Annex Books, Inc. v. City of Indianapolis, Ind.

• Decision Date: 03 September 2009
• Docket Number: No. 05-1926.,05-1926.
• Citation: 581 F.3d 460
• Parties: ANNEX BOOKS, INC., et al., Plaintiffs-Appellants, v. CITY OF INDIANAPOLIS, INDIANA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

581 F.3d 460

ANNEX BOOKS, INC., et al., Plaintiffs-Appellants, v. CITY OF INDIANAPOLIS, INDIANA, Defendant-Appellee.

No. 05-1926.

United States Court of Appeals, Seventh Circuit.

Argued September 8, 2005.

Decided September 3, 2009.

J. Michael Murray, Steven D. Shafron (argued), Berkman, Gordon, Murray & Devan, Cleveland, OH, for Plaintiffs-Appellants.

Kostas Poulakidas (argued), Office of the Corporation Counsel, Indianapolis, IN, for Defendant-Appellee.

Before EASTERBROOK, Chief Judge, and FLAUM and ROVNER, Circuit Judges.

EASTERBROOK, Chief Judge.

Indianapolis revised its adult-business ordinances in 2003. These amendments expanded the definition of "adult entertainment business" to include any retail outlet that devotes 25% of more of its space or inventory to, or obtains at least 25% of its revenue from, adult books, magazines, films, and devices. (Adult "devices" include vibrators, dildos, and body-piercing implements.) See Indianapolis Rev.Code § 807-103. Until 2003 the trigger had been 50%. Any "adult entertainment business" needs a license, must be well lit and sanitary, and may not be open on Sunday or between mid-night and 10 a.m. on any other day. Indianapolis Rev. Code §§ 807-202(a), -301(f), -302.

Four firms defined as "adult entertainment businesses" under the revised ordinance filed this suit, contending that the law violates the first and fourth amendments, applied to the states by the fourteenth. The district court enjoined one portion of the amended ordinance and held that plaintiffs are entitled to notice of inspections. 333 F.Supp.2d 773, 787-89 (S.D.Ind.2004). Indianapolis has not appealed from that portion of the decision. The district court rejected plaintiffs' argument that the procedures for the issuance and judicial review of licenses permit the City to take too long, or afford it too much discretion. Id. at 778-83. Plaintiffs contest that portion of the decision, but it is supported by Littleton v. Z.J. Gifts D-4, L.L.C., 541 U.S. 774, 124 S.Ct. 2219, 159 L.Ed.2d 84 (2004), and Thomas v. Chicago Park District, 534 U.S. 316, 122 S.Ct. 775, 151 L.Ed.2d 783 (2002). Indianapolis gives businesses provisional licenses while judicial review proceeds, Rev.Code § 807-207(c), so its ordinance is easier to defend than the one sustained in Littleton. See Andy's Restaurant & Lounge, Inc. v. Gary, 466 F.3d 550, 556 (7th Cir.2006). We have nothing else to add to this portion of the district court's thoughtful opinion.

That leaves plaintiffs' challenge to the definition of "adult entertainment business" and the imposition of any limits on these firms, other than whatever rules apply to bookstores and video-rental outlets in general. Indianapolis justifies its restrictions on the ground that they reduce crime and other secondary effects associated with adult businesses. See Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 122 S.Ct. 1728, 152 L.Ed.2d 670 (2002), and Renton v. Playtime Theatres, Inc., 475 U.S. 41, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986). Although the restrictions are not as extensive as those at issue in Alameda Books and Playtime Theatres — the City does not, for example, limit the number of adult establishments by prescribing a 1,000-foot buffer zone around each, or require them to locate in industrial zones far from pedestrian traffic — the City nonetheless concedes that its laws are subject to "intermediate" scrutiny because plaintiffs sell books. This means that, to prevail, the City needs evidence that the restrictions actually have public benefits great enough to justify any curtailment of speech.

