Fantasysrus 2, L.L.C. v. East Grand Forks, Minnesota, City of
Filing
21
MEMORANDUM OPINION AND ORDER granting plaintiff's 2 Motion for Preliminary Injunction (Written Opinion). Signed by Judge John R. Tunheim on July 25, 20112. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FANTASYSRUS 2, L.L.C.,
Civil No. 12-1176 (JRT/LIB)
Plaintiff,
v.
CITY OF EAST GRAND FORKS,
MINNESOTA,
MEMORANDUM OPINION AND
ORDER GRANTING PLAINTIFF’S
MOTION FOR A PRELIMINARY
INJUNCTION
Defendant.
Randall D.B. Tigue and Rachel K. Nelson, RANDALL TIGUE LAW
OFFICE, PA, 810 North Lilac Drive, Suite 201, Golden Valley, MN
55422; and Barry N. Covert, LIPSITZ GREEN SCIME & CAMBRIA,
42 Delaware Avenue, Suite 100, Buffalo, NY 14202, for plaintiff.
James J. Thomson and Mary D. Tietjen, KENNEDY & GRAVEN,
CHARTERED, 200 South Sixth Street, Suite 470, Minneapolis, MN
55402; and Ronald I. Galstad, GALSTAD, JENSEN & MCCANN PA,
1312 Central Avenue NE, East Grand Forks, MN 56721, for defendant.
Plaintiff Fantasysrus 2, LLC (“Fantasysrus”) briefly operated a retail store known
as Fantasys in East Grand Forks, Minnesota before closing because it lacked the proper
permits. The City of East Grand Forks (“the City”) determined that because Fantasys
sold adult novelties and videos, the store engaged in “adult uses,” requiring a special use
permit to comply with the City zoning code. The City only issues special use permits for
businesses in the I-2 zoning district, not the C-2 zoning district where Fantasys is
currently leasing retail property. The City denied Fantasysrus the permits required to
operate Fantasys, and as a result, Fantasys closed. Fantasysrus filed a civil rights action
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under 42 U.S.C. § 1983 on May 16 alleging that the City zoning code is unconstitutional.
Fantasysrus now seeks a preliminary injunction1 preventing the City from taking any
action to enforce the adult entertainment provision of its zoning code against Fantasysrus
and waiving the security requirement of Rule 65(c). The City argues that the Court
should abstain from hearing the case because the Younger abstention doctrine applies.
The Court will decline to apply the Younger abstention doctrine because there is
no pending state judicial action. Because it finds that Fantasysrus is likely to succeed on
the merits and has satisfied the other Dataphase factors, the Court will grant its motion
for a preliminary injunction. Finally, because the City did not object, the Court will
waive the Rule 65 security requirement.
BACKGROUND
Fantasysrus’s retail store, Fantasys, wishes to sell products including “lingerie,
club wear, dance wear, bath and body products, greeting cards, T-shirts, and novelties.”
(Compl. ¶ 6, May 16, 2012, Docket No. 1.) Fantasys intends to sell, “as an insignificant
portion of its inventory, various sexual novelty and adult videos,” in a separate room,
accounting for less than ten percent of its total floor space. (Id. ¶¶ 9-10.) Fantasysrus has
leased premises for the store in a C-2 highway commercial district zone; retail uses are
permitted in this zone. (Id. ¶¶ 4, 6.)
1
Fantasysrus originally sought a preliminary injunction and a temporary restraining
order. (Docket No. 2.) In a telephone conference on May 30, Fantasysrus agreed not to continue
to seek a TRO because the Court could hold a hearing on its motion for a preliminary injunction
on June 7.
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On May 9, 2012, Nancy Ellis, senior planner for the City, refused to issue
Fantasys a certificate of occupancy, a document necessary for the store to open. (Id. ¶ 11
& Ex. B.) The letter explained that the certificate was being denied because “the sale of
sexually oriented devices classifies the store as a sexually oriented store and is considered
an Adult Use” under the City’s zoning code. (Id., Ex. B.) Under § 152.247 of the zoning
code, adult uses are permitted only in the I-2 district. (Id. ¶¶ 12.) Adult uses are defined
by § 152.006 as
[u]ses which include a sexually oriented arcade; sexually oriented
bookstore; sexually oriented video store; sexually oriented store; sexually
oriented cabaret; sexually oriented conversation/rap parlor; sexually
oriented massage parlor; sexually oriented motel; sexually oriented theater;
sexually oriented steam room, bath house or sauna; or a nude model studio.
