Baby Tam & Co., Inc. v. City of Las Vegas

• Decision Date: 10 September 1998
• Docket Number: No. 98-15004,98-15004
• Citation: 154 F.3d 1097
• Parties: 98 Cal. Daily Op. Serv. 7073, 98 Daily Journal D.A.R. 9789 BABY TAM & CO., INC., A Nevada corporation, Plaintiff-Appellant, v. CITY OF LAS VEGAS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1097

154 F.3d 1097

98 Cal. Daily Op. Serv. 7073, 98 Daily Journal

D.A.R. 9789

BABY TAM & CO., INC., A Nevada corporation, Plaintiff-Appellant, v. CITY OF LAS VEGAS, Defendant-Appellee.

No. 98-15004.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted July 13, 1998.

Decided Sept. 10, 1998.

Michael D. Stein, Las Vegas, NV, for plaintiff-appellant.

Philip R. Byrnes, Las Vegas, NV, for defendant-appellee.

Appeal from the United States District Court for the District of Nevada Philip M. Pro, District Judge, Presiding. D.C. No. CV-97-01522-PMP.

Before: REINHARDT, NOONAN and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge:

Baby Tam & Co., Inc. ("Baby Tam") sought, and was denied, a Las Vegas business license to operate an adult bookstore. It sued the City of Las Vegas ("City") under 42 U.S.C. § 1983 seeking a permanent injunction The district court denied Baby Tam's application for a preliminary injunction. Baby Tam appeals that denial. We have jurisdiction under 28 U.S.C. § 1292(a)(1). Because the ordinance fails to provide for prompt judicial review of a license denial, as required by Freedman v. Maryland, 380 U.S. 51, 58, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965) and FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 227, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990) (plurality opinion), the ordinance on its face is a prior restraint of speech which violates the First and Fourteenth Amendments. Accordingly, we reverse the district court's denial of Baby Tam's application for a preliminary injunction. Because our resolution of this issue is determinative of the litigation, we remand with instructions to the district court to enter a permanent injunction enjoining enforcement of the ordinance in its present form.

enjoining the City from enforcing the licensing ordinance. Baby Tam alleged that the licensing scheme constituted an unconstitutional prior restraint and suppression of speech in violation of the First and Fourteenth Amendments.

FACTS

Baby Tam operates its business under the name "Hot Stuff." Among other items, the store sells sexual novelties, adult videos, general videos, T-shirts, and gag gifts. In January of 1997, Baby Tam sought a business license for Hot Stuff from the City of Las Vegas. In Las Vegas, a business must obtain a license before beginning operations. Las Vegas, Nev. Municipal Code ("L.V.M.C.") § 6.02.060 (1996).

Baby Tam proposed to operate its business at 5100 W. Charleston Boulevard in the City of Las Vegas. This location is within the City's C-1 zone. That zone allows the presence of various commercial establishments, but not adult bookstores. L.V.M.C. § 19.74.020(A) (1992). Adult bookstores are permitted in other zones in the City.

Under L.V.M.C. § 19.74.020(A), an "adult bookstore" is defined as an establishment "having at least fifty-one percent of its stock in trade books, film, magazines, and other periodicals which are distinguished or characterized by an emphasis on depicting or describing sexual conduct or specified anatomical areas." ¹

On its application for a business license, Baby Tam stated that 30% of its merchandise would be adult videos. Based on that application, the City issued a 60-day temporary bookstore license which enabled Hot Stuff to begin operations. After the temporary license expired, the City issued another temporary license. In all, Baby Tam received four temporary licenses. Under the temporary license provision of the City's licensing ordinance, a business may receive a maximum of only three temporary licenses. L.V.M.C. § 6.02.070(D).

Baby Tam never received a permanent license. ² Before the final temporary license expired, the City conducted an audit of the Hot Stuff store's inventory to determine what percentage of it consisted of adult material. According to the results of that audit, the store's adult inventory exceeded the 51% threshold proscribed by the zoning ordinance. ³ The City ordered Baby Tam to On October 28, Baby Tam filed suit against the City in the district court seeking to enjoin the City from enforcing the ordinance. Baby Tam alleged that the City's bookstore licensing and zoning ordinance was an unconstitutional prior restraint, in violation of the First and Fourteenth Amendments. Baby Tam also alleged that the amendment to the zoning ordinance, which added sexual novelties to the classification of "sexual material," suppressed Baby Tam's speech in violation of the First and Fourteenth Amendments. The district court denied Baby Tam's motion for a preliminary injunction, and this appeal followed.

cease operations at the Charleston Boulevard location by October 29, 1997.

