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Cinema Pub, LLC v. Petilos

United States District Court, D. Utah

August 31, 2017

CINEMA PUB, LLC, d/b/a BREWVIES, Plaintiff,
v.
SALVADOR D. PETILOS, Director; CADE MEIER, Deputy Director; NINA MCDERMOTT, Director of Compliance, Licensing Enforcement, Utah Department of Alcoholic Beverage Control, in their official capacities; JOHN T. NIELSEN, Chairman; JEFFREY WRIGHT; KATHLEEN MCCONKIE COLLINWOOD; OLIVIA VELA AGRAZ; STEVEN B. BATEMAN; S. NEAL BERUBE; AMANDA SMITH, Members, Utah Alcoholic Beverage Control Commission, in their official capacities, Defendant.

          MEMORANDUM DECISION AND ORDERGRANTING [56] MOTION FOR SUMMARY JUDGMENT;DENYING [57] MOTION FOR SUMMARY JUDGMENT; ANDFINDING MOOT [69] MOTION TO RECONSIDER

          DAVID NUFFER UNITED STATES DISTRICT JUDGE.

         Cinema Pub (Brewvies) is a mainstream movie theater that showed the movie Deadpool.

         The defendants (collectively “the State”) brought an administrative enforcement action against Brewvies for violating subsection 7 of the Utah Code § 32B-1-504 (Section 7). In relevant part, Section 32B-1-504 states:

The following attire and conduct on premises or at an event regulated by the commission under this title are considered contrary to the public health, peace, safety, welfare, and morals, and are prohibited: . . . . (7) showing a film, still picture, electronic reproduction, or other visual reproduction depicting:
(a) an act or simulated act of:
(i) sexual intercourse;
(ii) masturbation;
(iii) sodomy;
(iv) bestiality;
(v) oral copulation;
(vi) flagellation; or
(vii) a sexual act that is prohibited by Utah law;
(b) a person being touched, caressed, or fondled on the breast, buttocks, anus, or genitals;
(c) a scene wherein an artificial device or inanimate object is employed to depict, or a drawing is employed to portray, an act prohibited by this section; or
(d) a scene wherein a person displays the genitals or anus.

         Brewvies seeks declaratory and injunctive relief from the State's enforcement of Section 7.[1]

         Brewvies (Brewvies Motion) and the State (State Motion) both move for summary judgment.[2] Both respond in opposition to the other's motion.[3] And both reply in support of their own motion.[4] Additionally, Brewvies filed a motion to reconsider (Motion to Reconsider)[5] a memorandum decision and order that granted the State's motion to exclude some of Brewvies experts and denied Brewvies's motion to exclude the State's expert, Dr. George.[6] The State responded in opposition.[7] Brewvies replied in support of that motion.[8]

         Generally, the State argues that Brewvies does not have a constitutional right to serve beer while showing movies. Brewvies argues that Section 7 is a content-based restriction on speech that fails strict scrutiny.

         Section 7 is a content-based law. And assuming the State has a compelling interest, it fails to show that Section 7 is the least restrictive means to further that interest. Therefore, the State Motion is DENIED and Brewvies Motion is GRANTED. The Motion to Reconsider is MOOT.

         Table of Contents

         Preliminary Issues ........................................................................................................................... 3

         1. Brewvies made an as-applied challenge and a facial challenge. . ........................... 3

         2. Because secondary effects are irrelevant, the Motion to Reconsider is moot. . ...... 5

         Undisputed Facts ............................................................................................................................. 5

         Standard of Review ....................................................................................................................... 11

         Discussion ..................................................................................................................................... 11

         1. Section 7 regulates protected speech. . .................................................................. 12

         2. Strict scrutiny applies to Section 7 ........................................................................ 13

         a. The secondary effects doctrine does not apply to Brewvies. . ................... 15

         b. Because it is not clear whether Reed abrogated the secondary effects doctrine, Reed should be applied narrowly. . ............................................. 18

         c. It is not necessary to consider the difference between secondary and primary effects. . ........................................................................................ 20

         3. Section 7 fails strict scrutiny. . ............................................................................... 20

         Order ........................................................................................................................................... 27

         PRELIMINARY ISSUES

         1. Brewvies made an as-applied challenge and a facial challenge.

         The State argues that Brewvies's Complaint is limited to an as-applied challenge of Section 7. The State also argues that Brewvies “did not plead [a facial challenge] in its Complaint” and that Cinema Pub did not “request relief congruent with a facial challenge.”[9]

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”[10] This statement must give the defendant “fair notice of what the . . . claim is and the grounds upon which it rests.”[11] However, when a statute is challenged as unconstitutional, determining whether the plaintiff has pleaded either an as-applied or facial challenge depends on the potential remedies. If the potential remedies implicate both types of challenges, the defendant has been given sufficient notice that both challenges are in play.

