Joelner v. Village of Washington Park, Illinois

• Decision Date: 04 August 2004
• Docket Number: No. 03-2669.,03-2669.
• Citation: 378 F.3d 613
• Parties: Eric JOELNER, Fish, Inc. d/b/a XXXtreme Entertainment, Free Speech, Inc., and First Amendment, Inc., Plaintiffs-Appellants, v. VILLAGE OF WASHINGTON PARK, ILLINOIS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

378 F.3d 613

Eric JOELNER, Fish, Inc. d/b/a XXXtreme Entertainment, Free Speech, Inc., and First Amendment, Inc., Plaintiffs-Appellants, v. VILLAGE OF WASHINGTON PARK, ILLINOIS, Defendant-Appellee.

No. 03-2669.

United States Court of Appeals, Seventh Circuit.

Argued November 7, 2003.

Decided August 4, 2004.

Appeal from the United States District Court for the Southern District of Illinois, G. Patrick Murphy, Chief District Judge.

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Robert Herman (argued), Schwartz, Herman & Davidson, St. Louis, MO, for Plaintiffs-Appellants.

John L. Gilbert (argued), Hinshaw & Culbertson, Belleville, IL, for Defendant-Appellee.

Before COFFEY, RIPPLE, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

I. Background

A. The Parties

Eric Joelner, a resident of the Village of Washington Park, Illinois, is president and sole shareholder of Fish, Inc. d/b/a XXXtreme Entertainment, Free Speech, Inc., and First Amendment, Inc. (collectively, "Plaintiffs" or "Joelner"). All of these entities conduct, or seek to conduct, adult entertainment business within the corporate limits of Washington Park. Joelner, through Fish, Inc., has owned and operated an adult video and bookstore located at 2226 Kingshighway since at least 1995.¹

In an effort to balance Washington Park's revenue needs and its desire to protect its citizens from what ostensibly it views as the negative effects of adult entertainment businesses, the municipality has enacted ordinances, which limit the number of adult entertainment outlets within its corporate limits, including both "bookstores" and "cabarets," see infra Part I.B., and impose license fees for such establishments. However, with a population of only 5,300 covering 2.5 square miles at the confluence of two interstate highways leading into St. Louis, Missouri, adult entertainment has been the industry of Washington Park. As of May 2003, there were four licensed, one unlicensed, and two newly licensed adult cabarets. Each licensed cabaret generates around $100,000 annually in licensing and other fees for the Village. And because the population of Washington Park decreased by more than 2,000 residents between 1990 and 2000, with a corresponding loss of about $300,000 a year in state funding, the income which the adult entertainment industry generates for the Village is critical. John McCormick, Cash-strapped Town Relies on Strip Clubs to Pay Bills, Chi. Trib., Apr. 29, 2003, at A1. (R. 1, Ex. 11.)

B. The Ordinances

Ordinance 069-99, adopted by the Village Board of Trustees on September 7, 1999, defined "adult entertainment" as anything "featuring acts, performances, videos, and/or movies, involving nudity, or partial nudity, but within the permitted community standards of the Village of Washington Park...." It limited the number of such establishments to four, imposed an annual license fee of $3000, prohibited the sale or other transfer of licenses, set hours of operation, and included a severability clause.²

Then, four months later on January 11, 2000, Ordinance 01-00, although making no express reference to the prior ordinance, increased the annual licensing fee tenfold to $30,000. The stated goal of the increase was to protect the "public health, safety, and welfare" and to defray the increase in police, fire, and other costs associated with adult entertainment establishments.

Ordinance 01-22, adopted two years later on November 6, 2002, differentiates between "adult entertainment" establishments.³ It defines "adult bookstores" as "[a]ny business which sells what is commonly known as adult entertainment books, magazines, other reading materials, movies, novelties, or paraphernalia" and "adult cabarets" as "[a]ny business with adult entertainment which includes live persons performing adult entertainment and which includes nudity." The annual licensing fees were altered as well: $10,000 for an adult bookstore, and $30,000 for a cabaret ($30,000 was the annual fee for either type of adult business under Ordinance 01-00). A permissible quarterly fee payment schedule was established in section 4, and the following provisions from Ordinance 069-99 were preserved in their entirety, although renumbered: the numerical "[l]imitation and [p]urpose" (now as section 5), the license transfer prohibition (section 6), hours of operation (section 7), and the severability provision (section 8).

