### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No

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- 1608
S IX S TAR H OLDINGS , LLC , and F EROL , LLC , Plaintiff s

- A ppellee s ,

v.

C ITY OF M ILWAUKEE , Defendant

- Appell ant

.

____________________ Appeal from the United States District Court for the Eastern District of Wisconsin

. No. 2:10

- cv

- 893

— Lynn Adelman , Judge

.

____________________
A RGUED N OVEMBER 9, 2015

— D ECIDED A PRIL 13 , 2016

____________________

Before W OOD , Chief Judge , R OVNER , Circuit Judge , and S HAH , District Judge

. *

W OOD , Chief Judge

. This case requires us to visit the world of strip clubs

— establishments that no one seems to want, officially, but that are somehow quite lucrative. Prior to

* Of the Northern District of Illinois, sitting by designation.2 No

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March 1, 2012, t he City of Milwaukee had various licensing requirements for this type of place, but it no longer defends their constitutionality. The First Amendment imposes a “heavy presumption” against the “ constitutional validity ” of prior restraints on speech

. Bantam Books, Inc. v. Sullivan , 372 U.S. 58, 70 (1963)

. P rior restraints that are viewpoint

- and
content

- n eu t ral and impose a limitation only on the tim e, place, and manner of speech are more likely to pass muster. See City of Lakewood v. Plain Dealer Pub l’g . Co. , 486 U.S. 750, 763 (1988); Blue Canary Corp. v. City of Milwaukee , 251 F.3 d 1121, 1123 (7th Cir. 2001)

. They are permissible if, and only if, there are pro cedural safeguards that ensure that t he decisionmaker approving the speech does not have “unfettered discretion” to grant or deny per mission to speak

. Plain Dealer Pub l’g . Co. , 486 U.S. at 755

– 57 ; Freedman v. State of M aryland , 380 U.S. 51, 58

– 59 (1965)

. Before us now are two Milwaukee ordinances , now repealed, that required certain licenses before a business was permitted to offer nude or partially nude entertainment. (W hen we say “nude,” we mean to includ e both total and partial nudity; the difference between the two is immaterial for this case. ) Two compani es

— Six Star Holdings, LLC, which applied for a license under one of these ordi nance s , and Ferol, LLC, which did not

— cha llenged these ordinances , seeking injunctive relief and damages

. Once the ordinances were repealed, the plaintiffs dropped their requests for injunctive relief but continued to pursue damages. The latter request saves the case from mootness. See Buckhannon Bd. & Care Home, Inc. v. W. V a. Dep’t of Health & Human Res ., 532 U.S. 598, 608

– 09 (2001)

. The district court held that the ordinances addressed time, place, and manner of expression, but that they did not include the necessary procedural safe-No

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gu ards. A jury then decided that but for the unconstitutional ordinances, Ferol would have opened a club providing nude entertainment. It awarded Ferol compensatory damages in the form of lost profits, and gave Six Star nominal damages. The City has appea led. It argues that Ferol had no injury and therefore no standing to challenge the ordinances. It a lso challenges Ferol’s theory of causation and the award of nominal damages to Six Star. Finding no merit in any of these points, we affirm the district court’s judgment.
I Jon Ferraro saw a business opportunity in what he regarded as a shortage of nude

- entertainment clubs in the Milwaukee area. He created, and is the majority owner of , the two plaintiff limited

- liability co mpanies : Six Star and Ferol

. (He owns other similar venues elsewhere in Wisconsin.) Ferraro wanted to open two club s in the downtown Milwaukee area. The one owned by Six Star would be called “Silk East , ” at 730 North Old World Third Street , and the other, owned b y Ferol, would be called “Satin” and located at 117 West Pittsburgh Avenue.
Under the licensing regime in place before March 1, 2012, there were three lawful ways to offer so

- called adult entertainment. To operate an establishment that offered both alcohol and nudity , the proprietor was required to obtain a liquor license , sometimes called a tavern license , and a tavern

- amusement license. See M ilwaukee Code of Ordinances (MCO) § 90. To operate a dry ( that is, alcohol

- free ) club with nude entertainment , the proprietor could obtain either a theater license , MCO § 83

– 1, or a public

– entertainment club license , MCO § 108

- 5

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Initially, Ferraro hoped that both of his planned cl ubs would be authorized to serve alcohol and to provide nude entertainment

