Eleventh Circuit Carves a Redressability Window for Closed Adult Businesses and Reaffirms Secondary-Effects Analysis Post‑Reed

Introduction

In WBY, Inc. v. City of Chamblee, Georgia, the United States Court of Appeals for the Eleventh Circuit affirmed summary judgment in favor of the City of Chamblee against WBY, Inc., which operated the adult entertainment club “Follies.” The decision consolidates and clarifies several important strands of constitutional doctrine as applied to adult entertainment: Article III standing and redressability for closed businesses, preclusive effect of state administrative determinations on federal claims for damages, the continuing vitality of the secondary-effects doctrine in First Amendment challenges post‑Reed, the limits of Contract Clause claims against municipal successors under Georgia law, and comparators in “class‑of‑one” Equal Protection claims.

The case arises from Chamblee’s 2018 ordinances that, among other things, prohibited alcohol possession and consumption at adult establishments, defined nudity and limited attire, imposed a midnight closing time on adult establishments, and tightened the criteria to qualify as a “restaurant” eligible for an alcohol license—including a requirement that at least 50% of total revenue derive from food prepared and consumed on premises and nonalcoholic beverages. After Follies’ alcohol and business license denials and a state injunction enforcing the ordinances, Follies permanently closed and lost its lease. It nonetheless brought federal constitutional claims for free speech, equal protection, and impairment of contract, together with requests for equitable and monetary relief.

The Eleventh Circuit’s published opinion addresses: (1) whether a shuttered adult business has standing to seek equitable relief or damages; (2) whether adult-entertainment restrictions like Chamblee’s survive First Amendment scrutiny in light of Reed v. Town of Gilbert; (3) whether a prior settlement with a county binds an annexing city under the Contract Clause; and (4) whether selective enforcement of a revenue-based restaurant qualification violates equal protection when a bowling alley was treated differently.

Summary of the Opinion

• Standing and Redressability: The court held Follies lacks Article III standing for equitable relief because it is permanently closed and has no concrete plan to reopen. It does, however, have standing to seek damages for a narrow 45-day period—between entry of a state court injunction compelling compliance with the challenged ordinances (July 7, 2020) and the City’s denial of its Occupation Tax Certificate (August 21, 2020)—because the state injunction, not an independent barrier, restrained its operations during that window.
• Preclusion and Alcohol Sales Redressability: The court gave preclusive effect to Georgia hearing officer determinations that Follies failed the 50% food revenue requirement, foreclosing redressability for damages tied to alcohol sales (since Follies could not lawfully obtain a license regardless of any other ordinance).
• First Amendment: Applying the secondary-effects doctrine and intermediate scrutiny under O’Brien/Renton/Alameda Books (as synthesized in Eleventh Circuit precedent like Peek‑A‑Boo and Flanigan’s), the court upheld Chamblee’s anti-nudity, no-alcohol-at-adult-establishments, and midnight-closure provisions. Reed v. Town of Gilbert does not displace the secondary-effects framework; lower courts remain bound unless the Supreme Court says otherwise.
• Contract Clause: No Contract Clause violation exists because Follies lacked a valid contractual relationship with the City. Under Georgia law (particularly Trop, Inc. v. City of Brookhaven), DeKalb County’s settlement did not bind the subsequently annexing municipality with respect to adult-entertainment regulation.
• Equal Protection: The “class-of‑one” claim failed because Follies and proposed comparator AMF Bowling Centers (Bowlmor) were not similarly situated “in all relevant respects.” Even on the single metric of the 50% food threshold, Follies was materially different (the City had evidence of “pairing” gimmicks to inflate food revenue; Bowlmor’s 2019 license was issued “by mistake” and was denied in 2020). Summary judgment for the City was affirmed.
• Disposition: Affirmed in full—no equitable relief; damages possible only within the 45-day window, but all constitutional claims fail on the merits.

