Palo's dress code was recently changed to allow jeans and I guess t-shirts (with limitations on graphics and offensive language). Not sure why they have the limitation on tennis shoes given the way they loosened the jeans and shirts requirements.
Dress to Impress
To preserve the elegant ambiance of this restaurant, you are asked to adhere to a dress code when dining at Palo. We recommend dress pants or slacks and a collared shirt for men, and a dress, skirt or pants and a blouse for women. Jeans may also be worn if in good condition (no holes). Please no tank tops, swimsuits, swimsuit cover-ups, shorts, hats, cut-offs, torn clothing, t-shirts with offensive language and/or graphics, flip-flops or tennis shoes