Jake's, Ltd., Inc. v. City of Coates ( 2002 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 01-1869
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Jake's, Ltd., Inc.; Richard J. Jacobson,
*
*
Plaintiffs - Appellants, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
City of Coates, *
*
Defendant - Appellee. *
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Submitted: November 12, 2001
Filed: March 26, 2002
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Before LOKEN, LAY, and HEANEY, Circuit Judges.
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LOKEN, Circuit Judge.
Jake’s Bar in Coates, Minnesota, has featured live nude dancing since early
1992. Coates is a town of 182 people located fifteen miles southeast of St. Paul. The
Coates City Council enacted a zoning ordinance in 1994 that strictly limited the
location of sexually oriented businesses. Jake’s sued, and the district court declared
that the ordinance unconstitutionally infringed the First Amendment protection
afforded to nude dancing as a form of expressive conduct. The City then enacted an
amended zoning ordinance and a restrictive licensing ordinance. Jake’s sued again.
Ruling on cross motions for summary judgment, the district judge upheld the current
ordinances. Jake’s appeals. We modify one portion of the judgment and affirm.
I. Background.
Nude dancing is expressive conduct protected by the First Amendment,
“though . . . only marginally so.” Barnes v. Glen Theatre, Inc., 501 U.S. 560, 565-66
(1991) (plurality opinion). The Supreme Court has held that state and local laws
prohibiting public nudity may constitutionally be applied to businesses such as
Jake’s, despite the limited First Amendment protection afforded totally nude dancing.
See City of Erie v. Pap’s A.M., 529 U.S. 277, 296-302 (2000) (plurality opinion);
Barnes, 501 U.S. at 567-72 (plurality opinion). But the City of Coates elected to
proceed differently. Rather than ban public nudity altogether, its 1994 ordinance
regulated the time, place, and manner in which Jake’s as a sexually oriented business
may present live nude dancing to its customers. It is now well-established that this
type of regulation is permissible under the First Amendment provided the ordinance
is justified without reference to the content of the regulated speech, is designed to
promote a substantial government interest, and allows reasonable alternate avenues
for communication. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 48-50
(1986). We have applied this test in numerous cases in which various adult
entertainment businesses challenged local zoning and licensing ordinances. See
BZAPS, Inc. v. City of Mankato, 268 F.3d 603, 605 (8th Cir. 2001) (nude dancing);
ILQ Investments, Inc. v. City of Rochester, 25 F.3d 1413, 1416 (8th Cir.) (adult
bookstore), cert. denied, 513 U.S. 1017 (1994); Ambassador Books & Video, Inc. v.
City of Little Rock, 20 F.3d 858, 861-63 (8th Cir.) (adult bookstore), cert. denied, 513
U.S. 867 (1994); Holmberg v. City of Ramsey, 12 F.3d 140, 142 (8th Cir. 1993)
(adult bookstore and novelty shop), cert denied, 513 U.S. 810 (1994); Alexander v.
City of Minneapolis, 928 F.2d 278, 283-84 (8th Cir. 1991) (adult theater).
The 1994 zoning ordinance provided that sexually oriented businesses must be
located within an agricultural zone and must be at least 750 feet from specified uses,
including other sexually oriented businesses, single- or multi-family dwellings,
churches, schools, bars, and public parks. The ordinance also required all
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nonconforming sexually oriented businesses to cease operations by December 31,
1996. This type of delayed prohibition is known as an amortization provision
because it justifies the removal of a nonconforming use by giving the owner a period
of time to recoup (amortize) its investment before it must relocate. Jake’s present
location did not comply with the 1994 ordinance because it is not in an agricultural
zone and is less than 750 feet from a residence. Thus, the amortization provision if
valid would force Jake’s to relocate.
Jake’s filed a lawsuit in state court challenging the 1994 ordinance in late 1996.
After the City removed, the district court declared the ordinance unconstitutional
because the requirement that a portion of any new subdivision of agriculturally zoned
land be donated as parkland did not leave any site to which Jake’s could lawfully
relocate (as the ordinance prohibited Jake’s from locating near a public park).
