. Walrath:

No, I did not.

Thurgood Marshall:

Huh?

James A. Walrath:

I did not.

I just think they are irrelevant.

Thurgood Marshall:

They are irrelevant on the question of nude dancing?

James A. Walrath:

No, they were irrelevant on the question of what was before the Licensing Committee and the City Council at the time it reached this decision.

The one other point that came up on direct argument is the statement of reasons why the Kenosha municipality, why it denied the liquor licenses, those reasons that you find on page 7 of our brief were adapted at a City Council meeting word per word.

In other words, the License Committee entered these findings and then made these findings a recommendation to the City Council.

The City Council adapted them, word for word, with regard to each of the six applicants.

In other words, word for word, there were no variations in finding of facts.

The same activities were ascribed to each of the applicants in a rather indiscriminate broad fashion.

Now to the question —

Warren E. Burger:

Do you think that is a nature of the legislative licensing process sometimes.

You take a category of people and they say they are not going to be in or they will be in?

James A. Walrath:

Yes Your Honor, I would submit that in a legislative type situation where you are as in LaRue instance where you are dealing with legislative findings in enacting a resolution or an ordinance or state statute, these kinds of statements are appropriate, but here we were dealing with a definite adjudicatory situation where the City Council or the Licensing Committee itself was passing on — as required by the statute, was passing on the question of whether these individuals were proper individuals to have their licenses renewed.

So, I think we are in an adjudicatory situation which requires more specific findings of fact.

Potter Stewart:

Is it you argument — did you contend that in any way there was a common law kind of a property right or expectancy to a renewal each year?

James A. Walrath:

Yes Your Honor and that’s an argument that we did not make sufficiently I would submit in our brief.

That is the Perry versus Sindermann rationale that — I would submit there was — there is clear evidence that there is an implied property interest in — or claim to having your liquor license renewed from year-to-year.

First of all, I think it is implied by the very fact that the state statutes require that licenses can only be renewed, if reasons are — are not renewed, excuse me, can only be denied if there are reasons given by the municipality.

Secondly, the record also indicates that there were some 154 to 159, I believe, applications to renew licenses before the municipality and in only six situations, the six appellees in this case, were those applications denied.

So, there is more or less I would submit a common law situation or an implied situation that licenses will be renewed unless the cause is shown by the municipality.

Potter Stewart:

The District Court did not rely on that at all?

James A. Walrath:

No, it did not.

Potter Stewart:

So, the District Court rather relied on the Court of Appeals’ opinion in the Roth case which was subsequently reversed here, correct?

James A. Walrath:

Yes, the three-judge court below did not have the benefit of Perry versus Sindermann or Roth with Board of Regents versus Roth.

Potter Stewart:

You have the then benefit of — you had the then benefit of a case that was subsequently reversed.

They are all (Inaudible) in Court of Appeals?

James A. Walrath:

Yes, but we think quite clearly even in light of Roth which does restrict concepts or at least define concepts of liberty and property more carefully that quite clearly, these individuals, their liberty and property interests were affected.

Going back to the definition of liberty under the Roth decision, I would submit that it should also be borne in mind that because these individuals and the accusations against them consisted of allegations of criminal tight conduct, immoral influence on minors and juveniles in the community, quite clearly this brings this case within the language of Roth that these are the types of allegations which affect a person’s liberty.

And more importantly, these are the types of allegations which attribute bad moral character to the license holders and by state statute once again, a critical eligibility factor for getting a license is that you must be a person of good moral character.

I would submit that the allegations therefore, are in effect, makes these license holders ineligible for renewal or ineligible to hold a license anywhere else in the state of Wisconsin because they have been branded as persons of bad moral character.

So, that’s the other aspect of liberty which we would submit has been affected.

Just because these tavern keepers who run legitimate businesses as tavern keepers choose to have burlesque type entertainment or topless or nude dancing on their premises does not necessarily imply that they, in any way, have permitted a prostitution on their premises or that they have permitted minors on their premises and have imposed immoral influences on juveniles.

