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Bottoms Up Enterprises, Inc. v. Borough of Homestead

October 4, 2007

BOTTOMS UP ENTERPRISES, INC. AND ISLAND INTERNATIONAL VENTURES, LLC, PLAINTIFFS,
v.
THE BOROUGH OF HOMESTEAD, DEFENDANT.



The opinion of the court was delivered by: Mitchell, M.J.

MEMORANDUM OPINION

Introduction

Plaintiffs, Bottoms Up Enterprises, Inc. and Island International Ventures, LLC, bring this action pursuant to 28 U.S.C. § 2201 and 42 U.S.C. §§ 1983 and 1985, for declaratory and injunctive relief with respect to the constitutionality of actions undertaken by the legislative and executive representatives of the Defendant, the Borough of Homestead, restricting adult entertainment establishments through a framework of zoning, licensing and regulatory provisions which, they allege, impose restrictions on their First Amendment protected expression, specifically on adult entertainment businesses. Plaintiffs allege that Defendant's actions violate their rights under the First, Fourth, Fifth and Fourteenth Amendments to the United States Constitution as well as Article I, Section 10, which prohibits states from enacting laws impairing the obligation of contracts.

Presently before the Court for disposition is Plaintiffs' Motion for a Preliminary Injunction. Both parties have submitted briefs and a hearing was held on July 10, July 12, and July 16, 2007, at which testimony and evidence were presented.

Statement of the Case

Bottoms Up Enterprises, Inc., a Pennsylvania corporation, desires to place an "exotic dance club" called "Scores" on East Eighth Avenue in Homestead. (Compl. ¶ 8.) This location at issue is zoned C-1, Central Business District. Restaurants are a permitted use in C-1. However, adult live entertainment facilities and exotic dance clubs with nude performers are prohibited uses in C-1.

Representatives of the Plaintiffs, including their attorney, Luke Lirot, were present at the May 11, 2006 meeting of Homestead Borough Council. Attorney Lirot made a presentation to Council explaining the specific characteristics of the proposed business. Attorney Lirot commented at this meeting that, given the language of the existing ordinances, he believed Scores could open on East Eighth Avenue because the dancers would not be totally nude.

Following Attorney Lirot's presentation, in July of 2006, Homestead Borough Council enacted an ordinance (No. 1185) amending the definition of "adult live entertainment facility" to specifically include references to performers wearing g-strings and opaque coverings ("pasties"). Council also enacted another ordinance in July of 2006 (No. 1184), to increase from 500 feet to 1,000 feet the setback required between certain "sensitive uses" and any adult use.

As a result, Plaintiffs could not open their proposed Scores facility in the C-1 zone. Rather, their only option would have been to submit an application to open it in the Waterfront Development District ("WDD"), a commercial zone that contains stores, restaurants and clubs.

However, unlike the C-1 zone, Plaintiffs could not simply open their business in the WDD, but would have to submit an application because the Homestead Code of Ordinances indicated that adult live entertainment was a "conditional" use in the WDD. They did not do so, but instead initiated this lawsuit.

Facts

Daniel Smithbower is the President and the sole shareholder of Bottoms Up Enterprises, Inc. (Hr'g Day 1 at 36.)*fn1 Smithbower testified that Bottoms Up Enterprises desires to purchase the former bank building located on East Eighth Avenue and to open a Scores restaurant/bar "providing First Amendment protected dance performances." (Hr'g Day 1 at 26-28.) He described Scores as a high-end supper club with semi-nude dancing. (Hr'g Day 1 at 35, 46-48; Pls.' Ex. 1.)

The former bank building is located at 145 East Eighth Avenue in the C-1 zoning district. (Hr'g Day 1 at 28.) A daycare center is currently operating on a month-to-month lease in a portion of the building. Smithbower stated that he intended to assist the daycare center in relocating. (Hr'g Day 1 at 33-34.) He further testified that there might be another daycare center in the C-1 zoning district, but that he was not exactly sure. (Hr'g Day 1 at 39.) He also acknowledged that people have their residences above some of the businesses along East Eighth Avenue. (Hr'g Day 1 at 40-41.)

