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It has been replaced by a new law that uses a 35 percent benchmark regarding the amount of merchandise, its monetary value, the interior floor space used for its display or the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

Xgen Expands Bodywand Line With 2 New Vibes

Xgen Products has added two new bullet vibrators to its Bodywand collection.

Womanizer Introduces 'Snap' Micro Stimulator

Womanizer has debuted its new Snap stimulator, billed as the smallest pleasure product the company has released.

Product-Specific Local Store Locator Tool 'RetailCurrent' Launches

RetailCurrent, a tool that lets pleasure brands show online customers nearby brick-and-mortar stores with confirmed availability of specific products, has officially launched.

Blush Debuts 'M for Men' Male Sleeve Warmer

Blush has introduced its new M for Men sleeve warmer for male masturbators and strokers.

Orion Debuts 3 New Styles From 'Cottelli Party' Line

Orion Wholesale has expanded its Cottelli Party line with three new styles.

FSC Publishes Guidance on New UK Pornography Laws

The Free Speech Coalition (FSC) has published information for its members on the United Kingdom's recently passed pornography laws, which take effect next week.

Brazil Issues Guide to Digital Safety Compliance

Brazil’s National Data Protection Agency (ANPD) published on Wednesday a new guide outlining online providers’ child-protection responsibilities under the Digital Statute for Children and Adolescents (Digital ECA), which requires adult websites to age-verify users located in Brazil.

Nalpac Releases 2026 Winter Catalog

Nalpac has released its 84-page 2026 winter catalog.

2027 XBIZ Exec Awards Nominees Announced for Pleasure Product and Retail Edition

XBIZ is pleased to announce the executive nominees for the pleasure product and retail industry edition of the 2027 XBIZ Awards, presented by Svakom and sister brand Kaotik Labs, set to take place on Saturday, Jan. 9, in conjunction with the XBIZ 2027 event series.

Arcom Issues Warnings to 3 Adult Sites Over Age Verification

French media regulator Arcom has issued formal notices to the operators of three adult websites that the agency says have failed to implement age verification as required under French law.

Show More