Posted by: Patricia Salkin | September 5, 2015

NY Appellate Court Strikes Down Amendments to New York City’s Adult Use Zoning Regulations as Unconstitutional

In 1994, the New York City Department of City Planning (DCP) conducted an “Adult Entertainment Study”, which concluded that adult entertainment establishments, particularly when concentrated in a specific area, tended to produce negative secondary effects such as increased crime, decreased property values, reduced commercial activities, and erosion of community character. As a result, the City adopted an amended zoning resolution in 1995 that barred any “adult establishment” from all residential zones and most commercial and manufacturing districts, mandating that adult businesses had to be at least 500 feet from houses of worship, schools, and day care centers. The 1995 Resolution defined an “adult establishment” as a commercial establishment in which a “substantial portion” of the establishment includes “an adult book store, adult eating or drinking establishment, adult theater, or other adult commercial establishment, or any combination thereof”. In response to claims from owners and operators of adult establishments that the resolution’s operative phrase, “substantial portion,” was fatally vague, the Department of Buildings and the City Planning Commission determined that the “substantial portion” provision meant that any commercial establishment with “at least 40 percent” of its accessible floor area or stock used for adult purposes qualified as an adult establishment.

The New York City Council adopted and ratified Text Amendment N010508 ZRY to the 1995 Resolution (the 2001 Amendments) to address the concern that some commercial establishments were subverting the 1995 Resolution by superficially complying with the 60/40 formula but retaining their predominant, ongoing focus on sexually explicit materials or activities. The 2001 Amendments modified the “substantial portion” standard to provide that non-adult material would not be considered stock-in-trade for the purpose of the “substantial portion” analysis where one of several additional factors were present. Plaintiffs For the People Theatres, a movie theater that showed adult films, and JGJ Merchandise Corp., an adult video store, brought an action against the City, seeking a judgment declaring the 2001 Amendments to be facially unconstitutional and unenforceable, as well as for injunctive relief. In October 2002, plaintiffs Ten’s Cabaret and Pussycat Lounge commenced similar actions, which were later consolidated. The Supreme Court, New York County, entered judgment for owners, and the Appellate Division reversed. The Court of Appeals, affirmed as modified and remanded for further proceedings. On remand, the Supreme Court, New York County, entered judgment for city with respect to adult bookstores and video stores, and the Supreme Court, Appellate Division, reversed in part, vacated in part, and remanded. On remand, The Supreme Court, New York County, entered judgment for owners, and city appealed.

The Court of Appeals held that the City met its initial burden of showing that the 2001 Amendments were justified as a measure to eradicate the potential for sham compliance with the 1995 Ordinance, and thus to reduce negative secondary effects to the extent originally envisaged. The Court also found that because the plaintiffs met their burden to furnish evidence that disputed the City’s factual findings, the burden shifted back to the City to supplement the record with evidence renewing support for a theory that justified the 2001 Amendments. The City argued that despite any changes allowing for formal compliance with the 60/40 rule, the identified establishments clearly retained a predominant, ongoing sexual focus. However, at many of these adult stores the signs were modified, and signs advertising non-adult stock have been added so as to limit, if not eliminate, any emphasis on adult material. Furthermore, the evidence was not indicative of a predominant sexual focus in most of the stores, since nearly half of the stores did not restrict the admittance of minors at all. Finally, ample evidence that most of the stores kept the non-adult materials in the front of the stores, making them easy to access. Therefore, the court found that the City did not meet its burden with respect to the adult video and book stores.

As to the eating and drinking establishments, the evidence indicated that topless dancing took place daily for approximately 16–18 hours a day and that lap dances were provided in both public and private areas of the club. The City contended that this focus on sexually explicit activities and specified anatomical areas was not mitigated by the clubs’ non-adult sections where the non-adult use was a restaurant or bar that served adult-section customers or even where it is independent of the adult business but takes place in a separate part of the premises. Despite this, there was no evidence as to the size of the signs of these establishments or how they compared to signs advertising non-adult activity or those of surrounding non-adult businesses, which was not enough to show that the signage indicated a predominant sexual focus in most of the clubs. Accordingly, the judgment of the Supreme Court, New York County, declaring the 2001 Amendments to New York City’s adult use zoning regulation as to adult eating and drinking establishments and adult video and book stores an unconstitutional violation of the First Amendment and permanently enjoining the City from enforcing the amendments was affirmed.

For the People Theaters of N.Y. Inc. v City of New York, 2015 WL 4429048 (NYAD 1 Dept. 7/21/2015)

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