HDV Cleveland, L.L.C. v. Ohio Liquor Control Comm. , 101 N.E.3d 1025 ( 2017 )

[Cite as HDV Cleveland, L.L.C. v. Ohio Liquor Control Comm., 2017-Ohio-9032.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
HDV Cleveland, LLC, d.b.a. :
Larry Flynt's Hustler Club,
:
Appellant-Appellant,
: No. 17AP-362
v. (C.P.C. No. 16CV-10364)
:
Ohio Liquor Control Commission, (REGULAR CALENDAR)
:
Appellee-Appellee.
:
D E C I S I O N
Rendered on December 14, 2017
On brief: Berkman, Gordon, Murray & DeVan, J. Michael
Murray, and Steven D. Shafron, appellant. Argued: J.
Michael Murray.
On brief: Michael DeWine, Attorney General, and
Charles E. Febus, for appellee. Argued: Charles E. Febus.
APPEAL from the Franklin County Court of Common Pleas
SADLER, J.
{¶ 1} Appellant-appellant, HDV Cleveland, LLC, d.b.a. Larry Flynt's Hustler Club,
appeals from a judgment of the Franklin County Court of Common Pleas affirming orders
of appellee-appellee, Ohio State Liquor Control Commission ("commission"), issued on
September 9 and October 19, 2016 and April 25, 2017. For the reasons that follow, we
affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} Appellant operates an adult night club in Cleveland, Ohio. At all relevant
times, appellant held a valid D-5 and D-6 liquor permit issued by the Ohio division of
No. 17AP-362 2
Liquor Control ("division"). According to appellant, the club operates a bar on the
premises where patrons can sit and purchase alcoholic beverages. In addition to the bar
area, the club contains a stage featuring female entertainers performing choreographed
erotic dance. The club also contains a VIP area where entertainers can perform personal
one-on-one dances for patrons who pay a fee.
{¶ 3} On August 29, 2015, liquor control agent Kevin J. Cesaratto entered the club
posing as a patron, and he paid the required fee for a personal one-on-one dance in the
VIP area. According to Cesaratto's September 3, 2015 investigation report, during the
private dance, the female entertainer "expos[ed] her naked breasts, * * * rubbed her bare
nipple over [his] lips * * * and pulled away the clothing exposing her vagina [and]
exposing her anus." Liquor control agents subsequently cited appellant for two violations
of Ohio Adm.Code 4301:1-1-52, otherwise known as "Rule 52." Agents cited appellant for
prohibited conduct in knowingly or willfully allowing dancers to "[a]ppear in a state of
nudity," in violation of Ohio Adm.Code 4301:1-1-52(B)(2), and to "[e]ngage in sexual
activity," in violation of Ohio Adm.Code 4301:1-1-52(B)(3).
{¶ 4} The commission held a hearing on August 11, 2016 regarding the two
charges stemming from the August 29, 2015 investigation, as well as two other charges
arising out of a similar investigation on February 7, 2015. As a result of the hearing,
appellant denied the August 29, 2015 charge alleging nudity but stipulated to the facts
contained in agent Ceseratto's report. The commission dismissed the second charge of
"sexual activity" arising from the August 29, 2015 investigation. The commission also
dismissed the two charges arising out of the February 7, 2015 investigation.
{¶ 5} On August 25, 2016, the commission issued an order finding that appellant
committed one violation of Rule 52 and imposing the following penalty:
It is the order of this Commission that the Permit Holder has
the option to either pay a forfeiture in the amount of
$100,000.00, or the permit will be REVOKED if the Permit
Holder shall elect to pay the forfeiture, the Permit Holder has
twenty-one (21) days after the date on which this order is sent
to pay the full amount of the forfeiture.
(Order at 1.)
No. 17AP-362 3
{¶ 6} The commission subsequently denied appellant's motion for
reconsideration on October 19, 2016. On November 1, 2016, appellant filed a notice of
appeal to the common pleas court pursuant to R.C. 119.12. The notice of appeal alleges
the following errors by the commission:
The grounds for the appeal are that the decisions below are
not supported by reliable, substantial and probative evidence;
that the decisions below are contrary to law; that Regulation
4301:1-1-52 is unconstitutional on its face and as applied
under Art. I, § 11 of the Ohio Constitution; that the forfeiture
imposed is excessive and far greater than forfeitures imposed
on permit holders that are similarly situated or whose
violations were more egregious and denies HDV equal
protection of the laws, as well as procedural and substantive
due process under the Fourteenth Amendment to the United
States Constitution, and Art. I, §§ 1, 2 and 16 of the Ohio
Constitution.
(Notice of Appeal at 1-2.)
{¶ 7} On November 4, 2016, the trial court stayed the commission's order
pending appeal. On December 19, 2016, appellant moved the trial court to supplement
the administrative record with evidence in support of its contention that Rule 52 is
unconstitutional. On April 25, 2017, the trial court issued a decision and entry affirming
the commission's order and denying appellant's motion to supplement the administrative
record.
{¶ 8} Appellant timely appealed to this court from the trial court judgment.
II. ASSIGNMENTS OF ERROR
{¶ 9} Appellant sets forth the following three assignments of error:
1. Rule 52 is unconstitutional on its face and as applied under
Art. I, § 11 of the Ohio Constitution, and the court below erred
in concluding otherwise.
2. The court erred in sustaining the penalty imposed by the
Commission that HDV pay $100,000 or have its license
revoked because the penalty violated HDV's right to due
process and equal protection under the United States and
Ohio Constitutions and because it was not supported by
substantial, reliable and probative evidence.
