729, Inc. v. Kenton County Fiscal Court, 06-6390.

Citation515 F.3d 485
Decision Date06 February 2008
Docket NumberNo. 06-6390.,06-6390.
Parties729, INC., Foxx Restaurants, Inc., The Venus Lounge, Inc., Patsy Hiatt, Tina Sturgeon, Wanda Blankenship, Plaintiffs-Appellants, Foster, Inc., Plaintiff, Kim Foran, Liberty's Show Lounge, Inc., Intervening Plaintiffs, v. KENTON COUNTY FISCAL COURT, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

ARGUED: Jennifer M. Kinsley, Sirkin, Finales & Schwartz, Cincinnati, Ohio, for Appellants. Christopher S. Nordloh, Nordloh Law Office, Covington, Kentucky, for Appellee. ON BRIEF: Jennifer M. Kinsley, H. Louis Sirkin, Sirkin, Finales & Schwartz, Cincinnati, Ohio, for Appellants. Christopher S. Nordloh, Nordloh Law Office, Covington, Kentucky, Garry L. Edmondson, Stacy M. Hege, Kenton County Attorney's Office, Covington, Kentucky, for Appellee.

Before: BOGGS, Chief Judge; and CLAY and ROGERS, Circuit Judges.

BOGGS, C. J., delivered the opinion of the court, in which ROGERS, J., joined. CLAY, J. (pp. 505-11), delivered a separate opinion dissenting in part and concurring in part.

OPINION

BOGGS, Chief Judge.

This case stems from Kenton County's enactment of a licensing ordinance that comprehensively regulates sexually oriented businesses within the County's jurisdiction. A group of such businesses and their employees brought suit against the County under 42 U.S.C. § 1983 and K.R.S. § 418.040, challenging the constitutionality of the Ordinance. Before the district court, the plaintiffs raised more than ten separate constitutional claims. Both sides moved for summary judgment, which the district court granted to the County.

The plaintiffs raise four issues on appeal. First, they claim that the Ordinance violates the First Amendment by barring entertainers from entering areas of an establishment occupied by customers within one hour of the entertainers' performing semi-nude on stage. Second, they claim that the Ordinance violates their rights under the Contracts Clause of Article I, § 10 of the Constitution. Third, they claim that the Ordinance's judicial review provisions do not satisfy the First Amendment's prompt-judicial-review requirements. Fourth, they claim that the Ordinance's license fees are excessive, content-based taxes that violate the First Amendment. Following a brief recitation of the background of this case, we address each of the plaintiffs' challenges in turn, relating details relevant to each respective challenge when appropriate. Ultimately, we affirm the district court with respect to the first three challenges and we vacate and remand for further proceedings with respect to the fourth challenge.

I

On August 17, 2004, the County adopted Ordinance No. 451.7, which regulated "sexually oriented businesses" within the County and required that such businesses, along with managers and entertainers working therein, obtain licenses from the County. The Ordinance has been amended several times since this case began. The current version of the Ordinance, No. 451.12, is the subject of this appeal.

Businesses must submit a required application, along with a fee of $3,000, in order to secure a license. Should a business's license be denied, the County refunds $1,500 of that fee. The applicable fee for entertainers and managers is $155, none of which is refundable. The Ordinance also creates a structure for administrative appeal of license denials and allows for judicial review of such denials "in a manner provided by law."

Two segments of the Ordinance govern a licensee's responsibilities. First, Sections 14 and 15, taken together, impose affirmative duties on licensees, breaches of which are punishable within the County's administrative framework.1 When a licensee fails to fulfill a duty, the County can levy a penalty. For some violations, the penalty is a point-assessment. Whereas an establishment or managerial licensee can accrue twenty-four points over a two-year period before its license is subject to revocation, an entertainer licensee is permitted only eighteen points within the same period. More serious violations, though, may result in suspension or revocation as a penalty instead of a point-assessment. Second, Section 22 defines certain courses of conduct as "violations of chapter" that constitute misdemeanor offenses under Kentucky law. There is an overlap between conduct criminally punishable under Section 22 and conduct that could bring administrative sanction under Sections 14 and 15. Section 22 makes operating without a current, non-suspended license a misdemeanor offense.

