$2-Million Settlement Paid by Anaheim

After a nine-year court battle that tested Anaheim’s right to restrict adult entertainment, the city has paid $2 million to the owner of the Taboo Gentlemen’s Club, officials said Tuesday.

In 1994, the city denied Bill Gammoh permission to open the nude entertainment venue. He sued the city, claiming violation of his constitutional rights.

An Orange County Superior Court judge ruled in the city’s favor, but the California Court of Appeal overturned that decision in 1999 and ordered Anaheim to issue the permit, said Scott Wellman, Gammoh’s attorney.

The $2-million settlement covers Gammoh’s lost profits during a roughly six-year period from the time the permit was first denied to 2001, when he opened the club near the Riverside Freeway and Kraemer Boulevard. Deputy City Atty. Moses Johnson said the city agreed to settle because Gammoh’s experts estimated his lost profits at $6 million.

“We thought $2 million was a pretty good deal,” Johnson said.

Gammoh has a similar case pending in a federal court against La Habra, which also denied him a business permit, but was later ordered to issue one.

The city of Anaheim, over a nine-year period, spent about $430,000 in legal fees, Johnson said. La Habra has spent more than $800,000, Wellman said, citing city documents.