## Facts

- Maricopa County enacted Ordinance P-10 under Arizona statutory authority to regulate sexually oriented businesses through zoning, licensing, and conduct rules.
- Dream Palace operated a non-alcoholic adult-entertainment club featuring nude or semi-nude dancing, including stage, table-side, and semi-private booth performances.
- The county adopted the ordinance after reviewing a departmental report describing asserted “secondary effects” of adult businesses (e.g., crime and neighborhood decline), relying on prior judicial decisions addressing such effects.
- The ordinance required adult establishments, managers, and employees to obtain licenses/permits and imposed operational limits such as location restrictions and hours of operation.
- The ordinance also prohibited “specified sexual activities” by adult service providers, restricting certain intimate physical contact during performances.
- Dream Palace did not comply and filed a federal suit challenging the county’s state-law authority and arguing the ordinance imposed unconstitutional prior restraints and content-based restrictions on protected expression.
- The district court upheld most provisions but invalidated and enjoined some parts; Dream Palace appealed and the county cross-appealed.

## Issues

1. Whether the ordinance’s licensing and permit requirements for adult businesses, managers, and employees imposed an unconstitutional prior restraint under the First Amendment.
2. Whether the ordinance’s prohibition on specified sexual activities and related conduct restrictions unlawfully burdened protected expressive conduct (nude dancing).
3. Whether any unconstitutional provisions were severable so the remainder of the ordinance could remain in effect.
4. Whether Arizona law authorized the county to enact the ordinance regulating sexually oriented businesses.

## Decision

- The Ninth Circuit affirmed in part, reversed in part, and remanded.
- The court held the licensing scheme and most operational restrictions were constitutional under the First Amendment.
- The court held the blanket prohibition on specified sexual activities by adult service providers violated the First Amendment and was the only provision that should be enjoined.
- The court held the invalid provision was severable, leaving the rest of the ordinance in force.
- The court rejected the challenge to the county’s authority under Arizona law, noting legislative amendments clarified county power to license and regulate sexually oriented businesses, including permits for dancers and managers.

## Legal Principles

- Nude dancing is expressive conduct protected by the First Amendment, though afforded limited protection relative to core speech.
- Regulations aimed at the secondary effects of adult businesses may be treated as content-neutral time, place, and manner rules if directed at harms associated with the businesses rather than suppressing erotic expression.
- Adult-business licensing schemes do not constitute unconstitutional prior restraints when decisionmaking is constrained by objective criteria, includes set time limits, and provides for prompt judicial review.
- A categorical conduct ban affecting performances is unconstitutional when it effectively suppresses protected expression and is not sufficiently tailored to the government’s asserted interests.
- Unconstitutional provisions may be severed when the valid and invalid parts are functionally independent and the legislature likely would have adopted the remainder without the invalid section.

## Conclusion

The Ninth Circuit upheld Maricopa County’s adult-business licensing regime and most operating restrictions as permissible regulation of secondary effects, but struck down as unconstitutional an overbroad prohibition on specified sexual activities; that provision was severed and enjoined while the remainder of the ordinance stayed effective.


Dream Palace v. County of Maricopa, 384 F.3d 990 (9th Cir. 2004)