Appeal from the United States District Court for the Western District of Wisconsin. No. 79 C 288 -- Barbara B. Crabb, Judge .
Before Pell and Sprecher, Circuit Judges, and Marovitz,*fn* Senior District Judge.
Appellants' claim for injunctive and monetary relief under 42 U.S.C. §§ 1983, 1985(2) and 1985(3) were dismissed by the trial court for failure to state a cause of action pursuant to Fed.R.Civ.P. 12(b)(6). The court also awarded attorney's fees to the prevailing defendants. The questions presented by this appeal are: (1) whether allegations that the defendants conspired to eliminate nude dancing in the plaintiffs' nightclubs by interfering in various municipal administrative proceedings state a cause of action when neither the plaintiffs' expressive activities nor business have been interrupted; and (2) whether the trial court abused its discretion in awarding attorney's fees to the defendants.
I. THE ALLEGATIONS OF THE COMPLAINT
It is well settled that for the purpose of reviewing the grant of a motion to dismiss, the well-pleaded factual allegations of the complaint are taken as true, and the grant is appropriate only if it is beyond doubt that the plaintiff can prove no set of facts entitling him to relief. Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957); Ashbrook v. Hoffman, 617 F.2d 474, 475 (7th Cir. 1980). In reviewing the complaint, however, it is well to keep in mind that only factual allegations will be considered, and that legal conclusions which may be alleged are not binding upon the court. City of Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir. 1976). For the purposes of determining whether the plaintiffs' second amended complaint states a claim upon which relief can be granted, we accept as true the following factual allegations of the complaint.
The plaintiffs in the suit, Alfonse and Thomas Reichenberger (the Reichenbergers), own and operate two nightclubs in the City of Madison, Wisconsin. The clubs sell liquor by the drink, and present nonobscene nude dancing entertainment. The clubs' economic survival depends upon offering the combination of liquor sales and nude dancing, and the Reichenbergers derive their living from the operation of the two clubs.
The defendant the Reverend Richard Pritchard (Pritchard) is a Madison minister. He is also a leader of a community organization, Citizens Concerned for Our Community (CCOC), which has as one of its goals the elimination of nude dancing at the plaintiffs' nightclubs.
The defendant Jean Stewart (Stewart), has been a Madison alderperson and member of the Madison Common Council since before December 1977. She shares with Pritchard and CCOC the goal of elimination of the nude dancing at the plaintiffs' nightclubs.
Prior to November 1977 the defendants began to conspire together and with others not named in this suit for the purpose of completely suppressing the nude dancing presented at the plaintiffs' clubs by putting them out of business. In furtherance of the conspiracy, the defendants sought to participate in three separate municipal administrative proceedings relating to the plaintiffs' business, in an effort to have the plaintiffs' liquor licenses revoked, or to make the cost of renewal of the licenses prohibitively expensive.
A. The Certificate of Nonconforming Occupancy.
The first such proceeding related to the plaintiffs' attempt to obtain a certificate of nonconforming occupancy for the clubs. Prior to January 1978, entertainment in all Madison businesses selling liquor was regulated by §§ 9.10(10)11 and 9.11(10)(d)9, Regulations for Entertainers and Employees, Madison General Ordinances, which proscribed all nude entertainment on pain of revocation of the offender's liquor license. These ordinances were never enforced, however, and the plaintiffs' liquor licenses were renewed annually despite the clubs' violations of the regulations. In December 1977, the Common Council repealed the above regulations, and enacted a zoning-licensing regulatory scheme, which created a definition of "adult entertainment tavern," based on the dress (or undress) of employees and entertainers, and established both the conditions under which such taverns could operate, and the areas of the city in which they might lawfully exist. § 9.10(17), Madison General Ordinances. It was generally agreed that existing businesses falling within the adult entertainment tavern definition but operating outside the newly designated areas, could continue to operate by obtaining certificates of nonconforming occupancy from the City Zoning Administrator pursuant to § 28.12(6)(c), Madison General Ordinances, and the plaintiffs proceeded to apply for such certificates.
Application for a certificate of nonconforming use requires submission of documentary proof of lawful existence prior to the effective date of the zoning change, and the plaintiffs submitted such proof. The defendants also submitted documents to the Zoning Administrator, without notice or service upon the plaintiffs. The defendants' submissions consisted of ex parte legal argument and affidavits of counsel for CCOC, and sought to influence the Zoning Administrator not to grant the certificate. The arguments were unsound, and known to be so, and the affidavits contained false and irrelevant information. There is no allegation that the allegedly false affidavits were made with knowledge of their falsity. On June 8, 1978, the Zoning Administrator, having received both the above-mentioned submissions and an opinion of the City Attorney, denied the plaintiffs' application on the grounds that the nightclubs had not been lawfully existing prior to the zoning change, because they had been in violation of the Regulations for Entertainers and Employees, and because there had been no authorization in the Zoning Code for such use.
The plaintiffs appealed that decision to the Zoning Board of Appeals. Proceedings were held before that body on three occasions in 1978. At the second of those proceedings, counsel for CCOC again appeared, pursuant to and in furtherance of the agreement of all the defendants, and sought to influence the Board not to grant the certificates by repeatedly speaking out of turn against the plaintiffs. In April 1979, the Board voted three to one to reverse the Zoning Administrator's decision. The Board determined, however, not to issue a certificate, in light of their governing ordinance, which they interpreted to require that the four members vote unanimously before directing any action.*fn1 The plaintiffs appealed the failure of the Board to issue the certificate to the Circuit Court for Dane County, pursuant to § 62.23(7)(e), Wis.Stats. That case remains pending.
B. Pritchard's Citizen's Complaint.
The second municipal proceeding in which the plaintiffs allege the defendants conspired to do them harm was initiated on June 5, 1979, when the defendant Pritchard, again in furtherance of the conspiracy, filed a citizen's complaint against the plaintiffs' businesses, pursuant to § 176.11, Wis.Stats., and § 9.11(12), Madison General Ordinances, alleging past violations of city ordinances and current violations of the Zoning Code in an attempt to moot or otherwise interfere with the state court proceedings. That complaint was acted upon by the Alcohol License Review Committee (ALRC) of the City of Madison, an advisory body to the ...