## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 05-3847

___________ Passions Video, Inc., a Missouri * corporation; Gala Entertainment * of KC, Inc., a Missouri corporation, *
* Appellants, * * Appeals From the United States v. * District Court for the * Western District of Missouri. Jay Nixon, Attorney General of the * State of Missouri, in his official * capacity, *
* Appellee. *

___________ No. 05-4053

___________ Steele Retail 37, doing business * as Lion's Den, LLC, *
* Appellant, *
* v. *
* Jay Nixon, Attorney General of the * State of Missouri, in his official * capacity, *
* Appellee, * -------------------- *-2- American Civil Liberties Union of * Kansas and Western Missouri, *
* Amicus on Behalf of Appellant. *

Submitted: June 14, 2006 Filed: August 21, 2006

___________ Before SMITH, HEANEY, and GRUENDER, Circuit Judges.

___________ HEANEY, Circuit Judge. In this case we consider two consolidated appeals challenging the constitutionality of a Missouri criminal statute that regulates advertising by Missouri businesses that offer sexually explicit entertainment and mate rials. The district court found the statute to be a constitutional regul ation of commercial speech. We reverse.

BACKGROUND

Missouri statute section 226.531 restrict s on- and off-premises advertising within one mile of a state highway, by a ny business classified as “adult cabaret” or “sexually oriented business” (affected business). Mo. Rev. Stat. § 226.531. The statute includes an exception that allows a ffected businesses located within a mile of state highways to display two exterior, on-pr emises signs, but restricts the content of these signs. Business owners who violate the statute are subject to criminal prosecution. § 226.531.4.

The material facts in these appeals are not in dispute. All appellants are located within one mile of a state highway. The appellants have all erected , or intend to erect,1 Gala Entertainment and Passions Video jo intly filed the suit below. Gala has apparently closed since the commencement of the suit. S ubsequent references to the Passions Video suit include by refere nce the Gala Entertainment suit.

2 Appellee is the named defendant in his official role as Missouri State Attorney General.
-3- on- and off-premises signs and billboards thatviolate the location, size, and content restrictions of section 226.531.

Passions Video qualifies as a sexually oriented business because it devotes more than ten percent of its interior display space to non-obscene, sexually oriented materials. See§ 226.531.1(3) (defining “sexually oriented business”). Gala Entertainment of KC, Inc. 1 was a nightclub classified as an adult cabaret. See§ 226.531.1(1) (defining “adult cabaret”). In August 2004, Passions Video and Gala Entertainment jointly filed suit against the state, 2in the United States District Court for the Western District of Missouri, challenging the constitutionality of section 226.531. In its prayer for relief, Passions Video sought preliminary and permanent injunctions enjoining enforcement of sec tion 226.531, a declaration that section 226.531 was unconstitutional, and f ees and costs. On February 18, 2005, the district court issued an amended order denying Passions Video’s Motion for Temporary Restraining Order and Preliminary Injunction. Passi ons Video and the state subsequently filed cross-motions for su mmary judgment. On August 2, 2005, the district court denied Passions Video’s motion for summary judgment, and granted summary judgment on behalf of the state. Passions Video now appeals the district court’s August 2, 2005 order.

Steele Retail 37, L.L.C. (Steele Retail), operates a gas station and convenience store that receives the majority of its income from gas and other traditional convenience store items, but devotes more than ten percent of its interior display space to non-obscene, sexually oriented material s. Thus, it too qualifies as a sexually-4- oriented business. See § 226.531.1(3). On August 10, 2005, Steele Retail filed suit in the United States District Court for th e Western District of Missouri, seeking a declaration that section 226.531 violated the United States Constitution and seeking preliminary and permanent injunctions enjo ining its enforcement. The Steele Retail suit was assigned to the same district c ourt judge that presided over the Passions Video suit. The district court denied Steele Retail’s motion for preliminary and permanent injunctions, relying prim arily on its reasoning regarding the constitutionality of section 226.531 in its August 2005 order granting summary judgment against Passions Video. The distri ct court additionally interpreted the scope of section 226.531, finding that it prohibite d advertising only for sexually oriented materials. Steele Retail filed this appeal which was subsequently consolidated with Passions Video’s earlier appeal.

