Texas Supremes Uphold Adult Club Entrance Fee

AUSTIN, Texas—The all-Republican Texas Supreme Court today upheld a 2007 strip club entry fee—commonly known as the "pole tax"—claiming that the $5 charge doesn't substantially impact erotic speech and is justified as a tool to prevent the "secondary effects" allegedly caused by the combination of naked, gyrating female bodies and alcohol consumption.

"Because the fee is content-neutral and satisfies the four-part O’Brien test, we conclude that it does not violate the First Amendment," wrote Justice Nathan L. Hecht for the unanimous court in Combs, Comptroller v. Texas Entertainment Association and Karpod.

"There's just one problem: O'Brien doesn't apply to a tax," said one First Amendment attorney who's intimately familiar with the history of the case but who declined to be identified. "O'Brien talks about regulations, and to use this as a regulatory scheme is fallacy because if they're right, if the Court's right that this is a de minimis fee, then okay, you pay the $5 fee per patron and you have the same secondary effects. Nothing changes, except that the state collects more money."

To reach its conclusion, the Court drew on a variety of U.S. Supreme Court precedents, including City of Erie v. Pap's A.M., where a high court plurality ruled that a blanket ban on nudity in adult clubs was not content-based (even though theatrical plays were exempted), and City of Los Angeles v. Alameda Books, where the Supremes ruled that the city could rely on a faulty "secondary effects" study to force two or more adult businesses under the same roof to maintain separate venues, though it remanded the case to the trial court for further proceedings.

But as those who've been following this litigation know, the issue of using the fee to combat secondary effects was an idea introduced rather late in the game.

"This is just a source of revenue; it has nothing to do with secondary effects," the attorney stated. "The lady that authored the bill, when she presented the bill for the first time in committee, said, 'We are not claiming a link between topless bars and sexual assault.' She was specifically asked that question."

"That link was contested statistically by a professor at the University of Texas, and it was also contested in the sense of, there was no evidence introduced supporting that theory," he continued. "In the trial court, there was a finding that there was a potential or possible link between the operation of a topless dance club that served alcohol and sexual offenses, but it was very broad. That could have meant women who had been sexually abused went to work as topless dancers—there was, I think, one case of that—and there were assaults that happened between management and entertainers, but there was no evidence that there had been sexual assaults in the neighborhood, which is the basic secondary effect concept. They had evidence from a professor and a former police officer-turned-investigator that talked about sexual offenses in connection with entertainers, and they were assaultive type offenses, but not committed by patrons, and not in the neighborhood."

"So the problem was, with the district judge, he made that as a finding because the way he wrote his opinion, the money that was being generated from the tax, only a small part of it went to sexual assault victim programs, and a large part went to health insurance for poor people."

Indeed, the law requires that the first $25 million collected from the fee go to sexual assault prevention programs, while any funds beyond that would be split between those programs and programs to provide health care for the uninsured—a worthy goal, certainly, since Texas has the largest per capita uninsured population in the nation, but there's hardly a clear connection between those goals and charging strip club patrons an extra entry fee.

And as for the fee being de minimis—too small to notice?

"The testimony at trial was not that," the attorney noted. "The testimony was that it was extremely burdensome on small clubs; that it would put them out of business—and as to a 'medium-size club,' it would definitely impact the bottom line, but as to the major clubs, the chains, that they would be able to absorb the cost, but the testimony was never that it was de minimis and did no harm."

Of the 169 clubs to which the fee applies, the attorney estimated that more than half could be put out of business because of the fee; that another 30 percent would be hurt, while just 20 percent would be minimally affected.

