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Tuesday, March 12, 2024

In the Zone: Seventh Circuit Rules on Damages Claims in Strip Club Lawsuit

The Seventh Circuit Court of Appeals ruled in favor of a Village in excluding evidence regarding damages arising from a Village’s decision to deny a special use permit to operate a strip club. Chicago Joe’s Tea Room v. Village of Broadview

In 2006, the club owner (Owner) tried to open a strip club, but the Village denied the Owner a special use permit. The Owner filed a lawsuit in May 2007 alleging multiple issues that were resolved in complicated court proceedings between 2008 and 2018. The only issue remaining was whether the Owner was owed damages over the denial of the permit.

In August 2007, the State of Illinois amended laws governing the location of where new adult businesses could open that restricted new adult entertainment businesses. From 2012 to 2014, the Owner offered its opinion on the damages owed based on the club’s expected lost profits. The Village challenged the Owner’s opinion, and the Owner responded with a supplemental expert opinion. 

In August 2022, the Village filed a motion to exclude practically all the Owner’s evidence of damages and lost profits which was approved by the trial court. Ultimately, both parties agreed to a final judgement, and the court awarded the Owner $15,111.

On appeal, the Owner asked the Seventh Circuit to consider five issues:

1) the exclusion of the Owner’s opinion regarding damages owed;

2) the exclusion of the Owner’s rebuttal expert witness;

3) the exclusion of the financial records of the strip club where the Owner previously worked;

4) the exclusion of undisclosed total damages; and

5) the denial of the Owner’s 2018 motion to amend their lawsuit to challenge the constitutionality of the 2007 Illinois adult business law.

The Seventh Circuit held that determining profits for a business that never opened required specialized knowledge that the Owner, as a non-expert, could not provide. In addition, because the Owner’s testimony was based on a different strip club that he had not worked at for years prior, his personal knowledge was insufficient to provide relevant evidence. 

On the rebuttal expert and the other strip club’s financial records claims, the Seventh Circuit reasoned that the inclusion of this evidence, either directly or indirectly, was based on supporting the Owner’s testimony. Because the Owner's opinion testimony was properly excluded, tje rebuttal testimony was also properly excluded. 

Regarding Owner's undisclosed damages claim, the Seventh Circuit held that the parties must disclose calculations for each category of damages claimed, and the trial court was correct to exclude evidence that should have been included in prior required disclosures. 

Finally, on the Owner's challenge to the Illinois law claim, the Seventh Circuit upheld the trial court’s ruling that allowing the amendment in 2018 would have caused undue delay to the trial when the Owner could have amended its lawsuit previously where the lawsuit was filed in 2007.  

Post Authored by Daniel Lev, Ancel Glink


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