HH-Indianapolis, LLC v. Consolidated City of Indianapo ( 2018 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 17-3023
HH-INDIANAPOLIS, LLC,
Plaintiff-Appellant,
v.
CONSOLIDATED CITY OF INDIANAPOLIS
AND COUNTY OF MARION, INDIANA,
et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:17-cv-00036-SEB-DML — Sarah Evans Barker, Judge.
ARGUED MARCH 29, 2018 — DECIDED MAY 7, 2018
Before BAUER, FLAUM, and MANION, Circuit Judges.
BAUER, Circuit Judge. HH-Indianapolis, LLC (“HH”),
intended to open a retail establishment in Indianapolis under
the name “Hustler Hollywood.” After entering into a ten-year
lease at 5505 E. 82nd St. (“the Property”), HH applied for sign
and building permits. Problematically, HH’s proposed store
2 No. 17-3023
was located in a zoning district that prohibited “adult enter-
tainment businesses,” as defined under the Indianapolis-
Marion County Zoning Ordinance (“the Ordinance”). Upon
review, the Department of Business and Neighborhood
Services (DBNS) determined that HH was an adult entertain-
ment business, a decision which the Board of Zoning Appeals
(BZA) affirmed.
HH filed this lawsuit against the Consolidated City of
Indianapolis and County of Marion, Indiana, the DBNS, and
the BZA (collectively, “the City”) seeking a declaratory
judgment that the Ordinance violated its First and Fourteenth
Amendment rights and violated state administrative law, as
well as asking for an injunction against the City’s enforcement
of the Ordinance against HH. HH challenged the Ordinance
under the First Amendment both as applied to it, as well
as facially for overbreadth and vagueness. The district court
denied HH’s motion for a preliminary injunction, and HH filed
this interlocutory appeal challenging that decision only with
respect to its as-applied First Amendment claim. We affirm.
I. BACKGROUND
HH-Entertainment, Inc., the parent company of HH,
operates retail stores under the name “Hustler Hollywood”
throughout the United States in over twenty locations. HH
was incorporated in Indianapolis in order to open a store that
would sell a variety of merchandise, including lingerie, gag-
gifts, instructional DVDs and literature, marital aids, and
sexual devices, such as dildos and vibrators. According to HH,
when it seeks to open a new retail store, it studies the city’s
municipal ordinance in order to avoid being classified as an
“adult” store.
No. 17-3023 3
The Ordinance, which went into effect on April 1, 2016,
establishes six different Commercial Zoning Districts. City of
Indianapolis and Marion County Consolidated Zoning and
Subdivision Ordinance, § 742-104(B)–(G) (April 1, 2016). “The
C-3 District (Neighborhood Commercial District) is for the
development of an extensive range of retail sales and personal,
professional and business services required to meet the
demands of a fully developed residential neighborhood,
regardless of its size.” § 742-104(C).
The Ordinance also regulates “adult entertainment busi-
nesses.” See § 743-305(A). An adult entertainment business is
prohibited from operating in a C-3 district as a right, although
it may obtain a variance to operate in a C-3 district. See § 743-
305(A)(3)(b). However, an adult entertainment business
may operate as a right in three of the six districts: C-4
(Community-Regional District); C-5 (General Commercial
District); and C-7 (High-Intensity Commercial District). Id.
The various types of adult entertainment businesses are
defined under the Ordinance. See § 740-202(A). Relevant to this
appeal, an “adult bookstore” is defined as follows:
An establishment having at least 25% of its:
1. Retail floor space used for the display
of adult products; or
2. Stock in trade consisting of adult
products; or
3. Weekly revenue derived from adult
products.
4 No. 17-3023
Id. “Adult products” means any media (e.g., books, films,
magazines, photographs) “that are distinguished or character-
ized by their emphasis on matter depicting, describing or
relating to specified sexual activities or specified anatomical
areas;” as well as any device “designed or marketed as useful
primarily for the stimulation of human genital organs, or for
sadomasochistic use or abuse,” including, but not limited
to, chains, dildos, muzzles, phallic shaped vibrators, and
whips. Id. Additionally, the Ordinance defines an “adult
service establishment” as “[a]ny building, premises, structure
or other facility, or part thereof, under common ownership or
control which provides a preponderance of services involving
specified sexual activities1 or display of specified anatomical
areas.2” Id.