ANALYSIS

“We review the district court’s grant of summary judgment de novo, using the same standard under Federal Rule of Civil Procedure 56(c) as applied by the district court.” Excalibur Group, Inc. v. City of Minneapolis , 116 F.3d 1216, 1219 (8th Cir. 1997). A party is entitled to summary judgm ent “when ‘there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)). We review the denial of a motion for a preliminary injunction for abuse of discreti on. Safety-Kleen Sys., Inc. v. Hennkens , 301 F.3d 931, 935 (8th Cir. 2002).

The First Amendment provides that “Congr ess shall make no law . . . abridging the freedom of speech.” U.S. Const. amend I. The ame ndment applies to state and local governments through the Fourteenth Amendment. Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n , 447 U.S. 557, 561 (1980). Although one may find sexually explicit material tasteless and ev en immoral, it is constitutionally protected so long as it is not obscene. United States v. Playboy Entm’t Group, Inc. , 529 U.S.3 The statute includes an exception for aff ected businesses located within a mile of a state highway, which is discussed below.
-5- 803, 811 (2000). “The history of the law of free expression is one of vindication in cases involving speech that many citizens may find shabby, offensive, or even ugly.” Id. at 826.

At issue here is a Missouri statute that restricts advertising by “sexually oriented businesses” and “adult cabarets” that offer sexually explicit materials and entertainment for adults. Any business with more than ten percent of its display space dedicated for sexually oriented materials is presumed to be a “a sexually oriented business.” Mo. Rev. Stat. § 226.531.1(3). An “adult cabaret” is “a nightclub, bar, restaurant, or similar establishment in wh ich persons appear in a state of nudity, as defined [by the statute], or seminudity, in the performance of their duties[.]” § 226.531.1(2).

The advertisement restriction provides th at, “[n]o billboard or other exterior advertising sign for an adult cabaret or sexually oriented business shall be located within one mile of any stat e highway. . . .” § 226.531.2. 3 Accordingly, if a business fits the definition of a “sexually oriented business” or “adult cabaret,” it is prohibited from erecting any “billboard or other exteri or advertising sign,” regardless of the sign’s content. Id. Violation of this statute is a class C misdemeanor, § 226.531.4, punishable by a term of incarceration of up to fifteen days, § 558.011.1(7), and a fine of up to $300, § 560.016.1(3).

I.

As a threshold issue, we determine th e scope of the statute’s advertising restriction. In its denial of Steele Ret ail’s motion for permanent and preliminary injunctions, the district court interpre ted 226.531 to “prohibit only advertising for the sexually oriented aspects of sexually orient ed businesses.” (Steele Retail J.A. at 295.)4 At oral argument, the state took the pos ition that the mere inclusion of the affected business’s name or address on th e advertisement would subject the business owner to criminal prosecution under section 226.531.

5 The plaintiffs argue that the statute is subject to strict scrutiny because it potentially prohibits political speech. Becausethe regulation does not survive scrutiny under the more discretionary Central Hudson commercial speech test, we need consider the application of stricter tests. See Bd. of Trustees v. Fox , 492 U.S. 469, 485-86 (1989) (stating that further constitutional analysis is unnecessary if statute is found to be invalid in the commercial speech context).

6 The district court applied a novel hybrid analysis that combined the commercial speech and the time, place, and manner tests. We reject this approach
-6- We hold that the district court e rred in concluding that section 226.531 prohibited only advertising for sexually oriented products or “aspects” of the affected businesses. This interpretation contradicts the plain langua ge of the statute as well as the state’s own interpretation. 4The regulation makes no re ference to the content of the off-premises advertising signs. Rather, it states that “[n]o billboard or other exterior advertising sign for an adult cabar et or sexually oriented business shall be located within one mile of any state highw ay.” Mo. Rev. Stat. § 226.531.2. Thus, if a business is classified as an adult cab aret or sexually oriented business, it is prohibited from erecting any billboard or other exterior advertising sign, without regard to the content of the billboard . Although we adopt, where possible, an interpretation that renders a statute cons titutional, the plain language of section 226.531 precludes a constitutional interpretati on. Postscript Enters. v. Whaley , 658 F.2d 1249, 1253 (8th Cir. 1981).

