Knoxville v. Entertainment Resources, LLC

• Decision Date: 29 June 2005
• Citation: 166 S.W.3d 650
• Parties: CITY OF KNOXVILLE v. ENTERTAINMENT RESOURCES, LLC.
• Court: Tennessee Supreme Court

166 S.W.3d 650

CITY OF KNOXVILLE v. ENTERTAINMENT RESOURCES, LLC.

Supreme Court of Tennessee, at Knoxville.

January 4, 2005 Session.

June 29, 2005.

Angela R. Bolton and W. Morris Kizer, Knoxville, Tennessee, for the Appellant, City of Knoxville.

Philip N. Elbert and W. David Bridgers, Nashville, Tennessee, and Richard L. Gaines, Knoxville, Tennessee, for the Appellee, Entertainment Resources, LLC.

OPINION

E. RILEY ANDERSON, J., delivered the opinion of the court, in which ADOLPHO A. BIRCH, JR., JANICE M. HOLDER, and WILLIAM M. BARKER, JJ., joined. FRANK F. DROWOTA, III, C.J., filed a concurring opinion.

We granted this appeal to determine the constitutionality of a Knoxville city ordinance regulating the location of adult businesses. The chancery court upheld the ordinance and enjoined operation of the defendant's video store after finding that it fit the definition of an adult bookstore and was located within 1,000 feet of prohibited areas and therefore was operating in violation of the ordinance. The Court of Appeals reversed on the grounds that the ordinance's definition of adult bookstores is unconstitutionally vague. Because we have also determined that the ordinance is unconstitutionally vague under the United States and Tennessee Constitutions, we affirm the decision of the Court of Appeals but on the separate grounds set forth herein. We remand to the trial court for an assessment of the amount of damages incurred by the defendant as a result of the chancery court's injunction.

In 1979, the Knoxville City Council adopted an ordinance regulating, among other things, the location of "adult businesses." At all times relevant to this appeal, Knoxville City Code section 16-468 ("the ordinance") provided that adult businesses could not be located within 1,000 feet of: a residentially-zoned district; an area devoted to recreational activity; or an establishment selling alcoholic beverages. The ordinance included adult bookstores in its definition of adult businesses. An adult bookstore was defined as:

an establishment having as a substantial or significant portion of its stock and trade books, magazines and other periodicals, videotapes or other electronic media which are distinguished or characterized by their emphasis on matter depicting, describing or relating to specified sexual activities or specified anatomical areas, or an establishment with a segment or a section devoted to the sale or display of such material.

Knoxville City Code § 16-468(a) (emphasis added). The parties dispute whether the phrase "substantial or significant portion of its stock and trade" is impermissibly vague under the United States and Tennessee Constitutions.

Background

The City of Knoxville filed a complaint in Knox County Chancery Court seeking to enjoin the defendant, Entertainment Resources, from operating its store in alleged violation of the ordinance. The following facts were developed before the chancery court and stipulated by the parties.

On August 3, 1998, Entertainment Resources opened a store called Fantasy Video at 6422 Papermill Road in Knoxville, Tennessee. Entertainment Resources also operated two stores in Nashville and one in Columbia, Tennessee. It planned to open two Knoxville stores in addition to Fantasy Video.

Fantasy Video, like Entertainment Resources' other stores, rented and sold videotapes for off-site viewing. When Fantasy Video opened, its inventory consisted of 80% adult or sexually explicit, "X-rated" videos and 20% family or general videos. General videos were displayed in the store's "front room." Adult videos were displayed in the store's "back room," which was restricted to patrons 18 years of age and older.

Under the spacing provisions of the Knoxville ordinance, an "adult business" could not legally locate at the site of the Fantasy Video store. It was stipulated that the site was located next door to the New Mexicali Rose restaurant, which sold beer and liquor; within 1,000 feet of a Boy Scouts administrative building, and within 1,000 feet (as the crow flies) of a residentially zoned district, although the residential district was separated from the store by Interstate 40. Entertainment Resources did not believe that the Boy Scouts building qualified as a building devoted to recreational activity and did not believe it was within 1,000 feet of a residential district. Although Entertainment Resources had full knowledge that the New Mexicali Rose restaurant sold beer and liquor, it chose to locate Fantasy Video on Papermill Road because its lawyer had advised the company that the Knoxville ordinance was unconstitutional.

