HC Gun & Knife Shows, Inc. v. City of Houston , 201 F.3d 544 ( 2000 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 98-20497
_____________________
HC GUN & KNIFE SHOWS, INC.,
d/b/a High Caliber Gun & Knife Shows, Inc.,
TODD BEAN, individually and d/b/a High
Caliber Gun & Knife Shows, d/b/a
High Caliber Gun & Knife Shows, Inc.,
Plaintiffs-Appellees,
versus
CITY OF HOUSTON,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________________________
January 20, 2000
Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
Primarily at issue is whether Texas law preempts a City of
Houston ordinance regulating gun shows conducted on city property.
The City contests the partial summary judgment granting declaratory
and injunctive relief to HC Gun & Knife Shows, Inc., and Todd Bean,
individually and d/b/a High Caliber Gun & Knife Shows; the judgment
on a jury verdict awarding lost profits to Appellees; and
attorney’s fees awarded Appellees. We AFFIRM.
I.
Bean and his successor corporation (Appellees) have held gun
and knife shows since 1988. From 1990 until late 1993, they
conducted ten at the City’s George R. Brown Convention Center (the
center).
In June 1993, the Houston City Council passed an ordinance
requiring all persons attending gun shows at city-owned facilities,
inter alia: (1) to sign a form declaring the firearms in their
possession (registration requirement); and (2) for all firearms
brought to such shows, to either remove the firing pins or install
key-operated trigger locks (disabling requirement). HOUSTON, TEX.
CODE OF ORDINANCES § 12-24.
Bean conducted three shows at the center in 1993, but canceled
the fourth, scheduled for that December, because of the ordinance’s
registration and disabling requirements. No shows were held at the
center between December 1993 and March 1997.
In January 1996, Appellees filed this action in state court,
alleging that the ordinance’s registration and disabling
requirements effectively prevented them from holding shows on city-
owned property: the registration requirements would cause delay,
expense, and impositions that would deter attendance; removal of
the firing pins would damage many of the guns shown and traded at
the shows; and installation of trigger locks would be cost
prohibitive and result in delays that would greatly reduce
attendance. The City removed this action to federal court.
In early 1997, the district court denied summary judgment for
the City and granted partial summary judgment for Appellees.
Declaratory relief was premised on the ordinance being preempted by
TEX. LOCAL GOV’T CODE § 215.001, which prohibits, inter alia,
municipal regulation of the “transfer, private ownership, keeping,
transportation, ... or registration of firearms”; and on the
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ordinance being violative of the commercial speech protections
guaranteed by the United States and Texas Constitutions. The City
was permanently enjoined from enforcing the ordinance.
Following a trial on damages that May, the jury awarded
$329,000 for lost profits. In addition, the court awarded
Appellees $54,442 (stipulated amount) for attorney’s fees and
expenses.
II.
The City contends that the preemption and commercial speech
holdings are erroneous; that the court abused its discretion by
refusing to order production of documents relating to, and by
excluding evidence of, Appellees’ gross revenues and expenses,
including with respect to shows conducted outside the Houston area;
that the evidence is insufficient to support the verdict; and that,
because the judgment must be reversed, so must the fees award.
A.
The summary judgment is reviewed de novo, pursuant to the same
standard applied by the district court. E.g., Drake v. Advance
Const. Service, Inc., 117 F.3d 203, 204 (5th Cir. 1997). It is
proper when the summary judgment record, viewed in the light most
favorable to the non-movant, establishes that “there is no genuine
issue as to any material fact and ... the moving party is entitled
to a judgment as a matter of law”. FED. R. CIV. P. 56(c); Drake,
117 F.3d at 204.
The ordinance requires applicants seeking to use the center
for gun shows to execute an agreement which includes, inter alia,
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covenants (1) to provide and compensate off-duty City police
officers to provide security for the show; (2) that all persons in
attendance will be required to sign a form declaring all weapons in
their possession; and (3) to comply with the city’s regulations,
which require either the removal of firing pins or the installation
of trigger locks on all firearms brought into the facility.1
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The ordinance states, in pertinent part:
(a) Each approved applicant for the use
of a facility to conduct a gun show shall be
required to execute a special form of
occupancy agreement that incorporates the
requirements generally applicable to the
rental of facilities and the additional
requirements established in this section. The
agreement shall include:
(1) A covenant to provide a specified
minimum number of off-duty city
police officers who shall be
compensated solely at the occupant’s
expense and shall provide
security for the gun show; the number shall be approved by the
director and shall at least be based upon the number of expected
exhibitors, the expected number of patrons and the size of the area
to be leased;
....
