Passions Video, Inc. v. Nixon

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 05-3847
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Passions Video, Inc., a Missouri *
corporation; Gala Entertainment *
of KC, Inc., a Missouri corporation, *
*
Appellants, *
* Appeals From the United States
v. * District Court for the
* Western District of Missouri.
Jay Nixon, Attorney General of the *
State of Missouri, in his official *
capacity, *
*
Appellee. *
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No. 05-4053
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Steele Retail 37, doing business *
as Lion's Den, LLC, *
*
Appellant, *
*
v. *
*
Jay Nixon, Attorney General of the *
State of Missouri, in his official *
capacity, *
*
Appellee, *
-------------------- *
American Civil Liberties Union of *
Kansas and Western Missouri, *
*
Amicus on Behalf of Appellant. *

Submitted: June 14, 2006
Filed: August 21, 2006
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Before SMITH, HEANEY, and GRUENDER, Circuit Judges.
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HEANEY, Circuit Judge.

In this case we consider two consolidated appeals challenging the
constitutionality of a Missouri criminal statute that regulates advertising by Missouri
businesses that offer sexually explicit entertainment and materials. The district court
found the statute to be a constitutional regulation of commercial speech. We reverse.

BACKGROUND

Missouri statute section 226.531 restricts on- and off-premises advertising
within one mile of a state highway, by any business classified as “adult cabaret” or
“sexually oriented business” (affected business). Mo. Rev. Stat. § 226.531. The
statute includes an exception that allows affected businesses located within a mile of
state highways to display two exterior, on-premises signs, but restricts the content of
these signs. Business owners who violate the statute are subject to criminal
prosecution. § 226.531.4.

The material facts in these appeals are not in dispute. All appellants are located
within one mile of a state highway. The appellants have all erected, or intend to erect,

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on- and off-premises signs and billboards that violate the location, size, and content
restrictions of section 226.531.

Passions Video qualifies as a sexually oriented business because it devotes
more than ten percent of its interior display space to non-obscene, sexually oriented
materials. See § 226.531.1(3) (defining “sexually oriented business”). Gala
Entertainment of KC, Inc.1 was a nightclub classified as an adult cabaret. See §
226.531.1(1) (defining “adult cabaret”). In August 2004, Passions Video and Gala
Entertainment jointly filed suit against the state,2 in the United States District Court
for the Western District of Missouri, challenging the constitutionality of section
226.531. In its prayer for relief, Passions Video sought preliminary and permanent
injunctions enjoining enforcement of section 226.531, a declaration that section
226.531 was unconstitutional, and fees and costs. On February 18, 2005, the district
court issued an amended order denying Passions Video’s Motion for Temporary
Restraining Order and Preliminary Injunction. Passions Video and the state
subsequently filed cross-motions for summary judgment. On August 2, 2005, the
district court denied Passions Video’s motion for summary judgment, and granted
summary judgment on behalf of the state. Passions Video now appeals the district
court’s August 2, 2005 order.

Steele Retail 37, L.L.C. (Steele Retail), operates a gas station and convenience
store that receives the majority of its income from gas and other traditional
convenience store items, but devotes more than ten percent of its interior display space
to non-obscene, sexually oriented materials. Thus, it too qualifies as a sexually

1
Gala Entertainment and Passions Video jointly filed the suit below. Gala has
apparently closed since the commencement of the suit. Subsequent references to the
Passions Video suit include by reference the Gala Entertainment suit.
2
Appellee is the named defendant in his official role as Missouri State Attorney
General.

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oriented business. See § 226.531.1(3). On August 10, 2005, Steele Retail filed suit
in the United States District Court for the Western District of Missouri, seeking a
declaration that section 226.531 violated the United States Constitution and seeking
preliminary and permanent injunctions enjoining its enforcement. The Steele Retail
suit was assigned to the same district court judge that presided over the Passions
Video suit. The district court denied Steele Retail’s motion for preliminary and
permanent injunctions, relying primarily on its reasoning regarding the
constitutionality of section 226.531 in its August 2005 order granting summary
judgment against Passions Video. The district court additionally interpreted the scope
of section 226.531, finding that it prohibited advertising only for sexually oriented
materials. Steele Retail filed this appeal which was subsequently consolidated with
Passions Video’s earlier appeal.

