LSO vs. Goliath and The Legislation of Morality
By Dave Schwartz davybass@dabelly.com

America is a funny place. For many of our residents it's where we live; who we are. But for a good portion of the world America is so much more. Much to the chagrin of our general population, it is still the land of opportunity, home of the free and the brave. But all too often we take these rights for granted rather than taking them to heart and celebrating the spirit and intent of our founders. We subjugate our rights rather than defending the honor of the defenders before us and those before them. I know it almost sounds contrary to our belief system, but these days many here in America would rather be taken care of than assert their individual rights and freedoms. This is not a story about pornography or alternative lifestyles, this is a story about you and I and our willingness to be punched in the head by a government that wants to do what is best for us yet never once considering us. More importantly this is a story about doing something about it.

Dr. Robert McGinley is at the forefront of the fight. I know that name has little significance to most, but his actions may one day touch us all. Regardless of how this story ends, you won't find great bronze statues dedicated in his name nor flags flying over the White House that will be retired and endowed for his service. McGinley heads up LSO Ltd., AKA the Lifestyles Organization.

The Lifestyles Organization has established itself as the only adult couples-oriented company that offers a full service travel agency that specializes in adult couple, clothing-optional, all-inclusive destinations such as Hedonism II & III in Jamaica, Eden Resort in Loreto, Mexico, and Qualton Club Resort in Ixtapa, Mexico. LSO provides weekend events in Southern California that includes Playcouples Dances at local hotels and Club Wide World, an on-premise club. LSO organizes and sanctions adult-orientated socials. For better than the last 25 years, LSO has been a service to couples who choose to explore beyond the bounds of the typical vacation or, for that matter, evening out.

So what has McGinley done that's so important to us all? Right now he is in a legal struggle with a government agency that believes they can dictate the clientele of a given business. The story is actually very simple. Several years back LSO discovered that they were being targeted by a California agency called the Alcohol Beverage Control Board (ABC). ABC intended to limit the actions of LSO by applying pressure to various establishments catering to and hosting some of the LSO events and naturally the leverage applied was in the area of the liquor license. The threat was simple, cater to LSO and the ABC might pull your license. Considering the monetary importance of a liquor license to most businesses, this was a threat that was taken very seriously. The result for LSO was the denial of access to many establishments that would otherwise have no objections to doing business with them. After a number of years in which LSO functions were obstructed, an obvious conclusion awaited the organization. They had little recourse but to sue.

I called McGinley with the intent of fleshing out and researching this article and I found him very cordial, very gracious and yet very detailed. This court battle has taken up much of his time, but he doesn't seem to mind, after all this is as much a labor of love as it is a struggle to protect his business. I put together a list of questions, but soon discovered that I would only need to ask one-- in McGinley's effort to answer my first question he covered almost every other aspect of the lawsuit. Yes, it made life easy for me for several reasons not the least significant of which is accuracy.

I understand the pertinence of challenging the law in relationship to your organization. What does it mean for the average business owner?

"First allow me to give you some background," McGinley begins. "This story reaches all the way back to Prohibition. Prohibition was overturned by the 21st Amendment of the Constitution. In overturning it, the framers of the Amendment allowed the states the right to regulate the manufacture, sales and consumption of alcoholic beverages. So every state in the union has enacted legislation in that area. In many cases, this amounts to income for the state due to the sale of liquor licenses. Therefore every state has the equivalent of California's ABC. These organizations were initially there to insure the alcohol manufactured met certain requirements, to insure minors were not sold liquor and to insure that patrons showing signs of inebriation would not be sold additional drinks."

"In the 1970s a number of bars got an idea to increase sales. They started topless waitresses, which went very well, and later lead to nude dancing. It began in San Francisco and brought enough revenue to the bar owners that the idea spread nationally. Now let's go back to California for a second. The government at the time just didn't like the idea that there was nude dancing going on where there was alcohol being sold, after all, sex and alcohol doesn't mix," McGinley laughs. "The problem was that the sale of alcohol was absolutely legal and so is nude dancing, it's protected under the First Amendment. So what can they do about it? Well they enacted a regulation and here in California the regulation is 143."

"That regulation was challenged all the way to the U.S. Supreme Court. It was challenged because the bar owners didn't want the new regulation and neither one of those activities alone were illegal, they were both protected. However the Supreme Court came up with a rather torturous doctrine that has puzzled attorneys ever since. In that doctrine the court refers to 'secondary effects' meaning it's all right to serve alcohol to patrons at this bar and there is nothing wrong with them watching nude dancing, but, gee whiz, that brings other elements into an area, secondary effects. So what we'll due is outlaw this or let the regulation stand because of secondary effects. Now when I say torturous, it's kind of like saying that people get into car accidents so we must outlaw cars rather than handling the whatever the problem was. This also ignores the fact that because of zoning most of these bars were forced to operate in areas that were crime-filled in the first place."

"So that doctrine stood. 143 was written to apply to the holders of alcohol licenses. The state said to get a license to sell alcohol was like getting a driver's license, it's not a right, it's a privilege, and because it is a privilege, we have certain control over you. And so they wrote that you couldn't have scantily dressed girls to get you to drink and so on. In other words, this all applied to the holders of the liquor licenses. However, as many bureaucracies tend to do, over time they extended their influence. In California they have written into the law two very interesting things. First, if you held a license and wished to challenge an ABC ruling, you had to take it to the ABC's court with an administrative law judge that works for the ABC. Further, they forbade that administrative law judge from even considering a case brought before him that challenges the constitutionality of the law. And then, to make it even sweeter, let's say that the ABC judge did rule in your favor, then the ABC reserved the right to take up to 100 days to accept or reject the finding."