C. Joelner's Clashes With the Village

In January of 2003, the first in a series of disagreements over these ordinances began between Joelner and the Village. Joelner objected to the "increase" in annual licensing fees to $10,000, established in November of 2002 through Ordinance 01-22, for his existing bookstore at 2226 Kingshighway. Apparently, notwithstanding both Ordinances 069-99 and 01-00 which had, prior to Ordinance 01-22, set license fees for adult bookstores at $3000 and $30,000 respectively, Joelner had only been paying $100 per year to operate his business, without any documented objection. But in a letter dated December 23, 2002, the Village informed him of the "new" annual adult bookstore fee and requested that he make a first-quarter payment of $2500. On or around January 24, 2003 Joelner did so, but also remitted in the same check an additional $7500 first-quarter payment for an adult cabaret license.

The Village returned the $10,000 check to Joelner on February 20, informed him that his existing business was licensed only as a bookstore, not as a cabaret, and requested that Joelner forward his first-quarter bookstore fee as soon as possible. However, he made no further payment.

Notwithstanding this dispute with the Village over the fee for his bookstore's annual license, Joelner, through various corporate entities, attempted to obtain three new adult entertainment licenses for properties located at 2226 Kingshighway, 2215-2221 Kingshighway, and 5900-6000 Bunkum Road.⁴ At the April 15, 2003 Village Board of Trustees meeting, Joelner, as Fish, Inc., sought a license to expand his current bookstore business at 2226 Kingshighway to include cabaret entertainment, and, as First Amendment, Inc., sought a license to open a new combination cabaret and bookstore at 2215-2221 Kingshighway. As Joelner's requests were the final item on the Board's agenda, before any discussion or mention of his license applications, Ordinance 01-27 was adopted, increasing the number of adult businesses allowed in Washington Park from four to six.⁵

After the Board approved the ordinance, it then immediately granted the two newly available licenses — but not to Joelner. One license was awarded to a former village police chief's son, a convicted felon, whose application did not appear to be on the agenda, and the other to the owner of a trucking firm in the Village, whose application was on the agenda, immediately preceding Joelner's.

The Board then temporarily denied Joelner's two applications, accused Joelner of having past-due license fees for his currently operating bookstore (whether the Board was concerned with only the November 2002 fee increase or other arrearages is unclear), discussed revocation of Joelner's bookstore license, and finally voted to hold a hearing at a later time about the 2226 Kingshighway business.

Before the Village Board next convened, Joelner reached an informal agreement with the Village whereby he agreed to postpone the filing of any lawsuit against the Village until after June 1, in exchange for the Village's assurances that they would not seek to terminate his bookstore license during that same time. The Village continued to urge Joelner to "pay his delinquent adult bookstore fees."

Then at the next meeting on May 6, the Board briefly discussed the status of Joelner's 2226 Kingshighway business, and was informed by its attorney that negotiations were proceeding between Joelner and the Village regarding the disputed arrearages. The Board took no further action regarding the 2226 Kingshighway business, and then later, during that same meeting, considered Joelner's third license application seeking to open a combination adult cabaret and bookstore at 5900-6000 Bunkum Road, as Free Speech, Inc. Based upon the alleged arrearages and the Board's claimed desire to avoid an over-saturation of adult businesses at that particular location (another adult entertainment outlet was licensed for a property immediately adjacent to that proposed by Joelner), the Board denied this third and final application.

After negotiations regarding the 2226 Kingshighway business apparently failed, Joelner filed suit against the Village on May 23, 2003 in the Southern District of Illinois and asserted that the ordinances at issue were unconstitutional restrictions of protected speech both on their face and, with respect to the numerical restriction, as applied. Joelner also filed a preliminary injunction motion to prevent enforcement of the ordinances, and to force the Village to grant the three requested licenses. Again Joelner and the Village reached an informal agreement, whereby Joelner was allowed to continue to operate his existing bookstore pending a ruling on the preliminary injunction.

After a hearing on June 12, 2003, the district court granted in part and denied in part Joelner's request for a preliminary injunction. The court found the ordinances constitutional and refused to prohibit the Village from enforcing the ordinances with respect to both the numerical limitations and licensing fees imposed on adult entertainment outlets. It also refused to require the Village to issue any cabaret licenses to Joelner for the new locations. However, the court did order the Village to allow Joelner to continue to operate his current bookstore business at 2226 Kingshighway, and also to consider in a new hearing Joelner's application for a cabaret license for that same location, so long as he paid any arrearages and the newly approved November 2002 fees. This appeal followed....