The man sued the city with the city expending a goodly sum of money took its attempt to block the suit to the US Supreme Court. Not surprisingly - U.S. Supreme Court allows Santa Cruz Nazi salute case to go to trial.
Take a peek at the Petition [it is at the bottom of the article] by and for the city council. Note that the lawyers for the city are not city lawyers but outside counsel. Practice at the US Supreme Court is specialized and is not for the ordinary attorney. Thus one can expect legal fees to be splendid.
In a search of the federal appellate decision there is not one hit for "hate." But look at how the attorneys frame the legal issue in their Petition to the Supreme Court - the First Amendment does not extend to "hate" gestures. Nice try but no cigar. It is in the appellate decision that one gets a better 'education' on free speech.
Protecting your constitutional rights is not easy or speedy much less inexpensive.
To get a better context - take a peek at the video in the Mercury News story. The incident for the most part went unnoticed by the city council and members of the audience - except for one council member.
What is more interesting is that Santa Cruz is the home to one of the University of California campuses. And while not as liberal as the Berkeley campus - it is representative of the politics of Santa Cruz. It may have changed since 2002, but I doubt it.
See this from my post discussing the federal appellate decision:
"See the opinion, but a better read is the concurring opinion of Justice Kozinski, joined by Justice Reinhardt. It starts at page 20 on the Adobe Reader. It is this part where more of the juicy bits are found. E.g., we find that the plaintiff in this case was excluded for whispering 2 years later in a city council meeting.
The message is clear for governments making decorum rules: "speech must “disrupt[,] disturb[ ] or otherwise impede[ ] the orderly conduct of the Council meeting” before the speaker could be removed."
“Listeners’ reaction to speech is not a content-neutral basis for regulation. . . . Speech cannot be . . . punished or banned[ ] simply because it might offend a hostile” member of the [. . .] City Council.""
Take notice Portland city council - I can do more than wave my hands only in the sign of approval.