A divided panel of federal judges has upheld an Arizona state law that requires adult-oriented businesses to shut down at 1 a.m.

Both the two-judge majority of the Ninth U.S. Circuit Court of Appeals panel and the dissenter based their opinions largely on Supreme Court Justice Anthony Kennedy’s concurring opinion in Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002) (see CP&DR Legal Digest, June 2002). In Alameda Books, the high court narrowly upheld a city law barring two adult businesses from sharing the same premises because of the secondary effects of concentrating adult businesses.

The case marked the first time the Ninth Circuit had considered mandatory closing hours for adult businesses, and the court joined six other circuits that have held similar regulations to be constitutional under the “secondary effects” test laid out in the landmark case Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986).

In 1998, Arizona state lawmakers approved a bill that required “sexually-oriented businesses” — nude dance clubs, X-rated video arcades, adult bookstores and novelty shops and escort services — to be closed from 1 a.m. to 10 a.m. on Monday through Saturday and from 1 a.m. to noon on Sunday. The regulation was part of a bill that authorized Arizona counties to develop land use regulations, and to license and regulate adult businesses.

Adult business owners sued, and District Court Judge Earl Carroll ruled for the state. The adult business owners appealed, and the Ninth Circuit panel voted 2-1 to uphold the lower court.

Under the framework first established in Renton, a regulation must not be a total ban on constitutionally protected speech (such as sexually oriented entertainment), must not be aimed at the content of the speech, must be designed to serve a substantial government interest and must leave open reasonable alternative avenues of communication. The government interest typically at stake is reduction of “secondary effects,” namely crime in and around the adult business locations.

The U.S. Supreme Court relied on Renton in deciding the Alameda Books case. But the concurring opinion authored by Kennedy, who provided the key fifth vote in Alameda Books, is considered the controlling opinion. Kennedy established a new, two-part test built upon Renton: “First, what proposition does a city need to advance in order to sustain a secondary effects ordinance? Second, how much evidence is required to support the proposition?”

In answering the first question, the government must show that the secondary effects will be significantly reduced while the quantity of speech remains “substantially undiminished,” Kennedy wrote. The answer to the second question, he wrote, is “very little.” (The Ninth Circuit had struck down the Los Angeles law because of the lack of evidence used by the City Council.)

The adult business owners argued that Kennedy’s opinion established a heightened proportionality requirement. In other words, the government could not combat second effects simply decreasing the amount of speech. The business owners contended that was exactly what Arizona did, especially considering that the businesses do a great deal of trade in the wee hours.

But the Ninth Circuit held that Kennedy’s proportionality test applied only to “place” restrictions, such as the one in Alameda Books. “[T]he application of Justice Kennedy’s proportionality analysis to this particular type of second effects law would invalidate all such laws, and we are satisfied that he never intended such a result,” Judge Diarmuid O’Scannlain wrote for the court.

The court then applied the Renton test to the Arizona law. The court found that the law did not ban protected speech, was concerned with secondary effects of the businesses and allowed “ample alternative channels for communication” by permitting the businesses to operate 17 hours a day Monday through Saturday and 13 hours on Sunday.

The court also considered the evidence on which lawmakers relied to adopt the regulation. The court conceded that the record “is a slim one” but that it compared favorably with the evidence considered in other cases in which other federal circuit courts have upheld time restrictions.

“The question is whether the Arizona legislature relied on evidence ‘reasonably believed to be relevant’ in demonstrating a connection between its stated rationale and the protected speech, and we hold that it has done that here,” O’Scannlain wrote. “The Arizona Senate and House held public hearings at which lawmakers heard citizen testimony concerning the late night operation of sexually-oriented businesses and were briefed on several studies documenting secondary effects, and two of those studies were specific to late night operations.” Moreover, the business owners failed to show that the state’s approach or evidence were faulty.

In his dissent, Justice William Canby Jr. said the court could not carve out an exception to Kennedy’s proportionality analysis.

“Justice Kennedy has informed us that ‘a city may not attack secondary effects indirectly by attacking speech,’” Canby wrote. “A government similarly may not proceed on a theory that ‘it will reduce secondary effects by reducing speech in the same proportion.’ It would be hard to find a more exact description than this of Arizona’s closing hour regulation of adult entertainment establishments.”

Canby also decried the record on which the law was based, particularly the “total absence of evidence anywhere in the record to support the existence of disproportionate secondary effects from operation on Sunday mornings before noon.”

The Case:
Center for Fair Public Policy v. Maricopa County, Nos. 00-16858 and 00-16905, 03 C.D.O.S. 6603, 2003 DJDAR 8308.
The Lawyers:
For the adult business owners: G. Randall Garrou, Weston, Garrou & DeWitt, (310) 442-0072.
For the government: Scott Boehm, Copple, Chamberlin, Boehm & Murphy, (602) 528-4719.