No. 17AP-362 4
3. The Court erred in denying HDV the opportunity to
supplement the administrative record at an evidentiary
hearing on the issue of the unconstitutionality of Rule 52 on
its face under Art. I, § 11 of the Ohio Constitution, and of the
unconstitutionality of the penalty that it imposed.
III. STANDARD OF REVIEW
{¶ 10} "Under R.C. 119.12, a common pleas court, in reviewing an order of an
administrative agency, must consider the entire record to determine whether reliable,
probative, and substantial evidence supports the agency's order and the order is in
accordance with law." Yohannes Parkwood, Inc. v. Liquor Control Comm., 10th Dist. No.
13AP-974, 2014-Ohio-2736, ¶ 9, citing Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108,
110-11 (1980). "When a court of common pleas reviews an administrative determination
such as that of the commission, its review is 'neither a trial de novo nor an appeal on
questions of law only, but a hybrid review in which the court "must appraise all the
evidence as to the credibility of the witnesses, the probative character of the evidence, and
the weight thereof." ' " (Emphasis sic.) Gemini, Inc. v. Liquor Control Comm., 10th Dist.
No. 07AP-112, 2007-Ohio-4518, ¶ 6, quoting Big Bob's, Inc. v. Liquor Control Comm., 151
Ohio App.3d 498, 2003-Ohio-418, ¶ 14 (10th Dist.), quoting Lies v. Veterinary Med. Bd.,
2 Ohio App.3d 204, 207 (1st Dist.1981). "[T]he common pleas court must give due
deference to the administrative agency's resolution of evidentiary conflicts, but the
findings of the agency are not conclusive." Gemini at ¶ 6, citing Conrad at 111. The
common pleas court conducts a de novo review of questions of law, exercising its
independent judgment in determining whether the administrative order is "in accordance
with law." Yohannes at ¶ 9, quoting Ohio Historical Soc. v. State Emp. Relations Bd., 66
Ohio St.3d 466, 471 (1993).
{¶ 11} An appellate court's review of an administrative decision is more limited
than that of a common pleas court. Pons v. State Med. Bd., 66 Ohio St.3d 619, 621 (1993).
"The appellate court reviews factual issues to determine whether the court of common
pleas abused its discretion in determining that the administrative action either was or was
not supported by reliable, probative and substantial evidence." Yohannes at ¶ 10, citing
Alternative Residences, Two, Inc. v. Ohio Dept. of Job & Family Servs., 10th Dist. No.
04AP-306, 2004-Ohio-6444, ¶ 17. " '[A]buse of discretion' connotes more than an error
No. 17AP-362 5
of law or judgment; it implies that the court's attitude is unreasonable, arbitrary or
unconscionable." Yohannes at ¶ 10, quoting Blakemore v. Blakemore, 5 Ohio St.3d 217,
219 (1983). "Absent an abuse of discretion, a court of appeals may not substitute its
judgment for that of an administrative agency or the common pleas court." Yohannes at
¶ 10, citing Pons at 621. "An appellate court, however, has plenary review of purely legal
questions." Yohannes at ¶ 10, citing Big Bob's at ¶ 15.
IV. LEGAL ANALYSIS
A. First Assignment of Error
{¶ 12} In appellant's first assignment of error, appellant contends the trial court
erred when it concluded that Rule 52 does not violate Article I, Section 11 of the Ohio
Constitution either on its face or as applied to appellant. We disagree.
{¶ 13} Rule 52 contains the following prohibition against improper conduct by
permit holders:
(B) Prohibited activities; no permit holder, his agent, or
employee shall knowingly or willfully allow in and upon his
licensed permit premises any persons to:
***
(2) Appear in a state of nudity.
{¶ 14} Ohio Adm. Code 4301:1-1-52(A)(2) defines nudity as "the showing of the
human male or female genital, pubic area or buttocks with less than a fully opaque
covering; the showing of the female breast with less than a fully opaque covering of any
part of the nipple and/or areola."
{¶ 15} As noted above, appellant stipulated to the investigator's report, which sets
forth sufficient facts to support the commission's finding that appellant committed a
violation of Ohio Adm.Code 4301:1-1-52(B)(2). Appellant does not deny that conduct
amounting to a violation of Rule 52 occurred. Rather, appellant challenges the
constitutionality of Rule 52 on grounds that the rule violates appellant's right to freedom
of expression guaranteed by Article I, Section 11 of the Ohio Constitution. According to
appellant, Rule 52 is an unconstitutional prior restraint on appellant's freedom of
expression both on its face and as applied to appellant.
No. 17AP-362 6
1. Constitutionality of Rule 52 Under the United States Constitution
{¶ 16} Appellant concedes that Rule 52, in its current form, has previously
withstood constitutional scrutiny under the First and Fourteenth Amendments to the
United States Constitution. In WCI, Inc. v. Liquor Control Comm., 10th Dist. No. 16AP-
72, 2016-Ohio-4778, appellant, WCI, Inc., d.b.a. Cheeks, appealed a decision of the
common pleas court affirming the commission's order requiring it to either pay a
forfeiture of $25,000 or lose its liquor license due to a violation of Rule 52. In WCI, an
investigator for the Department of Public Safety reported while he was posing as a
customer, one of appellant's dancers knowingly touched him while nude or semi-nude
and that she subsequently led the investigator to a table located at the entrance of the
private area where she gave another employee an undetermined amount of money.
