The victory in the VoyeurDorm case [see "VoyeurDorm.com Wins Appeal," p. 42, and "No Trespassing: De-zoning the Net," p. 76 - Ed.] gives rise to the particular topic of zoning but, perhaps also, more general topics concerning business regulations of home-based businesses. Those of you who come to the Internet from the adult video business are all too familiar with adult-business regulations, having been plagued with them for decades. However, readers who started in the computer business and thereafter segued into the adult Internet business (and why not? ...that's what people want!) have found, or will find, that operating a business brings into play an unfathomable can of regulatory worms.
We begin with the topic du jour - zoning. Notably, every inhabited part of the United States except Houston, Texas has been subject to a comprehensive zoning plan for many years.
Some of the more readily apparent objectives of zoning ordinances are: to preserve the tranquility of residential areas; to promote the economic vitality of industrial, commercial, and office areas; and to provide for the general convenience of the population. Examination of a typical zoning ordinance, however, reveals additional objectives. For example, most zoning ordinances include off-street parking requirements for commercial, industrial, and office uses; and impose setback requirements, landscaping requirements, building height limitations, and other restrictions directed at reducing traffic congestion and visual pollution. Typical zoning codes also require that intense uses, such as regional shopping malls and amusement parks, be permitted only after one or more public hearings, following review by planning experts.
Hitting closer to home, zoning ordinances normally give special attention to uses that have an unusual impact on the surrounding areas, such as gas stations (pollution), large nightclubs and concert venues (late night activities and intense traffic), and others. Courts regularly use this concept to justify the restrictive zoning ordinances that have plagued adult retail businesses for years. Local governments have successfully contended that adult bookstores and the like create undesirable secondary effects on the neighborhood. Accordingly, zoning ordinances that restrict the location of adult businesses are presumably directed not at the content of speech but at the secondary effects of speech. Therefore, such ordinances are not unconstitutional as a regulation of the content of speech, despite the fact that, in reality, their application is a function of the content of speech.
As everyone likely is aware, the VoyeurDorm is a product of entrepreneurial genius. Some enterprising folks procured a house and arranged for a cadre of sexy young women to live there. They then stationed Web cameras all over the house, which photograph the residents in various stages of dress and undress to be broadcast to paying subscribers over the Internet. The City - for reasons obviously having little or nothing to do with urban planning and everything to do with censorship and morals - declared that the nudity component of the VoyeurDorm brought it into the realm of an adult entertainment business, therefore rendering it subject to the local zoning code. You don't have to know a thing about zoning to appreciate how ridiculous that was.
VoyeurDorm took the City to federal court and, incredibly, lost. Undaunted, VoyeurDorm appealed to the United States Court of Appeals for the 11th Circuit in Atlanta which, understandably, found that the trial court was wrong. Tagging VoyeurDorm as an adult retail business did not square with the constitutional theories that support adult-business zoning ordinances.
The VoyeurDorm case, however, is not the beginning and end of issues of zoning and Internet businesses. A staggering number of Webmasters operate their businesses from home. Perhaps the preponderance of them begin that way. Homes are in residential zones. Residential zones are for residential uses. Businesses are not residential uses, even very small businesses.
With the onset of telecommuting, many cities have come to grips with the reality that people work in their homes, even do business in their homes. Indeed, cities have always turned a blind eye to people who earmark one room of their residence for an office away from the office. Nobody complains, and the cities have other fish to fry.
When people do complain, however, the city often will step in. Complaints arise when there is something to complain about - extra cars parked all over the place; too much noise; debris around the neighborhood; visibly excessive garbage every week; or, of course, if the business has anything to do with sex. In the latter case, those doing the complaining often are not the neighbors, but people who fancy themselves as having better morals than the target of the complaint.
The cities that have seen the light and enacted ordinances that specifically allow home businesses have correctly determined that the problem should be approached in a realistic manner. Such ordinances typically allow home businesses, but substantially constrict them to those that will not be invasive to the residential character of the neighborhood. Restrictions typically include limiting the number of employees to one or zero, prohibiting signs, prohibiting walk-in customers, prohibiting any manufacturing process, and so on. As a practical matter, these commercial exceptions to residential zoning restrictions simply are sort of "truth-in-zoning," codifying realities of non-enforcement against unobtrusive home businesses.