Activities classified as obscene, as defined by M.S. § 617.241 . . . are not
included.
(Id., Ex. A, City Zoning Code.)2
The City Zoning Code contains no definition of
“sexually oriented” or “sexually oriented store.” (Id. ¶ 8.)
After receiving Ellis’s letter, Fantasys closed and has not reopened. Although
Fantasysrus had the right to appeal Ellis’s decision to the Planning Commission and City
Council within thirty days (see id., Ex. B), they did not do so.3 Section 152.021 of the
City’s Zoning Code states:
All findings and decisions of the planning staff or other official involved in
the administration of this chapter shall be final subject to appeal to the
Planning Commission, except as otherwise provided by this chapter. Any
2
Also available at http://www.egf.mn/DocumentView.aspx?DID=653.
3
Ellis’s letter is dated May 9, 2012. The thirty day period to submit the appeal expired
on June 8, 2012.
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affected person may initiate such a request by filing an appeal with
planning staff on an approved form. All appeals shall be filed within 30
days of the date of the decision. The planning commission shall hold a
public hearing on each complete application for appeal and, after the close
of the hearing, shall make findings and submit its recommendations to the
City Council. . .
The City Council shall make the final decision regarding all appeals
requests. Approval shall require a 2/3-majority vote of the City Council.
(City Zoning Code § 152.021(A-B).)
ANALYSIS
I.
JURISDICTION: YOUNGER ABSTENTION DOCTRINE
The City argues that this Court should apply the Younger doctrine and abstain
from exercising jurisdiction because Fantasysrus cold have pursued an administrative
appeal to the City Council and, if necessary, a review of the City Council’s decision in
state court. Further proceedings by this Court, the City contends, would interfere with
those state proceedings, offending the principles of comity and federalism.
A.
Standard of Review
In Younger v. Harris, the Supreme Court held that a federal court, in the absence
of unusual circumstances, cannot interfere with a pending state criminal prosecution. 401
U.S. 37, 41 (1971). The Court later extended Younger to cover civil cases. See Night
Clubs, Inc. v. Fort Smith, 163 F.3d 475, 479 (8th Cir. 1998) (summarizing development of
the doctrine). To determine whether the Younger abstention doctrine applies, the Court
must examine “(1) whether the action complained of constitutes an ongoing state judicial
proceeding; (2) whether the proceedings implicate important state interests; and
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(3) whether there is an adequate opportunity in the state proceedings to raise
constitutional challenges.” Id. (citing Middlesex Cnty. Ethics Comm. v. Garden State Bar
Ass’n, 457 U.S. 423, 432 (1982)). If all three factors are met, the federal court should
abstain unless it “detects bad faith, harassment, or some extraordinary circumstance that
would make abstention inappropriate.”
Id. (internal quotation marks and citation
omitted). The parties do not contest prong two,4 and Fantasysrus does not claim that any
of the exceptions are applicable. For the reasons explained below, the Court finds that
there is no ongoing judicial proceeding.
B.
Type of Proceeding
Administrative proceedings which investigate, declare or enforce liabilities “as
they stand on present or past facts and under laws supposed already to exist” are judicial
proceedings for the purposes of Younger. Alleghany Corp. v. Pomeroy, 898 F.2d 1314,
1316 (8th Cir. 1990). The Eighth Circuit has held that a planning commission’s denial of
a business license application “is more accurately characterized as judicial rather than
legislative.” Night Clubs, Inc., 163 F.3d at 479; see also Pomeroy, 898 F.2d at 1316
(applying Younger to a commissioner’s denial of an application because the actions are
judicial). These cases make clear that Ellis’s denial of Fantasysrus’s license should be
considered a judicial proceeding.
