Appeals Court Reverses NYC Adult Businesses' Zoning Win

NEW YORK CITY—It's a fight that's gone on for more than 20 years, but in a decision issued today, the New York Court of Appeals, the state's highest court, reversed the 2015 decision of the city's Appellate Division, First Department, which had invalidated amendments made to the city's zoning laws in 2001. Those amendments essentially zoned out any businesses selling adult videos, offering arcade booths or offering strip shows unless those businesses limited their sexually explicit merchandise to 60 percent or less of the business's floor space. In its decision, the Court of Appeals ruled that despite reducing adult signage, moving adult video displays to back rooms, and clubs dividing themselves so that only half of their floor space was devoted to strip shows, the "character" of the businesses was essentially unchanged, and therefore amounted to "sham compliance." Much of the Court of Appeals decision, authored by Judge Eugene Fahey, focused on the U.S. Supreme Court's decision in City of Los Angeles v. Alameda Books, which set forth three criteria by which alleged adult business zoning ordinances were to be judged: "First, a 'municipality's evidence must fairly support the municipality's rationale for its ordinance.' Second, the municipality prevails '[i]f plaintiffs fail 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.' Third, '[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.'" [Citations removed here and below] The case had been bouncing back and forth between the city's Supreme Court (which, as Law & Order viewers know, is the city's trial court level) and its Appellate Division since 2003, with the Appellate Division most recently telling the city, based on guidance from the Court of Appeals, that, "If the trier of fact determines, after review of this evidence, that the City has fairly supported its position on sham compliance—i.e., despite formal compliance with the 60/40 formula, these businesses display a predominant, ongoing focus on sexually explicit materials or activities, and thus their essential nature has not changed—the City will have satisfied its burden to justify strengthening the 1995 Ordinance by enacting the 2001 Amendments, and will be entitled to judgment in its favor. If not, plaintiffs will prevail on their claim that the 2001 Amendments are insufficiently narrow and therefore violate their free speech rights." Following trials held in 2010, the Supreme Court held that the adult businesses, by reducing signage, rearranging floor space and offering non-adult entertainment, had essentially complied with the 2001 zoning amendments, based on instruction from the Appellate Division to apply "intermediate scrutiny" to the city's actions rather than the lower "rational basis" standard. In its most recent ruling in 2015, the Appellate Division upheld the Supreme Court's decision, using criteria it had specifically stated in its 2011 ruling: That in order to find that the adult businesses' compliance was "sham," it should use the following criteria: "(1) the presence of large signs advertising adult content, (2) significant emphasis on the promotion of materials exhibiting 'specified sexual activities' or 'specified anatomical areas,' as evidenced by a large quantity of peep booths featuring adult films, (3) the exclusion of minors from the premises on the basis of age, and (4) difficulties in accessing nonadult materials." The trial court had found that none of those criteria were any longer applicable to the adult businesses involved in the lawsuits. But in today's decision, the Court of Appeals essentially dismissed the idea that because the adult businesses had made the required changes, their compliance with the zoning amendments was no longer a "sham." Instead, the court ruled that the lower courts had failed to apply the Alameda criteria to the issue of whether the city needed to provide any additional evidence to justify its ordinance, and found that with the evidence the city had already presented—mainly a 1994 study by the city's Department of City Planning (DCP)—was sufficient to determine that despite the physical alterations, the "essential character" of the businesses had not changed: "In short, the evidence credited by the Appellate Division supports one conclusion alone: that the adult bookstores continue to have a predominant focus on sexually explicit materials and activities ... [T]his Court's 2005 decision ordered the trial court to decide whether plaintiffs were predominantly sexual in focus at the time of trial, and this task did not require the City to adduce evidence as to their character in the past. In short, once the standard 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." What this means is that the city may once again apply its 2001 zoning amendments to adult businesses in the city, and require that at least 40 percent of a business's floor space and sale or rental items must be non-adult. How this will be applied in practice is unclear, but at least one attorney, Erica Dubno of Fahringer & Dubno, who represents a coalition of adult oriented bookstores, video stores and theaters, is worried about the future of her clients. "All I can say is that we are deeply disappointed with the decision, and we are currently looking at all of our options," Dubno told AVN. At this point, it's unclear what those options are, however, since it's unlikely that the Court of Appeals will revisit its decision, since five of the court's six associate judges signed onto the opinion. That would make the case's next stop the U.S. Supreme Court—not a place that's likely to be friendly to adult industry issues.