MD II Entertainment, Inc. v. City of Dallas, Tex.

                    United States Court of Appeals,

                             Fifth Circuit.

                              No. 93-1703.

   MD II ENTERTAINMENT, INC., d/b/a The Fare West, Plaintiff-
Appellee-Cross-Appellant,

                                    v.

   CITY OF DALLAS, TEXAS, et al., Defendants-Appellants-Cross-
Appellees.

                             Aug. 11, 1994.

Appeals from the United States District Court for the Northern
District of Texas.

Before WISDOM and JONES, Circuit Judges, and COBB,* District Judge.

     WISDOM, Circuit Judge:

     In this case we must decide whether the restrictions imposed

by the defendant/appellant, the City of Dallas ("the City"), on the

advertising of "Class D Dance Halls" are consistent with the First

and Fourteenth Amendments. We conclude, as did the district court,

that the restrictions imposed by the City are not allowable under

the First Amendment, and accordingly, we AFFIRM the district

court's summary judgment for the plaintiff.           We also AFFIRM the

district court's judgment on the plaintiff's cross-appeal.

                                    I.

     On   January   22,   1992,   the    City   amended   its   Dance   Halls

Ordinance to create a new category of business called a "Class D

Dance Hall".   The ordinance defined a Class D Dance Hall as any

place

     *
      District Judge of the Eastern District of Texas, sitting by
designation.

                                    1
          (A) where dancing is permitted one day a week or more by
     a person in a state of semi-nudity or simulated nudity; or

            (B) that is advertised either on or off the premises:

                 (i) as topless;

                 (ii) as a gentleman's club, bar, or saloon;

                 (iii) as adult entertainment;

                 (iv) as x-rated;   or

                 (v) by any other term calculated to attract patrons
            with nudity, semi-nudity, or simulated nudity.1

The ordinance defined "semi-nudity" as "a state of dress in which

clothing covers no more than the genitals, pubic region, buttocks,

and areolae of the female breast, as well as parts of the body

covered by supporting straps or devices".2       The ordinance defined

"simulated nudity" as "a state of dress in which any device or

covering, exposed to view, is worn that simulates any part of the

genitals,   buttocks,   pubic   region,   or   areolae   of   the   female

breast".3

     The amended Class D Dance Halls ordinance imposed zoning

restrictions on Class D Dance Halls.      Specifically, the ordinance

provided that no Class D Dance Hall may operate within 1,000 feet

of a church, school, residential area, park, or another Class D

Dance Hall.4    After the amendment to the ordinance, every single

operating business in the City of Dallas that fitted the definition

     1
      Dallas City Code, ch. 14, § 14-1(5).
     2
      Id. § 14-1(14).
     3
      Id. § 14-1(15).
     4
      Id. § 14-2.2.

                                    2
of   a    Class     D   Dance   Hall   was   in   violation   of   the   zoning

restrictions.

      Plaintiff/appellee MD II Entertainment, Inc. ("MD II") owns

and operates The Fare West, a club in Dallas that features topless

dancing.     By having its dancers dance in a state of "simulated

nudity",5 MD II avoided the strictures of the City's Sexually

Oriented Business Ordinance.6          MD II did, however, fall within the

purview of the City's Class D Dance Halls ordinance.               MD II has a

Class D Dance Hall license, but The Fare West in its present

location violates the zoning restrictions of § 14-2.2 of the

ordinance.        Accordingly, the ordinance requires The Fare West, as

a "nonconforming use", to cease operation as a Class D Dance Hall.

      MD II challenged the ordinance in the district court.                 On

cross-motions for summary judgment, the district court upheld most

of the ordinance.7        It upheld the zoning distance requirements of

§ 14-2.2 and rejected the plaintiffs' vagueness and overbreadth

challenges to the definition of "simulated nudity" in § 14-1(15).

The district court struck down two provisions:                (1) section 14-

1(5)(B), which imposes the zoning requirements of § 14-2.2 on


      5
      MD II's female dancers wear opaque latex pasties that cover
the areolae of their breasts. The district court noted that
these pasties "are clearly designed to simulate female areolae".
The dancers also wear opaque bikini bottoms. There is no
disagreement that this mode of attire fits the ordinance's
definition of "simulated nudity".
      6
      The Sexually Oriented Business ordinance defines "nudity"
in a fashion that excludes "semi-nudity" or "simulated nudity".
      7
      MD II Entertainment, Inc. v. City of Dallas, 1993 WL 227774
(N.D.Tex. Apr. 15, 1993).

