Adult Businesses Score Second Seventh Circuit Win

NEW ALBANY, Ind.—Just one week after First Amendment attorney J. Michael Murray's outstanding win against an oppressive Indianapolis anti-adult ordinance, a Seventh Circuit panel headed by Chief Judge Frank H. Easterbrook today struck down yet another misapplication of zoning law.

At issue was New Albany DVD, an adult store named for the town in which it does business, located near the Kentucky border. Its owners, New Albany DVD, LLC, had purchased in 2003 the land on which the store sits, and as noted in Judge Easterbrook's excellent opinion, "secured all necessary license, and renovated the site's store to meet its requirements. The land was properly zoned for the business it proposed to operate."

"A final inspection was scheduled for February 19, 2004," the opinion continued. "But the City refused to carry out that inspection, so plaintiff could not obtain the certificate of occupancy needed to open its doors. That very day the City Council enacted a six-month moratorium on new adult businesses. In March 2004 the Council amended the zoning rules to forbid any 'sexually oriented business' at plaintiff's site." [Emphasis added]

It's an old story, and one that's caused the closing of many adult businesses over the past couple of decades: A city gets wind that an adult business wants to open in its jurisdiction, and quickly moves to amend its ordinances to prevent that from happening, often using bogus testimony and "studies" to justify its abridgment of the owner's First Amendment rights.

Fortunately, New Albany DVD had a courageous jurist heading its appeals panel.

New Albany DVD had in fact won its case in the district court, where Judge Sarah Evans Barker held that even in the face of the city's new ordinance, under Indiana law, the store was entitled to open and to operate for two years as a nonconforming use since its renovations were completed before the ordinance amendment, and granted the store an injunction to allow that to happen.

"The injunction should not have issued, however—at least, it should not have issued on the ground that the district court gave," Judge Easterbrook wrote. "Although [City of Los Angeles v.] Alameda Books and [Renton v.] Playtime Theatres hold that regulation of adult businesses must be tailored to the justification for the regulation, these decisions also sustain laws that are no better tailored, and may well be more restrictive, than New Albany's..."

"This does not mean, however, that the injunction must be reversed, for a prevailing litigant is entitled to defend its judgment on any ground preserved in the district court, even if the district judge rejected that argument," Judge Easterbrook continued. "Plaintiff defends its judgment with the argument that New Albany has not established that book and video stores offering only take-home items cause any untoward secondary effects. The Supreme Court in Alameda Books and Playtime Theatres held that proof of such effects is essential if municipalities regulate adult establishments differently from the way they regulate other similar businesses—for the sellers of books and movies enjoy constitutional protections that sellers of snow shovels, shoes, and parakeets do not."

It's always gratifying when a federal appeals court judge knows the difference between marketing First Amendment-protected content and the sale of "snow shovels, shoes, and parakeets."

Judge Easterbrook took the trial judge to task for focusing on whether New Albany's ordinance was "narrowly tailored" to accomplish the government's purpose, opining that she should have focused instead on whether the city had any basis for enacting its ordinance in the first place.

"In the district court, New Albany relied on studies conducted in cities across the country," the panel's opinion stated. "Many of these show that a concentration of adult businesses in a part of a city is associated with higher crime and lower property values nearby. As we observed in Annex Books, Inc. v. Indianapolis, however, these studies principally reflect the effects of adult businesses that offer live entertainment or peep shows; they do not necessarily demonstrate that businesses selling books and DVDs have the same consequences for morals offenses (prostitution, lewd exhibition) or other kinds of crime. New Albany's own expert 'conceded that he knows of no research that shows... effects for various subclasses of businesses,' such as plaintiff's retail-only store." [Citations omitted here and below]

The panel then tore into the so-called "adverse secondary effects" evidence presented by the city.

"Recognizing that prior studies had lumped bookstores, peep shows, and exotic dancing establishments together, New Albany offered some anecdotal justifications in the district court," Judge Easterbrook reported. "It cited testimony in some earlier cases by people complaining about pornographic litter near adult bookstores, and it suggested that these stores may expose their customers to thefts. The former line of argument rests on the fact that some customers are bound to throw away wrappers, which may have images inappropriate for children. The 'theft' line of argument starts with the premise that many customers of adult establishments pay in cash, which makes them a target for thieves."