Analysis

Precedents Cited and Their Role

• Article III Standing and Redressability:
  • Lujan v. Defenders of Wildlife; TransUnion LLC v. Ramirez: Injury-in-fact and redressability requirements.
  • City News & Novelty, Inc. v. City of Waukesha; Sierra v. City of Hallandale Beach; Koziara v. City of Casselberry; Adler v. Duval County School Board: No injunctive standing without imminent future harm; closed businesses must show concrete plans to reopen.
  • City of Los Angeles v. Lyons: Damages claims redress past harms; equitable relief requires ongoing threat.
  • KH Outdoor, LLC v. Clay County: Redressability fails when unchallenged alternative regulations independently bar the same activity.
  • Travers v. Jones: Preclusive effect of state administrative fact-finding when parties had an adequate opportunity to litigate, preventing relitigation in federal court.
• First Amendment—Adult Entertainment:
  • United States v. O’Brien: Intermediate scrutiny for regulations of conduct with incidental expressive elements.
  • City of Renton v. Playtime Theatres; City of Los Angeles v. Alameda Books: Secondary-effects doctrine; government may rely on studies, judicial decisions, and experience to demonstrate substantial interests; time, place, manner approach.
  • Peek‑A‑Boo Lounge of Bradenton, Inc. v. Manatee County; Flanigan’s Enters., Inc. of Ga. v. Fulton County (Flanigan’s I); Fly Fish, Inc. v. City of Cocoa Beach; Zibtluda, LLC v. Gwinnett County; Sammy’s of Mobile, Ltd. v. City of Mobile: Eleventh Circuit applications confirming intermediate scrutiny and sufficiency of alternative channels (e.g., semi‑nude dancing), and no constitutional right to drink alcohol while watching nude dancing.
  • Reed v. Town of Gilbert; Rodriguez de Quijas v. Shearson/American Express: Reed did not overrule the secondary-effects doctrine; the Eleventh Circuit remains bound by Supreme Court precedents directly on point unless the Court itself overrules them.
• Contract Clause:
  • Sveen v. Melin; Allied Structural Steel Co. v. Spannaus; General Motors Corp. v. Romein; Energy Reserves Group v. Kansas Power & Light: Two‑step Contract Clause framework (substantial impairment and reasonableness to advance significant public purpose).
  • Trop, Inc. v. City of Brookhaven; DeKalb County v. Atlanta Gas Light Co.: Georgia authority limiting counties’ ability to bind successor municipalities or surrender police power regarding adult entertainment.
  • Concurring note: U.S. Trust Co. v. New Jersey; United States v. Winstar Corp.: Reserved powers and unmistakability doctrines (acknowledged but not applied on these facts because Trop controls).
• Equal Protection:
  • Campbell v. Rainbow City; Griffin Industries, Inc. v. Irvin; Grider v. City of Auburn; Strickland v. Alderman: “Class‑of‑one” claims require comparators “prima facie identical in all relevant respects”; analysis differs for “one‑dimensional” vs. “multi‑dimensional” government decisions.

Legal Reasoning

1) Standing and the “Redressability Window” for Closed Businesses

The court reinforced that equitable relief is forward-looking; a permanently closed business without concrete plans to reopen faces an insurmountable imminence problem. Follies’ suggestion that it could reopen at a new location was “speculation” insufficient under City News & Novelty and Lujan.

By contrast, damages claims look backward and can proceed if past injury is concrete, caused by the challenged conduct, and redressable. The court’s key innovation is recognizing a bounded period when the alleged constitutional harm was operative and not independently foreclosed by unchallenged barriers: a 45‑day window when Follies still had its Occupation Tax Certificate (i.e., could lawfully operate) but was restrained by a state injunction enforcing the challenged ordinances. This careful temporal slicing implements KH Outdoor’s principle: if another, unchallenged law independently prohibits the same activity, redressability fails for that period—but not necessarily for prior periods without such independent bars.

The court then trimmed the scope of redressable damages further through administrative preclusion (Travers). Because a Georgia hearing officer twice found Follies failed the 50% prepared-food-and-nonalcoholic-beverage revenue requirement, and Follies neither appealed nor mounted a successful constitutional attack on that requirement on appeal, federal courts must treat those factual determinations as settled. That forecloses damages tied to the inability to sell alcohol (licensure was unattainable for independent reasons). However, the adult‑entertainment restrictions (e.g., midnight closure; limitations on nudity) apply independent of alcohol licensure, so any losses tied to those restrictions within the 45‑day window remain theoretically redressable—subject to the merits.

2) First Amendment: Secondary Effects and Intermediate Scrutiny Endure Post‑Reed

Follies urged strict scrutiny, relying on Reed’s insistence that facially content-based laws trigger strict scrutiny regardless of benign motives. The court declined that invitation for two reasons. First, Reed did not address (let alone overrule) the secondary-effects doctrine, which specifically governs adult-entertainment regulations that target the adverse secondary effects (crime, blight, public health) rather than the erotic message. Following Rodriguez de Quijas, the Eleventh Circuit remains bound by Renton and Alameda Books.

