Pink Pony Lawsuit: A Brookhaven Resident Provides a Perspective

The efforts of a few create expensive issue for new city.

Catherine Bernard, Attorney and Brookhaven resident

Catherine Bernard, Attorney and Brookhaven resident

Brookhaven is known for many things: beautiful neighborhoods, great restaurants and shops, a vibrant and diverse population, strong schools, engaging community activities, and civic pride. That list has never included “sexually-oriented businesses” – but thanks to the efforts of a few, adult entertainment has become a prominent and expensive issue for the new city. Brookhaven citizens have been left wondering how our elected officials decided to spend potentially hundreds of thousands of dollars on an attempt to drive out a decades-old business, and what that decision tells us about the way our new city government is working.

Adult-oriented businesses were uncontroversial during the cityhood initiative. The proposed map of Brookhaven was drawn to include the Pink Pony, an adult establishment that has operated on Buford Highway since 1991. It offers nude dancing and alcohol and is located just within the southern boundary of the city. Had the cityhood planners wished to eliminate this type of club from the city limits, it could have been accomplished easily at this stage by a small adjustment to the boundary. However, revenue from the Pink Pony played a significant role in the Brookhaven feasibility study estimates by the Carl Vinson Institute. This projected revenue consisted of not only the occupation taxes and alcoholic beverage license fees paid by the Pink Pony, but also “anticipated permit revenue from adult-oriented businesses.” Brookhaven’s initial budget relied on collecting taxes and special fees from the Pink Pony.

Even after the cityhood vote, the Mayoral and City Council campaigns made no mention of adult-oriented businesses as an important priority for the new Brookhaven. Unsurprising, since many residents weren’t even aware of the Pink Pony or its presence in the city, and those who were aware weren’t complaining about it. The concerns about new establishments and “secondary effects” – so thoroughly expounded upon in 2013 – were absent from the public forum as voters chose the first Mayor and City Council members.

Two important events took place December 4th.

But absent from the public forum does not mean absent from consideration. On December 4, 2012, there were at least two important events in Brookhaven governance: runoffs for Mayor and City Council were conducted, and a Tennessee attorney specializing in “adult business law” began billing the City of Brookhaven for work on a sexually-oriented business ordinance. It was not until December 10 that the elected officials were sworn in and an interim city attorney selected. The authority to hire Scott Bergthold at taxpayer expense did not exist on December 4 – so who directed him to begin work on an ordinance targeting a Brookhaven business?

It appears that Bergthold was directed to begin work by Bill Reilly, the interim city attorney selected on December 10 who abruptly resigned in October 2013. Reilly, who is not a resident of Brookhaven, has served as city attorney for Johns Creek and Sandy Springs and has been involved in the formation of several cities in the north metro Atlanta area. He volunteered his time to assist the City of Brookhaven Commission appointed by Governor Deal in August 2012, and his firm received $151,809 from the City of Brookhaven between December 2012 and August 2013. Councilman Jim Eyre has said that Reilly began working on ordinances to present to the Council before the elections because of the short window of time between seating the Council and the City’s launch. “He was involved in pulling that stuff together early on, so when we were in a group we could start acting on some of those things,” Eyre told the Brookhaven Reporter in October 2013. “Bill brought [Bergthold] in as an expert advisor or consultant.”

Reilly has hired Bergthold on behalf of several other municipalities for the purposes of writing restrictive ordinances for adult-oriented businesses, including one such ordinance that prompted costly litigation against Johns Creek. The Carl Vinson Institute specifically excluded those costs from its comparisons to Johns Creek in the Brookhaven feasibility study. Bergthold has been paid at least $40,000 by the City, including the work that was billed prior to elected officials taking office and the City beginning operations.

Bergthold delivered a presentation to the City Council on January 8, 2013, entitled “Negative Secondary Effects of Sexually Oriented Businesses,” which has been similarly presented to other brand-new municipalities in which Reilly has participated. It consisted of a sales pitch about the dangers of the existing Dekalb ordinance (the one in effect during 12 relatively litigation-free years of settlements between the County and adult-oriented businesses), explaining that it was constitutionally defective and exposed the community to danger. Bergthold used the phrase “wolf at the door,” and characterized the failure to write a new law as refusing to buy insurance. Not writing a restrictive new statute, Bergthold said, would produce endless trouble for the community and inspire resentment over the missed opportunity to fix the problem at the outset.