II.

We next determine whether the statute is constitutional as interpreted. The Missouri statute regulates outdoor advertis ing, therefore we apply the four-step commercial speech analysis 5 outlined by the Supreme Court in Central Hudson 6tobecause no federal precedent exists to support its application.
-7- determine whether the statute is constituti onally sound. Missouri v. Am. Blast Fax, Inc. , 323 F.3d 649, 653 (8th Cir. 2003); see also Central Hudson , 447 U.S. at 561 (defining “commercial speech” as “expression related solely to th e economic interests of the speaker and its audience”). Although the Constitution “accords a lesser protection to commercial speech than to ot her constitutionally gua ranteed expression,” Central Hudson , 447 U.S. at 563, commercial speech is protected “from unwarranted governmental regulation,” id. at 561. Regulations on commercial speech are subject to intermediate scrutiny under the framework set forth in Central Hudson . Florida Bar v. Went For It, Inc. , 515 U.S. 618, 623 (1995).

To determine whether the regulation on commercial speech is constitutionally valid we determine whether: (1) the affected speech con cerns lawful activity and is not misleading, therefore protected by the First Amendment; (2) the government’s asserted interest in regulating the speech is substantial; (3) the regulation directly advances the asserted interest; and (4) the regulation restricts no more speech than necessary to serve the asserted interest. Central Hudson , 447 U.S. at 566. The state “bears the burden of identifying a substantia l interest and justif ying the challenged restriction.” Greater New Orleans Br oad. Assoc., Inc. v. United States , 527 U.S. 173, 183 (1999).

There is no dispute here that the speech in question is commercial speech that contains no misleading statements or concerns unlawful activity, and is therefore constitutionally protected. See id. at 184. Therefore, the first Central Hudsonstep is satisfied.

We next consider whether the state’s assert ed interest is substantial. The statute includes a list of several interests it seeks to protect with the regulation. These include: mitigating “the adverse secondary effects of sexually oriented businesses,-8- [improving] traffic safety, [limiting] harm to minors, and [reducing] prostitution, crime, juvenile delinquenc y, deterioration in prope rty values, and lethargy in neighborhood improvement projects.” Mo. Rev. Stat. § 226.531.5.

Here, the affected businesses dedicate atleast ten percent of their interior display space to products “subject [to] in tense public debate in many communities.” Greater New Orleans Broad. , 527 U.S. at 184. Our court has recognized that “regulations aimed at minimizing the secondary effects of sexually oriented businesses serve a significant and substan tial governmental interest.” Excalibur Group v. City of Minneapolis , 116 F.3d 1216, 1221 (8th Cir. 1997). The state’s asserted interest in re gulating sexually oriented businesses and products is “substantial” and therefore satisfies the second step of the Central Hudsontest. Central Hudson , 447 U.S. at 566.

Next, we turn to the third step of the Central Hudson analysis, which requires the restriction to directly advance the st ate’s asserted interest. Central Hudson , 447 U.S. at 566. This step “concerns the relationship between the harm that underlies the State’s interest and the means identified by the State to advance that interest.” Lorillard Tobacco Co. v. Reilly , 533 U.S. 525, 555 (2001). To survive scrutiny, the regulation must advance the stated governme ntal interest “directly and materially.” Id. (quoting Greater New Orleans Broad. Assoc. , 527 U.S. at 188).

