California Court of Appeal, 4th District to hear argument in City of Encinitas v. F Street (adult use case) won in trial court

On Wednesday, December 13, the California Court of Appeal, 4th District will hear argument in an adult use case the City of Encinitas won in the trial court in May 2005 -- City of Encinitas v. F Street. The case centers on the definition in the City’s adult ordinance of an adult business which is based on "regular and substantial conduct" and "regular and substantial stock in trade." The use of these standards for regulating adult businesses has been upheld by numerous courts, including the California Supreme Court (there is only one California case on point). In most cases, the courts have addressed whether the City’s application of the standard comported with its own specific guidance as to what constitutes "regular and substantial conduct." In this case, the City of Encinitas did not issue any specific guidance, nor did it define the standard based on percentages of revenue, floor space, or inventory, instead choosing to rely on the totality of the circumstances in each particular case.

F Street opened its adult retail store in the City of Encinitas in August 2003, offering a full spectrum of adult fare including hard core videos and DVDs, sexual devices, how to manuals and the like -- all in the wrong zone and too close to residences and a daycare facility. F Street argued that while the adult items were a regular part of their stock in trade, they were not a substantial portion of the stock in trade since they never exceeded 15% of the store’s inventory (the majority of the "inventory" was padded with bulk books, many of which were stacked on top of the shelves to the ceiling and never removed from the shrink wrap, and used National Geographics and Harlequin Romances, which were packed into a storage space behind the front window). Shortly after the store opened, the City filed an action in state court to enjoin F Street from operating an adult business in the wrong zone and in violation of the distance restrictions from sensitive uses. F Street filed a cross complaint, arguing that the "regular and substantial conduct" standard was unconstitutionally vague and the City’s use of that standard violated their civil rights.

At trial, the court first ruled that the City’s "regular and substantial course of conduct" standard is constitutional and the term "substantial" used in the City’s definitions is sufficiently definite and readily understood. Next, the City established that under the City’s definition, the totality of the circumstances determine whether a business meets the City’s definition of an "adult business." In this case, F Street is a well known chain of adult stores that advertises itself as THE adult superstore in San Diego County. The F Street name, logos and advertising appeared prominently throughout the store, in the front windows and around the parking lot. When the store opened, the extensive adult merchandise was displayed throughout the main floor area and hundreds of DVDs and videos lined the front and a side wall of the store. More than 80% of the store’s revenues came from the adult items, which were simply restocked when they were sold.

Less than two months after the store opened, Encinitas obtained a preliminary injunction which ordered F Street to cease operating as an adult store at its location. F Street simply reduced the percentage of adult merchandise and moved it to a large back room in the store which had no door and was immediately adjacent to the rear entrance of the store. At the conclusion of the trial, the court determined that F Street was operating as an "adult business" both when it opened and after the preliminary injunction issued and the store was reconfigured. The court issued a permanent injunction ordering F Street to cease selling any adult merchandise at the Encinitas location.

In its appeal, F Street argues that the trial court should have relied on the percentages of inventory and floor space devoted to adult merchandise in determining whether it was operating as an "adult business." F Street also argues that it was not lawful for the trial court to enjoin F Street from selling any adult merchandise at the Encinitas store.

Please review this blog to keep posted as to the appellate court’s ruling.