242 F.3d 976 (11th Cir. 2001), 98-02441-CV-GET-1, Flanigan's Enterprises v Fulton County Georgia

Docket Nº:D. C. Docket No. 98-02441-CV-GET-1
Citation:242 F.3d 976
Party Name:FLANIGAN'S ENTERPRISES, INC. OF GEORGIA, d.b.a. Mardi Gras, Plaintiff-Appellant, v. FULTON COUNTY, GEORGIA THE BOARD OF COMMISSIONERS OF FULTON COUNTY, GEORGIA, et al.., Defendants-Appellees. 6420 ROSWELL ROAD, INC. , a Georgia Corporation, d.b.a. Flashers, HARRY FREESE, individually and as Licensee for Flashers, et al., Plaintiffs-Appellants, v. F
Case Date:February 20, 2001
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 976

242 F.3d 976 (11th Cir. 2001)

FLANIGAN'S ENTERPRISES, INC. OF GEORGIA, d.b.a. Mardi Gras, Plaintiff-Appellant,

v.

FULTON COUNTY, GEORGIA THE BOARD OF COMMISSIONERS OF FULTON COUNTY, GEORGIA, et al.., Defendants-Appellees.

6420 ROSWELL ROAD, INC. , a Georgia Corporation, d.b.a. Flashers, HARRY FREESE, individually and as Licensee for Flashers, et al., Plaintiffs-Appellants,

v.

FULTON COUNTY, THE BOARD OF COMMISSIONERS OF FULTON COUNTY, GEORGIA, et al., Defendants-Appellees.

CEEDA ENTERPRISES, INC. d.b.a. Riley's Restaurant and Lounge, Plaintiff-Appellant,

v.

FULTON COUNTY, GEORGIA, THE BOARD OF COMMISSIONERS OF FULTON COUNTY, GEORGIA, et al., Defendants-Appellees.

No. 00-11152

D. C. Docket No. 98-02441-CV-GET-1

United States Court of Appeals, Eleventh Circuit

February 20, 2001

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[Copyrighted Material Omitted]

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        Appeals from the United States District Court for the Northern District of Georgia

        Before DUBINA, FAY and COX, Circuit Judges.

        PER CURIAM:

        Plaintiffs, four adult entertainment businesses ("Plaintiffs") operating in unincorporated Fulton County, Georgia appeal from the grant of summary judgment in favor of defendants Fulton County and its Board of Commissioners. The district court held that a 1997 amendment to Section 18-76 of the Fulton County Code ("Section 18-76" or "1997 amendment") which prohibited the sale and consumption of alcoholic beverages in adult entertainment establishments was constitutional as a matter of law. The district court found that the 1997 amendment operated as a content-neutral restriction that furthered the government's interest in preventing negative secondary effects associated with adult entertainment businesses, and denied Plaintiffs' claims based on due process, prior restraint, and contract impairment. On appeal, Plaintiffs contend that the amendment to Section 18-76 fails to further the government's purported concern because local studies show no evidence of negative secondary effects connected with Plaintiffs' clubs. Plaintiffs also contend that Defendants' conduct in passing the 1997 amendment violated due process, that the amendment impairs their contractual obligations, and that the district

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court erred in declining to reach the merits of their prior restraint claim. We hold that the 1997 amendment fails to further Defendants' purported concern with negative secondary effects, and accordingly REVERSE IN PART and AFFIRM IN PART the district court's grant of summary judgment.

        I.Background Facts

        In considering whether to amend Section 18-76, the Fulton County Board of Commissioners ("Board") passed a resolution directing the Fulton County Police Department, the County Attorney, and the Department of Planning and Economic Development (collectively "Fulton County staff") to conduct a study on the secondary effects of alcohol consumption in adult entertainment establishments located in Fulton County. See Fulton County, Ga., Resolution Relating to Regulation of Alcohol Consumption in Adult Entertainment Establishments (Apr. 16, 1997). The Board also directed Fulton County staff to assemble similar studies from foreign jurisdictions ("foreign studies"). The resolution stated that the Board had reason to believe that consumption of alcoholic beverages in adult entertainment establishments contributed to increased crime and decreased real property values. The resolution further stated the Board's intent "to enact, if warranted by said studies, a carefully tailored regulation to minimize the negative secondary effects of the serving and consumption of alcoholic beverages at adult entertainment establishments...."

        On June 13, 1997, the Fulton County Police Department completed a study concerning the number of calls for police assistance and the number and types of crimes occurring in the vicinity of twelve drinking establishments: six that featured adult entertainment and six that did not. See Study of Calls for Service to Adult Entertainment Establishments Which Serve Alcoholic Beverages (June 13, 1997). The study concluded that, for the time period January 1, 1995 through May 31, 1997, there was no statistical correlation showing an increase in crime at adult entertainment establishments that served alcoholic beverages. Rather, the statistics indicated greater instances of calls for service and reported crime at non-adult entertainment establishments that served alcoholic beverages.