4
“[I]t is well-established that for abstention purposes, the enforcement and application of
zoning ordinances and land use regulations is an important state and local interest.” Night Clubs,
163 F.3d at 480.
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C.
Ongoing Proceeding/Exhaustion of Administrative Remedies
The next question is whether there are “ongoing” state proceedings. Fantasysrus
sought no administrative remedies before filing this case – and, therefore, no state
proceeding is currently pending. The City contends that the Court should still abstain
because the Eighth Circuit has held that a party cannot avoid Younger by declining to
seek state appellate remedies. Alleghany Corp. v. McCartney, 896 F.2d 1138, 1144
(8th Cir. 1990). Although a plaintiff is generally not required to exhaust its administrative
remedies before filing a § 1983 action in federal court, see, e.g., Patsy v. Bd. of Regents
of the State of Fla., 457 U.S. 496, 500 (1982), the Eighth Circuit has indicated that
Younger abstention may be appropriate in certain cases involving claims brought under
§ 1983, Cedar Rapids Cellular Tel., L.P. v. Miller, 280 F.3d 874, 881 (8th Cir. 2002)
(“The Supreme Court has applied Younger in cases involving state civil proceedings and
federal claims under § 1983, and so have we[.]”) (internal citation omitted). The Court
must consider whether abstention is appropriate in a dispute such as this one when
Fantasysrus has not exhausted its administrative remedies.
In Cedar Rapids Cellular Telephone, the Eighth Circuit held that Younger required
abstention in a § 1983 action and looked at whether “the relief sought [in federal court]
. . . would unduly interfere with ongoing state judicial proceedings.” Id. In Cedar
Rapids Cellular Telephone, however, there was a pending case in state district court,
making the scope of the state judicial proceeding clear. Id. at 877; see also Night Clubs,
Inc., 163 F.3d at 477-78 (noting an appeal was pending at the time the federal case was
submitted). By contrast, in Planned Parenthood of Greater Ia., Inc. v. Atchison, the
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Eighth Circuit held that Younger abstention was improper because “the plaintiff was not
yet subject to coercive proceedings” and, therefore, “no administrative proceeding of a
kind subject to Younger” was “ongoing.” 126 F.3d 1042, 1047-48 (8th Cir. 1997). The
Court concludes that without a pending case in a state court – or even a pending
administrative proceeding or any type of proceeding – this case is more akin to Atchison
than to Cedar Rapids Cellular Telephone, and that Younger abstention would be
inappropriate here.
The Court will note that in some cases the Eighth Circuit has held that Younger
applies even when there is no pending administrative proceeding.5
In those cases,
however, the administrative proceeding was final, and the plaintiff was free to seek a
remedy in a state court. In contrast, Fantasysrus has not even initiated administrative
proceedings, and an extensive appeals period would be required before an action in state
court was available.
Other circuit courts look to the type of the administrative proceeding – coercive or
remedial – to determine if abstention is required. See Brown ex rel. Brown, 555 F.3d
882, 890 (10th Cir. 2009) (summarizing cases from the First, Third, Fourth, and Seventh
5
In Alleghany Corp. v. Pomeroy, the North Dakota Insurance Commissioner had rejected
the plaintiff’s application to acquire control of the St. Paul Companies. 898 F.2d at 1315. The
plaintiff did not seek review of the commissioner’s decision in state court but rather commenced
an action in United States District Court. Id. at 1316-17.
In 3005 Cedar, LLC v. Minneapolis, the plaintiff never applied for a license for the rental
hall it was operating. No. 09-1580, 2010 WL 455307, at *1 (D. Minn. Feb 3, 2010). After the
city cited the plaintiff for operating a rental hall without a license, the plaintiff sought an
administrative hearing; the administrative hearing officer affirmed the citation. Id. at *2. The
plaintiff, instead of seeking judicial review of the hearing officer’s decision in the Minnesota
Court of Appeals, then filed a complaint in this Court. See id. at *2 n.2.
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Circuits).6 Although the Eighth Circuit has not adopted this analysis, 7 the Court finds
that it is consistent with Supreme Court precedent and instructive in this case.
