WBY, Inc. v. City of Chamblee

WBY, INC. d/b/a FOLLIES, Plaintiff, v. CITY OF CHAMBLEE, GEORGIA, Defendant.

Civil Action No. 1:18-cv-05748-SDG

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

July 15, 2021

OPINION AND ORDER

Plaintiff WBY, Inc. d/b/a Follies (hereafter, Follies) is a strip club located in Chamblee, Georgia. Follies's business model centers around offering fully nude dancing, selling alcohol to its patrons, and remaining open until the early hours of the morning. In 2018, Defendant City of Chamblee, Georgia (hereafter, Chamblee) enacted ordinances essentially prohibiting Follies from providing those services. In response, Follies initiated this lawsuit. After pursuing an unsuccessful motion for a preliminary injunction, Follies filed the operative Second Amended Complaint. Follies asserts a total of twelve claims against Chamblee. Only Counts I, III, V, VII, IX, and XI constitute substantive causes of action:

• Counts I and III allege violations of Follies's freedom of speech under the First and Fourteenth Amendments to the U.S. Constitution and related provisions of the Georgia Constitution; • Counts V and VII allege the impermissible impairment of contract under the U.S. Constitution and Georgia Constitution;

• Count IX alleges violations of the First and Fourteenth Amendments to the U.S. Constitution relating to Chamblee's Alcohol Code; and

• Count XI alleges violations of the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution and corresponding provisions of the Georgia Constitution.¹

Before the Court are cross-motions for summary judgment.² For the following reasons, Chamblee's motion for summary judgment [ECF 120] is GRANTED and Follies's motion for partial summary judgment [ECF 118] is DENIED. Follies has also filed an independent motion to strike [ECF 136], which is DENIED.³

I. BACKGROUND

Follies opened for business during 1992 in then-unincorporated DeKalb County, Georgia.⁴ In June 2001, Follies—and other similar establishments—entered into a settlement agreement with DeKalb County that: (1) resolved pending litigation over DeKalb County's ordinances governing strip clubs and (2) granted Follies—upon payment of an annual fee—non-conforming status to offer fully nude dancing, sell alcohol, and remain open until 4:55 am (the DeKalb Agreement).⁵ In November 2013, Chamblee incorporated as an independent city and annexed territory from DeKalb County, thereby subsuming Follies's physical location.⁶ Although Chamblee quickly enacted a resolution rejecting the notion that incorporation bound it to the DeKalb Agreement, it nonetheless permitted Follies to continue its operations largely unabated.⁷ Follies subsequently obtained an alcohol license from Chamblee for each of the years 2014 through 2018.⁸

Things changed in 2018. Chamblee decided to enact significant changes to its municipal codes. In February, Chamblee adopted Ordinance 745. That ordinance amended its Alcohol Code and required Follies to stop selling alcohol by 2:00 am (11:59 pm on Saturday nights) and close by 2:30 am.⁹ Follies challenged the constitutionality of that ordinance in a separate litigation.¹⁰

Later that fall, Chamblee amended its regulations governing strip clubs and alcohol-serving establishments.¹¹ Ordinance 752 (colloquially referred to as the Adult Code) imposes three relevant restrictions. First, it prohibits any "patron, employee, or any other person" from "knowingly or intentionally, in an adult establishment, appear[ing] in a state of nudity."¹² Second, Ordinance 752 outlaws the sale, possession, use, or consumption of alcohol at a strip club.¹³ Finally, Ordinance 752 requires such establishments to close at midnight.¹⁴

On the same day, Chamblee also adopted Ordinance 754. That ordinance amended a portion of Chamblee's Alcohol Code to render strip clubs categoricallyineligible from applying for or obtaining an alcohol license.¹⁵ That ordinance also altered the method for an establishment to qualify as a restaurant—and thereby gain eligibility to obtain an alcohol license—by requiring the applicant to "[d]erive at least 50 percent of total revenue from the sale of food prepared and consumed on the premises and nonalcoholic beverages consumed on the premises."¹⁶

