For the People Theaters of N.Y. Inc. v. City of N.Y.

• Decision Date: 21 July 2015
• Docket Number: 121197/02, 121080/02, 12158
• Parties: FOR THE PEOPLE THEATERS OF N.Y. INC., doing business as Fair Theater, Plaintiff, JGJ Merchandise Corp., doing business as Vishans Video, also known as Mixed Emotions, Plaintiff–Respondent, v. The CITY OF NEW YORK, et al., Defendants–Appellants. Ten's Cabaret, Inc., formerly known as Stringfellow's of New York, Ltd., et al., Plaintiffs–Respondents, v. The City of New York, et al., Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

131 A.D.3d 279

14 N.Y.S.3d 338

2015 N.Y. Slip Op. 06200

FOR THE PEOPLE THEATERS OF N.Y. INC., doing business as Fair Theater, Plaintiff

JGJ Merchandise Corp., doing business as Vishans Video, also known as Mixed Emotions, Plaintiff–Respondent

v.The CITY OF NEW YORK, et al., Defendants–Appellants.

Ten's Cabaret, Inc., formerly known as Stringfellow's of New York, Ltd., et al., Plaintiffs–Respondents

v.The City of New York, et al., Defendants–Appellants.

121197/02, 121080/02, 12158

Supreme Court, Appellate Division, First Department, New York.

July 21, 2015.

Zachary W. Carter, Corporation Counsel, New York (Elizabeth S. Natrella, Leonard Koerner, Robin Binder and Sheryl Neufeld of counsel), for appellants.

Fahringer & Dubno, New York (Herald Price Fahringer, Erica T. Dubno and Nicole Neckles of counsel), for JGJ Merchandise Corp., respondent.

Zane and Rudofsky, New York (Edward S. Rudofsky of counsel), and Mehler & Buscemi, New York (Martin P. Mehler of counsel), for Ten's Cabaret Ltd., Pussycat Lounge, Inc., Church Street Café, Inc., and 62–20 Queens Blvd., Inc., respondents.

ANGELA M. MAZZARELLI, J.P., RICHARD T. ANDRIAS, LELAND G. DeGRASSE, PAUL G. FEINMAN, BARBARA R. KAPNICK, JJ.

Opinion

KAPNICK, J.

Before this Court is the third consolidated appeal in two matters that were commenced in or about September 2002. These matters, which were previously addressed in For the People Theatres of N.Y. Inc. v. City of New York, 84 A.D.3d 48, 923 N.Y.S.2d 11 [1st Dept.2011, Acosta, J.] and For the People Theaters of N.Y. Inc. v. City of New York,

20 A.D.3d 1, 793 N.Y.S.2d 356 [1st Dept.2005, Nardelli, J.], mod. 6 N.Y.3d 63, 810 N.Y.S.2d 381, 843 N.E.2d 1121 [2005], pertain to the constitutionality of certain zoning amendments aimed at curtailing adult businesses.

Factual Background

In 1993, the New York City Department of City Planning (DCP) began a comprehensive assessment of the impact of adult establishments on the quality of urban life. DCP's 1994 “Adult Entertainment Study” (DCP Study) concluded that adult entertainment establishments,¹ particularly when concentrated in a specific area, tend to produce negative secondary effects such as increased crime, decreased property values, reduced commercial activities, and erosion of community character.

In response to the DCP Study, the City adopted an amended zoning resolution in 1995 (1995 Resolution) that barred any “adult establishment” from all residential zones and most commercial and manufacturing districts, mandating that adult businesses, where permitted, had to be at least 500 feet from houses of worship, schools, and day care centers (Text Amendment N 950384 ZRY [No. 1322]; Amended Zoning Resolution § 32–01[a]; § 42–01[b] ).

The 1995 Resolution defined an “adult establishment” as a commercial establishment in which a “substantial portion” of the establishment includes “an adult book store, adult eating or drinking establishment, adult theater, or other adult commercial establishment, or any combination thereof” (Amended Zoning Resolution § 12–10[1] ). An “adult book store” was defined as having a “substantial portion” of its “stock-in-trade” in, among other things, printed matter or video representations depicting “specified sexual activities” or “specified anatomical areas” (§ 12–10[1][a] ), and an “adult eating or drinking establishment” was defined as an eating or drinking establishment “ which regularly features” live performances or movies “characterized by an emphasis on” “specified sexual activities” or “specified anatomical areas,” or whose employees regularly expose “specified anatomical areas” to patrons as part of their employment, and which excludes minors (§ 12–10[b] ).²

In response to claims from owners and operators of adult establishments that the resolution's operative phrase, “substantial portion,” was fatally vague, the Department of Buildings and the City Planning Commission determined that the “substantial portion” provision meant that any commercial establishment with “at least 40 percent” of its accessible floor area or stock used for adult purposes qualified as an adult establishment (see City of New York v. Les Hommes, 94 N.Y.2d 267, 271, 702 N.Y.S.2d 576, 724 N.E.2d 368 [1999] ).

