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It has been replaced by a new law that uses a 35 percent benchmark regarding the amount of merchandise, its monetary value, the interior floor space used for its display or the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

Liberator Introduces 'Luxe Faux-Fur' Throw Collection From 'Fascinator' Line

Liberator has debuted its Luxe Faux-Fur throw blanket collection from its Fascinator line.

XR Brands Debuts 'Jock Premium' Squirting Dildos Collection

XR Brands has introduced its Jock Premium collection of squirting, silicone dildos.

Kaotik Labs, Dildos Assorted Ink Distro Deal

Svakom’s male-focused sextech sister brand, Kaotik Labs, has signed a deal with Dildos Assorted (DA) for exclusive online distribution.

Calvista Now Shipping Tenga Products and 'Iroha' Line

Calvista has signed an Australian and New Zealand distribution deal for Tenga and its Iroha product line.

Orion Unveils 6 New Styles From 'Abierta Fina' Line

Orion Wholesale has introduced six new styles from its Abierta Fina collection.

Full Circle Debuts New Pleasure Products for 'Anal August'

Full Circle has introduced its Sparkle-LIT anal plug and My Buddy collection of rechargeable plugs.

Creator and Sexual Wellness Brand Marketplace Platform 'Teasr' Launches

Teasr, an online marketplace for creators and sexual wellness brands that focuses on live-selling and video product demonstrations, has officially launched.

B-Vibe Debuts 'Premium XXL' Collection

B-Vibe has debuted its Premium XXL collection of dildos and anal pleasure products.

Orion Debuts 'Love Balls' Collection From Cuties Line

Orion Wholesale has introduced the new Love Balls pelvic trainer collection from its Cuties line.

FSC Hails Members, Allies in SCREEN Act Victory

The Free Speech Coalition (FSC) released a statement today praising its members and allies after a successful lobbying effort to prevent the SCREEN Act, a nationwide age verification bill, from advancing out of the Commerce Committee for a full vote on the Senate floor.

Show More