United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
February 22, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 05-11474
Consolidated with 06-10304
H AND A LAND CORP.; ET AL,
Plaintiffs,
RELIABLE CONSULTANTS, INC., doing business as Dreamer’s,
Intervenor Plaintiff-Appellee,
v.
CITY OF KENNEDALE, TEXAS,
Defendant-Intervenor Defendant-Appellant.
Appeals from the United States District Court for the
Northern District of Texas, Fort Worth
Before SMITH, BENAVIDES, and PRADO, Circuit Judges.
BENAVIDES, Circuit Judge:
Kennedale, Texas, appeals the district court’s grant of
summary judgment. We reverse and remand.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This appeal raises a single question: Does the evidence
offered by the city of Kennedale sufficiently support its ordinance
regulating sexually oriented businesses?
In 1999, Kennedale annexed land that included multiple
sexually oriented businesses, thereby subjecting those businesses
to the city’s ordinances. The ordinances prohibit the operation of
sexually oriented businesses within 800 feet of churches, schools,
residences, day care centers, parks, and other sexually oriented
businesses, as well as within specified overlay districts.
Additionally, the ordinances require sexually oriented businesses
to obtain a license to operate. In justifying its ordinances,
Kennedale relied on (1) studies from nine other cities, (2) an
opinion survey of land use appraisers conducted by the city’s
attorney, and (3) citizen commentary from public meetings, all
regarding the harmful secondary effects of sexually oriented
businesses on surrounding land uses.
Following annexation, the ordinances allowed affected
businesses three years to recoup their investments and relocate.
Following criticism that the regulations failed to leave a
sufficient number of alternative locations for already existing
sexually oriented businesses, the city amended the ordinances to
identify specific parcels of land upon which sexually oriented
businesses may locate.
Reliable Consultants, Inc., d/b/a “Dreamers” (hereinafter
“Reliable”) is an off-site store, meaning that it sells video
tapes, DVD’s, magazines, and other print materials, but that none
of the materials can be viewed or consumed on the premises, and the
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store offers no live entertainment, viewing booths, or theaters.1
After finding the ordinances were content neutral, the
district court relied on Encore Videos, Inc. v. City of San
Antonio, 330 F.3d 288 (5th Cir. 2003), to find that the City’s
evidence of secondary effects failed to show that the ordinances
were narrowly tailored to further a substantial government
interest. The court declined to consider additional evidence
Kennedale offered, and granted Reliable’s motion for a permanent
injunction. Kennedale appealed.
II. STANDARD OF REVIEW
We review a district court’s summary judgment ruling and
other legal issues de novo. N.W. Enters. Inc. v. City of Houston,
352 F.3d 162, 172 (5th Cir. 2003). We review a district court’s
factual findings for clear error. Kona Tech. Corp. v. S. Pac.
Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000). The Supreme
Court’s admonition that cities not justify ordinances by relying on
“shoddy data or reasoning,” City of Los Angeles v. Alameda Books,
535 U.S. 425, 438 (2002) (plurality opinion), requires factual
findings, but turns on the legal interpretation of what the Supreme
Court meant by “shoddy.” Therefore, we review a district court’s
findings as to the existence of a city’s evidence for clear error,
but we review de novo whether that evidence falls within the
1
Originally, there were five affected sexually oriented
businesses/plaintiffs, but all but one settled during the course of
litigation, leaving Reliable as the lone plaintiff-appellee.
3
Supreme Court’s admonition.
III. DISCUSSION
“Zoning regulations restricting the location of adult
entertainment businesses are considered time, place, and manner
restrictions . . . if they do not ban [adult-entertainment]
businesses throughout the whole of a jurisdiction and are ‘designed
to combat the undesirable secondary effects of such businesses’
rather than to restrict the content of their speech per se.”
Encore Videos, 330 F.3d at 291 (quoting City of Renton v. Playtime
Theaters, Inc., 475 U.S. 41, 49 (1986)) (citing Lakeland Lounge v.