A state proceeding is generally “coercive” if it was initiated by the state, making
the plaintiff’s participation mandatory or if the federal plaintiff is contending that the
state proceeding is unlawful. Id. at 889. A proceeding is also “coercive” if the plaintiff
“has committed an alleged bad act” and “the state proceeding [was] initiated to punish the
plaintiff.” Id. at 891. In contrast, a state proceeding is generally “remedial” if the
plaintiff initiated the state proceeding of his or her own volition to right a wrong inflicted
by the state or if the federal plaintiff is using the state proceeding to seek a remedy for
some other state-inflicted wrong.
Id.
Courts employing this framework hold that
coercive proceedings are entitled to Younger deference and require federal plaintiffs to
perfect their § 1983 claims by exhausting state remedies.
Id. at 890.
Because
Fantasysrus would have had to appeal Ellis’s determination to initiate an administrative
proceeding, any further state proceeding would be remedial, not coercive. Consequently,
under a coercive / remedial analysis, no abstention is required.
6
The Sixth Circuit does not apply Younger when “the federal plaintiffs are also plaintiffs
in the state court action and the plaintiffs are not attempting to use the federal courts to shield
them from state court enforcement efforts.” Devlin v. Kalm, 594 F.3d 893, 895 (6th Cir. 2010)
(internal quotation marks omitted).
7
In Hudson v. Campbell, the Eighth Circuit noted that “[o]ther circuits recognize a
distinction between coercive and remedial actions” and that it had “recognized the existence of
the coercive-remedial distinction” in its other abstention cases. 663 F.3d 985, 987 (8th Cir.
2011). Nevertheless, the court noted that “we have not considered the distinction to be outcome
determinative.” Id.
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The third Younger factor addresses whether Fantasysrus would have an adequate
opportunity to raise a constitutional challenge in a state proceeding. Because Minnesota
courts can review constitutional questions on appeal from an administrative decision, see
Neeland v. Clearwater Mem. Hosp., 257 N.W.2d 366, 368 (Minn. 1977), the Court finds
that if state proceedings were initiated, Fantasysrus would eventually have an adequate
opportunity to raise its constitutional challenges.
Because Ellis’s denial of Fantasysrus’s permit application did not initiate an
ongoing administrative proceeding, the Court concludes that Fantasysrus was free to
choose between a local administrative appeal and an action in federal district court.
Moreover, proceeding in Federal Court permits Fantasysrus to avoid the long delay that
would otherwise occur before it had an opportunity to raise constitutional challenges.
Younger abstention is inappropriate due to the absence of an ongoing judicial proceeding.
II.
MOTION FOR A PRELIMINARY INJUNCTION
Because the Court finds the Younger abstention doctrine inapplicable, it will now
address Fantasysrus’s motion for a preliminary injunction. The Court will grant the
motion because each of the Dataphase factors is satisfied.
A.
Standard of Review
The Court must consider four primary factors in determining whether a
preliminary injunction should be granted: 1) the threat of irreparable harm to the moving
party; 2) the state of balance between the alleged irreparable harm and the harm that
granting the preliminary injunction would inflict on the other party; 3) the likelihood of
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the moving party’s success on the merits; and 4) the public interest. Dataphase Sys., Inc.
v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). The Court’s aim is to preserve the
status quo until the merits of the case are determined. Id.
B.
Dataphase Factors
1.
Threat of Irreparable Harm to the Moving Party
“It is well-settled law that a ‘loss of First Amendment freedoms, for even minimal
periods of time, unquestionably constitutes irreparable injury.’” Phelps-Roper v. Nixon,
545 F.3d 685, 690 (8th Cir. 2008) (quoting Elrod v. Burns, 427 U.S. 347, 373 (1976)). If
Fantasysrus can establish a sufficient likelihood of success on its First Amendment claim,
it will also establish irreparable harm as the result of deprivation. Id. Because the Court
finds a likelihood of success on the First Amendment claims, infra, the Court finds
Fantasysrus has established a threat of irreparable harm.
2.
