Texas Entertainment Ass'n, Inc. v. Hegar, No. 20-50262 (5th Cir. 2021)Annotate this Case
The Texas legislature enacted a "sexually oriented business" fee (SOBF) in 2007, imposing a $5-per-customer charge on businesses that serve alcohol in the presence of "nude" entertainment. The Comptroller promulgated a rule eight years later that clarified the definition of "nude" under the SOBF statute to apply to dancers who wear opaque latex over their breasts (the Clothing Rule).
TEA filed suit against the Comptroller, challenging the Clothing Rule on First Amendment, due process, and equal protection grounds. The district court granted partial summary judgment to TEA on its First Amendment freedom of expression claim and its claim that the Clothing Rule violated due process. After a bench trial, the district court held that the Clothing Rule was not overbroad in violation of the First Amendment, but that it violated the Equal Protection Clause of the Fourteenth Amendment.
The Fifth Circuit agreed with the district court's conclusion that TEA had associational standing to challenge the Clothing Rule and dismissal of the Comptroller's other jurisdictional claims. On the merits, the court concluded that the Clothing Rule fails strict scrutiny under the First Amendment. In this case, the Clothing Rule is directed at the essential expressive nature of the latex clubs' business, and thus is a content based restriction subject to strict scrutiny. Furthermore, the Comptroller does not present an argument that the Clothing Rule satisfies this high burden. The court also concluded that the retroactive imposition of the SOBF upon the latex clubs via the Clothing Rule constitutes a violation of due process guaranteed by the Fourteenth Amendment. Finally, the court concluded that TEA's equal protection claim lacks merit because none of the examples proffered by TEA or employed by the district court are "in all relevant respects alike" to the latex clubs at issue. Therefore, TEA failed to prove that similarly situated individuals were treated differently. Accordingly, the court affirmed the district court's judgment with respect to its jurisdictional, First Amendment, and due process rulings. The court reversed with respect to the district court's equal protection ruling and rendered judgment in favor of the Comptroller as to TEA's equal protection claim.