New York Supreme Court Justice Louis B. York ruled on August 30 that the 2001 amendments to New York City's zoning law dealing with adult businesses violates the 1st Amendment rights of those businesses. Changing course from some prior rulings he had issued in the case, Justice York found that the City failed to show that the additional restrictions on adult businesses enacted in 2001 to supplement the restrictions first enacted in 1995 were supported by an evidence showing that they were substantially related to advancing any important city policy. Thus, they were stricken as unjustified content-based restrictions on constitutionally protected speech.
The New York City Council commissioned a study more than twenty years ago about the effects of adult businesses on the communities in which they were located. That study was intended to provide support for proposed zoning restrictions that would sharply reduce the geographical area in which adult businesses could operate, basically excluding them from residential and business districts with high pedestrian traffic and making them much less visible as part of the New York City streetscape. The study purported to show that such businesses attract crime, lower property values, and expose minors to sexually explicit images (mainly through their external signage).
Such documentation is necessary under U.S. Supreme Court precedents holding that zoning regulations to exclude adult businesses are content-based regulations of speech that can only be justified by documentation of serious "secondary effects" on the community. Based on the 1994, study the Council, with the urging of Mayor Rudolph Giuliani, passed the 1995 amendments, which, according to Justice York's opinion, "caused the dispersal and elimination of many adult establishments by requiring them to be 500 feet from each other, residences, houses of worship and schools." The 1995 provisions also required that if a business wanted to provide sexually-related goods and services and remain in an area where adult businesses were excluded, it would have to devote "a substantial portion" of the establishment to "non-adult uses."
To implement this requirement, the City adopted an administrative rule, referred to as the 60-40 ruled, meaning that "less than 40% of the entities' business could be devoted to adult activities." Many adult businesses did undertake to restructure their premises and diversity their stock and services so as to avoid being classified as an adult business and remain operating in residential and business districts. The City sent in inspectors to monitor compliance, and determined based on their reports that there were cases of "sham compliance." That is, there was literal compliance with the 60-40 rule but, according to the City, the establishments were still predominantly dealing in adult goods and services. The City moved to try to shut down the alleged "sham" establishments, and several lawsuits resulted.
When it appeared that the City's enforcement effort went beyond the authorization of the statute, the Council passed the 2001 Amendments that are the subject of this new ruling. These amendments imposed a variety of requirements that were intended to make it exceedingly difficult for any establishment to sell adult goods or services and continue to operate in the areas covered by the adult-uses zoning ordinance. More litigation ensued as the City attempted to enforce the 2001 amendments.
Justice York had previously upheld the amendments, finding that they survived constitutional review under the "rational basis" test, but higher courts disagreed, concluding that they were a content-based regulation of free speech activity and thus should be subject to the more demanding heightened scrutiny that free speech deserves. The cases were sent back to Justice York for a new look under this heightened test. In addition to receiving descriptions of the operations of these 60-40 businesses, Justice York received testimony by experts retained by the businesses to document the secondary effects — or, more accurately, lack of secondary effects — attributable to their operation.
One study, conducted by Dr. Bryant Paul of Indiana University, surveyed neighborhood opinion, and found that according to residents living near 60-40 businesses, "the overall quality of life in the 60-40 club's areas was better, the 60-40 neighborhoods were safer, the 60-40 neighborhoods were a more preferable place to live, and the 60-40 neighborhoods were a preferred shopping area." Another expert whose testimony was credited by Justice York, Dr. Daniel Lenz of University of California at Santa Barbara, testified that "60-40 clubs are not associated with negative secondary crime effects, 60-40 clubs were not 'hot spots' for crime in their neighborhoods, crimes did not increase with the opening of a 60-40 clug, and crimes did not decrease after the closing of a 60-40 club." Another expert looking at property values concluded that "proximity to a 60-40 club does not result in a diminution in value." In fact, it seems that property values went up near 60-40 clubs! Justice York also found that the 1995 law had achieved its objective of reducing the number of adult establishments in the city and breaking up the then-existing concentrations of such clubs in particular neighborhoods.
The city presented an "expert witness" as well, but Justice York found that he was not credible and gave no weight to his testimony, because his only study involved a survey of real estate brokers that drew a pitifully small response, and "his ipse dixit opinions" lacked an "real world corroboration."
Having found that the 1995 zoning ordinance provisions had effectively led to reduction in number and dispersion of adult businesses and that the businesses involved in this lawsuit had reconfigured to come within the original 60-40 requirements, Justice York found that the 2001 amendments had not been justified by the City. There was no study showing that these allegedly "sham" 60-40 clubs had generated the kind of secondary effects that are necessary to justify a zoning exclusion in light of First Amendment free speech protection against content-based regulation.
"This decision certainly does not prevent the defendant [the City] from removing sham entities," wrote Justice York. "The City need only change its guidelines to turn the 60-40 test into a rebuttable presumption. Then, even if less than 40% of the entity is devoted to adult purposes, the characteristics discussed can establish sham compliance. This Court finds significant and distinct differences between the 1994 adult entities and the 60-40 entities, so that the current establishments no longer resemble their 1994 predecessors. Given their current arrangements and secondary characteristics, these entities no longer operate in an atmosphere placing more dominance of sexual matters over non-sexual ones. According, there is no need for the 2001 amendments. On their face, therefore, they are a violation of free speech provisions of the U.S. and State Constitutions."
Justice York added that he "cannot understand how an 18 year old study of the negative effects of the 100% entities can be applied to the current 60-40 entities without determining the actual negative secondary effect of these institutions today." Given New York's history of strong protection for freedom of speech, and the constitutional limitation on regulating adult businesses to situations with documented secondary effects, the lack of a more recent study by the City was hard to understand. "Without an actual study," wrote Justice York, "the 2001 legislation should have been struck down" in earlier litigation, as dissenters in the New York Court of Appeals had argued in an earlier case. Justice York concluded that the City should have made a new study if it wanted to go against entities that had converted their premises and businesses to comply with the 60-40 rule promulgated under the 1995 zoning measure. Otherwise, the City would be engaging in regulation of "the content of expression, clearly a violation of the plaintiffs' rights to freedom of speech."
Justice York issued a permanent injunction against enforcement of the 2001 provisions. Reporting on the decision on August 31, the New York Law Journal commented that the decision would have no immediate practical effect, "because the 2001 law that it overturned was not enforced while lawsuits challenging its constitutionality winded through the courts." Ironically, because of the pending lawsuits, the 60-40 clubs were able to operate for many years, making it possible for the new expert studies commissioned by their lawyers to demonstrate the lack of adverse secondary effects from their operations.
However, the City is expected to appeal Justice York's ruling. A spokesperson for the New York City Law Department, Robin Binder, told the Law Journal, "We believe the court was right the first time when it ruled that 60-40 establishments have a predominant sexual focus," referring to York's earlier rulings in this case. "The City's ability to regulate adult establishments is critical to preserving neighborhood quality of life." In other words, the Law Department has reflex reaction against any case in which it loses. Perhaps they would be wise to commission a new study documenting secondary effects before going back to court.