Court Upholds Strip Club Fee; Not Infringement on Free Speech

August 29th, 2011

Back in June, I wrote about a New York case brought by an adult entertainment establishment seeking to apply for a tax exemption because of the “arts performances” taking place at the restaurant (i.e., the strip dance).  The court in that case held that the adult dancing did not fall under the requirements of the statute sufficiently to qualify for the tax exemption.

On August 26, the Supreme Court in Texas released an opinion regarding a similar issue. The Court held that a fee imposed on nudie bars (i.e., any adult establishment with nude entertainment and alcohol consumption) did not violate the businesses’ rights to free speech.

A Texas statute, the Sexually Oriented Business Fee Act (287 S.W. 3d 852 (Texas 2009)), requires that any business offering live nude entertainment as well as the consumption of alcohol on its premises must pay a $5 fee per customer to the state comptroller.  One of these “sexually oriented businesses” sued the Attorney General for declaratory and injunctive relief, arguing that the fee violates the First Amendment’s guarantee of freedom of speech.

After discussing in detail the “essence” of the content of artistis expression using examples such as a “wet T-shirt contest,” the appellate court applied the strict scrutiny standard and affirmed the trial court’s holding that the statute does in fact violate the First Amendment.

Upon review, the Supreme Court reversed, instead holding that the fee does not violate the First Amendment.  “The fee in this case is clearly directed, not at expression in nude dancing, but at the secondary effects of nude dancing when alcohol is being consumed.  An adult entertainment business can avoid the fee altogether simply by not allowing alcohol to be consumed.  For these reasons, we conclude that the fee is not intended to suppress expression in nude dancing.”  After deciding that the fee was content neutral, it looked to the 4 factors of the O’Brien test, holding that the fee furthers the State’s important interest in reducing negative secondary effects of adult businesses and does not impose a greater burden than is essential to further this interest.