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August 1, 2001


The opinion of the court was delivered by: Joan B. Gottschall, Judge.


Plaintiff Wisconsin Vendors, Inc. brought this action against Lake County under 42 U.S.C. § 1983, alleging that a Lake County ordinance unconstitutionally regulates activities that are protected by the First Amendment. Plaintiff seeks a preliminary injunction preventing Lake County from enforcing the challenged ordinance against plaintiff during the pendency of this litigation. For the reasons set forth below, plaintiff's motion for a preliminary injunction is granted.


Wisconsin Vendors operates a retail store, Select Video, in Lake County, Illinois. Select Video sells and rents various items to the public, including books, magazines, newspapers, videotapes, and other items. Prior to March, 2000, Select Video's inventory contained a mixture of sexually explicit, but not obscene, materials and other materials that were not sexually explicit.

Lake County Ordinance 6:1-15 requires that all "Adult Entertainment Establishments" apply for and receive a license in order to conduct business in the County. The ordinance provides that an applicant for a license must post a $5000 bond, in addition to a nonrefundable $200 administrative processing fee. The bond is to be forfeited automatically to reimburse the Licensing Commission for any suspension or revocation proceedings unless the licensee is exonerated at such proceedings.*fn1 The ordinance further provides that the Adult Use Commissioner must either issue or deny a license, depending on compliance with certain criteria, within 30 days of receipt of a completed application.

The crux of the present dispute involves the definition of "Adult Entertainment Establishments" in the Lake County ordinance. The ordinance defines three separate categories of Adult Entertainment establishments: "Adult Cabaret," "Adult Store," and "Adult Theater." An Adult Store is defined as any commercial establishment that either contains viewing booths used to demonstrate Adult Materials, or "as a substantial or significant portion of its business offers for sale, rental, or viewing any Adult Materials," or has a "segment or section devoted to the sale or display of Adult Materials." Ord. 6:1-15, § 3B. "Adult Materials" are defined as any books, magazines, films, video cassettes, or other visual representations that are distinguished or characterized by an emphasis on the exposure, depiction, or description of certain specified anatomical areas or the conduct or simulation of certain specified sexual activities.

The parties agree that Select Video does not have any viewing booths. Plaintiffs assert that Select Video does not have a separate segment or section devoted to the sale or display of adult materials. Defendant, however, notes that the layout of Select Video prior to March, 2000 included "three separate free-standing video display racks in a tight configuration," which contained only adult videos. Defendant argues that this constitutes a segment or section devoted to the sale or display of adult materials.

Assuming for the moment that Select Video did not have a segment or section devoted to adult materials, then the critical question for determining whether Select Video was an "Adult Store" is whether or not offers of sale, rental, or viewing of adult materials constituted a "substantial or significant portion of its business." It is this phrase that lies at the heart of plaintiff's constitutional challenge.*fn2 Plaintiff argues that the phrase "substantial or significant portion of its business" renders the ordinance unconstitutionally vague, both facially and as applied to Wisconsin Vendors. Plaintiff also argues that the licensing ordinance is an unconstitutional prior restraint that gives the County authorities unbridled discretion in enforcement, as a result of the vague definition. Finally, plaintiff argues that the automatic forfeiture of the $5000 bond upon license suspension or revocation violates procedural due process.

When Select Video first opened, the plaintiff sought to avoid regulation as an Adult Entertainment Establishment. Adult Entertainment Establishments have restricted hours of operation and must be closed on Sundays and on state and federal holidays. Other regulations apply specifically to Adult Stores, including limits on the size of exterior signage. Plaintiff anticipated that these regulations would decrease business and profits. Thus, plaintiff consulted with Lake County authorities in order to ascertain what level of adult materials, in comparison to non-adult materials, would trigger regulation under the "substantial or significant portion" phrase of the ordinance. On November 18, 1999, at the invitation of plaintiff, Select Video was inspected by Lake County Zoning Administrator Sheel Yajnik, Senior Planner Eric Waggoner, Deputy Director of the Planning and Development Building Division Michael Kuhar, and Assistant State's Attorney Daniel Jasica. An agent of the plaintiff told the inspectors that there were no viewing booths, that there were a total of 2100 videos for sale and/or rent, and that only 300 of those videos were adult material. The plaintiff's agent asked the inspectors several times how to interpret the ordinance with respect to the "significant or substantial portion of its business" phrase, and none of the inspectors provided an answer. The inspectors told plaintiff's agent that they would report their observations to the County Board Chairman, who would make the determination whether Select Video was an Adult Entertainment Establishment.

In a letter dated December 7, 1999, James LaBelle, the Lake County Adult Use Commissioner, informed plaintiff that it had been determined that Select Video was operating as an Adult Store, and because plaintiff had not applied for a license, it must cease operation or reorganize within seven days. The letter did not explain the basis for the decision, nor did it inform plaintiff what changes could be made in order to avoid regulation as an Adult Store. Mark Phillips, the manager of Select Video, then wrote a letter to Commissioner LaBelle, expressing a commitment to reorganization of the store, and inquiring about exactly what steps needed to be taken to avoid classification as an Adult Store. Phillips also attempted to telephone Commissioner LaBelle. Phillips was later called by Eric Waggoner, who stated that he and Sheel Yajnik had been assigned to handle Select Video's attempt to comply with the Lake County ordinance. Phillips asked Waggoner what he should do to bring Select Video into compliance. Waggoner told Phillips that he needed to reduce the inventory of adult materials to less than a significant amount of the store's entire inventory. When Phillips asked Waggoner to clarify what a "significant amount" was, Waggoner chose not to give any numbers or percentages. In a letter to Phillips dated December 21, 1999, Waggoner stated:

I would reiterate at this point that the term "substantial or significant portion of its business" is clear; for example, one could not reasonably assert that a "Blockbuster Video" store offers for sale, rental or viewing any adult materials as a substantial or significant portion of its business. I am certain the retail field offers many such examples.

(Def's Resp., Exh. B attached to Exh. 2). The letter further stated that Phillips' desire to focus on only the inventory or stock of Select Video was misplaced, and that the statute used the term "business," rather than "inventory." Waggoner suggested that the "dominant theme" and the "business purpose" of Select Video was to sell and rent adult videos, regardless of the percentage of non-adult materials in its inventory, because the non-adult materials appeared to be included solely to dilute the percentage of adult materials.

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