Bottoms Up Enterprises, Inc. had a sales contract with Island International Ventures LLC to purchase the former bank building and later secured an option to purchase this property. (Hr'g Day 1 at 32-33; Compl. Ex. A.) However, Smithbower acknowledged that the option to purchase expired on June 15, 2006 and, that while he has been negotiating a further option to purchase, there is no written option to purchase that extends beyond June 15, 2006. (Hr'g Day 1 at 36-37.) He also acknowledged that at no point in time either before or after May of 2006 did the Plaintiffs apply for a building, occupancy or zoning permit for the former bank building. (Hr'g Day 1 at 38, 55.)*fn2 Smithbower met informally with Marvin Brown, then president of Borough Council, and addressed Brown's concerns about security by proposing to work with the Borough police department. Brown was satisfied with Smithbower's responses and was in favor of Scores opening. (Hr'g Day 1 at 22-32, 109-25.)

Smithbower appeared before Borough Council in May of 2006 (along with Attorney Lirot) and gave to Council a written overview/summary of the type of business that Scores is and three volumes of materials showing no adverse secondary effects in regard to adult entertainment uses. (Hr'g Day 1 at 26-30; Pls.' Ex. 2.) At the meeting, several Council members indicated their opposition to the project and their desire to hold a vote on it, even though there was no issue then before the Council. A number of local business people spoke in favor of the project. (Hr'g Day 1 at 31.)

At the time that Attorney Lirot made a presentation to Homestead Borough Council, the definition of an "adult live entertainment facility" under the Homestead Code was as follows:

A use including live entertainment involving persons (which may include waiters, waitresses, dancers, clerks, bartenders, contractors or others) displaying uncovered male or female genitals or nude female breasts or engaging in simulated or actual specified sexual activities related to some form of monetary compensation paid to a person, company or organization operating the use or to persons involved in such activity.

(Def.'s Ex. K.) This definition did not specifically reference g-strings or pasties and thus would have allowed Plaintiffs' proposed facility, because they did not intend for the performers to display complete nudity.*fn3

Following Attorney Lirot's presentation, on July 13, 2006, Homestead Borough Council enacted an ordinance (No. 1185) amending the definition of "adult live entertainment facility." The amended definition of "adult live entertainment facility" is as follows:

A commercial use (including, but not limited to, a use selling food or beverage) featuring or including sexually-oriented live entertainment involving persons (which may include waiters, waitresses, dancers, clerks, bartenders, contractors or others) displaying uncovered male or female genitals or nude female breasts or who are scantily clad so as to be covering the genital area with no more than a g-string or similar opaque covering sufficient to cover only or not much more than the genitals and pubic hair and/or sufficient to opaquely cover only or not much more than the nipples and areolas of a female's breasts. (Def.'s Ex. C.)

This amended definition specifically references g-strings and pasties. Council also amended § 260-30 of its Code on July 13, 2006. Section 260-30 of the Homestead Code that was in effect in May of 2006 provided, among other things, that adult use shall not be located "within 500 lineal feet of the lot line of any primary or secondary school, place of worship, public park, day-care center, child nursery, library, existing dwelling not owned by the same owner as the adult use or any site marked as a proposed future park location on any Borough official map." (Compl. Ex. D, § 260.30(A)(1).)

Under the July of 2006 amendments (Ordinance No. 1184), adult live entertainment facilities now cannot be located "within 1000 lineal feet of a residential district or the lot line" of the "sensitive uses" cited in the previous version of the ordinance. (Def.'s Ex. T § 260.30(A)(1).) As a result, Plaintiffs could not open their proposed Scores facility in the C-1 zone.

Rather, their only option would have been to submit an application to open it in the WDD zone. The Homestead Code of Ordinances indicated that adult live entertainment was a "conditional" use in the WDD zone. (Pls.' Ex. 11, § 260 Attach. 1:1, Table of Permitted Uses.)

