Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 79-C-20 -- William E. Steckler, Judge .
Before Fairchild, Chief Circuit Judge, Bauer, Circuit Judge, and Grant, Senior District Judge.*fn*
The issue here is the validity of the general business licensing ordinance of the City of Indianapolis under the First Amendment, as applied to the States by the Fourteenth Amendment. Plaintiff-appellant Charles Chulchian was denied a license to operate a movie theatre under the ordinance. He appeals that part of the district court's order which upheld certain sections of the ordinance. We affirm the district court's order.
The City of Indianapolis, defendant-appellee here, requires the annual licensing of all businesses in the City.*fn1 Regulations issued pursuant to the licensing ordinance designate a license administrator as the first level of review. If an application for a license is denied, the applicant is entitled to a hearing before the controller.*fn2 If the controller also denies the application, the applicant may then appeal to a license review board, whose decision is final.*fn3
Plaintiff-appellant Charles Chulchian operates the Rivoli Theater, a movie theatre in Indianapolis, Indiana. The theatre exhibits sexually explicit films. In years prior to 1979, Chulchian sought and obtained a license from the City. Chulchian's application for his 1979 license, however, was denied first by the license administrator and, after a hearing, by the controller. Both the administrator and the controller stated two reasons for refusing Chulchian's license. Both stated that Chulchian violated section 17-6(4) of the ordinance because there were at least ten arrests on the premises for "illegal, immoral or obscene conduct." Second, they stated that the "residents of the area consider the Rivoli "to create a nuisance,' " in violation of section 17-6(2).*fn4 Chulchian then filed this suit, attacking the constitutionality of the licensing ordinance and seeking declaratory and injunctive relief under 42 U.S.C. § 1983. The License Review Board voluntarily stayed its consideration of Chulchian's appeal pending the court's decision.
On Chulchian's motion for summary judgment, the district court ruled that certain sections of the licensing ordinance were unconstitutional. Evansville Book Mart, Inc. v. City of Indianapolis, 477 F. Supp. 128 (S.D.Ind.1979). The court first reviewed the arrests constituting the "illegal, immoral or obscene conduct" allegedly permitted by appellant. The arrests were made pursuant to Indianapolis Code § 20-44, the "obscene conduct ordinance."*fn5 Without ruling on the ordinance's constitutionality, the court held it invalid under Indiana law as an attempted local law. Id. at 131.
The court next considered Chulchian's challenges to the two sections on which the controller based denial of his license. The court struck down section 17-31(c)(6) of the ordinance, which permits the controller
to take into consideration the effect of the proposed business or calling upon surrounding property and upon residents or inhabitants thereof; and in granting, denying or revoking said license the controller may exercise his sound discretion as to whether said license should be granted, transferred, denied or revoked.
Code of Indianapolis § 17-31(c)(6). The court held the section "unconstitutional due to its lack of guiding standards for the licensing officials." 477 F. Supp. at 132-33.
The second section provides that a licensee shall "not permit any sort of illegal, immoral or obscene conduct or practices to take place on his premises or in the conduct of his business." Code of Indianapolis § 17-6(4). The City conceded, and the court ruled, that the use of the words "immoral" and "obscene" was unconstitutional. 477 F. Supp. at 131. The court upheld the rest of the ordinance "because it is content neutral in that it does not single out adult theatres, and is the expression of an equally legitimate City concern, the City's interest in preventing the licensing of businesses the owners of which permit illegal occurrences." Id. at 132. The court ruled that the City may constitutionally deny a license on the basis of illegal conduct other than prior convictions for showing obscene films. The court stated that it did not "have before it documentation of arrests under valid statutes." Id. The court nevertheless denied appellant's request to order the issuance of a license because of representations by the City that "other arrests for violations of valid state statutes had been made recently at the theatre." Id. The court also upheld as constitutionally sufficient the procedures governing the decision of the controller and the License Review Board. Id. at 130.
Chulchian appeals, first, the district court's order upholding the "permitting illegal conduct" portion of section 17-6(4); second, the court's ruling upholding the constitutionality of the procedures governing the controller's decision of the License Review Board; and third, the court's refusal to order the City to issue him a license.
At the outset, we must resolve the procedural posture of this suit. A license to do business in Indianapolis is effective for only one year. We did not hear oral argument until April 1980, after appellant's 1979 license would have expired. The License Review Board, which had agreed to stay consideration of appellant's appeal until this court rendered its decision, dismissed Chulchian's appeal. The ...