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January/February
Vol. 22 No. -1
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Tips for Successfully Regulating Sexually Oriented Businesses



By David A. Thomas

David A. Thomas is the Rex E. Lee Endowed Chair and Professor of Law at the J. Reuben Clark Law School, Brigham Young University, Provo, Utah. Prof. Thomas is a member of the Section Council and chair of the Section Advisory Board.

Sexually oriented businesses, sometimes saddled with the acronym “SOBs,” have been a part of the municipal legal landscape for several decades. Usually not welcomed by local municipal officials and ordinary citizens, these enterprises have had to press for constitutional rights to do business against regulatory attempts to eliminate or restrain their presence in the community. This article will review the current legal rules and techniques for a balanced and successful legal regime for regulating these enterprises.

Social Issues Generated by Sexually Oriented Businesses

Sexually oriented businesses are not the same as pornography, but the two are related. Although a technical legal definition is elusive, “pornography” could be considered as sexually explicit pictures, writing, or other material whose primary purpose is to cause sexual arousal and whose protection from restraint under the First Amendment free speech guarantees may be limited. In a more general sense, pornography is an activity that undertakes the presentation or production of pornographic material. Of special concern to many is the fact that the largest consumer group of Internet pornography is the 12- to-17-year-old age group.

In this broader sense sexually oriented businesses are related to and part of pornography or the pornography industry. A sexually oriented business may be defined as any enterprise that, as one of its principal business purposes, offers for any form of consideration any entertainment, materials, or services that appeal to a prurient (lustful, lewd, or lascivious) interest. Examples of sexually oriented businesses include adult arcades; adult book, novelty, or video stores; adult cabarets, night clubs, gentlemen’s clubs, go-go clubs, or strip bars; adult motels and adult hotels; adult motion picture theaters or adult theaters; escorts or escort agencies; massage parlors; nude model studios; and sexual encounter centers. It is possible that pornographic film production studios or wholesale pornographic film distribution businesses could be included in this list, but no cases on this point have been identified. Because these businesses do not directly rely on customers from the public at large, the secondary adverse effects that form the basis for current forms of regulation may be hard to establish.

The presence of sexually oriented businesses in a community is part of the astounding pervasiveness of pornography. At the same time, the effect of pervasive pornography is relevant to sexually oriented businesses because many people exposed to pornography—especially young people—will eventually patronize sexually oriented businesses, especially in response to some form of sexual addiction.

Constitutional Issues Generated by Sexually Oriented Businesses

Social concerns regarding pornography have generated difficult legal issues, beginning with the definition of pornography itself. Justice Stewart’s famous confession of defeat on this point, “I know it when I see it,” Jacobellis v. Ohio, 378 U.S. 184, 197 (1964), aptly describes the difficulty. Still, the definition is essential because expression that is obscene is not entitled to federal First Amendment protection from government interference. Roth v. United States, 354 U.S. 476 (1957). The absence of protection for obscene expression means that its dissemination may be prohibited, Paris Adult Theatre I v. Slaton, 413 U.S. 49 (1973), but only if the obscene character has been established in a hearing before the prohibition. Kingsley Books, Inc. v. Brown, 354 U.S. 436 (1957). The absence of such a hearing may be an unconstitutional “prior restraint.” Near v. Minnesota, 283 U.S. 697 (1931).

Avoiding the stigma of “prior restraint” by undertaking a proper judicial process is also unlikely to succeed. This is because any local ordinance intended to suppress expression on the basis of its allegedly obscene content would be judged under a strict scrutiny standard. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986). That standard requires the regulating authority to show that its content-based regulation “is a precisely drawn means of serving a compelling state interest.” Consol. Edison Co. v. Pub. Serv. Comm’n, 447 U.S. 530, 540 (1980). Few content-based regulations of expression survive the strict scrutiny standard.

The dilemma this strict scrutiny standard poses for attempts to regulate sexually oriented businesses is that some materials disseminated by these businesses may be obscene and some, though perhaps offensive, clearly are not obscene. A regulatory scheme that could not be implemented until the pornographic nature of particular items of the stock in trade were judicially established would be ineffective.

A Legal Basis for Successful Regulation

A local ordinance that attempted to completely ban a sexually oriented business because it dealt in obscene materials, expression, or conduct would likely be held unconstitutional. On the other hand, a local ordinance that regulated where the business could be located or some aspects of how it operated, in order to reduce the adverse effects of the business, could be upheld in the courts. This is because such regulation could be considered “content neutral,” not seeking directly to suppress expression on account of its allegedly obscene nature, but seeking rather to regulate only the “time, place and manner” in which the expression would take place. Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976).

These regulations, being content neutral, are subject to a milder form of judicial scrutiny than “strict scrutiny.” To be upheld, such a regulation must be designed to serve a substantial (not compelling) governmental interest, must be narrowly (not precisely) tailored to serve that purpose, and must not unreasonably limit alternative means of communication. Barnes v. Glen Theatre, Inc., 501 U.S. 560 (1991). Cities and counties typically demonstrate a substantial governmental interest by citing adverse secondary effects of sexually oriented businesses. The range of such adverse secondary effects is impressive and includes unlawful sexual activities, sexually transmitted diseases, a deleterious effect on surrounding businesses, declining property values in surrounding residential neighborhoods, increased crime, increased blight, and deteriorating quality of life in the areas near the sexually oriented business.