ANALYSIS

“We review the district court’s grant of summary judgment de novo, using the
same standard under Federal Rule of Civil Procedure 56(c) as applied by the district
court.” Excalibur Group, Inc. v. City of Minneapolis, 116 F.3d 1216, 1219 (8th Cir.
1997). A party is entitled to summary judgment “when ‘there is no genuine issue as
to any material fact and . . . the moving party is entitled to judgment as a matter of
law.’” Id. (quoting Fed. R. Civ. P. 56(c)). We review the denial of a motion for a
preliminary injunction for abuse of discretion. Safety-Kleen Sys., Inc. v. Hennkens,
301 F.3d 931, 935 (8th Cir. 2002).

The First Amendment provides that “Congress shall make no law . . . abridging
the freedom of speech.” U.S. Const. amend I. The amendment applies to state and
local governments through the Fourteenth Amendment. Central Hudson Gas & Elec.
Corp. v. Public Serv. Comm’n, 447 U.S. 557, 561 (1980). Although one may find
sexually explicit material tasteless and even immoral, it is constitutionally protected
so long as it is not obscene. United States v. Playboy Entm’t Group, Inc., 529 U.S.

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803, 811 (2000). “The history of the law of free expression is one of vindication in
cases involving speech that many citizens may find shabby, offensive, or even ugly.”
Id. at 826.

At issue here is a Missouri statute that restricts advertising by “sexually oriented
businesses” and “adult cabarets” that offer sexually explicit materials and
entertainment for adults. Any business with more than ten percent of its display space
dedicated for sexually oriented materials is presumed to be a “a sexually oriented
business.” Mo. Rev. Stat. § 226.531.1(3). An “adult cabaret” is “a nightclub, bar,
restaurant, or similar establishment in which persons appear in a state of nudity, as
defined [by the statute], or seminudity, in the performance of their duties[.]” §
226.531.1(2).

The advertisement restriction provides that, “[n]o billboard or other exterior
advertising sign for an adult cabaret or sexually oriented business shall be located
within one mile of any state highway. . . .” § 226.531.2.3 Accordingly, if a business
fits the definition of a “sexually oriented business” or “adult cabaret,” it is prohibited
from erecting any “billboard or other exterior advertising sign,” regardless of the
sign’s content. Id. Violation of this statute is a class C misdemeanor, § 226.531.4,
punishable by a term of incarceration of up to fifteen days, § 558.011.1(7), and a fine
of up to $300, § 560.016.1(3).

I.

As a threshold issue, we determine the scope of the statute’s advertising
restriction. In its denial of Steele Retail’s motion for permanent and preliminary
injunctions, the district court interpreted 226.531 to “prohibit only advertising for the
sexually oriented aspects of sexually oriented businesses.” (Steele Retail J.A. at 295.)

3
The statute includes an exception for affected businesses located within a mile
of a state highway, which is discussed below.

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 We hold that the district court erred in concluding that section 226.531
prohibited only advertising for sexually oriented products or “aspects” of the affected
businesses. This interpretation contradicts the plain language of the statute as well as
the state’s own interpretation.4 The regulation makes no reference to the content of
the off-premises advertising signs. Rather, it states that “[n]o billboard or other
exterior advertising sign for an adult cabaret or sexually oriented business shall be
located within one mile of any state highway.” Mo. Rev. Stat. § 226.531.2. Thus, if
a business is classified as an adult cabaret or sexually oriented business, it is
prohibited from erecting any billboard or other exterior advertising sign, without
regard to the content of the billboard. Although we adopt, where possible, an
interpretation that renders a statute constitutional, the plain language of section
226.531 precludes a constitutional interpretation. Postscript Enters. v. Whaley, 658
F.2d 1249, 1253 (8th Cir. 1981).

II.

