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Green Valley Invs., LLC v. Winnebago County

United States Court of Appeals, Seventh Circuit

July 27, 2015

GREEN VALLEY INVESTMENTS, LLC, Plaintiff-Appellant,
v.
WINNEBAGO COUNTY, WISCONSIN, Defendant-Appellee

Argued February 13, 2015.

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 13-C-402--William C. Griesbach, Chief Judge.

For Green Valley Investment LLC, Plaintiff - Appellant: Jeff Scott Olson, Attorney, Madison, WI.

For Winnebago County, Wisconsin, Defendant - Appellee: Charles H. Bohl, Attorney, Kurt M. Simatic, Attorney, Whyte Hirschboeck Dudek S.C., Milwaukee, WI; Paul David Cranley, Attorney, Whyte, Hirschboeck & Dudek S.C., Madison, WI.

Before WOOD, Chief Judge, and BAUER and RIPPLE, Circuit Judges.

OPINION

Page 865

WOOD, Chief Judge.

Stars Cabaret is a nude dancing establishment in Neenah, Wisconsin, which lies in Winnebago County. When Stars opened in 2006, the County had a zoning ordinance governing Adult Entertainment Overlay Districts. In order to operate legally, Stars's owner, Green Valley Investments, had to locate its cabaret within an area authorized by the zoning law. But the process was stalled at the outset because, as all parties agree, the 2006 ordinance violated the First Amendment. In an effort to reap a permanent benefit from that fact, Green Valley later sued in federal court for a declaration that its operation of Stars has been legal from the outset. Green Valley reasoned that anything is legal that is not forbidden, and its cabaret was banned only by an unconstitutional ordinance: ergo, it said, the cabaret was permitted in 2006 and now has become a legal nonconforming use that cannot be barred by a later ordinance. To drive the point home, Green Valley also brought a supplemental claim seeking a declaration under state law that the Stars Cabaret was a valid nonconforming use under state law.

The district court found this a little too much to buy, and so it granted summary judgment to the County. It did so on the understanding that it was possible to use the severance clause in the ordinance to strike its unconstitutional provisions. After doing so, the court thought, enough of

Page 866

a regulatory scheme remained to support a finding that the cabaret was unlawful in 2006 when it opened, that it is still unlawful, and thus that it cannot take advantage of grandfathering.

We agree with the district court that the permissive use scheme laid out in the County's ordinance is unconstitutional. But we have serious reservations about the rest of its analysis. Once the constitutional problems with the County's law are dealt with, the core questions that remain are those of state law. Their resolution depends on facts that have not yet been developed, and on the possible existence of a power not only to sever problematic language but to revise it--a power we do not have. Under the circumstances, we conclude that the district court should have declined to exercise supplemental jurisdiction over the state-law claims; instead, it should have dismissed them without prejudice so that the parties may (if they wish) pursue them in state court. We therefore reverse to that extent.

I

In 2006, when Stars opened for business, Winnebago County had on its books Town/County Zoning Ordinance 17.13, which required adult entertainment establishments to locate within " adult entertainment overlay [AEO] district[s]." An AEO district could be established only if the County issued a conditional-use permit to the would-be adult entertainment operator. The zoning committee responsible for this process would issue such a permit only if it found that the proposed use complied with several requirements, including that it would " not be a detriment to the public welfare" and " in no way [would] contribute to the deterioration of the surrounding neighborhood" or " have a harmful influence on children residing in or frequenting the area." The application also had to demonstrate (among other things) that no intoxicating beverages would be sold within the AEO district, and that any " adult use" ...


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