Procedural History

Plaintiffs filed this action on March 19, 2007. Count I alleges that the legislation violates their First Amendment right to free expression. Count II alleges that the legislation constitutes a prior restraint on their First Amendment right to free expression. Count III alleges that the legislation constitutes an impermissible chilling effect on constitutionally protected speech and expression, in violation of the First Amendment. Count IV alleges that the legislation denies them equal protection of the laws and is arbitrary, oppressive and capricious and unreasonably requires them to submit to controls not imposed on other similarly situated business or properties, in violation of the Fourteenth Amendment. Count V alleges that the legislation acts in a way arbitrary and capricious as applied to their proposed business. Count VI alleges that the legislation constitutes an unlawful exercise of the state's police power in that there is no substantial relationship to the protection of public health and welfare or any legitimate governmental objective. Count VII alleges that the legislation violates Plaintiff's right in that it uses terms vague and indefinite and fails to properly define all phrases set forth therein and fails to set out distinct criteria. Count VIII alleges that the legislation violates their rights in that it lacks adequate procedural safeguards. Count IX alleges that the legislation violates their rights in that it manifests an improper purposes because it is not content-neutral and is not unrelated to the suppression of free speech. Count X alleges that the legislation contains restrictions on First Amendment freedoms that are overbroad and far greater than are essential to the furtherance of any alleged governmental interest. Count XI alleges that the legislation fails to provide sufficient alternative avenues of communication by impermissibly limiting available locations for adult businesses. Count XII alleges that the legislation grants unbridled discretion to the administrative officials in the enforcement of its provisions. Count XIII alleges that the legislation is an unlawful exercise of the state's police power and that the Borough adopted it without competent substantial evidence. Count XIV alleges that the legislation impaired Plaintiffs' contractual relationship in violation of the First Amendment and Article I, Section 10 of the Constitution.

On April 10, 2007, Plaintiffs filed a motion for preliminary injunction (Docket No. 9). On April 24, 2007, Defendant filed an answer to the complaint and a response to the motion for preliminary injunction (Docket Nos. 11-13). On May 31, 2007, an order was entered, forwarding the matter to the undersigned to conduct all proceedings through the final determination of the claims set forth in the motion for preliminary injunction (Docket No. 21).

On July 10, July 12, and July 16, 2007, a hearing was held, at which both sides presented testimony and evidence. Subsequently, post-hearing briefs were filed by both parties. (Docket Nos. 32, 36.) The Defendant's post-hearing brief reveals that, on July 25, 2007 (after the hearing concluded but while this matter was under active consideration), a Borough Council meeting was held at which a further amendment to the ordinances at issue was proposed. (Def.'s Ex. V.) On September 13, 2007, this amendment was adopted by Borough Council. See Docket No. 38.

Defendant contends that the proposed amendment (now enacted as Ordinance No. 1196) has rendered moot Plaintiffs' challenges to the conditional use and overbroad aspects of Ordinance Nos. 1184 and 1185. They also note that Ordinance No. 1196 addresses all of Plaintiffs' contentions that Ordinance Nos. 1184 and 1185 do not allow for adequate alternative avenues of communication, except for the restrictive covenants, which are private agreements to which the Borough is not a party.

On August 16, 2007, Plaintiffs filed a brief in response to the proposed 2007 amendment (Docket No. 37), in which they argue that the Court cannot take notice of the proposed ordinance, but must consider the situation as it existed at the time of the hearing. They further argue that, even if enacted, the ordinance would change nothing and still result in a "complete zone-out" of adult entertainment in Homestead. Standard of Review

The four factors which govern the Court's decision whether to issue a preliminary injunction are the following: (1) whether the movant has shown a reasonable probability of success on the merits; (2) whether the movant will be irreparably injured by denial of the relief;

(3) whether granting preliminary relief will result in even greater harm to the non-moving party; and (4) whether granting the preliminary relief will be in the public interest. Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d Cir. 1999) (citation omitted).

Discussion

Speech, be it in the form of film, live presentations, or printed matter, that is sexually explicit in content but not "obscene" is protected under the First Amendment. Schad v. Borough of Mt. Ephraim, 452 U.S. 61, 66 (1981); Phillips v. Borough of Keyport, 107 F.3d 164, 172 (3d Cir. 1997) (en banc). The Supreme Court has held that "nude dancing ... is expressive conduct, although we think it falls only within the outer ambit of the First Amendment's protection." City of Erie v. Pap's A.M., 529 U.S. 277, 289 (2000) (O'Connor, J.).*fn4

However, not every regulation of protected speech violates the First Amendment; nor is every form of speech regulation subject to the same degree of scrutiny when challenged in court. "Exacting" or "strict" scrutiny is applied to regulations that suppress, disadvantage, or impose differential burdens upon speech because of its content. Turner Broadcasting Sys., Inc. v.