Applying its established framework (Peek‑A‑Boo; Flanigan’s I):

• Not a total ban: The ordinances did not prohibit erotic expression, only totally nude performances in adult establishments and the combination of alcohol with adult entertainment; the court reiterated there is no First Amendment right to consume alcohol while viewing nude dancing (Sammy’s of Mobile), and semi‑nude performances remain available.
• Secondary-effects purpose: The City legislated to mitigate crime, prostitution, trafficking, and property degradation; it compiled an extensive record—72 judicial decisions and 38 studies, plus testimony from local law enforcement. That far exceeds the “not high” evidentiary threshold recognized in Zibtluda, satisfying the government’s burden to show the purpose was combating secondary effects rather than suppressing speech.
• Intermediate scrutiny satisfied: The interests (public safety, crime reduction, neighborhood quality) are substantial. The measures are designed to further those interests, and reasonable alternative avenues of expression—semi‑nude erotic dancing—remain. Reed did not unsettle this doctrinal path.

Evidence of political awareness about similar litigation in nearby jurisdictions does not taint the purpose finding; illicit motive allegations do not suffice to rebut the secondary-effects rationale without undermining the City’s evidence or factual findings.

3) Contract Clause: No Binding Contract with the City under Georgia Law

Follies’ Contract Clause theory hinged on DeKalb County’s 2007 amended agreement granting nonconforming status (alcohol + nude dancing) and an asserted binding effect on any successor jurisdiction. The court found no valid contractual relationship with the City as a matter of Georgia law. Trop v. City of Brookhaven, with highly analogous facts, forecloses the argument that a settlement with the County vested a right to serve alcohol and offer nude dancing binding on a subsequently incorporated or annexing municipality exercising its police power.

Because the claim fails at step one of the Contract Clause test (no contract with the City to be impaired), the court did not need to reach whether the impairment was substantial or whether the ordinances were reasonable and necessary. The concurrence underscores that broader doctrines—the reserved powers doctrine and the unmistakability doctrine—frame when government may “contract away” sovereign powers, but Trop controlled here, obviating a deeper dive.

4) Equal Protection: No “Class-of‑One” Comparator

Follies’ equal-protection theory argued selective enforcement, citing Bowlmor, which received a 2019 alcohol license despite facially failing the 50% threshold; it then worked with the City on an ordinance clarifying licensing for bowling centers and never ceased selling alcohol. The court reiterated that class‑of‑one plaintiffs must identify comparators “prima facie identical in all relevant respects.” Two layers defeated Follies’ claim:

• Multi‑ vs. one‑dimensional analysis (Griffin Industries): While some regulatory decisions are “multi‑dimensional” and sensitive to an establishment’s nature (a strip club vs. a bowling alley), the 50% revenue metric is “one‑dimensional.” Even in that narrow dimension, differences mattered.
• Not similarly situated on the 50% measure: Follies undisputedly used pairing tactics (selling a nominal food item with each alcoholic beverage) to inflate food revenue; Bowlmor had no such record. Bowlmor’s 2019 approval was a mistake the City corrected in 2020. Follies also failed to attend or seek to delay its hearing; Bowlmor sought a delay and pursued a legislative fix suited to its business model. These factual and procedural differences preclude a finding that the City unequally applied a facially neutral rule to identically situated entities for a discriminatory purpose.