Jackson, 973 F.2d 1255, 1257–58 (5th Cir. 1992)). Time, place, and
manner restrictions on speech violate the First Amendment unless
they are content-neutral, are designed to serve a substantial
governmental interest, do not unreasonably limit alternative
avenues of communication, and are narrowly tailored. See Encore
Videos, 330 F.3d at 291–92.
Kennedale’s ordinances meet the narrow tailoring standard if
they “target[] and eliminate[] no more than the exact source of the
evil [they] seek[] to remedy.” Encore Videos, 330 F.3d at 293;
Frisby v. Schultz, 487 U.S. 474, 485 (1988). Thus, an ordinance
meant to deter property depreciation may only regulate businesses
for which a connection to property depreciation can be
demonstrated.
To show that an ordinance advances its goals, a city “may rely
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on any evidence that is ‘reasonably believed to be relevant.’”
Alameda Books, 535 U.S. at 438. However, “[t]his is not to say
that a municipality can get away with shoddy data or reasoning.
The municipality’s evidence must fairly support the municipality’s
rationale for its ordinance.” Id. at 438.2
On-site businesses (i.e., adult theaters or strip clubs) pose
a greater threat of secondary effects than off-site sexually
oriented businesses (i.e., adult bookstores).3 Therefore, a city
that enforces an ordinance meant to prevent harmful secondary
effects associated with the operation of an off-site business must
rely on evidence showing that off-site businesses, rather than the
broader category of sexually oriented businesses that includes on-
site businesses, cause harmful secondary effects. Encore Videos,
330 F.3d at 295 (requiring city to “provide at least some
substantial evidence of secondary effects specific to adult
businesses that sell books or videos solely for off-site
entertainment” to meet narrow tailoring requirement).
In Encore Videos, we invalidated San Antonio’s ordinance
2
Though this was a plurality opinion, a review of the
concurrences and dissent demonstrates that the Court would
unanimously support this admonishment.
3
See Encore Videos, 330 F.3d at 295 (“Off-site businesses
differ from on-site ones, because it is only reasonable to assume
that the former are less likely to create harmful secondary
effects. If consumers of pornography cannot view the materials at
the sexually oriented establishment, they are less likely to linger
in the area and engage in public alcohol consumption and other
undesirable activities.”)
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regulating sexually oriented businesses because the city failed to
present adequate evidence showing a connection between off-site
businesses and harmful secondary effects. San Antonio’s evidence
consisted of three studies conducted in other cities showing a
connection between sexually oriented businesses, without isolating
off-site businesses and secondary effects. Encore Videos, 330 F.3d
at 294–95. Those studies did not provide any information exclusive
to off-site businesses, so a substantial portion of the ordinance’s
burden on speech did not serve to advance its goals, and it failed
the narrow tailoring prong. Id. at 295.
This case differs from Encore Videos because Kennedale, unlike
San Antonio, offers evidence that purports to show a connection
between purely off-site businesses, or “bookstores,” and harmful
secondary effects. To determine whether the ordinance at issue is
narrowly tailored, we must determine whether Kennedale could
reasonably believe that the evidence is relevant to show the
requisite connection to harmful secondary effects. Alameda Books,
535 U.S. at 438. In other words, we ask whether that evidence
“fairly support[s] the [city’s] rationale for its ordinance.” Id.
Applying our holding from Encore Videos, Kennedale cannot
reasonably believe its evidence is relevant unless it sufficiently
segregates data attributable to off-site establishments from the
data attributable to on-site establishments. Encore Videos, 330
F.3d at 294–95.
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Kennedale’s evidence consisted of studies from nine cities, as
well as an opinion survey of land use appraisers conducted by the
city’s attorney, and citizen commentary from public meetings.
Seven of Kennedale’s nine studies from other cities fail to
differentiate between on-site and off-site businesses. The 1984
Indianapolis and 1986 Oklahoma City studies, however, included
surveys of real estate appraisers that focused strictly on “adult
bookstores.” The overwhelming majority of survey respondents in
both studies predicted that the presence of an adult bookstore
would negatively affect real estate value in the surrounding area.