The sort of evidence that the Justices deemed sufficient in Alameda Books and Playtime Theatres showed that crime is higher in city blocks (or census tracts) in which adult establishments are located. That could be because real estate is cheaper in high-crime areas, and that sleazy establishments tend to congregate in low-rent districts. But the fact that crime rose as adult establishments entered the area (see 535 U.S. at 435, 122 S.Ct. 1728 (describing the study)) implied that the causal arrow ran from adult businesses to crime, rather than the other way. That could happen because adult establishments attract a particular kind of clientele that is emboldened by association with like-minded people, so that prostitution and public masturbation (for example) are more acceptable near a congeries of sexually oriented businesses than they would be elsewhere. Justice Kennedy put it this way in Alameda Books:

We may posit that two adult stores next door to each other attract 100 patrons per day. The two businesses split apart might attract 49 patrons each. (Two patrons, perhaps, will be discouraged by the inconvenience of the separation — a relatively small cost to speech.) On the other hand, the reduction in secondary effects might be dramatic, because secondary effects may require a critical mass. Depending on the economics of vice, 100 potential customers/victims might attract a coterie of thieves, prostitutes, and other ne'er-do-wells; yet 49 might attract none at all. If so, a dispersal ordinance would cause a great reduction in secondary effects at very small cost to speech. Indeed, the very absence of secondary effects might increase the audience for the speech; perhaps for every two people who are discouraged by the inconvenience of two-stop shopping, another two are encouraged by hospitable surroundings. In that case, secondary effects might be eliminated at no cost to speech whatsoever, and both the city and the speaker will have their interests well served.

535 U.S. at 452-53, 122 S.Ct. 1728 (Kennedy, J., concurring in the judgment).

Indianapolis relies on this line of argument, as well as on a study it conducted in 1984, before adopting the original version of the challenged ordinance. This study found higher crime rates near businesses that were defined as "adult". But here the City encounters problems, for the studies on which it relies — like Justice Kennedy's hypothetical — deal with ordinances dispersing adult businesses. The 2003 revision does not require dispersal. Instead it closes all businesses after midnight and on Sundays, and requires bright interior lights when the businesses are open. None of the studies on which the City relied before enacting the law, and none introduced in this record, concerns that kind of ordinance. Nor do the studies show that an increase in adult businesses' operating hours is associated with more crime; the studies are simple cross-sectional analyses that leave causation up in the air. (In other words, they may show no more than that adult businesses prefer high-crime districts where rents are lower.)

More importantly, the studies to which the City points concern adult businesses that offer live sex shows, private viewing booths, or both. This circuit's decisions likewise concern live entertainment. See, e.g., R.V.S., L.L.C. v. Rockford, 361 F.3d 402 (7th Cir.2004) (exotic-dancing nightclubs); G.M. Enterprises, Inc. v. St. Joseph, 350 F.3d 631 (7th Cir.2003) (nude dancing in bars). Three of the four plaintiffs in this suit, however, do not offer live entertainment or private viewing. They are simple book or video outlets, brought under the regulatory umbrella only because 25% or more of their sales come from sex-related materials. Until the 2003 amendments, these stores were treated the same as Barnes & Noble or Blockbuster Video. If they were associated with significant crime or disorderly conduct, it should be easy for Indianapolis to show it. But the City has not offered an iota of evidence to that effect.

The City's only evidence about the four plaintiffs is that during 2002 the police made 41 arrests for public masturbation at Annex Books, the only plaintiff that offers private booths. (The masturbation was "public" in the sense that officers could see what customers were doing inside the booths.) The district court thought this datum enough, by itself, to support the 2003 amendments. Yet it is hard to grasp how misdemeanors committed in single-person booths justify the regulation of book and video retailers that lack such booths.

Indeed, we do not know when the arrests occurred. Unless most of them were after midnight, or on Sunday, they don't justify the ordinance even with respect to establishments that supply entertainment on the premises. Nor can we tell whether 41 arrests at one business over the course of 365 days is a large or a small number. How does it compare with arrests for drunkenness or public urination in or near taverns, which in Indianapolis can be open on Sunday and well after midnight? If there is more misconduct at a bar than at an adult emporium, how would that justify greater legal restrictions on the bookstore — much of whose stock in trade is constitutionally protected in a way that beer and liquor are not.

Indianapolis has approached this case by assuming that any empirical study of morals offenses near any kind of adult establishment in any city justifies every possible kind of legal restriction in every city. That might be so if the rational-relation test governed, for then all a court need do is ask whether a sound justification of a law may be imagined. See, e.g., Vance v. Bradley, 440 U.S. 93, 99 S.Ct. 939, 59 L.Ed.2d 171 (1979); Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976). But because books (even of the "adult" variety) have a constitutional status different from granola and wine, and laws requiring the closure of bookstores at night and on Sunday are likely to curtail sales, the public benefits of the restrictions must be established by evidence, and not just asserted. The evidence need not be local; Indianapolis is entitled to rely on findings from Milwaukee or Memphis (provided that a suitable effort is made to control for other variables). See Andy's Restaurant, 466 F.3d at 554-55. But there must be evidence; lawyers' talk is...