No. 86-273 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

CITY OF GREAT FALLS, MONTANA, 

a municipal corporation, 

Plaintiff and Respondent, 

-vsM.K. ENTERPRISES, INC., a corporation, 

TIM WOLF and ROBERT WOLF, individuals, 

d/b/a RED DOOR ADULT BOOK STORE, et al., 

Defendants and Appellants. 

APPEAL FROM: District Court of the Eighth Judicial ~istr?ct, 

In and for the County of Cascade, 

The Honorable Thomas McKittrick, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Goldman & Goldman; Bernard J. Goldman argued, Missoula, 

Montana (M.K. Enterprises & Treasure State Sales) 

Datsopoulos, MacDonald & Lind; Edward A. Murphy argued, 

Missoula, Montana (Wolf d/b/a Red Door Adult Book 

Store) 

For Respondents: 

David Gliko argued, City Attorney, Great Falls, 

Montana 

submitted: December 9, 1986 

Decided: February 5, 1987 

~iled: FEB 5 - 1987 

-"mu--- 

i) - ac.+f!! *H" Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

This is an appeal from an Eighth Judicial District, 

Cascade County decision upholding the constitutionality of a 

Great Falls city ordinance. The ordinance establishes a $300 

per booth annual license fee on video booths used to view 

adult movies. We affirm. 

The issue is whether the trial court erred in concluding 

that the $300 annual fee for adult movie video booths was 

reasonable as a regulatory measure and therefore not a violation of the First Amendment of the United States 

Constitution. 

In January 1983 the City Commission of Great Falls 

adopted Ordinance No. 2311 "providing for the establishment 

of license fees to be paid by operators of coin-operated 

devices depicting sexual activities." The annual license fee 

imposed under this ordinance is $300 per booth. At the time 

of the trial of this case, there were a total of 59 booths in 

four adult bookstores in the City of Great Falls. 

The booths are small cubicles in which customers view 

movies on a television or movie screen. To view the movie, 

the customer is required to deposit money in a coin box. It 

has not been argued that any movies shown were obscene or 

otherwise illegal, but they are admittedly sexually explicit. 

This case began when the City of Great Falls (City) 

filed actions against two owners of adult bookstores for 

failing to pay the annual license fee. The actions were 

consolidated, together with another case filed by a third 

adult bookstore owner who was challenging the constitutionality of the ordinance. A trial was conducted at which the 

City presented evidence of actual and anticipated costs 

justifying the fee. After considering the evidence before 

it, the District Court concluded that the City had met its 
burden of proving that the $300 fee is reasonable and "designed to further valid, nonspeech-related municipal interests." On appeal, the bookstores argue that the City has 

failed to prove that the $300 fee is justified by the costs 

established, or that it is either nominal or imposed to 

defray the expenses of policing the booths. 

Did the trial court err in concluding that the $300 

annual fee for adult movie video booths was reasonable as a 

regulatory measure and therefore not a violation of the First 

Amendment of the United States Constitution? 

The First Amendment to the Federal Constitution provides 

that "Congress shall make no law . . . abridging the freedom 

of speech, or of the press." This right of free speech is 

protected from state infringement through application of the 

Due Process Clause of the Fourteenth Amendment. Grosjean v. 

American Press Co. (1936), 297 U.S. 233, 56 S.Ct. 444, 80 

L.Ed. 660. Although many persons find them distasteful, 

booths for viewing adult oriented films which are not obscene 

or otherwise illegal are protected by the First Amendment. A 

license fee on such protected activities will pass constitutional muster only if the fee is nominal and imposed as a 

regulatory measure to defray the expenses of policing the 

activity in question. Murdock v. Pennsylvania (1943), 319 

U.S. 105, 63 S.Ct. 870, 87 L.Ed. 1292. These expenses may 

include more than routine processing of licenses; among 

permissible costs is the cost of "protecting those on the 

streets and at home against the abuses of solicitors." 

Murdock, 319 U.S. at 116, citing Cox v. New Hampshire (1941), 

312 U.S. 569. 

The District Court cited cases involving fees on adult 

video booths and expanding the statement in Murdock that the 

allowable license fee may include the costs of policing the 
activity being licensed. In Bayside ~nterprises, Inc. v. 