Attempts to regulate sexually oriented businesses because of their alleged adverse secondary effects require some effort to determine what those effects are. A city need not conduct or commission its own study to show blighting effects but may borrow such studies from other communities. Moreover, the blighting effects do not need to actually exist in the community at the time of the regulation. City of Renton, 475 U.S. at 50–51.

In summary, even though a constitutional right exists to sell or rent sexually oriented materials that are considered not obscene (even if they are indecent), those activities may be regulated to minimize the adverse secondary effects. Such regulations are imposed on sexually oriented businesses in ways that directly relate to suppressing the specific adverse secondary effects of those businesses. Legal scholars have varying views on the secondary effects doctrine. One view is that it concedes too much and permits much offensive and dangerous activity to go unchallenged. Daniel J. McDonald, Regulating Sexually Oriented Businesses: The Regulatory Uncertainties of a “Regime of Prohibition by Indirection” and the Obscenity Doctrine’s Communal Solution, 1997 B.Y.U. L. Rev. 339. A very different view holds that courts’ deferential approach to legislative judgments about secondary effects unduly restricts adult entertainment and the First Amendment. Clay Calvert & Robert D. Richards, Stripping Away First Amendment Rights: The Legislative Assault on Sexually Oriented Businesses, 7 N.Y.U. J. Legis. & Pub. Pol’y 287 (2003–2004).

Permissible Forms of Regulation

The land use regulations that are used to control secondary adverse effects of sexually oriented businesses typically are in either or both of two categories: zoning regulations and licensing requirements. Here’s how they operate.

Zoning

A municipality may enact an ordinance regulating the places where sexually oriented businesses may operate, as long as the content of the ordinance is rationally related to the purposes for which the ordinance was enacted. So if the purpose of the ordinance is to minimize adverse secondary effects, the ordinance should specify the particular effects targeted, cite some reasonable documentation for those effects, and recite how the location restrictions relate to reducing those effects. Most such zoning ordinances cluster sexually oriented businesses into one area or disperse them throughout a larger area. They may include distance or proximity requirements such as being 1,000 feet away from a church, school, or day-care center, or from another sexually oriented business. Clearly, then, zoning is not a means for excluding sexually oriented businesses from the community altogether. But clustering or dispersal may help control some of the secondary adverse effects.

Licensing

Special licensing requirements may be imposed on businesses identified as sexually oriented businesses. These additional requirements can include requiring detailed background information on owners and operators (and prohibiting persons with certain criminal convictions from participating in sexually oriented businesses); prohibiting certain types of behavior such as nudity or alcohol consumption; and regulating hours of operation. Violations of these regulations can result in penalties or license revocation.

Key Points in Evaluating Regulations of Sexually Oriented Businesses

If one is confronted with the imposition of an ordinance regulating a sexually oriented business, or with the task of drafting or amending such an ordinance, several key questions may help determine the validity of the ordinance:

 

• Does the ordinance serve a substantial and legitimate governmental purpose? As discussed above, restraining adverse secondary effects is such a purpose, and the ordinance should refer to data or documentation for such effects in that community.

• Does the ordinance declare a purpose that could be construed as suppressing free expression? Although some may consider the secondary effects doctrine as a thin disguise for attacks on protected expression, current jurisprudence generally upholds, as content neutral, regulations for the expressed purposes of controlling specific secondary effects.

• Does the ordinance’s particular method of regulation relate to the legitimate governmental purpose in promulgating the regulation?

• If the ordinance regulates the enterprise on the basis of separation (distance) requirements or zone restrictions, does it leave reasonable alternative avenues of communication for the regulated form of expression?

• Does the ordinance contain procedures that might be construed as any form of “prior restraint”?

• Does the ordinance contain definitions or restrictions that might be construed as too broad?

• Does the ordinance contain provisions that may be too vague on such issues as method of measuring distance, amount of sexual conduct in a film, phrases or definitions, or unguided discretion in public officials or agencies?

• Was the ordinance properly authorized by delegation of state power to the municipality?

• Does the ordinance provide for reasonable review procedures?

A Sampling of Recent Cases

A small but steady stream of judicial opinions gives constant refinement to sexually oriented business jurisprudence. In the 2007 case of Gold Diggers, LLC v. Town of Berlin, 469
F. Supp. 2d 43 (D. Conn. 2007), the court ruled that the disappointed license applicants did not have standing to challenge the town’s ordinance regulating sexually oriented businesses because the plaintiff had abandoned a prior nonconforming adult business use. But to ensure a complete review, the court assumed standing and ruled on the merits, upholding the municipal licensing scheme as valid. Specifically, the ordinance’s “no touch” rule was upheld as helping prevent prostitution and the spread of communicable diseases.