II

We review a district court's grant of summary judgment de novo. Trustees of the Mich. Laborers' Health Care Fund v. Gibbons, 209 F.3d 587, 590 (6th Cir. 2000). The decision below may be affirmed only if the pleadings, affidavits, and other submissions show "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). We must draw all reasonable inferences in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III

The plaintiffs first attack the Ordinance's commingling provision, which is found within the affirmative-duty provisions of Sections 14 and 15. Because the provision was intended to target prostitution, likely will have the effect of reducing prostitution, and leaves substantially intact the amount of protected speech, we reject this challenge.

The provision at issue reads as follows: [E]ntertainers [must] maintain a minimum distance of five (5) feet from areas on the establishment's premises being occupied by customers, for a minimum of one (1) hour after the entertainer appears semi-nude on the establishment's premises. This regulation is not intended to prohibit ingress or egress from the premises or entertainers [sic] use of the premises' common restroom. It is intended to control illicit sexual contact and reduce the incidents of prostitution occurring in the establishments. Regulating a reasonable delay between the times the entertainers appear semi-nude and their commingling with customers is a narrowly tailored furtherance [sic] of this interest. Penalty for violation: license suspension after being cited for two (2) such violations.

JA 364 (emphasis in original). Because the Ordinance forbids anyone from being semi-nude anywhere but on stage, this provision requires that an entertainer stay at least five feet away from areas being occupied by customers for at least one hour after the entertainer performs semi-nude on stage. Managers, establishments, and entertainers each have an affirmative duty to ensure the enforcement of this provision.

Although the plaintiffs contend that this provision should be subjected to strict scrutiny, it is well-settled that laws targeting the "secondary effects" of adult-entertainment establishments are subject to intermediate scrutiny. In Renton v. Playtime Theatres, Inc., the Supreme Court held that an ordinance designed to concentrate such establishments in one area of a city would be subject to intermediate scrutiny because it was a content-neutral time, place, and manner restriction. 475 U.S. 41, 46-47, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986). Although five members of the Court abandoned the premise that such restrictions are content-neutral sixteen years later in City of Los Angeles v. Alameda Books,2 the Court continued to apply intermediate scrutiny to laws targeting "secondary effects." 535 U.S. 425, 429, 122 S.Ct. 1728, 152 L.Ed.2d 670 (2002) (applying intermediate scrutiny to an ordinance dispersing, rather than concentrating, adult businesses). In each of those cases, the Court applied its earlier ruling in United States v. O'Brien, which set intermediate scrutiny as the standard when the government regulates pursuant to an interest unrelated to speech's content. See 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968).

There is no doubt that prostitution constitutes a "secondary effect" within the meaning of the pertinent case law. See Alameda Books, 535 U.S. at 430, 122 S.Ct. 1728. Because the County sought to target prostitution, intermediate scrutiny applies here. In order to survive such scrutiny, a regulation must meet three requirements. First, the government must have had the actual purpose of suppressing "secondary effects" when it enacted the ordinance. White River Amusement Pub, Inc., v. Town of Hartford, 481 F.3d 163, 171-72 (2d Cir.2007) (collecting cases). See also Christy v. Ann Arbor, 824 F.2d 489, 493 (6th Cir.1987). Second, the entity must have had a reasonable evidentiary basis for concluding that its regulation would have the desired effect. Although not extraordinarily high, this evidentiary burden requires that the entity show that the evidence upon which it relied was "reasonably believed to be relevant to the problem" that the entity sought to address. Renton, 475 U.S. at 51-52, 106 S.Ct. 925; Alameda Books, 535 U.S. at 438, 439, 122 S.Ct. 1728 (plurality); Id. at 449, 122 S.Ct. 1728 (Kennedy, J., concurring in the judgment). Third, the ordinance must, leave "the quantity and accessibility of speech substantially intact." Id. at 449, 122 S.Ct. 1728 (Kennedy, J., concurring in the judgment); id. at 450, 122 S.Ct. 1728 ("As discussed, the necessary rationale for applying intermediate scrutiny is the promise that zoning ordinances like this one may reduce the costs of secondary effects without substantially reducing speech."). Although the Alameda Books plurality did not discuss the third requirement, Justice Kennedy expressly said that consideration of this issue was required for his concurrence in the judgment. Justice Kennedy's opinion binds us on this point. See, e.g., Ben's Bar, Inc. v. Village of Somerset, 316 F.3d 702, 722 (7th Cir.2003).

Under the above test, the plaintiffs' challenge to the commingling provision must...

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