Chulchian v. City of Indianapolis

• Decision Date: 06 October 1980
• Docket Number: No. 79-2232,79-2232
• Citation: 633 F.2d 27
• Parties: Charles CHULCHIAN, Plaintiff-Appellant, v. CITY OF INDIANAPOLIS et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 27

633 F.2d 27

Charles CHULCHIAN, Plaintiff-Appellant, v. CITY OF INDIANAPOLIS et al., Defendants-Appellees.

No. 79-2232.

United States Court of Appeals Seventh Circuit.

Argued April 28, 1980.

Decided Oct. 6, 1980.

Richard Kammen, Indianapolis, Ind., for plaintiff-appellant.

JoAnn Hoffman, Indianapolis, Ind., for defendants-appellees.

Before FAIRCHILD, Chief Circuit Judge, BAUER, Circuit Judge, and GRANT, Senior District Judge. ^*

BAUER, Circuit Judge.

The issue here is the validity of the general business licensing ordinance of the City of Indianapolis under the First Amendment, as applied to the States by the Fourteenth Amendment. Plaintiff-appellant Charles Chulchian was denied a license to operate a movie theatre under the ordinance. He appeals that part of the district court's order which upheld certain sections of the ordinance. We affirm the district court's order.

I.

The City of Indianapolis, defendant-appellee here, requires the annual licensing of all businesses in the City. ¹ Regulations issued pursuant to the licensing ordinance designate a license administrator as the first level of review. If an application for a license is denied, the applicant is entitled to a hearing before the controller. ² If the controller also denies the application, the applicant may then appeal to a license review board, whose decision is final. ³

Plaintiff-appellant Charles Chulchian operates the Rivoli Theater, a movie theatre in Indianapolis, Indiana. The theatre exhibits sexually explicit films. In years prior to 1979, Chulchian sought and obtained a license from the City. Chulchian's application for his 1979 license, however, was denied first by the license administrator and, after a hearing, by the controller. Both the administrator and the controller stated two reasons for refusing Chulchian's license. Both stated that Chulchian violated section 17-6(4) of the ordinance because there were at least ten arrests on the premises for "illegal, immoral or obscene conduct." Second, they stated that the "residents of the area consider the Rivoli 'to create a nuisance,' " in violation of section 17-6(2). ⁴ Chulchian then filed this suit, attacking the constitutionality of the licensing ordinance and seeking declaratory and injunctive relief under 42 U.S.C. § 1983. The License Review Board voluntarily stayed its consideration of Chulchian's appeal pending the court's decision.

On Chulchian's motion for summary judgment, the district court ruled that certain sections of the licensing ordinance were unconstitutional. Evansville Book Mart, Inc. v. City of Indianapolis, 477 F.Supp. 128 (S.D.Ind.1979). The court first reviewed the arrests constituting the "illegal, immoral or obscene conduct" allegedly permitted by appellant. The arrests were made pursuant to Indianapolis Code § 20-44, the "obscene conduct ordinance." ⁵ Without ruling on the ordinance's constitutionality, the court held it invalid under Indiana law as an attempted local law. Id. at 131.

The court next considered Chulchian's challenges to the two sections on which the controller based denial of his license. The court struck down section 17-31(c)(6) of the ordinance, which permits the controller

to take into consideration the effect of the proposed business or calling upon surrounding property and upon residents or inhabitants thereof; and in granting, denying or revoking said license the controller may exercise his sound discretion as to whether said license should be granted, transferred, denied or revoked.

Code of Indianapolis § 17-31(c)(6). The court held the section "unconstitutional due to its lack of guiding standards for the licensing officials." 477 F.Supp. at 132-33.

The second section provides that a licensee shall "(n)ot permit any sort of illegal, immoral or obscene conduct or practices to take place on his premises or in the conduct of his business." Code of Indianapolis § 17-6(4). The City conceded, and the court ruled, that the use of the words "immoral" and "obscene" was unconstitutional. 477 F.Supp. at 131. The court upheld the rest of the ordinance "because it is content neutral in that it does not single out adult theatres, and is the expression of an equally legitimate City concern, the City's interest in preventing the licensing of businesses the owners of which permit illegal occurrences." Id. at 132. The court ruled that the City may constitutionally deny a license on the basis of illegal conduct other than prior convictions for showing obscene films. The court stated that it did not "have before it documentation of arrests under valid statutes." Id. The court nevertheless denied appellant's request to order the issuance of a license because of representations by the City that "other arrests for violations of valid state statutes had been made recently at the theatre." Id. The court also upheld as constitutionally sufficient the procedures governing the decision of the controller and the License Review Board. Id. at 130.

