465 F.3d 1150 (10th Cir. 2006), 04-4270, Doctor John's, Inc. v. City of Roy

Docket Nº:04-4270.
Citation:465 F.3d 1150
Party Name:DOCTOR JOHN'S, INC., a Utah Corporation; and John Haltom, Plaintiffs-Appellants, v. CITY OF ROY; G. Blake Wahlen, in his official capacity as City Manager; and Tammy Nelson, in her official capacity as Development Services Manager, Defendants-Appellees.
Case Date:October 10, 2006
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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465 F.3d 1150 (10th Cir. 2006)

DOCTOR JOHN'S, INC., a Utah Corporation; and John Haltom, Plaintiffs-Appellants,


CITY OF ROY; G. Blake Wahlen, in his official capacity as City Manager; and Tammy Nelson, in her official capacity as Development Services Manager, Defendants-Appellees.

No. 04-4270.

United States Court of Appeals, Tenth Circuit.

Oct. 10, 2006

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W. Andrew McCullough, McCullough & Associates, LLC, Midvale, UT (Michael W. Gross, Schwartz & Goldberg, PC, with him on the briefs), for Plaintiffs-Appellants.

Robert C. Keller (Jody K. Burnett, with him on the brief), Williams & Hunt, Salt Lake City, UT, for Defendants-Appellees.

Before HENRY, EBEL, and TYMKOVICH, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellant Dr. John's, Inc. ("Dr. John's") operates stores that sell, among other things, a range of "adult" products. After Dr. John's located a store within its city limits, Defendant-Appellee Roy City ("Roy City" or "City") passed an ordinance subjecting "sexually oriented businesses" to certain regulations. Dr. John's challenged this ordinance on a variety of constitutional grounds; the district court rejected them all. We agree with the majority of the district court's rulings, and thus AFFIRM in substantial part. However, one of the issues before the district court was whether the ordinance was properly supported as targeting the untoward "secondary effects" adult businesses are thought to produce. It is unclear from the record what evidence supporting and countering the City's rationale that the ordinance was indeed necessary to prevent these negative effects was presented to, and considered by, the district court. We therefore REMAND this case for consideration of that issue.


Dr. John's stocks a variety of "adult" products, ranging from swimwear and lingerie to "marital aids" to sexually-explicit books and videos. In February 2001, Dr. John's applied for and received a general business license to operate a store in Roy City. Plaintiff-Appellant John Haltom, a

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major shareholder in Dr. John's parent company, is also involved in the operation of Dr. John's Roy City store.

Soon after Dr. John's came to Roy City, the City adopted an ordinance requiring "sexually oriented businesses" ("SOBs") and their employees to follow certain regulations. The ordinance's stated purpose is "to regulate sexually oriented businesses in order to promote the health, safety, morals, and general welfare of the citizens of the City, and to establish reasonable and uniform regulations to prevent the deleterious secondary effects of sexually oriented businesses within the City." The ordinance also sets forth findings demonstrating the need for the regulations, which are based on case law, Congressional testimony, research papers, and various studies from other areas about the secondary effects of SOBs.

The ordinance provides that SOBs and their employees must obtain licenses in order to operate in the City. The license application requires the applicant's name, address, proof of age, whether the applicant or the business has had a previous SOB license suspended or revoked, and whether the applicant has been convicted of or pled guilty to certain "specified criminal activities." If the application is for a business license (rather than an employee license), the applicant must also provide the business name, location, and contact information; the name of the agent authorized to receive service of process; and a sketch of the layout of the premises.

Upon the filing of a completed application, the City is to issue immediately a temporary license to the applicant; a permanent license is thereafter issued unless the applicant: is under 18; failed to provide information or provided false information on the application form; failed to pay the application fee; was convicted of a "specified criminal activity"; refused an inspection of an SOB's premises by the City within the preceding year; or had an SOB license revoked within the preceding year. If the application is for a business license (as opposed to an employee license), the application may also be denied if the premises do not conform to the sketch of the layout of the premises submitted with the application.