1
“Specified sexual activities” is defined as any of the following:
(1) Human genitals in a state of sexual stimulation or
arousal; (2) Acts of human masturbation, sexual inter-
course or sodomy; (3) Fondling or other erotic touching of
human genitals, pubic regions, buttocks or female breasts;
(4) Flagellation or torture in the context of a sexual rela-
tionship; (5) Masochism, erotic or sexually oriented
torture, beating or the infliction of pain; (6) Erotic touch-
ing, fondling or other such contact with an animal by a
human being; or (7) Human excretion, urination, menstru-
ation, vaginal or anal irrigation as part of or in connection
with any of the activities set forth in” (1) through (6).
§ 740-202(A).
2
“Specified anatomical areas” is defined as any of the following: “(1) Less
than completely and opaquely covered human genitals, pubic region,
buttocks, anus or female breasts below a point immediately above the top
of the areolae; (2) Human male genitals in a discernibly turgid state, even
(continued...)
No. 17-3023 5
In early 2016, HH began exploring the possibility of
opening a store in Indianapolis. HH identified a vacant
commercial property at 5505 E. 82nd Street, on Indianapolis’
northeast side. The Property is located in a C-3 district,3 and
a driveway separates the Property from a Chuck E. Cheese’s,
a kid-friendly restaurant and entertainment center. Notably,
directly across 82nd Street to the north of the Property is a C-4
district where HH could operate freely as an adult entertain-
ment business as a right.
HH was aware that the City was revising the then-existing
zoning ordinance, and preemptively contacted City officials in
order to apprise themselves of the revised Ordinance, particu-
larly the “adult” provisions. According to HH, it entered into
a ten-year lease at the Property on July 14, 2016, in reliance on
the communications it had with City officials. Shortly thereaf-
ter, HH applied for a structural permit to remodel the Prop-
erty, and for a sign permit to hang exterior signs. The DBNS
flagged the applications after noticing that the proposed signs
stated “Hustler Hollywood,” and advertised such things as
2
(...continued)
if completely and opaquely covered.” § 740-202(A).
The entire phrase “services involving specified sexual activity or display
of specified anatomical areas” is defined as “[a]ny combination or [two] or
more” among five different activities. § 740-202(A). The relevant two
categories for the purpose of this appeal are discussed below.
3
Additionally, the Property is 355 feet from a D-2 dwelling district. Under
the Ordinance, adult entertainment businesses may not operate as a right
within 500 feet of a dwelling district. Thus, even if the Property were not
located in a C-3 district, it would still need a variance to operate within that
range of a dwelling district.
6 No. 17-3023
“erotica.” Given that the Property is located in a C-3 district,
the DBNS was concerned HH was intending to operate an
adult entertainment business. HH’s applications were put on
hold, and the DBNS requested additional information in order
to verify that HH was permitted to operate in a C-3 district. In
response, HH submitted a weekly inventory and sales projec-
tion, which projected the stock and sales of adult products, a
floor plan with square footage designations, and a description
of the business. After reviewing this information, which the
DBNS described as “imprecise and contradictory,” the DBNS
concluded that HH was either an adult bookstore or an adult
service establishment.
Instead of electing to seek a variance with the DBNS, HH
appealed to the BZA. Prior to the hearing before the BZA, the
DBNS staff submitted a report explaining its decision. In
explaining the adult bookstore classification, the DBNS noted
the inventory and sales projection provided by HH indicated
that only 16.1% of their inventory and 23.9% of their sales
would derive from “adult products.” However, the DBNS
pointed to other projections that rendered those figures
imprecise: 32.2% of inventory and 12.8% of sales were broadly
categorized as “general merchandise;” and “toys” accounted
for 13.1% of inventory and 28.8% of sales. Adding either of
these figures to the adult products figures would put HH
above the 25% threshold for adult bookstores under the
Ordinance. Moreover, “sensual care” products were to be sold
behind a separation wall along with adult products; yet,
sensual care products were not included in the adult products
projection. HH stated in their business description that sensual
care products included gels, oils, lotions and marital aids, and
No. 17-3023 7
the DBNS noted that “[m]arital aids, by definition, are sex
toys.”
