Opinion ID: 787235
Heading Depth: 2
Heading Rank: 1

Heading: Reasonable Likelihood of Success on the Merits

Text: 23 Here we must decide, in the context of a preliminary injunction, whether a municipality can constitutionally limit the number of adult entertainment venues and impose annual licensing fees for such businesses. Specifically, Joelner posits that both the numerical restriction and licensing fees are facially unconstitutional, and that the numerical restriction was unconstitutionally applied. With respect to the facial challenges, it is an uphill battle because, absent overbreadth and/or vagueness challenges, he can only prevail if he demonstrates `that no set of circumstances exist under which the [regulation] would be valid.' Ben's Bar, 316 F.3d at 708 n. 11 (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987) (brackets in original) and citing Horton v. City of St. Augustine, 272 F.3d 1318, 1331 (11th Cir.2001)). See also Thomas v. Chicago Park Dist., 227 F.3d 921, 923 (7th Cir.2000), aff'd on other grounds, 534 U.S. 316, 122 S.Ct. 775, 151 L.Ed.2d 783 (2002). We recently conducted an exhaustive review of First Amendment Supreme Court jurisprudence in Ben's Bar, Inc. v. Village of Somerset, 316 F.3d 702, 708-722 (7th Cir.2003), and need not repeat that analysis here.
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25 The primary thrust of Joelner's facial challenge to the numerical restriction is his assertion that because the ordinance applies only to adult entertainment outlets, it is a content-based restriction of erotic expression, subject to strict scrutiny, and cannot pass constitutional muster. But content-neutrality is a concept easily and oft confused. Cf. City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 444-48, 122 S.Ct. 1728, 152 L.Ed.2d 670 (2002) (Kennedy, J. concurring) (discussing the difficulties of the content-neutrality inquiry); Schultz v. City of Cumberland, 228 F.3d 831, 845 (7th Cir.2000) ([T]he fact that the Ordinance definition is content-based on its face does not necessarily dictate that the Ordinance is analyzed as content-based and subject to strict scrutiny.). 26 Ordinance 01-27 is clearly directed only at adult entertainment. Regulations which directly circumscribe a certain category of speech are subject to strict scrutiny and are likely to be constitutionally impermissible. See, e.g., R.A.V. v. City of St. Paul, 505 U.S. 377, 382, 112 S.Ct. 2538, 120 L.Ed.2d 305 (1992); Renton, 475 U.S. at 47, 106 S.Ct. 925; Stromberg v. California, 283 U.S. 359, 368-69, 51 S.Ct. 532, 75 L.Ed. 1117 (1931). But the First Amendment tolerates governmental interference with general categories of expressive conduct, as opposed to actual speech. Schultz, 228 F.3d at 841. Very generally, whether conduct regulations will be subject to intermediate or strict scrutiny most often actually hinges upon the regulation's intended purpose, rather than some strained interpretation of content-neutrality. See Ben's Bar, 316 F.3d at 723; Schultz, 228 F.3d at 845 ([C]ourts often called [regulations] content-neutral without explaining that [they] are in fact content-based and only analyzed as content-neutral when certain preconditions are met.). 27 There are two distinct, yet overlapping, lines of Supreme Court jurisprudence addressing the degree of First Amendment protection afforded to adult entertainment, a particular type of expressive conduct. Ben's Bar, 316 F.3d at 712-13. One group of cases addresses public indecency regulations. See Barnes v. Glen Theatre, Inc., 501 U.S. 560, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991); City of Erie v. Pap's A.M., 529 U.S. 277, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000). The other considers adult entertainment zoning ordinances. See Young v. Am. Mini Theatres, Inc., 427 U.S. 50, 96 S.Ct. 2440, 49 L.Ed.2d 310 (1976) ( AMT); City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986); City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 122 S.Ct. 1728, 152 L.Ed.2d 670 (2002). However, the analytical framework underpinning both strains of jurisprudence is rooted in United States v. O'Brien, 391 U.S. 367, 376-82, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968). Ben's Bar, 316 F.3d at 714. Consequently, the Supreme Court has held that the distinctions between the test used to assess the constitutionality of public indecency statutes, see Pap's A.M., 529 U.S. at 289, 120 S.Ct. 1382, and that used to evaluate adult entertainment zoning ordinances, see Renton, 475 U.S. at 46-47, 106 S.Ct. 925, are irrelevant. 316 F.3d at 714. 