TK's Video, Inc. v. Denton County, Tex., s. 93-4631

• Decision Date: 20 June 1994
• Docket Number: Nos. 93-4631,93-5234,s. 93-4631
• Citation: 24 F.3d 705
• Parties: TK'S VIDEO, INC., Plaintiff-Appellant, v. DENTON COUNTY, TEXAS, Defendant-Appellee. TK'S VIDEO, INC., Plaintiff-Appellee, v. DENTON COUNTY, TEXAS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 705

24 F.3d 705

TK'S VIDEO, INC., Plaintiff-Appellant, v. DENTON COUNTY, TEXAS, Defendant-Appellee.

TK'S VIDEO, INC., Plaintiff-Appellee, v. DENTON COUNTY, TEXAS, Defendant-Appellant.

Nos. 93-4631, 93-5234.

United States Court of Appeals Fifth Circuit.

June 20, 1994.

Opinion Denying Rehearing July 26, 1994.

Brad Reich, Arthur M. Schwartz, Michael W. Gross, Denver, CO, for appellant in No. 93-4631.

Terrence S. Welch, Jimmy Edward Crouch, William C. Arnold, Pamela A. Wells, Denton County Crim. Dist. Atty., Dallas, TX, for appellee in No. 93-4631.

Terrence S. Welch, William C. Arnold, Vial, Hamilton, Koch & Knox, Dallas, TX, for appellant in No. 93-5234.

Brad Reich, Arthur M. Schwartz, Michael W. Gross, Denver, CO, Malcolm Dade, Dallas, TX, for appellee in No. 93-5234.

Appeals from the United States District Court for the Eastern District of Texas.

Before GOLDBERG, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

TK's Video, Inc., an adult book and video store, sued Denton County, Texas, contending its licensing requirements for "adult" businesses violate the First and Fourteenth Amendments. ¹ The district court held several licensing requirements unconstitutional, severed them, upheld the others, and awarded attorney's fees, 830 F.Supp. 335. Both TK's and Denton County appealed. We reject contentions that the County's licensing scheme was impermissibly broad and failed to provide adequate procedural protection, including judicial review. We affirm except in one particular. We find that the County regulation fails to assure maintenance of the status quo while processing an application for a license by a business existing when the County adopted its regulation.

I.

Erotic nonobscene printed matter, films, and live entertainment are sheltered by the First Amendment, Mitchell v. Commission on Adult Entertainment Establishments, 10 F.3d 123, 130 (3rd Cir.1993), but enjoy less protection than some other forms of speech such as political speech. Young v. American Mini Theatres, Inc., 427 U.S. 50, 70, 96 S.Ct. 2440, 2452, 49 L.Ed.2d 310 (1976). There is no contention that TK's sells obscene pornographic material. Rather, TK's is regulated as an adult book and video store.

We distinguish between regulating the content and regulating the consequence of protected activity. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 46-48, 106 S.Ct. 925, 928-29, 89 L.Ed.2d 29 (1986). A content-neutral time, place, or manner restriction must (1) be justified without reference to the content of the regulated speech; (2) be narrowly tailored to serve a significant or substantial governmental interest; and (3) preserve ample alternative means of communication. Id.

Under the first City of Renton factor, the Denton County order must justify its restrictions by reference to effects attending the regulated speech. The order, by its own terms, combats pernicious side effects of adult businesses such as prostitution, disease, street crime, and urban blight. It does not censor, prevent entrepreneurs from marketing, or impede customers from obtaining communicative material. The County's regulation does not on its face regulate content. Rather, the regulation is aimed at the impact on the surrounding community. But there are also procedural limits to regulating even at this lesser level of protection.

In FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990), Justice O'Connor, writing for Justices Stevens and Kennedy, and joined in the judgment by Justices Brennan, Marshall, and Blackmun, stated that content-neutral regulations contain adequate procedural safeguards when (1) any prior restraint before judicial review of the licensing process is for

a specified brief period during which the status quo is maintained; and (2) there is prompt judicial review after denial of a license.

II.

TK's first charges that the Denton County order, which provides that a county official shall issue an operating license within 60 days after receiving the application unless he discovers one of several disqualifying facts, fails to provide adequate procedural safeguards. ² TK's argues that the county must have a deadline shorter than 60 days and that it must not interfere with normal business operation during the application process.