We next determine whether the statute is constitutional as interpreted. The
Missouri statute regulates outdoor advertising, therefore we apply the four-step
commercial speech analysis5 outlined by the Supreme Court in Central Hudson6 to

4
At oral argument, the state took the position that the mere inclusion of the
affected business’s name or address on the advertisement would subject the business
owner to criminal prosecution under section 226.531.
5
The plaintiffs argue that the statute is subject to strict scrutiny because it
potentially prohibits political speech. Because the regulation does not survive scrutiny
under the more discretionary Central Hudson commercial speech test, we need
consider the application of stricter tests. See Bd. of Trustees v. Fox, 492 U.S. 469,
485-86 (1989) (stating that further constitutional analysis is unnecessary if statute is
found to be invalid in the commercial speech context).
6
The district court applied a novel hybrid analysis that combined the
commercial speech and the time, place, and manner tests. We reject this approach

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determine whether the statute is constitutionally sound. Missouri v. Am. Blast Fax,
Inc., 323 F.3d 649, 653 (8th Cir. 2003); see also Central Hudson, 447 U.S. at 561
(defining “commercial speech” as “expression related solely to the economic interests
of the speaker and its audience”). Although the Constitution “accords a lesser
protection to commercial speech than to other constitutionally guaranteed expression,”
Central Hudson, 447 U.S. at 563, commercial speech is protected “from unwarranted
governmental regulation,” id. at 561. Regulations on commercial speech are subject
to intermediate scrutiny under the framework set forth in Central Hudson. Florida Bar
v. Went For It, Inc., 515 U.S. 618, 623 (1995).

To determine whether the regulation on commercial speech is constitutionally
valid we determine whether: (1) the affected speech concerns lawful activity and is
not misleading, therefore protected by the First Amendment; (2) the government’s
asserted interest in regulating the speech is substantial; (3) the regulation directly
advances the asserted interest; and (4) the regulation restricts no more speech than
necessary to serve the asserted interest. Central Hudson, 447 U.S. at 566. The state
“bears the burden of identifying a substantial interest and justifying the challenged
restriction.” Greater New Orleans Broad. Assoc., Inc. v. United States, 527 U.S. 173,
183 (1999).

There is no dispute here that the speech in question is commercial speech that
contains no misleading statements or concerns unlawful activity, and is therefore
constitutionally protected. See id. at 184. Therefore, the first Central Hudson step is
satisfied.

We next consider whether the state’s asserted interest is substantial. The statute
includes a list of several interests it seeks to protect with the regulation. These
include: mitigating “the adverse secondary effects of sexually oriented businesses,

because no federal precedent exists to support its application.

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[improving] traffic safety, [limiting] harm to minors, and [reducing] prostitution,
crime, juvenile delinquency, deterioration in property values, and lethargy in
neighborhood improvement projects.” Mo. Rev. Stat. § 226.531.5.

Here, the affected businesses dedicate at least ten percent of their interior
display space to products “subject [to] intense public debate in many communities.”
Greater New Orleans Broad., 527 U.S. at 184. Our court has recognized that
“regulations aimed at minimizing the secondary effects of sexually oriented
businesses serve a significant and substantial governmental interest.” Excalibur
Group v. City of Minneapolis, 116 F.3d 1216, 1221 (8th Cir. 1997). The state’s
asserted interest in regulating sexually oriented businesses and products is
“substantial” and therefore satisfies the second step of the Central Hudson test.
Central Hudson, 447 U.S. at 566.

Next, we turn to the third step of the Central Hudson analysis, which requires
the restriction to directly advance the state’s asserted interest. Central Hudson, 447
U.S. at 566. This step “concerns the relationship between the harm that underlies the
State’s interest and the means identified by the State to advance that interest.”
Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 555 (2001). To survive scrutiny, the
regulation must advance the stated governmental interest “directly and materially.”
Id. (quoting Greater New Orleans Broad. Assoc., 527 U.S. at 188).

The state argues that its ultimate goal is to reduce the adverse secondary effects
of sexually oriented businesses by limiting the presence of sexually oriented
businesses. Under that theory, restricting the amount of advertising by the affected
businesses would reduce the number of customers that patronize the affected business,
thus reducing profits, and ultimately forcing the affected business to close. Although
there may be some evidence that the statute directly and materially advances the
state’s asserted interest, the statute fails under the final Central Hudson step because
it is not narrowly tailored to meet its asserted goals.

