City of Encinitas v. F Street Corp.

Filed 1/30/07 City of Encinitas v. F Street Corp. CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment and an order of the Superior Court of San Diego County, Lisa Guy-Schall, Judge. Judgment affirmed, order reversed and matter remanded.

F Street Corporation (F Street) appeals a judgment declaring its store in the City of Encinitas (the City) as a public nuisance and an order permanently enjoining it from operating an adult retail store or selling any adult- or sexually-oriented merchandise at that location. F Street contends (1) that its Encinitas store is not an "adult business" or an "adult retail store" subject to regulation under Chapter 6.10 of the City's municipal code; or alternatively (2) that the definitions of those terms are unconstitutionally vague, facially and as applied to it. F Street also contends that the enforcement of the municipal code provisions and the judgment and permanent injunctive order violate its constitutional right to equal protection of law and that, in any event, the permanent order is unconstitutional insofar as it precludes F Street from selling any adult material at the store. Except as to the final argument, we find F Street's contentions unavailing and thus affirm the judgment. We agree, however, that the City failed to make the required showing that an order permanently enjoining F Street from selling, offering or visibly storing any adult material is constitutional and thus reverse the order.

FACTUAL AND PROCEDURAL BACKGROUND

F Street owns and operates a well-known chain of stores that sell adult-oriented products throughout San Diego County. Based on requests from customers that it open an adult store in Encinitas, F Street applied for, and apparently received, a retail business license from the City in 2001 to operate a gift and novelty store at a property it owned at 704 North Coast Highway 101 (the site). (All further specified dates are in 2003 except as otherwise noted.) The site is located in a commercial mixed zoning area (an N-CM-1 zone), 24 feet east of a residential zone and 575 feet from a Head Start daycare center. Because the City's municipal code precluded the operation of an "adult business" in an N-CM-1 zone or within certain distances of an existing residential zone or daycare facility, the City inspected the premises, which F Street was remodeling prior to opening its store, and later sent F Street a letter notifying F Street in part that the site could not be used to operate an "adult business" as defined by City ordinance.

F Street completed its remodeling of the site and, in August 2003, opened the store for business, prominently displaying the traditional logo that it used at all of its adult stores on its front window. The front window was also posted with a sign indicating that persons under 18 could not enter.

At the time of the store's opening, 88 percent of its stock in trade consisted of nonadult products such as greeting cards, party favors, games, candles, clothing and books, although a significant portion of those nonadult products was made up of out-of-date books (including National Geographic magazines and Harlequin romance novels) stacked in two separate rooms in disorganized fashion, some of them still in shrink wrap, others with titles not exposed and none of them individually priced. The remaining 12 percent of the stock available for sale was adult merchandise, which was neatly displayed and individually priced.

In response to complaints received from the public, the City inspected the store again and sent a letter demanding that F Street cease and desist operating an "adult business" at that location in violation of its municipal code. Shortly thereafter, the City filed this action against F Street seeking injunctive and declaratory relief relating to the Encinitas store, as well as abatement of a public nuisance there. F Street filed an answer denying that its Encinitas store was an "adult business" and cross-complained against the City for declaratory and injunctive relief and for damages arising out of the City's alleged violation of its constitutional rights to free speech and equal protection.

In October, the court granted the City's request for a preliminary injunction precluding F Street "from operating the F Street adult retail store" at the Encinitas location pending trial. It reduced the amount of adult merchandise and moved most of the remaining merchandise to a room at the back of the store. Although the room was marked off with a strip of yellow tape and designated as "temporarily closed," the moved merchandise remained carefully displayed on shelves and individual easels and the merchandise was still visible to customers. The back room was also conveniently located close to the rear door to the store parking lot, a desirable location for customers hoping to shop with anonymity.

Although the City had no evidence that F Street was continuing to sell adult merchandise, it issued a second cease and desist letter to F Street on November 18 based on the presence of the adult materials on site and the visibility of those materials from other parts of the store. F Street thereafter placed a paper curtain over the door to the back room of the store and, many months later, returned all of the remaining adult merchandise to its warehouse.

