Constitutional – First Amendment – Adult Entertainment – Municipal Ordinance – Timing & Distance

American Entertainers, L.L.C. v. City of Rocky Mount (Lawyers Weekly No. 002-019-16, 28 pp.) (James Dever III, C.J.) 5:14-cv-00438; E.D.N.C.

Holding: The defendant-city’s Sexually Oriented Business Ordinance (SOBO) unconstitutionally allows the city to indefinitely delay a decision on an application for a SOBO license; this effectively gives the city’s police chief unreviewable power to deny an applicant the ability to open a business and engage in protected expression.

The court strikes this portion of the SOBO and an ordinance purporting to regulate the distance between adult businesses. Otherwise, the court grants summary judgment for the city.

Plaintiff first contends that, according to a settlement of a 2003 lawsuit, it is allowed to operate its “bikini bar” without a SOBO license. However, plaintiff has produced no writing that constitutes an enforceable settlement agreement.

In fact, the only applicable writing plaintiff has produced is an email from its attorney to the city’s attorney stating that plaintiff’s entertainers would switch from “surgical tape” to “makeup latex” to cover their areolae and that “police have indicated” that the makeup latex “is sufficient to comply” with the SOBO. Even if a single email sent to a city’s lawyer, to which the city never replied, could satisfy the requirement of G.S. § 160A-16’s requirement that contracts with municipalities be in writing, the email would not be sufficient to establish a contract. The absence of any mutual obligation makes this writing insufficient to demonstrate an enforceable agreement with the city. The court rejects this argument.

Plaintiff operates as a private club and sells snacks, alcohol, and soft drinks. Its dancers do not cover up any part of their breasts besides their areolae and nipples. Thus, the rest of the breast “below a point immediately above the top of the areola” remains exposed, constituting a display of “specified anatomical areas” under SOBO § 13-270. Uncontroverted testimony and video evidence demonstrate that plaintiff’s performers regularly display “specified anatomical areas,” making their performances “adult live entertainment” which, when regularly provided, render plaintiff an “adult cabaret” which cannot operate without an SOBO license. The court rejects plaintiff’s argument that its “bikini bar” falls outside the SOBO.

Since plaintiff is a limited liability company, it lacks standing to challenge the SOBO provision allowing the city’s police chief to deny a license where stockholders holding ten percent or more of an applicant-corporation’s stock have been convicted of certain crimes.

If the police chief fails to act on an application within 15 days, an applicant “shall be permitted to begin operating the sexually oriented business for which the license is sought[] unless and until the chief of police notifies the applicant of a denial and states the reason(s) for denial.” However, the SOBO provides no appeal or review for an applicant whose application has been neither approved nor denied after 15 business days have passed. As such, the SOBO unconstitutionally permits the city to effectively deny a SOBO license to businesses like plaintiff by failing to act on the application. This effectively gives the police chief unreviewable power to deny an applicant the ability to open a business and engage in protected expression.

An applicant’s temporary ability to operate a sexually oriented business pending a final decision does not satisfy FW/PBS, Inc. v. Dallas, 493 U.S. 215 (1990), when the temporary ability could be revoked at any time.

The SOBO contains a severability provision. Because the portion of SOBO § 13-273(e) that impermissibly allows city officials to indefinitely forestall granting or denying a license is limited to the language “unless and until the chief of police notifies the applicant of a denial and states the reason(s) for denial,” this language alone shall be unenforceable.

Plaintiff also argues that the SOBO prohibition on entertainers touching patrons is unconstitutionally overbroad because it would cover completely nonsexual contact, such as a handshake or incidental contact between a fully-clothed dancer and a fully-clothed patron. The court accepts the city’s construction of the SOBO: a person is only an adult entertainer while exposing the body parts described in SOBO § 13-271.

So interpreted, the SOBO does not sweep substantially beyond the scope of its justification of limiting the opportunities for illegal activity to arise out of exotic dancing.

Plaintiff has cited no law, and this court is aware of no precedent, suggesting that the Equal Protection Clause or the First Amendment encompasses a right of an 18- to 20-year old to own or be an officer or director of a sexually oriented business. The court rejects plaintiff’s claim that the SOBO is unconstitutional because it prohibits persons over 18 but under 21 years of age from owning or being officers or directors of a sexually oriented business.

The city’s Land Development Code § 503(C)(3)(a) requires that adult businesses be separated from each other by at least 500 feet. Onslow Cty. v. Moore, 129 N.C. App. 376, 499 S.E.2d 780 (1998), held that a North Carolina municipality may not regulate “the distance that must be kept between adult and sexually oriented businesses” because G.S. § 14-202.11 preempts such municipal regulation. Therefore, the 500-foot spacing provision in the city’s Land Development Code is void under North Carolina law.

Finally, plaintiff claims that the SOBO’s prohibition against providing adult live entertainment for only one customer is unconstitutional.

One of the city’s primary purposes in regulating businesses like plaintiff is to reduce the risk of illegal activity created by the “private or semi-private performance of adult live entertainment.” SOBO § 13-280(a). The city’s goal of reducing opportunities for illegal activity would be achieved less effectively if the city did not ban private adult live entertainment.

Moreover, the regulation does not burden substantially more speech than is necessary. Rather, it prohibits only private dances. Therefore, because the provision is narrowly tailored to the city’s substantial interest in regulating the manner of exotic dancing, it passes constitutional muster.

The court grants summary judgment to plaintiff as to the 500-foot spacing provision and the constitutionality of the procedural timing requirements in SOBO § 13-273(e). Otherwise, the court grants summary judgment for the city.