The ordinance subjects SOBs to various rules and regulations. Applicants must pay an initial application fee and an annual renewal fee; the fees are set by the City Council and may not exceed $200 initially/$100 annually for an SOB license or $100 initially/$50 annually for an SOB employee license. Additionally, an SOB's operating hours are limited to between 10:00 am and 11:00 pm, the business must post and enforce a no-loitering policy, and there must be appropriate lighting around the exterior of the premises.

Under the ordinance, SOBs are classified into eight categories. The City contends that Dr. John's falls into category 2--"adult bookstores, adult novelty stores, adult video stores." The ordinance defines a category 2 business as stores with a "significant or substantial portion" of their stock or floor space or revenue devoted to or deriving from adult media (e.g., books, magazines, videos) or adult "toys."

In December 2002, the City presented Dr. John's with a copy of the ordinance and the application materials. Instead of completing the SOB application, Dr. John's sought renewal of its general business license and sent the City a letter stating that it had reviewed the ordinance and did not believe it fell under the definition of an SOB. The letter also explained that a case pending in the Utah Supreme Court-- Midvale City v. Haltom--dealt with a similar SOB ordinance as applied to another Dr. John's store, and that Dr. John's felt the resolution of that case would "answer the questions" of whether it would need an

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SOB license to do business in the City. The letter suggested that the City delay any action against Dr. John's pending the outcome of Midvale.

In May 2003, the Utah Supreme Court decided Midvale and ruled against Dr. John's. See Midvale City Corp. v. Haltom, 73 P.3d 334 (Utah 2003). Even so, Dr. John's again refused to complete the Roy City SOB application and instead filed the present case pursuant to 42 U.S.C. § 1983, alleging that the City's ordinance was an unconstitutional restriction on speech. The City counterclaimed, seeking a court order requiring Dr. John's to comply with the ordinance.

Both sides then moved for summary judgment, with the City arguing that Dr. John's challenge should be dismissed and that it should be ordered to comply with the ordinance, and Dr. John's urging that the ordinance be declared unconstitutional. The district court considered and rejected Dr. John's arguments as to the ordinance's unconstitutionality, and therefore entered judgment in the City's favor on this issue. The court then turned to the City's request for an order requiring Dr. John's to comply with the ordinance, which turned on whether Dr. John's met the ordinance's definition of an SOB. Noting that this was an issue of state law, the court declined to exercise jurisdiction over this issue and thus denied the City's motion for summary judgment on this point. 1

Dr. John's then filed a motion to amend the district court's judgment, asking the court to construe the ordinance's "significant or substantial" language by specifying a percentage of inventory or floorspace or revenue that would determine whether or not a particular business was an SOB. The district court declined to do so, and this appeal followed.


We review the district court's decisions on motions for summary judgment de novo, applying the same legal standard used by the district court. Gregory v. Fort Bridger Rendezvous Ass'n, 448 F.3d 1195, 1199 (10th Cir.2006). Summary judgment is proper when the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

I. Constitutional Standing

"Standing ... raises jurisdictional questions and we are required to consider the issue sua sponte to ensure that there is an Article III case or controversy before us." Rector v. City and County of Denver, 348 F.3d 935, 942 (10th Cir.2003) (quotations omitted). The doctrine of standing limits who may bring a matter before the federal courts for adjudication. The "irreducible constitutional minimum of standing" requires plaintiffs to show (1) that they have suffered an "injury in fact," (2) that the injury is "fairly traceable to the challenged action of the defendant," and (3) that the injury is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (quotations, alterations omitted). Where, as here, the proceedings have reached the summary judgment stage, the plaintiff bears the burden of setting forth (by affidavit or other evidence) specific facts that, if proved, would establish these elements. Nova Health Sys. v. Gandy, 416 F.3d 1149, 1154 (10th Cir.2005).

An injury in fact does not automatically occur by "[t]he mere presence on the statute books of an unconstitutional statute ..., even if [plaintiffs] allege an

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inhibiting effect on constitutionally protected conduct prohibited by the statute." Winsness v. Yocom, 433 F.3d 727, 732 (10th Cir.2006). Where a law has yet to be enforced against the plaintiff, the plaintiff is further required to show a "credible threat" of enforcement. Id.; see also Pac. Frontier v. Pleasant Grove City, 414 F.3d 1221, 1229 (10th Cir.2005) ("[A] plaintiff establishes standing when a credible...

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