. Six Star and Ferol accordingly each applied for a liquor license and a tavern

- amusement license in September 2010

. They quickly learned that the City did not welcome Ferraro’s plans

. The Milwaukee Common Council denied b oth sets of applications after a pub lic hearing before the Council’s Licensing Committee. Members of the public complained that the clubs would produce unwanted secondary effects on the neighborhood, including a disorderly clientele and increas ed crime, and that they would drive away other b usiness es

. Following this setback, Ferraro reevaluated his options. He began preparations to open a dry adult club at one of his locations

. For market research, h e visited several other dry clubs

— one near Appleton, Wisconsin , and other s in Las Vegas

. He began calculating whether a Milwaukee

- area dry club could be profitable based on the financ ial data from another Milwaukee

- area club he owned. He identified managers from his other establishments who could move to his new club, and he contacted a parking s ervice to arrange for valet parking at the new club

. But h is lawyer interrupted his preparations with more bad news: although he would not

n eed a liquor license and tavern

- amusement license, he would need either a theater license or a public

- entertainment club license to operate a dry club that featured nudity. With this information in hand, Ferraro decided that Six Star should apply for a theater license to operate “Silk East” as a dry club

. Six Star submitted a revised application to the Common Council in September 2011. I t went nowhere: a Milwaukee a lderman put a “ hold ” on it, and there it sat. NoNo

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action was taken on Six Star’s application before both ordinances were repealed on March 1, 2012

. A s Ferraro’s business plans evolved , so did his legal strategy

. Back in 2010 , before applying for any license, both Six Star and Ferol filed suits in the federal district court for the Eastern District of Wisconsin attacking t he liquor license and tavern amusement license ordinance, MCO § 90

. Their

cases were quickly consolidated

. After the Common Council denied their applications for liquor licenses and tavern amusement licenses, they amended their complaint a few times. Eventually they reached their Fourth Amended Complaint . It challenged MCO § 90 ( the liquor and ta vern amusement license ordinance ) , MCO § 83

– 1 (the theater license ordinance ) , and MCO § 108

- 5 (the public entertainment club ordinance ) under 42 U.S.C. § 1983 ; all of these ordinances, they charged, violated their F irst Amendment rights facially and as applied

. The complaint asked for damages and injunctive relief. In time, cross

- motions for summary judgment were filed

. O n March 18, 2013 , t he district court granted summary judgment in the City’s favor with respect to the facial and as

applied challenge t o the tavern

- amusement license part of MCO § 90 and the as

— applied challenge to the liquor license part. The court relied on Blue Canary Corp. , 251 F.3d 1121, which it understood to allow a city to d eny a license based on the secondary effects of the proposed establishment without running afoul of the First Amendment. I t held that the Common Council ’s decision rested on the predicted secondary effects of the clubs and not on the ir expressive content

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T he court granted summary judgment for Six Star on its challenge to the theater ordinance , MCO § 83

– 1

. Because the ordinance had since been repealed, the court limited itself to the as

- applied challenge. It held that the theater ordinance operated as a prior restraint on expressive activity without the necessary procedural safeguards , particularly because the city had unfettered discretion to indefinitely delay rendering a decision , contrary to Plain Dealer Publ’g

. Co. , 486 U.S. 750 and Freedman , 380 U.S. 51. Six Star , it said, was entitled to damages fo r lost profits from the months during which it would have operated Silk East but for the ordinance. The court did not reach Six Star’s facial challeng e to the theater ordinance, which it thought no longer made any difference. It noted a question about Fero l’s standing to bring

an as

- applied challenge to the theater ordinance or the public entertainment club ordinance , because it had not requested a license, but it invited additional briefing on the matter. After the court received additional briefing on Ferol’s standing, it issued a second opinion on August 28, 2013 , granting summary judgment to Ferol on liability

. It was persuaded that Ferol did have standing in light of an affidavit that F erraro submitted. Ferraro attested that F erol would have opened S atin as a dry club at 117 West Pittsburgh Avenue in September 2010 had it not been for the theater license and public

— entertainment club ordinances. Ferraro detailed the concrete steps he had undertaken to p repare for the club ’s opening. The court concluded that the ordinances were unconstitutional as applied to Ferol. Finally, the court put the questions of causation and damages before a jury, at a trial held on Fe bruary 1 7

– 19 , 201 5

. Ferraro acknowledged that he would have opened on-No

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ly one club

— either Satin or Silk East

— and therefore he asked for nominal damages for Six Star and lost

- profit damages for Ferol. At the trial, the City cross

- examine d Ferraro and his business partners in detail about their plans to open a dry club