Appellant was cited for a violation of Ohio Adm.Code 4301:1-1-52(B)(2), nudity.
{¶ 17} Appellant appealed the penalty imposed by the commission on several
grounds, including the constitutionality of Rule 52 under the First and Fourteenth
Amendments to the United States Constitution. The common pleas court found that Rule
52 was constitutional and the commission's order was supported by reliable, probative,
and substantial evidence and was in accordance with law. In disposing of appellant's
third assignment of error on appeal, this court noted that "[t]he question of whether Rule
52 violates the First and Fourteenth Amendment to the United States Constitution has
already been settled." Id. at ¶ 24. This court discussed the prior jurisprudence on the
issue as follows:
The United States Supreme Court held that content-neutral
time, place and manner regulations of protected speech will
survive constitutional scrutiny "so long as they are designed to
serve a substantial governmental interest and do not
unreasonably limit alternative avenues of communication."
Renton v. Playtime Theatres, 475 U.S. 41, 47, 106 S. Ct. 925,
89 L. Ed. 2d 29 (1986). "[T]he constitutionally of regulations
that purport to ameliorate the deleterious secondary effects of
sexually oriented establishments under the intermediate-
scrutiny standard announced in [Renton]." Entertainment
Prods., Inc. v. Shelby Cnty., 721 F.3d 729, 734 (6th Cir.2013).
"Rule 52 is a content-neutral regulation aimed at ameliorating
the adverse secondary effects associated with nude dancing in
No. 17AP-362 7
an environment that sells liquor." J.L. Spoons, Inc. v. Ohio
Dep't of Pub. Safety, 31 F. Supp. 3d 933, 938-39 (N.D.Ohio
2014), See Renton at 47 (finding that the Renton ordinance is
content neutral because it "is aimed not at the content of the
films shown at 'adult motion picture theaters,' but rather at
the secondary effects of such theaters on the surrounding
community"). (Emphasis sic.)
"Rule 52's requirement that dancers at establishments that
serve alcohol wear, at a minimum, pasties, passes
constitutional scrutiny." J.L. Spoons at 943. "The evidence
establishes that the State, when it promulgated Rule 52, had a
reasonable evidentiary basis for concluding that nude dancing
in adult cabarets leads to undesirable secondary effects." Id.
at 951. J.L. Spoons clearly shows that Rule 52 passes
constitutional scrutiny.
Id. at ¶ 25-27.1
{¶ 18} In this court's previous decision in 34 Jefferson, LLC v. Liquor Control
Comm., 10th Dist. No. 11AP-868, 2012-Ohio-3231, we rejected appellant's contention that
former Rule 52 violated the First Amendment to the United States Constitution on its face
and as applied to appellant. In 34 Jefferson, the permit holder was cited for several Rule
52 violations when a male dancer at the club exposed his buttocks and genitals during a
performance. The commission found that the permit holder committed a violation of
Ohio Adm.Code 4301:1-1-52(B)(1) prohibiting disorderly conduct and Ohio Adm.Code
4301:1-1-52(B)(2) and (4) prohibiting public indecency. The commission ordered it to
pay a forfeiture or serve a suspension order. The common pleas court upheld the
violation for public indecency but not disorderly conduct. The permit holder appealed.
{¶ 19} On appeal, this court held that former Rule 52, as it pertained to "nudity,"
did not violate the First Amendment of the United States Constitution either on its face or
as applied to appellant. With regard to the permit holder's contention that former Rule 52
was facially invalid due to overbreadth, this court set forth the relevant law as follows:
In order for a statute to be facially challenged on overbreadth
grounds, " 'there must be a realistic danger that the statute
itself will significantly compromise recognized First
1 Brunner, J., concurred as to the majority's resolution of appellant's first, third, and fourth assignments of
error but dissented, in part, as to appellant's second assignment of error regarding the property rights of
permit holders.
No. 17AP-362 8
Amendment protections of parties not before the Court.' " 161
Dublin, [Inc. v. Liquor Control Comm., 10th Dist. No. 01AP-
134 (Dec. 27, 2001)], quoting Members of City Council of Los
Angeles v. Taxpayers for Vincent, 466 U.S. 789, 801, 104 S.
Ct. 2118, 80 L. Ed. 2d 772 (1984). Further, "particularly
where conduct and not merely speech is involved, * * * the
overbreadth of a statute must not only be real, but substantial
as well, judged in relation to the statute's plainly legitimate
sweep." Broadrick v. Okla., 413 U.S. 601, 615, 93 S. Ct. 2908,
37 L. Ed. 2d 830 (1973). The "mere fact that one can conceive
of some impermissible applications of a statute is not
sufficient to render it susceptible to an overbreadth
challenge." Members of City Council at 800.
One federal court has noted that "the Supreme Court has
'vigorously enforced the requirement that a statute's
overbreadth be substantial,' * * * and cautioned that
invalidation for overbreadth be deployed sparingly and 'only
as a last resort.' " Entertainment Prods., Inc. v. Shelby Cty.,
Tenn., 588 F.3d 372, 379 (6th Cir. 2009), citing Broadrick at
613. Moreover, "[o]nly if a plaintiff demonstrates 'from the
text of [the statute] and from actual fact that a substantial
number of instances exist in which the law cannot be applied
constitutionally,' is facial invalidation on overbreadth grounds
appropriate." Entertainment Prods. at 379.
