Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02137/USCOURTS-azd-2_06-cv-02137-0/pdf.json

Nature of Suit Code: 950
Nature of Suit: Constitutionality of State Statutes
Cause of Action: 42:1983 Civil Rights Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

IDAHO BUSINESS HOLDINGS, LLC,,

Plaintiff, 

vs.

CITY OF TEMPE, 

Defendant. 

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No. CV-06-2137-PHX-FJM

ORDER

On August 8, 2007, this court held a comprehensive hearing on the parties’ “Joint

Motion and Stipulation to Seal Proposed Consent Judgment and Settlement Agreement”

(doc. 42). The court advised the parties that their proposed consent judgment was utterly

unacceptable. The court has an independent obligation to satisfy itself that a proposed

consent decree is consistent with the Constitution and laws of the United States and does not

undermine the public interest or the interests of third parties. United States v. Oregon, 913

F.2d 576, 581 (9th Cir. 1990); Kasper v. Board of Election Commissioners, 814 F.2d 332,

338 (7th Cir. 1987).

The proposed consent decree in this case would have this court declare certain

Arizona statutes in violation of the Arizona Constitution in order to allow plaintiff to operate

its business in violation of state law. No federal court exercising its jurisdiction under Article

III of the United States Constitution should ever do that by consent of the parties. A federal

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court has a solemn obligation to avoid constitutional adjudication when it can do so, even

where the parties present a live case or controversy. But here, the parties purport to have

settled their case and thus there is no longer a case within the meaning of Article III in which

it would be appropriate to adjudicate a constitutional question. Moreover, before this court

would ever adjudicate a constitutional issue, it would have to satisfy itself of the rectitude

of the decision. It could never do so by consent of the parties. 

In a recent case strikingly similar to ours, the United States Court of Appeals for the

Ninth Circuit reversed a district court’s approval of a settlement agreement in which the City

of Los Angeles granted a conditional use permit in violation of state zoning laws. League

of Residential Neighborhood Advocates v. Los Angeles, No. 06-56211 (9th Cir. Aug. 21,

2007). Concluding that the settlement agreement was invalid and unenforceable, the court

stated that “[b]efore approving any settlement that authorizes a state or municipal entity to

disregard its own statutes in the name of federal law, a district court must find that there has

been or will be an actual violation of that federal law.” Slip op. at 10193-94. “A federal

consent decree or settlement agreement cannot be a means for state officials to evade state

law.” Id. at 10188. 

The parties’ proposed consent decree would mislead the public into believing a federal

court required the City to allow plaintiff to run its business in violation of state law, when,

in fact, the City is choosing to ignore state law. We will not “place our imprimatur” on the

proposed consent decree or settlement agreement and “effectively authorize[ ] the City to

disregard its local ordinances.” Id. at 10193. If the City of Tempe elects to ignore state and

local zoning laws, it will do so at its own peril, without the sanction of this court.

In addition, we advised the parties that their proposed consent decree and settlement

agreement raised other substantial questions about the public interest. The settlement

agreement proposed that plaintiff would pay its lawyer to represent the City in connection

with the agreement. See agreement, ¶ 8(g) at 8-9. This obvious conflict of interest would

compromise the substantial interests of the citizens of Tempe in the enforcement of state and

local restrictions of sexually oriented businesses. The proposed agreement would keep the

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agreement confidential. This is directly contrary to the public interest in knowing what its

publicly elected officials are doing and plainly violative of Kamakana v. City of Honolulu,

447 F.3d 1172 (9th Cir. 2006), and Foltz v. State Farm, 331 F.3d 1122 (9th Cir. 2003).

At the hearing on this matter, counsel for the City of Tempe could not give this court

a single reason that would justify any of these provisions. Indeed, this court was left with

the conclusion that the citizens of Tempe were not being well served here. We do not know

whether this attempt to conceal this bad arrangement for the City from public view is driven

by counsel or by the City’s representatives. Either way, it is wrong. The citizens of Tempe

are entitled to know the terms of the settlement agreement their representatives have entered

on their behalf.

On the day after our hearing, the parties filed a “Stipulated Notice of withdrawal of

Proposed Consent Judgment” (doc. 45). Under Rule 41(a)(1). Fed . R. Civ. P., the parties

may dismiss their action without court order based upon their stipulation. In light of the

notice of dismissal, IT IS ORDERED as follows:

1. the “Joint Motion and Stipulation to Seal Proposed Consent Judgment and

Settlement Agreement” is DENIED for the failure of the parties to show any compelling

interest to conceal from the public what they were trying to do. Kamakana v. City of

Honolulu, supra, Foltz v. State Farm, supra. Under General Order 05-23, after the denial

of a motion to seal “the proposed document will be returned to the filer.” In addition, given

the nature of the proposed consent judgment and settlement agreement, the clerk shall

maintain a copy under seal in order to preserve the integrity of the record in this case.

2. the parties having filed a stipulation of dismissal within the meaning of Rule

41(a)(1), Fed. R. Civ. P., this action is terminated.

DATED this 22nd day of August, 2007.

 

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