Further, the DBNS found that even if HH was not an adult
bookstore, it would be classified as an adult service establish-
ment. Under the Ordinance, providing “a preponderance of
services involving specified sexual activities or display of
specified anatomical areas” means any combination of two or
more specified categories of services. According to the DBNS,
the two categories that applied to HH were (1) “[t]he sale or
display” of media “characterized by an emphasis upon the
depiction or description of specified sexual activities or
specified anatomical areas;” and (2) the presentation of such
media for observation by patrons. The DBNS concluded that
HH plainly fit under the first category based on the products
it intended to sell, as well as the presentation-of-media cate-
gory since other Hustler Hollywood locations offered work-
shops and classes involving live demonstrations or videos,
with titles such as “Masturbation Workshop.”
The BZA held a hearing on December 6, 2016. HH appeared
by counsel and presented a revised inventory and sales
projection. HH claimed that the initial projections had mistak-
enly included figures from nationwide-stores and online sales.
In the new projections, only 8.7% of inventory and 12.4% of
sales would be “adult products.” HH insisted that it did not
intend to operate an adult bookstore or an adult service
establishment, and that it would not offer any workshops or
classes that are offered at other Hustler Hollywood stores.
Finally, HH invited City officials to inspect the Property once
it was ready to open.
8 No. 17-3023
Remonstrators, a group composed of community members,
property owners, and tenants, appeared by counsel in opposi-
tion to HH’s proposed store. They submitted evidence to
counter HH’s argument that it did not intend to operate an
adult entertainment business, including photographs from
other Hustler Hollywood locations showing adult products
visibly displayed throughout the store, as well as advertise-
ments from the Hustler Hollywood website for workshops and
classes at their stores. The Remonstrators also emphasized that
the Property was situated next to Chuck E. Cheese’s, as well as
a bus stop frequented by school children. A City councillor also
appeared at the hearing and argued that HH-Entertainment
had a history of deception in opening stores nationwide. At the
conclusion of the hearing, the BZA voted unanimously, 5-0, to
affirm the decision of the DBNS.
Rather than seek judicial review of that decision in an
Indiana state court pursuant to Ind. Code § 36-7-4-1614(d), HH
filed this lawsuit against the City on January 5, 2017. HH
sought declaratory and injunctive relief under three different
First Amendment theories: (1) an as-applied challenge to the
City’s determination that HH is an adult entertainment
business; (2) a facial challenge for vagueness to the definition
of an “adult service establishment;” and (3) a facial challenge
for overbreadth to the definition of an “adult service establish-
ment.” HH also sought relief under the Equal Protection
Clause of the Fourteenth Amendment, and challenged the
City’s determination as arbitrary, capricious, and unsupported
by substantial evidence under Indiana law.
On June 6, 2017, HH filed for a preliminary injunction.
After briefing and a hearing, the court denied HH’s motion on
No. 17-3023 9
September 22, 2017. HH-Indianapolis LLC v. Consol. City of
Indianapolis/Marion Cty., Ind., 265 F. Supp. 3d 873 (S.D. Ind.
2017). The court found that HH was unlikely to succeed on the
merits under any of the First Amendment theories, or under
the Equal Protection claim. Id. at 881–891. Additionally, the
court concluded that HH had not alleged an irreparable injury
in its state law claim. Id. at 891. HH then filed this interlocutory
appeal pursuant to 28 U.S.C. § 1292(a)(1).
II. DISCUSSION
“A preliminary injunction is an extraordinary remedy.”