28 Ordinance 01-27 cannot neatly be categorized as either an indecency regulation or zoning ordinance, similar to the statute at issue in Ben's Bar, 316 F.3d at 722-28. Thus, we will analyze Ordinance 01-27 just as we analyzed the Ben's Bar statute — by using the road map provided in 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996). 316 F.3d at 722. A restriction placed upon the number of adult entertainment outlets is constitutional if: 29 (1) the State is regulating pursuant to a legitimate governmental power; (2) the regulation does not completely prohibit adult entertainment; (3) the regulation is aimed not at the suppression of expression, but rather at combating the negative secondary effects caused by adult entertainment establishments; and (4) the regulation is designed to serve a substantial government interest, [is] narrowly tailored, and reasonable alternative avenues of communication remain available.... 30 Id. at 722 (citations omitted). Step four encapsulates the intermediate standard of scrutiny applicable in First Amendment challenges to adult entertainment regulations. See, e.g., Renton, 475 U.S. at 47, 106 S.Ct. 925; AMT, 427 U.S. at 61, 96 S.Ct. 2440. However, if a regulation fails to satisfy either steps two or three, strict scrutiny applies and, in order to be constitutional, the statute must be necessary to serve a compelling state interest and be narrowly drawn to achieve that end. Schultz, 228 F.3d at 848 (citing Simon & Schuster, Inc. v. Members of the N.Y. State Crime Victims Bd., 502 U.S. 105, 112 S.Ct. 501, 116 L.Ed.2d 476 (1991)). 31 First, Ordinance 01-27 is an exercise of the Village's general police power because it is purportedly justified as an effort to protect the public's health, welfare, and safety. See, e.g., Ben's Bar, 316 F.3d at 722-23. Therefore, the Village is regulating pursuant to a legitimate government power and prong one is met. 32 Second, Ordinance 01-27 is plainly not a complete prohibition of adult entertainment. It explicitly allows six venues for such expression. Because no additional adult cabarets or bookstores can be licensed after the maximum number of licenses are issued, Joelner asserts that the Ordinance therefore operates as a complete ban. See, e.g., Alameda Books, 535 U.S. at 443, 122 S.Ct. 1728 (mentioning that the Ninth Circuit had rejected a similar argument advanced below by the adult bookstore/arcade owner, but not reaching the issue). We find this characterization unpersuasive. Because adult entertainment venues are not prohibited entirely in Washington Park, it is more appropriate to view the ordinance as a limitation, rather than a ban. Joelner is unable to point us to any case which says otherwise. Thus, as Ordinance 01-27 does not eliminate erotic expression in Washington Park, prong two is met. 33 The third prong of the analysis, which considers whether the regulation is aimed at reducing the negative effects of adult speech and not the suppression of speech, when coupled with the second, concerns the level of scrutiny that must be applied to Ordinance 01-27. Ben's Bar, 316 F.3d at 723. In Ben's Bar, although we concluded that the statute was content-based, we nonetheless applied intermediate scrutiny. Id. at 724. The focus was solely upon the municipality's purpose in enacting the statute. 34 If an ordinance was enacted to restrict certain viewpoints or modes of expression, see Schultz, 228 F.3d at 844-47, it is subject to strict scrutiny and is presumptively invalid. But if an ordinance is a time, place, and manner restriction, enacted predominant[ly] to address the negative secondary effects caused by such expression and not to suppress the content of erotic speech, it is subject to intermediate scrutiny. 6 Id. at 841-42. 35 The content-neutrality inquiry is therefore subsumed by the inquiry into a municipality's purpose in enacting the regulation. See 316 F.3d at 724 (citing Alameda Books, 535 U.S. at 432-39, 122 S.Ct. 1728 (plurality opinion); id. at 448-49, 122 S.Ct. 1728 (Kennedy, J. concurring); Pap's A.M., 529 U.S. at 294-96, 120 S.Ct. 1382 (plurality opinion); and id. at 310, 120 S.Ct. 1382 (Souter, J., concurring in part and dissenting in part)). In evaluating a municipality's underlying regulatory motivations, we may consider a `wide variety of materials including, but not limited to, the text of the regulation or ordinance, any preamble or express legislative findings associated with it, and studies and information of which legislators were clearly aware.' 