At trial in May 2005, F Street withdrew its damage claims and the case was presented to the court without a jury. The parties stipulated to certain facts (such as the proximity of the store to existing residences and a daycare facility and that the store's average gross receipts for the months after the issuance of the preliminary injunction were 80 percent lower than the receipts for the months preceding that time and presented evidence in support of their respective cases.

The City introduced evidence as to the extent of adult products offered for sale and videos and DVDs offered for sale or rent by F Street at the site, as well as gag gifts, off-color cards, boxed lingerie featuring pictures of bondage scenes, leather accessories and other items that complemented the more hard core adult products. It also showed that the sale and rental of adult videos and DVDs alone constituted an average of more than 35 percent of the store's revenues for the months preceding the issuance of the preliminary injunction, without considering the sales of other adult items, and that the sales of remainder books constituted 1 percent or less of revenues for the same period. The City's senior code enforcement officer who inspected the property on numerous occasions testified as to the extent of the adult products displayed at the Encinitas store and that her inspections led her to conclude that the store was being operated as an adult business, both before and after the issuance of the preliminary injunction.

F Street argued that because adult merchandise initially made up only 12 percent of its stock in trade and took up only 12 percent of its floor space, it was not an "adult business" within the meaning of the municipal code. Implicitly acknowledging that the figures showed a much larger percentage of its sales were attributable to adult merchandise, however, F Street also argued in part that if it had been allowed to continue to develop its efforts to sell nonadult merchandise, its revenues would have become "more balanced and in line with the stock and floor space proportions[.]" F Street also contended that even if the store was an "adult business" initially, the municipal code prohibition was clearly inapplicable after October 2003, when it reduced its inventory of adult items to only 3 percent of its stock in trade and that the out-dated books were not considered in calculating that figure.

After both sides rested, the court took the matter under submission. It later issued a 27-page statement of decision in which it found that the City's definitions of "adult business" and "adult retail store" were facially constitutional. The court rejected F Street's contention that the City was required to specify the percentage of products or floor space that would render a store an "adult business," noting that such a standard was subject to manipulation, as F Street had tried to do at the store, by stocking a significant number of nonadult products that it never truly intended to sell to its customers. Finding that the City properly defined "adult business," the court held that F Street had operated an "adult business" at the site, both before and after the issuance of the preliminary injunction, and that the store constituted a public nuisance in accordance with the municipal code and Civil Code section 3479 et seq. Finally, it found that F Street had not proven the City violated its civil rights and that the City's enforcement of its ordinances did not violate equal protection.

The court entered judgment in the City's favor on all claims and cross-claims and issued an injunction permanently enjoining F Street from selling any adult material at the site. F Street appeals.

DISCUSSION

1. Was F Street's Encinitas Store an "Adult Business" or an "Adult Retail Store"?

Chapter 30.26 of the City's municipal code precludes the operation of an "adult business" (1) in any area in the City other than the general commercial zone or the ER-C zone of the Encinitas Ranch Specific Plan and (2) even within those zones, in any area that is within 750 feet of any existing residential zone, park, religious institution, school or child day care facility and further provides that "any adult business . . . operating in violation of these provisions . . . is hereby declared to constitute a public nuisance and, as such, may be abated or enjoined from further operation." (City of Encinitas Ordinance No. 2002-02,  30.26.010, 30.26.040.) The code also sets forth the following definitions:

"(b) Adult Retail Store shall mean a business establishment having as a regular and substantial portion of its stock in trade, adult oriented material.

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"(d) Adult Business shall mean:

"(1) A business establishment or concern that as a regular and substantial course of conduct operates as an adult retail store, adult motion picture theater, adult arcade, adult cabaret, adult motel or hotel, adult modeling studio; or

"(2) A business establishment or concern which as a regular and substantial course of conduct offers, sells or distributes adult oriented material or sexually oriented merchandise, or which offers to its patrons materials, products, merchandise, services or entertainment characterized by an emphasis on matters depicting, describing, or relating to specified sexual activities or specified anatomical areas but not including those uses or activities which are preempted by State law." (City of Encinitas Ordinance No. 2001-14,  6.10.020, subds. (b), (d).)