34 Jefferson at ¶ 28-29.
{¶ 20} In finding that the permit holder's overbreadth argument had no merit with
regard to the prohibition on dancers appearing "in a state of nudity," the 34 Jefferson
court concluded that "we are not persuaded that the rule [is] susceptible to 'a substantial
number of impermissible applications.' " Id. at ¶ 32, quoting New York v. Ferber, 458
U.S. 747, 771 (1982).2
{¶ 21} The permit holder in 34 Jefferson also contended former Rule 52 was
unconstitutional as applied to an expressive dance performance because it was a content-
based prohibition on performances likely to offend the viewer. In holding that Rule 52
2This court did find that the provision in former Ohio Adm.Code 4301:1-1-52 pertaining to "lewd activities"
was unconstitutionally overbroad. Though Rule 52 was subsequently amended to remove the offending
provisions, the specific prohibition against persons "[a]ppear[ing] in a state of nudity" remains part of Rule
52.
No. 17AP-362 9
was not unconstitutional as applied to nude dancing, this court set forth the relevant legal
principal as follows:
The United States Supreme Court has recognized that "nude
dancing * * * is expressive conduct, although * * * it falls only
within the outer ambit of the First Amendment's protection."
Erie v. Pap's AM., 529 U.S. 277, 289, 120 S. Ct. 1382, 146 L.
Ed. 2d 265 (2000). In Barnes v. Glen Theatre, Inc., 501 U.S.
560, 111 S. Ct. 2456, 115 L. Ed. 2d 504 (1991), the Supreme
Court considered a public indecency statute as applied to
nude dancing, and adopted the four-part test of United States
v. O'Brien, 391 U.S. 367, 88 S. Ct. 1673, 20 L. Ed. 2d 672(1968), in determining the constitutionality of a government
rule or regulation proscribing protected expressive conduct.
Under that test, a government regulation is sufficiently
justified if it (1) is " 'within the constitutional power of the
Government,' " (2) " 'furthers an important or substantial
governmental interest,' " (3) " 'the governmental interest is
unrelated to the suppression of free expression,' " and
(4) " 'the incidental restriction on alleged First Amendment
freedoms is no greater than is essential to the furtherance of
that interest.' " Barnes at 567, quoting O'Brien at 377.
The United States Supreme Court has recognized that "nude
dancing * * * is expressive conduct, although * * * it falls only
within the outer ambit of the First Amendment's protection."
Erie v. Pap's AM., 529 U.S. 277, 289, 120 S. Ct. 1382, 146 L.
Ed. 2d 265 (2000). In Barnes v. Glen Theatre, Inc., 501 U.S.
560, 111 S. Ct. 2456, 115 L. Ed. 2d 504 (1991), the Supreme
Court considered a public indecency statute as applied to
nude dancing, and adopted the four-part test of United States
v. O'Brien, 391 U.S. 367, 88 S. Ct. 1673, 20 L. Ed. 2d 672(1968), in determining the constitutionality of a government
rule or regulation proscribing protected expressive conduct.
Under that test, a government regulation is sufficiently
justified if it (1) is " 'within the constitutional power of the
Government,' " (2) " 'furthers an important or substantial
governmental interest,' " (3) " 'the governmental interest is
unrelated to the suppression of free expression,' " and
(4) " 'the incidental restriction on alleged First Amendment
freedoms is no greater than is essential to the furtherance of
that interest.' " Barnes at 567, quoting O'Brien at 377.
Id. at ¶ 20.
No. 17AP-362 10
{¶ 22} This court disagreed with appellant's "as applied" argument, stating that
"[i]n general, courts have recognized that [Rule 52] is a content-neutral regulation
designed to address the negative secondary effects relating to adult establishments." Id.
at ¶ 25, citing J.L. Spoons, Inc. v. Dragani, 538 F.3d 379, 382 (2008). This court
reasoned that the "undesirable secondary effects" Rule 52 was designed to thwart
included "prostitution, drug trafficking, and assault, associated with nude dancing in an
environment serving alcohol." 34 Jefferson at ¶ 25, quoting J.L. Spoons at 382; see also
Junction 615, Inc. v. Liquor Control Comm., 135 Ohio App.3d 33, 40 (11th Dist.1999).
This court found "no merit to appellant's claims that the regulation * * * represent[s] a
content-based prohibition on expressive performances; nor do we find that the trial court
erred in concluding appellant failed to establish the regulation is unconstitutional as
applied to the facts herein." 34 Jefferson at ¶ 26.
2. Constitutionality of Rule 52 Under Article I, Section 11 of the Ohio
Constitution
{¶ 23} Appellant does not dispute the United States Supreme Court and the
Supreme Court of Ohio have applied the secondary-effects doctrine in upholding local
government's regulation of brick-and-mortar purveyors of adult sexually explicit conduct.
Appellant also concedes that 34 Jefferson, WCI, and J.L. Spoons have determined that
the "state of nudity" provision of Rule 52 does not violate the First Amendment of the
United States Constitution either on its face or as applied to establishments providing
choreographed erotic dancing. Appellant argues, however, that no Ohio court has
considered a challenge to Rule 52 under the analogous provisions of Article I, Section 11 of
the Ohio Constitution. Article I, Section 11, provides as follows:
Every citizen may freely speak, write, and publish his
sentiments on all subjects, being responsible for the abuse of
the right; and no law shall be passed to restrain or abridge the
liberty of speech, or of the press.
