GA Supreme Court Upholds Constitutionality of Adult Business Use Ordinance and Finds Owners Not Entitled to Vested Rights

Trop, Inc. and the JEG Family Trust had operated the Pink Pony entertainment club (“Pink Pony”) as a restaurant with alcohol consumption and adult nude dancing under DeKalb County licenses since November 1990. In June 2001, Pink Pony entered into a Settlement and Release Agreement with DeKalb County, which gave Pink Pony the right to continue its operations, as it had always done, for a term of eight years. In May 2007, Pink Pony entered into the First Amended and Extended Settlement and Release Agreement, extending the original settlement agreement for an additional fifteen years.

Approximately five years later, the City of Brookhaven was incorporated. As a result, Pink Pony’s location became part of the new municipality. At that time, DeKalb County ordinances continued to apply in Brookhaven. Later, Brookhaven approved its own sexually-oriented business Code based on evidence of adverse secondary effects of adult uses presented to the City Council. The new sexually-oriented business ordinance, in conjunction with Brookhaven’s Alcohol Code, prohibited the sale of alcohol at sexually-oriented businesses and allowed only semi-nudity, not full nudity.

Pink Pony filed suit claiming that Brookhaven’s newly-enacted sexually-oriented business Code was unconstitutional, and that Pink Pony was exempt from it based on its settlement agreement with DeKalb County. The trial court granted Brookhaven’s motion for summary judgment. On appeal, the Supreme Court of Georgia affirmed and held that the sexually-oriented business ordinance did not unconstitutionally infringe on Pink Pony’s free speech rights. And, the settlement agreement did not create a vested right to continue operations as a nude dancing club that served alcohol.

The Court explained that the sexually-oriented business ordinance passed all three prongs of the Paramount Pictures test. First, it furthered the important government interests of attempting to preserve the quality of urban life, and reducing criminal activity and preventing the deterioration of neighborhoods. Second, these goals were not related to any desire to suppress speech. Brookhaven’s desire to preserve the quality of urban life and its attempt to reduce crime and prevent neighborhood deterioration by separating alcohol from adult entertainment were important government interests unrelated to the suppression of speech. Finally, any incidental restriction of speech caused by the ordinance was no greater than essential to further the important governmental interests. The ordinance’s application was sufficiently narrowly tailored because it was limited to the modes of expression implicated in the production of negative secondary effects, establishments that provide alcohol and entertainment requiring an adult entertainment license. It exempted mainstream performance houses, museums, and theaters. Therefore, the court held given the long history of sexually-oriented business ordinances, and the record regarding the deleterious effects of alcohol coupled with nude dancing, the trial court did not err by finding that, as a matter of law, Brookhaven’s sexually-oriented business ordinance did not unconstitutionally infringe upon Pink Pony’s free speech rights.

Further, Pink Pony’s contention that Brookhaven should be bound by the prior agreement between Pink Pony and DeKalb County did not change the result. Under OCGA § 36–30–3(a), the prior agreement could not be used to bind the successively incorporated City of Brookhaven.

Trop, Inc. v City of Brookhaven, 2014 WL 4958232 (GA 10/6/2014)

The opinion can be accessed at: http://caselaw.findlaw.com/ga-supreme-court/1680049.html