Las Vegas licensing ordinance violates First Amendment, appeals court rules

Wednesday, September 16, 1998

Las Vegas' business license ordinance violates the First Amendment because it fails to provide for prompt judicial review of license denials, a federal appeals court ruled recently.

The 9th U.S. Circuit Court of Appeals ruled last week in Baby Tam & Co., Inc. v. City of Las Vegas that the city's licensing statute constituted an unconstitutional prior restraint on speech because it contained insufficient procedural safeguards.

First Amendment law requires a licensing ordinance to provide both a quick decision on whether or not to issue a license and a prompt judicial review of the licensing decision. The U.S. Supreme Court has found that failure to incorporate these procedural elements renders an ordinance in violation of First Amendment free-speech rights.

The licensing controversy began when the owners of Baby Tam petitioned city officials for a business license in January 1997 to operate a store called Hot Stuff. On the application, Baby Tam's owners said that 30% of Hot Stuff's inventory would be of an adult nature. Hot Stuff featured adult videos and sex toys but also sold general videos, T-shirts and gag gifts.

How much of a store's merchandise is adult or non-adult is significant, because city law defines an “adult bookstore” as an establishment having at least 51% of its stock featuring or describing “sexual conduct.”

City law further regulates where adult bookstores can operate. Baby Tam received a temporary license in an area not zoned for adult businesses.

Baby Tam received three temporary licenses but never managed to obtain a permanent license. Then, before its final temporary license expired, city officials audited Hot Stuff and determined that more than 51% of its inventory was of an adult nature. City officials then ordered the business to close down by Oct. 29, 1997.

Baby Tam filed a federal lawsuit on Oct. 28, contending that the licensing statute constituted an unconstitutional prior restraint on speech. The business sought a preliminary injunction preventing city officials from enforcing the law.

After a federal district court denied Baby Tam's motion for a preliminary injunction, the company appealed to the 9th Circuit.

The appeals court noted that the city's licensing scheme represented a prior restraint on speech. According to the court, “a prior restraint exists when the enjoyment of protected expression is contingent upon the approval of government officials.”

The court found that in order for a licensing scheme to survive First Amendment review, it must provide for prompt judicial review in case the license is denied.

Baby Tam had argued that the city law clearly violated this procedural safeguard because there is nothing in the law which sets up a timetable for review of a license denial decision.

The city had argued that its law satisfied the prompt judicial review requirement by providing a right of access to a Nevada state court. However, the law provided no timetable on when the state court would have to issue a ruling.

The 9th Circuit sided with Baby Tam on Sept. 10, concluding that “'prompt judicial review' means the opportunity for a prompt hearing and a prompt decision by a judicial officer.”

The appeals court noted that there was a split among the federal circuits as to what was enough to constitute prompt judicial review. The 5th and 7th circuits had ruled that quick judicial access without a quick decision was enough to satisfy the requirement. However, the 4th, 6th and 11th circuits had ruled that there must be a system that requires a reviewing court to make a quick decision.

The 9th Circuit explained its reasoning, saying: “In baseball terms, it would be like throwing a pitch and not getting a call. As legendary major league umpire Bill Klem once said to an inquisitive catcher: 'It ain't nothin' till I call it.' This is also true of judicial review. Until the judicial officer makes the call, it 'ain't nothin.'”

The appeals court ordered the federal district court judge to enter a permanent injunction prohibiting enforcement of the law. The effect of the order is that Hot Stuff can continue to operate in its present location.

Michael Stein, attorney for Baby Tam, told said: “This opinion is significant in part because it is another example of the courts being our only safeguard to maintaining the importance of the Constitution.

“It is really easy to gather public opinion against speech when it offends certain people,” Stein said. “However, this case stands for the proposition that the First Amendment is so important that speech, even speech some or many people find offensive, should not be chilled for a moment.

“In the criminal law context, the U.S. Supreme Court said a long time ago that some of our most important constitutional rights have been advanced in the name of some not very nice people,” he said. “This same principle applies with respect to the First Amendment, which is designed to protect the minority against the majority.”

A call placed to the attorney who handled the case for the city was not returned.