        In or about June 1997, the six Fulton County adult entertainment establishments ("the Clubs"), four of which are owned by Plaintiffs, commissioned Land Development Analysts, Inc. ("LDA, Inc.") to conduct a study of the Clubs' economic impact on their surrounding environs. Specifically, LDA, Inc. sought to identify negative impacts, if any, on the business volumes, rental rates and property values of surrounding properties. The study revealed high occupancies and rental rates in existing buildings, expensive improvements, business expansions, turn- away business volume and proposed development in the Clubs' vicinities. See Economic Impact Study, Six Locations in Three Neighborhoods, Fulton County, Georgia (June 1997). LDA, Inc. could not identify any detrimental impacts as caused by the Clubs.

        In response, the Board of Commissioners retained its own appraiser, Dabney & Associates ("Dabney"), to inspect the subject properties and to review the economic impact study prepared by LDA, Inc. The Dabney report claimed several weaknesses with the aforementioned study, but determined that the report's weaknesses did not invalidate it's conclusions.1 The Dabney

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report found that LDA, Inc. gathered appropriate data and arrived at reasonable conclusions. Based on the market data provided by LDA, Inc., Dabney found that the Clubs had caused no diminution of property values or rents. See An Administrative Review of An Economic Impact Study of Six Locations In Three Neighborhoods, Fulton County, Georgia dated August 7, 1997. Dabney personally observed that none of the subject properties or those around them showed a lack of maintenance.2 The Clubs bore restrained identification signs, and Dabney found it difficult even to identify two of the Clubs as adult entertainment establishments. Thus, the Dabney report drew similar to identical conclusions to that of LDA, Inc., i.e., that the Clubs had caused no quantifiable "blight" upon their environs.

        The Board held two public meetings, on November 19, 1997, and on December 17, 1997, to consider the amendment. At the first public meeting, the Board considered the following: (1) foreign studies collected by Fulton County staff;3 (2) the LDA, Inc. study; (3) the Fulton County Police study; (4) and the Dabney report. The Board also received public comments and permitted counsel for Plaintiffs fifteen minutes each to present their position regarding the proposed amendment and the relevant studies.

        On December 17, 1997, at the second public hearing, the Board met and approved the amendment to Section 18-76. The 1997 amendment prohibits the serving, offering or consuming of any alcoholic beverages on the premises of an adult entertainment licensee.4. The preamble to the ordinance provides the Board's justification for the amendment:

        .WHEREAS, in a public hearing held November 19, 1997, the Board of Commissioners heard testimony and received studies from its staff, the public, and from representatives of the adult entertainment industry concerning negative secondary effects connected with adult entertainment facilities where alcoholic beverages are consumed, and live nude, or partially nude, performances are presented;

         WHEREAS, based upon the experience of other urban counties and municipalities, which experiences the Board of Commissioners finds are relevant to the problems faced by Fulton County, Georgia, and which do not vary greatly

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among generally comparable communities within this country, the Board of Commissioners finds that public nudity, under certain circumstances, particularly circumstances related to the sale and consumption of alcoholic beverages in adult entertainment facilities offering live entertainment, begets criminal behavior and tends to create undesirable community conditions;

         WHEREAS, among the undesirable community conditions identified with live nude entertainment and alcohol are depression of property values in the surrounding neighborhood, increased expenditure for the allocation of law enforcement personnel to preserve law and order, increased burden on the judicial system as a consequence of the criminal behavior herein above described, and acceleration of community blight by the concentration of such establishments in particular areas;

         WHEREAS, the limitation of nude conduct in establishments licensed to sell alcohol for consumption on the premises is in the public welfare, and it is a matter of government interest and concern to prevent the occurrence of criminal behavior and undesirable community conditions normally associated with establishments which serve alcohol and also allow or encourage nudity;....

        Ordinance Amending Fulton County, Ga., Code § 18-76 (Dec. 17, 1997).

        II. Procedural History

        On August 25, 1998, plaintiff Flanigan's Enterprises, Inc. of Georgia, d/b/a Mardi Gras ("Mardi Gras") filed a civil action in the District Court for the Northern District of Georgia seeking declaratory and injunctive relief and monetary damages. The civil action names Fulton County, a political subdivision of the State of Georgia, and the Fulton County Board of Commissioners, individually and in their official capacities, as defendants (collectively "Defendants"). On October 5, 1998, plaintiff CEEDA Enterprises, d/b/a Riley's Restaurant...

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