After 40 Retail, which operates a sexually oriented business, opened a store in Clarksville, the City Council enacted a law (“Ordinance 06-534”) imposing licensing requirements and regulations for these types of businesses. Ordinance 06-534 restricts the location of such stores to industrial districts only and provides that these stores must also be located at least 750 feet from certain businesses, bars, schools, and residences. However, the Ordinance also contained a provision which states that sexually oriented businesses already in existence can remain in operation for three years in order to recoup any financial investments, but at the conclusion of that three year period the legal nonconforming use status will be revoked unless an extension is sought.
For three years 40 Retail operated the business in Clarksville and did not seek an extension thereafter. Two months after the expiration of the three year period, Clarksville filed an action to enjoin 40 Retail from operating the business. 40 Retail responded arguing: the law did not comply with various statutory notice procedures; it was unconstitutional, on its face and as applied, under the Arkansas Constitution because it did not provide alternative sites where adult businesses could operate, it prohibited the use of photographs, drawings, or pictorial representations, and the City could not establish a nexus between the store’s constitutionally protected freedom of expression and any negative secondary effects.
Clarksville filed a motion for summary judgment which was granted by the court. Clarksville argued simply that the three year period was up and that 40 Retail was now operating its business in violation of the Ordinance. The court did not discuss the merits of 40 Retail’s constitutional arguments, but rather found that the doctrines of waiver and estoppel prohibited 40 Retail from challenging the ordinance because it sought and was granted a hardship license and because it had received the benefit of the ordinance’s amortization period. 40 Retail subsequently appealed, arguing that the waiver and estoppel do not preclude challenges to the validity and constitutionality of the Ordinance. Furthermore, noting that it was operating in a lawful manner before the ordinance was enacted, 40 Retail maintained that there can be no estoppel when an applicant receives what he was already entitled to receive. Additionally, appellant contended that a waiver does not occur by submitting to a mandatory law that includes penalties for noncompliance.
After summarizing the history of parties being estopped from challenging the constitutionality of a statute they also seek and reap a benefit from, the Supreme Court of Arkansas concluded that 40 Retail is not estopped from mounting its challenges to the Ordinance. To the court, the passage of the Ordinance provided no benefit to appellant because the business was already in operation. On the other hand, the Ordinance imposed significant burdens. Unlike other litigants in cases cited, 40 Retail did not seek to retain any benefit of the Ordinance while at the same time seeking to rid itself of its burdens. Compliance was mandatory, and non-compliance would result in fines and/or a criminal sentence. The court also noted that it supported a relaxed interpretation of the estoppel doctrine in order to reach the merits of constitutional issues. For these reasons the court reversed and remanded.
40 Retail v. Clarksville, 2012 WL 5457440 (Ark. 11/8/2012).
The opinion can be accessed at: http://opinions.aoc.arkansas.gov/WebLink8/0/doc/309662/Electronic.aspx