But many Brookhaven residents don’t believe there was a problem that needed to be fixed. They note that the examples of “negative secondary effects” offered by Bergthold are largely from cities with different environments from Brookhaven, such as Myrtle Beach, and are often presented without the context that would allow for effective risk assessment. They point to the fact that the Pink Pony club in Dekalb County has never been cited for any violation of an ordinance or state law, and that neighbors and local law enforcement report no disproportionate criminal activity suggesting that the area is unsafe. They question whether Brookhaven actually risks attracting an influx of adult-oriented businesses, given that none have sought to open in recent years and the industry itself has declined. And they point to over a dozen large businesses that have opened within 1000 feet of the Pink Pony.

Unfortunately, these citizen opinions were not solicited by the new Brookhaven elected officials before they voted unanimously to approve the Sexually Oriented Business ordinance on January 15, 2013 – less than one month after the City officially began operating. The ordinance restricts the Pink Pony from serving alcohol with nude dancing, as of January 2, 2014. This would effectively shut down the existing business, and eliminate the many jobs it provides for members of the community.

The legal battle begins.

In May 2013, the Pink Pony filed a lawsuit against the City of Brookhaven. The complaint alleges numerous improprieties and failures to adhere to legal and procedural requirements in passing ordinances, including a lack of notice purportedly invalidating HB636 which chartered Brookhaven as a city. It attacks the constitutionality of the Bergthold/Reilly-written Sexually-Oriented Business ordinance on multiple grounds. And it challenges Brookhaven’s authority to alter the terms of the agreement under which the Pink Pony was operating with Dekalb County.

There has been some confusion regarding the nature of the Pink Pony’s relationship with Dekalb. For the first ten years of the club’s existence, it and other adult-oriented businesses skirmished with Dekalb County over various bans intended to destroy the profitability of the businesses. After court victories for the adult establishments, in 2001 Dekalb County entered into a Settlement Agreement with them providing existing sexually-oriented businesses the right to continue operations for an eight year term. In 2007, that agreement was extended for a minimum fifteen-year term with an option to renew for ten years. The Pink Pony and other establishments agreed to pay an increased, graduating licensing fee.

Brookhaven city officials have characterized this arrangement as somehow unsavory. Councilwoman Rebecca Williams said “…it was not an agreement any of us were willing to be a part of”. In exhorting the City Council to implement his restrictive ordinances, Bergthold specifically encouraged Council members not to consider themselves bound by decisions of previous governments. He told them that as a new political entity, they were sovereign and could make new laws as they wished without being bound by previous agreements. Regardless of the dubious legal merit of this argument (the Dekalb Settlement Agreement specifically applies to cities formed within the area) it is far from clear that citizens supported the Council’s view of the matter. Some compared it to the City nullifying zoning variances and other agreements that Brookhaven residents had entered into with Dekalb County. Many perceived a fairness issue when a successful business’s license to operate is cancelled after five years of a fifteen-to-twenty-five year contract. The Pink Pony’s complaint against the City pointed out that the club had made numerous business decisions and investments based on the timeline established in the agreement with Dekalb County. A capricious government that alters existing contracts at will does not create a healthy environment for business and economic growth.

Citizens attempting to express these views to City leadership were frustrated by the official lack of response. Citing the pending litigation, the Mayor and City Councilors refused to comment on the City’s decisions – the same decisions that resulted in the litigation in question. And that litigation was the first notification many citizens had that there was even an issue regarding a new Sexually Oriented Business ordinance. The City issued a statement in May 2013: “Brookhaven will defend its ordinances, which are designed to protect public safety, health and welfare, and further the city’s goal of ensuring that Brookhaven is an excellent community in which to live.”

HOA’s and citizens commission public opinion poll; results compelling.

In September 2013, a coalition of Brookhaven residents and neighborhood associations raised money to commission 20/20 Insight, a professional public opinion research firm, to conduct a telephone opinion poll. Sixty-two percent of the respondents said they felt the city was not representing the will of the people on the subject of the Pink Pony; 75% said that the city should enter into a settlement agreement with the club to avoid the associated costs of the litigation. City officials did not respond to the poll.