However, the problems of operating a home business do not end with a commercial use in a residential zone. Another problem arises from the pesky Labeling and Recording-Keeping Law, 18 U.S.C. � 2257. That statute and its regulations, we all know, require that the statement disclosing the custodian of the records list a real human being as the custodian and his or her physical address - not a mail drop or post office box. So, if your site includes content that triggers labeling and record keeping under section 2257, you must post your home address for everyone to see. Everyone thought that was unconstitutional until the Connection Magazine case, Connection Distributing Co. v. Reno, 154 F.3d 281(6th Cir. 1998), where swingers claimed that it invaded their privacy to be required to post their home address as the location of the custodian of the records. The United States Court of Appeals for the Sixth Circuit was not impressed, and there has not been another case addressing the issue. Moreover, even if your site does not trigger Section 2257 compliance, you may be plagued with a state requirement that the actual address of a business be disclosed, generally, or perhaps in connection with a business license or fictitious business name.
The news on this topic, however, is not all bad. At least the report from the VoyeurDorm case came back positive from the United States Court of Appeals for the Eleventh Circuit.
As explained above, the VoyeurDorm case involved one of those adult zoning ordinances that exist pretty much everywhere - "sexually oriented" or "adult," or whatever they call them, businesses are required to be at least so many feet from various "sensitive uses" and in specified zoning districts. These ordinances always are profoundly more restrictive than the general requirements for a commercial business.
The basis upon which the courts have upheld these adult-business zoning ordinances is that they are directed not at the content of the speech but, supposedly, to the secondary effects caused by a particular category of speech. Adult businesses supposedly cause blight, reduce property values, and so on. Indeed, there may be some truth to that, although certainly not as much as municipalities regularly claim.
In the VoyeurDorm case, the business had none of the trappings of ordinary adult businesses. That is, the characteristics of adult businesses that cause whatever problems they cause are the character of the buildings, the signs, sexually charged-up customers traipsing in and out, and so on. But the only distinction between the building that was the subject of the VoyeurDorm case and every other house in its neighborhood was this one had cameras all over the place broadcasting on the Internet. It was perfectly legal for a group of young women to rent a house and live there - and prancing around nude might be perfectly normal, although it would not be photographed. Accordingly, the fact of the matter was that the ordinance, as applied to VoyeurDorm, was simply a product of the City's moral objection to presenting naked people on the Internet and had nothing to do with secondary effects running down the neighborhood. As the court explained:
"The residence - provides no 'offer[ing] [of adult entertainment] to members of the public' [as defined in the ordinance]. The offering occurs when the videotaped images are dispersed over the Internet and into the public eye for consumption. The City Code cannot be applied to a location that does not, itself, offer adult entertainment to the public. As a practical matter, zoning restrictions are indelibly anchored in particular geographic locations. Residential areas are often cordoned off from business districts in order to promote a State's interest - 'in attempting to preserve the quality of urban life-.' It does not follow, then, that a zoning ordinance designed to restrict facilities that offer adult entertainment can be applied to a particular location that does not, at that location, offer adult entertainment. Moreover, the case law relied upon by Tampa and the district court concern adult entertainment in which customers physically attend the premises wherein the entertainment is performed. Here, the audience or consumers of the adult entertainment do not go to [the residence] or congregate anywhere else in Tampa to enjoy the entertainment. Indeed, the public offering occurs over the Internet in 'virtual space.' While the district court read Section 27-523 in a literal sense, finding no requirement that the paying public be on the premises, we hold that section 27-523 does not apply to a residence at which there is no public offering of adult entertainment."
However, there is little difference between the motivation for applying the adult ordinances to VoyeurDorm compared to the motivations underlying the initial enactment of such ordinances in general. There are enough people who are squeamish about erotic expression to galvanize the town council, and there are few politicians willing to label these people as the extremist prudes that they are.
All of this leaves our home-based Internet operators plagued with good reasons not to tell anybody where they are despite laws requiring that they do so. Savvy advice would be to rent a cubicle (as small as you can find) at an executive office suite, and install a telephone with call forwarding with a desk and a file cabinet for storing your � 2257 records. Such may not be a solution to all legal concerns raised by theses local laws, but you will likely sleep better as a result.
Clyde DeWitt is a partner in the Los Angeles office of the law firm of Weston, Garrou & DeWitt. He can be reached through AVN's offices, at his office at 12121 Wilshire Boulevard, Suite 900 Los Angeles, CA 90025, or by e-mail at [email protected]. Readers are considered a valuable source of court decisions, legal gossip, and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases, and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
