City’s permit rules for adult businesses ruled constitutional

Tuesday, January 26, 1999

Raleigh, N.C.'s ordinance mandating special permits for adult entertainment businesses does not infringe on First Amendment freedoms, a federal appeals court panel has ruled.

Steakhouse, Inc. sued the city in federal court in 1997 after officials at the Raleigh Board of Adjustment rejected its application for a permit to offer topless dancing.

The board rejected Steakhouse's proposal because the business site did not offer a sufficient number of parking spaces and failed to show that offering topless dancing would not harm adjacent properties and negatively affect traffic control.

After a federal judge denied Steakhouse's motion asking for a permit, the business appealed to a three-judge panel of the 4th U.S. Circuit Court of Appeals. Steakhouse argued that the city's permit plan violated First Amendment free-expression rights and constituted an unconstitutional prior restraint on speech.

However, in its Jan. 22 decision in Steakhouse, Inc. v. City of Raleigh, the 4th Circuit rejected these claims, finding that the permit ordinance was constitutional. According to the court, the permit requirement enabled city officials to regulate businesses that created harmful secondary effects — such as increased crime and decreased property values — commonly associated with adult businesses.

“Nude (dancing) and topless barroom dancing have a long history of spawning deleterious effects,” the court wrote. “The First Amendment does not foreclose communities from taking modest precautions against the secondary maladies of nude or topless barroom dancing.”

The appeals court also rejected Steakhouse's claim that the permit plan violated the First Amendment because it failed to impose reasonable time limits within which city officials must either grant or deny the permit.

The 4th Circuit said that, in order to be consistent with First Amendment safeguards, the Raleigh ordinance must limit city officials' discretion, ensure prompt administrative determination and provide for quick judicial review. The court found the Board of Adjustment's 90-day time frame both reasonable and constitutional.

Steakhouse also argued that provisions in the city's permit plan violated the First Amendment by placing the burden on the applicant to prove that the business would not create harmful secondary effects.

Steakhouse relied on the 1965 U.S. Supreme Court decision Freedman v. Maryland, in which the high court struck down Maryland's motion picture censorship statute because it required film distributors, rather than the licensing board, to bear the burden of proof that the license should be denied.

The Supreme Court in Freedman determined that “the burden of proving that the film is unprotected expression must rest on the censor.”

However, the 4th Circuit distinguished the statute censoring the film in Freedman from the administrative process regulating permits for topless bars in Steakhouse. The Raleigh permit system does “not directly regulate content” and is “a far cry from the censorship scheme present in Freedman,” the appeals court wrote.

The appeals court also ruled that Raleigh's permit ordinance required prompt enough judicial review to satisfy constitutional scrutiny.

The court concluded: “Steakhouse simply states that it is in the public interest to enjoin an unconstitutional statute. That is true. But Raleigh's special use permit process is not unconstitutional as it pertains to topless dancing bars. The process serves simply to protect Raleigh's citizenry from the negative secondary effects associated with such establishments.”

David Alan Wasserman, attorney for Steakhouse, said that the 4th Circuit's decision was at odds both with a full-panel decision of the 4th Circuit and U.S. Supreme Court case law.

Wasserman said the Raleigh ordinance “gives city officials a license to stifle live expression they don't like.” He said his clients had not yet made a decision whether to appeal.