F Street maintains that, as a matter of law, its Encinitas store is not, and was not, an "adult business" or an "adult retail store" as defined by these provisions because adult products were not a "substantial" portion of its stock in trade and the sale of such products was not a "substantial" course of conduct at that store. This challenge raises a question of law, which we review de novo. (See People v. Saephanh (2000) 80 Cal.App.4th 451, 457 [the interpretation of a statutory definition, in the abstract, presents a question of law]; compare People v. Rodriguez (2000) 77 Cal.App.4th 1101, 1106 [the sufficiency of the evidence to satisfy that definition is a question of fact].)

F Street relies on its evidence of the percentages of adult and nonadult products and of floor space attributed to each such product type in arguing that, even when it first opened the store, adult products were not a "substantial" portion of its stock in trade and that its offering of such products did not constitute a "substantial" course of conduct there. Specifically, F Street contends that a business would have to have at least 15 percent of its inventory or floor space devoted to adult items in order to constitute an "adult business."

However, although adult products may have made up only 12 percent of all the products the Encinitas store offered for sale and the displays of such products took up only 12 percent of its floor space, F Street does not dispute that its sales and rentals of adult videos and DVDs alone (without considering sales of other adult products) for August, September and October at that location constituted well over 25 percent of its gross revenues for each of those months. In accordance with F Street's own contention, such sales are sufficient to qualify it as an "adult business." (City of Encinitas Ordinance No. 2001-14,  6.10.020, subd. (d)(2) [defining an "adult business" to include any "business establishment or concern which as a regular and substantial course of conduct offers, sells or distributes adult oriented material or asexually oriented merchandise"].)

F Street also argues that even if it was initially operating as an "adult business," by November, after the City issued a second cease and desist order and it reduced its inventory of adult items to 3 percent, it was no longer within the definition of an "adult business." The principal difficulty with this argument is that the preliminary injunction was in place at that time and there is no evidence in the record to support the assertion that F Street would have voluntarily reduced its inventory of adult items if the preliminary injunction had not been in effect; in fact, F Street's contention below and on appeal that its initial operations did not qualify as an "adult business" suggests quite to the contrary. (Although F Street also argues that its store was not an "adult business" as of the time of trial, by which time when it had removed all of its adult merchandise from the store, it did not raise this argument below and thus cannot be heard to raise it for the first time on appeal. In any event, such an argument is unavailing in light of the continuing effect of the preliminary injunction.)

For these reasons, we find the trial court correctly concluded that F Street's Encinitas store was an "adult business" within the meaning of the City's ordinance restricting the location of such businesses.

2. Are the Definitions Constitutional, Facially and as Applied to F Street?

A. Facial Challenge: Void for Vagueness

"To satisfy the constitutional command [of certainty], a statute must meet two basic requirements: (1) the statute must be sufficiently definite to provide adequate notice of the conduct proscribed; and (2) the statute must provide sufficiently definite guidelines . . . to prevent arbitrary and discriminatory enforcement." (Tobe v. City of Santa Ana (1995) 9 Cal.4th 1069, 1106-1107.) F Street contends that the provisions of the municipal code regulating "adult business[es]" are unconstitutionally vague because the term "substantial" is too uncertain to provide adequate notice and permits arbitrary or discriminatory enforcement of those provisions by City officials.

A statute or ordinance is only required to have "a reasonable degree of certainty" to survive a challenge based on constitutional vagueness and will not be held void for uncertainty "if any reasonable and practical construction can be given to its language." (Tobe v. City of Santa Ana, supra, 9 Cal.4th at p. 1107; see also Walker v. Superior Court (1988) 47 Cal.3d 112, 143.) That a term is somewhat imprecise does not offend the requirements of due process; rather all that is required is that the language conveys sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices . . . ." (People v. Green (1991) 227 Cal.App.3d 692, 698-699, disagreed with on other grounds by People v. Castaneda (2000) 23 Cal.4th 743, 752.)

