NY Appellate Division Revives Challenge to Adult Business Zoning Resolution

A unanimous panel of the New York Appellate Division, First Department, based in Manhattan, ruled on April 8 that opinions rendered last year by New York Supreme Court Justice Louis B. York, rejecting constitutional challenges to the NYC Zoning Resolution concerning location of adult businesses, were so terse that they lacked the necessary findings of fact that would enable the appeals court to determine whether Justice York's conclusions were supported by the factual record in the case.  Consequently, the court reversed the decisions, vacated Justice York's finding that the Zoning Resolution is constitutional with regard to bookstores, video stores, topless night clubs and bars, and sent the case back to Justice York for reconsideration.

Thus begins a new chapter in a long-running saga that began during the Rudolph Giuliani Administration almost twenty years ago.  Giuliani strongly advocated "cleaning up the city" by closing as many adult businesses as possible.  Under the 1st Amendment of the U.S. Constitution, however, there are limits to what the government can do in its regulation of sexually-oriented businesses, so long as their goods and services don't cross the line into constitutionally-unprotected obscenity.  The city can impose restrictions on the location of adult businesses so long as it can show that their presence has undesirable "secondary effects," and the U.S. Supreme Court has accepting the contention that a zoning plan backed up by studies showing such secondary effects – crime, including drug dealing and prostitution, and negative effects on property values – can be constitutional, so long as it leaves enough locations so that those who want to purchase such goods and services can do so.

In 1993, the City Planning Department carried out a study of secondary effects of adult establishments in the City, generating a report that provided the basis for the 1995 Amendment to the city's Zoning Resolution.  The 1995 Amended Zoning Resolution barred adult businesses from all residential zones and most commercial and manufacturing districts, defining an "adult business" as a commercial establishment in which a "substantial portion" of the establishment includes "an adult bookstore, adult eating or drinking establishment, adult theater, or other adult commercial establishment, or any combination thereof."

This was not a definition that could be readily applied without more specific guidance, and the City Planning Commission came up with a rule of thumb that defined "substantial portion" as 40 percent, specifying that any commercial establishment with "at least 40 percent of its accessible floor area used for adult purposes qualifies as an adult establishment or adult bookstore."  Operators of such businesses that wanted to remain open in their existing locations and not be exiled to remote locations altered their premises and their stock to try to comply with what became known as the 60/40 rule. 

City inspectors brought actions against such businesses despite their technical compliance, contending that it was a "sham" and they were still "adult businesses" that could not operate where they were located.  This didn't play well in the courts, since these businesses were technically in compliance with the 60/40 rule, leading the City Council to adopt further amendments to the Zoning Resolution in 2001.  The 2001 Amendments spelled out that compliance with the 60/40 rule was not sufficient to avoid the label of "adult business" if (1) customers had to pass through adult material to reach the non-adult section, (2) any material exposred one to adult material, (3) non-adult material was only for sale, while adult materials was for sale or rent, (4) more adult printed materials were available than non-adult ones, (5) minors were restricted from the entire store or from any section offering non-adult material, (6) signs or window displays of adult matter were disproportionate to signs and window displays featuring non-adult matter, (7) one or more individual enclosures were available for viewing adult movies or live performances, and (8) purchasing non-adult material exposed the buyer to adult material.

In October 2002, new lawsuits were filed challenging the constitutionality of the 2001 Amendment.  Trial judges issued temporary injunctions against the new Amendment being enforced while the cases were under litigation, so the 60/40 establishments continue to operate.  Meanwhile, the cases wound their way through the courts, eventually hitting the Court of Appeals (the state's highest court) in 2005.  That court found that the plaintiffs were entitled to a hearing of their constitutional claim, which boiled down to the contention that the original study of adult businesses carried out by the City Planning Commission in 1993 could no longer support the current version of the Zoning Resolution as it applied to the reconfigured 60/40 businesses, because these reconfigured businesses as substantially different from the adult businesses that operated in the City back then. 

The Court of Appeals said that the City did not have to carry out an entirely new study, although certainly it could do so.  Its burden, however, was to create an evidentiary record so that the trial court could determine "that the City has fairly supported its position on sham compliance — i.e., despite formal compliance with the 60/40 formula, these businesses display a predominant, ongoing focus on sexually explicit materials or activities, and thus their essential nature has not changed."  If the nature of the businesses hasn't really changed, goes the logic of the decision, then the original study on secondary effects is sufficient to uphold the constitutionality of the Resolution.

After the case went back to Justice York from the Court of Appeals, he granted a further preliminary injunction against enforcement of the Resolution pending the outcome.  After considering further evidence, Justice York ruled early in 2010 that the amended definition of "adult establishment" was constitutional as applied to adult bookstores and live entertainment establishments, but not as applied to "adult theaters."  His brief decisions emphasized the Court of Appeals' comment that the burden on the City was relatively light, and that no new study of secondary effects was necessary if the City showed that the essential nature of the businesses had not changed as a result of their 60/40 configuration.

Writing for the Appellate Division panel, Justice Rolando T. Acosta pointed out the shortcomings of Justice York's opinion.  "In its extremely terse decision," he wrote, "Supreme Court did not elaborate on the criteria by which it determined that the plaintiff's essential nature was similar or dissimilar to the sexually explicit adult uses that were analyzed in the DCP Study or other studies and case law from across the country.  Moreover, it failed to state the particular facts on which it based its judgment.  Supreme Court simply detailed the City's evidence and arrived at legal conclusions.  This was insufficient to answer the question posed… from the Court of Appeals — namely, whether the 60/40 establishments are similar in nature to adult establishments that have been shown by means of empirical data to cause negative 'secondary effects.'  As Supreme Court did not provide any direction for the parties or this Court to adequately review, analyze, or understand the ruling, its decision is 'manifestly inadequate' and violates the dictates" of the statute governing the content of trial court decisions.

The problem for the Appellate Division is that its job is to determine whether Justice York's legal conclusions are supported by the factual record.  Without a more detailed explanation from Justice York about how his conclusions are based on particular facts in the record, the Appellate Division is unable to perform this task.

Justice Acosta devoted the balance of his opinion to describing the evidence that would be necessary to support the constitutionality of the Resolution, either on its face or as applied to particular establishments.  Part of the problem with the trial court's decision was that it seemed based on broad generalizations about the 60/40 businesses rather than detailed factual findings about the actual businesses that are contesting the City's application to them of the label "adult business."  "Supreme Court's decision states very few, if any, facts that can be used by this Court to resolve plaintiff's as-applied challenge," commented Justice Acosta, noting that Justice York had been dismissive of evidence offered by the plaintiffs to show that their businesses differed in relevant ways from others whose characteristics were entered into evidence. 

Justice Acosta pointed out that "neither the decision nor the judgment makes any factual findings to help resolve the question of whether only some of the clubs were found to have a predominantly sexual focus or whether all of them were….  The result of Supreme Court's decision is that some of the non-sham clubs could be put out of business by a law that, in fairness, many not apply to them."

The Appellate Division's opinion does not specify a deadline for Justice York to render a new decision, but the clear implication of the ruling is that further evidentiary submissions will be required to provide a factual basis for rendering a decision that complies with the court's requirements, and that Justice York would need to produce a detailed set of factual findings to bolster his conclusions, so this may take some time.  Meanwhile, the preliminary injunctions remain in effect.

Attorneys for the plaintiffs challenging the Zoning Resolution include Herald Price Fahringer, Erica L. Dubno and Nicole Neckles of Fahringer & Dubno, and Edward S. Rudofsky of Zane & Rudofsky.  The City Law Department is defending the Zoning Resolution.

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