Balance of the Harms
“The balance of equities . . . generally favors the constitutionally-protected
freedom of expression.” Phelps-Roper, 545 F.3d at 690. The City argues that if a
preliminary injunction is issued it will create “apparent irreparable harm to [the]
governmental unit by a continuous and knowing violation of that body’s duly
promulgated laws and regulations.” Rockville Twp. v. Lang, 387 N.W.2d 200, 205
(Minn. Ct. App. 1986). In Rockville Township, however, the state court was approving
the use of an injunction to prevent a party’s operations without a permit. Id. In contrast,
allowing a business to operate while the Court determines the constitutionality of a city’s
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ordinance would not undermine the authority of government body. Fantasysrus is not
acting in disregard of the city’s ordinance but has rather asked the Court to determine if
the ordinance may be enforced. The Court concludes that this factor weighs in favor of a
preliminary injunction.
3.
Likelihood of the Moving Party’s Success on the Merits
Fantasysrus argues that it is likely to succeed on each of its theories: (1) that the
ordinance is unconstitutionally vague; (2) that the ordinance is unconstitutionally
overbroad; (3) that the ordinance subjects First Amendment rights to the “unbridled
discretion” of a government official; and (4) that the ordinance suppresses or severely
restricts access to constitutionally protected speech. The City contends that Fantasysrus
is unlikely to succeed on the merits because the ordinance is not vague and the First
Amendment does not apply.
a.
Vagueness
Fantasysrus claims that the City’s ordinance is impermissibly vague because it
contains no definition of “adult uses” and permits arbitrary enforcement. (Pl.’s Mem. in
Supp. at 8, Docket No. 3.) A law is void for vagueness8 if it “fails to provide a person of
ordinary intelligence fair notice of what is prohibited, or is so standardless that it
authorizes or encourages seriously discriminatory enforcement.”
Williams, 553 U.S. 285, 304 (2008).
United States v.
First, the city code defines “adult uses” in
8
“The void-for-vagueness doctrine is embodied in the due process clauses of the fifth and
fourteenth amendments.” Woodis v. Westark Cmty. Coll., 160 F.3d 435, 438 (8th Cir. 1998).
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§ 152.006, listing various examples of “sexually oriented” businesses like an “arcade,”
“bookstore,” or “store.” The phrase “sexually oriented” as used in § 152.006 is not,
however, defined. The City argues that the phrase “sexually oriented” is not vague
because the phrase is “used throughout the federal case law involving the regulation of
sex-based businesses.” (Def.’s Mem. in Opp. at 18, Docket No. 11.) The use of the term
“sexually oriented” by the courts in other contexts is only marginally relevant. The issue
is whether the terms “adult use” or “sexually oriented” in the context of this ordinance
fail “to provide a person of ordinary intelligence fair notice of what is prohibited, or [are]
so standardless that [they] authorize[] or encourage[] seriously discriminatory
enforcement.” See Williams, 553 U.S. at 304.
The Eighth Circuit has upheld a Rochester ordinance that restricted the location of
businesses with “adult establishment uses” where the code classified a business as an
adult bookstore “if a ‘substantial or significant portion’ of its merchandise is sexually
explicit.” ILQ Inv., Inc. v. City of Rochester, 25 F.3d 1413, 1418 (8th Cir. 1994). The
Rochester ordinance also defined an “adult establishment” as a “business that offers any
entertainment ‘characterized by an emphasis’ on sexually explicit activity.” Id. In
contrast, the East Grand Forks city ordinance does not define “sexually oriented” and
provides no guidance as to how much of the merchandise or activity must be sexually
explicit or an “adult use” to trigger the ordinance. Consequently, an art gallery with
some paintings of nudes, a dance studio that teaches belly dancing, a sauna that allowed
nudity at certain times, or a bookstore selling Fifty Shades of Gray could be “sexually
oriented” or not, depending on the discretion of the city official. Because the ordinance
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does not define how much “adult use” or “sexually oriented” content is required to trigger
application of the ordinance, the Court concludes that Fantasysrus is likely to be able to
show that the term “sexually oriented” is impermissible vague.
b.