Here, as discussed above, it is clear that the municipal code provisions regulating the location of "adult business[es]" apply to F Street. Thus, although there might be some uncertainty how the ordinances affect other businesses in Encinitas, any element of vagueness in the ordinances does not affect F Street. This provides a basis for rejecting F Street's argument, without reaching the merits of F Street's contention that the use of the word "substantial" in the ordinances is constitutionally fatal. (Young v. American Mini Theaters, Inc. (1976) 427 U.S. 50, 58-61 [claimant lacks standing to assert a void for vagueness challenge to a statute when there is no question that the statute is applicable to that claimant]; see also ILQ Investments, Inc. v. City of Rochester (8th Cir. 1994) 25 F.3d 1413, 1418-1419.)

Even if we were to reach the merits of F Street's vagueness challenge, however, we would in any event reject its contention. The use of the terms "substantial" and "substantially" to define the applicable standard has been repeatedly upheld by California courts in a number of contexts. (E.g., Atchison etc. Ry. Co. v. Kings Co. Water Dist. (1956) 47 Cal.2d 140, 144 [defining "substantial" for purposes of determining whether particular land would be "substantially and directly benefited by" its continued inclusion in a water district as a relative term to be gauged by the surrounding circumstances]; People v. Box (2000) 23 Cal.4th 1153, 1217 [rejecting a contention by a criminal defendant that the use of the terms "extreme" and "substantial" to describe factors considered by the jury in the penalty phase of a capital case rendered the instructions unconstitutionally vague]; see also World Wide Video, WA. v. City of Spokane (9th Cir. 2004) 368 F.3d 1186, 1198-1199; ILQ Investments, Inc. v. City of Rochester, supra, 25 F.3d at p. 1419.) As explained by the California Supreme Court:

"The law is replete with instances in which a person must, at his peril, govern his conduct by such nonmathematical standards as 'reasonable,' 'prudent,' 'necessary and proper,' 'substantial,' and the like. Indeed, a wide spectrum of human activities is regulated by such terms: thus one man may be given a speeding ticket if he overestimates the 'reasonable or prudent' speed to drive his car in the circumstances [citation], while another may be incarcerated in state prison on a conviction of wilful homicide if he misjudges the 'reasonable' amount of force he may use in repelling an assault [citation] . . . . 'There is no formula for the determination of reasonableness.' Yet standards of this kind are not impermissively vague, provided their meaning can be objectively ascertained by reference to common experiences of mankind." (People v. Daniels (1969) 71 Cal.2d 1119, 1128-1129; see also Young v. American Mini Theaters Inc., supra, 427 U.S. at p. 61.)

Moreover, the California Supreme Court has expressly rejected a contention that a mathematical standard is required to achieve the level of certainty that is constitutionally required. In People v. Superior Court (Lucero) (1989) 49 Cal.3d 14, the high court rejected appellate cases holding that the federal constitution required a local agency to adopt a numeric standard for use in determining whether a particular establishment was an "adult" business subject to a local zoning ordinance limiting the locations of such businesses. (Id. at p. 26.) Instead, the court concluded that the zoning ordinance applied to any business that provided adult entertainment (there, adult films) on a regular basis, where such entertainment either constituted a substantial portion of the entertainment provided by the business or accounted for a substantial portion of the business's revenues. (Id. at p. 27.)

For these reasons, we conclude that the trial court properly rejected F Street's contention that the City's adult business ordinances were facially void for vagueness.

B. As Applied Challenge: Equal Protection

F Street contends that the evidence at trial showed the City did not investigate or pursue enforcement of its adult business ordinances against other businesses that stocked, displayed and sold adult products and that this establishes an equal protection violation. Unequal treatment that results from a laxity of enforcement or that reflects a nonarbitrary basis for selective enforcement of a statute does not deny equal protection and is not constitutionally prohibited. (Wayte v. United States (1985) 470 U.S. 598, 608-610; Murgia v. Municipal Court (1975) 15 Cal.3d 286, 296 (Murgia).) However, the enforcement or administration by state or local officers of a statute or ordinance that is fair on its face, in a manner that results in its unequal application to persons who are entitled to be treated alike, will constitute a denial of equal protection if such enforcement or administration is the product of intentional or purposeful discrimination. (Baluyut v. Superior Court (1996) 12 Cal.4th 826, 831-832 (Baluyut).) "[A]n equal protection violation does not arise whenever officials 'prosecute one and not [another] for the same act;' instead, the equal protection guarantee simply prohibits prosecuting officials from purposefully and intentionally singling out individuals for disparate treatment on an invidiously discriminatory basis." (Murgia, supra, 15 Cal.3d at p. 297; accord, Baluyut, supra, 12 Cal.4th at p. 834.)

