East Brooks Books, Inc. v. City of Memphis

• Decision Date: 05 May 1995
• Docket Number: Nos. 93-6102,93-6103 and 93-6104,s. 93-6102
• Citation: 48 F.3d 220
• Parties: EAST BROOKS BOOKS, INC. (93-6102); Steven C. Cooper; and Southern Entertainment Management Company, Inc. (93-6103), Plaintiffs-Appellants/Cross-Appellees, v. CITY OF MEMPHIS, Defendant-Appellee/Cross-Appellant (93-6104), W.W. Herenton and Melvin Burgess, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 220

48 F.3d 220

EAST BROOKS BOOKS, INC. (93-6102); Steven C. Cooper; and Southern Entertainment Management Company, Inc (93-6103), Plaintiffs-Appellants/Cross-Appellees, v. CITY OF MEMPHIS, Defendant-Appellee/Cross-Appellant (93-6104) W.W. Herenton and Melvin Burgess, Defendants-Appellees.

Nos. 93-6102, 93-6103 and 93-6104.

United States Court of Appeals Sixth Circuit.

Argued Jan. 19, 1995.

Decided March 7, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied May 5, 1995.

Frierson M. Graves (argued and briefed), Michael F. Pleasants, Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, Memphis, TN, for East Brooks Books, Inc.

Robert B. Rolwing, Memphis, TN (argued and briefed), for City of Memphis, defendant-appellee W.W. Herenton and Melvin Burgess in Nos. 93-6102, 93-6104.

Rex L. Brasher, Jr. (briefed), Brown, Brasher & Smith, Memphis, TN, for Steve C. Cooper, Southern Entertainment Management Co., Inc. dba Club Tiffany plaintiff-appellant.

Monice M. Hagler, Robert B. Rolwing (argued and briefed), Memphis, TN, for City of Memphis, W.W. Herenton and Melvin Burgess in No. 93-6103.

Before: KENNEDY and SUHRHEINRICH, Circuit Judges; and HOOD, District Judge. ^*

KENNEDY, Circuit Judge.

Plaintiffs, East Brooks Books, Inc., Steve C. Cooper, and Southern Entertainment Management Company, Inc., brought this action against the City of Memphis, Mayor W.W. Herenton and Police Director Melvin Burgess challenging the constitutionality of a licensing and zoning ordinance for sexually oriented businesses. ¹ The District Court granted partial summary judgment to defendants on the licensing provisions and granted partial summary judgment to plaintiffs on the zoning provisions. Both parties appeal. Plaintiffs argue that the licensing scheme constitutes an impermissible prior restraint on protected speech. On cross-appeal, defendants argue that the District Court erroneously held that the amortization provision of the zoning regulations violated Tennessee law. For the following reasons, we affirm in part, reverse in part, and vacate in part.

I. The Licensing Scheme

On January 15, 1991, the Memphis City Council passed Ordinance 4013 ("the ordinance") which imposed a licensing and zoning scheme on all sexually oriented businesses within the City of Memphis ("the city"). ² The ordinance was enacted "to regulate sexually oriented business 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 continued concentrations of sexually oriented businesses within the city." See Sec. 20-121(a). The Preamble to the ordinance states that the Memphis City Council concluded that there were serious secondary effects, such as crime and neighborhood deterioration, associated with the proliferation of sexually oriented businesses within the city. The City Council reached these conclusions after reviewing reports of the unusually large number of criminal arrests around sexually oriented businesses, reports prepared by the Memphis Vice Squad, and studies of the impact of sexually oriented businesses on other cities.

The ordinance imposes the following requirements on operators of sexually oriented businesses. ³ Anyone wishing to operate a sexually oriented business must apply for an operator's permit by filling out a form provided by the city's Director of Police Services. See Sec. 20-122(a)(3). The Director of Police Services must issue a permit within 30 days unless the applicant possesses an enumerated "disabling factor," such as being overdue in payment of taxes or fines related to the business, failure to provide necessary information or providing false information on the application, or conviction of certain crimes within a specified time period. See Sec. 20-122(b)(1) and (b)(3). Additionally, an applicant may not be issued a permit if he or she "has demonstrated an inability to operate or manage a sexually oriented business premises in a peaceful and law-abiding manner, thus necessitating action by law enforcement officers." Id.

Sexually oriented businesses also must obtain permits for any employees and independent contractors whom they hire. See Sec. 20-122(a)(8). Employees and independent contractors are subject to the same disabling factors for prior criminal convictions as operators. Id. All sexually oriented businesses are subject to a $5000 operating fee; employees and independent contractors are subject to a $15 fee. See Sec. 20-122(c).

