In 1997, Lifestyles Organization, Limited (“LSO”) held its annual Erotic Art Exhibition and Trade Show at the Palm Springs Convention Center. Prior to the event, the California Department of Alcoholic Beverage Control (“ABC”) had allegedly threatened the Convention Center and other businesses with sanctions, including the loss of their liquor licenses, if they allowed LSO to display its art on the premises. The threats were based on a California law prohibiting the presentation of erotic or explicit art in any premises holding a liquor license. A previous court issued a temporary restraining order against the officials so that LSO could proceed with the event.

After the exhibition, LSO sought damages and prospective and declaratory injunctive relief preventing the ABC officials from interfering with future LSO shows. The court here found that the threat of future interference was realistic, and noted it was more inclined to act preemptively when First Amendment rights were threatened. Holding state officials were not entitled to immunity in performing discretionary functions if they violated constitutional rights a reasonable person would have known about, the court held no reasonable official could have believed that the California law could be used to impede LSO’s constitutional right to display non-obscene art. State liquor regulations cannot be used to impose restrictions on speech that would otherwise be prohibited under the First Amendment.