. The jury found for Ferol, answering “Yes” to the question, “Would plaintiff Ferol, LLC have opened a dry gentlemen’s club at 117 West Pittsburgh Avenue in the City of Milwaukee before March [1], 2012, but for the existence of the former theater and public enter tainment club ordinances?” (The form actually said March 12, but this seems to be a typographical error.) The jury awarded Ferol $ 435,000 in compensatory damages for its lost profits

. II
A
The City’s central argument on appeal is that Ferol lacked s tanding to challenge either the theater license or the public

- entertainment club ordinance s because it suffered no injury traceable to the City’s conduct

. This is a fundamental issue we must take up whenever it is raised. United States v. Cotton , 535 U.S. 625, 630 (2002). Article III standing “requires the litigant to prove that he has suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.” Hollingswo rth v. Perry , 13 3 S. Ct. 2652, 2661 (2013) (citing Lujan v. D e fenders of Wildlife , 504 U.S. 555, 560

– 61 (1992) ). As the “ par ty invoking federal jurisdiction , ” Ferol

“ bears the bur den of establishing these elements. ” Lujan , 504 U.S. at 561

. Standing must “ be supported in the same way as any other matter on which the plaintiff bears the burden of proof .” Id. At the pleading stage, “ general factual allegations of injury resulting from the defendant ’ s conduct may suf-8 No

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fice ,” but at summary judgment, the plaintif f “must ‘set forth’ by affidavit or other evidence ‘specific facts.’” Id. (quoting F ED

. R. C IV

. P. 56(e)).

We first consider whether Ferol has standing on the assumption that he is bringing a pre

- enforcement challenge to the relevant ordinances. In that case, Ferol must demonstrate that the threat of enforcement of an unconstitutional ordinance caused injury that was “ actual or imminent , not conjectural or hypothetical. ” Susan B. A n thony List v. Driehaus , 134 S. Ct. 23 34 , 2341 (2014 ) (inte rnal quot ation marks omitted)

. Ferol’s “ a l l e g a tion[s] of f u ture i n jury may suffice [when] ... there is a ‘su b stantial risk ’ that the harm will occur.” Id. (quoting Cla p per v. Amne s ty Int’l USA , 133 S. Ct. 1138, 1147, 1150 n.5 (2013) (some internal quotation marks omitted) ). Ferol can establish future injury by alleging “ ‘ an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, ’ ” and “ ’ a credible threat of prosecution

. ’ ” Id. at 2342 (quoting Babbit v. United Farm Workers Nat’l Union , 442 U.S. 289, 298 (1979)); see also Holder v. Human itarian Law Project , 561 U.S. 1 , 15 (2010) (pre

- enforcement challenge to criminal law justiciable because “[p]laintiffs face a cred ible t hreat of prosecution” (internal quotation mar k s omitted) )

.
Ferol fits comfortably within the boundaries laid out by Susan B. Anthony List

. Ferraro averred in his affidavit that the company had “an intention to engage in a co urse of conduct ” p rotected by the First Amendment, but that conduct was proscribed by the ordinances , and the company faced a credible threat of prosecution. H e alleged that Ferol would have opened a dry adult e ntertainment club at 117 WestNo

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Pittsburgh Avenue had the City not had its op en

- ended and unpredictable licen sing regime. Ferraro set out the numerous concrete steps that he had taken on Ferol’s behalf to prepare for business. In that respect, Ferol went the extra mile: it did not have the burden of proving that it definitely would have opened the dry club in order to have stan ding (although the jury’s lost

- profits verdict shows that the jury thought Ferol did prove this). At the summary judgment stage, Ferol needed only to a l lege su f f i cient facts to support standing and to sup port those facts with evidence that met the criteria of Federal Rule of Civil Procedure 56(c). Lujan , 504 U.S. at 561.

