Comprehensive Commentary on Texas Entertainment Association v. Glenn Hegar: Fifth Circuit's Landmark Ruling on Associational Standing and First Amendment Constraints

Introduction

The case of Texas Entertainment Association, Incorporated v. Glenn Hegar, adjudicated by the United States Court of Appeals for the Fifth Circuit on August 19, 2021, marked a significant moment in the intersection of business regulation, constitutional law, and LGBTQ+ rights in Texas. This comprehensive commentary delves into the background, judicial reasoning, and broader implications of the court's decision, offering an in-depth analysis for legal practitioners, scholars, and stakeholders in the sexually oriented business sector.

Summary of the Judgment

The Texas legislature's enactment of the Sexually Oriented Business Fee (SOBF) in 2007 imposed a $5-per-customer fee on businesses serving alcohol alongside "nude" entertainment. To circumvent this fee, several establishments, dubbed "latex clubs," required dancers to wear shorts and opaque latex over their breasts. In 2016, the Texas Comptroller promulgated the Clothing Rule, expanding the definition of "nude" to include such attire, thereby subjecting latex clubs to the SOBF. The Texas Entertainment Association (TEA) challenged this rule on First Amendment, due process, and equal protection grounds. While the district court partially favored TEA, particularly on the First Amendment and due process claims, it found merit in TEA's equal protection argument. The Fifth Circuit appellate court affirmed the district court's rulings on jurisdiction, First Amendment, and due process, but reversed the equal protection finding, ultimately ruling in favor of the Comptroller on that aspect.

Analysis

Precedents Cited

The Fifth Circuit's decision in this case rested heavily on established precedents that delineate the boundaries of associational standing, the applicability of the Tax Injunction Act (TIA), and the interpretation of the First Amendment in regulating sexually oriented businesses.

• Combs v. Texas Entertainment Association, Inc. (Tex. 2011): The Texas Supreme Court upheld the SOBF, determining it to be a content-neutral regulation that passed intermediate scrutiny under the First Amendment based on its aim to mitigate harmful secondary effects of nude dancing in the presence of alcohol.
• EX PARTE YOUNG: This doctrine allows for injunctions against state officials in their official capacity when they are alleged to violate federal law, thereby circumventing Eleventh Amendment immunity.
• NEINAST v. TEXAS (5th Cir. 2000): Provided a framework to distinguish between taxes and fees, influencing the court's determination that the SOBF qualifies as a fee under the TIA.
• MD II Entertainment and Baby Dolls Topless Saloons, Inc.: These cases examined the constitutionality of clothing regulations in adult entertainment venues, with the former striking down an ordinance lacking evidence of its efficacy, and the latter upholding one supported by extensive studies on secondary effects.
• RENTON v. PLAYTIME THEATRES, INC. (U.S. 1986): Established the "secondary effects" doctrine, which allows for content-neutral restrictions on speech based on the regulation's intent to mitigate adverse secondary effects.
• Ass’n of American Physicians & Surgeons v. Texas Medical Board (5th Cir. 2010): Offered criteria for associational standing, which were pivotal in determining TEA's eligibility to sue.

Legal Reasoning

The Fifth Circuit meticulously dissected each of TEA's arguments, upholding certain aspects while overturning others based on legal standards and factual determinations.

• Standing: The court affirmed TEA's associational standing by applying the three-factor test from Hunt v. Washington State Apple Advertising Comm’n, confirming that TEA's members would individually have standing, the association's interests aligned with its purpose, and the claims did not necessitate individual member participation.
• Tax Injunction Act (TIA): By applying the Neinast factors, the court determined that the SOBF is a regulatory fee rather than a tax, thereby not barred by the TIA from federal court jurisdiction.
• Eleventh Amendment: Under the EX PARTE YOUNG exception, the court ruled that TEA could seek injunctive relief against the Comptroller without being impeded by sovereign immunity.
• First Amendment: The court classified the Clothing Rule as a content-based restriction, necessitating strict scrutiny. It found the rule unconstitutional due to lack of evidence linking the attire restrictions to mitigating secondary effects, drawing parallels to the unconstitutional ordinance in MD II Entertainment.
• Due Process: The retroactive enforcement of the Clothing Rule was deemed oppressive, violating the Fourteenth Amendment as it altered the legal landscape for latex clubs without prior notice.
• Equal Protection: Contrary to the district court's conclusion, the appellate court found that TEA failed to demonstrate that latex clubs were treated differently from similarly situated traditional nude dancing establishments, thereby invalidating the equal protection claim.

Impact

This judgment has multifaceted implications:

• Associational Standing: The affirmation strengthens the ability of associations like TEA to represent their members' interests in federal courts, broadening the scope for collective legal action.
• Regulatory Clarity: By distinguishing the SOBF as a fee, the court clarified the boundaries of the TIA's applicability, influencing future tax and fee imposition by state agencies.
• First Amendment Constraints: The ruling underscores the necessity for concrete evidence when implementing content-based regulations, particularly those affecting expressive conduct, setting a high bar for governmental justification.
• Due Process Protections: The decision emphasizes the importance of non-retroactive enforcement of regulations, ensuring that businesses are adequately notified before being subjected to new or expanded legal obligations.
• Sexually Oriented Business Regulation: The court's approach may influence how other jurisdictions regulate sexually oriented businesses, balancing regulatory objectives with constitutional protections.

Complex Concepts Simplified

The judgment navigated through several intricate legal doctrines, which are elucidated below for better comprehension:

• Associational Standing: This legal principle allows an association to sue on behalf of its members if it can demonstrate that its members would have standing to sue individually, the association's interests align with those of its members, and individual participation is not required for the lawsuit.
• Tax Injunction Act (TIA): A federal statute that generally prohibits federal courts from issuing injunctions against the collection of state taxes, unless it falls under specific exceptions. Distinguishing between a "tax" and a "fee" is crucial, as fees related to regulatory purposes may not fall under TIA's restrictions.
• EX PARTE YOUNG Doctrine: An exception to the Eleventh Amendment immunity allowing lawsuits against state officials in their official capacity for prospective injunctive relief when they are alleged to have violated federal law.
• Content-Based vs. Content-Neutral Restrictions: Content-based restrictions apply to speech based on the topic or message, necessitating strict judicial scrutiny. Content-neutral restrictions, which regulate the time, place, or manner of expression without regard to content, are subject to intermediate scrutiny.
• Secondary Effects Doctrine: Allows regulation of expressive conduct based on the adverse secondary effects the conduct may have on the community, rather than on the content of the expression itself.

Conclusion