The U.S. Court of Appeals for the Eleventh Circuit revived a constitutional challenge to the city of Atlanta's adult entertainment ordinance, dealing it another setback in a years-long effort to shut down “adult superstore” Tokyo Valentino on Cheshire Bridge Road.   

The opinion, issued Friday, reverses an injunction against the business issued last year by a trial judge, who ruled that Tokyo Valentino should have challenged the constitutionality of the law in two earlier lawsuits and had therefore lost the chance to make those claims now.

But the appellate panel said the earlier lawsuits did not deal with the constitutionality of the law and that the store had no way of knowing when they were filed that it would later be cited for purported code violations the city had ignored for years.

The per curiam opinion, written by Judges Charles Wilson, Jill Pryor and Ninth Circuit Senior Judge Richard Tallman, sitting by appointment, also took aim at the city's arguments that a small note saying “not approved” on a building permit issued more than 20 years ago was sufficient notice to the club that it would be cited years later for a violation over the presence of video booths on the site, in violation of a 1996 ordinance.

“The city was the only party with knowledge that it had applied or intended to apply the 1996 Code to forbid operation of video booths by [Tokyo Valentino]—if it in fact did so,” the opinion said.

The city itself could have raised the permit issue in the earlier litigation but did not, the opinion said.  

“Ultimately, the city attempts to find an elephant in a mousehole,” it said. “Statements written in tiny font in a corner or in unclear handwriting in a building permit, about which there are conflicting explanations and that were not discussed in the previous litigation, cannot serve to preclude facially valid constitutional claims.”

Cary Wiggins, Wiggins Law Group, Atlanta. (Photo: John Disney/ ALM)

The attorney who filed the original complaint in 2014, Wiggins Law Group principal Cary Wiggins, referred questions to the lawyers who are handling the appeal, Gary Edinger and Daniel Aaronson of Benjamin, Aaronson, Edinger & Patanzo in Gainesville, Florida.

Aaronson said he looked forward to having the store's arguments decided on their merits and that the ruling bodes well for his client, which has remained open for business throughout the dispute with the city.

“This decision might be the writing on wall,” he said. “I think Tokyo Valentino's going to be there a long time.”

The city is represented by Law Department lawyer Susan Garrett, Jeffrey Haymore of Dillard Sellers, and Scott Bergthold and Bryan Dykes from the Law Office of Scott D. Bergthold in Chattanooga, Tennessee.

A spokesman said the city is considering its options. 

The ruling is the latest twist in a two-decade struggle between the owners of Tokyo Valentino and the city, which has long been under pressure from nearby residents to shutter the store.

As detailed in court filings, Atlanta revised its ordinances in 1987 to ensure a buffer of at least 500 feet between residential areas and “adult businesses,” which included adult bookstores, movie theaters, “mini-motion picture” theaters and entertainment establishments. But there was nothing in the definition to include businesses that sold sex toys or explicit videos.

Michael Morrison, the owner of Tokyo Valentino's corporate parent, contacted the city in 1996 about opening a store to sell “novelties, cards, CD-ROM, video, lingerie (not live) and condoms.” His letter said no adult books or video rooms would be included.  

Morrison filed a permit request the same day City Council passed an amendment adding novelties and videos to the definitions list for adult businesses.  

The city denied the permit, but a Fulton County Superior Court judge ruled the store should have been deemed a lawful nonconforming use under the prerevision code and ordered the permit granted. The Georgia Supreme Court declined to hear the city's appeal.

Shortly after opening what would become Tokyo Valentino, the store installed 20 video booths in its basement. Although the store was often visited by code and building inspectors, the city did not move to have the booths removed.

In 1998, Morrison's company filed a federal lawsuit demanding the city pay damages it suffered while its permit request was denied. The court granted summary judgment to the city, which the Eleventh Circuit upheld.

In 2014, the store applied to the city for a permit to renovate its facade and build out an unused section to open a “social club” that, according to its subsequent complaint, “sparked a neighborhood uproar.”

After several visits from city officials, inspectors determined the video booths in the basement were a code violation and issued a cease and desist order demanding they be removed. The Board of Zoning Adjustments denied the store's appeal.

Tokyo Valentino's corporate owner, Cheshire Bridge Holdings, sued the city and zoning board in 2015, claiming Atlanta's adult entertainment ordinance was overly broad and violated its Fourth Amendment rights.

The city counterclaimed, saying the store had been in violation of its permit since it opened and requested an injunction shutting it down.

Both sides moved for summary judgment.

Judge Thomas Thrash sided with the city in January 2018, writing among other things that the principle of res judicata barred the store's action because it “could have challenged the constitutionality of the same definitions” of adult businesses in the earlier suits.  

In reversing him, the appellate panel said the store's goal in the state litigation was to have the “correct version of the code” applied to its license application; the first federal case involved its right “to open its business without delay.” 

“Here, by contrast, the primary right [Tokyo Valentino] asserts is to renovate the property and freely express itself under the First Amendment by operating a social club as part of its business,” it said.

Although there is a substantial history between the parties, it said, the “fact remains that the city never initiated a code enforcement proceeding to challenge [Tokyo Valentino's] operations at the property until it issued the cease and desist notice in 2014.”

“The city argues that writing that the property was 'not approved for adult business' in the [1997] building permit provided notice that it was applying the 'adult business' provisions to Cheshire. But the property was never approved for 'adult business,'” it said. 

“Barring a claim where the plaintiff apparently had no knowledge that code provisions had been applied against it, and where there is a genuine issue of material fact on whether the code provision was actually enforced against it at all, would encourage 'kitchen-sink' claims against statutory schemes and is a bridge too far,” the opinion said.  

“The district court's opinion is well-reasoned and learned in addressing this case's myriad complicated issues,” the opinion said, but must be reversed and remanded, and the injunction vacated.