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Strip club suit hinges on liquor license

By: Molly Willms//October 10, 2013//

Strip club suit hinges on liquor license

By: Molly Willms//October 10, 2013//

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John Ferraro, owner of Ferol LLC and Six Star Holdings LLC, both based in Menomonee Falls, sits June 5, 2012, at a bar in Silk Exotic, 11400 W. Silver Spring Road, Milwaukee. Ferol and Six Star Holdings made a settlement offer that it will drop its lawsuit against the city of Milwaukee if it grants a liquor license for a club that Ferraro wants to open at 730 N. Old World Third St. (File photo by Kevin Harnack)
Jon Ferraro, owner of Ferol LLC and Six Star Holdings LLC, both based in Menomonee Falls, sits June 5, 2012, at a bar in Silk Exotic, 11400 W. Silver Spring Road, Milwaukee. Ferol and Six Star Holdings made a settlement offer that it will drop its lawsuit against the city of Milwaukee if it grants a liquor license for a club that Ferraro wants to open at 730 N. Old World Third St. in Milwaukee. (File photos by Kevin Harnack)

A liquor license for a proposed gentlemen’s club will be a deciding factor in whether a lawsuit against the city of Milwaukee proceeds.

According to a settlement offer from Ferol LLC and Six Star Holdings LLC, two Menomonee Falls-based companies owned by Jon Ferraro, the companies will not pursue damages in an existing lawsuit if the city grants a liquor license for Silk East, a club Ferraro wants to open in downtown Milwaukee.

License rulings are made by the city’s Licenses Committee, and the decision on the proposed club at 730 N. Old World Third St. will have a hearing Oct. 18.

Ferraro’s companies were denied tavern amusement licenses in 2010 for Silk East and another proposed club.

The city never took action on a 2011 application for Silk East to operate as an alcohol-free club under Milwaukee’s theater ordinance, according to court documents. Ferraro sued the city through his companies, claiming the city’s tavern amusement ordinance was unconstitutional.

In March, U.S. District Judge Lynn Adelman decided the ordinance is legal but also ruled Ferraro was entitled to damages from the city for its failure to consider his 2011 application if he can prove he lost profits because he was not able to operate the proposed dry club. If a settlement is not reached, the trial will continue into next year.

Ferraro referred questions about the proposed settlement to his attorney.

Sarah Furey Crandall, the trial consultant to Ferraro’s companies in the lawsuit, said the plaintiffs could be pursuing millions of dollars in damages and possibly filing another lawsuit if the liquor license is not approved. She declined to provide an amount until an accountant’s estimate is given.

The companies also will continue to pursue liquor licenses to open the club if this attempt fails, Furey Crandall said.

“If they do get a license,” she said, “we’d like to just make peace because it’s going to be very awkward to be in a cooperative licensing relationship with the city and still be fighting with the city. We’d just as soon have the fight be over.”

But Assistant City Attorney Adam Stephens said the settlement offer does not mean the license will be automatically granted in the interest of avoiding potential legal action.

Silk Exotic is seeking to open a new location in downtown Milwaukee at Rusty’s Old 50, 730 N. Old World Third St.
Silk Exotic is seeking to open a new location in downtown Milwaukee at Rusty’s Old 50, 730 N. Old World Third St.

“We’re not,” Stephens said, “going to consider an application as a quid-pro-quo.”

The decision on a liquor license for Silk East will, like other license decisions, be made on its individual merits, Stephens said.

The License Committee’s recommendation will go to the full Common Council, which will have the final word on whether to grant the license barring a mayoral veto.

Alderman Nik Kovac, a member of the committee, would not say until the committee hearing whether he will oppose or support granting the license. But he said his decision will depend on what is best for the neighborhood.

Opinions on what is best vary.

David Weir owns the proposed Silk East site, as well as the apartments above it. He leases the proposed Silk East site to Six Star Holdings and said he supports opening the club because it means a high-quality business in the neighborhood.

“There’s a difference between a 5-star hotel and a 2-star hotel,” Weir said. “These guys are 5-star material, and they run it as such.”

The residents of his apartments, he said, also support the proposal because a business such as Silk East will drive away crime, while the vacant building attracts it.

Chad Ahrens, general manager of the Fairfield Inn & Suites, 710 N. Old World Third St., said he would oppose the liquor license. He would not say why, but said he would be at the Oct. 18 hearing.

Alderman Joe Dudzik, a member of the Licenses Committee, said he will not decide whether to support or oppose until he hears testimony, but the settlement offer will influence his decision on the license.

When the city is trying to save money in its budget, he said, a potential million-dollar damage payment has to be taken into consideration when making decisions.

“Yeah, I got moral responsibilities,” he said, “but I have fiscal responsibilities, too.”

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