Under FW/PBS, the County must ensure that any restraint before judicial review is limited to a specified brief period. In Teitel Film Corp. v. Cusack, 390 U.S. 139, 141, 88 S.Ct. 754, 755-56, 19 L.Ed.2d 966 (1967) (per curiam), the Supreme Court found that 50 to 57 days is not a specified brief period. It is true that Denton County's order placed a 60-day limit on licensing procedures after receipt of an application. But the regulation in Teitel was content-based. The ordinance in Teitel also required administrators to review films before they could be shown, a relatively easy task compared to licensing adult businesses and the people who run them. Licensing entails reviewing applications, performing background checks, making identification cards, and policing design, layout, and zoning arrangements. We are persuaded that Denton County's order creates less of a danger to free speech and requires a more time-consuming inquiry than screening movies. We conclude that here 60 days for acting on license applications imposes no undue burden.

TK's also urges that the regulation is invalid for a related reason. It urges that Denton County fails to assure maintenance of the status quo. The contention is that the County cannot constitutionally shut down an existing business while its application for a license is pending and that TK's was operating when Denton County adopted its regulation. The County points out that it has not attempted to close TK's; that because its regulation is content-neutral, it is not obligated to refrain from regulation during the licensing period. The district court rejected TK's contention concluding that interim regulation is implicit in a valid period for issuing a license. This is true as far as it goes, but it is qualified by the further limit that the County must maintain the status quo. We agree that an applicant for a license not in business when the Order was adopted is not free to operate while its license is pending.

Maintaining the status quo means in our view that the County cannot regulate an existing business during the licensing process. It is no answer that the County has not elected to do so. The absence of constraint internal to the regulation is no more than open ended licensing. Businesses engaged in activity protected by the First Amendment are entitled to more than the grace of the State.

The regulating order does not address the problem. The order maintains the status quo pending judicial review for licensees facing suspension or revocation. An applicant denied a license has a right to de novo review by the state district court and, by the terms of the Order, filing an appeal stays a Decision of the Director of Public Works in suspending or revoking a license until final decision by the state district court. Because TK's was in business when the Order was adopted, its free speech activity cannot be suppressed pending review of its license application by the County.

TK's also contends that the Order is deficient in failing to provide an automatic stay pending appeal of an administrative decision denying an application for a license. This argument is in essence a twin of the contention that the status quo must be maintained. We have concluded that the County cannot alter the status quo during the licensing process. There is then nothing to stay except a denial of a license. Stated another way, the issue is whether a business must be This does not answer the further question of how much of the total licensing process must be complete within the specified brief period, specifically whether the brief period includes completion of judicial review. Despite contrary suggestions in Justice Brennan's opinion in FW/PBS, Inc. and some uncertainty in the language of Justice O'Connor's opinion in the same case, we read the Supreme Court to insist that the state must offer a fair opportunity to complete the administrative process and access the courts within a brief period. A "brief period" within which all judicial avenues are exhausted would be an oxymoron.

allowed to commence operation without a license during judicial review. Here we agree with the district court that a valid time period within which the County can act carries the implicit rejection of such required interim licensing. Nor is this unduly restrictive, given the availability of expeditious judicial review. A rejected license applicant has thirty days to seek judicial relief before the order of the Director of Public Works becomes final. National Socialist Party v. Village of Skokie, 432 U.S. 43, 44, 97 S.Ct. 2205, 2206, 53 L.Ed.2d 96 (1977).

TK's objects that the order does not provide automatic and prompt judicial review, or an automatic stay of an order denying a license. As we explained, the Order provides that filing a notice of appeal to the state district court of Denton County stays an administrative decision revoking or suspending a license. So the focus of TK's contention is on the absence of a stay of an order denying a license. FW/PBS requires only a prompt judicial hearing, a standard that the order meets by giving an unsuccessful license applicant 30 days to appeal to a district court in Denton County "on a trial de novo basis." The availability of expeditious judicial review obviates the need for an automatic stay. National Socialist Party v. Village of Skokie, 432 U.S. 43, 44, 97 S.Ct. 2205, 2206, 53 L.Ed.2d 96 (1977).

III.

A.

TK's urges that the County's list of persons associated with its business who must be licensed is impermissibly broad. Denton County required a license from numerous persons associated with...