6th Circuit ruling addresses constitutionality of SOB licensing fees
The United States Court of Appeals for the Sixth Circuit has issued an opinion in 729, Inc. v. Kenton County Court, No. 06-6390 (6th Cir. Feb. 6, 2008). In a 2-1 panel ruling, Chief Judge Boggs wrote the majority opinion joined Judge Rogers. Judge Clay dissented and concurred in part. The majority affirmed in part and vacated in part the trial court’s grant of summary judgment in favor of the County against various sexually oriented businesses (SOBs).
Kenton County enacted an ordinance (451.12) “comprehensively regulating” sexually oriented businesses. A group of SOBs challenged the ordinance raising numerous issues. Four basic issues were considered on appeal: (1) the constitutionality of “comingling” legislation requiring entertainers to maintain a distance “of at least five feet for a minimum of at least one hour after an entertainer appears semi-nude”; (2) whether the ordinance violates the Contracts Clause (Article I Section 10) of the US Constitution; (3) whether the lack of a specific time limit in ordinary judicial review satisfies the “promptness requirement”; (4) whether the licensing and penalty fees serve a substantial government interest rather than hinder protected expression.
(1) Regarding the “five feet minimum” the court of appeals held that Kenton County – through various investigations and reports – provided enough evidence to show a substantial government interest in preventing “secondary effects,” especially prostitution through a “time, place, and manner” regulation. Hired investigators and police stings had uncovered prostitution at local clubs and the accordant targeting of contact between patrons and entertainers immediately after their performances would be a positive step toward preventing prostitution without entirely eliminating all avenues of communication.
(2) The court of appeals rejected plaintiff’s argument that the entire ordinance violated the Contracts Clause of the US Constitution. The SOBs argued that the County’s new regulation violated a “contractual settlement” – with regulations already set in place – between SOBs and the City of Covington. The Circuit Court pointed out that, according to the Kentucky Constitution, the General Assembly alone has the authority to “delegate the task” of regulating sexually oriented businesses. Therefore, the County’s regulations did not “substantially impair” a prior settlement because they were issued by a prevailing authority. The court of appeals also observed that the “adult entertainment industry” is already highly regulated, therefore, existing establishments should not expect any “contractual” agreement to bar future regulation.
(3) The SOBs also challenged the ordinance on the grounds that its provisions do not provide “sufficiently prompt judicial review.” The challenge was based upon an opinion issued in Nightclubs, Inc. v. City of Paducah, 202 F.3d 884, 891-92 (6th Cir. 2000) which held that a regulatory ordinance was unconstitutional because it did not limit the possible duration of the judicial proceedings. The 6th Circuit overruled the decision in Nightclubs following the Supreme Court decision in City of Littleton v. Z.J. Gifts, 541 U.S. 774, 781 (2004) which held that “ordinary judicial review procedures” satisfy the requirement of “promptness” insofar as the licensing regulations do not seek to regulate content.
(4) Finally, the 6th Circuit - citing questions as to material facts - vacated the judgment of the district court concerning the constitutionality of the County’s licensing fees and “remanded [the case] for further consideration consistent with [the] opinion.” Realizing that the Supreme Court had “never enunciated a comprehensive approach to the constitutionality of a licensing fee charged for the exercise of First Amendment rights,” the Court distilled three “influential” cases (Cox v. New Hampshire, 312 U.S. 569, 576-77 (1941); Murdock v. Pennsylvania, 319; Forsyth County v. Nationalist Movement, 505 U.S. 123 (1992)) into three basic questions to be answered by the district court:
(1) whether the fee’s total amount will deter the exercise of First Amendment rights; (2) whether the measures associated with the fee’s amount are narrowly tailored means of advancing the County’s interests; and (3) whether the County’s cost estimates for those narrowly tailored measures are reasonable.