KNOXVILLE, TN — Knoxville, TN has agreed to pay $1.5 million to settle a 1998 lawsuit filed by a now-closed adult video store that was targeted for closure by the local government. This should close the legal fight between Fantasy Video and the city over an adult business ordinance that the state Supreme Court ruled “unconstitutionally vague.” The city council has since gone on to pass a more strict law on adult in their community, amending the books in 1995.The former rule outlawed stores with “substantial” portions of sexually explicit inventory from locating within 1,000 feet of neighborhoods, recreational facilities, and businesses selling alcohol.

The Knoxville Police Department issued dozens of citations on an almost daily basis against Fantasy Video, which stocked some 3,500 sexually explicit videos for rent in a back room while offering general-interest flicks up front.

The store attempted to comply with the ordinance by reducing its amount of adult material. Knox County Chancellor Daryl Fansler granted the city an injunction against the store’s owners, Nashville-based Entertainment Resources LLC.

The owners eventually lost their lease and the store closed for business in 2001.
The state Court of Appeals later reversed Fansler’s ruling in 2004 and sent it back to Chancery Court for a determination of any damages due. The state Supreme Court OK’ed the ruling the next year and the U.S. Supreme Court declined to hear the city’s final appeal in December 2005.

City Law Director Morris Kizer and attorneys for Entertainment Resources reached an agreement late last month, just ahead of a scheduled hearing to decide the damages.

The city will pay the final negotiated price of $1.5 million from a “risk fund” that exists for such instances, said city spokeswoman Margie Nichols.

“We’re pleased that what remained of the case is resolved and we can finally close the books on this thing,” Philip N. Elbert, a Nashville attorney who represents Entertainment Resources along with David Bridgers and Knoxville lawyer Richard Gaines, told the local media.

At the present, the city’s new ordinance requiring employee licenses has garnered three separate lawsuits, filed on behalf of seven adult businesses and two individual performers. Kizer said the city has delayed enforcing the law until the lawsuits are settled.