Part of the problem for the Texas Entertainment Association, which represents many of the affected clubs, is the Texas Supreme Court's excessive reliance on Erie v. Pap's, a decision which couldn't even gain a clear majority of the U.S. Supreme Court in 2000, when it was decided. Moreover, while the decision agrees with previous adult speech cases such as Barnes v. Glen Theatre that found a nudity ban permissible as a "time, place or manner" restriction, the Texas court ignored the separate opinion filed by Justice David Souter, where for the first time a Supreme Court justice opined that for claims of adverse secondary effects of a particular type of speech, there should be evidence presented to justify such claims, not merely the opinions (or prejudices) of legislators—evidence the Texas court admitted existed but found to be inconsequential. Souter later expanded the concept in his dissent in City of LA v. Alameda Books to state that adult businesses should be able to introduce evidence, both at trial and before city councils, that the alleged secondary effects of their businesses don't exist.

But the biggest problem with the Texas high court's decision was its attempt to use Erie's application of the four-part test in U.S. v. O'Brien (a 1968 case involved the public burning of a draft card) as a yardstick for whether the entry fee was constitutional, when the O'Brien case dealt strictly with regulation of speech. Rather, the standard to apply—and the Texas court does allude to it—is Justice Anthony Kennedy's clear statement in his concurrence in Alameda Books.

"On the other hand, a city may not regulate the secondary effects of speech by suppressing the speech itself," Kennedy wrote. "A city may not, for example, impose a content-based fee or tax."

So how does Texas get around that? Simple: It uses Erie v. Pap's, the regulatory decision, to conclude that the "pole tax" is not content-based, even though it applies only to venues where erotic speech is being practiced, and therefore the fee is not subject to Justice Kennedy's specific exclusion of such a fee!

But the biggest problem with the "pole tax" remains the "O'Brien test," which sets out four requirements for a speech regulation to be constitutional: If it is within the constitutional power of the Government; if it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.

Of course, First Amendment absolutists would argue that based on the clear text of the First Amendment, the government does not have a constitutional power to regulate sexual speech, even to put a small tax on it in the form of an entry fee, but let's assume for a moment, considering the plethora of Supreme Court decisions upholding such a power, that the power exists.

That brings us to the second requirement, that the fee furthers an important or substantial governmental interest. Few would argue (except, of course, Texas Gov. Rick Perry and his supporters) that programs to help sexual assault victims and to obtain health insurance for the poor are not important or substantial governmental interests. The question is, why should the strip clubs' sexual speech be specifically targeted to pay for such programs, since the clubs themselves—even the ones that serve or allow alcohol on the premises—don't cause women to be assaulted nor make it more difficult for the poor to obtain health coverage? Why not levy similar fees on bookstores, or hospitals, or sports venues—unless the fee is indeed content-based (and therefore prohibited under Alameda)?

But no: "[Justice Kennedy] did not suggest that a fee like the one now before us would never be permissible," Justice Hecht claims. "The fee is not a tax on unpopular speech but a restriction on combining nude dancing, which unquestionably has secondary effects, with the aggravating influence of alcohol consumption."

The "unquestionably" comes from Pap's and its forebears, and apparently the Texas high court, quoting the Pap's logic, thinks Texas can use the fee as "a reasonable opportunity to experiment with solutions to admittedly serious problems"—and besides, the fee is only on clubs that allow alcohol consumption on the premises, so how could the fee be a speech restriction? Never mind the fact that most clubs make most of their profit from liquor sales, and without such income, they'd be out of business—thereby severely restricting their speech ability. (Wow! That sounds like a government interest—the fee—that is related to the suppression of free speech... which O'Brien's third "prong" prohibits!)

And since the Texas high court has admitted that the fee required to be paid by clubs that serve alcohol has only a minuscule effect on the clubs' speech—though they earlier claim, "We think that the fee provides some disincentive to present live nude entertainment where alcohol is consumed"—it looks like any fee would be "greater than is essential to the furtherance of that interest," since if the fee is paid, alcohol can be served, and if the combination of nude dancing and booze did cause, say, rape, the "pole tax" would have little to no effect on that!

In any case, it appears that Combs, Comptroller v. Texas Entertainment Association and Karpod is ripe for review by the U.S. Supreme Court—and since more than half of Texas's strip clubs might close if forced to pay the fee, it's likely that such a cert petition is already in the works.