                                         3
businesses only because of terms used in their advertising, and (2)

section 14-3(a), which allows the Chief of Police to deny an

application for a Class D Dance Hall license to applicants who are

not of "good moral character" without providing any standards to

protect against an arbitrary denial. The City has appealed to this

court only the striking down of § 14-1(5)(B).8    The district court

also ruled that MD II has no standing to assert a state-law sex

discrimination challenge to the ordinance.       MD II cross-appeals

from this ruling.    Finally, the district court also awarded MD II

its attorneys' fees as a prevailing party, a ruling the City

challenges on this appeal.

                                 II.

     We begin by reviewing the district court's summary judgment

holding that § 14-1(5)(B) is unconstitutional.      Our standard of

review is de novo.     There are no disputed issues of fact, so we

need only decide whether the district court correctly ruled that MD

II was entitled to judgment as a matter of law.

A. The Ordinance Regulates Speech

         The city's first argument is that § 14-1(5)(B) is merely a

     8
      Only the constitutionality of § 14-1(5)(B) is before us.
The City conceded at oral argument that MD II now has clothed its
dancers sufficiently to remove it from the purview of § 14-
1(5)(A), but has not altered its advertising. The district
court's opinion noted that "MDII ... uses off-premises newspaper
and radio advertising which frequently employs the terms
"gentleman's entertainment,' "gentleman's party complex,' and
"gentleman's club' to attract customers. MDII also uses
on-premises signs to advertise its business which include the
term "topless' to describe the entertainment which MDII offers."
1993 WL 227774, at *11 n. 15. Accordingly, there is still a live
controversy between the parties, but only so far as § 14-1(5)(B)
is involved.

                                  4
definition that does not regulate speech at all, and accordingly is

beyond First Amendment scrutiny.       This argument exalts form over

substance. Under the ordinance, businesses which use certain terms

in their advertising must close and relocate, while businesses

which do not use those terms are unaffected.       The connection is one

of cause and effect:   the City says MD II must close The Fare West

because of the advertising it employs.     Section 14-1(5)(B) plainly

is a regulation of speech.

B. Which Test Applies?

     Section   14-1(5)(B)   of   the   ordinance   is   a   content-based

restriction on commercial advertising.9      The forbidden content is

stated expressly in the terms of the ordinance. Accordingly, until

very recently it would have been clear that the appropriate test

was the four-part intermediate scrutiny analysis laid out by the

Supreme Court in Central Hudson Gas & Electric Corp. v. Public


     9
      Because § 14-1(5)(B) regulates the content of protected
commercial speech, we need not evaluate it under the "secondary
effects" test often applied to content-neutral regulations of
nonobscene erotic entertainment. See City of Renton v. Playtime
Theatres, Inc., 475 U.S. 41, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986),
reh'g denied, 475 U.S. 1132, 106 S.Ct. 1663, 90 L.Ed.2d 205
(1986); Young v. American Mini Theatres, Inc., 427 U.S. 50, 96
S.Ct. 2440, 49 L.Ed.2d 310 (1976), reh'g denied, 429 U.S. 873, 97
S.Ct. 191, 50 L.Ed.2d 155 (1976); cf. TK's Video, Inc. v. Denton
County, Tex., 24 F.3d 705 (5th Cir.1994). We do consider some of
the "secondary effects" the City alleges, however, as relevant to
the question whether there is a "substantial governmental
interest" served by the ordinance. See infra part II.C.2.

          Similarly, because § 14-1(5)(B) regulates MD II's
     advertising, rather than regulating the attire of the
     dancers at The Fare West, we need not evaluate the
     restriction under the approach of Barnes v. Glen Theatre,
     Inc., 501 U.S. 560, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991)
     (plurality opinion).

                                   5
Service Commission.10        More recent cases, however, have questioned

the   continued        vitality   of    Central     Hudson    as   it    applies   to

content-based restrictions on commercial speech. Our resolution of

this case renders it unnecessary to decide which standard applies,

but we note the existence of the debate to inform counsel and

future panels.

