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of the Ninth Circuit Court of Appeals in petitioner’s favor.
Petitioner moved into the new building in 1986.
In June 1988 six women who worked as independent contractors
for petitioner were arrested for dancing in the nude at
petitioner’s nightclub. Petitioner undertook their legal defense
and bore all the costs thereof, in accordance with its policy of
offering to underwrite all the legal expenses of employees and
contractors that arose out of the business relationship. This is
common practice in the adult entertainment business. A letter
addressed to Hagerman from petitioner's attorneys in that case
dated July 8, 1988, indicates that petitioner was contemplating a
lawsuit against the county for the purpose of invalidating the
nudity ordinance under which the dancers had been arrested.
There is no evidence that such a lawsuit was ever filed. The
dancers were tried in June 1989, after which the representation
appears to have ended.
At least two further legal problems appear to have caused
petitioner’s president especial concern during TYE 8/31/89. One
was an ordinance that required theater operators to provide
unobstructed visibility of viewing areas from the aisle. The
so-called “no-door ordinance” had been adopted by San Bernardino
County in July 1987, yet, for reasons that were not explained at
trial, compliance with this ordinance was an issue for petitioner
2 years later. At this time Hagerman believed that the costs of
making the structural adjustments to petitioner’s theater that
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