Chulchian appeals, first, the district court's order upholding the "permitting illegal conduct" portion of section 17-6(4); second, the court's ruling upholding the constitutionality of the procedures governing the controller's decision of the License Review Board; and third, the court's refusal to order the City to issue him a license.

II.

At the outset, we must resolve the procedural posture of this suit. A license to do business in Indianapolis is effective for only one year. We did not hear oral argument until April 1980, after appellant's 1979 license would have expired. The License Review Board, which had agreed to stay consideration of appellant's appeal until this court rendered its decision, dismissed Chulchian's appeal. The present appeal is not moot, however, because appellant's application for a 1980 license has also been denied.

The License Administrator denied appellant's application on the grounds that his 1979 license had been denied and that under section 17-6(2) the operation of his business constituted a nuisance. These reasons are substantially the same as those advanced to deny appellant's 1979 license. We therefore consider the merits of appellant's case as a situation " 'capable of repetition, yet evading review.' " Roe v. Wade, 410 U.S. 113, 125, 93 S.Ct. 705, 713, 35 L.Ed.2d 147 (1973), quoting Southern Pacific Terminal Co. v. I.C.C., 219 U.S. 498, 515, 31 S.Ct. 279, 283, 55 L.Ed. 310 (1911).

III.

A.

The district court's decision striking the words "obscene" and "immoral" from section 17-6(4) is not challenged by the parties. As construed by the district court, the section now reads that a licensee "shall not permit any sort of illegal conduct or practices to take place ...." Appellant argues that the ordinance is unconstitutionally vague because "permit" is undefined and because the type of illegal conduct which will justify denial is not specified.

Although the ordinance has not been authoritatively construed by the Indiana courts, the body charged with its enforcement, the City, has provided a narrowing construction of the statute. See Law Students Civil Rights Research Council, Inc. v. Wadmond, 401 U.S. 154, 162-63, 91 S.Ct. 720, 726, 27 L.Ed.2d 749 (1971). The City first concedes that it cannot deny a license based on conduct beyond the licensee's control. The City acknowledges that section 17-6(4) requires knowledge of the illegal conduct by the licensee. We agree that such a construction sufficiently clarifies "permit."

We also agree that the ordinance has standards for its enforcement. The ordinance prohibits a licensee from knowingly allowing any illegal activity, i. e., any violation of law. It is hornbook law that all persons are deemed to have notice of the law. Other laws which similarly impose liability for violations of law have been upheld from vagueness attacks. See, e. g., United States v. Polizzi, 500 F.2d 856, 874-75 (9th Cir. 1974), cert. denied, 419 U.S. 1121, 95 S.Ct. 802, 42 L.Ed.2d 820 (1975). (Interstate Travel Act.) Compare Entertainment Concepts, Inc., III v. Maciejewski, 631 F.2d 497 (7th Cir. 1980) (no definition of "adult" in zoning ordinance). While the ordinance grants discretion to the controller and the License Review Board to consider the quantity and quality of illegal conduct, it is not vague.

Chulchian next challenges section 17-6(4) as an impermissible regulation of his movie theatre. Chulchian asserts that the ordinance impermissibly treads on constitutionally protected speech because it authorizes the closing of his theatre if he permits illegal conduct. We disagree.

Businesses which deal in material protected by the First Amendment, for example bookstores and theatres, are not immune from all regulation. They can be subject to the usual panoply of health, safety, licensing, and zoning regulations as all other businesses. See Young v. American Mini Theatres, Inc., 427 U.S. 50, 62, 79, 96 S.Ct. 2440, 2448, 2456, 49 L.Ed.2d 310 (Powell, J., concurring) (1976); Genusa v. City of Peoria, 619 F.2d 1203, 1214, 1218 (7th Cir. 1980). Enforcement of the ordinance here, however, implicates First Amendment rights. The four part test of United States v. O'Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968), therefore governs our review. Under that test, a governmental regulation is justified, despite its incidental impact on speech,

if it is within the constitutional power of the Government; if it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.

Id. at 377, 88 S.Ct. at 1679. We hold that section 17-6(4), as now construed, meets all these requirements. Consequently, we hold that enforcement of the ordinance by denial of a license is constitutional.

First, the section applies to all businesses in...