      In R.A.V. v. City of St. Paul, Minnesota,11 the Supreme Court

subjected a content-based restriction of "fighting words" to strict

scrutiny. The strict scrutiny test requires a regulation of speech

to be narrowly tailored to a compelling governmental interest. The

Supreme Court in R.A.V. concluded that the municipal ordinance at

issue failed the strict scrutiny test, and the Court struck the

ordinance      down.      Because      commercial    speech    traditionally       has

received greater First Amendment protection than "fighting words",12

some district courts have concluded that the strict scrutiny

standard must apply to content-based restrictions of commercial

speech as well.13        Of course, it is undisputed that Central Hudson

continues      to   govern   content-neutral        regulations     of    commercial

      10
           447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980).
      11
           505 U.S. ----, 112 S.Ct. 2538, 120 L.Ed.2d 305 (1992).
      12
      See R.A.V., 505 U.S. at ----, 112 S.Ct. at 2564-65, 120
L.Ed.2d at 343-44 (Stevens, J., concurring in the judgment); see
also Rodney A. Smolla, Information, Imagery, and the First
Amendment: A Case for Expansive Protection of Commercial Speech,
71 Tex.L.Rev. 777, 791 & nn. 56-57 (1993).
      13
      Citizens United for Free Speech II v. Long Beach Township
Bd. of Comm'rs, 802 F.Supp. 1223, 1232 (D.N.J.1992); cf. Hornell
Brewing Co., Inc. v. Brady, 819 F.Supp. 1227 (E.D.N.Y.1993)
(applying both the Central Hudson and R.A.V. tests without
deciding which is required).

                                           6
speech.14

     Because we conclude that, on the record before us, § 14-

1(5)(B) does not survive the intermediate scrutiny of Central

Hudson, we need not consider whether that test, rather than the

strict scrutiny of R.A.V., must guide our inquiry.15

C. Applying the Central Hudson Factors

          Central Hudson laid out a four-part test for evaluating a

restriction of commercial speech:

     At the outset, we must determine whether the expression is
     protected by the First Amendment. For commercial speech to
     come within that provision, it at least must concern lawful
     activity and not be misleading.     Next, we ask whether the
     asserted governmental interest is substantial.       If both
     inquiries yield positive answers, we must determine whether
     the regulation directly advances the governmental interest
     asserted, and whether it is not more extensive than is
     necessary to serve that interest.16

1. Legality and Truthfulness of the Communication

     This issue is not contested.      MD II's advertising is related

to lawful activity and is not misleading.

2. The Governmental Interest

     This part of Central Hudson requires us to "identify with care

the interests the [City] itself asserts" for the restriction on

speech;     we may not "supplant the precise interests put forward by


     14
      See, e.g., Ibanez v. Florida Dep't of Business &
Professional Regulation, Bd. of Accountancy, --- U.S. ----, 114
S.Ct. 2084, --- L.Ed.2d ---- (1994); United States v. Edge
Broadcasting Co., 509 U.S. ----, 113 S.Ct. 2696, 125 L.Ed.2d 345
(1993); Joe Conte Toyota, Inc. v. Louisiana Motor Vehicle
Comm'n, 24 F.3d 754 (5th Cir.1994).
     15
          See Hornell Brewing, 819 F.Supp. at 1228 n. 1.
     16
          Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351.

                                   7
the [City] with other suppositions".17                The chief interest the City

asserts to justify its regulation focuses on the deleterious

effects topless bars have on the surrounding community.                    There is

a     correlation        between    the     presence       of   topless     dancing

establishments, depressed property values, and increased crime.

The City in formulating its ordinance relied on studies finding

these correlations to exist.              The district court relied on just

these effects in upholding the location restrictions contained in

§ 14-2.2 of the Class D Dance Halls ordinance.                  MD II gives us no

cause to question the validity and importance of the governmental

interest in preserving property values and deterring crime.

3. Direct Advancement of the Governmental Interest

       This is the most difficult part of the Central Hudson test for

the    City.       The    Supreme   Court       has   repeatedly     emphasized    the

substantial burden this requirement places on the proponent of a

restriction on commercial speech.18               The burden is on the City to

show that its restrictions on MD II's advertising "will in fact

alleviate ... to a material degree"19 the harms identified above.