However, Judge Richard H. Kyle’s opinion further stated:
[I]f Coates’ requirement for land dedication for subdivision were altered
either to allow some non-discretionary alternative (equivalent fee in lieu
of the land dedication) or to limit the land dedication requirement to
certain types of subdivision (i.e., subdivisions over a certain size), much
of the land in the four quadrants [containing possible relocation sites]
would be rendered available for a sexually oriented business. The Court
sees the discretionary aspect of the waiver of the land dedication
requirement to be the only obstacle to Coates’ zoning ordinance passing
constitutional muster.
Rather than appeal Judge Kyle’s decision, the City amended its zoning
ordinance to correct this constitutional deficiency by making the parkland dedication
requirement nondiscretionary and permitting a developer to make a “cash park
dedication” in lieu of dedicating land. The City also enacted a licensing ordinance
imposing numerous restrictions on sexually oriented businesses. As relevant to this
appeal, the ordinance restricted persons with a criminal history for sex related
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offenses from obtaining a license, imposed license and investigation fees, required
that dancers and patrons be at least six feet apart at all times, and prohibited dancers
from soliciting and customers from offering gratuities.
Jake’s commenced this action in state court challenging the new zoning and
licensing ordinances. The City again removed, and the case was assigned to Judge
Donovan W. Frank. On cross-motions for summary judgment, Judge Frank upheld
the challenged ordinances but stayed his order pending appeal, thereby permitting
Jake’s to remain open. Jake’s, Ltd. v. City of Coates, 176 F. Supp. 2d 899, 905-11,
and 169 F. Supp. 2d 1014, 1017-19 (D. Minn. 2001). Jake’s appeals, renewing its
challenges to the current zoning and licensing ordinances.
II. Zoning Issues.
City of Renton requires that an ordinance restricting adult entertainment be
content-neutral, promote a substantial government interest, and allow reasonable
alternate avenues for communication. 475 U.S. at 48-50. Two of those requirements
are not at issue in this case. Jake’s concedes the ordinances at issue are content
neutral. See also ILQ, 25 F.3d at 1416 (even if an ordinance regulates only sexually
oriented businesses, it is content-neutral “if its purpose is to lessen undesirable
secondary effects attributable to those businesses”). And the final aspect of the City
of Renton test -- whether the zoning ordinance allows reasonable alternative avenues
for communication -- is no longer an issue because Judge Kyle’s initial decision told
the City how to amend the ordinance to cure a prior defect, the City amended the
ordinance accordingly, and Jake’s does not argue it has no reasonable alternative site
where it may now relocate.
Jake’s argues that the Coates ordinance fails the City of Renton test because
the City had an insufficient evidentiary basis to conclude that its zoning restrictions
further a substantial government interest. The ordinance is intended to reduce
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criminal activity, prevent the deterioration of residential neighborhoods, and
eliminate the “dehumanizing influence” that sexually oriented businesses may have
on churchgoers, park users, and daycare clients. These are commonly known as the
adverse “secondary effects” of adult entertainment enterprises. It is well-settled that
a city’s interest in preserving the quality of urban life and the character of its
neighborhoods justifies zoning restrictions intended to minimize such effects. See
Young v. American Mini Theatres, Inc., 427 U.S. 50, 71 (1976) (plurality opinion).
In making its secondary effects findings, the City relied on previous studies by
Phoenix, Seattle, Indianapolis, Rochester (Minnesota), St. Paul, and the Minnesota
Attorney General. The City also relied on a 1999 memorandum by the City Attorney
reviewing these studies and reporting that 17 of 38 crimes prosecuted by the City
since December 1993 were “Jake’s related.” Jake’s countered with an expert’s study
opining that the City Attorney erred in attributing many of the 17 crimes to Jake’s.