F.C.C., 512 U.S. 622 (1994). In contrast, regulations that are unrelated to the content of the speech are subject to an intermediate level of scrutiny because in most cases they pose a less substantial risk of excising certain ideas or viewpoints from the public dialogue.

Regulations that restrict the time, place and manner of expression in order to ameliorate undesirable secondary effects of sexually explicit expression are regarded as content neutral and receive "intermediate" rather than "exacting" or "strict" scrutiny. City of Renton v. Playtime Theaters, Inc., 475 U.S. 41, 48 (1986) (zoning ordinances designed to combat the undesirable secondary effects of businesses that purvey sexually explicit materials are to be reviewed under the standards applicable to "content neutral" time, place and manner regulations). Reasonable time, place and manner regulations of protected speech are valid if: (1) they are justified without reference to the content of the regulated speech; (2) they are narrowly tailored to serve a significant or substantial government interest; and (3) they leave open ample alternative channels of communication. Mitchell v. Commission on Adult Entertainment Establishments, 10 F.3d 123 (3d Cir. 1993). See Phillips, 107 F.3d at 172. In City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002), two adult establishments brought suit to challenge a city ordinance that prohibited the establishment or maintenance of more than one such enterprise in the same building. The district court granted their motion for summary judgment, finding that the ordinance was a content-based regulation of speech that failed strict scrutiny. The Ninth Circuit affirmed, but on different grounds: it held that, even if the ordinance were content-neutral, the city failed to demonstrate that the prohibition was designed to serve a substantial government interest, thereby rendering it invalid under City of Renton. Specifically, the Ninth Circuit found that the city failed to present evidence upon which it could reasonably rely to demonstrate a link between multiple-use establishments and negative secondary effects.

The Supreme Court reversed. A plurality of the Court (Justice O'Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas) applied City of Renton and concluded that the zoning ordinance at issue was constitutional because the city could reasonably rely on a 1977 study to demonstrate that its current ban on multiple adult establishments in the same building served its interest in reducing crime. Id. at 429-43 (plurality opinion). Justice Kennedy wrote a separate opinion concurring in the judgment. He agreed with the plurality that the zoning ordinance at issue should be analyzed under City of Renton, but he concurred in the judgment because he believed that "the plurality's application of City of Renton might constitute a subtle expansion, with which [he did] not concur." Id. at 445 (Kennedy, J., concurring in the judgment). He concluded that the Court's precedents could allow the city to impose its regulation in the exercise of the zoning authority and that the city should not have been foreclosed by summary judgment. Justice Souter, joined by Justices Stevens and Ginsburg (and, in part, Justice Breyer), dissented Id. at 453-66 (Souter, J., dissenting).

"When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds." Marks v. United States, 430 U.S. 188, 193 (1977) (quotation marks omitted). Because Justice Kennedy concurred in the judgment on the narrowest grounds, his opinion represents the Supreme Court's holding in Alameda Books under Marks.*fn5 See World Wide Video of Washington, Inc. v. City of Spokane, 368 F.3d 1186, 1193 (9th Cir. 2004); Peek-A-Boo Lounge of Bradenton, Inc. v. Manatee County, 337 F.3d 1251, 1264 (11th Cir. 2003); SOB, Inc. v. County of Benton, 317 F.3d 856, 862 n.1 (8th Cir. 2003); Ben's Bar, Inc. v. Village of Somerset, 316 F.3d 702, 722 (7th Cir. 2003). Justice Kennedy seemed to challenge the notion that these kinds of ordinances are content neutral, stating that they "are content based and we should call them so." 535 U.S. at 448 (Kennedy, J., concurring). However, he went on to conclude that: "A zoning restriction that is designed to decrease secondary effects and not speech should be subject to intermediate rather than strict scrutiny." Id.