"[T]he       regulation    may   not   be   sustained      if   it   provides     only

ineffective or remote support for the government's purpose".20


       17
      Edenfield v. Fane, 507 U.S. ----, ----, 113 S.Ct. 1792,
1798, 123 L.Ed.2d 543, 553 (1993).
       18
      See Ibanez, --- U.S. at ----, 114 S.Ct. at 2088-89, ---
L.Ed.2d at ----, and cases collected therein.
       19
            Fane, 507 U.S. at ----, 113 S.Ct. at 1800, 123 L.Ed.2d at
555.
       20
            Central Hudson, 447 U.S. at 564, 100 S.Ct. at 2350.

                                            8
     The district court found that "the city has failed to show

that its regulation of Plaintiff's use of the term "gentleman's

club' in any way furthers its stated interest" in preserving

property values or reducing crime.                "[T]he city has made no

finding", the district court continued, "that advertising that

employs    the   term   "gentleman's      club'   produces   the   deleterious

effects which the city seeks to curb".             The City has not on this

appeal     persuaded    us   that   the   district   court's   findings   were

incorrect.       In formulating its ordinance, the city relied on no

studies showing a link between advertising and property values or

crime.21    We have no doubt that the interests the city seeks to

protect merit protection, but like the district court, we are

     21
      See Fane, 507 U.S. at ----, 113 S.Ct. at 1800, 123 L.Ed.2d
at 555.

          After the district court granted summary judgment for
     MD II, the City submitted a motion for reconsideration.
     Attached to the City's motion was the affidavit of James
     Moncrief, an employee of a real estate consulting firm.
     Moncrief's affidavit for the first time asserted a link
     between advertising and depressed property values, and
     attached a one-page "asset performance monitor" report. The
     district court, however, refused to consider the new
     evidence and denied the city's motion. Thus, Moncrief's
     affidavit is not properly part of the record before this
     Court. The district court also ruled that "even if
     admitted, this [new] evidence would not be sufficient to
     alter the Court's decision ...". We note for the sake of
     completeness that the "asset performance monitor" provides
     decidedly mixed support for the City's argument, because it
     shows a higher property value and revenue growth rate for
     the area around MD II's property than for "comparable
     properties". Cf. Fane, 507 U.S. at ----, 113 S.Ct. at 1801,
     123 L.Ed.2d at 556, rejecting affidavit "which contains
     nothing more than a series of conclusory statements that add
     little if anything to the Board's original statement of its
     justifications". In any event, Moncrief's affidavit (dated
     July 1, 1993) plainly was not considered by the City when it
     amended the Dance Halls Ordinance on January 22, 1992.

                                          9
unable to conclude on this record that those interests are served

by banning the advertising prohibited by the ordinance.                     This

factor weighs in favor of affirming the district court.

4. Narrow Tailoring

     Finally,       Central    Hudson     requires     that    a   regulation   of

commercial speech "extend only as far as the interest it serves".22

In this respect, too, the ordinance is deficient.                    Section 14-

1(5)(B)(v) is particularly broad, forbidding the use of any "term

calculated     to    attract    patrons      with    nudity,    semi-nudity,    or

simulated nudity".       The City conceded at oral argument that the

literal wording of this provision reaches the advertising of events

that have never been shown to harm property values or promote

crime.23 The City has put no evidence in the record that forbidding

the use of any "term calculated to attract patrons with nudity,

semi-nudity, or simulated nudity" in commercial advertising is

narrowly tailored to prevent the erosion of property values or

reduce crime rates.           Therefore, this factor also supports the

district court's judgment.

     On balance, we conclude that application of the Central Hudson

factors supports affirmance of the district court.                 There has been

a failure of proof on this record.24                   Because the burden of

     22
          Central Hudson, 447 U.S. at 565, 100 S.Ct. at 2350.
     23
      In response to a question from the panel, the City's
attorney acknowledged that advertising of "regular performances"
of the musical Oh! Calcutta would fall within the prohibition in
§ 14-1(5)(B).
     24
      Cf. Ibanez, --- U.S. at ----, 114 S.Ct. at 2091, ---
L.Ed.2d at ---- ("We have never sustained restrictions on

                                        10
justifying its speech regulation is on the City, the district

court's summary judgment for the plaintiff was correct.

      Because we uphold the district court's summary judgment for

the plaintiff, we reject the City's challenge to the district

court's award of attorneys' fees to MD II.

                                    III.