316 F.3d at 723 n. 28 (quoting Ranch House, Inc. v. Amerson, 238 F.3d 1273, 1280 (11th Cir.2001)). And while a municipality need not conduct new studies or produce evidence independent of that already generated by other cities, id. at 716-17 (citing Renton, 475 U.S. at 51-52, 106 S.Ct. 925), there still must be some reasonably relevant evidentiary basis for a municipality's action. 7 36 In the instant case, Ordinance 01-27 limits the number of places providing adult entertainment at any one time to six, but includes no guidelines to restrict the mode by which erotic messages are conveyed. See, e.g., Schultz, 228 F.3d at 847 (holding unconstitutional a statute which restrict[ed] the particular movements and gestures of the erotic dancer and thereby depriv[ed] the performer of a repertoire of expressive elements with which to craft an erotic, sensual performance.) Hence, Ordinance 01-27 is a type of time, place, and manner restriction. 37 The preamble to Ordinance 01-27 states that it was enacted [i]n order to promote the public interest in the preservation of public health, safety and welfare.... In addition, the ordinances which were adopted prior to No. 01-27, Nos. 069-99 and 01-22, both cite public health, safety, and welfare as the basis for the restriction. 8 But it is not enough for the Village to indicate that the secondary effects of adult entertainment were one concern underlying its enactment of Ordinance 01-27, such effects must be the predominant concerns. Ben's Bar, 316 F.3d at 723. 38 The record does not contain any legislative findings or any indication that the Board considered studies or other information before enacting Ordinance 01-27, or its precursor ordinances. Without this information, we cannot now determine if intermediate scrutiny applies. But we also note that when the matter is fully considered upon remand, if the Village is unable to point to any legislative findings, other than the preamble noted above, or some outside information upon which the Board relied, the evidence indicates that the Village's decision to increase the limitation from four to six seemed to be motivated predominantly by concerns about revenue and/or political patronage, not secondary effects and hence, strict scrutiny would apply. And if so, the Ordinance would likely be unconstitutional because the Village's general statements about public welfare would be insufficient to demonstrate that the ordinance was necessary to serve a compelling state interest and narrowly drawn to that end. 39 Moreover, even if the Village can point to other legislative findings or outside information relied upon by the Board, such that Ordinance 01-27 is subject to the less demanding intermediate level of scrutiny, the Village still must satisfy the fourth prong of the analysis — the regulation must serve a substantial governmental interest, be narrowly tailored, and cannot unreasonably limit alternative avenues of communication. Id. at 724. And since a municipality `may not assert that it will reduce secondary effects by reducing speech in the same proportion,' id. at 725 (quoting Alameda Books, 122 S.Ct. at 1741 (Kennedy, J. concurring)), it is doubtful whether Washington Park will be able to meet this final prong of the analysis, absent some showing that there was no other regulatory means available (aside from the numerical restriction) which would have effectively curbed any deleterious secondary effects of adult entertainment outlets. 40 In sum, we agree with the district court that based on the limited appellate record, Joelner has a strong likelihood of success on the merits of his permanent injunction and declaratory judgment action as to the facial constitutionality of the numerical restriction. However, our inquiry cannot end here as we must proceed to the balancing of the harms, see infra Part II.B., after a brief review of Joelner's other constitutional challenges. 9 41
42 Joelner argues that the Village's application of the numerical restriction was unfounded, arbitrary, and capricious and thus, unconstitutional. As a preliminary matter, we point out that the Board based its rejections of his licenses, at least in part, upon his alleged failure to pay applicable licensing fees. This can hardly be considered an arbitrary and capricious reason for denying Joelner the requested licenses. However, because the record does not reveal what the Board based these allegations upon, how the license applications came to be ordered as they were on the April 15 agenda, or how an application not on the April 15 agenda was considered at all, and particularly how it was considered before Joelner's, we refrain from making any determination with respect to this assertion and leave the issue for a more full examination upon remand.
