Daily Development for Thursday, January 22, 2004 
by: Patrick A. Randolph, Jr. 
Elmer F. Pierson Professor of Law 
UMKC School of Law 
Of Counsel: Blackwell Sanders Peper Martin 
Kansas City, Missouri 
dirt@umkc.edu 
SERVITUDES; CONSTITUTIONAL LAW; ADULT 
BUSINESSES: Where government officials have right to control uses in 
industrial park pursuant to private covenants, such officials cannot 
exercise their discretion in such a way as to effectuate a prior restraint on 
free speech by prohibiting a lease to a nude dance club in an area 
properly zoned for such use. 
The Tool Box. v. Ogden City Corp., 316 F. 3d 1167 (10th Cir. 2003) 
City established an industrial park in an area zoned for heavy industry. 
Apparently City owned land within the park and sold it to private parties. 
Over time, this area expanded, and in one of the expansions, City sold 
land subject to a land use covenant that gave to an "Industrial Park 
Review Board" the power to pursue a "wholesome environment for the 
conduction of selective manufacturing and marketing enterprises. [Yes, 
"conduction" does appear to be a word.] The Review Board 
apparently had the power to approve or disapprove any land use within 
the Park. It consisted of three appointees of the mayor, two of which 
were required to be City employees. The sole stated appeal was to the 
Mayor personally. 
An owner of land bound by this covenant sought to lease its property to a 
nude dance club. The City Attorney opined that the land lay within one 
of the few areas in the city zoned for adult entertainment, and that the use 
restrictions controls administered by the Industrial Park Review Board 
would not restrict this activity. The Board, apparently, disagreed with 
this latter decision, and denied approval of the site plan expressly on the 
basis of the planned use and stated that an appeal could be taken to the 
Mayor. The Mayor affirmed the decision. 
The tenant, Tool Box, brought suit in federal district court, which 
dismissed the complaint. On appeal to the Tenth Circuit, Held: 
Reversed. The appeals court found that the application of the covenant 
to prohibit nude dancing in a properly zoned area amounted to a prior 
restraint on free speech. 
The court had little difficulty concluding that the action of the Review 
Board constituted "governmental action" subject to Constitutional 
restrictions. Although acknowledging that under the recent decision in 
Brentwood Academy v. Tenn. Secondary Sch. Athletic Ass'n, 531 U.S. 
288 (2001), the determination of whether government action exists 
requires a fact specific analysis, without rigid application of any specific 
test, the court viewed the relationship of public officials to the functions 
of the Review Board here as certainly an example of government action. 
It noted that two of three members of the Review Board are in fact public 
officials appointed by the Mayor, and that the sole appeal from their 
decision is to the Mayor. The court described the discretion given to the 
Review Committee as "absolute, limitless, boundless and measureless." 
The Tenth Circuit opinion noted that United States v. O'Brien, 391 U.S. 
367 (1968) sets forth a four pronged test for analysis of government 
restraints on free speech. First, does the restriction fall with 
government's constitutional powers; second, does it further important or 
substantial government interests; third, are these interests unrelated to 
the suppression of free expression; and fourth, are the restrictions no 
greater than absolutely necessary to accomplish the governmental end? 
The court stated, however, that O'Brien is inapplicable here. Tool Box 
was not alleging that the individual decision by the Review Board was a 
prior restraint. The dissent notes that this argument might not have led to 
the desired result, since the City in fact later permitted Tool Box to set up 
its nude dancing establishment elsewhere in the City. Arguably, the 
purpose for keeping the nude dancing establishment out of the industrial 
park was "content neutral" decision in favor of industrial activities and 
against all entertainment activities. Alternatively, the court noted that 
prohibition of nude dancing at this location, while permitting it in 
another, might have been regarded as a valid "time, place and manner" 
regulation. 
Rather, the court concluded that the lack of any standards given to the 
decision maker here made the existence of the ordinance itself a "prior 
restraint" on free speech. 
"Courts will not validate statutes that make protected expression 
subject to 'prior restraint' - that is, subject to 'official approval 
under laws that delegate[] standardless discretionary power to 
local functionaries." 
In Shuttlesworth v. City of Birmingham, 394 U.S. 147 (1969) (involving 
a parade permit ordinance), the U.S. Supreme Court stated that 
standardless discretion can never stand in the way of a proposed exercise 
of protected speech: 
"An ordinance which . . . makes the peaceful enjoyment of 
freedoms which the Constitution guarantees contingent upon the 
uncontrolled will of an official - as by requiring a prmit or license 
which may be granted or withheld in the discretion of such an 
official - is an unconstitutional censorship or prior restraint upon 
the enjoyment of those freedoms." 
A dissenting judge noted that the restrictive covenant doesn't really 
address speech of any kind. He pointed out that the cases relied upon the 
majority dealt with parade permits, movies, and other forms conduct 
acknowledged to be protected speech. The ordinance here, however, was 
not only "content neutral," it was "activity neutral." 
Comment 1: The weakness in the dissent's argument is that the Review 
Board specifically stated that it was rejecting the site plan application on 
the basis of the proposed activities. Thus, the Board asserted that indeed 
the purpose of the regulation was, among other things, to control 
activities involving protected speech. It apparently ignored the sage 
advice of the City Attorney, who had opined that the restrictive covenant 
had nothing to do with whether nude dancing could be conducted on the 
property, thus leading the Review Board to evaluate the proposal on 
other bases, some of which might in the end have justified a restriction 
that might have deterred the proposed lease. 
Comment 2: On the other hand, would any decision of the Review Board, 
whether or not dealing with speech, be subject to the same objection? 
Aren't we talking due process here - not simply prior restraint doctrine? 
Comment 3: The editor also wonders whether the City Attorney, had the 
thought occurred, might have been able to argue that the decisions of the 
Review Board and the review by the mayor were both subject to the 
provisions of the state's administrative procedure act. This might have 
resolved some of the procedural difficulties. As to whether adequate 
standards existed - the editor refers to prior posting here discussing when 
vague standards such as "public interest" "aesthetics" and the like can 
support a zoning decision. Sometimes they can, sometimes not. The 
decisions are in some confusion on the point.