But F erol’s claim may not be best understood as a pre

enforcement chal lenge

. It rests on the ordinances ’ immediate chilling effect on its protected speech

— in other words, on an injury that has already occurred. Wh ere statutes operate as prior restraints and the decisionmaker ’s discretion is not properly cabined, “the mere existence of the licensor ’ s unfettered discretion, coupled with th e power of prior restraint, intimidates parties into censoring their own speech, even if the discretion and power are never actually abused

. ” Plain Dealer Publ’g. Co. , U.S. 486 at 757

. It has thus long been established “that when a licensing statute alleg edly vests unbridled discretion in a government official over whether to permit or deny expressive activity, one who is subject to the law may challenge it facially without the necessity of first applying for , and being denied, a license.” See i d. at 755

– 56 (collecting cases) ; Freedman , 380 U.S. at 56 ( “ I n the area of freedom of expression it is well established that one hasstanding to challenge a statute on the ground that it delegates overly broad licensing discretion to an administrative office ... wheth er or not he applied for a license.” )

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We recognize that Ferol is challenging the Milwaukee ordinances as applied, not facially. But the distinction has little force in the present circumstances. As the Supreme Court has explained, ”the distinction between facial and as

applied challenges is not so well defined that it has some automatic effect or that it must always control the pleadingsand disposition in every case involving a constitutional challenge. ” Citizens United v. Fed. Election Comm’n , 558 U.S. 3 10, 331 (2010). Rather, “it goes to the breadth of the remedy employed by the Court”: a facial challenge usually invites prospective relief, such as an injunction , whereas an as

- applied challenge invites narrower , retrospective relief, such as damages. Id. In this case, the need for an injunction has disappeared, and so we are left only with Ferol’s request fordamages. That aspect of the case does not depend on the legal theory he is using.

Ferol had already suffered an injury from the unconstitutional ordinance s

. It alleged

— and a jury ultimately found

— that it refrained from protected speech in response to the City’s unconstitutional ordinanc e s

. This describes a n injury

in

- fact sufficient to support standing. See Virginia v. Am. Booksellers Ass ’n, Inc

. , 484 U.S. 383, 393 (1988) . It is fairly traceable to the unconstitutional ordinance s

— Ferol alleged that , but for the ordinances , it would have engaged in protected speech, and a jury ultimate ly found this to be true. Damages redress the harm that Ferol suff ered by replacing the lost profits Ferol would have earned if it had been able to open its club at the planned time. This is enough to show why the City’s complaint that the district court erred by construing Ferol’s suit as an applied, rather than a facial, challenge is going nowhere. Because t heNo

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distinction between facial and as

- applied challenges informs only the choice of remedy, “not what must be pleaded in the complaint,” a court may construe a challenge as appl ied or facially, as appropriate. See Citizens United , 558 U.S. at 331.

B The City offers two additional arguments against Ferol’s standing , but neither is persuasive

. First, the City assert s that Ferol’s decision not to apply for a license was unreasonabl ebecause it was based on the advice of an “unlicensed lawyer.” This argument was not raised below and is therefore waived. See James v. Hyatt Regency Chicago , 707 F.3d 775, 783 (7th Cir. 2013)

. Moreover , it is without merit: in a separate opinion regarding attorney’s fees, the district court explained that Ferol relied on the advice of it s ( licensed ) counsel, who employed and supervised a t rial consultant and other staff

. Six Star Holdings, LLC v. City of Milwaukee , No. 10

- C V

- 0893 , 2015 WL 5821441, at *4 (E.D. Wis. Oct. 5, 2015). Second, the City say s that Ferol ’s standing fails because the City never had the opportunity to exercise its prosecutorial discretion to refrain from enforcing the ordinances

. But there is no requirement to give it s uc h an opportunity . See Am. Booksellers Ass’n , Inc. , 484 U.S. at 392 (permitting challenge before statute took effect) ; Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm’n , 149 F.3d 679, 687 (7th Cir. 1998) (government must “indicate affirmatively that it will not enforce that statute” in a criminal context); N.H. Right to Life Political Action Comm

. v. Gardner , 99 F.3d 8, 15 (1st Cir. 1996) (“ c ourts will assume a credible threat of prosecution in the absence of compelling contrary evidence”); cf. Wis. Right to Life, Inc. v. Paradise , 138 F.3d 1183, 1185 (7th Cir. 1998) ( court will assume no “well

- founded” fear of enforce-12 No

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ment when government presents official, written policy against enforcement (quoting Am. Booksellers Ass’n , Inc. , 484 U.S. at 393 ) )

. The City’s real concern appears to be a variant of the floodgates scenario. It fears that p laintiffs will emerge from the woodwork alleging that they too would have undertaken protected First Amendment activities but for now

repealed statutes. This is sheer speculation, however, and it fails to take into account the many safeguards built into the courts’ authority to adjudicate claims. U nder Article III of the Constitution , any allegation of harm must be concrete and particularized and proven at each stage of litigation, just like any other fact