DISCUSSION

To obtain a preliminary injunction, a party must establish either: (1) probable success on the merits and irreparable injury, or (2) sufficiently serious questions going to the merits to make the case a fair ground for litigation with the balance of hardships tipping decidedly in its favor. Topanga Press, Inc. v. City of Los Angeles, 989 F.2d 1524, 1528 (9th Cir.1993). "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." United States v. Nutri-cology, Inc., 982 F.2d 394, 397 (9th Cir.1992) (quoting Oakland Tribune, Inc. v. Chronicle Publishing Co., 762 F.2d 1374, 1376 (9th Cir.1985)). They are not separate tests but rather "outer reaches of a single continuum." Los Angeles Memorial Coliseum Comm'n v. National Football League, 634 F.2d 1197, 1201 (9th Cir.1980).

The district court determined that the Las Vegas ordinance did not amount to an unconstitutional prior restraint, and Baby Tam lacked standing to challenge the amendment. The court also concluded that Baby Tam demonstrated neither a probability of success on the merits nor sufficiently serious questions going to the merits to make the case a fair ground for litigation.

Baby Tam asserts both a facial and an as-applied challenge to the constitutionality of the ordinance. We first consider the facial challenge and whether Baby Tam has standing to assert it.

Facial challenges to legislation have been permitted in the context of the First Amendment when the legislation allegedly vests government officials with unbridled discretion. The rationale is that "every application of the statute create[s] an impermissible risk of suppression of ideas." City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 798 n. 15, 104 S.Ct. 2118, 80 L.Ed.2d 772 (1984). A facial challenge is also appropriate when there is a lack of adequate procedural safeguards necessary to ensure against undue suppression of protected speech. FW/PBS, 493 U.S. at 223-24, 110 S.Ct. 596. Because, according to Baby Tam, the licensing/zoning ordinance vests the City with "unbridled discretion" to deny a license, and because the ordinance lacks constitutionally required procedural safeguards, Baby Tam has standing to assert its facial challenge. In making this challenge, it contends the City's licensing and zoning ordinance is an unconstitutional prior restraint of speech.

A prior restraint exists when the enjoyment of protected expression is contingent upon the approval of government officials. Near v. Minnesota, 283 U.S. 697, 713, 51 S.Ct. 625, 75 L.Ed. 1357 (1931). Because L.V.M.C. § 6.06A.015 requires all proposed bookstores to apply for and obtain a license before engaging in business, the City's licensing scheme is properly analyzed as a prior restraint. Although prior restraints are not unconstitutional per se, the Supreme Court has repeatedly stated that "[a]ny system of prior restraint" bears "a heavy presumption against its constitutional validity." FW/PBS, 493 U.S. at 225, 110 S.Ct. 596 (quoting Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 558, 95 S.Ct. 1239, 43 L.Ed.2d 448 (1975)); Freedman, 380 U.S. at 57, 85 S.Ct. 734; Vance v. Universal Amusement Co., 445 U.S. 308, 315-16, 100 S.Ct. 1156, 63 L.Ed.2d 413 (1980).

It is well established that, to pass constitutional muster, a legislative prior restraint must contain certain procedural safeguards. FW/PBS, 493 U.S. at 228, 110 S.Ct. 596; Freedman, 380 U.S. at 58-59, 85 S.Ct. 734. A decision to issue or deny a license must be made within a brief, specified and reasonably prompt period of time. FW/PBS A licensing scheme involving a prior restraint must also provide an avenue for prompt judicial review in the event a license is denied. Id. This is necessary because the First Amendment cannot tolerate a prior restraint that gives the effect of finality to the licensing official's decision to deny a license. Freedman, 380 U.S. at 58, 85 S.Ct. 734. "[O]nly a judicial determination in an adversary proceeding ensures the necessary sensitivity to freedom of expression." Id.

                493 U.S. at 226, 110 S.Ct. 596;  Freedman, 380 U.S at 59, 85 S.Ct. 734.   Promptness is essential because undue "delay compel[s] the speaker's silence" while the applicant awaits a decision.  FW/PBS, at 226, 110 S.Ct. 596.   Unreasonable and indefinite delay is tantamount to the complete suppression of speech.  Id. at 227, 110 S.Ct. 596
                

These two safeguards were first set forth by the Supreme Court in Freedman, 380 U.S. at 58-59, 85 S.Ct. 734. The Freedman Court also set forth a third procedural safeguard that required the licensor to bear the burden of going to court and justifying a license denial. Id. at 59-60, 85 S.Ct. 734. The current status of this third safeguard is unclear. Justice O'Connor's plurality opinion in FW/PBS dispensed with the requirement in the context of business licensing schemes. FW/PBS, 493 U.S. at 229-30, 110 S.Ct. 596. However, because only Justices Stevens and Kennedy concurred on this point, FW/PBS did not overrule Freedman.

We need not consider the applicability of the third Freedman safeguard in this appeal, because the ordinance clearly lacks the second procedural safeguard of "prompt judicial review." Id. This lack of a...