[T]he distinction between facial and as-applied challenges is not so well defined that it has some automatic effect or that it must always control the pleadings and disposition in every case involving a constitutional challenge. The distinction is both instructive and necessary, for it goes to the breadth of the remedy employed by the Court, not what must be pleaded in a complaint.[12]

         And even if the plaintiff thinks it only makes an as-applied challenge, “no general categorical line bars a court from making broader pronouncements of invalidity.”[13] “The label is not what matters.”[14]

         Brewvies's first and only claim for relief seeks declaratory and injunctive relief against past, present, and future enforcement of Section 7.[15] The potential remedies (declaratory and injunctive relief) for that claim therefore include both types of challenges because past and present enforcement springs from the application of the law, while a challenge to future enforcement attacks all applications of the statute. Therefore, the State had fair notice that Brewvies was bringing a facial challenge in addition to the as-applied challenge.

         2. Because secondary effects are irrelevant, the Motion to Reconsider is moot.

         Though Brewvies argued convincingly that the prior order excluding Mr. Parker's opinion relating to secondary effects was incorrectly decided, [16] it is not necessary to reconsider the order. As discussed below, [17] the secondary effects doctrine is not relevant. Therefore, it is not necessary to revisit whether Mr. Parker's or Dr. George's opinions should or should not be excluded. The Motion to Reconsider is MOOT.

         UNDISPUTED FACTS[18]

         1. Brewvies shows only mainstream movies to its customers-movies rated from G to R by the Motion Picture Association of America. Also, rarely, Brewvies shows documentary films, or ski, outdoor, or skateboarding films, which are not rated and that are not in any way pornographic or obscene.[19]

         2. Brewvies's business model is to serve food and drinks, including alcoholic drinks, soft drinks, and water, and to have customers be able to enjoy their food and drinks while watching movies. The two theaters operated by Brewvies are designed and constructed so there is a level plank that runs in front of every row of seats, where customers can set their food and drinks while watching movies. Brewvies also holds special events, such as fund-raisers. The business of Brewvies is selling food and beverages to its customers and providing mainstream movies.[20]

         3. Brewvies has a business license as a motion picture theater with Salt Lake City and as a social club with the State of Utah Department of Alcoholic Beverage Control.[21]

         4. Brewvies has never had live nude or live semi-nude dancers, nor does it specialize or focus on movies with sexual content.[22]

         5. Brewvies is not a business that focuses on sex. Rather, it shows movies that other mainstream theaters show, the only difference being that Brewvies serves food (beyond the usual theater fare of popcorn and candy) and beverages that include alcoholic drinks.[23]

         6. The movie Deadpool-which was the target of an investigation by three undercover police officers with the Utah State Bureau of Investigation and the subject of a Notice of Agency Action and a Division of Alcoholic and Beverage Control (DABC) threat of a fine and the possible suspension or termination of Brewvies's liquor license-is a critically acclaimed film starring Ryan Reynolds and distributed by Fox. As of March 20, 2016, Deadpool had grossed over $731 million worldwide, making it the highest grossing R-rated movie in the history of film. At its height, it was playing in 3, 856 movie theaters in the United States. As of April 15, 2016, Deadpool was still showing in at least seven movie theaters in Northern Utah. On May 6, 2016, after the filing of this lawsuit, Brewvies held a midnight showing of Deadpool at a “First Amendment Celebration” and, because it was over capacity, had to turn away approximately 200 people.[24]

         7. Licensing agreements, pursuant to which Brewvies shows films, forbid Brewvies from making alterations or cuts of any kind to the films it shows. For instance, a licensing agreement with Sony Pictures Classics, Inc. (“SPC”) provides as follows: “The Film, including any trailers or rolling track SPC (or its agent) attaches to the Film, shall be exhibited on the Screen during consecutive days during Exhibitor's normal operating hours. Such exhibition shall be without any cuts or alterations of any kind and without interruption, except what is necessary for theater maintenance and entrance and exit of patrons.”[25]