Whitaker v. Kenosha Unified Sch. Dist. No. 1 Bd. of Educ., 858 F.3d
1034, 1044 (7th Cir. 2017). A party seeking a preliminary
injunction must satisfy all three requirements in the “threshold
phase” by showing that (1) it will suffer irreparable harm in the
period before the resolution of its claim; (2) traditional legal
remedies are inadequate; and (3) there is some likelihood of
success on the merits of the claim. Girl Scouts of Manitou
Council, Inc. v. Girl Scouts of U.S. of Am., Inc., 549 F.3d 1079,
1086 (7th Cir. 2008). If a party makes the necessary showing,
the court moves to the “balancing phase.” Id. At that phase, the
court employs a sliding-scale approach and “weighs the factors
against one another, assessing whether the balance of harms
favors the moving party or whether the harm to other parties
or the public is sufficiently weighty that the injunction should
be denied.” BBL, Inc. v. City of Angola, 809 F.3d 317, 324 (7th
Cir. 2015).
HH contends that the district court erred with respect to its
finding that HH was not likely to succeed on the merits of its
as-applied First Amendment claim. The likelihood of success
requirement is a low threshold; HH must only show that its
10 No. 17-3023
claim’s chance of success is “better than negligible.” Whitaker,
858 F.3d at 1046 (quoting Cooper v. Salazar, 196 F.3d 809, 813
(7th Cir. 1999)). We review the denial of a preliminary injunc-
tion for an abuse of discretion, reviewing the legal conclusions
de novo and the factual findings for clear error. Valencia v. City
of Springfield, Ill., 883 F.3d 959, 966 (7th Cir. 2018).
At oral argument, HH described its claim as a “content-
based, prior restraint, as-applied claim.” Combining these
various terms from First Amendment jurisprudence into a
single claim requires some unpacking. We begin with the
framework for analyzing zoning regulations of sexually
oriented adult businesses under the First Amendment, which
derives from the Supreme Court’s decisions in Young v.
American Mini Theatres, Inc., 427 U.S. 50 (1976) (plurality), City
of Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986), and City
of Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002) (plural-
ity). Under this framework, regulations that do not prohibit
adult businesses altogether, but merely regulate their location,
are analyzed as time, place, and manner regulations. Renton,
475 U.S. at 46. The regulations must be “content-neutral,”4
meaning they are not aimed at the content of the adult busi-
nesses, but rather the harmful and undesirable “secondary
effects” of such businesses on the surrounding community.
4
“The ‘content-neutral’ label in this context is a misnomer; regulations
aimed at adult businesses apply to certain types of speech and not others.
As such, Justice Kennedy remarked in his Alameda Books concurrence that
‘[t]hese ordinances are content based, and we should call them so.’” BBL,
809 F.3d at 325 (quoting Alameda Books, 535 U.S. at 448 (Kennedy, J.,
concurring)).
No. 17-3023 11
Alameda Books, 535 U.S. at 444–47 (Kennedy, J., concurring);5
Renton, 475 U.S. at 47; Am. Mini Theaters, 427 U.S. at 70–72.
If the regulations are “content-based,” they “would be
considered presumptively invalid and subject to strict scru-
tiny.” Alameda Books, 535 U.S. at 434 (plurality opinion).
However, “content-neutral” time, place, and manner regula-
tions of adult businesses are subject to intermediate scrutiny
which means that: (1) the regulations must be “designed to
serve a substantial governmental interest” in curbing the
secondary effects, and be narrowly tailored toward that
interest; and (2) they must “allow[] for reasonable alternative
avenues of communication.” Renton, 475 U.S. at 50–52; see also
BBL, 809 F.3d at 327.
HH argues that the City’s enforcement of the Ordinance, as
applied to them, has “silenced” their ability to exercise their
First Amendment rights at the location of their choosing.
According to HH, the City classified them as an adult enter-
tainment business in order to “suppress” unwanted speech, in
light of the public outcry from the Remonstrators.
However, HH’s speech has not been silenced or sup-
pressed; rather, HH has only been told that it cannot operate
in a particular commercial district and must move elsewhere.
“A zoning measure can be consistent with the First Amend-
ment if it is likely to cause a significant decrease in secondary
effects and a trivial decrease in the quantity of speech.”
