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It has been replaced by a new law that uses a 35 percent benchmark regarding the amount of merchandise, its monetary value, the interior floor space used for its display or the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

Holiday Now Shipping 'Moonbloom' Collection From Intimate Earth

Holiday Products is now shipping the Moonbloom product line from Intimate Earth.

Final IRS 'No Tax on Tips' Rule Excludes Pornography

The Internal Revenue Service on Monday published final regulations on the “No Tax on Tips” provision included in the “One Big Beautiful Bill Act,” offering new tax deductions for tip workers but excluding revenue received for “pornographic activity.”

CC Wellness Names Brendi Acevedo National Training Manager

CC Wellness has promoted Brendi Acevedo to the position of national training manager.

PHE Forms Commercial Partnership With Kindra

Adam & Eve parent company PHE, Inc. has formed a strategic partnership with Kindra that includes distribution and a minority equity stake in the wellness brand.

Pennsylvania Legislature Weighs 'Porn Tax' Bill

The Pennsylvania State Senate is considering a bill that would impose a 10% tax on the revenue of adult websites doing business in that state.

Our Erotic Journey Expands 'Sublime,' 'Curious' Lines

Our Erotic Journey has introduced three new additions to its Sublime and Curious collections.

Trump Tariffs Refund Process to Launch April 20

WASHINGTON — U.S. Customs and Border Protection (CBP) will begin the process of refunding duties paid under the Trump administration’s sweeping program of tariffs by providing, starting April 20, an online tool for submitting refund claims.

UK Government May Limit 'Step' Porn Ban With New Amendments

The U.K. Ministry of Justice on Friday revealed new government amendments to the pending Crime and Policing Bill, potentially limiting a planned ban on “step” content to apply only if adult performers role-play as minors.

Lovense Debuts 'Velvo' Rabbit Vibe

Lovense has introduced Velvo, a rabbit vibrator with 360-degree rolling beads.

Arizona Senate Removes 'Catch-22' Provision From Consent Bill

The Arizona State Senate has amended a bill that would impose new requirements for adult content uploaded online, removing a seemingly contradictory provision that could have effectively made it impossible for adult sites to operate in the state.

Show More