Knoxville Pays $1.5M to Settle Adult Store Suit

KNOXVILLE, Tenn. — City officials have agreed to pay $1.5 million to settle a longstanding lawsuit filed by an adult video store that closed in 2001, ending a legal fight that began in 1998 between the city and Fantasy Video based on a 1979 ordinance regulating adult businesses that was judged "unconstitutionally vague" by the Tennessee Supreme Court in 2005.

The negotiated payout includes damages and attorneys’ fees.

The unconstitutional ordinance outlawed stores with "significant" and "substantial" portions of sexually explicit inventory from locating within 1,000 feet of neighborhoods, recreational facilities and businesses selling alcohol.

It has been replaced by a new law that uses a 35 percent benchmark regarding the amount of merchandise, its monetary value, the interior floor space used for its display or the revenues gained by its sale. The new law was approved by Knoxville's City Council in May 2005.

A second new ordinance also imposes licensing requirements for employees of adult-oriented businesses in the city.

The Knoxville Police Department issued dozens of citations against Fantasy Video, which stocked some 3,500 sexually explicit rental videos in a back room while offering general-interest videos in the front of the store.

The store attempted to comply with the ordinance by reducing its adult inventory, but Knox County Chancellor Daryl Fansler, calling the efforts a sham, granted the city an injunction against the store’s owners, Entertainment Resources LLC of Nashville.

The store eventually lost its lease and shut its doors in 2001.

The state Court of Appeals reversed Fansler’s ruling in 2004 and sent it back to Chancery Court for a determination of any damages due. The state Supreme Court affirmed the ruling the next year, and the U.S. Supreme Court declined to hear the city’s final appeal in December 2005.

Knoxville City Law Director Morris Kizer and attorneys for the owners reached an agreement July 25, right before a scheduled hearing to decide the damages.

The store’s attorneys were reportedly prepared to ask for about $3.5 million in damages and fees.

The city will pay the $1.5 million from a "risk fund" that exists for such instances, a city spokesperson said.

"We’re pleased that what remained of the case is resolved and we can finally close the books on this thing," said Philip N. Elbert, a Nashville attorney who represents the owners.

The city’s new ordinance requiring employee licenses has led to three separate lawsuits filed on behalf of seven adult businesses and two individual performers. Kizer said the city is delaying enforcement of the law until those lawsuits are settled.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Adam & Eve, Lovehoney Group Partner for Custom Products

Adam & Eve and Lovehoney Group have partnered to introduce two custom editions of We-Vibe vibrators and an advent calendar sex kit.

Lovely Planet, Dorcel Expand Partnership

Lovely Planet, longtime manufacturer and distributor of the Dorcel Toys line, has expanded its partnership with the company to include all Dorcel physical pleasure products.

Arcwave Debuts 'Air' Male Stroker

Arcwave has introduced Air, the newest stroker from its Pleasure Air collection.

Sportsheets Introduces 11-Piece 'Amethyst' Collection From 'Sex & Mischief' Line

Sportsheets is accepting pre-orders for its new Amethyst collection of pleasure accessories from its Sex & Mischief line.

Haute Sugar to Make Industry Debut at XBIZ Expo

Haute Sugar, a new lifestyle brand that blends intimate wellness with fashion-inspired design, will make its industry debut at XBIZ Expo in Los Angeles this January.

Ofcom Sets Timeline for Enforcing 'Extreme' Content Rules

U.K. media regulator Ofcom plans to begin enforcing new laws criminalizing certain “extreme” adult content online, but will first hold a consultation in early 2027 before providing updated guidance for sites and platforms.

Casey Murphy to Host Free Webinar for Indie Product Manufacturers

Industry marketing strategist and certified sex educator Casey Murphy is hosting a free live webinar for independent sexual wellness product manufacturers at 1 p.m. MT today.

Orion Debuts New Thrusting Bullet Vibe From 'Javida' Line

Orion Wholesale has introduced a thrusting bullet vibrator from its Javida collection.

Besharam CEO Raj Armani Featured in Cosmopolitan India Magazine Brand Showcase

Raj Armani, co-founder and CEO of Indian pleasure brand Besharam, was recently featured in a full-page brand showcase advertorial in Cosmopolitan India Magazine.

Aneros Rolls Out Resource Hub for Retailers, Industry Partners

Aneros has launched its new Aneros Media Website, a digital platform to centralize the company's educational resources, product training, point-of-sale materials, and marketing assets for its retailers, distributors, and industry partners.

Show More