Posted by: Patricia Salkin | July 3, 2019

Eleventh Circuit Court of Appeals Holds First Amendment Claims of Adult Business Were Not Barred by Res Judicata

This post was authored by Matthew Loeser, Esq.

Cheshire Bridge Holdings, LLC and Cheshire Visuals, LLC owned and operated Tokyo Valentino, an adult toy and video store connected to an adult videoplexx and swingers club. In 1996, Cheshire submitted a business license application to the City for operation of the adult store. That same day the City adopted a new ordinance that changed the 1987 Code by establishing distance requirements for the operation of adult novelty stores. Cheshire appealed to the City’s Board of Zoning Adjustment, which affirmed the denial. Cheshire then challenged the City’s denial of its license in Georgia state superior court and prevailed. The City approved a building construction permit for Cheshire at the Property, but then voided that permit and issued another that removed references to video booths and stated that the “location is not approved for adult business.” Cheshire filed suit in federal court against the City alleging various constitutional claims and seeking monetary damages for lost revenue from the lengthy delay. The district court granted summary judgement to the City. After the City withheld approval of permits and issued a violation correction notice that ordered Cheshire to “cease and desist” operating an adult business at the property, Cheshire commenced another action in district court. The district court held that Cheshire’s claims against two of adult business’s sub-definitions, “adult bookstore” and “adult mini-motion picture theater,” were barred by res judicata because Cheshire could have brought First Amendment challenges to substantially similar versions of those definitions in the State Court Litigation or the First Federal Lawsuit.

On appeal, Cheshire alleged that it could not have brought First Amendment challenges to the definitions of “adult bookstore” or “adult mini-motion picture theaters” in either the State Court Litigation or the First Federal Lawsuit because the cases did not concern themselves with the constitutional validity of the adult zoning code. The record reflected that the primary right asserted in the State Court Litigation was to have the correct version of the Code applied to Cheshire’s business license application. In the First Federal Lawsuit, the right Cheshire claimed was to open its business without delay caused by the City’s misapplication of the new 1996 Code. Here, by contrast, the primary right Cheshire asserted was to renovate the property and freely express itself under the First Amendment by operating a social club as part of its business at the property. The court found that since the City’s primary duty in this case was to properly apply the Current Code and not unlawfully obstruct Cheshire from operating its business by imposing allegedly overbroad ordinances in violation of the First Amendment, the primary rights and duties among the previous cases and this one were incongruent.

The court further noted that Cheshire did not open its store until February 21, 1998. As such, the earlier litigation, never would have touched whether Cheshire illegally operated the videoplexx “from the beginning.” Additionally, the issuance and reissuance of building permits on December 15 and 19, 1997, were likewise not within the relevant nucleus of operative facts for either prior case. The court determined that the nucleus of operative facts in this case differed in that the events surrounding the investigation and withholding of Cheshire’s application for a building permit and the City’s subsequent issuance of a “cease and desist” notice took place 17 years after the nucleus of operative facts in the prior litigation. Accordingly, the timing and origin were so different that this new case would not have been conveniently tried with either previous case. The court therefore held that res judicata did not preclude Cheshire’s Overbreadth Claim from proceeding against either the “adult bookstore” or the “adult mini-motion picture theater” definitions.

Since the court reversed the res judicata holding as to “adult mini-motion picture theater”, and there would be a live claim involving that definition on remand, it found there could be a redressable harm at the end of the litigation from the challenge to “adult entertainment establishment.” Furthermore, as the district court relied upon the definition of “adult business” and its various sub-definitions to issue the injunction, the injunction could not stand. Thus, the court vacated the district court’s injunction, and reversed the district court’s judgment as to the res judicata, redressability, and the injunction related issues.

Cheshire Bridge Holdings, LLC v. City of Atlanta, Georgia, 2019 WL 2406502 (11th Cir. CA 6/7/2019)

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