. Lujan , 504 U.S. at 561

. Statutes of limitations also limit legal exposure. Courts routinely entertain suits for damages stemming from r epealed laws. See, e.g. , Markadonatos v. Vill. of Woodridge , 760 F.3d 545, 546 (7th Cir. 2014) ( en banc ) (Posner, J., plurality opinion) (considering awarding damages based on repealed law , although ultimately not doing so on the merits ); id. at 565 (Hamil ton, J., dissenting) (agreeing that damages could be awarded based

on repealed law); Peterson v. Lindner , 765 F.2d 698, 701 (7th Cir. 1985) ( same )

. Ferol had standing to challenge the City’s theater license and public entertainment club ordinances. Therefore the district court had jurisdiction.

III
A The City also argues that Ferol ’ s claim for damages is not cognizable because the harm came from Ferraro ’ s choice toNo

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self

- censor, not from the ordinance. At times , the City frames this a s a challenge to the sufficiency of the evidence. To the
extent that is the case, the argument is waived: the City failed to make a proper motion under Federal Rule of Civil Procedure 50(a) prior to jury deliberations, and thus it had no motion to renew under Rule 50(b) after the verdict. See Unitherm Food Sys., Inc. v. Swift

- Eckrich, Inc ., 546 U.S. 394, 404 (2006) (holding appellate court may not review sufficiency of the evidence without proper Rule 50(a) and (b) motion). The City may , however, be makin g a simple legal point. We may consider “pure questions of law unrelated to the sufficiency of the trial evidence” regardless of whether the re was a motion under Rule 50(a) or (b). Lawson v. Sun Microsystems, Inc ., 791 F.3d 754, 761 (7th Cir. 2015) ; see a lso Ortiz v. Jordan , 562 U.S. 180, 189 (2011) (declining to resolve circuit split over the need for motions under Rule 50(a) and (b) to preserve pure questions of law for appellate review). So understood, it still cannot prevail. Neither company was self

- c ensoring in a vacuum ; they were responding rationally to the City’s position that they were not permitted to open their businesses until it gave them a license. To the extent that any voluntary action was involved, it is well established that the chilling effect of a statute that violates the First Amendment is enough to support a claim. See, e.g. , FCC v. Fox Television Stations, Inc

. , 132 S. Ct. 230 7, 2317 (2012) ( “when speech is involved, rigorous adherence to those requir ements [of avoiding vagueness and unlimited enforcement discretion] is necessary to ensure that ambiguity does not chill protected speech”); Am. Booksellers Ass'n
, Inc. , 484 U.S. at 393; City Council of Los Angeles v. Taxpay ers for Vincent , 466 U.S. 789, 798

– 99 (1984); Broadrick v. Oklaho ma , 413 U.S. 601, 612 (1973); Freedman , 380 U.S. at 61; see also FW/PBS,14 No

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Inc. v. City of Dallas , 493 U.S. 215, 253 (1990) ( Scalia , J., concu rring in part and dissenting in part); Ctr. for Individual Freedom v. Madigan , 697 F.3d 464, 473

– 74 (7th Cir. 2012); Schultz v. City of Cumbe r land , 228 F.3d 831, 848 (7th Cir. 2000).

B Last, we turn to the question of the nominal damages the district court awarded to Six Star. The City fights this because, it argues, Six Star suffered only de min i mi s har m

. But it overlooks the fact that this is exactly the situation for which nominal damages are designed. And in civil rights cases, nominal damages are ap propriate when a plaintiff’s rights are vio lated but there is no monetary injury. See Carey v. Piphus , 435 U.S. 247, 266

– 67 (1978). The City protests that Six Star could not have opened Silk East at 130 North Old World Third Street because another tenant occupied that space. Whether that is true is disputed: Six Star offer ed evidence that it leased th e space to a tenant with the caveat that Six Star c ould displace the tenant immediately upon obtaining a theater license. Moreover, this fact is irrelevant to the legal issue , which relates to the First Amendment implications of the lack of clear licensing s tandards binding the City, not how quickly Six Star could havemoved if the City had issued a license. The City is not defending these repealed ordinances. At most, the presence of the tenant might have been relevant to Six Star’s damages, but given the aw ard of nominal damages, even that point drops out.
IV The City is fighting a losing b attle over a regime whose time has passed

. Finding no merit in either of its challengesNo

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to Ferol’s and Six Star’ s standing or its arguments on the damages awarded to ea ch company, we AFFIRM t he judgment of the district court

.