City News & Novelty, Inc. v. City of Waukesha

• Decision Date: 20 October 1999
• Docket Number: No. 97-1504.,97-1504.
• Citation: 604 N.W.2d 870,231 Wis.2d 93
• Parties: CITY NEWS & NOVELTY, INC., Plaintiff-Appellant, v. CITY OF WAUKESHA, Defendant-Respondent.
• Court: Wisconsin Court of Appeals

231 Wis.2d 93

604 N.W.2d 870

CITY NEWS & NOVELTY, INC., Plaintiff-Appellant,¹ v. CITY OF WAUKESHA, Defendant-Respondent.

No. 97-1504.

Court of Appeals of Wisconsin.

Oral argument April 13, 1999.

Decided October 20, 1999.

On behalf of the plaintiff-appellant, there were briefs and oral arguments by Jeff Scott Olson of Madison.

On behalf of the defendant-respondent, there was a brief by Curt R. Meitz, city attorney, and Julie M. Gay, assistant city attorney. There were oral arguments by Curt R. Meitz, city attorney.

Before Nettesheim, Anderson and Snyder, JJ.

¶ 1. SNYDER, J.

City News and Novelty, Inc. (City News) appeals from a circuit court judgment affirming the City of Waukesha's (the City) decision not to renew City News's license to operate an adult-oriented establishment. City News raises the following issues on appeal. First, it contends that the City's adult establishment licensing scheme is unconstitutional because it fails to offer explicit standards for license renewal, provides inadequate time limits for judicial review, fails to preserve the status quo throughout the administrative process and does not permit prompt judicial review. Second, City News raises due process arguments claiming that it was deprived of an impartial administrative review, that it was given inadequate notice of the allegations against it and that the City improperly invoked the most severe sanction of nonrenewal. Finally, it contends that the grounds for nonrenewal were insufficient as a matter of law.² ¶ 2. While we find City News's arguments unavailing in large part, we conclude that § 8.195(3)(d) of the CITY OF WAUKESHA, WIS., MUNICIPAL CODE (1995) (hereinafter MUNICIPAL CODE), providing an applicant the right to a public hearing, is constitutionally infirm. However, because the public hearing provision of § 8.195(3)(d) is severable from the remainder of the ordinance, we reverse as to this provision and affirm as to the remainder.

BACKGROUND

¶ 3. City News is an adult-oriented establishment in the city of Waukesha which sells, rents and otherwise makes available to its customers sexually explicit books, magazines, videotapes and other materials. It also provides viewing booths in which its customers may view videotapes.

¶ 4. City News is licensed annually under the provisions of § 8.195 of the MUNICIPAL CODE.³ Licensure is required for an individual or a corporation to operate or maintain an adult-oriented establishment. See id. § 8.195(2)(a). An application to renew a license must be filed no later than sixty days before the license expires. See id. § 8.195(7). The city clerk shall notify the applicant whether the application is granted or denied within twenty-one days of the application's receipt. See id. § 8.195(3)(c).

¶ 5. For a corporate applicant, the licensure standards state that no officer, director or stockholder "shall have been found to have previously violated this section within 5 years immediately preceding the date of the application." Id. § 8.195(4)(b)2. The ordinance then sets forth specific requirements for the physical layout and the conduct of patrons and employees of the establishment which, among other things, provide that: (1) every viewing booth or room must have at least one side entirely open to the public,⁴ (2) no patron may engage in any type of sexual activity, and (3) no employee may permit a minor to loiter around or patronize the establishment. See id. § 8.195(9)(b)2, (9)(c), (10)(c).

¶ 6. On November 15, 1995, City News applied for renewal of its license which was due to expire on January 25, 1996. On December 19, 1995, the common council passed a resolution finding that City News had committed several code violations and therefore denied its renewal application. The violations included permitting minors to loiter on the premises, failing to maintain an unobstructed view of the viewing booths and allowing patrons to engage in sexual conduct inside the booths.