{¶ 24} Appellant claims that expressive conduct receives greater protection from
government regulation under the Ohio Constitution than it does under the United States
Constitution. Accordingly, appellant argues the case law establishing the constitutionality
of Rule 52 under the United States Constitution does not foreclose appellant's argument
No. 17AP-362 11
in this case that Rule 52 violates Article I, Section 11 of the Ohio Constitution both on its
face and as applied to appellant. We disagree.
{¶ 25} Appellant cites the opinion of the Supreme Court of Ohio in Vail v. Plain
Dealer Publishing Co., 72 Ohio St.3d 279 (1995), in urging this court to hold that Rule 52
violates Article I, Section 11 of the Ohio Constitution. In Vail, the Plain Dealer Publishing
Company ("Plain Dealer") published a column authored by appellant, Joe Dirck,
concerning Vail's 1990 campaign for the Ohio Senate. Vail sued the Plain Dealer and
Dirck alleging defamation. The Plain Dealer and Dirck argued the alleged defamatory
statements in the article were privileged statements of opinion rather than actionable
statements of fact. The trial court dismissed Vail's defamation claim for failure to state a
claim for relief after concluding the alleged defamatory statements were constitutionally
protected opinions. The Eighth District Court of Appeals reversed, holding that the
statements at issue were actionable because the statements were capable of being proven
false.
{¶ 26} In Vail, the issue for the Supreme Court was whether, for purposes of
determining if an alleged defamatory statement is a statement of fact or opinion, the court
should follow the United States Supreme Court opinion in Milkovich v. Lorain Journal
Co., 497 U.S. 1 (1990), or apply the four-part test earlier adopted by the Supreme Court of
Ohio in Scott v. News-Herald, 25 Ohio St.3d 243 (1986).3 In Milkovich, the United States
Supreme Court rejected the notion that an additional separate constitutional privilege for
"opinion" is required to ensure the freedom of expression guaranteed by the First
Amendment of the United States Constitution. Vail at 281, citing Milkovich at 21.
{¶ 27} The Supreme Court of Ohio in Vail determined that "[r]egardless of the
outcome in Milkovich, * * * [t]he Ohio Constitution provides a separate and independent
guarantee of protection for opinion ancillary to freedom of the press." Vail at 281.
Accordingly, the Supreme Court in Vail concluded that guarantee of protection for
opinions in Article I, Section 11 of the Ohio Constitution will apply to the benefit of a
3 Pursuant to Scott, a court should consider the specific language at issue, whether the statement is
verifiable, the general context of the statement, and the broader context in which the statement appeared.
Id. at syllabus.
No. 17AP-362 12
defamation defendant when the allegedly defamatory statements constitute statements of
opinion under Scott's four-part test. Vail at 280.
{¶ 28} Appellant contends that, pursuant to the reasoning Vail, this court should
hold that the greater protections afforded to opinions under Article I, Section 11 of the
Ohio Constitution should be extended to expressive conduct in the form of choreographed
erotic dance. In making this argument, appellant notes that the Ohio Constitution
includes the words "restrain or abridge," as opposed to simply the word "abridge."
{¶ 29} The holding in Vail speaks only to the Article I, Section 11 protection
afforded "opinion" in defamation and libel cases. Id. at 281. See also Eastwood Mall, Inc.
v. Slanco, 68 Ohio St.3d 221, 222 (1994) ("the free speech guarantees accorded by the
Ohio Constitution are no broader than the First Amendment, and * * * the First
Amendment is the proper basis for interpretation of Section 11, Article I of the Ohio
Constitution"), citing State ex rel. Rear Door Bookstore v. Tenth Dist. Court of Appeals,
63 Ohio St.3d 354, 362-63 (1992). The Supreme Court of Ohio has not extended the
additional constitutional protections afforded to opinion defamation cases to any other
form of speech. We find no merit in appellant's argument that the Ohio Constitution
provides more protection to expressive conduct in the form of choreographed erotic dance
simply because it includes the words "restrain or abridge," as opposed to simply the word
"abridge." As previously noted, though nude dancing is recognized as a protected form of
expressive conduct, "it falls only within the outer ambit of the First Amendment's
protection." 34 Jefferson at ¶ 20, citing Erie v. Pap's AM., 529 U.S. 277, 289 (2000).
Accordingly, we hold the free speech guarantees afforded choreographed nude dancing
under the Ohio Constitution are no broader than the protections afforded by the First and
Fourteenth Amendments to the United States Constitution.
3. Impact of Reed v. Gilbert
{¶ 30} Appellant contends that the opinion of the United States Supreme Court in
Reed v. Gilbert, __ U.S. __, 135 S.Ct. 2218 (2015), requires this court to conduct a strict
scrutiny analysis in determining whether Rule 52 is constitutionally overbroad because
under Reed, Rule 52 can no longer be considered a content-neutral regulation. We
disagree.
No. 17AP-362 13
{¶ 31} In Reed, the Supreme Court addressed the validity of a sign code that
banned the display of outdoor signs anywhere in town without a permit but exempted 23
classes of signs from this requirement. Id. at 2224. Under the Sign Code, signs that
received varying levels of preferential treatment under the code included ideological signs,
political signs, and temporary directional signs. Id. at 2224-25. Plaintiffs in the case
challenged the less preferential treatment given to temporary directional signs. Id. at
2224. The Ninth Circuit Court of Appeals determined that the Sign Code was content
neutral.4 That court declared "Gilbert did not adopt its regulation of speech because it
disagreed with the message conveyed," and its "interests in regulat[ing] temporary signs
[were] unrelated to the content of the sign." Id. at 2226.
