San Diego County's adult business ordinance has mostly survived two federal court challenges. In separate rulings, the Ninth U.S. Circuit Court of Appeals held that the ordinance's zoning provisions pass constitutional muster.

The county's permitting scheme, however, did suffer one significant setback. The court found the ordinance's 130- to 140-day time limit for the county to decide on an adult business permit application was "unreasonably long." Because of this, the court severed the permitting requirement from the remainder of the ordinance.

In 2002, the county adopted a comprehensive zoning ordinance to govern adult entertainment establishments in unincorporated areas. The ordinance restricted the businesses to designated industrial zones, required them to close between 2 a.m. and 6 a.m., and imposed certain operating conditions.

The owners of the two adult businesses in unincorporated San Diego County — Déjà Vu and Fantasyland Video — filed separate lawsuits in federal court questioning the constitutionality of numerous aspects of the ordinance. District Court Judge Larry Burns ruled against Fantasyland entirely, and against Déjà Vu except on the issue of the permit review timeline.

A three-judge panel of the Ninth Circuit then heard appeals in the separate lawsuits. Before deciding, the Ninth Circuit asked the California Supreme Court whether a court should review a challenge made under the state constitution's liberty of speech clause based on strict scrutiny, intermediate scrutiny or some other standard.

The question arose because of a 1980 state Supreme Court decision (People v. Glaze, 614 P.2d 291) that struck down an hours-of-operation restriction because the restriction was not the least restrictive means of accomplishing the government's purpose. The "least restrictive means" test exceeds the intermediate scrutiny standard and can impose a difficult hurdle for local government. The state Supreme Court has since applied intermediate scrutiny to adult business zoning ordinances, but has never specifically disavowed Glaze.

In late September, the state Supreme Court responded with this order: "California law is clear that content-neutral time, place, and manner regulations affecting protected speech are subject to an intermediate standard of scrutiny."

The U.S. Supreme Court's cornerstone case on adult business regulation, City of Renton v. Playtime Theaters, Inc., 475 U.S. 41 (1986), laid out the intermediate scrutiny test this way: The ordinance must serve a substantial government interest, be narrowly tailored to serve that interest and allow for reasonable alternative avenues of communication.

Also pivotal in the litigation at hand was the Ninth Circuit's interpretation of Supreme Court Justice Anthony Kennedy's concurring opinion in City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 444-53. Because Kennedy was the deciding vote in a 5-4 decision, his concurrence is considered to be the controlling opinion. Kennedy wrote that the government must have some basis to conclude that its regulation will leave "the quantity and accessibility of speech substantially intact" (see CP&DR Legal Digest, June 2002).

Of course, adult business regulations must focus on the "secondary effects" of such businesses because regulating adult businesses merely for the sake of regulation is unconstitutional under the First Amendment. The county's stated rationale for its 2002 ordinance was to reduce crime, disorderly conduct, blight, late-night noise and traffic, property value depreciation and unsanitary behavior.

In the Déjà Vu case, the business owner argued that the industrial zoning requirement was unconstitutional, that the available alternative sites were inadequate, and that the permitting provisions were unreasonable. The court disagreed, finding that under the intermediate scrutiny standard and Kennedy's Alameda Books concurrence, the ordinance was valid.

"The county's legislative record cites to a number of sources — studies and reports from other jurisdictions, relevant judicial decisions, and public testimony — to assert a connection between the adult establishments and negative secondary effects. A municipality may rely on these types of sources," Judge Barry Silverman wrote for the Ninth Circuit. "The county could then reasonably infer that isolating of adult businesses to industrial zones would have the purpose and effect of reducing crime, disorderly conduct, and property depreciation, as such zones are located away from residential areas and have little other commercial appeal at night."

"We reject Déjà Vu's contention that Alameda Books imposed a heightened evidentiary burden on the county to show ‘how speech would fare' under the ordinance," Silverman continued. "So long as there are a sufficient number of suitable relocation sites, the county could reasonably assume that, given the draw of pornographic and sexually explicit speech, willing patrons would not be measurably discouraged by the inconvenience of having to travel to an industrial zone."

As for alternative locations, the Ninth Circuit noted that Judge Burns determined there were 68 sites, on which 8 to 10 adult businesses could operate simultaneously. The Ninth Circuit upheld that determination and noted that locations in incorporated areas were also available.

The court then turned to the question of time restraints. The ordinance required anyone seeking to operate, enlarge or transfer control of an adult establishment to get a permit, and gave the county 130 to 140 days to decide on the request. The lower court rejected this period as unreasonably long and severed the time limits provision. This had the effect of imposing no time limits at all on the county, which is "patently unconstitutional," the Ninth Circuit noted. So, while upholding the lower court's ruling, the Ninth Circuit threw out the entire permit requirement.

"Owners of adult establishments would have to comply with the substantive provisions of the ordinance, but would not need to secure a permit prior to operation unless and until the time limit defect is corrected," Silverman wrote.

Much of the Fantasyland opinion addressed the ordinance's prohibition on doors for peep show booths, which the court ruled constitutional.

As for Fantasyland's challenge to the hours-of-operation limit, the court ruled that under the intermediate scrutiny test, the business had to "cast direct doubt" on the county's secondary-effects rationale. Fantasyland failed to do so, the court ruled. The expert for Fantasyland and Déjà Vu, Daniel Linz, a professor at University of California, Santa Barbara, rebutted the county's evidence regarding late-night crime and property values but did not address late-night noise and traffic.

"Fantasyland's failure to address these considerations is fatal under the second step of the Renton intermediate scrutiny analysis," Silverman wrote. The court made an identical ruling in the Déjà Vu case.

The Cases:
Tollis Inc. v. County of San Diego, No. 05-56300, 07 C.D.O.S. 12064, 2007 DJDAR 15555. Filed October 10, 2007.
Fantasyland Video, Inc. v. County of San Diego, No. 05-56026, 07 C.D.O.S. 12216, 2007 DJDAR 15758. Filed October 15, 2007.
The Lawyers:
For Tollis (Déjà Vu) and Fantasyland: Clyde DeWitt, Weston, Garrou, DeWitt & Walters, (310) 442-0072.
For the county: Thomas Bunton, county counsel's office, (619) 531-4860.