After this 60/40 formula became the governing standard, adult businesses sought to alter their character to ensure that they did not qualify as “adult establishments” within the meaning of the City's zoning law by reducing their adult usage to less than 40 percent of their floor area or stock. Thereafter, the City brought civil proceedings to close establishments that did not comply with the 60/40 standard (see e.g. City of New York v. Desire Video, 267 A.D.2d 164, 700 N.Y.S.2d 446 [1st Dept.1999] ).

Additionally, in 1998, the City began to bring nuisance proceedings against businesses that it believed were in technical compliance with the 60/40 formula, but were using their nonadult inventory as a “sham.” These claims for “sham compliance” were unsuccessful, the Court of Appeals finding that the guidelines must be enforced as written, and that there was nothing in the guidelines to permit considerations such as whether the nonadult stock was stable or unprofitable (Les Hommes, 94 N.Y.2d at 273, 702 N.Y.S.2d 576, 724 N.E.2d 368 [“Either the stock is available or accessible, or it is not; either the appropriate amount of square footage is dedicated to nonadult uses, or it is not.”] ).

Following these failed efforts, the New York City Council adopted and ratified Text Amendment N010508 ZRY to the 1995 Resolution (the 2001 Amendments) to address the concern that some commercial establishments were subverting the 1995 Resolution by superficially complying with the 60/40 formula but retaining their predominant, ongoing focus on sexually explicit materials or activities.

Specifically, with respect to “adult eating or drinking establishments,” the 2001 Amendments removed “substantial portion” from the definition of “adult establishment,” providing instead that a venue that “regularly features in any portion of such establishment” live performances characterized by an emphasis on “specified anatomical areas”³ or “specified sexual activities” ⁴ and excludes or restricts minors, is covered, regardless of whether it limits those performances to less than 40% of its floor area.

With respect to adult video and book stores, the 2001 Amendments modified the “substantial portion” standard to provide that nonadult material would not be considered stock-in-trade for the purpose of the “substantial portion” analysis where one or more of the following features were present:

“(aa) An interior configuration and lay-out which requires customers to pass through an area of the store with ‘adult printed or visual material’ in order to access an area of the store with ‘other printed or visual material’;

“(bb) One or more individual enclosures where adult movies or live performances are available for viewing by customers;

“(cc) A method of operation which requires customer transactions with respect to ‘other printed or visual material’ to be made in an area of the store which includes ‘adult printed or visual material’;“(dd) A method of operation under which ‘other printed or visual material’ is offered for sale only and ‘adult printed or visual material’ is offered for sale or rental;

“(ee) A greater number of different titles of ‘adult printed or visual material’ than the number of different titles of ‘other printed or visual material’;

“(ff) A method of operation which excludes or restricts minors from the store as a whole or from any section of the store with ‘other printed or visual material’;

“(gg) A sign that advertises the availability of ‘adult printed or visual material’ which is disproportionate in size relative to a sign that advertises the availability of ‘other printed or visual material,’ when compared with the proportions of adult and other printed or visual materials offered for sale or rent in the store, or the proportions of floor area or cellar space accessible to customers containing stock of adult and other printed or visual materials;

“(hh) A window display in which the number of products or area of display of ‘adult printed or visual material’ is disproportionate in size relative to the number of products or area of display of ‘other printed or visual material,’ when compared with the proportions of adult and other printed or visual materials offered for sale or rent in the store, or the proportions of floor area or cellar space accessible to customers containing stock of adult and other printed or visual materials;

“(ii) Other features relating to configuration and lay-out or method of operation, as set forth in rules adopted by the commissioner of buildings, which the commissioner has determined render the sale or rental of ‘adult printed or visual material’ a substantial purpose of the business conducted in such store. Such rules shall provide for the scheduled implementation of the terms thereof to commercial establishments in existence as of the date of adoption, as necessary” (§ 12–10[2][d] ).

Procedural History

In September 2002, plaintiffs For the People Theatres, a movie theater that showed adult films, and JGJ Merchandise Corp., an adult video store, brought an action against the City, seeking a judgment declaring the 2001 Amendments to be facially unconstitutional and unenforceable, as well as for injunctive relief. In October 2002, plaintiffs Ten's Cabaret and Pussycat Lounge commenced similar actions, which were later consolidated.

On their initial motion for a preliminary injunction, plaintiffs, all of whom had reconfigured their establishments to comply with the 60/40 allocation, argued that, in seeking to amend the 1995 Resolution, the City failed to review the data, or generate any new empirical data, regarding the purported adverse secondary effects of 60/40 establishments, instead improperly relying on the 1994 DCP Study it had used in support of the original zoning...