(3) A covenant that all persons who
attend the gun show will be required
to sign a form approved by the city
attorney setting forth a declaration
of weapons in their possession, if
any, and expressing their
understanding of their
responsibilities relating to
possession, use and access to any
firearms and ammunition at the gun
show;
(4) A covenant to comply with and
enforce the public gun show
regulations of the city, which shall
include, without limitation, a
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The Texas statute, TEX. LOC. GOV’T CODE ANN. § 215.001, held by
the district court to preempt the ordinance, prohibits
municipalities from regulating, inter alia, “the transfer, private
ownership, keeping, transportation, ... or registration of
firearms”.2
requirement that no firearm may be
brought into any exhibit area of any
facility without first being
inspected by a city police officer
... who shall verify that each
firing pin has been removed from the
firearm, or alternatively, the city
police officer may install a trigger
lock upon the firearm if it is of
such a design that the firing pin(s)
may not be removed by any procedure
that will not cause permanent damage
to the firearm, provided that the
city police officer shall retain the
key to the lock and the lock shall
not be removed from the firearm
until the firearm is checked out of
the exhibit area....
HOUSTON, TEX. CODE OF ORDINANCES § 12-24.
2
The statute provides, in pertinent part:
(a) A municipality may not adopt
regulations relating to the transfer, private
ownership, keeping, transportation, licensing,
or registration of firearms, ammunition, or
firearm supplies.
(b) Subsection (a) does not affect the
authority a municipality has under another law
to:
....
(2) regulate the discharge of
firearms within the limits of the
municipality;
....
(6) regulate the carrying of a
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The City’s brief devotes less than four pages (one of which is
devoted to quoting § 215.001) to preemption. Essentially, the City
contends that the ordinance is not preempted by § 215.001(a),
because, rather than restricting the transfer, private ownership,
keeping, transportation, licensing, or registration of firearms,
the ordinance is instead a valid exercise of the City’s authority,
under § 215.001(b)(2), to regulate the discharge of firearms within
the city limits.
The district court rejected this contention, reasoning that,
although the ordinance’s disabling requirement (removal of firing
pins or installation of trigger locks) prevents the discharge of
firearms, the ordinance also seeks to regulate the transfer,
private ownership, or keeping of firearms, which is prohibited by
firearm by a person other than a person
licensed to carry a concealed handgun
under Subchapter H, Chapter 411,
Government Code, at a:
(A) public park;
(B) public meeting of a
municipality, county, or other
governmental body;
(C) political rally, parade,
or official political meeting; or
(D) n o n f i r e a r m s - r e l a t e d
school, college, or professional
athletic event.
(c) The exception provided by Subsection
(b)(6) does not apply if the firearm is in or is carried to or from
an area designated for use in a lawful hunting, fishing, or other
sporting event and the firearm is of the type commonly used in the
activity.
TEX. LOC. GOV’T CODE ANN. § 215.001.
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§ 215.001(a). It concluded that, through the ordinance, the City
“attempts to occupy all but a hair’s width of the entire field of
the regulation of gun shows”; and that, if the City’s
interpretation of § 215.001(b)(2) (discharge-exception) were
accepted, it would “swallow[] the general rule preempting municipal
regulation of firearms”. We agree.
The City does not address the ordinance’s registration
requirement; nor does it make any attempt to defend that
requirement as a regulation relating to firearms-discharge. In any
event, pursuant to our review of whether the ordinance is
preempted, it is obvious that the registration requirement is not
related to preventing such discharge. Therefore, the ordinance is
not authorized by § 215.001(b)(2). Moreover, the registration
requirement is expressly preempted by § 215.001(a).
In district court, the City maintained that the disabling
requirement was authorized by § 215.001(b)(6), which permits
municipal regulation of the conduct of persons in certain public
places; and that the ordinance is an exception to the City’s more
restrictive ban on possession of all firearms on city premises.
But, the City does not make those contentions here and, therefore,
has abandoned them. See Yohey v. Collins, 985 F.2d 222, 224-25
(5th Cir. 1993).