Carson (D.C.Fla. 1979), 470 F.Supp. 1140, 1149, the court 

stated: 

As it now stands, the Code will merely serve perfectly valid municipal interests in public safety 

and welfare, most notably the presence of safe and 

sanitary conditions and the prevention of criminal 

conduct. These interests are wholly unrelated to 

suppressing free speech and, significantly enough, 

the plaintiffs have presented no evidence that 

furthering these interests through the Code's fee 

system would have the effect of suppressing free 

speech. Put another way, there is no evidence 

before this Court that these fees will drive the 

plaintiffs out of business or in any way hamper 

their ability to communicate through purveying 

their books and films. In sum, the City has met 

its burden of proving that these fees are reasonable, and that they are designed to further valid, 

nonspeech-related municipal interests. Accordingly, they must be held constitutional. 

The District Court also relied upon a North Dakota case 

in which a $300 per booth license fee for adult video booths 

was upheld. In City of Minot v. Central Ave. News, Inc. 

(N.D. 1981), 308 N.W.2d 851, 860, the court stated: 

. . . Central does not point to, nor has our own 

research unearthed, authority to the effect that a 

city must, before implementing a licensing scheme 

with a fee, demonstrate what the administrative 

costs would have been in the past had the licensing 

scheme been in effect. Moreover, we believe that 

Central's reliance upon Bayside Enterprises, Inc. 

- v. Carson, 450 F.Supp. 696 (M.D.Fla. 1978), to 

support its contention is misplaced. In Bayside, 

the licensinq fee in question was struck down not 

because it was specula<ive, but because the City of 

Jacksonville's projected costs of enforcing a newly 

enacted licensing ordinance for adult bookstores 

were unreasonable. Thus, regarding the licensing 

fee at issue in the instant case, we are left to 

determine only its reasonableness. 
Based on evidence of anticipated costs of routine policing of 

the video booths, together with anticipated costs of proceeding on violations of the law, the court upheld the $300 per 

booth annual fee. 

In the present case, the District Court's findings and 

conclusions outline the testimony given at the hearing as to 

costs of regulating and policing the booths. The evidence 

established past police department costs of $44 per year for 

routine investigation to verify licensing requirements; 

$1,408 in expenses incurred in 1982-83 for a stakeout related 

to an outbreak of venereal disease traced to one of the 

booths; and $220 in expenses for a child pornography check. 

An experienced detective testified on estimated future police 

department costs and expenses relating to adequate policing 

of the booths. He estimated that it would cost $1,786.88 per 

year to police the booths to insure adequate enforcement of 

the State child pornography law, S 45-5-625, MCA; $8,064 per 

year to police the booths to insure adequate enforcement of 

the State deviate sexual conduct law, S 45-5-505, MCA; and 

$2,688 per year to police the booths to insure adequate 

enforcement of the State obscenity law, S 45-8-201, MCA. The 

officer testified that at the time of the hearing the deviate 

sexual conduct law and the obscenity law were not being 

enforced in the City of Great Falls. A second law enforcement officer testified on the need for enforcement of the 

laws prohibiting minors in these establishments. 

The District Court also heard testimony that City-County 

health enforcement costs and expenses for the booths in 

1982-83 were $2,155.19, relating to the venereal disease 

traced to a video booth. There was uncontroverted testimony 

of homosexual and heterosexual intimate conduct between 

persons either sharing a booth or using "glory holes" in the 

walls; between the booths. Yearly health enforcement costs 
were set at $551.65, plus an anticipated increase in costs of 

monitoring and follow up contact tracing resulting from 

sexual contact in the booths and the risk of sexually transferable communicable diseases. Administrative licensing 

expenses were established as $18.29 for the cost of issuing 

the original license for each establishment and estimated 

annual renewal expense of $29.44 for each establishment. 

This Court has indicated that estimates of future expenses may be included for purposes of setting a license fee. 

State v. Police Court (1923), 68 Mont. 435, 443-44, 219 P. 

810, 812. Until law enforcement efforts have been in effect 

for a substantial period of time, we recognize that the costs 

of enforcement cannot precisely be established. The cost 

estimates provided by the City total over $13,000 per year, 

plus the anticipated increased health department costs. As 

stated previously, health department costs were over $2,000 

in 1982-83 from one outbreak of venereal disease. At $300 

per booth, the city will receive income of $17,700 per year 

on 59 booths. We conclude that the lower court was correct 

in not requiring proof of expenses precisely equalling the 

amount which will be collected on 59 video booths. 

The bookstores also argue that it was not proven that 

enforcement of the child pornography law was in any way 

connected with operation of the video booths. The need for 

enforcement of the child pornography law is not eliminated 

because no child pornography has been found in the booths in 

the past. That conclusion would ignore the very nature and 

purpose of the booths - to show sexually titilating films for 

all manner and persuasion of customers. 

