Opinion ID: 76252
Heading Depth: 3
Heading Rank: 2

Heading: The Licensing Fee

Text: 67 Finally, Fly Fish contends that the City may not charge a licensing fee that constitutes a tax on the exercise of First Amendment protected expressive conduct. See Murdock v. Pennsylvania, 319 U.S. 105, 113-14, 63 S.Ct. 870, 87 L.Ed. 1292 (1943); Cox v. New Hampshire, 312 U.S. 569, 577, 61 S.Ct. 762, 85 L.Ed. 1049 (1941). Under Murdock and Cox, when core First Amendment freedoms are made subject to a licensing scheme, only revenue-neutral fees may be imposed so that government is not charging for the privilege of exercising a constitutional right. Id. See also Sentinel Communications v. Watts, 936 F.2d 1189, 1205 (11th Cir.1991) (government may not profit from imposing revenue-raising fees on exercise of First Amendment rights). Furthermore, it is the government's burden to demonstrate that its licensing fee is reasonably related to recoupment of the costs of administering the licensing program. Id. 68 The City contends that these cases do not apply to the fee at issue here, because adult entertainment — nude dancing — is not a core First Amendment freedom and does not enjoy more than marginal constitutional protection. The Eighth Circuit has endorsed this view. Jakes, Ltd., Inc. v. City of Coates, 284 F.3d 884, 890-891 (8th Cir.2002) ( Murdock and Cox restrictions on licensing fee do not apply to nude dancing). 69 The district court did not discuss this issue, upholding the fee without comment. We cannot do the same. 70 Although we have not previously done so, at least one other circuit court and many district courts, including one in this circuit, have held that Cox and Murdock do apply to licensing fees on adult entertainment. Deja Vu of Nashville, Inc. v. Metropolitan Government of Nashville, 274 F.3d 377, 395 (6th Cir.2001); Kentucky Restaurant Concepts, Inc. v. City of Louisville, Jefferson County, Ky., 209 F.Supp.2d 672, 691-692 (W.D.Ky.2002); AAK, Inc. v. City of Woonsocket, 830 F.Supp. 99, 105 (D.R.I.1993); Ellwest Stereo Theater, Inc. v. Boner, 718 F.Supp. 1553, 1574 (M.D.Tenn.1989); Bayside Enterprises, Inc. v. Carson, 450 F.Supp. 696, 704-705 (M.D.Fla.1978). 71 We agree. Although nude dancing may be at the outer perimeter of the First Amendment's protection, the Supreme Court has never suggested that it is not protected by the First Amendment. On the contrary, Erie recently specifically reaffirmed that it is so protected. 529 U.S. at 289, 120 S.Ct. 1382. The Court made clear that a law aimed at suppressing this protected conduct would violate the First Amendment. Id. 72 Thus, we find no support in Erie for the Eighth Circuit's conclusion that nude dancing is `only marginally' protected. Jakes, 284 F.3d at 891. In fact, the presence of quotation marks around this phrase in Jakes indicates that the court thought it was quoting Barnes. What the Supreme Court actually said in Barnes was that nude dancing of the kind sought to be performed here is expressive conduct within the outer perimeters of the First Amendment, though we view it as only marginally so. Whether at the core or at the margin, a central tenet of Barnes is that, as expressive conduct protected by the First Amendment, government may not ban nude dancing. 27 If government may not ban nude dancing, we fail to see how it may tax that activity without constitutional limit. See Murdock, 319 U.S. at 113-14, 63 S.Ct. 870; Cox, 312 U.S. at 577, 61 S.Ct. 762. 73 Accordingly, we hold today that a licensing fee on adult entertainment establishments is controlled by Cox and Murdock and must be reasonably related to recouping the costs of administering the licensing program. 74 Having so decided, it is the City's burden to establish that its licensing fee is justified by the cost of processing the application. Id. See also Bayside Enterprises, 450 F.Supp. at 704-705. The record made by the City in this case is wholly inadequate to make such a showing. The City concedes that it has conducted no real accounting of the costs of administering its licensing program. Instead, the City argues that the $5000 ($1250 × 4 adult businesses) it collects to administer and enforce its licensing program is reasonable as a matter of law. We disagree. In fact, this seems a substantial amount to administer a program that routinely reapproves the three twenty-year old businesses that the ordinance allows. Absent a record sufficient to support the City's claim that its licensing fee is constitutionally reasonable, we hold that the present fee is unconstitutional.