Tool Box v. Ogden City Corp., No. 01-4134.

• Decision Date: 22 January 2003
• Docket Number: No. 01-4134.
• Citation: 316 F.3d 1167
• Parties: The TOOL BOX, a Utah Corporation, Plaintiff-Appellant, v. OGDEN CITY CORPORATION, a Utah Municipal Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

316 F.3d 1167

The TOOL BOX, a Utah Corporation, Plaintiff-Appellant, v. OGDEN CITY CORPORATION, a Utah Municipal Corporation, Defendant-Appellee.

No. 01-4134.

United States Court of Appeals, Tenth Circuit.

January 22, 2003.

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W. Andrew McCullough, McCullough & Associates, LLC, Orem, UT, for the Plaintiff-Appellant.

Donald L. Dalton, Dalton & Kelley, Salt Lake City, UT, for the Defendant-Appellee.

Before HARTZ, ALDISERT^* and PORFILIO, Circuit Judges.

ALDISERT, Circuit Judge.

Tool Box, Inc., operator of a nude dancing establishment, appeals from a grant of summary judgment in favor of Ogden City Corporation, whose review board used an industrial park's protective covenants to prevent the establishment from operating in an area zoned for sexually oriented businesses.

Nude dancing qualifies as expressive conduct that "falls within the outer ambit of the First Amendment's protection." City of Erie v. Pap's A.M., 529 U.S. 277, 289, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000) (plurality opinion); Barnes v. Glen Theatre, Inc., 501 U.S. 560, 566, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991) ("[N]ude dancing ... is expressive conduct within the outer perimeters of the First Amendment, though only ... marginally so.").

This appeal requires us to decide whether a First Amendment prior restraint analysis applies here, and if so, whether procedures that permit government officials to prevent an establishment from operating in a permissible zoned area constituted prior restraint. We hold that the doctrine of prior restraint applies in favor of the Appellant, and accordingly, reverse the judgment of the district court.

This appeal concerns a federal question arising under 42 U.S.C. § 1983. Consequently, the district court had jurisdiction of the underlying action pursuant to 28 U.S.C. §§ 1331 and 1343. The appeal was timely under Rule 4, Federal Rules of Appellate Procedure. This Court has appellate jurisdiction pursuant to 28 U.S.C. § 1291.

I.

In 1976, Ogden City established its Ogden Commercial and Industrial Park on the western edge of town to create an "environment where manufacturing uses could develop and prosper." App. at 26. To accommodate manufacturing interests and to provide for new development and expansion, Ogden City zoned the area "M-2" — a heavy industrial zone. The industrial park has since expanded progressively to the south and west of the original site.

Fourteen years later in 1990, Ogden City passed a Sexually-Oriented Business ("SOB") zoning ordinance, designed to "establish reasonable and uniform regulations to prevent the concentration of sexually-oriented businesses or their location in areas deleterious to the community of Ogden, and to ... prevent inappropriate exposure to the community." Ogden City, Utah, Ordinance § 15-13-13(A) (1990). Through a stated "time, place and manner" regulation, the SOB ordinance relegated such enterprises to very specific portions of the city — among those the areas zoned M-2. Id. at § 15-13-13(C).

Aiming for further development of its industrial park and preservation of a "wholesome environment for the conduction of selective manufacturing and marketing enterprises," Ogden City mapped out new plats in 1995 and entered into "protective covenants" restricting the use of land within the park. App. at 26. The covenants gave Ogden City a continued voice in how subsequent grantees could use the land. Indeed, Paragraph III of the Ogden Commercial and Industrial Park Protective Covenants set up a "special approval committee" known as the "Industrial Park Review Board" specifically to enforce the covenants. Id. The Mayor of Ogden City would appoint the committee's three members, two of whom would be Ogden City employees and one of whom would be an industrial park land owner or her representative. Although the covenants provided that "Review Board decisions may be appealed to the Mayor, whose decision shall be final," Id., the covenants offered no standards either for the Review Board's evaluation of which businesses would gain development approval or for the Mayor's review of an appealed committee determination. Neither the covenants nor the 1990 ordinance expressly bar SOBs from the M-2-zoned industrial park.