Shortly after Fantasy Video opened in August 1998, the Knoxville Police Department began inspecting the store and issuing citations for violation of the ordinance on an almost daily basis. The citations alleged that Fantasy Video was an adult bookstore within the meaning of the ordinance because a substantial or significant portion of its stock and trade constituted videotapes containing material within the ambit of the ordinance.

In response to the citations, Entertainment Resources attempted to gain clarification from the police and from the City's law director as to what constituted a "substantial or significant" portion of stock and trade under the ordinance, but no guidance was provided.

At a hearing on some of the citations in Knoxville City Court, three of the officers involved in the inspections of Fantasy Video testified that they had received no guidance or training in interpreting the ordinance. When asked to define the terms in the ordinance, Sergeant Ferguson testified that he could not define "substantial" other than, "substantial means substantial as red means red; I know red when I see it, but I can't describe red." He further testified that "significant to me means a quantity of something that, compared to something else [sic]." Officer Major testified that "substantial is substantial. I don't really have an opinion on the definition of substantial, it is self-explanatory." He further explained, "significant is just like substantial, I mean, significant is significant, just as substantial is substantial." Officer Shelton similarly testified that "substantial means substantial just like the color blue means the color blue. I can't provide any other [sic]." He also testified that "significant means significant." It was stipulated that if called to testify further, the officers would testify that in making the evaluation of "substantial" and "significant" they would look to what appeared to them to be the "important part of the business."

By November 1998, Entertainment Resources had altered the composition of Fantasy Video's inventory. A police inventory on November 17, 1998, revealed that approximately 57% of the stock was general feature videos and approximately 43% of the stock was adult-oriented videos. The balance was later adjusted again; the tally from a count on December 8, 1998, was 70% general feature and 30% adult feature. Despite these alterations, the City police continued to issue citations up until the date that the preliminary injunction was entered. As of November 1998, Entertainment Resources had been cited and found guilty of fifty-three separate violations of the ordinance. As of November 16, 1998, at least 75% of Fantasy Video's revenues were generated by the "back room" videos.

The record indicates that at least one other business in Knoxville rents and sells videos that fall within the purview of the ordinance. It was stipulated that Gemstone Video Stores have separate back rooms devoted to adult-oriented videotapes and magazines. It was stipulated that the City takes the position that Gemstone Video Stores are not "adult bookstores" within the meaning of the ordinance and that the back room stock is not a substantial or significant portion of Gemstone Video's stock and trade, but the record does not show the percentage breakdown between adult videos and general videos.

In spite of the repeated citations, Entertainment Resources continued to operate Fantasy Video. Therefore, on November 4, 1998, the City of Knoxville filed a complaint for injunctive relief seeking to enjoin Entertainment Resources from operating in violation of the ordinance. In its answer, Entertainment Resources averred numerous defenses, including the claim that the ordinance is impermissibly vague under the United States and Tennessee Constitutions.

On December 10, 1998, the chancery court granted the City's motion for a temporary injunction restraining Entertainment Resources from operating an adult bookstore at the Papermill Road location. The chancery court reasoned that a temporary injunction was appropriate because Entertainment Resources had opened the Fantasy Video store on Papermill Road with full knowledge of the ordinance, and it was not disputed that the adult videos offered for sale and rental at Fantasy Video were within the purview of the ordinance. The chancery court further noted that over 75% of the store's revenue and at least 85% of its customers were attributable to the adult videos. The court opined that the general video inventory was, "despite its number ... insignificant and insubstantial to this business's stock in trade."

For two years after the entry of the temporary injunction there was little movement on the merits of the case. Fantasy Video's general video business eventually dwindled to the point that it was only open two hours per week. In January 2001, Entertainment Resources lost its lease on the Papermill Road location and the City moved to dismiss the suit as moot. The chancery court granted that motion on July 9, 2001, except with respect to Entertainment Resources' claim for damages. Entertainment Resources argued that it was entitled to damages not only as to the Fantasy Video store, which had only operated for four months on Papermill Road prior to entry of the injunction, but also as to the two...