Longtime Houston strip club challenges city's rules on sexually oriented businesses



>>The Houston strip clubs that were part of, or have joined, the settlement with the city. less The Fantasy Plaza in north Houston is challenging the city of Houston ordinance regulating sexually oriented businesses.

>>The Houston strip clubs that were part of, or have joined, the settlement with the ... more The Fantasy Plaza in north Houston is challenging the city of Houston ordinance regulating sexually oriented businesses. Photo: Google Street Maps Photo: Google Street Maps Image 1 of / 33 Caption Close Longtime Houston strip club challenges city's rules on sexually oriented businesses 1 / 33 Back to Gallery

Houston's effort to close a longtime strip club has erupted into a federal court showdown over whether the city's ordinance for sexually oriented businesses is an unconstitutional "commercial bribery scheme."

After a state district judge ordered Fantasy Plaza Cabaret to shut its doors while a nuisance lawsuit is pending, a federal judge ordered the city to allow the strip club to operate under the loosened restrictions allowed for another group of gentlemen's clubs.

"This appears to be a concerted and arbitrary effort to kill Fantasy," U.S. District Lynn N. Hughes said in a order from the bench earlier this month. "The city has a higher duty than to play games with people's businesses. And I don't much care whether it's a sexually oriented business or a bank, a construction company or 16 yardmen."

Dobbins Chang LLC, owner of Fantasy Plaza on Interstate 45 in north Houston, filed the federal suit following the state court action filed by the city and the Harris County Attorney's Office, once again embroiling the city in litigation over its 2013 settlement with a so-called "Sweet 16" group of strip clubs.

The suit complicates efforts to shut down the establishment and brings new questions about whether the city's settlement will hold up in federal court.

City officials said the temporary injunction issued by Hughes will not stop efforts to police Fantasy Plaza.

"The federal court order does not expressly set aside the state court judge's order," city spokeswoman Mary Benton said in an email. "However, the federal court order may limit the actions that the city can take to protect the community in the state court case. The city will continue to do what it can, considering the federal restraining order, to combat human trafficking and criminal activity."

The 2013 settlement was meant to resolve a series of costly lawsuits filed against the city by 16 clubs protesting regulations that prevented topless dancers from being closer than three feet to patrons. Under the agreement, the clubs received a waiver from those requirements in exchange for making about $1 million in annual payments to the city's Human Trafficking Abatement Fund.

The Fantasy Plaza lawsuit accuses the city of violating antitrust laws and effectively taking bribes through payments from the Sweet 16 clubs to allow them to skirt enforcement of the city's sexually oriented business ordinances.

Stopping human trafficking

The city first filed suit in March 2016 against the property owners, and the Harris County Attorney's Office intervened in December to try to shut the club down with a nuisance lawsuit, claiming the business was a site for violence and prostitution, including the employment of underage strippers, according to court records.

State District Judge Fredericka Phillips granted an injunction against the club Feb. 5, ordering the club to shut down until it obtained a permit as a sexually oriented business and complied with the city's ordinances.

"The federal court order does not trump the state court's order," Assistant County Attorney Rosemarie Donnelly said in an email. "The state court's order is still in effect, and under the state court order the club has been ordered to remain closed until further order of the state court."

In the past four years, Houston police officers made more than 30 arrests at Fantasy Plaza for prostitution, employment of minors, and assault, among other offenses. The club has not had a liquor permit from the Texas Alcoholic Beverage Commission since at least 2008, the county's suit said.

"It's a huge problem," Donnelly said. "We think human trafficking is a very serious problem in this city, and we think places like Fantasy Plaza foster an environment where human trafficking goes on, not only with minors, but with other very vulnerable people."

Albert Van Huff, attorney for Fantasy Plaza, however, said that Houston police made 13 prostitution arrests in four years, eight of which were dismissed. The club has operated in Houston for more than three decades.

"It's our position that this is not enough to close down a business," Van Huff said. "If you're not in the (Sweet 16) agreement, the city is going to come and try to close you down, which has the added effect of increasing business at the clubs in the agreement."

He said the club has tried to abide by the city's requirements by sealing off the club's VIP area, brightening lighting and lowering booth walls, among other changes.

Ongoing disputes

Efforts to shutter Fantasy Plaza are the latest salvo in a lengthy legal fight between local topless bars and the city.

The 2013 settlement allowed 16 strip clubs to operate outside the provisions of Chapter 28 of the Houston Code of Ordinances, which outlines regulations for sexually oriented businesses that include prohibitions on topless dancing and the three-foot rule.

In exchange, the clubs agreed to contribute to the city fund, which paid for a 12-person unit in the police department to investigate human trafficking. The city has not responded to questions from the Houston Chronicle about how much money it has collected since the agreement or how the funds have been used.

Van Huff argued in the federal lawsuit that the stricter rules under which Fantasy Plaza must operate mean it can't compete for customers in the same manner as the "Sweet 16" Clubs.

"This has caused and will continue to cause, Fantasy Plaza to lose business and ultimately fail," he said.

Van Huff's filing also argues that the Sweet 16 agreement is a "sham" because it lays out harsher rules for clubs that aren't part of the Sweet 16 agreement.

"The city has enabled the clubs to obtain a dominant position in the marketplace and to obtain market power sufficient to maintain that dominant position through the use of the unlawful, contractual restraint on trade," he wrote.

Since the 2013 settlement, five additional strip clubs have agreed to operate within the city's guidelines and joined in the Sweet 16 agreement.

Questions raised

Houston Vice Division officers conducted more than a half-dozen investigations at Fantasy Plaza last year from April to December, arresting six people for prostitution and four others for violating the city's sexually oriented business regulations, according to the lawsuit.

The suit also accuses the club of attracting violent criminal activity.

"Police have had to respond to numerous emergency calls at the club, including fatal shootings, violent assaults and narcotics," the lawsuit said.

Those incidents included a March 14 fatal shooting and a June 2016 incident in which customers leaving the club shot at a parking valet. In June, Houston police officers investigated the club after a woman told them her 16-year-old daughter had run away and was working there.

Undercover officers spotted a girl they believed to be her, and eventually identified her by a mole near her collarbone after she gave one of them a lap dance. They took the girl into custody and reunited her with her mother.

Houston Police Chief Art Acevedo defended the officers' conduct during the undercover operation and commended them for rescuing the teen.

"The tactics they used were dictated by the challenging environment of ... the strip club," Acevedo said. "They didn't do anything inappropriate. I'm just happy we were able to get her and get her the hell out of there."

In the days following the incident, an HPD officer returned to the strip club and arrested three employees for violating sexually oriented business ordinances and harmful employment of a minor. Of those, two cases have been dismissed, court records show.

Van Huff questioned why the undercover officer needed a private lap dance from a topless teen before identifying her.

"You send a couple of Vice officers in there and they spend a couple of hours drinking and watching the girls," he said. "They have to justify why they're there with a couple of cases and that's what they do."

Geoffrey Alpert, a professor of criminology and criminal justice at the University of South Carolina, said that while the conduct might appear questionable to civilians, officers likely would have needed to blend in with the club's clientele.

"You've got to fit in - that's the rule of thumb," he said. "You get a young kid like that, while she may only be a runaway, according to her parents, it's likely they might try to turn her (into a prostitute)."

The state court case is set for trial in May. A hearing in the federal case has been set for later this month.