North Carolina Lawyers Weekly
A city ordinance empowering the police chief to deny a “sexually oriented business” license application if he determined that the business “would not comply with all applicable laws” was an overbroad prior restraint.
Background
The City of Rocky Mount, North Carolina regulates “sexually oriented businesses” by requiring those businesses to obtain a license prior to operation, pursuant to an Ordinance at chapter 13, article VII of Rocky Mount’s City Code. Rocky Mount enacted the Ordinance because “[s]exually oriented businesses … are recognized as having serious objectionable operational characteristics” and “[s]tudies and experiences in other municipalities have shown that lower property values and increased crime rates tend to accompany and are brought about by sexually oriented businesses.” The Ordinance’s stated goal is to “balanc[e] . . . the legitimate ends of the community.”
The Ordinance defines a sexually oriented business as one providing, among other things, “adult live entertainment,” or the “performance of or … actual presence of real people which exhibits specified sexual activities or specified anatomical areas,” including the “[f]ondling or other erotic touching of human genitals, pubic regions, buttocks or female breasts.”
The Ordinance also contains six license-denial provisions, including one for applicants under age 21 and another that permits the police chief to deny a license if either the business’s operation, if permitted, “would not comply with all applicable laws, including, but not limited to, the city’s building, zoning, and health regulations.”
Since 2002, Plaintiff/Appellant American Entertainers has operated “Gentleman’s Playground,” a business featuring exotic dancers. In 2014, the Rocky Mount enforced the Ordinance against American Entertainers on information that dancers were providing “adult live entertainment” within the meaning of the Ordinance.
In response, American Entertainers brought suit to challenge the application and constitutionality of the Ordinance. The district court ruled in Rocky Mount’s favor on the constitutional claims, and American Entertainers appealed.
Overbreadth
There is no dispute that Rocky Mount adopted the Ordinance to regulate the deleterious secondary effects of adult entertainment and therefore enacted the regulation for a purpose unrelated to the suppression of expression. Accordingly, intermediate scrutiny applies.
Rocky Mount has a substantial interest in regulating exotic dancing because such entertainment has a long history of spawning deleterious effects. The Ordinance expressly references such deleterious effects. The U.S. Supreme Court has accepted such evidence as justifying regulation of both adult motion picture theaters and concentrations of “adult establishments” more generally.
In addition, the Ordinance’s licensing provisions materially advance that substantial interest. They subject sexually oriented businesses to a $100 licensing fee to make such businesses “carry [their] share of financing the administrative and enforcement activities” associated with minimizing and ameliorating the deleterious secondary effects flowing from sexually oriented businesses. The fee subsidizes the increased safety-enforcement costs that experience demonstrates sexually oriented businesses require. In recognition of these deleterious secondary effects, the Ordinance also precludes the licensing of a sexually oriented business when individuals who are intimately tied to that business “have been convicted” of various criminal offenses. In sum, the licensing requirement materially advances a substantial governmental interest.
The Ordinance is narrowly tailored to achieve this substantial governmental interest. Notably, American Entertainers’ overbreadth challenge focuses on a licensing requirement, not a ban on speech. It rests solely on the claim that subjecting some businesses to a licensing requirement — but not others — violates the First Amendment, at least when some of the businesses subject to the licensing requirement might provide a venue for performances that are not “specifically sexual in nature” or involve “traditional theater and other artistic presentations which may incorporate an erotic component.”
This court declines American Entertainers’ invitation to closely parse the text of the Ordinance to determine whether venues that put on ballets, concerts, or theatrical productions — performances that might involve “fondling or other erotic touching” — would be subjected to the licensing requirement. American Entertainers’ myopic focus on the Ordinance’s definition of “sexually oriented business” misses the dispositive question: Does the Ordinance’s licensure requirement impose any substantial burden on First Amendment interests, such that the licensure is not narrowly tailored to serve the government’s substantial interest in regulating the deleterious secondary effects of sexually oriented businesses? Regardless of whether the language of the Ordinance in fact sweeps in venues that display mainstream performances, the court concludes that the licensing requirement does not significantly burden the speech of either exotic-dancing establishments or venues that display mainstream performances that may involve “erotic touching.”
