Keep Out! NYC Adult Biz Zoning Restrictions Upheld

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Recently, on June 7, 2017, in the case of  People Theatres of N.Y. v. City of New York, the New York State Court of Appeals, the highest court in the state, upheld that the City of New York can, through zoning laws, legally restrict adult businesses from operating in particular parts of the City.  The adult industry fought valiantly against the zoning ordinance for years, but ultimately, was unsuccessful.

For decades, adult businesses have dealt with zoning laws chasing them out of various areas of municipalities.  Usually, zoning legislation either concentrates adult uses in a particular geographic area of the locality, or disperses adult uses by implementing distance requirements.  This history of the zoning ordinance at issue is long and complex. It starts in 1995, with the New York City Council passing a law of the dispersal-type, barring adult establishments from residential zones and most commercial and manufacturing zones. It was also mandated that, where permitted, adult businesses had to be located at least 500 feet from houses of worship, schools, day care centers, and other adult businesses.

The ordinance wa passed based on a 1993-1994 study by the NYC Department of City Planning (DCP). The study allegedly found that “adult video and bookstores, adult live or movie theaters, and topless or nude bars,” caused negative secondary impacts, including increased crime, diminished property values, reduced shopping and commercial activity, and a perceived decline in residents’ quality of life. After public hearings, the City’s Planning Commission issued a report, adopting the findings and conclusions of the study and noting that the businesses with adverse secondary impacts had “a predominant, on-going focus on sexually explicit materials or activities.” Remember this quote, as it will come up several times here later on.

The Court in the recent People Theatres decision, at pages 2-3, summarized the ordinance as follows:

The 1995 Zoning Ordinance defined an “adult establishment” as a commercial establishment a “substantial portion” of which was “an adult book store, adult eating or drinking establishment, adult theater, or other adult commercial establishment, or any combination thereof.” In turn, an “adult book store” (a term meant to embrace stores selling or renting sexually explicit video material, as well as books and magazines) was defined as having a “substantial portion” of its “stock-in-trade” in, among other things, printed matter or video representations depicting “specified sexual activities” or “specified anatomical areas,” as defined in the regulations. An “adult eating or drinking establishment” was defined as an eating or drinking establishment that excludes minors and “regularly features” live performances or films emphasizing “specified sexual activities” or “specified anatomical areas,” or where the employees regularly expose “specified anatomical areas” to patrons as part of their employment.

The original 1995 zoning ordinance was challenged by some members of the adult industry affected by it (Stringfellow’s of New York, Ltd. v City of New York (“Stringfellows I”)), 91 N.Y.2d 382 (1998). The plaintiffs contended that the zoning restrictions were content-based suppressions of speech, and accordingly, violations of the First Amendment of the Federal Constitution and article I, § 8 of the State Constitution.  The case made it up to the Court of Appeals for review of the law for the first time (prior to the litigation which just recently concluded, which was the second time). In Stringfellows I, the Court issued a decision in 1998 declaring that the law was, in fact, constitutional. The Court based its decision on the test set out in the 1986 U.S. Supreme Court case of City of Renton v Playtime Theaters, 475 U.S. 41, 89 L. Ed. 2d 29, 106 S. Ct. 925 (1986).  The test, for determining when it is permissible to use zoning to single out adult uses without violating the First Amendment of the U.S. Constitution, requires courts consider whether:

1. The predominant purpose of zoning is to suppress the sexually explicit speech itself, or rather, to eliminate the “secondary effects” of adult uses;
2. The zoning regulation furthers a substantial governmental interest;
3. The zoning regulation is “narrowly tailored” to affect only those uses which produced the unwanted secondary effects; and
4. The zoning regulation leaves open reasonable alternative locations for adult uses.

The Court in the People Theatres decision, at pages 3-4, explained its reasoning in Stringfellows I:

This Court held that the Ordinance was content-neutral because it was not “purposefully directed at controlling the content of the message conveyed through adult businesses,” but instead “was aimed at the negative secondary effects caused by adult uses, a legitimate governmental purpose” (Stringfellow’s of New York v City of New York, 91 NY2d 382, 397, 399 [1998]). We further ruled that the Ordinance was not broader than necessary, since it “protect[ed] only those communities and community institutions that are most vulnerable to . . . adverse impacts” (id. at 400), and that reasonable alternative avenues of communication were assured, because the zoning “allow[ed] adult businesses to remain in districts that permit a wide mix of commercial, retail, entertainment and manufacturing uses” and, in almost every instance, were “within a 10-minute walk from a subway line or a major bus route” (id. at 403). The 1995 Ordinance was “not constitutionally objectionable” (id. at 406) under the standards of Renton v Playtime Theatres, Inc. (475 US 41 [1986]) and Matter of Town of Islip v Caviglia (73 NY2d 544 [1989]).