Instead, the City relies on a Texas Attorney General opinion
that a different ordinance, HOUSTON, TEX. CODE OF ORDINANCES § 28-47,
which makes it unlawful for a child to discharge a firearm within
the City limits, is not preempted by § 215.001(a). Op. Tex. Att’y
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Gen. No. 94-56 (1994). Unlike the ordinance now at issue, the
ordinance addressed by the Attorney General prohibited only
firearms-discharge; it did not impose registration or disabling
requirements such as those now at issue.
In sum, based on our review of the summary judgment record,
the ordinance is preempted by TEX. LOC. GOV’T CODE ANN. § 215.001(a);
it is not authorized by the discharge-exception in subpart(b)(2).
Because we so hold, we need not reach the federal and state
commercial speech constitutional issues. See County Court of
Ulster County, N.Y. v. Allen, 442 U.S. 140, 154 (1979) (court has
“strong duty to avoid constitutional issues that need not be
resolved in order to determine the rights of the parties to the
case under consideration”).
B.
The City moved for summary judgment in April 1996; Appellees,
that May. By a May scheduling order, the discovery deadline was
early January 1997, with trial in late March. In late November
1996, the parties moved jointly to extend the discovery deadline
until the end of February 1997; the motion was granted in early
December.
In mid-January 1997, the City requested documents related to
all gun shows conducted by Appellees. But, one week later, they
were awarded partial summary judgment. Accordingly, in mid-
February, the parties’ joint motion to limit discovery to
Appellees’ damages was granted.
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In early March, one week after the discovery deadline, the
parties moved jointly to continue trial. On 13 March, it was
continued until mid-May.
That same day (13 March), Appellees moved for a protective
order, contesting the relevancy of the requested documents
pertaining to non-Houston shows. On 31 March, the City moved to
compel document production and to amend the scheduling order; it
maintained that, in order to determine Appellees’ profit margins,
it was necessary to review documents related to all of their shows.
On 29 April, the court granted the protective order and denied
the motion to compel. Noting that the case was no longer at an
early stage of pre-trial discovery, and that the partial summary
judgment had narrowed discovery to damages for Appellees’ inability
to conduct shows at the center, the court held that the document
requests were overly broad, unreasonable, and unduly burdensome.
On Thursday, 15 May 1997, only four days before trial set for
Monday, 19 May, the City moved to continue trial for 45 days,
claiming that it had received incomplete information to allocate
Appellees’ overhead expenses and income in order to calculate their
profit margin. The continuance was denied at a hearing conducted
the following day. At trial, the City repeatedly, but
unsuccessfully, re-urged the relevance of the non-Houston evidence.
In contending that it was prohibited from defending against
Appellees’ damages claims, the City presses its need for documents,
including income tax returns, relating to Appellees’ gross revenues
and expenses for non-Houston shows. Therefore, it contests the
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adverse rulings on its motions to compel, for continuance, and for
judgment as a matter of law, as well as the non-Houston evidence
being excluded, and the protective order being granted.
In sum, the damages issue is extremely limited. For example,
the City does not contest the methodology employed by Appellees,
nor assert, as it did in district court, that, as a matter of Texas
law, lost profits could not be recovered under the circumstances
existing in this case. Distilled, the issue relates only to
denied-evidence wanted for challenging lost profits.
Concomitantly, as hereinafter discussed, the scope of our review is
narrow.
The discovery, evidentiary, and no-continuance rulings are
reviewed for abuse of discretion. E.g., Coughlin v. Lee, 946 F.2d
1152, 1158 (5th Cir. 1991) (discovery); Polanco v. City of Austin,
Tex., 78 F.3d 968, 982 (5th Cir. 1996) (evidentiary rulings);
Dorsey v. Scott Wetzel Servs., Inc., 84 F.3d 170, 171 (5th Cir.
1996) (continuance). “A trial judge’s control of discovery is
granted great deference.” Meadowbriar Home for Children, Inc. v.
Gunn, 81 F.3d 521, 534 n.12 (5th Cir. 1996). We will reverse a
discovery ruling only if it is “arbitrary or clearly unreasonable”,
Mayo v. Tri-Bell Industries, Inc., 787 F.2d 1007, 1012 (5th Cir.
1986), and the complaining party demonstrates that it was
prejudiced by the ruling. See Hastings v. North East Indep. School
Dist., 615 F.2d 628, 631 (5th Cir. 1980). Similarly, unless an
erroneous evidentiary ruling substantially affects the rights of
the complaining party, the error is harmless. FED. R. EVID. 103(a).