Here, F Street did not make a sufficient showing to establish a violation of its equal protection rights. It relies primarily on the trial testimony of its director of operations, Raul Armando Rodriguez, that a number of area liquor stores were carrying adult magazines or other adult products (DVDs and videos). Secondarily, F Street also cites to the testimony of the City's enforcement officer that the City had not searched to find out if other businesses in Encinitas were also improperly selling adult material.

F Street's reliance on the first component of evidence is misplaced, for two reasons. First, the trial court admitted Rodriguez's testimony regarding the existence of other stores only for a limited purpose, but specifically excluded it "as substantive evidence to establish [F Street's] cross-complaint claim" for equal protection violations, because F Street did not disclose this information in response to the City's discovery requests despite the City's repeated attempts to elicit such information. Second, F Street did not introduce any evidence to show where these liquor stores were located, what type of zoning restrictions applied to them or the nature of the businesses and did not otherwise establish that these businesses were similarly situated to its Encinitas store for purposes of applying the City's adult business ordinance.

F Street's reliance on the code enforcement officer's testimony is likewise misplaced, based on the uncontroverted evidence that: (1) the City did not affirmatively investigate any area businesses to determine if they were improperly operating "adult businesses", but instead initiated investigations only in response to complaints from the public, and (2) the City investigated every complaint it received from the public regarding such businesses and took action against them if they did not voluntarily comply with its requests to cease operating as adult businesses.

Based on this evidence, the trial court correctly concluded that F Street had not established the City violated its equal protection rights in its enforcement of its adult business ordinance.

3. Is the Permanent Injunction Invalid?

Having found the ordinances were constitutional, we must address F Street's contention that the permanent injunction precluding it from offering for sale, selling or visibly storing any adult products at the Encinitas store location is nonetheless infirm. The City essentially argues that because F Street had several opportunities to comply with its ordinance but refused to do so, the court acted within its discretion in issuing the injunction. We disagree.

The First Amendment right of free speech protects forms of expression intended to communicate ideas and generally precludes the government from restricting expression based on the message, ideas, subject matter or content thereof. (Police Department of City of Chicago v. Mosley (1972) 408 U.S. 92, 95-96.) Obscenity is not subject to such protections and thus may be regulated (and its dissemination prohibited) by states or local municipalities. (Roth v. United States (1957) 354 U.S. 476, 485-487 (Roth).) However, as the United States Supreme Court has recognized, the line between speech that is unconditionally guaranteed and speech that may be legitimately regulated "is finely drawn" and often uncertain. (Speiser v. Randall (1958) 357 U.S. 513, 525 [generally]; Bantam Books, Inc. v. Sullivan (1963) 372 U.S. 58, 65-66 [obscenity].) For this reason, a governmental body "is not free to adopt whatever procedures it pleases for dealing with obscenity . . . without regard to the possible consequences for constitutionally protected speech," but must instead provide rigorous safeguards to ensure against the curtailment of constitutionally protected expression. (Bantam Books, Inc. v. Sullivan, supra, 372 U.S. at p. 66, quoting Marcus v. Search Warrants of Property at 104 East 10th Street, Kansas City, Missouri (1961) 367 U.S. 717, 730-731.)

The need for safeguards is of particular constitutional concern where the government purports to impose prior restraints on expression, through laws, regulations or orders that preclude communications from being disseminated in the first instance (rather than punishing their dissemination after the fact). Although such laws, regulations or orders may be constitutionally acceptable, they are subject to a heavy presumption against their validity because of their ease of use as a mechanism for government censorship of ideas that are unpopular or controversial. (Alexander v. United States (1993) 509 U.S. 544, 550; Near v. Minnesota (1931) 283 U.S. 697; People ex. rel. Busch v. Projection Room Theater (1976) 17 Cal.3d 42, 57.)