And who was pushing the "theft line" in New Albany? A familiar name to adult litigators: Dr. Richard McCleary.

"They fly this guy McCleary around the country and he makes a killing," New Albany DVD's attorney Steve Mason told AVN. "When he started talking about, you know, 'these guys don't want their ugly wives to know that they're going to look at these magazines with these young girls, so they travel a hundred miles and they get a lot of money out of the bank and they have cash and they travel down to New Albany and they have all this cash, and when they come into town, the criminals catch them and rob them and there's this overflow of criminality that occurs from this long-distance travel with cash,' I mean, McCleary's been selling that line for a long time now. And the other thing is dirty boxtops; they brought in all this stuff about how dirty boxtops are going to end up in the parking lot and children are going to see it. In this opinion, Easterbrook just tears that to hell."


"The theft argument is paternalistic," Judge Easterbrook declared. "Why can't customers make their own assessments of risk? The norm under the first amendment is that government must combat harm to readers with disclosures rather than prohibitions of speech. Just as there is no hecklers' veto over speech, there is no 'thieves' veto.' The police must protect the readers from the hecklers or thieves, rather than ease their workload by forbidding the speech."

Here, Judge Easterbrook harks back once again, as he did in the Annex Books case, to Justice Anthony Kennedy's dictum regarding restrictions on sexual speech.

"In Renton, the Court determined that while the material inside adult bookstores and movie theaters is speech, the consequent sordidness outside is not," Justice Kennedy wrote in Alameda Books. "The challenge is to correct the latter while leaving the former, as far as possible, untouched. If a city can decrease the crime and blight associated with certain speech by the traditional exercise of its zoning power, and at the same time leave the quantity and accessibility of the speech substantially undiminished, there is no First Amendment objection... On the other hand, a city may not regulate the secondary effects of speech by suppressing the speech itself."

Better still, Judge Easterbrook takes the city to task for suggesting, in its ordinance, that the imaginary thieves that would prey on adult video customers would stop with that demographic and not expand their horizons.

"Anyway, if an adult bookstore located 200 feet from a church attracts thieves, won't a bookstore located 1,500 feet from a church do the same?" he asked. "Maybe the City's concern is for the worshippers, who may become the thieves' targets when video buyers are unavailable. But if that's so, the City needs some evidence that thefts from passers by are a serious problem—and a more severe problem for outlets near churches than for outlets father away... New Albany has not supplied evidence that 'fairly supports' the idea that adult bookstores located near churches or residences attract thieves who then steal from the local denizens as well as the stores' customers. We don't say that the City will be unable to produce this evidence, but the lack of good evidence to this effect in the record—coupled with evidence implying that take-home adult stores do not have adverse secondary effects—is enough to require an evidentiary hearing."

Judge Easterbrook, of course, reached the same conclusion in the Annex Books case.

The judge also took the city to task for its "porno litter" argument.

"Pornographic litter is the City's other principal basis," he noted. "The printed word often is tossed away, but litter-control justifications have fared poorly as reasons to regulate pamphlets and other written materials."

Citing Justice Kennedy's above-noted prohibition on reducing speech in order to reduce secondary effects, Judge Easterbrook stated, "New Albany's 'litter' justification comes perilously close to this, because the amount of pornographic litter may depend linearly on the volume of adult materials sold. The only way to cut litter by 10% may be to reduce sales by 10%, and such a justification would fail under Justice Kennedy's approach."

In the end, the panel ordered the district court to hold an evidentiary hearing "consistent with this opinion and Annex Books," which in that earlier decision the panel ruled that any speech regulation "must advance some basis to show that its regulation has the purpose and effect of suppressing secondary effects, while leaving the quantity and accessibility of speech substantially intact... A city may not assert that it will reduce secondary effects by reducing speech in the same proportion."

So chalk up another Seventh Circuit win for adult businesses, thanks to a jurist who knows how to read... and understand.