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“When the question for the trial court is a scheduling
decision, such as whether a continuance should be granted, the
judgment range is exceedingly wide, for, in handling its calendar
and determining when matters should be considered, the district
court must consider not only the facts of the particular case but
also all of the demands on counsel’s time and the court’s.”
Fontenot v. Upjohn Co., 780 F.2d 1190, 1193 (5th Cir. 1986). We
will not “substitute our judgment concerning the necessity of a
continuance for that of the district court”, unless the complaining
party demonstrates that it was prejudiced by the denial. Id. at
1194.
The denial of judgment as a matter of law is reviewed de novo;
in so doing, we apply the same standard as did the district court;
and “[s]uch judgment is appropriate if, after viewing the trial
record in the light most favorable to the non-movant, there is no
‘legally sufficient evidentiary basis’ for a reasonable jury to
have found for the prevailing party”. Hill v. International Paper
Co., 121 F.3d 168, 170 (5th Cir. 1997).
Obviously, each of the challenged rulings turns, to a great
extent, on the relevance of Appellees’ non-Houston documents.
Discovery and evidence being limited to Houston revenues and
expenses was premised, inter alia, on the court’s conclusion that
the other data was not relevant to Appellees’ damages resulting
from inability to conduct shows at the center. (As discussed, in
denying the motion to compel and granting the protective order, the
court also noted that the case was “no longer at an early stage of
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pretrial discovery”, and held that the discovery requests were
“overly broad, unreasonable, and unduly burdensome”.)
Consistent with this limitation-basis, the court, in denying
judgment as a matter of law, rejected the City’s contention that
Appellees could not recover lost profits without evidence of their
total revenues and expenses.
The City maintains that the desired evidence was relevant to
the profitability of Appellees’ business, alternate methods of
calculating lost profits, and mitigation of damages; and that the
evidence does not support the verdict because the lack of evidence
relating to total gross revenues and expenses precluded
establishing entitlement to lost profits. We conclude that the
evidentiary, discovery, and no-continuance rulings were not an
abuse of discretion; and that the damages award is supported by
sufficient evidence.
Before 1996, Bean, who lives approximately 30 minutes away
from the center, did business as a sole proprietorship; his
business was incorporated in 1996. In essence, the business was a
three-person operation, headed by Bean. Other personnel, such as
security, were hired as necessary for a show. During the period
1992-97, Bean conducted approximately 35 non-Houston shows
annually. He testified that, because of the ordinance, he was
precluded from presenting 13 shows at the center; and that
presenting a show there was not precluded by his presenting a non-
Houston show on the same day.
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Appellees sought damages only for lost profits resulting from
their inability, because of the ordinance, to conduct center-shows.
As noted, they did not claim that it affected their ability to
conduct shows in other markets, and did not seek to recover other
possible damages, such as for injury to business reputation, loss
of good will, or other potential harm related to non-Houston shows.
In its brief, the City has failed totally to demonstrate how the
evidence at issue is relevant to the awarded lost profits.
In any event, the record reflects that the challenged
discovery, evidentiary, and no-continuance rulings did not preclude
the City from defending against the damages claim. In short, the
requisite prejudice is lacking. Appellees presented evidence
pertaining to each of their Houston shows (both at the center and
at a private facility) before and after the ordinance was enacted.
The City cross-examined Bean about his calculation of profits and
expenses for each of those shows, and about his method of
allocating fixed expenses. Concerning mitigation, the City’s
cross-examination of Bean established, for example, that he did not
seek to conduct shows at several other facilities in the Houston
area while the ordinance was in effect. In addition, the court
allowed the City, over Appellees’ objection, to elicit from Bean
the above-described number of non-Houston shows held annually, and
ruled that it could question him about those in Biloxi,
Mississippi.
The City’s assertion that the evidence does not support the
award is belied by the record, which includes not only Bean’s
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testimony, but extensive documentary evidence corroborating it. In
the light of the framing of this issue on appeal, the exclusion of
the non-Houston data does not undermine the sufficiency of that
evidence. Restated, there is a legally sufficient evidentiary
basis for the awarded lost profits.
C.
Because we affirm, the City’s only challenge to the fees award
(stipulated amount of $54,442) — that a reversal compels its
abrogation — fails.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
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