SACRAMENTO, Calif.—Larry Flynt, who has much wider business interests than simply LFP Publications, has had two lawsuits in which he has an interest dismissed, one by the U.S. District Court for the Eastern District of California, and one by the U.S. Supreme Court.
The first dismissal occurred this past Friday, when U.S. District Judge John A. Mendez threw out the lawsuit filed by Flynt and two other California casino operators, Haig Kelegian Sr. and Haig Kelegian Jr., which sought to overturn the state's Gambling Registration Act, which prevents anyone who has a state gaming license from obtaining more than a 1 percent ownership in any out-of-state gambling operation, be it a card room such as the plaintiffs currently operate in California, or full-blown casino.
"Flynt and Kelegian, Sr. allege these laws made them forego lucrative business opportunities, including opportunities to purchase out-of-state casinos in 2014 and 2015," Judge Menedz noted, adding, "Kelegian, Jr. owned more than a one-percent interest in an out-of-state casino and the state made him divest it and fined him."
So Flynt and the Kelegians sued—but here's the problem: They filed their suit on November 30, 2016, which the defendants argued was not within the two-year statute of limitations, which began to run after the parties' attempts to purchase the casinos more than two years ago. However, Flynt and the Kelegians had argued their filing was timely because the statute of limitations does not apply to their claims and, even if it does, their injuries are ongoing. But Judge Mendez dismissed the trio's first complaint on that lack-of-timeliness basis—so they filed a "First Amended Complaint" earlier this year, and it's that complaint that Judge Mendez dismissed on Friday.
"[T]he Plaintiffs’ obligation to comply with the June 12, 2014 decision and the state’s related investigations are a continuing impact of that June 2014 decision," Judge Mendez wrote in his dismissal order. "They are not a new action by the state. Plaintiffs have not alleged a continuous harm, so their claims are time barred. The Court also finds that any further amendment would be futile and, therefore, grants Defendants’ motion to dismiss with prejudice."
Sadder, however, is Monday's decision by the U.S. Supreme Court to deny the cert petition filed by CMSG Restaurant Group on behalf of Larry Flynt's Hustler Club, which is based in New York City, and which had argued that it was not required to collect and pay a 4 percent "place of amusement" admission tax.
As AVN reported in September, New York's convoluted amusement tax laws on their face would appear to exempt the Hustler Club, which easily falls into the category of a place where "dramatic or musical arts performances" are presented—women stripping to music would seem inarguably to be a "musical arts performance"—and would fall under another exemption to the tax for "a place where merely live dramatic or musical arts performances are offered in conjunction with the serving or selling of food, refreshment or merchandise, so long as such serving or selling of food, refreshment or merchandise is merely incidental to such performances." Right; nobody's eating a full course meal while watching strippers.
But when the club sued to stop collection of the amusement tax, its claim was denied first by an administrative law judge, then by the state's trial court, and finally by the New York Court of Appeals, its highest judicial body.
The Supreme Court gave no reason for denying CSMG's cert petition, but that denial appears to be the end of the road for CSMG's challenges to the tax—and we're guessing that the state will move forthwith to collect it, an amount estimated to be several million dollars at this point.