So, the Court basically said that the law was not purposefully directed at controlling the content of the message conveyed through adult businesses, but instead aimed at “negative secondary effects caused by adult uses.” The Court called these negative secondary effects a legitimate governmental purpose with the law being narrowly tailored to serve that government interest.

In 1998, the City’s Department of Buildings and its Planning Commission issued an Operation Policy and Procedure Notice clarifying that any commercial establishment with at least 40 percent of its customer-accessible floor/cellar area or stock-in-trade used for adult purposes qualified as an adult establishment. This became known as the “60/40 test.”

As the City began to enforce the ordinance, it allegedly determined that adult businesses were attaining technical compliance with the 60/40 test, but without altering their predominant focus on sexually explicit activities or materials. The city claimed the 60/40 businesses were in “sham” compliance.

In response, in 2001, the NY City Council approved significant changes to the zoning regulations. These changes, implemented as amendments to the ordinance, considerably reduced the significance of the 60/40 test. The Court in the People Theatres decision, at pages 5-6, summarized the amendments as follows:

With respect to “adult eating or drinking establishments,” the 2001 Amendments removed “substantial portion” from the definition, providing instead that a venue is covered if it regularly features live performances characterized by an emphasis on certain “specified anatomical areas” or “specified sexual activities” in any portion of the establishment, regardless of whether it limits those performances to less than 40% of its floor area. In other words, a club featuring topless or nude dancers qualifies as an “adult eating or drinking establishment” no matter the proportion of its space devoted to adult entertainment.

With regard to adult bookstores, the 2001 Amendments formally kept the 60/40 test, with the added provision that if a store passes the test, but meets at least one of eight criteria, then the store’s non-adult material will not be considered stock-in-trade for the purpose of the “substantial portion” analysis. For example, if a store has peep booths, i.e. enclosures “where adult movies or live performances are available for viewing by customers,” then it qualifies as an adult bookstore, no matter how many nonadult video discs and magazines it stocks.

It is the constitutionality of these amendments which were the subject of the recent litigation concluding in June 2017 (the second time the law made it to the NYS Court of Appeals).

In reviewing the Amendments, the Court referred to the United States Supreme Court’s framework established in Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002). Such case set out what a municipality must prove in order to for a zoning ordinance that regulates adult businesses to survive a First Amendment challenge. The Alameda test is a three-pronged approach as follows:

(1) First, the burden is on the municipality to present evidence which “…must fairly support the municipality’s rationale for its ordinance” (id. at 438). If the municipality is successful in doing so, move to the second prong.

(2) Next, the burden shifts to plaintiff “to cast direct doubt on this rationale, either by demonstrating that the municipality’s evidence does not support its rationale or by furnishing evidence that disputes the municipality’s factual findings” (id. at 438-439). If the plaintiff fails, the municipality prevails. If the plaintiff is successful, then move to the third prong.

(3) Finally, “[i]f 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” (id. at 439).

According to the Court of Appeals, the question at issue in the recent People Theatres litigation was what burden of proof did the City have to meet to comply with the third prong.  In other words, what did the City need to show to adequately supplement the record to justify the ordinance? The Court, at pages 25-26 of the decision, referred to its previous review of the case during the prior litigation where the first prong (which, like the third prong, puts the burden on the City), as follows:

In discussing whether the City had met its initial burden at the first stage of Alameda Books, this Court noted that “a municipality’s burden to prove that it has a substantial interest in regulating a particular adult activity is not a very heavy one” (6 NY3d at 80) and we quoted Justice Kennedy’s concurrence in Alameda Books, which stated that “very little evidence is required” because generally “courts should not be in the business of second-guessing fact-bound empirical assessments of city planners” (id., quoting Alameda Books, 535 US at 451 [Kennedy, J., concurring]).