Moreover, American Entertainers doesn’t argue that the license would be difficult to obtain or would for some other reason discourage dancing exhibitions. Because there is no evidence that the licensing requirement, by itself, imposes any significant burden on speech, it is within Rocky Mount’s police powers to require licensure of “sexually oriented businesses,” however it chooses to define that term. That Rocky Mount may have been able to define “sexually oriented businesses” in a manner that more clearly excludes mainstream performances like ballets, concerts, and theatrical productions does not impact this conclusion where, as here, the challenged statute or ordinance does not meaningfully burden speech.
Prior restraint
But the court agrees with American Entertainers that the Ordinance’s license-denial provision vests impermissible discretion in the police chief to choose on a case-by-case basis which laws apply in reviewing a particular application and thus is too broad to survive constitutional scrutiny.
Rocky Mount argues that the police chief’s licensing determinations are objective ones, drawn exclusively from an applicant’s business proposal and the letter of the law. But this characterization overlooks the plain language of the license-denial provision at issue, which by its terms extends the police chief’s inquiry to the entire body of municipal, state, federal, and common law.
For example, each applicant must include the name of the sexually oriented business in her application. If that name creates a likelihood of confusion with another entity’s valid and protectable trademark, then the applicant violates the Lanham Act’s provisions regarding trademark infringement. But this determination can only be made after performing sophisticated analysis of a nine-factor test, the prongs of which almost all turn on evidence not contained within a licensing application. And it’s unrealistic to expect the police chief to consider the entire body of multiple jurisdictions’ law within the Ordinance’s 15-day time limit. Of necessity, the police chief must narrow the scope of his legal inquiry in order to comply with the deadline. But there’s no statutory guarantee that the police chief will uniformly narrow the scope of his legal inquiry across all applications.
In sum, the license-denial provision sweeps too broadly by requiring the police chief to choose on a case-by-case basis which particular laws to consider in evaluating applications. Accordingly, the court strikes as unconstitutional § 13-273(d)(2) of the Ordinance and remand to the district court to determine whether and to what extent that section is severable from the remainder of the Ordinance.
Equal Protection
Because age is not a suspect classification under the Equal Protection Clause, rational-basis review applies unless the First Amendment dictates a higher standard. The constitutional principles implicated by general business licensing schemes are those involving pure economic regulation and states’ inherent police powers, areas in which government enjoys great regulatory latitude. Thus, the court declines to recognize a First Amendment right for 18- to 21-year-olds to own an adult business.
Applying rational basis review, the Ordinance’s age restriction is rationally related to Rocky Mount’s interest in ensuring that sexually-oriented-business owners are of legal drinking age, given alcohol’s availability at most such venues. The court therefore rejects American Entertainers’ challenges to the Ordinance on Equal Protection grounds.
Affirmed in part and vacated and remanded in part.
Concurrence
(Thacker, J.) I write separately to address my colleagues’ perplexing suggestion that the Ordinance’s use of the phrase “fondling or erotic touching” may render the Ordinance applicable to nonsexual touching in mainstream artistic performances.
Quite simply, “erotic touching,” like “fondling,” has a sexual connotation that is plainly not present in mainstream artistic performances. Dancers performing a lift during a ballet surely do not intend for their touching to incite sexual arousal in the manner contemplated by the Ordinance. The same is true for athletic endeavors such as wrestling, where participants often come into contact with intimate body parts. Indeed, if “erotic touching” includes as broad a description as American Entertainers ascribes to it, the sports world is in trouble. Given such an extensive reading, a sports arena may well be considered a sexually oriented business, considering, for example, players’ frequent celebratory slaps on the buttocks.
Am. Entertainers LLC v. City of Rocky Mount, N.C. (Lawyers Weekly No. 001-076-18, 28 pp.) (Wynn, J.) No. 17-1577; Apr. 27, 2018; from EDNC at Raleigh (Dever, J.). Gary Scott Edinger for Appellant; James Nicholas Ellis for Appellee. 4th Cir.
