Richard W. Jacobson; Jake's Ltd., Inc., a Minnesotacorporation; Appellants; v. City of Coates, a Municipal Corporation; Appellee, 171 F.3d 1162 (8th Cir. 1999)

Since 1992, appellants have operated an adult entertainment business within the City of Coates. On June 1, 1994, the City enacted zoning ordinances designed to regulate "sexually oriented businesses." On December 31, 1996, appellants challenged the constitutional validity of two such ordinances. On April 13, 1998, the district court determined that one of the two challenged ordinances was unconstitutional. Subsequent to their victory before the district court, appellants sought attorney's fees under 42 U.S.C. § 1988(b). On May 11, 1998, the district court denied attorney's fees. On appeal, appellants argue that the district court erred by denying the award of attorney's fees. We agree.

As its basis for denying attorney's fees under § 1988(b), the district court characterized appellants' victory as "technical" and "insignificant," thereby precluding prevailing party status. See Jacobson v. City of Coates, No. 97-190 (D. Minn. May 11, 1998) (order denying attorney's fees) (quoting Texas State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792, 109 S. Ct. 1486, 103 L. Ed. 2d 866 (1989)). In our view, the determination that one of two challenged ordinances was unconstitutional changed the legal relationship between appellants and the City, see Texas State Teachers Association, 489 U.S. at 792, 109 S. Ct. 1486, and the district court erred by failing to award attorney's fees.

Accordingly, we reverse the district court's denial of attorney's fees and remand to the district court with instructions to award fees under § 1988(b). Of course, the district court retains the discretion to determine the appropriate fees. See Denesha v. Farmers Ins. Exch., 161 F.3d 491, 501 (8th Cir. 1998).