I asked the obvious question, at that point is the ruling final?

"No. Let's say you won but they rejected it and so you still lost. there are still ways you can go." McGinley continues, "Now you can take your case to an appeals court. An appeals court is pretty fair I have discovered. If you lose in the appeals court, then you can go into a regular court system. But here is the catch, you have taken up perhaps three years to fight this battle and in the meantime they are fining you and taking your license away. In short, you've gone broke. Anywhere from 40-60 percent of your revenue comes from alcohol sales; most places can't afford to do without the licenses, so the ABC held tremendous economic power over anyone with a license. Here in California the ABC became very arrogant because nobody ever challenged them, it's much cheaper to pay whatever the fine is and just get on with your life."

"Now the ABC did something else. They reinterpreted their own law. They decided that not only were they going to hold the liquor license holder responsible for nude dancing, in other words responsible for his employees, they were also going to hold him responsible for his patrons over whom he has no control. So in other words, if a couple were to enter a club and go off into some dark corner and fondle each other, the ABC would hold the liquor license holder responsible. They forced the license holder to be responsible for actions in which he has absolutely no ability to control. The ABC said that you 'should' know what's going on in your club. Notice the word 'should'. Whether you have seen it or not you 'should' have seen it."

"So this left the license holder little or no recourse at all. I'll tell you how ridiculous this got. Prior to our convention in Palm Springs back in 1997, the head of the ABC for that area of the state called the area hotel managers together. We had contracts with four hotels to be able to support all the attendees. So they got the managers together to explain to them the law. The ABC explained that because the hotels had mini-bars in the rooms, that having sex in those rooms was not legal. That shows you just how crazy people got."

"So that gives you the background. Now, as we discovered back in 1995, the ABC learned about us. I don't know how they learned about our activities but they decided that they didn't like our activities. They didn't know what we were, but obviously we must be doing something illegal. So they targeted us. Now we didn't know this until 1996, a year later. So the ABC would get on our mailing list and learn about our activities. They would go to hotels that we have contracts with and threaten the hotels with loss of license or sanctions due to our events. We have a whole record of this. Now legally they shouldn't even know that we exist because Lifestyles does not hold a liquor license. Because of that the ABC couldn't touch us, so the only way to get to us was to threaten the places where we do business and they are using regulation 143 to do this."

"Our law suits, there is more than one, the first one was heard in the Ninth Circuit Court and the ruling was in our favor. The court declared that section 143.4 was unconstitutional as applied. That section stated that you could not display any art that was considered obscene or depicted genitalia any place where alcohol was being served. In our case, the ABC went further when they stated that even though there was no alcohol being sold in our area, it was being sold on the premises or in the hotel we were at. So the Ninth Circuit said no, this is unconstitutional. Art is protected under the First Amendment and the ABC has no control over it whatsoever."

"So that left the balance of the section (143.2, 143.3), which we are going after right now. Since we have no standing in the ABC because we do not hold a liquor license, we sued the head of the ABC, its officers and the city of Long Beach in Superior Court. So far we have spent $100,000 on the lawsuit. We feel that the officers filed false reports and believe they got caught at it. And our lawsuit continues."

"What we are doing will effect every on-premises in the entire state. Every hotel, every bar, but not one of them has stepped up to help us. When we win, like we won in Palm Springs, they were all patting us on the back telling us that it was wonderful, but no one is willing to help us fight. As far as I am concerned they are a bunch of weak-minded people."

"In the Ninth Circuit we settled out of court. In the settlement we have requested two things; we gave up any punitive damages in order to get these two things. By their own admission they tried to drive us out of the state. One, we could make the settlement public and two, the right to pursue our interest to get the entire regulation 143 ruled unconstitutional as applied. Versions of this law are in every state of the union so our suit has bearing on all of the U.S."

Clearly this story has yet to end. Some of you will disregard the importance of it, failing to see past the surface text. The manner in which the ABC conducts business is not restricted to an organization that books adult vacations and gatherings, cities have been using this agency for years to leverage "unwanted" establishments out of their posted city limits. Establishments such as dance clubs and clubs featuring bands were often high on the list due to the sometimes aggressive nature of the clientele. What better way to address the "problem" than with an agency that operates outside the jurisdiction of our normal courts?

So what was this all about? Let's start with freedom of expression and work our way toward the government's intent to legislate morality.

All right now, all of you that think, "McGinley is that porn guy who does that thing" raise your hands. Come on, let's see them now... bastards. You haven't considered the implications have you? Well, get out of here then. I'm sure there are some funny pictures in one of our other stories that you can stare at for hours. Go on!

Sometimes it pays to thin the herd! Now, for the rest of us...

We always encourage opposing viewpoints. If you have something to say drop us a line at davybass@dabelly.com

For additional information: Attorney for LSO, Ltd. Paul Murray, Murray, Hayes & Sabban, LLP;
2550 Fifth Ave, Suite 709, San Diego, CA 92103; telephone 619-239-2115.

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