The Indianapolis survey, conducted by the City of Indianapolis in
conjunction with Indiana University School of Business, Division of
Research, polled 20% of the national membership of the American
Institute of Real Estate Appraisers.4 Eighty percent of the
respondents predicted that an adult bookstore would negatively
impact residential property values, and seventy-two percent
believed commercial property value would also be negatively
effected. The Oklahoma City study, which surveyed one hundred
Oklahoma City real estate appraisers, produced similar results:
Seventy-four percent predicted a negative impact on real estate
value in the surrounding area.
Appellee Reliable argues that the term “bookstore,” used in
both surveys, is a term of art and does not sufficiently specify
4
In the Indianapolis study, 1527 questionnaires were mailed,
and 507 (33%) were returned.
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off-site premises. They argue instead that adult bookstores often
include peep shows, arcades, and other forms of on-site
entertainment, rendering them on-site establishments. However, the
Supreme Court has previously used the term “bookstore” as
distinguishable from “adult video arcades.” Alameda Books, 535
U.S. at 442 (discussing city’s prohibition on “combination of adult
bookstores and arcades”). This was a survey sent to and completed
by real estate appraisers, and so what matters is how those
appraisers would have understood the survey’s reference to an adult
bookstore.
Standing alone, it is reasonable to infer that the survey
respondents interpreted “bookstore” as signifying an off-site
establishment. Webster’s Dictionary defines “bookstore” as “a
place of business where books are the chief stock in trade.”
WEBSTER’S NEW INT’L DICTIONARY 253 (3d ed. 1981). There is no reason to
expect that simply adding the word “adult” to the term would
completely transform the nature of the business activity described.
Moreover, the Indianapolis survey also asked respondents to explain
their prediction that an adult bookstore would negatively impact
property value: 29% believed such an establishment would attract
“undesirables” to the neighborhood, 14% felt it would create a bad
image of the area, and 15% felt that it offended prevailing
community attitudes. These reasons are equally applicable to an
on-site or off-site establishment, and are distinguishable from the
problems we have found to be unique to on-site businesses. See
8
Encore Videos, 330 F.3d at 295 (“If consumers of pornography cannot
view the materials at the sexually oriented establishment, they are
less likely to linger in the area and engage in public alcohol
consumption . . . .”). It is reasonable for Kennedale to believe
that the appraisers responding to the survey understood the term
“adult bookstore” to mean off-site businesses, such as that
operated by the plaintiff-appellee.
Kennedale’s ordinances purport to protect against harmful
secondary effects. The Indianapolis and Oklahoma City studies
support the belief that off-site sexually oriented businesses cause
harmful secondary effects to the surrounding area in the form of
decreased property value. So long as they are not relying on
shoddy data or reasoning, we afford substantial deference to cities
with regards to the ordinances they enact. See Alameda Books, 535
U.S. at 451 (Kennedy, J., concurring) (noting that “a city must
have latitude to experiment” and “courts should not be in the
business of second-guessing fact-bound empirical assessments of
city planners”). The Indianapolis survey, in particular, was
drafted by experts, pretested, and administered to a large,
national pool of respondents. It is not “shoddy.” We therefore
find that Kennedale has produced evidence that it could have
reasonably believed was relevant, and thus could have properly
relied upon. The ordinances are narrowly tailored to advance a
substantial governmental interest.
The other evidence produced by Kennedale to justify its
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ordinance — an opinion survey of land use appraisers conducted by
the city’s attorney, and citizen commentary from public meetings —
has also been hotly debated by the parties. Given our findings
above, however, we need not reach that additional evidence.
Similarly, our finding moots the question of whether the district
court erred in excluding additional evidence of secondary effects.
By finding that Kennedale’s ordinances were not narrowly
tailored, the district court never reached the final element of the
time, place, and manner analysis: whether the ordinances
unreasonably limit alternative avenues of communication. We
therefore remand this case to the district court to make those
findings.
IV. CONCLUSION
For the foregoing reasons, we REVERSE the district court’s
summary judgment and remand for findings as to whether the
ordinances leave open sufficient alternative channels of
communication.
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