{¶ 32} The United States Supreme Court reversed the Ninth Circuit, finding the
"Sign Code is content based on its face" because the restrictions "depend entirely on the
communicative content of the sign." Id. at 2227. The court held that a strict scrutiny
analysis was appropriate, not intermediate scrutiny, and that it was error to look to the
purpose of the Sign Code in determining the level of scrutiny that should be applied. Id.
at 2228. In Reed, the United States Supreme Court instructed "[a] law that is content
based on its face is subject to strict scrutiny regardless of the government's benign motive,
content-neutral justification, or lack of 'animus toward the ideas contained' in the
regulated speech." Id., quoting Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 429
(1993). "In other words, an innocuous justification cannot transform a facially content-
based law into one that is content neutral." Reed at 2228.
{¶ 33} Appellant argues that the Reed case effectively overrules the secondary-
effects doctrine because a court reviewing a claim that a regulation unlawfully restrains or
abridges free speech may no longer consider the purpose of the regulation in determining
the level of scrutiny that should be applied. We disagree.
{¶ 34} In Flanigan's Ents. v. Sandy Springs, 11th Cir. No. 16-14428 (Aug. 14,
2017), the Eleventh Circuit Court of Appeals recently addressed the question whether
Reed abrogated the secondary-effects doctrine as applied to businesses that offer sexually
explicit entertainment. In Flanigan's, two adult-oriented businesses challenged city
4 Reed v. Gilbert, 707 F.3d 1057, 1072 (9th Cir.2013).
No. 17AP-362 14
zoning ordinances banning the sale of liquor in establishments that feature nude dancing.
The Eleventh Circuit upheld the district court decision granting summary judgment in
favor of the city as to the First Amendment claims. In concluding that Reed did not
abrogate the secondary-effects doctrine, the Eleventh Circuit made the following
observations:
There is no question that Reed has called into question the
reasoning undergirding the secondary-effects doctrine. The
secondary-effects doctrine allows a content-based, adult-
entertainment-related law to be subjected to less than strict
scrutiny as long as the law can be justified by a legitimate
interest in combating the harmful secondary effects of adult
entertainment. The majority opinion in Reed, of course,
rejected the lower court's reliance on the sign code's
justification in conducting content-neutrality analysis; the
Court also declared that content-based laws should be
subjected to strict scrutiny.
But significantly, the majority opinion in Reed did not address
the secondary-effects doctrine. For this reason alone, we
cannot read Reed as abrogating either the Supreme Court's or
this Circuit's secondary-effects precedents.
Id. See also Free Speech Coalition, Inc. v. Atty. Gen. United States, 825 F.3d 149 (3d
Cir.2016) (if the secondary-effects doctrine survives Reed, case law counsels against
expanding its application beyond regulations affecting physical purveyors of adult
sexually explicit content); "Q" Lungian Ents. v. Windsor Locks, D.Conn. No. 3:13-cv-
01285 (Sept. 18, 2017) (declining to conclude that Reed repudiates prior decision of the
United States Supreme Court applying the secondary-effects doctrine in ruling that the
regulation of adult-oriented businesses is content-neutral regulation that warrants the
application of intermediate scrutiny).
{¶ 35} Because Reed did not expressly abrogate the secondary-effects doctrine as it
applies to local government regulation of brick-and-mortar purveyors of adult sexually
explicit conduct, this court need not apply a strict scrutiny analysis in determining the
constitutionality of Rule 52 under Article I, Section 11 of the Ohio Constitution.5
Furthermore, because this court has previously determined the provision of Rule 52 at
5 We express no opinion whether Rule 52 would pass muster under the strict scrutiny test.
No. 17AP-362 15
issue in this case does not violate the First and Fourteenth Amendments of the United
States Constitution, either on its face or as applied to adult-oriented establishments, and
because Article I, Section 11 of the Ohio Constitution does not provide broader protections
to such establishments, we hold that Ohio Adm.Code 4301:1-1-52(B)(2) does not violate
Article I, Section 11 of the Ohio Constitution either on its face or as applied to appellant.
{¶ 36} For the foregoing reasons, appellant's first assignment of error is overruled.
B. Second Assignment of Error
{¶ 37} In appellant's second assignment of error, appellant argues the trial court
erred in affirming the commission because the record does not contain substantial,
reliable, and probative evidence in support of the commission's decision. More
particularly, appellant contends that the evidence in the record does not support a
forfeiture order of $100,000.
{¶ 38} Pursuant to R.C. 4301.25(A), "[t]he liquor control commission may suspend
or revoke any permit issued under this chapter or Chapter 4303. of the Revised Code for
the violation of any * * * lawful rule of the commission." Similarly, R.C. 4301.252 permits
the commission to order forfeiture in lieu of revocation. This court has held that, under
the relevant statutory language, the commission may revoke a permit based on one
violation. If there is reliable, probative, and substantial evidence supporting the order,
the court of common pleas has no authority to reverse an order on the basis that the
penalty is harsh and an abuse of discretion. DKA, Inc. v. Liquor Control Comm., 10th
Dist. No. 03AP-316, 2004-Ohio-837, ¶ 13, citing Tolbert v. Liquor Control Comm. (In re
Tolbert), 10th Dist. No. 98AP-285 (Dec. 3, 1998).
{¶ 39} In WCI, appellant challenged the $25,000 forfeiture imposed by the
commission for violations of Rule 52 as being unsupported by the evidence. In holding
that substantial, reliable, and probative evidence supported the commission's decision,
this court noted the following relevant facts:
WCI did stipulate to certain facts in the investigator's report
but the hearing brought to light other facts that support a
forfeiture of $25,000 or revocation of the liquor license. (Tr.
at 6.) There were cameras that were supposed to be
monitoring the private dance rooms. (Tr. at 17.) WCI could
not determine what the cameras were supposed to show.