So, the Court had given substantial deference to the City, saying that very little evidence is needed, and courts should not be second guessing city planners. So, in effect, it was established in the previous litigation that the City doesn’t need to provide much with respect to the first prong. With respect to the third prong at issue here, the Court concluded that, like the first prong, the City doesn’t have to provide much. More specifically, the Court in the People Theatres decision at page 26, stated:

Then, in setting out what the City would have to show at the third Alameda Books stage, we clearly implied that the same evidentiary burden would apply. In particular, we required evidence that “fairly support[s]” the conclusion that there is an ongoing focus on the sexually explicit (id. at 84). The “fairly support” language was drawn from Alameda Books, which stated that, at the first stage of the three-part framework, a municipality, seeking to show a relation between speech and a government interest, “may rely on any evidence that is reasonably believed to be relevant” (Alameda Books, 535 US at 438 [internal quotation marks omitted]), but cannot “get away with shoddy data or reasoning,” and must adduce evidence that “fairly support[s] the municipality’s rationale for its ordinance” (id.). We further emphasized the modest burden placed upon the City at the third stage by noting that the City need not “perform a formal study or a statistical analysis, or . . . establish that it has looked at a representative sample of 60/40 businesses in the city” (6 NY3d at 84).

So, based on Alameda, according to the Court, the City cannot get away with “shoddy data or reasoning,” yet it does not need to perform a formal study or statistical analysis.  [Insert confused emoji here – This seems to be quite an ambiguous standard].  In view of that standard, the Court, at pages 29-30, considered the evidence as follows:

The Appellate Division found that all but one of the adult bookstores had peep booths for viewing adult films, with an average of about 17 booths per store. Peep booths, by design, obviously promote sexual activities. The Appellate Division further found that all the bookstores used signage, displays, and layouts to promote sexually focused adult materials and activities. In addition, as the trial court found, many of the adult bookstores sold sex toys, adult novelties, and the like in the nonadult sections of the stores. This evidence showed that most of the adult bookstores predominantly emphasized the promotion of sexual materials and activities.

The Court held, at page 31, that “…once the standard [relating to the burden of prong of the third prong] is clarified, it is evident as a matter of law that the City met its burden of showing that the adult establishments continued to have a predominant focus on sexually explicit materials and activities. It follows that the 2001 Amendments are facially constitutional.” …And, unfortunately, that means that adult establishments will have to abide by the law, and for the foreseeable future, hide in areas of the City that they are not “zoned out” of.

In this case, People Theaters, the NYS Court of Appeals relied on the U.S. Supreme Court’s Alameda decision.  In the last decade and a half since that 2002 decision issued, adult entertainment has become much more mainstream and accepted by general society.  Here, the NYS Court followed the precedent set by the U.S. Supreme Court.  Typically, the court of last resort for a case involving a state law issue in New York State is, in fact, the NYS Court of Appeals.  I think there is a reasonable argument though to be made here that a federal issue is at stake relating to the First Amendment, which could make the case appealable to the federal level, namely, the U.S. Supreme Court.  Recently, the U.S. Supreme Court overturned, on First Amendment grounds, the decades-long ban on trademarking of “disparaging” marks.  The Brunetti case will soon be looked at by the Federal Circuit, meaning that the prohibition of trademarking “immoral” or “scandalous” marks is up for review.  It is highly likely that such prohibition will be lifted as well.  Read my full article on those cases here.  This zoning case could follow in the footsteps of such cases, and potentially, result in a game-changing outcome as well.

In the meantime, many adult-oriented clubs and stores will shutter or have to relocate as failing to comply with the amended ordinance. Some business will also wind up forever lost to online media, like cam sites where a performer performs via web cam to fantasizing customers watching from home. Strip clubs have already taken a big hit in having to compete with this booming new technology. Adult movie, bookstores, and novelty shops have also taken a hit with some market share being lost to online retailers. The zoning away of “brick and mortar” adult businesses makes it even harder for them to compete.

In the movie, Dirty Dancing, Patrick Swayze famously remarked, “Nobody puts Baby in a corner.” I hope the adult businesses of New York City will take a similar attitude and explore an appeal to the federal level.

UPDATE: The adult entertainment businesses here plan to file a petition appealing to United States Supreme Court, as  reported by XBiz. The U.S. Supreme Court, however, picks and chooses which cases it will hear.  So whether the petition will be granted will remain to be seen. I will update this article as news comes in.

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