The state argues that its ultimate goal is to reduce the adverse secondary effects of sexually oriented businesses by limiting the presence of sexually oriented businesses. Under that theory, restricti ng the amount of advertising by the affected businesses would reduce the number of customers that patronize the affected business, thus reducing profits, and ultimately forcing the affected business to close. Although there may be some evidence th at the statute directly and materially advances the state’s asserted interest, the statut e fails under the final Central Hudson step because it is not narrowly tailored to meet its asserted goals.-9- In the final step, the “c ritical inquiry” is whether the regulation’s “complete suppression of speech ordinarily protected by the First Amendment is no more extensive than necessary to further [Miss ouri’s] interest in” reducing the secondary effects of adult businesses. Central Hudson , 447 U.S. at 569-70. While the state need not pursue the least restrictive means, it mu st enact a statute that is “reasonable” and “narrowly tailored to achieve the de sired objective.” Lorillard Tobacco , 533 U.S. at 556 (additional citations and quotations omitted). The statute cannot “curtail substantially more speech than is necessary to accomplish its purpose.” Krantz v. City of Fort Smith , 160 F.3d 1214, 1222 (8th Cir. 1998). The availability of obvious and numerous less-burdensome alternatives to the restriction factors into the consideration of whether the “fit” is reasonable. Went For It , 515 U.S. at 632.

It is clear that section 226.531 regulates the affected business’s speech; it threatens criminal prosecution for the mere inclusion of the name or address of an affected business on billboards within one mile of a state highway. The Missouri statute “sacrifices an intolerable amount of truthful speech about lawful conduct.” Greater New Orleans Broad. Assoc. , 527 U.S. at 194. The pr ohibition is directed at speech beyond that which would lead to th e stated secondary effects, and is not narrowly tailored to achieve Mi ssouri’s stated goal. See State v. Café Erotica, Inc. , 507 S.E.2d 732, 735 (Ga. 1998) ( holding “The absolute proscription against any form of off-site advertising impedes the free flow of information and far exceeds the State’s legitimate interest, is an unconstituti onal infringement on free speech.”).

In our view, the state has “failed to make a showing that a more limited speech regulation would not have ade quately served the State’s interest.” 44 Liquormart, Inc. v. Rhode Island , 517 U.S. 484, 500 (1996) (Op. of Steven s, J. for four members of the Court) (citing Central Hudson , 447 U.S. at 571). Accordingly, we find that Missouri statute section 226.531 fails to satisfy the Central Hudsontest for regulations on commercial speech.7 The exterior sign restrictions here are unlike those found to be “modest” in Excalibur Group , where this court found the exterior sign zoning restrictions did “not reach substantially more sp eech than necessary,” under th e reasonable time, place, and manner analysis. Excalibur Group , 116 F.3d at 1221-22. There, the restrictions regulated the exterior appearance of adult-only businesses. Id. Those restrictions prohibited the obscuring of windows, limited the size of exterior signs, and required exterior signs to be flat. Id. Finally, the regulation th ere included no restrictions regarding the content of the exterior signs. Id. at 1218-19.
-10- III.

Finally, we turn to the provision restric ting the content of on-premises signs for affected businesses located w ithin one mile of state highways. The exception provides that:

[I]f such business is located within one mile of a state highway then the business may display a maximum of two exterior signs on the premises of the business, consisting of one identification sign and one sign solely giving notice that the premises are off limits to minors. The identification sign shall be no more th an forty square feet in size and shall include no more than the following information: name, street address, telephone numbe r, and operating hours of the business.
Mo. Rev. Stat. § 226.531.2.

The statute specifically prohibits all e xpression, other than the name, address, telephone number, operating hours, and la nguage giving notice that minors are not allowed. § 226.531.2. In our view, this provision is not narrowly drawn to meet the state’s asserted goals, and thus fails to m eet the fourth step of the Central Hudson test. 7 Lorillard Tobacco , 533 U.S. at 556. Should an affected business owner choose to post a sign with the price of gasoline, or a sign advertising a nationally-known soft drink on the exterior of the business, he or she would be subject to criminal-11- prosecution. Thus, Missouri statute section 226.531, in its entirety, is unconstitutional because it fails to survive scrutiny under the Central Hudsontest for regulations on commercial speech.

CONCLUSION

We reverse the district court’s grant of summary judgment and its denial of the appellants’ motions for injunctive relief and remand to the district court for proceedings consistent with this opinion.

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