Alameda Books, 535 U.S. at 445 (Kennedy, J., concurring).
5
Alameda Books was decided by a plurality, and we have treated Justice
Kennedy’s concurring opinion as the holding of the case. See BBL, 809 F.3d
at 325.
12 No. 17-3023
Unquestionably, the City has provided HH with reasonable
alternative avenues of communication in a number of other
commercial districts, a fact HH does not dispute. HH may
operate as a right in a C-4, C-5, or C-7 district, and a C-4 district
lies directly north of the Property. “[T]he First Amendment
requires only that [the City] refrain from effectively denying
[HH] a reasonable opportunity to open and operate” an adult
entertainment business within Indianapolis. Renton, 475 U.S. at
54. There is simply “no First Amendment objection” when the
City exercises its zoning power to reduce the secondary effects
of adult businesses, and HH has alternative avenues of
communication. Alameda Books, 535 U.S. at 445 (Kennedy, J.,
concurring).
Moreover, HH does not dispute that the Ordinance is
“content-neutral,” or that the City’s interest in reducing the
secondary effects of adult businesses, codified at length in the
Ordinance, is a sufficient or substantial interest. See City of
Indianapolis and Marion County Consolidated Zoning and
Subdivision Ordinance § 743-305(A)(1) (“It is the purpose of
this section … to regulate adult entertainment businesses … to
promote the health, safety, morals, and general welfare of the
citizens of Marion County, and to establish reasonable and
uniform provisions to prevent the deleterious effects of adult
entertainment businesses within Marion County.”) Nor could
it since the Supreme Court has repeatedly recognized that this
is a legitimate interest. See Alameda Books, 535 U.S. at 444(Kennedy, J., concurring) (“Municipal governments know that
high concentrations of adult businesses can damage the value
and integrity of a neighborhood … . The law does not require
a city to ignore these consequences if it uses its zoning power
in a reasonable way to ameliorate them without suppressing
No. 17-3023 13
speech.”); American Mini Theaters, 427 U.S. at 71 (“[T]he city’s
interest in attempting to preserve the quality of urban life is
one that must be accorded high respect.”). Accordingly,
because the Ordinance is content-neutral, serves a substantial
interest, and allows for HH to operate in numerous other
commercial districts, HH’s likelihood of success on its First
Amendment claim is not better than negligible.
HH insists it demonstrated a likelihood of success on the
merits because the district court did not employ the proper
level of scrutiny in reviewing its claim. According to HH,
federal courts dealing with an as-applied challenge have a
“duty to engage in a critical examination of the government’s
reasoning and evidentiary support for applying the ordinance
in a particular way.” That sounds like strict scrutiny. HH
directs us to a number of cases where courts have performed
some heightened level of scrutiny in analyzing an as-applied
First Amendment challenge. See, e.g., In re Primus, 436 U.S. 412,
432–39 (1978) (applying “exacting scrutiny” to South Carolina’s
attorney regulatory scheme as applied to an attorney soliciting
a prospective client by mail); United States v. Marcavage, 609
F.3d 264, 274–91 (3d Cir. 2010) (applying strict scrutiny to a
content-based application of national park regulation against
an anti-abortion protester in a public forum). Yet, none of these
cases involve as-applied challenges to constitutional time,
place, and manner zoning regulations of adult businesses
which the Supreme Court has made abundantly clear are
subject to intermediate scrutiny.6
6
HH also relies on Fantasy Book Shop, Inc. v. City of Boston, 652 F.2d 1115(1st Cir. 1981), to support a heightened level of scrutiny. That case involved
(continued...)
14 No. 17-3023
The critical inquiry in this as-applied challenge is whether
the City’s application of the Ordinance to HH resulted in an
unconstitutional effect, i.e., an abridgment of its First Amend-
ment rights. See Members of City Council of City of Los Angeles v.