         8. It would take significant time and resources for Brewvies to review in advance a film for possible violations of Subsection 7.[26]

         9. In 2011, the DABC informed Brewvies of potential agency action because Brewvies showed the R-rated movie The Hangover Part II, which violated Subsection 7. For various reasons, Brewvies agreed to pay a fine of $1, 627.[27]

         10. On July 1, 2015, a DABC representative, Defendant Margaret Hardie, wrote an email to Brewvies owner Randall Miller informing him of potential agency action for showing “at least” two movies that “would not be allowed to be shown in your theater due to nudity and sexual content.” The only films being shown at Brewvies at that time were Magic Mike XXL and Ted 2, neither of which were alleged to have been obscene. The DABC representative wrote: “Please make sure you preview all movies you will be showing. This ensures we can keep you from citations or law enforcement referring you for violations against your liquor license.”[28]

         11. After Brewvies was sanctioned by the DABC for screening The Hangover Part II, legal counsel to the DABC, Sheila Page, suggested that Brewvies could simply give up its liquor license and show movies without allowing customers to drink alcoholic beverages while watching movies. In a letter to Brewvies's former counsel, Ms. Page stated: “Brewvies has chosen to meld the serving of alcohol and the showing of films. The management has the option of being a motion picture theater without alcohol service.” Ms. Page also said that Brewvies's “recourse if they do not wish to conform to the current law is to approach the legislature about changing the statute” and that she “would certainly encourage Brewvies to take the advice of DABC compliance officers to screen films for possible illegal conduct.”[29]

         12. Between February 12, 2016, and March 24, 2016, Brewvies showed the movie Deadpool on one of its screens. A friend of Sheila Page, the attorney at the Attorney General's Office who represents the DABC in enforcement proceedings, mentioned to Ms. Page that Brewvies was showing Deadpool. Once Ms. Page received the information from her friend, she sent an email to Defendant Margaret Hardie, who has been the DABC Compliance Officer assigned to Brewvies since 2014. In her email to Ms. Hardie, dated February 22, 2016, Ms. Page wrote: “I hate to bring this up, but it is just too blatant to ignore. Brewvies is showing Deadpool. The reviews describe explicit sex scenes and male and female frontal nudity. I know some people who have seen it, and they confirm that it is very raunchy amid the bloody violence. Perhaps you should refer it to [the State Bureau of Investigation].” That email, which was the only complaint received by the DABC about Brewvies showing Deadpool, triggered a referral to the State Bureau of Investigation.[30]

         13. Three undercover officers with the State Bureau of Investigation went to Brewvies on February 26, 2016, to watch the movie and report whether they believed there were violations of the law. Two of those officers have seen Deadpool on their own and one, Sean Cannon, had seen it twice before he saw it at Brewvies.[31]

         14. Officer Cannon submitted his written report, which described that in the movie a man, Wade, and woman, Vanessa, got into a relationship and had “implied sexual contact during numerous holidays.” He said Vanessa sodomized Wade in their bed. He also described Wade getting into a fight, during which his clothes came off and he “shows full frontal nudity during the fight scene.” Later there was a scene that “showed him simulating him [sic] masturbating in his bed with a stuff [sic] animal (Unicorn).” Later, there was full frontal nudity of women dancing at a strip club, where Wade had gone to speak with Vanessa.[32]

         15. Officer Bullock, also with the State Bureau of Investigation, joined with the other two undercover officers to investigate the showing of Deadpool because it might have been in violation of Utah law. He had seen Deadpool twice, once as an investigator at Brewvies and once “personally” at another theater.[33]

         16. Officer Bullock's report describes certain scenes of the movie in terms of the prohibitions of Subsection 7. For instance, he states that the male and female characters were “shown numerous times engaging in acts or simulated acts of sexual intercourse” and that the male character “is shown on his back under bed sheets briefly engaged in masturbation or simulated masturbation using a stuffed unicorn toy.” He also describes a scene where the woman was wearing a leather bikini, with an imagined strap-on penis “that isn't shown, ” and “has her groin area pressed against the man's posterior, ” and she tells him to relax as he is sweating and grimacing. She then bends down and says, “Happy Women's Rights Day” during what Officer Bullock calls “the sodomy or simulated sodomy scene.” Officer Bullock also says that during one sex scene, the male character fondled the woman's bare breasts and, finally, during the credits, Officer Bullock describes “a drawing of the main character (male) . . . ‘as he rides on the back of a unicorn, he rubs its horn briefly until the horn shoots out rainbows (simulating orgasm).”[34]