Before a prior restraint of presumptively protected materials will be permitted, it must be accompanied by procedures that provide for a prompt judicial determination on the question of whether the material to be restrained is obscene, an issue on which the would-be censor bears the burden of proof. (Freedman v. Maryland (1965) 380 U.S. 51.) While "[i]t is entirely permissible from a constitutional standpoint to enjoin further exhibition of specific magazines or films [that have] been finally adjudged to be obscene following a full adversary hearing," enjoining the exhibition or sale of magazines or films that have not specifically been determined to be obscene has been held to constitute an impermissible prior restraint in violation of the First Amendment. (People ex rel. Busch, supra, 17 Cal.3d at pp. 57, 59.)

Although the free speech protections preclude prior restraints on non-obscene adult material, the First Amendment does not preclude a governmental entity from regulating adult businesses, through zoning and licensing laws and through the enforcement of criminal statutes. (Bantam Books, Inc. v. Sullivan, supra, 372 U.S. at pp. 65-66; Morris v. Municipal Court (1982) 32 Cal.3d 553, 564.) For example, a governmental entity may place reasonable limits on the time, place and manner of dissemination of adult materials in its zoning ordinances, in order to further a substantial governmental interest in preventing deleterious secondary effects associated with adult businesses. (Young v. American Mini Theatres, Inc., supra, 427 U.S. at pp. 62-63 & fn. 18; see City of Renton v. Playtime Theaters, Inc. (1986) 475 U.S. 41.) However, a "single use" standard (one that precludes any adult material) generally does not pass constitutional muster as a content-neutral time, place and manner regulation, because it is much broader than necessary to achieve such legitimate governmental interests. (People v. Superior Court (Lucero), supra, 49 Cal.3d at pp. 25-26; Tollis, Inc. v. San Bernardino County (9th Cir. 1987) 827 F.2d 1329, 1332; see also Young v. American Mini Theatres, Inc, supra, 427 U.S. at p. 84 [recognizing that the government cannot use "the power to zone as a pretext for suppressing expression"].)

The City now argues that the superior court acted within its discretion in issuing the permanent injunction that precludes F Street from offering for sale, selling or visibly storing any adult material. However, although the principles discussed above would allow the court to ban F Street from selling, offering or visibly storing any obscene material, the City did not ask the court to determine which of F Street's products were obscene and which ones were not and the court did not make any findings in this regard. Further, the City cites us no persuasive authority to establish that the court could constitutionally ban F Street from offering or selling non-obscene adult material, a proposition that the foregoing authorities do not support. (See People v. Superior Court (Lucero), supra, 49 Cal.3d at pp. 25-26; Tollis, Inc. v. San Bernardino County, supra, 827 F.2d at p. 1332.) In fact, the City's contention that a complete ban of such materials is necessary is belied the language of the ordinance itself, which defines an adult business or retail store as a business that has adult oriented material "as a regular and substantial portion of its stock in trade" or that offers, sells or distributes such material "as a regular and substantial course of conduct" rather than as a business that offers, sells or distributes any adult products.

For the foregoing reasons, we hold that the issuance of the permanent injunction precluding F Street from offering for sale, selling or visibly storing any adult material was in error and that the court's order so providing must be reversed. On remand, the trial court may, upon request, conduct further proceedings on the issue of the proper scope of an injunction relating to F Street's Encinitas store, possibly including hearings regarding (1) which of F Street's products are obscene and/or (2) how to define "regular and substantial," as used in the ordinance (for example, by setting a maximum percentage of sales that adult products can comprise), so as to properly balance the City's legitimate interests, on one hand, and First Amendment considerations, on the other. (Young v. American Mini Theatres, Inc., supra, 427 U.S. at pp. 62-63 & fn. 18.)

DISPOSITION

The judgment is affirmed, but the permanent injunctive order is reversed. The matter is remanded for further proceedings consistent with the opinions expressed herein. Each party is to bear its own costs of appeal.

McINTYRE, J.

WE CONCUR:

NARES Acting, P.J.

IRION, J.

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