Regulated Club Owner Balks at Paying ‘Adult’ BMI Fees

GRAND RAPIDS, MI—Sin taxes come in all shapes and sizes and from all directions. Just ask Mark London, the owner of the Sensations and Lady Godiva’s Showgirls clubs in Grand Rapids, Michigan, who is currently in litigation with Broadcast Music, Inc. (BMI), the outfit that manages and collects license fees for musicians, over the definition of an “adult establishment.” The ultimate determination of that definition will resolve how much he has to pay for a music license for the clubs. BMI charges adult establishments significantly more than it does eating and drinking establishments.

According to court documents, the London/BMI battle over the correct license has been going on since 2006, when Grand Rapids passed a city ordinance that, among other provisions, prohibited topless dancing. London did what any self-respecting club owner would do—he sued in District Court, lost, appealed to the 6th Circuit and lost again.

At that point, he ended his court challenges and amended his businesses to align with the law, but he was damned if he was going to be forced to change his business model and still be labeled “adult entertainment.” One of his clubs, Sensations, had been in business for years, offering non-obscene nude and semi-nude dancing. Following the passage of the new ordinance, he ceased offering both at Sensations. In October 2006, he opened Lady Godiva’s, which from its inception featured performers wearing at most bikinis.

Here’s where the story gets litigious. According to court documents, Sensations has been a BMI licensee in good standing since the early 1990s. However, after the passage of the new ordinance, when it came time to renew his music license with BMI in November 2010, he sent in a application for an Eating and Drinking Establishments Music License and a check for $517.28. BMI returned the check to him that December, saying the club was categorized as “adult entertainment” and that as of Nov. 30, his music license was expired and he could no longer play BMI-licensed music at the club.

Lady Godiva’s had the same experience when it opened in October 2006. London likewise requested an Eating and Drinking Establishments Music License, which also was rejected, explaining that Lady Godiva’s is “clearly an adult club.”

Last month, after apparently realizing that London was not going to buckle, BMI sued him for copyright infringement, claiming the unauthorized use of songs by clients R. Kelly, Amy Winehouse and Rivers Cuomo. London filed a counterclaim this month, laying out in it the timeline of his disagreement with BMI, which his attorney says is currently at an impasse.

According to the application form, BMI defines an adult entertainment establishment as one that “provides adult entertainment such as, but not limited to, striptease, erotic, nude or semi-nude performances, and includes, but is not limited to, burlesque houses, gentlemen’s clubs, strip clubs, go-go bars and similar establishments.”

London asserts that the BMI definition is too vague and overbroad. In a Feb, 28, 2011 letter to BMI, his attorney further states, “Your language, 'not limited to,' in your definition may, in your opinion, include Mr. London’s businesses, however, it would then include all liquor licensed establishments in the state of Michigan, as well. Mr. London’s businesses are no more adult than a public beach.”

Interestingly, the London counterclaim includes as an exhibit an article by Larry Kaplan, the executive director of ACE of Michigan and California about a jury trial in Los Angeles in which a club owner was found not to be operating an “adult establishment,” which had been cited by vice cops for violating county zoning codes.

The club, The Show at Papa Joe’s, and its owner, John Lampasona, were represented by attorney Roger Jon Diamond, who argued that the club, which offered semi-private VIP rooms and lap dances but no nudity, was not an adult business as that term is defined in the county code. Stymied by the limiting construction of the code’s definition, the district attorney argued that physical contact between the bikini-clad dancers and the patrons made it an adult establishment.

However, according to Kaplan, the trial judge agreed with Diamond’s contention that “the touching was irrelevant because the county, in a different part of the code (not the part dealing with the location and licensing of adult businesses), prohibited physical contact between adult entertainers and patrons at adult businesses. Accordingly, Diamond reasoned, if The Show is not an adult business, the ban on touching did not apply.”

The judge agreed and instructed the jury not to take any performer/patron contact into consideration during its deliberations. Then the DA tried to argue that even if the contact could not be deemed sexual activity, and thus in violation of the part of the code banning “sexual activity,” the lap dances surely violated the part of the code banning “simulated sexual activity.”

Once again, Diamond prevailed, arguing that “no one at the club believed that dancers and patrons were actually engaged in sexual activity, and therefore there was no appearance of sexual activity. It was not “simulated’ sex, but rather ‘pretend’ sex.”

The jury acquitted Lampasona on all counts. Had they convicted, the club would have to have closed immediately. Instead, it was allowed to continue in business and remains in business to this day. Kaplan’s article, by the way, is titled “When is an Adult Nightclub Not an Adult Nightclub?”

Michigan is no Los Angeles, of course, so it remains to be seen if London will get the ultimate satisfaction that Lampasona did when he challenged the definition of “adult entertainment.” But the situations are also different in that London is challenging the higher fees being assessed by BMI to adult establishments. The difference is significant.

According to the application available now on the BMI site, the 2011-12 Adult Entertainment Establishment License fees run $868 annually plus $11.20 per occupant, which means “the total maximum allowable occupancy loads/capacities for the entire premises… calculated under adopted building/fire codes.” The fees for an Eating and Drinking Establishments Music License are much less: for recorded music, the annual fee is a minimum of $335, with each occupant charged at $2.70.

AVN has inquired of BMI why it charges adult entertainment establishments more than other one’s that also sell alcoholic beverages and offer live performances. Other than the fact that the performers are nude or semi-nude and providing erotic entertainment, the customers’ experience of the music would seem to be no different than it would be if it were being played at a nightclub run by Mormon missionaries. Indeed, on the face of it, there appears to be no justification other than the fact that no one in government is going to complain about sticking it to the strip clubs. A response to the query had not been received by post time.

The BMI v Lady Godiva's counterclaim can be accessed here.