Adult Megastores Lose Fight Over Dispersal Law

(CN) - The 9th Circuit on Friday revived a 15-year-old lawsuit over the city of Los Angeles' attempts to prohibit adult bookstores from operating in the same building as video arcades.

The federal appeals panel in Pasadena reversed a District Court's granting of summary judgment to Alameda Books and Highland Books, two adult bookstores with video arcades that are now joined under the corporate name Beverly Books. The stores sued the city in 1995 for First Amendment violations after an inspector attempted to enforce a local ordinance prohibiting combination adult bookstores and video arcades.

Since then, the case has worked its way slowly from the California's Central District Court to the 9th Circuit to the U.S. Supreme Court, where in 2002 it spawned a new framework for deciding the limits of a city's power to force adult-themed businesses to be dispersed instead of concentrated in one area.

In the 1970s, Los Angeles began to disperse adult-themed business from Hollywood, which had been shown in police studies to contribute to a high crime rate. By 1983, the city adopted the ordinance banning adult superstores that combined retail sections with video arcades under one roof.

Using the test created by the high court's Alameda Books decision, the 9th Circuit started the whole process over again on Friday, finding that the District Court, in ruling on the case for the second time, had considered evidence in favor of the bookstores that was obviously biased and unsupported.

To show that the separate bookstore and video-arcade sections of the businesses could not survive on their own if forced apart, the plaintiffs offered the nearly identical testimony of two longtime adult-entertainment industry mavens, William Andrus and Rick Hinckley, both of whom had close ties to the plaintiffs, according to the ruling.

Both men testified that stand-alone adult video arcades are virtually nonexistent in the industry because they are seen as "seedy" and more in keeping with the adult theaters that began to disappear in the early 1980s when video cassettes took over.

As quoted in Friday's ruling, Justice Anthony Kennedy wrote that, in a dispersal action such as this, the plaintiff's "claim ... must be that [the] ordinance will cause two businesses to split rather than one to close, that the quantity of speech will be substantially undiminished, and that total secondary effects will be significantly reduced."

While the District Court found that the testimony of two adult-industry professionals was enough to establish that the two sides of the businesses could not survive if torn asunder, the appeals panel was unconvinced, calling the lower court's willingness to overlook the witnesses' bias "a significant oversight."

"Here, the extent to which the Andrus and Hinckley declarations are 'convincing' is diminished by their obvious self-interest: one declarant is the vice-president of a party to this litigation, and the other is the president of a Southern California company that installs adult arcades, including those owned by the plaintiff," wrote Senior Circuit Judge Richard Cudahy, who was sitting on the panel by designation from the 7th Circuit. "The content of the declarations strikes us as plausible, but the sources are necessarily suspect."

Cudahy added that neither Andrus nor Hinckley backed up their claims with "empirical data," instead offering only speculative claims based on their own perceptions.

"Their testimony amounts to a conclusory assertion that they work in the industry, and we should take them at their word that adult arcades could not survive as stand-alone businesses because they would be perceived as too 'seedy,'" Cudahy wrote. "We do not see any support ... for the asserted relationship between the seediness of an adult-entertainment venue and its ability to stay in business."

The panel unanimously reversed the trial court's granting of summary judgment in favor of the plaintiffs and remanded the case, once again, back to the District Court.

"Viewing the evidence in the light most favorable to the city, the plaintiffs' two declarations are weakened by their not insignificant verbatim repetition and are affected by obvious bias," the ruling states. "The district court should have at least recognized the bias problem in determining whether they successfully 'cast doubt' on the city's rationale for its ordinance. At trial, the frailties of this evidence and its conformity to the 'actual and convincing' standard of the Alameda Books framework present an issue of material fact that might be examined, but summary judgment is not indicated."

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