And these were the allegations that were labeled against them and these are the allegations which, under Roth, they should have a right to answer and counter.

Now I hope the record is sufficiently clear under what —

Warren E. Burger:

On the fact, that whether this is true or on the fact — on the question of whether this is a legitimate reason for non renewal?

James A. Walrath:

I am sorry, I didn’t hear the beginning of your question, Your Honor.

Warren E. Burger:

You say they are entitled to a hearing to determine the fact of whether these events took place or whether this is an adequate ground for a non-renewal or former?

James A. Walrath:

The former and not the latter.

They are entitled to a hearing to dispute or challenge these allegations.

If the allegations of prostitution or immoral influence on youths had been established at the hearing, then I think quite clearly it’s within under state statute, it’s within the power of the municipalities to deny their applications.

William H. Rehnquist:

Mr. Walrath.

James A. Walrath:

Yes, Your Honor.

William H. Rehnquist:

As you were probably in Monroe against Pape, this Court said that Section 1983 did not apply to municipal corporations.

What is the Federal statutory basis for joining the City of Racine and the City of Kenosha in this action?

James A. Walrath:

They were joined because the lower court was able to distinguish the Monroe versus Pape language in that, that was, if I recall correctly, a request for damage —

William H. Rehnquist:

Here is what this Court said in Monroe against Pape, “For we are the opinion that Congress did not undertake to bring municipal corporations within the ambit of 1983.”

James A. Walrath:

But if I am correct, Your Honor, I believe that was in the context of a damage suit against the City of Chicago.

William H. Rehnquist:

That is correct.

I would not read that language as being addressed particularly to damage suits.

James A. Walrath:

Well, it is our position that it can be.

William H. Rehnquist:

How do you distinguish?

James A. Walrath:

There are two cases out of the Seven Circuit, Your Honor, that distinguishes it —

William H. Rehnquist:

I mean not as a matter of Seven Circuit present but as a matter of reason?

James A. Walrath:

Frankly, I am not familiar enough with the history of 1983 to be able to distinguish it at this time.

Potter Stewart:

You do not need the reasons if you have the law on your side in the Seven Circuit, do you?

James A. Walrath:

Well, that is what we had.

We had two cases.[Laughter]

Warren E. Burger:

When you responded previously to the question I put to you, I am not sure which case you were referring to, but turning to paragraph number 26 on page 32 of the Appendix, in the stipulation of facts, they have stipulated a fact, parties have stipulated a fact which under the LaRue would mean non-renewal of the license.

Now, do you–?

James A. Walrath:

I don’t dispute that except for the fact that the municipalities in this case didn’t say that they were denying the applications because of that fact in paragraph 26.

Warren E. Burger:

Well but then in paragraph 32, a page later, they say that their method of doing business?

James A. Walrath:

Yes, Your Honor.

Warren E. Burger:

And it includes that paragraph 26 reason.

How do you get away from that?

James A. Walrath:

The statement at paragraph 32 was something that happened in Federal Court and it is a statement that was not made at the time that the licenses were renewed or denied, excuse me, that the renewal applications were denied.

Warren E. Burger:

What was the purpose of paragraph 26 stipulation if it was not to bear on the decision to renew or not renew the license?

James A. Walrath:

I think the purpose of paragraph 26 was merely to get an agreed stipulation of facts that in fact we do not dispute the fact that nude dancing occurred on these premises.

That is not a disputed fact.

What is disputed is whether there was prostitution on the premises.

Warren E. Burger:

Well, but do you dispute that this is a good enough reason not to renew the license?

Do you challenge that after LaRue?

James A. Walrath:

Well at the time, yes, it was a disputed fact because —

Warren E. Burger:

At that time?

James A. Walrath:

Yes.

Warren E. Burger:

Since that time this Court decided the LaRue case.

James A. Walrath:

That is correct.

Warren E. Burger:

Now, after the LaRue case, isn’t paragraph 26 the end of the case in terms of whatever cases are covered by that stipulation?

James A. Walrath:

Well, whether or not the municipality has subsequently been proving to be right or wrong as to the basis for denying the applications still does not counter the problem that these individuals and the procedures that confronted them, denied them due process initially.