43 The main focus of Joelner's facial challenge to the licensing fees is his argument that Ordinance 01-22 is content-based and therefore unconstitutional. But a statute imposing licensing fees is not content-based simply because it is directed at a certain category of activities, such as regulations of parades, rallies, assemblies, and other demonstrations held on city streets or city property. MacDonald, 132 F.3d at 361; Alameda Books, 535 U.S. at 446, 122 S.Ct. 1728. See, e.g., Church of Am. Knights of Ku Klux Klan v. City of Gary, 334 F.3d 676, 680-81 (7th Cir.2003) ( KKK ) (treating regulation affecting only parade and demonstration activities as content-neutral); Forsyth County v. Nationalist Movement, 505 U.S. 123, 130-132, 112 S.Ct. 2395, 120 L.Ed.2d 101 (1992) (same). Rather, an inquiry into the constitutionality of a fee ordinance is two-fold: (1) does the regulation in question vest the public officials in charge of enforcing or applying the ordinance with a constitutionally impermissible amount of discretion, see, e.g., Forsyth, 505 U.S. at 130-32, 112 S.Ct. 2395; and (2) is the fee amount based upon the costs of administering the ordinance, maintaining public order, and relieving the other burdens on public services stemming from the matter licensed, see Cox v. New Hampshire, 312 U.S. 569, 576-77, 61 S.Ct. 762, 85 L.Ed. 1049 (1941); Murdock v. Pennsylvania, 319 U.S. 105, 116, 63 S.Ct. 870, 87 L.Ed. 1292 (1943); KKK, 334 F.3d at 682 (citations omitted); Thomas, 227 F.3d at 925; MacDonald, 132 F.3d at 362-63. 44 Turning to the first issue, Washington Park vests its public officials with no discretion at all regarding the application of the licensing fee. Every adult entertainment venue or proposed venue is subject to Ordinance 01-22, and the license applicant himself, rather than public officials, determines which fee will apply, either by applying for a bookstore or a cabaret license. MacDonald, 132 F.3d at 362. This ordinance does not create the unbridled discretion the Supreme Court condemned in Forsyth, 505 U.S. at 135-36, 112 S.Ct. 2395. 45 And as to the second issue, we cannot now make any determination regarding the underlying basis for the amount of the fee. Permit or license fees which restrict constitutionally protected speech must bear a rational relationship to the public services involved with the matter licensed. S.-Suburban Housing Ctr. v. Greater S. Suburban Bd. of Realtors, 935 F.2d 868, 898 (7th Cir.1991). The Village generally indicated the basis for the fees in section 1 of Ordinance 01-22: 46 [I]t is in the best interests of the health, safety, and welfare of its citizens to increase the license fees for adult entertainment establishments operating within the corporate limits of the Village. After careful consideration of the size of the Village and the number of businesses, the expenses involved in maintaining law and order, the vehicular and pedestrian traffic in the Village, the income and number of problems and difficulties that arise from the aforesaid businesses, and the desire to provide a safer, cleaner, and more aesthetically pleasing Village for its residents, the Board has determined that license fee rates should be increased. 47 Standing alone these are valid reasons for the imposition of a fee. But the $10,000 and $30,000 fees imposed by Washington Park are certainly not nominal. See Forsyth, 505 U.S. at 138-40, 112 S.Ct. 2395 (dissenting opinion) (discussing whether the Constitution limits a license fee to a nominal amount). Furthermore, the Village chose to differentiate between cabarets and bookstores. Without more, the statement of purpose included in the statute is insufficient to support the fees, particularly considering the differentiation between establishments and the large cabaret fee. However, the record has not been sufficiently developed for a reliable assessment to be made as to this issue, and thus, the Village will have the opportunity on remand to more adequately demonstrate its justification for these fees. S.-Suburban Housing Ctr., 935 F.2d at 898 (stating the burden is on the municipality to make this rational relationship showing). 48