Prior to passing Ordinance 752 and Ordinance 754, Chamblee prepared, received, and considered a voluminous evidentiary record.¹⁷ That evidence detailed a plethora of negative secondary effects associated with strip clubs and other sexually oriented businesses, particularly those that sell and serve alcohol. For example, Chamblee relied on at least seventy-two relevant judicial decisions and thirty-eight evidentiary reports discussing societal concerns across the United States and in the local community.¹⁸ Included amongst this evidence were: (1) a 2001 Fulton County study supporting the separation of adult and alcohol-servingestablishments;¹⁹ (2) investigator affidavits detailing various crimes, alcohol abuse, drug trafficking, and other events occurring in and around sexually oriented businesses in Forest Park and Sandy Springs, Georgia;²⁰ and (3) testimony from DeKalb County police officers concerning the prevalence of prostitution, drug sales, firearm possession, and other crimes at local strip clubs, specifically including Follies.²¹ Chamblee cited many of these opinions and reports in the challenged ordinances themselves.²²

According to Follies, the combination of these ordinances sounds the death knell for its business. If it cannot provide fully nude dancing, sell alcohol, and remain open after midnight—avers Follies—it will be forced to permanently cease operations. Follies maintains that Chamblee knows this to be true, as it enacted these ordinances—after tracking substantially similar litigation involving nearby newly-incorporated cities such as Sandy Springs, Brookhaven, and Doraville—to serve this exact purpose. Put another way, Follies alleges Chamblee disagrees withthe content of its expression and amended the municipal codes to drive Follies out of business.

II. LEGAL STANDARD

Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment has the initial burden of informing the district court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets its burden, the non-movant must present evidence showing either (1) a genuine issue of material fact or (2) that the movant is not entitled to judgment as a matter of law. Id. at 324. The filing of cross-motions for summary judgment does not alter this standard, "but simply requires a determination of whether either of the parties deserves judgment as a matter of law on the facts that are not disputed. GEBAM, Inc. v. Inv. Realty Series I, LLC, 15 F. Supp. 3d 1311, 1315-16 (N.D. Ga. 2013) (citing Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005)). See also United States v. Oakley, 744 F.2d 1553, 1555-56 (11th Cir. 1984).

In analyzing a motion for summary judgment, the Court must "view all of the evidence in a light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor." Newcomb v. Spring Creek Cooler Inc., 926 F.3d 709, 713 (11th Cir. 2019). But the non-movant cannot "rest upon the mere allegations or denials of [its] pleading, but must set forth specific facts showing that there is a genuine issue for trial." Sears v. Roberts, 922 F.3d 1199, 1207 (11th Cir. 2019). See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). If the non-movant relies on evidence that is "merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (citations omitted). See also Tesoriero v. Carnival Corp., 965 F.3d 1170, 1177 (11th Cir. 2020) ("Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial."). Further, the offering of "mere conclusions and unsupported factual allegations" is "legally insufficient to defeat a summary judgment motion." Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005).

III. DISCUSSION

Follies contends that Chamblee committed a number of constitutional violations. The Court addresses each general category of constitutional claim in turn.

A. Follies's Free Speech Claims

Follies alleges Ordinance 752 and Ordinance 754 violate its freedom of speech rights under the First Amendment and related provisions of the Georgia Constitution. States and municipal governments are prohibited from enacting laws that abridge the freedom of speech or expression. U.S. Const., amends. I, XIV. See also Reed v. Town of Gilbert, 576 U.S. 155, 163 (2015). The validity of a speech restriction "depends upon the type of speech and the type of forum being regulated." Gold Coast Publ'ns, Inc. v. Corrigan, 42 F.3d 1336, 1344 (11th Cir. 1994). A content-based regulation—which outlaws "particular speech because of the topic discussed or the idea or message expressed"—is "presumptively unconstitutional" and permissible "only if the government proves that [it is] narrowly tailored to serve compelling state interests." Reed, 576 U.S. at 163. See also Wollschlaeger v. Governor, Fla., 848 F.3d 1293, 1308 (11th Cir. 2017) ("Content-based restrictions on speech normally trigger strict scrutiny.").

Nude dancing is a form of protected expressive conduct, albeit "fall[ing] only within the outer ambit of the First Amendment's protections." City of Erie v. Pap's A.M., 529 U.S. 277, 289 (2000). See also Maxim Cabaret, Inc. v. City of Sandy Springs, 304 Ga. 187, 191 (2018) ("It is true that both the First Amendment and the free...