First Amendment Claims:
Discretion, Restricted Access
Overbroad,
Unbridled
Fantasysrus’s other claims are based on the First Amendment. The City argues
that each of these claims should fail because Fantasys would only “incidentally” sell a
few items protected by the First Amendment – and that the items in the store related to
“speech or expressive conduct” are not enough to give the entire store First Amendment
protections. (Def.’s Mem. in Opp. at 16.)
The city in Doctor John’s, Inc. v. Sioux City made a similar argument – arguing
that the business, Doctor John’s, would have been a “sex shop” under the “sex toys”
definition of its ordinance, which did not implicate First Amendment protections. 467
F. Supp. 2d 925, 928 (N.D. Iowa 2006).9 That court ruled: “to the extent that [the city’s
ordinance] defined a ‘sex shop’ on the basis of a ‘combination’ of two or more categories
of items including ‘adult media,’” First Amendment protections still applied. Id. As
noted above, the City’s ordinance is also imprecise, and, therefore, a “sexually oriented
store” containing only sexually explicit books could fall within the ordinance as could a
store containing only two books and thousands of sexual novelties.
9
Notably, the
Order clarified sub nom. Doctor John’s, Inc. v. Sioux City, No. C 03-4121, 2007 WL
200927 (N.D. Iowa Jan. 13, 2007), order clarified, Doctor John’s, Inc. v. Sioux City, No. C 034121, 2007 WL 200928 (N.D. Iowa Jan. 16, 2007).
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ordinance provides no framework for a city official to differentiate between a “sexually
oriented store” and a “sexually oriented bookshop.” The delineation would be entirely in
the discretion of the city official interpreting the ordinance. Consequently, the Court
finds that First Amendment protections apply to Fantasys because it is unclear how much
expressive content is required for a business to fall under the ordinance or subparts of the
ordinance.
Other than arguing that Fantasys is not entitled to First Amendment protection, the
City does not address the substance of Fantasysrus’s First Amendment claims. The Court
concludes that on the present record, Fantasysrus has shown it is likely to succeed on its
First Amendment claims.
4.
The Public Interest
Because “[i]t is always in the public interest to protect constitutional rights,”
Phelps-Roper, 545 F.3d at 690, the Court concludes that this final factor weighs in favor
of a preliminary injunction.
Because each of the Dataphase factors supports a
preliminary injunction, the Court will grant Fantasysrus’s motion. Moreover, although
Fantasys was only open briefly,10 granting the motion will allow Fantasys to resume
business, preserving the status quo.
10
At oral argument the parties represented that Fantasys did open without a permit, but
that the city took no enforcement action.
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III.
SECURITY REQUIREMENT
Federal Rule of Civil Procedure 65 requires that a preliminary injunction or a
temporary restraining order shall only issue if the applicant “gives security in an amount
that the court considers proper to pay the costs and damages sustained by any party found
to have been wrongfully enjoined or restrained.” Fed R. Civ. P. 65(c). Fantasysrus asks
that the Court waive the security requirement because no demonstrable harm could occur
to the City if the injunction and temporary restraining order are granted.
Because the City did not object to Fantasysrus’s request that the security
requirement be waived, the Court will grant the waiver. See Northshor Experience, Inc.
v. Duluth, 442 F. Supp. 2d 713, 723 (D. Minn. 2006) (granting a waiver when the
defendant had not objected or otherwise “addressed this issue or attempted to quantify
any dollar amount of harm that it may face from a wrongly issued injunction”).
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Plaintiff’s Motion for a Preliminary Injunction [Docket No. 2] is
GRANTED. A preliminary injunction is hereby entered against defendants as follows:
Until further order of this Court, defendants are enjoined from enforcing the
provisions of the East Grand Forks city ordinance related to adult
entertainment against Plaintiff in the operation of Plaintiff’s business
Fantasys at 207 Northeast Second Avenue, East Grand Forks, Minnesota.
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2.
Plaintiff is not required to provide security under Federal Rule of Civil
Procedure 65(c).
DATED: July 25, 2012
at Minneapolis, Minnesota.
____s/
____
JOHN R. TUNHEIM
United States District Judge
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