On October 16, 2013, sponsors of the Pink Pony poll organized a round table discussion with the Mayor and Councilman Joe Gebbia to discuss poll results, express their views, and discussed alternative strategies. The entire community was invited to the discussion, and sixty to seventy people attended along with a substantial media presence. No one in attendance supported the position that city officials had taken on the subject of adult-oriented businesses. At the City Council meeting held the following week, Mayor J. Max Davis suggested that the city seek additional legal counsel on the subject of the Sexually-Oriented Business ordinance. Council members Joe Gebbia and Bates Mattison supported the idea, while Jim Eyre and Rebecca Chase Williams opposed it. Councilman Eyre stated that he did not believe a second opinion from additional lawyers would sway the views of Brookhaven residents. Councilwoman Williams said that they were already committed to the current course and expressed frustration over the prospect of having to come up with an idea with which citizens agreed.

The key reasons cited by the Mayor for passing the ordinance and pursuing litigation are: 1) protection against future adult-oriented businesses opening in Brookhaven; 2) protection against future lawsuits; 3) negative impact on surrounding property values; and 4) increased rates of crime associated with adult-oriented businesses. None of these reasons stand up to scrutiny. The City Council has been advised (by Reilly and Bergthold) that the new ordinance is the only option for protecting the city against additional adult-oriented businesses entering Brookhaven. However, under the Dekalb ordinance in place since 1991, no new clubs have opened in Dekalb County and a net loss of three establishments. Similar patterns can be observed on Cheshire Bridge Road. Interestingly, Bergthold drafted an ordinance for the City of Atlanta that would drive out its strip clubs; the Atlanta City Council rejected the proposed ordinance and chose to keep their current regulatory scheme. Nude dancing establishments are simply becoming less common due to market forces and the availability of sexual material on the internet.

City officials have stated that they passed the Sexually-Oriented Business Ordinance as a way of protecting the city against lawsuits; Bergthold repeatedly insisted that the existing Dekalb ordinance was constitutionally flawed and open to legal challenge. It is perhaps surprising, then, that the expensive new ordinance crafted by Bergthold drew a lawsuit within a few months of being passed. Despite his reputation as the best Sexually Oriented Business ordinance lawyer in the country, his ordinance was unable to produce a result as desirable (at least as measured in terms of lawsuits filed against county/city government) as the old Dekalb ordinance that he called a wolf at the door.

Officials need to pay attention to what’s happening in the community they represent.

There is no evidence that the Pink Pony has had a negative effect on surrounding property values. Restaurants, hotels, drugstores, cabarets, apartments, moving companies, a large car wash, Wells Fargo Bank, a retail center, offices, and the Salvation Army have all opened within 1000 feet of the Pink Pony since it opened in 1991. The City of Brookhaven located its municipal court and city offices in the executive park next to the Pink Pony.

The Pink Pony has not caused an increase in crime in the surrounding area either. Neighbors have publicly stated that it is not a nuisance. The club has never been cited for violation of any law or ordinance. The area is kept clean and has not created blight. The studies repeatedly referred to by Bergthold deal with other localities, not Brookhaven. City officials need to pay attention to what’s happening here in the community that they represent.

Shutting down the Pink Pony simply isn’t a priority for the citizens of Brookhaven. City officials should focus on the issues they campaigned on and that are important to residents. We want our tax dollars spent on improving roads, parks, and services – not to pay lawyers who are attempting to shut down a source of almost half a million dollars in tax and licensing revenue while exposing the city to costly litigation. There has been no clear communication on how city officials will deal with important issues like this one in the future. Will they solicit citizen input before acting, or will they proceed with enacting “One Read” ordinances at meetings that few can attend? Will they commit to expensive, intrusive ordinances before citizens can be informed of the issues involved and develop a community perspective?

In addition to being pragmatically unwise, the actions of city officials have been ethically questionable. We expect our elected officials to treat businesses fairly. Deliberately including a long-time business within city limits, then immediately acting to shut it down upon incorporation, is not fair treatment. It negatively affects the livelihood of 250 employees, many of whom are longtime area residents. And it sets the precedent that the citizens’ priorities are less important than those of an out-of-town lawyer on a personal crusade against adult-oriented businesses.

– Brookhaven Resident and Attorney, Catherine Bernard

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October 7, 2014 8:45 am

An existing permit cannot be invalidated based on public whim? Sort of like the power of HR1306 gave to these minions of statism to endorse their developer buddies project, like maybe this issue, & certainly the braves stadium! Statutory law is mob rule, Constitution is what would have garranteed Christ’s rights to jury trail. How quickly we are reverting to the cave, mob mentality!