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 In the final step, the “critical inquiry” is whether the regulation’s “complete
suppression of speech ordinarily protected by the First Amendment is no more
extensive than necessary to further [Missouri’s] interest in” reducing the secondary
effects of adult businesses. Central Hudson, 447 U.S. at 569-70. While the state need
not pursue the least restrictive means, it must enact a statute that is “reasonable” and
“narrowly tailored to achieve the desired objective.” Lorillard Tobacco, 533 U.S. at
556 (additional citations and quotations omitted). The statute cannot “curtail
substantially more speech than is necessary to accomplish its purpose.” Krantz v. City
of Fort Smith, 160 F.3d 1214, 1222 (8th Cir. 1998). The availability of obvious and
numerous less-burdensome alternatives to the restriction factors into the consideration
of whether the “fit” is reasonable. Went For It, 515 U.S. at 632.

It is clear that section 226.531 regulates the affected business’s speech; it
threatens criminal prosecution for the mere inclusion of the name or address of an
affected business on billboards within one mile of a state highway. The Missouri
statute “sacrifices an intolerable amount of truthful speech about lawful conduct.”
Greater New Orleans Broad. Assoc., 527 U.S. at 194. The prohibition is directed at
speech beyond that which would lead to the stated secondary effects, and is not
narrowly tailored to achieve Missouri’s stated goal. See State v. Café Erotica, Inc.,
507 S.E.2d 732, 735 (Ga. 1998) (holding “The absolute proscription against any form
of off-site advertising impedes the free flow of information and far exceeds the State’s
legitimate interest, is an unconstitutional infringement on free speech.”).

In our view, the state has “failed to make a showing that a more limited speech
regulation would not have adequately served the State’s interest.” 44 Liquormart, Inc.
v. Rhode Island, 517 U.S. 484, 500 (1996) (Op. of Stevens, J. for four members of the
Court) (citing Central Hudson, 447 U.S. at 571). Accordingly, we find that Missouri
statute section 226.531 fails to satisfy the Central Hudson test for regulations on
commercial speech.

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 III.

Finally, we turn to the provision restricting the content of on-premises signs for
affected businesses located within one mile of state highways. The exception provides
that:

[I]f such business is located within one mile of a state highway then the
business may display a maximum of two exterior signs on the premises
of the business, consisting of one identification sign and one sign solely
giving notice that the premises are off limits to minors. The
identification sign shall be no more than forty square feet in size and
shall include no more than the following information: name, street
address, telephone number, and operating hours of the business.

Mo. Rev. Stat. § 226.531.2.

The statute specifically prohibits all expression, other than the name, address,
telephone number, operating hours, and language giving notice that minors are not
allowed. § 226.531.2. In our view, this provision is not narrowly drawn to meet the
state’s asserted goals, and thus fails to meet the fourth step of the Central Hudson
test.7 Lorillard Tobacco, 533 U.S. at 556. Should an affected business owner choose
to post a sign with the price of gasoline, or a sign advertising a nationally-known soft
drink on the exterior of the business, he or she would be subject to criminal

7
The exterior sign restrictions here are unlike those found to be “modest” in
Excalibur Group, where this court found the exterior sign zoning restrictions did “not
reach substantially more speech than necessary,” under the reasonable time, place, and
manner analysis. Excalibur Group, 116 F.3d at 1221-22. There, the restrictions
regulated the exterior appearance of adult-only businesses. Id. Those restrictions
prohibited the obscuring of windows, limited the size of exterior signs, and required
exterior signs to be flat. Id. Finally, the regulation there included no restrictions
regarding the content of the exterior signs. Id. at 1218-19.

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prosecution. Thus, Missouri statute section 226.531, in its entirety, is unconstitutional
because it fails to survive scrutiny under the Central Hudson test for regulations on
commercial speech.

CONCLUSION

We reverse the district court’s grant of summary judgment and its denial of the
appellants’ motions for injunctive relief and remand to the district court for
proceedings consistent with this opinion.
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