¶ 7. After City News requested review of the resolution, the common council affirmed the decision. City News sought administrative review, and on June 28, 1996, the City of Waukesha Administrative Review Appeals Board affirmed the common council's decision. City News then filed a certiorari action in the circuit court seeking judicial review of the denial of its license renewal application. In an April 2, 1997 decision, the circuit court affirmed the board's determination. City News appeals.⁵

STANDARD OF REVIEW

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¶ 8. In an action for certiorari review, appellate review is the same as in the trial court. See State ex rel. Wilson v. Schocker, 142 Wis. 2d 179, 183, 418 N.W.2d 8, 9 (Ct. App. 1987)

. We confine our review to whether: (1) the board kept within its jurisdiction; (2) the board acted according to the law; (3) the action was arbitrary, oppressive or unreasonable; and (4) the evidence presented was such that the board might reasonably make the order or determination in question. See State v. Goulette, 65 Wis. 2d 207, 215, 222 N.W.2d 622, 626 (1974). The primary issues raised in this case involve constitutional questions and questions of statutory construction which are questions of law that we review de novo. See City of Waukesha v. Town Bd., 198 Wis. 2d 592, 601, 543 N.W.2d 515, 518 (Ct. App. 1995); State v. Migliorino, 150 Wis. 2d 513, 524, 442 N.W.2d 36, 41 (1989).

DISCUSSION

A. First Amendment Protections

¶ 9. City News raises a number of facial challenges to the constitutionality of the City's licensing scheme. "Although facial challenges to legislation are generally disfavored, they have been permitted in the First Amendment context where the licensing scheme vests unbridled discretion in the decisionmaker and where the regulation is challenged as overbroad." FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 223 (1990).

¶ 10. FW/PBS is the United States Supreme Court's most recent articulation of the constitutional principles that apply to municipal licensing schemes implicating First Amendment rights. The Court held that a licensing scheme that exists as a prior restraint on businesses purveying sexually explicit but protected speech is constitutionally permissible if it contains safeguards to minimize the possibility that the licensing procedure will be used to suppress speech. See id. at 226. The Court then set forth several requirements that licensing ordinances must follow to pass constitutional scrutiny. First, the regulatory scheme cannot place "unbridled discretion in the hands of a government official or agency." Id. at 225 (quoting City of Lakewood v. Plain Dealer Publ'g Co., 486 U.S. 750, 757 (1988)). In other words, if a permit or license may be granted or withheld solely at the discretion of a government official, this is an "unconstitutional censorship or prior restraint" upon the exercise of the freedom of speech. See id. at 226. Second, "a prior restraint that fails to place limits on the time within which the decisionmaker must issue the license is impermissible." Id. A licensing decision must be made "within a specified and reasonable time period during which the status quo is maintained." Id. at 228. Finally, a regulatory scheme must provide for "prompt judicial review" in the event that a license is erroneously denied. See id.

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¶ 11. We apply the constitutional framework in FW/PBS to our examination of the City's licensing scheme. In doing so, we note that although ordinances normally receive a presumption of constitutionality which the challenger must refute, when the ordinance regulates First Amendment activities "the burden shifts to the government to defend the constitutionality of that regulation beyond a reasonable doubt." County of Kenosha v. C & S Management, Inc., 223 Wis. 2d 373, 383, 588 N.W.2d 236, 242 (1999) (quoted source omitted). Wisconsin courts have routinely applied this burden-shifting approach in First Amendment cases. See, e.g., id.; Lounge Management, Ltd. v. Town of Trenton, 219 Wis. 2d 13, 20, 580 N.W.2d 156, 159,

cert. denied, 119 S. Ct. 511 (1998); Town of Wayne v. Bishop, 210 Wis. 2d 218, 231, 565 N.W.2d 201, 206 (Ct. App. 1997). FW/PBS, however, rejected this approach where First Amendment prior restraints are concerned and the government action at issue is the review of an applicant's qualifications for a business operating license. The FW/PBS Court explained its reasoning in the following passage, distinguishing its licensing scheme from the scheme in Freedman v. Maryland, 380 U.S. 51 (1965).

The Court ... required in Freedman that the censor bear the burden of going to court in order to suppress the speech and the burden of proof once in court. The licensing scheme we examine today is significantly different from the censorship scheme examined in Freedman. In Freedman, the censor engaged in direct censorship of particular expressive material. Under our First Amendment jurisprudence, such regulation of speech is presumptively invalid and, therefore, the censor in Freedman was required to carry the burden of going to court if the speech was to be suppressed and of justifying its decision once in court. Under the Dallas ordinance [in FW/PBS], the city does not exercise discretion by passing judgment on the content of any protected speech. Rather, the city reviews the general qualifications of each license applicant, a ministerial action that is not presumptively invalid. The Court in Freedman also placed the burdens on the censor, because otherwise the motion picture distributor was likely to be deterred from challenging the decision to suppress the speech and, therefore, the censor's decision to suppress was tantamount to complete suppression of the speech. The license applicants under the Dallas scheme have much more at stake than did the motion picture distributor considered in Freedman, where only one film was censored. Because the license is the key to the applicant's obtaining and maintaining a business, there is every incentive

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