The Court in Alameda Book described the process it had followed in City of Renton in this way:

Our analysis of the ordinance proceeded in three steps. First, we found that the ordinance did not ban adult theaters altogether, but merely required that they be distanced from certain sensitive locations. The ordinance was properly analyzed, therefore, as a time, place, and manner regulation. We next considered whether the ordinance was content neutral or content based. If the regulation were content based, it would be considered presumptively invalid and subject to strict scrutiny. We held, however, that the Renton ordinance was aimed not at the content of the films shown at adult theaters, but rather at the secondary effects of such theaters on the surrounding community, namely, at crime rates, property values, and the quality of the city's neighborhoods. Therefore, the ordinance was deemed content neutral. Finally, given this finding, we stated that the ordinance would be upheld so long as the city of Renton showed that its ordinance was designed to serve a substantial government interest and that reasonable alternative avenues of communication remained available. We concluded that Renton had met this burden, and we upheld its ordinance.

Id. at 434 (citations omitted).

In Barnes v. Glen Theater, Inc., 501 U.S. 560 (1991), the Supreme Court indicated that it would analyze public nudity laws following the standard set forth in United States v. O'Brien, 391 U.S. 367 (1968). The O'Brien Court established a four-prong test to be applied in determining whether a government regulation of conduct violates the First Amendment. This test considers: 1) whether the regulation is within the constitutional power of the government to enact; 2) whether the regulation furthers an important or substantial government interest; 3) whether the government interest is unrelated to the suppression of free expression; and 4) whether the restriction is no greater than is essential to the furtherance of the government interest. See City of Erie v. Pap's A.M., 529 U.S. 277 (2000) (holding that an Erie ordinance proscribing nudity in public places was a content-neutral regulation that was valid under the O'Brien test).

The third step of the City of Renton test -- whether an ordinance "is designed to serve a substantial government interest" -- and the second step of the O'Brien test -- whether the ordinance "furthers a substantial government interest" -- have been described as "virtually indistinguishable." Peek-A-Boo Lounge, 337 F.3d at 1264. The Supreme Court's holdings contemplate a three-step burden-shifting process with respect to these steps. The burden shifting proceeds as follows: a city bears the initial burden of producing evidence that it relied upon to reach the conclusion that the ordinance furthers the city's interest in reducing secondary effects. To that end, a city need not "conduct new studies or produce evidence independent of that already generated by other cities, so long as whatever evidence the city relies upon is reasonably believed to be relevant to the problem that the city addresses." Alameda Books, 535 U.S. at 451, 122 S.Ct. 1728 (Kennedy, J., concurring in the judgment) (quoting Renton, 475 U.S. at 51-52, 106 S.Ct. 925); see also id. at 438, 122 S.Ct. 1728 (plurality opinion) ("[A] municipality may rely on any evidence that is reasonably believed to be relevant for demonstrating a connection between speech and a substantial, independent government interest." (quotation marks omitted)); Pap's A.M., 529 U.S. at 296, 120 S.Ct. 1382 (plurality opinion) (quoting Renton's "reasonably believed to be relevant" language). Although a municipality "must rely on at least some pre-enactment evidence," such evidence can consist of "a municipality's own findings, evidence gathered by other localities, or evidence described in a judicial opinion." Peek-A-Boo Lounge, 337 F.3d at 1268; see, e.g., Pap's A.M., 529 U.S. at 300, 120 S.Ct. 1382 (plurality opinion) (finding sufficient that "the city council relied on this Court's opinions detailing the harmful secondary effects caused by [adult] establishments ..., as well as on its own experiences"); Barnes v. Glen Theatre, Inc., 501 U.S. 560, 584, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991) (Souter, J., concurring in the judgment) (permitting a municipality to rely on prior judicial opinions); Renton, 475 U.S. at 51-52, 106 S.Ct. 925 (holding that the city was entitled to rely on the experiences of other cities and on a judicial opinion).