       We turn next to MD II's cross-appeal.         MD II attempted in the

district court to assert a state-law sex-discrimination challenge

to § 14-1(14) and (15) of the ordinance.             MD II argued that the

definitions contained in those sections define "semi-nudity" and

"simulated nudity" differently for males and females.                  Wearing an

opaque covering designed to simulate the areolae of the female

breast constitutes "simulated nudity", but the same definition does

not apply to the male breast.25

      The district court ruled that MD II lacked standing to assert

a   sex-discrimination      challenge.       Although     the   district   court

acknowledged the existence of Article III standing, it rejected MD

II's standing under the prudential rules of Warth v. Seldin.26

Specifically, the district court ruled that MD II may not rely on

jus   tertii—the   rights    of   its    employees   to    be   free    from   sex


constitutionally protected speech based on a record so bare as
the one on which the Board relies here.").
      25
      Cf. SDJ, Inc. v. City of Houston, 837 F.2d 1268, 1279-80
(5th Cir.), reh'g denied, 841 F.2d 107 (5th Cir.1988), cert.
denied, 489 U.S. 1052, 109 S.Ct. 1310, 103 L.Ed.2d 579 (1989),
rejecting a similar sex-discrimination challenge against a
sexually oriented business ordinance.
      26
      422 U.S. 490, 499-502, 95 S.Ct. 2197, 2205-2207, 45
L.Ed.2d 343 (1975).

                                        11
discrimination.27    We review a district court's rulings on standing

to sue de novo.28

     Article I, section 3a of the Texas Constitution provides:

     Equality under the law shall not be denied or abridged because
     of sex, race, color, creed, or national origin.           This
     amendment is self-operative.

This provision obviously protects MD II's dancers, not MD II

itself, against sex discrimination.           None of MD II's dancers have

joined as plaintiffs in this lawsuit, however.                MD II gives us no

reason to think that there is any practical obstacle to its dancers

asserting their own rights to freedom from sex discrimination if

they wish to do so.          Granting standing to MD II may, however,

result in the unnecessary litigation of a question those parties

most immediately affected may not dispute.29             Accordingly, we see

no   error   in    the   district     court's     ruling      that     prudential

considerations prevent MD II from litigating its dancers' rights.

     MD   II's    reliance    on   SDJ,    Inc.   v.   City    of    Houston30   is

misplaced.   Although it is true that we addressed the merits of a

     27
      "[E]ven when the plaintiff has alleged injury sufficient
to meet the "case or controversy' requirement, this Court has
held that the plaintiff generally must assert his own legal
rights and interests, and cannot rest his claim to relief on the
legal rights or interests of third parties". Seldin, 422 U.S. at
499, 95 S.Ct. at 2205 (citations omitted).
     28
      United States v. $38,570 U.S. Currency, 950 F.2d 1108,
1111 (5th Cir.1992).
     29
      See generally 13 Charles A. Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 3531.9 (2d ed.
1984 & supp. 1994).
     30
      837 F.2d 1268 (5th Cir.), reh'g denied, 841 F.2d 107 (5th
Cir.1988), cert. denied, 489 U.S. 1052, 109 S.Ct. 1310, 103
L.Ed.2d 579 (1989).

                                      12
sex-discrimination challenge brought by the owners of topless clubs

in SDJ, we did not hold that club owners always must be allowed to

raise   their   dancers'   rights.    We   note   also   that   the

sex-discrimination challenge in SDJ was unsuccessful, suggesting

that MD II likely would lose on the merits even if we did consider

its jus tertii argument.

                                IV.

     We AFFIRM the district court's judgment in all respects.

     EDITH H. JONES, Circuit Judge, concurring:

     I concur in the majority opinion in this case with two

additional observations.    First, one must step back in wonder

occasionally and ask, as to some areas of law, what have judges

wrought? It makes little practical sense to say that the Fare West

has to relocate if it permits certain forms of adult entertainment

but not if, clothing its "dancers" with minuscule additional

amounts of tape, it advertises—truthfully—that the entertainment

has not changed.   This is a silly consequence of first amendment

jurisprudence that results from categorizing "zoning" regulations

differently from "content-based" advertising regulations.

     Second, the City of Dallas could have avoided this adverse

ruling if it had adopted regulations such as that for "simple

signs," SDJ, Inc. v. City of Houston, 837 F.2d 1268, 1278 (5th

Cir.1988), or that upheld in In re Town of Islip v. Caviglia, 73

N.Y.2d 544, 540 N.E.2d 215, 542 N.Y.S.2d 139 (1989).




                                13