Either the cameras were malfunctioning or were not being
No. 17AP-362 16
monitored. Id. The investigator's report stated that at the end
of the private dance the performer led the investigator to a
table that was located at the entrance of the private area
where she gave another employee an undetermined amount of
money. (Public Safety Report at 2.)
The Commission also noted at the hearing that WCI was
recently before them for actions that occurred on January 3,
2013 in which WCI's liquor license would have been revoked
unless they paid a $10,000 forfeiture. (Tr. at 19.) The
evidence indicates that the Commission has required
substantial forfeitures from WCI before for similar violations.
The Commission chose to impose an increased forfeiture of
$25,000 rather than a $10,000 forfeiture that was imposed
less than one year before.
Id. at ¶ 13-14.
{¶ 40} The facts are similar in this case. Here, as in WCI, appellant stipulated to
the facts contained in the investigation report. Appellant does not deny one of its dancers
appeared in a state of nudity while providing a one-on-one dance for Cesaratto in the
club's VIP area. Appellant does not deny such conduct violated Ohio Adm.Code 4301:1-1-
52(B)(2) prohibiting appellant from knowingly or willfully allowing dancers to "[a]ppear
in a state of nudity." Though the commission found appellant guilty of only one violation,
the unrefuted information contained in Cesaratto's investigation report establishes that
additional conduct occurred on appellant's premises that arguably supported a finding of
further Rule 52 violations. For example, Cesaratto's investigation report establishes that
appellant's dancer engaged in the following conduct: repeatedly "straddled his legs, sat on
[his] groin and rubbed back and forth simulating a sexual act"; "started gyrating her hips
in a circular motion * * * simulating a sexual act"; rubbed her exposed nipple on his lips;
rubbed her finger on her clothed anus and vagina; went to her knees in front of Cesaratto
and proceeded to rub her lips over his clothed penis while "humming to make a vibrating
sensation"; and rubbed her head on his clothed penis. (Sept. 1, 2015 Investigation Report
at 1.) After performing these activities during two songs, the dancer asked for $60, which
Cesarrato paid. Such conduct is far well beyond simply allowing a dancer to "[a]ppear in a
state of nudity," and it involved sexual touching.
No. 17AP-362 17
{¶ 41} The record also contains evidence appellant has been cited for four Rule 52
violations in the past four years. In addition to the two citations issued by the division
arising from the August 2015 investigation, an investigation in February 2015 resulted in
two citations, one for nudity and the other for sexual activity. Though the commission did
not find appellant guilty of those violations, the fact remains the division cited appellant
for similar Rule 52 violations roughly seven months prior to the violation at issue.
Additionally, the record shows the division issued citations to appellant for Rule 52
violations on June 14, July 17, and October 24, 2014. Appellant acknowledges the three
separate violations were consolidated for purposes of punishment, and appellant paid a
forfeiture amount of $10,000 in lieu of revocation.
{¶ 42} In the administrative hearing on the Rule 52 violation arising from the
February investigation, appellant maintained it had taken steps following the 2014
violations to educate staff and to increase surveillance of the VIP area to ensure
compliance with the relevant regulations. According to appellant's manager, Jadranko
Cvetovac, there are real-time cameras monitoring virtually the entire club, including the
VIP area, but the cameras do not record. Cvetovac testified that prior to the violations in
2014, a single employee monitored all the cameras from inside the camera room. In
response to the chairperson's question regarding any additional measures taken
subsequent to the 2014 violations, Cvetovac stated that one additional employee had been
assigned to monitor the cameras from an iPad. Our review of the hearing transcript
reveals, however, that appellant allows staff monitoring those cameras to receive tips from
the dancers for referring customers. Neither of the two employees monitoring the
cameras on August 29, 2015, recalled having observed the nudity violation detailed in
Cesaratto's investigation report, even though the conduct described in the report occurred
over the space of two song tracks.
{¶ 43} Based on the foregoing, we find that substantial, reliable, and probative
evidence supports the commission's decision to revoke appellant's liquor permit or, in lieu
of revocation, forfeiture. We acknowledge that the $100,000 forfeiture in this case is
much steeper than the $10,000 forfeiture previously imposed by the commission for
appellant's prior Rule 52 violations and the $25,000 forfeiture imposed by the
commission for the Rule 52 violations in WCI. However, the decision of the Supreme
No. 17AP-362 18
Court of Ohio in Henry's Cafe, Inc. v. Bd. of Liquor Control, 170 Ohio St. 233 (1959),
provides as follows:
2. On appeal from an order of an agency (as defined in
Section 119.01, Revised Code) to the Court of Common Pleas,
the power of the court to modify such order is limited to the
ground set forth in Section 119.12, Revised Code, i.e., the
absence of a finding that the order is supported by reliable,
probative, and substantial evidence.
3. On such appeal, the Court of Common Pleas has no
authority to modify a penalty that the agency was authorized
to and did impose, on the ground that the agency abused its
discretion.
Id. at paragraphs two and three of the syllabus. Followed by Aida Ents., Inc. v. Liquor
Control Comm., 10th Dist. No. 01AP-1178, 2002-Ohio-2764, appeal not allowed, 96 Ohio
St.3d 1533, 2002-Ohio-5351; Goldfinger Ents., Inc. v. Liquor Control Comm., 10th Dist.
