Posted by: Patricia Salkin | December 23, 2020

IN Appeals Court Holds Ordinance Regulating Sexually Oriented Businesses was Not Preempted by Home Rule Act

This post was authored by Matthew Loescher, Esq.

The City of Fort Wayne passed an ordinance, Fort Wayne Ordinance No. G-19-19, which regulated “sexually oriented businesses,” including “adult cabarets.” B&S of Fort Wayne, Inc., d/b/a Showgirl I; Showgirl III, Inc., d/b/a Showgirl III; and JCF, Inc., d/b/a Brandy’s Lounge – the owners of adult cabarets located in Ft. Wayne – filed a complaint seeking a preliminary injunction, a permanent injunction, and a declaratory judgment. Specifically, the Nightclubs claimed that the ordinance violated their constitutional rights to free speech and posed “irreparable harm” to them if it were enforced. The trial court denied the Nightclubs’ motion for a preliminary injunction and granted the City’s motion for a preliminary injunction.

 On appeal, the Nightclubs argued that the statute was unambiguous and that, by its plain meaning, it prevented the kind of regulation established by the ordinance. The trial court found the “general purposes” of Title 7.1, included “to regulate and limit the manufacture, sale, possession, and use of alcohol and alcoholic beverages.” Here, nothing in the ordinance either directly or indirectly regulated, restricted, enlarged, or limited the operation or business of the Nightclubs’ permits to sell alcohol. Accordingly, the court held that the ordinance did not violate Indiana Code Section 7.1-3-9-6.

The Nightclubs next argued that the ordinance was preempted by Indiana Code Section 36-1-3-8(a)(7) of the Home Rule Act, which provides that a unit of local government does not have “the power to regulate conduct that is regulated by a state agency, except as expressly granted by statute.” The court found that nothing in the administrative code provisions cited by the Nightclubs indicated the State’s intent to occupy the field of the regulation of adult cabarets. Despite the fact that the State regulated some aspects of “adult entertainment” within the context of the sale of alcoholic beverages, the regulations cited by the Nightclubs merely prohibited nudity and required approval of floor plans for dancing. As the State had not preempted the field of adult entertainment, the Nightclubs failed to show that the trial court erred when it concluded that they were not likely to succeed on the merits of this issue at trial.

Lastly, the Nightclubs argued that the ordinance did not pass muster under Justice Kennedy’s test in Alameda Books because the ordinance required that each of the Nightclubs “remove a substantial portion of its seating, and reduce the number of patrons.” The court rejected this contention, finding the Nightclubs’ argument failed to address the part of Justice’s Kennedy’s opinion that set forth that an ordinance may, in its operation and effect, require a business to relocate or expand the size of an existing venue without impairing constitutionally protected speech. Accordingly, the trial court’s holding in favor of the City was affirmed.

B & S of Fort Wayne, Inc. v City of Fort Wayne, 159 N.E. 3d 67 (IN. App. 12/22/2020)

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