Relying on this study, Jake’s argues that the police activity due to Jake’s is on a par
with that at The House of Coates, a local bar that does not have nude dancing, and
therefore the City’s crime statistics do not support regulating Jake’s on the basis of
this secondary effect. In addition, pointing to evidence that property values near
Jake’s have increased in recent years, Jake’s argues the City has no evidence that
sexually oriented businesses contribute to economic blight. Therefore, Jake’s
concludes, the City Council had no evidence supporting its conclusion that the zoning
ordinance would reduce adverse secondary effects. We disagree.
Leaving aside whether the record is adequate to show the adverse secondary
effects of crime and economic blight, Jake’s argument is flawed because it ignores
the City’s reliance on studies showing that proximity to sexually oriented businesses
results in adverse secondary effects on residential neighborhoods, churches, schools,
and other land uses that would be lessened by an ordinance imposing distance
restrictions as great or greater than the 750 foot restriction in the Coates ordinance.
The appropriate location of various land users is a prime objective of municipal
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zoning. And a city need not conduct its own studies to demonstrate that a proposed
ordinance will serve to reduce adverse secondary effects, “so long as whatever
evidence the city relies upon is reasonably believed to be relevant to the problem that
the city addresses.” City of Renton, 475 U.S. at 51-52. See City of Erie, 529 U.S. at
297; Young, 427 U.S. at 55. We have repeatedly upheld as reasonable the reliance
on secondary effects studies from other communities to justify distance restrictions
of this type. See ILQ, 25 F.3d at 1417-18; Ambassador Books, 20 F.3d at 860;
Holmberg, 12 F.3d at 142.
Jake’s argues that this case is like Flanigan’s Enter., Inc. of Ga. v. Fulton
County, 242 F.3d 976 (11th Cir. 2001), petition for cert. filed, 70 U.S.L.W. 3091
(July 23, 2001) (No. 01-144), where the court reversed a grant of summary judgment
because the County had not reasonably relied on studies from other communities. But
Flanigan’s is distinguishable in two critical respects. First, it involved a total ban on
nude dancing in establishments that serve liquor, not a locational zoning restriction.
242 F.3d at 974. Thus, the adverse secondary effects from proximity to churches,
schools, and other specific land uses were not at issue. Second, in Flanigan’s, the
County’s own studies refuted the presence of the secondary effects on which it relied.
242 F.3d at 986. Here, though Jake’s attacks the City’s secondary effects findings,
the City contends they are supported by the secondary effects evidence, including the
City Attorney’s 1999 report. Like the district court, we conclude the City relied upon
secondary effects evidence it “reasonably believed to be relevant to the problem” it
addressed in the zoning ordinance. City of Renton, 475 U.S. at 51-52.
Having no viable challenge to the City’s zoning restrictions under City of
Renton, Jake’s attacks the amortization provision in the zoning ordinance. Jake’s
first argues that the state statute permitting municipalities to use amortization as a
means of eliminating nonconforming adult businesses is unconstitutional. See Minn.
Stat. § 462.357, subd. 1c. (2000). This argument is without merit. We have
repeatedly upheld amortization provisions requiring nonconforming adult
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entertainment businesses to relocate as part of a municipality’s valid time, place, and
manner regulation of such businesses. See Ambassador Books, 20 F.3d at 865;
Holmberg, 12 F.3d at 142, 144; Alexander, 928 F.2d at 283-84. Here, the state statute
merely authorizes municipalities to amortize nonconforming sexually oriented
businesses. The relevant question is whether a municipality’s use of that authority
complies with the City of Renton standards. The State of Minnesota was under no
constitutional obligation to study secondary effects in the abstract before granting this
authority to local governmental bodies.
Jake’s further argues that Coates may not invoke the statutory exception and
impose amortization on Jake’s because it does not qualify as a “similar adults-only
business” under state law. The argument is contrary to the plain language of the
statute,1 but Jake’s attempts to avoid this issue of statutory construction by arguing
there is no “constitutional basis” for classifying Jake’s as similar to an adults-only
business, and the statutory language is in any event unconstitutionally vague. At this
point, the argument becomes a jumble of federal and state law concepts. The simple
and complete answer is that the Coates zoning ordinance as applied to Jake’s passes
muster under City of Renton, and the state statute permitting amortization of “adults-
only” businesses is valid under deferential rational-basis review. Therefore, we
affirm the district court’s decision that the Coates zoning ordinances regulating
sexually oriented businesses (found in Coates Ordinances Nos. 40 and 41) are
constitutional.