No. 01AP-1172, 2002-Ohio-2770; Lindner v. Liquor Control Comm., 10th Dist. No. 00AP-
1430 (May 31, 2001).
{¶ 44} Appellant acknowledges that Henry's Cafe precludes this court from
conducting an abuse of discretion analysis in reviewing the sanction imposed by the
commission where we find that the commission's order is supported by substantial,
reliable, and probative evidence and is in accordance with law. Appellant also
acknowledges that the commission had the right to revoke its liquor permit based on a
single Rule 52 violation, rather than providing appellant with the option to pay forfeiture.
We note that R.C. 4301.252 imposes no monetary limit on the amount of forfeiture in lieu
of revocation. Nevertheless, appellant asks this court to review the severity of the
forfeiture under the due process and equal protection clauses of the United States and
Ohio Constitutions.
{¶ 45} Appellant argues that this court, in reviewing the size of a forfeiture order
issued by the commission, should apply the test courts apply when reviewing the validity
of punitive damage awards in a civil proceeding. See BMW of N. Am., Inc. v. Gore, 517
U.S. 559 (1996); Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424No. 17AP-362 19
(2001).6 Appellant also contends that the forfeiture in this case violates equal protection
because the amount of the forfeiture is out of proportion to forfeitures imposed on other
similarly situated permit holders for Rule 52 violations. Appellant asks us to compare the
size of the forfeiture in this case to other forfeiture orders issued by the commission.
{¶ 46} In Lindner, the commission revoked the permit holder's liquor permit
because gambling had occurred on the premises. The permit holder admitted the
violation but appealed to the common pleas court arguing that the sanction was excessive
given the fact that the permit holder had no prior violations. The common pleas court
found that substantial, reliable, and probative evidence supported the commission's
order.
{¶ 47} In her appeal to this court, the permit holder argued that the penalty of
revocation was too severe. In rejecting appellant's argument, this court made the
following observations:
Having properly found the commission's order was supported
by reliable, probative and substantial evidence, the common
pleas court had no authority to modify the penalty lawfully
imposed by the commission.
***
As a practical matter, courts have no power to review
penalties meted out by the commission. Thus, we have little
or no ability to review a penalty even if it seems on the surface
to be unreasonable or unduly harsh. Though she had no prior
violations, appellant had her liquor license revoked, not
suspended for a period of time. Perhaps the time to
reconsider Henry's Cafe has arrived, but the Supreme Court
of Ohio must be the court to do that reconsideration. We, as
an intermediate appellate court, are required to follow the
syllabus of Henry's Cafe unless or until such reconsideration
occurs.
Lindner.
6In deciding whether an award of punitive damages violates due process, courts have focused on the same
three criteria: (1) the degree of the defendant's reprehensibility or culpability; (2) the relationship between
the penalty and the harm to the victim caused by the defendant's actions; and (3) the sanctions imposed in
other cases for comparable misconduct. Gore at 575-85.
No. 17AP-362 20
{¶ 48} The Supreme Court of Ohio has not reconsidered the rule of law set forth in
Henry's Cafe. Appellant's due process and equal protection arguments in this case are a
thinly veiled attempt to circumvent the holding of the Supreme Court in Henry's Cafe. As
an intermediate appellate court, this court is required to follow the syllabus of Henry's
Cafe unless or until such reconsideration occurs. Lindner. Accordingly, we find that
appellant's due process and equal protection challenges to the amount of the forfeiture are
without merit.
{¶ 49} Because we have found that the trial court did not abuse its discretion when
it determined that the commission's order was supported by substantial, reliable, and
probative evidence and because the commission's order is in accordance with law, we
overrule appellant's second assignment of error.
C. Third Assignment of Error
{¶ 50} In appellant's third assignment of error, appellant argues the trial court
erred by denying appellant's motion to supplement the administrative record with
evidence in support of its contention that Rule 52 is unconstitutionally overbroad. More
particularly, appellant sought leave to submit evidence there are approximately 2,400
permit holders in Ohio and only about 1 percent of those permit holders operate adult-
oriented businesses. According to appellant, some of those permit holders include
theaters and opera houses that occasionally feature performances containing nudity.
Appellant argues Rule 52 might be impermissibly applied to suppress speech of great
artistic merit.
{¶ 51} This is precisely the argument this court considered and rejected in 34
Jefferson. As we previously noted in 34 Jefferson, "the Supreme Court has vigorously
enforced the requirement that a statute's overbreadth be substantial, * * * and cautioned
that invalidation for overbreadth be deployed sparingly and only as a last resort. * * *
[O]nly if a plaintiff demonstrates from the text of the statute and from actual fact that a
substantial number of instances exist in which the law cannot be applied constitutionally,
is facial invalidation on overbreadth grounds appropriate." (Internal citations and
quotations omitted.) Id. at ¶ 29. In 34 Jefferson, this court agreed with the commission
that the "ability to conceive of arguably impermissible applications of the rule or statute to
No. 17AP-362 21
constitutionally protected expression does not amount to real or substantial overbreadth."
Id. at ¶ 31.
{¶ 52} For the reasons set forth in 34 Jefferson, we hold the trial court did not err
when it denied appellant's motion to supplement the administrative record. Accordingly,
appellant's third assignment of error is overruled.
V. CONCLUSION
{¶ 53} Having overruled appellant's three assignments of error, we affirm the
judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
KLATT and BRUNNER, JJ., concur.
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