The ordinance limits the issuance of operating permits to natural persons. See Sec. 20-122(a)(7). If a sexually oriented business is operated by an entity rather than an individual, each person who owns any interest in the entity must sign the application form and meet the qualification requirements discussed above. See Sec. 20-122(a)(5). Sexually oriented businesses are subject to inspection by a variety of city departments, including the police and health departments, at any time the premises are occupied or open for business. See Sec. 20-122(d).

The ordinance also contains provisions for the revocation and suspension of permits. The Director of Police Services is required to revoke or suspend an operator's permit if certain enumerated offenses are committed either by the operator or on the premises. See Sec. 20-123. A permit will generally be revoked for five years, but in certain enumerated circumstances an operator may be able to apply for a new permit in ninety days. See Sec. 20-123(b)(5). Suspensions may be for thirty days or less. See Sec. 20-123(a).

The ordinance provides for appeals from the denial, revocation, or suspension of a permit. See Sec. 20-124. After an adverse decision, an applicant has ten days to file an appeal with the Director of Police Services, who must hold a hearing within sixty days. See Sec. 20-124(2) and (3). The Director of Police Services must make a decision in writing within five days of the hearing. See Sec. 20-124(5). If an operator appeals the suspension or revocation of a permit, the suspension or revocation will not occur within sixty days of the notice of appeal or prior to the date of the hearing, whichever is less, unless a health officer determines that there is a health hazard. See Sec. 20-124(4). An applicant or permittee whose permit is denied, suspended, or revoked may appeal the Director's decision by common law writ of certiorari to a court of competent jurisdiction within thirty days. See Sec. 20-124(6). No permit may be extended during a court appeal unless the court orders a writ of supersedeas. See Sec. 20-124(7).

The District Court held that plaintiffs lacked standing to challenge the use of prior convictions to deny a permit and the disabling provisions for permit suspension and revocation. The District Court upheld the constitutionality of all of the other licensing provisions, except the $5,000 permit fee. Subsequently, the city reduced the licensing fee from $5000 to $500. Plaintiffs do not challenge the reduced fee. Additionally, the ordinance was modified to allow any adult oriented business operating at the time the ordinance becomes effective to continue to operate pending its permit application, provided the application is submitted within thirty days of the ordinance's effective date.

A. The Adequacy of Procedural Safeguards

Plaintiffs make a facial challenge to the licensing scheme. "[O]ur cases have long held that when a licensing statute allegedly vests unbridled discretion in a government official over whether to permit or deny expressive activity, one who is subject to the law may challenge it facially without the necessity of first applying for, and being denied, a license." City of Lakewood v. Plain Dealer Publishing Co., 486 U.S. 750, 755-56, 108 S.Ct. 2138, 2143, 100 L.Ed.2d 771 (1988). Failure to place time limitations on a decision maker is a form of unbridled discretion. See Freedman v. Maryland, 380 U.S. 51, 56-57, 85 S.Ct. 734, 737-38, 13 L.Ed.2d 649 (1965). Thus, in FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 224, 110 S.Ct. 596, 603, 107 L.Ed.2d 603 (1990) (plurality op.), the Supreme Court held that when a licensing scheme creates a risk of delay, a facial challenge is appropriate because " 'every application of the statute create[s] an impermissible risk of suppression of ideas.' " (quoting City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 798, n. 15, 104 S.Ct. 2118, 2125, n. 15, 80 L.Ed.2d 772 (1984)).

In Freedman, the Supreme Court struck down a Maryland motion picture censorship statute, holding that the statute failed to provide sufficient procedural safeguards to protect First Amendment rights. See 380 U.S. at 51, 85 S.Ct. at 735. The Court determined that the following three procedural safeguards were required. First, any restraint imposed in advance of a final judicial determination must be for only a brief period of time and must be limited to preserving the status quo. Id. at 59, 85 S.Ct. at 739. Second, expeditious judicial review must be available. Id. Third, the censor must bear both the burden of seeking judicial review and the burden of proof. Id. at 59-60, 85 S.Ct. at 739-40.

In City of Dallas, the Supreme Court held that a licensing scheme did not present the grave dangers of a censorship scheme; therefore, the full procedural protections outlined in Freedman were unnecessary. ⁴ 493 U.S. at 228, 110 S.Ct. at 606. The Court noted that the licensing scheme for sexually oriented businesses in question did not require the city to evaluate the content of protected speech. Id. at 229, 110 S.Ct. at 606. Instead, the ordinance required the city to review the qualifications of the license applicants. Id. The Court reasoned, therefore, that the requirement in Freedman that the censor go to court to effect the denial of the license and bear the burden of proof was unnecessary. Id. at 230, 110 S.Ct. at 607.

The core policy underlying Freedman is that the...