Local Governments and the Regulation of Adult Entertainment Businesses

• Publication year: 2003
• Pages: 69
• Citation: Vol. 32 No. 4 Pg. 69

32 Colo.Law. 69 Colorado Lawyer 2003.

2003, May, Pg. 69. Local Governments and the Regulation Of Adult Entertainment Businesses

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69

Vol. 32, No. 4, Pg. 69

The Colorado Lawyer
May 2003
Vol. 32, No. 5 [Page 69]

Specialty Law Columns
Government and Administrative Law News
Local Governments and the Regulation Of Adult Entertainment Businesses
by Brad D. Bailey

This column provides information to attorneys dealing with various state and federal administrative agencies, as well as attorneys representing public or private clients in the areas of municipal, county, and school or special district law

Column Editors

Carolynne C. White of the Colorado Municipal League - (303) 831-6411; Brad Bailey, Assistant City Attorney, City of Littleton - (303) 795-3725; Tiffanie Bleau, Denver, an attorney with Light, Harrington & Dawes, P.C. - (303) 298-1601, tbleau@

lhdlaw.com

About The Author

This month's article was written by Brad D. Bailey, assistant city attorney for the city of Littleton and an editor of this column - (303) 795-3725, bbailey@littletongov.org. He was lead counsel in the trial court case of City of Littleton v. Z.J. Gifts D-4, LLC.

A recent Tenth Circuit Court of Appeals decision highlights the distinction between a prompt decision and prompt access to the courts in the context of a municipality's adult business licensing scheme. This article discusses the legal issues involved and suggests some ways to avoid problems and ensure a prompt judicial decision.

Municipalities may regulate adult businesses. However, the First Amendment rights of the businesses and their employees create pitfalls for local governments that are difficult to avoid. This article reviews a recent Tenth Circuit Court of Appeals decision, Z.J. Gifts D-4, LLC v. City of Littleton1 ("Z.J. Gifts"). That case highlights the distinction between a prompt decision and prompt access to the courts in the context of a municipality's adult business licensing scheme. The article discusses a number of legal issues involved in licensing adult businesses. It also suggests some alternatives local governments might take to avoid problems and ensure a prompt judicial decision.

Background and Course Of Litigation

In the summer of 1993, the city of Littleton adopted an ordinance regulating adult entertainment businesses. The ordinance was adopted after a detailed review by city staff of ordinances of other municipalities that had tackled the problem of regulating adult businesses. The ordinance was vetted by the city attorney's office and outside legal counsel. The adopted ordinance was similar to ordinances in many other Colorado municipalities in that it: (1) limited the zone districts in which adult entertainment businesses may operate; and (2) required licensing of adult entertainment businesses and their employees before beginning operations.

Z.J. Gifts D-4, LLC ("Z.J."), d/b/a Christal's, opened for business on August 20, 1999, in a property that previously had been a fast food restaurant. Z.J. did not apply for an adult entertainment license or sales tax license from Littleton. Nonetheless, Z.J. filed suit in federal district court on August 25, 1999, for alleged violations of its First, Fifth, Ninth, and Fourteenth Amendment rights.2 Z.J. sought a declaratory judgment that the city's adult entertainment ordinance was unconstitutional. It requested issuance of a permanent injunction prohibiting the city's enforcement of the ordinance and sought damages.3

On March 30, 2001, the U.S. District Court for the District of Colorado issued a twenty-three page Memorandum of Decision and Order dismissing the case against Littleton's ordinance. Z.J. appealed that decision to the Tenth Circuit Court of Appeals, which issued its decision on November 18, 2002.4 The Tenth Circuit Court affirmed in part and reversed in part the district court's order.

Tenth Circuit Decision

After briefly outlining the essential provisions of the Littleton ordinance, the Tenth Circuit Court stated that it would ". . . initially determine whether there is an Article III case or controversy before us."5 The court set forth which issues Z.J. had standing to challenge.

Pre-application Licensing, Location, and Judicial Review Requirements: Z.J. had standing to bring facial challenge to the licensing system based on its claims that the city vested too much discretion in licensing officials in granting or denying adult entertainment licenses. Further, the pre-application and licensing process created a risk of interminable delay in the granting or denying...