ST. LOUIS, MO – In a ruling filed Monday August 21st, a panel of judges from the U.S. Court of Appeals for the 8th Circuit found that a Missouri law regulating advertising by sexually oriented businesses unconstitutionally restricts commercial speech.The panel’s ruling overturns an earlier decision by U.S. District Judge Gary Fenner, who found that the statute was a constitutionally-permissible governmental regulation of commercial speech.

The contested statute, Missouri statute section 226.531, restricts both on- and off-premises advertising within one mile of a state highway for any business classified as either an “adult cabaret” or a “sexually oriented business.”

Section 226.531 reads, in relevant part; “No billboard or other exterior advertising sign for an adult cabaret or sexually oriented business shall be located within one mile of any state highway, except if such business is located within one mile of a state highway, then the business may display a maximum of two exterior signs on the premises of the business, consisting of one identification sign and one sign solely giving notice that the premises are off limits to minors. The identification sign shall be no more than forty square feet in size and shall include no more than the following information: name, street address, telephone number, and operating hours of the business.”

Attorneys for the state argued that the statute was necessary to improve “traffic safety,” and to mitigate the “adverse secondary effects of sexually oriented businesses,” including “harm to minors, prostitution, crime, juvenile delinquency, deterioration in property values, and lethargy in neighborhood improvement projects.”

While the court acknowledged that “regulations aimed at minimizing the secondary effects of sexually oriented businesses serve a significant and substantial governmental interest,” the panel found 226.531 “in its entirety, is unconstitutional,” concluding that the law is overbroad on its face.

The court found that the plain language of the statute is “directed at speech beyond that which would lead to the stated secondary effects,” and thus fails to survive scrutiny under the “Central Hudson test” for regulating commercial speech.

The “Central Hudson test” refers to the case Central Hudson. Florida Bar v Went For It, Inc., a case that established a framework for the “intermediate scrutiny” standard applied to commercial speech.

The Central Hudson standard is a four-prong test, in which the Court considers whether “(1) the affected speech concerns lawful activity and is not misleading, therefore protected by the First Amendment; (2) the government’s asserted interest in regulating the speech is substantial; (3) the regulation directly advances the asserted interest; and (4) the regulation restricts no more speech than necessary to serve the asserted interest.”

As there was no dispute that the advertising in question is “commercial speech that contains no misleading statements or concerns unlawful activity, and is therefore constitutionally protected,” the court focused on the remaining three prongs of the test.

Citing 8th Circuit precedent, the court found the “state’s asserted interest in regulating sexually oriented businesses and products is ‘substantial’ and therefore satisfies the second step of the Central Hudson test.”

The third and fourth steps of the test is where Missouri’s statute runs into constitutional trouble, in part stemming from the statutory definition of “sexually oriented business” used in section 226.531.

Under section 226.531, “any business which offers its patrons goods of which a substantial portion are sexually oriented materials. Any business where more than ten percent of display space is used for sexually oriented materials shall be presumed to be a sexually oriented business.”

One of the appellants in the case, Steele Retail, qualifies as a “sexually oriented business” under the state’s definition, as Steele Retail “operates a gas station and convenience store that receives the majority of its income from gas and other traditional convenience store items, but devotes more than ten percent of its interior display space to non-obscene, sexually oriented materials,” as the court states in its ruling.

In denying Steele Retail’s motion for permanent and preliminary injunctions, the district court had ruled previously that section 226.531 prohibited only “advertising for the sexually oriented aspects of sexually oriented businesses.” The 8th Circuit panel, however, said that the district court erred in their interpretation of section 226.531, and their interpretation was contradicted by the plain language of the statute.

“The regulation makes no reference to the content of the off-premises advertising signs,” Judge Gerald W. Heaney wrote for the panel. “Rather, it states that ‘[n]o billboard or other exterior advertising sign for an adult cabaret or sexually oriented business shall be located within one mile of any state highway.’ Thus, if a business is classified as an adult cabaret or sexually oriented business, it is prohibited from erecting any billboard or other exterior advertising sign, without regard to the content of the billboard.”

Heaney added that “Although we adopt, where possible, an interpretation that renders a statute constitutional, the plain language of section 226.531 precludes a constitutional interpretation.”

“In our view, the state has ‘failed to make a showing that a more limited speech regulation would not have adequately served the State’s interest,’” Heaney wrote. “Accordingly, we find that Missouri statute section 226.531 fails to satisfy the Central Hudson test for regulations on commercial speech.”

In its consideration of the fourth and final prong of the Central Hudson test, the panel turned its attention to the provisions of the statute restricting the content of on-premise signs for the businesses affected by section 226.531.

Noting that the statute “specifically prohibits all expression, other than the name, address, telephone number, operating hours, and language giving notice that minors are not allowed,” the court concluded that the “provision is not narrowly drawn to meet the state’s asserted goals.”

The court asserted that under the plain language of the statute, if an owner of such a business were to “post a sign with the price of gasoline, or a sign advertising a nationally-known soft drink on the exterior of the business, he or she would be subject to criminal prosecution. Thus, Missouri statute section 226.531, in its entirety, is unconstitutional because it fails to survive scrutiny under the Central Hudson test for regulations on commercial speech.”

The president of Passions Video, one of the appellants in the case, termed the decision a “great victory” for the citizens of Missouri, according to the Kansas City Star.

“In another year, it would have affected us severely,” said Gruender, referring to the fact that 226.531 had a three year grace period for existing signs that was due to expire in 2007.

“It was always our impression that the statute was unconstitutional,” Dick Bryant, a lawyer for one of the appellants, told the Star.

“We’re pleased the court of appeals has looked at the statute the way it was drawn and reached the conclusion that it did,” added Bryant, “namely that the First Amendment is alive and well in the state of Missouri.”

Missouri’s House Speaker, Rod Jetton, called the panel’s ruling “unfortunate,” and attorneys for the State said they would request a rehearing by the full 8th Circuit.

“It leaves Missourians of every age exposed to sleazy billboards along our highways,” Jetton said in a written statement. “Billboards like these are distasteful, unnecessary distractions that pose a real threat to highway safety and give children and adults the wrong impression about what quality entertainment really is.”

Jetton added that if the state ultimately fails in its appeal, the legislature would craft new legislation “so Missourians have the protections a law like this provides.”