ST. PAUL, Minn. — A federal appeals court on Thursday ruled that zoning officials in Fargo, North Dakota, acted in an “arbitrary and capricious” manner when they prevented sex toy retailer Romantix from opening a planned retail store in that city.
The decision by the U.S. Court of Appeals for the 8th Circuit in Romantix-Fargo, Inc. v. City of Fargo, et al. concerns Romantix’s 2022 attempt to open a proposed new location in Fargo’s downtown mixed-use district (DMU).
In its suit and appeal, Romantix-Fargo contended that the city of Fargo subjected the company to a sort of bait-and-switch. Zoning officials, the company said, initially indicated via a zoning confirmation letter that they would approve its plan to open a new store in the city’s DMU district — as long as it did not sell sexually oriented books or magazines, since stocking those items would classify it as an “adult bookstore.”
According to a Courthouse News report earlier this year, Romantix then retooled its plans to follow the city’s guidance, signed a seven-year lease and spent $400,000 on the planned new store — only to have its permit denied based on a new interpretation of the rules which equated its operation, for zoning purposes, with an adult bookstore.
Romantix sued the city, which shortly thereafter began updating its zoning ordinances to classify “sexual device shops” as “adult establishments.” Under the amended provisions, a store like Romantix would therefore no longer be permitted in the DMU zone.
Romantix sought a preliminary injunction against the city’s decision denying it a permit, arguing that if the company were unable to open and operate before the new ordinance was passed, its business would be “destroyed without full legal remedy.” The court denied the preliminary injunction, and the zoning amendment later passed.
In its suit against Fargo and the city's director of planning and development, Romantix contended that the decision to deny its requested change-of-use permit was “arbitrary, capricious, and unreasonable conduct,” as the city never provided any clear or reasonable interpretation of “adult bookstore” applicable to the products the store planned to offer. This vagueness, the store contended, made it impossible for it to know what was prohibited.
After arguing unsuccessfully before a lower court, the store appealed its case to the 8th Circuit. In its appeal brief, Romantix-Fargo stated, “Changing position as to the meaning of Adult Bookstore after official direction was supplied is the very epitome of unfair.”
The company told the 8th Circuit that the city’s zoning director lacks the authority to disregard the text of the land development code (LDC) “simply because doing so would not produce the desired result,” and that administering officials had conducted an “ad hoc analysis according to their own personal predilections.”
“Definitions do not change based on the Zoning Director’s personal preferences,” the brief stated. “The City was asked and it confirmed the meaning of the definition of Adult Bookstore. Romantix-Fargo relied upon and followed that guidance. The City reversed course without a valid explanation, let alone one rooted in the text of the LDC.”
At a March 17 appeal hearing before the 8th Circuit, Romantix-Fargo’s attorney, Matthew Hoffer, told a panel of three federal judges that the city of Fargo blocked its downtown location based on a desire to exclude the company, only retroactively adjusting its zoning ordinances to justify the denial.
“The city realized the problems with its ordinance in that it couldn’t, under the language of the definition of ‘adult bookstore,’ regulate sexual device shops or sexual wellness shops, because quite frankly the definition doesn’t encompass those items,” Hoffer stated.
Hoffer argued that the revised ordinance should not matter for the case, since “at the time that Romantix Fargo Inc. applied for their permit, the definition was just ‘adult bookstore,’ not ‘sex device shop.’” He asked the court to require that the city apply only the law that was in effect at the time of the store’s initial application.
Representing the city of Fargo, attorney Scott Bergthold told the court that Romantix was not entitled to such “grandfathering,” in part because it never actually opened or operated the proposed store, but merely “contemplated” doing so.
On Thursday, the 8th Circuit rejected some of Romantix’s claims, including that the city violated its First Amendment rights — on the grounds that the proposed store did not plan to sell any books, magazines, periodicals or DVDs — and that the zoning ordinance was unconstitutionally vague. However, the court called the issue of whether the city should have applied the ordinance to Romantix in the first place “a separate question.”
Since Romantix’s proposed store did not meet the then-operative definition of “adult bookstore,” Thursday’s ruling states, the zoning commissioners’ denial of the permit application was indeed “arbitrary and capricious under state law.”
The court noted that it remains unclear what relief is still available to Romantix, but remanded the case back to the U.S. District Court for the District of North Dakota – Eastern, to address whether Romantix’s state-law claim is moot, or whether it is possible for Romantix retroactively to obtain a permit under the former ordinance.
If the district court decides that Romantix’s claim is not moot, the store proposal could be revived and brought back before Fargo’s zoning commission.