1
After prohibiting municipalities from using amortization to eliminate
nonconforming uses, Minn. Stat. § 462.537, subd. 1c, provides that this restriction
“does not apply to adults-only bookstores, adults-only theaters, or similar adults-only
businesses, as defined by ordinance.” The Coates zoning ordinance defines a
sexually oriented business as “an adult book store, adult body painting studio, adult
companionship establishment, adult motion picture theater, adult entertainment
facility, adult modeling studio, adult mini motion picture theater, or adult sauna” and
includes definitions of each type of adult business.
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III. Licensing Issues.
A. Jake’s first argues that the licensing provisions in Coates Ordinance No. 36
constitute an unconstitutional prior restraint on free expression. “[I]n the area of free
expression a licensing statute placing unbridled discretion in the hands of a
government official or agency constitutes a prior restraint and may result in
censorship.” City of Lakewood v. Plain Dealer Publ’g Co., 486 U.S. 750, 757 (1988).
Jake’s does not challenge the provisions in Ordinance 36 governing issuance of an
initial license, which impose time constraints on the approval process, require the use
of objectively verifiable criteria, and provide for prompt judicial review, the
constitutional requirements enumerated in the various opinions in FW/PBS, Inc. v.
City of Dallas, 493 U.S. 215, 224-27, 239, 246, 249 (1990). Instead, Jake’s argues
that Ordinance 36 confers unbridled discretion in authorizing the City to suspend
licenses if a sexually oriented business is conducted “in such a manner as . . . to
constitute a menace to the health, safety, or general welfare of the community.”
Jake’s cites no authority for the proposition that the prior restraint standards of
City of Lakewood and FW/PBS apply equally to license suspensions and revocations.
The proposition is inherently suspect, because license revocation is necessarily less
of a prior restraint than the initial licensing process. But in any event, we reject as
frivolous the contention that an ordinance authorizing revocation if the licensee is “a
menace to the health, safety, or general welfare of the community” confers unbridled
discretion. This is a specific discretion-limiting standard not unlike the definition of
a public nuisance long known to the law. See, e.g., Minn. Stat. § 609.74(1) (defining
public nuisance as a condition which “endangers the safety, health, morals, comfort,
or repose of any considerable number of members of the public”).
Jake’s further objects that the license renewal provision does not provide for
a stay pending appeal if renewal is denied. Jake’s did not raise this issue in the
district court, and we decline to consider it.
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B. Jake’s next argues that Ordinance 36 unconstitutionally provides that a
license may not issue to any person who “has had a conviction of a felony or a gross
misdemeanor or misdemeanor relating to sex offenses, obscenity offenses, or adult
uses in the past five (5) years.” A similar restriction was upheld in DLS, Inc. v. City
of Chattanooga, 107 F.3d 403, 414 (6th Cir. 1997). However, Jake’s lacks standing
to raise the issue because it made no showing that the restriction will disable its
owners from obtaining a license. Therefore, the district court lacked jurisdiction to
consider the issue, and we must vacate the grant of summary judgment upholding this
provision in the ordinance. See FW/PBS, 493 U.S. at 234-35.
C. Jake’s next argues that Ordinance 36 imposes a $2,500 fee that is
constitutionally unreasonable. When core First Amendment freedoms are made
subject to licensing, only revenue-neutral licensing fees may be imposed so that
government is not charging for the privilege of exercising this constitutional right.
See Murdock v. Pennsylvania, 319 U.S. 105, 115-16 (1943); Cox v. New Hampshire,
312 U.S. 569, 576-77 (1941). Jake’s argues that this principle extends to the
licensing of sexually oriented businesses, citing three district court decisions that
referred to such fees as implicating “fundamental” rights. See AAK, Inc. v. City of
Woonsocket, 830 F. Supp. 99, 105 (D.R.I. 1993); Wendling v. City of Duluth, 495
F. Supp. 1380, 1384-85 (D. Minn. 1980); Bayside Enter., Inc. v. Carson, 450 F. Supp.
696, 704 (M.D. Fla. 1978). In our view, the analogy to Murdock and Cox does not
withstand close analysis in light of the Supreme Court’s declaration that nude dancing
is “only marginally” protected by the First Amendment.