Impact

• Standing and Damages Strategy for Shuttered Businesses:
  • Closed adult businesses cannot obtain prospective relief absent concrete, imminent plans to reopen. Mere possibility of relocating is too speculative.
  • Practitioners should identify precise “redressability windows” where challenged laws—not independent, unchallenged barriers—caused the injury. Subsequent independent legal disabling events (e.g., denial of a business license) cut off damages.
  • State administrative determinations (like hearing officer rulings) can preclude relitigation of factual predicates (e.g., failure to meet a revenue threshold), narrowing the scope of recoverable damages. Promptly appeal or directly challenge such determinations to preserve federal claims.
• First Amendment Landscape:
  • Secondary-effects analysis remains controlling in the Eleventh Circuit notwithstanding Reed. Municipalities can regulate the manner and context of adult expression (e.g., attire minimums, alcohol segregation, hours) under intermediate scrutiny with a robust evidentiary record.
  • Alternative channels analysis continues to treat semi‑nude dancing as an adequate substitute for fully nude performances.
  • Municipalities should continue to compile comprehensive records—studies, judicial decisions, local law-enforcement testimony—when enacting adult‑use ordinances.
• Contracting with Government Entities in Georgia:
  • Private agreements with counties about adult-entertainment operations will not bind later‑incorporated or annexing municipalities’ exercise of police power (Trop). Parties should not rely on settlement clauses purporting to bind successors in this regulatory space.
  • Concurrence flags, for future cases, the reserved powers and unmistakability doctrines that may define the limits of government contracting over sovereign powers.
• Equal Protection and Selective Enforcement:
  • Class‑of‑one claims face a high comparator bar. Plaintiffs must neutralize “multi‑dimensional” factors by identifying a comparator that is functionally indistinguishable on the metric actually applied—and preferably on surrounding facts such as procedural posture and compliance conduct.
  • Municipal self‑correction (recognizing a prior license was issued “in error”) and tailored legislative fixes for distinct business categories (e.g., bowling centers) will not ordinarily support a class‑of‑one claim absent evidence of discriminatory purpose.

Complex Concepts Simplified

• Secondary-Effects Doctrine: A framework allowing governments to regulate adult businesses to mitigate harms like crime and blight associated with such establishments. Regulations are assessed under intermediate scrutiny if aimed at those effects, not at suppressing erotic expression.
• Intermediate vs. Strict Scrutiny:
  • Strict scrutiny: Government must show laws are narrowly tailored to serve a compelling interest—rarely satisfied.
  • Intermediate scrutiny (O’Brien/Renton): Government must show substantial interest unrelated to speech suppression, that the regulation furthers that interest, and that reasonable alternative avenues for expression remain.
• Article III Standing:
  • Injury-in-fact: Concrete, particularized, actual or imminent.
  • Causation: Traceable to challenged conduct.
  • Redressability: Likely to be remedied by favorable court decision. For closed businesses seeking injunctions, imminence is usually lacking; for damages, identify timeframes when the challenged law caused the injury.
• Administrative Preclusion: When a state administrative tribunal makes factual findings after an adequate chance to litigate, federal courts often give those findings preclusive effect, preventing relitigation of those facts.
• Contract Clause (Two-Step Test):
  • Step 1: Has a law substantially impaired a contractual relationship? Requires a valid contract, a change in law that impairs it, and substantiality.
  • Step 2: If yes, is the law reasonable and appropriately tailored to a significant and legitimate public purpose?
• Class-of‑One Equal Protection: A claim that the government intentionally treated one person differently from others similarly situated without a rational basis. Requires a comparator “prima facie identical in all relevant respects.”
• One‑Dimensional vs. Multi‑Dimensional Government Decisions:
  • One‑dimensional: A single, fixed legal criterion (e.g., a 50% revenue line).
  • Multi‑dimensional: Complex discretionary decisions considering varied, context‑specific factors. Comparator analysis is stricter in this setting.

Conclusion

WBY, Inc. v. City of Chamblee offers a crisp, comprehensive reaffirmation of core adult‑entertainment jurisprudence in the Eleventh Circuit while refining standing and redressability analysis for shuttered businesses. The court:

• Denies injunctive standing to a permanently closed club lacking concrete reopening plans,
• Recognizes a narrow “redressability window” for damages, bounded by intervening, unchallenged legal barriers and reinforced by administrative preclusion,
• Reapplies secondary-effects, intermediate scrutiny analysis to uphold anti‑nudity, alcohol separation, and hours restrictions, undisturbed by Reed,
• Forecloses Contract Clause relief where state law (Trop) prevents a county’s settlement from binding an annexing city’s regulatory authority, and
• Demands exacting comparator identity for class‑of‑one Equal Protection claims, especially where the government corrects licensing errors and legislates prospectively for distinct business categories.

For municipalities, the opinion validates robust, evidence‑based regulation of adult establishments, particularly separating alcohol from nudity and imposing operational limits. For litigants, it supplies cautionary lessons: preserve appeals of adverse administrative facts, demonstrate concrete reopening plans if seeking equitable relief post‑closure, and identify truly identical comparators. In the broader legal landscape, the decision underscores that, absent Supreme Court revision, the secondary-effects doctrine continues to frame First Amendment review of adult‑use ordinances in this circuit.