In Commonwealth v. Jameson, 215 S.W.3d 9 ( Ky. 2007), an owner of a sexually oriented business who was fined for operating in violation of the local ordinance unsuccessfully challenged the constitutionality of the ordinance. Specifically the appellate court ruled that the local court’s findings on the adverse secondary effects were genuine and not merely pretext for suppressing protected speech. The requirement of minimal clothing for performers was intended to prevent illicit sexual conduct.

Utah has been somewhat of a battleground for sexually oriented business cases, with mixed results. The most recent case, American Bush v. City of South Salt Lake, 140 P.3d 1235 (Utah 2006), arose when the owner of a combination nude dancing establishment and lingerie shop complained about an amendment to a city ordinance. The ordinance eliminated nude dancing establishments from the city zoning ordinance that listed authorized forms of enterprise. In general, the city’s position was upheld. The case explicitly excluded federal claims and the Utah Supreme Court determined that, according to the framers’ intent at the time the Utah Constitution was adopted in 1896, nude dancing was not a protected form of expression and could be completely banned.

Two years earlier in Utah, in Doctor John’s, Inc. v. City of Roy, 333 F. Supp. 2d 1168 (D. Utah 2004), the owner of a store that sold some sexually oriented merchandise had challenged a city ordinance requiring his enterprise to be licensed as a sexually oriented business. The license imposed hours of operation requirements, which Doctor John’s was already observing. An opinion by the federal district court upheld every aspect of the city’s carefully drafted ordinance. The Court of Appeals for the Tenth Circuit upheld the district court decision on all issues, except that part of the case was remanded to the district court to determine whether the ordinance was narrowly enough tailored to address negative secondary effects. 465 F.3d 1150, 1169 (10th Cir. 2006). The plaintiff failed on remand. No. 1:03-cv-00081, 2007 WL 1302757 (D. Utah May 2, 2007).

An earlier Utah case reveals some of the technical, procedural, and substantive legal issues that pervade these cases. This is another Doctor John’s case, styled as Midvale City Corp. v. Haltom, 73 P.3d 334 (Utah 2003). It illustrates a particular characteristic of this kind of litigation, in which the owners of sexually oriented businesses seem by their bizarre conduct to invite litigation and then attempt to use the litigation as a means of getting a favorable judgment based on constitutional issues. Doctor John’s, Inc., owned and managed by Haltom, “who was ‘Doctor John’ himself,” commenced business and applied for a general business license, omitting from the license application mention of the numerous sexually oriented items to be sold in his store. The city admonished Haltom to apply for a sexually oriented business license and refused to approve the general business license. Doctor John’s operated thereafter without a business license, and the city obtained a restraining order, which Doctor John’s violated by continuing to operate. Similarly pugnacious behavior can be seen in the New Jersey case of Township of Saddle Brook v. A.B. Family Ctr., Inc., 722 A.2d 530 (N.J. 1999).

The city requested a court hearing, and the court determined that Doctor John’s was operating as a sexually oriented business without a license for sexually oriented businesses and permanently enjoined Doctor John’s from doing business in Midvale. On appeal, Doctor John’s argued that the sexually oriented business ordinance was unconstitutional on its face “as vague and overly broad” and that the ordinance was an invalid content restriction on speech rather than a valid time, place, and manner restriction.

The Utah Supreme Court ruled that the business owners had no standing because they alleged no harm arising from the licensing procedure, except classification as a sexually oriented business, and they alleged no specific harm from that classification. The municipal discretion built into the licensing procedure did not threaten to impose any restriction on communication.

The standing issue actually disposed of the case, but the Utah Supreme Court majority opinion contained dicta on the other issues. Three of the four majority justices also joined in a concurring opinion to offer, by way of dicta, alternative rationales for some of the issues treated. One justice dissented altogether, insisting on a prior restraint analysis, and considering the Midvale ordinance defective in leaving open the possibility of unreasonable delay in resolving licensing issues. This potential defect, of course, can easily be cured in drafting an ordinance.

Conclusion

The presence of sexually oriented businesses in American communities accurately reveals the dichotomy in American society: those who fear and abhor the enterprises and their effects and those who see these businesses’ existence as important signs of protected expression. This split is well reflected in the jurisprudence that has emerged regarding governmental attempts to regulate these enterprises.

Most attempts to regulate sexually oriented businesses are made at the local government level, and these attempts seldom seek to directly ban or prohibit such businesses. To do that requires a ruling that the business falls wholly into the category of obscene conduct, without First Amendment protection. Instead, cities and counties prefer to regulate the ways such businesses operate, with ordinances imposing so-called time, place, and manner restrictions. These regulations are usually upheld as legitimate attempts to minimize the adverse secondary effects of such businesses such as blight, crime, and sexual misconduct. Successful ordinances are carefully drafted to identify specific secondary effects that are targeted, relate the restrictions to those targeted effects, avoid vagueness and overbreadth, and ensure adequate alternative means for that type of communication. Although some ordinances regulating sexually oriented businesses continue to be successfully challenged, careful drafting can forestall almost all
litigation.

 


P R O B A T E   &   P R O P E R T Y
January/February 2008
Vol. 22 No.1
Articles from other issues of Probate and Property