We recognize that an adult entertainment license fee may be so large or so
discriminatory as to demonstrate that it is not content neutral. But in other contexts,
the prospective licensee has the burden of establishing that a license fee is
unreasonable. See LCM Enter., Inc. v. Town of Dartmouth, 14 F.3d 675, 680 (1st
Cir. 1994). Jake’s offered no evidence on this issue, instead simply arguing that the
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City had the burden to prove its fee is revenue neutral. On this record, we conclude
the district court’s grant of summary judgment was proper.
D. Finally, Jake’s challenges the provisions in Ordinance 36 requiring that live
exotic dancing be conducted on a platform raised at least two feet from the floor and
located no less than six feet from any patron, and prohibiting the solicitation or
offering of gratuities for the dancers. Several circuits have upheld similar
requirements as reasonable, content-neutral time, place, and manner restrictions. See
Deja Vu of Nashville, Inc. v. Metro. Gov’t of Nashville & Davidson County, 274
F.3d 377, 396-98 (6th Cir. 2001) (three feet); DLS, 107 F.3d at 408-13 (six feet);
Colacurcio v. City of Kent, 163 F.3d 545, 553 (9th Cir. 1998), cert. denied, 529 U.S.
1053 (2000) (ten feet); Kev, Inc. v. Kitsap County, 793 F.2d 1053, 1061-62 (9th Cir.
1986) (ten feet and no tipping).
Jake’s argues that these restrictions are not needed to combat adverse
secondary effects in Coates, pointing to the lack of arrests for sex crimes at its
establishment. Jake’s also contends that distance requirements destroy “individual
patron-focused dancing, a separate and distinct medium of communication,” relying
on expert testimony it presented to that effect. Like our sister circuits, we conclude
these restrictions reasonably further the government interest in preventing crime. As
the Ninth Circuit observed in Kev, 793 F.2d at 1061:
Separating dancers from patrons would reduce the opportunity for
prostitution and narcotics transactions. . . . Preventing the exchange of
money between dancers and patrons would also appear to reduce the
likelihood of drug and sex transactions occurring on regulated
premises. . . . While the dancer’s erotic message may be slightly less
effective from ten feet, the ability to engage in the protected expression
is not significantly impaired. (footnotes omitted)
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Jake’s further argues these provisions would have a disastrous effect on its
ability to operate because the six-foot requirement would eliminate two-thirds of the
seating capacity of 120 patrons, eliminate customer access to the women’s restroom,
and require further capacity reductions to permit access to the men’s restroom. Under
the City of Renton standard, Ordinance 36 must afford Jake’s a “reasonable
opportunity to open and operate.” 475 U.S. at 54. The inquiry is not concerned with
the economic impact of restrictions on a particular business; instead, “we consider the
economic effects of the ordinance in the aggregate, not at the individual level.” DLS,
107 F.3d at 413. Here, the Coates zoning ordinance is constitutional, so Jake’s must
relocate. Jake’s presented no evidence that it could not design a viable new facility
that would satisfy the six-foot requirement. It presented evidence that the no-tipping
restriction would reduce profits and adversely affect the income of the dancers, but
that evidence fell far short of establishing that Ordinance 36 does not provide a
reasonable opportunity to open and operate. Thus, while the short-term financial
impact of these restrictions might affect implementation of the zoning ordinance’s
amortization provision -- an issue we do not consider -- it does not affect the validity
of Ordinance 36.
IV. Conclusion.
The judgment of the district court is affirmed except the portion that declared
section 508.10(5) of Coates Ordinance No. 36 constitutional. We modify the
judgment to provide that plaintiffs’ challenge to section 508.10(5) is dismissed for
lack of jurisdiction.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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