347 S.W.3d 277
Tex.2011Background
- Texas Sexually Oriented Business Fee Act imposes a $5 entry fee on customers admitted to sexually oriented businesses that allow alcohol on premises.
- A sexually oriented business is defined as a venue with live nude entertainment and on-premises alcohol, triggering the fee on the business, not the patron.
- Revenue: first $25 million goes to the sexual assault program fund; remainder funds health benefits premium payment assistance for low-income individuals.
- Respondents (Karpod, TEA) sue for declaratory and injunctive relief, challenging the fee as violating the First Amendment.
- Trial court found nude entertainment protected, the fee a content-based tax failing strict scrutiny, and enjoined collection; appellate court affirmed.
- Texas Supreme Court held the fee is content-neutral under O'Brien and constitutional, reversing and remanding for state-constitution issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the fee is a content-based restriction on speech | Karpod/TEA contend the fee targets nude dancing. | Comptroller contends the fee targets secondary effects, not expression. | Not content-based; complies with O'Brien. |
| Whether the fee is a permissible tax or fee under First Amendment analysis | Fee is a tax aimed at speech, violating First Amendment. | Statute is a permissible revenue-raising measure with secondary-effect rationale. | Constitutional as a revenue-related, content-neutral measure. |
| Whether the fee furthers the state interest in reducing secondary effects | No proven link between the fee and reduction of secondary effects. | Fee discourages mixing nude entertainment with alcohol, reducing secondary effects. | Meets the O'Brien third factor; rationally linked to reducing secondary effects. |
| Whether the fee is no greater than necessary to further the state's interest | Fee is minimal but targeted; may burden protected expression. | Minimal burden; alcohol-free nude venues remain available; no suppression of speech. | Satisfies the fourth O'Brien factor; restriction is minimal. |
| Whether the fee's enactment motive undermines its validity under O'Brien | Legislative motive to suppress speech was not demonstrated; effect matters more. | Legislative motive is not controlling; functional impact suffices under O'Brien. | Motive irrelevant; fee furtheres the state's secondary-effects interest. |
Key Cases Cited
- Pap's A.M. v. City of Erie, 529 U.S. 277 (2000) (content-neutral restriction on nude dancing; secondary effects recognized)
- Alameda Books, LLC v. City of Los Angeles, 535 U.S. 425 (2002) (zoning to reduce secondary effects; evidence need not be perfect but credible)
- Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986) (time-place-m manner restriction allowed for secondary effects not targeted at content)
- United States v. O'Brien, 391 U.S. 367 (1968) (four-part test for regulation not aimed at suppressing expression)
- City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002) (confirming permissible government regulation aimed at secondary effects; Kennedy concurrence cited)
- Bushco v. Utah State Tax Comm'n, 225 P.3d 153 (Utah 2009) (upheld gross receipts tax on nude entertainment; relied on Pap's A.M. and Alameda Books)