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It has been replaced by a new law that uses a 35 percent benchmark regarding the amount of merchandise, its monetary value, the interior floor space used for its display or the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

Anastasia's Bedroom Introduces 'Lightly Loved Lingerie' Collection

Anastasia’s Bedroom, a Canadian-based online retailer, has debuted its Lightly Loved Lingerie collection.

AV Bulletin: Loopholes and Lawsuits

This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

LELO Debuts 'Surfer 2' Anal Plug

LELO has introduced its new Surfer 2 anal plug.

Utah 'Porn Tax' Bill Will Head to Governor's Desk

A bill that would tax adult websites and make them liable if minors circumvent geolocation has passed the Utah state legislature and will soon head to the office of Gov. Spencer Cox for signature or veto.

Pornhub to Restrict Access in Australia as AV Rules Take Effect

Pornhub parent company Aylo will restrict access to its free video-sharing platforms in Australia in response to new age verification regulations, the company confirmed Thursday.

Our Erotic Journey Expands 'Cristal Collection' of Vibrators

Our Erotic Journey has introduced five new vibrators from its Cristal Collection.

Nice & Naughty Names Chris Fleiger Director of Operations

Michigan-based retail chain Nice & Naughty has appointed Chris Fleiger as its new director of operations.

House Committee Approves Online Safety Bill With Federal AV Requirement

The U.S. House of Representatives Committee on Energy and Commerce on Thursday passed the Kids Internet and Digital Safety (KIDS) Act, which includes provisions to make age verification by adult websites federal law.

XBIZ Retreat to Make Its Cabo Comeback Aug. 17-21

XBIZ Retreat will return to Cabo San Lucas Aug. 17–21, bringing together top LATAM retail buyers and pleasure product brands for a week of dealmaking and networking.

Orion Debuts 'Oral Fun' Vibrator Collection

Orion Wholesale has introduced its Oral Fun vibrator line.

Show More