The City has proposed random checks by plainclothes 

officers to enforce the deviate sexual conduct statute. Our 

conclusion that this proposal is reasonable is not changed by 

the bookstores' proposal of alternative methods, which they 
say infringe less on the right of free speech. Without going 

into detail, we conclude that the enforcement methods proposed by the bookstores would not be effective. 

There was no evidence that the $300 per booth fee will 

drive the bookstores out of business or prohibit them from 

communicating through the films. Although the bookstores 

have questioned some of the enforcement cost figures, we 

affirm the holding of the lower court that the City has 

submitted sufficient evidence to justify the $300 per booth 

fee. We affirm the conclusion of the District Court that the 

City has met its burden of proving that the fee imposed is 

justified by the costs established and is set at an amount 

designed to defray the expenses of policing the booths. 

Affirmed. 

Justices 
Mr. Justice John C. Sheehy, dissenting: 

It is not an easy or pleasant task to defend the 

purveyors of sexually-explicit films from a confiscatory tax 

in the guise of a license fee. Yet, the constitutional 

protection of the First Amendment is like the air we breathe, 

it is there for the good and the bad. For the same reasons 

that I would strike down a law that levied a $2,000 annual 

license fee on individual lawyers (proposed in the 50th 

Legislature) I must urge striking down the exorbitant license 

fee in this case. License fees are levied under the police 

power of the state and their assessment cannot go beyond the 

cost of policing the activity licensed, otherwise exorbitant 

fees violate the principle of uniform taxation, and are held 

to be confiscatory. If the First Amendment is involved, 

there is additionally a problem of prior constraint. Once 

permitted, exorbitant license fees will be enacted on the 

wildest speculation and spread to other, perhaps cleaner 

endeavors. As the Spanish proverb said, "When you see your 

neighbor being shaved, prepare yourself for the barber." 

The claimed costs by the city in justifying the license 

fee are exaggerated or illusory. For example, of the 455 

venereal disease cases in Cascade County in 1982, two were 

traced to contacts at an adult bookstore. No further 

incidence of venereal disease traceable to adult bookstores 

or adult film booths have occurred in that county to the time 

of trial here. Yet the majority allow $1,400.00 per year in 

expenses for a stakeout, and $2,155.19 in annual city and 

county health costs as if these were annual recurring costs. 

The detectives in this case have acknowledged that they 

found no instances of child pornography in the time that 

these booths have existed in Great Falls. It is a crime in 
Montana, § 45-5-625, MCA, to use a child for or to expose him 

to pornographic material anywhere in the State. At the 

present time the City of Great Falls has no program for 

enforcement of this act. If the statute were to be enforced 

by the City of Great Falls, the cost of enforcement should be 

an obligation of the general taxpayers. 

Likewise it is a crime under 5 45-8-201, MCA, purposely 

or knowingly to provide, sell or deliver obscene material to 

anyone under age 18. This statute applies everywhere in the 

State of Montana. The City of Great Falls has no present 

program for the enforcement of the obscenity statute. Again 

the enforcement, if and when it occurs in the City of Great 

Falls should be an obligation of the general taxpayers. 

It is likewise a crime in the State of Montana to engage 

in deviate sexual conduct under § 45-5-505, MCA. No instance 

of a prosecution for such conduct related to the booths 

appears in the evidence of this case. If there is a program 

for enforcement of this statute in the City of Great Falls, 

again it should be the obligation of the general taxpayers. 

In Wendling v. City of Duluth (D.C. Minn. 1980), 495 

F.Supp 1380, 1384, 1385, the Court said: 

The narrow question here is whether the imposition 

of a license fee to finance enforcemeit of a 

separate obscenity ordinance can be considered the 

permissible policing of activities as prescribed in 

the Murdock case, or whether Murdock requires that 

the fee be no greater than is necessary to 

administer and enforce the licensing ordinance 

itself. A review of the case law suggests that the 

latter is the correct view. 

The majority rely upon Bayside Enterprises, Inc. v. 

Carson (D.C. Fla. 1979), 470 F.Supp. 1140. In that case, the 

Court upheld a $35 license fee. It was a follow-up case from 

an earlier one, Rayside Enterprises, Inc. v. Carson (M.D. 

Fla. 1978), 450 F.Supp. 696, that struck down a $100 fee on 
the grounds that the fee was speculative because the 

projected costs of enforcing a licensing ordinance for adult 

bookstores was unreasonable. 

I would strike down the $300 fee as unreasonable, and 

because of its unreasonableness, a prior constraint on the 

First Amendment rights of the $-ken ees. 

(. I, A 7 !. 4 6"?&+/, 

Justice 

Mr. Justice William E. Hunt, Sr.: 

I concur in the dissent of Mr. Justice Sheehy.