In People Theatres of N.Y. Inc. v. City of New York, 2017 N.Y. Slip Op. 04385, various owners of adult businesses (“Plaintiffs”) brought separate actions against the City of New York (“City”) based upon First Amendment challenges seeking relief against zoning ordinances that bar adult establishments from operating in, among other areas, all residential districts and most commercial and manufacturing districts (“Ordinance“). The cases were consolidated; and after the trial court’s initial determination, the cases experienced a complex procedural history, having been appealed to the Court of Appeals twice over the course of fifteen (15) years.  A comprehensive discussion of this case and its lengthy history can be found in this extended blog post.

Here, the Ordinance at issue sought to combat negative secondary impacts relating to sexually focused businesses, which impacts were  demonstrated in a 1994 study conducted by the City.  Whether and how the Ordinance applied to particular adult businesses was the impetus for prior litigation in 1995.  In 1998, the City created the so-called 60/40 rule.  Under this rule, any commercial establishment with at least 40% of its customer-accessible floor/cellar area or stock-in-trade used for adult purposes qualified as an “adult establishment” covered by the Ordinance.  Plaintiffs modified their businesses to comply with the 60/40 rule.   The City, however, believed that while many operators were achieving “technical compliance” with the rule, their compliance was a sham. According to the City, the businesses still primarily focused on sexually explicit activities or materials; and their non-explicit materials were an afterthought that did not generate sales.  To shore up enforcement, the City amended the Ordinance in 2001 to effectively eliminate the 60/40 rule (“2001 Amendments”).

The main issue in this case was the relationship between (1) the standard that applies to First Amendment challenges in the context of ordinances affecting adult uses, and (2) the burden of proof a municipality must meet in order to sustain such ordinances. The Court held that “intermediate scrutiny” applies in this type of First Amendment adult use zoning context, which requires that an ordinance be narrowly tailored to the municipality’s justified purpose and assure reasonable alternative avenues of communication.  When applying intermediate scrutiny, a court must balance the interests at stake while assessing a municipality’s factual judgments.  The burden of proof relative to the municipality’s factual judgments is “modest” (no pun intended) and akin to substantial evidence, which is accorded more deference than that given to administrative agencies.

As such, the standard of review in this case is intermediate scrutiny, while the burden of proof is similar to substantial evidence.

 Likewise, the governing legal precedent is set forth in Los Angeles v. Alameda Books, Inc., 535 U.S. 425 (2002), wherein the Supreme Court set forth the three-part burden shifting test, which describes a municipality’s burden of proof to sustain its laws in the face of a First Amendment challenge.   First, the municipality must “fairly support” its rationale for the ordinance. Second, a challenger must cast direct doubt upon the rationale – either by (I) demonstrating the municipality’s evidence does not support the rationale, or (ii) furnishing evidence disputing the municipality’s factual findings. If the challenger cannot cast doubt, then the municipality wins. If the challenger is able to cast doubt, then the third step comes into play; and the burden shifts back to the municipality to supplement the record with evidence renewing support to justify the ordinance.

Here, after applying the Alameda three-prong test, the Court reversed the Appellate Division holding that  the lower court’s mechanical approach was improper and confused the ultimate standard of review (intermediate scrutiny) with the evidentiary burden (similar to substantial evidence) borne by the City. Because the third step of the Alameda analysis obliges a modest burden of proof akin to substantial evidence, it was an error for the lower courts to determine that the City failed to meet its burden.  In this instance, the City met its burden of showing continued focus on sexually explicit activities and materials by the Plaintiffs’ businesses – despite any 60/40 compliance. Therefore, the Appellate Division was reversed and the Ordinance was sustained.

In Matter of Avella v. City of New York, 2017 NY Slip Op 04383 (June 6, 2017), the New York Court of Appeals reviewed a decision by the City of New York approving a proposal by Queens Development Group, LLC (“QDG”) which sought to construct a large-scale retail, restaurant and movie theater complex known as “Willets West,” on the portion of Flushing Meadows Park where Shea Stadium once stood – currently, the parking lot for Citi Field.  The development was part of QDG’s larger redevelopment plan for Willets Point, a blighted area adjacent to Citi Field.  QDG included Willets West in the development proposal under the theory that “the creation of a retail and entertainment center at Willets West w[ould] spur a critical perception change of Willets Point, establishing a sense of place and making it a destination where people want to live, work, and visit.”

After the City approved QDG’s proposal, a state senator, not-for-profit organizations, businesses, taxpayers, and users of Flushing Meadows Park brought an action seeking to enjoin the proposed development.  They claimed that because the Willets West development was located within designated parkland, the public trust doctrine required legislative authorization, which had not been granted.

The Supreme Court, New York County, denied the petition and dismissed the proceeding. The Appellate Division, First Department, unanimously reversed and granted the petition to the extent of declaring that construction of Willets West on City parkland “without the authorization of the state legislature” violated the public trust doctrine, and enjoined further construction.  The Court of Appeals granted QDG leave to appeal and affirmed the Appellate Division’s ruling.

The Court began its analysis by discussing the public trust doctrine from Brooklyn Park Commrs. v. Armstrong, 45 N.Y. 234 (1871) – a decision it issued nearly 150 years ago – where the Court held that, when a municipality has taken land “for the public use as a park,” it must hold that property “in trust for that purpose” and may not convey it without the sanction of the legislature.  The Court also held that the legislature’s authorization to alienate land held in public trust must be “plainly conferred” by its “direct and specific approval.”

Applying these principles, the Court examined whether the State legislature had authorized construction at Willets West, on property that the petitioners contended was City parkland. To address that inquiry, the Court reviewed the legislation the State legislature had enacted in 1961 authorizing the development of a sports stadium on City parkland that came to be known as Shea Stadium. The Court ruled that, since a shopping mall and movie theater were not consistent with typical uses of a stadium, the statute did not authorize the Willets West development.

The Court also considered the legislative history of the statute and ruled that it too demonstrated that the legislature had only authorized the land to be rented for public stadium use, not for private business purposes.

The Court concluded that the legislative authorization to rent the stadium and its grounds to private parties could not “under our longstanding construction of the public trust doctrine, constitute legislative authorization to build a shopping mall or movie theater.”

Interestingly, the Court acknowledged that the remediation of Willets Point was “a laudable goal” and that QDG’s Willets West development would immensely benefit the people of New York City by transforming a blighted area into a new, vibrant community.  Nonetheless, it pointed out that those contentions had no place in its consideration of whether the legislature had granted authorization for the Willets West development on City parkland that was held in the public trust.  Of course, it concluded, the legislature was free to alienate all or part of the parkland for whatever purposes it were to see fit, provided that it does so through direct and specific legislation that expressly authorizes the desired alienation.

While the Court’s ruling does not impact the mixed-use redevelopment proposed for Willets East, QDG is reportedly evaluating its next steps for the project.