Updated 11/16/11 – 8:03 a.m.

CHICAGO (CBS) — A panel of the Illinois Appellate Court has overturned the convictions of the owners of the E2 nightclub where 21 people were killed in a stampede to the exit in 2003 after a security guard used pepper spray in the crowded club.

In 2009, club owner Dwain Kyles and his “silent partner,” Calvin Hollins, were convicted of violating a Housing Court judge’s order to close the second floor of the club over building code violations before the deadly stampede. They were sentenced to two years in prison, but have been free pending their appeal. Those sentences were also thrown out.

The owners are set to discuss the ruling later Thursday morning.

LISTEN: WBBM Newsradio’s Steve Miller reports


Authorities have said that a security guard began spraying pepper spray to break up a fight on Feb. 17, 2003, causing a panic in the crowded club. In the panic, the crowd rushed to the front exit, but because the doors opened inwards, patrons couldn’t get out because of the weight of the crowd pressing out against the doors.

Twenty-one people died in the stampede and dozens of others were injured.

On Wednesday, a three-judge panel of the state appeals court overturned the Housing Court judge’s ruling that Hollins and Kyles violated a judge’s order to keep the second floor of the nightclub closed. The appellate court held that the original court order was not as clear-cut as city lawyers claimed.

“Simply, under the facts of this case, we disagree that the formal order was as clear and unambiguous as the city maintains the law requires,” Justice Michael J. Murphy wrote in the unanimous ruling. “At first blush the language appears clear, however, a review of the record before this court reveals the city’s law clerk should have included three words following ‘Mandatory order not to occupy 2nd floor’ in the formal order — either ‘of the building’ or ‘of the nightclub.'”

In a phone interview Wednesday, Kyles pointed the finger at the city, claiming police and fire crews focused on establishing order at the nightclub before focusing on rescuing people.

“The fact of the matter is those people died in that unfortunate situation, primarily because the city completely blew the rescue. They did not know what to do,” Kyles said.

Kyles tells WBBM Newsradio he believes there were ways to get people out of the stairwell, but the city failed to use them.

“It just didn’t happen,” he said, “and I daresay that this would never have happened this way on the North Side.”

Kyles compared the E2 situation the Lincoln Park porch collapse later in 2003, which killed 13 and injured more than 50 on the back porch of a building on Wrightwood Avenue.

“The public safety response was excellent in that instance,” he said.

Kyles says the response at E2 was a different matter.

“It took 40 minutes for them to figure out that the Fire Department should have been in charge of the scene,” he said. “How did that happen?”

Hollins also pointed the finger at the city for the deaths at the nightclub.

“I always will feel that no one ever had to die,” Hollins said Wednesday evening. “Had things turned out the right way, if the city had responded in a proper manner. Had it been any other facility, I think it would have, but being who we were – an African-American club – it didn’t happen.”

“Moral obligation? Sure, there’s always that … that little tinge of doubt,” Hollins added. “What could I have done differently that I might have made a difference, but other than that, no, I don’t feel that there was anything we could have done to prevent this tragedy.”

The night of the stampede, the owners had rented E2 to a promoter for a special event. A fight broke out and a security guard sprayed pepper spray into the packed club to break it up.

Instead, panic ensued and people rushed for the doors, ending up trapped and trampled inside the front entrance with no way out.

Kyles and Hollins claimed the city responded to the chaos at E2 as it were a riot, instead of going in to rescue the people stuck inside – then tried to sweep it under the rug.

“They did not know what to do and as the facts come out, it will become clear where the fault lies,” Kyles said. “The problem has been that there has been such an extraordinary stonewalling of the press, lying to the press, everything you can imagine.”

Victim Deshand Ray’s father and other victims’ relatives feel that way too.

“I would like to see a full, full investigation from beginning to the end,” Howard Ray said.

Wendell Young, whose cousin Michael Wilson died at E2, said, “I think the Chicago Police Department … needs to take some responsibility.”

Asked if he believes he and Kyles were unfairly labeled as villains, Hollins said, “I think this had a little bit to do with, you know, the color of our skin.”

In a statement, city officials said, “We are disappointed with the court’s decision. In our view, respondents violated a clear and mandatory court order, and but for that violation no one would have died or been injured at their club. We are continuing to review the court’s opinion to determine whether to seek further review.”

The defendants had argued that the housing court order about closing the second floor applied only to the VIP section of the nightclub, an extra level above the main club floor, which was on the second level of the building.

The appeals court disagreed with the city’s assertion that E2 owners should have asked the original housing court judge for clarification if they were confused about the order about closing the second floor.

“The city faces the burden of proving beyond a reasonable doubt that the underlying order was set forth ‘with certainty, clarity and conciseness precisely what actions are enjoined.'” Murphy wrote in the appeals court ruling. “It is telling that, after receiving clarification from counsel, the trial court indicated on its half sheet that the parties agreed to vacate the ‘2d floor VIP rooms.'”

The appeals court also ruled that city attorneys did not explain how the building code violations caused the deaths and injuries in the stampede.

“The City asserted that if respondents had been acting in compliance with that order, there would not have been 21 dead and 50 injured patrons. There was no explanation as to how the building code violations related to the actual incident and tragic deaths and injuries,” the ruling stated.

CBS 2 Legal Analyst Irv Miller said that the ruling shows that the appeals court believed while the E2 deaths were a tragedy, there wasn’t a crime involved.

“The law says that what occurred at E2 was not a violation of either a building code order or a violation of the Illinois statute. It wasn’t a crime, it was a tragedy and to try to link the two together, this court is saying is wrong,” CBS 2 Legal Analyst Irv Miller said. “Just because it’s so horrific and so tragic doesn’t necessarily mean somebody has to go to jail for it. You can be negligent and not commit a crime and I think that’s what this court is saying.”

In 2007, Hollins was acquitted of involuntary manslaughter charges. The next year, prosecutors dropped involuntary manslaughter charges against Kyles, but the city pressed forward with contempt charges in the housing court case.