Thurgood Marshall:

What do you do with the top of page 34 that says that this the reason for the denial?

James A. Walrath:

At the top page of 34?

Thurgood Marshall:

First full sentence.

Thurgood Marshall:

The defendant city relied on such entertainment as one of the fact as producing the factors producing the effects enumerated in paragraph (A through F in denying of a license?

James A. Walrath:

It relied but it did not specify — first of all, it did not give any notice prior to going into any of these meetings or hearings.

It did not give notice that that was what the charge was going to be.

Thurgood Marshall:

That’s not what I am talking about but this admits that the reason that they denied it was because of nude dancing?

James A. Walrath:

No, I would beg to differ with you, Your Honor.

This —

Thurgood Marshall:

Well, what word in that doesn’t say that?

James A. Walrath:

Well, it says that the defendant city relied on such entertainment as one of the factors producing the effects and what they specifically stated was the reason for denying the license — the applications was not the dance entertainment, it was the allegations of paragraphs A through F.

Thurgood Marshall:

But this is all in the same statement here, isn’t it?

It is all according to same thing.

James A. Walrath:

Well, what you are reading from is again the stipulation of facts.

Potter Stewart:

In the Federal District Court?

James A. Walrath:

In the Federal District Court.

Potter Stewart:

And 34 and 35 is the findings of the Committee adopted by the common council and one of those municipalities and on page 7 as we read for the findings of the Committee adopted by the common council and other municipalities.

James A. Walrath:

That is correct.

Potter Stewart:

And they are quite separate from what the stipulations of the District Court?

James A. Walrath:

That is correct.

William H. Rehnquist:

Am I right in thinking that the stipulations in the District Court weren’t necessarily entered into by all the parties?

You’re just representing a fraction I take it of the parties that were actually in the District Court.

James A. Walrath:

That’s also correct.

However, the stipulations were entered in every case which is noted on the cover.

William H. Rehnquist:

So, there is no distinction then between what might affect your clients or in people who are —

James A. Walrath:

There is no crucial variation in the facts as far as what were stipulated to.

The —

Thurgood Marshall:

(Inaudible) the review of this case goes back on the city as to do and to show that nude dancing and then that is against their policy and that is the end of the case, right?

James A. Walrath:

Yes.

Potter Stewart:

So long as you have taken charge here.

Thurgood Marshall:

So long as you have a hearing.

James A. Walrath:

So long as we have a hearing.

Potter Stewart:

So, this is purely a due process claim?

James A. Walrath:

We are not challenging what happened in the rule.

We are just saying before you can deny us the right to continue our taverns, you have to give us a requisite hearing so that allegations beyond nude dancing, should they arise and should they be the basis for denying the licenses can be countered, if they are in fact not true.

Potter Stewart:

There was no due process issue in the LaRue, wasn’t there?

James A. Walrath:

Not that I am aware of, Your Honor.

Warren E. Burger:

In your view of the due process question, if the case went back to the state, went back to the District Court, would the stipulation paragraph 26 be sufficient if they put that and only that in evidence of the reason for non-renewal?

Because the City Council, they have noticed, went through all its processes and then put the stipulation in evidence, would the paragraph 26 be sufficient then in your view for the denial of the renewal?

James A. Walrath:

If that is the only allegation that the city raises, I think that would be an adequate basis for non-renewal.

Under LaRue, the city admittedly does have an ordinance on the books which defines what type of dress is required on tavern premises.

I should add, however, that the city ordinance is not identical to LaRue statute and in fact, it is our position that the city ordinance is even broader and more restrictive than LaRue statute so that, that would be an additional issue that might be raised at a hearing before the City Council.

Thank you, very much.

Thurgood Marshall:

There would be no trouble in drawing an ordinance that would cover that criminal complaints, there would be?

James A. Walrath:

No, there would not be.

Thurgood Marshall:

They would be easy for you to find.

James A. Walrath:

Thank you.

Warren E. Burger:

Thank you gentlemen.

The case is submitted.