         17. After the investigative report was received from the State Bureau of Investigation, a determination was made that if there were a violation of Subsection 7, it would “be classified as a grave violation which would trigger penalties of fines or suspensions, ” so a Notice of Agency Action was sent, and the matter was turned over by the DABC to the Attorney General's Office.[35]

         18. On April 11, 2016, Brewvies received a Notice of Agency Action (“Notice”) signed by Defendant Nina McDermott on behalf of the DABC. The Notice alleged that Brewvies had violated Utah's alcoholic beverage control laws as follows: “On or about February 23, 2016, Brewvies, a social club, showed a film, electronic reproduction, or other visual reproduction depicting: (1) an act or simulated act of sodomy, bestiality, or oral copulation, and (2) a scene wherein a person displayed their genitals in violation of Utah Code Section 32B-1-504(7)(a) and (d).”[36]

         19. The Notice states that Brewvies faces a penalty of a “10 day license suspension up to a revocation of its club license and/or a $1, 000 TO $25, 000 fine.” It also states the DABC is seeking administrative hearing costs.[37]

         20. The Defendant Commissioners of the Utah Alcoholic Beverage Control Commission have rule-making and supervisory responsibilities relative to the enforcement of Subsection 7 and make the ultimate decisions regarding enforcement and sanctions for violations of that statute.[38]

         21. Hundreds of Utah liquor licensees provide televisions for their customers to watch.[39]

         STANDARD OF REVIEW

         Summary judgment is appropriate if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[40] A factual dispute is genuine when “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.”[41] In determining whether there is a genuine dispute as to material fact, the court should “view the factual record and draw all reasonable inferences therefrom most favorably to the nonmovant.”[42]

         The moving party “bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.”[43]

         DISCUSSION

         The First Amendment, which applies to government action at all levels, [44] affords basic but fundamental protections. It states that the government “shall make no law . . . abridging the freedom of speech.”[45] The courts have construed this provision as broadly as it reads, protecting almost all forms of communication. Offensive and disturbing speech are protected, along with political debate, news media, and every day communication. The analytical framework for challenges under this clause is generally two-part.[46] First, it is determined if the law regulates speech protected by the First Amendment.[47] And second-if the law regulates protected speech-it is determined if the law satisfies the requisite level of scrutiny.[48]

         1. Section 7 regulates protected speech.

         Brewvies argues that Deadpool and the other “mainstream” movies it shows are “constitutionally protected” speech.[49]

         “[A]s a general matter, the First Amendment means that government has no power to restrict expression because of its message, its ideas, its subject matter, or its content.”[50] Motion pictures fall within its ambit: “expression by means of motion pictures is included within the free speech and free press guaranty of the First and Fourteenth Amendments.”[51]

         There are, however, “well-defined and narrowly limited classes of speech” that the First Amendment does not protect.[52] These are the so-called exceptions to the general presumption that the speech is protected. The five exceptions are:

• obscenity;[53]
• defamation;[54]
• fraud;[55]
• incitement;[56] and
• speech integral to criminal conduct.[57]

         In the pleadings and summary judgment related papers, the State does not argue any exception applies. Regarding Deadpool specifically, the State delineates its position: “Defendants do not argue that the images in Deadpool are obscene as the term has been defined by the courts. Neither do Defendants argue that Deadpool is pornography.”[58]

         Generally, Section 7 necessarily includes material within the full protective force of the First Amendment. The State does not contend that the acts listed in Section 7 correspond with any exception listed above. Presumably, something obscene[59] would violate Section 7, but something (e.g., Deadpool) that violates Section 7 would not necessarily be obscene.

         Section 7, therefore, acts against a broad swath of speech. Section 7, as applied by the State, regulates Deadpool, which is protected speech. Facially, Section 7 regulates both protected and unprotected speech.

         2. Strict scrutiny ...


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