Once a city has provided evidence that it reasonably believed to be relevant to its rationale for enacting the ordinance, plaintiffs must be given the opportunity to "cast direct doubt on this rationale," either by demonstrating that the city's evidence does not support its rationale or by furnishing evidence that disputes the city's factual findings. Peek-A-Boo Lounge, 337 F.3d at 1265 (quoting Alameda Books, 535 U.S. at 438-39, 122 S.Ct. 1728 (plurality opinion)); see, e.g., Pap's A.M., 529 U.S. at 298, 120 S.Ct. 1382 (plurality opinion) (rejecting claim when plaintiff "never challenged the city council's findings or cast any specific doubt on the validity of those findings"). "If plaintiffs succeed in casting doubt on a municipality's rationale in either manner, the burden shifts back to the municipality to supplement the record with evidence renewing support for a theory that justifies its ordinance." Alameda Books, 535 U.S. at 439, 122 S.Ct. 1728 (plurality opinion) (citing Pap's A.M., 529 U.S. at 298, 120 S.Ct. 1382 (plurality opinion)).

Although the burden lies with the municipality, a court "should be careful not to substitute its own judgment for that of the [municipality,]" and the municipality's "legislative judgment should be upheld provided that [it] can show that its judgment is still supported by credible evidence, upon which [it] reasonably relies." Peek-A-Boo Lounge, 337 F.3d at 1273.

Daytona Grand, Inc. v. City of Daytona Beach, Fla.., 490 F.3d 860, 875-76 (11th Cir. 2007) (footnote and some citations omitted).

Evidence of Negative Secondary Effects

The government's burden at the initial step of the shifting-burden analysis has been described as very light. See Alameda Books, 535 U.S. at 451 (Kennedy, J., concurring). See also Illusions-Dallas Private Club, Inc. v. Steen, 482 F.3d 299, 313 (5th Cir. 2007); Doctor John's, Inc. v. City of Roy, 465 F.3d 1150, 1166 (10th Cir. 2006); Zibtluda, LLC v. Gwinnett County ex rel. board of County Comm'rs, 411 F.3d 1278, 1286-87 (11th Cir. 2005); World Wide Video, 368 F.3d at 1194; R.V.S., L.L.C. v. City of Rockford, 361 F.3d 402, 411 (7th Cir. 2004). Plaintiffs concede that the Borough meets its initial burden. (Docket No. 36 at 23-24.) However, they contend that they have presented sufficient evidence to cast doubt on the Borough's rationale and that the Borough has not met its burden of supplementing the record with evidence justifying its ordinances.

Defendant argues that Ordinance Nos. 1184 and 1185 were reasonable time, place and manner regulations of protected speech. It maintains that these ordinances were aimed at combating negative secondary effects caused by the presence of adult live entertainment facilities and were not directed at suppressing the erotic message, and that they were narrowly tailored and left the entire WDD zone, the largest or second largest zoning district in Homestead, open for adult live entertainment facilities.

Plaintiffs contend that there was no evidence that the ordinances were aimed at combating negative secondary effects, but rather Council's intent was to preclude Scores from opening anywhere in Homestead. They further argue that, although the ordinances appeared to leave the WDD available for adult live entertainment facilities, a number of factors (the 1,000-foot setback which was vague as to where the measurement ended, the discretion allowed to the Borough to deny the application for a conditional use and "illusory time limits" for it to do so, restrictive covenants between the owners of the Waterfront) resulted in a "complete zone-out" of live adult entertainment in the Borough.

Post-Enactment Support for Legislation

Plaintiffs argue that the Borough did not indicate that Ordinance Nos. 1184 and 1185 were enacted for the purpose of combating adverse secondary effects. However, at the hearing, Defendant presented testimony and evidence that this was the legislative purpose for their enactments and now Ordinance No. 1196 has added legislative findings in regard to reports and citing cases addressing secondary effects.

The Supreme Court has never decided whether a municipality can rely on evidence that it did not examine prior to adopting the ordinance at issue. See Alameda Books, 535 U.S. at 442 (noting that the Court did not need to reach the issue of whether the City of Los Angeles could rely on a study described in another case because the city could not prove that it examined this study before it enacted the ordinance). However, the Court of Appeals for the Third Circuit has held that a municipality can support its ordinance with a factual basis even if that basis was not presented to the legislative body prior the enactment of the measure at issue. The court stated that "we have always found it acceptable for individual legislators to base their judgments on their own study of the subject matter of the legislation, their ...


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