Jed Wilhite, who bought lot 112A from Ogden City pursuant to the 1995 protective covenants, leased the space to The Tool Box, Inc. ("Appellant") on October 15, 1999. The lease agreement with Tool Box President Michelle Lutz noted that the enterprise would operate as an SOB, specifically as a nude dance club. On December 29, 1999, Appellant's counsel sought assurance from the Ogden City Attorney that the covenants would not prohibit the SOB from operating in the Ogden City Commercial and Industrial Park. Five days later on January 3, 2000, the Ogden City Attorney confirmed in a reply letter that the covenants would "not constitute a bar to [Tool Box's] proposed business." Id. at 38. Based on this guarantee, Wilhite and Lutz began construction on an specially designed adult entertainment facility.

Notwithstanding the Ogden City Attorney's assurances, the Industrial Park Review Board informed Wilhite on April 20, 2000 that the committee rejected Wilhite and Tool Box's site plan because "the proposed use [was] not ... in accordance with the operative Protective Covenants." Id. at 39. The Review Board did approve the building's architectural drawings and its aesthetic appearance. Id. at 40. The Review Board stayed the "issuance of a building permit ... pending resolution of this issue either by use change or final resolution of an appeal to the Mayor for final determination." Id. at 39.

Wilhite, the owner of the land, appealed to Ogden City Mayor Matthew Godfrey. On May 19, 2000, Mayor Godfrey summarily affirmed the Review Board's decision, "recognizing the discretion granted to the exercise of judgement [sic] by the Review Board under Article IX of the Protective Covenants." Id. at 44.

A.

Tool Box filed suit under 42 U.S.C. § 1983 in the district court against Ogden City Corporation on June 1, 2000, seeking declaratory relief, injunctive relief, and damages resulting from the Review Board's permit denial. On September 18, 2000, the district court denied Tool Box's motion for a preliminary injunction that would have enjoined Ogden City from using protective covenants to prevent Tool Box from locating the business in the industrial park. Tool Box then filed a motion for partial summary judgment on the ground that the protective covenants, as applied by Ogden City to prevent Tool Box from establishing and operating a nude dancing business in the industrial park, constituted an unconstitutional prior restraint on Tool Box's First Amendment rights. The district court denied the motion on March 5, 2001. Ogden City subsequently moved for summary judgment and dismissal for no cause of action. The district court granted Ogden City's motion and dismissed Tool Box's action on June 26, 2001. Tool Box filed a proper notice of appeal on July 5, 2001.

B.

Tool Box contends that the district court incorrectly eschewed a prior restraint analysis of the protective covenants in favor of the test set forth in United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968), for regulations that are content-neutral but impact expression. Under the four-pronged test developed by the Court in O'Brien, the district court determined that the protective covenants were government regulations which: 1) fell within the government's constitutional powers; 2) furthered "important or substantial government interest[s]"; 3) were unrelated to the suppression of free expression; and 4) were no greater than absolutely necessary to satisfy those interests. 391 U.S. 367, 377, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968).

Tool Box argues that the O'Brien test was inappropriate for protective covenants that simply allowed Ogden City to prevent Tool Box from opening, without adequate procedural safeguards. It contends that the court should have used a prior restraint analysis to conclude that the protective covenants constituted an unlawful prior restraint because: 1) the covenants permitted city officials to use unbridled discretion in determining whether a nude dancing establishment could open in an area zoned specifically for such businesses; and 2) because the covenants lacked adequate procedural restraints.

II.

This Court reviews a district court order granting summary judgment de novo. Camfield v. City of Okla. City, 248 F.3d 1214, 1224 (10th Cir.2001). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Federal Rules of Civil Procedure. "When applying this standard, we view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party." Camfield, 248 F.3d at 1224.

III.

At the outset, we must determine whether Tool Box has standing to challenge the protective covenants. Tool Box argues that it objects to how the protective covenants were applied — that Ogden City officials improperly exploited the covenants so as to grant unbridled discretion in the Review Board and the Mayor to determine whether the business could open. On its part, Ogden City contends that Tool Box mounts a facial challenge to the protective covenants and thus lacks standing because the Review Board and the Mayor may constitutionally apply the covenants.

A.

The Court subjects nebulous, overbroad regulation in the realm of protected expression to facial review, even though the regulation may be applied constitutionally in a certain scenario. Forsyth County v. Nationalist Movement, 505 U.S. 123, 129, 112 S.Ct. 2395, 120 L.Ed.2d 101 (1992). A litigant has...