Taxpayers for Vincent, 466 U.S. 789, 805–12 (1984) (finding no
unconstitutional effect in the application of a time, place, and
manner ordinance which restricted a political group’s ability to
post signs on utility poles). The City’s application of the
Ordinance has resulted only in an incidental restriction on
HH’s speech in a particular location. HH has not been de-
prived of their First Amendment right to operate in Indianapo-
lis. The City has simply told HH that it cannot operate in a C-3
district, while also providing numerous other avenues for
speech in C-4, C-5, and C-7 districts, including a C-4 district
directly across the street.
The City acknowledges that the Ordinance functions as a
form of prior restraint, and in fact, did so in this case. Yet,
“prior restraints are not per se unconstitutional,” Schultz v. City
of Cumberland, 228 F.3d 831, 851 (7th Cir. 2000), and we have
previously stated that prior restraints “are constitutionally
legitimate if they are proper time, place, or manner restric-
tions.” Pleasureland Museum, Inc. v. Beutter, 288 F.3d 988, 1000
(7th Cir. 2002). As we have already found, the Ordinance is a
constitutional time, place, and manner regulation. Moreover,
6
(...continued)
an as-applied challenge to a municipal licensing ordinance that regulated
adult businesses. See id. at 1118–20. However, it lacks persuasive value
because it was decided before the Supreme Court’s decision in Renton,
which established the intermediate scrutiny framework for adult zoning
ordinances.
No. 17-3023 15
HH does not allege a lack of procedural safeguards in the
City’s zoning scheme that the Supreme Court has noted may
result in unconstitutional prior restraint. See FW/PBS, Inc. v.
City of Dallas, 493 U.S. 215, 225–28 (1990) (noting that censor-
ship may result when there is unfettered discretion in the
hands of public officials, or a lack of prompt judicial review).
Ultimately, HH’s “content-based, prior restraint, as-applied
claim” boils down to the following: (1) the evidence does not
support the DBNS and BZA’s determination that HH was
either an adult bookstore or an adult service establishment; (2)
the City intended to restrain HH’s speech given the public
outcry from the Remonstrators; and (3) the City should have at
least inspected the Property or allowed HH to open there
conditionally. However, an erroneous application of a zoning
ordinance is unlikely to be a First Amendment violation.
Indeed, federal courts “are not zoning boards of appeal,”
CEnergy-Glenmore Wind Farm No. 1, LLC v. Town of Glenmore,
769 F.3d 485, 487 (7th Cir. 2014), and Indiana law provides
judicial review for zoning decisions that are challenged as
arbitrary, capricious, or unsupported by the evidence. See Ind.
Code § 36-7-4-1614(d). In fact, the Supreme Court has found
ordinary state court civil procedures sufficient to protect any
First Amendment interests in erroneous zoning determina-
tions. See City of Littleton, Colo. v. Z.J. Gifts D-4, L.L.C., 541 U.S.
774, 782 (2004).
Nothing that HH has alleged gives rise to an unconstitu-
tional effect or First Amendment violation. The BZA holds
hearings in order to listen to testimony and evidence, including
evidence from the DBNS and “other persons,” such as the
Remonstrators. See Ind. Code § 36-7-4-920(e)–(f); Metro Board
16 No. 17-3023
of Zoning Appeals of Marion County, Indiana, Rules of
Procedure (2014). The BZA did not have to believe HH when
it stated it would not offer workshops or classes, nor did it
have to ignore evidence from other Hustler Hollywood stores.
Additionally, the BZA was not required to disregard HH’s
initial inventory and sales projections which contradicted their
second projections. HH presented no evidence in the district
court or on appeal that officials from the DBNS or BZA
displayed any bias or censorial intent in their determinations.
Furthermore, the City was under no constitutional obligation
to inspect the Property or allow HH to open conditionally
before making its determination.
Ultimately, the question of whether the City’s determina-
tion rested on a sufficient evidentiary basis is properly suited
for state court review. That evidentiary issue does not present
a First Amendment violation, nor does it justify the issuance of
a preliminary injunction.
III. CONCLUSION
Since HH has failed to establish that its as-applied First
Amendment claim has a better than negligible chance of
success on the merits, it is not entitled to a preliminary injunc-
tion. Accordingly, the district court’s denial of the issuance of
a preliminary injunction is AFFIRMED.